SEC. File Nos. 33-66214
811-7888
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 6
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 8
LIMITED TERM TAX-EXEMPT BOND 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
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 September 23, 1997, it filed its 24f-2 notice for fiscal 1997
Approximate date of proposed public offering:
It is proposed that this filing become effective on October 1, 1997, pursuant
to paragraph (b) of rule 485.
<PAGE>
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM NUMBER OF
PART "A" OF FORM N-1A CAPTIONS IN PROSPECTUS (PART "A")
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 Policies and Risks
Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management; Other Important Things to
Remember
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
ITEM NUMBER OF CAPTIONS IN STATEMENT OF
PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
10. Cover Page Cover
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 Fund Officers and Trustees
15. Control Persons and Principal Holder
of Securities Fund Officers and Trustees
16. Investment Advisory and Other Services Fund Officers and Trustees; Fund Organization and Management (Part "A");
Management; General Information
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions; Fund Organization and Management (Part
"A")
18. Capital Stock and Other Securities N/A
19. Purchase, Redemption and Pricing of
Securities Being Offered Purchase of Shares; Redeeming Shares; Shareholder Account Services and Privileges;
Purchasing Shares (Part "A"); General Information
20. Tax Status Dividends and Distributions
21. Underwriter Management; Fund Organization and Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ITEM IN PART "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)]
- -------------------------------------------------------------------------------
Limited Term Tax-Exempt
Bond Fund of America SM
Prospectus
OCTOBER 1, 1997
<PAGE>
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
333 South Hope Street
Los Angeles, CA 90071
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expenses 3
.....................................................
Financial Highlights 4
.....................................................
Investment Policies and Risks 5
.....................................................
Securities and Investment Techniques 6
.....................................................
Multiple Portfolio Counselor System 9
.....................................................
Investment Results 10
.....................................................
Dividends, Distributions and Taxes 11
.....................................................
Fund Organization and Management 12
.....................................................
Shareholder Services 15
</TABLE>
- --------------------------------------------------------------------------------
The fund's investment objective is to provide investors with current income,
exempt from federal income taxes, consistent with its stated maturity and
quality standards and preservation of capital. The fund seeks to achieve this
objective by investing in a portfolio of tax-exempt fixed-income securities
with a dollar-weighted average effective maturity of between 3 and 10 years.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND 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.
43-010-1097
<PAGE>
================================================================================
EXPENSES
The effect of the expenses described below is reflected in the fund's share
price and return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
- --------------------------------------------------------
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price) 4.75%
</TABLE>
........................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets after fee waiver)
<TABLE>
- --------------------------------------------------------
<S> <C>
Management fees 0.32%/1/
........................................................
12b-1 expenses 0.30%/2/
........................................................
Other expenses 0.13%
........................................................
Total fund operating expenses 0.75%
</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 of the fund. Without such reductions, fees (as a percentage of
average net assets) would have been 0.83%. 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 0.30% 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>
<S> <C>
One year $ 55
........................................................
Three years $ 70
........................................................
Five years $ 87
........................................................
Ten years $136
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 3
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
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 the annual
report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
..................
1997 1996 1995 1994 /1/
-----------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.36 $14.29 $14.10 $14.29
- ------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment income .68 .69 .69 .49
............................................................
Net realized and
unrealized gain (loss)
on investments .43 .07 .19 (.19)
............................................................
Total income from
investment operations 1.11 .76 .88 .30
- ------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.68) (.69) (.69) (.49)
............................................................
Net Asset Value, End of
Period $14.79 $14.36 $14.29 $14.10
............................................................
Total Return /2/ 7.96% 5.39% 6.45% 2.11% /3/
- ------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (in millions) $ 203 $ 197 $ 191 $ 189
............................................................
Ratio of expenses to
average net assets
before fee waiver .83% .85% .90% .73% /3/
............................................................
Ratio of expenses to
average net assets
after fee waiver .75% .74% .64% .51% /3/
............................................................
Ratio of net income to
average net assets 4.70% 4.77% 4.88% 3.67% /3/
............................................................
Portfolio turnover rate 31.89% 34.95% 45.82% 42.21% /3/
</TABLE>
/1/ The period ended July 31, 1994 represents the initial period of operations
from October 6, 1993 to July 31, 1994.
/2/ Excludes maximum sales charge of 4.75%.
/3/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
- --------------------------------------------------------------------------------
4 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
INVESTMENT POLICIES AND RISKS
The fund seeks to provide you with current income, exempt from federal income
taxes, consistent with its stated maturity and quality standards and
preservation of capital.
In seeking to achieve its investment objective, the fund will invest in a
portfolio of tax-exempt fixed-income securities with a dollar-weighted average
effective maturity of between 3 to 10 years. The fund will not purchase any
security with an effective maturity greater than 10 years. Additionally, the
average nominal or stated maturity of the fund's portfolio will not exceed 15
years. Under normal market conditions, at least 80% of the fund's net assets
will be invested in tax-exempt securities and at least 65% in bonds. For these
purposes, bonds are considered to be any debt securities having initial
maturities in excess of one year. In addition, at least 65% of the fund's
assets will be invested in debt securities rated A or better by Moody's
Investors Service, Inc. or Standard and Poor's Corporation or unrated but
determined to be of comparable quality. Up to 35% of the fund's assets will be
invested in debt securities rated Baa by Moody's or BBB by S&P or determined to
be of comparable quality. The fund may hold a portion of its assets in short-
term obligations (generally, securities with maturities of one year or less)
issued by states, municipalities, and public authorities.
The fund may invest up to 20% of its assets in certain tax-exempt securities,
the interest on which would constitute an item of tax preference subject to
federal alternative minimum taxes; therefore, while the fund's distributions
are not subject to regular federal income tax, a portion or all may be included
in determining a shareholder's federal alternative minimum tax. When in the
opinion of Capital Research and Management Company, the fund's investment
adviser, abnormal market conditions require a temporary defensive position, the
fund may invest all or a portion of its assets in taxable short-term fixed-
income securities (generally, securities with maturities of one year or less).
The fund's investment policies are described below. Limits on the fund's
investment policies are determined at the time of purchase and are based on the
fund's net assets unless otherwise stated. MORE INFORMATION ON THE FUND'S
INVESTMENT POLICIES IS CONTAINED IN ITS STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval.
THE FUND MAY NOT ACHIEVE ITS INVESTMENT OBJECTIVE DUE TO MARKET CONDITIONS AND
OTHER FACTORS.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 5
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SECURITIES AND INVESTMENT TECHNIQUES
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality, and maturity. In general their prices decline when interest rates rise
and vice versa.
The fund may invest in debt securities rated Baa or BBB by Moody's or S&P or in
unrated securities that are determined to be of equivalent quality by Capital
Research and Management Company. These securities are considered "investment
grade" but also may have speculative characteristics.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
MUNICIPAL BONDS
Municipal bonds are debt obligations generally issued to obtain funds for
various public purposes, including the construction of public facilities. The
interest on these obligations is generally not included in gross income for
federal income tax purposes. Opinions relating to the validity of municipal
bonds and to the exclusion from gross income for federal income tax purposes
and, where applicable, the exemption from state and local income tax are
rendered by bond counsel to the respective issuing authorities at the time of
issuance.
The two principal classifications of municipal bonds are general obligation and
limited obligation, or revenue bonds. General obligation bonds are secured by
the issuer's pledge of its full faith and credit including, if available, its
taxing power for the payment of principal and interest. Issuers of general
obligation bonds include states, counties, cities, towns and various regional
or special districts. Limited obligation or revenue bonds are secured by the
net revenue derived from a particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a special tax or other special
revenues. Although the security behind these bonds varies widely, many provide
additional security in the form of a debt service reserve fund which may also
be used to make principal and interest payments on the issuer's obligations.
- --------------------------------------------------------------------------------
6 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
There are, in addition, a variety of hybrid and special types of municipal
obligations, such as zero coupon and pre-refunded bonds, as well as numerous
differences in the security of municipal bonds, both within and between the two
primary classifications described above.
The amount of information about the financial condition of an issuer of
municipal bonds may not be as extensive as that which is made available by
corporations whose equity securities are publicly traded.
FORWARD COMMITMENTS
The fund may enter into commitments to purchase or sell securities at a future
date. When the fund agrees to purchase such securities, it assumes the risk of
any decline in value of the securities beginning on the date of the agreement.
When the fund agrees to sell such securities, it does not participate in
further gains or losses with respect to the securities beginning on the date of
the agreement. If the other party to such a transaction fails to deliver or pay
for the securities, the fund could miss a favorable price or yield opportunity,
or could experience a loss.
VARIABLE AND FLOATING RATE OBLIGATIONS
The fund may invest in variable and floating rate obligations which have
interest rates that are adjusted at designated intervals or whenever interest
rates change. The rate adjustment feature tends to limit the extent to which
the market value of the obligation will fluctuate.
MATURITY
Under normal market conditions, the fund's dollar-weighted average effective
portfolio maturity will range between 3 and 10 years. The fund will not
purchase any security with an effective maturity of more than 10 years. In
calculating effective maturity, the fund, under certain circumstances, may
consider demand features whose market characteristics indicate an earlier
maturity than the stated maturity date. In determining effective maturity, the
fund will only consider techniques approved by the staff of the Securities and
Exchange Commission.
Additionally, the fund's dollar-weighted average nominal or stated portfolio
maturity will not exceed 15 years, and the fund will not purchase any security
with a nominal or stated maturity in excess of 25 years.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 7
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SPECIAL CONSIDERATIONS
The fund may invest up to 20% of its assets in tax-exempt securities believed
to pay interest constituting an item of tax preference subject to alternative
minimum taxes; therefore, while the fund's distributions from tax-exempt
securities are not subject to regular federal income tax, a portion or all may
be included in determining a shareholder's federal alternative minimum tax.
- --------------------------------------------------------------------------------
8 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into segments which are managed by
individual counselors. Counselors decide how their respective segments will be
invested (within the limits provided by the fund's objective and policies and
by Capital Research and Management Company's investment committee). In
addition, Capital Research and Management Company's research professionals may
make investment decisions with respect to a portion of the fund's portfolio.
The primary individual portfolio counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
.........................
YEARS OF EXPERIENCE
AS PORTFOLIO COUNSELOR WITH CAPITAL
PORTFOLIO COUNSELORS FOR LIMITED TERM RESEARCH AND
FOR LIMITED TERM TAX-EXEMPT BOND MANAGEMENT
TAX-EXEMPT BOND FUND OF AMERICA COMPANY OR
FUND OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES TOTAL YEARS
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEIL L. Senior Vice 4 years (since 19 years 19 years
LANGBERG President of the fund began
the fund. Vice operations)
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ----------------------------------------------------------------------------------------
MARK R. Vice President 3 years 3 years 12 years
MACDONALD of the fund.
Vice
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ----------------------------------------------------------------------------------------
BRENDA S. Vice President, 1 year 6 years 8 years
ELLERIN Capital
Research
Company*
</TABLE>
The fund began operations on October 6, 1993
* A wholly owned subsidiary of Capital Research and Management Company
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 9
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
INVESTMENT RESULTS
The fund may from time to time compare investment results on a taxable and tax
equivalent basis to various indices or other mutual funds. Fund results may be
calculated on a total return, yield, and/or distribution rate basis. Results
calculated without a sales charge will be higher.
X 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.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by annualizing the current month's dividend
and dividing by the average price for the month.
INVESTMENT RESULTS
(FOR PERIODS ENDED JUNE 30, 1997)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND
TOTAL AT NET THE FUND AT MAXIMUM LIPPER
RETURNS: ASSET VALUE:/1/ SALES CHARGE:/1/,/2/ LEHMAN INDEX/3/ AVERAGE/4/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year 6.83% 1.78% 7.03% 6.55%
................................................................................
Lifetime/5/ 5.31% 3.95% 5.08% 4.50%
- --------------------------------------------------------------------------------
</TABLE>
Yield/1/,/2/: 4.22%
Distribution rate/2/: 4.40%
/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ Lehman Brothers 7-Year Municipal Bond Index represents the investment grade
municipal bond market. This index is unmanaged and does not reflect sales
charges, commissions or expenses.
/4/ The Lipper Intermediate Municipal Debt Funds Average is comprised of funds
that invest in municipal debt issues with dollar-weighted average
maturities of five to ten years.
/5/ The fund began investment operations on October 6, 1993.
- --------------------------------------------------------------------------------
10 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Here are the fund's annual total returns calculated without a sales charges.
This information is being supplied on a calendar year basis.
[GRAPH APPEARS HERE]
<TABLE>
<S> <C>
1993 3.47%
1994 (2.9)
1995 12.35
1996 4.46
</TABLE>
Past results are not an indication of future results and reflect a fee waiver.
See "Expenses."
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from its net investment income daily and
distributes the accrued dividends to shareholders each month. Dividends begin
accruing one day after payment for shares is received by the fund or American
Funds Service Company. Capital gains, if any, are usually distributed in
November or December. When a capital gain is distributed, the net asset value
per share is reduced by the amount of the payment.
TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax. The fund
is permitted to pass through to its shareholders federally tax-exempt income
subject to certain requirements. However, the fund may invest in obligations
which pay interest that is subject to state and local taxes when distributed by
the fund. Dividends
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 11
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
derived from taxable interest income, distributions of capital gains and
dividends on gains from the disposition of certain market discount bonds will
not be exempt from federal, state or local income tax.
Capital gains are taxable whether they are reinvested or received in cash--
unless you are exempt from taxation or entitled to tax deferral. Early each
year, you will be notified as to the amount and tax status of all income
distributions paid during the prior year. You are required by the Internal
Revenue Code to report to the federal government all fund exempt-interest
dividends (and all other tax-exempt interest).
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
certain dividends paid to 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 fund. Please see the statement of additional information and your tax
adviser for further information.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Massachusetts business trust on July 12, 1993. All fund operations are
supervised by the fund's board of trustees who meet periodically and perform
duties required by applicable state and federal laws. Members of the board who
are not employed by Capital Research and Management Company or its affiliates
are paid certain fees for services rendered to the fund as described in 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 the fund. The
fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
- --------------------------------------------------------------------------------
12 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
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 fund. The management fee paid by the fund to
Capital Research and Management Company is composed of a basic management fee
which may not exceed 0.30% of the fund's average net assets annually and
decline at certain asset levels, plus 3% of the fund's annual gross income. The
total management fee paid by the fund, as a percentage of average net assets,
for the previous fiscal year is discussed 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 the fund's code of ethics.
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board 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 fee paid by the fund as a percentage of average net assets
for the last fiscal year is discussed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality 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 a
concession or discount. On occasion, securities may be purchased directly from
an issuer, in which case no commissions or discounts are paid. In the over-the-
counter
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 13
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the fund or have provided investment research, statistical, and
other related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the 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
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
[MAP OF UNITED STATES]
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 SERVCE CENTER
American Funds
Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
- --------------------------------------------------------------------------------
14 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SHAREHOLDER SERVICES
The 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 FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, computer,
wire, or bank debit. You may also establish or add to your account by
exchanging shares from any of your other accounts in The American Funds Group.
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. This includes the exchange purchase orders that
may place an unfair burden on other shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(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.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
X Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
X 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 or computer including American
FundsLine (R) or American FundsLine OnLineSM (see below), or by fax.
EXCHANGES HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
Tax-exempt funds should not serve as retirement plan investments.
SHARE PRICE
The 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. The 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. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
To establish an account $1,000
To add to an account $ 50
</TABLE>
- --------------------------------------------------------------------------------
16 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
===============================================================================
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
..................
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.00%
.......................................................................
$25,000 but less than $50,000 4.50% 4.71% 3.75%
.......................................................................
$50,000 but less than $100,000 4.00% 4.17% 3.25%
.......................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
.......................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
.......................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
.......................................................................
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution and/or by American Funds Distributors on these investments.
Investments by retirement plans, foundations or endowments with $50 million or
more in assets may be made with no sales charge and are not subject to a
contingent deferred sales charge. A dealer concession of up to 1% may be paid
by the fund from its Plan of Distribution and/or by American Funds Distributors
on these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund and Capital Research and Management Company and its affiliated
companies are not subject to a sales charge.
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During the current fiscal year, 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.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 17
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
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.
X 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.
X 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.
X 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.
X 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.
- --------------------------------------------------------------------------------
18 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) or American FundsLine OnLineSM (see below). In addition, you may
sell shares in amounts of $50 or more automatically. If you sell shares through
your investment dealer you may be charged for this service. Shares held for you
in your dealer's street name must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone or computer, including American FundsLine(R) or
American FundsLine OnLineSM (see below), or by fax. Sales by telephone,
computer or fax are limited to $50,000 in accounts registered to individual(s)
(including non-retirement trust accounts). In addition, checks must be made
payable to the registered shareholder(s) and mailed to an address of record
that has been used with the account for at least 10 days.
Proceeds will not be mailed until sufficient time has passed to provide
reasonable assurance that checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may take up to 15 calendar
days from the purchase date). Except for delays relating to clearance of checks
for share purchases or in extraordinary circumstances (and as permissible under
the Investment Company Act of 1940), sale proceeds will be paid on or before
the seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
The fund 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 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.
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 19
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded. Reinvestment will be at the next calculated net asset value after
receipt and acceptance by American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINESM
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) or American
FundsLine OnLineSM. To use this service, call 800/325-3590 from a TouchTone(TM)
telephone or access the American Funds Web site on the Internet at
www.americanfunds.com.
TELEPHONE AND COMPUTER PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone or computer (including American
FundsLine(R) or American FundsLine OnLineSM) or fax purchase, sale and/or
exchange options (see below), you agree to hold the fund, American Funds
Service Company, any of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liabilities
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans, dividend and
capital gain reinvestments, and certain retirement plans will be confirmed at
least quarterly.
- --------------------------------------------------------------------------------
20 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 21
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
22 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS 23
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
</TABLE>
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
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the A current SAI has been filed
independent accountants' with the Securities and
report (in the annual Exchange Commission ("SEC").
report). It is incorporated by
reference into this
CODE OF ETHICS prospectus and is available
along with other related
Includes a description of materials on the SEC's
the fund's personal Internet Web site at
investing policy. http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company 800/421-0180 the fund 333 South Hope
ext. 1 StreetLos Angeles, CA 90071
This prospectus has been printed on recycled paper.
[LOGO OF PRINTED RECYCLED PAPER]
- --------------------------------------------------------------------------------
24 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
Part B
Statement of Additional Information
October 1, 1997
This document is not a prospectus but should be read in conjunction with
the current prospectus dated October 1, 1997 of Limited Term Tax-Exempt Bond
Fund of America (the "fund"). The prospectus may be obtained from your
investment dealer or financial planner or by writing to the fund at the
following address:
Limited Term Tax-Exempt Bond Fund of America
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
ITEM PAGE NO.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Description of Certain Securities and Investment Techniques 1
Investment Restrictions 5
Fund Officers and Trustees 8
Management 11
Dividends and Distributions 14
Additional Information Concerning Taxes 14
Purchase of Shares 18
Redeeming Shares 24
Shareholder Account Services and Privileges 25
Execution of Portfolio Transactions 27
General Information 27
Investment Results 28
Description of Ratings for Debt Securities 30
Financial Statements attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Policies and Risks."
INVESTMENT POLICIES -- The fund intends to invest in debt securities rated
in the top four categories by Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's") or unrated but determined to be of
comparable quality by Capital Research and Management Company. (See
"Description of Ratings for Debt Securities" below.) However, subsequent to
its purchase by the fund, an issue of bonds or notes 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 obligation from the fund's
portfolio, but the Investment Adviser will consider such an event in its
determination of whether the fund should continue to hold such obligation in
its portfolio. If, however, as a result of a downgrade or otherwise, the fund
holds more than 5% of its net assets in bonds rated Ba by Moody's and BB by S&P
or below or unrated but of comparable quality, commonly known as high-yield,
high-risk" or "junk" bonds, the fund will dispose of the excess as
expeditiously as possible.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it. In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices and yields of high-yield, high-risk
bonds.
PAYMENT EXPECTATIONS -- High-yield, high-risk bonds may contain redemption
or call provisions. If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors. Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as will the value of the fund's assets.
LIQUIDITY AND VALUATION -- There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
MUNICIPAL BONDS -- Municipal bonds are debt obligations generally issued to
obtain funds for various public purposes, including the construction of public
facilities. Opinions relating to the validity of municipal bonds and to the
exclusion from gross income for federal income tax purposes and, where
applicable, state and local income tax are rendered by bond counsel to the
respective issuing authorities at the time of issuance.
The two principal classifications of municipal bonds are general obligation
and limited obligation, or revenue, bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit including, if
available, its taxing power for the payment of principal and interest. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, highways and roads, water and sewer systems and facilities for a
variety of other public purposes. Lease revenue bonds or certificates of
participation in leases are payable from annual lease rental payments from a
state or locality. Annual rental payments are payable to the extent such
rental payments are appropriated annually.
Typically, the only security for a limited obligation or revenue bond is the
net revenue derived from a particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a special tax or other special
revenues Revenue bonds have been issued to fund a wide variety of
revenue-producing public capital projects including: electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; hospitals; and convention, recreational and housing
facilities. Although the security behind these bonds varies widely, many
provide additional security in the form of a debt service reserve fund which
may also be used to make principal and interest payments on the issuer's
obligations. In addition, some revenue obligations (as well as general
obligations) are insured by a bond insurance company or backed by a letter of
credit issued by a banking institution.
Revenue bonds also include, for example, pollution control, health care and
housing bonds, which, although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but are secured
by the revenues of the authority derived from payments by the private entity
which owns or operates the facility financed with the proceeds of the bonds.
Obligations of housing finance authorities have a wide range of security
features including reserve funds and insured or subsidized mortgages, as well
as the net revenues from housing or other public projects. Most of these bonds
do not generally constitute the pledge of the credit of the issuer of such
bonds. The credit quality of such revenue bonds is usually directly related to
the credit standing of the user of the facility being financed or of an
institution which provides a guarantee, letter of credit, or other credit
enhancement for the bond issue.
MUNICIPAL LEASE OBLIGATIONS -- The fund may invest without limitation in
municipal lease revenue obligations. The fund currently intends to purchase
only municipal lease revenue obligations that are determined to be liquid by
Capital Research and Management Company. In determining whether these
securities are liquid, Capital Research and Management Company will consider,
among other things, the credit quality and support, including strengths and
weaknesses of the issuer and lessee, the terms of the lease, frequency and
volume of trading, and number of dealers.
ZERO COUPON BONDS -- Municipalities may issue zero coupon securities which
are debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest. They are issued and traded at a discount from their face
amount or par value, which discount varies depending on the time remaining
until cash payments begin, prevailing interest rates, liquidity of the
security, and the perceived credit quality of the issuer.
PRE-REFUNDED BONDS -- From time to time, a municipality may refund a bond
that it has already issued prior to the original bond's call date by issuing a
second bond, the proceeds of which are used to purchase securities. The
securities are placed in an escrow account pursuant to an agreement between the
municipality and an independent escrow agent. The principal and interest
payments on the securities are then used to pay off the original bondholders.
For the purposes of diversification, pre-refunded bonds will be treated as
governmental issues.
FORWARD COMMITMENTS -- The fund may enter into commitments to purchase or
sell securities at a future date. When the fund agrees to purchase such
securities, it assumes the risk of any decline in value of the security
beginning on the date of the agreement. When the fund agrees to sell such
securities, it does not participate in further gains or losses with respect to
the securities beginning on the date of the agreement. If the other party to
such transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of
the fund's portfolio securities decline while the fund is in a leveraged
position, greater depreciation of its net assets will likely occur than were it
not in such a position. The fund will not borrow money to settle these
transactions and, therefore, will liquidate other portfolio securities in
advance of settlement if necessary to generate additional cash to meet its
obligations thereunder.
PRIVATE PLACEMENTS -- Normally, securities acquired in private placements
are subject to contractual restrictions on resales. Any such securities will
be considered illiquid unless they have been specifically determined to be
liquid under procedures adopted by the fund's board of trustees, taking into
account factors such as the frequency and volume of trading and the commitment
of dealers to make markets and the availability of qualified investors, all of
which can change from time to time. The fund may incur certain additional
costs in disposing of securities that are illiquid.
TEMPORARY INVESTMENTS -- The fund may invest in short-term municipal
obligations of up to one year in maturity during periods of temporary defensive
strategy resulting from abnormal market conditions, or when such investments
are considered advisable for liquidity. Generally, the income from all such
securities is exempt from federal income tax. See "Additional Information
Concerning Taxes" below. Further, a portion of the fund's assets, which will
normally be less than 20%, may be held in cash or invested in high-quality
taxable short-term securities of up to one year in maturity. Such investments
may include: (1) obligations of the U.S. Treasury; (2) obligations of agencies
and instrumentalities of the U.S. Government; and (3) money market instruments,
such as certificates of deposit issued by domestic banks, corporate commercial
paper, and bankers' acceptances; and (4) repurchase agreements (which are
subject to the limitations described below).
REPURCHASE AGREEMENTS - Although the fund has no current intention to do so
during the next 12 months, the fund may enter on a temporary basis into
repurchase agreements, under which the fund 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 the Investment Adviser. The fund will only
enter into repurchase agreements involving securities in which it could
otherwise invest and with selected banks and securities dealers whose financial
condition is monitored by the Investment Adviser. If the seller under the
repurchase agreement defaults, the fund may incur a loss if the value of the
collateral securing the repurchase agreement has declined and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, liquidation of the
collateral by the fund may be delayed or limited.
PORTFOLIO MANAGEMENT -- In seeking to achieve the fund's objective, the
Investment Adviser causes the fund to purchase securities which it believes
represent the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the economy, movements in
the general level and term structure of interest rates, political developments,
and variations in the supply of funds available for investment in the
tax-exempt market relative to the demand for the funds placed upon it. These
latter factors change continuously and should be met with a dynamic, responsive
approach to the investment process. Some of the more important portfolio
management techniques that are utilized by the Investment Adviser are set forth
below.
MATURITY -- Under normal market conditions, the fund's dollar-weighted average
effective portfolio maturity will range between 3 and 10 years. The fund will
not purchase any security with an effective maturity of more than 10 years. In
calculating effective maturity, a feature such as a put, call or sinking fund
will be considered to the extent it results in a security whose market
characteristics indicate a maturity of 10 years or less, even though the
nominal or stated maturity may be beyond 10 years. Capital Research and
Management Company will consider the impact on effective maturity of potential
changes in the financial condition of issuers and in market interest rates in
making investment selections for the fund.
Additionally, the fund's dollar-weighted average nominal or stated portfolio
maturity will not exceed 15 years, and the fund will not purchase any security
with a nominal or stated maturity in excess of 25 years. For purposes of
determining nominal or stated maturity, the fund will consider only the
techniques approved for such purposes by the staff of the Securities and
Exchange Commission which currently do not include any call or sinking fund
features but are limited to those described in rule 2a-7(d) under the
Investment Company Act of 1940 applicable to money market funds.
ADJUSTMENT OF MATURITIES -- The Investment Adviser seeks to anticipate
movements in interest rates and adjusts the maturity distribution of the
portfolio accordingly subject to maintaining, under normal market conditions,
an average dollar-weighted portfolio maturity of 3 to 10 years. Longer term
securities ordinarily yield more than shorter term securities but are subject
to greater and more rapid price fluctuation. Keeping in mind the fund's
objective, the Investment Adviser will increase the fund's exposure to this
price volatility only when it appears likely to increase current income without
undue risk to capital.
ISSUE CLASSIFICATION -- Securities with the same general quality rating and
maturity characteristics, but which vary according to the purpose for which
they were issued, often tend to trade at different yields. These yield
differentials tend to fluctuate in response to political and economic
developments, as well as temporary imbalances in normal supply/demand
relationships. The Investment Adviser monitors these fluctuations closely, and
will attempt to adjust portfolio concentrations in various issue
classifications according to the value disparities brought about by these yield
relationship fluctuations.
QUALITY -- Securities issued for similar purposes and with the same general
maturity characteristics, but which vary according to the creditworthiness of
their respective issuers, tend to trade at different yields. These yield
differentials also tend to fluctuate in response to political, economic and
supply/demand factors. The Investment Adviser will attempt to take advantage
of these fluctuations by adjusting the concentration of portfolio securities in
any given quality category according to the value disparities produced by these
yield relationship fluctuations.
