PROSPECTUS SUPPLEMENT
January 10, 2000
for the following funds with prospectuses dated February 1, 1999 - December 1,
1999
<TABLE>
<CAPTION>
<S> <C>
AMCAP Fund, Inc. Limited Term Tax-Exempt Bond
American Balanced Fund, Inc. Fund of America
American High-Income Municipal The New Economy Fund
Bond Fund, Inc. New Perspective Fund, Inc.
American High-Income Trust SMALLCAP World Fund, Inc.
The Bond Fund of America, Inc. The Tax-Exempt Bond Fund of
Capital World Bond Fund, Inc. America, Inc.
Capital World Growth and The Tax-Exempt Fund of
Income Fund, Inc. California
The Cash Management Trust of The Tax-Exempt Fund of
America Maryland
EuroPacific Growth Fund The Tax-Exempt Fund of
Fundamental Investors, Inc. Virginia
The Growth Fund of America, The Tax-Exempt Money Fund
Inc. of America
The Income Fund of America, U.S. Government Securities
Inc. Fund
Intermediate Bond Fund of The U.S. Treasury Money Fund
America of America
The Investment Company of Washington Mutual Investors
America Fund, Inc.
</TABLE>
The initial investment minimum for all funds in The American Funds Group(r),
except the money market funds and the state tax-exempt funds, is now $250. The
initial investment minimum for the money market funds (The Cash Management
Trust of America, The Tax-Exempt Money Fund of America and The U.S. Treasury
Money Fund of America) and the state tax-exempt funds (The Tax-Exempt Fund of
California, The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of
Virginia) is $1,000.
In addition, effective January 10, 2000, the sales charges applied to purchases
of the equity and fixed-income funds in The American Funds Group are as
follows:
<TABLE>
<CAPTION>
EQUITY FUNDS FIXED-INCOME FUNDS
Sales Charge Dealer Sales Charge Dealer
as % of Concession as % of Concession
as a % of as a % of
Offering Offering
Price Price
AMOUNT OF SALE Offering Net Offering Net
Price Amount Price Amount
Invested Invested
<S> <C> <C> <C> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
$25,000 but less than 5.00 5.26 4.25 3.75% 3.90% 3.00%
$50,000
$50,000 but less than 4.50 4.71 3.75
$100,000
$100,000 but less than 3.50 3.63 2.75 3.50 3.63 2.75
$250,000
$250,000 but less than 2.50 2.56 2.00 2.50 2.56 2.00
$500,000
$500,000 but less than 2.00 2.04 1.60 2.00 2.04 1.60
$750,000
$750,000 but less than 1.50 1.52 1.20 1.50 1.52 1.20
$1 million
$1 million and above none none see none none see
prospectus prospectus
</TABLE>
<PAGE>
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
Part B
Statement of Additional Information
November 1, 1999
(as amended January 10, 2000)
This document is not a prospectus but should be read in conjunction with the
current prospectus of The Tax-Exempt Bond Fund of America (the "fund" or "TEBF")
dated November 1, 1999. The prospectus may be obtained from your investment
dealer or financial planner or by writing to the fund at the following address:
The Tax-Exempt Bond Fund of America, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 7
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 8
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 9
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 16
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 20
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shareholder Account Services and Privileges . . . . . . . . . . . . 28
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 31
General Information . . . . . . . . . . . . . . . . . . . . . . . . 31
Investment Results and Related Statistics . . . . . . . . . . . . . 33
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Financial Statements
</TABLE>
The Tax-Exempt Bond Fund of America -- Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
- - The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax.
- - The fund will not invest in securities subject to alternative minimum
taxes.
- - The fund will invest at least 65% of its assets in straight debt securities
rated A or better by Standard & Poor's Corporation (S&P) or Moody's
Investors Service, Inc. (Moody's) or unrated but determined to be of
equivalent quality.
- - The fund may invest up to 35% of its assets in straight debt securities
rated BBB by S&P or Baa by Moody's or below or unrated but determined to be
of equivalent quality (with no more than 20% of its assets in straight debt
securities rated BB/Ba or below or unrated but determined to be of
equivalent quality).
- - The fund will invest substantially in securities with maturities in excess
of three years.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions. The
descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.
High-yield, high-risk bonds rated Ba or below by Standard & Poor's Corporation
and BB or below by Moody's Investors Services, Inc. (or unrated but considered
to be of equivalent quality) are described by the rating agencies as speculative
and involve greater risk of default or price changes due to changes in the
issuer's creditworthiness than higher rated bonds, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, or to determine the value
of, high-yield, high-risk bonds. Certain risk factors relating to "high-yield,
high-risk bonds" are discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and
corporate developments and may be less sensitive to interest rate changes.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain
additional financing. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices
and yields of high-yield, high-risk bonds.
The Tax-Exempt Bond Fund of America -- Page 2
<PAGE>
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercises these
provisions in a declining interest rate market, the fund would have to
replace the security with a lower yielding security, resulting in a
decreased return for investors. If the issuer of a bond defaults on its
obligations to pay interest or principal or enters into bankruptcy
proceedings, the fund may incur losses or expenses in seeking recovery of
amounts owed to it.
LIQUIDITY AND VALUATION - There may be little trading in the secondary
market for particular bonds, which may affect adversely the fund's ability
to value accurately or dispose of such bonds. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high-yield, high-risk bonds,
especially in a thin market.
The Investment Adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as well
as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.
MUNICIPAL BONDS - Municipal bonds are debt obligations generally issued to
obtain funds for various public purposes, including the construction of public
facilities. Opinions relating to the validity of municipal bonds, their
exclusion from gross income for federal income tax purposes and, where
applicable, state and local income tax are rendered by bond counsel to the
issuing authorities at the time of issuance.
The two principal classifications of municipal bonds are general obligation
bonds and limited obligation or revenue bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit including, if
available, its taxing power for the payment of principal and interest. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, highways and roads, water and sewer systems and facilities for a
variety of other public purposes. Lease revenue bonds or certificates of
participation in leases are payable from annual lease rental payments from a
state or locality. Annual rental payments are payable to the extent such rental
payments are appropriated annually.
Typically, the only security for a limited obligation or revenue bond is the net
revenue derived from a particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a special tax or other special
revenues. Revenue bonds have been issued to fund a wide variety of
revenue-producing public capital projects including: electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; hospitals; and convention, recreational and housing
facilities. Although the security behind these bonds varies widely, many provide
additional security in the form of a debt service reserve fund which may also be
used to make principal and interest payments on the issuer's obligations. In
addition, some revenue obligations (as well as general obligations) are insured
by a bond insurance company or backed by a letter of credit issued by a banking
institution.
Revenue bonds also include, for example, pollution control, health care and
housing bonds, which, although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but by the
revenues of the authority derived from payments by the private entity which owns
or operates the facility financed with the proceeds of the bonds.
The Tax-Exempt Bond Fund of America -- Page 3
<PAGE>
Obligations of housing finance authorities have a wide range of security
features including reserve funds and insured or subsidized mortgages, as well as
the net revenues from housing or other public projects. Most of these bonds do
not generally constitute the pledge of the credit of the issuer of such bonds.
The credit quality of such revenue bonds is usually directly related to the
credit standing of the user of the facility being financed or of an institution
which provides a guarantee, letter of credit, or other credit enhancement for
the bond issue.
MUNICIPAL LEASE OBLIGATIONS - The fund may invest in municipal lease revenue
obligations. The fund may purchase, without limitation, municipal lease revenue
obligations that are determined to be liquid by Capital Research and Management
Company. In determining whether these securities are liquid, Capital Research
and Management Company will consider, among other things, the credit quality and
support, including strengths and weaknesses of the issuers and lessees, the
terms of the lease, the frequency and volume of trading and the number of
dealers trading the securities.
CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper
(short-term notes up to 9 months in maturity issued by corporations or
governmental bodies), (ii) commercial bank obligations (e.g., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity)), (iii) savings
association and saving bank obligations (e.g., certificates of deposit issued by
savings banks or savings associations), (iv) securities of the U.S. Government,
its agencies or instrumentalities that mature, or may be redeemed, in one year
or less, and (v) corporate bonds and notes that mature, or that may be redeemed,
in one year or less.
TEMPORARY INVESTMENTS - The fund may invest in short-term municipal obligations
of up to one year in maturity during periods of temporary defensive strategy
resulting from abnormal market conditions, or when such investments are
considered advisable for liquidity. Generally, the income from all such
securities is exempt from federal income tax. Further, a portion of the fund's
assets, which will normally be less than 20%, may be held in cash or invested in
high-quality taxable short-term securities of up to one year in maturity. Such
investments may include: (1) obligations of the U.S. Treasury; (2) obligations
of agencies and instrumentalities of the U.S. Government; (3) money market
instruments, such as certificates of deposit issued by domestic banks, corporate
commercial paper, and bankers' acceptances; and (4) repurchase agreements.
MUNICIPAL INFLATION-INDEXED BONDS - The fund may invest in inflation-indexed
bonds issued by municipalities. Interest payments are made to bondholders
semi-annually and are made up of two components: a fixed "real coupon" or
spread, and a variable coupon linked to an inflation index. Accordingly,
payments will increase or decrease each period as a result of changes in the
inflation index. In a period of deflation payments may decrease to zero, but in
any event will not be less than zero.
ZERO COUPON BONDS - Municipalities may issue zero coupon securities which are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest. They are issued and traded at a discount from their face
amount or par value, which discount varies depending on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security, and
the perceived credit quality of the issuer.
The Tax-Exempt Bond Fund of America -- Page 4
<PAGE>
PRE-REFUNDED BONDS - From time to time, a municipality may refund a bond that it
has already issued prior to the original bond's call date by issuing a second
bond, the proceeds of which are used to purchase securities. The securities are
placed in an escrow account pursuant to an agreement between the municipality
and an independent escrow agent. The principal and interest payments on the
securities are then used to pay off the original bondholders. For the purposes
of diversification, pre-refunded bonds will be treated as governmental issues.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities it
assumes the risk of any decline in value of the security beginning on the date
of the agreement. When the fund agrees to sell such securities it does not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails to
deliver or pay for the securities, the fund could miss a favorable price or
yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of the
fund's portfolio securities decline while the fund is in a leveraged position,
greater depreciation of its net assets would likely occur than were it not in
such a position. As the fund's aggregate commitments under these transactions
increase the opportunity for leverage similarly may increase. The fund will not
borrow money to settle these transactions and therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations thereunder.
VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate based
upon changes in market rates. Variable and floating rate obligations bear coupon
rates that are adjusted at designated intervals, based on the then current
market rates of interest on which the coupon rates are based. Variable and
floating rate obligations permit the fund to "lock in" the current interest rate
for only the period until the next scheduled rate adjustment, but the rate
adjustment feature tends to limit the extent to which the market value of the
obligation will fluctuate.
PRIVATE PLACEMENTS - Generally, municipal securities acquired in private
placements are subject to contractual restrictions on resale. Accordingly, all
private placements will be considered illiquid unless they have been
specifically determined to be liquid, taking into account factors such as the
frequency and volume of trading and the commitment of dealers to make markets
under procedures adopted by the fund's board of directors.
ADJUSTMENT OF MATURITIES - The Investment Adviser seeks to anticipate movements
in interest rates and adjusts the maturity distribution of the portfolio
accordingly. Keeping in mind the fund's objective, the Investment Adviser will
increase the fund's exposure to this price volatility only when it appears
likely to increase current income without undue risk to capital.
The Tax-Exempt Bond Fund of America -- Page 5
<PAGE>
ISSUE CLASSIFICATION - Securities with the same general quality rating and
maturity characteristics, but which vary according to the purpose for which they
were issued, often tend to trade at different yields. Correspondingly,
securities issued for similar purposes and with the same general maturity
characteristics, but which vary according to the creditworthiness of their
respective issuers, tend to trade at different yields. These yield differentials
tend to fluctuate in response to political and economic developments, as well as
temporary imbalances in normal supply/demand relationships. The Investment
Adviser monitors these fluctuations closely, and will attempt to adjust
portfolio concentrations in various issue classifications according to the value
disparities brought about by these yield relationship fluctuations.
The Investment Adviser believes that, in general, the market for municipal bonds
is less liquid than that for taxable fixed-income securities. Accordingly, the
ability of the fund to make purchases and sales of securities in the foregoing
manner may, at any particular time and with respect to any particular
securities, be limited (or non-existent).
The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. Repurchase agreements
permit the fund to maintain liquidity and earn income over periods of time as
short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the Investment Adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the Investment Adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization upon the collateral by the
fund may be delayed or limited.
* * * * * *
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the length
of time particular investments may have been held. Short-term trading profits
are not the fund's objective and changes in its investments are generally
accomplished gradually, though short-term transactions may occasionally be made.
High portfolio turnover (100% or more) involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved.
The fund's portfolio turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's annual portfolio turnover for each of the last five
fiscal periods.
The Tax-Exempt Bond Fund of America -- Page 6
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
These restrictions provide that the fund may not:
1. With respect to 75% of the Fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer;
2. Enter into any repurchase agreement if, as a result, more than 10% of the
value of the fund's total assets would be subject to repurchase agreements
maturing in more than seven days;
3. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in securities secured by real estate or interests therein;
4. Make loans to others, except for the purchase of debt securities or
entering into repurchase agreements;
5. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
6. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases or sales;
7. Borrow money, except from banks for temporary or emergency purposes, not in
excess of 5% of the value of the fund's total assets, excluding the amount
borrowed. This borrowing provision is intended to facilitate the orderly sale of
portfolio securities to accommodate unusually heavy redemption requests, if they
should occur; it is not intended for investment purposes;
8. Underwrite any issue of securities, except to the extent that the purchase
of municipal bonds directly from the issuer in accordance with the fund's
investment objective, policies and restrictions, and later resale may be deemed
to be an underwriting;
9. Invest in companies for the purpose of exercising control or management;
10. Buy or sell commodities or commodity contracts or oil, gas or other mineral
exploration or development programs;
The Tax-Exempt Bond Fund of America -- Page 7
<PAGE>
11. Write, purchase or sell puts, calls, straddles, spreads or any combination
thereof;
For the purpose of the fund's investment restrictions, the identification of the
"issuer" of municipal bonds that are not general obligation bonds is made by the
Investment Adviser on the basis of the characteristics of the bonds as
described, the most significant of which is the ultimate source of funds for the
payment of principal and interest on such bonds.
For purposes of Investment Restriction #10, the term "oil, gas or other mineral
exploration or development programs" includes oil, gas or other mineral
exploration or development leases.
NON-FUNDAMENTAL POLICIES -- The following non-fundamental policies may be
changed without shareholder approval:
(a) invest 25% or more of its assets in municipal bonds the issuers of
which are located in the same state, unless such securities are guaranteed
by the U.S. Government, or more than 25% of its total assets in securities
the interest on which is paid from revenues of similar type projects (such
as hospitals and health facilities; turnpikes and toll roads; ports and
airports; or colleges and universities). The fund may on occasion invest
more than an aggregate of 25% of its total assets in industrial development
bonds. There could be economic, business or political developments which
might affect all municipal bonds of a similar category or type or issued by
issuers within any particular geographical area or jurisdiction;
(b)
invest more than 15% of its net assets in securities which are not readily
marketable.
(c) invest in securities of other investment companies, except as
permitted by the Investment Company Act of 1940, as amended.
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation on July 20, 1979.
All fund operations are supervised by the fund's board of directors which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Directors and Director Compensation" below. They may elect
to defer all or a portion of these fees through a deferred compensation plan in
effect for the fund.
