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. 13
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No.15
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)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On November 19, 1996, it filed its 24f-2 notice for fiscal 1996.
Approximate date of proposed public offering:
It is proposed that this filing become effective on February 1, 1996,
pursuant to paragraph (a) 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>
<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
- -------------------------------------------------------------------------------
The Cash Management Trust of America(R)
The U.S. Treasury Money Fund of AmericaSM
The Tax-Exempt Money Fund of AmericaSM
Prospectus
FEBRUARY 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
Expenses 3
Financial Highlights 4
Investment Policies and Risks 7
Securities and Investment Techniques 8
Investment Results 11
Dividends, Distributions and Taxes 13
Fund Organization and Management 14
Shareholder Services 17
- --------------------------------------------------------------------------------
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.
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.
09/39/49-010-0297
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
EXPENSES
The effect of the expenses described below is reflected in each fund's share
price or return.
Fund operating expenses are paid out of the fund's earned income.
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
(as a percentage of average net assets for the fiscal year ended September 30,
1996 after fee waiver)
<TABLE>
<CAPTION>
U.S. TAX-
CASH TREASURY EXEMPT
MANAGEMENT MONEY MONEY
TRUST FUND FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees 0.31% 0.30% 0.32%/1/
12b-1 expenses 0.07%/2/ 0.09%/2/ 0.06%/2/
Other expenses 0.22% 0.26% 0.27%
Total fund operating expenses 0.60% 0.65% 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, fees (as a
percentage of average net assets) would have been 0.44%. 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 $ 7 $ 7
Three years $19 $21 $21
Five years $33 $36 $36
Ten years $75 $81 $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
-----------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------
<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 .050 .052 .031 .025 .036 .061 .078 .086 .068 .059
Total income
from investment
operations .050 .052 .031 .025 .036 .061 .078 .086 .068 .059
- -----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
income (.050) (.052) (.031) (.025) (.036) (.061) (.078) (.086) (.068) (.059)
Total distributions (.050) (.052) (.031) (.025) (.036) (.061) (.078) (.086) (.068) (.059)
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 5.06% 5.34% 3.10% 2.57% 3.64% 6.26% 8.10% 8.98% 7.00% 6.07%
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $3,304 $2,996 $2,738 $1,940 $2,090 $2,134 $2,145 $1,432 $1,107 $809
Ratio of expenses to
average net assets .60% .60% .68% .65% .63% .61% .57% .54% .50% .51%
Ratio of net income
to average net assets 4.95% 5.21% 3.14% 2.57% 3.59% 6.12% 7.70% 8.62% 6.79% 5.85%
- -----------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
PER-SHARE DATA AND RATIOS
U.S. TREASURY MONEY FUND
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-----------------------
1996 1995 1994 1993 1992 1991/1/
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .046 .048 .028 .025 .036 .035
Total income
from investment
operations .046 .048 .028 .025 .036 .035
- -------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
Total distributions (.046) (.048) (.028) (.025) (.036) (.035)
Net asset value,
end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------
Total return 4.66% 4.89% 2.89% 2.49% 3.61% 3.52%/2/
- -------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $ 256 $ 231 $ 199 $ 140 $ 106 $ 59
Ratio of expenses to
average net assets .65% .67% .67% .61% .68% .68%/3/
Ratio of net income
to average net assets 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>
YEARS ENDED SEPTEMBER 30
------------------------
1996 1995 1994 1993 1992 1991 1990/1/
- --------------------------------------------------------------------------
<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 .029 .031 .020 .019 .029 .045 .049
Total income
from investment
operations .029 .031 .020 .019 .029 .045 .049
- --------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
Total distributions (.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
- --------------------------------------------------------------------------
Total return 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) $ 144 $150 $ 170 $ 121 $ 108 $ 107 $ 61
Ratio of expenses to
average net assets
Ratio of expenses to
average net assets
Ratio of net income
to average net assets 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 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.
Government, its 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. Government, its 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. The fund may 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 or to
take advantage of unusual investment opportunities, the fund may invest 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, or derive at least 80% of its income from, 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.
ACHIEVEMENT OF EACH FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED.
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. For U.S. Treasury
Money Fund they 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
anticipation notes, bond anticipation notes, revenue anticipation
8
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
notes, grant anticipation notes, construction loan notes, municipal commercial
paper, general obligation bonds, revenue bonds and industrial development
bonds. These securities are described in the statement of additional
information. 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.
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.
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 there are
changes in the market rates of interest on which the interest rates are based.
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.
9
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
"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 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 30 days or less,
90 days or less and 60 days or less, respectively.
10
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The funds may from time to time 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 income generated by an investment in 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 DECEMBER 31, 1996)
<TABLE>
<CAPTION>
CASH
AVERAGE ANNUAL MANAGEMENT U.S. TREASURY TAX-EXEMPT
TOTAL RETURNS: TRUST MONEY FUND MONEY FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One year 4.93% 4.59% 2.85%
................................................................................
Five years 3.95% 3.70% 2.52%
................................................................................
Ten years 5.58% -- --
................................................................................
Lifetime 7.70% 3.93%/1/ 3.23%/2/
- --------------------------------------------------------------------------------
7-day Yield/3/: 4.87% 4.38% 3.03%
Effective Yield/3/: 4.99% 4.48% 3.07%
</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 standard formula.
11
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
CASH MANAGEMENT TRUST
[GRAPH APPEARS HERE]
U.S. TREASURY MONEY FUND
[GRAPH APPEARS HERE]
12
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
TAX-EXEMPT MONEY FUND
[GRAPH APPEARS HERE]
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.