The Investment Adviser believes that, in general, the market for municipal
bonds is less liquid than that for taxable fixed-income securities.
Accordingly, the ability of the fund to make purchases and sales of securities
in the foregoing manner may, at any particular time and with respect to any
particular securities, be limited (or non-existent).
PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. High portfolio
turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions, and may result in the realization of
net capital gains, which are taxable when distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. The fund does not
anticipate its portfolio turnover to exceed 100% annually. The fund's
portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's annual portfolio turnover over its lifetime.
INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES -- The 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
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i)
67% or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations expressed in the following investment restrictions
are measured immediately after and giving effect to the relevant transaction.
The fund may not:
1. With respect to 75% of the fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, (a) more than 5%
of the fund's total assets would be invested in the securities of that issuer,
or (b) the fund would hold more than 10% of the outstanding voting securities
of that issuer;
2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
3. Purchase or sell commodities unless acquired as a result of ownership of
securities or other instruments or engage in futures transactions;
4. Invest 25% or more of the fund's total assets in the securities of
issuers in the same industry. Obligations of the U.S. Government, its agencies
and instrumentalities are not subject to this 25% limitation on industry
concentration;
5. Invest more than 15% of the value of its net assets in securities which
are not readily marketable (including repurchase agreements maturing in more
than seven days) or engage in the business of underwriting securities of other
issuers, except to the extent that the purchase or disposal of an investment
position may technically constitute the fund as an underwriter as that term is
defined under the Securities Act of 1933;
6. Invest in companies for the purpose of exercising control or management;
7. Make loans to others except for (a) purchasing debt securities; (b)
entering into repurchase agreements; and (c) loaning portfolio securities;
8. Issue senior securities, except as permitted under the Investment Company
Act of 1940;
9. Borrow money, except from banks for temporary purposes in an amount not to
exceed one-third of the value of the fund's total assets. Moreover, in the
event that the asset coverage for such borrowing falls below 300%, the fund
will reduce, within three days, the amount of its borrowing in order to provide
for 300% asset coverage;
10. Pledge or hypothecate assets in excess of one-third of the fund's total
assets;
11. Purchase or sell puts, calls, straddles, or spreads, or combinations
thereof (this restriction does not prevent the fund from investing in
securities with put and call features); nor
12. Invest in oil, gas, or other mineral exploration or development programs
or leases.
NON-FUNDAMENTAL POLICIES -- The following policies may be changed:
1. The fund does not currently intend (at least for the next 12 months) to
sell securities short, except to the extent that the fund contemporaneously
owns, or has the right to acquire at no additional cost, securities identical
to those sold short.
2. The fund does not currently intend (at least for the next 12 months) to
purchase the securities of any issuer (other than securities issued or
guaranteed by the governments of any country or political subdivisions thereof)
if, as a result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a record
of less than three years of continuous operation.
3. The fund does not currently intend (at least for the next 12 months) to
invest in the securities of other investment companies except in connection
with a merger, consolidation, acquisition, reorganization or as deemed
advisable by its officers in connection with the administration of a deferred
compensation plan adopted by Trustees and to the extent such investments are
allowed by an exemptive order granted by the U.S. Securities and Exchange
Commission.
4. The fund does not currently intend (at least for the next 12 months) to
invest more than 5% of its net assets in restricted securities (excluding Rule
144A securities).
5. The fund does not currently intend (at least for the next 12 months) to
purchase securities in the event its borrowings exceed 5%.
6. The fund does not currently intend (at least for the next 12 months) to
invest 25% or more of its assets in municipal bonds the issuers of which are
located in the same state, unless such securities are guaranteed by the U.S.
Government, or more than 25% of its total assets in securities the interest on
which is paid from revenues of similar type projects. The fund may on occasion
invest more than an aggregate of 25% of its total assets in industrial
development bonds. There could be economic, business or political developments
which might affect all municipal bonds of a similar category or type or issued
by issuers within any particular geographical area or jurisdiction.
7. The fund does not currently intend (at least for the next 12 months) to
loan portfolio securities.
For the purpose of the fund's investment restrictions, the identification of
the "issuer" of municipal bonds that are not general obligation bonds is made
by the Investment Adviser on the basis of the characteristics of the bonds as
described, the most significant of which is the ultimate source of funds for
the payment of principal and interest on such bonds.
FUND OFFICERS AND TRUSTEES
Trustees and Trustee Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION WITH PRINCIPAL AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
AND AGE REGISTRANT OCCUPATION(S) COMPENSATION (INCLUDING OF FUND
DURING (INCLUDING VOLUNTARILY BOARDS ON
PAST 5 YEARS VOLUNTARILY DEFERRED WHICH
(POSITIONS DEFERRED COMPENSATION/1/ TRUSTEE
WITHIN THE COMPENSATION/1/) FROM ALL FUNDS SERVES/2/
ORGANIZATIONS FROM THE FUND MANAGED BY CAPITAL
LISTED MAY HAVE DURING FISCAL RESEARCH AND
CHANGED DURING YEAR ENDED MANAGEMENT
THIS PERIOD) JULY 31, 1997 COMPANY/2/ FOR THE
YEAR ENDED
JULY 31, 1997
<S> <C> <C> <C> <C> <C>
H. Frederick Trustee Private $2,100/3/ $163,900 18
Christie Investor.
P.O. Box 144 Former
Palos Verdes President and
Estates, CA Chief Executive
90274 Officer,
Age: 64 The Mission
Group (non-utility holding
Company,
subsidiary of
Southern
California
Edison Company)
+Don R. Trustee President none/4/ none/4/ 12
Conlan (Retired), The
Age: 61 Capital Group
Companies, Inc.
Diane C. Trustee CEO and $2,300 $40,800 12
Creel President,
100 W. The Earth
Broadway Technology
Suite 5000 Corporation
Long Beach, (international
CA 90802 consulting
Age: 48 engineering)
Martin Trustee Chairman, $2,500/3/ $131,600 16
Fenton, Jr. Senior Resource
4350 Group
Executive (management of
Drive senior living
Suite 101 centers)
San Diego, CA
92121-2116
Age: 62
Leonard R. Trustee President, $2,100/3/ $44,600 12
Fuller Fuller &
4337 Marina Company, Inc.
City Drive (financial
Suite 841 ETN management
Marina del consulting
Rey, CA 90292 firm)
Age: 51
+*Abner D. President, Capital none/4/ none/4/ 12
Goldstine PEO and Research and
Age: 67 Trustee Management
Company,
Senior Vice
President
and Director
+**Paul G. Chairman of Capital none/4/ none/4/ 14
Haaga, Jr. the Board Research and
Age: 48 Management
Company,
Executive Vice
President
and Director
Herbert Trustee Private $1,700 $66,600 14
Hoover III Investor
1520 Circle
Drive
San Marino CA
91108
Age: 69
Richard G. Trustee Chairman, $3,000 /3/ $96,800 13
Newman President and
3250 Wilshire CEO,
Boulevard AECOM
Los Angeles, Technology
CA 90010-1599 Corporation
Age: 62 (architectural
engineering)
Peter Valli Trustee Retired; former $2,500 /3/ $44,000 12
45 Sea Isle Chairman, BW/IP
Drive International
Long Beach, Inc.
CA 90803 (industrial
Age: 70 manufacturing)
</TABLE>
+ Trustees who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on
the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
* 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 the
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 the fund (plus earnings thereon) for participating Trustees is as
follows: H. Frederick Christie ($5,125), Martin Fenton, Jr. ($6,849), Leonard
R. Fuller ($1,123), Richard G. Newman ($15,093) and Peter C. Valli ($10,569).
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, Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
Fund.
OFFICERS
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
WITH REGISTRANT PAST 5 YEARS
<S> <C> <C> <C>
Neil L. Langberg 44 Senior Vice Vice President - Investment
11100 Santa Monica Blvd. President Management Group, Capital
Los Angeles, CA 90025 Research Company
Michael J. Downer 43 Vice President Senior Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
Mary C. Hall 39 Vice President Senior Vice President - Fund
135 South State College Blvd. Business Management Group,
Brea, CA 92821 Capital Research and Management
Company
Julie F. Williams 49 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
Anthony W. Hynes, Jr. 34 Treasurer Vice President - Fund Business
135 South State College Blvd. Management Group, Capital
Brea, CA 92821 Research and Management Company
Kimberly S. Verdick 32 Assistant Assistant Vice President - Fund
333 South Hope Street Secretary Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
Todd L. Miller 38 Assistant Assistant Vice President - Fund
135 South State College Blvd. Treasurer Business Management Group,
Brea, CA 92821 Capital Research and Management
Company
</TABLE>
# Positions within the organizations listed may have changed during this
period.
No compensation is paid by the fund to any officer or Trustee who is a
director, officer, or employee of the Investment Adviser. The fund pays annual
fees of $900 to Trustees who are not affiliated with the Investment Adviser,
plus $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 the fund. The fund
also reimburses certain expenses of the Trustees who are not affiliated with
the Investment Adviser. As of September 1, 1997, the officers and Trustees
and their families as a group owned beneficially or of record less than 1% of
the outstanding shares of the fund.
MANAGEMENT
INVESTMENT ADVISER -- The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have years of investment experience. The
Investment Adviser is located at 333 South Hope Street, Los Angeles, CA 90071,
and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world.
The Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for 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 -- The Investment Advisory and
Service Agreement (the "Agreement") between the fund and the Investment Adviser
will continue in effect until May 31, 1998, unless sooner terminated, and may
be renewed from year to year thereafter, provided that any such renewal has
been specifically approved at least annually by (i) the Board of 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. The Agreement provides that the Investment Adviser
has no liability to the fund for its acts or omissions in the performance of
its obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it,
without penalty, upon 60 days' written notice to the other party and that the
Agreement automatically terminates in the event of its assignment (as defined
in the 1940 Act).
The Investment Adviser receives a fee, at an annual rate of 0.30% per annum
on the first $60 million of the fund's average net assets; plus 0.21% per annum
on the portion of such net assets in excess of $60 million, plus 3% of the
Fund's gross investment income for the preceding month. Assuming net assets of
$300 million and gross income levels of 3%, 4%, 5%, 6%, and 7%, management fees
would be 0.32%, 0.35%, 0.38%, 0.41% and 0.44%, respectively.
For the purposes of such computations under the Agreement, the fund's gross
investment income does not reflect any net realized gains or losses on the sale
of portfolio securities but does include original-issue discount as defined for
federal income tax purposes.
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 and related administrative,
clerical and bookkeeping functions of the fund, and provides suitable office
space, necessary small office equipment and general purpose accounting forms,
supplies, and postage used at the offices of the fund. The fund pays all
expenses not assumed by the Investment Adviser, including, but not limited to,
custodian, stock transfer and dividend disbursing fees and expenses; costs of
the designing, printing and mailing of reports, prospectuses, proxy statements,
and notices to its shareholders, taxes; expenses of the issuance and redemption
of shares (including stock certificates, registration and qualification fees
and expenses); 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 fund; and costs of
assembling and storing shareholder account data.
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.
The Investment Adviser has agreed to bear any fund expenses (with the
exception of interest, taxes, brokerage costs and extraordinary expenses such
as litigation and acquisitions) in excess of 0.75% of the fund's average net
assets per annum, subject to reimbursement by the fund, 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 1, 2003. Each month, to the extent the fund owes
money to the Investment Adviser pursuant to this provision of the Agreement and
the fund's annualized expense ratio for the month is below 0.75%, the fund will
reimburse the Investment Adviser until the fund's annualized expense ratio
equals 0.75% or the debt is repaid, whichever comes first. During the period,
the Investment Adviser's total fees amounted to $815,000.
PRINCIPAL UNDERWRITER -- American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio,
TX 78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the "Plan"), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares during the period ended July
31, 1997 amounted to $155,000 after allowance of $625,000 to dealers. During
the fiscal years ended 1996 and 1995, the Principal Underwriter received
$222,000 and $197,000, after allowance of $906,000 and $793,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal
Underwriting Agreement) has been approved by a majority of the entire Board of
Trustees and separately by a majority of the Trustees who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting
securities of the fund. The officers and Trustees who are "interested persons"
of the fund 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
fund are improved shareholder services, savings to the fund in transfer agency
costs, savings to the fund in advisory fees and other expenses, benefits to the
investment process from growth or stability of assets and maintenance of a
financially healthy management organization. The selection and nomination of
Trustees who are not "interested persons" of the fund shall be committed to the
discretion of the Trustees who are not "interested persons" during the
existence of the Plan. Plan expenditures are reviewed quarterly and must be
renewed annually by the Board of Trustees.
Under the Plan, the fund may expend up to 0.30% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Trustees has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees.). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the period, the fund paid $610,000 under the Plan as
compensation to dealers. As of July 31, 1997, accrued and unpaid distribution
expenses were $58,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS AND DISTRIBUTIONS -- The fund declares dividends from its net
investment income daily and distributes the accrued dividends to shareholders
each month. The percentage of the distribution that is tax-exempt may vary
from distribution to distribution. For the purpose of calculating dividends,
daily net investment income of the fund consists of: (a) all interest income
accrued on the fund's investments including any original issue discount or
market premium ratably amortized to the date of maturity or determined in such
other manner as may be deemed appropriate; minus (b) all liabilities accrued,
including interest, taxes and other expense items, amounts determined and
declared as dividends or distributions and reserves for contingent or
undetermined liabilities, all determined in accordance with generally accepted
accounting principles.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional federal, state and local
tax considerations generally affecting the fund and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
fund or its shareholders, and the discussion here and in the fund's prospectus
is not intended as a substitute for careful tax planning. Investors are urged
to consult their tax advisers with specific reference to their own tax
situations.
The fund is not intended to constitute a balanced investment program and is
not designed for investors seeking capital appreciation or maximum tax-exempt
income irrespective of fluctuations in principal. Shares of the fund would
generally not be suitable for tax-exempt institutions or tax-deferred
retirement plans (E.G., plans qualified under Section 401 of the Internal
Revenue Code, Keogh-type plans and individual retirement accounts.) Such
retirement plans would not gain any benefit from the tax-exempt nature of the
fund's dividends because such dividends would be ultimately taxable to
beneficiaries when distributed to them. In addition, the fund may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a non-exempt person
who regularly uses a part of such facilities in his trade or business and whose
gross revenues derived with respect to the facilities financed by the issuance
of bonds are more than 5% of the total revenues derived by all users of such
facilities, or who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" include certain related natural
persons, affiliated corporations, a partnership and its partners and an S
Corporation and its shareholders.
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; (b) for taxable years beginning on or before August 5, 1997, derive
less than 30% of its gross income from the gains or 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 the fund's assets is represented by cash, cash items, U.S.
Government securities, securities of other regulated investment companies, and
other securities which must be limited, in respect of any one issuer to an
amount not greater than 5% of the fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
its assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies) or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
The percentage of total dividends paid by the fund with respect to any
taxable year which qualify for exclusion from gross income ("exempt-interest
dividends") will be the same for all shareholders receiving dividends during
such year. In order for the fund to pay exempt-interest dividends during any
taxable year, at the close of each fiscal quarter at least 50% of the aggregate
value of the fund's assets must consist of certain tax-exempt obligations. Not
later than 60 days after the close of its taxable year, the fund will notify
each shareholder in writing of the portion of the dividends paid by the fund to
the shareholder with respect to such taxable year which constitutes
exempt-interest dividends. The aggregate amount of dividends so designated
cannot, however, exceed the excess of the amount of interest excludable from
gross income from tax under Section 103 of the Code received by the fund during
the taxable year over any amounts disallowed as deductions under Sections 265
and 171(a)(2) of the Code.
Interest on indebtedness incurred by a shareholder to purchase or carry fund
shares is not deductible for federal income tax purposes if the fund
distributes exempt-interest dividends during the shareholder's taxable year.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held for six months or less, any loss on the sale or exchange
of such share will be disallowed to the extent of the amount of such
exempt-interest dividend.
While the fund does not expect to realize substantial long-term capital gains,
any net realized long-term capital gains will be distributed annually. The
fund will have no tax liability with respect to such gains, and the
distributions will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held fund shares. Such distributions
will be designated as a capital gains distribution in a written notice mailed
by the fund to shareholders not later than 60 days after the close of the
fund's taxable year. If a shareholder receives a designated capital gain
distribution (treated by the shareholder as a long-term capital gain) with
respect to any fund share and such fund share is held for six months or less,
then (unless otherwise disallowed) any loss on the sale or exchange of that
fund share will be treated as long-term capital loss to the extent of the
designated capital gain distribution. The fund also may make a distribution of
net realized long-term capital gains near the end of the calendar year to
comply with certain requirements of the Code. Gain recognized on the
disposition of a debt obligation (including tax-exempt obligations purchased
after April 30, 1993) purchased by the fund at a market discount (generally at
a price less than its principal amount) will be treated as ordinary income to
the extent of the portion of the market discount which accrued during the
period of time the fund held the debt obligation.
Similarly, while the fund does not expect to earn any significant investment
company taxable income in the event that any taxable income is earned by the
fund it will be distributed. In general, the fund's investment company taxable
income will be its taxable income subject to certain adjustments and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The fund would be taxed on any
undistributed investment company taxable income. Since any such income will be
distributed, it will be taxable to shareholders as ordinary income (whether
distributed in cash or additional shares).
The Code imposes limitations on the use and investment of the proceeds of
state and local governmental bonds and upon other funds of the issuers of such
bonds. These limitations must be satisfied on a continuing basis to maintain
the exclusion from gross income of interest on such bonds. These provisions of
the Code generally apply to bonds issued after August 15, 1986. Bond counsel
qualify their opinions as to the federal tax status of new issues of bonds by
making such opinions contingent on the issuer's future compliance with these
limitations. Any failure on the part of an issuer to comply could cause the
interest on its bonds to become taxable to investors retroactive to the date
the bonds were issued.
In most cases, the interest on "private activity" bonds as defined under
the Code is an item of tax preference subject to the alternative minimum tax
("AMT") on corporations and individuals. The fund may invest up to 20% of its
net assets in "private activity" bonds. As of the date of this statement of
additional information, individuals are subject to an AMT at a maximum marginal
rate of 28% (20% on capital gains with respect to assets held more than 18
months) and corporations at a rate of 20%. Shareholders will not be permitted
to deduct any of their share of fund expenses in computing alternative minimum
tax income. With respect to corporate shareholders of the fund, all interest
on municipal bonds and other tax-exempt obligations, including exempt-interest
dividends paid by the fund, is included in adjusted current earnings in
calculating federal alternative minimum taxable income, and may also affect
corporate federal "environmental tax" liability.
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 (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and net capital gains of the regulated investment company for prior
periods. The term "distributed amount" generally means the sum of (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
during the periods described above. The fund intends to distribute net
investment income and net capital gains so as to minimize or avoid the excise
tax liability.
If for any taxable year the fund does not qualify for the special tax
treatment afforded regulated investment companies, all of its taxable income
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, and may
be eligible for the dividends received deduction for corporations. Under
normal circumstances, no part of the distributions to shareholders by the fund
is expected to qualify for the dividends-received deduction allowed to
corporate shareholders.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purposes of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other funds. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gains on assets held more than 18 months is 20%; and
on assets held more than one year and not more than 18 months is 28%; and the
maximum corporate tax applicable to ordinary income and net capital gains is
35%. However, to eliminate the benefit of lower marginal corporate income tax
rates, corporations which have taxable income in excess of $100,000 for 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 of up
to $100,000. Naturally, the amount of tax payable by a taxpayer will be
affected by a combination of tax law rules covering, E.G., deductions, credits,
deferrals, exemptions, sources of income and other matters.
Under the Code, distributions of net investment income by the fund to a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
non-U.S. corporation, or non-U.S. partnership (a "non-U.S. shareholder") will
be subject to U.S. withholding tax (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend paid by the fund to a
non-U.S. shareholder is "effectively connected" with a U.S. trade or business,
in which case the reporting and withholding requirements applicable to U.S.
citizens, U.S. residents, or domestic corporations will apply.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
<S> <C> <C>
See "Investment Minimums and Fund $50 minimum (except where a
Numbers" for initial investment lower minimum is noted under
minimums. "Investment Minimums and Fund
Numbers").
By contacting Visit any investment dealer who Mail directly to your
your is registered in the state where investment dealer's address
investment the purchase is made and who has printed on your account
dealer a sales agreement with American statement.
Funds Distributors.
By mail Make your check payable to the Fill out the account
fund and mail to the address additions form at the bottom
indicated on the account of a recent account
application. Please indicate an statement, make your check
investment dealer on the account payable to the fund, write
application. your account number on your
check, and mail the check and
form in the envelope provided
with your account statement.
By telephone Please contact your investment Complete the "Investments by
dealer to open account, then Phone" section on the account
follow the procedures for application or American
additional investments. FundsLink Authorization Form.
Once you establish the
privilege, you, your
financial advisor or any
person with your account
information can call American
FundsLine(r) and make
investments by telephone
(subject to conditions noted
in "Telephone and Computer
Purchases, Redemptions and
Exchanges" below).
By computer Please contact your investment Complete the American
dealer to open account, then FundsLink Authorization Form.
follow the procedures for Once you establish the
additional investments. privilege, you, your
financial advisor or any
person with your account
information may access
American FundsLine(r) on the
Internet and make investments
by computer (subject to
conditions noted in
"Telephone and Computer
Purchases, Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain your Your bank should wire your
account number(s), if necessary. additional investments in the
Please indicate an investment same manner as described
dealer on the account. Instruct under "Initial Investment."
your bank to wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS -- Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLine(r) (see
description below):
<TABLE>
<CAPTION>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(r) 02
$1,000
American Balanced Fund(r) 11
500
American Mutual Fund(r) 03
250
Capital Income Builder(r) 12
1,000
Capital World Growth and Income Fund(sm) 33
1,000
EuroPacific Growth Fund(r) 16
250
Fundamental Investors(sm) 10
250
The Growth Fund of America(r) 05
1,000
The Income Fund of America(r) 06
1,000
The Investment Company of America(r) 04
250
The New Economy Fund(r) 14
1,000
New Perspective Fund(r) 07
250
SMALLCAP World Fund(sm) 35
1,000
Washington Mutual Investors Fund(sm) 01
250
BOND FUNDS
American High-Income Municipal Bond Fund(sm) 40
1,000
American High-Income Trust(r) 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(r) 23
1,000
Limited Term Tax-Exempt Bond Fund of America(sm) 43
1,000
The Tax-Exempt Bond Fund of America(sm) 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>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
<S> <C> <C> <C>
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 will be paid to dealers who initiate and are responsible for
purchases of $1 million or more, for purchases by any employer-sponsored 403(b)
plan or purchases by any defined contribution plan qualified under section
401(a) of the Internal Revenue Code including a "401(k)" plan with 100 or more
eligible employees, and for purchases made at net asset value by certain
retirement plans of organizations with collective retirement plan assets of
$100 million or more: 1% 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 the current fiscal year, 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 100 or more eligible employees or any other purchaser investing at least
$1 million in shares of the fund (or in combination with shares of other funds
in The American Funds Group other than the money market funds) may purchase
shares at net asset value; however, a contingent deferred sales charge of 1% is
imposed on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a contingent deferred
sales charge.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES -- The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of 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 public offering
prices set forth in the prospectus apply to purchases of $50,000 or more made
within a 13-month period subject to the following statement of intention (the
"Statement") terms. The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder elects to utilize the Statement in order
to qualify for a reduced sales charge, shares equal to 5% of the dollar amount
specified in the Statement will be held in escrow in the shareholder's account
out of the initial purchase (or subsequent purchases, if necessary) by the
Transfer Agent. All dividends and 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 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 securities dealer, the appropriate
number of escrowed shares 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
holdings eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the directors of certain retirement
plans by payroll deduction, the sales charge for the investments made during
the 13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, 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 SHARES -- Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In the case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price. The 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.
The price you pay for shares, the public offering price, is based on the
net asset value per share which is calculated once daily at the close of
trading (currently 4:00 p.m., New York time) each day the New York Stock
Exchange is open. The New York Stock Exchange is currently closed on weekends
and on the following holidays: New Year's Day, Martin Luther King, Jr.'s
Birthday, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and
Management Company are valued, and the net asset value per share is determined,
as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies
are translated prior to the next determination of the net asset value of the
fund's shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board.
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell fund shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Trustees.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Service Company (at Send a letter of instruction specifying the
the appropriate address indicated under "Fund name of the fund, the number of shares or
Organization and Management - Principal dollar amount to be sold, your name and
Underwriter and Transfer Agent" in the account number. You should also enclose any
prospectus) share certificates you wish to redeem. For
redemptions over $50,000 and for certain
redemptions of $50,000 or less (see below),
your signature must be guaranteed by a bank,
savings association, credit union, or member
firm of a domestic stock exchange or the
National Association of Securities Dealers,
Inc. that is an eligible guarantor
institution. You should verify with the
institution that it is an eligible guarantor
prior to signing. Additional documentation
may be required for redemption of shares held
in corporate, partnership or fiduciary
accounts. Notarization by a Notary Public is
not an acceptable signature guarantee.
By contacting your investment dealer If you redeem shares through your investment
dealer, you may be charged for this service.
SHARES HELD FOR YOU IN YOUR INVESTMENT
DEALER'S STREET NAME MUST BE REDEEMED
THROUGH THE DEALER.
You may have a redemption check sent to you by You may use this option, provided the account
using American FundsLine(r) or American is registered in the name of an individual(s),
FundsLine Online(sm) or by telephoning, faxing, a UGMA/UTMA custodian, or a non-retirement
or telegraphing American Funds Service Company plan trust. These redemptions may not exceed
(subject to the conditions noted in this section $50,000 per shareholder, per day, per fund
and in "Telephone and Computer Purchases, account and the check must be made payable to
Redemptions and Exchanges" below) the shareholder(s) of record and be sent to
the address of record provided the address has
been used with the account for at least 10
days. See "Fund Organization and Management -
Principal Underwriter and Transfer Agent" in
the prospectus and "Exchange Privilege" below
for the appropriate telephone or fax number.
In the case of the money market funds, you may Upon request (use the account application for
have redemptions wired to your bank by the money market funds) you may establish
telephoning American Funds Service Company telephone redemption privileges (which will
($1,000 or more) or by writing a check ($250 enable you to have a redemption sent to your
or more) 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.
</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 10 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 100 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 59-1/2; 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 the
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 to the Transfer Agent.
AUTOMATIC REINVESTMENT --Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or you investment dealer.
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).
EXCHANGE PRIVILEGE -- You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(r) or American FundsLine OnLine(sm) (see "American FundsLine(r) and
American FundsLine OnLine(sm) below), or by telephoning 800/421-0180 toll-free,
faxing (see "Transfer Agent" below for the appropriate fax numbers) or
telegraphing American Funds Service Company. (See "Telephone and Computer
Redemptions and Exchanges" below.) Shares held in corporate-type retirement
plans for which Capital Guardian Trust Company serves as trustee may not be
exchanged by telephone, fax or telegraph. Exchange redemptions and purchases
are processed simultaneously at the share prices next determined after the
exchange order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND
PURCHASES.
AUTOMATIC EXCHANGES -- You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either 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.
AUTOMATIC WITHDRAWALS -- Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments 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) AND AMERICAN FUNDSLINE ONLINE(SM) -- You may check
your share balance, the price of your shares, or your most recent account
transaction, redeem shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(r) and American
FundsLine OnLine(sm). To use this service, call 800/325-3590 from a TouchTonet
telephone or access the American Funds Website on the Internet at
www.americanfunds.com. Redemptions and exchanges through American FundsLine(r)
and American FundsLine OnLine(sm) are subject to the conditions noted above and
in "Redeeming Shares--Telephone and Computer Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE AND COMPUTER REDEMPTIONS AND EXCHANGES -- By using the telephone
or computer (including American FundsLine(r)) and American FundsLine
OnLine(sm), fax or telegraph redemption and/or exchange options, you agree to
hold the fund, American Funds Service Company, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing American Funds Service Company (you may
reinstate them at any time also by writing American Funds Service Company). If
American Funds Service Company does not employ reasonable procedures to confirm
that the instructions received from any person with appropriate account
information are genuine, the fund may be liable for losses due to unauthorized
or fraudulent instructions. In the event that shareholders are unable to reach
the fund by telephone because of technical difficulties, market conditions, or
a natural disaster, redemption and exchange requests may be made in writing
only.
