[The American Funds Group(r)]
Limited Term Tax-Exempt Bond Fund of America
Semi-Annual Report
for the six months ended January 31, 2000
[illustration: fall forest landscape with dirt path]
Taking the Middle Path
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Limited Term Tax-Exempt Bond Fund of America (SM) seeks current income exempt
from federal income taxes, consistent with preservation of capital, through
investments in tax-exempt securities with effective maturities between three
and 10 years.
Limited Term Tax-Exempt Bond Fund of America is one of the 29 mutual funds in
The American Funds Group,(r) the nation's third-largest mutual fund family. For
nearly seven decades, Capital Research and Management Company, the American
Funds adviser, has invested with a long-term focus based on thorough research
and attention to risk.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the total
returns and average annual compound returns with all distributions reinvested
for periods ended December 31, 1999 (the most recent calendar quarter),
assuming payment of the 3.75% maximum sales charge at the beginning of the
stated periods - Since inception on October 6, 1993: +27.69%, or +4.00% a year;
5 years: +27.11%, or +4.91% a year; 12 months: -4.30%. These results reflect
the effect of a contractual expense reimbursement. Without the reimbursement,
results would have been lower.
The fund's 30-day yield as of February 29, 2000, calculated in accordance with
the Securities and Exchange Commission formula, was 4.48%. The fund's
distribution rate as of that date was 4.31%. The SEC yield reflects income the
fund expects to earn based on its current portfolio of securities, while the
fund's distribution rate is based solely on the fund's past dividends.
Accordingly, the fund's SEC yield and distribution rate may differ.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. Income may be subject
to state or local income taxes and/or federal alternative minimum taxes.
Certain other income, as well as capital gain distributions, may be taxable.
Please see back cover for important information about Class A and B shares.
Fellow Shareholders:
Faced with a difficult municipal bond market, Limited Term Tax-Exempt Bond Fund
of America closed the first half of fiscal 2000 down slightly, but remained
ahead of the majority of its peers.
For the six months ended January 31, the fund's monthly dividends totaled 31.0
cents a share, all exempt from regular federal income taxes.
- - If you took those dividends in cash, they represented a tax-free income
return of 2.11% (4.22% annualized).
- - If you reinvested your dividends in additional fund shares, your income
return was 2.14% (4.28% annualized).
- - To match a 4.28% tax-free income return, a shareholder in the top federal tax
bracket of 39.6% would have had to earn 7.09% from a taxable investment.
Rising interest rates during the period drove down the price of most bonds,
including many bonds in the fund's portfolio. Reflecting the decline, the share
price fell to $14.20 on January 31 from $14.62 at the beginning of the period.
The fund's income return largely offset that shift, producing a decline in
value of 0.8% (not annualized) if you reinvested dividends, as most
shareholders do.
The fund remained ahead of the average intermediate municipal bond fund, which
lost 1.30%, according to Lipper Inc. The unmanaged Lehman Brothers 7-Year
Municipal Bond Index (which reflects no expenses) fell 0.19%.
Fund true to form
With interest rates climbing, Limited Term Tax-Exempt Bond Fund's shares would
be expected to lose value. However, much as the fund has done in similar
circumstances, it did not lose as much ground as most of its peers. This
tendency has put Limited Term Tax-Exempt Bond Fund ahead of the average
intermediate municipal bond fund for the six-month, one-year, five-year and
lifetime periods ended January 31, as measured by Lipper. (Rankings do not
reflect the effect of sales charges.) The fund has achieved this record even
though it has sometimes trailed many of its peers when municipal bonds rallied.
We believe this success is due to the fund's cautious strategy, which balances
conservation of principal with generating income. In practice, this has meant
the fund has tended to hold bonds with shorter maturities than many other
limited term tax-exempt bond funds.
Economic review
Keeping a watchful eye on inflationary pressures, the Federal Reserve Board
raised the federal funds rate (the interest rate banks charge each other on
overnight loans) twice during the fund's fiscal half-year - from 5.0% to 5.5%.
Including its most recent hike on March 21, the Fed has now raised the rate
five times since it began to tighten it on June 30, 1999.
While Fed actions and their timing can never be predicted with certainty,
looking forward it appears further upticks may be possible in the near term.
Inflation appears to remain subdued. That said, some upward pressure is
building behind wages and other key indicators. We will continue to monitor the
economy's movements and make appropriate adjustments to the fund's portfolio as
we believe necessary.
Portfolio review
The fund continues to maintain a high level of credit quality. The portion of
the portfolio in bonds rated A and above was nearly 70% at the close of the
period.
On January 31, the fund's portfolio consisted of 175 debt issues from 43 states
and territories. Our largest holdings are concentrated in health care facility
and housing bonds. Assets currently stand at $274 million.
