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Previous: SENIOR HIGH INCOME PORTFOLIO II INC, DEF 14A, 1995-04-10 |
Next: TEMPLETON GLOBAL INVESTMENT TRUST, 497, 1995-04-10 |
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
SEMI-ANNUAL REPORT
for the six months ended January 31, 1995
[The American Funds Group(R)]
Limited Term Tax-Exempt
Bond Fund of America(SM)
offers a bridge between lower yielding short-term securities and more volatile
longer term bonds while helping to finance necessary public services and
improvements in America's infrastructure. The fund seeks to earn current income
exempt from federal income taxes while preserving capital through investments
in tax-exempt securities with effective maturities between three and 10 years.
[CAPTION]
ABOUT OUR COVER: View of Keystone Lake and Bridge, Oklahoma.
[END CAPTION]
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the total returns and average annual compound
return for the period ended December 31, 1994 (the most recent calendar
quarter) on an investment at the 4.75% maximum sales charge with all
distributions reinvested - Since inception on 10/6/93: -4.29%, or -3.48% a
year; 12 months: -7.51%. Sales charges are lower for accounts of $25,000 or
more. The fund's 30-day yield as of February 28, 1995, calculated in accordance
with the Securities and Exchange Commission formula, was 4.93%. The fund's
distribution rate as of that date was 4.77%. The SEC yield reflects income
earned by the fund while the distribution rate reflects dividends actually paid
by the fund.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY,
THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. All investments are subject
to certain risks. For example, those which include bonds are affected by
interest rate fluctuations. Accordingly, investors should maintain a long-term
perspective.
Fellow Shareholders:
During the six months ended January 31, 1995 - the first half of our fiscal
year - Limited Term Tax-Exempt Bond Fund of America paid federally tax-exempt
dividends totaling 34 cents a share.
- - If you took those dividends in cash, you received an income return of 2.42%
(or 4.84% on an annualized basis). The annualized dividend for the month of
January alone, however, was 5.06%.
- - If you reinvested your dividends, your income return was 2.45% (or 4.90% on
an annualized basis) due to the benefit of compounding.
- - For a shareholder in the top 39.6% federal tax bracket, an annualized income
return of 4.90% is equivalent to a taxable return of 8.11%.
While your fund continued to generate a steady stream of income, bond prices -
and thus your fund's share value - fluctuated considerably over the six-month
period. Your fund's net asset value, which began the period at $14.10 per
share, fell to a low of $13.37 on November 22 before rebounding to close the
period at $13.76. Coincidentally, the fund's income return exactly offset the
loss in share value.
During the first several months of the fiscal year that began last August 1,
bond prices moved lower as interest rates increased in the face of strong
economic growth and further moves by the Federal Reserve to tighten monetary
policy. The Fed raised short-term interest rates three times since we last
reported to you, and a total of seven times over the past 13 months. By
mid-November, these interest rate increases had begun to have the desired
effect: The economy began to show some signs that it was slowing and bond
prices did an about-face.
The bond market rally picked up considerable steam in January as investors
became optimistic that the Fed would be successful in its attempts to temper
[PULL QUOTE]
The fund has continued to provide a generous level of tax-exempt income.
[END PULL QUOTE]
the pace of economic activity and forestall inflation. In the municipal bond
market, the rally was helped along by strong demand for tax-exempt bonds and,
in particular, an unusually low supply of new municipal issues.
Although some investors believe we now may be nearing an end to this interest
rate cycle, we would not be surprised to see further rate hikes in the months
ahead. The U.S. economy, although slowing, could well maintain its
above-average growth and may generate moderate increases in inflation as 1995
progresses. We do, however, expect any further tightening by the Fed to lead to
only moderately higher intermediate-term interest rates. In fact, following
recent increases in short-term rates, the prices of intermediate- and long-term
bonds have, in some cases, moved up. That is in sharp contrast to the Fed's
initial rate hikes of a year or so ago, after which intermediate- and long-term
bond prices fell precipitously.
