LIMITED TERM TAX EXEMPT BOND FUND OF AMERICA, 485BPOS, 2000-03-15

LIMITED TERM TAX EXEMPT BOND FUND OF AMERICA
485BPOS, 2000-03-15

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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. 10

and

Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 12

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
March 15, 2000, pursuant to paragraph (b) of rule 485.

<PAGE>

NATIONAL TAX-EXEMPT INCOME FUNDS

The Tax-Exempt Bond Fund of America/(R)/
American High-Income Municipal Bond Fund/SM/
Limited Term Tax-Exempt Bond Fund/SM/

Prospectus

MARCH 15, 2000

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>

---------------------------------------------------------
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA

333 South Hope Street
Los Angeles, California 90071

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 7
-------------------------------------------------------
Investment Objective, Strategies and Risks 10
-------------------------------------------------------
Management and Organization 15
-------------------------------------------------------
Shareholder Information 18
-------------------------------------------------------
Choosing a Share Class 19
-------------------------------------------------------
Purchase and Exchange of Shares 20
-------------------------------------------------------
Sales Charges 21
-------------------------------------------------------
Sales Charge Reductions and Waivers 23
-------------------------------------------------------
Plans of Distribution 25
-------------------------------------------------------
How to Sell Shares 26
-------------------------------------------------------
Distributions and Taxes 27
-------------------------------------------------------
Financial Highlights 28
-------------------------------------------------------
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS
TE-010-0300/RRD

<PAGE>

---------------------------------------------------------
RISK/RETURN SUMMARY

The funds seek to provide you with high current income that is exempt from
regular federal income tax by investing in municipal bonds. The Tax-Exempt Bond
Fund of America may invest in lower quality municipal bonds and American
High-Income Municipal Bond Fund invests a substantial portion of its portfolio
in lower quality municipal bonds. Limited Term Tax-Exempt Bond Fund invests
primarily in municipal bonds with average effective maturities between 3 and 10
years and with quality ratings of A or better, but may also invest
significantly in bonds rated Baa or BBB. The funds emphasize undervalued but
fundamentally sound investments in municipal obligations including those issued
to finance roads, schools, hospitals, airports and other public needs.
Municipalities include counties, cities, towns, and various regional or special
districts.

The funds are designed for investors seeking a high level of current income
exempt from federal income tax and, in the case of American High-Income
Municipal Bond Fund, investors who are able to tolerate greater credit risk and
price fluctuations than funds investing in higher quality bonds. An investment
in the funds is subject to risks, including the possibility that a 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. Lower quality and longer maturity
bonds may be subject to greater price fluctuations than higher quality and
shorter maturity bonds.

Your investment in the funds 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 FUNDS. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

INVESTMENT RESULTS

The following information provides some indication of the risks of investing in
the funds by showing changes in the funds' investment results from year to year
and by showing how the funds' average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.

Unlike the bar charts, the investment result tables reflect each fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 3.75% deducted. Sales
charges are reduced for purchases of $100,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.

Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the funds' Class B
shares begin investment operations on March 15, 2000, no results are available
as of the date of this prospectus.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

THE TAX-EXEMPT BOND FUND OF AMERICA

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

(Results do not include a sales charge; if one were included, results would
be lower.)

------------------------------------------------------------------------------
[bar chart]
1990 6.17%
1991 11.17%
1992 9.04%
1993 11.72%
1994 -4.82%
1995 17.28%
1996 4.57%
1997 8.98%
1998 6.04%
1999 -2.32%
[end bar chart]

The fund's highest/lowest quarterly results during this time period were:

<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 6.87% (quarter ended March 31, 1995)
LOWEST -4.93% (quarter ended March 31, 1994)
</TABLE>

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge -5.95% 5.92% 6.20% 7.78%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
Lehman Municipal Bond Index/3/ -2.06% 6.91% 6.89% N/A
------------------------------------------------------------------------------
</TABLE>

Class A yield: 4.80%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)

1 The fund began investment operations for Class A shares on October 3, 1979.

2 The fund is beginning investment operations for Class B shares on March 15,
2000.

3 The Lehman Brothers Municipal Bond Index represents the long-term investment
grade municipal bond market. This index is unmanaged and does not reflect
sales charges, commissions or expenses. This index was not in existence as of
the date the fund began investment operations, therefore, lifetime results are
not available.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

(Results do not include a sales charge; if one were included, results would
be lower.)
------------------------------------------------------------------------------
[bar chart]
1995 19.05%
1996 6.45%
1997 10.37%
1998 4.89%
1999 -2.31%
[end bar chart]

The fund's highest/lowest quarterly results during this time period were:

<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 7.46% (quarter ended March 31, 1995)
LOWEST -1.40% (quarter ended December 31, 1999)
</TABLE>

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS LIFETIME
<S> <C> <C> <C>
Class A/1/ -5.97% 6.64% 6.28%
(with the maximum sales charge deducted)
-----------------------------------------------------------------------------
Class B/2/ N/A N/A N/A
-----------------------------------------------------------------------------
Lehman Municipal Bond Index/3/ -2.06% 6.91% 6.26%
-----------------------------------------------------------------------------
Lipper High Yield Municipal Debt Average/4/ -4.16% 6.07% 5.53%
-----------------------------------------------------------------------------
</TABLE>

Class A yield: 5.17%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)

1 The fund began investment operations for Class A shares on September 26,
1994.

2 The fund is beginning investment operations for Class B shares on March 15,
2000.

3 The Lehman Brothers Municipal Bond Index represents the long-term investment
grade municipal bond market. This index is unmanaged and does not reflect
sales charges, commissions or expenses. The lifetime figure is from the date
the fund's Class A shares began investment operations.

4 The Lipper High Yield Municipal Debt Funds Average represents an average of
funds in the objective that invest at least 50% of their assets in lower rated
municipal debt issues. 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. The lifetime figure is from the
date the fund's Class A shares began investment operations.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

LIMITED TERM TAX-EXEMPT BOND FUND

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

(Results do not include a sales charge, if one were included; results would
be lower.)

------------------------------------------------------------------------------
[bar chart]
1994 -2.90%
1995 12.35%
1996 4.46%
1997 7.30%
1998 5.50%
1999 -0.60%
[end bar chart]

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>

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS LIFETIME
<S> <C> <C> <C>
Class A/1/ -4.30% 4.91% 4.00%
(with the maximum sales charge deducted)
-------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A
-------------------------------------------------------------------------------
Lehman 7-Year Municipal Bond Index/3/ -0.14% 6.35% 4.79%
-------------------------------------------------------------------------------
Lipper Intermediate Municipal Debt Average/4/ -1.65% 5.56% 4.15%
-------------------------------------------------------------------------------
</TABLE>

Class A yield: 4.23%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)

1 The fund began investment operations for Class A shares on October 6, 1993.

2 The fund is beginning investment operations for Class B shares on March 15,
2000.

3 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. The lifetime figure is from the date
the fund's Class A shares began investment operations.

4 The Lipper Intermediate Municipal Debt Funds Average is comprised of funds
that invest in municipal debt issues with dollar-weighted average maturities
of five to ten years. 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. The lifetime figure is from the date
the fund's Class A shares began investment operations.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
FEES AND EXPENSES OF THE FUNDS

<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 3.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>

1 Sales charges are reduced or eliminated for purchases of $100,000 or more.

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.

3 Deferred sales charges are reduced after 12 months and eliminated after six
years.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
CLASS A CLASS B/1/
----------------------------------------------------------------------
<S> <C> <C>
THE TAX-EXEMPT BOND FUND OF AMERICA
----------------------------------------------------------------------
Management Fees 0.34% 0.34%
Distribution and/or Service (12b-1) Fees 0.25%/2/ 1.00%/3/
Other Expenses 0.06% 0.06%
Total Annual Fund Operating Expenses 0.65% 1.40%

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
----------------------------------------------------------------------
Management Fees 0.40% 0.40%
Service (12b-1) Fees 0.30%/4/ 1.00%/3/
Other Expenses 0.08% 0.08%
Total Annual Fund Operating Expenses 0.78% 1.48%
</TABLE>

1 Based on estimated amounts for the current fiscal year.

2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.