We look forward to reporting to you again in six months in the fund's annual
report.
Cordially,
/s/ Paul G. Haaga, Jr. /s/ Abner D. Goldstine
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
March 22, 2000
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<S> <C> <C>
Limited Term Tax-Exempt Bond Fund of America
Investment Portfolio, January 31, 2000
Unaudited
Portfolio Composition
California (CA) - 9.96%
Michigan (MI) - 8.99%
Illinois (IL) - 7.77%
New York (NY) - 7.66%
Texas (TX) - 5.66%
Louisiana (LA) - 5.11%
North Carolina (NC) - 4.89%
Pennsylvania (PA) - 4.15%
Maine (ME) - 3.64%
Washington (WA) - 3.53%
Other states - 33.87%
Cash & Equivalents - 4.77%
Principal Market
Amount Value
Tax-Exempt Securities Maturing in More Than One Year - 95.23% (000) (000)
- ------------------------------------------------------------------- ------ ------
Alabama - 1.07%
Industrial Dev. Board of the City of Butler, Pollution Control Ref. Rev. $3,000 $2,925
Bonds (James River Project), Series 1993, 5.50% 2005
Alaska - 1.07%
Industrial Dev. and Export Auth., Power Rev. Bonds, First Series AMT 1,000 996
(Snettisham Hydroelectric Project), AMBAC Insured, 5.25% 2005
Student Loan Corp., Student Loan Rev. Bonds, AMBAC Insured AMT:
1997 Series A, 5.20% 2006 1,000 988
1999 Series A, 4.80% 2007 1,000 954
Arizona - 0.64%
Industrial Dev. Auth. of the County of Maricopa, Health Fac. Rev. Bonds 1,950 1,762
(Catholic Healthcare West Project), 1998 Series A, 4.30% 2005
California - 9.96%
Health Facs. Fncg. Auth.:
Hospital Rev. Bonds (Downey Community Hospital), Series 1993:
5.00% 2001 1,150 1,151
5.20% 2003 1,000 996
5.30% 2004 1,010 1,005
Rev. Bonds (Catholic Healthcare West), 1998 Series A:
5.00% 2006 1,000 925
5.00% 2007 1,000 909
Pollution Control Fncg. Auth., Solid Waste Disposal Ref. Rev. Bonds 3,500 3,083
(USA Waste Services, Inc. Project), Series 1998A AMT, 5.10% 2018
(2008) (1)
Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bonds 4,000 3,782
(Irvine Apartment Communities, LP), Series 1998A-1 AMT, 5.05% 2025
(2008) (1)
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Ref.
Rev. Cert. of Part. (Episcopal Homes Foundation):
Series 1997A, 5.25% 2007 840 831
Series 1998, 5.00% 2007 1,405 1,323
City of Duarte, City of Hope National Medical Center, Cert. of Part., 1,000 925
Series 1999A, 5.25% 2008
Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific
Project), 1995 Series A:
5.75% 2005 3,500 3,501
5.75% 2006 780 777
County of Los Angeles, Capital Asset Leasing Corp., Cert. of Part. 2,555 2,604
(Marina del Rey), Series A, 6.25% 2003
Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds 2,200 2,315
(Procter & Gamble Project), 1995 Series, 7.00% 2004
Sacramento Power Auth., Cogeneration Project Rev. Bonds (Campbell
Soup Project), 1995 Series:
6.50% 2004 2,000 2,069
6.50% 2005 1,100 1,140
Colorado - 3.15%
Housing and Fin. Auth., Single Family Program Senior Bonds, 1995 Series 530 530
C-2, 5.625% 2009 (2000) (1)
City and County of Denver, Airport System Rev. Bonds, Series 1992C 1,640 1,709
AMT, 6.55% 2003
Eaglebend Affordable Housing Corp., Multifamily Housing Project Rev.