Extremely difficult conditions characterized the fixed-income markets during
much of the brief 16-month period since the Limited Term Tax-Exempt Bond Fund
of America's inception on October 6, 1993. Nevertheless, the fund achieved its
objective of helping its shareholders seek an attractive level of after-tax
income with less price volatility than long-term bonds by earning a lifetime
total return of +2.2%
That is a modest result, to be sure, yet it compares favorably with the total
returns of -0.5% for the Lipper Intermediate Municipal Bond Index and +0.2% for
the Lehman Brothers 7-Year Municipal Bond Index over this same period. It also
outpaced the average total returns of longer term municipal bonds, which
declined 1.1% as represented by the Lehman Brothers Long-Term Municipal Bond
Index. (The indexes are unmanaged.) Meanwhile, the fund has continued to
provide
[PULL QUOTE]
We believe that 1995 is shaping up as a much better year for fixed-income
investors than 1994.
[END PULL QUOTE]
a generous level of tax-exempt income on both an absolute and real - or
inflation-adjusted - basis.
The fund's portfolio consists of 97 bond issues from 27 states. These
securities are helping to provide funding for better schools, hospitals,
highways and other municipal services. More than 35% of these securities are
rated AA or better by independent bond-rating services. All issues met
investment-grade quality standards (BBB/Baa or higher).
The fund's wide diversification and conservative investment approach have
enabled it to avoid areas that have led some fixed-income investors into
serious difficulties over the past year or so. It has steered entirely clear of
highly volatile derivative securities and has held no direct or indirect
obligations of Orange County, California, which recently declared bankruptcy.
We believe that 1995 is shaping up as a much better year for fixed-income
investors than 1994, which saw the worst decline in intermediate-term bonds for
any year since the mid-1920s, the earliest period for which reliable data are
available. We look forward to reporting to you in greater detail on the fund's
progress six months from now in our annual report.
Cordially,
Paul G. Haaga, Jr.
Chairman of the Board
Abner D. Goldstine
President
March 10, 1995
LIMITED TERMI TAX-EXEMPT BOND FUND OF AMERICA
Investment Portfolio - January 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
(000) (000)
<S> <C> <C>
Tax-Exempt Securities Maturing in More than
One Year - 98.13%
Alaska - 1.64%
Alaska Student Loan Corporation, Student Loan
Revenue Bonds, 1988 Series A, AMBAC Insured,
8.40% 2003 $2,750 $2,977
Arizona - 2.26%
Arizona Educational Loan Marketing Corp.,
1992 Educational Loan Revenue Bonds, Series A,
6.70% 2000 4,000 4,112
California - 4.74%
Public Works Board, Lease Revenue Bonds
(Department of Corrections),
1991 Series A (State Prisons, Imperial
County), 5.00% 2001 2,250 2,163
Insured Revenue Certificate of Participation
(Childrens Hospital of Los Angeles),
Series 1993, MBIA Insured:
4.40% 2000 1,000 924
Los Angeles County, Certificate of Participation
(Marina Del Rey), Series A, 5.75% 1998 2,000 1,971
Pleasanton Joint Powers Financing Authority,
Reassessment Revenue Bonds, 1993 Series A:
5.40% 1999 995 977
5.70% 2001 2,625 2,573
Colorado - 4.16%
City and County of Denver, Airport System
Revenue Bonds, Series 1991D:
6.60% 1996 1,465 1,458
6.80% 1997 1,170 1,165
7.30% 2000 4,900 4,938