The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
The Tax-Exempt Bond Fund of America -- Page 8
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS AUGUST 31, 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Director Corporate Director and author; former none/3/
6077 San Elijo, Box 2494 United States Ambassador to Spain;
Rancho Santa Fe, CA 92067 former Vice Chairman of the Board,
Age: 63 Knight-Ridder, Inc., former Chairman
and Publisher, The Miami Herald
- ------------------------------------------------------------------------------------------------------------------
H. Frederick Christie Director Private Investor. Former President and $ 4,100
P.O. Box 144 Chief Executive Officer, The Mission
Palos Verdes Estates, CA Group (non-utility holding company,
90274 subsidiary of Southern California
Age: 66 Edison Company)
- ------------------------------------------------------------------------------------------------------------------
+ Don R. Conlan Director President (Retired), The Capital Group none/4/
1630 Milan Avenue Companies, Inc.
South Pasadena, CA 91030
Age: 63
- ------------------------------------------------------------------------------------------------------------------
Diane C. Creel Director CEO and President, The Earth Technology $4,100/5/
100 W. Broadway Corporation (international consulting
Suite 5000 engineering)
Long Beach, CA 90802
Age: 50
- ------------------------------------------------------------------------------------------------------------------
Martin Fenton Director Chairman, Senior Resource Group $ 4,900
4660 La Jolla Village (development and management of senior
Drive living communities)
Suite 725
San Diego, CA 92121-2116
Age: 64
- ------------------------------------------------------------------------------------------------------------------
Leonard R. Fuller Director President, Fuller Consulting (financial $4,100/5/
4337 Marina City Drive management consulting firm)
Suite 841 ETN
Marina del Rey, CA 90292
Age: 52
- ------------------------------------------------------------------------------------------------------------------
+* Abner D. Goldstine Vice Chairman Senior Vice President and Director, none/4/
Age: 69 and Capital Research and Management Company
Director
- ------------------------------------------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. Chairman of Executive Vice President and Director, none/4/
Age: 50 the Board Capital Research and Management Company
- ------------------------------------------------------------------------------------------------------------------
Richard G. Newman Director Chairman, President and CEO, AECOM $ 4,500
3250 Wilshire Boulevard Technology Corporation (architectural
Los Angeles, CA 90010-1599 engineering)
Age: 64
- ------------------------------------------------------------------------------------------------------------------
Frank M. Sanchez Director President, The Sanchez Family none/3/
5234 Via San Delarro, #1 Corporation dba McDonald's Restaurants
Los Angeles, CA 90022 (McDonald's licensee)
Age: 55
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED AUGUST 31, 1999 SERVES/2/
- --------------------------------------------------------------------------
<S> <C> <C>
Richard G. Capen, Jr. none/3/ 9
6077 San Elijo, Box 2494
Rancho Santa Fe, CA 92067
Age: 63
- --------------------------------------------------------------------------
H. Frederick Christie $206,600 19
P.O. Box 144
Palos Verdes Estates, CA
90274
Age: 66
- --------------------------------------------------------------------------
+ Don R. Conlan none/4/ 12
1630 Milan Avenue
South Pasadena, CA 91030
Age: 63
- --------------------------------------------------------------------------
Diane C. Creel $ 48,000 12
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Age: 50
- --------------------------------------------------------------------------
Martin Fenton $131,600 15
4660 La Jolla Village
Drive
Suite 725
San Diego, CA 92121-2116
Age: 64
- --------------------------------------------------------------------------
Leonard R. Fuller $ 51,600 13
4337 Marina City Drive
Suite 841 ETN
Marina del Rey, CA 90292
Age: 52
- --------------------------------------------------------------------------
+* Abner D. Goldstine none/4/ 12
Age: 69
- --------------------------------------------------------------------------
+** Paul G. Haaga, Jr. none/4/ 14
Age: 50
- --------------------------------------------------------------------------
Richard G. Newman $107,100 13
3250 Wilshire Boulevard
Los Angeles, CA 90010-1599
Age: 64
- --------------------------------------------------------------------------
Frank M. Sanchez none/3/ 7
5234 Via San Delarro, #1
Los Angeles, CA 90022 --------------
Age: 55
- ------------------------------------------------------------
</TABLE>
The Tax-Exempt Bond Fund of America -- Page 9
<PAGE>
The Tax-Exempt Bond Fund of America -- Page 10
<PAGE>
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Richard G. Capen, Jr. and Frank M. Sanchez became directors of the Fund
subsequent to the Fund's 8/31/99 fiscal year end.
4 Don R. Conlan, Paul G. Haaga, Jr., and Abner D. Goldstine are affiliated with
the Investment Adviser and, accordingly, receive no compensation from the
fund.
5 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of fiscal year
ended August 31, 1999 for participating Directors is as follows: H. Frederick
Christie ($9,423), Diane C. Creel ($4,659), Martin Fenton ($15,113), Leonard
R. Fuller ($9,710) and Richard G. Newman ($35,568). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Directors.
The Tax-Exempt Bond Fund of America -- Page 11
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Neil L. Langberg 46 President and PEO Vice President - Investment
11100 Santa Monica Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Michael J. Downer 44 Vice President Senior Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
- -------------------------------------------------------------------------------
Brenda S. Ellerin 35 Vice President Vice President, Capital
11100 Santa Monica Research Company
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
David A. Hoag 33 Vice President Director and Vice President,
11100 Santa Monica Capital Research Company
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Mark R. Macdonald 40 Vice President Vice President - Investment
11100 Santa Monica Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
- -------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 36 Treasurer Vice President - Fund Business
135 South State Management Group, Capital
College Blvd. Research and Management Company
Brea, CA 92821
- -------------------------------------------------------------------------------
Kimberly S. Verdick 35 Assistant Assistant Vice President - Fund
333 South Hope Street Secretary Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
- -------------------------------------------------------------------------------
Todd L. Miller 40 Assistant Assistant Vice President - Fund
135 South State Treasurer Business Management Group,
College Blvd. Capital Research and Management
Brea, CA 92821 Company
- -------------------------------------------------------------------------------
</TABLE>
All of the officers listed are officers, and/or directors/trustees of one of
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by a fund to any officer or Director who is a director,
officer or employee of the Investment Adviser or affiliated companies. The fund
pays annual fees of $2,500 to Directors who are not affiliated with the
Investment Adviser, plus $200 for each Board of Directors meeting attended, plus
$200 for each meeting attended as a member of a committee of the Board of
Directors. No pension or retirement benefits are accrued as part of fund
expenses. The Directors may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Directors who are not
affiliated with the Investment Adviser. As of October 1, 1999 the officers
The Tax-Exempt Bond Fund of America -- Page 12
<PAGE>
and Directors of the fund and their families, as a group, owned beneficially or
of record less than 1% of the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital International
Perspective, providing financial and market information about more than 2,400
companies around the world.
The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until May 31, 2000, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors
The Tax-Exempt Bond Fund of America -- Page 13
<PAGE>
unaffiliated with the Investment Adviser; association dues; costs of stationery
and forms prepared exclusively for the fund; and costs of assembling and storing
shareholder account data.
The management fee is based upon the net assets of the fund and monthly gross
investment income. For the purpose of such computations under the Agreement,
gross investment income means gross income, computed without taking account of
gains or losses from sales of capital assets, but including original issue
discount as defined for federal income tax purposes. The Internal Revenue Code
in general defines original issue discount to mean the difference between the
issue price and the stated redemption price at maturity of certain debt
obligations. The holder of such indebtedness is in general required to treat as
ordinary income the proportionate part of the original issue discount
attributable to the period during which the holder held the indebtedness.
The Investment Adviser receives a fee at the annual rate of 0.30% on the first
$60 million of the fund's net assets, plus 0.21% on net assets from $60 million
to $1 billion, plus 0.18% on net assets from $1 billion to $3 billion, plus
0.16% on net assets over $3 billion, plus 3% of the first $40 million of the
fund's annual gross investment income, plus 2.50% of such income over $40
million but not exceeding $100 million and 2.25% of such income in excess of
$100 million. Assuming net assets of $1.9 billion and gross investment income
levels of 3%, 4%, 5%, 6% and 7%, management fees would be 0.28%, 0.31%, 0.33%,
0.36% and 0.38%, respectively.
The Agreement provides for a management fee reduction to the extent that the
fund's annual ordinary operating expenses exceed 1-1/2% of the first $30 million
of the net assets of the fund and 1% of the net assets in excess thereof.
Expenses which are not subject to this limitation are interest, taxes, and
extraordinary expenses. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.
For the fiscal years ended August 31, 1999, 1998, 1997, the Investment Adviser
received advisory fees of $6,526,000, $5,969,000, and $5,567,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
August 31, 1999 amounted to $1,005,000 after allowance of $3,987,000 to dealers.
During the fiscal years ended 1998 and 1997 the Principal Underwriter retained
$827,000 and $632,000, respectively after an allowance of $3,336,000 and
$2,563,000 to dealers, respectively.
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Directors and separately by a majority of the directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting securities
of the fund. The
The Tax-Exempt Bond Fund of America -- Page 14
<PAGE>
officers and directors who are "interested persons" of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment process
from growth or stability of assets and maintenance of a financially healthy
management organization. The selection and nomination of directors who are not
"interested persons" of the fund are committed to the discretion of the
directors who are not "interested persons" during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales of
shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan, any defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During the
fiscal year ended August 31, 1999, the fund paid or accrued $4,721,000 for
compensation to dealers under the Plan. As of August 31, 1999, accrued and
unpaid distribution expenses were $894,000.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting, selling
or distributing securities, but permit banks to make shares of mutual funds
available to their customers and to perform administrative and shareholder
servicing functions. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited from so acting,
shareholder clients of such bank would be permitted to remain shareholders of
the fund and alternate means for continuing the servicing of such shareholders
would be sought. In such event, changes in the operation of the fund might occur
and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being provided by
such bank. It is not expected that shareholders would suffer adverse financial
consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
The Tax-Exempt Bond Fund of America -- Page 15
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute the amount
of capital gain and/or net investment income required to be distributed by an
excise tax provision of the Code, the fund may be subject to that excise tax. In
certain circumstances, the fund may determine that it is in the interest of
shareholders to distribute less than the required amount. In this case, the fund
will pay any income or excise taxes due.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
The following is only a summary of certain additional federal, state and local
tax considerations generally affecting the fund and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
fund or its shareholders, and the discussion here and in the fund's prospectus
is not intended as a substitute for careful tax planning. Investors are urged
to consult their tax advisers with specific reference to their own tax
situations.
The fund is not intended to constitute a balanced investment program and is not
designed for investors seeking capital appreciation or maximum tax-exempt income
irrespective of fluctuations in principal. Shares of the fund would generally
not be suitable for tax-exempt institutions or tax-deferred retirement plans
(e.g., plans qualified under Section 401 of the Internal Revenue Code,
Keogh-type plans and individual retirement accounts). Such retirement plans
would not gain any benefit from the tax-exempt nature of the fund's dividends
because such dividends would be ultimately taxable to beneficiaries when
distributed to them. In addition, the fund may not be an appropriate investment
for entities which are "substantial users" of facilities financed by private
activity bonds or "related persons" thereof. "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who regularly
uses a part of such facilities in his trade or business and whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities, or
who occupies more than 5% of the usable area of such facilities or for whom such
facilities or a part thereof were specifically constructed, reconstructed or
acquired. "Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S Corporation and its
shareholders.
The fund intends to meet all the requirements and has elected the tax status of
a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such
The Tax-Exempt Bond Fund of America -- Page 16
<PAGE>
stock, securities, or currencies; and (b) diversify its holdings so that, at the
end of each fiscal quarter, (i) at least 50% of the market value of the fund's
assets is represented by cash, cash items, U.S. Government securities,
securities of other regulated investment companies, and other securities which
must be limited, in respect of any one issuer to an amount not greater than 5%
of the fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies) or in two or more issuers
which the fund controls and which are engaged in the same or similar trades or
businesses or related trades or businesses.
The percentage of total dividends paid by the fund with respect to any taxable
year which qualify for exclusion from gross income ("exempt-interest dividends")
will be the same for all shareholders receiving dividends during such year. In
order for the fund to pay exempt-interest dividends during any taxable year, at
the close of each fiscal quarter at least 50% of the aggregate value of the
fund's assets must consist of certain tax-exempt obligations. Not later than 60
days after the close of its taxable year, the fund will notify each shareholder
in writing of the portion of the dividends paid by the fund to the shareholder
with respect to such taxable year which constitutes exempt-interest dividends.
The aggregate amount of dividends so designated cannot, however, exceed the
excess of the amount of interest excludable from gross income from tax under
Section 103 of the Code received by the fund during the taxable year over any
amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Code.
Interest on indebtedness incurred by a shareholder to purchase or carry fund
shares is not deductible for federal income tax purposes if the fund distributes
exempt-interest dividends during the shareholder's taxable year. If a
shareholder receives an exempt-interest dividend with respect to any share and
such share is held for six months or less, any loss on the sale or exchange of
such share will be disallowed to the extent of the amount of such
exempt-interest dividend.
While the fund does not expect to realize substantial long-term capital gains,
any net realized long-term capital gains will be distributed annually except as
indicated above. The fund will have no tax liability with respect to such
distributed gains, and the distributions will be taxable to shareholders as
long-term capital gains, regardless of how long a shareholder has held fund
shares. Such distributions will be designated as a capital gains distribution
in a written notice mailed by the fund to shareholders not later than 60 days
after the close of the fund's taxable year. If a shareholder receives a
designated capital gain distribution (treated by the shareholder as a long-term
capital gain) with respect to any fund share and such fund share is held for six
months or less, then (unless otherwise disallowed) any loss on the sale or
exchange of that fund share will be treated as long-term capital loss to the
extent of the designated capital gain distribution. The fund also may make a
distribution of net realized long-term capital gains near the end of the
calendar year to comply with certain requirements of the Code. Gain recognized
on the disposition of a debt obligation (including tax-exempt obligations
purchased after April 30, 1993) purchased by the fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the fund held the debt obligation.
Similarly, while the fund does not expect to earn any significant investment
company taxable income, in the event that any taxable income is earned by the
fund it will be distributed except as indicated above. In general, the fund's
investment company taxable income will be its taxable income subject to certain
adjustments and excluding the excess of any net long-term capital gain
The Tax-Exempt Bond Fund of America -- Page 17
<PAGE>
for the taxable year over the net short-term capital loss, if any, for such
year. The fund would be taxed on any undistributed investment company taxable
income. Any such income distributed will be taxable to shareholders as ordinary
income (whether distributed in cash or additional shares).
The Code imposes limitations on the use and investment of the proceeds of state
and local governmental bonds and upon other funds of the issuers of such bonds.
These limitations must be satisfied on a continuing basis to maintain the
exclusion from gross income of interest on such bonds. These provisions of the
Code generally apply to bonds issued after August 15, 1986. Bond counsel
qualify their opinions as to the federal tax status of new issues of bonds by
making such opinions contingent on the issuer's future compliance with these
limitations. Any failure on the part of an issuer to comply could cause the
interest on its bonds to become taxable to investors retroactive to the date the
bonds were issued.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. Except as indicated above, the fund intends to distribute net
investment income and net capital gains so as to minimize or avoid the excise
tax liability.
If for any taxable year the fund does not qualify for the special tax treatment
afforded regulated investment companies, all of its taxable income would be
subject to tax at regular corporate rates (without any deduction for
distributions to its shareholders). In such event, dividend distributions would
be taxable to shareholders to the extent of earnings and profits, and might be
eligible for the dividends-received deduction for corporations. Under normal
circumstances, no part of the distributions to shareholders by the fund is
expected to qualify for the dividends-received deduction allowed to corporate
shareholders.