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.
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).
13
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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 it does it 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 THE 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 THE
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.
- --------------------------------------------------------------------------------
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 who meet periodically
and perform 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 in effect
for each fund. The funds do not hold annual meetings of shareholders. However,
significant corporate matters which require shareholder approval,
14
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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."
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
15
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
expenses are approved in advance by the board and the expenses paid under the
Plan were incurred within the preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fees paid by each fund, as a percentage of average net
assets, for the previous fiscal year are listed earlier under "Expenses."
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 APPEARS HERE]
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
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
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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. IF
YOU ARE INVESTING THROUGH A RETIREMENT PLAN, YOU SHOULD CONTACT YOUR PLAN
ADMINISTRATOR/TRUSTEE 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, 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.
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.
17
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
- - Cross-Reinvestment
You may invest your dividend 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) (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
<TABLE>
- ----------------------------------------------------------------
<S> <C>
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
</TABLE>
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.
18
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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. During
1997, American Funds Distributors will also provide additional compensation to
the top one hundred 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.
- - 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.
19
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
- - 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) (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) (see below), or
by fax. Sales by telephone or fax are limited to $10,000 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. 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 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. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
20
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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 in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $10,000 per fund, per account each
day), or exchange shares around the clock with American FundsLine(R). To use
this service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the
funds, 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 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, each fund may be liable for losses due to
unauthorized or fraudulent instructions.
21
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
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. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
22
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS / PROSPECTUS
- --------------------------------------------------------------------------------
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
American Funds American Funds American
Service Company Distributors FundsLine(R)
800/421-0180 ext. 1 800/421-9900 ext. 11 800/325-3590
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
--------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects of
performance information, the funds, including each
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the
independent accountant's
report.
A current SAI has been filed
with the Securities and
Exchange Commission and is
incorporated by reference (is
legally part of the
prospectus).
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 of the
Service Company funds 333 South Hope Street
800/421-0180 ext. 1 Los Angeles, CA 90071
[RECYCLE LOGO]
This prospectus has been printed on recycled paper.
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
February 1, 1997
This document is not a prospectus but should be read in conjunction with the
current Prospectus dated February 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 6
Fund Officers and Trustees 12
Management 16
Dividends and Taxes 19
Additional Information Concerning Taxes 22
Purchase of Shares 24
Redeeming Shares 31
Shareholder Account Services and Privileges 32
Execution of Portfolio Transactions 34
General Information 35
Investment Results 37
Description of Ratings for Debt Securities 42
Financial Statements Attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
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. 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 rated 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 organiation), and
unrated 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 each
fund's total assets, with the investment in any one such issuer being limited
to no more than the greater of 1% of each 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
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 COMMITTMENTS - The funds may enter into commitments to purchase
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. 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. 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.
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. All percentage limitations expressed in the following
investment restrictions are measured immediately after and giving effect to the
relevant transaction.
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, see 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.
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 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. To the extent CTEX is required by any state in order to be
characterized as "diversified," it may be required to invest no more than 5% of
its total assets in the securities of any one issuer, except the U.S.
Government, its agencies and instrumentalities. 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 AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION COMPENSATION OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING FROM ALL FUNDS BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED MANAGED BY WHICH
COMPENSATION/1/) FROM CAPITAL TRUSTEE
EACH FUND DURING RESEARCH AND SERVES/2/
FISCAL YEAR ENDED MANAGEMENT
SEPTEMBER 30, 1996 COMPANY/2/
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Private Investor. Former President and $5,300 $145,750
P.O. Box 144 Trustee Chief Executive Officer The Mission CMTA 18
Palos Verdes Estates, CA 90274 Group (non-utility holding company, $3,000
Age: 63 subsidiary of Southern California Edison CTEX
Company) $3,000
CTRS
+ Don R. Conlan Trustee President Emeritus, The Capital Group none/4/ none/4/
1630 Milan Avenue Companies, Inc. 12
South Pasadena, CA 91030
Age: 61
Diane C. Creel Trustee CEO and President, $4,300 $37,300
100 W. Broadway The Earth Technology Corporation CMTA 12
Suite 5000 (international consulting engineering) $2,000
Long Beach, CA 90802 CTEX
Age: 48 $2,000
CTRS
Martin Fenton, Jr. Trustee Chairman, Senior Resource Group $4,500 $116,300
4350 Executive Drive (management of senior living centers) CMTA 16
Suite 101 $2,200
San Diego, CA 92121-2116 CTEX
Age: 61 $2,200
CTRS
Leonard R. Fuller Trustee President, Fuller & Company, Inc. $5,100 $40,300
4337 Marina City Drive (financial management consulting firm) CMTA 12
Suite 841 ETN $2,800
Marina del Rey, CA 90292 CTEX
Age: 50 $2,800
CTRS
+* Abner D. Goldstine President, PEO Capital Research and Management none/4/ none/4/
Age: 67 and Trustee Company, Senior Vice President 12
and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management none/4/
Age: 48 the Board Company, Executive Vice President none/4/ 14
and Director
Herbert Hoover III Trustee Private Investor $4,700 $61,400
1520 Circle Drive CMTA 14
San Marino, CA 91108 $2,400
Age: 69 CTEX
$2,400
CTRS
Richard G. Newman Trustee Chairman, President and CEO, $4,500/3/ $65,300
3250 Wilshire Boulevard AECOM Technology Corporation CMTA 13
Los Angeles, CA 90010-1599 (architectural engineering) $2,200/3/
Age: 62 CTEX
$2,200/3/
CTRS
Peter C. Valli Trustee Chairman, BW/IP $2,800/3/ $37,950
45 Sea Isle Drive International Inc. CMTA 12
Long Beach, CA 90803 (industrial manufacturing) $2,200/3/
Age: 69 CTEX
$2,200/3/
CTRS
</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: Richard G. Newman ($13,257 - CMTA; $7,033- CTEX and $7,033 - CTRS),
and Peter C. Valli ($12,731 - CMTA; $6,934 - CTEX; and $6,934 - 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
* Teresa S. Cook, VICE PRESIDENT (CMTA AND CTRS ONLY). Capital Research and
Management Company, Vice President - Investment Division.
