SIGNED
SEC. FILE NOS. 33-26431
811-5750
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 14
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 16
THE TAX-EXEMPT MONEY FUND OF AMERICA
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street, 23rd Floor
Los Angeles, CA 90071-2371
(Counsel for the Registrant)
Title of Securities being Registered: Shares of Beneficial Interest
Approximate date of proposed public offering:
It is proposed that this filing become effective on December 1, 1997,
pursuant to paragraph (b) of rule 485.
THE TAX-EXEMPT MONEY FUND OF AMERICA
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of
Part "A" of Form N-1A Captions in Prospectus (Part "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Fund Organization and Management; Investment Policies and
Risks; Securities and Investment Techniques
5. Management of the Fund Financial Highlights; Fund Organization and Management
6. Capital Stock and Other Securities Investment Policies and Risks;
Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management; Dividends, Distributions
and Taxes
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number of Captions in Statement of
Part "B" of Form N-1A Additional Information (Part "B")
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History N/A
13. Investment Objectives and Policies Description of Certain Securities ; Investment Restrictions
14. Management of the Registrant Trust Officers and Trustees
15. Control Persons and Principal Holders Trust Officers and Trustees
of Securities
16. Investment Advisory and Other Services Trust Officers and Trustees; Fund Organization and Management (Part "A")
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions; Fund Organization and
Management (Part "A")
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Redeeming Shares; Shareholder
Securities Being Offered Account Services and Privileges; Purchasing Shares
(Part "A"); General Information
20. Tax Status Dividends and Distributions
21. Underwriter Management -- Principal Underwriter; Fund Organization and Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Item in Part "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under
Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of
Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
[LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
The Cash Management Trust of America(R)
The U.S. Treasury Money Fund of AmericaSM
The Tax-Exempt Money Fund of AmericaSM
Prospectus
DECEMBER 1, 1997
<PAGE>
THE CASH MANAGEMENT TRUST OF AMERICA
THE U.S. TREASURY MONEY FUND OF AMERICA
THE TAX-EXEMPT MONEY FUND OF AMERICA
333 South Hope Street
Los Angeles, CA 90071
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Expenses 3 Investment Results 11
................................ ........................................
Financial Highlights 4 Dividends, Distributions and Taxes 13
................................ ........................................
Investment Policies and Fund Organization and Management 14
Risks 7
................................ ........................................
Securities and Investment Shareholder Services 17
Techniques 8
- -----------------------------------------------------------------------------
</TABLE>
The investment objective of each fund is to provide investors with a way to
earn income on their cash reserves (exempt from federal income tax in the case
of Tax-Exempt Money Fund), while preserving capital and maintaining liquidity.
CASH MANAGEMENT TRUST seeks to achieve its objective by investing in a high-
quality portfolio of money market instruments, which may include commercial
paper, commercial bank obligations, savings association obligations, corporate
bonds and notes, and securities of the U.S. Government, its agencies or
instrumentalities.
U.S. TREASURY MONEY FUND seeks to achieve its objective by investing in a
portfolio consisting entirely of U.S. Treasury securities. These securities are
guaranteed by the direct "full faith and credit" pledge of the United States
Government and therefore are of the highest credit quality.
TAX-EXEMPT MONEY FUND seeks to achieve its objective by investing in a high-
quality portfolio of municipal securities.
This prospectus presents information you should know before investing in the
funds. You should keep it on file for future reference.
WHILE THE FUNDS ATTEMPT TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO DO SO. YOU MAY
LOSE MONEY BY INVESTING IN THE FUNDS. YOUR INVESTMENT IN THESE FUNDS IS NOT A
DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
09/39/49-010-1297
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
EXPENSES
The effect of the expenses described below is reflected in each fund's share
price and return.
Fund operating expenses are paid out of the fund's assets.
SHAREHOLDER TRANSACTION EXPENSES
The funds have no sales charges on purchases or reinvested dividends, deferred
sales charges, redemption fees or exchange fees. However, if shares of the
funds are exchanged for shares of another fund in The American Funds Group the
sales charge applicable to the other fund may apply.
FUND OPERATING EXPENSES (after fee waiver)
(as a percentage of average net assets)
<TABLE>
<CAPTION>
U.S. TAX-
CASH TREASURY EXEMPT
MANAGEMENT MONEY MONEY
TRUST FUND FUND
- -----------------------------------------------------------------
<S> <C> <C> <C>
Management fees 0.29% 0.30% 0.35%/1/
.................................................................
12b-1 expenses 0.08%/2/ 0.09%/2/ 0.06%/2/
.................................................................
Other expenses 0.20% 0.14% 0.24%
.................................................................
Total fund operating expenses 0.57% 0.53% 0.65%
</TABLE>
1 The Investment Advisory and Service Agreement provides for fee reductions to
the extent that annual operating expenses exceed 0.75% of the average net
assets. Capital Research and Management Company has been voluntarily waiving
fees to the extent necessary to ensure that the fund's expenses do not exceed
0.65% of the average net assets. Without such a waiver, management fees (as a
percentage of average net assets) would have been 0.44%, and total fund
operating expenses would have been 0.74%. Under certain circumstances, as
described in the statement of additional information, the fund may be
required to repay amounts waived.
2 12b-1 expenses may not exceed 0.15% of the fund's average net assets
annually.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
<TABLE>
<CAPTION>
U.S. TAX-
CASH TREASURY EXEMPT
MANAGEMENT MONEY MONEY
TRUST FUND FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One year $ 6 $ 5 $ 7
................................................................................
Three years $18 $17 $21
................................................................................
Five years $32 $30 $36
................................................................................
Ten years $71 $66 $81
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY.
3
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse LLP, independent
accountants. This table should be read together with the financial statements
which are included in the statement of additional information and annual
report.
PER-SHARE DATA AND RATIOS
CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
.......................
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .049 .050 .052 .031 .025 .036 .061 .078 .086 .068
......................................................................................................
Total income
from investment
operations .049 .050 .052 .031 .025 .036 .061 .078 .086 .068
- ------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.049) (.050) (.052) (.031) (.025) (.036) (.061) (.078) (.086) (.068)
......................................................................................................
Total distributions (.049) (.050) (.052) (.031) (.025) (.036) (.061) (.078) (.086) (.068)
......................................................................................................
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
......................................................................................................
Total return 5.03% 5.06% 5.34% 3.10% 2.57% 3.64% 6.26% 8.10% 8.98% 7.00%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $3,527 $3,304 $2,996 $2,738 $1,940 $2,090 $2,134 $2,145 $1,432 $1,107
......................................................................................................
Ratio of expenses
to average net assets .57% .60% .60% .68% .65% .63% .61% .57% .54% .50%
......................................................................................................
Ratio of net income
to average net assets 4.93% 4.95% 5.21% 3.14% 2.57% 3.59% 6.12% 7.70% 8.62% 6.79%
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
PER-SHARE DATA AND RATIOS
U.S. TREASURY MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
........................
1997 1996 1995 1994 1993 1992 1991/1/
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .046 .046 .048 .028 .025 .036 .035
......................................................................
Total income
from investment
operations .046 .046 .048 .028 .025 .036 .035
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
income (.046) (.046) (.048) (.028) (.025) (.036) (.035)
......................................................................
Total distributions (.046) (.046) (.048) (.028) (.025) (.036) (.035)
......................................................................
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
......................................................................
Total return 4.71% 4.66% 4.89% 2.89% 2.49% 3.61% 3.52%/2/
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $279 $256 $231 $199 $140 $106 $ 59
......................................................................
Ratio of expenses to
average net assets .53% .65% .67% .67% .61% .68% .68%/3/
......................................................................
Ratio of net income
to average net
assets 4.61% 4.53% 4.79% 2.91% 2.43% 3.51% 4.77%
- ----------------------------------------------------------------------
</TABLE>
1 Represents the initial period of operations from February 1, 1991 to
September 30, 1991.
2 Based on operations for the period shown and, accordingly, not representative
of a full year's operations.
3 Annualized.
5
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- -------------------------------------------------------------------------------
PER-SHARE DATA AND RATIOS
TAX-EXEMPT MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
.......................
1997 1996 1995 1994 1993 1992 1991 1990/1/
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .029 .029 .031 .020 .019 .029 .045 .049
................................................................................
Total income
from investment
operations .029 .029 .031 .020 .019 .029 .045 .049
- ---------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
income (.029) (.029) (.031) (.020) (.019) (.029) (.045) (.049)
................................................................................
Total distributions (.029) (.029) (.031) (.020) (.019) (.029) (.045) (049)
................................................................................
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
................................................................................
Total return 2.94% 2.91% 3.14% 1.98% 1.90% 2.96% 4.58% 5.04%/2/
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $ 160 $ 144 $150 $ 170 $ 121 $ 108 $ 107 $ 61
................................................................................
Ratio of expenses to
average net assets
- -- before fee waiver .74% .77% .75% .73% .79% .77% .74% .87%/3/
................................................................................
Ratio of expenses to
average net assets
- -- after fee waiver .65% .65% .65% .65% .65% .65% .65% .65%/3/
................................................................................
Ratio of net income
to average net assets 2.94% 2.88% 3.09% 1.99% 1.88% 2.95% 4.43% 5.16%
- --------------------------------------------------------------------------------
</TABLE>
1 Represents the initial period of operations from October 24, 1989 to
September 30, 1990.
2 Based on operations for the period shown and, accordingly, not representative
of a full year's operations.
3 Annualized.
6
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RISKS
Each fund aims to provide you with a way to earn income on your cash reserves
(free from federal income tax in the case of Tax-Exempt Money Fund) while
preserving capital and maintaining liquidity.
The investment objective of each fund is to provide investors with a way to
earn income on their cash reserves (exempt from federal income tax in the case
of Tax-Exempt Money Fund), while preserving capital and maintaining liquidity.
Each fund invests only in securities determined, in accordance with procedures
established by its board of trustees, to present minimal credit risks. It is
the current policy of Cash Management Trust and Tax-Exempt Money Fund to invest
only in instruments rated in the highest short-term rating categories by
Moody's Investors Service, Inc. and Standard & Poor's Corporation (for example,
commercial paper rated "Prime-1" and "A-1" by Moody's and S&P, respectively or,
in the case of Tax-Exempt Money Fund, in instruments that do not have short-
term ratings by Moody's or S&P but are determined to be of comparable quality
in accordance with procedures established by the boards) or that are issued,
guaranteed or insured by the U.S. or Canadian governments, their agencies or
instrumentalities as to the payment of principal and interest. MORE INFORMATION
ON EACH FUND'S INVESTMENT POLICIES IS CONTAINED IN THE STATEMENT OF ADDITIONAL
INFORMATION.
CASH MANAGEMENT TRUST
The fund seeks to achieve its objective by investing in a high quality
portfolio of money market instruments, which may include commercial paper,
commercial bank obligations, savings association obligations, corporate bonds
and notes, and securities of the U.S. or Canadian governments, their agencies
or instrumentalities. The fund may also enter into repurchase agreements. See
"Securities and Investment Techniques" below.
U.S. TREASURY MONEY FUND
The fund seeks to achieve its objective by investing in a portfolio consisting
entirely of U.S. Treasury securities. These securities are guaranteed by the
direct "full faith and credit" pledge of the United States Government and
therefore are of the highest credit quality. Since the fund invests solely in
U.S. Treasury securities, its dividends are generally exempt from most state
and local taxes; however, dividends are not exempt from federal income taxes.
See "Dividends, Distributions and Taxes" below.
TAX-EXEMPT MONEY FUND
The fund seeks to achieve its objective by investing in a high-quality
portfolio of municipal securities. Dividends paid by the fund are subject to
most state and
7
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
local taxes. See "Securities and Investment Techniques" below. The fund
generally invests substantially all of its assets in securities the interest on
which is exempt from federal income taxes. However, the fund may invest in
taxable short-term securities to take advantage of unusual investment
opportunities. The fund may also invest up to 20% of its assets in certain
municipal securities, the interest on which would constitute an item of tax
preference subject to federal alternative minimum tax on corporations and
individuals. See "Dividends, Distributions and Taxes" below. When abnormal
market conditions require a temporary defensive position, the fund may invest
substantially all its assets in taxable short-term securities. In any event, as
a matter of fundamental policy, the fund will under normal market conditions
invest at least 80% of its total assets in securities the interest on which is
exempt from federal income taxes (and is not subject to federal alternative
minimum tax).
Each fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. All other investment practices may be changed by each fund's board.
EACH FUND MAY NOT ACHIEVE ITS INVESTMENT OBJECTIVE DUE TO MARKET CONDITIONS AND
OTHER FACTORS. INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT OR ANY OTHER ENTITY OR PERSON. THERE CAN BE NO ASSURANCE
THAT THE FUNDS WILL BE ABLE TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE.
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
MONEY MARKET INSTRUMENTS
The funds invest in various high-quality money market instruments that mature,
or may be redeemed or resold, in 13 months or less (25 months or less in the
case of U.S. Government securities). For Cash Management Trust they include:
(1) commercial paper (notes issued by corporations or governmental bodies), (2)
commercial bank obligations such as certificates of deposit, bank notes, and
bankers' acceptances (time drafts on a commercial bank where the bank accepts
an irrevocable obligation to pay at maturity), (3) savings association and
savings bank obligations, (4) securities of the U.S. Government, its agencies
or instrumentalities, and (5) corporate bonds and notes. Cash Management Trust
may invest in securities issued by non-U.S. entities or in securities with
credit and liquidity support features provided by non-U.S. entities. Since
these securities are issued by entities that may have substantial operations
outside the U.S. they may involve additional risks and
8
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
considerations. These securities may be affected by unfavorable political,
economic, or governmental developments that could affect the repayment of
principal or payment of interest. Securities of U.S. issuers with substantial
operations outside the U.S. may also be subject to similar risks.
U.S. Treasury Money Fund may invest in instruments that include U.S. Treasury
bills, notes, and bonds. Tax-Exempt Money Fund invests in money market
instruments that are issued by states, territories, or possessions of the
United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities ("municipalities") to obtain funds for various
public purposes. Tax-Exempt Money Fund may purchase various types of municipal
securities including tax, bond, revenue, and grant anticipation notes,
construction loan notes, municipal commercial paper, general obligation bonds,
revenue bonds and industrial development bonds. In addition, Tax-Exempt Money
Fund may invest in municipal securities that are supported by credit and
liquidity enhancements, which include letters of credit from domestic and non-
U.S. banks and other financial institutions. Changes in the credit quality of
these institutions could cause the fund to experience a loss and may affect its
share price. To the extent that the credit quality of these institutions is
downgraded, investments in such securities could increase the level of
illiquidity of the fund's portfolio for the remaining maturity of the
instruments.
REPURCHASE AGREEMENTS
Cash Management Trust 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. 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 Capital Research and
Management Company. The fund only enters into repurchase agreements involving
securities in which it could otherwise invest and with selected banks and
securities dealers whose financial condition is monitored by Capital Research
and Management Company. 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, liquidation of the collateral by the fund may be delayed
or limited.
9
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
VARIABLE AND FLOATING RATE OBLIGATIONS
The funds may invest in variable and floating rate obligations which have
interest rates that are adjusted at designated intervals or whenever interest
rates change. The rate adjustment feature tends to limit the extent to which
the market value of the obligation will fluctuate.
FORWARD COMMITMENTS
The funds may enter into commitments to purchase or sell securities at a future
date. When the funds agree to purchase such securities, they assume the risk of
any decline in value of the securities beginning on the date of the agreement.
When the funds agree to sell such securities, they do 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 funds could miss a favorable price or yield
opportunity, or could experience a loss.
"PUT" SECURITIES
Cash Management Trust and Tax-Exempt Money Fund may purchase securities that
provide for the right to resell them to the issuer, a bank, or a broker-dealer
typically at the par value plus accrued interest within a specified period of
time prior to maturity. This right is commonly known as a "put" or a "demand
feature." The funds may pay a higher price for such securities than would
otherwise be paid for the same security without such a right. The funds will
enter into these transactions only with issuers, banks, or broker-dealers that
are determined by Capital Research and Management Company to present minimal
credit risks. If an issuer, bank, or broker-dealer should default on its
obligation to repurchase, the funds might be unable to recover all or a portion
of any loss sustained. There is no specific limit on the extent to which the
funds may invest in such securities.
MATURITY
Each fund determines net asset value using the penny-rounding method, according
to rules of the Securities and Exchange Commission, which permits it to
maintain a constant net asset value of $1.00 per share under normal conditions.
These rules require, among other things, that each fund limit its investments
to securities that will mature no more than 13 months (25 months in the case of
securities of the U.S. Government, its agencies or instrumentalities) from the
date of purchase, and that the dollar-weighted average portfolio maturity of
its investments be 90 days or less. For this purpose, certain variable and
floating rate obligations and "put" securities which may
10
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
otherwise have stated maturities in excess of 13 months (25 months in the case
of U.S. Government securities) will be deemed to have remaining maturities
equal to the period remaining until the next readjustment of the interest rate
or until the fund is entitled to repayment or repurchase of the security. Cash
Management Trust, U.S. Treasury Money Fund and Tax-Exempt Money Fund currently
intend to maintain dollar-weighted average portfolio maturities of
approximately 35 days or less, 90 days or less and 60 days or less,
respectively.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The funds may compare investment results to various indices or other mutual
funds. Fund results may be calculated on a total return and/or yield (or
effective yield) basis. Both yield figures are based on historical earnings and
are not intended to indicate future performance. Tax-equivalent yields may be
calculated for Tax-Exempt Money Fund. Total returns assume the reinvestment of
all dividends and any capital gain distributions.
TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
YIELD is computed, according to a formula mandated by the Securities and
Exchange Commission, by taking the average dividends paid by the fund over a
seven-day period. This income is then "annualized" and shown as a percentage
of the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the fund is assumed to be
reinvested. For current yield information, phone 800/421-8068.
INVESTMENT RESULTS
(FOR PERIODS ENDED SEPTEMBER 30, 1997)
<TABLE>
<CAPTION>
CASH
AVERAGE ANNUAL MANAGEMENT U.S. TREASURY TAX-EXEMPT
TOTAL RETURNS: TRUST MONEY FUND MONEY FUND
- -----------------------------------------------------------
<S> <C> <C> <C>
One year 5.03% 4.71% 2.95%
...........................................................
Five years 4.22% 3.92% 2.57%
...........................................................
Ten years 5.49% -- --
...........................................................
Lifetime 7.61% 4.02%/1/ 3.20%/2/
- -----------------------------------------------------------
7-day Yield/3/: 5.07% 4.45% 3.11%
Effective Yield/3/: 5.20% 4.55% 3.16%
</TABLE>
1 The fund began investment operations February 1, 1991.
2 The fund began investment operations October 24, 1989.
3 These fund results were calculated according to a required standard formula.
11
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
CASH MANAGEMENT TRUST
-------------------------------------------------
Here are the fund's annual total returns which are being supplied on a calendar
year basis.
[begin bar chart]
1987 6.42
1988 7.30
1989 9.05
1990 7.89
1991 5.51
1992 3.14
1993 2.54
1994 3.66
1995 5.50
1996 4.93
[end bar chart]
-------------------------------------------------
U.S. TREASURY MONEY FUND
-------------------------------------------------
Here are the fund's annual total returns which are being supplied on a calendar
year basis.
-------------------------------------------------
[begin bar chart]
1992 3.05
1993 2.48
1994 3.36
1995 5.03
1996 4.59
[end bar chart]
12
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
TAX-EXEMPT MONEY FUND
-------------------------------------------------
Here are the fund's annual total returns which are being supplied on a calendar
year basis.
[begin bar chart]
1990 5.40
1991 4.17
1992 2.51
1993 1.83
1994 2.23
1995 3.21
1996 2.85
[end bar chart]
-------------------------------------------------
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each fund declares dividends from net investment income daily and distributes
the accrued dividends, which may fluctuate, to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, or the shareholder does
not respond to mailings from American Funds Service Company with regard to
uncashed distribution checks, the shareholder's distribution option will
automatically be converted to having all dividends and other distributions
reinvested in additional shares.
FEDERAL TAXES
In any fiscal year in which a fund qualifies as a regulated investment company
and distributes to shareholders all net investment income and net capital
gains, the fund itself is relieved of federal income tax.
13
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MONEY MARKET FUNDS / PROSPECTUS
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The tax treatment of dividends and any capital gains is the same whether they
are reinvested or received in cash. Dividends distributed by Cash Management
Trust and U.S. Treasury Money Fund are taxable for federal income tax purposes
(unless you are exempt from taxation or entitled to deferral). Dividends
distributed by U.S. Treasury Money Fund will be taxable for federal income tax
purposes but will be tax-exempt for purposes of most states' personal income
tax. Dividends distributed by Tax-Exempt Money Fund generally will be exempt
from federal income tax but generally will be subject to state income tax. This
favorable tax treatment may not apply to Tax-Exempt Money Fund shareholders who
are "substantial users" (or "related persons") of facilities financed by
securities held by Tax-Exempt Money Fund. None of the funds generally realizes
or distributes capital gains; however, if they do, they will be subject to
federal and state income tax. Early each calendar year, you will be notified as
to the amount and federal tax status of all dividends and capital gains paid
during the prior year. You are required by the Internal Revenue Code to report
dividends to the federal government even if they are tax-exempt.
YOU MUST PROVIDE EACH FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE EACH
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the funds. Please see the statement of additional information and your tax
adviser for further information.
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FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
Each fund is an open-end, diversified management investment company and was
organized as a Massachusetts business trust (Cash Management Trust in 1976,
Tax-Exempt Money Fund in 1989 and U.S. Treasury Money Fund in 1990). Each
fund's operations are supervised by its board of trustees which meets
periodically and performs duties required by applicable state and federal laws.
Members of the boards who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
funds as described in the statement of additional information. They may elect
to defer all or a portion of these fees through a deferred compensation plan
14
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MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
in effect for each fund. The funds do not hold annual meetings of shareholders.
However, significant matters that 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
its shares, the applicable fund will hold a meeting at which any member of the
board could be removed by a majority vote. Since the funds use a combined
prospectus, each fund may be liable for misstatements, inaccuracies, or
incomplete disclosure concerning any other fund contained in this prospectus.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to these
funds and other funds, including those in The American Funds Group. Capital
Research and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071.
Capital Research and Management Company manages the investment portfolio and
business affairs of the funds and receives an annual fee from each fund that
may not exceed:
Cash Management Trust: 0.32% of the fund's average net assets;
U.S. Treasury Money Fund: 0.30% of the fund's average net assets;
Tax-Exempt Money Fund: 0.44% of the fund's average net assets
and declines at certain asset levels for each fund. These management fee
schedules do not reflect voluntary fee waivers that may be made by Capital
Research and Management Company from time to time or fee waivers that may be
made under a fund's Investment Advisory and Service Agreement with Capital
Research and Management Company. The total management fees paid by the funds,
as a percentage of average net assets for the previous fiscal year, are listed
earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into each fund's code of ethics.
15
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MONEY MARKET FUNDS / PROSPECTUS
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PLAN OF DISTRIBUTION
Each fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board. The 12b-1 fees paid by each
fund, as a percentage of average net assets for the previous fiscal year, are
discussed above under "Expenses." Since these fees are paid out of a fund's
assets on an ongoing basis, over time they will increase the cost of an
investment and may cost you more than paying other types of sales loads.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for each fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP OF AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS APPEARS HERE]
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
p.o. Box 6007
Indianapolis, Indiana
46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
16
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MONEY MARKET FUNDS / PROSPECTUS
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SHAREHOLDER SERVICES
Each fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the funds' shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, computer,
wire, or bank debit. You may also establish or add to your account by
exchanging shares from any of your other accounts in The American Funds Group.
The funds and American Funds Distributors reserve the right to reject any
purchase order for any reason. This includes exchange purchase orders that may
place an unfair burden on other shareholders due to their frequency.
Various purchase options are available as described below, subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the
funds (with no sales charge). This will be done automatically unless you
elect to have the dividends and/or capital gain distributions paid to you in
cash.
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MONEY MARKET FUNDS / PROSPECTUS
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Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
Exchange Privilege
You may exchange your shares into other funds in The American Funds Group,
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone including American
FundsLine(R), or computer using American FundsLine OnLineSM (see below), or
by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND
PURCHASES.
Retirement Plans
You may invest in Cash Management Trust and U.S. Treasury Money Fund through
various retirement plans. Tax-Exempt Money Fund is not available for
investment by retirement plans. For further information contact your
investment dealer or American Funds Distributors.
SHARE PRICE
Each fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. Each fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. The net asset
value per share of the money market funds normally will remain constant at
$1.00 based on the funds' current practice of valuing their shares using the
penny-rounding method in accordance with rules of the Securities and Exchange
Commission. Shares are purchased at the offering price next determined after
your investment is received and accepted by American Funds Service Company.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
To establish an account $2,500
For a retirement plan account $1,000
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
18
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MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
SALES CHARGES
The money market funds have no sales charges on purchases of fund shares.
However, if shares of any money market fund are exchanged for shares of another
fund in The American Funds Group, the sales charge applicable to the other fund
may apply.
ADDITIONAL DEALER COMPENSATION
Up to 0.15% of average net assets is paid annually to qualified dealers for
providing certain services pursuant to each fund's Plan of Distribution.
American Funds Distributors currently provides additional compensation to the
top 100 dealers who have sold shares of funds in The American Funds Group based
on the pro rata share of a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not
be aggregated with those made for other accounts unless qualified as
described above.
Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or cross-
reinvestment from a fund having a sales charge do qualify.
19
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MONEY MARKET FUNDS / PROSPECTUS
Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which at your request, may include purchases made during the previous
90 days) in non-money market fund shares over a 13-month period. A portion
of your account may be held in escrow to cover additional sales charges
which may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) or American FundsLine OnLineSM (see below). In addition, you may
sell shares in amounts of $50 or more automatically. If you sell shares through
your investment dealer you may be charged for this service. Shares held for you
in your dealer's street name must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R), by computer
using American FundsLine OnLineSM (see below), or by fax. Sales by telephone,
computer or fax are limited to $50,000 in accounts registered to individual(s)
(including non-retirement trust accounts). In addition, checks must be made
payable to the registered shareholder(s) and mailed to an address of record
that has been used with the account for at least 10 days.
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 Investment Company Act of 1940), 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.
20
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MONEY MARKET FUNDS / PROSPECTUS
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The funds may, with 60 days' written notice, close your account if due to a
sale of shares the account has a value of less than the minimum required
initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a member firm of a domestic stock exchange or
the National Association of Securities Dealers, Inc., bank, savings
association, or credit union that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made payable to the registered shareholder(s) and is
mailed to the address of record on the account, and provided the address has
been used with the account for at least 10 days. Additional documentation may
be required for sale of shares held in corporate, partnership or fiduciary
accounts.
In the case of the money market funds, you may establish (use the account
application) telephone redemption privileges (which will enable you to have
redemption proceeds sent to your bank account) and/or check writing privileges.
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 of registered
shareholders exactly as indicated on your checking account signature card.
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. Reinvestment will be at the next calculated net asset value after
receipt and acceptance by American Funds Service Company.
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OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINESM
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) or American
FundsLine OnLineSM. To use this service, call 800/325-3590 from a TouchTone(TM)
telephone or access the American Funds Web site on the Internet at
www.americanfunds.com.
21
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MONEY MARKET FUNDS / PROSPECTUS
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TELEPHONE AND COMPUTER PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone or computer (including American
FundsLine(R) or American FundsLine OnLineSM) or fax purchase, sale and/or
exchange options (see below), you agree to hold the fund, American Funds
Service Company, 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 liabilities
(including attorney fees) which may be incurred in connection with the exercise
of these privileges, provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Dividend and capital gain reinvestments and purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
22
<PAGE>
NOTES
23
<PAGE>
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FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
- ------------------------------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In
the event of any inconsistency or ambiguity as to the
meaning of any word or phrase in a translation, the English
text will prevail.
- ------------------------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance
information, portfolio holdings, a statement from portfolio
management and the independent accountants' report (in the
annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of each
fund, including each fund's financial statements.
A current SAI has been filed with the Securities and
Exchange Commission ("SEC"). It is incorporated by
reference into this prospectus and is available along with
other related materials on the SEC's Internet Web site at
http://www.sec.gov.
CODE OF ETHICS
Includes a description of the funds' personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary
Service Company of the fund
800/421-0180 ext. 1 333 South Hope Street
Los Angeles, CA 90071
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This prospectus has been printed on recycled paper.
[RECYCLING LOGO APPEARS HERE]
24
THE CASH MANAGEMENT TRUST OF AMERICA
AND
THE U.S. TREASURY MONEY FUND OF AMERICA
AND
THE TAX-EXEMPT MONEY FUND OF AMERICA
Part B
Statement of Additional Information
December 1, 1997
This document is not a prospectus but should be read in conjunction with
the current prospectus dated December 1, 1997 of The Cash Management Trust of
America ("CMTA"), The U.S. Treasury Money Fund of America ("CTRS") and The
Tax-Exempt Money Fund of America ("CTEX"). The prospectus may be obtained from
your investment dealer or financial planner or by writing to the funds at the
following address:
The Cash Management Trust of America
The U.S. Treasury Money Fund of America
The Tax-Exempt Money Fund of America
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through employer-sponsored
defined contribution plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
Table of Contents
<TABLE>
<CAPTION>
Item Page No.
<S> <C>
Description of Certain Securities and Investment Techniques 2
Investment Restrictions 5
Fund Officers and Trustees 11
Management 15
Dividends and Taxes 17
Additional Information Concerning Taxes 20
Purchase of Shares 21
Redeeming Shares 26
Shareholder Account Services and Privileges 27
Execution of Portfolio Transactions 29
General Information 29
Investment Results 31
Description of Ratings for Debt Securities 34
Financial Statements attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
THE DESCRIPTIONS BELOW ARE INTENDED TO SUPPLEMENT THE MATERIAL IN THE
PROSPECTUS UNDER "INVESTMENT POLICIES AND RISKS."
INVESTMENT POLICIES - Each fund seeks to maintain a constant net asset value of
$1.00 per share for purchases and redemptions. To do so, each fund uses the
penny-rounding method of valuing securities pursuant to rule 2a-7 under the
Investment Company Act of 1940, certain requirements of which are summarized
below.
In accordance with rule 2a-7, each fund is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
instruments having remaining maturities of 13 months or less (25 months or less
in the case of U.S. Government securities) determined in accordance with
procedures established by the Board of Trustees to present minimal credit
risks.