REDEMPTION OF SHARES -- The fund's Declaration of Trust permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder if the shares
owned by such shareholder through redemptions, market decline or otherwise,
have a value of less than the minimum initial investment amount required of new
shareholders of that series or Class, (determined, for this purpose only as the
greater of the shareholder's cost or the current net asset value of the shares,
including any shares acquired through reinvestment of income dividends and
capital gain distributions). Prior notice of at least 60 days will be given to
a shareholder before the involuntary redemption provision is made effective
with respect to the shareholder's account. The shareholder will have not less
than 30 days from the date of such notice within which to bring the account up
to the minimum determined as set forth above.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser. The fund does not consider that it has
an obligation to obtain the lowest available commission rate to the exclusion
of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund does not intend to pay a mark-up
in exchange for research in connection with principal transactions.
GENERAL INFORMATION
CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including
proceeds from the sale of shares of the fund and of securities in the fund's
portfolio, are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, NY 10081, as custodian.
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. It was paid a fee of $71,000 for the fiscal
year ended July 31, 1997.
INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, provides audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements included in this statement of additional
information have been so included in reliance on the report of the independent
accountants given on the authority of said firm as experts in accounting and
auditing.
SHAREHOLDER VOTING RIGHTS -- At any meeting of shareholders, duly called and at
which a quorum is present, the shareholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
trustee or trustees from office and may elect a successor or successors to fill
any resulting vacancies for the unexpired terms of removed trustees. The fund
has made an undertaking, at the request of the staff of the Securities and
Exchange Commission, to apply the provisions of section 16(c) of the 1940 Act
with respect to the removal of trustees, as though the fund were a common-law
trust. Accordingly, the trustees of the fund shall promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee when requested in writing to do so by the record holders of not less
than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS -- The fund's fiscal year ends on July 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information audited
annually by the fund's independent accountants, Price Waterhouse LLP, whose
selection is determined annually by the Board of Trustees.
PERSONAL INVESTING POLICY -- The Investment Adviser and its affiliated
companies have adopted a personal investing policy consistent with Investment
Company Institute guidelines. This policy includes: a ban on acquisitions of
securities pursuant to an initial public offering; restrictions on acquisitions
of private placement securities; pre-clearance and reporting requirements;
review of duplicate confirmation statements; annual recertification of
compliance with codes of ethics; blackout periods on personal investing for
certain investment personnel; ban on short-term trading profits for investment
personnel; limitations on service as a director of publicly traded companies;
and disclosure of personal securities transactions. You may obtain a summary
of the personal investing policy by contacting the Secretary of the fund.
The financial statements including the investment portfolio and the report of
independent accountants contained in the annual report are included in this
statement of additional information. The following information is not included
in the annual report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- JULY 31, 1997
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $14.79
Maximum offering price per share (100/95.25 of
per share net asset value, which takes into account
the fund's current maximum sales charge) $15.53
</TABLE>
INVESTMENT RESULTS
The fund's yield is 4.09% based on a 30-day (or one month) period ended
July 31, 1997, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[(a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund may also calculate a tax equivalent yield based on a 30-day (or
one month) period ended no later than the date of the most recent balance sheet
included in the registration statement, computed by dividing that portion of
the yield (as computed by the formula stated above) which is tax-exempt by one
minus a stated income tax rate and adding the product to that portion, if any,
of the yield that is not tax-exempt. The fund's tax equivalent yield based on
the maximum individual effective federal tax rate of 39.6% for the 30-day (or
one month) period ended July 31, 1997 was 6.77%.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by annualizing the current
month's dividend and dividing by the average net asset value or maximum
offering price for the month. The distribution rate may differ from the yield.
As of July 31, 1997, the fund's total return over the past twelve months
and average annual total return over its lifetime were 2.80% and 4.39%,
respectively. Over the fund's lifetime (October 6, 1993 to July 31, 1997), the
Lehman Brothers 7-Year Municipal Bond Index/1/ and the Lipper Intermediate
Municipal Debt Funds Average/2/ had average annual total returns of 5.59% and
5.01%, respectively.
/1/ The Lehman Brothers 7-Year Municipal Bond Index is unmanaged, reflects no
expenses or management fees and consists of a large universe of municipal bonds
issued as state general obligations or revenue bonds with a minimum rating of
BBB by Standard & Poor's Corporation.
/2/ The Lipper Intermediate Municipal Debt Funds Average is comprised of funds
that invest in municipal debt issues with dollar-weighted average maturities of
five to ten years.
The fund's average annual total return ("T") will be computed by equating the
value at the end of the period ("ERV") with a hypothetical initial investment
of $1,000 ("P") over a number of years ("n") according to the following formula
as required by the Securities and Exchange Commission: P(1+T)/n/=ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
4.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. The
fund will calculate total return for one, five and ten-year periods after such
a period has elapsed.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
The fund may also refer to results compiled by organizations such as Lipper
Analytical Services, Morningstar, Inc. and Wiesenberger Investment Companies
Services. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
DESCRIPTION OF RATINGS FOR DEBT SECURITIES
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Corporation represent their opinions as to the quality of the municipal bonds
which they undertake to rate. It should be emphasized, however, that ratings
are general and are not absolute standards of quality. Consequently, municipal
bonds with the same maturity, coupon and rating may have different yields,
while municipal bonds of the same maturity and coupon with different ratings
may have the same yield.
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities from "Aaa" to "C." Moody's applies the numerical modifiers 1,
2, and 3 in each generic rating classification from AA through B in its
corporate bond rating system. The modifier 1 indicates that the security ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category. Ratings are described as follows:
BONDS --
"Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, I.E.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
NOTES --
"The MIG 1 designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
The MIG 2 designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group."
COMMERCIAL PAPER --
"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 earnings 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 appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained."
Standard & Poor's Corporation rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality. The
ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by 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."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories."
NOTES --
"The SP-1 rating denotes a very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
The SP-2 rating denotes a satisfactory capacity to pay principal and
interest."
COMMERCIAL PAPER --
The A-1 designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation."
<PAGE>
<TABLE>
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
INVESTMENT PORTFOLIO
July 31, 1997
- ---------------------------------------------------- ------------------
<S> <C> <C>
Portfolio Composition
New York 12.93%
Michigan 9.59%
California 8.28%
Maine 7.78%
Texas 5.43%
Massachusetts 5.00%
Pennsylvania 4.24%
Washington 4.24%
Illinois 3.69%
Louisiana 3.51%
Other states 31.12%
Cash & equivalents 4.19%
- ---------------------------------------------------- ------------------
Principal Market
Amount Value
(000) (000)
------------------
Tax-Exempt Securities Maturing in More than
One Year - 95.81%
Alabama - 1.51%
Industrial Development Board of the City of Butler,
Pollution Control Refunding Revenue Bonds (James River
Project), Series 1993, 5.50% 2005 $3,000 $3,063
Alaska - 1.93%
Student Loan Corp., Student Loan Revenue Bonds:
1988 Series A, AMBAC Insured AMT, 8.40% 2003 2,750 2,881
1997 Series A, AMBAC Insured AMT, 5.20% 2006 1,000 1,031
Arizona - 2.07%
Educational Loan Marketing Corp.,
1992 Educational Loan Revenue Bonds:
Series A, 6.70% 2000 3,000 3,145
Series B AMT, 6.95% 2001 1,000 1,067
California - 8.28%
Health Facilities Financing Authority,
Hospital Revenue Bonds (Downey Community
Hospital), Series 1993:
5.00% 2001 1,250 1,278
5.30% 2004 1,010 1,045
City of Fremont, Multifamily Housing Revenue Refunding Bonds,
Issue A of 1995 (Durham Greens Project), 5.40% 2026 (2006) /1/ 2,830 2,965
Long Beach Aquarium of the Pacific, Revenue Bonds
(Aquarium of the Pacific Project),
1995 Series A, 5.75% 2005 1,500 1,578
County of Los Angeles, Certificates of Participation:
1991 Master Refunding Project, 6.40% 2000 1,000 1,057
Marina del Rey, Series A, 6.25% 2003 3,100 3,342
Pleasanton Joint Powers Financing Authority,
Reassessment Revenue Bonds, 1993 Series A,
5.70% 2001 955 997
Sacramento:
Cogeneration Authority, Cogeneration
Project Revenue Bonds (Proctor & Gamble Project),
1995 Series, 7.00% 2004 1,000 1,136
Power Authority, Cogeneration Project Revenue
Bonds (Campbell Soup Project), 1995 Series:
6.50% 2004 2,000 2,213
6.50% 2005 1,100 1,210
Colorado - 1.76%
Housing and Finance Authority, Single
Family Program Senior Bonds, 1995 Series C-2,
5.625% 2009 (2000) /1/ 935 968
The Regents of the University of Colorado, Master Lease
Purchase Agreement, Refunding Certificates of
Participation (Telecommunications and Cogeneration
Projects), Series 1996, AMBAC Insured, 6.00% 2005 2,415 2,637
Connecticut - 2.68%
Mashantucket (Western) Pequot Tribe Special Revenue Bonds,
1996 Series A:
6.25% 2002 1,000 1,074
6.375% 2004 4,000 4,372
District of Columbia - 1.05%
General Obligation Refunding Bonds,
Series 1994D, FGIC Insured, 5.10% 2002 1,000 1,033
Hospital Revenue Refunding Bonds
(Medlantic Healthcare Group, Inc. Issue),
Series A, MBIA Insured, 6.00% 2006 1,000 1,094
Illinois - 3.69%
Health Facilities Authority:
Revenue Refunding Bonds, Series 1997A, (Advocate Health
Care Network):
5.50% 2004 1,250 1,314
5.10% 2005 1,815 1,864
Revenue Bonds, Series 1993 (OSF Healthcare System),
5.25% 2001 2,025 2,096
City of Chicago, Chicago-O'Hare International Airport,
Special Facilities Revenue Bonds for United Air Lines,
Series B AMT, 8.95% 2018 975 1,113
The County of Cook, General Obligation Capital Improvement
Bonds, Series 1996, FGIC Insured, 6.00% 2006 1,000 1,118
Indiana - 0.86%
Employment Development Commission,
Pollution Control Revenue Bonds (Chrysler
Corp. Project), Series 1985, 5.70% 1999 1,700 1,741
Iowa - 1.07%
Student Loan Liquidity Corp., Student Loan Revenue Bonds,
Series C AMT, 6.80% 2005 2,000 2,178
Louisiana - 3.51%
Offshore Terminal Authority,
Deepwater Port Refunding Revenue Bonds
(LOOP INC. Project), First Stage:
Series 1992B, 6.20% 2003 1,500 1,626
Series E, 7.45% 2004 5,000 5,507
Maine - 7.78%
Educational Loan Marketing Corp.,
Senior Student Loan Revenue Bonds:
Series 1991 AMT, 6.90% 2003 2,740 2,897
Series 1994A-4 AMT:
5.95% 2003 1,000 1,062
6.05% 2004 1,500 1,585
Student Loan Revenue Refunding Bonds:
Series 1992A-1 AMT, 6.20% 2003 525 557
Series 1992A-4 AMT, 6.30% 2004 895 949
Housing Authority, Mortgage Purchase Bonds:
1994 Series E, 6.30% 2002 1,650 1,724
1994 Series C-1, 5.90% 2015 (1999) /1/ 6,785 7,022
Maryland - 1.95%
Community Development Administration, Department
of Housing and Community Development,
Single Family Program Bonds,
1994 First Series, 5.70% 2017 (2004) /1/ 2,500 2,545
1994 Fifth Series AMT, 5.875% 2017 (2001) /1/ 1,380 1,415
Massachusetts - 5.00%
Housing Finance Agency, Housing Project Revenue Bonds,
Series A, AMBAC Insured:
5.25% 2002 1,000 1,034
5.35% 2003 750 779
The New England Education Loan Marketing
Corp., Student Loan Revenue Refunding Bonds:
1992 Senior Issue D, 6.20% 2000 2,000 2,106
1992 Senior Issue A, 6.50% 2002 4,500 4,895
1992 Issue C AMT, 6.75% 2002 1,250 1,347
Michigan - 9.59%
Hospital Finance Authority, Hospital Revenue Refunding
Bonds:
Genesys Health System Obligated Group, Series 1995A,
7.20% 2003 2,375 2,648
Pontiac Osteopathic, Series A, 5.375% 2006 4,000 3,998
Housing Development Authority, Rental Housing Revenue Bonds,
1992 Series A, AMBAC Insured, 6.40% 2005 1,200 1,296
City of Detroit, General Obligation Refunding Bonds
(Unlimited Tax):
Series A:
6.10% 2003 1,800 1,932
6.25% 2004 2,165 2,352
Series 1995-B, 6.75% 2003 4,500 4,975
Series A, FGIC Insured:
5.50% 2005 1,240 1,317
6.00% 2006 875 962
Minnesota - 0.91%
Housing and Finance Authority, Single Family Mortgage,
Series Q, 6.25% 2014 (1999) /1/ 770 801
Maplewood Health Care Facility Revenue Bonds (HealthEast
Project), 5.80% 2003 1,000 1,039
Mississippi - 0.54%
Claiborne County Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy,
Inc. Project), Series C, 9.875% 2014 (1998) /1/ 1,000 1,089
New Jersey - 1.46%
Housing and Mortgage Finance Agency, Home Buyer Revenue
Bonds, 1994 Series I, MBIA Insured, 5.60% 2016 2,900 2,965
New Mexico - 0.73%
New Mexico Educational Assistance Foundation, Student
Loan Revenue Bonds, Subordinate 1992 Series One-B AMT,
6.85% 2005 1,375 1,476
New York - 12.93%
Dormitory Authority Revenue Bonds:
City University Issue, Series U, 6.10% 2001 1,500 1,601
State University Educational Facilities, Series 1994B,
5.70% 2004 2,000 2,126
The City University of New York, as Lessee (John Jay
College of Criminal Justice Project Refunding),
5.75% 2005 2,000 2,129
State Medical Care Facilities Finance Agency,
Mental Health Services Facilities Improvement
Revenue Bonds, Series B:
5.30% 2004 1,620 1,682
5.30% 2004 2,000 2,082
6.00% 2007 3,000 3,259
Urban Development Corp.:
Correctional Capital Facilities Revenue Bonds,
1993A Refunding Series, 6.30% 2003 1,305 1,418
Revenue Refunding Bonds, PJ-CTR for Individual
Innovation, 5.25% 2003 1,500 1,555
Series 6, 6.00% 2006 1,500 1,623
The City of New York General Obligation Bonds:
1994 Series A, 6.00% 2000 1,000 1,052
Fiscal 1993 Series A, 6.25% 2003 2,000 2,175
Series E, 6.50% 2004 1,000 1,102
Series A-1, AMBAC Insured, 6.25% 2005 3,000 3,354
Series I, 6.25% 2006 1,000 1,098
North Carolina - 2.06%
Eastern Municipal Power Agency,
Power System Revenue Bonds, Refunding
Series 1993 C, 5.00% 2002 2,000 2,036
Municipal Power Agency Number 1,
Catawba Electric Revenue Bonds, Series 1992,
6.00% 2004 2,000 2,140
Ohio - 1.90%
Housing Finance Agency, Single Family
Mortgage Revenue Bonds, 1992 Series A-2 AMT,
5.70% 2013 (1999) /1/ 1,585 1,635
County of Franklin, Hospital Facilities
Revenue Refunding and Improvement Bonds (Doctors
Hospital Project), Series 1993, 5.70% 2004 1,120 1,182
The Student Loan Funding Corp., Cincinnati,
Senior Subordinated Revenue Bonds,
Series 1993A AMT, 5.75% 2003 1,000 1,041
Oklahoma - 0.70%
Housing Finance Agency, Single Family Mortgage
Revenue Bonds (Homeownership Loan Program),
1994 Series A-1 AMT, 6.25% 2016 (1999) /1/ 1,380 1,428
Pennsylvania - 4.24%
Higher Education Assistance Agency,
Student Loan Adjustable Rate Tender Revenue
Refunding Bonds, 1985 Series A, FGIC Insured,
6.80% 2000 8,000 8,610
South Dakota - 1.78%
Housing Development Authority, Homeownership Mortgage
Bonds, 1996 Series A, 5.50% 2010 985 1,014
Student Loan Finance Corporation, Student Loan
Revenue Bonds, Series 1994-A AMT, 5.95% 2001 (2001) /1/ 2,500 2,609
Texas - 5.43%
General Obligation Bonds,
Veterans' Housing Assistance Program, Fund I
Series 1994C Refunding Bonds, 6.25% 2015 (2000) /1/ 1,985 2,057
Brazos Higher Education Authority, Inc.,
Student Loan Revenue Refunding Bonds:
1992C-1 AMT, 6.20% 2000 1,000 1,048
Subordinate Series, 1993C-2 AMT, 5.875% 2004 4,000 4,190
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 1,081
Harris County Health Facilities Development Corp.,
Hospital Revenue Refunding Bonds, Children's Hospital
Project, Series 1995, MBIA Insured, 6.00% 2004 1,000 1,090
Houston Water Conveyance Systems Contract, Certificates
of Participation, Series 1993-C, AMBAC Insured,
7.00% 2004 1,350 1,565
Utah - 0.78%
Housing Finance Agency, Single Family Mortgage
Purchase Refunding Bonds, Series 1996 (Federally
Insured or Guranteed Mortgage Loans), 5.45% 2004 1,525 1,581
Vermont - 0.14%
Housing Finance Agency, Single Family
Housing Bonds, Series 4, 5.75% 2012 (1999 /1/ 280 286
Virginia - 1.17%
Housing Development Authority, Commonwealth Mortgage
Bonds, 1995 Series A AMT, Subseries A-1:
6.50% 2003 1,000 1,076
6.60% 2004 1,200 1,304
Washington - 4.24%
Health Care Facilities Authority, Weekly Rate Demand
Revenue Bonds (Virginia Mason Medical Center),
MBIA Insured, 6.00% 2006 /2/ 1,000 1,091
Public Power Supply System:
Nuclear Project No. 1 Refunding Revenue Bonds:
Series 1993A, 6.30% 2001 1,000 1,069
Series 1989B, 7.25% 2003 (2000) /1/ 1,000 1,092
Nuclear Project No. 2 Refunding Revenue Bonds:
Series 1990C, 7.30% 2000 1,500 1,622
Series 1993A, AMBAC Insured, 5.50% 2004 1,000 1,057
Series 1992A, 5.90% 2004 1,500 1,609
Nuclear Project No. 3 Refunding Revenue Bonds,
Series 1989B, 7.10% 2000 1,000 1,076
West Virginia - 1.27%
The State Building Commission, Lottery Revenue Bonds,
1997 Series A, MBIA Insured, 5.00% 2003 2,500 2,580
Wisconsin - 2.80%
Health and Educational Facilities
Authority, Revenue Bonds (Luther Hospital
Project), Series 1992A, 6.00% 2003 1,000 1,077
Housing and Economic Development
Authority, Housing Revenue Bonds:
6.20% 2001 1,500 1,570
Series B AMT, 5.30% 2006 3,000 3,039
---------
194,621
--C286-------
Tax-Exempt Securities Maturing in
One Year or Less - 2.39%
Houston, Texas, Tax and Revenue Anticipation Notes,
4.50% 6/30/98 1,500 1,509
County of Los Angeles, California 1997 Tax and Revenue
Anticipation Notes, Series A, 4.50% 6/30/98 2,100 2,113
The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota,
Hospital Facility Revenue Bonds (HealthEast Project), Series 1987-B,
9.75% 2017 (1997) /1/ 1,000 1,033
State of Texas, Tax and Revenue Anticipation Notes,
Series 1996, 4.75% 8/29/97 1,700 1,701
---------
6,356
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $194,169,000) 200,977
Excess of cash, prepaids and receivables over
payables 2,146
---------
NET ASSETS $203,123
=========
/1/Valued 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. The effective maturity dates
are shown in parentheses.
/2/Represents a when-issued security.
See Notes to Financial Statements
</TABLE>
<TABLE>
Limited Term Tax-Exempt Bond Fund of America
Financial Statements
Statement of Assets and Liabilities
at July 31, 1997 (dollars in thousands)
<S> <C> <C>
Assets:
Tax-exempt securities
(cost: $194,169) $200,977
Cash 99
Prepaid organization expense 3
Receivables for--
Sales of fund's shares $774
Accrued interest 3,119 3,893
---------- ----------
204,972
Liabilities:
Payables for--
Purchase of investments $1,090
Repurchases of fund's shares 357
Dividends payable 242
Management services 64
Accrued expenses 96 1,849
---------- ----------
Net Assets at July 31, 1997 --
Equivalent to $14.79 per share on 13,736,978
shares of beneficial interest issued and
outstanding; unlimited shares authorized $203,123
==========
Statement of Operations
for the year ended July 31, 1997
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $11,105
----------
Expenses:
Management services fee $815
Distribution expenses 610
Transfer agent fee 71
Reports to shareholders 36
Registration statement and prospectus 72
Postage, stationery and supplies 20
Trustees' fees 16
Auditing and legal fees 30
Custodian fee 10
Taxes other than federal income tax 4
Organization expense 3
Other expenses 13
----------
Total expenses before reimbursement 1,700
Reimbursement of expenses 169 1,531
---------- ----------
Net investment income 9,574
----------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (761)
Net unrealized appreciation
on investments:
Beginning of year 396
End of year 6,808
----------
Net increase in unrealized appreciation
appreciation on investments 6,412
----------
Net realized loss and unrealized
appreciation on investments 5,651
----------
Net Increase in Net Assets
Resulting from Operations $15,225
==========
Statement of Changes in Net Assets
(dollars in thousands)
Year ended Year ended
July 31 July 31
1997 1996
---------- ----------
Operations:
Net investment income $9,574 $9,651
Net realized (loss) gain on investments (761) 367
Net unrealized appreciation on investments 6,412 460
---------- ----------
Net increase in net assets
resulting from operations 15,225 10,478
---------- ----------
Dividends Paid from Net
Investment Income (9,603) (9,651)
---------- ----------
Capital Share Transactions:
Proceeds from shares sold:
6,106,012 and 6,334,113 shares, respectively 88,463 91,389
Proceeds from shares issued in
reinvestment of net investment
income dividends:
465,326 and 461,784 shares, respectively 6,740 6,661
Cost of shares repurchased:
6,523,758 and 6,465,529 shares, respectively (94,336) (93,099)
---------- ----------
Net increase in net assets
resulting from capital share
transactions 867 4,951
---------- ----------
Total Increase in Net Assets 6,489 5,778
Net Assets:
Beginning of year 196,634 190,856
---------- ----------
End of year $203,123 $196,634
========== ==========
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
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 fund seeks current income exempt from federal income
taxes, consistent with preservation of capital, through investments in
tax-exempt securities with effective maturities between three and 10 years. 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. However, in
circumstances where the investment adviser deems it appropriate to do so,
securities will be valued at the mean of their representative 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. Securities for which
market quotations are not readily available are valued at fair value by the
Board of Trustees or a committee thereof. All securities with 60 days or less
to maturity are valued at amortized cost, which approximates market value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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. Amortization of market discounts on
securities is recognized upon disposition, subject to applicable tax
requirements. Dividends to shareholders are declared daily after determination
of the fund's net investment income and paid to shareholders monthly.
Prepaid organization expenses are amortized over the estimated period of
benefit, not to exceed five years from commencement of operations. In the event
that Capital Research and Management Company (CRMC), the fund's investment
adviser, redeems any of its original shares prior to the end of the five-year
period, the proceeds of the redemption payable with respect to 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 prepaid 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 prepaid
organization expenses.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $10,000 includes $1,000 that was paid by these credits
rather than in cash.
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 taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of July 31, 1997, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $6,808,000, of which $7,119,000
related to appreciated securities and $311,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended July 31, 1997. The fund has
available at July 31, 1997 a net capital loss carryforward totaling $4,404,000
which may be used to offset capital gains realized during subsequent years
through 2003 and thereby relieve the fund and its shareholders of any federal
income tax liability with respect to the capital gains that are so offset. It
is the intention of the fund not to make distributions from capital gains while
there is a capital loss carryforward. The cost of portfolio securities for book
and federal income tax purposes was $194,169,000 at July 31, 1997.
3. The fee of $815,000 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 annual operating
expenses exceed 0.75% of the average daily 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. Expenses that are not subject to these
limitations are interest, taxes, brokerage commissions, transaction costs and
extraordinary expenses. Fee reductions were $169,000 for the year ended July
31, 1997.
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 year ended July 31, 1997,
distribution expenses under the Plan were limited to $610,000, representing
.30% of average net assets. Had no limitation been in effect, the fund would
have paid $1,022,000 in distribution expenses under the Plan. As of July 31,
1997, accrued and unpaid distribution expenses were $58,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $71,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $155,000 (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 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 July 31, 1997,
aggregate amounts deferred and earnings thereon were $39,000.
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. As of July 31, 1997, accumulated net realized loss on investments was
$4,404,000 and paid-in capital was $200,749,000.
The fund made purchases and sales of investment securities of $64,370,000
and $62,189,000, respectively, during the year ended July 31, 1997.
<TABLE>
Per-Share Data and Ratios
<S> <C> <C> <C> <C>
Period
October 6,
Year ended 1993 /1/
to July
1997 1996 1995 31, 1994
--------- --------- --------- ---------
Net Asset Value, Beginning of Period $14.36 $14.29 $14.10 $14.29
--------- --------- --------- ---------
Income From Investment Operations:
Net investment income .68 .69 .69 .49
Net realized and unrealized
gain (loss) on investments .43 .07 .19 (.19)
--------- --------- --------- ---------
Total income from investment operations 1.11 .76 .88 .30
--------- --------- --------- ---------
Less Distributions:
Dividends from net investment income (.68) (.69) (.69) (.49)
--------- --------- --------- ---------
Net Asset Value, End of Period $14.79 $14.36 $14.29 $14.10
========= ========= ========= =========
Total Return /2/ 7.96% 5.39% 6.45% 2.11% /3/
Ratios/Supplemental Data:
Net assets, end of period (in millions) $203 $197 $191 $189
Ratio of expenses to average net assets before fee waiver .83% .85% .90% .73% /3/
Ratio of expenses to average net assets after fee waiver .75% .74% .64% .51% /3/
Ratio of net income to average net assets 4.70% 4.77% 4.88% 3.67% /3/
Portfolio turnover rate 31.89% 34.95% 45.82% 42.21% /3/
/1/Commencement of operations.
/2/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.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Limited Term Tax-Exempt Bond 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 Limited Term Tax-Exempt
Bond Fund of America (the "Fund") at July 31, 1997, the results of its
operations, the changes in its net assets and the per-share data and ratios for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and per-share data and ratios (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at July 31, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Los Angeles, California
August 29, 1997
TAX INFORMATION (UNAUDITED)
During the fiscal year ended July 31, 1997, the fund paid 68.1 cents per
share of exempt-interest distributions within the meaning of Section
852(b)(5)(A) of the Internal Revenue Code.
This information is given to meet certain requirements of the Internal
Revenue Code and should not be used by shareholders for preparing their income
tax returns. For tax return preparation purposes, please refer to the calendar
year-end information you receive from the fund's transfer agent.
<PAGE>
PART C
LIMITED TERM TAX-EXEMPT BOND 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 Report of Independent Accountants
Statement of Changes in Net Assets
(B) EXHIBITS:
1. Copy of Declaration of Trust (July 1993) and Certificate of Amendment of
Declaration of Trust (September 1993)
2. Copy of By-laws
3. None.
4. Copy of specimen share certificate
5. Copy of Investment Advisory and Service Agreement dated October 1, 1993
6. Copy of Principal Underwriting Agreement dated October 1, 1993, form of
Selling Group Agreement, Supplemental Selling Group Agreement, Bank Selling
Group Agreement, Hold Harmless Agreement, and State Addendum to Selling Group
Agreement.