*** Neil L. Langberg, SENIOR VICE PRESIDENT (CTEX ONLY). Capital Research and
Management Company, Vice President - Investment Management Group
* Sarah P. Lucas, ASSISTANT VICE PRESIDENT. (CMTA AND CTRS ONLY). Capital
Research
and Management Company, Assistant Vice President - Investment Management Group
** Mary C. Hall, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* Michael J. Downer, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* Julie F. Williams, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
** Anthony W. Hynes, Jr., TREASURER. Capital Research and Management
Company, Vice President - Fund Business Management Group
* Kimberly S. Verdick, ASSISTANT SECRETARY. Capital Research and Management
Company,
Assistant Vice President - Fund Business Management Group
** Todd L. Miller, ASSISTANT TREASURER. Capital Research and Management
Company,
Assistant Vice President - Fund Business Management Group
* Address is 333 South Hope Street, Los Angeles, CA 90071
** Address is 135 South State College Boulevard, Brea, CA 92821
*** Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
No compensation is paid by a fund to any officer or Trustee who is a director
or officer of the Investment Adviser. CMTA pays annual fees of $4,000 to
Trustees who are not affiliated with the Investment Adviser; CTEX pays an
annual fee of $400 to Trustees who are not affiliated with the Investment
Adviser and CTRS pays an annual fee of $900 to Trustees who are not affiliated
with the Investment Adviser. 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 January 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 $100 billion of stocks,
bonds and money market instruments and serves over five 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, 1997, unless sooner
terminated. The CTEX Agreement will continue in effect until October 1, 1997,
unless sooner terminated, and the CTRS Agreement will continue in effect until
October 31, 1997, 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 asets 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, 1996, 1995, and 1994, the
Investment Adviser's total fees from CMTA amounted to $9,671,000, $9,526,000,
and $7,882,000, respectively. During the fiscal years ended September 30,
1996, 1995, and 1994, the Investment Adviser's total fees from CTEX amounted to
$648,000, $699,000, and $648,000, respectively. Voluntary fee waivers for CTEX
amounted to $173,000 during the fiscal year ended September 30, 1996 . During
the fiscal years ended 1996, 1995, and 1994, the Investment Adviser's total
fees from CTRS amounted to $699,000, $637,000 and $508,000, 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 Bouldevard, 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 (see
"Principal Underwriter" in the prospectus). 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,
1996, CMTA, CTRS and CTEX paid $2,314,000, $205,000 and $82,000, respectively,
to the Principal Underwriter under the Plan (compensation to dealers). As of
September 30, 1996, distribution expenses accrued and unpaid were $156,000,
$16,000 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; (b) derive
less than 30% of its gross income from the sale or other disposition of stock
or securities held less than three months; and (c) 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 to that extent 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 shall 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 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. Becauses
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 the funds and their shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
funds or their 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>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower
Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer who Mail directly to your investment
your is registered in the state where dealer's address printed on your
investment the purchase is made and who account statement.
dealer has a sales agreement with
American Funds Distributors.
By mail Make your check payable to the Fill out the account additions form at the
fund and mail to the address bottom of a recent account statement, make
indicated on the account your check payable to the fund, write your
application. Please indicate an account number on your check, and mail the
investment dealer on the check and form in the envelope provided with
account application. your account statement.
By telephone Please contact your investment Complete the "Investments by Phone"
dealer to open account, then section on the account application or
follow the procedures for American FundsLink Authorization Form.
additional investments. 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 wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "Initial Investment."
investment dealer on the
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
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>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
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 43
America(SM) 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 200 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), will, during calendar year 1997, provide 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 200 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.")
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 organizations with retirement plan assets of $100
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 $25,000 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 trustees 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 Investment Company Act of 1940, 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,
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 Send a letter of instruction specifying the name of the fund, the
Funds Service Company number of shares or dollar amount to be sold, your name and
(at the appropriate account number. You should also enclose any share
address indicated under certificates you wish to redeem. For redemptions over $50,000
"Principal Underwriter and for certain redemptions of $50,000 or less (see below),
and Transfer Agent" in your signature must be guaranteed by a bank, savings
the prospectus) 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 If you redeem shares through your investment dealer, you may
investment dealer 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 You may use this option, provided the account is registered in
redemption check sent to the name of an individual(s), a UGMA/UTMA custodian, or a
you by using American non-retirement plan trust. These redemptions may not exceed
FundsLine(R) or by $10,000 per day, per fund account and the check must be
telephoning, faxing, or made payable to the shareholder(s) of record and be sent to
telegraphing American the address of record provided the address has been used
Funds Service Company with the account for at least 10 days. See "Principal
(subject to the conditions Underwriter and Transfer Agent" in the prospectus and
noted in this section and "Exchange Privilege" below for the appropriate telephone or fax
in "Telephone number.