District of Columbia - 4.34%
General Obligation Refunding Bonds:
Series 1993A, 5.30% 2000 1,500 1,400
Series 1994C, 4.90% 1998 500 472
Series 1994A-3, 4.70% 1999 4,500 4,131
Series 1994C, FGIC Insured, 5.00% 2001 1,000 941
Series 1994D, FGIC Insured, 5.10% 2002 1,000 935
Georgia - 1.74%
Municipal Electric Authority, Power Revenue
Bonds, Series Q, 8.375% 2016 (crossover
refunded 1998) 500 545
Fulco Hospital Authority, Revenue Anticipation
Certificates (Saint Joseph's Hospital of
Atlanta, Inc.), Series 1994:
4.55% 1999 855 790
4.70% 2000 2,000 1,823
Illinois - 3.74%
Health Facilities Authority, Revenue Bonds,
(Rush Presbyterian-St. Luke's Medical
Center Obligated Group), Series 1993,
MBIA Insured, 4.70% 2001 1,470 1,368
Housing Development Authority, Housing
Development Bonds, 1993 Series A:
4.80% 1999 500 474
4.90% 2000 2,770 2,598
Toll Highway Authority, Toll Highway Refunding
Revenue Bonds, 1993 Series A, 4.70% 2001 2,475 2,357
Health Facilities Authority, Revenue Bonds,
(Barnes-Jewish, Inc./Christian Health
Services), Series 1993B, 4.80% 2003 640 567
Indiana - 2.02%
Employment Development Commission, Pollution
Control Revenue Bonds (Chrysler Corporation
Project), Series 1985, 5.70% 1999 3,700 3,661
Kentucky - 3.05%
Higher Education Student Loan Corporation,
Insured Student Loan Revenue Bonds:
1993 Series B, 5.00% 2002 3,000 2,814
1993 Series C, 4.95% 2000 2,855 2,731
Louisiana - 6.58%
Parish of St. Charles, Adjustable/Fixed Rate
Pollution Control Revenue Bonds (Louisiana
Power & Light Company Project), Second Series
1984, 8.00% 2014 (1999)/1/ 6,250 6,657
Parish of West Feliciana, Pollution Control
Revenue Bonds (Gulf States Utilities Company
Project):
Series 1984-II, 7.70% 2014 (2001)/1/ 3,500 3,636
Series 1985-B, 9.00% 2015 (2000)/1/ 1,500 1,667
Maine - 5.54%
Educational Loan Marketing Corporation, Senior
Student Loan Revenue Bonds, Series 1994A-4,
5.85% 2002 1,000 1,000
State Housing Authority, Mortgage Purchase Bonds,
1994 Series C-1, 5.90% 2015 9,000 9,059
Maryland - 1.62%
Community Development Administration, Department
of Housing and Community Development, Single
Family Program Bonds, 1994 Fifth Series:
5.875% 2017 1,500 1,484
6.125% 2019 1,000 983
Health and Higher Educational Facilities
Authority Revenue Bonds, Howard County
General Hospital Issue, Series 1993,
4.55% 1998 500 475
Massachusetts - 4.18%
Water Resources Authority:
General Revenue Refunding Bonds, 1993 Series B,
5.00% 2000 1,000 968
General Revenue Bonds, 1993 Series C,
5.25% 2001 1,000 971
The New England Education Loan Marketing
Corporation, Student Loan Refunding Bonds:
1992 Senior Issue A, 6.00% 1998 2,100 2,140
1992 Senior Issue A, 6.50% 2002 2,500 2,580
1993 Series H, 4.75% 1999 1,000 941
Michigan - 0.76%
Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Genesys Health System
Obligated Group), Series 1995A, 7.20% 2003 2,000 2,019
State Housing Development Authority, Rental
Housing Revenue Bonds, 1994 Series A,
4.70% 2000 1,500 1,373
Minnesota - 6.75%
Housing Finance Agency, Single Family Mortgage
Bonds, 1994 Series D, 4.70% 2002 2,000 1,802
Housing and Redevelopment Authority of the City
of Saint Paul, Minnesota, Hospital Facility
Revenue Bonds (HealthEast Project):
Series 1987 A, 9.75% 2017 (crossover refunded
1997) 2,500 2,795
Series 1987 B, 9.75% 2017 (1997)/1/ 2,255 2,483
Series 1987 C, 9.75% 2017 (crossover refunded
1997) 1,975 2,175
City of Minneapolis and Housing and
Redevelopment Authority of the City of St.