7. None.
8. Copy of form of Global Custody Agreement
9. On file (see SEC file No. 33-66214, Post-Effec Amendment No. 3 on form
N-1A filed 9/28/95)
10. On file (see SEC file No. 33-66214, Pre-Effec Amendment No. 2 on Form N-1A
filed 10/4/93)
11. Consent of Independent Accountants
12. None
13. Copy of investment letter from the Investment Adviser relating to initial
shares dated September 23, 1993
14. Copies of the model plan used in the establishment of any retirement plan
- - not applicable.
15. Copy of Plan of Distribution (12b-1) dated October 1, 1993
16. On file (see SEC file Nos. 811-7888 and 33-66214, Post-Effective Amendment
No. 5 filed 11/29/96).
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 July 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Number of
Title of Class Record Holders
Shares of beneficial
3,586
interest (no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under Investment Advisor/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which
insures its officers and trustees against certain liabilities. However, in no
event will Registrant maintain insurance to indemnify any such person for any
act for which Registrant itself is not permitted to indemnify the individual.
Article VI of the Trust's By-Laws states:
(a) The Trust shall indemnify any Trustee or officer of the Trust who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Trust) by reason
of the fact that such person is or was such Trustee or officer or an employee
or agent of the Trust, or is or was serving at the request of the Trust as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person reasonably believed to be opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that such person is or was such Trustee or
officer or an 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
attorneys' 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 under
the 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,
and are disinterested Trustees or (ii) if such a quorum of disinterested
Trustees so directs, by independent legal counsel in a written opinion; and any
determinations so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Trust in advance of the final disposition of such
action, suit or proceeding, as authorized in the particular case, upon receipt
of an undertaking by or on behalf of the Trustee or officer to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Trust as authorized herein. Such determination must be
made by disinterested trustees or independent legal counsel.
(f) Agents and employees of the Trust who are not Trustees or officers of the
Trust may be indemnified under the same standards and procedures set forth
above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled and
shall continue as to a person who has ceased to be Trustee or officer and shall
inure to the benefit of the heirs, executors and administrators of such person.
(h) Nothing in the Declaration of Trust 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 of 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.
The fund will comply with the indemnification requirements contained in the
1940 Act Releases No. 7221 (June 9, 1972) and No. 11330 (September 4, 1980).
In addition, indemnification by the Trust shall be consistent with the
requirements of rule 484 under the Securities Act of 1933. Furthermore, the
fund has undertaken to the staff of the Securities and Exchange Commission that
the fund's indemnification provisions quoted above prohibit indemnification for
liabilities arising under the Securities Act of 1933 and the Investment Company
Act of 1940.
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, American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The
Income Fund of America, Inc., Intermediate Bond Fund of America, The Investment
Company of America, The New Economy Fund, New Perspective Fund, Inc., SMALLCAP
World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt
Money Fund of America, The U.S. Treasury Money Fund of America and Washington
Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David A. Abzug Regional Vice President None
27304 Park Vista Road
Van Nuys, CA 91301
John A. Agar Regional Vice President None
1501 N. University Drive,
Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard L. Armstrong Assistant Vice 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
Three Maryland Farms, Ste. 110
Brentwood, TN 37027
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President
4129 Laclede Avenue None
St. Louis, MO 63108
L Daniel C. Brown Senior Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
609 W. Littleton Blvd., Ste 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 94583
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, #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
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge 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
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director Chairman of the Board
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 Ave., 36th Floor
New York, NY 10111-0121
V. John Kriss Senior Vice President None
P.O. Box 274
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, #303
Denver, CO 80202
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional Investment Services None
S Stella Lopez Vice President None
L Robert W. Lovelace Director None
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 S. Race Street
Littleton, CO 80121
L J. Clifton Massar Director and Senior Vice President None
L E. Lee McClennahan 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
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98029
Stephen S. Nelson Vice President None
P. O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Federic Phillips Vice President None
32 Ridge Avenue
Newton Centre, MA 02161
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, Jr. 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 07960
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30008 Oakland Hills Drive
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Vice President None
4604 Glencoe Avenue, Suite 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
L John C. Smith Vice President - None
Institutional Investment Services
L Mary E. Smith Vice President - Institutional Investment Services None
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 Ave, Ste 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
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. 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
60 Reedland Woods Way
Tiburon, CA 94920
L David M. Ward Vice President - Institutional Investment Services None
Thomas E. Warren Regional Vice President None
1701 Starling Drive
Sarasota, FL 34231
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
N. Dexter Williams Vice President None
25 Whitside Court
Danville, CA 94526
Timothy J. Wilson Regional Vice President None
13 Farmview Place
Venetia, PA 15367
B Laura Wimberly Assistant Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior Vice President None
Laurie B. Wood Regional Vice President None
3500 W. Camino de Urania
Tucson, AZ 85741
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
320 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
______________________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
B Business Address, 135 South State College Blvd., Brea, CA 92821
S Business Address, 8000 IH-10 West, 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 Fund 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, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230, 5300 Robin Hood
Road, Norfolk, VA 23513 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, NY
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.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
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
26th day of September, 1997.
LIMITED TERM TAX-EXEMPT BOND
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 September 26, 1997, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Trustee
(Abner D. Goldstine)
(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 President and Trustee
(Abner D. Goldstine)
Trustee
Herbert Hoover III* Trustee
Richard G. Newman* Trustee
Peter C. Valli* Trustee
</TABLE>
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
/1/ Power of Attorney attached hereto.
Counsel represents that this amendment does not contain disclosures that
would make the amendment ineligible for effectiveness under the provisions of
Rule 485(b).
/s/ Michael J. Downer
(Michael J. Downer)
Limited Term Tax-Exempt Bond Fund of America C-14
DECLARATION OF TRUST
OF
INTERMEDIATE TAX-EXEMPT BOND FUND OF AMERICA
Dated July 8, 1993
DECLARATION OF TRUST made July 8, 1993 by Michael J. Downer, Caroline
Pearson, and Michele Y. Yang (the "Trustees");
WHEREAS, it is desired that the trust established hereby (the "Trust") be
managed and operated as a trust with transferable shares under the laws of
Massachusetts, of the type commonly known as and referred to as a Massachusetts
business trust, in accordance with the provisions hereinafter set forth;
WHEREAS, it is proposed that the assets held by the Trustees may be
divided into separate funds, each with its own separate investment portfolio,
investment objectives, policies and purposes, and that the beneficial interest
in each such fund when and if established shall be divided into transferable
Shares of Beneficial Interest, a separate Series of Shares for each fund, all
in accordance with the provisions hereinafter set forth; and
WHEREAS, it is proposed that the shares of the Trust of each separate
Series may be further divided into classes of Shares, with each such Class
differing from other classes representing interests in the same Fund in respect
of expenses and fees or such other matters as the Trustees shall determine;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of the holders, from time to time, of the Shares of
Beneficial Interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1 - Name.
The name of the Trust created hereby is "Intermediate Tax-Exempt Bond Fund
of America."
EXHIBIT 1
SECTION 1.2 - Definitions.
Wherever they are used herein, the following terms have the following
respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as
such By-Laws may be amended from time to time.
(b) A "Class of Shares" means all Shares of Beneficial Interest
representing interests in the same Fund and subject to the same fees and
expenses charged against the income of the Fund and such other provisions as
may be designated by the Trustees in establishing such Class. Classes may be
established from time to time by the Trustees hereunder and may differ from
other Classes in the same Fund with respect to the expenses and fees charged to
each such Class or as to such other matters as the Trustees shall determine in
establishing each such Class, but Classes in the same Fund shall in each case
represent interests in the same Trust Property.
(c) The terms "Commission" and "Interested Person", have the meanings
given them in the 1940 Act.
(d) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act.
(e) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration to "Declaration", "hereof", "herein"
and "hereunder" shall be deemed to refer to this Declaration rather than
exclusively to the article or section in which such words appear.
(f) "Distributor" means the other person to any contract entered into by
the Trust pursuant to Section 4.1 hereof.
(g) "Fund" or "Funds" means one or more of the separate components of the
Trust Property which are now or hereafter established and designated under or
in accordance with the provisions of Article 6.10 hereof.
(h) "Fundamental Policies" means the investment restrictions set forth
and identified as such in the current registration statement of the Trust under
the 1940 Act.
(i) "His" shall be deemed to include the feminine and neuter, as well as
the masculine, genders.
(j) "Investment Adviser" means the other Person to any contract entered
into by the Trust pursuant to Section 4.2 hereof.
(k) The "1940 Act" means the Investment Company Act of 1940, and the
rules and regulations thereunder, both as amended from time to time, and any
order or orders thereunder which may from time to time be applicable to the
Trust.
(l) "Majority Shareholder Vote" as used with respect to the election of
any Trustee at a meeting of Shareholders, shall mean the vote for the election
of such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series or Class, represented in person or by proxy and entitled to
vote thereon, provided that a quorum (as determined in accordance with the
By-Laws) is present, and as used with respect to any other action required or
permitted to be taken by Shareholders, shall mean the vote for such action of
the holders of that majority of all outstanding Shares of the Trust (or, where
a separate vote of Shares of any particular Series or Class is to be taken, the
affirmative vote of that majority of the outstanding Shares of that Series or
Class) which consists of: (i) a majority of all Shares (or of Shares of the
particular Series or Class) represented in person or by proxy and entitled to
vote on such action at the meeting of Shareholders at which such action is to
be taken, provided that a quorum (as determined in accordance with the By-Laws)
is present; or (ii) if such action is to be taken by written consent of
Shareholders, a majority of all Shares (or of Shares of the particular Class or
Series) issued and outstanding and entitled to vote on such action; provided,
that (iii) as used with respect to any action requiring the affirmative vote of
"a majority of the outstanding voting securities", as the quoted phrase is
defined in the 1940 Act, of the Trust or of any Series or Class, "Majority
Shareholder Vote" means the vote for such action at a meeting of Shareholders
of the smallest majority of all outstanding Shares of the Trust (or of Shares
of the particular Class or Series entitled to vote on such action) which
satisfies such 1940 Act voting requirement.
(m) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, and other entities, whether or not legal
entities, governments and agencies and instrumentalities and political
subdivisions thereof, and quasi-governmental agencies and instrumentalities.
(n) "Prospectus" means the prospectus of the Trust effective from time to
time under the Securities Act of 1933, as amended from time to time.
(o) "Securities" shall include, without limitation, common and preferred
stocks; American Depository Receipts, futures and related options, options on
securities or indices of securities, certificates of deposit, finance paper,
commercial paper, bankers' acceptances; all kinds of repurchase agreements and
reverse repurchase agreements; debentures; bills; notes; other evidences of
indebtedness; negotiable or non-negotiable instruments; government securities,
including, without limitation, securities of the United States or any other
government, any state, municipality or other political subdivision thereof, or
any governmental or quasi-governmental agency or instrumentality.
(p) "Series" means one or more of the series of Shares authorized by the
Trustees to represent the entire beneficial interest in one or more of the
Funds. Shares of any Series may be classified or reclassified by the Trustees
into one or more Classes of Shares.
(q) "Shareholder" means a record owner of outstanding Shares of
Beneficial Interest of any Class of any Series.
(r) "Shares" means the equal proportionate transferable units of interest
of each Class and of each Series into which the beneficial interest in the
Trust shall be classified or reclassified from time to time by the Trustees
acting under this Declaration of Trust, or in the absence of such action, means
the equal proportionate transferable units of interest into which the entire
beneficial interest in the Trust shall be divided from time to time, and
includes fractions of Shares as well as whole Shares. All references herein to
"Shares" which are not accompanied by a reference to any particular Series or
Class shall be deemed to apply to outstanding shares without regard to Series
or Class. "Outstanding" Shares means those Shares shown from time to time on
the books of the Trust or its Transfer Agent as then issued and outstanding,
but shall not include Shares which have been redeemed or repurchased by the
Trust and which are at the time held in the Treasury of the Trust.
(s) "Transfer Agent" means the other Person to any contract entered into
by the Trust pursuant to Section 4.3 hereof.
(t) "Trust" means the Trust created by this Declaration.
(u) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees as such, without regard to the Fund to which such
property is allocated, but shall not include property owned by the Trustees as
individuals.
(v) "Trustees" means the persons who have signed this Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be serving as Trustees in
accordance with the provisions of Article II hereof, and reference herein to a
Trustee or the Trustees shall refer to such Person or Persons in his capacity
as Trustee or their capacities as Trustees hereunder and not in his or their
individual capacities except where the context otherwise requires.
SECTION 1.3 - Purpose.
The purpose of the Trust shall be to engage in the business of being an
investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and otherwise disposing
of, and turning to account, realizing upon and generally dealing in and with,
in any manner, Securities of all kinds, and all as the Trustees in their
discretion shall determine to be necessary, desirable or appropriate, and to
exercise and perform any and every act, thing or power necessary, suitable or
desirable for the accomplishment of such purpose, the attainment of any of the
objectives or the furtherance of any of the powers given hereby which are
lawful purposes, objectives or powers of a trust with transferable shares of
the type commonly termed a Massachusetts business trust; and to do every other
act or acts or thing or things incidental or appurtenant to or growing out of
or in connection with the aforesaid objectives, purposes or powers, or any of
them, which a trust of the type commonly termed a Massachusetts business trust
is not now or hereafter prohibited from doing, exercising or performing.
ARTICLE II
TRUSTEES
SECTION 2.1 - Number of Trustees.
The number of Trustees shall be such number as shall be fixed from time to
time by written instrument signed by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be reduced to less than
three by such an instrument.
SECTION 2.2 - Term and Election.
The Trustees shall (except in the event of resignations or removals or
vacancies pursuant to Sections 2.3 or 2.4 or 2.5 hereof) hold office during the
lifetime of the Trust and until its termination as hereinafter provided. The
Trustees shall be elected by the Shareholders of the Trust at the first meeting
of Shareholders prior to the initial public offering of Shares of the Trust,
and the term of office of any Trustees in office before such election shall
terminate at the time of such election. Subject to Section 16(a) of the 1940
Act and to the preceding sentence of this Section, the Trustees shall have the
power to set and alter the terms of office of the Trustees, and at any time to
lengthen or shorten their own terms or make their terms of unlimited duration,
to elect their own successors and, pursuant to Section 2.5 hereof, to appoint
Trustees to fill vacancies; provided, that Trustees shall be elected by
Majority Shareholder Vote at any such time or times as the Trustees shall
determine that such action is required under Section 16(a) of the 1940 Act or,
if not so required, that such action is advisable; and, further provided that
after the initial election of Trustees by the Shareholders, the term of office
of any incumbent Trustee shall continue until the termination of this Trust or
such Trustee's removal, replacement or until the election of such Trustee's
successor in office has become effective in accordance with this section.
SECTION 2.3 - Resignation and Removal by Trustees.
Any Trustee may resign as such (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the
other Trustees and such resignation shall be effective upon such delivery, or
at a later date according to the terms of the instrument. Any of the Trustees
may be removed (provided the aggregate number of Trustees after such removal
shall not be less than the minimum number required by this Declaration) for
cause by the action of two-thirds of the remaining Trustees. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
SECTION 2.4 - Removal by Shareholders.
The Shareholders shall have the power to remove a Trustee by Majority
Shareholder Vote, either by declaration in writing filed with the transfer
agent or by votes cast in person or by proxy at a meeting called for the
purpose of removal under this section. The Trustees shall promptly call such a
meeting of shareholders when requested to do so by the record holders of not
less than 10 per cent of such outstanding Shares.
Whenever ten or more Shareholders of record who have been Shareholders at
least six months preceding the date of application, and who hold in the
aggregate either Shares having a net asset value of at least $25,000 or at
least 1 per centum of the outstanding shares of all Series and all Classes in
the aggregate, whichever is less, shall apply to the Trustees in writing,
stating that they wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a meeting pursuant to this Section 2.4
and accompanied by a form of communication and request which they wish to
transmit, the Trustees shall within five business days after receipt of such
application either:
(a) Afford to such applicants access to a list of the names and addresses
of all Shareholders as recorded on the books of the Trust; or
(b) Inform such applicants as to the approximate number of Shareholders
of record, and the approximate cost of mailing to them the proposed
communication and form of request.
SECTION 2.5 - Vacancies.
The term of office of a Trustee shall terminate and a vacancy shall occur
in the event of his death, resignation, removal, bankruptcy, adjudicated
incompetence or other permanent incapacity as two-thirds of the remaining
Trustees deem to have rendered him unable to perform the duties of the office
of a Trustee. No such vacancy shall operate to annul this Declaration or to
revoke any existing agency created pursuant to the terms of this Declaration.
In the case of an existing vacancy, including a vacancy existing by reason of
an increase in the number of Trustees, the remaining Trustees shall fill,
subject to the provisions of the 1940 Act, such vacancy by the appointment of
such other person as they in their discretion shall see fit, made by a written
instrument signed by a majority of the Trustees then in office. No such
appointment shall become effective until the person named in the written
instrument of appointment shall have accepted such appointment in writing and
agreed in writing to be bound by the terms of this Declaration. An appointment
of a Trustee may be made in anticipation of a vacancy to occur at a later date
by reason of retirement, resignation or increase in the number of Trustees,
provided that such appointment shall not become effective prior to such
retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.5, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy.
SECTION 2.6 - Delegation of Power to Other Trustees.
Any Trustee may, by power of attorney, delegate his power for a period not
exceeding six (6) months at any one time to any other Trustee or Trustees,
provided that in no case shall less than two (2) Trustees personally exercise
the powers granted to the Trustees under this Declaration except as herein
otherwise expressly provided, and provided further that this Section shall in
no way be deemed to limit the provisions of Section 3.5.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1 - General.
The Trustees shall have exclusive and absolute control over the Trust
Property and over the business of the Trust to the same extent as if the
Trustees were the sole owners of the Trust Property and business in their own
right.
The Trustees are responsible for the general policies of the Trust and for
such general supervision of the business of the Trust conducted by all
officers, employees, agents, Investment Advisers, Distributors, Custodians,
Transfer Agents or independent contractors of the Trust as may be necessary to
insure that such business conforms to the provisions of this Declaration.
However, the Trustees are not and shall not be required personally to conduct
the business of the Trust and, consistent with their ultimate responsibility as
stated above, the Trustees shall have the power to appoint, employ or contract
with any Person or Persons (including one or more of themselves or any Person
of which one or more of them may be directors, officers, agents, employees,
stockholders, partners or Trustees or with which one or more of them may be
otherwise affiliated) as the Trustees may deem necessary or proper for the
transaction of the business of the Trust, and for such purpose may grant or
delegate such authority to any such Person as the Trustees may in their sole
discretion deem necessary or desirable without regard to whether such authority
is normally granted or delegated by Trustees. The Trustees shall have the
power to determine the terms and compensation of any such Person and may
exercise broad discretion in allowing such Person to administer and regulate
the operations of the Trust, to act as agent for the Trust, to execute
documents on behalf of the Trustees or the Trust, and to make executive
decisions which conform to the general policies and general principles
previously established by the Trustees.
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain offices
both within and without the Commonwealth of Massachusetts, in any and all
states of the United States of America, in the District of Columbia, and in any
and all commonwealths, territories, dependencies, colonies, and possessions of
the United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust in addition to those
things which are specifically mentioned herein. Any determination as to what
is in the interests of the Trust or as to the existence of powers or
authorities hereunder made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration, the presumption shall be in
favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid powers. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2 - Investments.
The Trustees shall have the power, subject to the Fundamental Policies:
(a) To operate as and carry on the business of an investment company and
exercise all the powers necessary and appropriate to the conduct of such
business;
(b) To invest in, hold for investment, and reinvest in Securities or in
"when issued" or delayed delivery contracts for any Securities or retain all or
any part of the Trust Property in cash and at any time and from time to time to
change the investments of the Trust Property;
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to sell or otherwise dispose of, to lend, and to pledge,
Securities;
(d) To exercise all rights, powers and privileges of ownership or
interest in all Securities included in the Trust Property, including the right
to vote thereon and otherwise act with respect thereto and to do all acts for
the preservation, protection, improvement and enhancement in value of all Trust
Property;
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, tangible or intangible, including, without limitation, cash, and any
interest therein;
(f) To borrow money and in connection therewith to issue notes or other
evidences of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property or any portion thereof; to
endorse, guarantee, or undertake the performance of any obligation or
engagement of any other Person and to lend Trust Property;
(g) To aid by further investment any Person, any Security of or interest
in which is included in the Trust Property or in the affairs of which the
Trustee, as such, have any direct or indirect interest; to do all acts and
things designed to protect, preserve, improve or enhance the value of such
Security or interest; to guarantee or become surety on any or all of the
contracts, stocks, bonds, notes, debentures and other obligations of any such
Person; and
(h) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power herein set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3 - Legal Title.
Legal title to all the Trust Property shall be vested in the Trustees as
joint tenants except that the Trustees shall have power to cause legal title to
any Trust Property to be held by or in the name of one or more of the Trustees,
or in the name of the Trust, or in the name of any other Person as nominee, on
such terms as the Trustees may determine. The right, title and interest of the
Trustees in the Trust Property shall vest automatically in each Person who may
become a Trustee. Upon the termination of a Trustee's term of office, he shall
automatically cease to have any right, title, or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
SECTION 3.4 - Issuance and Repurchase of Shares.
The Trustees shall have the power to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in Shares of any Series or Class and, subject to the provisions
set forth in Articles VII, VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares of any Series or
Class, any of the Fund Assets belonging to the Fund to which such Series or
Class relates, whether constituting capital or surplus or otherwise, to the
full extent now or hereafter not prohibited by the laws of the Commonwealth of
Massachusetts.
SECTION 3.5 - Delegation; Committees.
The Trustees shall have power to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
in the names of the Trustees or otherwise as the Trustees may deem expedient,
except as may be prohibited by the 1940 Act.
SECTION 3.6 - Collection and Payment.
The Trustees shall have power to collect all property due to the Trust; to
pay all claims, including, without limitation, taxes, against the Trust
Property; to prosecute, defend, compromise or abandon any claims relating to
the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
SECTION 3.7 - Expenses.
The Trustees shall have the power to incur and pay any expenses which, in
the opinion of the Trustees, are necessary or incidental to carrying out any of
the purposes of this Declaration, to pay themselves reasonable compensation and
to reimburse themselves for expenses incurred in the performance of their
duties as Trustees from the Trust Property. The Trustees shall fix the
compensation of all officers, employees, agents and Trustees.
SECTION 3.8 - Manner of Acting.
Except as otherwise provided herein or in the By-Laws, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum is present, including any meeting held by
means of a conference telephone circuit or similar communications equipment by
means of which all persons participating in the meeting can hear each other, or
by written consents of the entire number of Trustees then in office.
SECTION 3.9 - By-Laws.
The Trustees may adopt By-Laws not inconsistent with this Declaration to
provide for the conduct of the business of the Trust and may amend or repeal
such By-Laws to the extent such power is not reserved to the Shareholders.
SECTION 3.10 - Miscellaneous Powers.
The Trustees shall have the power to:
(a) Employ or contract with such Person or Persons as the Trustees
may deem desirable for the transaction of the business of the Trust;
(b) Enter into joint ventures, partnerships and any other
combinations or associations;
(c) Remove Trustees or fill vacancies in or add to their number,
elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, and appoint from their own number, and
terminate, any one or more committees which may exercise some or all of the
power and authority of the Trustees as the Trustees may determine;
(d) Purchase, and pay for out of Trust Property, insurance policies
insuring the Shareholders, Trustees, officers, employees, agents, Investment
Advisers, Distributors, Transfer Agents, Custodians, selected dealers or
independent contractors of the Trust against any and all claims and liabilities
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such claim or liability;
(e) Establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust;
(f) To the extent not prohibited by law, indemnify any Person with
whom the Trust has dealings, including any Investment Adviser, Distributor,
Transfer Agent and selected dealers, to such extent as the Trustees shall
determine;
(g) Guarantee indebtedness or contractual obligations of others;
(h) Determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and
(i) Adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
SECTION 3.11 - Principal Transactions.
Except in transactions permitted by the 1940 Act or any order of exemption
issued by the Commission, or effected to implement the provisions of any
agreement to which the Trust is a party, the Trustees shall not, on behalf of
the Trust, buy any securities (other than Shares of any Series or Class) from
or sell any securities (other than Shares of any Series or Class) to, or lend
any assets of the Trust to, any Trustee or officer of the Trust or any firm of
which any such Trustee or officer is a member acting as principal, or have any
such dealings with the Investment Adviser, Distributor or Transfer Agent or
with any Affiliated Person of such Person; but the Trust may employ any such
Person, or firm or company in which such Person is an Interested Person, as
broker, legal counsel, registrar, transfer agent, dividend disbursing agent or
custodian upon customary terms.
SECTION 3.12 - Trustees and Officers as Shareholders.
Any Trustee, officer, employee or agent of the Trust may acquire, own and
dispose of Shares to the same extent as if he were not such a Trustee, officer,
employee or agent; and the Trustees may issue and sell or cause to be issued
and sold Shares to and buy Shares from any such Person or any firm or company
in which he is an Interested Person.
SECTION 3.13 - Litigation.
The Trustees shall have the power to engage in and to prosecute, defend,
compromise, abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, and demands relating to the Trust, and
out of the assets of the Trust to pay or to satisfy any debts, claims or
expenses incurred in connection therewith, including those of litigation, and
such power shall include without limitation the power of the Trustees or any
appropriate committee thereof, in the exercise of their or its good faith
business judgment, to dismiss any action, suit, proceeding, dispute, claim, or
demand, derivative or otherwise, brought by any person, including a Shareholder
in its own name or the name of the Trust, whether or not the Trust or any of
the Trustees may be named individually therein or the subject matter arises by
reason of business for or on behalf of the Trust.
ARTICLE IV
CONTRACTS
SECTION 4.1 - Underwriting Contract.
Subject to the provisions of the 1940 Act, the Trustees may, in their
discretion, from time to time enter into, renew, amend, or modify an exclusive
or non-exclusive underwriting contract or contracts providing for the sale of
Shares of any one or more Series or Classes to net the Trust an amount per
Share not less than the amount provided for in Section 8.1 hereof, whereby the
Trustees may agree to sell the Shares to the other party to the contract and/or
appoint such other party sales agent of the Trust for the Shares, on such terms
and conditions as may be prescribed in the By-Laws, if any, and such further
terms and conditions as the Trustees may, in their discretion, determine not
inconsistent with the provisions of this Declaration or the By-Laws; and any
such contract may also provide for the repurchase of the Shares by such other
party as agent of the Trust and may provide that such other party may enter
into selected dealer agreements with registered securities dealers to further
the purpose of the distribution or repurchase of such Shares.
SECTION 4.2 - Investment Advisory or Management Contract.
Subject to the provisions of the 1940 Act, the Trustees may, in their
discretion, from time to time enter into, renew, amend, or modify an investment
advisory or management contract or contracts whereby the other party or parties
to such contract or contracts shall undertake to furnish to the Trust such
management, investment advisory, statistical, and research facilities and
services and such other facilities and services, if any, and all upon such
terms and conditions as the Trustees may, in their discretion, determine,
including the grant of authority to such other party to determine what
Securities shall be purchased or sold by the Trust and what portion of its
assets shall be uninvested, which authority shall include the power to make
changes in the Trust's investments. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser (subject to such
general or specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales, loans or exchanges of Securities of the Trust on
behalf of the Trustees and may authorize any officer, employee or Trustee to
effect such purchases, sales, loans or exchanges pursuant to recommendations of
the Investment Adviser, all without further action by the Trustees. Any such
activities shall be deemed to have been authorized by all of the Trustees.
SECTION 4.3 - Transfer Agent.
The Trustees may in their discretion from time to time enter into a
transfer agency and shareholder service contract or contracts whereby the other
party or parties to such contract or contracts shall undertake to furnish
transfer agency and shareholder services to the Trust. Any such contract shall
have such terms and conditions not inconsistent with this Declaration or the
By-Laws as the Trustees may, in their discretion, determine. Such services may
be provided by one or more Persons.
SECTION 4.4 - Affiliations of Trustees or Officers, etc.