Purchases, Sales and
Exchanges" in the
prospectus)
In the case of the money Upon request (use the account application for the money
market funds, you may market funds) you may establish telephone redemption
have redemptions wired privileges (which will enable you to have a redemption sent to
to your bank by your bank account) and/or check writing privileges. If you
telephoning American request check writing privileges, you will be provided with
Funds Service Company checks that you may use to draw against your account. These
($1,000 or more) or by checks may be made payable to anyone you designate and
writing a check ($250 or must be signed by the authorized number of registered
more) 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 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 200 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 shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their 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 shareholders will receive a confirmation statement
at least quarterly. Participation in the plan will begin within 30 days after
receipt of the account application. If the shareholder's 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. The
shareholder 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 - A shareholder in one fund
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 the shareholder's 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 shall have the right, if the
shareholder fails 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 the shareholder. 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 cancelled checks will be returned to you. Generally, you pay no fee for
this checkwriting 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 and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $10,000
per fund, per account each day), or exchange shares around the clock with
American FundsLine(R). To use this service, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American
FundsLine(R) are subject to the conditions noted above and in "Redeeming
Shares--Telephone 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 REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLine(R)), fax or telegraph redemption and/or exchange options,
you agree to hold the funds, 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 relevant fund or funds may be
liable for losses due to unauthorized or fraudulent instructions. In the event
that shareholders are unable to reach a 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 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 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,
1996, CMTA, CTRS and CTEX paid $4,511,000, $251,000 and $150,000, 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 auditing and accounting.
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; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; 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 for CTEX
or CTRS 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, 1996
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, 1996 : $1.0009236
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $ $10009236
Less beginning account value: $1.00000000
Net change in account value: $ $0.0009236
Seven-day yield = ( 0.0009236 X 365/7) = 4.82%
Effective yield = [1 + ( 0.0009236) 1/7]/365/ = 4.93%
CTRS The seven-day and effective yields for the period ended September 30, 1996
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, 1996: $ $1.00087602
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $1.00087602
Less beginning account value: $1.00000000
Net change in account value: $0.00087602
Seven-day yield = (0.00087602 X /365/7/) = 4.57%
Effective yield = [1 + (0.00087602) 1/7]/365/ = 4.67%
CTEX The seven-day, effective and tax-equivalent yields for the period ended
September 30, 1996 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, 1996: $ 1.00056219
*Value includes additional shares acquired with dividends paid on the original
share.
CALCULATION: Ending account value: $1.00056219
Less beginning account value: $1.00000000
Net change in account value: $0.00056219
Tax-exempt portion of net change: $ $0.00056219
Taxable portion of net change: $ -0-
Seven-day yield = ($$0.00056219 X 365/7) = 2.93%
Seven-day tax equivalent yield = ($ 0.00056219 X 365/7(1-0.396)) = 4.85%
Effective yield =[1 + ($0.00056219) 1/7]/365/ = 2.97%
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 341.0% (for the
period 11/3/76 through 9/30/96), the lifetime return of CTEX was 24.8% (for the
period 10/24/89 through 9/30/96), and the lifetime return of CTRS was 24.2%
(for the period 2/1/91 through 9/30/96).
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>
10/1/91 - 9/30/96 +21.3 +21.6 +20.9
10-Year Period
1986 - 1996 72.4% 70.3% 67.7%
1985 - 1995 75.6 73.1 72.6
1984 - 1994 80.9 78.0 80.2
1983 - 1993 93.6 89.3 91.1
1982 - 1992 105.7 100.0 102.6
1981 - 1991 126.2 118.6 114.7
1980 - 1990 149.2 135.9 122.9
1979 - 1989 159.8 NA 125.5
1978 - 1988 162.0 NA 125.3
1977 - 1987 159.8 NA 125.0
</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 - 9/30/96 +24.8% +25.1% +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 - 9/30/96 +24.2% +25.2% +26.4%
</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 broadbased 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."