Ref. Bonds, Series 1997 A:
5.45% 2002 355 354
5.75% 2007 2,585 2,545
The Regents of the University of Colorado, Ref. Cert. of Part. 2,415 2,502
(Telecommunications and Cogeneration Projects), Series 1996, AMBAC
Insured, 6.00% 2005
University of Colorado Hospital Auth., Hospital Ref. Rev. Bonds, Series 1,000 1,014
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) 500 519
6.375% 2004 (Escrowed to Maturity) 995 1,054
District of Columbia - 1.61%
G.O. Ref. Bonds, Series 1993D, FGIC Insured:
5.10% 2002 (Escrowed to Maturity) 932 941
5.10% 2002 68 69
Fixed Rate Rev. Bonds (National Academy of Sciences Project), Series 1999A, 1,065 1,049
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 1,047
6.00% 2007 (Escrowed to Maturity) 1,250 1,311
Florida - 1.00%
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds, 1,500 1,410
(Shell Point/Alliance Obligated Group, Shell Point Village Project),
Series 1999A, 5.25% 2005
Meadow Pointe II, Community Dev. Dist. (Pasco County), Capital Improvement 1,380 1,332
Rev. Bonds, Series 1998A, 5.25% 2003
Hawaii - 1.09%
Cert. of Part. (Kapolei State Office Building), 1998 Series A, AMBAC Insured:
4.10% 2004 2,125 1,998
5.00% 2005 1,000 990
Idaho - 1.07%
Housing and Fin. Association, Single Family Mortgage Bonds, AMT:
1998 Series C-2, 5.25% 2011 520 507
1998 Series E-3, 5.125% 2011 750 728
1998 Series H, 4.65% 2012 1,200 1,147
1998 Series I-2, 4.70% 2012 600 565
Illinois - 7.77%
Health Facs. Auth., Rev. Ref. Bonds:
Series 1997A (Advocate Health Care Network):
5.50% 2004 1,250 1,260
5.10% 2005 1,815 1,788
Series 1998A (Advocate Health Care Network), 5.00% 2006 1,730 1,675
Series 1998 (Centegra Health System), 5.50% 2007 2,480 2,413
Series 1997A (Highland Park Hospital Project), FGIC Insured, 5.50% 2005 1,490 1,511
Series 1998 (Northwestern Medical Faculty Foundation, Inc.), MBIA Insured, 1,810 1,804
5.25% 2006
Series 1993 (OSF Healthcare System), 5.25% 2001 2,300 2,309
Series 1999 (OSF Healthcare System):
5.125% 2004 815 801
5.25% 2005 855 838
5.375% 2006 900 883
5.50% 2008 1,000 972
Series 1997A (Victory Health Services), 5.25% 2004 1,755 1,726
Housing Dev. Auth., Multi-Family Housing Bonds, 1992 Series A, 6.55% 2003 1,165 1,205
Chicago O'Hare International Airport, Special Fac. Rev. Ref. Bonds, Series 1,000 1,080
1994 (American Airlines, Inc. Project), 8.20% 2024 (2004) (1)
County of Cook, G.O. Capital Improvement Bonds, Series 1996, FGIC Insured, 1,000 1,045
6.00% 2006
Indiana - 1.94%
Health Facs. Fncg. Auth., Hospital Rev. Bonds:
Charity Obligated Group, Series 1999D, 5.50% 2008 1,000 995
Clarian Health Partners, Inc., Series 1996A, MBIA Insured, 5.25% 2008 1,000 986
Hospital Auth.:
City of Fort Wayne, Rev. Bonds, (Parkview Health System, Inc. Project), 1,000 932
Series 1998, MBIA Insured, 4.10% 2004
St. Joseph County, Health System Bonds, (Memorial Health System), Series 1,010 1,012
1998A, 5.50% 2008
Housing Fin. Auth., Multifamily Housing Rev. Bonds (Indiana Affordable 1,400 1,385
Housing, Inc.), Series 1999A, 5.40% 2009
Iowa - 1.80%
Fin. Auth., Hospital Facs. Rev. Bonds:
Series 1998A (Iowa Health System), MBIA Insured, 5.25% 2007 1,895 1,878
Series 1999 (Mercy Medical Center Project), FSA Insured, 5.30% 2009 1,000 971
Student Loan Liquidity Corp., Student Loan Rev. Bonds, Series 1992C 2,000 2,093
AMT, 6.80% 2005
Kentucky - 0.98%
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement Rev. Bonds
(Appalachian Regional Healthcare, Inc. Project), Series 1997:
5.20% 2004 1,000 926
5.40% 2006 1,500 1,349
5.50% 2007 465 413
Louisiana - 5.11%
Public Facs. Auth., Hospital Rev. and Ref. Bonds (Franciscan Missionaries 4,500 4,537
of Our Lady Health System Project), Series 1998A, FSA Insured, 5.50% 2006