3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.

4 Class A 12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually.

5 The fund's Investment Advisory and Service Agreement provides for fee
reductions to the extent that annual operating expenses exceed 0.75% and 1.45%
of the fund's average net assets for Class A and Class B shares respectively.
With the waiver, management fees (as a percentage of average net assets) are
0.35% and total operating expenses are 0.75% and 1.45% for Class A and Class B
shares respectively. Under certain circumstances as described in the statement
of additional information, the fund may be required to repay amounts waived.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
CLASS A CLASS B/1/
----------------------------------------------------------------------
<S> <C> <C>
LIMITED TERM TAX-EXEMPT BOND FUND
----------------------------------------------------------------------
Management Fees 0.37%/5/ 0.37%/5/
Service (12b-1) Fees 0.30%/4/ 1.00%/3/
Other Expenses 0.10% 0.10%
Total Annual Fund Operating Expenses 0.77% 1.47%
Fee Waiver 0.02% 0.02%
Net Expenses 0.75% 1.45%
</TABLE>

1 Based on estimated amounts for the current fiscal year.

2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.

3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.

4 Class A 12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the funds
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in each fund for the time periods indicated, that your
investment has a 5% return each year and that each fund's operating expenses
remain the same as shown above. The Class A example reflects the maximum
initial sales charge in Year One. The Class B-assuming redemption example
reflects applicable contingent deferred sales charges through Year Six (after
which time they are eliminated). Both Class B examples reflect Class A expenses
for Years 9 and 10 since Class B shares automatically convert to Class A after
eight years. Although your actual costs may be higher or lower, based on these
assumptions your cumulative expenses would be:

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE TAX-EXEMPT BOND FUND OF AMERICA
Class A $439 $ 575 $ 724 $1,155
Class B - assuming redemption $643 $ 843 $ 966 $1,475
assuming no redemption $143 $ 443 $ 766 $1,475
--------------------------------------------------------------------------
AMERICAN HIGH-INCOME MUNICIPAL BOND
FUND
--------------------------------------------------------------------------
Class A $452 $ 615 $ 792 $1,305
Class B - assuming redemption $651 $ 868 $1,008 $1,579
assuming no redemption $151 $ 468 $ 808 $1,579
--------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND*
Class A $451 $ 612 $ 787 $1,293
Class B - assuming redemption $650 $ 865 $1,030 $1,567
assuming no redemption $150 $ 465 $ 803 $1,567
</TABLE>

* Does not reflect fee waiver.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

THE TAX-EXEMPT BOND FUND OF AMERICA

The fund's investment objective is to provide you with a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. It seeks to achieve this objective by investing primarily in
municipal bonds, including lower quality bonds.

Normally, the fund will invest at least 80% of its assets in securities exempt
from regular federal income tax. The fund will invest at least 65% of its
assets in debt securities rated A or better. The fund may also invest up to 35%
of its assets in debt securities rated Baa or BBB or below (however, no more
than 20% of its assets may be invested in debt securities rated Ba and BB or
below).

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND

The fund's investment objective is to provide you with a high level of current
income exempt from regular federal income tax. In seeking to achieve its
objective, the fund may forego opportunities that would result in capital gains
and may accept prudent risks to capital value, in each case to take advantage
of opportunities for higher current income. The fund invests primarily in
municipal bonds and will invest at least 50% of its assets in lower quality
debt securities (rated Baa or BBB or below). The fund may also purchase
securities that would subject you to federal alternative minimum taxes.

In addition, the fund may invest significantly in municipal obligations of
issuers in the same state or of similar project type. This may make the fund
more susceptible to certain economic, political or regulatory occurrences. As a
result, the potential for fluctuations in the fund's share price may increase
the more the fund invests in municipal obligations of issers in the same state
or of similar project type.

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA

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. 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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

Municipal bonds are debt obligations generally issued to obtain funds for
various public purposes, including the construction of public facilities. The
values of most debt securities held by the funds may be affected by changing
interest rates, and individual securities by changes in their effective
maturities and credit ratings. For example, the values of bonds in each fund's
portfolio generally will decline when interest rates rise and vice versa. Debt
securities are also subject to credit risk, which is the possibility that the
credit strength of an issuer will weaken and/or an issuer of a debt security
will fail to make timely payments of principal or interest and the security
will go into default. The values of lower quality and longer maturity bonds
will be subject to greater price fluctuations than higher quality and shorter
maturity bonds.

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 funds' investment adviser attempts to reduce
these risks through diversification of the portfolio and with ongoing credit
analysis of each issuer as well as by monitoring economic and legislative
developments.

The funds may also hold cash, money market instruments or taxable debt
securities. The size of each 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 each
fund's objective, but it also would reduce each fund's exposure in the event of
a market downturn and provide liquidity to make additional investments or to
meet redemptions.

Each fund relies on the professional judgment of its investment adviser,
Capital Research and Management Company, to make decisions about each fund's
portfolio securities. The basic investment philosophy of the investment adviser
is to seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

THE TAX-EXEMPT BOND FUND OF AMERICA

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ -2.32% 6.72% 6.60% 7.98%
(with no sales charge deducted)
----------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
----------------------------------------------------------------------------
Lipper General Municipal Debt -4.63% 5.77% 6.19% 7.84%
Average/4/
----------------------------------------------------------------------------
</TABLE>

Class A distribution rate/5/: 5.10%

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 fund began investment operations for Class A shares on October 3, 1979.

3 The fund is beginning investment operations for Class B shares on March 15,
2000.

4 The Lipper General Municipal Debt Funds Average represent funds that invest
at least 65% of assets in municipal debt issues in the top four rating
categories. 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. The lifetime figure is from the date the fund's
Class A shares began investment operations.

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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS LIFETIME
<S> <C> <C> <C>
Class A/2/ -2.31% 7.46% 7.06%
(with no sales charge deducted)
-------------------------------------------------------------------
Class B/3/ N/A N/A N/A
-------------------------------------------------------------------
Lehman Municipal Bond Index/4/ -2.06% 6.91% 6.26%
-------------------------------------------------------------------
Lipper High Yield Municipal -4.16% 6.07% 5.53%
Debt Average/5/
-------------------------------------------------------------------
</TABLE>

Class A distribution rate/6/: 5.50%

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 fund began investment operations for Class A shares on September 26,
1994.

3 The fund is beginning investment operations for Class B shares on March 15,
2000.

4 The Lehman Brothers Municipal Bond Index represents the long-term investment
grade municipal bond market. This index is unmanaged and does not reflect
sales charges, commissions or expenses. The lifetime figure is from the date
the fund's Class A shares began investment operations.

5 The Lipper High Yield Municipal Debt Funds Average represents an average of
funds in the objective that invest at least 50% of their assets in lower rated
municipal debt issues. 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. The lifetime figure is from the
date the fund's Class A shares began investment operations.

6 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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS LIFETIME
<S> <C> <C> <C>
Class A/2/ -0.60% 5.72% 4.64%
(with no sales charge deducted)
-------------------------------------------------------------------------------
Class B/3/ N/A N/A N/A
-------------------------------------------------------------------------------
Lehman 7-Year Municipal Bond Index/4/ -0.14% 6.35% 4.79%
-------------------------------------------------------------------------------
Lipper Intermediate Municipal Debt Average/5/ -1.65% 5.56% 4.15%
-------------------------------------------------------------------------------
</TABLE>

Class A distribution rate/6/: 4.30%

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 fund began investment operations for Class A shares on October 6, 1993.

3 The fund is beginning investment operations for Class B shares on March 15,
2000.

4 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. The lifetime figure is from the date
the fund's Class A shares began investment operations.

5 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. The lifetime figure is from the date
the fund's Class A shares began investment operations.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the funds and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the funds. The total management fee paid by the funds, as a
percentage of average net assets, for the previous fiscal year is discussed
earlier under "Fees and Expenses of the Funds."

Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into each fund's code of ethics.