CMTA and CTEX may invest in securities that are rated in the two highest
rating categories for debt obligations by at least two nationally recognized
statistical rating organizations (or one rating organization if the instrument
was rated by only one such organization) or, if unrated, are of comparable
quality as determined in accordance with procedures established by the Board of
Trustees ("eligible securities"). The nationally recognized statistical rating
organizations currently rating instruments of the type each fund may purchase
are Moody's Investors Service, Inc., Standard & Poor's Corporation, Duff and
Phelps, Inc., Fitch Investors Service, Inc., and IBCA Limited and IBCA Inc.
Subsequent to its purchase, an issue of securities may cease to be rated or its
rating may be reduced below the minimum rating required for its purchase.
Neither event requires the elimination of such securities from a fund's
portfolio, but Capital Research and Management Company (the "Investment
Adviser") will consider such an event in its determination of whether the fund
should continue to hold the securities. Investments in eligible securities not
rated in the highest category by at least two rating organizations (or one
rating organization if the instrument was rated by only one such organization),
and unrated eligible securities not determined by the Board of Trustees to be
of comparable quality to those rated in the highest category, will be limited
to 5% of a fund's total assets, with the investment in any one such issuer
being limited to no more than the greater of 1% of a fund's total assets or
$1,000,000. It is the current policy of CMTA and CTEX to invest only in
instruments rated in the highest short-term rating category by Moody's
Investors Service, Inc. and Standard & Poor's Corporation or in instruments
that do not have short-term ratings by Moody's or S&P but determined to be of
comparable quality in accordance with procedures established by the Board of
Trustees or that are issued, guaranteed or insured by the U.S. Government, its
agencies or instrumentalities as to the payment of principal and interest.
CTRS invests exclusively in U.S. Treasury securities, which are of the highest
credit quality.
THE CASH MANAGEMENT TRUST OF AMERICA
CMTA may invest in the short-term securities described below:
1. COMMERCIAL PAPER: Short-term notes (usually maturing in 90 days or less)
issued by companies or governmental bodies.
2. COMMERCIAL BANK OBLIGATIONS: Certificates of deposit (interest-bearing
time deposits), bank notes, bankers' acceptances (time drafts drawn on a
commercial bank where the bank accepts an irrevocable obligation to pay at
maturity) representing direct or contingent obligations of commercial banks
with assets in excess of $1 billion, based on latest published reports, or
obligations issued by commercial banks with assets of less than $1 billion if
the principal amount of such obligation is fully insured by the U. S.
Government. Commercial banks issuing obligations in which CMTA invests must be
on an approved list that is monitored on a regular basis; currently all
approved banks have assets in excess of $10 billion.
3. SAVINGS ASSOCIATION OBLIGATIONS: Certificates of deposit (interest-bearing
time deposits) issued by savings banks or savings and loan associations that
have assets in excess of $1 billion, based on latest published reports, or
obligations issued by institutions with assets of less than $1 billion if the
principal amount of such obligation is fully insured by the U. S. Government.
Savings associations issuing obligations in which CMTA invests must be on an
approved list that is monitored on a regular basis; currently all approved
savings associations have assets in excess of $10 billion.
4. U.S. GOVERNMENT SECURITIES: These securities include (1) direct
obligations of the Treasury (such as Treasury bills, notes and bonds), (2) U.S.
Government agency obligations guaranteed as to principal and interest by the
Treasury, and (3) obligations of certain U.S. Government agencies and
instrumentalities which are neither direct obligations of, nor guaranteed by,
the Treasury. The latter involve federal sponsorship in one way or another;
some are backed by specific types of collateral; some are supported by the
issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to Federal Land Banks, Farmers Home Administration, Federal
Home Loan Mortgage Corporation, Federal Home Loan Bank System, Federal Farm
Credit System, and the Federal National Mortgage Association.
5. CORPORATE BONDS AND NOTES: Corporate obligations that mature, or may be
redeemed by CMTA, in 13 months or less. These obligations may originally have
been issued with maturities in excess of 13 months. CMTA may currently invest
only in corporate bonds or notes of issuers having outstanding short-term
securities rated in the top rating category by Standard & Poor's Corporation or
by Moody's Investors Service, Inc. See "Description of Ratings for Debt
Securities" for a description of high-quality ratings by Standard & Poor's
Corporation and Moody's Investors Service, Inc.
THE TAX-EXEMPT MONEY FUND OF AMERICA
MUNICIPAL SECURITIES - Municipal securities generally include debt obligations
issued to obtain funds for various public purposes, including the construction
of a wide range of public facilities such as airports, bridges, highways,
housing, hospitals, mass transportation, schools, streets and water and sewer
works. Other public purposes for which municipal securities may be issued
include refunding outstanding obligations, obtaining funds for general
operating expenses and lending such funds to other public institutions and
facilities. In addition, certain types of bonds have been issued by
municipalities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit,
industrial, port or parking facilities, air or water pollution control
facilities and certain local facilities for water supply, gas, electricity or
sewage or solid waste disposal; the interest paid on such obligations may be
excludable from gross income for federal income tax purposes, although current
tax laws have eliminated or placed substantial limitations on the purposes of
new issues whose interest will be so excluded. Such obligations are considered
to be tax-exempt municipal securities, provided that the interest paid thereon
qualifies as excludable from federal income tax in the opinion of bond counsel
to the issuer; however, the interest on certain of these obligations may be a
tax preference item for purposes of the alternative minimum tax. There are, of
course, variations in the security of municipal securities, both within a
particular classification and between classifications.
Tax anticipation notes, bond anticipation notes and revenue anticipation notes
are issued on an interim basis in expectation of tax collections, revenue
receipts or bond sales. Grant anticipation notes are issued in anticipation of
receipt of intergovernmental grants. Construction loan notes are issued to
provide short-term construction financing for building projects. General
obligations bonds are unsecured promissory obligations issued by
municipalities. General obligation bonds are backed by the full faith, credit,
and unlimited taxing power of a municipality and repaid with general revenue
and other borrowings. Revenue bonds are issued by municipalities to finance
facilities which generate income, and are repayable from the revenue received
from the facilities built with the borrowed funds. Industrial development
bonds are issued by municipalities to finance facilities that are then leased
to private businesses and typically are repaid by the private business. CTEX
may also purchase other types of municipal securities which have a remaining
life of 13 months or less.
For the purpose of diversification under the Investment Company Act of 1940
(the "1940 Act"), the identification of the issuer of municipal securities
depends on the terms and conditions of the security. When the assets and
revenues of an agency, authority, instrumentality or other political
subdivision are separate from those of the government creating the subdivision
and the security is backed only by the assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the case
of an industrial development bond, if that bond is backed only by the assets
and revenues of the non-governmental user, then such non-governmental user
would be deemed to be the sole issuer. If, however, in either case, the
creating government or some other entity guarantees a security, such a guaranty
may be considered a separate security and would then be treated as an issue of
such government or other entity.
TEMPORARY TAXABLE INVESTMENTS - A portion of CTEX's assets, which will normally
be less than 20%, may be invested in high-quality taxable short-term
securities. Such temporary investments may include: (1) obligations of the
U.S. Treasury; (2) obligations of agencies and instrumentalities of the U.S.
Government; and (3) money market instruments, such as certificates of deposit
issued by domestic banks, corporate commercial paper, and bankers' acceptances.
These investments may be made when deemed advisable for temporary defensive
purposes or when the Investment Adviser believes there is an unusual disparity
between the after-tax income available on taxable investments and the income
available on tax-exempt securities.
THE U.S. TREASURY MONEY FUND OF AMERICA
REVERSE REPURCHASE AGREEMENTS - Although CTRS has no current intention to do so
during the next 12 months, the fund is authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is the sale of a
security by a fund and its agreement to repurchase the security at a specified
time and price. CTRS will segregate liquid assets, which will be marked to
market daily, in an amount sufficient to cover its obligations under reverse
repurchase agreements with broker-dealers (but no collateral is required on
reverse repurchase agreements with banks). Under the 1940 Act, these
transactions may be considered borrowings by CTRS; accordingly, CTRS will limit
these transactions, together with any other borrowings, to no more than
one-third of its total assets. Although these transactions will not be entered
into for leveraging purposes, to the extent CTRS' aggregate commitments under
these transactions exceed its holdings of cash and securities that do not
fluctuate in value (such as short-term money market instruments), CTRS
temporarily will be in a leveraged position (I.E., it will have an amount
greater than its net assets subject to market risk). Should market values of
CTRS' 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 CTRS' aggregate commitments under these transactions
increase, the opportunity for leverage similarly increases.
THE TAX-EXEMPT MONEY FUND OF AMERICA AND THE U.S. TREASURY MONEY FUND OF
AMERICA
LOANS OF PORTFOLIO SECURITIES - Although CTEX or CTRS have no current intention
of doing so during the next 12 months, each fund is authorized to lend
portfolio securities to selected securities dealers or other institutional
investors whose financial condition is monitored by the Investment Adviser.
The borrower must maintain with a fund's custodian collateral consisting of
cash, cash equivalents or U.S. Government securities equal to at least 100% of
the value of the borrowed securities, plus any accrued interest. The
Investment Adviser will monitor the adequacy of the collateral on a daily
basis. A fund may at any time call a loan of its portfolio securities and
obtain the return of the loaned securities. A fund will receive any interest
paid on the loaned securities and a fee or a portion of the interest earned on
the collateral. Each fund will limit its loans of portfolio securities to an
aggregate of 10% of the value of its total assets, determined at the time any
such loan is made.
REPURCHASE AGREEMENTS - Although CTEX or CTRS have no current intention of
doing so during the next 12 months, each fund is authorized to enter into
repurchase agreements, subject to the standards applicable to CMTA's repurchase
agreement transactions as described in the prospectus.
THE CASH MANAGEMENT TRUST OF AMERICA, THE U.S. TREASURY MONEY FUND OF AMERICA
AND THE TAX-EXEMPT MONEY FUND OF AMERICA
FORWARD COMMITMENTS - The funds may enter into commitments to purchase or sell
securities at a future date. When a fund purchases such securities it assumes
the risk of any decline in value of the securities beginning on the date of the
agreement. When a fund sells such securities it does not participate in
further gains or losses with respect to such 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.
Each fund 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 a fund's aggregate commitments under these transactions exceed
its holdings of cash and securities that do not fluctuate in value (such as
short-term money market instruments), the fund temporarily will be in a
leveraged position (because it will have an amount greater than its net assets
subject to market risk). Should market values of a fund's portfolio securities
decline while the fund is in a leveraged position, greater depreciation of its
net assets will likely occur than were it not in such a position. A 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.
INVESTMENT RESTRICTIONS
Each fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the 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. Investment limitations expressed in the following investment
restrictions as a percentage of assets are considered at the time securities
are purchased.
CMTA may not:
1. Invest its assets in issues other than those of the U.S. Government, its
agencies or instrumentalities, obligations of commercial banks and savings
institutions with total assets in excess of $1 billion, commercial paper, and
investment-grade corporate obligations--all maturing in one year or less. CMTA
may, however, invest in obligations issued by commercial banks and savings
institutions with assets of less than $1 billion if the principal amounts of
such obligations are fully insured by the U. S. Government;
2. Invest more than 5% of its total assets in the securities of any one
issuer, except the U.S. Government, its agencies and instrumentalities. With
respect to 25% of total assets, commercial banks are excluded from this 5%
limitation;
3. Invest more than 25% of total assets in the securities of issuers in the
same industry. Electric, natural gas distribution, natural gas pipeline,
combined electric and natural gas, and telephone utilities are considered
separate industries for purposes of this restriction. Obligations of the U.S.
Government, its agencies and instrumentalities are not subject to this 25%
limitation on industry concentration. In addition, CMTA may, if deemed
advisable, invest more than 25% of its assets in the obligations of commercial
banks;
4. Enter into any repurchase agreement if, as a result, more than 10% of
total assets would be subject to repurchase agreements maturing in more than
seven days;
5. Make loans to others except for the purchase of debt securities or
entering into repurchase agreements as listed above;
6. Borrow money, except from banks for temporary purposes and then in an
amount not in excess of 33-1/3% of total assets. This borrowing power is
reserved to facilitate the orderly sale of portfolio securities to accommodate
unusually heavy redemption requests, if they should occur; it is not included
for investment purposes;
7. Pledge more than 15% of its assets and then only to secure temporary
borrowings from banks;
8. Sell securities short;
9. Invest in puts, calls, straddles, spreads or any combination thereof;
10. Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization), real
estate, or commodities;
11. Engage in the underwriting of securities issued by others.
Notwithstanding Investment Restriction #9, the fund may invest in securities
with put and call features. Notwithstanding Investment Restriction #10, the
fund may invest in securities of other investment companies if deemed advisable
by its officers in connection with the administration of a deferred
compensation plan adopted by Trustees pursuant to an exemptive order granted by
the Securities and Exchange Commission.
For purposes of Investment Restriction #1, CMTA currently invests only in high
quality obligations in accordance with rule 2a-7 under the 1940 Act, as
described in the prospectus. (CMTA will notify shareholders 180 days in
advance in the event it no longer is required to adhere to rule 2a-7 and it
intends to stop relying on the rule.) For purposes of Investment Restriction
#3, CMTA will not invest 25% or more of total assets in the securities of
issuers in the same industry. Additionally, for purposes of Investment
Restriction #3, the Investment Adviser currently interprets the term
"commercial banks" to mean domestic branches of U.S. banks. These policies are
non-fundamental and may be changed by the Board of Trustees without shareholder
approval.
For purposes of Investment Restriction #4, the fund will not enter into any
repurchase agreement if, as a result, more than 10% of net assets would be
subject to repurchase agreements maturing in more than seven days.
CTRS may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities), if immediately after and
as a result of such investment (a) with respect to 75% of CTRS' total assets,
more than 5% of CTRS' total assets would be invested in securities of the
issuer, or (b) CTRS would hold more than 10% of any class of securities or of
the total securities of the issuer (for this purpose all indebtedness of an
issuer shall be deemed a single class).
2. Buy or sell real estate (including real estate limited partnerships) in
the ordinary course of its business; however, CTRS may invest in securities
secured by real estate or interests therein;
3. Acquire securities for which there is no readily available market or enter
into repurchase agreements or purchase time deposits maturing in more than
seven days, if, immediately after and as a result, the value of such securities
would exceed, in the aggregate, 10% of CTRS' total assets;
4. Make loans to others, except by the purchase of debt securities, entering
into repurchase agreements or making loans of portfolio securities;
5. Sell securities short;
6. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases or sales of securities;
7. Borrow money, except from banks for temporary or emergency purposes, not
in excess of 5% of the value of CTRS' 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. In the event
that the asset coverage for CTRS' borrowings falls below 300%, CTRS will reduce
within three days (excluding Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage, and except that CTRS
may enter into reverse repurchase agreements, provided that reverse repurchase
agreements and any other transactions constituting borrowing by CTRS may not
exceed one-third of CTRS' total assets;
8. Mortgage, pledge, or hypothecate its assets, except in an amount up to 5%
of the value of its total assets, but only to secure borrowings for temporary
or emergency purposes;
9. Underwrite any issue of securities, except to the extent that the purchase
of securities directly from the issuer in accordance with CTRS' investment
objective, policies and restrictions, and later resale, may be deemed to be an
underwriting;
10. Knowingly purchase securities of other managed investment companies,
except in connection with a merger, consolidation, acquisition, or
reorganization;
11. Buy or sell commodities or commodity contracts (including futures
contracts) or oil, gas or other mineral exploration or development programs;
12. Write, purchase or sell puts, calls, straddles, spreads or any
combination thereof, except that this shall not prevent the purchase of
securities which have "put" or "stand-by commitment" features;
13. Purchase or retain the securities of any issuer, if, to the knowledge of
CTRS, those individual officers and Board members of CTRS, its Investment
Adviser, or principal underwriter, each owning beneficially more than 1/2 of 1%
of the securities of such issuer, together own more than 5% of the securities
of such issuer;
14. Invest more than 5% of the value of CTRS' total assets in securities of
any issuer with a record of less than three years continuous operation,
including predecessors;
15. Invest 25% or more of total assets in the securities of issuers in the
same industry. Electric, natural gas distribution, natural gas pipeline,
combined electric and natural gas, and telephone utilities are considered
separate industries for purposes of this restriction. Obligations of the U.S.
Government, its agencies and instrumentalities, are not subject to this 25% or
more limitation on industry concentration. In addition, CTRS may, if deemed
advisable, invest 25% or more of its assets in the obligations of commercial
banks.
Notwithstanding Investment Restriction #10, the fund may invest in securities
of other investment companies if deemed advisable by its officers in connection
with the administration of a deferred compensation plan adopted by Trustees
pursuant to an exemptive order granted by the Securities and Exchange
Commission.
For purposes of Investment Restriction #11, the term "oil, gas or other
mineral exploration or development programs" includes oil, gas or other mineral
exploration or development leases. For purposes of Investment Restriction #15,
the Investment Adviser currently interprets the term "commercial banks" to mean
domestic branches of U.S. banks. Finally, CTRS will not invest more than 5% of
its net assets valued at market at the time of purchase, in warrants including
not more than 2% of such net assets in warrants that are not listed on either
the New York Stock Exchange or the American Stock Exchange; however, warrants
acquired in units or attached to securities may be deemed to be without value
for the purpose of this restriction. These policies are not deemed fundamental
and may be changed by the Board of Trustees without shareholder approval.
CTEX may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities), if immediately after and
as a result of such investment (a) with respect to 75% of CTEX's total assets,
more than 5% of CTEX's total assets would be invested in securities of the
issuer, or (b) CTEX would hold more than 10% of any class of securities or of
the total securities of the issuer (for this purpose all indebtedness of an
issuer shall be deemed a single class).
2. Enter into any repurchase agreement if, as a result, more than 10% of the
value of CTEX's total assets would be subject to repurchase agreements maturing
in more than seven days;
3. Buy or sell real estate (including real estate limited partnerships) in
the ordinary course of its business; however, CTEX may invest in securities
secured by real estate or interests therein;
4. Acquire securities subject to restrictions on disposition or securities
for which there is no readily available market (including securities of foreign
issuers not listed on any recognized foreign or domestic exchange), or enter
into repurchase agreements or purchase time deposits maturing in more than
seven days, if, immediately after and as a result, the value of such securities
would exceed, in the aggregate, 10% of CTEX's total assets;
5. Make loans to others, except for the purchase of debt securities, entering
into repurchase agreements or making loans of portfolio securities;
6. Sell securities short, except to the extent that CTEX contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
7. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases or sales of securities;
8. Borrow money, except from banks for temporary or emergency purposes, not
in excess of 5% of the value of CTEX'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. In the event
that the asset coverage for CTEX's borrowings falls below 300%, CTEX will
reduce within three days (excluding Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage;
9. Mortgage, pledge, or hypothecate its assets, except in an amount up to 5%
of the value of its total assets, but only to secure borrowings for temporary
or emergency purposes;
10. Underwrite any issue of securities, except to the extent that the purchase
of municipal securities directly from the issuer in accordance with CTEX's
investment objective, policies and restrictions, and later resale, may be
deemed to be an underwriting;
11. Invest in companies for the purpose of exercising control or management;
12. Knowingly purchase securities of other managed investment companies,
except in connection with a merger, consolidation, acquisition, or
reorganization;
13. Buy or sell commodities or commodity contracts or oil, gas or other
mineral exploration or development programs;
14. Write, purchase or sell puts, calls, straddles, spreads or any combination
thereof, except that this shall not prevent the purchase of municipal
securities which have "put" or "stand-by commitment" features;
15. Purchase or retain the securities of any issuer, if, to the knowledge of
CTEX, those individual officers and Board members of CTEX, its Investment
Adviser, or principal underwriter, each owning beneficially more than 1/2 of 1%
of the securities of such issuer, together own more than 5% of the securities
of such issuer;
16. Invest more than 5% of the value of CTEX's total assets in securities of
any issuer with a record of less than three years continuous operation,
including predecessors;
17. Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry.
For purposes of Investment Restriction #2, the fund will not enter into any
repurchase agreement if, as a result, more than 10% of net assets would be
subject to repurchase agreements maturing in more than seven days.
For the purpose of CTEX's investment restrictions, the identification of the
"issuer" of municipal securities that are not general obligation securities is
made by the Investment Adviser on the basis of the characteristics of the
securities as described, the most significant of which is the ultimate source
of funds for the payment of principal and interest on such securities. For
purposes of investment restriction #13 the term "commodities contract" includes
futures contracts.
Notwithstanding Investment Restriction #12, the fund may invest in securities
of other investment companies if deemed advisable by its officers in connection
with the administration of a deferred compensation plan adopted by Trustees
pursuant to an exemptive order granted by the Securities and Exchange
Commission.
The following policies of CTEX are not deemed fundamental, and thus may be
changed by the Board of Trustees without shareholder approval: CTEX may not
invest 25% or more of its assets in municipal securities 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. CTEX may
invest no more than an aggregate of 20% of its total assets in industrial
development securities. There could be economic, business or political
developments which might affect all municipal securities of a similar category
or type or issued by issuers within any particular geographical area or
jurisdiction. Finally, CTEX will not invest more than 5% of its net assets
valued at market at the time of purchase, in warrants including not more than
2% of such net assets in warrants that are not listed on either the New York
Stock Exchange or the American Stock Exchange; however, warrants acquired in
units or attached to securities may be deemed to be without value for the
purpose of this restriction.
FUND OFFICERS AND TRUSTEES
Trustees and Trustee Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL AGGREGATE TOTAL TOTAL
AND AGE WITH OCCUPATION(S) COMPENSATION COMPENSATION NUMBER
REGISTRANT DURING (INCLUDING FROM ALL OF FUND
PAST 5 YEARS VOLUNTARILY FUNDS BOARDS ON
(POSITIONS DEFERRED MANAGED BY WHICH
WITHIN THE COMPENSATION/1/) CAPITAL TRUSTEE
ORGANIZATIONS FROM RESEARCH AND SERVES/2/
LISTED MAY HAVE EACH FUND DURING MANAGEMENT
CHANGED DURING FISCAL YEAR COMPANY/2/
THIS PERIOD) ENDED DURING FISCAL
SEPTEMBER 30, YEAR ENDED
1997 SEPTEMBER 30,
1997
<S> <C> <C> <C> <C> <C>
H. Frederick Trustee Private $5,911 CMTA $166,300 18
Christie Age: 64 Investor. $2,311 CTEX
P.O. Box 144 Former President $2,811 CTRS
Palos Verdes and CEO, The
Estates, CA Mission Group
90274 (non-utility
holding company,
subsidiary of
Southern
California
Edison Company)
+Don R. Conlan Trustee President none/4/ none/4/ 12
Age: 61 (retired),
1630 Milan The Capital
Avenue Group Companies,
South Inc.
Pasadena, CA
91030
Diane C. Trustee CEO and $5,200 CMTA $43,000 12
Creel President, $1,600 CTEX
Age: 49 The Earth $2,100 CTRS
100 W. Technology
Broadway Corporation
Suite 5000 (international
Long Beach, CA consulting
90802 engineering)
Martin Fenton, Trustee Chairman, Senior $5525/3/MTA $134,000 16
Jr. Resource Group $1,925/3/ CTEX
Age: 62 (management of $2,425/3/ CTRS
4350 Executive senior living
Drive centers)
Suite 101
San Diego, CA
92121-2116
Leonard R. Trustee President, $5,967/3/ CMTA $48,200 12
Fuller Fuller $2,367/3/ CTEX
Age: 51 Consulting $2,867/3/ CTRS
4337 Marina (management
City Drive consultants)
Suite 841 ETN
Marina del
Rey, CA 90292
+*Abner D. President, Senior Vice none/4/ none/4/ 12
Goldstine PEO President and
Age: 67 and Director,
Trustee Capital Research
and Management
Company
+**Paul G. Chairman Executive Vice none/4/ none/4/ 14
Haaga, Jr. of President and
Age: 48 the Board Director,
Capital Research
and Management
Company
Herbert Hoover Trustee Private Investor $5,543 CMTA $70,000 14
III $2,143 CTEX
Age: 70 $2,643 CTRS
1520 Circle
Drive
San Marino, CA
91108
Richard G. Trustee Chairman, $5,554/3/ CMTA $100,000 13
Newman President and $1,954/3/ CTEX
Age: 63 CEO, $2,454/3/ CTRS
3250 Wilshire AECOM Technology
Boulevard Corporation
Los Angeles, (architectural
CA 90010-1599 engineering)
Peter C. Trustee Retired. Former $5,567/3/ CMTA $48,200 12
Valli Chairman and $1,967/3/ CTEX
Age: 70 CEO, BW/IP $2,467/3/ CTRS
45 Sea Isle International
Drive Inc.
Long Beach, CA (industrial
90803 manufacturing)
</TABLE>
+ Trustees who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on
the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* 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 Trustees under a non-qualified deferred
compensation plan adopted by each fund in 1994. 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 Trustee.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 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., 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 Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by each fund (plus earnings thereon) for participating Trustees is as
follows: Martin Fenton, Jr. ($4,154 - CMTA; $415 -CTEX and $935 - CTRS),
Richard G. Newman ($19,699 - CMTA; $9,410 - CTEX and $9,929 - CTRS), and Peter
C. Valli ($19,159 - CMTA; $9,318 - CTEX and $9,838 - CTRS). Amounts deferred
and accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Trustee.
/4/ Don R. Conlan, Abner D. Goldstine and Paul G. Haaga, Jr. and are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
OFFICERS
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING
REGISTRANT PAST 5 YEARS
<S> <C> <C> <C>
Teresa S. Cook 45 Senior Vice President Senior Vice President - Investment
333 South Hope Street (CMTA and CTRS only) Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Michael J. Downer 43 Vice President Senior Vice President - Fund Business
333 South Hope Street Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Mary C. Hall 39 Vice President Senior Vice President - Fund Business
135 South State College Management Group, Capital Research and
Blvd. Management Company
Brea, CA 92821
Neil L. Langberg 44 Vice President Vice President - Investment Management
11100 Santa Monica Blvd. Group, Capital Research and Management
Los Angeles, CA 90025 Company
Sarah P. Lucas 43 Assistant Assistant Vice President - Investment
333 South Hope Street Vice President (CMTA Management Group, Capital Research and
Los Angeles, CA 90071 and CTRS only) Management Company
Julie F. Williams 49 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital Research and
Los Angeles, CA 90071 Management Company
Anthony W. Hynes, Jr. 34 Treasurer Vice President - Fund Business
135 South State College Management Group, Capital Research and
Blvd. Management Company
Brea, CA 92821
Kimberly S. Verdick 32 Assistant Secretary Assistant Vice President - Fund
333 South Hope Street Business Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
Todd L. Miller 38 Assistant Treasurer Assistant Vice President - Fund
135 South State College Business Management Group, Capital
Blvd. Research and Management Company
Brea, CA 92821
</TABLE>
# Positions within the organizations listed may have changed during this period
.
No compensation is paid by a fund to any officer or Trustee who is a
director or officer of the Investment Adviser. The funds pay annual fees to
Trustees who are not affiliated with the Investment Adviser as follows: CMTA -
$4,000; CTEX - $400 and CTRS - $900. In addition, each fund pays $200 for each
Board of Trustees meeting attended, plus $200 for each meeting attended as a
member of a committee of the Board of Trustees. The Trustees may elect, on a
voluntary basis, to defer all or a portion of these fees through a deferred
compensation plan in effect for each fund. The funds also reimburse certain
expenses of the Trustees who are not affiliated with the Investment Adviser. As
of November 1, 1997, the officers and Trustees and their families as a group,
owned beneficially or of record fewer than 1% of the outstanding shares of each
fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. 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.
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 more than $175 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 - Each fund has an Investment
Advisory and Service Agreement (the "Agreement") with the Investment Adviser
which provides that the Investment Adviser shall determine which securities
shall be purchased or sold by each fund and provides certain services to each
fund.
The CMTA Agreement will continue in effect until May 31, 1998, unless
sooner terminated. The CTEX Agreement will continue in effect until October 1,
1998, unless sooner terminated, and the CTRS Agreement will continue in effect
until October 31, 1998, unless sooner terminated. Each Agreement 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 Trustees, 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 Trustees 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. Each 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 qualified persons to perform the executive, administrative, clerical and
bookkeeping functions of each fund; provides suitable office space and
utilities; and provides necessary small office equipment, and general purpose
accounting forms, supplies, and postage used at the office of the funds
relating to the services furnished by the Investment Adviser. Each fund pays
all expenses not specifically assumed by the Investment Adviser, including, but
not limited to, custodian, stock transfer and dividend disbursing fees and
expenses; costs of designing, printing and mailing reports, prospectuses, proxy
statements, and notices to shareholders; taxes; expenses for the issuance and
redemption of shares of the fund (including stock certificates, registration
and qualification fees and expenses); expenses pursuant to the funds' Plan of
Distribution (described below); legal and auditing expenses; compensation,
fees, and expenses paid to trustees unaffiliated with the Investment Adviser;
association dues; costs of stationery and forms prepared exclusively for the
funds; and costs of assembling and storing shareholder account data.
Capital Research and Management Company manages the investment portfolios and
business affairs of the funds and receives an annual fee from each fund as
follows:
Cash Management Trust: 0.32% on the first $1 billion of average net assets;
plus 0.29% on average net assets between $1 billion and $2 billion; plus 0.27%
on average net assets in excess of $2 billion;
U.S. Treasury Money Fund: 0.30% on the first $800 million of average net
assets; plus 0.285% on average net assets in excess of $800 million;
Tax-Exempt Money Fund: 0.44% on the first $200 million of average net assets;
plus 0.42% on average net assets between $200 million and $600 million; plus
0.38% on the portion of average net assets between $600 million and $1.2
billion; plus 0.34% on average net assets in excess of $1.2 billion.
The Investment Adviser has agreed to waive its fees by any amount necessary
to assure that such expenses do not exceed applicable expense limitations in
any state in which the funds' shares are being offered for sale.
CMTA The Agreement provides that the Investment Adviser will reimburse CMTA
for any expenses incurred by CMTA in any fiscal year, exclusive of interest,
taxes, brokerage costs and extraordinary items such as litigation and
acquisitions, to the extent such expenses exceed the lesser of 25% of gross
income for the preceding year or the sum of (a) 1-1/2% of the average daily net
assets of the preceding year up to and including $30 million, and (b) 1% of any
excess of average daily net assets of the preceding year over $30 million. The
Investment Advisory fee is included as an expense of CMTA and is subject to the
expense limitation described in the preceding sentence.