<PAGE>
<TABLE>
<S> <C> <C> <C>
The Tax-Exempt Money Fund of America
Investment Portfolio, September 30, 1996
Principal Market
Yield at Amount Value
Acquisition (000) (000)
Municipal Securities
- -------------------------------------------------------- ------------- ---------- ----------
Alabama - 1.39%
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:
3.40% 11/15/96 3.40 $1,000 $1,000
3.50% 11/19/96 3.50 1,000 1,000
Alaska - 5.22%
Housing Finance Corporation General
Purpose Bonds, 1991 Series C, VRDN,
3.90%, 10/2/96* 3.90 3,500 3,500
City of Valdez, Marine Terminal Revenue
Refunding Bonds (ARCO Transportation
Alaska, Inc. Project):
1994 Series C, TECP, 3.60% 10/16/96 3.60 1,000 1,000
1994 Series, TECP, 3.55% 11/6/96 3.55 1,000 1,000
1994 Series C, TECP, 3.50% 11/12/96 3.50 2,000 2,000
Arizona - 4.35%
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, 3.75% 10/16/96* 3.75 1,000 1,000
Salt River Project Agricultural Improvement
and Power District, Promissory Notes, TECP:
Series L:
3.45% 10/2/96 3.45 1,400 1,400
3.50% 10/4/96 3.50 1,500 1,500
3.45% 11/5/96 3.45 1,000 1,000
Series G, 3.50% 11/6/96 3.50 1,350 1,350
Arkansas - 1.39%
Board of Trustees of the University of Arkansas
Various Facility Revenue Bonds (UAMS
Campus), Series 1994, VRDN, 3.90% 10/2/96* 3.90 2,000 2,000
California - 2.10%
County of Los Angeles, 1996-97 Tax and Revenue
Anticipation Notes, Series A, 4.50% 6/30/97 4.50 3,000 3,016
Colorado - 0.70%
State Tax and Revenue Anticipation Notes,
1996 Series A, 4.50% 6/27/97 4.50 1,000 1,005
Florida - 6.05%
Sunshine State Governmental Financing
Commission Revenue Bonds, TECP:
Series L:
3.30% 10/4/96 3.30 1,000 1,000
3.40% 10/8/96 3.40 1,000 1,000
3.50% 10/11/96 3.50 1,000 1,000
Series G, 3.50% 11/5/96 3.50 1,600 1,600
Jacksonville Electric Authority Electric System,
Series D-1, TECP:
3.60% 10/3/96 3.60 1,700 1,700
3.40% 10/8/96 3.40 1,000 1,000
3.50% 11/8/96 3.50 1,400 1,400
Georgia - 3.79%
Municipal Electric Authority, Subordinated
Bonds, Money Market Municipal, Project I:
1994-D, 3.50% 10/4/96 3.50 1,450 1,450
1994-E, 3.60% 10/7/96 3.60 1,000 1,000
1985-A, 3.50% 11/1/96 3.50 1,000 1,000
1985-C, 3.60% 11/5/96 3.60 1,000 1,000
1994-D, 3.50% 11/6/96 3.50 1,000 1,000
Hawaii - 3.90%
Housing Finance and Development Corporation,
Affordable Rental Housing Program Revenue
Bonds, 1993 Series A, VRDN, 3.95% 10/2/96* 3.95 1,000 1,000
City and County of Honolulu General Obligation
Bond Anticipation Notes, TECP:
3.30% 10/1/96 3.30 1,300 1,300
3.40% 10/2/96 3.40 1,300 1,300
3.45% 11/8/96 3.45 2,000 2,000
Kansas - 2.30%
City of Burlington Pollution Control
Refunding and Improvement Revenue Bonds
(Kansas City Power & Light Co. Project)
1985 Series A, TECP:
3.55% 10/3/96 3.55 1,000 1,000
3.50% 11/7/96 3.50 2,300 2,300
Kentucky - 2.91%
Pendleton County, Multi-County Lease
Revenue Bonds (Kentucky Association of
Counties Leasing Trust Program), Series
1989, Money Market Municipal:
3.60% 10/2/96 3.60 1,385 1,385
3.45% 10/7/96 3.45 1,000 1,000
3.50% 10/7/96 3.50 1,800 1,800
Louisiana - 3.69%
Public Facilities Authority Hospital
Revenue and Refunding Bonds (Willis-
Knighton Medical Center Project), Series
1993, AMBAC Insured, VRDN, 3.80% 10/2/96* 3.80 900 900
Parish of Ascension, Variable Rate Demand
Pollution Control Revenue Refunding Bonds
(Borden, Inc. Project), Series 1992,
VRDN, 3.90% 10/2/96* 3.90 3,000 3,000
Lake Charles Harbor and Terminal District,
Flexible Demand Port Facilities Revenue
Bonds (CITGO Petroleum Corp. Project),
Series 1984, VRDN, 3.85% 10/2/96* 3.85 1,400 1,400
Maryland - 4.83%
Community Development Administration, Department
of Housing and Community Development, Single-Family
Program Bonds, 1996 First and 1996 Second Series,
3.45% Mandatory Put 10/1/96 3.45 1,000 1,000
Anne Arundel County Economic Development
Revenue Bonds (Baltimore Gas and Electric
Co. Project), Series 1988, TECP:
3.45% 10/8/96 3.45 1,000 1,000
3.55% 10/9/96 3.55 1,000 1,000
3.70% 10/11/96 3.70 1,240 1,240
3.60% 11/20/96 3.60 1,700 1,700
Howard County, Consolidated Public Improvement
Commercial Paper Bond Anticipation Notes, Series B,
TECP, 3.55% 11/18/96 3.55 1,000 1,000
Massachusetts - 5.50%
Bay Transportation Authority, Series C, TECP:
3.55% 10/9/96 3.55 2,000 2,000
3.40% 10/16/96 3.40 1,900 1,900
3.50% 10/24/96 3.50 1,000 1,000
Health and Educational Facilities Authority
Revenue Bonds, Harvard University Issue,
Series L, TECP:
3.50% 11/13/96 3.50 1,000 1,000
3.50% 11/14/96 3.50 2,000 2,000
Michigan - 2.78%
Economic Development Corporation of the
Township of Cornell, Industrial Development
Revenue Refunding Bonds (Mead-Escanaba Paper
Co. Project), Series 1990, TECP:
3.45% 10/10/96 3.45 1,300 1,300
3.50% 10/24/96 3.50 2,100 2,100
Economic Development Corporation of the
County of Delta Environmental Improvement
Revenue Bonds (Mead-Escanaba Paper Co.