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 The Tax-Exempt Bond Fund of America, American
High-Income Municipal Bond Fund, and Limited Term Tax-Exempt Bond Fund of
America are listed on the following pages.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
(AND RESEARCH PROFESSIONAL, WITH CAPITAL
PORTFOLIO IF APPLICABLE) FOR RESEARCH AND
COUNSELORS FOR THE FUNDS MANAGEMENT
THE FUNDS PRIMARY TITLE(S) (APPROXIMATE) COMPANY
-------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
BRENDA S. Vice President of Tax-Exempt Bond Fund of America 9 years 10 years
ELLERIN Tax-Exempt Bond Fund of - 1 year (plus 6 years as a
America, Limited Term research professional prior to
Tax-Exempt Bond Fund. becoming a portfolio counselor
Vice President and for the fund)
Director, Capital American High-Income Municipal
Research Company* Bond Fund - 1 year (plus 4
years as a research
professional prior to becoming
a portfolio counselor for the
fund)
Limited Term Tax-Exempt Bond
Fund - 4 years
-------------------------------------------------------------------------------------------------------------
REBECCA L. Vice President - Tax-Exempt Bond Fund of America 17 years 17 years
FORD Investment Management - 14 years
Group, Capital Research
and Management Company

-------------------------------------------------------------------------------------------------------------
DAVID A. Vice President of Tax-Exempt Bond Fund of America 9 years 12 years
HOAG Tax-Exempt Bond Fund of - 1 year (plus 6 years as a
America, American research professional prior to
High-Income Municipal becoming a portfolio counselor
Bond Fund. Vice for the fund)
President and Director, American High-Income Municipal
Capital Research Bond Fund - 4 years (plus 2
Company* years as a research
professional prior to becoming
a portfolio counselor for the
fund)
-------------------------------------------------------------------------------------------------------------
NEIL L. President and PEO of Tax-Exempt Bond Fund of 22 years 22 years
LANGBERG Tax-Exempt Bond Fund of America- 20 years (since the
America; Senior Vice fund began operations)
President of American American High-Income Municipal
High-Income Municipal Bond Fund -
Bond Fund, Limited Term 5 years (since the fund began
Tax-Exempt Bond Fund. operations)
Vice President - Limited Term Tax-Exempt Bond
Investment Management Fund - 6 years (since the fund
Group, Capital Research began operations)
and Management Company
-------------------------------------------------------------------------------------------------------------
MARK R. President and PEO of Tax-Exempt Bond Fund of America 6 years 14 years
MACDONALD American High-Income - 6 years
Municipal Bond Fund; American High-Income Municipal
Vice President of Bond Fund -
Tax-Exempt Bond Fund of 6 years (since the fund began
America. Vice President operations)
- Investment Management
Group, Capital Research
and Management Company
-------------------------------------------------------------------------------------------------------------
The Tax-Exempt Bond Fund of America began investment operations on October 3, 1979.
American High-Income Municipal Bond Fund began investment operations on September 26, 1994.
Limited Term Tax-Exempt Bond Fund of America began investment operations on October 6, 1993.
* Company affiliated with Capital Research and Management Company
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
SHAREHOLDER INFORMATION

SHAREHOLDER SERVICES

American Funds Service Company, the funds' 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 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 FUNDS'
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.

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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
CHOOSING A SHARE CLASS

Each fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.

Factors you should consider in choosing a class of shares include:

- How long you expect to own the shares

- How much you intend to invest

- The expenses associated with owning shares of each class

- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)

EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.

Differences between Class A and Class B shares include:

<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
3.75%. Sales charges are reduced
for purchases of $100,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% or 0.30% of up to 1.00% annually.
annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES

PURCHASE

Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell each 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 shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.

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 FUNDS AND AMERICAN FUNDS DISTRIBUTORS, EACH 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 FUNDS 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 FUNDS.

<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account $ 250
To add to an account $ 50
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

SHARE PRICE

Each fund calculates its share price, also called net asset value, as of
approximately 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, each fund will determine the appropriate
price for the security.

Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.

---------------------------------------------------------
SALES CHARGES

CLASS A

The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and 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 $100,000 3.75% 3.90% 3.00%
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>

CLASS A 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, and Individual Retirement Account rollovers involving
retirement plan assets invested in the American Funds, may invest with no sales
charge and are not

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. Each fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.

CLASS B

Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.

<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>

Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.

CLASS B CONVERSION TO A SHARES

Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS

You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."

REDUCING YOUR CLASS A SALES CHARGES

You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.

AGGREGATING ACCOUNTS

To receive a reduced Class A 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 Class A and/or B shares 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 Class A sales charge. Direct purchases of money market funds are
excluded.

RIGHTS OF ACCUMULATION

You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

STATEMENT OF INTENTION

You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. 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. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.

CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES

The contingent deferred sales charge on Class B shares may be waived in the
following cases:

- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);

- to receive certain distributions, such as required minimum distributions
from retirement accounts; or

- for redemptions due to death or post-purchase disability of the
shareholder.

For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
PLANS OF DISTRIBUTION

Each fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by each fund's board of directors/trustees.
The plans provide for annual expenses of up to 0.25% or 0.30% for Class A
shares and up to 1.00% for Class B shares. Up to 0.25% of these payments are
used to pay service fees to qualified dealers for providing certain shareholder
services. The remaining 0.75% expense for Class B shares is used for financing
commissions paid to your dealer. The 12b-1 fees paid by each fund, as a
percentage of average net assets, for the previous fiscal year is indicated
above under "Fees and Expenses of the Funds." Since these fees are paid out of
each fund's assets or income on an ongoing basis, over time they will increase
the cost and reduce the return of an investment. The higher fees for Class B
shares may cost you more over time than paying the initial sales charge for
Class A shares.

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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
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.

- 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 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 each 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, each fund may be liable
for losses due to unauthorized or fraudulent instructions.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Each fund declares dividends from net investment income daily and distributes
the accrued dividends, which may fluctuate, to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. Capital gains, if any, are usually
distributed in November or December. When a dividend or 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. Each fund is permitted to pass through to its
shareholders federally tax-exempt income subject to certain requirements.
However, each fund may invest in obligations which pay interest that is
subject to state and local taxes when distributed by each fund.

TAXES ON DISTRIBUTIONS

Distributions you receive from the funds may be subject to income tax and may
also be subject to state or local taxes - 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 funds' distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the funds will normally be taxable to
you when made, regardless of whether you reinvest distributions or receive them
in cash.

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 funds 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.

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

---------------------------------------------------------
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with each fund's
2000 fiscal year end. 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 funds (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with each fund's
financial statements, is included in the statement of additional information,
which is available upon request.