Paul, Health Care System Revenue Bonds
(Health Span), Series 1993B, AMBAC Insured,
4.50% 2001 3,300 3,011
Mississippi - 5.04%
Claiborne County Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy,
Inc. Project), Series C, 9.875% 2014 (1998)/1/ 7,500 8,491
Lamar County, Pollution Control Revenue
Refunding Bonds (South Mississippi Electric
Power Association Project), Pooled Series
1993S, 4.45% 2002 750 660
New Jersey - 0.60%
Economic Development Authority, Market
Transition Facility Senior Lien Revenue Bonds,
Series 1994A, MBIA Insured, 7.00% 2003 1,000 1,094
New Mexico - 0.52%
Educational Assistance Foundation,Student Loan
Purchase Bonds, Senior 1994, Series II-A,
4.90% 2001 1,000 944
New York - 15.30%
Dormitory Authority of the State of New York:
State University Educational Facilities
Revenue Bonds, Series 1993C, 5.10% 2000 3,425 3,271
City University Refunding Bonds, Issue 1993G,
5.00% 2001 1,000 923
Court Facilities Lease Revenue Bonds (The
City of New York Issue), Series 1993A,
5.00% 1999 1,500 1,445
Medical Care Facilities Finance
Agency, Mental Health Services Facilities
Improvement Revenue Bonds:
1994 Series A:
4.60% 1999 2,875 2,681
4.75% 2000 3,005 2,769
1993 Series F Refunding, 4.60% 1999 1,000 932
Metropolitan Transportation Authority, Transit
Facilities 1987 Service Contract Bonds,
Series 7, 4.85% 2001 500 458
Urban Development Corporation, Correctional
Capital Facilities Revenue Bonds:
1993A Refunding Series, 4.60% 1999 2,000 1,882
Series 4, 4.80% 2000 1,900 1,774
City of New York General Obligation Bonds:
1994 Series E, 4.60% 1998 2,000 1,931
1994 Series C, 4.70% 1999 770 720
1994 Series A, 6.00% 2000 2,000 1,983
1994 Series B, 6.25% 2001 1,000 998
1994 Series A, 6.10% 2002 1,800 1,767
1994 Series D, 5.70% 2002 1,000 952
New York City, Municipal Water Finance
Authority, Water and Sewer System Revenue
Bonds, Fiscal 1994 Series B:
4.75% 2001 1,600 1,474
4.875% 2002 2,000 1,832
North Carolina - 1.11%
Municipal Power Agency Number 1, Catawba
Electric Revenue Bonds, Series 1992, 6.00% 2004 2,000 2,009
Ohio - 1.64%
Housing Finance Agency, Single Family Mortgage
Revenue Bonds, 1992 Series A-2, 5.70% 2013 2,100 2,076
The Student Loan Funding Corporation,
Cincinnati, Student Loan Revenue Refunding
Bonds, Series 1992A, 5.40% 1999 925 904
Oklahoma - 1.10%
Housing Finance Agency, Single Family Mortgage
Revenue Bonds (Homeownership Loan Program),
1994 Series A-1, 6.25% 2016 2,000 2,005
Pennsylvania - 4.62%
Higher Education Assistance Agency, Student Loan
Adjustable Rate Tender Revenue Refunding Bonds,
1985 Series A, FGIC Insured, 6.80% 2000 8,000 8,398
Puerto Rico - 0.36%
Housing Bank and Finance Agency, Subsidy
Prepayment Refunding Bonds, 4.50% 1998 700 657
South Dakota - 1.37%
Student Loan Finance Corporation, Student Loan
Revenue Bonds, Series 1994-A, 5.95% 2001/2/ 2,500 2,487
Texas - 8.66%
General Obligation Bonds, Veterans' Housing