Project) Series 1992, VRDN, 3.90% 10/1/96* 3.90 600 600
Minnesota - 1.39%
Regents of the University of Minnesota,
Variable Rate Demand Bond, Series 1985G,
3.75% Optional Put 2/1/97 3.75 2,000 2,001
Missouri - 5.29%
Higher Education Loan Authority, Adjustable
Rate Demand Student Loan Revenue Bonds, VRDN:
Series 1990 A, 3.90% 10/2/96* 3.90 1,600 1,600
Series 1990 B, 3.90% 10/2/96* 3.90 1,000 1,000
City of Columbia, Special Obligation
Insurance Reserve Bonds, Series 1988 A,
VRDN, 3.85% 10/2/96* 3.85 1,000 1,000
City of Independence, Variable Rate Demand
Water Utility Revenue Bonds, Series 1986, TECP:
3.50% 10/3/96 3.50 1,000 1,000
3.45% 10/4/96 3.45 1,000 1,000
3.55% 10/18/96 3.55 1,000 1,000
3.55% 11/4/96 3.55 1,000 1,000
Montana - 0.70%
City of Forsyth, Flexible Demand Pollution
Control Revenue Bonds (Portland General
Electric Co. Colstrip Project),
Series 1983 A, VRDN, 3.80% 10/2/96* 3.80 1,000 1,000
North Carolina - 1.74%
Educational Facilities Finance Agency, Revenue
Bonds (Duke University Project), VRDN:
Series 1991 D, 3.75% 10/3/96* 3.75 1,500 1,500
Series 1992 A, 3.75% 10/3/96* 3.75 1,000 1,000
Ohio - 1.04%
Ohio Water Development Authority, Pollution
Control Revenue Bonds, Series 1988
(Duquesne Light Co. Project), TECP,
3.60% 11/20/96 3.60 1,500 1,500
Pennsylvania - 5.77%
Allegheny County Industrial Development
Authority, Customized Purchase Environmental
Improvement Revenue Refunding Bonds (United
States Steel Corp. Project), Series 1986, TECP,
3.35% 10/3/96 3.35 1,000 1,000
Beaver County Industrial Development Authority,
Pollution Control Revenue Refunding Bonds
(Duquesne Light Co. Beaver Valley Project),
1990 Series C, TECP:
3.50% 10/22/96 3.50 2,000 2,000
3.45% 11/21/96 3.45 2,000 2,000
Carbon County Industrial Development Authority,
Resource Recovery Revenue Bonds (Panther Creek
Partners Project), 1990 Series B, TECP,
3.55% 10/21/96 3.55 1,290 1,290
Delaware County Industrial Development Authority:
Pollution Control Revenue Refunding Bonds
(Philadelphia Electric Co. Project),
1988 Series A, FGIC Insured, TECP, 3.45% 11/4/96 3.45 1,000 1,000
Solid Waste Revenue Bonds (Scott Paper Co. Project),
Series 1984 D, VRDN, 3.80% 10/2/96* 3.80 1,000 1,000
Texas - 14.11%
State Tax and Revenue Anticipation Notes,
Series 1997, 4.75% 8/29/97 4.75 3,600 3,631
City of Austin (Travis and Williamson Counties),
Combined Utility Systems Notes, TECP:
Series G, 3.45% 10/8/96 3.45 1,000 1,000
Series A:
3.35% 10/8/96 3.35 1,000 1,000
3.50% 11/7/96 3.50 1,000 1,000
Brazos Higher Education Authority, Inc. Student
Loan Revenue Bonds, Series 1993B-1, VRDN,
3.90% 10/2/96* 3.90 1,000 1,000
Brazos River Authority, Collateralized
Pollution Control Revenue Refunding Bonds
(Texas Utilities Electric Co. Project),
Series 1994A, TECP:
3.70% 10/9/96 3.70 1,000 1,000
3.60% 11/13/96 3.60 1,000 1,000
3.50% 11/19/96 3.50 1,000 1,000
City of Brownsville Utility System, Tax Exempt
Commercial Paper Notes, Series A:
3.55% 10/31/96 3.55 1,000 1,000
3.55% 11/15/96 3.55 1,000 1,000
3.45% 11/18/96 3.45 1,000 1,000
Harris County:
General Obligation Commercial
Paper Notes. Series A, TECP, 3.50% 11/12/96 3.50 1,750 1,750
Health Facilities Development Corporation,
SCH Health Care System, Unit Priced Demand
Adjustable Revenue Bonds (Sisters of
Charity of the Incarnate Word, Houston)
Series 1985, TECP:
3.50% 10/23/96 3.50 1,900 1,900
3.50% 10/30/96 3.50 2,000 2,000
Lower Neches Valley Authority Pollution Control
Revenue Bonds (Chevron U.S.A. Inc. Project),
Series 1987, 3.65% Optional Put 2/18/97 3.65 1,000 1,000
Utah - 4.24%
Board of Regents, Student Loan Revenue Bonds, 1988
Series C, AMBAC Insured, VRDN, 3.90% 10/2/96* 3.90 1,100 1,100
Intermountain Power Agency:
Variable Rate Power Supply Revenue Bonds,
1985 Series F, 3.93% Optional Put 6/16/97 3.93 3,000 3,000
Variable Rate Power Supply Revenue and
Refunding Bonds, 1985 Series F2, TECP:
3.35% 10/7/96 3.35 1,000 1,000
3.55% 10/31/96 3.55 1,000 1,000
Virginia - 4.18%
Industrial Development Authority of Fairfax
County, Unit Priced Demand Adjustable Hospital
Revenue Bonds (Inova Health System Hospitals
Project), Series 1993B, TECP:
3.40% 10/10/96 3.40 1,100 1,100
3.45% 10/17/96 3.45 2,100 2,100
3.50% 10/21/96 3.50 1,400 1,400
Industrial Development Authority of the City
of Norfolk, Hospital Revenue Bonds (Sentara
Hospitals-Norfolk Project), Series 1990A,
TECP, 3.35% 10/9/96 3.35 1,400 1,400
Washington - 3.06%
Student Loan Finance Association,
Guaranteed Student Loan Program, 1988
Series B, VRDN, 3.70% 10/3/96* 3.70 1,000 1,000
Port of Seattle, General Obligation Bonds,
Series 1985, VRDN, 3.90% 10/2/96* 3.90 3,400 3,400
West Virginia - 3.79%
The County Commission of Marion County, Solid
Waste Disposal Facility Revenue Bonds, 1990
Series A (Grant Town Congeneration Project),
VRDN, 4.00% 10/2/96* 4.00 1,700 1,700
Public Energy Authority, Energy Revenue Bonds
(Morgantown Energy Associates Project),
1989 Series A, TECP:
3.55% 10/18/96 3.55 1,000 1,000
3.65% 10/18/96 3.65 1,000 1,000
3.60% 11/7/96 3.60 1,750 1,750
Wyoming - 2.78%
Converse County, Pollution Control Revenue Bonds,
