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. 9
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 11
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, Secretary
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
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)
Approximate date of proposed public offering:
It is proposed that this filing will become effective on December 1,
1999, pursuant to paragraph (a) of rule 485.
<PAGE>
Limited Term Tax-Exempt Bond Fund of America/SM/
Prospectus
DECEMBER 1, 1999
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
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LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
<S> <C> <C>
TICKER SYMBOL: LTEBX NEWSPAPER ABBREV: LtdTEBd FUND NO: 43
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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<S> <C>
Risk/Return Summary 2
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Fees and Expenses of the Fund 5
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Investment Objective, Strategies and Risks 7
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Year 2000 10
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Management and Organization 10
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Shareholder Information 12
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Purchase and Exchange of Shares 13
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Distribution Arrangements 18
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Financial Highlights 20
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Appendix 21
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</TABLE>
1
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
43-010-1299/B
<PAGE>
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RISK/RETURN SUMMARY
The fund seeks to provide you with high current income that is exempt from
regular federal income tax, consistent with preservation of capital by
primarily investing in municipal bonds with average effective maturities
between 3 and 10 years and with quality ratings of A or better. The fund may
also invest significantly in bonds rated Baa or BBB.
The fund is designed for investors seeking income exempt from federal income
tax and capital preservation over the long term. An investment in the fund is
subject to risks, including the possibility that the fund may decline in value
in response to economic, political or social events in the U.S. or abroad. The
values of debt securities may be affected by changing interest rates and credit
risk assessments.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.
Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)
[bar chart]
1994 -2.90%
1995 12.35%
1996 4.46^
1997 7.30%
1998 5.50%
[end bar chart]
The fund's year-to-date return for the nine months ended September 30, 1999
was -0.42%.
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The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 4.38% (quarter ended March 31, 1995)
LOWEST -3.44% (quarter ended March 31, 1994)
</TABLE>
3
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
THE FUND WITH LEHMAN BROTHERS LIPPER INTERMEDIATE
AVERAGE ANNUAL MAXIMUM SALES 7-YEAR MUNICIPAL MUNICIPAL DEBT
TOTAL RETURN CHARGE DEDUCTED/1/ INDEX/2/ AVERAGE/3/
<S> <C> <C> <C>
One Year 0.50% 6.22% 5.35%
---------------------------------------------------------------------------
Five Years 4.21% 5.78% 5.18%
---------------------------------------------------------------------------
Lifetime/4/ 4.70% 5.76% 5.20%
---------------------------------------------------------------------------
</TABLE>
30-day yield/1/: 3.40%
(For current yield information, please call American FundsLine/R/ at
1-800-325-3590)
1 These fund results were calculated according to a formula which requires that
the maximum sales charge of 4.75% be deducted and include the reinvestment of
dividend and capital gain distributions. Results would be higher if they were
calculated at net asset value.
2 The 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.
3 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 results of the underlying funds in the index include
the reinvestment of dividend and capital gain distributions, but do not
reflect sales charges and commissions.
4 The fund began investment operations on October 6, 1993.
4
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment)
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<S> <C>
Maximum sales charge imposed on purchases 4.75%/1/
(as a percentage of offering price)
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Maximum sales charge imposed on reinvested dividends 0%
----------------------------------------------------------------
Maximum deferred sales charge 0%/2/
----------------------------------------------------------------
Redemption or exchange fees 0%
</TABLE>
1 Sales charges are reduced or eliminated for larger purchases.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
------------------------------------------------------------
<S> <C>
Management Fees 0.37%/1/
Service (12b-1) Fees 0.30%/2/
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.77%
Fee Waiver 0.02%
Net Expenses 0.75%
</TABLE>
1 The fund's Investment Advisory and Service Agreement provides for fee
reductions to the extent that annual operating expenses exceed 0.75% of the
fund's average net assets. With the waiver, management fees (as a percentage
of average net assets) are 0.35% and total operating expenses are 0.75%.
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.
5
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your cumulative expenses would
be:
<TABLE>
<CAPTION>
<S> <C>
One year $ 550*
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Three years $ 709*
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Five years $ 883*
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Ten years $1,384*
</TABLE>
* Does not reflect fee waiver
6
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide you with current income that is
exempt from regular federal income tax, consistent with its stated maturity and
quality standards and preservation of capital. The fund invests primarily in
municipal bonds with average effective maturities between 3 and 10 years and
with quality ratings of A or better by Moody's Investors Services, Inc. or
Standard & Poor's Corporation. Municipal bonds are debt obligations generally
issued to obtain funds for various public purposes, including the construction
of public facilities. Normally, the fund will invest at least 80% of its assets
in securities exempt from regular federal income tax. The fund may also invest
significantly in municipal bonds rated Baa or BBB. In addition, the fund may
purchase securities that would subject you to federal alternative minimum
taxes.
The values of most debt securities held by the fund may be affected by changing
interest rates, effective maturities and credit ratings. For example, the
values of bonds in the fund's portfolio generally will decline when interest
rates rise and vice versa. A bond's effective maturity is the market's trading
assessment of its maturity and represents an estimate of the most likely time
period an investor in that bond will receive payment of principal. For
example, as market interest rates decline, issuers may exercise call provisions
which acts to shorten the bond's effective maturity. Conversely, if interest
rates rise, effective maturities tend to lengthen. The average effective
maturity is the market-weighted average (i.e., more weight is given to larger
holdings) of all effective maturities in the portfolio.
The fund may also hold cash, money market instruments or taxable debt
securities. The size of the fund's cash position will vary and will depend on
various factors, including market conditions and purchases and redemptions of
fund shares. A larger cash position could detract from the achievement of the
fund's objective, but it also provides greater liquidity to meet redemptions or
to make additional investments, and it would reduce the fund's exposure in the
event of a market downturn.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good investment opportunities.
Securities may be sold when the investment adviser believes they no longer
represent good values.
7
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
LEHMAN BROTHERS LIPPER INTERMEDIATE
AVERAGE ANNUAL THE FUND WITH 7-YEAR MUNICIPAL MUNICIPAL DEBT
TOTAL RETURN NO SALES CHARGE/1/ INDEX/2/ AVERAGE/3/
<S> <C> <C> <C>
One Year 5.50% 6.22% 5.35%
---------------------------------------------------------------------------
Five Years 5.23% 5.78% 5.18%
---------------------------------------------------------------------------
Lifetime/4/ 5.67% 5.76% 5.20%
---------------------------------------------------------------------------
</TABLE>
Distribution rate/5/: 3.99%
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The 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.
3 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 results of the underlying funds in the index include
the reinvestment of dividend and capital gain distributions, but do not
reflect sales charges and commissions.
4 The fund began investment operations on October 6, 1993.
5 The distribution rate represents actual distributions paid by the fund. It
was calculated at net asset value by annualizing dividends paid by the fund
over one month and dividing that number by the fund's average net asset value
for the month.
8
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the quality ratings of holdings in the fund's
investment portfolio as of the end of the fund's fiscal year, July 31, 1999.
See the Appendix for a description of quality ratings.
[pie chart]
AAA 29.76%
AA 18.22%
A 19.91%
BBB 24.81%
BB* 1.03%
Cash & Cash Equivalents 6.27%
[end pie chart]
*Represents bonds whose quality ratings were downgraded while held by the
fund.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
GEOGRAPHIC BREAKDOWN NET ASSETS NET ASSETS
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama 1.09% Nevada 0.35%
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Alaska 1.44 New Jersey 1.95
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Arizona 1.02 New Mexico 0.33
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California 10.67 New York 7.02
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Colorado 3.22 North Carolina 4.49
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Connecticut 0.57 Ohio 0.95
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District of Columbia 1.60 Oklahoma 0.90
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Florida 1.03 Pennsylvania 2.32
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Hawaii 1.10 Rhode Island 0.49
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Idaho 1.07 South Carolina 0.86
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Illinois 6.48 South Dakota 0.64
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Indiana 1.58 Tennessee 0.88
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Iowa 0.74 Texas 3.62
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Kentucky 2.14 Utah 1.80
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Louisiana 8.72 Vermont 0.93
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Maine 4.40 Virginia 1.49
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Maryland 0.74 Virgin Islands 0.72
---------------------------------- ------------------------------
Massachusetts 1.38 Washington 3.90
---------------------------------- ------------------------------
Michigan 6.49 West Virginia 0.36
---------------------------------- ------------------------------
Minnesota 0.35 Wisconsin 3.33
----------------------------------
Nebraska 0.57
</TABLE>
Average effective maturity of the fund's portfolio = 5.4 years
Because the fund is actively managed, its holdings will change from time to
time.
9
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service providers -
including the investment adviser and its affiliates - have updated all of their
computer systems to process date-related information properly following the
turn of the century. In addition, the Year 2000 problem may adversely affect
the issuers in which the fund invests. For example, issuers may incur
substantial costs to address the problem. They may also suffer losses caused by
corporate and governmental data processing errors. The fund and its investment
adviser will continue to monitor developments relating to this issue.
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MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as 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 total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
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.
10
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a 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 a fund's objective(s) 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 a fund's portfolio. The primary individual
portfolio counselors for Limited Term Tax-Exempt Bond Fund of America are
listed below.
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL
AS PORTFOLIO COUNSELOR (INCLUDNG THE LAST FIVE YEARS)
PORTFOLIO (AND RESEARCH PROFESSIONAL, -----------------------------------
COUNSELORS FOR IF APPLICABLE) FOR WITH CAPITAL
LIMITED TERM LIMITED TERM TAX-EXEMPT RESEARCH AND
TAX-EXEMPT BOND BOND FUND OF AMERICA MANAGEMENT
FUND OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
------------------------------------------------------------------------ OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
NEIL L. LANGBERG Senior Vice President 6 years (since the fund 21 years 21 years
of the fund. Vice began operations)
President - Investment
Management Group,
Capital Research and
Management Company
-----------------------------------------------------------------------------------------------------------
BRENDA S. Vice President of the 3 years 8 years 10 years
ELLERIN fund. Vice President,
Capital Research
Company*
The fund began investment operations on October 6, 1993
* Company affiliated with Capital Research and Management Company.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services 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. For your convenience, American Funds Service
Company has four service centers across the country.
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 the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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.
TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS.
Additionally, accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your dealer.
12
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone..." for
information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
INVESTMENT MINIMUMS
<S> <C>
To establish an account $1,000
To add to an account $ 50
</TABLE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value,
market prices are used when available. If a market price for a particular
security is not available, the fund will determine the appropriate price for
the security.
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and
accepts your request. The offering price is the net asset value plus a sales
charge, if applicable.
13
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
SALES CHARGE
A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.
<TABLE>
<CAPTION> SALES CHARGE AS A
PERCENTAGE OF
-------------------- DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING 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 CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE
MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type
plans investing $1 million or more, or with 100 or more eligible employees, may
invest with no sales charge and are not subject to a contingent deferred sales
charge. Investments made by retirement plans, endowments or foundations with
$50 million or more in assets may also be made with no sales charge and are not
subject to a contingent deferred sales charge. The fund may pay a dealer
concession of up to 1% under its Plan of Distribution on investments made with
no initial sales charge.
REDUCING YOUR SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your sales charge. 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 and in the statement of additional information and "Welcome to
the Family."
14
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
AGGREGATING ACCOUNTS
To receive a reduced sales charge, investments made by you and your immediate
family (see above) may be aggregated if made for their own account(s) and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of two or more American Funds, as well
as individual holdings in various American Legacy variable annuities or
variable life insurance policies, to qualify for a reduced sales charge. Direct
purchases of money market funds are excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing holdings in The
American Funds Group, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to determine your sales
charge. Direct purchases of money market funds are excluded.