Jefferson Parish Hospital Service Dist. No. 2, Parish of Jefferson, 2,150 2,129
Hospital Rev. Bonds, Series 1998, FSA Insured, 5.00% 2005
Lake Charles Harbor and Terminal Dist., Port Facs. Rev. Ref. Bonds 5,000 5,381
(Trunkline LNG Co. Project), Series 1992, 7.75% 2022
Parish of St. Charles, Pollution Control Rev. Ref. Bonds (Entergy Louisiana, 2,000 1,967
Inc. Project), Series 1999-C, 5.35% 2029 (2003) (1)
Maine - 3.64%
Educational Loan Marketing Corp., Senior Student Loan Rev. Bonds, AMT:
Series 1991, 6.90% 2003 3,295 3,345
Series 1994A-4:
5.95% 2003 1,000 1,028
6.05% 2004 1,500 1,547
Housing Auth., Mortgage Purchase Bonds:
1994 Series E, 6.30% 2002 1,280 1,284
1994 Series C-1, 5.90% 2015 1,325 1,353
Student Loan Rev. Ref. Bonds, Series 1992A-1 AMT:
6.20% 2003 515 531
6.30% 2004 880 908
Maryland - 0.69%
Community Dev. Administration, Dept. of Housing and Community Dev., 1,905 1,904
Single Family Program Bonds, 1994 First Series, 5.70% 2017 (2004) (1)
Massachusetts - 0.90%
Industrial Fin. Agcy., Resource Recovery Rev. Ref. Bonds (Ogden Haverhill 1,550 1,418
Project), Series 1998A AMT, 5.15% 2007
The New England Education Loan Marketing Corp., Student Loan Rev. Ref. 1,000 1,041
Bonds, 1992 Senior Issue A, 6.50% 2002
Michigan - 8.99%
Hospital Fin. Auth., Rev. Ref. Bonds:
Genesys Health System Obligated Group, Series 1995A, 7.20% 2003 1,375 1,479
(Escrowed to Maturity)
Pontiac Osteopathic, Series 1994A, 5.375% 2006 4,345 4,032
Hospital Fin. Auth., Hospital Rev. and Ref. Bonds:
The Detroit Medical Center Obligated Group, AMBAC Insured:
Series 1993B, 5.00% 2006 1,000 978
Series 1997A, 5.00% 2006 1,000 978
Hackley Hospital Obligated Group, Series 1998A, 4.90% 2007 1,140 1,052
Henry Ford Health System, Series 1999A, 5.50% 2008 1,000 984
Mercy Health Services, Series 1997T, 6.25% 2011 1,000 1,018
Sinai Hospital of Greater Detroit, Series 1995, 6.00% 2008 2,000 1,875
Hospital Fin. Auth. Variable Rate Rev. Bonds (Ascension Health Credit Group):
Series 1999B-3, 5.30% 2033 (2006) (1) 5,000 4,945
Series 1999B-4, 5.375% 2033 (2007) (1) 2,000 1,975
Housing Dev. Auth., Rental Housing Rev. Bonds, 1992 Series A, AMBAC 1,200 1,254
Insured, 6.40% 2005
City of Detroit, G.O. Ref. Bonds (Unlimited Tax):
Series 1995-A, 6.25% 2004 1,000 1,036
Series 1995-B, 6.75% 2003 2,000 2,090
City of Flint Hospital Building Auth., Rev. Ref. Bonds (Hurley Medical 1,000 965
Center), Series 1998A, 5.00% 2003
Minnesota - 0.35%
City of Maplewood, Health Care Fac. Rev. Bonds (HealthEast Project), 1,000 966
Series 1996, 5.80% 2003
Nebraska - 0.58%
Hospital Auth. No. 1 of Lancaster County, Rev. Bonds, Series 1991A 1,530 1,586
(Sisters of Charity Health Care Systems, Inc.), MBIA Insured, 6.375% 2005
Nevada - 0.34%
Housing Division, Single Family Mortgage Bonds, 1998 Series B-1, 5.20% 2011 995 936
New Hampshire - 1.09%
Business Fin. Auth., Pollution Control Ref. Rev. Bonds (The United 3,000 2,982
Illuminating Company Project), Series 1999A AMT, 5.40% 2029 (2002)(1)
New Jersey - 1.95%
Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village
Project), Series 1998A:
5.00% 2006 1,275 1,191
5.05% 2007 1,375 1,265
Housing and Mortgage Fin. Agcy., Home Buyer Rev. Bonds, 1994 Series I, 2,900 2,904
MBIA Insured, 5.60% 2016
New Mexico - 0.26%
Educational Assistance Foundation, Student Loan Rev. Bonds, Subordinate 695 712
1992 Series One-B AMT, 6.85% 2005
New York - 7.66%
Dormitory Auth.:
Center for Nursing & Rehabilitation, Inc., FHA-Insured Mortgage Nursing 870 857
Home Rev. Bonds, Series 1997, 4.75% 2007
Cert. of Part., on behalf of the City University of New York, as Lessee 1,500 1,544
(John Jay College of Criminal Justice Project Ref.), 6.00% 2006
Secured Hospital Rev. Ref. Bonds:
Saint Agnes Hospital, Series 1998A, 4.80% 2006 1,000 962