Series 1988, TECP, 3.55% 10/17/96 3.55 1,000 1,000
Sweetwater County:
Pollution Control Revenue Bonds (PacifiCorp Projects),
Series 1990A, VRDN, 3.80% 10/2/96* 3.80 2,000 2,000
Customized Purchase Pollution Control
Revenue Refunding Bonds (PacificCorp Projects),
Series 1988A, TECP, 3.60% 11/4/96 3.60 1,000 1,000
----------
Total Tax-Exempt Securities (cost: $142,262,000) 142,268
Excess of cash, and receivables over payables 1,451
----------
Net Assets $143,719
==========
*Coupon rates may change periodically; "yield at
acquisition" reflects current coupon rate.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
The Tax-Exempt Money Fund of America
Financial Statements
- ------------------------------------- ------------ ------------
Statement of Assets and Liabilities
at September 30, 1996 (dollars in thousands)
- ------------------------------------- ------------ ------------
Assets:
Investment securities at market
(cost: $142,262) $142,268
Cash 423
Receivables for--
Sales of fund's shares $1,467
Accrued interest 472 1,939
------------ ------------
144,630
Liabilities:
Payables for--
Repurchases of fund's shares 843
Dividends payable 24
Management services 44 911
Accrued expenses 0
------------ ------------
Net Assets at September 30, 1996 --
Equivalent to $1.00 per share on
143,711,476 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $143,719
=============
Statement of Operations
for year ended September 30, 1996 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Interest $ 5,176
Expenses:
Management services fee $648
Distribution expenses 82
Transfer agent fee 150
Reports to shareholders 23
Registration statement and prospectus 91
Postage, stationery and supplies 39
Trustees' fees 17
Auditing and legal fees 40
Custodian fee 8
Taxes other than federal income tax 5
Other expenses 28
------------------
Total expenses before reimbursement 1,131
Reimbursement of expenses 173 958
------------ ------------
Net investment income 4,218
------------
Realized Gain and Change in
Unrealized (Depreciation)
Appreciation on Investments:
Net realized gain 5
Net unrealized (depreciation)
appreciation on investments:
Beginning of year (7)
End of year 6
------------
Net change in unrealized
(depreciation)
appreciation on investments 13
------------
Net realized gain and unrealized
appreciation on investments 18
------------
Net Increase in Net Assets
Resulting from Operations $4,236
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Year Ended September 30
1996 1995
Operations: ------------- -------------
Net investment income $ 4,218 $ 4,914
Net realized gain (loss) 5 (12)
Net change in unrealized
appreciation on investments 13 8
------------- -------------
Net increase in net assets
resulting from operations 4,236 4,910
------------- -------------
Dividends Paid to Shareholders (4,218) (4,914)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
225,676,042 and 254,916,915
shares, respectively 225,676 254,917
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
3,845,965 and 4,518,581 shares,
respectively 3,846 4,519
Cost of shares repurchased:
236,244,699 and 279,235,665
shares, respectively (236,243) (279,236)
------------- -------------
Net decrease in net assets
resulting from capital share
transactions (6,721) (19,800)
------------- -------------
Total Decrease in Net Assets (6,703) (19,804)
Net Assets:
Beginning of year 150,422 170,226
------------- -------------
End of year $143,719 $150,422
============= ==============
See Notes to Financial Statements
</TABLE>
<PAGE>
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 maturing in 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.
Tax-exempt securities with 60 days or less to maturity are valued at
amortized cost, which approximates market value. Securities with original or
remaining maturities in excess of 60 days are valued at prices obtained from a
national municipal bond pricing service. The pricing service takes into account
various factors such as quality, yield and maturity of tax-exempt securities
comparable to those held by the fund, as well as actual bid and asked prices on
a particular day. Securities for which pricing service values are not available
are valued at the mean of their quoted bid and asked prices. However, in
circumstances where the investment adviser deems it appropriate to do so,
securities will be valued at the mean of their quoted bid and asked prices, or,
if such prices are not available, at the mean of such prices for securities of
comparable maturity, quality and type. The maturities of variable or floating
rate instruments are deemed to be the time remaining until the next interest
rate adjustment date. Securities for which market quotations are not readily
available are valued at fair value by the Board of Trustees or a committee
thereof.
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. Dividends are declared
daily after the determination of the fund's net investment income and paid to
shareholders monthly. Discounts and premiums on securities purchased are
amortized over the life of the respective securities.