STATEMENT OF INTENTION
You may establish a Statement of Intention (SOI) that allows you to combine the
purchases you intend to make over a 13-month period in any non-money market
fund or individual American Legacy variable annuity or variable life insurance
policy. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. An SOI allows you to take
immediate advantage of the maximum quantity discount available. 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 13-month period do not qualify for
the applicable sales charge reduction.
15
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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 fund's board of trustees. Up to 0.25%
of average net assets is paid annually to qualified dealers for providing
certain shareholder services. The 12b-1 fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is indicated earlier under
"Fees and Expenses of the Fund." Since these fees are paid out of the fund's
assets or income on an ongoing basis, over time they will increase the cost and
reduce the return of an investment and may cost you more than paying higher
initial sales charges.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
. A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
16
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE
ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), 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.
17
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
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DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from net investment income daily and distributes
the accrued dividends, which may fluctuate, to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. 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.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAX CONSEQUENCES
Interest on municipal bonds is generally not included in gross income for
federal income tax purposes. 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.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes to the extent they include income from
debt securities that are not exempt from tax - unless you are exempt from
taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
Dividends 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.
18
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
19
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, is included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED JULY 31
---------------------------
1999 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $14.85 $14.79 $14.36 $14.29 $14.10
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .61 .66 .68 .69 .69
Net gains or losses on
securities (both (.23) .06 .43 .07 .19
realized and unrealized)
------------------------------------------------------------------------------
Total from investment .38 .72 1.11 .76 .88
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net (.61) (.66) (.68) (.69) (.69)
investment income)
------------------------------------------------------------------------------
Net Asset Value, $14.62 $14.85 $14.79 $14.36 $14.29
End of Year
------------------------------------------------------------------------------
Total return* 2.59% 4.95% 7.96% 5.39% 6.45%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in $283 $227 $203 $197 $191
millions)
------------------------------------------------------------------------------
Ratio of expenses to
average net assets before fee .77% .83% .83% .85% .90%
waiver
------------------------------------------------------------------------------
Ratio of expenses to
average net assets after fee .75% .75% .75% .74% .64%
waiver
------------------------------------------------------------------------------
Ratio of net income 4.12% 4.40% 4.70% 4.77% 4.88%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 17.00% 34.07% 31.89% 34.95% 45.82%
* Excludes maximum sales charge of 4.75%.
</TABLE>
20
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
APPENDIX
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C," according to quality
as described below.
"Aaa--Best quality. These securities 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 shares."
"Aa--High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A--Upper medium grade obligations. These bonds possess many favorable
investment attributes. 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."
"Baa--Medium grade obligations. 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."
"Ba--Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B--Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"Caa--Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"Ca--Speculative in a high degree; often in default or having other marked
shortcomings."
"C--Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
21
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
Moody's supplies numerical indicators, 1, 2 and 3 to rating categories. The
modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and 3 indicates
a ranking toward the lower end of that generic category.
Standard & Poor's Corporation rates the long-term debt securities issued by
various entities in categories ranging from "AAA" to "D," according to quality
as described below.
"AAA--Highest rating. Capacity to pay interest and repay principal is extremely
strong."
"AA--High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A--Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB--Regarded as having adequate capacity to pay interest and repay principal.
These bonds normally exhibit adequate protection parameters, but adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal than for debt in higher
rated categories."
"BB, B, CCC, CC, C--Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions."
"C1--Reserved for income bonds on which interest is being paid."
"D--In default and payment of interest and/or repayment of principal is in
arrears."
Standard & Poor's applies indicators "+", no character and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
22
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext. 11
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FOR 24-HOUR INFORMATION
American FundsLine(R) American FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
---------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. If there is any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, the English text will prevail.
---------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Contains additional information about the fund including financial statements,
investment results, portfolio holdings, a statement from portfolio management
discussing market conditions and the fund's investment strategies, and the
independent accountants' report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the fund, including the
fund's financial statements.
CODE OF ETHICS
Includes a description of the fund's personal investing policy.
The fund's code of ethics and current SAI has been filed with the Securities
and Exchange Commission ("SEC"). The SAI is incorporated by reference into
this prospectus. These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington,
D.C. (1-800-SEC-0330) or on the SEC's Internet Web site at http://www.sec.gov.
To request a free copy of any of the documents above:
<TABLE>
<CAPTION>
<S> <C> <C>
Call American Funds Write to the Secretary of the fund
Service Company or 333 South Hope StreetLos Angeles,
800/421-0180 ext. 1 California 90071
</TABLE>
Investment Company File No. 811-7888
Printed on recycled paper
<PAGE>
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
Part B
Statement of Additional Information
December 1, 1999
\
This document is not a prospectus but should be read in conjunction with the
current prospectus of Limited Term Tax-Exempt Bond Fund of America (the "fund"
or "LTEX") dated December 1, 1999. 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 StreetLos Angeles, California 90071
(213) 486-9200
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 6
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 8
Fund Trustees and Officers. . . . . . . . . . . . . . . . . . . . . 10
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 16
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 20
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shareholder Account Services and Privileges . . . . . . . . . . . . 28
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 31
General Information . . . . . . . . . . . . . . . . . . . . . . . . 31
Investment Results and Related Statistics . . . . . . . . . . . . . 32
Financial Statements
</TABLE>
Limited Term Tax-Exempt Bond Fund of America -- Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
TAX-EXEMPT SECURITIES
- - The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax.
DEBT SECURITIES
- - The fund will invest up to 65% of its assets in bonds (any debt securities
having initial maturities in excess of one year).
- - The fund may invest up to 20% of its assets in securities subject to
federal alternative minimum tax.
- - The fund will invest at least 65% of its assets in debt securities rated A
or better by Moody's Investors Services, Inc. (Moody's) or Standard &
Poor's Corporation (S&P) or unrated but determined to be of equivalent
quality.
- - The fund may invest up to 35% of its assets in debt securities rated
BBB/Baa by Moody's or S&P or unrated but determined to be of equivalent
quality.
- - Although the fund is not normally required to dispose of a security in the
event its rating is reduced below the current minimum rating for its
purchase (or it is not rated and its quality becomes equivalent to such a
security), if, as a result of a downgrade or otherwise, the fund holds more
than 5% of its net assets in these securities, the fund will dispose of the
excess as deemed prudent by the investment adviser.
MATURITY
- - The dollar-weighted average effective maturity of the fund's portfolio will
be between 3 and 10 years.
- - The maximum dollar-weighted average nominal or stated maturity of the
fund's portfolio will be 15 years.
- - The maximum effective maturity of any one security in the fund's portfolio
will be 10 years.
- - The maximum nominal or stated maturity of any security in the fund's
portfolio will be 25 years.
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a
Limited Term Tax-Exempt Bond Fund of America -- Page 2
<PAGE>
discount from their face values. The prices of debt securities fluctuate
depending on such factors as interest rates, credit quality, and maturity. In
general their prices decline when interest rates rise and vice versa.
High-yield, high-risk bonds rated Ba or below by Standard & Poor's Corporation
and BB or below by Moody's Investors Services, Inc. (or unrated but considered
to be of equivalent quality) are described by the rating agencies as speculative
and involve greater risk of default or price changes due to changes in the
issuer's creditworthiness than higher rated bonds, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, or to determine the value
of, high-yield, high-risk bonds.
MUNICIPAL BONDS - Municipal bonds are debt obligations generally issued to
obtain funds for various public purposes, including the construction of public
facilities. Opinions relating to the validity of municipal bonds, their
exclusion from gross income for federal income tax purposes and, where
applicable, state and local income tax are rendered by bond counsel to the
issuing authorities at the time of issuance.
The two principal classifications of municipal bonds are general obligation
bonds and limited obligation or revenue bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit including, if
available, its taxing power for the payment of principal and interest. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, highways and roads, water and sewer systems and facilities for a
variety of other public purposes. Lease revenue bonds or certificates of
participation in leases are payable from annual lease rental payments from a
state or locality. Annual rental payments are payable to the extent such rental
payments are appropriated annually.
Typically, the only security for a limited obligation or revenue bond is the net
revenue derived from a particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a special tax or other special
revenues. Revenue bonds have been issued to fund a wide variety of
revenue-producing public capital projects including: electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; hospitals; and convention, recreational and housing
facilities. Although the security behind these bonds varies widely, many provide
additional security in the form of a debt service reserve fund which may also be
used to make principal and interest payments on the issuer's obligations. In
addition, some revenue obligations (as well as general obligations) are insured
by a bond insurance company or backed by a letter of credit issued by a banking
institution.
Revenue bonds also include, for example, pollution control, health care and
housing bonds, which, although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but by the
revenues of the authority derived from payments by the private entity which owns
or operates the facility financed with the proceeds of the bonds. 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.
Limited Term Tax-Exempt Bond Fund of America -- Page 3
<PAGE>
MUNICIPAL LEASE OBLIGATIONS - The fund may invest, without limitation, in
municipal lease revenue obligations that are determined to be liquid by the
Investment Adviser. In determining whether these securities are liquid, the
Investment Adviser will consider, among other things, the credit quality and
support, including strengths and weaknesses of the issuers and lessees, the
terms of the lease, the frequency and volume of trading and the number of
dealers trading the securities.
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.
VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate based
upon changes in market rates. Variable and floating rate obligations bear coupon
rates that are adjusted at designated intervals, based on the then current
market rates of interest. Variable and floating rate obligations permit the fund
to "lock in" the current interest rate for only the period until the next
scheduled rate adjustment, but the rate adjustment feature tends to limit the
extent to which the market value of the obligation will fluctuate.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities it
assumes the risk of any decline in value of the security beginning on the date
of the agreement. When the fund agrees to sell such securities it does not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails to
deliver or pay for the securities, the fund could miss a favorable price or
yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of the
fund's portfolio securities decline while the fund is in a leveraged position,
greater depreciation of its net assets would likely occur than were it not in
such a position. 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.
Limited Term Tax-Exempt Bond Fund of America -- Page 4
<PAGE>
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which have been adopted by the fund's board of trustees, taking
into account factors such as the frequency and volume of trading, 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 illiquid securities.
TEMPORARY INVESTMENTS - The fund may invest in short-term municipal obligations
of up to one year in maturity during periods of temporary defensive strategy
resulting from abnormal market conditions, or when such investments are
considered advisable for liquidity. Generally, the income from all such
securities is exempt from federal income tax. Further, a portion of the fund's
assets, which will normally be less than 20%, may be held in cash or invested in
high-quality taxable short-term securities of up to one year in maturity. Such
investments may include: (1) obligations of the U.S. Treasury; (2) obligations
of agencies and instrumentalities of the U.S. Government; (3) money market
instruments, such as certificates of deposit issued by domestic banks, corporate
commercial paper, and bankers' acceptances; and (4) repurchase agreements.
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. The Investment Adviser 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. 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. Correspondingly,
securities issued for similar purposes and with the same general maturity
characteristics, but which vary according to the creditworthiness of their
respective issuers, tend to trade at different yields. These yield differentials
tend to fluctuate in response to political and economic developments, as well as
temporary imbalances in normal supply/demand relationships. The Investment
Adviser monitors these fluctuations closely, and will attempt to adjust
portfolio concentrations in various issue classifications according to the value
disparities brought about by these yield relationship fluctuations.
Limited Term Tax-Exempt Bond Fund of America -- Page 5
<PAGE>
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).
SECURITIES SUBJECT TO ALTERNATIVE MINIMUM TAXES -- The fund may invest 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.
The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. Repurchase agreements
permit the fund to maintain liquidity and earn income over periods of time as
short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the Investment Adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the Investment Adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization upon the collateral by the
fund may be delayed or limited.