Wyckoff Heights Medical Center, Series 1998H, 5.125% 2008 2,000 1,939
Housing Fin. Agcy., Health Facs. Rev. Bonds (New York City), 1996 Series A 5,450 5,578
Ref., 6.00% 2006
Port Auth. of New York and New Jersey, Special Project Bonds (Delta Air Lines, 3,000 3,126
Inc. Project), LaGuardia Airport Passenger Terminal, Series 1R, 6.95% 2008
State Medical Care Facs. Fin. Agcy., Mental Health Services Facs. Improvement
Rev. Bonds, Series 1997B:
5.30% 2004 1,620 1,627
6.00% 2007 1,000 1,030
Castle Rest Residential Health Care Fac., FHA-Insured Mortgage Rev. Bonds, 1,400 1,357
Series 1997A, 4.875% 2007
Dutchess County Industrial Dev. Agcy., Industrial Dev. Bonds (IBM Project), 2,000 1,956
Series 1999 AMT, 5.45% 2029 (2009) (1)
City of New York, G.O. Bonds, Fiscal 1996 Series E, 6.50% 2004 1,000 1,049
North Carolina - 4.89%
Eastern Municipal Power Agcy., Power System Rev. Bonds, Ref.:
Series 1993B:
6.00% 2005 (2003) (1) 1,330 1,337
6.125% 2009 1,750 1,737
Series 1993C, 5.50% 2007 1,550 1,504
Series 1999D, 5.45% 2004 1,000 989
Municipal Power Agcy. Number 1, Catawba Electric Rev. Bonds, Series 1992:
5.75% 2002 1,010 1,016
5.90% 2003 1,000 1,009
6.00% 2004 4,525 4,572
6.00% 2005 1,250 1,260
Ohio - 1.11%
Air Quality Dev. Auth., Pollution Control Rev. Ref. Bonds (Ohio Edison Company 1,000 983
Project), Series 1999C, 5.80% 2016 (2004) (1)
Housing Fin. Agcy., Single Family Mortgage Rev. Bonds, 1992 Series A-2 AMT, 15 15
5.70% 2013 (2000) (1)
The Student Loan Funding Corp., Cincinnati, Student Loan Rev. Bonds, Series 1,000 989
1988B-3 AMT, AMBAC Insured, 5.125% 2005
County of Knox, Hospital Facs. Ref. Rev. Bonds, Series 1998 (Knox Community 1,155 1,060
Hospital), Asset Guaranty Insured, 4.70% 2008
Oklahoma - 0.84%
Industries Auth., Health System Rev. Ref. Bonds (INTEGRIS Health), Series
1995D, AMBAC Insured:
5.25% 2004 1,000 1,006
5.25% 2006 1,300 1,296
Pennsylvania - 4.15%
Blair County Hospital Auth., Hospital Rev. Bonds (Altoona Hospital Project), 2,180 2,157
1998 Series A, AMBAC Insured, 5.00% 2005
Delaware County Industrial Dev. Auth., Pollution Control Rev. Ref. Bonds, 1,500 1,452
1999 Series A (PECO Energy Co. Project), 5.20% 2021 (2004) (1)
Hospitals and Higher Education Facs. Auth. of Philadelphia, Hospital Rev.
Bonds (Jefferson Health System), Series 1997 A:
5.50% 2006 2,045 2,029
5.50% 2008 1,000 974
Montgomery County Industrial Dev. Auth., Pollution Control Rev. Ref. Bonds, 1,500 1,457
1999 Series A (PECO Energy Co. Project), 5.20% 2030 (2004) (1)
Philadelphia Auth. for Industrial Dev., Airport Rev. Bonds (Philadelphia 3,410 3,327
Airport System Project), Series 1998A AMT, FGIC Insured, 5.25% 2009
Rhode Island - 0.50%
Student Loan Auth., Student Loan Rev. Ref. Bonds, Series 1992B AMT, 1,300 1,358
6.90% 2003 (2001) (1)
South Carolina - 0.86%
Florence County, Hospital Rev. Bonds, McLeod Regional Medical Center 2,330 2,351
Project, MBIA Insured, Series 1998A, 5.50% 2007
South Dakota - 0.62%
Housing Dev. Auth., Homeownership Mortgage Bonds, 1996 Series A, 5.50% 2010 695 680
Student Loan Fin. Corp., Student Loan Rev. Bonds, Series 1994-A AMT, 5.95% 2001 1,000 1,017
Tennessee - 0.35%
Housing Dev. Agcy., Homeownership Program Bonds, Issue 1999-2A AMT, 5.05% 2008 1,000 962
Texas - 5.66%
G.O. Bonds, Veterans' Housing Assistance Program, Fund I, Series 1994C Ref. 490 482
Bonds, 6.25% 2015 (2000) (1)
Dept. of Housing and Community Affairs, Single Family Mortgage Rev. Bonds, 1,080 1,088
1996 Series B, MBIA Insured, 5.55% 2011 (1)
Bell County Health Facs. Dev. Corp., Hospital Rev. Ref. and Improvement Bonds 1,965 1,934
(Cook Children's Medical Center Project), Series 1998, FSA Insured, 5.25% 2008
Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner
Retirement Services, Inc. Obligated Group Project), Series 1998:
5.00% 2005 1,330 1,290
5.00% 2007 1,470 1,389
Brazos Higher Education Auth. Inc., Student Loan Rev. Ref. Bonds, Subordinate 910 915
Series, 1993C-2 AMT, 5.875% 2004
Harris County Health Facs. Dev. Corp.:
Hospital Rev. Ref Bonds (Children's Hospital Project), Series 1995, MBIA Insured, 1,000 1,040
6.00% 2004
Hospital Rev. Bonds (Memorial Hermann Hospital System Project), Series 1998, 1,000 984
FSA Insured, 5.25% 2008
City of Houston, Airport System, Subordinate Lien Rev. Bonds, Series 1998B AMT, 3,500 3,415
FGIC Insured, 5.25% 2009
Matagorda County, Navigation Dist. Number One, Rev. Ref. Bonds (Reliant Energy, 2,000 1,970
Inc. Project), Series 1999C, 5.20% 2029 (2002) (1)
Tarrant County, Health Facs. Dev. Corp., Health Resources Systems Rev. Bonds, 1,000 1,006
Series 1997A, MBIA Insured, 5.50% 2007
Utah - 1.70%
Housing Fin. Agcy. (Federally Insured or Guaranteed Mortgage Loans):
Single Family Mortgage Purchase Ref. Bonds:
Series 1996, 5.45% 2004 680 686
Series 1997 F-2 AMT, 5.50% 2010 (1) 975 954
Single Family Mortgage Bonds, AMT:
1998 Issue F-2 , 4.25% 2008 2,440 2,294
1998 Issue D-2 , 5.25% 2012 (1) 390 370
1998 Issue E-1 , 5.25% 2012 (1) 370 351
Vermont - 0.93%
Educational and Health Buildings Fncg. Agcy., Hospital Rev. Bonds (Medical 2,500 2,545
Center Hospital of Vermont Project), Series 1993, FGIC Insured, 5.75% 2007
Virginia - 1.48%
Housing Dev. Auth., Commonwealth Mortgage Bonds, 1995 Series A AMT, 1,000 1,007
Subseries A-1, 6.50% 2003
Industrial Dev. Auth. of the City of Norfolk, Hospital Rev. Bonds (Daughters 2,000 2,125
of Charity National Health System DePaul Medical Center), Series 1992A,
6.50% 2007 (2002) (1)
Pocahontas Parkway Association, Route 895 Connector Toll Road Rev. Bonds, 1,000 941
Senior Current Interest Bonds, Series 1998A, 5.25% 2007
Virgin Islands - 0.72%
Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund Loan Notes), Series 1998 C, 2,000 1,984
5.00% 2002
Washington - 3.53%
Health Care Facs. Auth.:
Rev. Bonds, Series 1997A (Catholic Health Initiatives), MBIA Insured, 5.50% 2005 1,000 1,015
Weekly Rate Demand Rev. Bonds (Virginia Mason Medical Center), 1997 Series A, 2,000 2,078
MBIA Insured, 6.00% 2006
Public Power Supply System:
Nuclear Project No. 1 Ref. Rev. Bonds, Series 1991A, 6.30% 2001 1,000 1,022
Nuclear Project No. 2 Ref. Rev. Bonds:
Series 1992A, 5.90% 2004 1,500 1,545
Series 1998A, 5.00% 2005 1,000 987
Series 1997B, 5.50% 2006 2,000 2,017
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1990B, 7.375% 2004 1,000 1,032
West Virginia - 0.37%
State Building Commission, Lottery Rev. Bonds, 1997 Series A, 1,000 1,005
MBIA Insured, 5.00% 2003
Wisconsin - 2.22%
Health and Educational Facs. Auth.:
Var. Rate Hospital Rev. Bonds (Charity Obligated Group, Daughters of Charity 3,715 3,683
National Health System), Series 1997D, 4.90% 2015 (2005) (1)
Rev. Bonds, Series 1999 (The Monroe Clinic, Inc.), 4.60% 2008 1,010 892
Housing and Econ. Dev. Auth., Housing Rev. Ref. Bonds, Series 1992A, 6.20% 2001 1,500 1,521
----------
261,237
----------
Tax-Exempt Securities Maturing in One Year or Less - 3.51%
Lincoln County, Wyoming, Pollution Control Rev. Bonds (Exxon Project), 1,000 1,000
Series 1984C, 3.65% 2014 (3)
State of North Carolina, Medical Care Commission Variable Rate Hospital 1,200 1,200
Rev. Bonds (Pooled Fncg. Project), Series 1996A, 3.65% 2016 (3)
State of Texas, Tax and Rev. Anticipation Notes, Series 1999A, 4.50% 8/31/00 7,400 7,423
----------
9,623
----------
TOTAL TAX-EXEMPT SECURITIES (cost:$278,806,000) 270,860
Excess of cash and receivables over payables 3,461
----------
NET ASSETS $274,321
========
(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) Coupon rate may change periodically.