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, 1996, unrealized appreciation for book and federal
income tax purposes aggregated $6,000, 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, 1996. During the year
ended September 30, 1996, the fund realized, on a tax basis, a net capital gain
of $5,000 on sales of securities. The cost of portfolio securities for book and
federal income tax purposes was $142,262,000 at September 30, 1996.
3. The fee of $648,000 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% on that portion of net assets in excess of $600 million but not exceeding
$1.2 billion; and 0.34% on that portion of net 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 $173,000 for the year ended September 30, 1996.
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, 1996, distribution expenses under the Plan were
$82,000. As of September 30, 1996, accrued and unpaid distribution expenses
were $6,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $150,000 under the terms of a contract that provides for transfer
agency services to be performed for the fund.
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,
1996, aggregate amounts deferred and earnings thereon were $14,000.
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 $766,316,000
and $772,968,000, respectively, during the year ended September 30, 1996.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA AND RATIOS
- ---------------------------------------------------------- ---------- ---------- ---------- ----------
Year ended September 30, 1996
---------- ---------- ---------- ---------- ----------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment income .029 .031 .020 .019 .029
---------- ---------- ---------- ---------- ----------
Total income from investment operations .029 .031 .020 .019 .029
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from net investment income (.029) (.031) (.020) (.019) (.029)
---------- ---------- ---------- ---------- ----------
Total distributions (.029) (.031) (.020) (.019) (.029)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00
========= ========= ========= ========= =========
Total Return 2.91% 3.14% 1.98% 1.90% 2.96%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $144 $150 $170 $121 $108
Ratio of expenses to average net assets -
Before fee waiver .77% .75% .73% .79% .77%
Ratio of expenses to average net assets -
After fee waiver .65% .65% .65% .65% .65%
Ratio of net income to average net assets 2.88% 3.09% 1.99% 1.88% 2.95%
</TABLE>
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, 1996, 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, 1996 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Los Angeles, California
October 31, 1996
1996 TAX INFORMATION
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-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 of the distributions paid by the
fund during the fiscal year ended September 30, 1996 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 1997 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1996 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
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 Auditors Report
Statement of Changes in Net Assets
(B) EXHIBITS:
1. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
2. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
3. None.
4. None.
5. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
6. On file (see SEC file No. 33-26431)
7. None.
8. On file (see SEC file No. 33-26431, Pre-Effec Amndmnt No. 2 to Form N-1A
filed 10/10/89)
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. On file (see SEC file No. 33-26431, Pre-Effec Amndmnt No. 2 to Form N-1A
filed 10/10/89)
14. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
15. On file (see SEC file No. 33-26431, Initial Form N-1A filed 1/9/89)
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, 1996
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Shares of beneficial 5,222
interest (no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual Fund
Errors and Omissions Policy 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
ITEM 27. INDEMNIFICATION (CONT.)
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
ITEM 27. INDEMNIFICATION (CONT.)
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.
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>
(2) (3)
(B) (1)
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
5657 Lemona Avenue
Van Nuys, CA 91411
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 Armstrong Assistant Vice President None
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
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
3100 West End Avenue, Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
L Daniel C. Brown Sr. 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 Vice President None
609 W. Littleton, Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director, None
L Kevin G. Clifford Director, Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Dan 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 Vice President None
3034 Parkridge Drive
Ann Arbor, MI 48103
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 Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Regional 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 Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
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, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue, 36th Floor
New York, NY 10111-0121
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 - Institutional
Investment Services
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
L John C. Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
3500 West Camino de Urania
Tucson, AZ 85741
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 - Institutional None
Investment Services Division
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
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 President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
L John O. Post Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James R. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree 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 President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
*L John C. Smith Vice President - Institutional None
Investment Services Division
L Mary E. Smith Assistant Vice President - None
Institutional Investment
Services Division
Rodney G. Smith Vice President None
100 N. Central Expressway, Suite 1214
Richardson, TX 75080
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew Taylor Assistant Vice President None
S James P. Toomey Assistant Vice President None
I Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
L David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, Treasurer None
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
SF N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Assistant Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior Vice President None
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
209 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
SF Business Address, , One Market Plaza, Steuart Towers, Suite 1800, San
Francisco, CA 94111
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 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
17th day of January, 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 January 17, 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/*1/ Trustee
Diane C. Creel* Trustee
Martin Fenton, Jr.* Trustee
Leonard R. Fuller* Trustee
/s/ Abner D. Goldstine Trustee
(Abner D. Goldstine)
Herbert Hoover III* Trustee
Richard G. Newman* Trustee
Peter C. Valli* Trustee
</TABLE>
/1/ Power of Attorney attached hereto.
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
C-14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 13 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 31, 1996, relating to the financial
statements and per share data and ratios appearing in the September 30, 1996
Annual Report of The Tax-Exempt Money Fund of America, which is also
incorporated by reference into the 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
January 20, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 142262
<INVESTMENTS-AT-VALUE> 142268
<RECEIVABLES> 1939
<ASSETS-OTHER> 423
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 144630
<PAYABLE-FOR-SECURITIES> 843
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 911
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 143711476
<SHARES-COMMON-PRIOR> 150434168
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6
<NET-ASSETS> 143719
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5176
<OTHER-INCOME> 0
<EXPENSES-NET> 958
<NET-INVESTMENT-INCOME> 4218
<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 13
<NET-CHANGE-FROM-OPS> 4236
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4218
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 225676042
<NUMBER-OF-SHARES-REDEEMED> 236244699
<SHARES-REINVESTED> 3845965
<NET-CHANGE-IN-ASSETS> (6703)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 648
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 958
<AVERAGE-NET-ASSETS> 146625
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .029
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