Any Shareholder, Trustee or officer of the Trust, individually, or any
firm of which any Shareholder, Trustee or officer of the Trust may be a member,
or any Person of which any Shareholder, Trustee or officer of the Trust may be
an officer or director or in which any Shareholder, Trustee or officer of the
Trust may be directly or indirectly interested as the holder of any amount of
its capital stock or otherwise, may be a party to, or may be financially or
otherwise interested in, any contract or transaction of the Trust, and in the
absence of fraud, no contract or other transaction shall be thereby affected or
invalidated by reason of the existence of any such relationship; nor shall any
Person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of said
contract or accountable for any profit realized directly or indirectly
therefrom, provided that the fact of any such interests or relationships shall
be disclosed or shall have been known to the Trustees or a majority thereof.
Any such Shareholder, Trustee or officer of the Trust may be counted in
determining the existence of a quorum at the meeting of the Trustees of the
Trust which shall authorize any such contract or transaction and may vote
thereat to authorize any such contract or transaction, with like force and
effect as if such other interests or relationships did not exist. In
furtherance and not in limitation of the foregoing, the Trustees of the Trust
are expressly authorized to contract for investment advisory and management
services of any nature, as described in Section 4.2, with any Person affiliated
with any Trustee or parent or affiliate or Interested Person of any such
Person, on such terms as the Trustees may deem desirable. The Trustees are
further expressly authorized to contract with any such Person or parent or
affiliate or Interested Person of any such Person on such terms as the Trustees
may deem desirable for the distribution of shares of the Trust as described in
Section 4.1 and to contract for other services, including, without limitation
services as Transfer Agent for the Trust's shares as described in Section 4.3
above with any such Person on such terms as the Trustees may deem desirable.
Any such Person or parent or affiliate or Interested Person of any such Person
which enters into one or more of such contracts may also perform similar or
identical services for other investment companies and other Persons without
restriction by reason of the relationship with the Trust.
ARTICLE V
LIMITATIONS OF LIABILITY OF
SHAREHOLDERS, TRUSTEES AND OTHERS
SECTION 5.1 - No Personal Liability of Shareholders, Trustees, etc.
No Shareholder as such shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the acts,
omissions, obligations or affairs of the Trust. No Trustee, officer, employee
or agent of the Trust as such shall be subject to any Personal liability
whatsoever to any Person in connection with Trust Property or the affairs of
the Trust, save only that to which they would be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of their duties,
or by reason of their reckless disregard of their obligations and duties with
respect to such Person; and all Persons shall look solely to the Trust Property
for satisfaction of claims of any nature arising directly or indirectly in
connection with the affairs of the Trust. If any Shareholder, Trustee,
officer, employee, or agent, as such, of the Trust is made a party to any suit
or proceeding to enforce any such liability of the Trust, he shall not, on
account thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and liabilities
to which such Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1 shall
not exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein, provided that a Shareholder of any Series
shall be indemnified only from the assets belonging to the Fund to which such
Series relates.
SECTION 5.2 - Non-Liability of Trustees, etc.
No trustee, officer, employee or agent of the Trust shall be liable to the
Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without limitation
the failure to compel in any way any former or acting Trustee to redress any
breach of Trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
SECTION 5.3 - No Bond Required of Trustees.
No Trustee shall be obligated to give any bond or other security for the
performance of any of his duties hereunder.
SECTION 5.4 - No Duty of Investigation; Notice in Trust Instruments, etc.
No purchaser, lender, Transfer Agent, Custodian or other Person dealing
with the Trustees or any officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be liable for the
application of Trust Property paid, loaned, or delivered to or on the order of
the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection
with or on behalf of the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract, instrument, certificate, Share,
other security of the Trust or undertaking made or issued by the Trustees may
recite, in substance, that the same is executed or made by them not
individually, but as Trustees under the Declaration, and that the obligations
of the Trust under any such instrument are not binding upon any of the Trustees
or Shareholders individually, but bind only the Trust estate, and may contain
any further recital which they or he may deem appropriate, but the omission of
such recital shall not operate to bind the Trustee or Shareholders
individually. The Trustees may maintain insurance for the protection of the
Trust Property, its Shareholders, Trustees, officers, employees, and agents in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
SECTION 5.5 - Reliance on Experts, etc.
Each Trustee, officer, employee, or agent of the Trust shall, in the
performance of his duties, be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust, upon an opinion of
counsel, or upon reports made to the Trust by any of its officers, employees,
agents or by the Investment Adviser, the Distributor, Transfer Agent,
Custodian, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers, or
employees of the Trust, regardless of whether any such Person may also be a
Trustee or an Interested Person of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 - Beneficial Interest.
The interest of the beneficiaries of the Trust shall be divided into
transferable shares and fractions of shares of beneficial interest without par
value. The number of shares of beneficial interest is unlimited. Initially
the shares of beneficial interest shall be of one series and of one class. The
Trustees shall have authority in their sole discretion to create one or more
separate, distinct and independent Funds into which assets of the Trust shall
be divided, and to authorize a separate Series of shares of beneficial interest
for such Fund (each of which Series, including without limitation, the Series
authorized in Section 6.10 hereof, shall represent interests only in the Fund
with respect to which such Series was authorized), or one or more additional
Classes of shares of beneficial interest, on such terms and conditions as they
may determine, without vote of the shareholders. The Trustees shall have
authority, in their sole discretion, to combine Series of shares of beneficial
interest or a Class of shares of beneficial interest with another Series of
shares of beneficial interest or another Class of shares of beneficial
interest, without vote of the shareholders, either
(a) through an exchange of shares of beneficial interest in one Series of
shares of beneficial interest or Class of shares of beneficial interest for
shares of beneficial interest in another Series of shares of beneficial
interest or Class of shares of beneficial interest, or
(b) by amendment of the terms of and conditions applicable to a Series of
shares of beneficial interest or to a Class of shares of beneficial interest to
conform such terms and conditions to the terms and conditions applicable to the
other Series of shares of beneficial interest or to the other Class of shares
of beneficial interest; provided that any such combination of two or more
Series of shares of beneficial interest or two or more Classes of shares of
beneficial interest shall always be effected in a way which will preserve the
relative net asset value of the shares of beneficial interest affected. All
shares of beneficial interest issued hereunder including, without limitation,
shares of beneficial interest issued in connection with any dividend declared
and paid in shares of beneficial interest or any split of shares of beneficial
interest, shall be fully paid and non-assessable.
SECTION 6.2 - Rights of Shareholders.
The ownership of the Trust Property of every description and the right to
conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest in the Trust Property or
in the business of the Trust other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition,
divisions, dividend or distribution of any property, profits, rights or
interests of the Trust nor can they be called upon personally to share or
assume any losses of the Trust or suffer an assessment of any kind by virtue of
their ownership of Shares. The Shares of any Series or Class shall be personal
property giving only the rights specifically set forth in this Declaration.
The Shares of any Series or Class shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights except as the Trustees may
determine with respect to any Series or Class of shares.
SECTION 6.3 - Trust Only.
It is the intention of the Trustees to create only the relationship of
trustee and beneficiary between the Trustees and each Shareholder from time to
time. It is not the intention of the Trustees to create a general partnership,
limited partnership, joint stock association, joint venture, corporation,
bailment or any form of legal relationship other than a trust. Nothing in this
Declaration shall be construed to make the Shareholders, either by themselves
or with the Trustees, partners or members of a joint stock association.
SECTION 6.4 - Issuance of Shares.
The Trustees, in their discretion, may at any time and from time to time
without vote of the Shareholders, issue Shares of any Series or Class to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares of any Series or Class,
the Trustees may issue fractional Shares. The Trustees may from time to time
divide or combine the Shares of any Series or Class into a greater or lesser
number without thereby changing the proportionate beneficial interests in the
Trust and may classify or reclassify any unissued shares, or any shares of any
Series or Class previously issued and reacquired by the Trust, into shares of
one or more other Funds that may be established and designated from time to
time. The Trustees may also reduce the number of outstanding Shares of any
Series. Contributions to the Trust may be accepted for, and Shares of any
Series shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or
integral multiples thereof.
SECTION 6.5 - Register of Shares; Share Certificates.
A register shall be kept at the principal office of the Trust or an office
of the Transfer Agent which books shall be maintained separately for the shares
of each Series that has been authorized and shall contain the names and
addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, or to have notice given to him as herein or in the
By-Laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
SECTION 6.6 - Transfer of Shares.
All Shares shall be transferable on the register of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing,
upon delivery to the Trustees or the Transfer Agent of a duly executed
instrument of transfer, together with such evidence of the genuineness of each
such execution and authorization and of such other matters as may reasonably be
required. Upon such delivery, the transfer shall be recorded on the register
of the Trust. Until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereunder and neither
the Trustees nor any Transfer Agent or registrar, if any, nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any Person becoming entitled to Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, except as may otherwise be provided in the laws of the Commonwealth of
Massachusetts, shall be recorded on the register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Trustees or
the Transfer Agent, but until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar, if any, nor any
officer or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law. Nothing in this
Declaration shall impose on the Trustees or a Transfer Agent a duty, or limit
their rights, to inquire into adverse claims.
SECTION 6.7 - Notices.
Any and all notices to which any Shareholder may be entitled and any and
all communications shall be deemed duly served or given if mailed, postage
prepaid, addressed to any Shareholder of record at his last known address as
recorded on the register of the Trust.
SECTION 6.8 - Treasury Shares.
Shares held in the treasury shall, until reissued pursuant to Section 6.4,
not confer any voting rights on the Trustees, nor shall such Shares be entitled
to any dividends or other distributions declared with respect to the Shares.
SECTION 6.9 - Voting Powers.
The Shareholders shall have power to vote with respect to such matters
relating to the Trust as may be required by law, this Declaration, the By-Laws,
the 1940 Act, any registration of Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares shall not entitle the Shareholders to preference,
appraisal, conversion, exchange or preemptive rights of any kind. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required by law, this Declaration or the By-Laws to be taken by
Shareholders. The By-Laws may include further provisions for Shareholder's
votes and meetings, setting of record dates, and related matters.
SECTION 6.10 - Establishment of Fund; Series or Classes of Shares.
Without limiting the authority of the Trustees as set forth herein to
establish and designate further Funds and/or Classes, the following Fund and
Class is hereby established and designated: Intermediate Tax-Exempt Bond Fund
of America, all of the Shares of which shall initially be issued in a single
Class. If the Trustees shall establish additional Funds and divide the Shares
of the Trust into two or more Series or two or more Classes of any Series, as
provided in Section 6.1 hereof, the following provisions shall be applicable:
(a) Each Fund established hereunder shall be a separate component of
the assets of the Trust, and the holders of Shares of the Series representing
the beneficial interest in the assets of that Fund shall be considered
Shareholders of such Fund, but such Shareholders shall also be considered
Shareholders of the Trust for purposes of receiving reports and notices and,
except as otherwise provided herein or in the Certificate of Designation of a
particular Fund as to such Fund, or as required by the 1940 Act or other
applicable law, the right to vote, all without distinction by Series. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Funds and to fix
and determine the relative rights and preferences as between the Shares of the
respective Funds as to rights of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the Shareholders of the several Funds shall have
separate voting rights or no voting rights. Within each Fund so established,
the Trustees shall have the exclusive power without the requirement of
shareholder approval to establish one or more Classes of Shares and to fix and
determine the relative rights and preferences as between Shares of the
respective Classes of a Fund as to rights of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the Shareholders of the several
Classes shall have separate voting rights or no voting rights.
(b) All provisions herein relating to the Trust shall apply equally
to each Series of the Trust except as the context otherwise requires.
(c) The power of the Trustees to invest and reinvest the Trust
Property shall be governed by Section 3.2 of this Declaration with respect to
any one or more Series which represents the interests in the assets of the
Trust immediately prior to the establishment of two or more Series and the
power of the Trustees to invest and reinvest assets applicable to any other
Series shall be as set forth in the instrument of the Trustees establishing
such Series which is hereinafter described.
(d) All consideration received by the Trust for the issue or sale of
shares of a particular Series together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Series, the Trustees shall allocate them among any one or more
of the Series established and designated from time to time in such manner and
on such basis as they, in their sole discretion, deem fair and equitable. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(e) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and equitable. The Trustees
may further allocate such liabilities, expenses, costs, charges and reserves of
a Series among various Classes of Shares of that Series. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of Shares of Classes of all Series for
all purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders. The assets of a
particular Series of the Trust shall under no circumstances be charged with
liabilities attributable to any other Series of the Trust. All persons
extending credit to, or contracting with or having any claim against a
particular Series of the Trust shall look only to the assets of that particular
Series for payment of such credit, contract or claim.
(f) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series which shall be equal to the interest
of all other Shares of the same Class. Each holder of Shares of a Class shall
be entitled to receive his pro rata share of distribution of income and capital
gains made with respect to such Class. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been
a Shareholder of a Series, such Shareholder shall be paid solely out of the
funds and property of such Series of the Trust. Upon liquidation or
termination of a Series of the Trust, Shareholders of such Series of each Class
shall be entitled to receive a pro rata share of the net assets of such Series
equal to that of all other Shareholders of such Class. A Shareholder of a
particular Series of the Trust shall not be entitled to participate in a
derivative or class action on behalf of any other Series or the Shareholders of
any other Series of the Trust.
(g) Notwithstanding any other provision hereof, on any matter
submitted to a vote of Shareholders of the Trust other than the election of
Trustees, all Shares then entitled to vote shall be voted by individual Series,
except that (1) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual Series, and (2) when the Trustees have
determined that the matter affects only the interests of Shareholders of a
limited number of Series of a particular Class of a Series, then only the
Shareholders of such Series (or Class, as the case may be) shall be entitled to
vote thereon.
(h) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 8.2 of this Declaration with respect
to any one or more Series or Classes which represents the interests in the
assets of the Trust immediately prior to the establishment of two or more
Series or Classes. With respect to any other Series or Class, dividends and
distributions on shares of a particular Series or Class may be paid with such
frequency as the Trustees may determine, which may be daily or otherwise,
pursuant to a standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of shares of that
Series or Class, from such of the income and capital gains, accrued or
realized, from the assets belonging to that series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
Series or Class. All dividends and distributions on shares of a particular
Series or Class shall be distributed pro rata to the holders of that Series or
Class in proportion to the number of shares of that Series or Class held by
such holders at the date and time of record established for the payment of such
dividends or distributions.
(i) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and dividend
rights, of each Class and Series of Shares.
(j) The establishment and designation of any Series or Class in
addition to the Series and Class established and designated in section 6.10
hereof and the authorization of the Shares thereof shall be effective upon the
execution by a majority of the Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Fund or such Class and the manner in which the same may be
amended (a "Certificate of Designation"), and may provide that the number of
Shares of such Fund or Class which may be issued is unlimited, or may limit the
number issuable. At any time that there are no Shares or Class outstanding of
any particular Fund or Class previously established and designated, including
any Fund or Class established and designated in Section 6.10 hereof, the
Trustees may by an instrument executed by a majority of the Trustees, terminate
such Fund or Class and the establishment and designation thereof and the
authorization of its Shares (a "Certificate of Termination"). Each Certificate
of Designation, Certificate of Termination and any instrument amending a
Certificate of Designation shall have the status of an amendment to this
Declaration of Trust, and shall be filed and become effective as provided in
Section 10.1 hereof.
(k) In the event of the liquidation or dissolution of the Trust, the
Shareholders of each Fund of which Shares are outstanding shall be entitled to
receive, when and as declared by the Trustees, the excess of the Fund Assets
over the liabilities of such Fund divided among the Classes of Shares of the
Fund in accordance with Certificate(s) of Designation of the Fund and of any
such Class. The assets so distributable to the Shareholders of any particular
Fund or Class shall be distributed among such Shareholders in proportion to the
number of Shares of that Fund or Class held by them and recorded on the books
of the Trust. The liquidation of any particular Fund may be authorized by vote
of a majority of the Trustees, subject to the affirmative vote of "a maority of
the outstanding voting securities" of that Fund of all Classes voting together,
as the quoted phrase is defined in the 1940 Act, determined in accordance with
clause (iii) of the definition of "Majority Shareholder Vote" in Section 1.2
hereof.
ARTICLE VII
REDEMPTION, REPURCHASE, AND
REDUCTION OF SHARES
SECTION 7.1 - Redemption of Shares.
All Shares of any Series or Class of the Trust shall be redeemable, at the
redemption price determined in the manner set out in this Declaration.
Redeemed or repurchased Shares may be reissued by the Trust.
The Trust shall redeem the Shares of any Series or Class at the price
determined as hereinafter set forth, upon the appropriately verified written
application of the record holder thereof (or upon such other form of request as
the Trustees may determine) at such office or agency as may be designated from
time to time for that purpose by the Trustees. The Trustees may from time to
time specify additional conditions not inconsistent with the 1940 Act regarding
the redemption of Shares.
SECTION 7.2 - Price.
Shares shall be redeemed at their net asset value determined as set forth
in Section 8.1 hereof as of such time as the Trustees shall have theretofore
prescribed by resolution. In the absence of such resolution, the redemption
price of Shares deposited shall be the net asset value of such Shares next
determined as set forth in Section 8.1 after receipt of the application
required by Section 7.1.
SECTION 7.3 - Payment.
Payment for redeemed Shares shall be made at such time and in the manner,
not inconsistent with the 1940 Act or other applicable law, as may be specified
from time to time in the Prospectus, subject to the provision of Section 7.4
hereof.
SECTION 7.4 - Repurchase by Agreement.
The Trust may repurchase Shares of any Series or Class directly, or
through the Distributor or another agent designated for the purpose, by
agreement with the owner thereof at a price not exceeding the net asset value
per Share next determined after the time when the purchase or contract is made
or the net asset value as of any time which may be later determined pursuant to
Section 8.1 hereof, provided payment is not made for the Shares prior to the
time as of which such net asset value is determined.
SECTION 7.5 - Redemption of Shareholder's Interest; Redemption of Shares to
Qualify as a Regulated Investment Company; Disclosure of Holdings.
The Trust shall have the right at any time to redeem the Shares of any
Shareholder for their then current net asset value per Share if at such time
the Shareholder owns of record, Shares of any Series or Class having an
aggregate net asset value of less than the minimum initial investment amount
required of new Shareholders of that Series or Class, subject to such terms and
conditions as the Trustee may approve and subject to the Trust's giving general
notice to all Shareholders of the existence of such right, either by
publication in the Trust's Prospectus, if any, or by such other means as the
Trustees may determine.
If the Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of the Trust
has or may become concentrated in any Person to an extent which would
disqualify the Trust as a regulated investment company under the Internal
Revenue Code, then the Trustees shall have the power by lot or other means
deemed equitable by them to:
(a) Call for redemption by any such Person a number, or principal
amount, of Shares or other securities of the Trust sufficient to maintain or
bring the direct or indirect ownership of Shares or other securities of the
Trust into conformity with the requirements for such qualification, and
(b) Refuse to transfer or issue Shares or other securities of the
Trust to any Person whose acquisition of the Shares or other securities of the
Trust in question would, in the judgment of the Trustees, be likely to result
in such disqualification.
The redemption shall be effected at the redemption price.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or
to comply with the requirements of any other taxing authority.
SECTION 7.6 - Suspension of Right of Redemption.
The Trust may declare a suspension with respect to one or more Series or
Classes of Shares of the right of redemption or postpone the date of payment of
redemption for the whole or any part of any period:
(a) During which the New York Stock Exchange is closed other than
customary weekend and holiday closings;
(b) During which trading on the New York Stock Exchange is
restricted;
(c) During which an emergency exists as a result of which disposal
by the Trust of Securities owned by the Trust within a Fund is not reasonably
practicable or it is not reasonably practicable for the Trust fairly to
determine the value of the net assets of a Fund; or
(d) During any other period when the Commission may for the
protection of Shareholders of the Trust by order permit suspension of the right
of redemption or postponement of the date of payment or redemption;
provided that applicable rules and regulations of the Commission shall govern
as to whether the conditions prescribed in subparagraphs (b), (c) or (d) exist.
Such suspension shall take effect at such time as the Trust shall specify but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an
end, except that the suspension shall terminate in any event on the first day
on which said stock exchange shall have reopened or the period specified in
subparagraphs (b) or (c) above shall have expired (as to which in the absence
of an official ruling by the Commission, the determination of the Trust shall
be conclusive). In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the net asset value next determined after the termination of the
suspension.
SECTION 7.7 - Effect of Suspension of Determination of Net Asset Value.
If, pursuant to Section 8.1, the Trustees shall declare a suspension of
the determination of net asset value, the rights of Shareholders (including
those who shall have applied for redemption pursuant to Section 7.1, but who
shall not yet have received payment) to have Shares redeemed and paid for by
the Trust and the right of the Trust to redeem Shares at its option set forth
in Section 7.5, shall be suspended until the termination of such suspension is
declared. Any record holder who shall have his redemption right so suspended
may, during the period of such suspension, by appropriate written notice of
revocation at the office or agency where application was made, revoke any
application for redemption not honored and withdraw any certificates on
deposit. The redemption price of Shares for which redemption applications have
not been revoked shall be the net asset value of such Shares next determined as
set forth in Section 8.1 hereof after the termination of such suspension, and
payment shall be made within seven (7) days after the date upon which the
application was made plus the period after such application during which the
determination of net asset value was suspended.
SECTION 7.8 - Reductions of Shares.
The Trust may also reduce the number of outstanding Shares of any Series
or Class.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME, AND DISTRIBUTIONS
SECTION 8.1 - Net Asset Value.
The net asset value per Share of any Class of any Series shall be
determined as follows: the value of the Securities and other assets owned by
the Fund corresponding to that Series shall be valued by methods, reflecting
their fair value, as determined by the Trustees in good faith.
From the total value of said assets, there shall be deducted the
liabilities of the Fund attributable to each Class, including proper accruals
of interest, taxes and other expense items, amounts determined and declared as
dividends or distributions, and reserves for contingent or undetermined
liabilities. The net assets of the Fund attributable to each Class so obtained
shall then be divided by the total number of Shares of the Fund of that Class
outstanding and the result, rounded to the nearest cent, shall be the net asset
value per Share of the Fund of that Class. The net asset value of the Shares
of that Fund of that Class shall be determined once on each business day, as of
the close of trading on the New York Stock Exchange or as of such other time or
times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Custodian, the Transfer Agent, or such other Person as the Trustees by
resolution may determine. The Trustees may suspend the daily determination of
net asset value if to do so is not prohibited by the 1940 Act.
SECTION 8.2 - Distributions With Respect to Outstanding Shares.
The Trustees shall from time to time distribute ratably among the
Outstanding Shares of a Series and/or of a Class of a Series, such proportion
of the net profits, surplus (including paid-in surplus), capital, or assets
held by the Trustees as they may deem proper. Such distribution may be made in
cash or property (including, without limitation, any type of obligation of the
Trust or any assets thereof), and the Trustees may distribute ratably among the
Outstanding Shares of such Series or Class additional Shares of such Series or
Class or another Series or Class issuable hereunder in such manner, at such
times, and on such terms as the Trustees may deem proper. Such distributions
may be among the Outstanding Shares at the time of declaring a distribution or
among the Outstanding Shares at such later date as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, Outstanding Shares shall exclude Shares for
which orders have been placed subsequent to a specified time and date. The
Trustees may always retain from the net profits of the Trust such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
the obligations of the Trust, or as they may deem desirable to use in the
conduct of its affairs or to retain for future requirements or extensions of
the business. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or other plans as the Trustees
shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books of the Trust, the
above provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
At such time as the Trustees divide the Shares of the Trust into two or
more Series and/or two or more Classes of a Series, the distributions provided
for herein will be determined separately for the outstanding Shares of each
Class of each Series as set forth in Section 6.10(h) hereof.
SECTION 8.3 - Determination of Net Income; Constant Net Asset Value of Shares
of Certain Series or Classes; Reduction of Outstanding Shares.
The Trustees shall have the power to determine the net income of each
Series of Shares of the Trust one or more times on each business day and at
each such determination declare such net income as dividends in additional
Shares of such Series. The determination of net income and the resultant
declaration of dividends shall be as set forth in the Prospectus. In the event
that any Series or Class of the Trust attempts to maintain a constant net asset
value per Share, if, for any reason, the net income of such Series of the Trust
determined at any time is a negative amount, the Trustees shall have the power
(i) to offset each Shareholder's pro rata share of such negative amount from
the accrued dividend account of such Shareholder, or (ii) to reduce the number
of outstanding shares of such Series or Class of the Trust by reducing the
number of Shares in the account of such Shareholder by that number of full and
fractional Shares which represents the amount of such excess negative net
income, or (iii) to cause to be recorded on the books of the Trust an asset
account in the amount of such negative net income, which account may be reduced
by the amount, provided that the same shall thereupon become the property of
the Trust and shall not be paid to any Shareholder, of dividends declared
thereafter upon the outstanding Shares on the day such negative net income is
experienced, until such asset account is reduced to zero, or (iv) to combine
the methods described in clauses (i) and (ii) and (iii) of this sentence, in
order to cause the net asset value per Share of such Series or Class of the
Trust to remain at a constant amount per outstanding Share immediately after
each such determination and declaration. The Trustees shall also have the
power to fail to declare a dividend out of net income for the purpose of
causing the net asset value per Share of any such Series or Class to be
increased to a constant amount. The Trustees shall have full discretion to
determine whether any cash or property received shall be treated as income or
as principal and whether any item of expense shall be charged to the income or
the principal account, and their determination made in good faith shall be
conclusive upon the Shareholders. In the case of stock dividends received, the
Trustees shall have full discretion to determine, in the light of the
particular circumstances, how much, if any, of the value thereof shall be
treated as income, the balance, if any, to be treated as principal. The
Trustees shall not be required to adopt, but may at any time adopt, discontinue
or amend the practice of maintaining the net asset value per Share of any
Series or Class of the Trust at a constant amount.
SECTION 8.4 - Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article VIII, the
Trustees may prescribe, in their absolute discretion, such other bases and
times for determining the per Share net asset value of any Series or Class of
the Trust's Shares or net income, or the declaration and payment of dividends
and distributions as they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS; ETC.
SECTION 9.1 - Duration.
The Trust shall continue without limitation of time, subject to the
provisions of this Article IX.
SECTION 9.2 - Termination of Trust.
(a) The Trust may be terminated by the vote of a majority of the
Shares outstanding and entitled to vote of each Fund of the Trust voting
separately at any meeting of Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than a majority of such Shares, or by such greater or
different vote of Shareholders of any Series as may be established by the
Certificate of Designation by which such Series was authorized. Upon the
termination of the Trust,
(i) the Trust shall carry on no business except for the
purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up, including,
without limitation, the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one or
more Persons at public or private sale for consideration which may consist in
whole or in part of cash, Securities or other property of any kind, discharge
or pay its liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange, transfer or
other disposition of all or substantially all the Trust Property shall require
Shareholder approval in accordance with Section 9.4 hereof; and
(iii) after paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary, the Trustees may distribute the remaining
Trust Property, if any, in cash or in kind or partly each, among the
Shareholders in conformity with Section 6.10(k) hereof.
(b) After termination of the Trust and distribution to the Shareholders
as herein provided, a majority of the Trustees shall execute and lodge among
the records of the Trust an instrument in writing setting forth the fact of
such termination, and the Trustees shall thereupon be discharged from all
further duties hereunder, and the rights and interests of all Shareholders
shall thereupon cease.
SECTION 9.3 - Amendment Procedure.
(a) This Declaration may be amended by a majority shareholder vote,
with each Series or Class voting separately if such amendment shall have a
materially different effect on one or more particular Series or Classes and
otherwise by all Shares voting together, or by any instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of a majority of the Shares outstanding and entitled to vote either
separately by Series or Classes or together, as appropriate. The Trustees may
also amend this Declaration without the vote or consent of Shareholders to
change the name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, to
establish and distinguish separate and distinct Funds and separate and distinct
Classes as provided in Section 6.10(a) hereof, or if they deem it necessary to
conform this Declaration to the requirements of, or to reduce or eliminate the
payment of taxes by the Trust or any Series thereof under applicable federal or
state laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code, but the Trustees shall not be
held liable for failing to do so;
(b) No amendment may be made under this Section 9.3 which would
change any rights with respect to any Shares of the Trust by reducing the
amount payable thereon upon liquidation of the Trust or by diminishing or
eliminating any voting rights pertaining thereto, except with a majority vote
of the Shares of the affected Series or Class. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders;
and
(c) A certificate signed by a majority of the Trustees setting forth
an amendment and reciting that it was duly adopted by the Shareholders or by
the Trustees as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
SECTION 9.4 - Merger, Consolidation or Sale of Assets.