If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other funds.
Also, any loss realized on a redemption or exchange of shares of the fund will
be disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.
As of the date of this statement of additional information, the maximum
individual tax rate applicable to ordinary income is 39.6% (effective tax rates
may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate
The Tax-Exempt Bond Fund of America -- Page 18
<PAGE>
generally applicable to net capital gains on assets held more than one year is
20%, and the maximum corporate tax applicable to ordinary income and net capital
gains is 35%. However, to eliminate the benefit of lower marginal corporate
income tax rates, corporations which have taxable income in excess of $100,000
for a taxable year will be required to pay an additional amount of income tax of
up to $11,750 and corporations which have taxable income in excess of
$15,000,000 for a taxable year will be required to pay an additional amount of
income tax of up to $100,000. Naturally, the amount of tax payable by a
taxpayer will be affected by a combination of tax law rules covering, e.g.,
deductions, credits, deferrals, exemptions, sources of income and other matters.
Under the Code, distributions of net investment income by the fund to a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend paid by the fund is
"effectively connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S. citizens, U.S.
residents, or domestic corporations will apply.
The Tax-Exempt Bond Fund of America -- Page 19
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers "for initial "Investment Minimums and Fund
investment minimums. Numbers").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)
For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>
The Tax-Exempt Bond Fund of America -- Page 20
<PAGE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine/(R)/ (see description
below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 02
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 11
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 03
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 12
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . . . . . . 250 33
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 16
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . . . . . . 250 10
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 05
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 06
The Investment Company of America/(R)/ . . . . . . . . . . . . . . . . . 250 04
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 14
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 07
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 36
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . 250 35
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . . . . . . 250 01
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . . . . . . 250 40
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . . . . . . 250 21
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . . . . . . 250 08
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 31
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 250 23
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . 250 43
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . . . . . . 250 19
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . . . . . . 1,000 20
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . . . . . . 1,000 24
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . . . . . . 1,000 25
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . . . . . . 250 22
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . . . . . . 1,000 09
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . . . . . . 1,000 39
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . . . . . . 1,000 49
___________
*Available only in certain states.
</TABLE>
Minimums are reduced to $50 for purchases through "Automatic Investment Plans"
(except for the money market funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived for shareholders of
other funds in The American Funds Group. TAX-EXEMPT FUNDS SHOULD NOT
The Tax-Exempt Bond Fund of America -- Page 21
<PAGE>
SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional
investments (except as noted above).
SALES CHARGES -- The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below. The
money market funds of The American Funds Group are offered at net asset value.
(See "Investment Minimums and Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount of Purchase SALES CHARGE AS DEALER
at the Offering Price PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $25,000 6.10% 5.75% 5.00%
$25,000 but less than $50,000 5.26 5.00 4.25
$50,000 but less than $100,000 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND
FUNDS
$100,000 but less than 3.63 3.50 2.75
$250,000
$250,000 but less than 2.56 2.50 2.00
$500,000
$500,000 but less than 2.04 2.00 1.60
$750,000
$750,000 but less than 1.52 1.50 1.20
$1,000,000
$1,000,000 or more none none (see below)
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES - Investment of $1 million or more are
sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans investing $1 million or more,
or with 100 or more eligible employees, may invest with no sales charge and are
not subject to a contingent deferred sales charge. Investments made by
retirement plans, endowments or foundations with $50 million or more in assets
may also be made with no sales charge and are not subject to a contingent
deferred sales charge. A dealer concession of up to 1% may be paid by the fund
under its Plan of Distribution on investments made with no initial sales charge.
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board members
of the funds managed by Capital Research and Management Company, employees of
Washington Man-
The Tax-Exempt Bond Fund of America -- Page 22
<PAGE>
agement Corporation, employees and partners of The Capital Group Companies, Inc.
and its affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
DEALER COMMISSIONS - Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at net
asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million to
$4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
REDUCING YOUR SALES CHARGE - You and your "immediate family" (your spouse and
your children under age 21) may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company (the "Transfer
Agent") know if you qualify for a reduction in your sales charge using one or
any combination of the methods described below.
The Tax-Exempt Bond Fund of America -- Page 23
<PAGE>
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the
same sales charge as if all shares had been purchased at once. This
includes purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $25,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to utilize a Statement in order to qualify for a reduced sales
charge, shares equal to 5% of the dollar amount specified in the Statement
will be held in escrow in the shareholder's account out of the initial
purchase (or subsequent purchases, if necessary) by the Transfer Agent. All
dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see the account application) and any individual
investments in American Legacy products (American Legacy, American Legacy
II and American Legacy III variable annuities, American Legacy Life,
American Legacy Variable Life, and American Legacy Estate Builder) may be
credited toward satisfying the Statement. During the Statement period
reinvested dividends and capital gain distributions, investments in money
market funds, and investments made under a right of reinstatement will not
be credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy products are added to the
figure determined above. The sum is the Statement amount and applicable
breakpoint level. On the first investment and all other investments made
pursuant to the Statement, a sales charge will be assessed according to the
sales charge breakpoint thus determined.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:
- employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
The Tax-Exempt Bond Fund of America -- Page 24
<PAGE>
- business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
- for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
- made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or
- for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of two or more funds in
The American Funds Group, except direct purchases of the money market
funds. Shares of money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a sales charge do
qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing holdings in The American Funds Group, as well as your
holdings in Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or
charity. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy products (American Legacy,
American Legacy II and American Legacy III variable annuities, American
Legacy Life, American Legacy Variable Life, and American Legacy Estate
Builder). Direct purchases of the money market funds are excluded.
PRICE OF SHARES - Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; this offering price is effective for orders received prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In the case of orders sent directly to the fund or the Transfer Agent, an
investment dealer MUST be indicated. The dealer is responsible for promptly
transmitting purchase orders to the Principal Underwriter. Orders received by
the investment dealer, the Transfer Agent, or the fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will
The Tax-Exempt Bond Fund of America -- Page 25
<PAGE>
be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price whereas purchases and redemptions are
made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New
York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or the
over-the-counter market. Fixed-income securities are valued at prices obtained
from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 4.5% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Directors.
The Tax-Exempt Bond Fund of America -- Page 26
<PAGE>
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. You may sell (redeem) shares in
your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold through
the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered shareholder(s);
or
- Sent to an address other than the address of record, or an address
of record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in certificate
form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/ and
American FundsLine OnLine/(R)/) are limited to $50,000 per shareholder each
day.
- Checks must be made payable to the registered shareholder(s).
- Checks must be mailed to an address of record that has been used with
the account for at least 10 days.
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by
writing American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application).
The Tax-Exempt Bond Fund of America -- Page 27
<PAGE>
- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Proceeds will be reinvested at the next calculated net asset value after your
request is received and accepted by the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds made
within twelve months of purchase on investments of $1 million or more (other
than redemptions by employer-sponsored retirement plans). The charge is 1% of
the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for purposes
of calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from 403(b) plans or IRAs due to death, disability
or attainment of age 591/2; for tax-free returns of excess contributions to
IRAs; and for redemptions through certain automatic withdrawals not exceeding
10% of the amount that would otherwise be subject to the charge.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. If your
bank account cannot be debited due to insufficient funds, a stop-payment or the
closing of the account, the plan may be terminated and the related investment
reversed. You may change the amount of the investment or discontinue the plan at
any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares at no sales charge unless you indicate otherwise on the
account application. You also
The Tax-Exempt Bond Fund of America -- Page 28
<PAGE>
may elect to have dividends and/or capital gain distributions paid in cash by
informing the fund, the Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "Principal
Underwriter and Transfer Agent" in the prospectus for the appropriate fax
numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer
Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type
retirement plans for which Capital Guardian Trust Company serves as trustee may
not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions
and purchases are processed simultaneously at the share prices next determined
after the exchange order is received. (See "Purchase of Shares--Price of
Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares in amounts of $50 or
more among any of the funds in The American Funds Group on any day (or preceding
business day if the day falls on a non-business day of each month you designate.
You must either (a) meet the minimum initial investment requirement for the
receiving fund OR (b) the originating fund's balance must be at least $5,000 and
the receiving fund's minimum must be met within one year.
The Tax-Exempt Bond Fund of America -- Page 29
<PAGE>
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
REDEMPTION OF SHARES - The fund's articles of incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder owns of record
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in
The Tax-Exempt Bond Fund of America -- Page 30
<PAGE>
the fund's current registration statement under the 1940 Act, and subject to
such further terms and conditions as the Board of Directors of the fund may from
time to time adopt.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.
Dealer concessions paid on underwriting transactions for the fiscal years ended
August 31, 1999, 1998 and 1997, amounted to $1,261,000, $1,673,000 and $771,000,
respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or foreign branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee of
$499,000 for the fiscal year ended August 31, 1999.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as the fund's independent accountants providing audit
services, preparation of tax returns and review of certain documents to be filed
with the Securities and Exchange Commission. The financial statements included
in this Statement of Additional Information from the Annual Report have been so
included in reliance on the report PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountants is reviewed and
determined annually by the Board of Directors.
The Tax-Exempt Bond Fund of America -- Page 31
<PAGE>
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on August 31. Shareholders
are provided at least semiannually with reports showing the investment
portfolio, financial statements and other information. The fund's annual
financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP. In an effort to reduce the volume of mail
shareholders receive from the fund when a household owns more than one account,
the Transfer Agent has taken steps to eliminate duplicate mailings of
shareholder reports. To receive additional copies of a report, shareholders
should contact the Transfer Agent.
YEAR 2000 - The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The fund understands that these
service providers are taking steps to address the "Year 2000 problem". However,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the fund. In addition, the fund's investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- AUGUST 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $11.86
Maximum offering price per share
(100/95.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $12.45
</TABLE>
The Tax-Exempt Bond Fund of America -- Page 32
<PAGE>
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield is 4.34% based on a 30-day (or one month) period ended August
31, 1999, computed by dividing the net investment income per share earned during
the period by the maximum offering price per share on the last day of the
period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b =
expenses accrued for the period (net of reimbursements).
c =
the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d =
the maximum offering price per share on the last day of the
period.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.
The fund's one year total return and average annual total return for the five-
and ten-year periods ended August 31, 1999 were -4.55%, 5.34% and 6.56%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on August 31, 1999 were 0.22%, 6.36% and
7.09, respectively.
In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 4.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average total return figures.
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The Tax-Exempt Bond Fund of America -- Page 33
<PAGE>
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
The investment results for the fund set forth below were calculated as described
in the fund's prospectus. The fund's results will vary from time to time
depending upon market conditions, the composition of the fund's portfolio and
operating expenses of the fund, so that any investment results reported by the
fund should not be considered representative of what an investment in the fund
may earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative to
the risks associated with the fund's investment objective and policies.
During its lifetime, the fund had a total return of 355.3% compared with 397.0
for The Bond Buyer Index./1/ In the period from January 1, 1980, when the
Lehman Brothers Municipal Bond Index/2/ began, to August 31, 1999, the fund had
a total return of 354.6% and the index showed a 378.8% return. Note that past
results are not an indication of future investment results.
/1/ The Bond Buyer Index is unmanaged, reflects no expenses or management fees
and consists of 20 General Obligations bonds maturity in 20 years and rated A to
AA by Standard & Poor's Corporation.
/2/ The Lehman Brothers Municipal Bond Index is unmanaged, reflects no expenses
or management fees and consists of a large universe of municipal bonds issued as
state general obligations or revenue bonds with a minimum rating of BBB by
Standard & Poor's Corporation.
The Tax-Exempt Bond Fund of America -- Page 34
<PAGE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
. . . AND HAD TAKEN
ALL DIVIDENDS AND
CAPITAL GAIN
DISTRIBUTIONS
IN SHARES, YOUR
IF YOU HAD INVESTMENT WOULD
INVESTED $10,000 HAVE BEEN WORTH
IN TEBF THIS MANY THIS MUCH AT
YEARS AGO . . . AUGUST 31, 1999
NUMBER PERIODS
OF YEARS 9/1 - 8/31 VALUE
<S> <C> <C>
1
1998 - 1999 $ 9,545
2
1997 - 1999 10,336
3
1996 - 1999 11,306
4
1995 - 1999 11,924
5
1994 - 1999 12,968
6
1993 - 1999 12,948
7
1992 - 1999 14,554
8
1991 - 1999 16,133
9
1990 - 1999 18,012
10
1989 - 1999 18,885
11
1988 - 1999 20,827
12
1987 - 1999 22,217
13
1986 - 1999 22,463
14
1985 - 1999 27,879
15
1984 - 1999 32,444
16
1983 - 1999 34,847
17
1982 - 1999 40,536
18
1981 - 1999 50,944
19
1980 - 1999 46,400
20
1979* - 1999 45,529
</TABLE>
The Tax-Exempt Bond Fund of America -- Page 35
<PAGE>
Illustration of a $10,000 investment in TEBF
with dividends reinvested
(FOR THE LIFETIME OF THE FUND OCTOBER 3, 1979 THROUGH AUGUST 31, 1999)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES**
-------------- -----------------
FISCAL ANNUAL DIVIDENDS TOTAL FROM FROM FROM TOTAL
YEAR END DIVIDENDS (CUMULATIVE) INVESTMENT INITIAL CAPITAL GAINS DIVIDENDS VALUE
8/31 --------- ------------ COST INVESTMENT REINVESTED REINVESTED -----
---- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1980* $ 553 $ 553 $10,553 $ 8,819 $ 0 $ 529 $ 9,348
1981 779 1,332 11,332 7,362 0 1,146 8,508
1982 932 2,264 12,264 8,362 0 2,334 10,696
1983 978 3,242 13,242 8,971 0 3,473 12,444
1984 1,026 4,268 14,268 8,895 0 4,466 13,361
1985 1,182 5,450 15,450 9,543 0 6,012 15,555
1986 1,297 6,747 16,747 10,962 53 8,297 19,312
1987 1,335 8,082 18,082 10,267 192 9,057 19,516
1988 1,390 9,472 19,472 10,162 307 10,357 20,826
1989 1,499 10,971 20,971 10,467 317 12,176 22,960
1990 1,573 12,544 22,544 10,267 311 13,493 24,071
1991 1,621 14,165 24,165 10,762 326 15,800 26,888
1992 1,722 15,887 25,887 11,219 339 18,234 29,792
1993 1,773 17,660 27,660 11,838 577 21,077 33,492
1994 1,874 19,534 29,534 11,095 773 21,576 33,444
1995 2,011 21,545 31,545 11,371 792 24,192 36,355
1996 2,017 23,562 33,562 11,295 1,041 26,024 38,360
1997 2,131 25,693 35,693 11,686 1,193 29,082 41,961
1998 2,180 27,873 37,873 12,000 1,358 32,070 45,428
1999 2,202 30,075 40,075 11,295 1,927 32,307 45,529
</TABLE>
Includes reinvested dividends of $30,075 and reinvested capital gain
distributions of $1,956
* From inception on October 3, 1979
**Results assume deduction of the maximum sales charge of 4.75% from the initial
purchase payment.
The Tax-Exempt Bond Fund of America -- Page 36
<PAGE>
APPENDIX
Description of Bond Ratings
BOND RATINGS -- The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
Moody's rates the long-term debt securities issued by various entities from
- -------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
The Tax-Exempt Bond Fund of America -- Page 37
<PAGE>
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
S & P rates the long-term securities debt of various entities in categories
- -----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."