* * * * * *
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the length
of time particular investments may have been held. Short-term trading profits
are not the fund's objective and changes in its investments are generally
accomplished gradually, though short-term transactions may occasionally be made.
High portfolio turnover (100% or more) involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved.
The fund's portfolio turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's annual portfolio turnover for each of the last five
fiscal periods.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a
Limited Term Tax-Exempt Bond Fund of America -- Page 6
<PAGE>
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations are considered at the time
securities are purchased and are based on the fund's net assets unless otherwise
indicated. None of the following investment restrictions involving a maximum
percentage of assets will be considered violated unless the excess occurs
immediately after, and is caused by, an acquisition by the fund.
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; nor
10. 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).
NON-FUNDAMENTAL POLICIES -- The following non-fundamental policies may be
changed without shareholder approval:
Limited Term Tax-Exempt Bond Fund of America -- Page 7
<PAGE>
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 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 which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Trustees and Trustee Compensation" below. They may elect
to defer all or a portion of these fees through a deferred compensation plan in
effect for the fund.
Limited Term Tax-Exempt Bond Fund of America -- Page 8
<PAGE>
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.
Limited Term Tax-Exempt Bond Fund of America -- Page 9
<PAGE>
FUND TRUSTEES AND OFFICERS
Trustees and Trustee Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS JULY 31, 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Trustee Corporate Director and author; former none/3/
6077 San Elijo, Box 2494 United States Ambassador to Spain;
Rancho Santa Fe, CA 92067 former Vice Chairman of the Board;
Age: 65 Knight Ridder, Inc., former Chairman
and Publisher, The Miami Herald
----------------
- ---------------------------------------------------------------------------------------------------------------
H. Frederick Christie Trustee Private Investor. Former President and $2,500/4/
P.O. Box 144 Chief Executive Officer, The Mission
Palos Verdes Estates, CA Group (non-utility holding company,
90274 subsidiary of Southern California
Age: 66 Edison Company)
- ---------------------------------------------------------------------------------------------------------------
+ Don R. Conlan Trustee President (retired), The Capital Group none/5/
Age: 63 Companies, Inc.
- ---------------------------------------------------------------------------------------------------------------
Diane C. Creel Trustee CEO and President, The Earth Technology $2,500/4/
100 W. Broadway Corporation (international consulting
Suite 5000 engineering)
Long Beach, CA 90802
Age: 51
- ---------------------------------------------------------------------------------------------------------------
Martin Fenton Trustee Chairman, Senior Resource Group LLC $ 2,900
4660 La Jolla Village (development and management of senior
Drive living communities)
Suite 725
San Diego, CA 92122
Age: 64
- ---------------------------------------------------------------------------------------------------------------
Leonard R. Fuller Trustee President, Fuller Consulting (financial $2,500/4/
4337 Marina City Drive management consulting firm)
Suite 841 ETN
Marina del Rey, CA 90292
Age: 53
- ---------------------------------------------------------------------------------------------------------------
+* Abner D. Goldstine President, Senior Vice President and Trustee, none/5/
Age: 69 PEO and Capital Research and Management Company
Trustee
- ---------------------------------------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. Chairman Private Investor; former Owner and none/5/
Age: 50 of President, Energy Investment, Inc.
the Board
- ---------------------------------------------------------------------------------------------------------------
Richard G. Newman Trustee Chairman, President and CEO, AECOM $4,150/4/
3250 Wilshire Boulevard Technology Corporation (architectural
Los Angeles, CA 90010-1599 engineering)
Age: 63
- ---------------------------------------------------------------------------------------------------------------
Frank M. Sanchez Trustee President, The Sanchez Family none/3/
5234 Via San Delarro, #1 Corporation dba McDonald's Restaurants
Los Angeles, CA 90022 (McDonald's licensee)
Age: 56
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE TRUSTEE
NAME, ADDRESS AND AGE YEAR ENDED JULY 31, 1999 SERVES/2/
- --------------------------------------------------------------------------
<S> <C> <C>
Richard G. Capen, Jr. $ 42,700 14
6077 San Elijo, Box 2494
Rancho Santa Fe, CA 92067
Age: 65
- --------------------------------------------------------------------------
H. Frederick Christie $203,600 19
P.O. Box 144
Palos Verdes Estates, CA
90274
Age: 66
- --------------------------------------------------------------------------
+ Don R. Conlan none/5/ 12
Age: 63
- --------------------------------------------------------------------------
Diane C. Creel $ 48,000 12
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Age: 51
- --------------------------------------------------------------------------
Martin Fenton $130,600 15
4660 La Jolla Village
Drive
Suite 725
San Diego, CA 92122
Age: 64
- --------------------------------------------------------------------------
Leonard R. Fuller $ 51,600 12
4337 Marina City Drive
Suite 841 ETN
Marina del Rey, CA 90292
Age: 53
- --------------------------------------------------------------------------
+* Abner D. Goldstine none/5/ 12
Age: 69
- --------------------------------------------------------------------------
+** Paul G. Haaga, Jr. none/5/ 14
Age: 50
- --------------------------------------------------------------------------
Richard G. Newman $107,100 13
3250 Wilshire Boulevard
Los Angeles, CA 90010-1599
Age: 63
- --------------------------------------------------------------------------
Frank M. Sanchez $ 3,000 12
5234 Via San Delarro, #1
Los Angeles, CA 90022
Age: 56
- --------------------------------------------------------------------------
</TABLE>
Limited Term Tax-Exempt Bond Fund of America -- Page 10
<PAGE>
Limited Term Tax-Exempt Bond Fund of America -- Page 11
<PAGE>
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
1 Amounts may be deferred by eligible Trustees under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Trustees.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Richard G. Capen, Jr. and Frank M. Sanchez did not serve as Trustees of
Limited Term Tax-Exempt Bond Fund of America during the fund's fiscal year
ended July 31, 1999 and, therefore, received no compensation. Both were
elected by shareholders as Trustees on December 1, 1999.
4 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of fiscal year
ended July 31, 1999 for participating Trustees is as follows: H. Frederick
Christie ($6,175), Diane C. Creel ($1,597), Martin Fenton ($9,544), Leonard R.
Fuller ($3,531) and Richard G. Newman ($24,505). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Trustees.
5 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.
Limited Term Tax-Exempt Bond Fund of America -- Page 12
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Neil L. Langberg 46 Senior Vice Vice President - Investment
11100 Santa Monica President Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Mark R. Macdonald 40 Senior Vice Vice President - Investment
11100 Santa Monica President Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Michael J. Downer 44 Vice President Senior Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
- -------------------------------------------------------------------------------
Brenda S. Ellerin 36 Vice President Vice President, Capital Research
11100 Santa Monica Company*
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
- -------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 36 Treasurer Vice President - Fund Business
135 South State Management Group, Capital
College Blvd. Research and Management Company
Brea, CA 92821
- -------------------------------------------------------------------------------
Kimberly S. Verdick 35 Assistant Assistant Vice President - Fund
333 South Hope Street Secretary Business Management Group,
Los Angeles, CA 90071 Capital Research and Management
Company
- -------------------------------------------------------------------------------
Todd L. Miller 41 Assistant Assistant Vice President - Fund
135 South State Treasurer Business Management Group,
College Blvd. Capital Research and Management
Brea, CA 92821 Company
- -------------------------------------------------------------------------------
</TABLE>
All of the officers listed are officers, and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by the fund to any officer or Trustee who is a director,
officer or employee of the Investment Adviser or affiliated companies. 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. No
pension or retirement benefits are accrued as part of fund expenses. The
Trustees may elect, on a voluntary basis, to defer all or a portion of their
fees through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the Trustees who are not affiliated with the
Investment Adviser. As of November 1, 1999 the officers and Directors of the
fund and their families, as a group, owned beneficially or of record less than
1% of the outstanding shares of the fund.
Limited Term Tax-Exempt Bond Fund of America -- Page 13
<PAGE>
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital International
Perspective, providing financial and market information about more than 2,400
companies around the world.
The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until May 31, 2000, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of 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, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors 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.
Limited Term Tax-Exempt Bond Fund of America -- Page 14
<PAGE>
The management fee is based upon the net assets of the fund and monthly gross
investment income. Gross investment income means gross income, computed without
taking account of gains or losses from sales of capital assets, but including
original issue discount as defined for federal income tax purposes. The Internal
Revenue Code in general defines original issue discount to mean the difference
between the issue price and the stated redemption price at maturity of certain
debt obligations. The holder of such indebtedness is in general required to
treat as ordinary income the proportionate part of the original issue discount
attributable to the period during which the holder held the indebtedness.
The Investment Adviser receives a fee, at 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 has agreed 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 the 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 any regulations thereunder, will reimburse the fund
in the amount of such excess.
For the fiscal years ended July 31, 1999, 1998, and 1997, the Investment Adviser
received advisory fees of $999,000, $830,000, and $815,000, respectively. Fee
waivers amounted to $63,000 for the year ended July 31, 1999.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended July
31, 1999 amounted to $189,000 after allowance of $737,000 to dealers. During the
fiscal years ended 1998 and 1997 the Principal Underwriter retained $113,000 and
$155,000, respectively after an allowance of $463,000 and $625,000 to dealers,
respectively.
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
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
may be considered to have a direct or indirect financial interest in the
operation of the Plan due to present or past affiliations with the
Limited Term Tax-Exempt Bond Fund of America -- Page 15
<PAGE>
Investment Adviser and related companies. Potential benefits of the Plan to the
fund include improved shareholder services, savings to the fund in transfer
agency costs, savings to the fund in advisory fees and other expenses, benefits
to the investment process from growth or stability of assets and maintenance of
a financially healthy management organization. The selection and nomination of
trustees who are not "interested persons" of the fund are committed to the
discretion of the trustees who are not "interested persons" during the existence
of the Plan. The Plan is reviewed quarterly and must be renewed annually by the
Board of Trustees.
Under the Plan the fund may expend up to 0.30% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of 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, any defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During the
fiscal year ended July 31, 1999, the fund paid or accrued $794,000 for
compensation to dealers under the Plan. As of July 31, 1999, accrued and unpaid
distribution expenses were $71,000.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting, selling
or distributing securities, but permit banks to make shares of mutual funds
available to their customers and to perform administrative and shareholder
servicing functions. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited from so acting,
shareholder clients of such bank would be permitted to remain shareholders of
the fund and alternate means for continuing the servicing of such shareholders
would be sought. In such event, changes in the operation of the fund might occur
and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being provided by
such bank. It is not expected that shareholders would suffer adverse financial
consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long--
Limited Term Tax-Exempt Bond Fund of America -- Page 16
<PAGE>
term capital gains over net realized short-term capital losses. However, the
fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute the amount
of capital gain and/or net investment income required to be distributed by an
excise tax provision of the Code, the fund may be subject to that excise tax. In
certain circumstances, the fund may determine that it is in the interest of
shareholders to distribute less than the required amount. In this case, the fund
will pay any income or excise taxes due.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
TAXES - The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The fund intends to distribute annually all
of its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by the fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to increase
the adjusted tax basis on fund shares by the difference between a pro rata share
of the retained gains and their related tax credit.
Limited Term Tax-Exempt Bond Fund of America -- Page 17
<PAGE>
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a partial return of investment
capital upon the distribution, which will nevertheless be taxable to them.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund
Limited Term Tax-Exempt Bond Fund of America -- Page 18
<PAGE>
which must be distributed to shareholders in order to maintain the qualification
of the fund as a regulated investment company and to avoid federal income tax at
the level of the fund. Shareholders will be subject to income tax on such
original issue discount, whether or not they elect to receive their
distributions in cash.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company may be subject to withholding of federal income tax at the rate of 31%
in the case of non-exempt U.S. shareholders who fail to furnish the investment
company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.