THE TAX-EXEMPT BOND FUND OF AMERICA

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
---------------------------
1999 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $12.60 $12.27 $11.86 $11.94 $11.65
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .59 .62 .64 .64 .68
Net gains or losses on
securities (both (.55) .37 .45 .01 .29
realized and unrealized)
------------------------------------------------------------------------------
Total from investment .04 .99 1.09 .65 .97
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.59) (.62) (.64) (.64) (.68)
Distributions (from capital (.19) (.04) (.04) (.09) -
gains)
------------------------------------------------------------------------------
Total distributions (.78) (.66) (.68) (.73) (.68)
------------------------------------------------------------------------------
Net Asset Value, $11.86 $12.60 $12.27 $11.86 $11.94
End of Year
------------------------------------------------------------------------------
Total return* 0.22% 8.26% 9.39% 5.51% 8.70%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in $1,917 $1,795 $1,593 $1,476 $1,424
millions)
------------------------------------------------------------------------------
Ratio of expenses to .65% .66% .68% .68% .66%
average net assets
------------------------------------------------------------------------------
Ratio of net income 4.78% 4.98% 5.27% 5.35% 5.87%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 14.56% 23.19% 14.39% 26.89% 49.28%
* Excludes maximum sales charge.
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
YEARS ENDED JULY 31
---------------------------------------------
1999 1998 1997 1996 1995/1/
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $16.12 $15.90 $15.23 $15.14 $14.29
Beginning of Year
-----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .81 .84 .87 .88 .76
Net gains or losses on
securities (both
realized and (.54) .26 .80 .37 .85
unrealized)
-----------------------------------------------------------------------------------------------------
Total from investment .27 1.10 1.67 1.25 1.61
operations
-----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.82) (.84) (.86) (.88) (.76)
Distributions (from (.08) (.04) (.14) (.28) -
capital gains)
-----------------------------------------------------------------------------------------------------
Total distributions (.90) (.88) (1.00) (1.16) (.76)
-----------------------------------------------------------------------------------------------------
Net Asset Value, $15.49 $16.12 $15.90 $15.23 $15.14
End of Year
-----------------------------------------------------------------------------------------------------
Total return/2/ 1.63% 7.05% 11.36% 8.48% 11.62%/3/
-----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of $564 $464 $316 $217 $157
year (in millions)
-----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets .78% .79% .87% .88% .94%/3/
before fee waiver
-----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets .78% .79% .87% .86% .62%/3/
after fee waiver
-----------------------------------------------------------------------------------------------------
Ratio of net income 5.09% 5.19% 5.51% 5.74% 5.66%/3/
to average net assets
-----------------------------------------------------------------------------------------------------
Portfolio turnover
rate 16.67% 16.38% 15.31% 35.22% 46.42%/3/
1 The period ended July 31, 1995 represents the initial period of operations from September 26, 1994
to July 31, 1995.

2 Excludes maximum sales charge.

3 Based on operations for the period shown and, accordingly, not representative of a full year.
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

LIMITED TERM TAX-EXEMPT BOND FUND

<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.
</TABLE>

NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
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.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the funds including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the funds' investment strategies, and the independent accountants' report
(in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of each fund, including each fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by each
fund and the funds' investment adviser and its affiliated companies.

The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the funds
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the funds. In order to reduce
the volume of mail you receive, when possible, only one copy of these
documents will be sent to shareholders that are part of the same family and
share the same residential address.

If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the funds at 333 South Hope
Street, Los Angeles, California 90071.

Printed on Recyled Paper

Investment Company File No. 811-2421 (The Tax-Exempt Bond Fund of America)
Investment Company File No. 811-8576 (American High-Income Municipal Bond Fund)
Investment Company File No. 811-7888 (Limited Term Tax-Exempt Bond Fund of
America)

<PAGE>

THE TAX-EXEMPT BOND FUND OF AMERICA
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA

Part B
Statement of Additional Information

March 15, 2000

This document is not a prospectus but should be read in conjunction with the
current prospectus of The Tax-Exempt Bond Fund of America, Inc. ("TEBF"),
American High-Income Municipal Bond Fund ("AHIM"), and Limited Term Tax-Exempt
Bond Fund of America ("LTEX") dated March 15, 2000. The prospectus may be
obtained from your investment dealer or financial planner or by writing to the
fund at the following address:

The Tax-Exempt Bond Fund of America, Inc.
American High-Income Municipal Bond Fund, Inc.
Limited Term Tax-Exempt Bond Fund of America
Attention: Secretary
333 South Hope Street
Los 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 . . . . 3
Fundamental Policies and Investment Restrictions. . . . . . . . . . 9
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 14
Fund Directors/Trustees and Officers. . . . . . . . . . . . . . . . 15
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 24
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 31
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 35
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 38
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Shareholder Account Services and Privileges . . . . . . . . . . . . 41
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 44
General Information . . . . . . . . . . . . . . . . . . . . . . . . 44
Class A Share Investment Results and Related Statistics . . . . . . 46
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Financial Statements
</TABLE>

National Tax-Exempt Income Funds - 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 funds' investment limitations.

THE TAX-EXEMPT BOND FUND OF AMERICA
- -----------------------------------

. The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax.
. The fund will not invest in securities subject to alternative minimum
taxes.
. The fund will invest at least 65% of its assets in straight debt securities
rated A or better by Standard & Poor's Corporation (S&P) or Moody's
Investors Service, Inc. (Moody's) or unrated but determined to be of
equivalent quality.
. The fund may invest up to 35% of its assets in straight debt securities
rated BBB by S&P or Baa by Moody's or below or unrated but determined to be
of equivalent quality (with no more than 20% of its assets in straight debt
securities rated BB/Ba or below or unrated but determined to be of
equivalent quality).
. The fund will invest substantially in securities with maturities in excess
of three years.

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
- ----------------------------------------

. The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax (including securities subject to alternative
minimum taxes).
. The fund will invest at least 65% of its assets in debt securities rated A
or below by S&P or Moody's or unrated but determined to be of equivalent
quality.
. The fund will invest at least 50% of its assets in debt securities rated
BBB/Baa or below or unrated but determined to be of equivalent quality.
. The fund will invest at least 65% of its assets in bonds (any debt
securities having initial maturities in excess of one year).
. The fund may invest more than 25% of its assets in municipal obligations of
issuers located in the same state or in obligations of the same type
(however, the fund may not invest 25% of more in municipal securities of
the same project type issued by non-governmental entities).

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
- --------------------------------------------

. The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax.
. 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

National Tax-Exempt Income Funds - Page 2

<PAGE>

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.
. 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 funds 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."

THE TAX-EXEMPT BOND FUND OF AMERICA, AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
AND LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
- ------------------------------------------------

DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.

Lower quality, lower rated 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, lower quality, lower rated bonds.

Certain risk factors relating to "lower quality, lower rated bonds" are
discussed below.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - Lower quality, lower
rated bonds can be sensitive to adverse economic changes and political and
corporate developments and may be less sensitive to interest rate changes.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain
additional financing. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices
and yields of lower quality, lower rated bonds.

National Tax-Exempt Income Funds - Page 3

<PAGE>

PAYMENT EXPECTATIONS - Lower quality, lower rated bonds, like other bonds,
may contain redemption or call provisions. If an issuer exercises these
provisions in a declining interest rate market, the fund would have to
replace the security with a lower yielding security, resulting in a
decreased return for investors. If the issuer of a bond defaults on its
obligations to pay interest or principal or enters into bankruptcy
proceedings, the fund may incur losses or expenses in seeking recovery of
amounts owed to it.

LIQUIDITY AND VALUATION - There may be little trading in the secondary
market for particular bonds, which may affect adversely the fund's ability
to value accurately or dispose of such bonds. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of lower quality, lower rated bonds,
especially in a thin market.

The Investment Adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as well
as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.

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

National Tax-Exempt Income Funds - Page 4

<PAGE>

the private entity which owns or operates the facility financed with the
proceeds of the bonds. Obligations of housing finance authorities have a wide
range of security features including reserve funds and insured or subsidized
mortgages, as well as the net revenues from housing or other public projects.
Most of these bonds do not generally constitute the pledge of the credit of the
issuer of such bonds. The credit quality of such revenue bonds is usually
directly related to the credit standing of the user of the facility being
financed or of an institution which provides a guarantee, letter of credit, or
other credit enhancement for the bond issue.

MUNICIPAL LEASE OBLIGATIONS - The fund may invest, without limitation, in
municipal lease revenue obligations 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.

CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper
(e.g.,short-term notes up to 9 months in maturity issued by corporations,
governmental bodies or bank/ corporation sponsored conduits (asset backed
commercial paper)), (ii) commercial bank obligations (e.g., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity)), (iii) savings
association and savings bank obligations (e.g., bank notes and certificates of
deposit issued by savings banks or savings associations), (iv) securities of the
U.S. Government, its agencies or instrumentalities that mature, or may be
redeemed, in one year or less, and (v) corporate bonds and notes that mature, or
that may be redeemed, in one year or less.

TEMPORARY INVESTMENTS - The funds 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.

National Tax-Exempt Income Funds - Page 5

<PAGE>

FORWARD COMMITMENTS - The funds may enter into commitments to purchase or sell
securities at a future date. When the funds agree to purchase such securities
they assume the risk of any decline in value of the security beginning on the
date of the agreement. When the funds agree to sell such securities they do not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails to
deliver or pay for the securities, the funds could miss a favorable price or
yield opportunity, or could experience a loss.