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>
<TABLE>
<S> <C> <C>
Limited Term Tax-Exempt Bond Fund of America (unaudited)
Financial Statements
Statement of Assets and Liabilities
at January 31, 2000 (dollars in thousands)
Assets:
Tax-exempt securities
(cost: $278,806) $270,860
Cash 106
Receivables for--
Sales of investments $495
Sales of fund's shares 1,823
Accrued interest 3,618 5,936
---------- ----------
276,902
Liabilities:
Payables for--
Repurchases of fund's shares 2,092
Dividends payable 307
Management services 59
Accrued expenses 123 2,581
---------- ----------
Net Assets at January 31, 2000 --
Equivalent to $14.20 per share on 19,320,632
shares of beneficial interest issued and
outstanding; unlimited shares authorized $274,321
==========
Statement of Operations
for the six month ended January 31, 2000
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $7,201
Expenses:
Management services fee $546
Distribution expenses 430
Transfer agent fee 66
Reports to shareholders 31
Registration statement and prospectus 55
Postage, stationery and supplies 12
Trustees' fees 7
Auditing and legal fees 32
Custodian fee 3
Taxes other than federal income tax 0
Other expenses 8
----------
Total expenses before reimbursement 1,190
Reimbursement of expenses 107 1,083
---------- ----------
Net investment income 6,118
----------
Realized Loss and Net Unrealized
Depreciation on Investments
Net realized loss (511)
Net unrealized depreciation on
investments:
Beginning of period (73)
End of period (7,946)
----------
Net change in unrealized depreciation
on investments (7,873)
----------
Net realized loss and unrealized depreciation
on investments (8,384)
----------
Net Decrease in Net Assets
Resulting from Operations ($2,266)
==========
Statement of Changes in Net Assets
(dollars in thousands)
Six
months ended Year ended
January 31, July 31,
2000* 1999
---------- ----------
Operations:
Net investment income $6,118 $10,926
Net realized (loss) gain on investments (511) 1,150
Net unrealized depreciation
on investments (7,873) (6,206)
---------- ----------
Net (decrease) increase in net assets
resulting from operations (2,266) 5,870
---------- ----------
Dividends Paid from Net
Investment Income (6,152) (10,912)
---------- ----------
Capital Share Transactions:
Proceeds from shares sold:
7,377,889 and 10,081,007 shares, respectively 106,183 150,785
Proceeds from shares issued in
reinvestment of net investment
income dividends:
312,158 and 525,895 shares, respectively 4,484 7,841
Cost of shares repurchased:
7,699,411 and 6,566,151 shares, respectively (110,559) (97,927)
---------- ----------
Net increase in net assets
resulting from capital share
transactions 108 60,699
---------- ----------
Total (Decrease) Increase in Net Assets (8,310) 55,657
Net Assets:
Beginning of period 282,631 226,974
---------- ----------
End of period (including undistributed $274,321 $282,631
net investment income: $0 and $34, respectively ========== ==========
*Unaudited
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements (unaudited)
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 10 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.
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 January 31, 2000, net unrealized depreciation on investments for book and
federal income tax purposes aggregated $7,946,000, of which $569,000 related to
appreciated securities and $8,516,000 related to depreciated securities. There
was no difference between book and tax realized losses on securities
transactions for the six months ended January 31, 2000. The fund had available
at January 31, 2000 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
$278,806,000 at January 31, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $546,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Trustees of the fund are affiliated.
The Investment Advisory and Service Agreement provides for monthly fees,
accrued daily, based on an annual rate of 0.30% 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 income.
The Investment Advisory and Service Agreement provides for a reimbursement 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 12 consecutive
months, provided no advances are outstanding, or October 1, 2003. Expenses
that are not subject to these limitations are interest, taxes, brokerage
commissions, transaction costs, and extraordinary expenses. Reimbursements were
$107,000 for the six months ended January 31, 2000.
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 six months ended January 31,
2000, distribution expenses under the Plan were limited to $430,000. Had no
limitation been in effect, the fund would have paid $577,000 in distribution
expenses under the Plan. As of January 31, 2000, accrued and unpaid
distribution expenses were $71,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $72,000 (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 $66,000.
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 January 31, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1994), net of any payments to
Trustees, were $57,000.
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 $53,890,000 and $47,645,000, respectively, during the
six months ended January 31, 2000.
As of January 31, 2000, accumulated net realized loss on investments was
$2,344,000 and paid-in capital was $284,611,000.