The Trust may merge or consolidate with any other Person or may sell,
lease or exchange all or substantially all of the Trust Property, including its
goodwill, if any, upon such terms and conditions and for such consideration
when and as authorized, at any meeting of Shareholders called for the purpose,
by the affirmative vote of the holders of not less than two-thirds of the
Shares outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than
two-thirds of the Shares outstanding and entitled to vote or by such other vote
as may be established by the Trustees with respect to any series or class of
shares; provided, however, that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, a majority shareholder vote shall be
sufficient authorization.
SECTION 9.5 - Incorporation.
With a Majority Shareholder Vote, the Trustees may cause to be organized
or assist in organizing a corporation or corporations under the laws of any
jurisdiction, or any other trust, partnership, association or other
organization to take over all or substantially all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer all or substantially all of the
Trust Property to any such corporation, trust, association or organization in
exchange for securities thereof or otherwise, and to lend money to, subscribe
for securities of, and enter into any contracts with any such corporation,
trust, partnership, association, or organization, or any corporation,
partnership, trust, association or organization in which the Trust holds or is
about to acquire Securities or any other interest. The Trustees may also cause
a merger or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other organization if and
to the extent not prohibited by applicable law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations, and selling,
conveying or transferring a portion of the Trust Property to such organization
or entities.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 - Filing.
This Declaration and any amendment hereto (including each Certificate of
Designation and Certificate of Determination) shall be filed in the office of
the Secretary of the Commonwealth of Massachusetts and in such other places as
may be required under the laws of Massachusetts and may also be filed or
recorded in such other places as the Trustees deem appropriate. Each amendment
so filed shall be accompanied by a certificate signed and acknowledged by a
Trustee stating that such action was duly taken in a manner provided herein,
and unless such amendment or such certificate sets forth some later time for
the effectiveness of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may
be executed from time to time by a majority of the Trustees and shall, upon
filing with the Secretary of the Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Declaration and the various amendments thereto.
SECTION 10.2 - Resident Agent.
The name of the Trust's resident agent is CT Corporation System, and its
post office address is 2 Oliver Street, Boston, MA 02109.
SECTION 10.3 - Governing Law.
This Declaration is executed by the Trustees and delivered in the
Commonwealth of Massachusetts and with reference to the laws thereof, and the
rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said State.
SECTION 10.4 - Counterparts.
This Declaration may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and such counterparts,
together, shall constitute one and the same instrument, which shall be
sufficiently evidenced by any such original counterpart.
SECTION 10.5 - Reliance by Third Parties.
Any certificate executed by an individual who, according to the records of
the Trust appears to be a Trustee hereunder or an officer of the Trust
appointed by the Trustees, certifying to:
(a) The number or identity of Trustees or Shareholders or agents or
employees;
(b) The due authorization of the execution of any instrument in
writing;
(c) The form of any vote passed at a meeting of Trustees or
committees therof or Shareholders;
(d) The fact that the number of Trustees or Shareholders present at
any meeting or executing any written instrument satisfies the requirements of
this Declaration;
(e) The form of any By-Laws adopted by or the identity of any
officers, Trustees, agents or employees; or
(f) The existence of any fact or facts which in any manner relate to
the affairs of the Trust; shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees or their successors
or the Trust.
SECTION 10.6 - Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable and, if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination; and
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
SECTION 10.7 - Index and Heading for Reference Only.
The Index and headings preceding the text, articles and sections hereof
have been inserted for convenience and reference only and shall not be
construed to affect the meaning, construction or effect of this Declaration.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 8th
day of July, 1993.
Michael J. Downer, as Trustee
and not individually
Address: 333 South Hope Street
50th Floor
Los Angeles, CA 90071
Michele Y. Yang, as Trustee
and not individually
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On July 8, 1993, before me, Susan M. Laba, a Notary Public in and for the
County of Los Angeles, State of California, personally appeared Michael J.
Downer and Michele Y. Yang, personally known to me to be the person(s) whose
name or names is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS, my hand and notarial seal this 8th day of July, 1993.
Notary Public in and for said
County and State
IN WITNESS WHEREOF, the undersigned has executed this instrument on this
9th day of July, 1993.
/s/ Caroline Pearson
Caroline Pearson, as Trustee
and not individually
Address: Ten Post Office Street
Boston, MA 02109
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
Before me, ___________________, a Notary Public in and for the County of
Suffolk, State of Massachusetts, personally appeared this day Caroline Pearson,
to me known and known to me to be the same person whose name is signed to the
foregoing instrument, and who acknowledged to me that he executed the same as
his free and voluntary act and deed.
WITNESS, my hand and notarial seal this 9th day of July, 1993.
Notary Public in and for said
County and State
CERTIFICATE OF AMENDMENT OF
DECLARATION OF TRUST OF
INTERMEDIATE TAX-EXEMPT BOND FUND OF AMERICA
The undersigned, H. Frederick Christie, Paul G. Haaga, Jr., Herbert Hoover
III, Richard G. Newman and Leonard Weil certify that they constitute a majority
of the Board of Trustees of Intermediate Tax-Exempt Bond Fund of America, a
Massachusetts Business Trust, and further that Section 1.1 of Article I of the
Declaration of Trust is amended in pertinent part to read as follows, such
amendment being duly adopted by the Board of Trustees:
SECTION 1.1 - Name.
The name of the Trust created hereby is "Limited Term Tax-Exempt Bond Fund
of America."
IN WITNESS WHEREOF, the undersigned have executed this instrument this
30th day of September, 1993.
H. Frederick Christie, as Trustee Richard G. Newman, as Trustee
and not individually and not individually
Paul G. Haaga, as Trustee Leonard Weil, as Trustee
and not individually and not individually
Herbert Hoover III, as Trustee
and not individually
Address: 333 South Hope Street
51st Floor
Los Angeles, CA 90071
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
Before me, Esther Kim, a Notary Public in and for the County of Los
Angeles, State of California, personally appeared this day H. Frederick
Christie, Paul G. Haaga, Jr., Herbert Hoover III, Richard G. Newman, and
Leonard Weil, to me known and known to me to be the same persons whose names
are signed to the foregoing instrument, and who acknowledged to me that they
executed the same at their free and voluntary act and deed.
WITNESS my hand and notarial seal this 30th day of September, 1993.
Notary Public in and for said
County and State
BY-LAWS
OF
LIMITED TERM TAX-EXEMPT BOND OF AMERICA
ARTICLE I.
SHAREHOLDERS
Section 1.01. Annual Meetings. Unless otherwise required by law, the
Declaration of Trust as amended from time to time (the "Declaration") or by
these By-Laws, the Trust shall not be required to hold an annual meeting of
shareholders unless the Board of Trustees of the Trust (the "Board") determines
to hold an annual meeting. If the Board makes such a determination, the annual
meeting of shareholders shall be held at such date and time as may be
designated from time to time by the Board for the election of trustees and the
transaction of any business within the powers of the Trust. Any business of
the Trust may be designated in the notice, except such business as is
specifically required by statute or by the Declaration to be stated in the
notice. Failure to hold an annual meeting at the designated time shall not,
however, invalidate the existence of the Trust or affect otherwise valid acts
of the Trust.
Section 1.02. Special Meetings. At any time in the interval between
annual meetings, special meetings of the shareholders may be called by the the
Chairman of the Board or the President or by a majority of the Board by vote at
a meeting or in writing with or without a meeting, or, in writing by those
shareholders holding 10% the outstanding shares of beneficial interest of the
Trust.
Section 1.03. Place of Meetings. Meetings of the shareholders for the
election of trustees shall be held at such place either within or without the
State of Massachusetts as shall be designated from time to time by the Board of
Trustees and stated in the notice of the meeting. Meetings of shareholders for
any other purpose may be held at such time and place, within or without the
State of Massachusetts, as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 1.04. Notice of Meetings. Not less than ten days nor more than
ninety days before the date of every shareholders' meeting, the Secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, either by
mail or by presenting it to the shareholder personally or by leaving it at the
shareholder's residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Trust, with postage thereon prepaid. Notwithstanding the foregoing
provision, a waiver of notice in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting in
person or by proxy, shall be deemed equivalent to the giving of such notice to
such persons. Any meeting of shareholders, annual or special, may adjourn from
time to time to reconvene at the same or some other place, and no notice need
be given of any such adjourned meeting other than by announcement at the
meeting.
Section 1.05. Quorum. At any meeting of shareholders the presence in
person or by proxy of shareholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Declaration for the vote necessary for
the adoption of any measure. In the absence of a quorum the shareholders
present in person or by proxy, by majority vote and without notice, may adjourn
the meeting from time to time until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 1.06. Votes Required. A majority of the votes cast at a meeting
of shareholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless more than a majority of votes cast is required by
statute or by the Declaration.
Section 1.07. Proxies. A shareholder may vote the shares owned of record
by him either in person or by proxy executed in writing by the shareholder or
by the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy.
Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.08. List of Shareholders. At each meeting of shareholders, a
full, true and complete list in alphabetical order of all shareholders entitled
to vote at such meeting, certifying the number of shares held by each, shall be
made available by the Secretary.
Section 1.09. Voting. In all elections for trustees every shareholder
shall have the right to vote, in person or by proxy, the shares owned of record
by the shareholder, for as many persons as there are trustees to be elected and
for whose election the shareholder has a right to vote. At all meetings of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions regarding the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders,
present in person or by proxy, entitled to cast 10% in number of votes, or if
ordered by the chairman, the vote upon any election or question shall be taken
by ballot. Upon like demand or order, the voting shall be conducted by two
inspectors in which event the proxies and ballots shall be received, and all
questions regarding the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided, by such inspectors.
Unless so demanded or ordered, no vote need be by ballot, and voting need not
be conducted by inspectors. Inspectors may be elected by the shareholders at
their annual meeting, to serve until the close of the next annual meeting and
their election may be held at the same time as the election of trustees. In
case of a failure to elect inspectors, or in case an inspector shall fail to
attend, or refuse or be unable to serve, the shareholders at any meeting may
choose an inspector or inspectors to act at such meeting, and in default of
such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10. Action by Shareholders Other than at a Meeting. Any action
required or permitted to be taken at any meeting of shareholders may be taken
without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the
records of the Trust.
ARTICLE II.
BOARD OF TRUSTEES
Section 2.01. Powers. The Board may exercise all the powers of the
Trust, except such as are by statute or the Declaration or these By-Laws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.02. Number of Trustees. The number of trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the trustees; provided, however, the number of trustees shall in no
event be reduced to less than three by such an instrument. The tenure of
office of a trustee shall not be affected by any decrease in the number of
trustees made by the Board.
Section 2.03. Regular Meetings. After each meeting of shareholders at
which a Board of Trustees shall have been elected, the Board so elected shall
meet as soon as practicable for the purpose of organization and the transaction
of other business. No notice of such first meeting shall be necessary if held
immediately after the adjournment, and at the site, of such meeting of
shareholders. Other regular meetings of the Board shall be held without notice
on such dates and at such places within or without the State of Massachusetts
as may be designated from time to time by the Board.
Section 2.04. Special Meetings. Special meetings of the Board may be
called at any time by the Chairman of the Board, the President or the Secretary
of the Trust, or by a majority of the Board by vote at a meeting, or in writing
with or without a meeting. Such special meetings shall be held at such place
or places within or without the State of Massachusetts as may be designated
from time to time by the Board. In the absence of such designation such
meetings shall be held at such places as may be designated in the calls.
Section 2.05. Notice of Meetings. Except as provided in Section 2.03,
notice of the place, day and hour of every regular and special meeting shall be
given to each trustee two days (or more) before the meeting, by delivering the
same personally, or by sending the same by telegraph, or by leaving the same at
the trustee's residence or usual place of business, or, in the alternative, by
mailing such notice three days (or more) before the meeting, postage prepaid,
and addressed to the trustee at the trustee's last known business or residence
post office address, according to the records of the Trust. Unless required by
these By-Laws or by resolution of the Board, no notice of any meeting of the
Board need state the business to be transacted thereat. No notice of any
meeting of the Board need be given to any trustee who attends, or to any
trustee who in writing executed and filed with the records of the meeting
either before or after the holding thereof, waives such notice. Any meeting of
the Board, regular or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the adjourned meeting.
Section 2.06. Quorum. At all meetings of the Board, one-third of the
entire Board (but in no event fewer than two trustees) shall constitute a
quorum for the transaction of business. Except in cases in which it is by
statute, by the Declaration or by these By-Laws otherwise provided, the vote of
a majority of such quorum at a duly constituted meeting shall be sufficient to
elect and pass any measure. In the absence of a quorum, the trustees present
by majority vote and without notice other than by announcement at the meeting
may adjourn the meeting from time to time until a quorum shall attend. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.07. Compensation and Expenses. Trustees may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
consist of an annual fee or retainer and/or a fixed fee for attendance at
meetings. In addition, trustees may in the same manner be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as trustees. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude
any trustee from serving the Trust in any other capacity and receiving
compensation therefor.
Section 2.08. Action by Trustees Other than at a Meeting. Except as
required by the Investment Company Act of 1940 or regulations thereunder, any
action required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 2.09. Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the trustees. The Board may designate one or more
trustees as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution, shall have and may exercise the powers
of the Board in the management of the business and affairs of the Trust,
provided, however, that in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required.
Section 2.10. Holding of Meetings by Conference Telephone Call. Except as
required by the Investment Company Act of 1940 or regulations thereunder, at
any regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.01. Executive Officers. The Board of Trustees shall choose a
President and may choose a Chairman of the Board and a Vice Chairman of the
Board from among the trustees, and shall choose a Secretary and a Treasurer who
need not be trustees. The Board of Trustees shall designate as principal
executive officer of the Trust either the Chairman of the Board, the Vice
Chairman of the Board, or the President. The Board of Trustees may choose an
Executive Vice President, one or more Senior Vice Presidents, one or more
Vice-Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers, none of whom need be a trustee. Any two or more of the
above-mentioned offices, except those of President and a Vice-President, may be
held by the same person, but no officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument be required by law,
by the Declaration of Trust, by the By-Laws or by resolution of the Board of
Trustees to be executed by any two or more officers. Each such officer shall
hold office until his successor shall have been duly chosen and qualified, or
until he shall have resigned or shall have been removed. Any vacancy in any of
the above offices may be filled for the unexpired portion of the term of the
Board of Trustees at any regular or special meeting.
Section 3.02. Chairman and Vice Chairman of the Board. The Chairman of
the Board, if one be elected, shall preside at all meetings of the Board of
Trustees and of the shareholders at which he is present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board of
Trustees. The Vice Chairman of the Board, if one be elected, shall, when
present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and trustees, and he shall perform such other
duties as may from time to time be assigned to him by the Board of Trustees or
as may be required by law.
Section 3.03. President. In the absence of the Chairman or Vice Chairman
of the Board, the President shall preside at all meetings of the shareholders
and of the Board at which the President is present; and in general, shall
perform all duties incident to the office of a president of a trust, and such
other duties, as from time to time, may be assigned to him by the Board.
Section 3.04. Vice Presidents. The Vice President or Vice Presidents,
including any Executive or Senior Vice President or Presidents, at the request
of the President or in President's absence or during the President's inability
or refusal to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice President, the Board may determine which one or more of
the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.05. Secretary and Assistant Secretaries. The Secretary shall:
keep the minutes of the meetings of the shareholders, of the Board and of any
committees, in books provided for the purpose; shall see that all notices are
duly given in accordance with the provisions of these By-Laws or as required by
law; be custodian of the records of the Trust; see that the corporate seal is
affixed to all documents the execution of which, on behalf of the Trust, under
its seal, is duly authorized, and when so affixed may attest the same; and in
general perform all duties incident to the office of a secretary of a trust,
and such other duties as, from time to time, may be assigned to him by the
Board, the Chairman of the Board, or the President.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board, the President or the Chairman
of the Board, shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.06. Treasurer and Assistant Treasurers. The Treasurer shall:
have charge of and be responsible for all funds, securities, receipts and
disbursements of the Trust, and shall deposit, or cause to be deposited in the
name of the Trust, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by the
Board in accordance with Section 5.04 of these By-Laws; render to the
President, the Chairman of the Board and to the Board, whenever requested, an
account of the financial condition of the Trust; and in general, perform all
the duties incident to the office of a treasurer of a trust, and such other
duties as may be assigned to him by the Board, the President or the Chairman of
the Board.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board, the President or the Chairman
of the Board shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.07. Subordinate Officers. The Board may from time to time
appoint such subordinate officers as it may deem desirable. Each such officer
shall hold office for such period and perform such duties as the Board, the
President or the Chairman of the Board may prescribe. The Board may, from time
to time, authorize any committee or officer to appoint and remove subordinate
officers and prescribe the duties thereof.
Section 3.08. Removal. Any officer or agent of the Trust may be removed
by the Board whenever, in its judgment, the best interests of the Trust will be
served thereby, but such removal shall be without prejudice to the contractual
rights, if any, of the person so removed.
ARTICLE IV
SHARES OF BENEFICIAL INTEREST
Section 4.01. Certificates. If the Board authorizes the issuance of
certificates representing the shares of beneficial interest, such certificates
shall be signed by the President, the Chairman of the Board or a Vice President
and countersigned by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and sealed with the seal of the Trust. The
signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. No certificates shall be issued
for fractional shares. Such certificates shall be in such form, not
inconsistent with law or with the Declaration, as shall be approved by the
Board. In case any officer of the Trust who has signed any certificate ceases
to be an officer of the Trust, whether because of death, resignation or
otherwise, before such certificate is issued, the certificate may nevertheless
be issued and delivered by the Trust as if the officer had not ceased to be
such officer as of the date of its issue. Certificates need not be issued
except to shareholders who request such issuance in writing.
The Board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Trust
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representative, to advertise the same in
such manner as it shall require and/or to give the Trust a bond in such sum as
it may direct as indemnity against any claim that may be made against the Trust
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4.02. Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a
determination of shareholders for any other proper purpose. Such date in any
case shall be not more than sixty days, and in case of a meeting of
shareholders, not less than ten days, prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken.
ARTICLE V
GENERAL PROVISIONS
Section 5.01. Checks. All checks or demands for money and notes of the
Trust shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.
Section 5.02. Custodian. All securities and cash of the Trust shall be
placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.) The Trust shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of
the Custodian with respect to the cash and securities of the Trust held by the
Board of Trustees of the Trust. The Trust shall upon the resignation or
inability to serve of the Custodian use its best efforts to obtain a successor
custodian; require that the cash and securities owned by the Trust be delivered
directly to the successor custodian; and in the event that no successor
custodian can be found, submit to the shareholders, before permitting delivery
of the cash and securities owned by the Trust to other than a successor
custodian, the question whether or not the Trust shall be liquidated or shall
function without a custodian.
The Trustees may direct the Custodian to deposit all or any part of the
securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or such other person as may be
permitted by the Securities and Exchange Commission, or otherwise in accordance
with applicable law, pursuant to which system all securities of any particular
class or series of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust.
The Trustees may direct the Custodian to accept written receipts or other
written evidences indicating purchases of securities held in book entry form in
the Federal Reserve System in accordance with regulations promulgated by the
Board of Governors of the Federal Reserve System and the local Federal Reserve
Banks in lieu of receipt of certificates representing such securities.
Section 5.03. Bonds. The Board may require any officer, agent or
employee of the Trust to give a bond to the Trust, conditioned upon the
faithful discharge of such person's duties, with one or more sureties and in
such amount as may be satisfactory to the Board.
Section 5.04. Inspection of Records. The records of the Trust shall be
open to inspection by shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 5.05. Representation of Shares. Any officer of the Trust is
authorized to vote, represent and exercise of the Trust any and all rights
incident to any shares of any corporation or other business enterprise owned by
the Trust.
Section 5.06. Offices of the Trust. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk. The principal executive office of the
Trust is hereby fixed and located at 333 South Hope Street, Los Angeles,
California. The Trustees are granted full power and authority to change from
time to time the respective locations of said principal executive office. Any
such change shall be noted on the By-Laws opposite this Section, or this
Section may be amended to state the new location. Branch or subordinate
offices may be established at any time by the Trustees at any place or places.
ARTICLE VI
INDEMNIFICATION
The Trust shall provide any indemnification required by applicable law and
shall indemnify directors, officers, agents and employees as follows:
(a) The Trust shall indemnify any Trustee or officer of the Trust who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Trust) by reason
of the fact that such person is or was such Trustee or officer or an employee
or agent of the Trust, or is or was serving at the request of the Trust as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith or in a manner reasonably believed to be
in or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that such person is or was such Trustee or
officer or an employee or agent of the Trust, or is or was serving at the
request of the Trust as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Trust unless and
only to the extent that the court in which such action or suit was brought, or
any other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been
successful on the merits in defense of any action, suit or proceeding referred
to in subparagraphs (a) or (b) above or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
therewith, without the necessity for the determination as to the standard of
conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless ordered by
a court) shall be made by the Trust only as authorized in the specific case
upon a determination that indemnification of the Trustee or officer is proper
in the circumstances because such person has met the applicable standard of
conduct set forth in subparagraph (a) or (b). Such determination shall be made
(i) by the Board by a majority vote of a quorum consisting of Trustees who were
not parties to such action, suit or proceeding, or (ii) if such a quorum of
disinterested Trustees so directs, by independent legal counsel in a written
opinion; and any determination so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action, writ or
proceeding may be paid by the Trust in advance of the final disposition of such
action, suit or proceeding, as authorized in the particular case, upon receipt
of an undertaking by or on behalf of the Trustee or officer to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Trust as authorized herein. Such determination must be
made by disinterested trustees or independent legal counsel.
(f) Agents and employees of the Trust who are not Trustees or officers of
the Trust may be indemnified under the same standards and procedures set forth
above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled and
shall continue as to a person who has ceased to be a Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
(h) Nothing in the Declaration or in these By-Laws shall be deemed to
protect any Trustee or officer of the Trust against any liability to the Trust
or to its shareholders to which such person would otherwise be subject by
reason of willful malfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's office.
(i) The Trust shall have power to purchase and maintain insurance on
behalf of any person against any liability asserted against or incurred by such
person, whether or not the Trust would have the power to indemnify such person
against such liability under the provisions of this Article. Nevertheless,
insurance will not be purchased or maintained by the Trust if the purchase or
maintenance of such insurance would result in the indemnification of any person
in contravention of any rule or regulation of the Securities and Exchange
Commission.
ARTICLE VII
AMENDMENT OF BY-LAWS
These By-Laws of the Trust may be altered, amended, added to or repealed
by the shareholders or by majority vote of the entire Board.
002206
NUMBER SHARES
(Void)
A MASSACHUSETTS BUSINESS TRUST
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
This Certifies that is the owner of
*SEE REVERSE FOR CERTAIN ABBREVIATIONS
CUSIP 532726 10 6
fully paid and nonassessable Shares of the Capital Stock of Limite Term
Tax-Exempt Bond Fund of America each of the par value of One Dollar,
transferable on the books of the Corporation by the holder thereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent.
Witness, the facsimile signatures of its duly authorized officers.
Dated:
/s/ Julie F. Williams /s/ Abner D. Goldstine
Secretary President
COUNTERSIGNED
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY---------------------------
AUTHORIZED SIGNATURE
------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
CERTIFICATE LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA, INC.
NUMBER SHARES
ACCOUNT NO. ALPHA CODE DEALER NUMBER TRADE DATE
CHANGE NOTICE: IF THE ABOVE INFORMATION IS INCORRECT OR MISSING,
PLEASE PRINT THE CORRECT INFORMATION BELOW AND RETURN TO:
--------------------------------------------------------------
--------------------------------------------------------------
TAXPAYER I.D. NUMBER------------------------------------------
EXPLANATION OF ABBREVIATIONS
* The following abbreviations, when used in the registration on the face of
this certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADM --Administratrix FBO --For the benefit of TTEE --Trustee
--Administrator
COM PROP --Community Property GDN --Guardian U/A --Under Agreement
CUST --Custodian JT TEN --Joint tenants UGMA/ --Gift to minors act in effect in the state
with right of (State) indicated
survivorship
DTD --Dated LIFE TEN --Life tenant UTMA/ --Transfers to minors act in effect in the state
(State) indicated
EST --Estate TR --Trust U/W --Last will and testament
--Of Estate of --Under last will and testament of
--Of will of
--Under the will of
--Of the will of
ET AL --(and) Others TEN COM --Tenants in common
EXEC --Executor TEN ENT --Tenants by the entireties
--Executrix
</TABLE>
Note: Abbreviations refer where appropriate to the singular or plural, male or
female. Other abbreviations may also be used, including U.S. Post Office
Department two-letter state abbreviations.
NOTE: AS STATED IN THE FUND'S ARTICLES OF INCORPORATION, THIS CERTIFICATE
REPRESENTING SHARES OF CAPITAL STOCK OF THE FUND MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
REQUIREMENTS: The signature(s) on this assignment must correspond exactly with
the name(s) as written upon the face of the certificate in every particular.
Except as described below, in order to redeem shares, 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 prior toobtaining the signature guarantee.
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. However, the fund
reserves the right to require signature guarantee(s) on all redemptions.
For value received, the undersigned hereby sell, assign, and transfer
- --------- shares of capital stock represented by this certificate to:
- ------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
and do hereby irrevocably constitute and appoint -------- attorney to transfer
the said stock on the books of the corporation with full power
of substitution.
Dated: ----------------------
----------------------------------------
Owner
----------------------------------------
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH REQUIREMENTS PRINTED
ABOVE.
Signatures(s) guaranteed by:
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of October, 1993 is
made and entered into by and between LIMITED TERM TAX-EXEMPT BOND FUND OF
AMERICA, a Massachusetts business trust, (hereinafter called the "Fund"), and
CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter
called the "Investment Adviser").
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management
type, registered under the Investment Company Act of 1940 (the "1940 Act").
The Investment Adviser is registered under the Investment Advisers Act of 1940
and is engaged in the business of providing investment advisory and related
services to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual
undertaking of the parties, it is covenanted and agreed as follows:
1. The Investment Adviser shall determine what securities and other
assets shall be purchased or sold by the Fund.
2. The Investment Adviser shall furnish the services of persons to
perform the executive, administrative, clerical, and bookkeeping functions of
the Fund, including the daily determination of net asset value per share. The
Investment Adviser shall pay the compensation and travel expenses of all such
persons, and they shall serve without any additional compensation from the
Fund. The Investment Adviser shall also, at its expense, provide the Fund with
necessary office space (which may be in the offices of the Investment Adviser);
all necessary office equipment and utilities; and general purpose forms,
supplies, and postage used at the offices of the Fund.
3. The Fund shall pay all its expenses not assumed by the Investment
Adviser as provided herein. Such expenses shall include, but shall not be
limited to, expenses incurred in connection with the organization of the Fund,
its qualification to do business as a foreign corporation in the State of
California, and its registration as an investment company under the 1940 Act;
custodian, stock transfer and dividend disbursing fees and expenses;
distribution expenses pursuant to a plan under rule 12b-1 under the 1940 Act;
costs of designing and of printing and mailing to its shareholders reports,
prospectuses, proxy statements, and notices to its shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the Fund
(including registration and qualification expenses); legal and auditing fees
and expenses; compensation, fees, and expenses paid to trustees not affiliated
with the Investment Adviser; association dues; and costs of any share
certificates, stationery and forms prepared exclusively for the Fund.
EXHIBIT 5
4. The Fund shall pay to the Investment Adviser on or before the
tenth (10th) day of each month, as compensation for the services rendered by
the Investment Adviser during the preceding month, a fee at the annual rate of:
(a) 0.30% per annum on the first $60 million of the Fund's net
assets; plus 0.21% per annum on the portion of such net assets in excess of $60
million ("Net Asset Portion"), plus
(b) 3% of the Fund's gross investment income for the preceding
month ("Investment Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rates set forth above. The net asset value of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund as of the close of the New York Stock Exchange on each
day of which said Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes
hereof, the Fund's gross investment income shall not reflect any net realized
gains or losses on the sale of portfolio securities but shall include
original-issue discount as defined for Federal income tax purposes.