As the funds' aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The funds 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 funds' aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because they may have an amount
greater than their net assets subject to market risk). Should market values of
the funds' portfolio securities decline while the funds are in a leveraged
position, greater depreciation of its net assets would likely occur than were it
not in such a position. The funds 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.

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.

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 each 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.

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).

National Tax-Exempt Income Funds - Page 6

<PAGE>

PRIVATE PLACEMENTS - Generally, municipal securities acquired in private
placements are subject to contractual restrictions on resale. Accordingly, all
private placements will be considered illiquid unless they have been
specifically determined to be liquid, taking into account factors such as the
frequency and volume of trading and the commitment of dealers to make markets
under procedures adopted by the fund's board of directors.

RESTRICTED SECURITIES AND LIQUIDITY - The funds 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
directors/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.

The funds 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 funds 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.

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA AND AMERICAN HIGH-INCOME MUNICIPAL
BOND FUND
- ---------

SECURITIES SUBJECT TO ALTERNATIVE MINIMUM TAXES - The funds 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 TAX-EXEMPT BOND FUND OF AMERICA
- -----------------------------------

MUNICIPAL INFLATION-INDEXED BONDS - The fund may invest in inflation-indexed
bonds issued by municipalities. Interest payments are made to bondholders
semi-annually and are made up of two components: a fixed "real coupon" or
spread, and a variable coupon linked to an inflation index. Accordingly,
payments will increase or decrease each period as a result of changes in the
inflation index. In a period of deflation payments may decrease to zero, but in
any event will not be less than zero.

National Tax-Exempt Income Funds - Page 7

<PAGE>

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
- ----------------------------------------

CONCENTRATION OF INVESTMENTS - The fund may invest more than 25% of its assets
in municipal obligations of issuers located in the same state or in municipal
obligations of the same type which pay interest on their obligations from
revenue of similar projects. This may make the fund more susceptible to similar
economic, political, or regulatory occurrences such as changes in healthcare
regulations, environmental considerations related to construction, construction
cost increases and labor problems, failure of healthcare facilities to maintain
adequate occupancy levels, and inflation. As the similarity in issuers
increases, the potential for fluctuations in the fund's share price may
increase. The fund may invest more than 25% of its assets in industrial
development bonds.

The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:

LOANS OF PORTFOLIO SECURITIES - Each fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the Investment Adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. Government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The Investment Adviser will
monitor the adequacy of the collateral on a daily basis. Each fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. Each fund will receive any interest paid on the loaned securities
and a fee or a portion of the interest earned on the collateral. The fund will
limit its loans of portfolio securities to an aggregate of 10% of the value of
its total assets, measured at the time any such loan is made.

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
- --------------------------------------------

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.

* * * * * *

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

National Tax-Exempt Income Funds - Page 8

<PAGE>

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 - Each 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 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 TAX-EXEMPT BOND FUND OF AMERICA
- -----------------------------------

These restrictions provide that the fund may not:

1. With respect to 75% of the Fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer;

2. Enter into any repurchase agreement if, as a result, more than 10% of the
value of the fund's total assets would be subject to repurchase agreements
maturing in more than seven days;

3. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in securities secured by real estate or interests therein;

4. Make loans to others, except for the purchase of debt securities or
entering into repurchase agreements;

5. 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;

National Tax-Exempt Income Funds - Page 9

<PAGE>

6. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases or sales;

7. Borrow money, except from banks for temporary or emergency purposes, not in
excess of 5% of the value of the fund's total assets, excluding the amount
borrowed. This borrowing provision is intended to facilitate the orderly sale of
portfolio securities to accommodate unusually heavy redemption requests, if they
should occur; it is not intended for investment purposes;

8. Underwrite any issue of securities, except to the extent that the purchase
of municipal bonds directly from the issuer in accordance with the fund's
investment objective, policies and restrictions, and later resale may be deemed
to be an underwriting;

9. Invest in companies for the purpose of exercising control or management;

10. Buy or sell commodities or commodity contracts or oil, gas or other mineral
exploration or development programs;

11. Write, purchase or sell puts, calls, straddles, spreads or any combination
thereof;

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.

For purposes of Investment Restriction #10, the term "oil, gas or other mineral
exploration or development programs" includes oil, gas or other mineral
exploration or development leases.

NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be
changed without shareholder approval:

(a) 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 (such
as hospitals and health facilities; turnpikes and toll roads; ports and
airports; or colleges and universities). 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;

(b)
invest more than 15% of its net assets in securities which are not readily
marketable.

(c) invest in securities of other investment companies, except as
permitted by the Investment Company Act of 1940, as amended.

National Tax-Exempt Income Funds - Page 10

<PAGE>

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
- ----------------------------------------
These restrictions provide that the fund may not:

1. With respect to 75% of the fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
fund's total assets would be invested in securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of that
issuer.

2. Invest in companies for the purpose of exercising control or management;

3. Purchase or sell real estate (including real estate limited partnerships)
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);

4. Purchase or sell commodities unless acquired as a result of ownership of
securities or other instruments or engage in futures transactions;

5. 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. Make loans in an aggregate amount in excess of 33(alpha)% of the value of
the fund's total assets, taken at the time any loan is made, provided that the
purchase of debt securities pursuant to the fund's investment objective and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction and that loans of portfolio
securities may be made;

7. Issue senior securities, except as permitted under the Investment Company
Act of 1940;

8. Borrow money, except from banks for temporary or emergency purposes not to
exceed one-third of the value of the fund's total assets. Moreover, in the event
that the asset coverage for the fund's borrowings falls below 300%, the fund
will reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage;

9. 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);

10. Invest 25% or more of its assets in municipal securities of the same
project type issued by non-governmental entities. However, the fund may invest
more than 25% of its assets in municipal obligations of issuers located in the
same state or in municipal obligations of the same type, including without
limitation the following: general obligations of states and localities; lease
rental obligations of state and local authorities; obligations of state and
local housing finance authorities, municipal utilities systems or public housing
authorities; or industrial development or pollution control bonds issued for
hospitals, electric utility systems, life care facilities or other purposes. As
a result, the fund may be more susceptible to adverse economic, political, or
regulatory occurrences affecting a particular category of issuers. As the
concentration in the secu-

National Tax-Exempt Income Funds - Page 11

<PAGE>

rities of a particular category of issuer increases, the potential for
fluctuation in the value of the fund's shares also increases; nor

11. 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.

NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be
changed without shareholder approval:

1. The fund does not currently intend (at least for the next 12 months) to
lend portfolio securities. However, if such action is authorized by the Board of
Directors, loans of portfolio securities as described under "Loans of Portfolio
Securities" shall be made in accordance with the terms and conditions therein
set forth and consistent with fundamental investment restriction #6;

2. The fund will not invest more than 15% of the value of its net assets in
illiquid securities;

3. The fund does not currently intend (at least for the next 12 months) to
invest in the securities of other registered management investment companies,
except in connection with a merger, consolidation, acquisition, reorganization,
or in connection with the implementation of any deferred compensation plan as
adopted by the Board of Directors;

4. The fund does not currently intend (at least for the next 12 months) to
purchase securities in the event its borrowings exceed 5% of total assets.

For the purposes 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.

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
- --------------------------------------------

These restrictions provide that 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;

National Tax-Exempt Income Funds - Page 12

<PAGE>

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 policy(ies) may be
changed without shareholder approval:

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
invest in the securities of other investment companies except as permitted by
the Investment Company Act of 1940, as amended.

3. The fund does not currently intend (at least for the next 12 months) to
purchase securities in the event its borrowings exceed 5%.

4. 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.

5. 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

National Tax-Exempt Income Funds - Page 13

<PAGE>

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

Each fund is an open-end, diversified management investment company. The
Tax-Exempt Bond Fund of America and American High-Income Municipal Bond Fund
were each organized as a Maryland corporation on July 20, 1979 and June 14,
1994, respectively. Limited Term Tax-Exempt Bond Fund of America was organized
as a Massachusetts business trust on July 12, 1993.