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 without limitation 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 one year) 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.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
Limited Term Tax-Exempt Bond Fund of America -- Page 19
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers "for initial "Investment Minimums and Fund
investment minimums. Numbers").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)
For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>
Limited Term Tax-Exempt Bond Fund of America -- Page 20
<PAGE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine/(R)/ (see description
below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 02
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 500 11
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 03
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . . . . . . 1,000 12
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . . . . . . 1,000 33
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 16
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . . . . . . 250 10
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 1,000 05
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 1,000 06
The Investment Company of America/(R)/ . . . . . . . . . . . . . . . . . 250 04
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 1,000 14
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 07
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 36
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . 1,000 35
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . . . . . . 250 01
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . . . . . . 1,000 40
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . . . . . . 1,000 21
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . . . . . . 1,000 08
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 1,000 31
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 1,000 23
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . 1,000 43
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . . . . . . 1,000 19
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . . . . . . 1,000 20
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . . . . . . 1,000 24
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . . . . . . 1,000 25
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . . . . . . 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . . . . . . 2,500 09
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . . . . . . 2,500 39
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . . . . . . 2,500 49
___________
*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
Limited Term Tax-Exempt Bond Fund of America -- Page 21
<PAGE>
SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional
investments (except as noted above).
SALES CHARGES - The sales charges you pay when purchasing the stock, stock/bond,
and bond funds of The American Funds Group are set forth below. The money market
funds of The American Funds Group are offered at net asset value. (See
"Investment Minimums and Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
- ------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
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 . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or more are
sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans investing $1 million or more,
or with 100 or more eligible employees, may invest with no sales charge and are
not subject to a contingent deferred sales charge. Investments made by
retirement plans, endowments or foundations with $50 million or more in assets
may also be made with no sales charge and are not subject to a contingent
deferred sales charge. A dealer concession of up to 1% may be paid by the fund
under its Plan of Distribution on investments made with no initial sales charge.
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board members
of the funds managed by Capital Research and Management Company, employees of
Washington Man-
Limited Term Tax-Exempt Bond Fund of America -- Page 22
<PAGE>
agement Corporation, employees and partners of The Capital Group Companies, Inc.
and its affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
DEALER COMMISSIONS - Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at net
asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million to
$4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
REDUCING YOUR SALES CHARGE - You and your "immediate family" (your spouse and
your children under age 21) may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company (the "Transfer
Agent") know if you qualify for a reduction in your sales charge using one or
any combination of the methods described below.
Limited Term Tax-Exempt Bond Fund of America -- Page 23
<PAGE>
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the
same sales charge as if all shares had been purchased at once. This
includes purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $50,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to utilize a Statement in order to qualify for a reduced sales
charge, shares equal to 5% of the dollar amount specified in the Statement
will be held in escrow in the shareholder's account out of the initial
purchase (or subsequent purchases, if necessary) by the Transfer Agent. All
dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see the account application) and any individual
investments in American Legacy variable annuities or variable life
insurance policies (American Legacy, American Legacy II, American Legacy
III, and American Legacy Shareholder's Advantage variable annuities,
American Legacy Life, American Legacy Variable Life, and American Legacy
Estate Builder) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy variable annuities or
variable life insurance policies are added to the figure determined above.
The sum is the Statement amount and applicable breakpoint level. On the
first investment and all other investments made pursuant to the Statement,
a sales charge will be assessed according to the sales charge breakpoint
thus determined.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:
Limited Term Tax-Exempt Bond Fund of America -- Page 24
<PAGE>
- employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
- business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
- for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
- made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or
- for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of two or more funds in
The American Funds Group, as well as individual holdings in various
American Legacy variable annuities and variable life insurance policies to
qualify for a reduced sales charge. Direct purchases of the money market
funds are excluded. Shares of money market funds purchased through an
exchange, reinvestment or cross-reinvestment from a fund having a sales
charge do qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing holdings in The American Funds Group, as well as your
holdings in Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or
charity. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy variable annuities and variable
life insurance policies. Direct purchases of the money market funds are
excluded.
PRICE OF SHARES - Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; this offering price is effective for orders received prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In the case of orders sent directly to the fund or the Transfer Agent, an
investment dealer MUST be indicated. The dealer is responsible for promptly
transmitting purchase orders to the Principal Underwriter. Orders received by
the investment dealer, the Transfer Agent, or the fund after the
Limited Term Tax-Exempt Bond Fund of America -- Page 25
<PAGE>
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 price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New
York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or the
over-the-counter market. Fixed-income securities are valued at prices obtained
from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 4.5% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Trustees.
Limited Term Tax-Exempt Bond Fund of America -- Page 26
<PAGE>
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. You may sell (redeem) shares in
your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold
through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered shareholder(s);
or
- Sent to an address other than the address of record, or an
address of record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in
certificate form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/
and American FundsLine OnLine/(R)/) are limited to $50,000 per
shareholder each day.
- Checks must be made payable to the registered shareholder(s).
- Checks must be mailed to an address of record that has been used
with the account for at least 10 days.
MONEY MARKET FUNDS
-- You may have redemptions of $1,000 or more wired to your bank by
writing American Funds Service Company.
- You may establish check writing privileges (use the money market
funds application).
Limited Term Tax-Exempt Bond Fund of America -- Page 27
<PAGE>
- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Proceeds will be reinvested at the next calculated net asset value after your
request is received and accepted by the Transfer Agent
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds made
within twelve months of purchase on investments of $1 million or more (other
than redemptions by employer-sponsored retirement plans). The charge is 1% of
the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for purposes
of calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from 403(b) plans or IRAs due to death, disability
or attainment of age 591/2; for tax-free returns of excess contributions to
IRAs; and for redemptions through certain automatic withdrawals not exceeding
10% of the amount that would otherwise be subject to the charge.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. If your
bank account cannot be debited due to insufficient funds, a stop-payment or the
closing of the account, the plan may be terminated and the related investment
reversed. You may change the amount of the investment or discontinue the plan at
any time by writing to the Transfer Agent. Checks that remain uncashed earn no
interest.
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
Limited Term Tax-Exempt Bond Fund of America -- Page 28
<PAGE>
may elect to have dividends and/or capital gain distributions paid in cash by
informing the fund, the Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "Principal
Underwriter and Transfer Agent" in the prospectus for the appropriate fax
numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer
Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type
retirement plans for which Capital Guardian Trust Company serves as trustee may
not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions
and purchases are processed simultaneously at the share prices next determined
after the exchange order is received. (See "Purchase of Shares--Price of
Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares in amounts of $50 or
more among any of the funds in The American Funds Group on any day (or preceding
business day if the day falls on a non-business day of each month you designate.
You must either (a) meet the minimum initial investment requirement for the
receiving fund OR (b) the originating fund's balance must be at least $5,000 and
the receiving fund's minimum must be met within one year.
Limited Term Tax-Exempt Bond Fund of America -- Page 29
<PAGE>
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.
REDEMPTION OF SHARES - The funds' declaration of trust permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder owns of record
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the Board of Trustees of the fund may from time to time
adopt.
Limited Term Tax-Exempt Bond Fund of America -- Page 30
<PAGE>
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.
Dealer concessions paid on underwriting transactions for the fiscal years ended
July 31, 1999, 1998 and 1997, amounted to $221,000, $262,000 and $121,000,
respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or foreign branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee of
$70,000 for the fiscal year ended July 31, 1999.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as the fund's independent accountants providing audit
services, preparation of tax returns and review of certain documents to be filed
with the Securities and Exchange Commission. The financial statements included
in this Statement of Additional Information from the Annual Report have been so
included in reliance on the report PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting. The selection of the fund's independent accountants is reviewed and
determined annually by the Board of Trustees.
Limited Term Tax-Exempt Bond Fund of America -- Page 31
<PAGE>
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on July 31. Shareholders
are provided at least semiannually with reports showing the investment
portfolio, financial statements and other information. The fund's annual
financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP. In an effort to reduce the volume of mail
shareholders receive from the fund when a household owns more than one account,
the Transfer Agent has taken steps to eliminate duplicate mailings of
shareholder reports. To receive additional copies of a report, shareholders
should contact the Transfer Agent.
YEAR 2000 - The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. The fund understands that these service providers
have updated all of their computer systems to process date-related information
properly following the turn of the century. However, there can be no assurance
that these steps are sufficient to avoid any adverse impact on the fund. In
addition, the fund's investments could be adversely affected by the Year 2000
problem. For example, the markets for securities in which the fund invests could
experience settlement problems and liquidity issues. Corporate and governmental
data processing errors may cause losses for individual companies and overall
economic uncertainties. Earnings of individual issuers are likely to be affected
by the costs of addressing the problem, which may be substantial and may be
reported inconsistently.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- JULY 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $14.62
Maximum offering price per share
(100/95.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $15.35
</TABLE>
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 4.00% based on a 30-day (or one month) period ended July
31, 1999, computed by dividing the net investment income per share earned during
the period by the maximum offering price per share on the last day of the
period, according to the following formula:
Limited Term Tax-Exempt Bond Fund of America -- Page 32
<PAGE>
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 combined effective federal/state tax rate of 39.6% for the 30-day (or
one month) period ended July 31, 1999 was 6.62%.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
As of July 31, 1999, the fund's total return over the past twelve months and
average annual total return over its lifetime were -2.28% and 4.17%,
respectively. Over the fund's lifetime (October 6, 1993 to July 31, 1999), the
Lehman Brothers 7-Year Municipal Bond Index<F1> and the Lipper Intermediate
Municipal Debt Funds Average<F2> had average annual total returns of 5.13% and
4.60%, respectively. The fund's average annual total return at net asset value
over the past twelve months and average annual over its lifetime at July 31,
1999 were 2.59% and 5.05%, respectively.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.
In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 4.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average total return figures.
[FN]
<F1> 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.
<F2> 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.