CTEX The Investment Adviser has agreed to bear any CTEX expenses (with the
exception of interest, taxes, brokerage costs and extraordinary expenses such
as litigation and acquisitions) in excess of 0.75% of CTEX's average net assets
per annum, subject to reimbursement by CTEX, during a period which will
terminate at the earlier of (i) such time as no reimbursement has been required
for a period of 12 consecutive months, provided no advances are outstanding, or
(ii) October 2, 1999. Additionally, the Investment Adviser voluntarily agreed
to waive its fees to the extent necessary to ensure that fund expenses do not
exceed 0.65% of the average daily net assets. There can be no assurance that
this voluntary fee waiver will continue in the future. Each month, to the
extent CTEX owes money to the Investment Adviser pursuant to this provision of
the Agreement and CTEX's annualized expense ratio for the month is below 0.75%,
CTEX will reimburse the Investment Adviser until CTEX's annualized expense
ratio equals 0.75% or the debt is repaid, whichever comes first.
CTRS The Investment Adviser has agreed to bear any CTRS expenses (with the
exception of interest, taxes, brokerage costs and extraordinary expenses such
as litigation and acquisitions) in excess of 0.75% of CTRS's average net assets
per annum, subject to reimbursement by CTRS during a period which will
terminate at the earlier of (i) such time as no reimbursement has been required
for a period of 12 consecutive months, provided no advances are outstanding, or
(ii) February 1, 2001. Additionally, the Investment Adviser voluntarily agreed
to waive its fees to the extent necessary to ensure that fund expenses do not
exceed 0.675% of the average daily net assets. There can be no assurance that
this voluntary fee waiver will continue in the future. Each month, to the
extent CTRS owes money to the Investment Adviser pursuant to this provision of
the Agreement and CTRS' annualized expense ratio for the month is below 0.75%,
CTRS will reimburse the Investment Adviser until CTRS' annualized expense ratio
equals 0.75% or the debt is repaid, whichever comes first.
During the fiscal years ended September 30, 1997, 1996, and 1995, the
Investment Adviser's total fees from CMTA amounted to $10,230,000 $9,671,000,
and $9,526,000, , respectively. During the fiscal years ended September 30,
1997, 1996, and 1995, , the Investment Adviser's total fees from CTEX amounted
to $699,000, $648,000, and $699,000, , respectively. Voluntary fee waivers for
CTEX amounted to $140,000 during the fiscal year ended September 30, 1997.
During the fiscal years ended 1997, 1996, and 1995, , the Investment Adviser's
total fees from CTRS amounted to $808,000, $699,000, and $637,000,
respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of each 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, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The funds have each 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).
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Trustees and separately by a
majority of the Trustees who are not "interested persons" of the funds 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 each fund. The
officers and Trustees who are "interested persons" of the funds due to present
or past affiliations with the Investment Adviser and related companies may be
considered to have a direct or indirect financial interest in the operation of
the Plan. Potential benefits of the Plan to the funds are improved shareholder
services, savings to the funds in transfer agency costs, savings to the funds
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 Trustees who are not
"interested persons" of the funds is committed to the discretion of the
Trustees 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
Trustees.
Under the Plan each fund may expend up to 0.15% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of the funds' shares, provided the funds' Boards of Trustees have approved
the category of expenses for which payment is being made. In this regard, each
fund's Board of Trustees has approved one category of expenses: a service fee
to be paid to qualified dealers. During the fiscal year ended September 30,
1997, CMTA, CTRS and CTEX paid $2,836,000, $250,000 and $94,000, respectively,
to the Principal Underwriter under the Plan (compensation to dealers). As of
September 30, 1997, distribution expenses accrued and unpaid were $202,000,
$20,000 and $6,000 for CMTA, CTRS and CTEX, respectively.
DIVIDENDS AND TAXES
DAILY INCOME DIVIDENDS - A dividend from net investment income is declared each
day on shares of each fund. This dividend is payable to everyone who was a
shareholder at the close of business the previous day. Accordingly, when
shares are purchased dividends begin to accrue on the day following receipt by
the Transfer Agent of payment for the shares; when shares are redeemed, the
shares are entitled to the dividend declared on the day the redemption request
is received by the Transfer Agent. Dividends are automatically reinvested in
shares, on the last business day of the month, at net asset value (without
sales charge), unless a shareholder otherwise instructs the Transfer Agent in
writing. Shareholders so requesting will be mailed checks in the amount of the
accumulated dividends.
Under the penny-rounding method of pricing (see "Purchase of Shares"), each
fund rounds its per share net asset value to the nearer cent to maintain a
stable net asset value of $1.00 per share. Accordingly its share price
ordinarily would not reflect realized or unrealized gains or losses unless such
gains or losses were to cause the net asset value to deviate from $1.00 by one
half-cent or more. Pursuant to Securities and Exchange Commission regulations,
the Trustees have undertaken, as a particular responsibility within their
overall duty of care owed to shareholders, to assure to the extent reasonably
practicable that each fund's net asset value per share, rounded to the nearer
cent, will not deviate from $1.00. Among the steps that could be taken to
maintain the net asset value at $1.00 when realized or unrealized gains or
losses approached one half-cent per share would be to reflect all or a portion
of such gains or losses in the daily dividends declared. This would cause the
amount of the daily dividends to fluctuate and to deviate from a fund's net
investment income for those days, and could cause the dividend for a particular
day to be negative. In that event a fund would offset any such amount against
the dividends that had been accrued but not yet paid for that month.
Alternatively, each fund has reserved the right to adjust its total number of
shares outstanding, if deemed advisable by the Trustees, in order to maintain
the net asset value of its shares at $1.00. This would be done either by
regarding each shareholder as having contributed to the capital of the fund the
number of full and fractional shares that proportionately represents the
excess, thereby reducing the number of outstanding shares, or by declaring a
stock dividend and increasing the number of outstanding shares. Each
shareholder will be deemed to have agreed to such procedure by investing in a
fund. Such action would not change a shareholder's pro rata share of net
assets, but would reflect the increase or decrease in the value of the
shareholder's holdings which resulted from the change in net asset value.
TAXES - Each 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, as amended (the "Code"). Under
Subchapter M, if a fund distributes within specified times at least 90% of the
sum of its investment company taxable income and tax-exempt income, if any, it
will be taxed only on that portion, if any, of the investment company taxable
income which it retains.
To qualify, a 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 or 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 each fund's assets is represented by cash, cash
items, U.S. Government securities and 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.
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 net income 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 a 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. The
funds intend to meet these distribution requirements to avoid the excise tax
liability.
The funds do not ordinarily realize short- or long-term capital gains or
losses on sales of securities. If a fund should realize gains or losses, it
would distribute to shareholders all of the excess of net long-term capital
gain over net short-term capital loss on sales of securities. Although each
fund generally maintains a stable net asset value of $1.00 per share, if the
net asset value of shares of a fund should, by reason of a distribution of
realized capital gains, be reduced below a shareholder's cost, such
distribution would in effect be a return of capital to that shareholder even
though taxable to the shareholder, and a sale of shares by a shareholder at net
asset value at that time would establish a capital loss for federal tax
purposes. See also "Purchase of Shares" below.
If for any taxable year a fund does not qualify for the special tax treatment
afforded regulated investment companies, all of its taxable income will 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.
If a shareholder exchanges or otherwise disposes of shares of a 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 purpose 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 shares.
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 applicable to net
capital gains on assets held more than 18 months is 20%, and on assets held
more than one year and not more than 18 months is 28%; 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 in a taxable year
will be required to pay an additional amount of 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 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, an individual
is entitled to establish an Individual Retirement Account ("IRA") each year
(prior to the tax return filing deadline for that year) whereby earnings on
investments are tax-deferred. In addition, in some cases, the IRA contribution
itself may be deductible.
STATE TAXES - Information relating to the percentage of CTEX's income derived
from securities issued in a particular state is available upon request from the
Transfer Agent at year end.
Since all of CTRS' dividends are expected to be attributable to income on U.S.
Treasury securities, they are generally exempt from state personal income
taxes. Also, some states do not have personal income taxes. CTRS believes
that, as of the date of this publication, neither the District of Columbia nor
any state impose an income tax on dividends attributable to income on U.S.
Treasury securities paid by the fund to individuals. However, other taxes may
apply to dividends paid by CTRS to individual shareholders. Further, any
distributions of capital gains will not be exempt from income taxes. Because
tax laws vary from state to state and may change over time, you should consult
your tax adviser or state tax authorities regarding the tax status of
distributions from CTRS. Corporate shareholders may be subject to income tax
or other types of tax on dividends they receive, even in those states that do
not impose an income tax on distributions to individual shareholders of CTRS.
Corporate shareholders should therefore seek advice from their tax adviser
regarding the tax treatment of distributions from CTRS.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional federal, state and
local tax considerations generally affecting CTEX and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment ofCTEX
or its shareholders, and the discussion here and in the funds' prospectus is
not intended as a substitute for careful tax planning. Investors should
consult their own tax advisers for additional details as to their particular
tax situations.
CTEX
GENERAL - CTEX 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 CTEX
would generally not be suitable for tax-exempt institutions or tax-deferred
retirement plans (E.G., corporate-type plans, Keogh-type plans and IRA's).
Such retirement plans would not gain any benefit from the tax-exempt nature of
CTEX's dividends because such dividends would be ultimately taxable to
beneficiaries when distributed to them. In addition, CTEX 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, partnerships and their partners and S
Corporations and their shareholders.
The percentage of total dividends paid by CTEX 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 CTEX to pay exempt-interest dividends during any
taxable year, at the close of each fiscal quarter at least 50% of the aggregate
value of CTEX's assets must consist of tax-exempt securities. Not later than
60 days after the close of its taxable year, CTEX will notify each shareholder
of the portion of the dividends paid by CTEX to the shareholder with respect to
such taxable year which constitutes exempt-interest dividends. Shareholders
are required by the Code to report to the federal government all
exempt-interest dividends received from the fund (as well as all other similar
interest). 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 CTEX 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 CTEX
shares is not deductible for federal income tax purposes if CTEX distributes
exempt-interest dividends during the shareholder's taxable year. Although CTEX
normally maintains a constant net asset value of $1.00 per share, in the event
a shareholder receives an exempt-interest dividend with respect to any share
and such share is held for six months or less, and is sold or exchanged at a
loss, such loss will be disallowed to the extent of the amount of such
exempt-interest dividend.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
<S> <C> <C>
See "Investment Minimums and Fund $50 minimum (except where a lower
Numbers" for initial minimum is noted under
investment minimums. "Investment Minimums and Fund
Numbers").
By contacting Visit any investment dealer who is Mail directly to your investment
your investment registered in the state where the dealer's address printed on your
dealer purchase is made and who has a account statement.
sales agreement with American
Funds Distributors.
By mail Make your check payable to the Fill out the account additions
fund and mail to the address form at the bottom of a recent
indicated on the account account statement, make your
application. Please indicate an check payable to the fund, write
investment dealer on the account your account number on your
application. check, and mail the check and
form in the envelope provided
with your account statement.
By telephone Please contact your investment Complete the "Investments by
dealer to open account, then Phone" section on the account
follow the procedures for application or American FundsLink
additional investments. Authorization Form. Once you
establish the 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 "Telephone
Purchases, Sales and Exchanges"
in the prospectus).
By computer Please contact your investment Complete the American FundsLink
dealer to open account, then Authorization Form. Once you
follow the procedures for establish the privilege, you,
additional investments. your financial advisor or any
person with your account
information may access American
FundsLine OnLine(sm) on the
Internet and make investments by
computer (subject to conditions
noted in "Telephone and Computer
Purchases, Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your
your account number(s), if additional investments in the
necessary. Please indicate an same manner as described under
investment dealer on the "Initial Investment."
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>
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>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(r) 02
$1,000
American Balanced Fund(r) 11
500
American Mutual Fund(r) 03
250
Capital Income Builder(r) 12
1,000
Capital World Growth and Income Fund(sm) 33
1,000
EuroPacific Growth Fund(r) 16
250
Fundamental Investors(sm) 10
250
The Growth Fund of America(r) 05
1,000
The Income Fund of America(r) 06
1,000
The Investment Company of America(r) 04
250
The New Economy Fund(r) 14
1,000
New Perspective Fund(r) 07
250
SMALLCAP World Fund(r) 35
1,000
Washington Mutual Investors Fund(sm) 01
250
BOND FUNDS
American High-Income Municipal Bond Fund(r) 40
1,000
American High-Income Trust(sm) 21
1,000
The Bond Fund of America(sm) 08
1,000
Capital World Bond Fund(r) 31
1,000
Intermediate Bond Fund of America(sm) 23
1,000
Limited Term Tax-Exempt Bond Fund of America(sm) 43
1,000
The Tax-Exempt Bond Fund of America(r) 19
1,000
The Tax-Exempt Fund of California(r)* 20
1,000
The Tax-Exempt Fund of Maryland(r)* 24
1,000
The Tax-Exempt Fund of Virginia(r)* 25
1,000
U.S. Government Securities Fund(sm) 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of America(r) 09
2,500
The Tax-Exempt Money Fund of America(sm) 39
2,500
The U.S. Treasury Money Fund of America(sm) 49
2,500
__________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). 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 SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - 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 $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below)
none none
</TABLE>
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 $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage
of its income) currently provides additional compensation to dealers. Currently
these payments are limited to the top one hundred dealers who have sold shares
of the fund or other funds in The American Funds Group. These payments will be
based on a pro rata share of a qualifying dealer's sales. American Funds
Distributors will, on an annual basis, determine the advisability of continuing
these payments.
Any employer-sponsored 403(b) plan or 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 any other purchaser investing at least
$1 million in shares of the fund (or in combination with shares of other funds
in The American Funds Group other than the money market funds) may purchase
shares at net asset value; however, a contingent deferred sales charge of 1% is
imposed on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a contingent deferred
sales charge.
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.
NET ASSET VALUE PURCHASES - 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 Management 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 American Funds Distributors (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 foundations or endowments with 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.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the prospectus for the stock and stock/bond funds apply to purchases
of $50,000 or more and for the bond funds apply to purchases of $50,000 or more
made within a 13-month period subject to the following statement of intention
(the Statement) terms. The Statement is not a binding obligation to purchase
the indicated amount. When a shareholder elects to utilize the 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 within 45 days after written
request by the Principal Underwriter or the investment dealer, 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 and there will be
no retroactive reduction of the sales charges paid on prior purchases.
Existing holding eligible for rights of accumulation (see the prospectus and
account application) 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.
In the case of purchase orders by the directors of certain retirement
plans 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 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 of intention, a sales charge will be assessed
according to the sales charge breakpoint thus determined. There will be no
retroactive adjustments in sales charges on investments previously made during
the 13-month period.
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 account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) 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 (3) 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.
PRICE OF MONEY MARKET FUND SHARES - The price you pay for fund shares
(normally $1.00) is 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 as set forth below. The New York Stock
Exchange is currently closed on weekends and on the following holidays: New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day.
The valuation of each fund's portfolio securities and calculation of its net
asset value are based upon the penny-rounding method of pricing pursuant to
Securities and Exchange Commission regulations. Under the Securities and
Exchange Commission regulations permitting the use of the penny-rounding method
of pricing, each fund must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase instruments having remaining maturities
of 13 months or less only (25 months or less in the case of U.S. Government
securities), and invest only in securities determined by the Board of Trustees
to be of high quality with minimal credit risks.
1. All securities with 60 days or less to maturity are amortized to maturity
based on their cost if acquired within 60 days of maturity or, if already held
on the 60th day, based on the value determined on the 61st day. The maturities
of variable or floating rate instruments, with the right to resell them at an
agreed-upon price to the issuer or dealer, are deemed to be the time remaining
until the later of the next interest adjustment date or until they can be
resold.
Other securities with more than 60 days remaining to maturity are valued at
prices obtained from a pricing service selected by the Investment Adviser,
except that, where such prices are not available or where the Investment
Adviser has determined that such prices do not reflect current market value,
they are valued at the mean between current bid and ask quotations obtained
from one or more dealers in such securities.
Where market prices or market quotations are not readily available, securities
are valued at fair value as determined in good faith by the Board of Trustees
or a committee thereof. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of expense items; and
3. The 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. The net asset value of each share will normally remain constant at
$1.00.
In case of orders sent directly to a fund or American funds Service Company,
an investment dealer MUST be indicated. Any purchase order may be rejected by
the Principal Underwriter or by the funds.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Service Send a letter of instruction specifying the name of
Company (at the appropriate address the fund, the number of shares or dollar amount to
indicated under "Principal Underwriter be sold, your name and account number. You should
and Transfer Agent" in the prospectus) also enclose any share certificates you wish to
redeem. For redemptions over $50,000 and for
certain redemptions of $50,000 or less (see below),
your signature must be guaranteed by a bank,
savings association, credit union, or member firm
of a domestic stock exchange or the National
Association of Securities Dealers, Inc. that is an
eligible guarantor institution. You should verify
with the institution that it is an eligible
guarantor prior to signing. Additional
documentation may be required for redemption of
shares held in corporate, partnership or fiduciary
accounts. Notarization by a Notary Public is not
an acceptable signature guarantee.
By contacting your investment dealer If you redeem shares through your investment
dealer, you may be charged for this service.
SHARES HELD FOR YOU IN YOUR INVESTMENT DEALER'S
STREET NAME MUST BE REDEEMED THROUGH THE DEALER.
You may have a redemption You may use this option, provided the account is
check sent to you by using registered in the name of an individual(s), a
American FundsLine(r) or American UGMA/UTMA custodian, or a non-retirement plan
FundsLine OnLine(sm) or by trust. These redemptions may not exceed $50,000
telephoning, faxing, or per shareholder per day, per fund account and the
telegraphing American Funds Service check must be made payable to the shareholder(s) of
Company (subject to the conditions record and be sent to the address of record
noted in this section and in provided the address has been used with the account
"Telephone and Computer Purchases, for at least 10 days. See "Fund Organization and
Sales and Exchanges" below) Management - Principal Underwriter and Transfer
Agent" in the Prospectus and "Exchange Privilege"
below for the appropriate telephone or fax number.
In the case of the money Upon request (use the account application for the
market funds, you may have money market funds) you may establish telephone
redemptions wired to your redemption privileges (which will enable you to
bank by telephoning American Funds have a redemption sent to your bank account) and/or
Service Company ($1,000 or more) or by check writing privileges. If you request check
writing a check ($250 or more) 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 of registered shareholders
exactly as indicated on your checking account
signature card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 15 DAYS.
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 and
on any investment made with no initial sales charge by any employer-sponsored
403(b) plan or defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees. 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 qualified retirement
plans and other employee benefit plans; for redemptions resulting from
participant-directed switches among investment options within a
participant-directed employer-sponsored retirement plan; 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; for redemptions through
certain automatic withdrawals not exceeding 10% of the amount that would
otherwise be subject to the charge; and for redemptions in connection with
loans made by qualified retirement plans.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables you to
make regular monthly or quarterly investments in shares through automatic
charges to your bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the dates you select. Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and you will receive a confirmation statement at least
quarterly. Participation in the plan will begin within 30 days after receipt
of the account application. If your bank account cannot be charged due to
insufficient funds, a stop-payment order or closing of your 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 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 may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
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 specified fund of sufficient
shares, deposited by the shareholder with the Transfer Agent, to provide the
withdrawal payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may elect to
cross-reinvest dividends or dividends and capital gain distributions paid by
that fund (the "paying fund") into any other fund in The American Funds Group
(the "receiving fund") subject to the following conditions: (i) the aggregate
value of your account(s) in the paying fund(s) must equal or exceed $5,000
(this condition is waived if the value of the account in the receiving fund
equals or exceeds that fund's minimum initial investment requirement), (ii) as
long as the value of the account in the receiving fund is below that fund's
minimum initial investment requirement, dividends and capital gain
distributions paid by the receiving fund must be automatically reinvested in
the receiving fund, and (iii) if this privilege is discontinued with respect to
a particular receiving fund, the value of the account in that fund must equal
or exceed the fund's minimum initial investment requirement or the fund will
have the right, if you fail to increase the value of the account to such
minimum within 90 days after being notified of the deficiency, automatically to
redeem the account and send the proceeds to you. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
CHECK WRITING - When the checks you write are presented to The Chase Manhattan
Bank for payment, the bank will instruct the Transfer Agent to withdraw the
appropriate number of shares from your account (provided payment for the shares
has been collected). The bank's rules and regulations governing such checking
accounts include the right of the bank not to honor checks in amounts exceeding
the value of the account at the time the check is presented for payment. Each
month canceled checks will be returned to you. Generally, you pay no fee for
this check writing service; however, reasonable service charges for "regular or
frequent use" of this service may be assessed in the future. Besides being
convenient, this procedure enables you to continue earning daily income
dividends on your money until your checks actually clear.
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.
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 meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
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 American
Funds Service Company. Dividend and capital gain reinvestments and purchases
through automatic investment plans and certain retirement plans will be
confirmed at least quarterly.
AMERICAN FUNDSLINE(R) and American FundsLine OnLine(sm) - 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(r) and American
FundsLine OnLine(sm). To use this service, 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(r) and American FundsLine OnLine(sm) are subject to the conditions
noted above and in "Redeeming Shares--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(r)) and American FundsLine OnLine(sm),
fax or telegraph redemption and/or exchange options, you agree to hold the
fund, American Funds Service Company, 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 American Funds Service Company (you may also reinstate them
at any time by writing American Funds Service Company). If American Funds
Service Company 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.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for each fund's portfolio securities transactions are placed by the
Investment Adviser which strives to obtain the best available prices, taking
into account the costs and promptness of executions. Fixed-income securities
are generally traded on a "net" basis with a dealer acting as principal for its
own account without a stated commission, although the price of the security
usually includes a profit to the dealer. In underwritten offerings, securities
are usually purchased at a fixed price which includes an amount of compensation
to the underwriter, generally referred to as the underwriter's concession or
discount. On occasion, securities also may be purchased directly from an
issuer, in which case no commissions or discounts are paid.
Subject to the above policy, in circumstances in which two or more brokers
either directly or through their correspondent clearing agents are in a
position to offer comparable prices and executions, preference may be given to
brokers that have sold shares of the funds or have provided investment
research, statistical, and other related services to the Investment Adviser for
the benefit of the funds and/or of other funds served by the Investment
Adviser.
There are occasions on which portfolio transactions for the funds 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 funds, they are effected only when the
Investment Adviser believes that to do so is in the interest of the funds.
When such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the funds, including
proceeds from the sale of shares of the funds and of securities in either
fund's portfolio, are held by The Chase Manhattan Bank, One Chase Manhattan
Plaza, New York, NY 10081, as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary
of the Investment Adviser, maintains the record 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. During the fiscal year ended September 30,
1997, CMTA, CTRS and CTEX paid $5,032,000, $295,000 and $143,000, respectively,
to American Funds Service Company.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the funds' independent accountant since
inception, 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 have
been so included in reliance on the report of the independent accountants
given on the authority of said firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS - Each fund's fiscal year ends on September 30.
Shareholders are provided, at least semiannually, with reports showing the
investment portfolio and financial statements audited annually by each fund's
independent accountants, Price Waterhouse LLP, whose selection is determined
annually by the Trustees. The financial statements contained in the annual
report are included in this statement of additional information.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy 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.
You may obtain a summary of the personal investing policy by contacting the
Secretary of the fund.
SHAREHOLDER AND TRUSTEE RESPONSIBILITY - Under the laws of certain states,
including Massachusetts, where the funds were organized, and California, where
each fund's principal office is located, shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the fund in which they have invested. However,
the risk of a shareholder incurring any financial loss on account of
shareholder liability is limited to circumstances in which a fund itself would
be unable to meet its obligations. The Declaration of Trust of each fund
contains an express disclaimer of shareholder liability for acts or obligations
of the fund and provides that notice of the disclaimer may be given in each
agreement, obligation, or instrument which is entered into or executed by the
fund or its Trustees. Each Declaration of Trust provides for indemnification
out of fund property of any shareholder held personally liable for the
obligations of the fund and also provides for the fund to reimburse such
shareholder for all legal and other expenses reasonably incurred in connection
with any such claim or liability.
Under each Declaration of Trust, the Trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office. Each fund
will provide indemnification to its Trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.
SHAREHOLDER VOTING RIGHTS - All shares of each fund have equal voting rights
and may be voted in the elections of Trustees and on other matters submitted to
the vote of shareholders. As permitted by Massachusetts law, there will
normally be no meetings of shareholders for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by shareholders. At that time, the Trustees then in
office will call a shareholders meeting for the election of Trustees. The
Trustees of a fund must call a meeting of shareholders for the purpose of
voting upon the question of removal of any trustee when requested to do so by
the record holders of 10% of the outstanding shares of a fund. At such
meeting, a trustee may be removed after the holders of record of not less than
two-thirds of the outstanding shares have declared that the trustee be removed
either by declaration in writing or by votes cast in person or by proxy.
Except as set forth above, the Trustees will continue to hold office and may
appoint successor Trustees. The shares do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the
election of Trustees of a fund can elect all the Trustees of a fund. No
amendment may be made to any fund's Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the fund except
that amendments may be made upon the sole approval of the Trustees to conform
the Declaration of Trust to the requirements of applicable Federal laws or
regulations or the requirements of the regulated investment company provisions
of the Code; however, the Trustees will not be held liable for failing to do
so. If not terminated by the vote or written consent of a majority of the
outstanding shares, each fund will continue indefinitely.
INVESTMENT RESULTS
Each fund may from time to time provide yield information (including CTEX
tax-equivalent yield information) or comparisons of the fund's yield to various
averages in advertisements or in reports furnished to current or prospective
shareholders. Yield will be calculated on a seven-day, tax-equivalent and
effective basis, as appropriate, pursuant to formulas prescribed by the
Securities and Exchange Commission:
Seven-day yield = (net change in account value x 365/7)
Tax-equivalent yield = tax-exempt portion of seven-day yield/(1-stated income
tax rate) + taxable portion of seven day yield
Effective yield* = [1 + (net change in account value) 1/7]365
*The effective yield will assume a year's compounding of the seven-day yield.
CMTA The seven-day and effective yields for the period ended September 30,
1997 are calculated as follows:
ASSUMPTIONS:
Value of hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.0000000
Value of same account* (excluding capital changes) at the end of the
seven-day period ending September 30, 1997 : $1.00097205
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $1.00097205
Less beginning account value: $1.00000000
Net change in account value: $0.00097205
Seven-day yield = (0.00097205 X 365/7) = 5.07%
Effective yield = [1 + (0.00097205) 1/7]365 = 5.20%
CTRS The seven-day and effective yields for the period ended September 30,
1997 are calculated as follows:
ASSUMPTIONS:
Value of hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.0000000
Value of same account* (excluding capital changes) at the end of the
seven-day period ending September 30, 1997: $1.00085396
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $1.00085396
Less beginning account value: $1.00000000
Net change in account value: $0.00085396
Seven-day yield = (0.00085396 X 365/7) = 4.45%
Effective yield = [1 + (0.00085396) 1/7]365 = 4.55%
CTEX The seven-day, effective and tax-equivalent yields for the period ended
September 30, 1997 are calculated as follows:
ASSUMPTIONS:
Value of hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.0000000
Value of same account* (excluding capital changes) at the end of the
seven-day period ending September 30, 1997: $1.0005967
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $1.0005967
Less beginning account value: $1.0000000
Net change in account value: $0.0005967
Tax-exempt portion of net change: $0.0005967
Taxable portion of net change: $ -0-
Seven-day yield = ($0.0005967 X 365/7) = 3.11%
Seven-day tax equivalent yield = ($0.0005967 X 365/7(1-0.396)) = 5.15%
Effective yield = [1 + ($0.0005967) 1/7]365 = 3.16%
Each fund's investment results may also be calculated for longer periods in
accordance with the following method: by subtracting (a) the net asset value
of one share at the beginning of the period, from (b) the net asset value of
all shares an investor would own at the end of the period for the share held at
the beginning of the period (assuming reinvestment of all dividends and
distributions) and dividing by (c) the net asset value per share at the
beginning of the period. The resulting percentage indicates the positive or
negative rate of return that an investor would have earned from reinvested
dividends and distributions and any changes in share price during the period.
Based on the foregoing formula, the lifetime return of CMTA was 363.2% (for the
period 11/3/76 through 9/30/97), the lifetime return of CTEX was 28.4% (for the
period 10/24/89 through 9/30/97), and the lifetime return of CTRS was 30.0%
(for the period 2/1/91 through 9/30/97).
Each fund's investment 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 yield figure should not be considered
representative of what an investment in a fund may earn in any future period.
These factors and possible differences in calculation methods should be
considered when comparing each fund's investment results with those published
for other investment companies, other investment vehicles and averages.
Investment results also should be considered relative to the risks associated
with the investment objective and policies.
CMTA VS. MONEY MARKET FUND AVERAGE ("MMFA") AND BANK AVERAGE ("BA")
The information below permits investors to compare the results of similar
investment vehicles.
<TABLE>
<CAPTION>
5-Year Period CMTA MMFA* BA**
<S> <C> <C> <C>
10/1/92 - 9/30/97 +22.9 +22.9 +17.8
10-Year Period
1987 - 1997 70.7% 69.2% 55.5%
1986 - 1996 72.4 70.3 58.6%
1985 - 1995 75.6 73.1 64.0
1984 - 1994 80.9 78.0 72.0
1983 - 1993 93.6 89.3 83.3
1982 - 1992 105.7 100.0 95.1
1981 - 1991 126.2 118.6 107.8
1980 - 1990 149.2 135.9 117.2
1979 - 1989 159.8 NA 121.3
1978 - 1988 162.0 NA 122.7
1977 - 1987 159.8 NA 123.9
</TABLE>
* BASED ON YIELDS COMPILED BY THE FOLLOWING PUBLICATIONS: FOR FIGURES PRIOR TO
1/1/91, THE SOURCE IS THE MONEY MARKET FUND SURVEY PUBLISHED BY SURVEY
PUBLICATIONS; FOR FIGURES BEGINNING 1/1/91, IBC/DONOGHUE'S MONEY FUND REPORT IS
USED. THESE PUBLICATIONS PROVIDE 30-DAY AVERAGE YIELD FIGURES ON "X" NUMBER OF
MONEY MARKET FUNDS. THIS YIELD FIGURE IS MATHEMATICALLY CONVERTED TO A
PER-SHARE DIVIDEND AMOUNT WHICH IS THEN USED TO PRODUCE HYPOTHETICAL RESULTS
FOR THE AVERAGE MONEY MARKET FUND.
** CALCULATED FROM FIGURES SUPPLIED BY THE U.S. LEAGUE OF SAVINGS INSTITUTIONS
AND THE FEDERAL RESERVE BOARD WHICH ARE BASED ON EFFECTIVE ANNUAL RATES OF
INTEREST ON BOTH PASSBOOK AND CERTIFICATE ACCOUNTS. SAVINGS ACCOUNTS OFFER A
GUARANTEED RETURN OF PRINCIPAL AND A FIXED RATE OF INTEREST BUT NO OPPORTUNITY
FOR CAPITAL GROWTH.