All fund operations are supervised by each fund's Board of Directors/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 "Directors/Trustees and Director/Trustee
Compensation" below. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for each fund.

The funds have two classes of shares - Class A and Class B. The shares of each
class represent an interest in the same investment portfolio. Each class has
equal rights as to voting, redemption, dividends and liquidation, except that
each class bears different distribution expenses and may bear different transfer
agent fees and other expenses properly attributable to the particular class as
approved by the Board of Directors/Trustees. Class A and Class B shareholders
have exclusive voting rights with respect to the rule 12b-1 Plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests in another class. Shares of
all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone.

The funds do 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.

National Tax-Exempt Income Funds - Page 14

<PAGE>

FUND DIRECTORS/TRUSTEES AND OFFICERS

Directors/Trustees and Director/Trustee Compensation

AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
POSITION FROM THE FUND
WITH PRINCIPAL OCCUPATION(S) DURING DURING THE
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS 1999 FISCAL YEAR/2/
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Director/ Corporate Director and author; former TEBF none/4/
6077 San Elijo, Box 2494 Trustee United States Ambassador to Spain; AHIM none/4/
Rancho Santa Fe, CA 92067 former Vice Chairman of the Board, LTEX none/4/
Age: 65 Knight-Ridder, Inc., former Chairman
and Publisher, The Miami Herald
----------------
- ---------------------------------------------------------------------------------------------------------------
H. Frederick Christie Director/ Private Investor. Former President and TEBF $4,100/5/
P.O. Box 144 Trustee Chief Executive Officer, The Mission AHIM $2,500/5/
Palos Verdes Estates, CA Group (non-utility holding company, LTEX $2,500/5/
90274 subsidiary of Southern California
Age: 66 Edison Company)
- ---------------------------------------------------------------------------------------------------------------
+ Don R. Conlan Director/ President (retired), The Capital Group none/6/
1630 Milan Avenue Trustee Companies, Inc.
South Pasadena, CA 91030
Age: 64
- ---------------------------------------------------------------------------------------------------------------
Diane C. Creel Director/ CEO and President, The Earth Technology TEBF $4,100/5/
100 W. Broadway Trustee Corporation (international consulting AHIM $2,500/5/
Suite 5000 engineering) LTEX $2,500/5/
Long Beach, CA 90802
Age: 51
- ---------------------------------------------------------------------------------------------------------------
Martin Fenton Director/ Managing Director, Senior Resource TEBF $4,900/5/
4660 La Jolla Village Trustee Group LLC (development and management AHIM $2,900/5/
Drive of senior living communities) LTEX $2,900
Suite 725
San Diego, CA 92121-2116
Age: 64
- ---------------------------------------------------------------------------------------------------------------
Leonard R. Fuller Director/ President, Fuller Consulting (financial TEBF $4,100/5/
4337 Marina City Drive Trustee management consulting firm) AHIM $2,500/5/
Suite 841 ETN LTEX $2,500/5/
Marina del Rey, CA 90292
Age: 53
- ---------------------------------------------------------------------------------------------------------------
+* Abner D. Goldstine AHIM and Senior Vice President and Director, none/6/
Age: 70 TEBF: Capital Research and Management Company
Vice
Chairman
and
Director

LTEX:
President
and
Trustee
- ---------------------------------------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. Chairman Executive Vice President and Director, none/6/
Age: 51 of Capital Research and Management Company
the Board
- ---------------------------------------------------------------------------------------------------------------
Richard G. Newman Director/ Chairman, President and CEO, AECOM TEBF $4,500/5/
3250 Wilshire Boulevard Trustee Technology Corporation (architectural AHIM $4,150/5/
Los Angeles, CA 90010-1599 engineering) LTEX $4,150/5/
Age: 65
- ---------------------------------------------------------------------------------------------------------------
Frank M. Sanchez Director/ President, The Sanchez Family TEBF none/4/
5234 Via San Delarro, #1 Trustee Corporation dba McDonald's Restaurants AHIM none/4/
Los Angeles, CA 90022 (McDonald's licensee) LTEX none/4/
Age: 55
- ---------------------------------------------------------------------------------------------------------------
<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/3/ FOR THE DIRECTOR/TRUSTEE
NAME, ADDRESS AND AGE 1999 FISCAL YEAR END SERVES/2/
- ------------------------------------------------------------------------------
<S> <C> <C>
Richard G. Capen, Jr. 7/31/99 $42,700/4/ 14
6077 San Elijo, Box 2494 8/31/99 $43,700/4/
Rancho Santa Fe, CA 92067 ------------------
Age: 65
- ------------------------------------------------------------
H. Frederick Christie 7/31/99 $203,600 19
P.O. Box 144 8/31/99 $206,000
Palos Verdes Estates, CA ------------------
90274
Age: 66
- ------------------------------------------------------------
+ Don R. Conlan none/6/ 12
1630 Milan Avenue
South Pasadena, CA 91030
Age: 64
- ------------------------------------------------------------------------------
Diane C. Creel 7/31/99 $48,000 12
100 W. Broadway 8/31/99 $48,000
Suite 5000 ------------------
Long Beach, CA 90802
Age: 51
- ------------------------------------------------------------
Martin Fenton 7/31/99 $130,600/5/ 15
4660 La Jolla Village 8/31/99 $131,600/5/
Drive ------------------
Suite 725
San Diego, CA 92121-2116
Age: 64
- ------------------------------------------------------------
Leonard R. Fuller 7/31/99 $51,600/5/ 13
4337 Marina City Drive 8/31/99 $51,600/5/
Suite 841 ETN ------------------
Marina del Rey, CA 90292
Age: 53
- ------------------------------------------------------------
+* Abner D. Goldstine none/6/ 12
Age: 70

- ------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. none/6/ 15
Age: 51

- ------------------------------------------------------------------------------
Richard G. Newman 7/31/99 $107,100 13
3250 Wilshire Boulevard 8/31/99 $107,100
Los Angeles, CA 90010-1599 ------------------
Age: 65
- ------------------------------------------------------------
Frank M. Sanchez 7/31/99 $3,000 12
5234 Via San Delarro, #1 8/31/99 $4,000
Los Angeles, CA 90022 ------------------
Age: 55
- ------------------------------------------------------------
</TABLE>

National Tax-Exempt Income Funds - Page 15

<PAGE>

National Tax-Exempt Income Funds - Page 16

<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.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071

1 Amounts may be deferred by eligible Directors/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 Directors/Trustees.

2 The Tax-Exempt Bond Fund of America's fiscal year ends on August 31.
American High-Income Municipal Bond Fund's and Limited Term Tax-Exempt Bond
Fund of America's fiscal year ends on July 31.

3 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.

4 Richard G. Capen, Jr. and Frank M. Sanchez were elected by TEBF
shareholders on 10/27/99 and by AHIM and LTEX shareholders on 12/1/99.

5 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) during the 1999
fiscal year for participating Directors/Trustees is as follows:

National Tax-Exempt Income Funds - Page 17

<PAGE>
TEBF - H. Frederick Christie ($9,423), Diane C. Creel ($4,659), Martin Fenton
($15,113), Leonard R. Fuller ($9,710) and Richard G. Newman ($35,568).
AHIM - H. Frederick Christie ($6,512), Diane C. Creel ($1,597), Martin Fenton
($1,344), Leonard R. Fuller ($3,531) and Richard G. Newman ($17,311).
LTEX - 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 Directors/Trustees.

6 Don R. Conlan, Paul G. Haaga, Jr., and Abner D. Goldstine are affiliated with
the Investment Adviser and, accordingly, receive no compensation from the funds.