Limited Term Tax-Exempt Bond Fund of America -- Page 33
<PAGE>
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
Limited Term Tax-Exempt Bond Fund of America -- Page 34
<PAGE>
Limited Term Tax-Exempt Bond Fund of America -- Page 35
Limited Term Tax-Exempt Bond Fund of America
July 31, 1999
PORTFOLIO COMPOSITION
]pie chart]
California(CA) - 10.67%
Louisiana(LA) - 8.72%
New York(NY) - 7.02%
Michigan(MI) - 6.49%
Illinois(IL) - 6.48%
North Carolina(NC) - 4.49%
Maine(ME) - 4.40%
Washington(WA) - 3.90%
Texas(TX) - 3.62%
Wisconsin(WI) - 3.33%
Other States - 34.61%
Cash & equivalents - 6.27%
[end pie chart]
Key to Abbreviations
Agcy. = Agency
Auth. = Authority
Cert. of Part. = Certificates of Participation
Dept. = Department
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facility
Facs. = Facilities
Fin. = Finance
Fncg. = Financing
G.O. = General Obligation
Ref. = Refunding
Rev. = Revenue
<TABLE>
Limited Term Tax-Exempt Bond Fund of America
Investment Portfolio, July 31, 1999
<S> <C> <C>
Principal Market
Amount Value
(000) (000)
-------- --------
Tax-Exempt Securities Maturing in More Than One Year - 93.73%
Alabama - 1.09%
Industrial Dev. Board of the City of Butler, Pollution Control $3,000 $ 3,067
Ref. Rev. Bonds (James River Project), Series 1993, 5.50% 2005
Alaska - 1.44%
Industrial Dev. and Export Auth., Power Rev. Bonds, First Series AMT
(Snettisham Hydroelectric Project), AMBAC Insured:
5.25% 2005 1,000 1,025
5.50% 2007 1,000 1,034
Student Loan Corp., Student Loan Rev. Bonds:
1997 Series A AMT, AMBAC Insured, 5.20% 2006 1,000 1,013
1999 Series A, AMBAC Insured, 4.80% 2007 1,000 990
Arizona - 1.02%
Educational Loan Marketing Corp., 1992 Educational Loan Rev. Bo 1,000 1,032
Series B AMT, 6.95% 2001
Industrial Dev. Auth. of the County of Maricopa, Health Fac. Re 1,950 1,844
(Catholic Healthcare West Project), 1998 Series A, 4.30% 2005
California - 10.67%
Health Facs. Fncg. Auth.:
Hospital Rev. Bonds (Downey Community Hospital), Series 1993:
5.00% 2001 1,150 1,161
5.20% 2003 1,000 1,018
5.30% 2004 1,010 1,033
Rev. Bonds (Catholic Healthcare West), 1998 Series A:
5.00% 2006 1,000 977
5.00% 2007 1,000 969
Pollution Control Fncg. Auth., Solid Waste Disposal Ref. Rev. B 3,500 3,470
(USA Waste Services, Inc. Project), Series 1998A AMT, 5.10% 2018
(2008)(1)
Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bond 4,000 3,886
(Irvine Apartment Communities, LP), Series 1998A-1 AMT, 5.05% 2025
(2008)(1)
Association of Bay Area Governments, Fncg. Auth. for Nonprofit 1,405 1,415
Ref. Rev. Cert. of Part. (Episcopal Homes Foundation), Series 1998,
5.00% 2007
City of Duarte, City of Hope National Medical Center, Cert. of 1,000 993
Series 1999A, 5.25% 2008
City of Fremont, Multifamily Housing Rev. Ref. Bonds, Issue A o 1,830 1,900
(Durham Greens Project), 5.40% 2026 (2006)(1)
Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific
Project), 1995 Series A:
5.75% 2005 3,000 3,146
5.75% 2006 780 819
County of Los Angeles, Capital Asset Leasing Corp., Cert. of Pa 2,555 2,655
(Marina del Rey), 1993 Series A, 6.25% 2003
Pleasanton Joint Powers Fncg. Auth., Reassessment Rev. Bonds, 905 930
1993 Series A, 5.70% 2001
Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds 2,200 2,421
& Gamble Project), 1995 Series, 7.00% 2004
Sacramento Power Auth., Cogeneration Project Rev. Bonds (Campbell Soup
Project), 1995 Series:
6.50% 2004 2,000 2,155
6.50% 2005 1,100 1,199
Colorado - 3.22%
Housing and Fin. Auth., Single Family Program Senior Bonds, 199 595 611
Series C-2, 5.625% 2009 (2000)(1)
City and County of Denver, Airport System Rev. Bonds, Series 19 1,640 1,736
6.55% 2003
Eaglebend Affordable Housing Corp., Multifamily Housing Project Rev.
Ref. Bonds, Series 1997A:
5.45% 2002 455 463
5.75% 2007 2,585 2,669
The Regents of the University of Colorado, Refunding Cert. of P 2,415 2,583
(Telecommunications and Cogeneration Projects), Series 1996, AMBAC
Insured, 6.00% 2005
University of Colorado Hospital Auth., Hospital Ref. Rev. Bonds 1,000 1,045
Series 1997A, AMBAC Insured, 5.50% 2007
Connecticut - 0.57%
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds,
1996 Series A:(2)
6.25% 2002 (Escrowed to Maturity) 500 531
6.375% 2004 (Escrowed to Maturity) 995 1,087
District of Columbia - 1.60%
G.O. Ref. Bonds, Series 1993D, FGIC Insured:
5.10% 2002 (Escrowed to Maturity) 42 43
5.10% 2002 958 981
Fixed Rate Rev. Bonds (National Academy of Sciences Project), 1,065 1,078
Series 1999A, AMBAC Insured, 5.00% 2007
Hospital Rev. Ref. Bonds (Medlantic Healthcare Group, Inc. Issue),
Series 1997A, MBIA Insured:
6.00% 2006 (Escrowed to Maturity) 1,000 1,080
6.00% 2007 (Escrowed to Maturity) 1,250 1,353
Florida - 1.03%
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds, 1,500 1,503
Series 1999A (Shell Point/Alliance Obligated Group, Shell Point
Village Project), 5.25% 2005
Meadow Pointe II, Community Dev. Dist. (Pasco County), Capital 1,445 1,418
Improvement Rev. Bonds, Series 1998A, 5.25% 2003
Hawaii - 1.10%
Cert. of Part. (Kapolei State Office Building), 1998 Series A,
AMBAC Insured:
4.10% 2004 2,125 2,082
5.00% 2005 1,000 1,017
Idaho - 1.07%
Housing and Fin. Association, Single Family Mortgage Bonds:
1998 Series C AMT, 5.25% 2011 550 555
1998 Series E-3 AMT, 5.125% 2011 750 741
1998 Series H AMT, 4.65% 2012 1,200 1,154
1998 Series I-2 AMT, 4.70% 2012 600 579
Illinois - 6.48%
Health Facs. Auth., Rev. Ref. Bonds:
Series 1997A, (Advocate Health Care Network):
5.50% 2004 1,250 1,292
5.10% 2005 1,815 1,839
Series 1998A (Advocate Health Care Network), 5.00% 2006 1,730 1,736
Series 1998 (Centegra Health System), 5.50% 2007 2,480 2,519
Series 1997A (Highland Park Hospital Project), FGIC Insured, 5. 1,490 1,558
Series 1998 (Northwestern Medical Faculty Foundation, Inc.), MB 1,810 1,866
Insured, 5.25% 2006
Series 1993 (OSF Healthcare System), 5.25% 2001 2,300 2,335
Series 1997A (Victory Health Services), 5.25% 2004 1,755 1,786
Housing Dev. Auth., Multi-Family Housing Bonds, 1992 Series A, 1,165 1,231
6.55% 2003
City of Chicago, G.O. Certificates, Series 1997, 5.25% 2006 1,030 1,063
County of Cook, G.O. Capital Improvement Bonds, Series 1996, 1,000 1,083
FGIC Insured, 6.00% 2006
Indiana - 1.58%
Health Facs. Fncg. Auth., Hospital Rev. Bonds:
Charity Obligated Group:
Series 1999D, 5.50% 2008 (3) 1,000 1,030
Series 1997D, 5.00% 2026 (2007)(1) 1,455 1,448
Clarian Health Partners, Inc., Series 1996A, MBIA Insured, 5.25 1,000 1,020
Hospital Auth. of the City of Fort Wayne, Rev. Bonds, Series 19 1,000 978
(Parkview Health System, Inc. Project), MBIA Insured, 4.10% 2004
Iowa - 0.74%
Student Loan Liquidity Corp., Student Loan Rev. Bonds, Series 1 2,000 2,106
AMT, 6.80% 2005
Kentucky - 2.14%
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement Rev. Bonds,
Series 1997 (Appalachian Regional Healthcare, Inc. Project):
5.20% 2004 1,000 984
5.40% 2006 1,500 1,465
5.50% 2007 465 454
Cities of Carrollton and Henderson, Public Energy Auth. of Kentucky
Trust, Gas Rev. Bonds, Series 1998A, FSA Insured:
5.00% 2006 1,600 1,633
5.00% 2007 1,500 1,525
Louisiana - 8.72%
Offshore Terminal Auth., Deepwater Port Ref. Rev. Bonds (LOOP I 5,000 5,256
Project), First Stage, Series 1990E, 7.45% 2004
Public Facs. Auth., Hospital Rev. and Ref. Bonds (Franciscan
Missionaries of Our Lady Health System Project):
Series 1998A, FSA Insured, 5.50% 2006 4,500 4,701
Series 1998C, MBIA Insured:
5.25% 2006 1,000 1,030
5.50% 2005 1,500 1,567
Jefferson Parish Hospital:
Dist. No. 1, Parish of Jefferson (West Jefferson Medical Center 1,695 1,708
Hospital Rev. Bonds, Series 1998A, FSA Insured, 5.00% 2007
Service Dist. No. 2, Parish of Jefferson, Hospital Rev. Bonds,
Series 1998, FSA Insured:
5.00% 2005 2,150 2,188
5.00% 2007 1,500 1,512
Lake Charles Harbor and Terminal Dist., Port Facs. Rev. Ref. Bo 6,000 6,668
(Trunkline LNG Co. Project), Series 1992, 7.75% 2022
Maine - 4.40%
Educational Loan Marketing Corp., Senior Student Loan Rev. Bonds:
Series 1991 AMT, 6.90% 2003 2,515 2,619
Series 1994A-4 AMT:
5.95% 2003 1,000 1,046
6.05% 2004 1,500 1,571
Housing Auth., Mortgage Purchase Bonds:
1994 Series E, 6.30% 2002 1,650 1,696
1994 Series C-1, 5.90% 2015 3,890 4,025
Student Loan Rev. Ref. Bonds, Series 1992A-1 AMT:
6.20% 2003 515 540
6.30% 2004 880 925
Maryland - 0.74%
Community Dev. Administration, Dept. of Housing and Community Dev.,
Single Family Program Bonds:
1994 Fifth Series AMT, 5.875% 2017 (2001)(1) 155 158
1994 First Series, 5.70% 2017 (2004)(1) 1,905 1,943
Massachusetts - 1.38%
Industrial Fin. Agcy, Resource Recovery Rev. Ref. Bonds (Ogden 1,550 1,536
Haverhill Project), Series 1998A, 5.15% 2007
The New England Education Loan Marketing Corp., Student Loan Rev.
Ref. Bonds:
1992 Senior Issue A, 6.50% 2002 1,000 1,053
1992 Issue C AMT, 6.75% 2002 1,250 1,316
Michigan - 6.49%
Hospital Fin. Auth., Rev. Ref. Bonds:
Genesys Health System Obligated Group, Series 1995A, 7.20% 2003 1,375 1,524
(Escrowed to Maturity)
Pontiac Osteopathic, Series 1994A, 5.375% 2006 4,345 4,259
State Hospital Fin. Auth., Hospital Rev. and Ref. Bonds:
The Detroit Medical Center Obligated Group:
Series 1993B, AMBAC Insured, 5.00% 2006 1,000 1,009
Series 1997A, AMBAC Insured, 5.00% 2006 1,000 1,009
Hackley Hospital Obligated Group, Series 1998A, 4.90% 2007 1,140 1,118
Mercy Health Services, Series 1997T, 6.25% 2011 1,000 1,079
Sinai Hospital of Greater Detroit, Series 1995, 6.00% 2008 2,000 1,988
Housing Dev. Auth., Rental Housing Rev. Bonds, 1992 Series A, A 1,200 1,272
Insured, 6.40% 2005
City of Detroit, G.O. Refunding Bonds (Unlimited Tax):
Series 1995-A:
6.10% 2003 1,800 1,891
6.25% 2004 1,000 1,064
Series 1995-B, 6.75% 2003 2,000 2,142
Minnesota - 0.35%
City of Maplewood, Health Care Fac. Rev. Bonds (HealthEast Proj 1,000 992
Series 1996, 5.80% 2003
Nebraska - 0.57%
Hospital Auth. No. 1 of Lancaster County, Rev. Bonds, Series 19 1,530 1,607
(Sisters of Charity Health Care Systems, Inc.), MBIA Insured,
6.375% 2005
Nevada - 0.35%
Housing Division, Single Family Mortgage Bonds, 1998 Series B-1 1,000 995
5.20% 2011
New Jersey - 1.95%
Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village
Project), Series 1998A:
5.00% 2006 1,275 1,239
5.05% 2007 1,375 1,328
Housing and Mortgage Fin. Agcy., Home Buyer Rev. Bonds, 1994 Se 2,900 2,947
MBIA Insured, 5.60% 2016
New Mexico - 0.33%
Educational Assistance Foundation, Student Loan Rev. Bonds, Sub 900 932
1992 Series One-B AMT, 6.85% 2005
New York - 7.02%
Dormitory Auth.:
Center for Nursing & Rehabilitation, Inc., FHA-Insured Mortgage 1,000 984
Home Rev. Bonds, Series 1997, 4.75% 2007
Cert. of Part., on behalf of the City University of New York, as
Lessee (John Jay College of Criminal Justice Project Ref.):
5.75% 2005 2,000 2,106
6.00% 2006 1,500 1,602
Secured Hospital Rev. Ref. Bonds:
Saint Agnes Hospital, Series 1998A, 4.80% 2006 1,000 1,000
Wyckoff Heights Medical Center, Series 1998H, 5.125% 2008 2,000 2,011
Housing Fin. Agcy., Health Facs. Rev. Bonds (New York City), 5,450 5,841
1996 Series A Ref., 6.00% 2006
State Medical Care Facs. Fin. Agcy., Mental Health Services Facs.