For the purposes hereof, the net assets of the Fund shall be determined in
the manner set forth in the Declaration of Trust and Prospectus of the Fund.
The advisory fee shall be payable for the period commencing on the date on
which operations of the Fund begin and ending on the date of termination hereof
and shall be prorated for any fraction of a month at the termination of such
period.
5. The Investment Adviser agrees that in the event the expenses of
the Fund (with the exclusion of interest, taxes, brokerage costs, extraordinary
expenses such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on
a date on which this Investment Advisory and Service Agreement is in effect,
exceed the expense limitations, if any, applicable to the Fund pursuant to
state securities laws or any regulations thereunder, it will reduce its fee by
the extent of such excess and, if required pursuant to any such laws or
regulations, will reimburse the Fund in the amount of such excess.
6. The Investment Adviser agrees to pay the expenses of the Fund
referred to in paragraph 3 above (with the exclusion of interest, taxes,
brokerage costs and extraordinary expenses such as litigation and acquisitions)
for a period ending not later than October 1, 2003, all subject to
reimbursement by the Fund. To accomplish such reimbursement, the Fund shall
pay the Investment Adviser an expense reimbursement fee which on an annual
basis is equivalent to the difference between the fees of the Investment
Adviser described in paragraph 4 above and .75% of the average net assets of
the Fund. The expense reimbursement fees are for reimbursement of actual
expenses incurred by or on behalf of the Fund and are intended to have the
effect of assuring that the total normal operating expenses of the Fund during
the expense reimbursement period will not exceed .75% of the Fund's average net
assets per annum. Such expense reimbursement fee arrangement will terminate
either when all of such reimbursable expenses of the Fund which have been paid
by the Investment Adviser pursuant thereto have been reimbursed by the Fund for
a period of twelve consecutive months or on October 1, 2003, whichever is
earlier.
7. This Agreement may be terminated at any time, without payment of
any penalty, by the Trustees of the Fund or by vote of a majority (within the
meaning of the 1940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. Unless sooner terminated in accordance
with this provision, this Agreement shall continue until September 30, 1995.
It may thereafter be renewed from year to year by mutual consent; provided that
such renewal shall be specifically approved at least annually by the Board of
Trustees of the Fund, or by vote of a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund. In either event, it
must be approved by a majority of those Trustees who are not parties to such
Agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
8. This agreement shall not be assignable by either party hereto,
and in the event of assignment (within the meaning of the 1940 Act) by the
Investment Adviser shall automatically be terminated forthwith. The term
"assignment" shall have the meaning defined in the 1940 Act.
9. Nothing contained in this Agreement shall be construed to
prohibit the Investment Adviser from performing investment advisory,
management, or distribution services for other investment companies and other
persons or companies, nor to prohibit affiliates of the Investment Adviser from
engaging in such business or in other related or unrelated businesses.
10. The Investment Adviser shall not be liable to the Fund or its
stockholders for any error of judgment, act, or omission not involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations and duties hereunder.
11. The obligations of the Fund under this Agreement are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund's estate. The Investment Adviser
agrees to look solely to the assets of the Fund for the satisfaction of any
liability in respect of the Fund under this Agreement and will not seek
recourse against such Trustees, officers, employees, agents or shareholders, or
any of them, or any of their personal assets for such satisfaction.
12. It is understood that the name "American Funds" or any
derivative thereof or logo associated with that name is the valuable property
of the Invstment Adviser and its affiliates, and that the Fund shall have the
right to use such name (or derivative or logo) only so long as this Agreement
shall continue in effect. Upon termination of this Agreement the Fund shall
forthwith cease to use such name (or derivative or logo) and shall promptly
amend its Declaration of Trust to change its name.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
LIMITED TERM TAX-EXEMPT BOND CAPITAL RESEARCH AND
FUND OF AMERICA MANAGEMENT COMPANY
By /s/ Paul G. Haaga, Jr. By /s/ James W. Ratzlaff
Paul G. Haaga, Jr. James W. Ratzlaff
Chairman Vice Chairman of the Board
By /s/ Julie F. Williams By /s/ Thomas E. Terry
Julie F. Williams Thomas E. Terry
Secretary Vice President and Secretary
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between LIMITED TERM TAX-EXEMPT
BOND FUND OF AMERICA, a Massachusetts business trust (the "Fund"), and AMERICAN
FUNDS DISTRIBUTORS, INC., a California corporation ("AFD").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end investment company which offers
shares of beneficial interest and it is a part of the business of the Fund, and
affirmatively in the interest of the Fund, to offer shares of the Fund and
shares of future series for sale, either continuously, or from time to time by
means of such arrangements as are determined by its Trustees to be appropriate;
and
WHEREAS, AFD is engaged in the business of promoting the distribution of
shares of investment companies through securities broker-dealers; and
WHEREAS, the Fund and AFD wish to enter into an agreement with each other
to promote the distribution of the shares of the Fund and of all series of the
Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) AFD shall be the exclusive principal underwriter for the sale of
the shares of the Fund and of each series of the Fund which may be established
in the future, except as otherwise provided pursuant to the following
subsection (b). The terms "shares of Fund" or "shares" as used herein shall
mean shares of beneficial interest of the Fund and each series which may be
established in the future and become covered by this Agreement in accordance
with Section 22.
(b) The Fund may, upon 60 days' written notice to AFD, from time to
time designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of AFD under this Agreement to sell shares in the areas
so designated shall terminate, but this Agreement shall remain otherwise in
full force and effect until terminated in accordance with the other provisions
hereof.
2. In the sale of shares of the Fund, AFD shall act as agent of the Fund
except in any transaction in which AFD sells such shares as a dealer to the
public, in which event AFD shall act as principal for its own account.
3. The Fund shall sell shares only through AFD, except that the Fund may,
to the extent permitted by the 1940 Act and the rules and regulations
promulgated thereunder or pursuant thereto, at any time:
EXHIBIT 6
(a) issue shares to any corporation, association, trust, partnership
or other organization, or its, or their, security holders, beneficiaries or
members, in connection with a merger, consolidation or reorganization to which
the Fund is a party, or in connection with the acquisition of all or
substantially all the property and assets of such corporation, association,
Fund, partnership or other organization;
(b) issue shares at net asset value to the holders of shares of
capital stock or beneficial interest of other investment companies served as
investment adviser by any affiliated company or companies of The Capital Group,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in
connection with the reinvestment of dividends paid and other distributions made
by the Fund;
4. AFD shall devote its best efforts to the sale of shares of the Fund
and shares of any other mutual funds served as investment adviser by affiliated
companies of The Capital Group, Inc., and insurance contracts funded by shares
of such mutual funds, for which AFD has been authorized to act as a principal
underwriter for the sale of shares. AFD shall maintain a sales organization
suited to the sale of shares of the Fund and shall use its best efforts to
effect such sales in countries as to which the Fund shall have expressly waived
in writing its right to designate another principal underwriter pursuant to
subsection 1(b) hereof, and shall effect and maintain appropriate qualification
to do so in all those jurisdictions in which it sells or offers shares for sale
and in which qualification is required.
5. Within the United States of America, all dealers to whom AFD shall
offer and sell shares must be duly licensed and qualified to sell shares of the
Fund. Shares sold to dealers shall be for resale by such dealers only at the
public offering price set forth in the effective prospectus which is part of
the Fund's Registration Statement in effect under the Securities Act of 1933,
as amended, for each series issued by the Fund at the time of such offer or
sale (herein the "Prospectus"). AFD shall not, without the consent of the
Fund, sell or offer for sale any shares of a series issued by the Fund other
than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of AFD to
insure that such dealers are appropriately qualified to transact business in
the shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price
which is equal to the net asset value per share as shall be determined by the
Trust in the manner and at the time or times set forth in and subject to the
provisions of the Prospectus of the Fund.
8. All orders for shares received by AFD shall, unless rejected by AFD or
the Fund, be accepted by AFD immediately upon receipt and confirmed at an
offering price determined in accordance with the provisions of the Prospectus
and the 1940 Act, and applicable rules in effect thereunder. AFD shall not
hold orders subject to acceptance nor otherwise delay their execution. The
provisions of this Section shall not be construed to restrict the right of the
Fund to withhold shares from sale under Section 16 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. AFD shall adopt and follow procedures as approved by the officers of
the Fund for the confirmation of sales to dealers, the collection of amounts
payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Commission or the National Association of Securities Dealers, Inc. ("NASD"), as
such requirements may from time to time exist.
11. The compensation for the services of AFD as a principal underwriter
under this Agreement shall be (i) that part of the sales charge which is
retained by AFD after allowance of discounts to dealers as set forth in the
effective prospectus which is part of the Fund's Registration Statement in
effect under the Securities Act of 1933, as amended, and (ii) amounts payable
to AFD as reimbursement of distribution expenses pursuant to the Fund's Plan of
Distribution under Rule 12b-1 under the 1940 Act, payable in arrears as of the
10th day following each month-end.
12. The Fund agrees to use its best efforts to maintain its registration
as a diversified open-end management investment company under the 1940 Act.
13. The Fund agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part becomes effective, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. AFD agrees and warrants that it will not in the sale of shares use
any Prospectus, advertising or sales literature not approved by the Fund or its
officers nor make any untrue statement of a material fact nor omit the stating
of a material fact necessary in order to make the statements made, in the light
of the circumstances under which they are made, not misleading. AFD agrees to
indemnify and hold the Fund harmless from any and all loss, expense, damage and
liability resulting from a breach of the agreements and warranties in this
Section contained, or from the use of any sales literature, information,
statistics or other aid or device employed in connection with the sale of
shares.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, AFD and any
other principal underwriter of the shares of the Fund as follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, AFD,
and any other principal underwriter(s) in accordance with the number of copies
each receives; and
(c) expenses incurred in connection with the foregoing, other than
to meet the requirements of the Securities Act of 1933, as amended, or other
applicable laws, shall be borne by AFD, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s) in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
15. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series it offers
for sale under the securities laws of such states as AFD and the Fund may
approve. Any such qualification for any series may be withheld, terminated or
withdrawn by the Fund at any time in its discretion. The expense of
qualification and maintenance of qualification shall be borne by the Fund, but
AFD shall furnish such information and other material relating to its affairs
and activities as may be required by the Fund or its counsel in connection with
such qualifications.
16. The Fund may withhold shares of any series from sale in any
jurisdiction temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Trustees or the President or
any Vice President of the Fund determines that such offer or sale is not in the
best interest of the Fund. The Fund will give prompt notice to AFD of any
withholding and will indemnify it against any loss suffered by AFD as a result
of such withholding by reason of nondelivery of shares of any series after a
good faith confirmation by AFD of sales thereof prior to receipt of notice of
such withholding.
17. (a) This Agreement may be terminated at any time, without payment of
any penalty, as to the Fund or any series on sixty (60) days' written notice by
AFD to the Fund.
(b) This Agreement may be terminated as to the Fund or any series by
either party upon five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series.
(c) This Agreement may be terminated as to any series upon five (5)
days' written notice to AFD provided either of the following events has
occurred:
(i) The NASD has expelled AFD or suspended its membership in
that organization;
(ii) the qualification, registration, license or right of AFD
to sell shares of any series in a particular state has been suspended or
cancelled by the State of California or any other state in which sales of the
shares of the Fund or such series during the most recent 12-month period
exceeded 10% of all shares of such series sold by AFD during such period.
(d) This Agreement may be terminated as to the Fund or any series at
any time on sixty (60) days' written notice to AFD without the payment of any
penalty, by vote of a majority of the members of the Board of Trustees of the
Fund who are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan of Distribution or this
Agreement or any other agreements related to the Plan of Distribution (the
"Independent Trustees") or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or such series.
18. This Agreement shall not be assignable by either party hereto and in
the event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act.
19. No provision of this Agreement shall protect or purport to protect
AFD against any liability to the Fund or holders of its shares for which AFD
would otherwise be liable by reason of willful misfeasance, bad faith, or gross
negligence.
20. This Agreement shall become effective on October 1, 1993. Unless
sooner terminated in accordance with the other provisions hereof, this
Agreement shall continue in effect until September 30, 1994, and shall continue
in effect from year to year thereafter but only so long as such continuance is
specifically approved at least annually by (i) the vote of a majority of the
Independent Trustees of the Fund cast in person at a meeting called for the
purpose of voting on such approval, and (ii) the vote of either a majority of
the entire Board of Trustees of the Fund or a majority (within the meaning of
the 1940 Act) of the outstanding voting securities of the Trust.
21. If the Fund shall at any time issue shares in more than one series,
this Agreement shall take effect with respect to such series of the Fund which
may be established in the future at such time as it has been approved as to
such series by vote of the Board of Trustees and the Independent Trustees in
accordance with Section 21. The Agreement as approved with respect to any
series shall specify the compensation payable to AFD pursuant to Section 11, as
well as any provisions which may differ from those herein with respect to such
series, subject to approval in writing by AFD.
This Agreement may be approved, amended, continued or renewed with respect
to a series as provided herein notwithstanding such approval, amendment,
continuance or renewal has not been effected with respect to any one or more
other series of the Fund.
This Agreement shall be construed under and shall be governed by the laws
of the State of California, and the parties hereto agree that proper venue of
any action with respect hereto shall be Los Angeles County, California.
22. The obligations of the Fund under this Agreement are not binding upon
any of the Trustees, officers, employees, agents or shareholders of the Fund,
or any other series, individually, but bind only the Fund's estate. AFD agrees
to look solely to the assets of the Fund for the satisfaction of any liability
of the Fund in respect of this Agreement and will not seek recourse against
such Trustees, officers, employees, agents or shareholders or any of them, or
any of their personal assets for such satisfaction.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of October 1, 1993.
LIMITED TERM TAX-EXEMPT BOND FUND
OF AMERICA
By /s/ Abner D. Goldstine
Abner D. Goldstine, President
By /s/ Julie F. Williams
Julie F. Williams, Secretary
AMERICAN FUNDS DISTRIBUTORS, INC.
By /s/ Mark Freeman
Mark Freeman, President
By /s/ Michael J. Downer
Michael J. Downer, Secretary
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. As such agent we offer to sell to you as a member of a Selling
Group, shares of such of the Companies as are qualified for sale in your state,
on the terms set forth below. We are acting as an underwriter within the
meaning of Article 111, Section 26 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
You are to offer and sell shares only at the regular public price currently
determined by the respective Companies in the manner described in their
offering Prospectuses. This Agreement on your part runs to us and to the
respective Companies and is for the benefit of and enforceable by each. The
offering Prospectuses and this Agreement set forth the terms applicable to
members of the Selling Group and all other representations or documents are
subordinate.
2. On sales of shares of Companies listed in Category I on the attached
Schedule A you will be paid dealer commissions as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AS PERCENTAGE OF AS PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than 3.75% 4.50%
$100,000
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than S1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
If you initiate and are responsible for sales of shares a) amounting to $1
million or more or b) made at net asset value to retirement plans of
organizations with collective retirement plan assets of $100 million or more,
you will be paid a dealer commission of 1.00% on sales to $2 million, plus
0.80% on amounts over $2 million up to $3 million, plus 0.50% on amounts over
$3 million up to $50 million, plus 0.25% on amounts over $50 million up to $100
million, plus 0. 15% on amounts over $100 million. For each account of a
shareholder of the respective Companies (and accounts related by the fight of
accumulation), only such net asset value sales made over a 12 month period
(commencing from the date of the first such sale) will be considered for
purposes of determinin the level of dealer commissions to be paid during that
period with respect to such account(s). No dealer commissions are paid on any
other sales of shares at net asset value, except that commissions may be paid
to dealers on their sales of fund shares to accounts managed by affiliates of
The Capital Group, Inc. as set forth in this Agreement. Sales of shares of
Washington Mutual Investors Fund below $1 million made in connection with
certain accounts established prior to September 1, 1969 are subject to reduced
dealer commissions and sales charges as described in the Washington Mutual
Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A). and purchases made under a statement of intention and
pursuant to the right of accumulation. both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same dealer commissions indicated in paragraph
2 above except as follows:
<TABLE>
<CAPTION>
SALES DEALER SALES
COMMISSION CHARGE
AT PERCENTAGE OF AT PERCENTAGE OF
THE OFFERING PRICE THE OFFERING PRICE
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission schedule
for sales of shares to retirement plans of organizations with assets of $100
million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no dealer commissions
will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to promote selling efforts and to compensate
you for providing certain services for your clients such as processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the Companies, provided you
meet certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to all members of the
Selling Group. The shares purchased will be issued by the respective Companies
only against receipt of the purchase price, in collected New York or Los
Angeles Clearging House funds subject to deduction of all commissions on such
sale (reallowance of any commissions to which you are entitled on purchases at
net asset value will be paid through our direct purchase commission system).
If payment for the shares purchased is not received within seven days after the
date of confirmation the sale may be canceled forthwith, by us or by the
respective Companies, without any responsibility or liability on our part or on
the part of the Companies, and we and/or the respective Companies may hold you
responsible for any loss, expense, liability or damage, including loss of
profit suffered by us and/or the respective Companies resulting from your delay
or failure to make payment as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to vou on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however. be permitted to sell any shares for the account of a shareholder of
the respective
Companies at the net asset value currently quoted by or for the respective
Companies' shares, and may charge a fair service fee for handling the
transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without our prior written
approval.
11. This Agreement is in all respects subject to statements regarding the sale
and repurchase or redemption of shares made in the offering Prospectuses of the
respective Companies, and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., which shall control and override any
provision to the contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having, either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale IN any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are a properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., and agree to notify us immediately if you cease to be so registered or
licensed or a member in good standing of that Association. (The provisions of
the preceding sentence do not apply to a broker or dealer located in a foreign
country and doing business outside the jurisdiction of the United States.)
15. Either of us may cancel this Agreement at any time by written notice to the
other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if
mailed or telegraphed to you at the address specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (I) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Accepted: Very truly yours,
- ----------------
Firm AMERICAN FUNDS DISTRIBUTORS, INC.
By------------- By /s/ Mark Freeman
Officer or Partner
--------------
Print Name of Officer or Partner
Address:-----
Date:--------
(06/96)
SCHEDULE A
SEPTEMBER 26, 1994
(SUPERSEDES SCHEDULE A DATED
OCTOBER 5, 1993)
CATEGORY 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
CATEGORY 2
American High-Income Trust
American High-Income Municipal Bond Fund
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Eempt Fund of Virginia
U.S. Government Securities Fund
CATEGORY 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors(sm)
American Funds Distributors
333 South Hope Street
Los Angeles, California 90071
Telephone 800/421-9900; ext. 11
HOLD HARMLESS AGREEMENT
WHEREAS, (the "Employer") is eligible to establish a 403(b) custodial account
for its employees pursuant to Section 403(b)(7)(A) of the Internal Revenue Code
("Code"); and
WHEREAS, Section 403(b)(7) of the Code provides that amounts paid by an
eligible employer to a custodial account which satisfies the requirements of
Section 401(f)(2) of the Code shall be treated as amounts contributed by the
Employer for an annuity contract (as described in Section 403(b) of the Code)
for the employee if the amounts are to be paid to provide a retirement benefit
for that employee and are to be invested in shares of regulated investment
companies to be held in that custodial account; and
WHEREAS, the Employer desires to make available to its employees custodial
accounts eligible to comply with Section 403(b)(7) of the Code; and
WHEREAS, the Employer is willing to permit its employees to select AMCAP Fund,
Inc., American Balanced Fund, Inc., American High-Income Trust, American Mutual
Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder, Inc.,
Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The
Cash Management Trust of America, EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Inter-mediate Bond Fund of America, The Investment Company of America,
The New Economy Fund, New Perspective Fund, Inc., SMALLCAP World Fund, Inc.,
U.S. Government Securities Fund, The U.S. Treasury Money Fund of America, and
Washington Mutual Investors Fund, Inc., each of which is a regulated investment
company advised by Capital Research and Management Company ("Investment
Companies"); and
WHEREAS, American Funds Distributors, Inc. is the principal underwriter for
each of the Investment Companies; and
WHEREAS, the Investment Companies are regulated investment companies within the
meaning of Sections 403(b)(7)(C) and 851(a) of the Code; and
WHEREAS, the Investment Companies are described as regulated investment
companies in their current Prospectuses declared effective under the Securities
Act of 1933; and
WHEREAS, the Investment Companies are authorized for sale in all 50 states; and
WHEREAS, Capital Guardian Trust Company, a bank, shall be the custodian, within
the meaning of Section 401(f)(2), of the custodial accounts; and
WHEREAS, the Investment Companies are offered to the public by independent
broker-dealers;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The Investment Companies are eligible investments for 403(b) custodial
accounts.
2. If any of such Investment Companies should no ton,,er be a regulated
investment company, or permitted to be offered for sale under the securities
laws of the United States or any state, American Funds Distributors, Inc. will
inform the Employer and such Investment Companies will immediately cease
accepting investments from the employees.
3. American Funds Distributors, Inc. shall comply with all pertinent written
directives regarding the solicitation of employees and the purchase of
investment company shares.
4. Capital Research and Management Company, the Investment Companies and
American Funds Distributors, Inc. are not and shall not be regarded as the
agent or employee of the Employer, of the Board of Education of the Employer,
or any Board member individually, or of any officer, agent or employee of any
of the foregoing, or of any legal successor of any of the foregoing, or of any
combination thereof.
Neither the Employer, the Board, any Board members individually, the officers,
agents and employees of any of the foregoing, the legal successors of any of
the foregoing, nor any combination thereof are or shall be regarded as the
agents or employees of Capital Research and Management Company, the Investment
Companies or American Funds Distributors, Inc.
5. Payments for the purchase of shares of the Investment Companies shall be
sent to Capital Guardian Trust Company, at the address indicated on the 403(b)
account application or to such other address as may be designated in writing to
the Employer.
6. Any notice to the Employer shall be in duplicate and sent to:
- -------------------------------------------------------------
- -------------------------------------------------------------
Notices to the Investment Companies or American Funds Distributors, Inc. shall
be sent to 135 South State College Boulevard, Brea, CA 92621, Attention: Dealer
Support Department.
7. American Funds Distributors, Inc. or any Investment Company reserves the
right upon 30 days' written notice to the Employer, to discontinue making such
shares available for purchase by the Employer or the employees of the Employer.
Such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
8. The Employer reserves the right upon 30 days' written notice to American
Funds Distributors, Inc. or any Investment Company, to terminate this agreement
or any other agreement in which this agreement might be or is incorporated, but
such termination shall in no manner affect any rights of the Employer incurred
prior to such termination.
9. No alteration or variation of the terms of this agreement shall be valid
unless made in writing and signed by the
parties hereto.
10. American Funds Distributors, Inc. hereby agrees to hold Employer harmless
for any loss sustained by Employer
by virtue of the breach of this agreement by American Funds Distributors, Inc.
11. This agreement supersedes and replaces any and all such agreements
heretofore executed by the parties.
AMERICAN FUNDS DISTRIBUTORS, INC.
Print Name of Employer
By /s/ Mark F. Freeman
By
Title
Date
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
BANK SELLING GROUP AGREEMENT
Gentlemen:
We have entered into principal underwriting agreements with each of the Funds
in The American Funds Group (hereafter called the "Companies") under which we
are appointed exclusive agent for the respective Companies for the sale of
their shares. You have indicated that you wish to act as agent for your
customers in connection with the purchase, sale and redemption of shares of
such Companies as are qualified for sale in your state. We agree to honor your
request, subject to the terms set forth below.
1. In placing orders for the purchase and sale of shares of the Companies,
you will be acting as agent for your customers. We shall execute transactions
for each of your customers only upon your authorization, at the regular public
price currently determined by the respective Companies in the manner described
in their offering Prospectuses. This Agreement on your part runs to us and to
the respective Companies and is for the benefit of and enforceable by each.
The offering Prospectuses and this Agreement set forth the terms applicable to
sales of shares of the Companies through you and all other representations or
documents are subordinate.
2. On each order for shares of Companies listed in Category 1 on the attached
Schedule A that is accepted by us, you will be entitled to receive the
applicable commission as set forth below:
<TABLE>
<CAPTION>
Purchases Commission as Sales Charge as
Percentage of Percentage of
Offering Price Offering Price
<S> <C> <C>
Less than $50,000 5.00% 5.75%
$50,000 but less than $100,000 3.75% 4.50%
$100,000 but less than $250,000 2.75% 3.50%
$250,000 but less than $500,000 2.00% 2.50%
$500,000 but less than $1,000,000 1.60% 2.00%
$1,000,000 or more see below none
</TABLE>
For purchases a) amounting to $1 million or more or b) made at net asset value
to retirement plans of organizations with collective retirement plan assets of
$100 million or more, you will be paid a commission of 1.00% on sales to $2
million, plus 0.80% on amounts over $2 million up to $3 million, plus 0.50% on
amounts over $3 million up to $50 million, plus 0.25% on amounts over $50
million up to $100 million, plus 0.15% on amounts over $100 million. For each
account of a shareholder of the respective Companies (and accounts related by
the right of accumulation), only such net asset value sales made over a 12
month period (commencing from the date of the first such sale) will be
considered for purposes of determining the level of commissions to be paid
during that period with respect to such account(s). No commissions are paid on
any other sales of shares at net asset value, except that commissions may be
paid on sales of fund shares to accounts managed by affiliates of The Capital
Group, Inc. as set forth in this agreement. Sales of shares of Washington
Mutual Investors Fund below $1 million made in connection with certain accounts
established before September 1, 1969 are subject to reduced commissions and
sales charges as described in the Washington Mutual Investors Fund Prospectus.
The schedule of sales charges above applies to single purchases, concurrent
purchases of two or more of the Companies (except those listed in Category 3 on
the attached Schedule A), and purchases made under a statement of intention and
pursuant to the right of accumulation, both of which are described in the
Prospectuses.
3. On sales of shares of Companies listed in Category 2 on the attached
Schedule A you will be paid the same commissions indicated in paragraph 2 above
except as follows:
<TABLE>
<CAPTION>
Purchases Commission as Sale
Percentage of Charge
Offering Price as Percentage of
Offering Price
<S> <C> <C>
Less than $25,000 4.00% 4.75%
$25,000 but less than $50,000 3.75% 4.50%
$50,000 but less than $100,000 3.25% 4.00%
</TABLE>
With respect to sales of shares of any tax-exempt fund, the commission
schedule for sales of shares to retirement plans of organizations with assets
of $100 million or more is inapplicable.
4. On sales of shares of Companies listed in Category 3 on the attached
Schedule A no commission will be paid.
5. We are also authorized to pay you continuing service fees with respect to
the shares of all the Companies to compensate you for providing certain
services for your clients such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies, provided you meet
certain service-related criteria and have executed a "Supplemental Selling
Group Agreement" available from us upon request.
6. Any order by you for the purchase of shares of the respective Companies
through us shall be accepted at the time when it is received by us (or any
clearinghouse agency that we may designate from time to time), and at the
offering and sale price next determined, unless rejected by us or the
respective Companies. In addition to the right to reject any order, the
Companies have reserved the right to withhold shares from sale temporarily or
permanently. We will not accept any order from you which is placed on a
conditional basis or subject to any delay or contingency prior to execution.
The procedure relating to the handling of orders shall be subject to
instructions which we shall forward from time to time to you. The shares
purchased will be issued by the respective Companies only against receipt of
the purchase price, in collected New York or Los Angeles Clearing House funds
subject to deduction of all commissions on such sale (reallowance of any
commissions to which you are entitled on purchases at net asset value will be
paid through our direct purchase commission system). If payment for the shares
purchased is not received within seven days after the date of confirmation the
sale may be cancelled forthwith, by us or by the respective Companies, without
any responsibility or liability on our part or on the part of the Companies,
and we and/or the respective Companies may hold you responsible for any loss,
expense, liability or damage, including loss of profit suffered by us and/or
the respective Companies resulting from your delay or failure to make payment
as aforesaid.