National Tax-Exempt Income Funds - Page 18

<PAGE>

OFFICERS

<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS AGE WITH REGISTRANT DURING
- ----------------------------------------------------- PAST 5 YEARS#
-----------------------------
<S> <C> <C> <C>
Neil L. Langberg 46 President and PEO - Vice President - Investment
11100 Santa Monica TEBF Management Group, Capital
Blvd. Senior Vice President Research and Management
Los Angeles, CA 90025 - AHIM and LTEX Company
- ----------------------------------------------------------------------------------
Mark R. Macdonald 40 President and PEO - Vice President - Investment
11100 Santa Monica AHIM Management Group, Capital
Blvd. Senior Vice President Research and Management
Los Angeles, CA 90025 - LTEX Company
Vice President -TEBF
- ----------------------------------------------------------------------------------
Michael J. Downer 45 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 and Director,
11100 Santa Monica TEBF and LTEX Capital Research Company*
Blvd.
Los Angeles, CA 90025
- ----------------------------------------------------------------------------------
David A. Hoag 34 Vice President - Vice President and Director,
11100 Santa Monica TEBF and AHIM Capital Research Company*
Blvd.
Los Angeles, CA 90025
- ----------------------------------------------------------------------------------
Edward B. Nahmias 47 Vice President - Vice President, Capital
11100 Santa Monica AHIM Research Company*
Blvd.
Los Angeles, CA 90025
- ----------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund
333 South Hope Street Business Management Group,
Los Angeles, CA 90071 Capital Research and
Management Company
- ----------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 37 Treasurer Vice President - Fund
135 South State Business Management Group,
College Blvd. Capital Research and
Brea, CA 92821 Management Company
- ----------------------------------------------------------------------------------
Kimberly S. Verdick 35 Assistant Assistant Vice President -
333 South Hope Street Secretary Fund Business Management
Los Angeles, CA 90071 Group, Capital Research and
Management Company
- ----------------------------------------------------------------------------------
Todd L. Miller 41 Assistant Assistant Vice President -
135 South State Treasurer Fund Business Management
College Blvd. Group, Capital Research and
Brea, CA 92821 Management Company
- ----------------------------------------------------------------------------------
</TABLE>

# Positions within the organizations listed may have changed during this period.
* Company affiliated with Capital Research and Management Company.

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 Director/Trustee who is a
director, officer or employee of the Investment Adviser or affiliated companies.
TEBF pays annual fees of $2,500 to

National Tax-Exempt Income Funds - Page 19

<PAGE>

Directors/Trustees who are not affiliated with the Investment Adviser, plus $200
for each Board of Directors/Trustees meeting attended, plus $200 for each
meeting attended as a member of a committee of the Board of Directors/Trustees.
AHIM and LTEX pay annual fees of $900 to Directors/Trustees who are not
affiliated with the Investment Adviser. In addition, each fund pays $200 for
each Board of Directors/Trustees meeting attended, plus $200 for each meeting
attended as a member of a committee of the Board of Directors/Trustees.

No pension or retirement benefits are accrued as part of fund expenses. The
Directors/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 Directors/Trustees who are not
affiliated with the Investment Adviser. As of February 15, 2000 the officers and
Directors/Trustees of each fund and their families, as a group, owned
beneficially or of record less than 1% of the outstanding shares of the fund.

MANAGEMENT

INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, 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.

The Investment Adviser is responsible for managing more than $300 billion of
stocks, bonds and money market instruments and serves over 11 million
shareholder accounts 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
Agreements (the "Agreements") between the funds 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 Directors/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
Directors/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,

National Tax-Exempt Income Funds - Page 20

<PAGE>

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 Plans 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.

For TEBF the Investment Adviser receives a fee at the annual rate of 0.30% on
the first $60 million of the fund's net assets, plus 0.21% on net assets from
$60 million to $1 billion, plus 0.18% on net assets from $1 billion to $3
billion, plus 0.16% on net assets over $3 billion, plus 3% of the first $40
million of the fund's annual gross investment income, plus 2.50% of such income
over $40 million but not exceeding $100 million and 2.25% of such income in
excess of $100 million. Assuming net assets of $1.9 billion and gross
investment income levels of 3%, 4%, 5%, 6% and 7%, management fees would be
0.28%, 0.31%, 0.33%, 0.36% and 0.38%, 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 defiined for federal income tax
purposes.

The Agreement provides for a management fee reduction to the extent that the
annual ordinary operating expenses of the fund's Class A shares exceed the
lesser of either 25% of gross income of the Fund for the preceding year or the
sum or (a) 1-1/2% of the average daily net assets of the preceding year up to
and including $30,000,000 and (b) 1% of any excess of average daily net assets
of the preceding year over $30,000,000. Expenses which are not subject to these
limitations are interest, taxes, and extraordinary expenses. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies are accounted for as
capital items and not as expenses. To the extent the fund's management fee must
be waived due to Class A share expense ratios exceeding this limit, management
fees will be reduced similarly for all classes of shares of the fund or other
Class A fees will be waived in lieu of management fees.

For AHIM the Investment Adviser receives a fee at the annual rate of 0.30% on
the first $60 million of average net assets, plus 0.21% on net assets over $60
million, plus 3% of gross investment income. Assuming net assets of $600
million and gross investment income levels of 3%, 4%, 5%, 6% and 7%, management
fees would be 0.31%, 0.34%, 0.37%, 0.40% and 0.43%, 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 Class A
shares 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

National Tax-Exempt Income Funds - Page 21

<PAGE>

excess. To the extent the fund's management fee must be waived due to Class A
share expense ratios exceeding the above limit, management fees will be reduced
similarly for all classes of shares of the fund or other Class A fees will be
waived in lieu of management fees.

For LTEX 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.

For the fiscal years ended 1999, 1998, and 1997, the Investment Adviser received
advisory fees from TEBF of $6,526,000, $5,969,000, and $5,567,000, respectively.
For the fiscal years ended 1999, 1998, and 1997, the Investment Adviser received
advisory fees from AHIM of $2,083,000, $1,544,000, and $1,100,000, respectively.
For the fiscal years ended 1999, 1998, and 1997, the Investment Adviser received
advisory fees from LTEX of $999,000, $830,000, and $815,000, respectively.

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. Each fund has adopted Plans of
Distribution (the Plans), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plans (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 Class A shares during the 1999 fiscal year
amounted to $1,005,000 after allowance of $3,987,000 to dealers for TEBF;
$450,000 after allowance of $1,829,000 to dealers for AHIM; $189,000 after
allowance of $737,000 to dealers for LTEX.

For TEBF during the fiscal years ended 1998 and 1997 the Principal Underwriter
retained $827,000 and $632,000, respectively on sales of Class A shares after an
allowance of $3,336,000 and $2,563,000 to dealers, respectively.

National Tax-Exempt Income Funds - Page 22

<PAGE>

For AHIM during the fiscal years ended 1998 and 1997 the Principal Underwriter
retained $487,000 and $345,000, respectively on sales of Class A shares after an
allowance of $2,007,000 and $1,424,000 to dealers, respectively.

For LTEX during the fiscal years ended 1998 and 1997 the Principal Underwriter
retained $113,000 and $155,000, respectively on sales of Class A shares after an
allowance of $463,000 and $625,000 to dealers, respectively.

As required by rule 12b-1 and the 1940 Act, the Plans (together with the
Principal Underwriting Agreement) have been approved by the full Boards of
Directors/Trustees and separately by a majority of the directors/trustees who
are not "interested persons" of the fund and who have no direct or indirect
financial interest in the operation of the Plans or the Principal Underwriting
Agreement. The officers and directors/trustees who are "interested persons" of
the fund may be considered to have a direct or indirect financial interest in
the operation of the Plans due to present or past affiliations with the
Investment Adviser and related companies. Potential benefits of the Plans to the
fund include 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
directors/trustees who are not "interested persons" of the fund are committed to
the discretion of the directors/trustees who are not "interested persons" during
the existence of the Plans. Plan expenses are reviewed quarterly and the Plans
must be renewed annually by the Boards of Directors/Trustees.