Improvement Rev. Bonds, Series 1997B:
5.30% 2004 1,620 1,670
6.00% 2007 2,000 2,139
Castle Rest Residential Health Care Fac., FHA-Insured Mortgage 1,400 1,398
Bonds, Series 1997A, 4.875% 2007
City of New York, G.O. Bonds, Fiscal 1996 Series E, 6.50% 2004 1,000 1,079
North Carolina - 4.49%
Eastern Municipal Power Agcy., Power System Rev. Bonds, Refunding:
Series 1993B:
6.00% 2005 (2003) (1) 1,330 1,361
6.125% 2009 1,750 1,797
Series 1993C, 5.50% 2007 1,550 1,542
Municipal Power Agcy. Number 1, Catawba Electric Rev. Bonds,
Series 1992:
5.75% 2002 1,010 1,028
6.00% 2004 5,525 5,684
6.00% 2005 1,250 1,288
Ohio - 0.95%
Housing Fin. Agcy., Single Family Mortgage Rev. Bonds, 1992 Ser 385 388
A-2 AMT, 5.70% 2013 (1999)(1)
County of Franklin, Hospital Facs. Rev. Ref. and Improvement Bo 1,120 1,183
(Doctors Hospital Project), Series 1993, 5.70% 2004 (Escrowed
to Maturity)
County of Knox, Hospital Facs Ref. Rev. Bonds, Series 1998 (Kno 1,155 1,126
Community Hospital), Asset Guaranty Insured, 4.70% 2008
Oklahoma - 0.90%
Housing Fin. Agcy., Single Family Mortgage Rev. Bonds, 1994 Ser 165 165
AMT, 6.25% 2016 (1999)(1)
Industries Auth., Health System Rev. Ref. Bonds (INTEGRIS Health),
Series 1995D, AMBAC Insured:
5.25% 2004 1,000 1,032
5.25% 2006 1,300 1,339
Pennsylvania - 2.32%
Blair County Hospital Auth., Hospital Rev. Bonds (Altoona Hospi 2,180 2,221
Project), 1998 Series A, AMBAC Insured, 5.00% 2005 (3)
Higher Educational Facs. Auth., UPMC Health System Rev. Bonds, 2,000 2,009
Sries 1999A, FSA Insured, 5.00% 2007
Hospitals and Higher Education Facs. Auth. of Philadelphia, Hospital
Rev. Bonds (Jefferson Health System), Series 1997A:
5.50% 2006 1,265 1,309
5.50% 2008 1,000 1,015
Rhode Island - 0.49%
Student Loan Auth., Student Loan Rev. Ref. Bonds, Series 1992B 1,300 1,371
6.90% 2003 (2001)(1)
South Carolina - 0.86%
Florence County, Hospital Rev. Bonds, McLeod Regional Medical C 2,330 2,434
Project, MBIA Insured, Series 1998A, 5.50% 2007
South Dakota - 0.64%
Housing Dev. Auth., Homeownership Mortgage Bonds, 1996 Series A 770 790
5.50% 2010
Student Loan Fin. Corp., Student Loan Rev. Bonds, Series 1994-A 1,000 1,032
5.95% 2001
Tennessee - 0.88%
The Tennessee Energy Acquisition Corp., Gas Rev. Bonds, Series 1,500 1,494
AMBAC Insured, 4.35% 2004
Housing Dev. Agcy., Homeownership Program Bonds, Issue 1999-2A 1,000 993
5.05% 2008
Texas - 3.62%
G.O. Bonds, Veterans' Housing Assistance Program, Fund I, Serie 725 743
1994C Ref. Bonds, 6.25% 2015 (2000)(1)
Dept. of Housing and Community Affairs, Single Family Mortgage 1,595 1,626
Bonds, 1996 Series B, MBIA Insured, 5.55% 2011(1)
Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds
(Buckner Retirement Services, Inc. Obligated Group Project),
Series 1998:
5.00% 2005 1,330 1,329
5.00% 2007 1,470 1,449
Brazos Higher Education Auth. Inc., Student Loan Rev. Ref. Bonds:
Series 1992C-1 AMT, 6.20% 2000 1,000 1,027
Subordinate Series, 1993C-2 AMT, 5.875% 2004 910 917
Harris County Health Facs. Dev. Corp.:
Hospital Rev. Ref. Bonds (Children's Hospital Project), Series 1,000 1,072
MBIA Insured, 6.00% 2004
Hospital Rev. Bonds (Memorial Hermann Hospital System Project), 1,000 1,019
Series 1998, FSA Insured, 5.25% 2008
Tarrant County, Health Facs. Dev. Corp., Health Resources Syste 1,000 1,040
Rev. Bonds, Series 1997A, MBIA Insured, 5.50% 2007
Utah - 1.80%
Housing Fin. Agcy. (Federally Insured or Guaranteed Mortgage Loans):
Single Family Mortgage Purchase Ref. Bonds:
Series 1996, 5.45% 2004 820 848
Series 1997F AMT, 5.50% 2010(1) 1,030 1,036
Single Family Mortgage Bonds:
1998 Issue F-2 AMT, 4.25% 2008 2,500 2,440
1998 Issue D-2 AMT, 5.25% 2012(1) 400 394
1998 Issue E-1 AMT, 5.25% 2012(1) 375 369
Vermont - 0.93%
Educational and Health Buildings Fncg. Agcy, Hospital Rev. Bond 2,500 2,618
(Medical Center Hospital of Vermont Project), Series 1993, FGIC
Insured, 5.75% 2007
Virginia - 1.49%
Housing Dev. Auth., Commonwealth Mortgage Bonds, 1995 Series A 1,000 1,032
Subseries A-1, 6.50% 2003
Industrial Dev. Auth. of the City of Norfolk, Hospital Rev. Bon 2,000 2,158
(Daughters of Charity National Health System DePaul Medical Center),
Series 1992A, 6.50% 2007 (2002)(1)
Pocahontas Parkway Association, Route 895 Connector Toll Road R 1,000 1,009
Bonds, Series 1998A, 5.25% 2007
Virgin Islands - 0.72%
Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund Loan Note 2,000 2,024
Series 1998 C, 5.00% 2002
Washington - 3.90%
Health Care Facs. Auth.:
Rev. Bonds, Series 1997A (Catholic Health Initiatives), MBIA In 1,000 1,048
5.50% 2005
Weekly Rate Demand Rev. Bonds (Virginia Mason Medical Center), 2,000 2,149
1997 Series A, MBIA Insured, 6.00% 2006
Public Power Supply System:
Nuclear Project No. 1 Ref. Rev. Bonds, Series 1991A, 6.30% 2001 1,000 1,037
Nuclear Project No. 2 Ref. Rev. Bonds:
Series 1992A, 5.90% 2004 1,500 1,589
Series 1996A, AMBAC Insured, 5.50% 2004 1,000 1,045
Series 1998A, 5.00% 2005 1,000 1,019
Series 1997B, 5.50% 2006 2,000 2,088
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1990B, 7.375% 200 1,000 1,049
West Virginia - 0.36%
State Building Commission, Lottery Rev. Bonds, 1997 Series A, M 1,000 1,024
Insured, 5.00% 2003
Wisconsin - 3.33%
Health and Educational Facs. Auth.:
Var. Rate Hospital Rev. Bonds (Charity Obligated Group, Daughte 3,860 3,865
Charity Nat. Health Sys.), Series 1997D, 4.90% 2015 (2005)(1)
Rev. Bonds, Series 1999 (The Monroe Clinic, Inc.), 4.60% 2008 1,010 956
Housing and Econ. Dev. Auth.:
Housing Rev. Ref. Bonds, Series 1992A, 6.20% 2001 1,500 1,545
Housing Rev. Bonds, 1993 Series B AMT, 5.30% 2006 3,000 3,050
----------
264,910
----------
Tax-Exempt Securities Maturing in One Year or Less - 5.45%
State of Arizona, Educational Loan Marketing Corp., 1992 Educat 3,000 3,047
Loan Rev. Bonds, Series A, 6.70% 3/1/00
City of Houston, Tax and Rev. Anticipation Notes, Series 1999, 1,000 1,008
4.25% 6/30/00
State of Idaho, Tax Anticipation Notes, Series 1999, 4.25% 6/30 1,500 1,511
State of Indiana, Employment Dev. Commission, Pollution Control 1,700 1,703
Bonds (Chrysler Corp. Project), Series 1985, 5.70% 10/1/99
Kentucky Asset/Liability Commission, General Fund Tax and Rev. 1,000 1,008
Anicipation Notes, 1999 Series A, 4.25% 6/28/00
County of Los Angeles, Tax and Rev. Anticipation Notes, Series 1,000 1,006
4.00% 6/30/00
State of South Carolina, Public Service Auth., Rev. Bonds, 1995 1,000 1,012
Series A, AMBAC Insured, 6.25% 1/1/00
State of Texas, Tax and Rev. Anticipation Notes, Series 1998, 8 3,100 3,103
State of Alaska, City of Valdez, Marine Terminal Rev. Ref. Bond 1,000 1,000
(Exxon Pipeline Company Project), 1993 Series C, 3.40% 2033(4)
State of Wyoming, General Fund Tax and Rev. Anticipation Notes, 1,000 1,005
Series 1999, 4.00% 6/27/00
----------
15,403
----------
Total Tax-Exempt Securities (cost: $280,386,000) 280,313
Excess of cash and receivables over payables 2,318
----------
NET ASSETS $282,631
==========
(1) Valued on the basis of the effective maturity - that is, the date
at which the security is expected to be called or refunded by
the issuer.
(2) Purchased in a private placement transaction; resale may be
limited to qualified institutional buyers; resale to the public may
require registration.
(3) Represents a when - issued security.
(4) Coupon rate may change periodically.