The Tax-Exempt Bond Fund of America -- Page 38
<PAGE>
Note Ratings
STANDARD & POOR'S CORPORATION: "SP-1" and "SP-2" are the two highest note rating
categories, and are described as follows:
"SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation."
"SP-2 Satisfactory capacity to pay principal and interest."
MOODY'S INVESTORS SERVICE, INC.: "MIG-1" and "MIG-2" are the two highest note
rating categories, and are described as follows:
"MIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad based access to the market for refinancing."
"MIG 2: This designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group."
Description of Commercial Paper Ratings
MOODY'S employs the designations "Prime-1," "Prime-2" and "Prime-3" to indicate
- -------
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity.
Issues rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into four categories ranging from "A"
- ---
for the highest quality obligations to "D" for the lowest.
A -- Issues assigned its highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with numbers
1, 2, and 3 to indicate the relative degree of safety.
A-1 -- This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
A-2 -- Capacity for timely payments on issues with this designation is strong;
however, the relative degree of safety is not as high as for issues designated
"A-1."
The Tax-Exempt Bond Fund of America -- Page 39
The Tax-Exempt Bond Fund of America
Investment Portfolio
August 31, 1999
[S] [C]
Geographic Breakdown
[begin pie chart]
California 9.51%
New York 9.10%
Illinois 8.47%
Michigan 8.29%
Pennsylvania 7.20%
Louisiana 5.36%
Other States 45.07%
Cash & Short-Term Securities 7.00%
-
[end pie chart]
Quality Ratings
[begin pie chart]
Aaa/AAA 37.81%
Aa/AA 14.21%
A 12.55%
Baa/BBB 18.74%
Below Investment Grade 9.69%
Cash and Short-Term Securities 7%*
[end pie chart]
Short-term securities rated A
or better = 6.60%
<TABLE>
The Tax-Exempt Bond Fund of America, Inc.
Investment Portfolio, August 31, 1999
<S> <C> <C>
Principa Market
Amount Value
(000) (000)
- -------------------------------------------- ----------------
Tax-Exempt Securities Maturing in More Than One Year - 93.00%
Alabama - 0.20%
Daughters of Charity, National Health System, 5.25% 2015 $4,000 $3,797
Alaska - 0.64%
Housing Fin. Corp., Collateralized Bonds (Veterans 3,375 3,532
Mortgage Program), Series 1992A-1, 6.75% 2032
Municipality of Anchorage:
1995 G.O. Ref. General Purpose Bonds, Series B, 2,895 3,089
FGIC Insured, 6.00% 2012
Municipal Light & Power, Senior Lien Ref. Electric 5,000 5,585
Rev. Bonds, MBIA Insured, Series 1996, 6.50% 2014
Arizona - 0.25%
State Transportation Board, Subordinated Highway 1,850 1,986
Rev. Bonds, Series 1992B, 6.50% 2008 (Preref. 2002)
Industrial Dev. Auth. of the County of Maricopa, 2,850 2,782
Health Fac. Rev. Bonds (Catholic Healthcare West
Project), 1998 Series A, 5.25% 2006
California - 9.51%
G.O. Bonds:
6.75% 2006 1,000 1,120
5.25% 2016 7,320 7,170
Educational Facs. Auth., Rev. Bonds, Stanford 3,000 2,872
University, Series N, 5.35% 2027
Health Facs. Fncg. Auth., Hospital Rev. Bonds 2,990 2,970
(Downey Community Hospital), Series 1993, 5.75% 2015
Housing Fin. Agcy., Single Family Mortgage Rev.
Bonds, 1998 Series C-4, Class I:
5.10% 2007 1,790 1,801
5.20% 2009 3,095 3,088
Public Works Board, Lease Rev. Bonds, California 1,315 1,482
Community Colleges, 1994 Series B (Various Community
College Projects), 7.00% 2007 (Preref. 2004)
Statewide Communities Dev. Auth.:
Apartment Dev. Rev. Ref. Bonds (Irvine Apartment 4,000 3,840
Communities, LP), Series 1998A-3, 5.10% 2025 (Put 2010)
Children's Hospital of Los Angeles, MBIA Insured, 6.00% 2008 1,715 1,857
The Internext Group, Cert. of Part., 5.375% 2017 2,000 1,863
St. Joseph Health System Obligated Group, Cert. of Part.:
5.50% 2014 2,000 1,946
5.50% 2023 2,700 2,584
Alameda Public Fncg. Auth., 1999 Rev. Bonds (1997
Rev. Bond Refinancing):
5.20% 2010 2,495 2,397
5.30% 2011 1,820 1,752
5.35% 2012 1,620 1,556
5.40% 2013 500 479
5.45% 2014 1,000 957
Anaheim Public Fncg. Auth., Lease Rev. Bonds, 1,000 1,063
(Anaheim Public Improvement Project), Senior Lease
Rev. Bonds, 1997 Series A, FSA Insured, 6.00% 2024
City of Antioch, Public Fncg. Auth., 1998 Reassessment
Rev. Bonds, Subordinated Series B:
5.60% 2009 1,305 1,258
5.85% 2015 1,500 1,442
Association of Bay Area Governments, Fncg. Auth.
for Nonprofit Corps., Ref. Rev. Cert. of Part.:
(American Baptist Homes Foundation), Series 1998A, 3,000 2,993
6.10% 2017
(Episcopal Homes Foundation), Series 1998, 5.00% 2008 1,350 1,339
Bonita Canyon Public Facs. Fncg. Auth., Community 2,500 2,235
Facs. Dist. No. 98-1, Special Tax Bonds, Series
1998, 5.375% 2028
Central Valley Fncg. Auth., Cogeneration Project
Rev. Bonds (Carson Ice-Gen Project), Series 1993:
5.80% 2004 3,300 3,465
6.00% 2009 3,750 3,862
6.10% 2013 (Preref. 2003) 1,000 1,082
County of Contra Costa Public Fncg. Auth., 1999 1,000 928
Tax Allocation Rev. Bonds (Pleasant Hill BART,
N. Richmond, Bay Point, Oakley & Rodeo Redev. Projs),
5.10% 2014
Del Mar Race Track Auth., Rev. Ref. Bonds, 1,470 1,493
Series 1996, 6.00% 2001
County of El Dorado, Community Facs. Dist. 1,000 999
No. 1992-1 (El Dorado Hills Dev.), Series 1999
Special Tax Bonds, 6.125% 2016
City of Irvine, Limited Obligation Improvement Bonds:
Group One:
Assessment Dist. No. 94-13 (Oak Creek), 5.50% 2022 2,000 1,847
Assessment Dist. No. 97-17, 6.00% 2023 1,500 1,466
Group Two, Assessment Dist. No. 94-13 (Oak Creek), 1,250 1,214
6.00% 2022
Group Three, Assessment Dist. No. 95-12, Fixed 2,750 2,559
Rate Bonds, 5.50% 2021
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 4,000 4,118
6.125% 2015 7,000 7,071
6.125% 2023 14,000 14,035
City of Los Angeles:
State Building Auth., Lease Rev. Ref. Bonds, Dept.
of General Services Lease, 1993 Series A:
5.375% 2006 3,000 3,124
5.50% 2007 5,545 5,804
Community Redev. Agcy., Central Business Dist. 2,000 2,021
Redev. Project, Tax Allocation Ref. Bonds,
Series I, 5.00% 2001
Regional Airports Improvement Corp., Facs. Lease 2,000 2,119
Ref. Rev. Bonds, Issue of 1992, United Air Lines, Inc.
(Los.Angeles International Airport), 6.875% 2012
County of Los Angeles:
Capital Asset Leasing Corp., Cert. of Part.
(Marina del Rey), Series A:
6.25% 2003 4,530 4,683
6.50% 2008 4,750 5,041
Metropolitan Transportation Auth., Proposition C 1,300 1,231
Sales Tax Rev. Bonds, Second Series 1993B,
AMBAC Insured, 5.25% 2023
The Metropolitan Water Dist. of Southern California, 3,000 3,095
Waterworks G.O. Ref. Bonds, 1993 Series A1, 5.50% 2010
Northern California Power Agcy., Geothermal Project
Number 3 Special Rev. Bonds, 1993 Ref. Series A:
5.60% 2006 (Escrowed to Maturity) 1,495 1,591
5.60% 2006 1,505 1,569
County of Orange:
Aliso Viejo Special Tax Bonds of Community Facs.
Dist. No. 88-1, Series A of 1992:
7.15% 2006 (Preref. 2002) 2,000 2,209
7.35% 2018 (Preref. 2002) 10,000 11,101
Limited Obligation Improvement Bonds, Irvine Coast
Assessment Dist. No. 88-1, 1998 Series A:
5.05% 2007 1,000 975
5.15% 2008 1,000 973
5.30% 2010 1,100 1,071
Pleasanton Joint Powers Fncg. Auth., Reassessment 465 477
Rev. Bonds, 1993 Series A, 5.70% 2001
Riverside County Transportation Commission, Sales 3,600 3,824
Tax Rev. Bonds (Limited Tax Bonds), 1991 Series A,
6.50% 2009 (Preref. 2001)
City of Roseville, North Central Roseville Community
Facs. Dist. No. 1, Special Tax Ref. Bonds:
Series 1998, 5.20% 2007 1,235 1,197
Series 1999:
5.30% 2007 2,865 2,799
5.80% 2017 3,000 2,891
Sacramento Cogeneration Auth., Cogeneration
Project Rev. Bonds:
Procter & Gamble Project, 1995 Series:
6.00% 2003 2,200 2,299
7.00% 2005 1,500 1,656
6.20% 2006 1,000 1,071
6.375% 2010 500 546
6.375% 2010 (Preref. 2005) 500 556
County of Sacramento, Laguna Creek Ranch/Elliott 500 503
Ranch Community Facs. Dist. No. 1, Improvement
Area No. 2 Special Tax Ref. Bonds (Elliott Ranch),
6.30% 2021
County of San Bernardino, Housing Auth., Multi-Family 1,500 1,476
Housing Rev. Ref. Bonds (Equity Residential/Redlands
Lawn & Tennis Apartments), Issue 1999A, 5.20% 2029 (09
County of San Diego, Reassessment Dist. No. 97-1 1,000 1,021
(4-S Ranch), Limited Obligation Improvement Bonds,
6.25% 2012
San Diego Unified School Dist., 1999 G.O. Bonds 3,690 1,358
(Election of 1998, Series A), Capital Appreciation
Bonds, FGIC Insured, 0.00% 2017
Redev. Agcy. of the City and County of San Francisco, 4,000 3,979
Ref. Lease Rev. Bonds, Series 1991 (George R.
Moscone Convention Center), 5.50% 2018
San Marcos Public Facs. Auth., Ref. Rev. Bonds, 2,000 1,920
Series 1998, 5.80% 2027
San Marcos Unified School Dist., Community Facs. 3,250 2,992
Dist. No. 5 (Rancho Carrillo), Series 1999 Special
Tax Bonds, 5.60% 2029
Community Facs. Dist. No. 99-1 (Talega) of the 1,195 1,191
Santa Margarita Water Dist., Series 1999 Special
Tax Bonds, 6.10% 2014
Stanislaus Waste-To-Energy Fin. Agcy., Solid Waste 2,450 2,515
Fac. Ref. Rev. Certificates (Ogden Martin Systems
of Stanislaus, Inc. Project), Series 1990, 7.625% 2010
City of Stockton, Mello-Roos Rev. Bonds, Community 500 503
Facs. Dist. No. 90-2B (Brookside Estates),
Series 1997A, 5.40% 2004
Washington Township Health Care Dist., Rev. Bonds, 1,300 1,194
Series 1999, 5.00% 2014
The Regents of the University of California, Various 2,000 1,949
University of California Projects, 1993 Series A,
5.50% 2021
City of West Sacramento, Limited Obligation Ref.
Improvement Bonds, Reassessment Dist. of 1998:
5.30% 2009 750 719
5.30% 2010 500 476
West Sacramento Fncg. Auth., Special Tax Rev.
Bonds, Series F:
5.75% 2011 1,540 1,484
6.10% 2029 1,000 937
Colorado - 4.38%
Housing and Fin. Auth.:
Multi-Family Housing Insured Mortgage Rev. Bonds:
1982 Series A, 9.00% 2025 1,515 1,494
1997 Series C-3, 5.65% 2015 2,300 2,345
Single Family Housing Program Senior and
Subordinate Bonds:
1997 Series:
A-3, 7.00% 2016 1,750 1,906
C-3, 6.75% 2017 1,000 1,079
B-3, 6.80% 2028 1,000 1,092
1998 Series:
A-3, 6.50% 2016 1,000 1,064
D-3, 6.125% 2023 2,000 2,063
B-3, 6.55% 2025 5,750 6,122
Student Obligation Bond Auth., Student Loan Rev. 1,065 1,096
Bonds, 1994 Series L, 6.00% 2001
Arapahoe County, Capital Improvement Trust Fund
Highway Rev. Bonds (E-470 Project):
6.90% 2015 (Preref. 2005) 5,750 6,579
6.95% 2020 (Preref. 2005) 20,500 23,510
City and County of Denver, Airport System Rev.
Bonds, Series 1992A:
7.25% 2025 (Preref. 2002) 14,210 15,717
7.25% 2025 (Preref. 2002) 5,590 6,183
Eaglebend Affordable Housing Corp., Multi-Family
Housing Project Rev. Ref. Bonds:
Series 1997 A, 6.45% 2021 1,175 1,207
Series 1998A:
6.35% 2014 1,065 1,055
6.63% 2039 2,000 1,972
Metroplitan Football Stadium Dist., Capital
Appreciation Sales Tax Rev. Bonds, MBIA Insured:
Series 1999B, 0.00% 2006 6,000 4,405
Series 1999A, 0.00% 2012 1,750 896
The Regents of the University of Colorado, Refunding 3,000 3,190
Cert. of Part. (Telecommunications and Cogeneration
Projects), Series 1996, AMBAC Insured, 6.00% 2005
University of Colorado Hospital Auth., Hospital Ref. 1,000 1,041
Rev. Bonds, Series 1997A, AMBAC Insured, 5.50% 2007
Connecticut - 1.01%
Dev. Auth., Pollution Control Rev. Ref. Bonds (The 6,025 5,674
Connecticut Light and Power Co. Project), Series
1993A, 5.85% 2028
Health and Educational Fac. Auth., Rev. Bonds, 2,800 2,881
University of Hartford Issue, Series D, 6.75% 2012
Housing Fin. Auth., Housing Mortgage Fin. Program 605 620
Bonds, Subseries B-1, 6.25% 2011
Mashantucket (Western) Pequot Tribe, Special Rev.