CTEX VS. MONEY MARKET FUND AVERAGE ("MMFA") AND BANK AVERAGE ("BA")
<TABLE>
<CAPTION>
Tax-Exempt
Lifetime Period CTEX MMFA/#/ BA
<S> <C> <C> <C>
10/24/89 - 9/30/97 +28.4% +28.9% +38.0%
</TABLE>
# SAME AS * EXCEPT IT IS FOR TAX-EXEMPT MONEY MARKET FUNDS
CTRS VS. GOVT MONEY MARKET FUND AVERAGE (" GOVT MMFA") AND BANK AVERAGE ("BA")
<TABLE>
<CAPTION>
Lifetime Period CTRS Govt BA
MMFA/@/
<S> <C> <C> <C>
2/1/91 - 9/30/97 +30.0% +31.2% +27.6%
</TABLE>
@ SAME AS * EXCEPT IT IS FOR GOVERNMENT MONEY MARKET FUNDS
DESCRIPTION OF RATINGS FOR DEBT SECURITIES
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S CORPORATION: "A-1" and "A-2" are the two highest commercial
paper rating categories and are described as follows:
"A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong."
"A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
'A-1'."
MOODY'S INVESTORS SERVICE, INC.: "Prime-1" and "Prime-2" are the two highest
commercial paper rating categories and are described as follows:
"ISSUERS RATED PRIME-1 (or related supporting institutions) 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 earning coverage of fixed financial charges and high
internal cash generation.
- - Well established access to a range of financial markets and assured sources
of alternate liquidity."
"ISSUERS RATED PRIME-2 (or related supporting institutions) 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 alternative liquidity is
maintained."
BOND RATINGS
STANDARD & POOR'S CORPORATION: "AAA" and "AA" are the two highest bond rating
categories, and are described as follows:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
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."
MOODY'S INVESTORS SERVICE, INC.: "Aaa" and "Aa" are the two highest bond
rating categories, and are described as follows:
"Bonds 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 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."
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."
<TABLE>
<S> <C> <C> <C>
The Tax-Exempt Money Fund of America
Investment Portfolio, September 30, 1997 Principal Market
Yield at Amount Value
Acquisition (000) (000)
Municipal Securities
- ---------------------------------------------------- ---------------------------------
Alabama - 1.88%
The Industrial Development Board of the City of
Montgomery, Pollution Control and Solid Waste
Disposal Revenue Refunding Bonds (General
Electric Co. Project), Series 1990, TECP:
3.45% 10/16/97 3.45% $1,000 $1,000
3.75% 11/17/97 3.75 2,000 2,000
Alaska - 6.75%
Housing Finance Corporation General
Purpose Bonds, 1991 Series C, VRDN,
4.10%, 10/7/97* 4.10 3,700 3,700
City of Valdez, Marine Terminal Revenue
Refunding Bonds (ARCO Transportation
Alaska, Inc. Project), 1994 Series A, TECP:
3.60% 10/6/97 3.60 2,600 2,600
3.75% 10/8/97 3.75 2,000 2,000
3.60% 10/10/97 3.60 1,000 1,000
3.80% 11/13/97 3.80 1,500 1,500
Arizona - 4.69%
The Industrial Development Authority of the City
of Chandler, Floating Rate Monthly Demand
Industrial Development Revenue Bonds
(Parsons Municipal Services, Inc. Project),
Series 1983, VRDN, 3.80% 10/7/97* 3.80 1,000 1,000
Salt River Project Agricultural Improvement
and Power District, Promissory Notes, TECP:
Series G, 3.50% 10/20/97 3.50 1,000 1,000
Series G, 3.65% 11/7/97 3.65 2,500 2,500
Series G, 3.80% 11/7/97 3.80 3,000 3,000
Arkansas - 1.25%
Board of Trustees of the University of Arkansas
Various Facility Revenue Bonds (UAMS
Campus), Series 1994, VRDN, 4.20% 10/7/97* 4.20 2,000 2,000
California - 3.62%
State Revenue Anticipation Notes,
1997 Series A, 4.50% 6/30/98 3.75 2,850 2,866
County of Los Angeles, 1997-98 Tax and Revenue
Anticipation Notes, Series A, 4.50% 6/30/98 3.85 2,900 2,915
Colorado - 3.51%
State Tax and Revenue Anticipation Notes,
Series 1997A, 4.50% 6/26/98 3.84 1,500 1,508
City and County of Denver, Department of Aviation,
Airport System Subordinate Revenue Bonds AMT:
3.70% 11/3/97 3.70 3,400 3,400
3.85% 11/3/97 3.85 700 700
Connecticut - 1.25%
State Health and Educational Facilities Authority,
Revenue Bonds, Yale University, Series S,
3.60% 10/8/97 3.60 2,000 2,000
Florida - 6.33%
Sunshine State Governmental Financing
Commission Revenue Bonds, TECP:
Series L, 3.70% 10/17/97 3.70 1,000 1,000
Series G:
3.65% 10/17/97 3.65 3,600 3,600
3.80% 11/17/97 3.80 1,220 1,220
Jacksonville Electric Authority Electric System,
Series D-1, TECP, 3.40% 10/14/97 3.40 4,300 4,300
Hawaii - 4.13%
City and County of Honolulu General Obligation
Bond Anticipation Notes, TECP:
3.65% 10/3/97 3.65 3,300 3,300
3.65% 10/10/97 3.65 3,300 3,300
Indiana - 2.44%
City of Mount Vernon, Pollution Control and Solid
Waste Disposal Revenue Refunding Bonds
(General Electric Co. Project), Series 1989A:
3.60% 10/14/97 3.60 1,000 1,000
3.50% 10/16/97 3.50 2,900 2,900
Kansas - 3.50%
City of Burlington Pollution Control Refunding
and Improvement Revenue Bonds (Kansas City
Power & Light Co. Project), TECP:
1985 Series A 3.55% 10/7/97 3.55 3,300 3,300
1987 Series A 3.45% 10/1/97 3.45 1,300 1,300
1987 Series B 3.40% 11/3/97 3.40 1,000 1,000
Kentucky - 3.62%
Pendleton County, Multi-County Lease
Revenue Bonds (Kentucky Association of
Counties Leasing Trust Program), Series
1989, Money Market Municipal:
3.75% 10/23/97 3.75 2,785 2,785
3.80% 11/14/97 3.80 3,000 3,000
Louisiana - 2.75%
Parish of Ascension, Variable Rate Demand
Pollution Control Revenue Refunding Bonds
(Borden, Inc. Project), Series 1992,
VRDN, 4.10% 10/7/97* 4.10 3,000 3,000
Lake Charles Harbor and Terminal District,
Flexible Demand Port Facilities Revenue
Bonds (CITGO Petroleum Corp. Project),
Series 1984, VRDN, 4.15% 10/7/97* 4.15 1,400 1,400
Maryland - 5.00%
Anne Arundel County Economic Development
Revenue Bonds (Baltimore Gas and Electric
Co. Project):
Series 1988, TECP AMT:
3.85% 11/12/97 3.85 2,000 2,000
3.85% 11/14/97 3.85 1,000 1,000
Series 1985, TECP, 3.75% 11/5/97 3.75 1,000 1,000
Montgomery County Consolidated Commercial Paper
Bond Anticipation Notes, Series 1995, TECP,
3.45% 10/2/97 3.45 4,000 4,000
Massachusetts - 5.82%
Dedicated Income Tax Bonds, Fiscal Recovery Loan Act
of 1990, Series B, 3.80% 12/1/97 3.80 800 800
Health and Educational Facilities Authority
Revenue Bonds, Harvard University Issue,
Series L, TECP:
3.55% 10/9/97 3.55 5,200 5,200
3.55% 10/24/97 3.55 1,000 1,000
Water Resources Authority, Series 1994, TECP:
3.60% 10/7/97 3.60 1,300 1,300
3.65% 10/7/97 3.65 1,000 1,000
Missouri - 5.63%
Higher Education Loan Authority, Adjustable
Rate Demand Student Loan Revenue Bonds, VRDN AMT:
Series 1990 A, 4.10% 10/7/97* 4.10 1,600 1,600
Series 1990 B, 4.10% 10/7/97* 4.10 1,000 1,000
City of Columbia, Special Obligation
Insurance Reserve Bonds, Series 1988 A,
VRDN, 4.15% 10/7/97* 4.15 1,000 1,000
City of Independence, Variable Rate Demand
Water Utility Revenue Bonds, Series 1986, TECP:
3.50% 10/6/97 3.50 4,000 4,000
3.60% 11/6/97 3.60 1,400 1,400
North Carolina - 4.56%
Educational Facilities Finance Agency, Revenue
Bonds (Duke University Project), VRDN:
Series 1992 A, 4.00% 10/7/97* 4.00 1,000 1,000
Series 1991 D, 4.00% 10/7/97* 4.00 1,800 1,800
Eastern Municipal Power Agency, TECP:
3.40% 11/4/97 3.40 2,000 2,000
3.40% 11/4/97 3.40 500 500
Municipal Power Agency No. 1, Catawba Electric
Revenue Bonds, TECP, MBIA Insured:
3.80% 11/10/97 3.80 1,000 1,000
3.80% 11/13/97 3.80 1,000 1,000
Ohio - 2.19%
Air Quality Development Authority, Pollution
Control Revenue Bonds, Series 1988
(Duquesne Light Co. Project), TECP AMT,
3.65% 10/15/97 3.65 1,000 1,000
Water Development Authority, Pollution Control
Revenue Bonds, Series 1988 (Duquesne Light Co.
Project), TECP AMT,
3.75% 11/10/97 3.75 2,500 2,500
Pennsylvania - 10.48%
Higher Education Assistance Agency Student Loan
Adjustable Rate Revenue Bonds, 1997 Series A,
VRDN, AMT, 4.10% 10/7/97* 4.10 2,000 2,000
Allegheny County Industrial Development
Authority, Customized Purchase Environmental
Improvement Revenue Refunding Bonds (United
States Steel Corp. Project), Series 1986, TECP,
3.55% 10/7/97 3.55 1,000 1,000
Beaver County Industrial Development Authority,
Pollution Control Revenue Refunding Bonds
(Duquesne Light Co. Beaver Valley Project),
1990 Seires C, TECP, 3.60% 11/6/97 3.60 3,000 3,000
Carbon County Industrial Development Authority,
Resource Recovery Revenue Bonds (Panther Creek
Partners Project), 1990 Series B, TECP AMT,
3.60% 10/24/97 3.60 1,250 1,250
Delaware County Industrial Development Authority
Solid Waste Revenue Bonds (Scott Paper Co. Project),
Series 1984 D, VRDN, 4.00% 10/7/97* 4.00 1,000 1,000
Montgomery County Industrial Development Authority
Pollution Control Revenue Refunding Bonds (PECO
Energy Co. Project), 1994 Series A, TECP,
3.50% 11/5/97 3.50 3,000 3,000
School District of Philadelphia, Tax
and Revenue Anticipation Notes,
Series of 1997-1998, 4.50% 6/30/98 3.95 1,500 1,507
Venango Industrial Development Authority
Resource Recovery Revenue Bonds (Scrubgrass
Project), TECP AMT:
Series A 3.70% 10/3/97 3.70 3,000 3,000
Series B 3.75% 10/2/97 3.75 1,000 1,000
Texas - 5.95%
City of Austin (Travis and Williamson Counties),
Combined Utility Systems Notes, TECP, Series A:
3.60% 10/1/97 3.60 2,600 2,600
3.60% 10/15/97 3.60 1,000 1,000
3.55% 10/1/97 3.55 1,100 1,100
Brazos Higher Education Authority, Inc. Student
Loan Revenue Bonds, Series 1993B-1, VRDN, AMT,
4.20% 10/7/97* 4.20 1,000 1,000
City of Houston, Tax and Revenue Anticipation
Notes, Series 1997, 4.50% 6/30/98 3.85 2,800 2,815
Lower Neches Valley Authority Pollution Control
Revenue Bonds (Chevron U.S.A. Inc. Project),
Series 1987, 3.50% Optional Put 2/17/98* 3.50 1,000 1,000
Utah - 4.75%
Board of Regents, Student Loan Revenue Bonds, 1988
Series C, AMBAC Insured, VRDN, AMT, 4.10% 10/7/97* 4.10 1,100 1,100
Intermountain Power Agency:
Variable Rate Power Supply Revenue Bonds,
1985 Series F, 3.93% Optional Put 6/15/98* 3.93 3,000 3,003
Variable Rate Power Supply Revenue and Refunding
Bonds, TECP:
1985 Series F2, 3.70% 10/14/97 3.70 2,500 2,500
1985 Series F2, 3.60% 11/6/97 3.60 1,000 1,000
Virginia - 1.31%
Industrial Development Authority of Fairfax
County, Unit Priced Demand Adjustable Hospital
Revenue Bonds (Inova Health System Hospitals
Project), Series 1993B, TECP,
3.65% 10/3/97 3.65 1,000 1,000
Industrial Development Authority of the City
of Norfolk, Hospital Revenue Bonds (Sentara
Hospitals-Norfolk Project), Series 1990A,
TECP, 3.55% 10/22/97 3.55 1,100 1,100
Washington - 2.56%
Student Loan Finance Association,
Guaranteed Student Loan Program, 1988
Series B, VRDN, AMT, 3.90% 10/7/97* 3.90 1,000 1,000
Port of Seattle, General Obligation Bonds,
Series 1985, VRDN, 4.10% 10/7/97* 4.10 3,100 3,100
West Virginia - 3.41%
The County Commission of Marion County, Solid
Waste Disposal Facility Revenue Bonds, 1990
Series A (Grant Town Cogeneration Project),
VRDN, AMT, 4.25% 10/7/97* 4.25 1,700 1,700
Public Energy Authority, Energy Revenue Bonds
(Morgantown Energy Associates Project),
1989 Series A, TECP, AMT:
3.70% 10/8/97 3.70 1,000 1,000
3.80% 10/21/97 3.80 1,750 1,750
3.60% 10/23/97 3.60 1,000 1,000
Wyoming - 1.88%
City of Gillette, Campbell County,
Pollution Control Revenue Bonds
(PacifiCorp Projects), Series 1988,
TECP, 3.65% 11/12/97 3.65 1,000 1,000
Sweetwater County Pollution Control
Revenue Bonds (PacifiCorp Projects),
Series 1990A, VRDN, 4.00% 10/7/97* 4.00 2,000 2,000
---------
Total Tax-Exempt Securites (Cost: $158,710,000) 158,719
Excess of cash and receivables over payables 1,188
---------
Net Assets 159,907
=========
* Coupon rate may change periodically; "yield at acquisition"
reflects current coupon rate.
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C>
The Tax-Exempt Money Fund of America
Financial Statements
- ------------------------------------- ------------ ------------
Statement of Assets and Liabilities
at September 30, 1997 (dollars in thousands)
- ------------------------------------- ------------ ------------
Assets:
Investment securities at market
(cost: $158,710) $158,719
Cash 297
Receivables for--
Sales of fund's shares $1,848
Accrued interest 732 2,580
------------ ------------
161,596
Liabilities:
Payables for--
Repurchases of fund's shares 1,579
Dividends payable 30
Management services 61
Accrued expenses 19 1,689
Accrued expenses 0
------------ ------------
Net Assets at September 30, 1997 -
Equivalent to $1.00 per share on
159,901,968 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $159,907
=============
Statement of Operations
for the year ended September 30, 1997 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Interest $ 5,652
Expenses:
Management services fee $699
Distribution expenses 94
Transfer agent fee 143
Reports to shareholders 52
Registration statement and prospectus 60
Postage, stationery and supplies 43
Trustees' fees 14
Auditing and legal fees 30
Custodian fee 8
Taxes other than federal income tax 4
Other expenses 27
------------------
Total expenses before reimbursement 1,174
Reimbursement of expenses 140 1,034
------------ ------------
Net investment income 4,618
------------
Realized Loss and Increase in
Unrealized
Appreciation on Investments:
Net realized loss (5)
Net increase in unrealized appreciation
on investments:
Beginning of year 6
End of year 9
------------
Increase in unrealized
appreciation on investments 3
------------
Net realized loss and increase in
unrealized appreciation on
investments (2)
------------
Net Increase in Net Assets
Resulting from Operations $4,616
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Year Ended September 30
1997 1996
Operations: ------------- -------------
Net investment income $ 4,618 $ 4,218
Net realized (loss) gain (5) 5
Net change in unrealized
appreciation on investments 3 13
------------- -------------
Net increase in net assets
resulting from operations 4,616 4,236
------------- -------------
Dividends Paid to Shareholders (4,618) (4,218)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
308,684,562 and 225,676,042
shares, respectively 308,684 225,676
Proceeds from shares issued in
reinvestment of net investment
income dividends:
4,217,106 and 3,845,965 shares,
respectively 4,217 3,846
Cost of shares repurchased:
296,711,176 and 236,244,699
shares, respectively (296,711) (236,243)
------------- ------------
Net increase (decrease) in net assets
resulting from capital share
transactions 16,190 (6,721)
------------- ------------
Total Increase (Decrease) in Net Assets 16,188 (6,703)
Net Assets:
Beginning of year 143,719 150,422
------------- ------------
End of year $159,907 $143,719
============= ============
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. The Tax-Exempt Money Fund of America (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks to provide income free from federal taxes,
while preserving capital and maintaining liquidity, through investments in
high-quality municipal securities with effective maturities of one year or
less. The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
The fund uses the penny-rounding method of valuing its shares, in accordance
with Securities and Exchange Commission (SEC) rules. This method permits the
fund to maintain a constant net asset value of $1.00 per share, provided the
market value of the fund's shares does not deviate from $1.00 by more than
one-half of 1% and the fund complies with other restrictions set forth in the
SEC rules.
Securities having 60 days or less to maturity are amortized to maturity based
on their cost if acquired within 60 days of maturity or, if already held on the
60th day, based on the value determined on the 61st day. All other
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. 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 Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Discounts and
premiums on securities purchased are amortized. Dividends to shareholders are
declared daily after the determination of the fund's net investment income and
paid to shareholders monthly.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of September 30, 1997, unrealized appreciation for book and federal income
tax purposes aggregated $9,000, all of which related to appreciated securities.
There was no difference between book and tax realized gains on securities
transactions for the year ended September 30, 1997. During the year ended
September 30, 1997, the fund realized, on a tax basis, a net capital loss of
$5,000 on sales of securities. The cost of portfolio securities for book and
federal income tax purposes was $158,710,000 at September 30, 1997.
3. The fee of $699,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Trustees of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.44% of the first $200 million of average net assets;
0.42% of such assets in excess of $200 million but not exceeding $600 million;
0.38% of such assets in excess of $600 million but not exceeding $1.2 billion;
and 0.34% of such assets in excess of $1.2 billion.
The Investment Advisory and Service Agreement provides for fee reductions to
the extent that annual operating expenses exceed 0.75% of the average net
assets of the fund during a period which will terminate at the earlier of such
time as no reimbursement has been required for a period of 12 consecutive
months, provided no advances are outstanding, or October 2, 1999. CRMC has also
voluntarily agreed to waive its fees to the extent necessary to ensure that the
fund's expenses do not exceed 0.65% of the average net assets. Expenses that
are not subject to these limitations are interest, taxes, brokerage
commissions, transaction costs and extraordinary expenses. There can be no
assurance that this voluntary fee waiver will continue in the future. Fee
waivers amounted to $140,000 for the year ended September 30, 1997.
Pursuant to a Plan of Distribution with American Funds Distributors, Inc.
(AFD), the fund may expend up to 0.15% 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 Trustees. Fund expenses under the Plan include payments to
dealers to compensate them for their selling and servicing efforts. During the
year ended September 30, 1997, distribution expenses under the Plan were
$94,000. As of September 30, 1997, accrued and unpaid distribution expenses
were $6,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $143,000.
Trustees 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 September 30,
1997, aggregate amounts deferred and earnings thereon were $19,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Trustees 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. The fund made purchases and sales of investment securities of $947,178,000
and $930,581,000, respectively, during the year ended September 30, 1997.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $8,000 includes no amounts paid by these credits rather
than in cash.
Report of Independent Accountants
To the Board of Trustees and Shareholders of The Tax-Exempt Money Fund of
America:
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 Money Fund of
America (the "fund") at September 30, 1997, the results of its operations, the
changes in its net assets and the per-share data and ratios for the periods
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 September 30, 1997
by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Los Angeles, California
October 31, 1997
1997 Tax Information (Unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions.
Dividends received by retirement plans such as IRAs, Keogh-type plans, and
403(b) plans need not be reported as taxable income. However, many retirement
trusts may need this information for their annual information reporting.
Shareholders may exclude from federal taxable income any exempt-interest
dividends paid from net investment income. All distributions paid by the fund
during the fiscal year ended September 30, 1997 were exempt-interest
distributions within the meaning of Section 852(b)(5)(A) of the Internal
Revenue Code.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FISCAL YEAR AND NOT THE CALENDAR
YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099- DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 1998 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1997 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
<TABLE>
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA AND RATIOS
- ------------------------------------------------------ ------------------------ ----------------
Year ended September 30
------------------------ ----------------
1997 1996 1995 1994 1993
------------------------ ----------------
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
------------------------ ----------------
Income from Investment Operations:
Net investment income .029 .029 .031 .020 .019
------------------------ ----------------
Total income from investment operations .029 .029 .031 .020 .019
------------------------ ----------------
Less Distributions:
Dividends from net investment income (.029) (.029) (.031) (.020) (.019)
------------------------ ----------------
Total distributions (.029) (.029) (.031) (.020) (.019)
------------------------ ----------------
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total Return 2.94% 2.91% 3.14% 1.98% 1.90%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $160 $144 $150 $170 $121
Ratio of expenses to average net assets -
before fee waiver .74% .77% .75% .73% .79%
Ratio of expenses to average net assets -
after fee waiver .65% .65% .65% .65% .65%
Ratio of net income to average net assets 2.94% 2.88% 3.09% 1.99% 1.88%
</TABLE>
PART C
THE TAX-EXEMPT MONEY FUND OF AMERICA
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio Notes to Financial Statements
Statement of Assets and Liabilities Per-Share Data and Ratios
Statement of Operations Independent Accountants Report
Statement of Changes in Net Assets
(B) EXHIBITS:
1. Copy of Declaration of Trust (December 2, 1988) and copy of Certificate
of Amendment of Declaration of Trust (December 19, 1988).
2. Copy of By-laws.
3. None.
4. None.
5. Copy of Investment Advisory and Service Agreement dated October 2,
1989.
6. Copy of Principal Underwriting Agreement dated October 2, 1989, form of
Selling Group Agreement, Supplemental Selling Group Agreement, Bank Selling
Group Agreement, Hold Harmless Agreement, and State Addendum to Selling Group
Agreement.
7. None.
8. Copy of form of Global Custody Agreement.
9. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
10. Not applicable to this filing
11. Consent of Independent Accountants
12. None.
13. Copy of investment letter from the Investment Adviser relating to
initial shares dated September 26, 1989.
14. Copies of model plans.
15. Copy of Plan of Distribution (12b-1) dated October 2, 1989.
16. On file (see SEC file No. 33-26431)
17. Financial data schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of September 30, 1997
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Shares of beneficial 5,299
interest (no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under investment advisor/mutual fund errors
and omissions policies written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company and ICI Mutual Insurance
Company which insures its officers and Trustees against certain liabilities.
However, in no event will Registrant maintain insurance to indemnify any such
person for any act for which Registrant itself is not permitted to indemnify
the individual.
Article VI of the Trust's By-Laws states:
(a) The Trust shall indemnify any Trustee or officer of the Trust who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Trust) by reason
of the fact that such person is or was such Trustee or officer or an employee
or agent of the Trust, or is or was serving at the request of the Trust as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person reasonably believed
to be opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that such person is or was such Trustee or
officer or an
ITEM 27. INDEMNIFICATION (CONTINUED)
employee or agent of the Trust, or is or was serving at the request of the
Trust as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Trust, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of such person's duty to the Trust unless and only to the extent
that the court in which such action or suit was brought, or any other court
having jurisdiction in the premises, shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been
successful on the merits in defense of any action, suit or proceeding referred
to in subparagraphs (a) or (b) above or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
therewith, without the necessity for the determination as to the standard of
conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless ordered by a
court) shall be made by the Trust only as authorized in the specific case upon
a determination that indemnification of the Trustee or officer is proper in the
circumstances because such person has met the applicable standard of conduct
set forth in subparagraph (a) or (b). Such determination shall be made (i) by
the Board by a majority vote of a quorum consisting of Trustees who were not
parties to such action, suit or proceeding, or (ii) if such a quorum of
disinterested Trustees so directs, by independent legal counsel in a written
opinion; and any determination so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action, writ or
proceeding may be paid by the Trust in advance of the final disposition of such
action, suit or proceeding, as authorized in the particular case, upon receipt
of an undertaking by or on behalf of the Trustee or officer to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Trust as authorized herein. Such determination must be
made by disinterested trustees or independent legal counsel.
(f) Agents and employees of the Trust who are not Trustees or officers of the
Trust may be indemnified under the same standards and procedures set forth
above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled and shall
continue as to a person who has ceased to be a Trustee or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ITEM 27. INDEMNIFICATION (CONTINUED)
(h) Nothing in the Declaration or in these By-Laws shall be deemed to protect
any Trustee or officer of the Trust against any liability to the Trust or to
its shareholders to which such person would otherwise be subject by reason of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office.
(i) The Trust shall have power to purchase and maintain insurance on behalf of
any person against any liability asserted against or incurred by such person,
whether or not the Trust would have the power to indemnify such person against
such liability under the provisions of this Article. Nevertheless, insurance
will not be purchased or maintained by the Trust if the purchase or maintenance
of such insurance would result in the indemnification of any person in
contravention of any rule or regulation of the Securities and Exchange
Commission.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, officer of controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income 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., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of
America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Van Nuys, CA 91301
John A. Agar Regional Vice President None
1501 N. University,
Suite 227A
Little Rock, AR
72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard L. Armstrong Assistant Vice None
President
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
B Carl R. Bauer Assistant Vice None
President
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS
66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Michael L. Brethower Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
C. Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
L Daniel C. Brown Senior Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Senior Vice President None
Cassin
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, Senior Vice None
President
Ruth M. Collier Vice President None
145 West 67th St., Ste. 12K
New York, NY 10023
S David Coolbaugh Assistant Vice None
President
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
325 E. Eisenhower Parkway
Suite 106, #16
Ann Arbor, MI 48103 48108
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
L Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director Chairman of the Board
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
L Robert L. Johansen Vice President, None
Controller
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue,
36th Floor
New York, NY 10111-0121
B Damien M. Jordan Vice President None
V. John Kriss Senior Vice President None
P. O. Box 247
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
1940 Blake Street, Suite 303
Denver, CO 80202
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - None
Institutional
Investment Services
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Steve A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 90121
L J. Clifton Massar Director, Senior Vice None
President
L E. Lee McClennahan Senior Vice President None
L Jamie R. McCrary Assistant Vice None
President
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - None
Institutional
Investment Services
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
P.O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge
Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
B Candance D. Pilgrim Assistant Vice None
President
Carl S. Platou Regional Vice President None
4021 96th Avenue,
S.E.
Mercer Island, WA
98040
L John O. Post Vice President None
S Richard P. Prior Assistant Vice None
President
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30008 Oakland Hills Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Point Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joseph D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
L Daniel B. Seivert Assistant Vice President None
L R. Michael Shanahan Director None
David W. Short Director, Senior Vice None
President
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
William P. Simon, Senior Vice President None
Jr.
554 Canterbury Lane
Berwyn, PA 19312
L John C. Smith Vice President - None
Institutional
Investment Services
L Mary E. Smith Vice President - None
Institutional Investment Services
Rodney G. Smith Vice President None
100 N. Central Expressway, Suite 1214
Richardson, TX 75080
Nicholas D. Regional Vice President None
Spadaccini
855 Markley Woods
Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice None
President
Daniel S. Spradling Senior Vice President None
4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Vice President None
31641 Saddletree
Drive
Westlake Village, CA
91361
L Drew W. Taylor Assistant Vice None
President
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
H Andrew J. Ward Vice President
None
L David M. Ward Vice President - None
Institutional
Investment Services
Thomas E. Warren Regional Vice President None
1701 Starling Drive
Sarasota, FL 34231
L J. Kelly Webb Senior Vice President, None
Treasurer
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
N. Dexter Williams Senior Vice President None
25 Whitside Court
Danville, CA 94526
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice None
President
L Robert L. Winston Director, Senior Vice None
President
Laurie B. Wood Regional Vice President None
3500 W. Camino de Urania
Tucson, AZ 85741
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN
55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
320 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
_____________________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92621
S Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the Trust and its investment adviser, Capital Research and
Management Company, 333 South Hope Street, Los Angeles, CA 90071. Certain
accounting records are maintained and kept in the offices of the Fund's
accounting department, 135 South State College Blvd., Brea, CA 92821.
Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92821 and 8000 IH-10 West, Suite 1400, San Antonio, TX 78230, 5300 Robin Hood
Road, Norfolk, VA 23514 and 8332 Woodfield Crossing Blvd., Indianapolis, IN
46240.
Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, New
York, 10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the prospectus, the fund undertakes to provide each person
to whom a prospectus is delivered with a copy of the fund's latest annual
report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on the 25th
day of November, 1997.
THE TAX-EXEMPT MONEY FUND OF AMERICA
By /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr., Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this amendment to
registration statement has been signed below on November 25, 1997, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Paul G. Haaga, Jr. Chairman of the
Board
Paul G. Haaga, Jr.
(2) Principal Financial Officer and Principal Accounting
Officer:
/s/ Anthony W. Hynes, Jr. Treasurer
Anthony W. Hynes, Jr.
(3) Trustees:
H. Frederick Christie* Trustee
Don R. Conlan* Trustee
Diane C. Creel* Trustee
Martin Fenton, Jr.* Trustee
Leonard R. Fuller* Trustee
/s/ Abner D. Goldstine Trustee
Abner D. Goldstine
/s/ Paul G. Haaga, Jr. Chairman of the
Board
Paul G. Haaga, Jr.