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, 1999 (dollars in thousands)
<S> <C> <C>
Assets:
Tax-exempt securities
(cost: $280,386) $280,313
Cash 80
Receivables for--
Sales of investments $1,011
Sales of fund's shares 624
Accrued interest 3,902 5,537
------------------
285,930
Liabilities:
Payables for--
Purchases of investments 2,058
Repurchases of fund's shares 757
Dividends payable 289
Management services 81
Accrued expenses 114 3,299
------------------
Net Assets at July 31, 1999 --
Equivalent to $14.62 per share on 19,329,996
shares of beneficial interest issued and
outstanding; unlimited shares authorized $282,631
==========
Statement of Operations
for the year ended July 31, 1999
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $12,915
Expenses:
Management services fee $999
Distribution expenses 794
Transfer agent fee 70
Reports to shareholders 60
Registration statement and prospectus 43
Postage, stationery and supplies 12
Trustees' fees 17
Auditing and legal fees 31
Custodian fee 5
Organization expense 1
Other expenses 20
----------
Total expenses before reimbursement 2,052
Reimbursement of expenses 63 1,989
------------------
Net investment income 10,926
----------
Realized Gain and Net Unrealized
Depreciation on Investments
Net realized gain 1,150
Net unrealized depreciation
investments:
Beginning of year 6,133
End of year (73)
----------
Net unrealized depreciation
on investments (6,206)
----------
Net realized gain and unrealized depreciation
on investments (5,056)
----------
Net Increase in Net Assets
Resulting from Operations $5,870
==========
Statement of Changes in Net Assets
(dollars in thousands)
Year endYear ended
July 31,July 31,
1999 1998
------------------
Operations:
Net investment income $10,926 $9,399
Net realized gain on investments 1,150 1,474
Net unrealized depreciation
on investments (6,206) (674)
------------------
Net increase in net assets
resulting from operations 5,870 10,199
------------------
Dividends Paid from Net
Investment Income (10,912) (9,406)
------------------
Capital Share Transactions:
Proceeds from shares sold:
10,081,007 and 6,125,626 shares, respecti150,785 90,775
Proceeds from shares issued in
reinvestment of net investment
income dividends:
525,895 and 436,639 shares, respectively 7,841 6,463
Cost of shares repurchased:
6,566,151 and 5,009,998 shares, respectiv(97,927)(74,180)
------------------
Net increase in net assets
resulting from capital share
transactions 60,699 23,058
------------------
Total Increase in Net Assets 55,657 23,851
Net Assets:
Beginning of year 226,974 203,123
------------------
End of year (including undistributed $282,631$226,974
net investment income: $34 and $1, respec==================
See Notes to Financial Statements
</TABLE>
Limited Term Tax-Exempt Bond Fund of America
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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 ten years.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Tax-exempt securities are valued at prices obtained from
a pricing service, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. The ability of the issuers
of the debt securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
Short-term securities maturing within 60 days are valued at amortized cost,
which approximates market value. Securities and assets for which representative
market quotations are not readily available are valued at fair value as
determined in good faith by a committee appointed by the Board of Trustees.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for as of the trade date. Realized gains and losses from
securities transactions are determined based on specific identified cost. In
the event securities are purchased on a delayed delivery or "when-issued"
basis, the fund will instruct the custodian to segregate liquid assets
sufficient to meet its payment obligations in these transactions. Interest
income is recognized on an accrual basis. Premiums and original issue discounts
on securities are amortized daily over the expected life of the security.
Amortization of market discounts on securities is recognized upon disposition.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are
declared daily after the determination of the fund's net investment income and
are paid to shareholders monthly.
PREPAID ORGANIZATION EXPENSES - Expenses incurred in organizing the fund are
capitalized and amortized on a straight line basis over five years. In the
event 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.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of July 31, 1999, net unrealized depreciation on investments for book and
federal income tax purposes aggregated $73,000, of which $2,781,000 related to
appreciated securities and $2,854,000 related to depreciated securities. There
was no difference between book and tax realized gains on securities
transactions for the year ended July 31, 1999. During the year ended July 31,
1999, the fund utilized a capital loss carryforward totaling $989,000 to
offset, for tax purposes, capital gains realized during the year up to such
amount. The fund had available at July 31, 1999 a net capital loss carryforward
totaling $1,833,000 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. The fund will not make distributions from capital gains while a
capital loss carryforward remains.
The cost of portfolio securities for book and federal income tax purposes was
$280,386,000 at July 31, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $999,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company,
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; plus 3.00% of the fund's
monthly gross investment.
The Investment Advisory and Service Agreement provides for a fee reduction to
the extent that 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 twelve 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
$63,000 for the year ended July 31, 1999.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may
expend up to 0.30% of its average net assets annually for any activities
primarily intended to result in sales of fund shares, provided the categories
of expenses for which reimbursement is made are approved by the fund's Board of
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, 1999, distribution expenses under the Plan were $794,000. Had no
limitation been in effect, the fund would have paid $1,185,000 in distribution
expenses under the Plan. As of July 31, 1999, accrued and unpaid distribution
expenses were $71,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $189,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $70,000.
DEFERRED TRUSTEES' FEES - 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, 1999, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1994), net of any payments to
Trustees, were $45,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $97,784,000 and $42,363,000, respectively, during the
year ended July 31, 1999.
As of July 31, 1999, accumulated net realized loss on investments was
$1,833,000 and paid-in capital was $284,505,000. The fund reclassified $19,000
to undistributed net investment income from undistributed net realized gains,
for the year ended July 31, 1999 as a result of permanent differences between
book and tax.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $5,000 was paid by these credits rather than in cash.
<TABLE>
Per-Share Data and Ratios
<S> <C> <C> <C>
Year ended July 31
1999 1998 1997
--------- --------- ---------
Net Asset Value, Beginning of Period $14.85 $14.79 $14.36
--------- --------- ---------
Income From Investment Operations:
Net investment income .61 .66 .68
Net gains or losses on securities (both
realized and unrealized) (.23) .06 .43
--------- --------- ---------
Total from investment operations .38 .72 1.11
--------- --------- ---------
Less Distributions:
Dividends (from net investment income) (.61) (.66) (.68)
--------- --------- ---------
Net Asset Value, End of Period $14.62 $14.85 $14.79
========= ========= =========
Total Return (2) 2.59% 4.95% 7.96%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $283 $227 $203
Ratio of expenses to average net assets before fee .77% .83% .83%
Ratio of expenses to average net assets after fee w .75% .75% .75%
Ratio of net income to average net assets 4.12% 4.40% 4.70%
Portfolio turnover rate 17.00% 34.07% 31.89%
Period
October 6,
Year ended July 31 1993(1)
to July
1996 1995 31, 1994
--------- --------- ---------
Net Asset Value, Beginning of Period $14.29 $14.10 $14.29
--------- --------- ---------
Income From Investment Operations:
Net investment income .69 .69 .49
Net gains or losses on securities (both
realized and unrealized) .07 .19 (.19)
--------- --------- ---------
Total from investment operations .76 .88 .30
--------- --------- ---------
Less Distributions:
Dividends (from net investment income) (.69) (.69) (.49)
--------- --------- ---------
Net Asset Value, End of Period $14.36 $14.29 $14.10
========= ========= =========
Total Return (2) 5.39% 6.45% 2.11%(3)
Ratios/Supplemental Data:
Net assets, end of period (in millions) $197 $191 $189
Ratio of expenses to average net assets before fee .85% .90% .73%(3)
Ratio of expenses to average net assets after fee w .74% .64% .51%(3)
Ratio of net income to average net assets 4.77% 4.88% 3.67%(3)
Portfolio turnover rate 34.95% 45.82% 42.21%(3)
/1/Commencement of operations.
/2/Excludes maximum sales charge of 4.75%.
/3/Based on operations for the period shown and,
accordingly, not representative of a full year.
</TABLE>
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, 1999, the results of its operations, the
changes in its net assets and the per-share data and ratios for the years
indicated, in conformity with generally accepted accounting principles. These
financial statements and per-share data and ratios (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at July 31, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
Pricewaterhousecoopers LLP
Los Angeles, California
August 31, 1999
Tax Information (unaudited)
During the fiscal year ended July 31, 1999, the fund paid 61.4 cents per share
of exempt-interest distributions within the meaning of Section 852(b)(5)(A) of
the Internal Revenue Code and a taxable ordinary income distribution of 0.10
cents per share.
The fund designates a capital gain distribution a portion of earnings and
profits paid to shareholders in redemption of their shares.
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.
PART C
OTHER INFORMATION
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
ITEM 23. EXHIBITS
(a) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(b) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(c) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(d) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(e) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(f) None
(g) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(h) None
(i) Not applicable to this filing
(j) Consent of Independent Accountants
(k) None
(l) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(m) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(n) None
(o) None
(p) Code of Ethics
ITEM 24 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 25. 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.
ITEM 25. INDEMNIFICATION (CONTINUED)
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
Trustee, 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 Trustee, 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).
ITEM 25. INDEMNIFICATION (CONTINUED)
(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 TEM 25.
INDEMNIFICATION (CONTINUED)
asserted by such Trustee, officer of controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
None
ITEM 27. PRINCIPAL UNDERWRITERS
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., The Investment Company of America, Intermediate Bond Fund of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America,
U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
#61 Point West Circle
Little Rock, AR 72211
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
5400 Mount Meeker Road
Suite 1
Boulder, CO 80301-3508
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
John A. Blanchard Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Mick L. Brethower Senior Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Greenwood Village, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, President and None
Co-Chief
Executive Officer
Ruth M. Collier Senior Vice President None
29 Landsdowne Drive
Larchmont, NY 10538
H Carlo Cordasco Assistant Vice President None
S David Coolbaugh Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
L Carl D. Cutting Vice President None
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
633 Menlo Avenue, Suite 210
Menlo Park, CA 94025
Peter J. Doran Director, Senior Vice None
President
Suite 216W
100 Merrick Road
Rockville Centre, NY 11570
L Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director Chairman of the Board
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Assistant Vice President None
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
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
Arthur J. Levine Senior Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
5506 East Mineral Lane
Littleton, CO 80122
Mark J. Lien Regional Vice President None
5570 Beechwood Terrace
West Des Moines, IA 50266
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - None
Institutional
Investment Services
LW Robert W. Lovelace Director None
Stephen A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice None
President
L E. Lee McClennahan Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - None
Institutional
Investment Services
David R. Murray Vice President None
60 Briant Drive
Sudbury, MA 01776
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 Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Gary Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
6133 Calle del Paisano
Scottsdale, AZ 85251
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
L John O. Post Senior Vice President None
S Richard P. Prior Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
P.O. Box 472245
Charlotte, NC 28247
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director None
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive
Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
L John C. Smith Assistant Vice President None
-
Institutional Investment
Services
Rodney G. Smith Vice President None
100 N. Central Expressway, Suite 1214
Richardson, TX 75080
S Sherrie Snyder-Senft Assistant Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
Theresa Souiller Assistant Vice President None
2652 Excaliber Court
Virginia Beach, VA 23454
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
181 Second Avenue, Suite 228
San Mateo, CA 94401
LW Eric H. Stern Director None
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
7 Gladstone Lane
Laguna Niguel, CA 92677
Thomas E. Warren Regional Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George Wenzel Regional Vice President None
3406 Shakespeare Drive
Troy, MI 48084
H J. D. Wiedmaier Assistant Vice President None
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice None
President
L Robert L. Winston Director, Senior Vice None
President
William R. Yost 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
2887 Player Lane
Tustin Ranch, CA 92782
</TABLE>
__________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. 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 held in the
offices of its investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92821.
Registrant's records covering shareholder accounts are maintained and kept by
its transfer agent, American Funds Service Company, 135 South State College
Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by its custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, New York 10081.
ITEM 29. MANAGEMENT SERVICES
None
ITEM 30. UNDERTAKINGS
n/a
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 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 29/th/ day of November, 1999.
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 November 29, 1999, 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* Trustee
Diane C. Creel* Trustee
Martin Fenton, Jr.* Trustee
Leonard R. Fuller* Trustee
/s/ Abner D. Goldstine President and Trustee
(Abner D. Goldstine)
/s/ Paul G. Haaga, Jr. Chairman and Trustee
(Paul G. Haaga, Jr.