Bonds, 1996 Series A:(1)
6.25% 2002 (Escrowed to Maturity) 1,000 1,058
6.375% 2004 (Escrowed to Maturity) 1,985 2,157
6.50% 2005 (Escrowed to Maturity) 1,490 1,642
6.40% 2011 2,530 2,655
6.40% 2011 (Preref. 2007) 2,470 2,756
Delaware - 0.05%
Econ. Dev. Auth., First Mortgage Rev. Bonds 1,000 1,019
(Peninsula United Methodist Homes, Inc. Issue),
Series 1997A, 6.00% 2009
District of Columbia - 1.27%
G.O. Bonds:
Series 1992 B, MBIA Insured, 6.30% 2010 (Preref. 2002) 2,900 3,098
Series 1993 A, AMBAC Insured:
5.875% 2005 2,780 2,935
5.875% 2005 (Escrowed to Maturity) 220 234
Series 1993 B-1, AMBAC Insured, 5.50% 2009 3,000 3,074
Convention Center Auth. (Washington, D.C.), 1,105 1,120
Senior Lien Dedicated Tax Rev. Bonds, Series 1998,
AMBAC Insured, 5.00% 2006
Fixed Rate Rev. Bonds (National Academy of Sciences
Project), Series 1999A, AMBAC Insured:
5.00% 2009 1,300 1,294
5.00% 2010 1,810 1,785
Hospital Rev. and Ref. Bonds:
Medlantic Healthcare Group, Inc. Issue:
Series 1992 B, 6.50% 2002 (Escrowed to Maturity) 2,000 2,115
Series 1993 A, MBIA Insured, 5.25% 2012 (Escrowed 2,000 1,981
to Maturity)
Series 1996A, MBIA Insured, 6.00% 2009 (Escrowed 3,355 3,598
to Maturity)
Washington Hospital Center Issue, Series 1992A, 2,000 2,146
7.00% 2005 (Preref. 2002)
Redev. Land Agcy., Sports Arena Special Tax Rev. 890 906
Bonds, Series 1996, 5.625% 2010
Florida - 3.16%
Arbor Greene Community Dev. Dist. (City of Tampa,
Hillsborough County), Special Assessment Rev. Bonds:
Series 1996, 7.60% 2018 975 1,027
Series 1998, 5.75% 2006 1,490 1,465
Broward County, Resource Recovery Rev. Bonds,
Series 1984:
North Project, 7.95% 2008 7,350 7,626
South Project, 7.95% 2008 9,985 10,361
Championsgate Community Dev. Dist., Capital 1,515 1,485
Improvement Rev. Bonds, Series 1998B, 5.70% 2005
The Crossings at Fleming Island Community Dev. 1,065 1,143
Dist. (Clay County), Special Assessment Bonds,
Series 1995, 8.25% 2016
Heritage Harbor Community Dev. Dist. Rev. Bonds, 1,165 1,161
Series B, 6.00% 2003
Heritage Palms Community Dev. Dist. (Fort Myers), 1,935 1,891
Capital Improvement Rev. Bonds, Series 1998, 5.40% 2003
Heritage Pines Community Dev. Dist. (Pasco County), 2,925 2,846
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Lee County Industrial Dev. Auth. Healthcare Facs.
Rev. Bonds:
Series 1997A (Cypress Cove at Healthpark Florida, Inc.
Project):
5.80% 2006 1,005 994
6.25% 2017 5,550 5,518
Series 1999A (Shell Point/Alliance Obligated Group,
Shell Point Village Project):
5.25% 2006 1,150 1,132
5.50% 2010 1,500 1,468
5.75% 2012 1,360 1,336
5.75% 2015 1,000 960
Meadow Pointe II, Community Dev. Dist. (Pasco
County), Capital Improvement Rev. Bonds:
Series 1998A, 5.25% 2003 1,915 1,867
Series 1998B, 5.50% 2005 1,670 1,619
Mid-Bay Auth., Rev. Ref. Bonds:
Series 1991B, 8.50% 2022 (Subject to Crossover 4,000 4,430
Refunding)
Series 1993D, 6.10% 2022 500 507
Northern Palm Beach County Improvement Dist.,
Water Control and Improvement BondS:
Unit of Dev. No. 9A, Series 1996A:
6.80% 2006 960 1,023
7.30% 2027 1,500 1,611
Unit of Dev. No. 9B, Series 1999:
5.85% 2013 1,000 979
6.00% 2029 2,200 2,135
City of Orlando, Special Assessment Rev. Bonds
(Conroy Road Interchange Project), Series 1998A:
5.50% 2010 1,000 956
5.80% 2026 2,000 1,857
River Ridge Community Dev. Dist. (Lee County), 1,800 1,750
Capital Improvement Rev. Bonds, Series 1998,
5.75% 2008
Sarasota County Public Hospital Board, Fixed Rate 1,500 1,414
Hospital Rev. Ref. Bonds, Series 1998B (Sarasota
Memorial Hospital Project), MBIA Insured, 5.25% 2024
Georgia - 2.23%
Municipal Electric Auth.:
General Power Rev. Bonds:
Series X, 6.50% 2012 1,215 1,333
CTFS-1992B Series, 6.375% 2016 1,000 1,077
Mel Power, Project One Subordinated Bonds, Series B, 1,995 2,136
AMBAC Insured, 6.00% 2007
City of Atlanta:
Airport Facs. Rev. Ref. Bonds, Series 1994A, 1,000 1,109
AMBAC Insured, 6.50% 2009
Special Purpose Facs. Rev. Ref. Bonds (Delta Air 4,500 4,619
Lines, Inc. Project), Series 1989A, 7.50% 2019
Water and Wastewater Rev. Bonds, Series 1999, 8,500 8,461
FGIC Insured, 5.50% 2022
Housing Auth. of the County of DeKalb, Multi-Family
Housing Rev. Ref. Bonds (The Park at Briarcliff
Apartments Project):
Series 1998A, 4.55% 2028 8,000 7,793
Series 1998B, 4.70% 2028 1,985 1,945
Fulco Hospital Auth., Rev. Anticipation Certificates:
Georgia Baptist Health Care System Project:
Series 1992 A, (Preref. 2002):
6.40% 2007 1,000 1,076
6.25% 2013 2,100 2,249
6.375% 2022 1,595 1,714
Series 1992 B, 6.375% 2022 610 655
St. Joseph's Hospital of Atlanta, Inc., Series 1994, 2,305 2,335
4.80% 2001 (Escrowed to Maturity)
Dev. Auth. of Fulton County, Special Facs. Rev. 3,115 3,274
Bonds (Delta Air Lines, Inc. Project), Series 1992,
6.95% 2012
Hospital Auth. of Savannah, Rev. Bonds, St. Joseph's/ 2,895 2,898
Candler Health System, Inc. Issue, Series 1998B,
FSA Insured, 5.25% 2011
Hawaii - 0.77%
G.O. Bonds:
1997, Series CN, FGIC Insured, 5.25% 2013 10,000 9,900
1998, Series CR, MBIA Insured, 5.00% 2008 3,000 3,020
City and County of Honolulu, G.O. Bonds, Ref. And
Improvement Series, 1993B:
5.00% 2013 1,370 1,318
5.00% 2013 (Escrowed to Maturity) 630 612
Illinois - 8.47%
Build Illinois Bonds (Sales Tax Rev. Bonds), Series O, 1,000 1,044
6.00% 2002
Civic Center Bonds (Special State Obligation Bonds), 6,500 7,000
Series 1991, AMBAC Insured, 6.25% 2020
Educational Facs. Auth., Rev. Bonds:
MJH Education Assistance Illinois III LLC, Series 1,500 1,471
1999D, AMBAC Insured, 5.45% 2014
Wesleyan University, Series 1993, 5.625% 2018 1,490 1,487
Health Facs. Auth.:
Rev. Bonds:
Advocate Health Care Network:
Series 1998A:
5.00% 2007 1,620 1,591
5.00% 2008 1,870 1,821
4.50% 2009 1,930 1,759
4.625% 2010 3,000 2,727
Series 1998B, 4.875% 2013 2,460 2,215
Alexian Brothers Health System, Series 1999, FSA Insured:
5.00% 2008 1,230 1,228
5.25% 2010 3,500 3,507
5.25% 2012 6,960 6,857
5.00% 2025 2,000 1,761
Centegra Health System, Series 1998:
5.50% 2008 1,640 1,630
5.50% 2009 2,290 2,258
5.50% 2010 2,440 2,388
5.20% 2012 2,200 2,063
5.25% 2013 2,430 2,273
5.25% 2018 2,500 2,249
The Children's Memorial Hospital Series 1999A, AMBAC Insured:
5.75% 2010 1,835 1,913
5.75% 2011 1,690 1,751
Edward Hospital Association Project, Series 1992, 1,000 1,080
7.00% 2022(Preref. 2002)
Northwestern Memorial Hospital, Series 1994A, 6.00% 2024 2,000 2,008
OSF Healthcare System, Series 1993, 5.75% 2007 6,760 6,833
Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997A:
5.50% 2008 2,110 2,128
5.80% 2016 8,000 7,953
Edward Hospital Project, Series 1993 A:
5.75% 2009 1,550 1,563
6.00% 2019 1,435 1,416
Fairview Obligated General Project, 1995 Series A:
6.25% 2001 1,105 1,123
6.50% 2006 770 792
7.40% 2023 1,500 1,604
Rev. and Rev. Ref. Bonds:
Evangelical Hospitals Corp., Series C, 6.25% 2022 4,000 4,298
(Escrowed to Maturity)
Lutheran General Health, Series C, 6.00% 2018 2,705 2,814
Dev. Fin. Auth., Rev. Bonds, Series 1998A (Provena 5,000 5,087
Health), MBIA Insured, 5.50% 2010
Housing Dev. Auth., Multi-Family Housing Bonds, 1,490 1,589
1992 Series A, 7.00% 2010
Metropolitan Pier and Exposition Auth., McCormick 3,910 4,263
Place Expansion Project Bonds, Series 1992A, 6.50%
2027 (Preref. 2003)
City of Berwyn, Rev. Bonds, Series 1995 (MacNeal 3,000 3,199
Memorial Hospital Association Project), AMBAC
Insured, 6.00% 2009
City of Chicago:
General Obligation Bonds (Emergency Telephone 2,000 1,907
System), Ref. Series 1999, FGIC Insured, 5.25% 2020
Board of Trustees of Chicago State University, 1,000 979
Auxiliary Facs. System Rev. Bonds, Series 1998,
MBIA Insured, 5.50% 2023
County of Cook, G.O. Capital Improvement Bonds,
Series 1996, FGIC Insured:
6.00% 2006 3,920 4,217
6.50% 2011 4,000 4,448
Chicago O'Hare International Airport, Special Fac. 2,750 3,122
Rev. Ref. Bonds, Series 1994 (American Airlines, Inc.
Project), 8.20% 2024
Metropolitan Water Reclamation Dist. of Greater
Chicago, Series B:
Capital Improvement Bonds, 5.25% 2004 5,000 5,179
Ref. Bonds, 5.30% 2005 5,325 5,527
Sales Tax Rev. Bonds, Series 1997, FGIC Insured, 5,000 4,707
5.375% 2027
School Reform Board of Trustees of the Board of
Education of the City of Chicago, Unlimited Tax G.O.
Bonds, Series 1997A, AMBAC Insured:
5.30% 2011 2,745 1,404
6.75% 2012 1,000 1,134
Capital Appreciation Bonds, 0.00% 2015 6,485 2,541
Skyway Toll Bridge Ref. Rev. Bonds, Series 1994:
6.50% 2010 (Preref. 2004) 13,250 14,514
6.75% 2014 (Preref. 2004) 6,500 7,183
Regional Transportation Auth., Cook, Du Page, Kane,
Lake, McHenry and Will Counties, G.O. Bonds:
Series 1994D, FGIC Insured, 7.75% 2019 4,500 5,650
Series 1990A, AMBAC Insured, 7.20% 2020 1,000 1,193
Indiana - 4.87%
Educational Facs. Auth., Educational Facs. Rev. 1,000 1,014
Bonds (University of Evansville Project), Series
1996, 5.25% 2005
Health Fac. Fncg. Auth., Hospital Rev. Bonds:
Charity Obligated Group:
Series 1997D, 5.00% 2026 (Put 2007) 17,620 17,266
Series 1999D, 5.25% 2016 3,000 2,826
Clarian Health Partners, Inc., Series 1996A:
5.50% 2016 16,250 15,712
MBIA Insured, 5.25% 2008 1,700 1,724
Holy Cross Health System Corp., Series 1998, MBIA Insured:
5.375% 2009 5,340 5,436
5.375% 2010 7,095 7,169
Sisters of St. Francis Health Services, Inc. Project, 1,000 997
Series 1997A, MBIA Insured, 5.00% 2008
Housing Fin. Auth., Single Family Mortgage Ref. 1,275 1,332
Rev. Bonds, 1992 Series A, 6.75% 2010
State Dev. Fin. Auth.:
Pollution Control Rev. Bonds (Inland Steel Co. 2,500 2,485
Project No. 12), 6.85% 2012
Rev. Ref. Bonds, Exempt Fac. Inland Steel, 5.75% 2011 4,000 3,654
State Office Building Commission, Correctional Facs. 8,490 9,271
Program Rev. Bonds, Series 1995B, AMBAC Insured,
6.25% 2012
Transportation Fin. Auth., Airport Facs. Lease Rev.
Bonds, Series A:
6.50% 2007 1,160 1,239
6.50% 2007 (Preref. 2002) 3,755 4,067
6.75% 2011 (Preref. 2002) 2,400 2,617
City of East Chicago, Pollution Control Rev. Ref. 3,000 3,036
Bonds, Inland Steel Co. Project No. 11, Series 1994,
7.125% 2007
Hospital Auth. of the City of Fort Wayne, Rev. Bonds
(Parkview Memorial Hospital Inc. Project), Series 1992:
6.375% 2013 (Preref. 2002) 6,000 6,467
6.40% 2022 (Preref. 2002) 2,000 2,157
Hospital Auth. of St. Joseph County, Health System
Bonds (Memorial Health System), Series 1998A, MBIA Insured:
5.50% 2006 2,055 2,134
5.50% 2007 1,650 1,710
5.50% 2008 1,010 1,043
Iowa - 0.84%
Fin. Auth.:
Healthcare Rev. Bonds, Series 1997 (Genesis Medical 2,920 2,948
Center), MBIA Insured, 5.00% 2006
Hospital Facs. Rev. Bonds, Series 1998 A (Iowa 6,395 6,520
Health System), MBIA Insured, 5.25% 2007
Single Family Mortgage Bonds, 1997 Series F, 5.55% 2016 1,985 1,966
Polk County, Rev. Bonds, Catholic Health Initiatives:
Series 1997A, 5.50% 2007 1,520 1,565
Series A, 5.125% 2012 3,170 3,034
Kentucky - 0.91%
Econ. Dev. Fin. Auth., Hospital System Ref. And
Improvement Rev. Bonds, Series 1997 (Appalachian
Regional Healthcare, Inc. Project):
5.20% 2004 1,540 1,502
5.60% 2008 630 607
5.60% 2009 3,305 3,164
5.70% 2010 490 469
5.75% 2011 2,190 2,083
5.85% 2017 2,000 1,849
City of Ashland, Pollution Control Ref. Rev. Bonds, 5,000 5,298
Series 1992 (Ashland Oil, Inc. Project), 6.65% 2009
Kenton County Airport Board, Special Facs. Rev.
Bonds (Delta Air Lines, Inc. Project):
Series 1985, 7.80% 2015 1,000 1,027
1992 Series B, 7.25% 2022 1,350 1,430
Louisiana - 5.36%
Environmental Improvement Rev. Bonds, Parish of 1,500 1,394
St. John the Baptist (USX Corp. Project), Ref.