7. You are obliged to date and time stamp all orders received by you and
promptly to transmit all orders to us in time to provide for processing at the
price next determined after receipt by you, in accordance with the
Prospectuses. You are not to withhold placing with us orders received from any
customers for the purchase of shares so as to profit yourself as a result of
such withholding. You shall not purchase shares through us except for the
purpose of covering purchase orders already received by you, or for your bona
fide investment.
8. If any share is repurchased by any of the respective Companies or is
tendered thereto for redemption within seven business days after confirmation
by us of the original purchase order from you for such security you shall
forthwith refund to us the full commissions paid to you on the original sale.
9. You shall not, if acting as principal, purchase any share of any of the
respective Companies from a record holder at a price lower than the net asset
value next determined by or for the respective Companies' shares. You shall,
however, be permitted to sell any shares for the account of a shareholder of
the respective Companies at the net asset value currently quoted by or for the
respective Companies' shares, and may charge a fair service fee for handling
the transaction provided you disclose the fee to the record owner.
10. We shall furnish you without charge reasonable quantities of offering
Prospectuses, with any supplements currently in effect, and copies of current
shareholder reports of the respective Companies, and sales materials issued by
us from time to time. In the purchase of shares through us, you are entitled
to rely only on the information contained in the offering Prospectus(es). You
may not publish any advertisement or distribute sales literature or other
written material to the public which makes reference to us or any of the
Companies (except material which we furnished to you) without prior written
approval.
11. This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of shares made in offering Prospectuses of
the respective Companies, which shall control and override any provision to the
contrary in this Agreement.
12. You shall make available shares of the respective Companies only through
us. In no transaction (whether of purchase or sale) shall you have any
authority to act as agent for, partner of, or participant in a joint venture
with us or with the respective Companies or any other entity having either a
Selling Group Agreement or other Agreement with us.
13. We act solely as agent for the Companies, and are not responsible for
qualifying the Companies or their shares for sale in any jurisdiction. Upon
written request we will provide you with a list of the jurisdictions in which
the respective Companies or their shares are qualified for sale. We also are
not responsible for the issuance, form, validity, enforceability or value of
shares of the Companies.
14. You represent that you are (a) properly registered or licensed broker or
dealer under applicable federal and state securities laws and regulations and a
member in good standing of the National Association of Securities Dealers,
Inc., or (b) a "bank" as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934 (or other financial institution) and not otherwise required to
register as a broker or dealer under such Act or any state laws. You agree to
notify us immediately in writing if this representation ceases to be true. You
also agree that, if you are a bank or other financial institution as set forth
above, you will maintain adequate records with respect to your customers and
their transactions, and that such transactions will be without recourse against
you by your customers. We recognize that, in addition to applicable provisions
of state and federal securities laws, you may be subject to the provisions of
the Glass-Steagall Act and other laws governing, among other things, the
conduct of activities by federal and state chartered and supervised financial
institutions and their affiliated organizations. Because you will be the only
entity having a direct relationship with the customer in connection with
securities purchases hereunder, you will be responsible in that relationship
for insuring compliance with all laws and regulations, including those of all
applicable federal and state regulatory authorities and bodies having
jurisdiction over you or your customers to the extent applicable to securities
purchases hereunder.
15. Either of us may cancel this Agreement at any time by written notice to
the other.
16. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed in accordance with
the laws of the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE A
October 5, 1993
(supersedes Schedule A dated
February 1, 1991)
Category 1
AMCAP Fund
American Balanced Fund
American Mutual Fund
Capital Income Builder
Capital World Growth and Income Fund
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
SMALLCAP World Fund
Washington Mutual Investors Fund
Category 2
American High-Income Trust
Bond Fund of America
Capital World Bond Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
Tax-Exempt Bond Fund of America
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category 3
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
[American Funds Distributors(SM) logo]
American Funds Distributors
- ------------------------------------------------------------------------------
- --------------------------------------
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
SUPPLEMENTAL SELLING GROUP AGREEMENT
Gentlemen:
You have entered into a Selling Group Agreement with us with respect to each
of the Funds in The American Funds Group (hereafter called the Companies). We
are authorized to pay you certain service fees each quarter in connection with
your sales of shares of the Companies, subject to the terms set forth below
which will be revised by us from time-to-time. your participation in this
service fee program will be evaluated at specific time intervals. Initial
qualification does not assure continued participation and this Agreement may be
amended or terminated by us at any time as indicated below. The offering
Prospectuses and this Agreement set forth the terms applicable to service fees
and all other representations and documents are subordinate.
1. You have met the minimum aggregate assets requirement set forth on the
attached Schedule 1.
2. You agree to cooperate as requested with programs that we provide to
enhance shareholder service. You also agree to assume an active role in
providing shareholder services such as processing purchase and redemption
transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the Companies. Redemption levels of
shareholder accounts assigned to you will be considered in evaluating your
continued participation in this service fee program.
3. You agree to support our marketing efforts by granting reasonable requests
for visits to your offices by our wholesalers and, to the extent applicable, by
including all Companies covered by this Agreement on your "approved" list.
4. You agree to assign an individual broker to each shareholder account on
your books and to reassign the account should that broker leave your firm. You
agree to instruct each such broker to regularly contact shareholders having
accounts so assigned.
5. You agree to pass through to your brokers a share of the service fees paid
to you pursuant to this Agreement.
6. You acknowledge that (i) all service fee payments are subject to the
limitations contained in each Company's Plan of Distribution and may be varied
or discontinued at any time, (ii) in order to receive a service fee for a
particular quarter, the fee must amount to at least $100, and (iii) with
respect to shares of the Companies listed in Categories A and B, no service
fees will be paid on shares sold at net asset value (except on shares
attributable to sales (i) amounting to $1 million or more, (ii) made to
retirement plans of organizations with collective retirement plan assets of
$100 million or more or (iii) made to accounts managed by affiliates of The
Capital Group, Inc. which you initiated and for which you were responsible).
7. On shares of Companies listed in Category A on the attached Schedule 2
you will be paid a service fee each quarter based on the aggregate net asset
value of each account assigned to you (including accounts entitled to the right
of accumulation) as of the last day of the quarter for which payment is being
made at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares Acquired Through
June 30, 1988 0.15%
All Shares Acquired After
June 30, 1988 0.25% (accrual
of fee commencing after
after such shares are
held 12 months)
8. On shares of Companies listed in Category B on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.25% (accrual of fee
commencing after such
shares are held 12
months
9. On shares of Companies listed in Category C on the attached Schedule 2 you
will be paid a service fee each quarter based on the aggregate net asset value
of each account assigned to you (including accounts entitled to the right of
accumulation) as of the last day of the quarter for which payment is being made
at the following annual rates:
ANNUAL SERVICE FEE RATE
All Shares 0.15% (accrual of fee
commencing after such
shares are held 12
months
10. Either of us may cancel this Agreement at any time by written notice to
the other.
11. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
Execute this Agreement in duplicate and return one of the duplicate originals
to us for our file. This Agreement (i) may be amended by notification from us
and orders received following such notification shall be deemed to be an
acceptance of any such amendment and (ii) shall be construed with the laws of
the State of California.
Very truly yours,
AMERICAN FUNDS DISTRIBUTORS, INC.
By: /s/ Mark Freeman
Accepted:
________________________________________
Firm
By _____________________________________
Officer or Partner
________________________________________
Print Name of Officer or Partner
Address: ________________________________
Date: __________________________________
SCHEDULE 1
SEPTEMBER 1, 1988
Your eligibility is conditioned on verification by us of accounts of shares of
the Companies assigned to you having an aggregate net asset value amounting to
at least $750,000.
---------------------
SCHEDULE 2
September 26, 1994
(supersedes Schedule 2 dated
October 5, 1993)
Category A
AMCAP Fund
American Balanced Fund
American Mutual Fund
Bond Fund of America
EuroPacific Growth Fund
Fundamental Investors
Growth Fund of America
Income Fund of America
Investment Company of America
New Economy Fund
New Perspective Fund
Tax-Exempt Bond Fund of America
Washington Mutual Investors Fund
Category B
American High-Income Municipal Bond Fund
American High-Income Trust
Capital Income Builder
Capital World Bond Fund
Capital World Growth and Income Fund
Intermediate Bond Fund of America
Limited Term Tax-Exempt Bond Fund of America
SMALLCAP World Fund
Tax-Exempt Fund of California
Tax-Exempt Fund of Maryland
Tax-Exempt Fund of Virginia
U.S. Government Securities Fund
Category C
Cash Management Trust of America
Tax-Exempt Money Fund of America
U.S. Treasury Money Fund of America
American Funds Distributors (SM)
AMERICAN FUNDS DISTRIBUTORS
333 South Hope Street - Los Angeles, California 90071
Telephone 800/421-9900, ext. 11
ADDENDUM TO SELLING GROUP AGREEMENT
FOR THE STATE OF___________________
This Addendum to the SELLING GROUP AGREEMENT ("Agreement") among AMERICAN
FUNDS DISTRIBUTORS, INC. ("AFD"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
("LNL"), and the broker-dealer firm identified below ("Dealer") is effective
upon execution by all parties.
AFD, LNL and Dealer hereby agree that LNL shall pay all compensation due any
agents of the Dealer for business transacted on behalf of LNL directly to, and
in the name of a compensation manager appointed by Dealer, such compensation
manager being a duly licensed insurance agent in the state referenced above.
Dealer shall appoint its compensation manager in writing, signed by an
officer or partner of Dealer who has the authority to bind Dealer. LNL shall
direct all pavments for business transacted by agents of Dealer to the named
compensation manager until such time as Dealer notifies LNL, in writing, that
another compensation manager has been appointed.
It is agreed that payment of compensation payable by LNL to the agents of
Dealer shall be the responsibility of the compensation manager and shall not be
the responsibility of LNL. Furthermore, Dealer represents and warrants that
all monies received from LNL shall be distributed by the compensation manager
only to duly licensed agents appointed with LNL in accordance with the
Agreement and all applicable laws of the above referenced state.
It is further agreed that Dealer shall indemnify and hold harmless LNL, AFD,
and any of their affiliates, their respective officers, directors, employees or
agents ("Indemnified Party") from any and all claims, and demands or causes of
action that arise out of the compensation manager's negligence, or failure to
properly perform the responsibilities set forth in this Addendum or the
Agreement. Dealer, at its own cost, shall defend any legal proceeding that may
be brought against an Indemnified Party on any such claim or demand in respect
to which such Indemnified Party is indemnified and held harmless hereunder, and
shall satisfy any judgment that may be rendered against such Indemnified Party
with respect to any such claim or demand. Dealer shall notify LNL and AFD
promptly upon receipt of any such claim or demand which it receives.
Dealer agrees that this Addendum constitutes written consent by Dealer to
allow LNL to pay the compensation to the compensation manager as required by
Rule 3060 of the Rules of the NASD.
Any party to this Addendum may cancel this Addendum at any time upon written
notice to all other parties, effective upon receipt.
Three originals of the Addendum should be executed. Two of the originals
should be returned to AFD.
In WITNESS WHEREOF, the undersigned have executed this Addendum to the
Selling Group Agreement on the date written below.
AMERICAN FUNDS DISTRIBUTORS, INC. THE LINCOLN NATIONAL LIFE
133 South Hope Street INSURANCE COMPANY
Los Angeles, CA 90071 1300 South Clinton Street
Fort Wayne, IN 46801
By_______________________________ By________________________
_________________________________
(Name of Broker-Dealer Firm)
By_______________________________
Print Name_______________________
Title____________________________
Date_____________________________
Please state the name and the tax identification number of the compensation
manager who is licensed in THE above referenced state with The Lincoln National
Life Insurance Company.
Compensation Manager ____________________________________
Print Name
____________________________________
Signature
Social Security No. ____________________________________
9/96
FORM OF GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective _______________ and is between THE CHASE
MANHATTAN BANK (the "Bank") and [fund name] (the "Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated or
uncertificated as may be received by the Bank or its Subcustodian (as defined
in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to withdrawal
by draft or check.
The Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. The Bank may deliver securities of the
same class in place of those deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and the Bank can comply with such
Instructions, the Bank is authorized to maintain cash balances on deposit for
the Customer with itself or one of its affiliates at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as the Customer may direct, if acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3
(or their securities depositories), such arrangement must be authorized by a
written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed in
Schedule A of this Agreement with which the Bank has entered into subcustodial
agreements ("Subcustodians"). The Customer authorizes the Bank to hold Assets
in the Accounts in accounts which the Bank has established with one or more of
its branches or Subcustodians. The Bank and Subcustodians are authorized to
hold any of the Securities in their account with any securities depository in
which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule A. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets will be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by
the Customer with any particular Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed a
loan payable on demand, bearing interest at the rate customarily charged by the
Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit Account,
with interest, dividends, redemptions or any other amount due, the Customer
will promptly return any such amount upon oral or written notification: (i)
that such amount has not been received in the ordinary course of business or
(ii) that such amount was incorrectly credited. If the Customer does not
promptly return any amount upon such notification, the Bank shall be entitled,
upon oral or written notification to the Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. The Bank or
its Subcustodian shall have no duty or obligation to institute legal
proceedings, file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such amount, but may
act for the Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Securities with respect to any sale,
exchange or purchase of Securities. Otherwise, such transactions will be
credited or debited to the Accounts on the date cash or Securities are actually
received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any transfers
of Assets to or from the Accounts. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets. Unless
the Customer sends the Bank a written exception or objection to any Bank
statement within sixty (60) days of receipt, the Customer shall be deemed to
have approved such statement. In such event, or where the Customer has
otherwise approved any such statement, the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all matters set
forth in such statement or reasonably implied therefrom as though it had been
settled by the decree of a court of competent jurisdiction in an action where
the Customer and all persons having or claiming an interest in the Customer or
the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Customer.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities (other
than a proxy), such as subscription rights, bonus issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer notice of such Corporate Actions to the extent that the Bank's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar Corporate Action is received
which bears an expiration date, the Bank will endeavor to obtain Instructions
from the Customer or its Authorized Person, but if Instructions are not
received in time for the Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, the Bank is
authorized to sell such rights entitlement or fractional interest and to credit
the Deposit Account with the proceeds or take any other action it deems, in
good faith, to be appropriate in which case it shall be held harmless for any
such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
Securities in the Custody Account registered in the name of such nominee but
without indicating the manner in which such proxies are to be voted; and where
bearer Securities are involved, proxies will be delivered in accordance with
Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be registered
in a nominee name of the Bank, Subcustodian or securities depository, as the
case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees or
agents including investment managers as have been designated by written notice
from the Customer or its designated agent to act on behalf of the Customer
under this Agreement. Such persons shall continue to be Authorized Persons
until such time as the Bank receives Instructions from the Customer or its
designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Customer will hold
the Bank harmless for the failure of an Authorized Person to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time. The Bank may electronically record any
Instructions given by telephone, and any other telephone discussions with
respect to the Custody Account. The Customer shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure of
a Subcustodian to exercise reasonable care with respect to the safekeeping of
such Assets to the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of any loss to the
Customer by reason of the failure of the Bank or its Subcustodian to utilize
reasonable care, the Bank shall be liable to the Customer only to the extent of
the Customer's direct damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of such
loss and without reference to any special conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission, default or
for the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to the
Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if such act or
omission was in good faith, without negligence. In performing its obligations
under this Agreement, the Bank may rely on the genuineness of any document
which it believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than as provided in
Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement;
(v) review or reconcile trade confirmations received from brokers.
The Customer or its Authorized Persons (as defined in Section 10) issuing
Instructions shall bear any responsibility to review such confirmations against
Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any
of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this Agreement
such amount as may be agreed upon in writing, together with the Bank's
reasonable out-of-pocket or incidental expenses, including, but not limited to,
legal fees. The Bank shall have a lien on and is authorized to charge any
Accounts of the Customer for any amount owing to the Bank under any provision
of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts but the
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where the Bank, its subsidiaries,
affiliates or Subcustodians enter into a foreign exchange contract related to
Accounts, the terms and conditions of the then current foreign exchange
contract of the Bank, its subsidiary, affiliate or Subcustodian and, to the
extent not inconsistent, this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their examination of
books and records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an undertaking to
permit the Customer's independent public accountants reasonable access to the
records of any Subcustodian which has physical possession of any Assets as may
be required in connection with the examination of the Customer's books and
records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, and the following Rider(s) [Check applicable rider(s)]:
ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise, or the
exercise of any other power or right. No waiver by a party
of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver is
to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Capital Research and Management Company
135 South State College Blvd.
Brea, CA 92821
or telex:
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver
the Assets to the persons so specified, after deducting any amounts which the
Bank determines in good faith to be owed to it under Section 13. If within
sixty (60) days following receipt of a notice of termination by the Bank, the
Bank does not receive Instructions from the Customer specifying the names of
the persons to whom the Bank shall deliver the Assets, the Bank, at its
election, may deliver the Assets to a bank or trust company doing business in
the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may continue to hold
the Assets until Instructions are provided to the Bank.
CUSTOMER
By:____________________________________________
Title:
THE CHASE MANHATTAN BANK
By:____________________________________________
Title:
SSA/AOA02F60.WP5-052693/020497
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the foregoing
instrument; that he/she knows the seal of said entity, that the seal affixed to
said instrument is such seal, that it was so affixed by order of said entity,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 ,
before me personally came , to me known, who being by me
duly sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank and
[fund name]
effective _________________
Customer represents that the Assets being placed in the Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except to the extent that the Bank has specifically agreed to comply with
a condition of a rule, regulation, interpretation promulgated by or under the
authority of the SEC or the Exemptive Order applicable to accounts of this
nature issued to the Bank (Investment Company Act of 1940, Release No. 12053,
November 20, 1981), as amended, or unless the Bank has otherwise specifically
agreed, the Customer shall be solely responsible to assure that the maintenance
of Assets under this Agreement complies with such rules, regulations,
interpretations or exemptive order promulgated by or under the authority of the
Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository, which are further
defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country other
than the United States that is regulated as such by that country's government
or an agency thereof and that has shareholders' equity in excess of $200
million in U.S. currency (or a foreign currency equivalent thereof), (ii) a
majority owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of
$100 million in U.S. currency (or a foreign currency equivalent thereof)(iii) a
banking institution or trust company incorporated or organized under the laws
of a country other than the United States or a majority owned direct or
indirect subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be specified in
Instructions and approved by the Bank; or (iv) any other entity that shall have
been so qualified by exemptive order, rule or other appropriate action of the
SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States, which operates (i) the central system for
handling securities or equivalent book-entries in that country, or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
The Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A to this Agreement and the terms of the
subcustody agreements between the Bank and each Subcustodian, and further
represents that its Board has determined that the use of each Subcustodian and
the terms of each subcustody agreement are consistent with the best interests
of the Fund(s) and its (their) shareholders. The Bank will supply the Customer
with any amendment to Schedule A for approval. The Customer has supplied or
will supply the Bank with certified copies of its Board of Directors
resolution(s) with respect to the foregoing prior to placing Assets with any
Subcustodian so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to
be made and Customer shall be solely responsible to assure that Instructions
are in accord with any limitations or restrictions applicable to the Customer
by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's transfer agent
of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due
other than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign custodian
and each eligible foreign securities depository holding the Customer's
Securities pursuant to this Agreement afford protection for such Securities at
least equal to that afforded by the Bank's established procedures with respect
to similar securities held by the Bank and its securities depositories in New
York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall endeavor to obtain and furnish the Customer with such similar
reports as it may reasonably request with respect to each Subcustodian and
securities depository holding the Customer's assets.
Global Custody Agreement
With: [fund name]
Dated: __________________
Special Terms and Conditions
1. Add the following new paragraph to the end of Section 1:
"The Bank shall be accountable under the terms of this agreement to the
Customer for all Assets held in the accounts and shall take prompt and
appropriate action to remedy any discrepancies with respect to such Assets."
2. Add to the end of Section 6 (b) (i):
"; provided however that prior to taking action, the Bank will use every
reasonable effort to give Customer written notice of any such reversal which
may include back valuation."
3. Amend the second sentence of the second paragraph of Section 7 to read:
"Unless the Customer sends the Bank a written exception or objection to
certain bank statements as shall be mutually agreed upon in writing within 180
days of receipt,..."
4. Amend the first paragraph of Section 8 as follows:
"Whenever the Bank,...("Corporate Actions"), the Bank will give the
Customer prompt notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
5. In the first sentence of paragraph 13, after "legal fees", insert
"incurred on behalf of the Customer".
6. Add the following new sentence to the end of Section 14 (c):
"The Bank shall not unreasonably refuse to furnish to the Customer such
reports (or portions thereof) of the Bank's external auditors as they relate
directly to the Bank's system of internal accounting controls applicable to the
Bank's duties under this Agreement. The Bank shall endeavor to obtain and
furnish the Customer with such similar reports as the Customer may reasonably
request with respect to each Subcustodian holding Assets of the Customer.
Expenses of the Bank and any Subcustodians under this provision shall be paid
by the Customer."
7. Amend the last paragraph of Section 3 of the Mutual Fund Rider to read:
"The Customer represents that its Board of Directors will approve each of
the Subcustodians listed in Schedule A to this Agreement before Assets are
held by such Subcustodian and the form of the subcustody agreements between
the Bank and each Subcustodian, and further represents that its Board will
determine that the use of such Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the customer's fund(s) and
its (their) shareholders prior to placing Assets with any such Subcustodian.
The Bank will supply the Customer with any amendment to Schedule A for
approval within such reasonable period of time as agreed to by the Bank and the
Customer. Upon request, the Customer has supplied or will supply the Bank with
certified copies of its Board of Directors resolutions with respect to the
foregoing prior to placing Assets with any Subcustodian so approved."
8. Add as a new section to the end of Section 3 of the Mutual Fund Rider:
"The Bank shall furnish annually to the Customer information concerning
Subcustodians employed by the Bank. Such information shall be similar in kind
and scope to that furnished to the Customer in connection with the initial
approval of the subcustodian by the Customer's Board of Directors. In
addition, the Bank will promptly inform the Customer in the event that the
Bank learns of a material adverse change in the financial condition of a
Subcustodian or is notified by a foreign banking institution employed as a
Subcustodian that there appears to be a substantial likelihood that its
shareholders's equity as required by Rule 17f-5 or any order thereunder. With
regard to the foregoing paragraphs, the Bank shall not be deemed to have
assumed any fiduciary duties imposed upon Customer by law.
The Bank will supply periodically, as mutually agreed upon, a statement in
respect of any Securities and cash, including indentification of the foreign
entities having custody of the Securities and cash and descriptions thereof."
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 6 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated August 29, 1997, relating to the financial
statements and selected per share data and ratios appearing in the July 31,
1997 Annual Report of Limited Term Tax-Exempt Bond 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
September 24, 1997
INTERMEDIATE TAX-EXEMPT BOND FUND OF AMERICA
333 South Hope Street, Los Angeles, California 90071 Telephone (213)
486-9200
September 23, 1993
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
Re: Investment Letter
Gentlemen:
Intermediate Tax-Exempt Bond Fund of America, a Massachusetts business
trust (the "Fund"), hereby offers to sell to you 6,998 shares of beneficial
interest of Intermediate Tax-Exempt Bond Fund of America at $0.01 par value
(the "Shares") at a price of $14.29 per share upon the following terms and
conditions:
You agree to pay to the Fund the aggregate purchase price of $100,000
against delivery of a statement confirming the registration of the 6,998 Shares
in your name.
You represent to the Fund that you are purchasing the Shares for your own
account for investment purposes and not with the present intention of redeeming
or reselling the Shares and that the purchase price of such Shares is in
payment for an equity interest and does not represent a loan or temporary
advance by you.
You understand that you are obligated to pay certain expenses incurred in
connection with the organization of the Fund, as shall be reflected in an
Investment Advisory and Service Agreement between you and the Fund. You agree
that you will not redeem any of the Shares while any portion of such
organizational expenses has not been paid by you.
Very truly yours,
INTERMEDIATE TAX-EXEMPT BOND FUND
OF AMERICA
By
Julie F. Williams, Secretary
Confirmed and agreed to September 23, 1993
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
Paul G. Haaga, Jr., Senior Vice President
EXHIBIT 13
PLAN OF DISTRIBUTION
OF
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
WHEREAS, Limited Term Tax-Exempt Bond Fund of America (the "Fund") is a
Massachusetts business trust which offers shares of beneficial interest.
WHEREAS, American Funds Distributors, Inc. ("AFD") will serve as
distributor of the shares of common stock of the Fund, and the Fund and AFD are
parties to a principal underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to
authorize the Fund to bear expenses of distribution of its shares, including
reimbursement of AFD for certain of its expenses incurred in connection with
the Fund;
WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders:
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. The Fund may expend pursuant to this Plan amounts not to exceed .30 of
1% of the average net assets of the Fund per annum.
2. Subject to the limit in paragraph 1, the Fund shall pay, or reimburse
AFD for, amounts to finance any activity which is primarily intended to result
in the sale of shares of the Fund provided that the Board of Trustees of the
Fund shall have approved categories of expenses for which payment or
reimbursement shall be made pursuant to this paragraph 2.
3. This Plan shall not take effect until it has been approved by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940 (the "1940 Act")) and by the Board of Trustees
as provided in paragraph 4.
4. This Plan shall not take effect until it has been approved, together
with any related agreement, by votes of the majority of both (i) the Board of
Trustees of the Fund and (ii) those Trustees of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
5. At least quarterly, the Board of Trustees shall be provided by any
person authorized to direct the disposition of monies paid or payable by the
Fund pursuant to this Plan or any related agreement, and the Board shall review
a written report of the amounts expended pursuant to the Plan and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until September 30, 1994. It may thereafter be renewed from year to
year in the manner provided for in paragraph 4 hereof.
7. Any agreement related to this Plan shall be in writing, and shall
provide:
A. that such agreement may be terminated as to the Fund at any time,
without payment of any penalty, by vote of a majority of the Independent
Directors or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, on not more than sixty (60) days' written
notice to any other party to the agreement; and
B. that such agreement shall terminate automatically in the event of
its assignment.
8. This Plan may not be amended to increase materially the maximum amount
of fee or other distribution expenses provided for in paragraph 1 hereof with
respect to the Fund unless such amendment is approved by the voting securities
of the Fund in the manner provided in paragraph 3 hereof, and no material
amendment to this Plan shall be made unless approved in the manner provided for
in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of Trustees
of the Fund who are not "interested persons" of the Fund (as defined in the
1940 Act) shall be committed to the discretion of the Trustees who are not
interested persons.
10. If the Fund shall at any time issue shares in more than one series,
this Plan may be adopted, amended, continued or renewed with respect to a
series as provided herein notwithstanding such adoption, amendment, continuance
or renewal has not been effected with respect to any one or more other series
of the Fund.
11. The Fund shall preserve copies of this Plan and any related agreement
and all reports made pursuant to paragraph 5 hereof for a period of not less
than six (6) years from the date of this Plan, or such agreement or reports, as
the case may be, the first two (2) years of which such records shall be stored
in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of October 1, 1993.
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
By /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr., Chairman
By /s/ Julie F. Williams
Julie F. Williams, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-1-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 194,169
<INVESTMENTS-AT-VALUE> 200,977
<RECEIVABLES> 3,893
<ASSETS-OTHER> 102
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 204,972
<PAYABLE-FOR-SECURITIES> 1,090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 759
<TOTAL-LIABILITIES> 1,849
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 200,749
<SHARES-COMMON-STOCK> 13,736,978
<SHARES-COMMON-PRIOR> 13,689,398
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,404)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,808
<NET-ASSETS> 203,123
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,105
<OTHER-INCOME> 0
<EXPENSES-NET> 1,531
<NET-INVESTMENT-INCOME> 9,574
<REALIZED-GAINS-CURRENT> (761)
<APPREC-INCREASE-CURRENT> 6,412
<NET-CHANGE-FROM-OPS> 15,225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,603
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,106,012
<NUMBER-OF-SHARES-REDEEMED> 6,523,758
<SHARES-REINVESTED> 465,326
<NET-CHANGE-IN-ASSETS> 6,489
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,643)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 815
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,700
<AVERAGE-NET-ASSETS> 203,796
<PER-SHARE-NAV-BEGIN> 14.36
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> .43
<PER-SHARE-DIVIDEND> (.68)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.79
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