Herbert Hoover III* Trustee
Richard G. Newman* Trustee
Peter C. Valli* Trustee
</TABLE>
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
/s/ Michael J. Downer
Michael J. Downer
DECLARATION OF TRUST
OF
THE TAX-EXEMPT CASH FUND OF AMERICA
TABLE OF CONTENTS
Article Page
I. NAME AND DEFINITIONS 2
1.1 Name 2
1.2 Definitions 2
1.3 Purpose 5
II. TRUSTEES 5
2.1 Number of Trustees 5
2.2 Term and Election 6
2.3 Resignation and Removal by Trustees 6
2.4 Removal by Shareholders 6
2.5 Vacancies 7
2.6 Delegation of Power to Other Trustees 8
III. POWERS OF TRUSTEES 8
3.1 General 8
3.2 Investments 9
3.3 Legal Title 10
3.4 Issuance and Repurchase of Shares 10
3.5 Delegation; Committees 11
3.6 Collection and Payment 11
3.7 Expenses 11
3.8 Manner of Acting 11
3.9 By-Laws 11
3.10 Miscellaneous Powers 12
3.11 Principal Transactions 13
3.12 Trustees and Officers as Shareholders 13
3.13 Litigation 13
IV. CONTRACTS 13
4.1 Underwriting Contract 13
4.2 Investment Advisory or Management Contract 14
4.3 Transfer Agent 14
4.4 Affiliations of Trustees or Officers, etc. 15
Article Page
V. LIMITATIONS OF LIABILITY OF
SHAREHOLDERS, TRUSTEES AND OTHERS 15
5.1 No Personal Liability of Shareholders,
Trustees, etc. 15
5.2 Non-Liability of Trustees, etc. 16
5.3 No Bond Required of Trustees 16
5.4 No Duty of Investigation; Notice in Trust
Instruments, etc. 16
5.5 Reliance on Experts, etc. 17
VI. SHARES OF BENEFICIAL INTEREST 17
6.1 Beneficial Interest 17
6.2 ights of Shareholders 18
6.3 Trust Only 18
6.4 Issuance of Shares 19
6.5 Register of Shares; Share Certificates 19
6.6 Transfer of Shares 19
6.7 Notices 20
6.8 Treasury Shares 20
6.9 Voting Powers 20
6.10 Establishment of Fund; Series or Classes
of Shares 21
VII. REDEMPTION, REPURCHASE, AND REDUCTION OF SHARES 25
7.1 Redemption of Shares 25
7.2 Price 25
7.3 Payment 26
7.4 Repurchase by Agreement 26
7.5 Redemption of Shareholder's Interest;
Redemption of Shares to Qualify as a
Regulated Investment Company; Disclosure of
Holdings 26
7.6 Suspension of Right of Redemption 26
7.7 Effect of Suspension of Determination of
Net Asset Value 27
7.8 Reductions of Shares 28
Article Page
VIII. DETERMINATION OF NET ASSET VALUE,
NET INCOME, AND DISTRIBUTIONS 28
8.1 Net Asset Value 28
8.2 Distributions With Respect to Outstanding
Shares 28
8.3 Determination of Net Income; Constant Net
Asset Value of Shares of Certain Series or
Classes; Reduction of Outstanding Shares 29
8.4 Power to Modify Foregoing Procedures 30
IX. DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS; ETC. 30
9.1 Duration 30
9.2 Termination of Trust 30
9.3 Amendment Procedure 31
9.4 Merger, Consolidation or Sale of Assets 32
9.5 Incorporation 32
X. MISCELLANEOUS 33
10.1 Filing 33
10.2 Resident Agent 33
10.3 Governing Law 34
10.4 Counterparts 34
10.5 Reliance by Third Parties 34
10.6 Provisions in Conflict With Law or
Regulations 34
10.7 Index and Heading for Reference Only 35
DECLARATION OF TRUST
OF
THE TAX-EXEMPT CASH FUND OF AMERICA
Dated December 2, 1988
DECLARATION OF TRUST made December 2, 1988 by Michael J. Downer, David M.
Elwood and Paul G. Haaga, Jr. (the "Trustees");
WHEREAS, it is desired that the trust established hereby (the "Trust") be
managed and operated as a trust with transferable shares under the laws of
Massachusetts, of the type commonly known as and referred to as a Massachusetts
business trust, in accordance with the provisions hereinafter set forth;
WHEREAS, it is proposed that the assets held by the Trustees may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes, and that the beneficial interest
in each such fund when and if established shall be divided into transferable
Shares of Beneficial Interest, a separate Series of Shares for each fund, all
in accordance with the provisions hereinafter set forth; and
WHEREAS, it is proposed that the shares of the Trust of each separate
Series may be further divided into classes of Shares, with each such Class
differing from other classes representing interests in the same Fund in respect
of expenses and fees or such other matters as the Trustees shall determine;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the Shares of
Beneficial Interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1 - Name.
The name of the Trust created hereby is "The Tax-Exempt Cash Fund of
America."
SECTION 1.2 - Definitions.
Wherever they are used herein, the following terms have the following
respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof,
as such By-Laws may be amended from time to time.
(b) A "Class of Shares" means all Shares of Beneficial Interest
representing interests in the same Fund and subject to the same fees and
expenses charged against the income of the Fund and such other provisions as
may be designated by the Trustees in establishing such Class. Classes may be
established from time to time by the Trustees hereunder and may differ from
other Classes in the same Fund with respect to the expenses and fees charged to
each such Class or as to such other matters as the Trustees shall determine in
establishing each such Class, but Classes in the same Fund shall in each case
represent interests in the same Trust Property.
(c) The terms "Commission" and "Interested Person", have the
meanings given them in the 1940 Act.
(d) "Custodian" means any Person other than the Trust who has
custody of any Trust Property as required by Section 17(f) of the 1940 Act.
(e) "Declaration" means this Declaration of Trust as amended from
time to time. Reference in this Declaration to "Declaration", "hereof",
"herein" and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(f) "Distributor" means the other person to any contract entered
into by the Trust pursuant to Section 4.1 hereof.
(g) "Fund" or "Funds" means one or more of the separate components
of the Trust Property which are now or hereafter established and designated
under or in accordance with the provisions of Article 6.10 hereof.
(h) "Fundamental Policies" means the investment restrictions set
forth and identified as such in the current registration statement of the Trust
under the 1940 Act.
(i) "His" shall be deemed to include the feminine and neuter, as
well as the masculine, genders.
(j) "Investment Adviser" means the other Person to any contract
entered into by the Trust pursuant to Section 4.2 hereof.
(k) The "1940 Act" means the Investment Company Act of 1940, and the
rules and regulations thereunder, both as amended from time to time, and any
order or orders thereunder which may from time to time be applicable to the
Trust.
(l) "Majority Shareholder Vote" as used with respect to the election
of any Trustee at a meeting of Shareholders, shall mean the vote for the
election of such Trustee of a plurality of all outstanding Shares of the Trust,
without regard to Series or Class, represented in person or by proxy and
entitled to vote thereon, provided that a quorum (as determined in accordance
with the By-Laws) is present, and as used with respect to any other action
required or permitted to be taken by Shareholders, shall mean the vote for such
action of the holders of that majority of all outstanding Shares of the Trust
(or, where a separate vote of Shares of any particular Series or Class is to be
taken, the affirmative vote of that majority of the outstanding Shares of that
Series or Class) which consists of: (i) a majority of all Shares (or of Shares
of the particular Series or Class) represented in person or by proxy and
entitled to vote on such action at the meeting of Shareholders at which such
action is to be taken, provided that a quorum (as determined in accordance with
the By-Laws) is present; or (ii) if such action is to be taken by written
consent of Shareholders, a majority of all Shares (or of Shares of the
particular Class or Series) issued and outstanding and entitled to vote on such
action; provided, that (iii) as used with respect to any action requiring the
affirmative vote of "a majority of the outstanding voting securities", as the
quoted phrase is defined in the 1940 Act, of the Trust or of any Series or
Class, "Majority Shareholder Vote" means the vote for such action at a meeting
of Shareholders of the smallest majority of all outstanding Shares of the Trust
(or of Shares of the particular Class or Series entitled to vote on such
action) which satisfies such 1940 Act voting requirement.
(m) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, and other entities, whether
or not legal entities, governments and agencies and instrumentalities and
political subdivisions thereof, and quasi-governmental agencies and
instrumentalities.
(n) "Prospectus" means the prospectus of the Trust effective from
time to time under the Securities Act of 1933, as amended from time to time.
(o) "Securities" shall include, without limitation, common and
preferred stocks; American Depository Receipts, futures and related options,
options on securities or indices of securities, certificates of deposit,
finance paper, commercial paper, bankers' acceptances; all kinds of repurchase
agreements and reverse repurchase debentures; bills; notes; other evidences of
indebtedness; negotiable or non-negotiable instruments; government securities,
including, without limitation, securities of the United States or any other
government, any state, municipality or other political subdivision thereof, or
any governmental or quasi-governmental agency or instrumentality.
(p) "Series" means one or more of the series of Shares authorized by
the Trustees to represent the entire beneficial interest in one or more of the
Funds. Shares of any Series may be classified or reclassified by the Trustees
into one or more Classes of Shares.
(q) "Shareholder" means a record owner of outstanding Shares of
Beneficial Interest of any Class of any Series.
(r) "Shares" means the equal proportionate transferable units of
interest of each Class and of each Series into which the beneficial interest in
the Trust shall be classified or reclassified from time to time by the Trustees
acting under this Declaration of Trust, or in the absence of such action, means
the equal proportionate transferable units of interest into which the entire
beneficial interest in the Trust shall be divided from time to time, and
includes fractions of Shares as well as whole Shares. All references herein to
"Shares" which are not accompanied by a reference to any particular Series or
Class shall be deemed to apply to outstanding shares without regard to Series
or Class. "Outstanding" Shares means those Shares shown from time to time on
the books of the Trust or its Transfer Agent as then issued and outstanding,
but shall not include Shares which have been redeemed or repurchased by the
Trust and which are at the time held in the Treasury of the Trust.
(s) "Transfer Agent" means the other Person to any contract entered
into by the Trust pursuant to Section 4.3 hereof.
(t) "Trust" means the Trust created by this Declaration.
(u) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees as such, without regard to the Fund to which such
property is allocated, but shall not include property owned by the Trustees as
individuals.
(v) "Trustees" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be serving as Trustees in
accordance with the provisions of Article II hereof, and reference herein to a
Trustee or the Trustees shall refer to such Person or Persons in his capacity
as Trustee or their capacities as Trustees hereunder and not in his or their
individual capacities except where the context otherwise requires.
SECTION 1.3 - Purpose.
The purpose of the Trust shall be to engage in the business of being an
investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and otherwise disposing
of, and turning to account, realizing upon and generally dealing in and with,
in any manner, Securities of all kinds, and all as the Trustees in their
discretion shall determine to be necessary, desirable or appropriate, and to
exercise and perform any and every act, thing or power necessary, suitable or
desirable for the accomplishment of such purpose, the attainment of any of the
objectives or the furtherance of any of the powers given hereby which are
lawful purposes, objectives or powers of a trust with transferable shares of
the type commonly termed a Massachusetts business trust; and to do every other
act or acts or thing or things incidental or appurtenant to or growing out of
or in connection with the aforesaid objectives, purposes or powers, or any of
them, which a trust of the type commonly termed a Massachusetts business trust
is not now or hereafter prohibited from doing, exercising or performing.
ARTICLE II
TRUSTEES
SECTION 2.1 - Number of Trustees.
The number of Trustees shall be such number as shall be fixed from time to
time by written instrument signed by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be reduced to less than
three by such an instrument.
SECTION 2.2 - Term and Election.
The Trustees shall (except in the event of resignations or removals or
vacancies pursuant to Sections 2.3 or 2.4 or 2.5 hereof) hold office during the
lifetime of the Trust and until its termination as hereinafter provided. The
Trustees shall be elected by the Shareholders of the Trust at the first meeting
of Shareholders prior to the initial public offering of Shares of the Trust,
and the term of office of any Trustees in office before such election shall
terminate at the time of such election. Subject to Section 16(a) of the 1940
Act and to the preceding sentence of this Section, the Trustees shall have the
power to set and alter the terms of office of the Trustees, and at any time to
lengthen or shorten their own terms or make their terms of unlimited duration,
to elect their own successors and, pursuant to Section 2.5 hereof, to appoint
Trustees to fill vacancies; provided, that Trustees shall be elected by
Majority Shareholder Vote at any such time or times as the Trustees shall
determine that such action is required under Section 16(a) of the 1940 Act or,
if not so required, that such action is advisable; and, further provided that
after the initial election of Trustees by the Shareholders, the term of office
of any incumbent Trustee shall continue until the termination of this Trust or
such Trustee's removal, replacement or until the election of such Trustee's
successor in office has become effective in accordance with this section.
SECTION 2.3 - Resignation and Removal by Trustees.
Any Trustee may resign as such (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the
other Trustees and such resignation shall be effective upon such delivery, or
at a later date according to the terms of the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after such removal
shall not be less than the minimum number required by this Declaration) for
cause by the action of two-thirds of the remaining Trustees. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
SECTION 2.4 - Removal by Shareholders.
The Shareholders shall have the power to remove a Trustee by Majority
Shareholder Vote, either by declaration in writing filed with the transfer
agent or by votes cast in person or by proxy at a meeting called for the
purpose of removal under this section. The Trustees shall promptly call such a
meeting of shareholders when requested to do so by the record holders of not
less than 10 per cent of such outstanding Shares.
Whenever ten or more Shareholders of record who have been Shareholders at
least six months preceding the date of application, and who hold in the
aggregate either Shares having a net asset value of at least $25,000 or at
least 1 per centum of the outstanding shares of all Series and all Classes in
the aggregate, whichever is less, shall apply to the Trustees in writing,
stating that they wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a meeting pursuant to this Section 2.4
and accompanied by a form of communication and request which they wish to
transmit, the Trustees shall within five business days after receipt of such
application either:
(a) Afford to such applicants access to a list of the names and
addresses of all Shareholders as recorded on the books of the Trust; or
(b) Inform such applicants as to the approximate number of
Shareholders of record, and the approximate cost of mailing to them the
proposed communication and form of request.
SECTION 2.5 - Vacancies.
The term of office of a Trustee shall terminate and a vacancy shall occur
in the event of his death, resignation, removal, bankruptcy, adjudicated
incompetence or other permanent incapacity as two-thirds of the remaining
Trustees deem to have rendered him unable to perform the duties of the office
of a Trustee. No such vacancy shall operate to annul this Declaration or to
revoke any existing agency created pursuant to the terms of this Declaration.
In the case of an existing vacancy, including a vacancy existing by reason of
an increase in the number of Trustees, the remaining Trustees shall fill,
subject to the provisions of the 1940 Act, such vacancy by the appointment of
such other Person as they in their discretion shall see fit, made by a written
instrument signed by a majority of the Trustees then in office. No such
appointment shall become effective until the Person named in the written
instrument of appointment shall have accepted such appointment in writing and
agreed in writing to be bound by the terms of this Declaration. An appointment
of a Trustee may be made in anticipation of a vacancy to occur at a later date
by reason of retirement, resignation or increase in the number of Trustees,
provided that such appointment shall not become effective prior to such
retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.5, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy.
SECTION 2.6 - Delegation of Power to Other Trustees.
Any Trustee may, by power of attorney, delegate his power for a period not
exceeding six (6) months at any one time to any other Trustee or Trustees,
provided that in no case shall less than two (2) Trustees personally exercise
the powers granted to the Trustees under this Declaration except as herein
otherwise expressly provided, and provided further that this Section shall in
no way be deemed to limit the provisions of Section 3.5.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1 - General.
The Trustees shall have exclusive and absolute control over the Trust
Property and over the business of the Trust to the same extent as if the
Trustees were the sole owners of the Trust Property and business in their own
right.
The Trustees are responsible for the general policies of the Trust and for
such general supervision of the business of the Trust conducted by all
officers, employees, agents, Investment Advisers, Distributors, Custodians,
Transfer Agents or independent contractors of the Trust as may be necessary to
insure that such business conforms to the provisions of this Declaration.
However, the Trustees are not and shall not be required personally to conduct
the business of the Trust and, consistent with their ultimate responsibility as
stated above, the Trustees shall have the power to appoint, employ or contract
with any Person or Persons (including one or more of themselves or any Person
of which one or more of them may be directors, officers, agents, employees,
stockholders, partners or Trustees or with which one or more of them may be
otherwise affiliated) as the Trustees may deem necessary or proper for the
transaction of the business of the Trust, and for such purpose may grant or
delegate such authority to any such Person as the Trustees may in their sole
discretion deem necessary or desirable without regard to whether such authority
is normally granted or delegated by Trustees. The Trustees shall have the
power to determine the terms and compensation of any such Person and may
exercise broad discretion in allowing such Person to administer and regulate
the operations of the Trust, to act as agent for the Trust, to execute
documents on behalf of the Trustees or the Trust, and to make executive
decisions which conform to the general policies and general principles
previously established by the Trustees.
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain offices
both within and without the Commonwealth of Massachusetts, in any and all
states of the United States of America, in the District of Columbia, and in any
and all commonwealths, territories, dependencies, colonies, and possessions of
the United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust in addition to those
things which are specifically mentioned herein. Any determination as to what
is in the interests of the Trust or as to the existence of powers or
authorities hereunder made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration, the presumption shall be in
favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2 - Investments.
The Trustees shall have the power, subject to the Fundamental Policies:
(a) To operate as and carry on the business of an investment company
and exercise all the powers necessary and appropriate to the conduct of such
business;
(b) To invest in, hold for investment, and reinvest in Securities or
in "when issued" or delayed delivery contracts for any Securities or retain all
or any part of the Trust Property in cash and at any time and from time to time
to change the investments of the Trust Property;
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to sell or otherwise dispose of, to lend, and to pledge,
Securities;
(d) To exercise all rights, powers and privileges of ownership or
interest in all Securities included in the Trust Property, including the right
to vote thereon and otherwise act with respect thereto and to do all acts for
the preservation, protection, improvement and enhancement in value of all Trust
Property;
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, tangible or intangible, including, without limitation, cash, and any
interest therein;
(f) To borrow money and in connection therewith to issue notes or
other evidences of indebtedness; to secure borrowings by mortgaging, pledging
or otherwise subjecting as security the Trust Property or any portion thereof;
to endorse, guarantee, or undertake the performance of any obligation or
engagement of any other Person and to lend Trust Property;
(g) To aid by further investment any Person, any Security of or
interest in which is included in the Trust Property or in the affairs of which
the Trustee, as such, have any direct or indirect interest; to do all acts and
things designed to protect, preserve, improve or enhance the value of such
Security or interest; to guarantee or become surety on any or all of the
contracts, stocks, bonds, notes, debentures and other obligations of any such
Person; and
(h) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power herein set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers. The foregoing clauses shall be construed both as
objects and powers, and the foregoing enumeration of specific powers shall not
be held to limit or restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3 - Legal Title.
Legal title to all the Trust Property shall be vested in the Trustees as
joint tenants except that the Trustees shall have power to cause legal title to
any Trust Property to be held by or in the name of one or more of the Trustees,
or in the name of the Trust, or in the name of any other Person as nominee, on
such terms as the Trustees may determine. The right, title and interest of the
Trustees in the Trust Property shall vest automatically in each Person who may
become a Trustee. Upon the termination of a Trustee's term of office, he shall
automatically cease to have any right, title, or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
SECTION 3.4 - Issuance and Repurchase of Shares.
The Trustees shall have the power to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in Shares of any Series or Class and, subject to the provisions
set forth in Articles VII, VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares of any Series or
Class, any of the Fund Assets belonging to the Fund to which such Series or
Class relates, whether constituting capital or surplus or otherwise, to the
full extent now or hereafter not prohibited by the laws of the Commonwealth of
Massachusetts.
SECTION 3.5 - Delegation; Committees.
The Trustees shall have power to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
in the names of the Trustees or otherwise as the Trustees may deem expedient,
except as may be prohibited by the 1940 Act.
SECTION 3.6 - Collection and Payment.
The Trustees shall have power to collect all property due to the Trust; to
pay all claims, including, without limitation, taxes, against the Trust
Property; to prosecute, defend, compromise or abandon any claims relating to
the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
SECTION 3.7 - Expenses.
The Trustees shall have the power to incur and pay any expenses which, in
the opinion of the Trustees, are necessary or incidental to carrying out any of
the purposes of this Declaration, to pay themselves reasonable compensation and
to reimburse themselves for expenses incurred in the performance of their
duties as Trustees from the Trust Property. The Trustees shall fix the
compensation of all officers, employees, agents and Trustees.
SECTION 3.8 - Manner of Acting.
Except as otherwise provided herein or in the By-Laws, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum is present, including any meeting held by
means of a conference telephone circuit or similar communications equipment by
means of which all persons participating in the meeting can hear each other, or
by written consents of the entire number of Trustees then in office.
SECTION 3.9 - By-Laws.
The Trustees may adopt By-Laws not inconsistent with this Declaration to
provide for the conduct of the business of the Trust and may amend or repeal
such By-Laws to the extent such power is not reserved to the Shareholders.
SECTION 3.10 - Miscellaneous Powers.
The Trustees shall have the power to:
(a) Employ or contract with such Person or Persons as the Trustees
may deem desirable for the transaction of the business of the Trust;
(b) Enter into joint ventures, partnerships and any other
combinations or associations;
(c) Remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine;
(d) Purchase, and pay for out of Trust Property, insurance policies
insuring the Shareholders, Trustees, officers, employees, agents, Investment
Advisers, Distributors, Transfer Agents, Custodians, selected dealers or
independent contractors of the Trust against any and all claims and liabilities
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such claim or liability;
(e) Establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust;
(f) To the extent not prohibited by law, indemnify any Person with
whom the Trust has dealings, including any Investment Adviser, Distributor,
Transfer Agent and selected dealers, to such extent as the Trustees shall
determine;
(g) Guarantee indebtedness or contractual obligations of others;
(h) Determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and
(i) Adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
SECTION 3.11 - Principal Transactions.
Except in transactions permitted by the 1940 Act or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares of any Series or Class) from
or sell any securities (other than Shares of any Series or Class) to, or lend
any assets of the Trust to, any Trustee or officer of the Trust or any firm of
which any such Trustee or officer is a member acting as principal, or have any
such dealings with the Investment Adviser, Distributor or Transfer Agent or
with any Affiliated Person of such Person; but the Trust may employ any such
Person, or firm or company in which such Person is an Interested Person, as
broker, legal counsel, registrar, transfer agent, dividend disbursing agent or
custodian upon customary terms.
SECTION 3.12 - Trustees and Officers as Shareholders.
Any Trustee, officer, employee or agent of the Trust may acquire, own and
dispose of Shares to the same extent as if he were not such a Trustee, officer,
employee or agent; and the Trustees may issue and sell or cause to be issued
and sold Shares to and buy Shares from any such Person or any firm or company
in which he is an Interested Person.
SECTION 3.13 - Litigation.
The Trustees shall have the power to engage in and to prosecute, defend,
compromise, abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, and demands relating to the Trust, and
out of the assets of the Trust to pay or to satisfy any debts, claims or
expenses incurred in connection therewith, including those of litigation, and
such power shall include without limitation the power of the Trustees or any
appropriate committee thereof, in the exercise of their or its good faith
business judgment, to dismiss any action, suit, proceeding, dispute, claim, or
demand, derivative or otherwise, brought by any person, including a Shareholder
in its own name or the name of the Trust, whether or not the Trust or any of
the Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
ARTICLE IV
CONTRACTS
SECTION 4.1 - Underwriting Contract.
Subject to the provisions of the 1940 Act, the Trustees may, in their
discretion, from time to time enter into, renew, amend, or modify an exclusive
or non-exclusive underwriting contract or contracts providing for the sale of
Shares of any one or more Series or Classes to net the Trust an amount per
Share not less than the amount provided for in Section 8.1 hereof, whereby the
Trustees may agree to sell the Shares to the other party to the contract and/or
appoint such other party sales agent of the Trust for the Shares, on such terms
and conditions as may be prescribed in the By-Laws, if any, and such further
terms and conditions as the Trustees may, in their discretion, determine not
inconsistent with the provisions of this Declaration or the By-Laws; and any
such contract may also provide for the repurchase of the Shares by such other
party as agent of the Trust and may provide that such other party may enter
into selected dealer agreements with registered securities dealers to further
the purpose of the distribution or repurchase of such Shares.
SECTION 4.2 - Investment Advisory or Management Contract.
Subject to the provisions of the 1940 Act, the Trustees may, in their
discretion, from time to time enter into, renew, amend, or modify an investment
advisory or management contract or contracts whereby the other party or parties
to such contract or contracts shall undertake to furnish to the Trust such
management, investment advisory, statistical, and research facilities and
services and such other facilities and services, if any, and all upon such
terms and conditions as the Trustees may, in their discretion, determine,
including the grant of authority to such other party to determine what
Securities shall be purchased or sold by the Trust and what portion of its
assets shall be uninvested, which authority shall include the power to make
changes in the Trust's investments. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser (subject to such
general or specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales, loans or exchanges of Securities of the Trust on
behalf of the Trustees and may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
the Investment Adviser, all without further action by the Trustees. Any such
activities shall be deemed to have been authorized by all of the Trustees.
SECTION 4.3 - Transfer Agent.
The Trustees may in their discretion from time to time enter into a
transfer agency and shareholder service contract or contracts whereby the other
party or parties to such contract or contracts shall undertake to furnish
transfer agency and shareholder services to the Trust. Any such contract shall
have such terms and conditions not inconsistent with this Declaration or the
By-Laws as the Trustees may, in their discretion, determine. Such services may
be provided by one or more Persons.
SECTION 4.4 - Affiliations of Trustees or Officers, etc.
Any Shareholder, Trustee or officer of the Trust, individually, or any
firm of which any Shareholder, Trustee or officer of the Trust may be a member,
or any Person of which any Shareholder, Trustee or officer of the Trust may be
an officer or director or in which any Shareholder, Trustee or officer of the
Trust may be directly or indirectly interested as the holder of any amount of
its capital stock or otherwise, may be a party to, or may be financially or
otherwise interested in, any contract or transaction of the Trust, and in the
absence of fraud, no contract or other transaction shall be thereby affected or
invalidated by reason of the existence of any such relationship; nor shall any
Person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of said
contract or accountable for any profit realized directly or indirectly
therefrom, provided that the fact of any such interests or relationships shall
be disclosed or shall have been known to the Trustees or a majority thereof.
Any such Shareholder, Trustee or officer of the Trust may be counted in
determining the existence of a quorum at the meeting of the Trustees of the
Trust which shall authorize any such contract or transaction and may vote
thereat to authorize any such contract or transaction, with like force and
effect as if such other interests or relationships did not exist. In
furtherance and not in limitation of the foregoing, the Trustees of the Trust
are expressly authorized to contract for investment advisory and management
services of any nature, as described in Section 4.2, with any Person affiliated
with any Trustee or parent or affiliate or Interested Person of any such
Person, on such terms as the Trustees may deem desirable. The Trustees are
further expressly authorized to contract with any such Person or parent or
affiliate or Interested Person of any such Person on such terms as the Trustees
may deem desirable for the distribution of shares of the Trust as described in
Section 4.1 and to contract for other services, including, without limitation
services as Transfer Agent for the Trust's shares as described in Section 4.3
above with any such Person on such terms as the Trustees may deem desirable.
Any such Person or parent or affiliate or Interested Person of any such Person
which enters into one or more of such contracts may also perform similar or
identical services for other investment companies and other Persons without
restriction by reason of the relationship with the Trust.
ARTICLE V
LIMITATIONS OF LIABILITY OF
SHAREHOLDERS, TRUSTEES AND OTHERS
SECTION 5.1 - No Personal Liability of Shareholders, Trustees, etc.
No Shareholder as such shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the acts,
omissions, obligations or affairs of the Trust. No Trustee, officer, employee
or agent of the Trust as such shall be subject to any Personal liability
whatsoever to any Person in connection with Trust Property or the affairs of
the Trust, save only that to which they would be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of their duties,
or by reason of their reckless disregard of their obligations and duties with
respect to such Person; and all Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising directly or indirectly in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee, or agent, as such, of the Trust is made a party to any suit
or proceeding to enforce any such liability of the Trust, he shall not, on
account thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and liabilities
to which such Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall
not exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein, provided that a Shareholder of any Series
shall be indemnified only from the assets belonging to the Fund to which such
Series relates.
SECTION 5.2 - Non-Liability of Trustees, etc.
No trustee, officer, employee or agent of the Trust shall be liable to the
Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without limitation
the failure to compel in any way any former or acting Trustee to redress any
breach of Trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
SECTION 5.3 - No Bond Required of Trustees.
No Trustee shall be obligated to give any bond or other security for the
performance of any of his duties hereunder.
SECTION 5.4 - No Duty of Investigation; Notice in Trust Instruments, etc.
No purchaser, lender, Transfer Agent, Custodian or other Person dealing
with the Trustees or any officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of Trust Property paid, loaned, or delivered to or on the order of
the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection
with or on behalf of the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract, instrument, certificate, Share,
other security of the Trust or undertaking made or issued by the Trustees may
recite, in substance, that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the obligations
of the Trust under any such instrument are not binding upon any of the Trustees
or Shareholders individually, but bind only the Trust estate, and may contain
any further recital which they or he may deem appropriate, but the omission of
such recital shall not operate to bind the Trustee or Shareholders
individually. The Trustees may maintain insurance for the protection of the
Trust Property, its Shareholders, Trustees, officers, employees, and agents in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
SECTION 5.5 - Reliance on Experts, etc.
Each Trustee, officer, employee, or agent of the Trust shall, in the
performance of his duties, be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust, upon an opinion of
counsel, or upon reports made to the Trust by any of its officers, employees,
agents or by the Investment Adviser, the Distributor, Transfer Agent,
Custodian, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers, or
employees of the Trust, regardless of whether any such Person may also be a
Trustee or an Interested Person of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 - Beneficial Interest.
The interest of the beneficiaries of the Trust shall be divided into
transferable shares and fractions of shares of beneficial interest without par
value. The number of shares of beneficial interest is unlimited. Initially
the shares of beneficial interest shall be of one series and of one class. The
Trustees shall have authority in their sole discretion to create one or more
separate, distinct and independent Funds into which assets of the Trust shall
be divided, and to authorize a separate Series of shares of beneficial interest
for such Fund (each of which Series, including without limitation, the Series
authorized in Section 6.10 hereof, shall represent interests only in the Fund
with respect to which such Series was authorized), or one or more additional
Classes of shares of beneficial interest, on such terms and conditions as they
may determine, without vote of the shareholders. The Trustees shall have
authority, in their sole discretion, to combine Series of shares of beneficial
interest or a Class of shares of beneficial interest with another Series of
shares of beneficial interest or another Class of shares of beneficial
interest, without vote of the shareholders, either
(a) through an exchange of shares of beneficial interest in one Series of
shares of beneficial interest or Class of shares of beneficial interest for
shares of beneficial interest in another Series of shares of beneficial
interest or Class of shares of beneficial interest, or
(b) by amendment of the terms of and conditions applicable to a Series of
shares of beneficial interest or to a Class of shares of beneficial interest to
conform such terms and conditions to the terms and conditions applicable to the
other Series of shares of beneficial interest or to the other Class of shares
of beneficial interest; provided that any such combination of two or more
Series of shares of beneficial interest or two or more Classes of shares of
beneficial interest shall always be effected in a way which will preserve the
relative net asset value of the shares of beneficial interest affected. All
shares of beneficial interest issued hereunder including, without limitation,
shares of beneficial interest issued in connection with any dividend declared
and paid in shares of beneficial interest or any split of shares of beneficial
interest, shall be fully paid and non-assessable.