Series of 1998, 5.35% 2013
Health Education Auth.(Lambeth House Project):
Rev. Bonds, Series 1996, 9.00% 2026 (Preref. 2006) 9,000 11,366
Rev. Ref. Bonds, Series 1998A:
5.50% 2010 5,505 5,126
6.15% 2018 2,000 1,887
6.20% 2028 5,500 5,087
Jefferson Parish Hospital Service:
Dist. No. 1, Parish of Jefferson (West Jefferson
Medical Center),FSA Insured:
Hospital Rev. Bonds, Series 1998A:
5.25% 2010 1,965 1,966
5.25% 2011 2,070 2,033
5.25% 2012 1,930 1,876
Dist. No. 2, Parish of Jefferson, Hospital Rev. Bonds, 3,520 3,497
Series 1998, FSA Insured, 5.25% 2011
Public Facs. Auth., Hospital Rev. and Ref. Bonds
(Franciscan Missionaries of Our Lady Health System
Project), Series 1998A, FSA Insured:
5.50% 2008 6,935 7,172
5.50% 2011 5,000 5,032
5.75% 2014 3,495 3,559
5.75% 2015 3,825 3,882
Lake Charles Harbor and Terminal Dist., Port Facs. 33,500 37,036
Rev. Ref. Bonds (Trunkline LNG Co. Project), Series
1992, 7.75% 2022
City of New Orleans, Ref. Cert. of Indebtedness, 7,750 7,713
Series 1998B, FSA Insured, 5.10% 2010
Offshore Terminal Auth., Deepwater Port Ref. Rev.
Bonds (LOOP INC., Project), First Stage Series E:
7.45% 2004 1,000 1,047
7.60% 2010 415 435
7.60% 2010 (Preref. 2000) 585 618
Parish of West Feliciana, Pollution Control Rev. Bonds 2,000 2,113
(Gulf States Utilities Co. Project), Series 1985-B,
9.00% 2015
Maine - 0.10%
Housing Auth., Mortgage Purchase Bonds, 1994 Series C-1, 5.90% 2015 1,775 1,833
Maryland - 1.29%
Community Dev. Administration, Dept. of Housing
and Community Dev., Single Family Program Bonds:
1990 First Series, 7.60% 2017 4,845 4,970
1997 First Series, 5.25% 2005 5,815 5,904
Health and Higher Educational Facs. Auth.:
First Mortgage Rev. Bonds, PUMH of Maryland, Inc.
Issue (Heron Point of Chestertown):
Series 1998A:
5.60% 2013 1,000 944
5.75% 2019 2,400 2,295
Series 1998B, 5.75% 2026 2,000 1,900
Project and Ref. Rev. Bonds:
Peninsula Regional Medical Center Issue, Series 1,000 968
1993, 5.25% 2012
Roland Park Place Issue, Series 1999, 5.50% 2013 500 484
Rev. Bonds, Howard County General Hospital Issue,
Series 1993:
5.50% 2013 2,300 2,324
5.50% 2021 1,225 1,224
Calvert County, Econ. Dev. Rev. Bonds (Ashbury- 2,500 2,987
Solomons Island Facility), Series 1995, 8.625%
2024 (Preref. 2005)
Prince George's County, Hospital Rev. Bonds, 750 823
Dimensions Health Corp. Issue, Series 1992,
7.25% 2017 (Preref. 2002)
Massachusetts - 1.34%
Massachussetts Bay Transportation Auth., General 5,000 5,688
Transportation System Bonds, 1994 Series A Ref.
Bonds, 7.00% 2007
Health and Educational Facs. Auth. Rev. Bonds:
Brigham and Women's Hospital Issue, Series D, 7,000 7,452
6.75% 2024 (Preref. 2001)
Caregroup Issue, Series A, MBIA Insured, 5.50% 2007 2,675 2,793
Housing Fin. Agcy., Single Family Housing Rev. 25 25
Bonds, Series 39, 6.50% 2014
Turnpike Auth., Metropolitan Highway System Rev. 2,500 2,169
Bonds, 1999 Series A, AMBAC Insured, 5.00% 2039
The New England Education Loan Marketing Corp.:
Student Loan Rev. Ref. Bonds, 1992 Senior Issue A, 1,000 1,051
6.50% 2002
Student Loan Ref. Bonds, 1993 Series G, 5.20% 2002 4,000 4,076
Water Resources Auth., General Rev. Ref. Bonds, 2,500 2,521
1993 Series B, 5.25% 2009
Michigan - 8.29%
Hospital Fin. Auth.:
Hospital Rev. Bonds, The Detroit Medical Center
Obligated Group, Series 1998A:
5.00% 2012 1,370 1,212
5.00% 2013 1,000 873
5.00% 2014 1,525 1,318
5.25% 2023 1,955 1,615
Hospital Rev. and Ref. Bonds:
Daughters of Charity, National Health System, 5.50% 2005 1,565 1,606
The Detroit Medical Center Obligated Group:
Series 1993A:
6.375% 2009 2,000 2,003
6.25% 2013 4,250 4,116
6.50% 2018 7,000 6,873
Series 1993B, AMBAC Insured, 5.00% 2006 1,365 1,368
Genesys Health System Obligated Group:
Series 1995A:
7.10% 2002 1,770 1,884
7.10% 2002 (Escrowed to Maturity) 285 307
7.20% 2003 (Escrowed to Maturity) 1,000 1,103
8.00% 2005 (Escrowed to Maturity) 8,880 10,443
8.10% 2013 (Preref. 2005) 5,000 5,981
8.125% 2021 (Preref. 2005) 4,500 5,388
7.50% 2027 (Preref. 2005) 4,520 5,199
Series 1998A:
5.30% 2011 5,340 5,091
5.50% 2018 3,250 3,093
5.50% 2027 4,000 3,717
Hackley Hospital Obligated Group, Series 1998A:
4.85% 2006 1,105 1,071
5.00% 2008 1,215 1,170
5.30% 2013 3,650 3,445
McLaren Obligated Group, Series 1993A, 5.375% 2013 2,985 2,879
Mercy Health Services, Series 1997T, 6.25% 2011 3,255 3,484
Pontiac Osteopathic, Series 1994 A:
5.375% 2006 1,000 968
6.00% 2014 5,905 5,647
6.00% 2024 4,775 4,452
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 2,000 1,963
6.625% 2016 5,750 5,696
6.70% 2026 2,680 2,641
Housing Dev. Auth., Rental Housing Rev. Bonds:
1992 Series A:
AMBAC Insured, 6.40% 2005 2,350 2,479
6.60% 2012 16,285 17,233
1994 Series A, 6.20% 2003 1,600 1,669
City of Detroit:
G.O. Rev. Bonds (Unlimited Tax), Series 1995-B:
6.75% 2003 2,000 2,133
7.00% 2004 2,500 2,721
6.25% 2005 2,625 2,794
6.25% 2008 1,730 1,837
6.25% 2009 1,195 1,269
6.25% 2010 1,250 1,327
Downtown Dev. Auth., Tax Increment Bonds
(Dev. Area No. 1 Projects), Series 1996C:
6.20% 2017 (Preref. 2006) 9,310 10,227
6.25% 2025 (Preref. 2006) 4,265 4,697
School Dist. of Wayne County, School Building 1,955 1,851
and Site Improvement Ref. Bonds, Series 1998C,
FGIC Insured, 5.25% 2025
Econ. Dev. Corp. of Dickinson County, Solid Waste 2,000 2,069
Disposal Ref. Rev. Bonds (Champion International
Corp. Project), Series 1989, 6.55% 2007
City of Royal Oak, Hospital Fncg. Auth., Hospital 3,000 2,763
Rev. Ref. Bonds (William Beaumont Hospital),
Series 1993 G, 5.25% 2019
Charter County of Wayne, Special Airport Facs. Rev. 6,955 7,201
Ref. Bonds (Northwest Airlines, Inc.), Series 1995,
6.75% 2015
Minnesota - 0.25%
Housing Fin. Agcy.:
Multi-Family Housing Dev. Bonds, 1991 Series A, 2,535 2,653
6.85% 2007
Single Family Mortgage Bonds, 1994 Series E, 2,085 2,097
5.60% 2013
Mississippi - 0.37%
Perry County, Pollution Control Ref. Rev. Bonds 7,500 7,048
(Leaf River Forest Products, Inc. Project),
Series 1999, 5.20% 2012
Nebraska - 0.12%
City of Kearney, Industrial Dev. Rev. Bonds 2,750 2,301
(The Great Platte River Road Memorial Foundation
Project), Series 1998, 6.75% 2028
Nevada - 0.97%
G.O. (Limited Tax) Bonds, Series A-2, 6.00% 2011 2,135 2,282
Housing Division, Single Family Mortgage Rev. Bonds, 800 771
1999 Series A-1, 4.75% 2012
City of Henderson:
Health Fac. Rev. Bonds (Catholic Healthcare West), 7,000 6,021
1998 Series A, 5.375% 2026
Local Improvement Dist. No. T-4C (Green Valley
Properties), Limited Obligation Ref. Bonds, 1999 Series A:
5.65% 2009 1,500 1,423
5.75% 2013 4,000 3,828
5.90% 2018 3,000 2,848
Local Improvement Dist. No. T-10 (Seven Hills) 1,480 1,529
Limited Obligation Improvement Bonds, 7.50% 2015
New Jersey - 2.19%
Econ. Dev. Auth.:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation
Improvement Dist. Project (City of Elizabeth),
Series 1998A:
6.375% 2018 1,000 1,012
6.375% 2031 17,405 17,476
First Mortgage Rev. Fixed-Rate Bonds:
Fellowship Village Project:
Series 1998A, 4.95% 2005 1,230 1,194
Series 1995A, 9.25% 2025 (Preref. 2005) 7,000 8,607
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 4,000 4,459
8.625% 2025 3,500 3,915
Housing and Mortgage Fin. Agcy., Section 8 Bonds,
1991 Series A:
6.80% 2005 2,570 2,695
6.85% 2006 2,500 2,624
New Mexico - 0.06%
Mortgage Fin. Auth., Single Family Mortgage Purchase 1,055 1,079
Ref. Senior Bonds, 1992 Series A-1, 6.85% 2010
New York - 9.10%
Dormitory Auth.:
Center for Nursing/Rehabilitation, Inc. Rev. Bonds, 2,100 2,024
5.45% 2017
City University System Consolidated Third General 2,000 2,050
Resolution Rev. Bonds, 1998 Series 2, AMBAC
Insured, 5.50% 2008
Court Facs., Lease Rev. Bonds, Series 1993A, 5.50% 2010 4,000 4,020
Edgar Health Care Center (Nursing Home), Rev. 2,375 2,257
Bonds, FHA Insured, 4.90% 2013
Mental Health Services Facs. Improvement Rev. Bonds:
Series 1997A, 6.00% 2007 1,750 1,864
Series 1997B:
6.00% 2007 2,500 2,663
5.60% 2008 1,300 1,346
Series 1998B:
5.375% 2008 1,345 1,371
5.375% 2009 1,270 1,287
5.00% 2010 1,495 1,461
5.00% 2010 1,530 1,494
Series 1998C:
5.375% 2008 1,250 1,275
5.00% 2010 1,760 1,720
Montefiore Medical Center, FHA-Insured Mortgage 5,250 5,144
Hospital Rev. Bonds, Series 1999, AMBAC Insured,
5.25% 2019
The New York and Presbysterian Hospital FHA-Insured
Mortgage Hospital Rev. Bonds, Series 1998, AMBAC
Insured:
5.50% 2006 5,500 5,709
5.50% 2008 8,000 8,282
Secured Hospital:
Rev. Bonds (Interfaith Medical Center), Series 1998D, 5.25% 2007 2,000 2,023
Rev. Ref. Bonds, Brookdale Hospital, Series 1998J, 5.125% 2009 2,500 2,478
Sisters of Charity Health Care System Corp., FHA- 2,070 2,023
Insured Mortgage Hospital Rev. Bonds, Series 1999,
MBIA Insured, 4.80% 2019
State University Educational Facs.:
Rev. Bonds, Series 1997, 6.00% 2007 3,000 3,201
Rev. Ref. Bonds:
Series 1990A, 7.50% 2013 3,500 4,201
Series 1990B:
7.50% 2011 1,720 1,994
7.00% 2016 1,000 1,039
Staten Island University Hospital, Insured Rev. 7,000 7,211
Bonds, Series 1998, AMBAC Insured, 5.50% 2009
Environmental Fac. Corp., State Water Pollution Control
Revolving Fund Rev. Bonds (New York City Municipal
Water Fin. Auth. Project):
Series 1990A, 7.50% 2012 500 523
Series 1991E, 6.875% 2010 (Preref. 2001) 1,270 1,354
Series 1991E, 6.875% 2010 230 244
Housing Fin. Agcy.:
Health Facs. Rev. Bonds (New York City), 1996
Series A Ref.:
6.375% 2003 4,500 4,804
6.00% 2006 4,500 4,786
Service Contract Obligation Rev. Ref. Bonds, 1,750 1,727
Series 1997C, 5.20% 2010
Local Government Assistance Corp.:
Series 1991 B, 7.50% 2020 (Preref. 2001) 6,925 7,416
Series 1991 C, Capital Appreciation Bonds, 0% 2005 5,000 3,830
Series 1991 D:
7.00% 2011 (Preref. 2002) 2,000 2,171
7.00% 2018 (Preref. 2002) 4,650 5,048
6.75% 2021 (Preref. 2002) 1,350 1,457
Series 1992 C, 5.50% 2022 1,000 968
State Medical Care Facs. Fin. Agcy.:
Hospital Insured Mortgage Rev. Bonds, 1994
Series A Ref., FHA Insured:
5.10% 2010 3,045 2,996
5.25% 2014 5,000 4,916
Mental Health Services Facs. Improvement Rev. Bonds:
1993 Series D, 5.25% 2023 1,000 924
1997 Series B, 5.30% 2004 2,220 2,286
St. Luke's-Roosevelt Hospital Center, FHA-Insured 12,830 12,985
Mortgage Rev. Bonds, 1993 Series A, 5.60% 2013
Metropolitan Transit Auth., Transit Facs. Service 4,000 4,101
Contract Bonds, Series O, 5.375% 2002
Urban Dev. Corp., Correctional Capital Facs. Rev. Bonds:
Ref. Series 1993 A, 5.30% 2005 2,800 2,867
Series 7, 5.25% 2009 1,375 1,378
Castle Rest Residential Health Care Fac., FHA 1,700 1,684
Insured Mortgage Rev. Bonds, Series 1997A, 5.60% 2017
Town of Hempstead Industrial Dev. Agcy., Resource 6,000 5,988
Recovery Rev. Bonds (American REF-FUEL Co.