Assistance Program, Fund I Series 1994C
Refunding Bonds, 6.25% 2015 3,000 3,035
City of Austin, Combined Utility Systems
Revenue Refunding Bonds, Series 1992A,
7.00% 2002 1,000 1,063
Brazos Higher Education Authority, Inc.,
Student Loan Revenue Refunding Bonds,
Series 1992C-1, 6.00% 1999 4,000 4,008
Central Texas Higher Education Authority, Inc.,
Student Loan Revenue Refunding Bonds,
Senior Series 1993C, 4.75% 2001 1,500 1,403
Cities of Dallas and Fort Worth, Dallas-Fort
Worth International Airport, Dallas-Fort
Worth Regional Airport Joint Revenue
Refunding Bonds Series 1992B, 6.00% 2002 1,000 1,019
City of Houston General Obligation Bonds,
6.00% 2000 2,000 2,054
North Central Texas Health Facilities
Development Corporation, Hospital Revenue Bonds
(Presbyterian Healthcare System Project),
Series 1991A, 6.60% 2002 1,200 1,243
North Texas Higher Education Authority, Inc.,
Student Loan Revenue Bonds, Series 1993B,
5.25% 2000 1,000 964
Panhandle-Plains Higher Education Authority,
Inc., Student Loan Revenue Refunding Bonds,
Series 1993D, 4.90% 2001 1,000 943
South Texas Higher Education Authority, Inc.,
Student Loan Revenue Refunding Bonds,
Series 1993A-1, 5.00% 2002 1,000 939
Vermont - 0.69%
Housing Finance Agency, Single Family Housing
Bonds, Series 4, 5.75% 2012 1,250 1,256
Washington - 1.49%
Washington Public Power Supply System:
Nuclear Project No. 1 Refunding Revenue Bonds,
Series 1993A, 6.30% 2001 1,000 1,024
Nuclear Project No. 2 Refunding Revenue Bonds,
Series 1993A, 5.10% 2000 1,750 1,683
Wisconsin - 0.55%
Health and Educational Facilities Authority,
Revenue Bonds, (Luther Hospital Project),
Series 1992, 6.00% 2003 1,000 995
---------
$178,230
---------
Tax-Exempt Securities Maturing in
One Year or Less - 1.90%
County of Los Angeles, California, 1994-95 Tax
and Revenue Anticipation Notes, Series A,
4.50% 6/30/95 200 200
Louisiana Recovery District, Sales Tax
Bonds, Series 1988, 3.85% 1998 200 200
Commonwealth of Pennsylania, Tax Anticipation
Notes, First Series of 1994-1995, 4.75% 6/30/95 200 200
State of Texas, Tax and Revenue Anticipation
Notes, Series 1994, 5.00% 8/31/95 2,050 2,054
State of Virginia, Peninsula Ports Authority,
Coal Terminal Revenue Refunding Bonds (Dominion
Terminal Associates Project), Variable Rate
Demand Note, 1-day put, 1987 Series C,
3.85% 2016 200 200
State of Wisconsin, Operating Notes of 1995,
4.50% 6/15/95 600 600
---------
3,454
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $189,655,000) $181,684
Excess of payables over cash, prepaids and
receivables (52)
---------
NET ASSETS $181,632
=========
</TABLE>
/1/Some investments are valued in the market on the
basis of their effective maturity - that is, the
dates at which the securities are expected to be
called or refunded by the issuers or the dates
at which the investor can put the securities to
the issuers for redemption. The effective
maturity dates are shown in parenteses.