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 $3,000 includes $2,000 that was paid by these credits
rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Per-Share Data and Ratios
Six months
ended Year ended July 31
January 31
2000(1) 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- -----
Net Asset Value, Beginning of Period $14.62 $14.85 $14.79 $14.36 $14.29 $14.10
----- ----- ----- ----- ----- -----
Income From Investment Operations:
Net investment income .31 .61 .66 .68 .69 .69
Net gains or losses on securities (both
realized and unrealized) (.42) (.23) .06 .43 .07 .19
----- ----- ----- ----- ----- -----
Total from investment operations (.11) .38 .72 1.11 .76 .88
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends (from net investment income) (.31) (.61) (.66) (.68) (.69) (.69)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $14.20 $14.62 $14.85 $14.79 $14.36 $14.29
===== ===== ===== ===== ===== =====
Total Return(2) (0.76)%(3) 2.59% 4.95% 7.96% 5.39% 6.45%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $274 $283 $227 $203 $197 $191
Ratio of expenses to average net assets .42%(3) .77% .83% .83% .85% .90%
before expense reimbursement
Ratio of expenses to average net assets .38%(3) .75% .75% .75% .74% .64%
after expense reimbursement
Ratio of net income to average net assets 2.14%(3) 4.12% 4.40% 4.70% 4.77% 4.88%
Portfolio turnover rate 17.93%(3) 17.00% 34.07% 31.89% 34.95% 45.82%
(1)Unaudited.
(2)Excludes maximum sales charge of 4.75%,
in effect prior to January 10, 2000, and
3.75% in effect thereafter.
(3)Based on operations for the period shown
and, accordingly, not representative
of a full year.
</TABLE>
Results of Shareholder Meeting (unaudited)
Shares Outstanding on September 3, 1999 (record date) 19,117,262
Shares Voting on December 1, 1999 12,495,790 (65.4%)
Proposal 1: Election of Trustees
<TABLE>
<CAPTION>
Percent of Percent of
Shares Votes Shares
Trustee Votes For Voting For Withheld Withheld
<S> <C> <C> <C> <C>
Richard G. Capen, Jr. 12,411,343 99.3% 84,447 0.7%
H. Frederick Christie 12,403,965 99.3 91,825 0.7
Don R. Conlan 12,404,423 99.3 91,367 0.7
Diane C. Creel 12,411,343 99.3 84,447 0.7
Martin Fenton 12,410,058 99.3 85,732 0.7
Leonard R. Fuller 12,411,343 99.3 84,447 0.7
Abner D. Goldstine 12,403,965 99.3 91,825 0.7
Paul G. Haaga, Jr. 12,404,423 99.3 91,367 0.7
Richard G. Newman 12,411,343 99.3 84,447 0.7
Frank M. Sanchez 12,413,710 99.3 82,080 0.7
</TABLE>
Proposal 2: Eliminate or revise certain of the fund's investment restrictions
<TABLE>
<CAPTION>
Percent of
Percent of Shares Percent of
Shares Votes Voting Shares
Votes For Voting For Against Against Abstentions Abstaining
<S> <C> <C> <C> <C> <C> <C>
2A.
Pledging 8,680,299 69.5% 539,896 4.3% 332,496 2.7%
Assets
(Broker non-votes = 2,943,099)
2B.
Oil, Gas or 8,689,981 69.5 508,478 4.1 354,232 2.8
Mineral
Exploration
(Broker non-votes = 2,943,099
</TABLE>
Proposal 3: Ratification of Auditors
<TABLE>
<CAPTION>
Percent of
Percent of Shares Percent of
Shares Votes Voting Shares
Votes For Voting For Against Against Abstentions Abstaining
<S> <C> <C> <C> <C> <C>
12,270,049 98.2% 46,764 0.4% 178,978 1.4%
</TABLE>
[The American Funds Group(r)]
Limited Term Tax-Exempt Bond Fund of America
Offices of the fund and of
the investment adviser,
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
Transfer agent
for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
Custodian of assets
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
There are two ways to invest in this fund. Class A shares are subject to a
3.75% maximum upfront sales charge that declines for accounts of $100,000 or
more. Class B shares have no upfront charge. They are, however, subject to
additional expenses of approximately 0.75% a year over the first eight years of
ownership. If redeemed within six years, they may also be subject to a
contingent deferred sales charge (5% maximum) that declines over time.
For information about your account or any of the fund's services, or for a
prospectus for any of the American Funds, please contact your financial
adviser. You may also call American Funds Service Company, toll-free, at
800/421-0180, or visit www.americanfunds.com on the World Wide Web. Please read
the prospectus carefully before you invest or send money.
This report is for the information of shareholders of Limited Term Tax-Exempt
Bond Fund of America, but it may also be used as sales literature when preceded
or accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 2000, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA CGD/INS/4561
Lit. No. LTEX-013-0300