Richard G. Newman* Trustee
</TABLE>
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 9 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
August 31, 1999, relating to the financial statements and per-share data and
ratios of Limited Term Tax-Exempt Bond Fund of America, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings
"Independent Accountants" and "Reports to Shareholders" in such Statement of
Additional Information and to the reference to us under the heading "Financial
Highlights" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
November 24, 1999
<PAGE>
THE CAPITAL GROUP COMPANIES
CODE OF CONDUCT
(as of October 1, 1999)
All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.
Over the years we have earned a reputation for the highest integrity.
Regardless of lesser standards that may be followed through business or
community custom, we must observe exemplary standards of honesty and integrity.
REPORTING VIOLATIONS
If you know of any violation of our Code of Conduct, you have a responsibility
to report it. Deviations from controls or procedures that safeguard the
company, including the assets of shareholders and clients, should also be
reported.
You can report confidentially to:
- - Your manager or department head
- - CGC Audit Committee:
Donnalisa Barnum
Larry P. Clemmensen
Roberta Conroy
Bill Hurt
Sonny Kamm
Mike Kerr
John McLaughlin
Bob O'Donnell
Tom Rowland
John Smet
Mark Smith
Wally Stern
Antonio Vegezzi
Shaw Wagener
Kelly Webb
- - Mike Downer or any other lawyer in the CGC Legal Group
- - Don Wolfe of Deloitte & Touche LLP (CGC's auditors)
CONFLICTS OF INTEREST
A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual or
potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a business
entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.
REPORTING -- Although the limitations on accepting gifts applies to ALL
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report ALL gifts received)
and business entertainment in which an event exceeds $75.
GIFTS POLICY COMMITTEE
The Gifts Policy Committee oversees administration of and compliance with the
Policy.
INSIDER TRADING
Antifraud provisions of the federal securities laws generally prohibit persons
while in possession of material nonpublic information from trading on or
communicating the information to others. Sanctions for violations can include
civil injunctions, permanent bars from the securities industry, civil penalties
up to three times the profits made or losses avoided, criminal fines and jail
sentences.
While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply to
all CGC associates and extend to activities both within and outside each
associate's duties. All associates must read the Insider Trading Policy in the
Appendix of the CGC Handbook for Associates.
PERSONAL INVESTING POLICY
As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.
You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.
There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.
ALL ASSOCIATES
Information regarding proposed or partially completed plans by CGC companies to
buy or sell specific securities must not be divulged to outsiders.
Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to any initial public offering or any other
securities offering that is subject to allocation (so-called "hot issues").
Generally, this prohibition applies to spouses of associates and any family
member residing in the same household. However, an associate may request that
the Personal Investing Policy Committee consider granting an exception.
COVERED PERSONS
Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. You should take the time to review this memo as ongoing interpretations
of the policy will be explained therein.
Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you are
trustee or custodian have a transaction in a security when the funds or client
accounts are considering or concluding a transaction in the same security.
Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, and investment administration
personnel (see below).
PRE-CLEARANCE OF SECURITIES TRANSACTIONS
Before buying or selling securities, covered persons should find out if the
purchase or sale of a particular security would involve a conflict of interest.
This involves checking with the CGC Legal Group based in LAO by calling [phone
number]. (You will generally receive a response within one business day.)
Unless a shorter period is specified, clearance is good for two trading days
(including the day you check). If you have not executed your transaction
within this period, you must again pre-clear your transaction.
Covered persons must promptly submit quarterly reports of certain transactions.
Transactions of securities (including fixed-income securities) or options (see
below) must be pre-cleared as described above and reported except for: gifts
or bequests of securities (although pre-clearance and reporting are required if
these securities are later sold); open-end investment companies (mutual funds);
shares of CGC stock; money market instruments with maturities of one year or
less; direct obligations of the U.S. Government, bankers' acceptances, CDs or
other commercial paper; commodities; and options or futures on broad-based
indices. Covered persons must also report transactions made by family members
in their household and by those for which they are a trustee or custodian.
Reporting forms will be supplied at the appropriate times.
In addition, the following transactions must be reported but need not have been
pre-cleared: transactions in debt instruments rated "A" or above by at least
one national rating service; sales pursuant to tender offers; and dividend
reinvestment plan purchases (provided the purchase pursuant to such plan is
made with dividend proceeds only).
BROKERAGE ACCOUNTS
Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. The broker is
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may be
more favorable than the broker grants to accounts with similar characteristics.
In addition, covered persons must direct their brokers to send duplicate
confirmations and copies of all periodic statements on a timely basis to The
Legal Group of The Capital Group Companies, Inc., [P.O. Box address]. ALL
DOCUMENTS RECEIVED IN THIS POST OFFICE BOX ARE KEPT STRICTLY CONFIDENTIAL.
[If extraneous information is included on an associate's statements (E.G.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]
ANNUAL RECERTIFICATION
All access persons will be required to certify annually that they have read and
understood the Personal Investing Policy and recognize that they are subject
thereto.
ADDITIONAL RULES FOR INVESTMENT PERSONNEL
DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Any associate who is in a
position to recommend the purchase or sale of securities by the fund or client
accounts must not recommend securities that s/he personally owns without FIRST
disclosing ownership. Typically, a complete disclosure of holdings (such as in
the annual disclosure of personal securities) satisfies this requirement.
BLACKOUT PERIOD -- Portfolio counselors/managers and research analysts may not
buy or sell a security within at least seven calendar days before and after A
FUND OR CLIENT ACCOUNT THAT HIS OR HER COMPANY MANAGES transacts in that
security. Profits resulting from transactions occurring within this time
period are subject to special review and may be subject to disgorgement.
BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.
ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS - Investment personnel will
be required to disclose all personal securities holdings upon commencement of
employment and thereafter on an annual basis. Reporting forms will be supplied
for this purpose.
SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company BEFORE
SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY TRADED COMPANIES.
PERSONAL INVESTING POLICY COMMITTEE
Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Policy Committee.
<PAGE>
THE CAPITAL GROUP COMPANIES
CODE OF CONDUCT
(as of January 1, 1998)
All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.
Over the years we have earned a reputation for the highest integrity.
Regardless of lesser standards that may be followed through business or
community custom, we must observe exemplary standards of honesty and integrity.
If you have trouble interpreting laws or regulations, ask CGC's Legal Group for
advice.
REPORTING VIOLATIONS
If you know of any violation of our Code of Conduct, you have a responsibility
to report it. Deviations from controls or procedures that safeguard the
company, including the assets of shareholders and clients, should also be
reported.
You can report confidentially to:
- - Your manager or department head
- - CGC Audit Committee:
Donnalisa Barnum
Larry P. Clemmensen
Roberta Conroy
Bill Hurt
Sonny Kamm
Mike Kerr
Bob O'Donnell
John Smet
Mark Smith
Wally Stern
Kelly Webb
Shaw Wagener
- - Mike Downer or any other lawyer in the CGC Legal Group
- - Don Wolfe of Deloitte & Touche LLP (CGC's auditors)
CONFLICTS OF INTEREST
A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual or
potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a business
entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.
REPORTING -- Although the limitations on accepting gifts applies to ALL
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report ALL gifts received)
and business entertainment in which an event exceeds $75.
GIFTS POLICY COMMITTEE
The Gifts Policy Committee oversees administration of and compliance with the
Policy. If you have any questions about the Policy, you should contact Ken
Gorvetzian, Kristine Nishiyama, or Michele Yang.
INSIDER TRADING
Antifraud provisions of the federal securities laws generally prohibit persons
while in possession of material nonpublic information from trading on or
communicating the information to others. Sanctions for violations can include
civil injunctions, permanent bars from the securities industry, civil penalties
up to three times the profits made or losses avoided, criminal fines and jail
sentences.
While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply to
all CGC associates and extend to activities both within and outside each
associate's duties. All associates must read the Insider Trading Policy in the
Appendix of the CGC Handbook for Associates.
PERSONAL INVESTING POLICY
As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.
You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.
There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.
ALL ASSOCIATES
Information regarding proposed or partially completed plans by CGC companies to
buy or sell specific securities must not be divulged to outsiders.
Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to any initial public offering or any other
securities offering that is subject to allocation (so-called "hot issues").
Generally, this prohibition applies to spouses of associates and any family
member residing in the same household. However, an associate may request that
the Personal Investing Policy Committee consider granting an exception by
contacting Cheryl Ruff or Michele Yang.
COVERED PERSONS
Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. A MEMO CONTAINING MORE IN-DEPTH DETAILS OF THE PERSONAL INVESTING
POLICY IS ATTACHED TO EACH QUARTERLY REPORTING FORM. You should take the time
to review this memo as ongoing interpretations of the policy will be explained
therein.
Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you are
trustee or custodian have a transaction in a security when the funds or client
accounts are considering or concluding a transaction in the same security.
Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, and investment administration
personnel (see below).
PRE-CLEARANCE OF SECURITIES TRANSACTIONS
Before buying or selling securities, covered persons should find out if the
purchase or sale of a particular security would involve a conflict of interest.
This involves checking with the CGC Legal Group based in LAO by calling [phone
number]. (You will generally receive a response within one business day.)
Unless a shorter period is specified, clearance is good for two trading days
(including the day you check). If you have not executed your transaction
within this period, you must again pre-clear your transaction.
Covered persons must promptly submit quarterly reports of certain transactions.
Transactions of securities (including fixed-income securities) or options (see
below) must be pre-cleared as described above and reported except for: gifts
or bequests of securities (although pre-clearance and reporting are required if
these securities are later sold); open-end investment companies (mutual funds);
shares of CGC stock; money market instruments with maturities of one year or
less; direct obligations of the U.S. Government, bankers' acceptances, CDs or
other commercial paper; commodities; and options or futures on broad-based
indices. Covered persons must also report transactions made by family members
in their household and by those for which they are a trustee or custodian.
Reporting forms will be supplied at the appropriate times.
In addition, the following transactions must be reported but need not have been
pre-cleared: transactions in debt instruments rated "A" or above by at least
one national rating service; sales pursuant to tender offers; and dividend
reinvestment plan purchases (provided the purchase pursuant to such plan is
made with dividend proceeds only).
BROKERAGE ACCOUNTS
Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. The broker is
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may be
more favorable than the broker grants to accounts with similar characteristics.
In addition, covered persons must direct their brokers to send duplicate
confirmations and copies of all periodic statements on a timely basis to The
Legal Group of The Capital Group Companies, Inc., [P.O. Box address]. ALL
DOCUMENTS RECEIVED IN THIS POST OFFICE BOX ARE KEPT STRICTLY CONFIDENTIAL.
[If extraneous information is included on an associate's statements (E.G.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]
ANNUAL RECERTIFICATION
All access persons will be required to certify annually that they have read and
understood the Personal Investing Policy and recognize that they are subject
thereto.
ADDITIONAL RULES FOR INVESTMENT PERSONNEL
DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Any associate who is in a
position to recommend the purchase or sale of securities by the fund or client
accounts must not recommend securities that s/he personally owns without FIRST
disclosing ownership. Typically, a complete disclosure of holdings (such as in
the annual disclosure of personal securities) satisfies this requirement. If
you have questions, you should contact Michele Yang, Mike Downer, or Cheryl
Ruff.
BLACKOUT PERIOD -- Portfolio counselors/managers and research analysts may not
buy or sell a security within at least seven calendar days before and after A
FUND OR CLIENT ACCOUNT THAT HIS OR HER COMPANY MANAGES transacts in that
security. Profits resulting from transactions occurring within this time
period are subject to special review and may be subject to disgorgement.
BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.
ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS - Investment personnel will
be required to disclose all personal securities holdings upon commencement of
employment and thereafter on an annual basis. Reporting forms will be supplied
for this purpose.
SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company BEFORE
SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY TRADED COMPANIES.
PERSONAL INVESTING POLICY COMMITTEE
Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Policy Committee (by
calling Cheryl Ruff or Michele Yang).