of Hempstead Project), Series 1997, MBIA Insured,
5.00% 2009(2)
City of New York, G.O. Bonds:
Fiscal 1991 Series B, 8.25% 2006 1,500 1,785
Fiscal 1992 Series C, 6.50% 2004 (Preref. 2002) 470 505
Fiscal 1992 Series H:
6.875% 2002 (Escrowed to Maturity) 1,745 1,851
6.875% 2002 155 164
Fiscal 1993 Series A, 6.25% 2003 1,000 1,061
Fiscal 1995 Series F:
6.60% 2010 (Preref. 2005) 2,000 2,208
6.625% 2025 (Preref. 2005) 1,500 1,658
Fiscal 1996 Series E, 6.50% 2006 3,000 3,269
Fiscal 1996 Series I, 6.50% 2006 10,000 10,906
Municipal Water Fin. Auth., Water and Sewer
System Rev. Bonds:
Fiscal 1991 Series C, 7.75% 2020 (Preref. 2001) 5,000 5,383
Fiscal 1994 Series B, 5.50% 2019 2,000 1,952
Triborough Bridge and Tunnel Auth., General Purpose 1,000 1,070
and Rev. Bonds, Series Y, 6.00% 2012
North Carolina - 2.83%
Eastern Municipal Power Agcy., Power System Rev. Bonds:
Ref. Series 1993B:
7.25% 2007 5,425 5,901
7.00% 2008 10,720 11,523
6.125% 2009 4,000 4,063
6.00% 2026 1,700 1,659
MBIA Insured, 6.00% 2026 2,500 2,624
Series 1993 B, 6.00% 2006 3,120 3,176
Series 1993 D, 5.875% 2013 1,250 1,216
Series 1993 C, 5.00% 2021 2,300 1,939
Ref. Series 1999 B:
5.55% 2014 1,800 1,688
5.60% 2015 7,000 6,548
5.65% 2016 2,000 1,872
5.70% 2017 4,775 4,470
Municipal Power Agcy. Number 1, Catawba Electric 4,000 4,085
Rev. Bonds, Series 1992, 5.90% 2003
County of Catawba, Hospital Ref. Rev. Bonds 1,000 944
(Catawba Memorial Hospital Project), Series 1999,
AMBAC Insured, 4.60% 2010
Medical Care Commission, Health Care Rev. Ref. 2,540 2,535
Bonds (Novant Health Project), Series 1998A,
MBIA Insured, 5.10% 2010
Ohio - 0.20%
County of Franklin, Hospital Facs. Rev. Ref. And 1,750 1,808
Improvement Bonds (Doctors Hospital Project), 5.60% 2006
County of Knox, Hospital Facs. Ref. Rev. Bonds, 2,175 2,103
Series 1998 (Knox Community Hospital), Asset
Guaranty Insured, 4.60% 2007
Oklahoma - 0.55%
Health System Rev. Bonds, Baptist Medicine Center 2,500 2,718
of Oklahoma, Series 1995 C, AMBAC Insured, 6.375% 2009
Industrial Auth., Health System Rev. Ref. Bonds 2,500 2,667
(Obligated Group consisting of INTEGRIS Baptist
Medical Center, Inc., INTEGRIS South Oklahoma,
AMBAC Insured, 6.00% 2009
Industries Auth., Health Facs. Rev. Ref. Bonds 2,505 2,377
(Sisters of Mercy Health System, St. Louis, Inc.),
Series 1993A, 5.00% 2013
Tulsa Industrial Auth., Hospital Rev. and Ref. Bonds, 3,000 2,885
St. John Medical Center Project, Series 1996,
5.375% 2017
Oregon - 0.81%
City of Klamath Falls, Electric Rev. Bonds (Klamath
Cogeneration Project), Series 1999:
5.75% 2013 7,000 6,707
5.875% 2016 3,500 3,334
6.00% 2025 2,250 2,120
Hospital Facs. Auth. of the City of Medford, Rev. 3,425 3,437
Bonds (Asante Health System), Series 1998-A,
MBIA Insured, 5.25% 2010
Pennsylvania - 7.20%
Convention Center Auth., Ref. Rev. Bonds, 1994 10,000 10,369
Series A, 6.25% 2004
Higher Educational Facs. Auth.:
Rev. Bonds (Thomas Jefferson University),
1992 Series A, MBIA Insured:
6.625% 2009 375 403
6.625% 2009 (Preref. 2002) 875 946
UPMC Health System Rev. Bonds, Series 1999A, 2,000 1,967
FSA Insured, 5.00% 2009
Housing Fin. Agcy., Rev. Bonds, Rental Housing
Ref. Bonds:
Issue 1992, 6.50% 2023 7,850 8,257
Issue 1993, 5.80% 2018 4,000 4,069
Housing Fin. Auth., Single Family Mortgage Rev. 1,000 1,048
Bonds, Series 1992-33, 6.85% 2009
Industrial Dev. Auth., Econ. Dev. Rev. Bonds, 1,750 1,986
Series 1994, AMBAC Insured, 7.00% 2007
Allegheny County, Hospital Dev. Auth. Rev. Bonds:
Catholic Health Systems:
Series 1998A, AMBAC Insured, 5.50% 2008 2,445 2,524
Series A, AMBAC Insured:
5.00% 2010 2,705 2,656
5.25% 2011 2,840 2,823
UPMC Health System Rev. Ref. Bonds, Series 5,160 5,260
1999B, AMBAC Insured, 5.25% 2008
Blair County Hospital Auth., Hospital Rev. Bonds 3,415 3,445
(Altoona Hospital Project), 1998 Series A, AMBAC
Insured, 5.25% 2009
Delaware County, Auth. Rev. Bonds, Catholic Health
Systems, Series A, AMBAC Insured:
5.00% 2010 2,465 2,424
5.25% 2011 4,115 4,098
Hospitals and Higher Education Facs. Auth. Of
Philadelphia:
Frankford Hospital, Series A:
6.00% 2014 3,705 3,941
6.00% 2023 4,000 4,205
Hospital Rev. Bonds (The Children's Hospital of
Philadelphia Project):
Series A of 1992:
6.50% 2009 (Preref. 2002) 4,500 4,813
6.50% 2021 (Preref. 2002) 3,000 3,208
Series A of 1993, 5.375% 2014 1,505 1,439
Jefferson Health Systems, Series 1997 A:
5.50% 2006 2,285 2,308
5.50% 2007 1,995 2,007
5.50% 2008 2,000 2,001
5.00% 2009 1,000 957
5.00% 2010 1,000 952
Lehigh County, General Purpose Auth. Rev. Bonds 1,500 1,504
(KidsPeace Obligated Group), 5.70% 2009
Temple University Hospital, Series of 1997, 5.70% 2009 1,000 986
Hospital Auth. of Philadelphia, Hospital Rev. Bonds
(Temple University Hospital):
Series of 1993 A, 6.50% 2008 15,500 16,319
Series of 1983, 6.625% 2023 15,385 15,795
Philadelphia Auth. for Industrial Dev., Rev. Bonds 2,815 2,748
(Cathedral Village Project), Series of 1998, 5.50% 2010
Public Auditorium Auth. of Pittsburgh and Allegheny
County, Regional Asset Dist. Sales Tax Rev. Bonds,
Series of 1999, AMBAC Insured:
5.00% 2008 2,000 2,012
5.25% 2012 2,000 1,988
City of Pottsville Hospital Auth., Hospital Rev. Bonds 8,500 9,580
(The Pottsville Hospital and Warne Clinic), Series
of 1994, 7.25% 2024 (Preref. 2004)
Scranton-Lackawanna Health and Welfare Auth.,
City of Scranton, Lackawanna County, Hospital
Rev. Bonds (Moses Taylor Hospital Project), Series 1997:
6.05% 2010 1,000 981
6.15% 2012 2,245 2,182
6.15% 2014 3,000 2,874
6.20% 2017 3,000 2,955
Rhode Island - 0.70%
Convention Center Auth., Ref. Rev. Bonds, 1993 1,590 1,600
Series B, MBIA Insured, 5.00% 2008
Depositors Econ. Protection Corp., Special Obligation Bonds:
1992 Series A, FSA Insured, 6.625% 2019 (Preref. 2002) 1,000 1,083
1993 Series A:
5.75% 2021 (Escrowed to Maturity) 1,210 1,237
5.75% 2021 2,715 2,776
MBIA Insured, 5.75% 2012 4,850 5,110
Housing and Mortgage Fin. Corp., Homeownership 1,485 1,541
Opportunity Bonds, Series 3-A, 7.80% 2010
South Carolina - 1.16%
Florence County, Hospital Rev. Bonds, McLeod Regional
Medical Center Project, Series 1998A, MBIA Insured:
5.25% 2009 2,400 2,441
5.25% 2010 2,785 2,812
Lexington County Health Services Dist. Inc., Hospital
Rev. Ref. and Improvement Bonds, Series 1997, FSA Insured:
5.50% 2007 2,000 2,059
5.00% 2009 1,000 983
5.125% 2021 2,000 1,838
Piedmont Municipal Power Agcy., Electric Rev. Bonds, 13,420 12,083
1999A Ref. Series, 5.25% 2015
South Dakota - 0.88%
Building Auth., Rev. Capital Appreciation Bonds, 3,780 1,597
Series 1996A, AMBAC Insured, 0.00% 2014
Health and Educational Facs. Auth., Rev. Ref. Bonds,
Series 1999 (Rapid City Regional Hospital Issue),
MBIA Insured:
5.00% 2007 4,095 4,118
5.00% 2009 4,010 3,980
5.00% 2010 4,175 4,107
Housing Dev. Auth., Homeownership Mortgage Bonds, 3,000 3,053
1995 Series A, 5.80% 2014
Tennessee - 1.73%
Health and Educational Facs. Board of the Metropolitan 6,600 7,996
Government of Nashville and Davidson County
(Blakeford Project), 9.25% 2024 (Preref. 2004)
Memphis-Shelby County Airport Auth., Special Facs.
Rev. Bonds (Federal Express Corp.):
Rev. Bonds, Series 1984, 7.875% 2009 2,755 2,974
Rev. Bonds, Ref. Series 1992, 6.75% 2012 20,850 22,148
Texas - 2.46%
Bell County Health Facs. Dev. Corp.:
Hospital Rev. Ref. and Improvement Bonds (Cook
Children's Medical Center Project), Series 1998,
FSA Insured:
5.25% 2008 1,965 1,994
5.25% 2009 2,070 2,087
5.25% 2010 2,180 2,183
Retirement Fac. Rev. Bonds (Buckner Retirement
Services, Inc. Obligated Group Project), Series 1998:
5.25% 2009 1,620 1,584
5.00% 2010 1,705 1,614
5.25% 2028 3,400 2,948
Industrial Dev. Corp.of Port of Corpus Christi, Rev. 2,000 1,825
Ref. Bonds (Valero Refining and Marketing Co.
Project), 5.40% 2018
Dallas/Forth Worth International Airport Fac. 5,000 4,953
Improvement Corp., American Airlines, Inc., Rev.
Bonds, Series 1995, 6.00% 2014
Harris County Health Facs. Dev. Corp.:
Rev. Bonds (CHRISTUS Health), Series 1999A, 3,380 3,462
MBIA Insured, 5.50% 2010
SCH Health Care System Rev. Bonds (Sisters of Charity
of the Incarnate Word, Houston):
Series 1991A, 7.10% 2021 (Preref 2001) 3,000 3,209
Series 1997B, 6.25% 2027 1,500 1,609
Hospital Rev. Bonds (Memorial Hermann Hospital 1,890 1,912
System Project), Series 1998, FSA Insured, 5.25% 2008
Hidalgo County Health Services Corp., Hospital Rev.
Bonds, (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 1,000 1,065
6.75% 2016 1,740 1,804
Northeast Medical Clinic, Hospital Auth., County of 1,000 1,085
Humble, Rev. Bonds, FSA Insured, 6.25% 2012
Northside Independent School Dist. (Bexar, Medina 3,500 3,609
and Bandera Counties), Unlimited Tax School
Building Bonds, Series 1991, 6.375% 2008 (Preref. 2001)
Tarrant County, Health Facs. Dev. Corp., Health 4,000 4,137
Resources Systems Rev. Bonds, Series 1997A,
MBIA Insured, 5.50% 2007
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6,250 6,100
6.125% 2023
Utah - 0.52%
Housing Fin. Agcy., Single Family Mortgage Bonds, 525 529
1995 Issue E (Federally Insured or Guaranteed
Mortgage Loans), 5.50% 2024
Intermountain Power Agcy., 1997 Series A, AMBAC 1,435 1,598
Insured, 6.50% 2011
Salt Lake City, Hospital Rev. Bonds, Series 1992 8,100 7,828
(IHC Hospitals, Inc.), 5.50% 2021
Vermont - 0.12%
Educational and Health Buildings Fncg. Agcy, 2,250 2,345
Hospital Rev. Bonds (Medical Center Hospital of
Vermont Project), Series 1993, FGIC Insured, 5.75% 2007
Virginia - 1.11%
Housing Dev. Auth., Commonwealth Mortgage Bonds, Series D:
Subseries D-3:
6.00% 2012 1,430 1,471
6.00% 2012 1,470 1,512
Subseries D-4, 6.05% 2010 1,290 1,319
Big Stone Gap Redev. and Housing Auth. Correctional 1,000 1,006
Fac. Lease, Wallens Ridge Dev. Project, 5.25% 2010
Fairfax County Industrial Dev. Auth., Hospital Rev.
Ref. Bonds (Inova Health Systems Hospital Project),
Series 1993 A:
4.80% 2005 1,850 1,854
5.00% 2023 1,200 1,090
5.00% 2011 1,300 1,270
Gateway Community Dev. Auth. (Prince William 2,130 2,009
County), Special Assessment Bonds, Series 1999,
6.25% 2026
Industrial Dev. Auth., Hanover County, Hospital 1,000 1,116
Rev. Bonds (Memorial Regional Medical Center
Project at Hanover Medical Park), Series 1995,
MBIA Insured, 6.50% 2009
Industrial Dev. Auth. of the City of Norfolk, Hospital 2,500 2,712
Rev. Bonds (Sentara Hospitals-Norfolk Project),
Series 1991, 6.50% 2013
Peninsula Ports Auth., Health System Rev. Ref. Bonds 1,000 969
(Riverside Health System Project), Series 1998,
5.00% 2010
Pocahontas Parkway Association, Route 895 Connector 5,000 4,963
Toll Road Rev. Bonds, Series 1998A, 5.25% 2008
Virgin Islands - 0.18%
Public Fin. Auth., Rev. and Ref. Bonds (Matching
Fund Loan Notes), Series 1998 D:
5.50% 2001 1,600 1,609
5.50% 2002 1,840 1,849
Washington - 3.02%
G.O. Bonds, Series B, 5.50% 2010 2,000 2,066
Health Care Facs. Auth., Rev. Bonds, Ref. Series 1,500 1,609
1997A (Virginia Mason Medical Center), MBIA
Insured, 6.00% 2007
Public Power Supply System:
Nuclear Project No. 1 Ref. Rev. Bonds, Series 1997B, 5,000 4,755
5.125% 2014
Nuclear Project No. 2 Ref. Rev. Bonds:
Series 1993B, FSA Insured, 5.65% 2008 3,030 3,181
Series 1994A:
6.00% 2007 19,900 21,235
5.25% 2008 5,000 5,058
Series 1998A, 5.75% 2008 2,000 2,099
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1989 B:
5.375% 2015 3,000 2,916
7.125% 2016 5,250 6,111
Public Utility Dist. No. 1 of Chelan County, Columbia 11,345 3,619
River-Rock Island Hydro-Electric System Rev. Ref.