/2/Represent a when-issued security
See Notes to Financial Statements
Limited Term Tax-Exempt Bond Fund of America
Financial Statements
Statement of Assets and Liabilities
at January 31, 1995 (dollars in thousands) (unaudited)
<TABLE>
<CAPTION>
Assets:
Tax-exempt securities
<S> <C> <C>
(cost: $189,655) $181,684
Cash 116
Prepaid organization expense 10
Receivables for-
Sales of fund's shares $369
Accrued interest 2,667 3,036
--------- ---------
184,846
Liabilities:
Payables for-
Purchases of investments 1,999
Repurchases of fund's shares 911
Dividends payable 235
Management services 19
Accrued Expenses 50 3,214
--------- ---------
Net Assets at January 31, 1995-
Equivalent to $13.76 per share on 13,197,943
shares of beneficial interest issued and
outstanding;
unlimited shares authorized $181,632
=========
Statement of Operations
for the six months ended January 31, 1995
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $5,136
---------
Expenses:
Management services fee $378
Distribution expenses 286
Transfer agent fee 37
Reports to shareholders 41
Registration statement and prospectus 103
Postage, stationery and supplies 9
Trustees' fees 13
Auditing and legal fees 28
Custodian fee 5
Taxes other than federal income tax 2
Organization expense 27
Other expenses 2
---------
Total expenses before reimbursement 931
Reimbursement of expenses 356 575
--------- ---------
Net investment income 4,561
---------
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (650)
Net unrealized depreciation:
Beginning of period (4,011)
End of period (7,971)
---------
Net change in unrealized depreciation (3,960)
---------
Net realized loss and unrealized
depreciation on investments (4,610)
---------
Net Decrease in Net Assets Resulting
from Operations ($49)
=========
Statement of Changes in Net Assets Period
for the six months ended January 31, 1995 Six months October 6,
(dollars in thousands) ended 6, 1993/2/
January to January
31, 1995/1/ 31, 1995
Operations:
Net investment income $4,561 $5,285
Net realized loss on investments (650) (2,384)
Net unrealized depreciation
on investments (3,960) (4,011)
------- ---------
Net decrease in net assets
resulting from operations (49) (1,110)
--------- ---------
Dividends Paid from Net
Investment Income (4,587) (5,261)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold:
5,442,030 and 20,341,276 shares, respectively 74,758 294,347
Proceeds from shares issued in
reinvestment of net investment
income dividends:
229,248 and 256,486 shares, respectively 3,156 3,644
Cost of shares repurchased:
5,874,285 and 7,203,811 shares, respectively (80,582) (102,784)
--------- ---------
Net (decrease) increase in net assets
resulting from capital share
transactions (2,668) 195,207
--------- ---------
Total (Decrease) Increase in Net Assets (7,304) 188,836
Net Assets:
Beginning of period 188,936 100
--------- ---------
End of period $181,632 $188,936
========= =========
</TABLE>
/1/Unaudited
/2/Commencement of operations
See Notes to Financial Statements
Notes to Financial Statements (Unaudited)
1. Limited Term Tax-Exempt Bond Fund of America (the "fund") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Tax-exempt 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. Other
securities with original or remaining maturities in excess of 60 days,
including securities for which pricing service values are not available, are
valued at the mean of their quoted bid and asked prices. All securities with
60 days or less to maturity are valued at amortized cost, which approximates
market value. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Valuation Committee
of the Board of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Premiums and original
issue discounts on securities purchased are amortized over the life of the
respective securities. Dividends are declared on a daily basis after
determination of the fund's net investment income and paid to shareholders on a
monthly basis.
Prepaid organizational expenses include registration fees which are charged to
income over 12 months, the estimated period of benefit. Other organizational
expenses are amortized over a period not exceeding five years from commencement
of operations. In the event that Capital Research and Management Company
(CRMC), the funds investment adviser, redeems any of its original shares prior
to the end of the five-year period, the proceeds of the redemption payable in
respect of such shares shall be reduced by the pro rata share (based on the
proportionate share of the original shares redeemed to the total number of
original shares outstanding at the time of such redemption) of the unamortized
deferred organization expenses as of the date of such redemption. In the event
that the fund liquidates prior to the end of the five-year period, CRMC shall
bear any unamortized deferred organization expenses.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the six months ended January 31, 1995, no credit was used to offset the
custodian fee.
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 January 31, 1995, net unrealized depreciation on investments for book
and federal income tax purposes aggregated $7,971,000, of which $248,000
related to appreciated securities and $8,219,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended January 31, 1995. The cost of
portfolio securities for book and federal income tax purposes was $189,655,000
at January 31, 1995.