SECTION 6.2 - Rights of Shareholders.
The ownership of the Trust Property of every description and the right to
conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest in the Trust Property or
in the business of the Trust other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition,
divisions, dividend or distribution of any property, profits, rights or
interests of the Trust nor can they be called upon personally to share or
assume any losses of the Trust or suffer an assessment of any kind by virtue of
their ownership of Shares. The Shares of any Series or Class shall be personal
property giving only the rights specifically set forth in this Declaration.
The Shares of any Series or Class shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights except as the Trustees may
determine with respect to any Series or Class of shares.
SECTION 6.3 - Trust Only.
It is the intention of the Trustees to create only the relationship of trustee
and beneficiary between the Trustees and each Shareholder from time to time.
It is not the intention of the Trustees to create a general partnership,
limited partnership, joint stock association, joint venture, corporation,
bailment or any form of legal relationship other than a trust. Nothing in this
Declaration shall be construed to make the Shareholders, either by themselves
or with the Trustees, partners or members of a joint stock association.
SECTION 6.4 - Issuance of Shares.
The Trustees, in their discretion, may at any time and from time to time
without vote of the Shareholders, issue Shares of any Series or Class to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares of any Series or Class,
the Trustees may issue fractional Shares. The Trustees may from time to time
divide or combine the Shares of any Series or Class into a greater or lesser
number without thereby changing the proportionate beneficial interests in the
Trust and may classify or reclassify any unissued shares, or any shares of any
Series or Class previously issued and reacquired by the Trust, into shares of
one or more other Funds that may be established and designated from time to
time. The Trustees may also reduce the number of outstanding Shares of any
Series. Contributions to the Trust may be accepted for, and Shares of any
Series shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or
integral multiples thereof.
SECTION 6.5 - Register of Shares; Share Certificates.
A register shall be kept at the principal office of the Trust or an office
of the Transfer Agent which books shall be maintained separately for the shares
of each Series that has been authorized and shall contain the names and
addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, or to have notice given to him as herein or in the
By-Laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
SECTION 6.6 - Transfer of Shares.
All Shares shall be transferable on the register of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing,
upon delivery to the Trustees or the Transfer Agent of a duly executed
instrument of transfer, together with such evidence of the genuineness of each
such execution and authorization and of such other matters as may reasonably be
required. Upon such delivery, the transfer shall be recorded on the register
of the Trust. Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent or registrar, if any, nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any Person becoming entitled to Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, except as may otherwise be provided in the laws of the Commonwealth of
Massachusetts, shall be recorded on the register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Trustees or
the Transfer Agent, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar, if any, nor any
officer or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law. Nothing in this
Declaration shall impose on the Trustees or a Transfer Agent a duty, or limit
their rights, to inquire into adverse claims.
SECTION 6.7 - Notices.
Any and all notices to which any Shareholder may be entitled and any and
all communications shall be deemed duly served or given if mailed, postage
prepaid, addressed to any Shareholder of record at his last known address as
recorded on the register of the Trust.
SECTION 6.8 - Treasury Shares.
Shares held in the treasury shall, until reissued pursuant to Section 6.4,
not confer any voting rights on the Trustees, nor shall such Shares be entitled
to any dividends or other distributions declared with respect to the Shares.
SECTION 6.9 - Voting Powers.
The Shareholders shall have power to vote with respect to such matters
relating to the Trust as may be required by law, this Declaration, the By-Laws,
the 1940 Act, any registration of Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares shall not entitle the Shareholders to preference,
appraisal, conversion, exchange or preemptive rights of any kind. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required by law, this Declaration or the By-Laws to be taken by
Shareholders. The By-Laws may include further provisions for Shareholder's
votes and meetings, setting of record dates, and related matters.
SECTION 6.10 - Establishment of Fund; Series or Classes of Shares.
Without limiting the authority of the Trustees as set forth herein to
establish and designate further Funds and/or Classes, the following Fund and
Class is hereby established and designated: The Tax-Exempt Cash Fund of
America, all of the Shares of which shall initially be issued in a single
Class. If the Trustees shall establish additional Funds and divide the Shares
of the Trust into two or more Series or two or more Classes of any Series, as
provided in Section 6.1 hereof, the following provisions shall be applicable:
(a) Each Fund established hereunder shall be a separate component of
the assets of the Trust, and the holders of Shares of the Series representing
the beneficial interest in the assets of that Fund shall be considered
Shareholders of such Fund, but such Shareholders shall also be considered
Shareholders of the Trust for purposes of receiving reports and notices and,
except as otherwise provided herein or in the Certificate of Designation of a
particular Fund as to such Fund, or as required by the 1940 Act or other
applicable law, the right to vote, all without distinction by Series. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Funds and to fix
and determine the relative rights and preferences as between the Shares of the
respective Funds as to rights of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the Shareholders of the several Funds shall have
separate voting rights or no voting rights. Within each Fund so established,
the Trustees shall have the exclusive power without the requirement of
shareholder approval to establish one or more Classes of Shares and to fix and
determine the relative rights and preferences as between Shares of the
respective Classes of a Fund as to rights of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the Shareholders of the several
Classes shall have separate voting rights or no voting rights.
(b) All provisions herein relating to the Trust shall apply equally
to each Series of the Trust except as the context otherwise requires.
(c) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with respect to
any one or more Series which represents the interests in the assets of the
Trust immediately prior to the establishment of two or more Series and the
power of the Trustees to invest and reinvest assets applicable to any other
Series shall be as set forth in the instrument of the Trustees establishing
such Series which is hereinafter described.
(d) All consideration received by the Trust for the issue or sale of
shares of a particular Series together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Series, the Trustees shall allocate them among any one or more
of the Series established and designated from time to time in such manner and
on such basis as they, in their sole discretion, deem fair and equitable. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(e) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and equitable. The Trustees
may further allocate such liabilities, expenses, costs, charges and reserves of
a Series among various Classes of Shares of that Series. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of Shares of Classes of all Series for
all purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders. The assets of a
particular Series of the Trust shall under no circumstances be charged with
liabilities attributable to any other Series of the Trust. All persons
extending credit to, or contracting with or having any claim against a
particular Series of the Trust shall look only to the assets of that particular
Series for payment of such credit, contract or claim.
(f) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series which shall be equal to the interest
of all other Shares of the same Class. Each holder of Shares of a Class shall
be entitled to receive his pro rata share of distribution of income and capital
gains made with respect to such Class. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been
a Shareholder of a Series, such Shareholder shall be paid solely out of the
funds and property of such Series of the Trust. Upon liquidation or
termination of a Series of the Trust, Shareholders of such Series of each Class
shall be entitled to receive a pro rata share of the net assets of such Series
equal to that of all other Shareholders of such Class. A Shareholder of a
particular Series of the Trust shall not be entitled to participate in a
derivative or class action on behalf of any other Series or the Shareholders of
any other Series of the Trust.
(g) Notwithstanding any other provision hereof, on any matter
submitted to a vote of Shareholders of the Trust other than the election of
Trustees, all Shares then entitled to vote shall be voted by individual Series,
except that (1) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual Series, and (2) when the Trustees have
determined that the matter affects only the interests of Shareholders of a
limited number of Series of a particular Class of a Series, then only the
Shareholders of such Series (or Class, as the case may be) shall be entitled to
vote thereon.
(h) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 8.2 of this Declaration with respect
to any one or more Series or Classes which represents the interests in the
assets of the Trust immediately prior to the establishment of two or more
Series or Classes. With respect to any other Series or Class, dividends and
distributions on shares of a particular Series or Class may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of shares of that
Series or Class, from such of the income and capital gains, accrued or
realized, from the assets belonging to that series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
Series or Class. All dividends and distributions on shares of a particular
Series or Class shall be distributed pro rata to the holders of that Series or
Class in proportion to the number of shares of that Series or Class held by
such holders at the date and time of record established for the payment of such
dividends or distributions.
(i) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and dividend
rights, of each Class and Series of Shares.
(j) The establishment and designation of any Series or Class in
addition to the Series and Class established and designated in section 6.10
hereof and the authorization of the Shares thereof shall be effective upon the
execution by a majority of the Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Fund or such Class and the manner in which the same may be
amended (a "Certificate of Designation"), and may provide that the number of
Shares of such Fund or Class which may be issued is unlimited, or may limit the
number issuable. At any time that there are no Shares or Class outstanding of
any particular Fund or Class previously established and designated, including
any Fund or Class established and designated in Section 6.10 hereof, the
Trustees may by an instrument executed by a majority of the Trustees, terminate
such Fund or Class and the establishment and designation thereof and the
authorization of its Shares (a "Certificate of Termination"). Each Certificate
of Designation, Certificate of Termination and any instrument amending a
Certificate of Designation shall have the status of an amendment to this
Declaration of Trust, and shall be filed and become effective as provided in
Section 10.1 hereof.
(k) In the event of the liquidation or dissolution of the Trust, the
Shareholders of each Fund of which Shares are outstanding shall be entitled to
receive, when and as declared by the Trustees, the excess of the Fund Assets
over the liabilities of such Fund divided among the Classes of Shares of the
Fund in accordance with Certificate(s) of Designation of the Fund and of any
such Class. The assets so distributable to the Shareholders of any particular
Fund or Class shall be distributed among such Shareholders in proportion to the
number of Shares of that Fund or Class held by them and recorded on the books
of the Trust. The liquidation of any particular Fund may be authorized by vote
of a majority of the Trustees, subject to the affirmative vote of "a maority of
the outstanding voting securities" of that Fund of all Classes voting together,
as the quoted phrase is defined in the 1940 Act, determined in accordance with
clause (iii) of the definition of "Majority Shareholder Vote" in Section 1.2
hereof.
ARTICLE VII
REDEMPTION, REPURCHASE, AND
REDUCTION OF SHARES
SECTION 7.1 - Redemption of Shares.
All Shares of any Series or Class of the Trust shall be redeemable, at the
redemption price determined in the manner set out in this Declaration.
Redeemed or repurchased Shares may be reissued by the Trust.
The Trust shall redeem the Shares of any Series or Class at the price
determined as hereinafter set forth, upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at such office or agency as may be designated from
time to time for that purpose by the Trustees. The Trustees may from time to
time specify additional conditions not inconsistent with the 1940 Act regarding
the redemption of Shares.
SECTION 7.2 - Price.
Shares shall be redeemed at their net asset value determined as set forth
in Section 8.1 hereof as of such time as the Trustees shall have theretofore
prescribed by resolution. In the absence of such resolution, the redemption
price of Shares deposited shall be the net asset value of such Shares next
determined as set forth in Section 8.1 after receipt of the application
required by Section 7.1.
SECTION 7.3 - Payment.
Payment for redeemed Shares shall be made at such time and in the manner,
not inconsistent with the 1940 Act or other applicable law, as may be specified
from time to time in the Prospectus, subject to the provision of Section 7.4
hereof.
SECTION 7.4 - Repurchase by Agreement.
The Trust may repurchase Shares of any Series or Class directly, or
through the Distributor or another agent designated for the purpose, by
agreement with the owner thereof at a price not exceeding the net asset value
per Share next determined after the time when the purchase or contract is made
or the net asset value as of any time which may be later determined pursuant to
Section 8.1 hereof, provided payment is not made for the Shares prior to the
time as of which such net asset value is determined.
SECTION 7.5 - Redemption of Shareholder's Interest; Redemption of Shares to
Qualify as a Regulated Investment Company; Disclosure of Holdings.
The Trust shall have the right at any time 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 of any Series or Class having an
aggregate net asset value of less than the minimum initial investment amount
required of new Shareholders of that Series or Class, subject to such terms and
conditions as the Trustee may approve and subject to the Trust's giving general
notice to all Shareholders of the existence of such right, either by
publication in the Trust's Prospectus, if any, or by such other means as the
Trustees may determine.
If the Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of the Trust
has or may become concentrated in any Person to an extent which would
disqualify the Trust as a regulated investment company under the Internal
Revenue Code, then the Trustees shall have the power by lot or other means
deemed equitable by them to:
(a) Call for redemption by any such Person a number, or principal
amount, of Shares or other securities of the Trust sufficient to maintain or
bring the direct or indirect ownership of Shares or other securities of the
Trust into conformity with the requirements for such qualification, and
(b) Refuse to transfer or issue Shares or other securities of the
Trust to any Person whose acquisition of the Shares or other securities of the
Trust in question would, in the judgment of the Trustees, be likely to result
in such disqualification. The redemption shall be effected at the redemption
price.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or
to comply with the requirements of any other taxing authority.
SECTION 7.6 - Suspension of Right of Redemption.
The Trust may declare a suspension with respect to one or more Series or
Classes of Shares of the right of redemption or postpone the date of payment of
redemption for the whole or any part of any period:
(a) During which the New York Stock Exchange is closed other than
customary weekend and holiday closings;
(b) During which trading on the New York Stock Exchange is
restricted;
(c) During which an emergency exists as a result of which disposal
by the Trust of Securities owned by the Trust within a Fund is not reasonably
practicable or it is not reasonably practicable for the Trust fairly to
determine the value of the net assets of a Fund; or
(d) During any other period when the Commission may for the
protection of Shareholders of the Trust by order permit suspension of the right
of redemption or postponement of the date of payment or redemption; provided
that applicable rules and regulations of the Commission shall govern as to
whether the conditions prescribed in subparagraphs (b), (c) or (d) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an
end, except that the suspension shall terminate in any event on the first day
on which said stock exchange shall have reopened or the period specified in
subparagraphs (b) or (c) above shall have expired (as to which in the absence
of an official ruling by the Commission, the determination of the Trust shall
be conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value next determined after the termination of the
suspension.
SECTION 7.7 - Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 8.1, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 7.1, but who
shall not yet have received payment) to have Shares redeemed and paid for by
the Trust and the right of the Trust to redeem Shares at its option set forth
in Section 7.5, shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on
deposit. The redemption price of Shares for which redemption applications have
not been revoked shall be the net asset value of such Shares next determined as
set forth in Section 7.1 hereof after the termination of such suspension, and
payment shall be made within seven (7) days after the date upon which the
application was made plus the period after such application during which the
determination of net asset value was suspended.
SECTION 7.8 - Reductions of Shares.
The Trust may also reduce the number of outstanding Shares of any Series
or Class.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME, AND DISTRIBUTIONS
SECTION 8.1 - Net Asset Value.
The net asset value per Share of any Class of any Series shall be
determined as follows: the value of the Securities and other assets owned by
the Fund corresponding to that Series shall be valued by methods, reflecting
their fair value, as determined by the Trustees in good faith.
From the total value of said assets, there shall be deducted the
liabilities of the Fund attributable to each Class, including proper accruals
of interest, taxes and other expense items, amounts determined and declared as
dividends or distributions, and reserves for contingent or undetermined
liabilities. The net assets of the Fund attributable to each Class so obtained
shall then be divided by the total number of Shares of the Fund of that Class
outstanding and the result, rounded to the nearest cent, shall be the net asset
value per Share of the Fund of that Class. The net asset value of the Shares
of that Fund of that Class shall be determined once on each business day, as of
the close of trading on the New York Stock Exchange or as of such other time or
times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Custodian, the Transfer Agent, or such other Person as the Trustees by
resolution may determine. The Trustees may suspend the daily determination of
net asset value if to do so is not prohibited by the 1940 Act.
SECTION 8.2 - Distributions With Respect to Outstanding Shares.
The Trustees shall from time to time distribute ratably among the
Outstanding Shares of a Series and/or of a Class of a Series, such proportion
of the net profits, surplus (including paid-in surplus), capital, or assets
held by the Trustees as they may deem proper. Such distribution may be made in
cash or property (including, without limitation, any type of obligation of the
Trust or any assets thereof), and the Trustees may distribute ratably among the
Outstanding Shares of such Series or Class additional Shares of such Series or
Class or another Series or Class issuable hereunder in such manner, at such
times, and on such terms as the Trustees may deem proper. Such distributions
may be among the Outstanding Shares at the time of declaring a distribution or
among the Outstanding Shares at such later date as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, Outstanding Shares shall exclude Shares for
which orders have been placed subsequent to a specified time and date. The
Trustees may always retain from the net profits of the Trust such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
the obligations of the Trust, or as they may deem desirable to use in the
conduct of its affairs or to retain for future requirements or extensions of
the business. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or other plans as the Trustees
shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books of the Trust, the
above provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
At such time as the Trustees divide the Shares of the Trust into two or
more Series and/or two or more Classes of a Series, the distributions provided
for herein will be determined separately for the outstanding Shares of each
Class of each Series as set forth in Section 6.10(h) hereof.
SECTION 8.3 - Determination of Net Income; Constant Net Asset Value of Shares
of Certain Series or Classes; Reduction of Outstanding Shares.
The Trustees shall have the power to determine the net income of each
Series of Shares of the Trust one or more times on each business day and at
each such determination declare such net income as dividends in additional
Shares of such Series. The determination of net income and the resultant
declaration of dividends shall be as set forth in the Prospectus. In the event
that any Series or Class of the Trust attempts to maintain a constant net asset
value per Share, if, for any reason, the net income of such Series of the Trust
determined at any time is a negative amount, the Trustees shall have the power
(i) to offset each Shareholder's pro rata share of such negative amount from
the accrued dividend account of such Shareholder, or (ii) to reduce the number
of outstanding shares of such Series or Class of the Trust by reducing the
number of Shares in the account of such Shareholder by that number of full and
fractional Shares which represents the amount of such excess negative net
income, or (iii) to cause to be recorded on the books of the Trust an asset
account in the amount of such negative net income, which account may be reduced
by the amount, provided that the same shall thereupon become the property of
the Trust and shall not be paid to any Shareholder, of dividends declared
thereafter upon the outstanding Shares on the day such negative net income is
experienced, until such asset account is reduced to zero, or (iv) to combine
the methods described in clauses (i) and (ii) and (iii) of this sentence, in
order to cause the net asset value per Share of such Series or Class of the
Trust to remain at a constant amount per outstanding Share immediately after
each such determination and declaration. The Trustees shall also have the
power to fail to declare a dividend out of net income for the purpose of
causing the net asset value per Share of any such Series or Class to be
increased to a constant amount. The Trustees shall have full discretion to
determine whether any cash or property received shall be treated as income or
as principal and whether any item of expense shall be charged to the income or
the principal account, and their determination made in good faith shall be
conclusive upon the Shareholders. In the case of stock dividends received, the
Trustees shall have full discretion to determine, in the light of the
particular circumstances, how much, if any, of the value thereof shall be
treated as income, the balance, if any, to be treated as principal. The
Trustees shall not be required to adopt, but may at any time adopt, discontinue
or amend the practice of maintaining the net asset value per Share of any
Series or Class of the Trust at a constant amount.
SECTION 8.4 - Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article VIII, the
Trustees may prescribe, in their absolute discretion, such other bases and
times for determining the per Share net asset value of any Series or Class of
the Trust's Shares or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS; ETC.
SECTION 9.1 - Duration.
The Trust shall continue without limitation of time, subject to the
provisions of this Article IX.
SECTION 9.2 - Termination of Trust.
(a) The Trust may be terminated by the vote of a majority of the
Shares outstanding and entitled to vote of each Fund of the Trust voting
separately at any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than a majority of such Shares, or by such greater or
different vote of Shareholders of any Series as may be established by the
Certificate of Designation by which such Series was authorized. Upon the
termination of the Trust,
(i) the Trust shall carry on no business except for the purpose
of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up, including,
without limitation, the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one or
more Persons at public or private sale for consideration which may consist in
whole or in part of cash, Securities or other property of any kind, discharge
or pay its liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange, transfer or
other disposition of all or substantially all the Trust Property shall require
Shareholder approval in accordance with Section 9.4 hereof; and
(iii) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary, the Trustees may distribute the remaining
Trust Property, if any, in cash or in kind or partly each, among the
Shareholders in conformity with Section 6.10(k) hereof.
(b) After termination of the Trust and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further duties hereunder, and the rights and interests of all Shareholders
shall thereupon cease.
SECTION 9.3 - Amendment Procedure.
(a) This Declaration may be amended by a majority shareholder vote,
with each Series or Class voting separately if such amendment shall have a
materially different effect on one or more particular Series or Classes and
otherwise by all Shares voting together, or by any instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of a majority of the Shares outstanding and entitled to vote either
separately by Series or Classes or together, as appropriate. The Trustees may
also amend this Declaration without the vote or consent of Shareholders to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, to
establish and distinguish separate and distinct Funds and separate and distinct
Classes as provided in Section 6.10(a) hereof, or if they deem it necessary to
conform this Declaration to the requirements of, or to reduce or eliminate the
payment of taxes by the Trust or any Series thereof under applicable federal or
state laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code, but the Trustees shall not be
held liable for failing to do so;
(b) No amendment may be made under this Section 9.3 which would
change any rights with respect to any Shares of the Trust by reducing the
amount payable thereon upon liquidation of the Trust or by diminishing or
eliminating any voting rights pertaining thereto, except with a majority vote
of the Shares of the affected Series or Class. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders;
and
(c) A certificate signed by a majority of the Trustees setting forth
an amendment and reciting that it was duly adopted by the Shareholders or by
the Trustees as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
SECTION 9.4 - Merger, Consolidation or Sale of Assets.
The Trust may merge or consolidate with any other Person or may sell,
lease or exchange all or substantially all of the Trust Property, including its
goodwill, if any, upon such terms and conditions and for such consideration
when and as authorized, at any meeting of Shareholders called for the purpose,
by the affirmative vote of the holders of not less than two-thirds of the
Shares outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than
two-thirds of the Shares outstanding and entitled to vote or by such other vote
as may be established by the Trustees with respect to any series or class of
shares; provided, however, that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, a majority shareholder vote shall be
sufficient authorization.
SECTION 9.5 - Incorporation.
With a Majority Shareholder Vote, the Trustees may cause to be
organized or assist in organizing a corporation or corporations under the laws
of any jurisdiction, or any other trust, partnership, association or other
organization to take over all or substantially all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer all or substantially all of the
Trust Property to any such corporation, trust, association or organization in
exchange for securities thereof or otherwise, and to lend money to, subscribe
for securities of, and enter into any contracts with any such corporation,
trust, partnership, association, or organization, or any corporation,
partnership, trust, association or organization in which the Trust holds or is
about to acquire Securities or any other interest. The Trustees may also cause
a merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent not prohibited by applicable law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations, and selling,
conveying or transferring a portion of the Trust Property to such organization
or entities.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 - Filing.
This Declaration and any amendment hereto (including each Certificate
of Designation and Certificate of Determination) shall be filed in the office
of the Secretary of the Commonwealth of Massachusetts and in such other places
as may be required under the laws of Massachusetts and may also be filed or
recorded in such other places as the Trustees deem appropriate. Each amendment
so filed shall be accompanied by a certificate signed and acknowledged by a
Trustee stating that such action was duly taken in a manner provided herein,
and unless such amendment or such certificate sets forth some later time for
the effectiveness of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may
be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Declaration and the various amendments thereto.
SECTION 10.2 - Resident Agent.
The name of the Trust's resident agent is CT Corporation System, and
its post office address is 2 Oliver Street, Boston, MA 02109.
SECTION 10.3 - Governing Law.
This Declaration is executed by the Trustees and delivered in the
Commonwealth of Massachusetts and with reference to the laws thereof, and the
rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said State.
SECTION 10.4 - Counterparts.
This Declaration may be simultaneously executed in several
counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
SECTION 10.5 - Reliance by Third Parties.
Any certificate executed by an individual who, according to the
records of the Trust appears to be a Trustee hereunder or an officer of the
Trust appointed by the Trustees, certifying to:
(a) The number or identity of Trustees or Shareholders or agents or
employees;
(b) The due authorization of the execution of any instrument in
writing;
(c) The form of any vote passed at a meeting of Trustees or
committees therof or Shareholders;
(d) The fact that the number of Trustees or Shareholders present at
any meeting or executing any written instrument satisfies the requirements of
this Declaration;
(e) The form of any By-Laws adopted by or the identity of any
officers, Trustees, agents or employees; or
(f) The existence of any fact or facts which in any manner relate to
the affairs of the Trust; shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees or their successors
or the Trust.
SECTION 10.6 - Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable and, if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination; and
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
SECTION 10.7 - Index and Heading for Reference Only.
The Index and headings preceding the text, articles and sections
hereof have been inserted for convenience and reference only and shall not be
construed to affect the meaning, construction or effect of this Declaration.
IN WITNESS WHEREOF, the undersigned have executed this instrument
this 2nd day of December, 1988.
_________________________
Michael J. Downer, as Trustee
and not individually
Address: 333 South Hope Street
50th Floor
Los Angeles, CA 90071
____________________________
Paul G. Haaga, Jr., as Trustee
and not individually
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
Before me, Angela M. Mitchell, a Notary Public in and for the County of
Los Angeles, State of California, personally appeared this day Michael J.
Downer and Paul G. Haaga, Jr., to me known and known to me to me the same
persons whose names are signed to the foregoing instrument, and who
acknowledged to me that they executed the same as their free and voluntary act
and deed.
WITNESS, my hand and notarial seal this 2nd day of December, 1988.
_______________________________ Notary Public in and for said County and State
IN WITNESS WHEREOF, the undersigned has executed this instrument on this
5th day of December, 1988.
David M. Elwood, as Trustee
and not individually
Address: One Federal Street
Boston, MA 02110
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
Before me, ___________________, a Notary Public in and for the County of
Suffolk, State of Massachusetts, personally appeared this day David M. Elwood,
to me known and known to me to be the same person whose name is signed to the
foregoing instrument, and who acknowledged to me that he executed the same as
his free and voluntary act and deed.
WITNESS, my hand and notarial seal this 5th day of December, 1988.
Notary Public in and for said
County and State
CERTIFICATE OF AMENDMENT
OF
DECLARATION OF TRUST
OF
THE TAX-EXEMPT CASH FUND OF AMERICA
The undersigned, MICHAEL J. DOWNER and PAUL G. HAAGA, JR., certify that
they constitute a majority of the Board of Trustees The Tax-Exempt Cash Fund of
America, a Massachusetts Business Trust, and further that:
(1) Section 1.1 of Article I of the Declaration of Trust has been amended
to read as follows:
"Section 1.1 - Name.
The name of the Trust created hereby is 'The Tax- Exempt
Money Fund of America.'"
(2) Section 6.10 of Article VI of the Declaration of Trust has been
amended in pertinent part to read as follows:
"Section 6.10 - Establishment of Fund; Series or Classes of
Shares. Without limiting the authority of the Trustees as set forth herein to
establish and designate further Funds and/or Classes, the following Fund and
Class is hereby established and designated: The Tax-Exempt Money Fund of
America, all of the Shares of which shall initially be issued in a single
CLass."
(3) The Amendment was unanimously approved by the Board of Trustees.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
19th day of December, 1988.
Address: 333 South Hope Street
50th Floor Michael J. Downer, as Trustee
Los Angeles, CA 990071 and not individually
Paul G. Haaga, Jr., as Trustee
and not individually
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
Before me, Julie F. Williams, a Notary Public in and for the County of Los
Angeles, State of California, personally appeared this day Michael J. Downer
and Paul G. Haaga, Jr., known to me to be the same persons whose names are
signed to the foregoing instrument, and who acknowledged to me that they
executed the same.
WITNESS my hand and notarial seal this 19th day of December, 1988.
Notary Public in and for said
County and State
BY-LAWS
OF
THE TAX-EXEMPT MONEY FUND OF AMERICA
THE TAX-EXEMPT MONEY FUND OF AMERICA
BY-LAWS
I N D E X
Section and Title Page
Article I. SHAREHOLDERS 1
1.01 Annual Meetings 1
1.02 Special Meetings 1
1.03 Place of Meetings 1
1.04 Notice of Meetings 1
1.05 Quorum 2
1.06 Votes Required 2
1.07 Proxies 2
1.08 List of Shareholders 2
1.09 Voting 2
1.10 Action by Shareholders Other than at a Meeting 3
Article II. BOARD OF TRUSTEES 3
2.01 Powers 3
2.02 Number of Trustees 3
2.03 Regular Meetings 3
2.04 Special Meetings 3
2.05 Notice of Meetings 3
2.06 Quorum 4
2.07 Compensation and Expenses 4
2.08 Action by Trustees Other than at a Meeting 4
2.09 Committees 4
2.10 Holding of Meetings by Conference Telephone
Call 5
Article III. OFFICERS 5
3.01 Executive Officers 5
3.02 Chairman and Vice Chairman of the Board 5
3.03 President 5
3.04 Vice Presidents 6
3.05 Secretary and Assistant Secretaries 6
3.06 Treasurer and Assistant Treasurers 6
3.07 Subordinate Officers 6
3.08 Removal 7
Article IV. SHARES OF BENEFICIAL INTEREST 7
4.01 Certificates 7
4.02 Record Dates 7
Article V. GENERAL PROVISIONS 8
5.01 Checks 8
5.02 Custodian 8
5.03 Bonds 8
5.04 Inspection of Records 9
5.05 Representation of Shares 9
5.06 Offices of the Trust 9
Article VI. INDEMNIFICATION 9
Article VII. AMENDMENT OF BY-LAWS 11
BY-LAWS
OF
THE TAX-EXEMPT MONEY FUND OF AMERICA
ARTICLE I.
SHAREHOLDERS
Section 1.01. Annual Meetings. Unless otherwise required by law, the
Declaration of Trust as amended from time to time (the "Declaration") or by
these By-Laws, the Trust shall not be required to hold an annual meeting of
shareholders unless the Board of Trustees of the Trust (the "Board") determines
to hold an annual meeting. If the Board makes such a determination, the annual
meeting of shareholders shall be held at such date and time as may be
designated from time to time by the Board for the election of trustees and the
transaction of any business within the powers of the Trust. Any business of
the Trust may be designated in the notice, except such business as is
specifically required by statute or by the Declaration to be stated in the
notice. Failure to hold an annual meeting at the designated time shall not,
however, invalidate the existence of the Trust or affect otherwise valid acts
of the Trust.