Capital Appreciation Bonds, Series 1997A , MBIA
Insured, 0.00% 2019
MBIA Insured, 0.00% 2019
Central Puget Sound Regional Transit Auth., Sales 5,500 5,245
Tax and Motor Vehicle Excise Tax Bonds, Series
1999, FGIC Insured, 5.25% 2021
Wisconsin - 1.53%
Health and Educational Facs. Auth., Rev. Bonds:
Children's Hospital of Wisconsin, Inc., Series 1998, 1,130 1,140
AMBAC Insured, 5.625% 2015
Children's Hospital Project, Series 1993, FGIC 2,000 2,085
Insured, 5.50% 2006
The Monroe Clinic, Inc., Series 1998:
4.80% 2010 1,110 1,019
4.90% 2011 1,165 1,069
Medical College of Wisconsin, Series 1993, 5.95% 2015 3,000 3,060
Health and Educational Facs. Auth., Rev. Ref. Bonds 2,505 2,481
(Wausau Hospital, Inc.), Series A, AMBAC Insured,
5.00% 2009
Housing and Econ. Dev. Auth., Housing Rev. Bonds, 3,480 3,636
1992 Series A, 6.40% 2003
City of Nekoosa, Pollution Control Funding Rev. Bonds 5,000 4,754
(Nekoosa Papers Inc. Project), Series 1999B, 5.50% 2015
Pollution Control and Industrial Dev. Rev. Bonds 3,000 3,068
(General Motors Corp. Projects), City of Janesville,
Series 1984, 5.55% 2009
City of Superior, Limited Obligation Ref. Rev. Bonds 6,000 6,940
(Midwest Energy Resources Co. Project), Series
E-1991 (Collateralized), FGIC Insured, 6.90% 2021
----------
1,782,979
----------
Tax-Exempt Securities Maturing in One Year or Less - 6.60%
State of Massachusetts, Boston City Hospital, 980 1,033
Series A, FHA Insured, 7.625% 2021 (Preref. 2000)
State of Florida, Broward County, Coral Springs 2,500 2,574
Improvement Dist., G.O. Water and Sewer Rev. Bonds,
1989 Series C, MBIA Insured, 7.50% 2005 (Preref. 1999)
State of Tennessee, Clarksville Public Building Auth. 3,600 3,600
Adjustable Rate-Pooled Fincg. Rev. Bonds, 3.30% 2027(1,2)
State of Pennsylvania, Deleware County Industrial 2,400 2,400
Dev. Auth., Airport Facs. Rev. Bonds, Series 1985,
3.05% 2015(2)
State of Georgia, Building Auth. of Fulton County, 1,000 1,007
Rev. Ref. Bonds (Judicial Center Facs. Project),
Series 1991, 5.70% 1/1/00
State of Texas, City of Houston, Tax and Rev. 3,000 3,014
Anticipation Notes, Series 1999, 4.25% 6/30/00
State of Idaho, Tax Anticipation Notes, Series 1999, 1,500 1,507
4.25% 6/30/00
State of Illinois:
Health Facs. Auth., Adjustable Rate Rev. Bonds, 1,300 1,300
Series 1995 (Swedish Covenant Hospital Project),
AMBAC Insured, 3.35% 2025(2)
Joliet Regional Port Dist., Marine Terminal Rev. Ref. 1,400 1,400
Bonds (Exxon Project), 1989 Series, 2.70% 2024(2)
State of Kentucky, Asset/Liability Commission, 4,000 4,020
General Fund Tax and Rev. Anticipation Notes,
1999 Series A, 4.25% 6/28/00
State of Wyoming, Lincoln County, Pollution Control
Rev. Bonds (Exxon Project):
Series 1984C, 3.05% 2014(2) 1,300 1,300
Series 1984D, 3.05% 2014(2) 1,000 1,000
County of Los Angeles, 1999-2000 Tax and Rev. 3,500 3,512
Anticipation Notes, Series A, 4.00% 6/30/00
State of Texas, Lower Neches Valley Auth., Industrial
Dev. Corp., Variable Rate Pollution Control Rev. Bonds,
Series 1994A (Neches River Treatment Corp. 1,500 1,500
Project), 3.30% 2004(2)
State of Massachusetts, Water Resources Auth. 9,500 9,896
General Rev. Bonds, 1990 Series A, 7.50% 2009
(Preref. 2000)
State of Michigan, Job Dev. Auth, Pollution Control 7,000 7,017
Rev. Bonds (Chrysler Corp. Project), Series 1984,
5.70% 11/1/99
State of New York, Transit Auth., Transit Facs. Rev. 4,000 4,131
Bonds (Livingston Plaza Project), Series 1990,
FSA Insured, 7.50% 2020 (Preref. 2000)
State of Ohio:
Franklin County Health Systems Variable Rate Rev. 1,000 1,000
Bonds, Franciscan Sisters of Charity, 3.05% 2015(1)(2)
Parks and Recreation Capital Facs. Bonds, Series 5,000 5,007
II-1997A, 4.25% 12/1/99
State of Florida, Orange County Industrial Dev. Auth., 4,000 4,000
Variable Rate Demand Rev. Bonds, Series 1998
(Lake Highland Preparatory School, Inc. Project,
3.30% 2018(2)
County of San Bernardino, 1998-99 Fixed Rate Tax 5,000 5,004
and Rev. Anticipation Notes, 4.50% 9/30/99
State of California, San Francisco Bay Area Rapid 3,250 3,398
Transit Dist., Sales Tax Rev. Ref. Bonds, Series 1990,
AMBAC Insured, 6.75% 2009 (Preref. 2000)
County of Santa Clara, 1999 Tax and Rev. 3,000 3,002
Anticipation Notes, 4.50% 10/1/99
State of South Carolina, Public Service Auth., Rev. 1,000 1,008
Bonds, 1995 Ref. Series A, AMBAC Insured, 6.25% 1/1/00
Texas National Research Laboratory Commission, 12,000 12,473
G.O. Bonds, Series 1990 (Superconducting Super
Collider Project), 7.125% 2020 (Preref. 2000)
Texas Tax and Rev. Anticipation Notes, Series 1999A, 4,000 4,031
4.50% 8/31/00
State of Alaska, City of Valdez, Marine Terminal Rev. 2,800 2,800
Ref. Bonds (Exxon Pipeline Co. Project), 1993
Series A, 2.70% 2033(2)
County of Ventura, 1999 Tax and Rev. Anticipation 6,000 6,024
Notes, 4.00% 7/6/00
State of Virginia, Industrial Dev. Auth. of the City of 1,000 1,000
Roanoke, Hospital Rev. Bonds (Carilion Health System
Obligated Group), Series 1997B, 2.95% 2027(2)
State of North Carolina, Wake County Industrial
Facs. and Pollution Control Fncg. Auth., Pollution
Control Rev. Ref. Bonds (Carolina Power & Light Co.
Project), Series 1990A, 3.10% 2014(2) 3,550 3,550
State of Washington, Public Power Supply System,
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1989 B:
FGIC Insured, 7.00% 2005 (Preref. 2000) 4,500 4,638
7.25% 2015 (Preref. 2000) 3,500 3,610
State of Wyoming:
General Fund Tax and Rev. Anticipation Notes, 9,700 9,724
Series 1999, 4.00% 6/27/00
Wyoming Student Loan Corp., Student Loan Rev. 950 956
Ref. Bonds, Series 1991, 6.25% 12/1/99
State of Pennsylvania, City of York, General Auth.
Adjustable Rate Pooled Fncg. Rev. Bonds, Sub-Series
96-B (School Dist. of the City of Harrisburg Project),
AMBAC Insured, 3.25% 2026(2) 5,000 5,000
----------
126,436
----------
Total Tax-Exempt Securities 1,909,415
----------
Excess of cash and receivables over payables 7,751
----------
NET ASSETS $1,917,166
==========
(1)Purchased in a private placement transaction;
resale to the public may require registration or
sale only to qualified institutional buyers.
(2)Coupon rate may change periodically.
See Notes to Financial Statements
Key to Abbreviations
Agcy. = Agency
Auth. = Authority
Cert. Of Part = Certificates of Participation
Dept. = Department
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facilities
Fin. = Financing
G.O. = General Obligation
Prefer. = Prerefunded
Rev. = Revenue
Rev. = Revenue Refunding
</TABLE>
<TABLE>
The Tax-Exempt Bond Fund of America
Financial Statements
<S> <C> <C>
Statement of Assets and Liabilities
at August 31, 1999 (dollars in thousands)
Assets:
Tax-exempt securities (cost: $1,875,213) $1,909,415
Cash 1,050
Receivables for--
Sales of investments $1,100
Sales of fund's shares 3,676
Accrued interest 26,568 31,344
---------- -----------
1,941,809
Liabilities:
Payables for--
Purchases of investments 9,198
Repurchases of fund's shares 10,833
Dividends payable 3,074
Management services 562
Accrued expenses 976 24,643
---------- -----------
Net Assets at August 31, 1999--
Equivalent to $11.86 per share on
161,703,571 shares of $1 par value
capital stock outstanding (authorized
capital stock--200,000,000 shares) $1,917,166
===========
Statement of Operations
For the year ended August 31, 1999
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $102,930
Expenses:
Management services fee $6,526
Distribution expenses 4,721
Transfer agent fee 499
Reports to shareholders 103
Registration statement and prospectus 221
Postage, stationery and supplies 97
Directors' fees 29
Auditing and legal fees 73
Custodian fee 35
Taxes other than federal income tax 22
Other expenses 33
----------- 12,359
-----------
Net investment income 90,571
-----------
Realized Gain and Change in Unrealized
Appreciation on Investments:
Net realized gain 12,422
Net unrealized appreciation on investments:
Beginning of year 135,956
End of year 34,202
----------
Net unrealized depreciation
on investments (101,754)
-----------
Net realized gain and
unrealized depreciation on investments (89,332)
-----------
Net Increase in Net Assets Resulting
From Operations $1,239
===========
Statement of Changes in Net Assets
(dollars in thousands)
Year ended August 31
1999 1998
----------- -----------
Operations:
Net investment income $90,571 $84,097
Net realized gain on investments 12,422 25,646
Net unrealized appreciation (depreciation)
on investments (101,754) 23,687
----------- -----------
Net increase in net assets
resulting from operations 1,239 133,430
----------- -----------
Dividends and Distributions Paid to
Shareholders:
Dividends paid from net investment income (90,695) (84,100)
Distributions from net realized gain on
investments (27,512) (5,006)
----------- -----------
Total dividends and distributions (118,207) (89,106)
----------- -----------
Capital Share Transactions:
Proceeds from shares sold:
38,674,257 and 27,437,243
shares, respectively 477,680 341,812
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
6,494,510 and 4,320,816 shares,
respectively 80,021 53,787
Cost of shares repurchased:
25,928,672 and 19,085,481
shares, respectively (318,929) (237,660)
----------- -----------
Net increase in net assets
resulting from capital share
transactions 238,772 157,939
----------- -----------
Total Increase in Net Assets 121,804 202,263
Net Assets:
Beginning of year 1,795,362 1,593,099
----------- -----------
End of year (including undistributed net $1,917,166 $1,795,362
investment income of $121 and $13, =========== ===========
respectively)
See Notes to Financial Statements
</TABLE>
The Tax-Exempt Bond Fund of America, Inc.
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The Tax-Exempt Bond Fund of America, Inc. (the "fund") is
registered under the Investment Company Act of 1940 as an open-end, diversified
management investment company. The fund seeks a high level of federally
tax-free current income, consistent with the preservation of capital, through a
diversified, portfolio of municipal bonds.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - Tax-exempt securities are valued at prices obtained from a
pricing service, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. The ability of the issuers
of the debt securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
Short-term securities maturing within 60 days are valued at amortized cost,
which approximates market value. Securities and assets for which representative
market quotations are not readily available are valued at fair value as
determined in good faith by a committee appointed by the Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities transactions
are accounted for as of the trade date. Realized gains and losses from the
securities transactions are determined based on specific identified cost. In
the event securities are purchased on a delayed delivery or "when-issued"
basis, the fund will instruct the custodian to segregate liquid assets
sufficient to meet its payment obligations in these transactions. Interest
income is recognized on an accrual basis. Premiums and original issue discounts
on securities are amortized daily over the expected life of the security.
Amortization of market discounts on securities is recognized upon disposition.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are
declared daily after determination of the fund's net investment income and are
paid to shareholders monthly.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As a
regulated investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of August 31, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $34,202,000, of which $64,993,000
related to appreciated securities and $30,791,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended August 31, 1999. During the year
ended August 31, 1999, the fund realized, on a tax basis, a net capital gain of
$12,132,000 on securities transactions. The cost of portfolio securities for
book and federal income tax purposes was $1,875,213,000 at August 31, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $6,526,000 for management services
was incurred pursuant to an agreement with CRMC, with which certain officers
and Directors of the fund are affiliated. The Investment Advisory and Service
Agreement provides for monthly fees, accrued daily, based on an annual rate of
0.30% of the first $60 million of average net assets; 0.21% of such assets
between $60 million and $1 billion; 0.18% of such assets between $1 billion and
$3 billion; 0.16% of such assets in excess of $3 billion; plus 3.00% of the
first $40 million of annual gross income; plus 2.5% of such income between $40
million and $100 million; plus 2.25% of such income in excess of $100 million.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may
expend up to 0.30% of its average net assets annually for any activities
primarily intended to result in sales of fund shares, provided the categories
of expenses for which reimbursement is made are approved by the fund's Board of
Directors. Fund expenses under the Plan include payments to dealers to
compensate them for their selling and servicing efforts. During the year ended
August 31, 1999, distribution expenses under the Plan were limited to
$4,721,000. Had no limitation been in effect, the fund would have paid
$5,427,000 in distribution expenses under the Plan. As of August 31, 1999,
accrued and unpaid distribution expenses were $894,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $1,005,000 (after allowance to dealers) as its portion
of the sales charges paid by purchasers of the fund's shares. Such sales
charges are not an expense of the fund and, hence, are not reflected in the
accompanying statement of operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $499,000.
DEFERRED DIRECTORS' FEES - Directors who are unaffiliated with CRMC may elect
to defer part or all of the fees earned for services as members of the Board.
Amounts deferred are not funded and are general unsecured liabilities of the
fund. As of August 31, 1999, aggregate amounts deferred and earnings thereon
were $74,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $486,217,000 and $261,774,000, respectively, during
the year ended August 31, 1999.
As of August 31, 1999, accumulated undistributed net realized gain on
investments was $6,784,000 and additional paid-in capital was $1,714,207,000.
The fund reclassified $232,000 and $1,808,000 to undistributed net investment
income and additional paid-in capital, respectively, from undistributed net
realized gains for the year ended August 31, 1999 as a result of permanent
differences between book and tax.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $35,000 includes $9,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>
Year Ended Augus 31
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Year $12.60 $12.27 $11.86 $11.94$11.65
---------- ------- --------------------
Income from Investment Operations:
Net investment income .59 .62 .64 .64 .68
Net gains or losses on securities (both
realized and unrealized) (.55) .37 .45 .01 .29
---------- ------- --------------------
Total from investment operations .04 .99 1.09 .65 .97
---------- ------- --------------------
Less Distributions:
Dividends (from net investment income) (.59) (.62) (.64) (.64) (.68)
Distributions (from capital gains) (.19) (.04) (.04) (.09) -
---------- ------- --------------------
Total distributions (.78) (.66) (.68) (.73) (.68)
---------- ------- --------------------
Net Asset Value, End of Year $11.86 $12.60 $12.27 $11.86$11.94
========== ======= ====================
Total Return* 0.2 8.2 9.39 5.51% 8.70%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $1,917 $1,795 $1,593 $1,476$1,424
Ratio of expenses to average net assets .65% .66% .68% .68% .66%
Ratio of net income to average net assets 4.78% 4.98% 5.27% 5.35% 5.87%
Portfolio turnover rate 14.56% 23.19% 14.39%26.89%49.28%
*Excludes maximum sales charge of 4.75%.
</TABLE>
Report of Independent Accountant
To the Board of Directors and Shareholders of The Tax-Exempt Bond Fund of
America, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of The Tax-Exempt Bond Fund of
America, Inc.(the "Fund") at August 31, 1999, the results of its operations,
the changes in its net assets and the per-share data and ratios for the years
indicated, in conformity with generally accepted accounting principles. These
financial statements and per-share data and ratios (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at August 31, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
September 30, 1999
Tax Information (unaudited)
During the fiscal year ended August 31, 1999, the fund paid 59.2 cents per
share of exempt-interest distributions within the meaning of Section
852(b)(5)(A) of the Internal Revenue Code, a short-term capital gain of 0.4
cents per share and a long-term capital gain of 18.2 cents per share.
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For tax return preparation purposes, please refer to the calendar
year-end information you receive from the fund's transfer agent.