3. The fee of $378,000 for management services was paid pursuant to an
agreement with 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 0.30% of the first $60 million
of average net assets; 0.21% of such assets in excess of $60 million; and 3.00%
of the fund's monthly gross investment income. 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 1, 2003. For the current period, CRMC has also
voluntarily agreed to waive its fees to the extent necessary to ensure that the
fund's expenses do not exceed 0.62% 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
reductions amounted to $356,000 for the period ended January 31, 1995.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Trustees. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended January 31,
1995, distribution expenses under the Plan were $286,000. As of January 31,
1995, accrued and unpaid distribution expenses were $39,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $37,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $111,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Trustees of the fund 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
January 31, 1995, aggregate amounts deferred were $10,000.
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
affiliated officers, Trustees or employees of CRMC, AFS, and AFD received any
remuneration directly from the fund.
4. As of January 31, 1995, accumulated undistributed net realized loss on
investments was $650,000 and paid-in capital was $192,639,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $23,721,000 and $20,386,000 respectively, during the
six months ended January 31, 1995.
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Six Period
months October
ended 6, 1993/1/
January to July
31, 1995* 31, 1994
<S> <C> <C>
Net Asset Value, Beginning
of Period $14.10 $14.29
------- -------
Income From Investment
Operations:
Net investment income .34 .49
Net realized and
unrealized loss
on investments (.34) (.19)
------- -------
Total income from
investment operations .00 .30
------- -------
Less Distributions:
Dividends from net investment income (.34) (.49)
------- -------
Net Asset Value, End of Period $13.76 $14.10
======= =======
Total Return/2/ .04%/3/ 2.11%/3/
Ratios/Supplemental Data:
Net assets, end of period (in millions) $182 $189
Ratio of expenses to average net assets .31%/3/,/4/ .51%/3/,/4/
Ratio of net income to average net assets 2.46%/3/ 3.67%/3/
Portfolio turnover rate 11.40%/3/ 42.70%/3/
</TABLE>
* Unaudited
/1/Commencement of operations.
/2/This was calculated without deducting a sales
charge. The maximum sales charge is 4.75%
of the fund's offering price.
/3/Based on operations for the period shown and,
accordingly, not representative of a full year's
operations.
/4/Had CRMC not waived fees, the fund's ratio of
expenses to average net assets would have been
0.73% and 0.50% for the period October 6, 1993
to July 31, 1994, and the six months ended
January 31, 1995, respectively.
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
BOARD OF TRUSTEES
H. FREDERICK CHRISTIE
Palos Verdes Estates, California
Private investor; former President and Chief Executive Officer, The Mission
Group; former President, Southern California Edison Company
DIANE C. CREEL
Long Beach, California
Chairwoman, Chief Executive Officer and President, The Earth
Technology Corporation
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER
Los Angeles, California
President, Fuller & Company, Inc.
(financial management consulting firm)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
Pasadena, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and Chief Executive Officer, AECOM Technology
Corporation (architectural engineering)
PETER C. VALLI
Long Beach, California
Chairman of the Board and Chief Executive Officer, BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
NEIL L. LANGBERG
Los Angeles, California
Senior Vice President of the fund
Vice President - Investment
Management Group, Capital Research and Management Company
MARY C. CREMIN
Los Angeles, California
Vice President and Treasurer of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Compliance Associate - Fund Business
Management Group, Capital Research and Management Company
ANTHONY W. HYNES, JR.
Los Angeles, California
Assistant Treasurer of the fund
Vice President - Fund Business
Management Group, Capital Research and Management Company
LEONARD WEIL retired from the Board effective December 31, 1994. He has been a
member of the Board of Trustees since the inception of the fund. The Trustees
thank him for his many contributions to the fund.
DIANE CREEL and LEONARD FULLER were elected Trustees effective September 22,
1994.
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
FUND SERVICES
These handy services can add convenience and flexibility to your American Funds
investments.