Section 1.02. Special Meetings. At any time in the interval between
annual meetings, special meetings of the shareholders may be called by the
Chairman of the Board or the President or by a majority of the Board by vote at
a meeting or in writing with or without a meeting, or, in writing by those
shareholders holding a majority of the outstanding shares of beneficial
interest of the Trust.
Section 1.03. Place of Meetings. Meetings of the shareholders for the
election of trustees shall be held at such place either within or without the
State of Massachusetts as shall be designated from time to time by the Board of
Trustees and stated in the notice of the meeting. Meetings of shareholders for
any other purpose may be held at such time and place, within or without the
State of Massachusetts, as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 1.04. Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every shareholders' meeting, the Secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, either by
mail or by presenting it to the shareholder personally or by leaving it at the
shareholder's residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Trust, with postage thereon prepaid. Notwithstanding the foregoing
provision, a waiver of notice in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting in
person or by proxy, shall be deemed equivalent to the giving of such notice to
such persons. Any meeting of shareholders, annual or special, may adjourn from
time to time to reconvene at the same or some other place, and no notice need
be given of any such adjourned meeting other than by announcement at the
meeting.
Section 1.05. Quorum. At any meeting of shareholders the presence in
person or by proxy of shareholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Declaration for the vote necessary for
the adoption of any measure. In the absence of a quorum the shareholders
present in person or by proxy, by majority vote and without notice, may adjourn
the meeting from time to time until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 1.06. Votes Required. A majority of the votes cast at a meeting
of shareholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless more than a majority of votes cast is required by
statute or by the Declaration.
Section 1.07. Proxies. A shareholder may vote the shares owned of record
by him either in person or by proxy executed in writing by the shareholder or
by the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.08. List of Shareholders. At each meeting of shareholders, a
full, true and complete list in alphabetical order of all shareholders entitled
to vote at such meeting, certifying the number of shares held by each, shall be
made available by the Secretary.
Section 1.09. Voting. In all elections for trustees every shareholder
shall have the right to vote, in person or by proxy, the shares owned of record
by the shareholder, for as many persons as there are trustees to be elected and
for whose election the shareholder has a right to vote. At all meetings of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in number of votes, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot. Upon like demand or order, the voting shall be conducted by two
inspectors in which event the proxies and ballots shall be received, and all
questions regarding the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot, and voting need not
be conducted by inspectors. Inspectors may be elected by the shareholders at
their annual meeting, to serve until the close of the next annual meeting and
their election may be held at the same time as the election of trustees. In
case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of
such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10. Action by Shareholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Trust.
ARTICLE II.
BOARD OF TRUSTEES
Section 2.01. Powers. The Board may exercise all the powers of the
Trust, except such as are by statute or the Declaration or these By-Laws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.02. Number of Trustees. The number of trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the trustees; provided, however, the number of trustees shall in no
event be reduced to less than three by such an instrument. The tenure of
office of a trustee shall not be affected by any decrease in the number of
trustees made by the Board.
Section 2.03. Regular Meetings. After each meeting of shareholders at
which a Board of Trustees shall have been elected, the Board so elected shall
meet as soon as practicable for the purpose of organization and the transaction
of other business. No notice of such first meeting shall be necessary if held
immediately after the adjournment, and at the site, of such meeting of
shareholders. Other regular meetings of the Board shall be held without notice
on such dates and at such places within or without the State of Massachusetts
as may be designated from time to time by the Board.
Section 2.04. Special Meetings. Special meetings of the Board may be
called at any time by the Chairman of the Board, the President or the Secretary
of the Trust, or by a majority of the Board by vote at a meeting, or in writing
with or without a meeting. Such special meetings shall be held at such place
or places within or without the State of Massachusetts as may be designated
from time to time by the Board. In the absence of such designation such
meetings shall be held at such places as may be designated in the calls.
Section 2.05. Notice of Meetings. Except as provided in Section 2.03,
notice of the place, day and hour of every regular and special meeting shall be
given to each trustee two days (or more) before the meeting, by delivering the
same personally, or by sending the same by telegraph, or by leaving the same at
the trustee's residence or usual place of business, or, in the alternative, by
mailing such notice three days (or more) before the meeting, postage prepaid,
and addressed to the trustee at the trustee's last known business or residence
post office address, according to the records of the Trust. Unless required by
these By-Laws or by resolution of the Board, no notice of any meeting of the
Board need state the business to be transacted thereat. No notice of any
meeting of the Board need be given to any trustee who attends, or to any
trustee who in writing executed and filed with the records of the meeting
either before or after the holding thereof, waives such notice. Any meeting of
the Board, regular or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the adjourned meeting.
Section 2.06. Quorum. At all meetings of the Board, one-third of the
entire Board (but in no event fewer than two trustees) shall constitute a
quorum for the transaction of business. Except in cases in which it is by
statute, by the Declaration or by these By-Laws otherwise provided, the vote of
a majority of such quorum at a duly constituted meeting shall be sufficient to
elect and pass any measure. In the absence of a quorum, the trustees present
by majority vote and without notice other than by announcement at the meeting
may adjourn the meeting from time to time until a quorum shall attend. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.07. Compensation and Expenses. Trustees may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
consist of an annual fee or retainer and/or a fixed fee for attendance at
meetings. In addition, trustees may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as trustees. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any trustee from serving the Trust in any other capacity and receiving
compensation therefor.
Section 2.08. Action by Trustees Other than at a Meeting. Any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 2.09. Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the trustees. The Board may designate one or more
trustees as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution, shall have and may exercise the powers
of the Board in the management of the business and affairs of the Trust,
provided, however, that in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required.
Section 2.10. Holding of Meetings by Conference Telephone Call. At any
regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.01. Executive Officers. The Board of Trustees shall choose a
President and may choose a Chairman of the Board and a Vice Chairman of the
Board from among the trustees, and shall choose a Secretary and a Treasurer who
need not be trustees. The Board of Trustees shall designate as principal
executive officer of the Trust either the Chairman of the Board, the Vice
Chairman of the Board, or the President. The Board of Trustees may choose an
Executive Vice President, one or more Senior Vice Presidents, one or more
Vice-Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers, none of whom need be a trustee. Any two or more of the
above-mentioned offices, except those of President and a Vice-President, may be
held by the same person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument be required by law,
by the Declaration of Trust, by the By-Laws or by resolution of the Board of
Trustees to be executed by any two or more officers. Each such officer shall
hold office until his successor shall have been duly chosen and qualified, or
until he shall have resigned or shall have been removed. Any vacancy in any of
the above offices may be filled for the unexpired portion of the term of the
Board of Trustees at any regular or special meeting.
Section 3.02. Chairman and Vice Chairman of the Board. The Chairman of
the Board, if one be elected, shall preside at all meetings of the Board of
Trustees and of the shareholders at which he is present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board of
Trustees. The Vice Chairman of the Board, if one be elected, shall, when
present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and trustees, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Trustees or
as may be required by law.
Section 3.03. President. In the absence of the Chairman or Vice Chairman
of the Board, the President shall preside at all meetings of the shareholders
and of the Board at which the President is present; and in general, shall
perform all duties incident to the office of a president of a trust, and such
other duties, as from time to time, may be assigned to him by the Board.
Section 3.04. Vice Presidents. The Vice President or Vice Presidents,
including any Executive or Senior Vice President or Presidents, at the request
of the President or in President's absence or during the President's inability
or refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice President, the Board may determine which one or more of
the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary shall:
keep the minutes of the meetings of the shareholders, of the Board and of any
committees, in books provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these By-Laws or as required by
law; be custodian of the records of the Trust; see that the corporate seal is
affixed to all documents the execution of which, on behalf of the Trust, under
its seal, is duly authorized, and when so affixed may attest the same; and in
general perform all duties incident to the office of a secretary of a trust,
and such other duties as, from time to time, may be assigned to him by the
Board, the Chairman of the Board, or the President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.06. Treasurer and Assistant Treasurers. The Treasurer shall:
have charge of and be responsible for all funds, securities, receipts and
disbursements of the Trust, and shall deposit, or cause to be deposited in the
name of the Trust, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by the
Board in accordance with Section 5.04 of these By-Laws; render to the
President, the Chairman of the Board and to the Board, whenever requested, an
account of the financial condition of the Trust; and in general, perform all
the duties incident to the office of a treasurer of a trust, and such other
duties as may be assigned to him by the Board, the President or the Chairman of
the Board.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board, the President or the Chairman
of the Board shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.07. Subordinate Officers. The Board may from time to time
appoint such subordinate officers as it may deem desirable. Each such officer
shall hold office for such period and perform such duties as the Board, the
President or the Chairman of the Board may prescribe. The Board may, from time
to time, authorize any committee or officer to appoint and remove subordinate
officers and prescribe the duties thereof.
Section 3.08. Removal. Any officer or agent of the Trust may be removed
by the Board whenever, in its judgment, the best interests of the Trust will be
served thereby, but such removal shall be without prejudice to the contractual
rights, if any, of the person so removed.
ARTICLE IV
SHARES OF BENEFICIAL INTEREST
Section 4.01. Certificates. If the Board authorizes the issuance of
certificates representing the shares of beneficial interest, such certificates
shall be signed by the President, the Chairman of the Board or a Vice President
and countersigned by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and sealed with the seal of the Trust. The
signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. No certificates shall be issued
for fractional shares. Such certificates shall be in such form, not
inconsistent with law or with the Declaration, as shall be approved by the
Board. In case any officer of the Trust who has signed any certificate ceases
to be an officer of the Trust, whether because of death, resignation or
otherwise, before such certificate is issued, the certificate may nevertheless
be issued and delivered by the Trust as if the officer had not ceased to be
such officer as of the date of its issue. Certificates need not be issued
except to shareholders who request such issuance in writing.
The Board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Trust
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representative, to advertise the same in
such manner as it shall require and/or to give the Trust a bond in such sum as
it may direct as indemnity against any claim that may be made against the Trust
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4.02. Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of shareholders for any other proper purpose. Such date in any
case shall be not more than sixty days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Checks. All checks or demands for money and notes of the
Trust shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
Section 5.02. Custodian. All securities and cash of the Trust shall be
placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.) The Trust shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of
the Custodian with respect to the cash and securities of the Trust held by the
Board of Trustees of the Trust. The Trust shall upon the resignation or
inability to serve of the Custodian use its best efforts to obtain a successor
custodian; require that the cash and securities owned by the Trust be delivered
directly to the successor custodian; and in the event that no successor
custodian can be found, submit to the shareholders, before permitting delivery
of the cash and securities owned by the Trust to other than a successor
custodian, the question whether or not the Trust shall be liquidated or shall
function without a custodian.
The Trustees may direct the Custodian to deposit all or any part of the
securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or such other person as may be
permitted by the Securities and Exchange Commission, or otherwise in accordance
with applicable law, pursuant to which system all securities of any particular
class or series of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust.
The Trustees may direct the Custodian to accept written receipts or other
written evidences indicating purchases of securities held in book entry form in
the Federal Reserve System in accordance with regulations promulgated by the
Board of Governors of the Federal Reserve System and the local Federal Reserve
Banks in lieu of receipt of certificates representing such securities.
Section 5.03. Bonds. The Board may require any officer, agent or
employee of the Trust to give a bond to the Trust, conditioned upon the
faithful discharge of such person's duties, with one or more sureties and in
such amount as may be satisfactory to the Board.
Section 5.04. Inspection of Records. The records of the Trust shall be
open to inspection by shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 5.05. Representation of Shares. Any officer of the Trust is
authorized to vote, represent and exercise of the Trust any and all rights
incident to any shares of any corporation or other business enterprise owned by
the Trust.
Section 5.06. Offices of the Trust. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk. The principal executive office of the
Trust is hereby fixed and located at 333 South Hope Street, Los Angeles,
California. The Trustees are granted full power and authority to change from
time to time the respective locations of said principal executive office. Any
such change shall be noted on the By-Laws opposite this Section, or this
Section may be amended to state the new location. Branch or subordinate
offices may be established at any time by the Trustees at any place or places.
ARTICLE VI
INDEMNIFICATION
The Trust shall provide any indemnification required by applicable law and
shall indemnify directors, officers, agents and employees as follows:
(a) The Trust shall indemnify any Trustee or officer of the Trust
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than action by or in the right of the
Trust) by reason of the fact that such person is or was such Trustee or officer
or an employee or agent of the Trust, or is or was serving at the request of
the Trust as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith or in a
manner reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that such person is or was such
Trustee or officer or an employee or agent of the Trust, or is or was serving
at the request of the Trust as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), actually and reasonably incurred
by such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Trust, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Trust unless and
only to the extent that the court in which such action or suit was brought, or
any other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been
successful on the merits in defense of any action, suit or proceeding referred
to in subparagraphs (a) or (b) above or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
therewith, without the necessity for the determination as to the standard of
conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless
ordered by a court) shall be made by the Trust only as authorized in the
specific case upon a determination that indemnification of the Trustee or
officer is proper in the circumstances because such person has met the
applicable standard of conduct set forth in subparagraph (a) or (b). Such
determination shall be made (i) by the Board by a majority vote of a quorum
consisting of Trustees who were not parties to such action, suit or proceeding,
or (ii) if such a quorum of disinterested Trustees so directs, by independent
legal counsel in a written opinion; and any determination so made shall be
conclusive.
(e) Expenses incurred in defending a civil or criminal action, writ
or proceeding may be paid by the Trust in advance of the final disposition of
such action, suit or proceeding, as authorized in the particular case, upon
receipt of an undertaking by or on behalf of the Trustee or officer to repay
such amount unless it shall ultimately be determined that such person is
entitled to be indemnified by the Trust as authorized herein. Such
determination must be made by disinterested trustees or independent legal
counsel.
(f) Agents and employees of the Trust who are not Trustees or
officers of the Trust may be indemnified under the same standards and
procedures set forth above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled and
shall continue as to a person who has ceased to be a Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
(h) Nothing in the Declaration or in these By-Laws shall be deemed
to protect any Trustee or officer of the Trust against any liability to the
Trust or to its shareholders to which such person would otherwise be subject by
reason of willful malfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's office.
(i) The Trust shall have power to purchase and maintain insurance on
behalf of any person against any liability asserted against or incurred by such
person, whether or not the Trust would have the power to indemnify such person
against such liability under the provisions of this Article. Nevertheless,
insurance will not be purchased or maintained by the Trust if the purchase or
maintenance of such insurance would result in the indemnification of any person
in contravention of any rule or regulation of the Securities and Exchange
Commission.
ARTICLE VII
AMENDMENT OF BY-LAWS
These By-Laws of the Trust may be altered, amended, added to or
repealed by the shareholders or by majority vote of the entire Board.
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 2nd day of October, 1989 is
made and entered into by and between THE TAX-EXEMPT MONEY FUND OF AMERICA, a
Massachusetts business trust, (hereinafter called the "Fund"), and CAPITAL
RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called
the "Investment Adviser").
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management
type, registered under the Investment Company Act of 1940 (the "1940 Act").
The Investment Adviser is registered under the Investment Advisers Act of 1940
and is engaged in the business of providing investment advisory and related
services to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual
undertaking of the parties, it is covenanted and agreed as follows:
1. The Investment Adviser shall determine what securities and other
assets shall be purchased or sold by the Fund.
2. The Investment Adviser shall furnish the services of persons to
perform the executive, administrative, clerical, and bookkeeping functions of
the Fund, including the daily determination of net asset value per share. The
Investment Adviser shall pay the compensation and travel expenses of all such
persons, and they shall serve without any additional compensation from the
Fund. The Investment Adviser shall also, at its expense, provide the Fund with
necessary office space (which may be in the offices of the Investment Adviser);
all necessary office equipment and utilities; and general purpose forms,
supplies, and postage used at the offices of the Fund.
3. The Fund shall pay all its expenses not assumed by the Investment
Adviser as provided herein. Such expenses shall include, but shall not be
limited to, expenses incurred in connection with the organization of the Fund,
its qualification to do business as a foreign corporation in the State of
California, and its registration as an investment company under the 1940 Act;
custodian, stock transfer and dividend disbursing fees and expenses;
distribution expenses pursuant to a plan under rule 12b-1 under the 1940 Act;
costs of designing and of printing and mailing to its shareholders reports,
prospectuses, proxy statements, and notices to its shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the Fund
(including registration and qualification expenses); legal and auditing fees
and expenses; compensation, fees, and expenses paid to trustees not affiliated
with the Investment Adviser; association dues; and costs of any share
certificates, stationery and forms prepared exclusively for the Fund.
4. The Fund shall pay to the Investment Adviser on or before the
tenth (10th) day of each month, as compensation for the services rendered by
the Investment Adviser during the preceding month, a fee at the annual rate of
0.44% of the first $200 million of the Fund's average net assets; 0.42% of the
Fund's average net assets in excess of $200 million but not exceeding $600
million; 0.38% of the Fund's average net assets in excess of $600 million but
not exceeding $1.2 billion; and 0.34% of the Fund's average net assets in
excess of $1.2 billion.
For the purposes hereof, the net assets of the Fund shall be determined in
the manner set forth in the Declaration of Trust and Prospectus of the Fund.
The advisory fee shall be payable for the period commencing on the date on
which operations of the Fund begin and ending on the date of termination hereof
and shall be prorated for any fraction of a month at the termination of such
period.
5. The Investment Adviser agrees that in the event the expenses of the
Fund (with the exclusion of interest, taxes, brokerage costs, extraordinary
expenses such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on
a date on which this Investment Advisory and Service Agreement is in effect,
exceed the expense limitations, if any, applicable to the Fund pursuant to
state securities laws or any regulations thereunder, it will reduce its fee by
the extent of such excess and, if required pursuant to any such laws or
regulations, will reimburse the Fund in the amount of such excess.
6. The Investment Adviser agrees to pay the expenses of the Fund referred
to in paragraph 3 above (with the exclusion of interest, taxes, brokerage costs
and extraordinary expenses such as litigation and acquisitions) for a period
ending not later than October 2, 1999, all subject to reimbursement by the
Fund. To accomplish such reimbursement, the Fund shall pay the Investment
Adviser an expense reimbursement fee which on an annual basis is equivalent to
the difference between the fees of the Investment Adviser described in
paragraph 4 above and 0.75% of the average net assets of the Fund. The expense
reimbursement fees are for reimbursement of actual expenses incurred by or on
behalf of the Fund and are intended to have the effect of assuring that the
total normal operating expenses of the Fund during the expense reimbursement
period will not exceed 0.75% of the Fund's average net assets per annum. Such
expense reimbursement fee arrangement will terminate either when all of such
reimbursable expenses of the Fund which have been paid by the Investment
Adviser pursuant thereto have been reimbursed by the Fund for a period of
twelve consecutive months or on October 2, 1999, whichever is earlier.
7. This Agreement may be terminated at any time, without payment of any
penalty, by the Trustees of the Fund or by vote of a majority (within the
meaning of the 1940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. Unless sooner terminated in accordance
with this provision, this Agreement shall continue until October 2, 1991. It
may thereafter be renewed from year to year by mutual consent; provided that
such renewal shall be specifically approved at least annually by the Board of
Trustees of the Fund, or by vote of a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund. In either event, it
must be approved by a majority of those Trustees who are not parties to such
Agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
8. This agreement shall not be assignable by either party hereto, and in
the event of assignment (within the meaning of the 1940 Act) by the Investment
Adviser shall automatically be terminated forthwith. The term "assignment"
shall have the meaning defined in the 1940 Act.
9. Nothing contained in this Agreement shall be construed to prohibit the
Investment Adviser from performing investment advisory, management, or
distribution services for other investment companies and other persons or
companies, nor to prohibit affiliates of the Investment Adviser from engaging
in such business or in other related or unrelated businesses.
10. The Investment Adviser shall not be liable to the Fund or its
stockholders for any error of judgment, act, or omission not involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations and duties hereunder.
11. The obligations of the Fund under this Agreement are not binding upon
any of the Trustees, officers, employees, agents or shareholders of the Fund
individually, but bind only the Fund's estate. The Investment Adviser agrees
to look solely to the assets of the Fund for the satisfaction of any liability
in respect of the Fund under this Agreement and will not seek recourse against
such Trustees, officers, employees, agents or shareholders, or any of them, or
any of their personal assets for such satisfaction.
12. It is understood that the name "American Funds" or any derivative
thereof or logo associated with that name is the valuable property of the
Invstment Adviser and its affiliates, and that the Fund shall have the right to
use such name (or derivative or logo) only so long as this Agreement shall
continue in effect. Upon termination of this Agreement the Fund shall
forthwith cease to use such name (or derivative or logo) and shall promptly
amend its Declaration of Trust to change its name.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
THE TAX-EXEMPT MONEY FUND CAPITAL RESEARCH AND MANAGEMENT
OF AMERICA COMPANY
By /s/Abner D. Goldstine By /s/James W. Ratzlaff
Abner D. Goldstine, President James W. Ratzlaff, Vice Chairman
By /s/Julie F. Williams By /s/Thomas E. Terry
Julie F. Williams, Secretary Thomas E. Terry, Vice President
and Secretary
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between THE TAX-EXEMPT MONEY FUND
OF AMERICA, a Massachusetts business trust (the "Fund"), and AMERICAN FUNDS
DISTRIBUTORS, INC., a California corporation ("AFD").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end investment company which offers
shares of beneficial interest and it is a part of the business of the Fund, and
affirmatively in the interest of the Fund, to offer shares of the Fund and
shares of future series for sale, either continuously, or from time to time by
means of such arrangements as are determined by its Trustees to be appropriate;
and
WHEREAS, AFD is engaged in the business of promoting the distribution of
shares of investment companies through securities broker-dealers; and
WHEREAS, the Fund and AFD wish to enter into an agreement with each other
to promote the distribution of the shares of the Fund and of all series of the
Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of
the shares of the Fund and of each series of the Fund which may be established
in the future, except as otherwise provided pursuant to the following
subsection (b). The terms "shares of Fund" or "shares" as used herein shall
mean shares of beneficial interest of the Fund and each series which may be
established in the future and become covered by this Agreement in accordance
with Section 22.
(b) The Fund may, upon 60 days' written notice to AFD, from time to
time designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full force and effect until terminated in accordance with the other provisions
hereof.
2. In the sale of shares of the Fund, AFD shall act asagent of the Fund
except in any transaction in which AFD sells such shares as a dealer to the
public, in which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may,
to the extent permitted by the 1940 Act and the rules and regulations
promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership
or other organization, or its, or their, security holders, beneficiaries or
members, in connection with a merger, consolidation or reorganization to which
the Fund is a party, or in connection with the acquisition of all or
substantially all the property and assets of such corporation, association,
Fund, partnership or other organization;
(b) issue shares at net asset value to the holders of shares of
capital stock or beneficial interest of other investment companies served as
investment adviser by any affiliated company or companies of The Capital Group,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in connection
with the reinvestment of dividends paid and other distributions made by the
Fund;
4. AFD shall devote its best efforts to the sale of shares of the Fund
and shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group, Inc., and insurance contracts funded by shares
of such mutual funds, for which AFD has been authorized to act as a principal
underwriter for the sale of shares. AFD shall maintain a sales organization
suited to the sale of shares of the Fund and shall use its best efforts to
effect such sales in countries as to which the Fund shall have expressly waived
in writing its right to designate another principal underwriter pursuant to
subsection 1(b) hereof, and shall effect and maintain appropriate qualification
to do so in all those jurisdictions in which it sells or offers shares for sale
and in which qualification is required.
5. Within the United States of America, all dealers to whom AFD shall
offer and sell shares must be duly licensed and qualified to sell shares of the
Fund. Shares sold to dealers shall be for resale by such dealers only at the
public offering price set forth in the effective prospectus which is part of
the Fund's Registration Statement in effect under the Securities Act of 1933,
as amended, for each series issued by the Fund at the time of such offer or
sale (herein the "Prospectus"). AFD shall not, without the consent of the
Fund, sell or offer for sale any shares of a series issued by the Fund other
than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to
insure that such dealers are appropriately qualified to transact business in
the shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price
which is equal to the net asset value per share as shall be determined by the
Trust in the manner and at the time or times set forth in and subject to the
provisions of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or
the Fund, be accepted by AFD immediately upon receipt and confirmed at an
offering price determined in accordance with the provisions of the Prospectus
and the 1940 Act, and applicable rules in effect thereunder. AFD shall not
hold orders subject to acceptance nor otherwise delay their execution. The
provisions of this Section shall not be construed to restrict the right of the
Fund to withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of
the Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Commission or the National Association of Securities Dealers, Inc. ("NASD"), as
such requirements may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter
under this Agreement shall be (i) that part of the sales charge which is
retained by AFD after allowance of discounts to dealers as set forth in the
effective prospectus which is part of the Fund's Registration Statement in
effect under the Securities Act of 1933, as amended, and (ii) amounts payable
to AFD as reimbursement of distribution expenses pursuant to the Fund's Plan of
Distribution under Rule 12b-1 under the 1940 Act, payable in arrears as of the
10th day following each month-end.
12. The Fund agrees to use its best efforts to maintain its registration
as a diversified open-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part becomes effective, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. AFD agrees and warrants that it will not in the sale of shares use
any Prospectus, advertising or sales literature not approved by the Fund or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from
the use of any sales literature, information, statistics or other aid or device
employed in connection with the sale of shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD, and
any other principal underwriter(s) in accordance with the number of copies each
receives; and
(c) expenses incurred in connection with the foregoing, other than to
meet the requirements of the Securities Act of 1933, as amended, or other
applicable laws, shall be borne by AFD, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s) in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series it offers
for sale under the securities laws of such states as AFD and the Fund may
approve. Any such qualification for any series may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Fund, but
AFD shall furnish such information and other material relating to its affairs
and activities as may be required by the Fund or its counsel in connection with
such qualifications.
16. The Fund may withhold shares of any series from sale in any
jurisdiction temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Trustees or the President or
any Vice President of the Fund determines that such offer or sale is not in the
best interest of the Fund. The Fund will give prompt notice to AFD of any
withholding and will indemnify it against any loss suffered by AFD as a result
of such withholding by reason of nondelivery of shares of any series after a
good faith confirmation by AFD of sales thereof prior to receipt of notice of
such withholding.
17. (a) This Agreement may be terminated at any time, without payment of
any penalty, as to the Fund or any series on sixty (60) days' written notice by
AFD to the Fund.
(b) This Agreement may be terminated as to the Fund or any series by
either party upon five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series.
(c) This Agreement may be terminated as to any series upon five (5)
days' written notice to AFD provided either of the following events has
occurred:
(i) The NASD has expelled AFD or suspended its membership in
that organization;
(ii) the qualification, registration, license or right of AFD to
sell shares of any series in a particular state has been suspended or cancelled
by the State of California or any other state in which sales of the shares of
the Fund or such series during the most recent 12-month period exceeded 10% of
all shares of such series sold by AFD during such period.
(d) This Agreement may be terminated as to the Fund or any series at
any time on sixty (60) days' written notice to AFD without the payment of any
penalty, by vote of a majority of the members of the Board of Trustees of the
Fund who are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan of Distribution or this
Agreement or any other agreements related to the Plan of Distribution (the
"Independent Trustees") or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or such series.
18. This Agreement shall not be assignable by either party hereto and in
the event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act.
19. No provision of this Agreement shall protect or purport to protect AFD
against any liability to the Fund or holders of its shares for which AFD would
otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement shall become effective on October 2, 1989. Unless
sooner terminated in accordance with the other provisions hereof, this
Agreement shall continue in effect until October 1, 1990, and shall continue in
effect from year to year thereafter but only so long as such continuance is
specifically approved at least annually by (i) the vote of a majority of the
Independent Trustees of the Fund cast in person at a meeting called for the
purpose of voting on such approval, and (ii) the vote of either a majority of
the entire Board of Trustees of the Fund or a majority (within the meaning of
the 1940 Act) of the outstanding voting securities of the Trust.
21. If the Fund shall at any time issue shares in more than one series,
this Agreement shall take effect with respect to such series of the Fund which
may be established in the future at such time as it has been approved as to
such series by vote of the Board of Trustees and the Independent Trustees in
accordance with Section 21. The Agreement as approved with respect to any
series shall specify the compensation payable to AFD pursuant to Section 11, as
well as any provisions which may differ from those herein with respect to such
series, subject to approval in writing by AFD.
This Agreement may be approved, amended, continued or renewed with
respect to a series as provided herein notwithstanding such approval,
amendment, continuance or renewal has not been effected with respect to any one
or more other series of the Fund.
This Agreement shall be construed under and shall be governed by the
laws of the State of California, and the parties hereto agree that proper venue
of any action with respect hereto shall be Los Angeles County, California.
22. The obligations of the Fund under this Agreement are not binding upon
any of the Trustees, officers, employees, agents or shareholders of the Fund,
or any other series, individually, but bind only the Fund's estate. AFD agrees
to look solely to the assets of the Fund for the satisfaction of any liability
of the Fund in respect of this Agreement and will not seek recourse against
such Trustees, officers, employees, agents or shareholders or any of them, or
any of their personal assets for such satisfaction.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of October 2, 1989.
THE TAX-EXEMPT MONEY FUND
OF AMERICA
By /s/Abner D. Goldstine
Abner D. Goldstine, President
By /s/Julie F. Williams
Julie F. Williams, Secretary
AMERICAN FUNDS DISTRIBUTORS, INC.
By /s/E. Graham Holloway
E. Graham Holloway, Chairman
By /s/James R. Zukor
James R. Zukor, Secretary
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. As such agent we offer to sell to you as a member of a Selling
Group, shares of such of the Companies as are qualified for sale in your state,
on the terms set forth below. We are acting as an underwriter within the
meaning of Article 111, Section 26 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
You are to offer and sell shares only at the regular public price currently
determined by the respective Companies in the manner described in their
offering Prospectuses. This Agreement on your part runs to us and to the
respective Companies and is for the benefit of and enforceable by each. The
offering Prospectuses and this Agreement set forth the terms applicable to
members of the Selling Group and all other representations or documents are
subordinate.