ADDING TO YOUR INVESTMENT
There are three ways you can group your American Funds purchases to qualify for
a quantity discount:
RIGHT OF ACCUMULATION: You can combine the value of your existing shares with
those you are purchasing to qualify for a discount.
STATEMENT OF INTENTION: You can, without obligation, use a Statement of
Intention that allows you to combine the value of your existing shares and the
purchases you intend to make over a 13-month period so you can take immediate
advantage of the maximum quantity discount available.
CONCURRENT PURCHASES: By purchasing shares in more than one American Fund
simultaneously, you may qualify for a quantity discount.
(Shares of money market funds purchased directly do not apply to quantity
discounts. Additionally, certain accounts may not be eligible to be grouped.
See the fund's prospectus or your investment professional for more details.)
SUBSEQUENT INVESTMENTS BY MAIL: Once your account has been established and
you've selected a broker/dealer, simply send a check for $50 or more, along
with the bottom portion of your account statement, to American Funds Service
Company.
PUTTING YOUR INVESTMENTS ON AUTOPILOT
AUTOMATIC INVESTMENT PLAN: You can make automatic investments regularly by
authorizing American Funds Service Company to deduct a specified sum from your
bank account.
AUTOMATIC EXCHANGE PLAN: You can automatically exchange $50 or more between
funds on a regular basis.
AUTOMATIC WITHDRAWAL PLAN: You can arrange to have regular checks for specified
amounts sent to you or to anyone you designate in any month(s) you choose.
CHOOSING THE PAYOUT SYSTEM THAT'S RIGHT FOR YOU
AUTOMATIC REINVESTMENT: All dividends and capital gain distributions can be
automatically reinvested in additional fund shares without a sales charge.
CROSS-REINVESTMENT: You can reinvest dividends and/or capital gains from one
fund to another fund at no charge if you have a balance of at least $5,000 in
the originating fund or meet the minimum initial investment for the receiving
fund.
DIVIDENDS IN CASH: You can elect to take dividends in cash.
REPORTS YOU'LL RECEIVE FROM US
CONFIRMATIONS OF TRANSACTIONS: You receive account statements reflecting the
transactions in your account.
CONSOLIDATED QUARTERLY STATEMENTS: If you have more than one account with the
American Funds, you can request a quarterly statement combining certain
accounts registered to the same individual.
YEAR-END TAX REPORTS: At the end of each year, you will receive an individual
report which shows the tax status of the distributions paid to you during the
year. In many instances, these reports can help you calculate taxes due on
shares sold by reporting average cost.
SPECIAL SERVICES
EXCHANGE PRIVILEGES: You can transfer some or all of your holdings into other
American Funds by mail or by phone. Certain restrictions apply (a sales charge
may apply if one has not already been paid), and it's important to remember
that an exchange constitutes a sale and purchase for tax purposes.
TELEPHONE INFORMATION SERVICE: American FundsLine(R) is a toll-free service
which gives you account information as well as current prices for all American
Funds. Just call 800/325-3590.
SAFEKEEPING OF CERTIFICATES: Your shares are credited to your account and
certificates are not issued unless specifically requested. (Certificates are
not available for money market funds.)
FREE CHECK-WRITING WITHDRAWAL SERVICE: If you have a money market fund account,
this service enables you to write checks for $250 or more against the account.
The account continues to earn daily interest until checks clear the fund's
bank.
FOR MORE COMPLETE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN
FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR
SECURITIES DEALER OR FINANCIAL PLANNER, OR PHONE THE FUND'S TRANSFER AGENT,
AMERICAN FUNDS SERVICE COMPANY, AT 800/421-0180. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE YOU INVEST OR SEND MONEY. THESE SERVICES ARE SUBJECT TO CHANGE
OR TERMINATION.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
AMERICAN FUNDS SERVICE COMPANY
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of Limited Term Tax-Exempt
Bond Fund of America but it may also be used as sales literature when preceded
or accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 1995, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA AGD/GAC
Lit. No. LTEX-013-0395
[The American Funds Group(R)]
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