2. On sales of shares of Companies listed in Category I on the attached
Schedule A you will be paid dealer commissions as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AS PERCENTAGE OF AS PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than 3.75% 4.50%
$100,000
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than S1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
If you initiate and are responsible for sales of shares a) amounting to $1
million or more or b) made at net asset value to retirement plans of
organizations with collective retirement plan assets of $100 million or more,
you will be paid a dealer commission of 1.00% on sales to $2 million, plus
0.80% on amounts over $2 million up to $3 million, plus 0.50% on amounts over
$3 million up to $50 million, plus 0.25% on amounts over $50 million up to $100
million, plus 0. 15% on amounts over $100 million. For each account of a
shareholder of the respective Companies (and accounts related by the fight of
accumulation), only such net asset value sales made over a 12 month period
(commencing from the date of the first such sale) will be considered for
purposes of determinin the level of dealer commissions to be paid during that
period with respect to such account(s). No dealer commissions are paid on any
other sales of shares at net asset value, except that commissions may be paid
to dealers on their sales of fund shares to accounts managed by affiliates of
The Capital Group, Inc. as set forth in this Agreement. Sales of shares of
Washington Mutual Investors Fund below $1 million made in connection with
certain accounts established prior to September 1, 1969 are subject to reduced
dealer commissions and sales charges as described in the Washington Mutual
Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A). and purchases made under a statement of intention and
pursuant to the right of accumulation. both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same dealer commissions indicated in paragraph
2 above except as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AT PERCENTAGE OF AT PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission schedule
for sales of shares to retirement plans of organizations with assets of $100
million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no dealer commissions
will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to promote selling efforts and to compensate
you for providing certain services for your clients such as processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the Companies, provided you
meet certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to all members of the
Selling Group. The shares purchased will be issued by the respective Companies
only against receipt of the purchase price, in collected New York or Los
Angeles Clearging House funds subject to deduction of all commissions on such
sale (reallowance of any commissions to which you are entitled on purchases at
net asset value will be paid through our direct purchase commission system).
If payment for the shares purchased is not received within seven days after the
date of confirmation the sale may be canceled forthwith, by us or by the
respective Companies, without any responsibility or liability on our part or on
the part of the Companies, and we and/or the respective Companies may hold you
responsible for any loss, expense, liability or damage, including loss of
profit suffered by us and/or the respective Companies resulting from your delay
or failure to make payment as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to vou on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however. be permitted to sell any shares for the account of a shareholder of
the respective
Companies at the net asset value currently quoted by or for the respective
Companies' shares, and may charge a fair service fee for handling the
transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without our prior written
approval.
11. This Agreement is in all respects subject to statements regarding the sale
and repurchase or redemption of shares made in the offering Prospectuses of the
respective Companies, and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., which shall control and override any
provision to the contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having, either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale IN any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are a properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., and agree to notify us immediately if you cease to be so registered or
licensed or a member in good standing of that Association. (The provisions of
the preceding sentence do not apply to a broker or dealer located in a foreign
country and doing business outside the jurisdiction of the United States.)
15. Either of us may cancel this Agreement at any time by written notice to the
other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if
mailed or telegraphed to you at the address specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (I) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Accepted: Very truly yours,
- ----------------
Firm AMERICAN FUNDS DISTRIBUTORS, INC.
By------------- By /s/ Mark Freeman
Officer or Partner
--------------
Print Name of Officer or Partner
Address:-----
Date:--------
(06/96)
SCHEDULE A
SEPTEMBER 26, 1994
(SUPERSEDES SCHEDULE A DATED
OCTOBER 5, 1993)
CATEGORY 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
CATEGORY 2
American High-Income Trust
American High-Income Municipal Bond Fund
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Eempt Fund of Virginia
U.S. Government Securities Fund
CATEGORY 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
HOLD HARMLESS AGREEMENT
WHEREAS, (the "Employer") is eligible to establish a 403(b) custodial account
for its employees pursuant to Section 403(b)(7)(A) of the Internal Revenue Code
("Code"); and
WHEREAS, Section 403(b)(7) of the Code provides that amounts paid by an
eligible employer to a custodial account which satisfies the requirements of
Section 401(f)(2) of the Code shall be treated as amounts contributed by the
Employer for an annuity contract (as described in Section 403(b) of the Code)
for the employee if the amounts are to be paid to provide a retirement benefit
for that employee and are to be invested in shares of regulated investment
companies to be held in that custodial account; and
WHEREAS, the Employer desires to make available to its employees custodial
accounts eligible to comply with Section 403(b)(7) of the Code; and
WHEREAS, the Employer is willing to permit its employees to select AMCAP Fund,
Inc., American Balanced Fund, Inc., American High-Income Trust, American Mutual
Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Inc.,
Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The
Cash Management Trust of America, EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Inter-mediate Bond Fund of America, The Investment Company of America,
The New Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc.,
U.S. Government Securities Fund, The U.S. Treasury Money Fund of America, and
Washington Mutual Investors Fund, Inc., each of which is a regulated investment
company advised by Capital Research and Management Company ("Investment
Companies"); and
WHEREAS, American Funds Distributors, Inc. is the principal underwriter for
each of the Investment Companies; and
WHEREAS, the Investment Companies are regulated investment companies within the
meaning of Sections 403(b)(7)(C) and 851(a) of the Code; and
WHEREAS, the Investment Companies are described as regulated investment
companies in their current Prospectuses declared effective under the Securities
Act of 1933; and
WHEREAS, the Investment Companies are authorized for sale in all 50 states; and
WHEREAS, Capital Guardian Trust Company, a bank, shall be the custodian, within
the meaning of Section 401(f)(2), of the custodial accounts; and
WHEREAS, the Investment Companies are offered to the public by independent
broker-dealers;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The Investment Companies are eligible investments for 403(b) custodial
accounts.
2. If any of such Investment Companies should no ton,,er be a regulated
investment company, or permitted to be offered for sale under the securities
laws of the United States or any state, American Funds Distributors, Inc. will
inform the Employer and such Investment Companies will immediately cease
accepting investments from the employees.
3. American Funds Distributors, Inc. shall comply with all pertinent written
directives regarding the solicitation of employees and the purchase of
investment company shares.
4. Capital Research and Management Company, the Investment Companies and
American Funds Distributors, Inc. are not and shall not be regarded as the
agent or employee of the Employer, of the Board of Education of the Employer,
or any Board member individually, or of any officer, agent or employee of any
of the foregoing, or of any legal successor of any of the foregoing, or of any
combination thereof.
Neither the Employer, the Board, any Board members individually, the officers,
agents and employees of any of the foregoing, the legal successors of any of
the foregoing, nor any combination thereof are or shall be regarded as the
agents or employees of Capital Research and Management Company, the Investment
Companies or American Funds Distributors, Inc.
5. Payments for the purchase of shares of the Investment Companies shall be
sent to Capital Guardian Trust Company, at the address indicated on the 403(b)
account application or to such other address as may be designated in writing to
the Employer.
6. Any notice to the Employer shall be in duplicate and sent to:
- -------------------------------------------------------------
- -------------------------------------------------------------
Notices to the Investment Companies or American Funds Distributors, Inc. shall
be sent to 135 South State College Boulevard, Brea, CA 92621, Attention: Dealer
Support Department.
7. American Funds Distributors, Inc. or any Investment Company reserves the
right upon 30 days' written notice to the Employer, to discontinue making such
shares available for purchase by the Employer or the employees of the Employer.
Such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
8. The Employer reserves the right upon 30 days' written notice to American
Funds Distributors, Inc. or any Investment Company, to terminate this agreement
or any other agreement in which this agreement might be or is incorporated, but
such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
9. No alteration or variation of the terms of this agreement shall be valid
unless made in writing and signed by the
parties hereto.
10. American Funds Distributors, Inc. hereby agrees to hold Employer harmless
for any loss sustained by Employer
by virtue of the breach of this agreement by American Funds Distributors, Inc.
11. This agreement supersedes and replaces any and all such agreements
heretofore executed by the parties.
AMERICAN FUNDS DISTRIBUTORS, INC.
Print Name of Employer
By /s/ Mark F. Freeman
By
Title
Date
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
BANK SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. You have indicated that you wish to act as agent for your
customers in connection with the purchase, sale and redemption of shares of
such Companies as are qualified for sale in your state. We agree to honor your
request, subject to the terms set forth below.
1. In placing orders for the purchase and sale of shares of the Companies,
you will be acting as agent for your customers. We shall execute transactions
for each of your customers only upon your authorization, at the regular public
price currently determined by the respective Companies in the manner described
in their offering Prospectuses. This Agreement on your part runs to us and to
the respective Companies and is for the benefit of and enforceable by each.
The offering Prospectuses and this Agreement set forth the terms applicable to
sales of shares of the Companies through you and all other representations or
documents are subordinate.
2. On each order for shares of Companies listed in Category 1 on the attached
Schedule A that is accepted by us, you will be entitled to receive the
applicable commission as set forth below:
<TABLE>
<CAPTION>
Purchases Commission as Sales Charge as
Percentage of Percentage of
Offering Price Offering Price
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than $100,000 3.75% 4.50%
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than $1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
For purchases a) amounting to $1 million or more or b) made at net asset value
to retirement plans of organizations with collective retirement plan assets of
$100 million or more, you will be paid a commission of 1.00% on sales to $2
million, plus 0.80% on amounts over $2 million up to $3 million, plus 0.50% on
amounts over $3 million up to $50 million, plus 0.25% on amounts over $50
million up to $100 million, plus 0.15% on amounts over $100 million. For each
account of a shareholder of the respective Companies (and accounts related by
the right of accumulation), only such net asset value sales made over a 12
month period (commencing from the date of the first such sale) will be
considered for purposes of determining the level of commissions to be paid
during that period with respect to such account(s). No commissions are paid on
any other sales of shares at net asset value, except that commissions may be
paid on sales of fund shares to accounts managed by affiliates of The Capital
Group, Inc. as set forth in this agreement. Sales of shares of Washington
Mutual Investors Fund below $1 million made in connection with certain accounts
established before September 1, 1969 are subject to reduced commissions and
sales charges as described in the Washington Mutual Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A), and purchases made under a statement of intention and
pursuant to the right of accumulation, both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same commissions indicated in paragraph 2 above
except as follows:
<TABLE>
<CAPTION>
Purchases Commission as Sale
Percentage of Charge
Offering Price as Percentage of
Offering Price
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission
schedule for sales of shares to retirement plans of organizations with assets
of $100 million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no commission will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to compensate you for providing certain
services for your clients such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies, provided you meet
certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to you. The shares
purchased will be issued by the respective Companies only against receipt of
the purchase price, in collected New York or Los Angeles Clearing House funds
subject to deduction of all commissions on such sale (reallowance of any
commissions to which you are entitled on purchases at net asset value will be
paid through our direct purchase commission system). If payment for the shares
purchased is not received within seven days after the date of confirmation the
sale may be cancelled forthwith, by us or by the respective Companies, without
any responsibility or liability on our part or on the part of the Companies,
and we and/or the respective Companies may hold you responsible for any loss,
expense, liability or damage, including loss of profit suffered by us and/or
the respective Companies resulting from your delay or failure to make payment
as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to you on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however, be permitted to sell any shares for the account of a shareholder of
the respective Companies at the net asset value currently quoted by or for the
respective Companies' shares, and may charge a fair service fee for handling
the transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without prior written
approval.
11. This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of shares made in offering Prospectuses of
the respective Companies, which shall control and override any provision to the
contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale in any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are (a) properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., or (b) a "bank" as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934 (or other financial institution) and not otherwise required to
register as a broker or dealer under such Act or any state laws. You agree to
notify us immediately in writing if this representation ceases to be true. You
also agree that, if you are a bank or other financial institution as set forth
above, you will maintain adequate records with respect to your customers and
their transactions, and that such transactions will be without recourse against
you by your customers. We recognize that, in addition to applicable provisions
of state and federal securities laws, you may be subject to the provisions of
the Glass-Steagall Act and other laws governing, among other things, the
conduct of activities by federal and state chartered and supervised financial
institutions and their affiliated organizations. Because you will be the only
entity having a direct relationship with the customer in connection with
securities purchases hereunder, you will be responsible in that relationship
for insuring compliance with all laws and regulations, including those of all
applicable federal and state regulatory authorities and bodies having
jurisdiction over you or your customers to the extent applicable to securities
purchases hereunder.
15. Either of us may cancel this Agreement at any time by written notice to
the other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE A
October 5, 1993
(supersedes Schedule A dated
February 1, 1991)
Category 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
Category 2
American High-Income Trust
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
SUPPLEMENTAL SELLING GROUP AGREEMENT
Gentlemen:
You have entered into a Selling Group Agreement with us with respect to each
of the Funds in The American Funds Group (hereafter called the Companies). We
are authorized to pay you certain service fees each quarter in connection with
your sales of shares of the Companies, subject to the terms set forth below
which will be revised by us from time-to-time. your participation in this
service fee program will be evaluated at specific time intervals. Initial
qualification does not assure continued participation and this Agreement may be
amended or terminated by us at any time as indicated below. The offering
Prospectuses and this Agreement set forth the terms applicable to service fees
and all other representations and documents are subordinate.
1. You have met the minimum aggregate assets requirement set forth on the
attached Schedule 1.
2. You agree to cooperate as requested with programs that we provide to
enhance shareholder service. You also agree to assume an active role in
providing shareholder services such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies. Redemption levels of
shareholder accounts assigned to you will be considered in evaluating your
continued participation in this service fee program.
3. You agree to support our marketing efforts by granting reasonable requests
for visits to your offices by our wholesalers and, to the extent applicable, by
including all Companies covered by this Agreement on your "approved" list.
4. You agree to assign an individual broker to each shareholder account on
your books and to reassign the account should that broker leave your firm. You
agree to instruct each such broker to regularly contact shareholders having
accounts so assigned.
5. You agree to pass through to your brokers a share of the service fees paid
to you pursuant to this Agreement.
6. You acknowledge that (i) all service fee payments are subject to the
limitations contained in each Company's Plan of Distribution and may be varied
or discontinued at any time, (ii) in order to receive a service fee for a
particular quarter, the fee must amount to at least $100, and (iii) with
respect to shares of the Companies listed in Categories A and B, no service
fees will be paid on shares sold at net asset value (except on shares
attributable to sales (i) amounting to $1 million or more, (ii) made to
retirement plans of organizations with collective retirement plan assets of
$100 million or more or (iii) made to accounts managed by affiliates of The
Capital Group, Inc. which you initiated and for which you were responsible).
7. On shares of Companies listed in Category A on the attached Schedule 2
you will be paid a service fee each quarter based on the aggregate net asset
value of each account assigned to you (including accounts entitled to the right
of accumulation) as of the last day of the quarter for which payment is being
made at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares Acquired Through
June 30, 1988 0.15%
All Shares Acquired After
June 30, 1988 0.25% (accrual
of fee commencing after
after such shares are
held 12 months)
8. On shares of Companies listed in Category B on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.25% (accrual of fee
commencing after such
shares are held 12
months
9. On shares of Companies listed in Category C on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.15% (accrual of fee
commencing after such
shares are held 12
months
10. Either of us may cancel this Agreement at any time by written notice to
the other.
11. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed with the laws of
the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE 1
SEPTEMBER 1, 1988
Your eligibility is conditioned on verification by us of accounts of shares of
the Companies assigned to you having an aggregate net asset value amounting to
at least $750,000.
---------------------
SCHEDULE 2
September 26, 1994
(supersedes Schedule 2 dated
October 5, 1993)
Category A
AMCAP Fund
American Balanced Fund
American Mutual Fund
Bond Fund of America
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
Tax-Exempt Bond Fund of America
Washington Mutual Investors Fund
Category B
American High-Income Municipal Bond Fund
American High-Income Trust
Capital Income Builder
Capital World Bond Fund
Capital World Growth and Income Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
SMALLCAP World Fund
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category C
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors (SM)
AMERICAN FUNDS DISTRIBUTORS
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
ADDENDUM TO SELLING GROUP AGREEMENT
FOR THE STATE OF___________________
This Addendum to the SELLING GROUP AGREEMENT ("Agreement") among AMERICAN
FUNDS DISTRIBUTORS, INC. ("AFD"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
("LNL"), and the broker-dealer firm identified below ("Dealer") is effective
upon execution by all parties.
AFD, LNL and Dealer hereby agree that LNL shall pay all compensation due any
agents of the Dealer for business transacted on behalf of LNL directly to, and
in the name of a compensation manager appointed by Dealer, such compensation
manager being a duly licensed insurance agent in the state referenced above.
Dealer shall appoint its compensation manager in writing, signed by an
officer or partner of Dealer who has the authority to bind Dealer. LNL shall
direct all pavments for business transacted by agents of Dealer to the named
compensation manager until such time as Dealer notifies LNL, in writing, that
another compensation manager has been appointed.
It is agreed that payment of compensation payable by LNL to the agents of
Dealer shall be the responsibility of the compensation manager and shall not be
the responsibility of LNL. Furthermore, Dealer represents and warrants that
all monies received from LNL shall be distributed by the compensation manager
only to duly licensed agents appointed with LNL in accordance with the
Agreement and all applicable laws of the above referenced state.
It is further agreed that Dealer shall indemnify and hold harmless LNL, AFD,
and any of their affiliates, their respective officers, directors, employees or
agents ("Indemnified Party") from any and all claims, and demands or causes of
action that arise out of the compensation manager's negligence, or failure to
properly perform the responsibilities set forth in this Addendum or the
Agreement. Dealer, at its own cost, shall defend any legal proceeding that may
be brought against an Indemnified Party on any such claim or demand in respect
to which such Indemnified Party is indemnified and held harmless hereunder, and
shall satisfy any judgment that may be rendered against such Indemnified Party
with respect to any such claim or demand. Dealer shall notify LNL and AFD
promptly upon receipt of any such claim or demand which it receives.
Dealer agrees that this Addendum constitutes written consent by Dealer to
allow LNL to pay the compensation to the compensation manager as required by
Rule 3060 of the Rules of the NASD.
Any party to this Addendum may cancel this Addendum at any time upon written
notice to all other parties, effective upon receipt.
Three originals of the Addendum should be executed. Two of the originals
should be returned to AFD.
In WITNESS WHEREOF, the undersigned have executed this Addendum to the
Selling Group Agreement on the date written below.
AMERICAN FUNDS DISTRIBUTORS, INC. THE LINCOLN NATIONAL LIFE
133 South Hope Street INSURANCE COMPANY
Los Angeles, CA 90071 1300 South Clinton Street
Fort Wayne, IN 46801
By_______________________________ By________________________
_________________________________
(Name of Broker-Dealer Firm)
By_______________________________
Print Name_______________________
Title____________________________
Date_____________________________
Please state the name and the tax identification number of the compensation
manager who is licensed in THE above referenced state with The Lincoln National
Life Insurance Company.
Compensation Manager ____________________________________
Print Name
____________________________________
Signature
Social Security No. ____________________________________
9/96
FORM OF GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective _________ and is between THE CHASE MANHATTAN
BANK (the "Bank") and [fund name] (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined
in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to withdrawal
by draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed a
loan payable on demand, bearing interest at the rate customarily charged by the
Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer
will promptly return any such amount upon oral or written notification: (i)
that such amount has not been received in the ordinary course of business or
(ii) that such amount was incorrectly credited. If the Customer does not
promptly return any amount upon such notification, the Bank shall be entitled,
upon oral or written notification to the Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. The Bank or
its Subcustodian shall have no duty or obligation to institute legal
proceedings, file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such amount, but may
act for the Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received
which bears an expiration date, the Bank will endeavor to obtain Instructions
from the Customer or its Authorized Person, but if Instructions are not
received in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in
good faith, to be appropriate in which case it shall be held harmless for any
such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
Securities in the Custody Account registered in the name of such nominee but
without indicating the manner in which such proxies are to be voted; and where
bearer Securities are involved, proxies will be delivered in accordance with
Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold
the Bank harmless for the failure of an Authorized Person to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time. The Bank may electronically record any
Instructions given by telephone, and any other telephone discussions with
respect to the Custody Account. The Customer shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure of
a Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of such
loss and without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or
for the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness of any document
which it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision
of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts but the
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its subsidiaries,
affiliates or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and, to the
extent not inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their examination of
books and records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an undertaking to
permit the Customer's independent public accountants reasonable access to the
records of any Subcustodian which has physical possession of any Assets as may
be required in connection with the examination of the Customer's books and
records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, and the following Rider(s) [Check applicable rider(s)]:
ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise, or the
exercise of any other power or right. No waiver by a party
of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver is
to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Capital Research and Management Company
135 South State College Blvd.
Brea, CA 92821
or telex:
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver
the Assets to the persons so specified, after deducting any amounts which the
Bank determines in good faith to be owed to it under Section 13. If within
sixty (60) days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying the names of
the persons to whom the Bank shall deliver the Assets, the Bank, at its
election, may deliver the Assets to a bank or trust company doing business in
the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may continue to hold
the Assets until Instructions are provided to the Bank.
CUSTOMER
By:____________________________________________
Title:
THE CHASE MANHATTAN BANK
By:____________________________________________
Title:
SSA/AOA02F60.WP5-052693/020497
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 ,
before me personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank and
[fund name]
effective _____________
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's government
or an agency thereof and that has shareholders' equity in excess of $200
million in U.S. currency (or a foreign currency equivalent thereof), (ii) a
majority owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of
$100 million in U.S. currency (or a foreign currency equivalent thereof)(iii) a
banking institution or trust company incorporated or organized under the laws
of a country other than the United States or a majority owned direct or
indirect subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, and further
represents that its Board has determined that the use of each Subcustodian and
the terms of each subcustody agreement are consistent with the best interests
of the Fund(s) and its (their) shareholders. The Bank will supply the Customer
with any amendment to Schedule A for approval. The Customer has supplied or
will supply the Bank with certified copies of its Board of Directors
resolution(s) with respect to the foregoing prior to placing Assets with any
Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to
be made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's transfer agent
of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due
other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign custodian
and each eligible foreign securities depository holding the Customer's
Securities pursuant to this Agreement afford protection for such Securities at
least equal to that afforded by the Bank's established procedures with respect
to similar securities held by the Bank and its securities depositories in New
York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar
reports as it may reasonably request with respect to each Subcustodian and
securities depository holding the Customer's assets.
Global Custody Agreement
With: [fund name]
Dated: ________________
Special Terms and Conditions
1. Add the following new paragraph to the end of Section 1:
"The Bank shall be accountable under the terms of this agreement to the
Customer for all Assets held in the accounts and shall take prompt and
appropriate action to remedy any discrepancies with respect to such Assets."
2. Add to the end of Section 6 (b) (i):
"; provided however that prior to taking action, the Bank will use every
reasonable effort to give Customer written notice of any such reversal which
may include back valuation."
3. Amend the second sentence of the second paragraph of Section 7 to read:
"Unless the Customer sends the Bank a written exception or objection to
certain bank statements as shall be mutually agreed upon in writing within 180
days of receipt,..."
4. Amend the first paragraph of Section 8 as follows:
"Whenever the Bank,...("Corporate Actions"), the Bank will give the
Customer prompt notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
5. In the first sentence of paragraph 13, after "legal fees", insert
"incurred on behalf of the Customer".
6. Add the following new sentence to the end of Section 14 (c):
"The Bank shall not unreasonably refuse to furnish to the Customer such
reports (or portions thereof) of the Bank's external auditors as they relate
directly to the Bank's system of internal accounting controls applicable to the
Bank's duties under this Agreement. The Bank shall endeavor to obtain and
furnish the Customer with such similar reports as the Customer may reasonably
request with respect to each Subcustodian holding Assets of the Customer.
Expenses of the Bank and any Subcustodians under this provision shall be paid
by the Customer."
7. Amend the last paragraph of Section 3 of the Mutual Fund Rider to read:
"The Customer represents that its Board of Directors will approve each of
the Subcustodians listed in Schedule A to this Agreement before Assets are
held by such Subcustodian and the form of the subcustody agreements between
the Bank and each Subcustodian, and further represents that its Board will
determine that the use of such Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the customer's fund(s) and
its (their) shareholders prior to placing Assets with any such Subcustodian.
The Bank will supply the Customer with any amendment to Schedule A for
approval within such reasonable period of time as agreed to by the Bank and the
Customer. Upon request, the Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolutions with respect to the
foregoing prior to placing Assets with any Subcustodian so approved."
8. Add as a new section to the end of Section 3 of the Mutual Fund Rider:
"The Bank shall furnish annually to the Customer information concerning
Subcustodians employed by the Bank. Such information shall be similar in kind
and scope to that furnished to the Customer in connection with the initial
approval of the subcustodian by the Customer's Board of Directors. In
addition, the Bank will promptly inform the Customer in the event that the
Bank learns of a material adverse change in the financial condition of a
Subcustodian or is notified by a foreign banking institution employed as a
Subcustodian that there appears to be a substantial likelihood that its
shareholders's equity as required by Rule 17f-5 or any order thereunder. With
regard to the foregoing paragraphs, the Bank shall not be deemed to have
assumed any fiduciary duties imposed upon Customer by law.
The Bank will supply periodically, as mutually agreed upon, a statement in
respect of any Securities and cash, including indentification of the foreign
entities having custody of the Securities and cash and descriptions thereof."
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 14 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
October 31, 1997, relating to the financial statements and per share data and
ratios of The Tax-Exempt Money Fund of America, which appears in such Statement
of Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the heading "Financial Highlights"
in the Prospectus and under the headings "Independent Accountants" and "Reports
to Shareholders" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
November 24, 1997
September 26, 1989
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
Re: Investment Letter
Gentlemen:
The Tax-Exempt Money Fund of America, a Massachusetts business trust (the
"Fund"), hereby offers to sell to you 100,000 shares of beneficial interest of
The Tax-Exempt Money Fund of America, without par value, (the "Shares") at a
price of $1.00 per share upon the following terms and conditions:
You agree to pay to the Fund the aggregate purchase price of $100,000
against delivery of a statement confirming the registration of the 100,000
Shares in your name.
You represent to the Fund that you are purchasing the Shares for your
own account for investment purposes and not with the present intention of
redeeming or reselling the Shares and that the purchase price of such Shares is
in payment for an equity interest and does not represent a loan or temporary
advance by you.
You understand that you are obligated to pay certain expenses incurred
in connection with the organization of the Fund, as shall be reflected in an
Investment Advisory and Service Agreement between you and the Fund. You agree
that you will not redeem any of the Shares while any portion of such
organizational expenses has not been paid by you.
Very truly yours,
THE TAX-EXEMPT MONEY FUND
OF AMERICA
By
Paul G. Haaga, Jr.
Executive Vice President
Confirmed and agreed to September 26, 1989
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
Thomas E. Terry
Vice President and Secretary
PLAN OF DISTRIBUTION
OF
THE TAX-EXEMPT MONEY FUND OF AMERICA
WHEREAS, The Tax-Exempt Money Fund of America (the "Fund") is a
Massachusetts business trust which offers shares of beneficial interest and may
offer shares of additional series in the future;
WHEREAS, American Funds Distributors, Inc. ("AFD") will serve as
distributor of the shares of beneficial interest of the Fund, and the Fund and
AFD are parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to
authorize the Fund to bear expenses of distribution of its shares, including
reimbursement of AFD for its expenses in the promotion of the sale of shares of
the Fund, pursuant to the Agreement;
WHEREAS, the Board of Trustees of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders:
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. The Fund may expend pursuant to this Plan amounts not to exceed 0.15
of 1% of the average daily net assets of the Fund per annum.
2. Subject to the limit in paragraph 1, the Fund shall pay, or reimburse
AFD for, amounts to finance any activity which is primarily intended to result
in the sale of shares of the Fund including, but not limited to, commissions or
other payments to dealers, and salaries and other expenses relating to selling
or servicing efforts; provided, (i) that the Board of Trustees of the Fund
shall have approved categories of expenses for which payment or reimbursement
shall be made pursuant to this paragraph 2, and (ii) that reimbursement shall
be made in accordance with the terms of the Agreement.
3. This Plan shall not take effect until it has been approved by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940 (the "1940 Act")) and by the Board of Trustees
as provided in paragraph 4.
4. This Plan shall not take effect until it has been approved, together
with any related agreement, by votes of the majority of both (i) the Board of
Trustees of the Fund and (ii) those Trustees of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
5. At least quarterly, the Board of Trustees shall be provided by any
person authorized to direct the disposition of monies paid or payable by the
Fund pursuant to this Plan or any related agreement, and the Board shall review
a written report of the amounts expended pursuant to the Plan and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until October 2, 1990. It may thereafter be renewed from year to
year in the manner provided for in paragraph 4 hereof.
7. Any agreement related to this Plan shall be in writing, and shall
provide:
A. that such agreement may be terminated as to the Fund at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, on not more than sixty (60) days' written
notice to any other party to the agreement; and
B. that such agreement shall terminate automatically in the event of
its assignment.
8. This Plan may not be amended to increase materially the maximum amount
of fee or other distribution expenses provided for in paragraph 1 hereof with
respect to the Fund unless such amendment is approved by the voting securities
of the Fund in the manner provided in paragraph 3 hereof, and no material
amendment to this Plan shall be made unless approved in the manner provided for
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Trustees
of the Fund who are not "interested persons" of the Fund (as defined in the
1940 Act) shall be committed to the discretion of the Trustees who are not
interested persons.
10. If the Fund shall at any time issue shares in more than one series,
this Plan may be adopted, amended, continued or renewed with respect to a
series as provided herein notwithstanding such adoption, amendment, continuance
or renewal has not been effected with respect to any one or more other series
of the Fund.
11. The obligations of the Fund under this Agreement are not binding upon
any of the Trustees, officers, employees, agents or shareholders of the Fund
individually, but bind only the Fund's estate. Persons entitled to receive
payments from the Fund under the Plan shall look solely to the assets of the
Fund for any payment by the Fund under this Plan and will not seek recourse
against such Trustees, officers, employees, agents or shareholders, or any of
them or any of their personal assets for such payments.
12. The Fund shall preserve copies of this Plan and any related agreement
and all reports made pursuant to paragraph 5 hereof for a period of not less
than six (6) years from the date of this Plan, or such agreement or reports, as
the case may be, the first two (2) years of which such records shall be stored
in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of October 2, 1989.
THE TAX-EXEMPT MONEY FUND OF AMERICA
By /s/ Abner D. Goldstine
Abner D. Goldstine, President
By /s/Julie F. Williams
Julie F. Williams, Secretary
THE TAX-EXEMPT MONEY FUND OF AMERICA
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 158,710
<INVESTMENTS-AT-VALUE> 158,719
<RECEIVABLES> 2,580
<ASSETS-OTHER> 297
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 161,596
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,689
<TOTAL-LIABILITIES> 1,689
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 159,901,968
<SHARES-COMMON-PRIOR> 143,711,476
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9
<NET-ASSETS> 159,907
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,652
<OTHER-INCOME> 0
<EXPENSES-NET> 1,034
<NET-INVESTMENT-INCOME> 4,618
<REALIZED-GAINS-CURRENT> (5)
<APPREC-INCREASE-CURRENT> 3
<NET-CHANGE-FROM-OPS> 4,616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,618
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 308,684,562
<NUMBER-OF-SHARES-REDEEMED> 296,711,176
<SHARES-REINVESTED> 4,217,106
<NET-CHANGE-IN-ASSETS> 16,188
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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</TABLE>