Under the Plans TEBF may expend up to 0.25%, 0.30% in the case of AHIM and LTEX,
of its net assets annually for Class A shares and up to 1.00% of its net assets
annually for Class B shares to finance any activity which is primarily intended
to result in the sale of fund shares, provided the fund's Board of
Directors/Trustees has approved the category of expenses for which payment is
being made. For Class A shares these include up to 0.25% in service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales of
shares exceeding $1 million purchased without a sales charge (including
purchases by employer-sponsored defined contribution-type retirement plans
investing $1 million or more or with 100 or more eligible employees, rollover
IRA accounts as described in "Individual Retirement Account (IRA) Rollovers"
below, and retirement plans, endowments or foundations with $50 million or more
in assets). For Class B shares these include 0.25% in service fees for qualified
dealers and 0.75% in payments to the Principal Underwriter for financing
commissions paid to qualified dealers selling Class B shares.

Commissions on sales of Class A 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 Class A 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, these commissions are not recoverable.
During the 1999 fiscal year, TEBF, AHIM, and LTEX paid or accrued $4,721,000,
$1,574,000, and $794,000 for compensation to dealers or the Principal
Underwriter under the Plan for Class A shares, respectively.

As of the end of the 1999 fiscal year end, accrued and unpaid distribution
expenses for TEBF, AHIM and LTEX were $894,000, $161,000 and $71,000,
respectively.

National Tax-Exempt Income Funds - Page 23

<PAGE>

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.

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-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 has elected 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 100% of
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.

National Tax-Exempt Income Funds - Page 24

<PAGE>

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.

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.

National Tax-Exempt Income Funds - Page 25

<PAGE>

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 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.

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

National Tax-Exempt Income Funds - Page 26

<PAGE>

alternative minimum taxable income, and may also affect corporate federal
"environmental tax" liability.

The following is only a summary of certain additional federal, state and local
tax considerations generally affecting the fund and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
fund or its shareholders, and the discussion here and in the fund's prospectus
is not intended as a substitute for careful tax planning. Investors are urged
to consult their tax advisers with specific reference to their own tax
situations.

The fund is not intended to constitute a balanced investment program and is not
designed for investors seeking capital appreciation or maximum tax-exempt income
irrespective of fluctuations in principal. Shares of the fund would generally
not be suitable for tax-exempt institutions or tax-deferred retirement plans
(e.g., plans qualified under Section 401 of the Internal Revenue Code,
Keogh-type plans and individual retirement accounts). Such retirement plans
would not gain any benefit from the tax-exempt nature of the fund's dividends
because such dividends would be ultimately taxable to beneficiaries when
distributed to them. In addition, the fund may not be an appropriate investment
for entities which are "substantial users" of facilities financed by private
activity bonds or "related persons" thereof. "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who regularly
uses a part of such facilities in his trade or business and whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities, or
who occupies more than 5% of the usable area of such facilities or for whom such
facilities or a part thereof were specifically constructed, reconstructed or
acquired. "Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S Corporation and its
shareholders.

The fund intends to meet all the requirements and has elected the tax status of
a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.

To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of other
regulated investment companies, and other securities which must be limited, in
respect of any one issuer to an amount not greater than 5% of the fund's assets
and 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any one
issuer (other than U.S. Government securities or the securities of other
regulated investment companies) or in two or more issuers which the fund
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses.

The percentage of total dividends paid by the fund with respect to any taxable
year which qualify for exclusion from gross income ("exempt-interest dividends")
will be the same for all shareholders receiving dividends during such year. In
order for the fund to pay exempt-interest dividends during any taxable year, at
the close of each fiscal quarter at least 50% of the aggregate value of the
fund's assets must consist of certain tax-exempt obligations. Not later

National Tax-Exempt Income Funds - Page 27

<PAGE>

than 60 days after the close of its taxable year, the fund will notify each
shareholder in writing of the portion of the dividends paid by the fund to the
shareholder with respect to such taxable year which constitutes exempt-interest
dividends. The aggregate amount of dividends so designated cannot, however,
exceed the excess of the amount of interest excludable from gross income from
tax under Section 103 of the Code received by the fund during the taxable year
over any amounts disallowed as deductions under Sections 265 and 171(a)(2) of
the Code.

Interest on indebtedness incurred by a shareholder to purchase or carry fund
shares is not deductible for federal income tax purposes if the fund distributes
exempt-interest dividends during the shareholder's taxable year. If a
shareholder receives an exempt-interest dividend with respect to any share and
such share is held for six months or less, any loss on the sale or exchange of
such share will be disallowed to the extent of the amount of such
exempt-interest dividend.

While the fund does not expect to realize substantial long-term capital gains,
any net realized long-term capital gains will be distributed annually except as
indicated above. The fund will have no tax liability with respect to such
distributed gains, and the distributions will be taxable to shareholders as
long-term capital gains, regardless of how long a shareholder has held fund
shares. Such distributions will be designated as a capital gains distribution
in a written notice mailed by the fund to shareholders not later than 60 days
after the close of the fund's taxable year. If a shareholder receives a
designated capital gain distribution (treated by the shareholder as a long-term
capital gain) with respect to any fund share and such fund share is held for six
months or less, then (unless otherwise disallowed) any loss on the sale or
exchange of that fund share will be treated as long-term capital loss to the
extent of the designated capital gain distribution. The fund also may make a
distribution of net realized long-term capital gains near the end of the
calendar year to comply with certain requirements of the Code. Gain recognized
on the disposition of a debt obligation (including tax-exempt obligations
purchased after April 30, 1993) purchased by the fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the fund held the debt obligation.

Similarly, while the fund does not expect to earn any significant investment
company taxable income, in the event that any taxable income is earned by the
fund it will be distributed except as indicated above. In general, the fund's
investment company taxable income will be its taxable income subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. The
fund would be taxed on any undistributed investment company taxable income. Any
such income distributed will be taxable to shareholders as ordinary income
(whether distributed in cash or additional shares).

The Code imposes limitations on the use and investment of the proceeds of state
and local governmental bonds and upon other funds of the issuers of such bonds.
These limitations must be satisfied on a continuing basis to maintain the
exclusion from gross income of interest on such bonds. These provisions of the
Code generally apply to bonds issued after August 15, 1986. Bond counsel
qualify their opinions as to the federal tax status of new issues of bonds by
making such opinions contingent on the issuer's future compliance with these
limitations. Any failure on the part of an issuer to comply could cause the
interest on its bonds to become taxable to investors retroactive to the date the
bonds were issued.

National Tax-Exempt Income Funds - Page 28

<PAGE>

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. Except as indicated above, the fund intends to distribute net
investment income and net capital gains so as to minimize or avoid the excise
tax liability.

If for any taxable year the fund does not qualify for the special tax treatment
afforded regulated investment companies, all of its taxable income would be
subject to tax at regular corporate rates (without any deduction for
distributions to its shareholders). In such event, dividend distributions would
be taxable to shareholders to the extent of earnings and profits, and might be
eligible for the dividends-received deduction for corporations. Under normal
circumstances, no part of the distributions to shareholders by the fund is
expected to qualify for the dividends-received deduction allowed to corporate
shareholders.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other funds.
Also, any loss realized on a redemption or exchange of shares of the fund will
be disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.

As of the date of this statement of additional information, the maximum
individual tax rate applicable to ordinary income is 39.6% (effective tax rates
may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate generally applicable
to net capital gains on assets held more than one year is 20%, and the maximum
corporate tax applicable to ordinary income and net capital gains is 35%.
However, to eliminate the benefit of lower marginal corporate income tax rates,
corporations which have taxable income in excess of $100,000 for a taxable year
will be required to pay an additional amount of income tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of income tax of up to
$100,000. Naturally, the amount of tax payable by a taxpayer will be affected
by a combination of tax law rules covering, e.g., deductions, credits,
deferrals, exemptions, sources of income and other matters.

Under the Code, distributions of net investment income by the fund to a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend paid by the fund is

National Tax-Exempt Income Funds - Page 29

<PAGE>

"effectively connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S. citizens, U.S.
residents, or domestic corporations will apply.

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.

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.

National Tax-Exempt Income Funds - Page 30

<PAGE>

PURCHASE OF SHARES

<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Purchase $50 minimum (except where a
Minimums" for initial lower minimum is noted under
investment minimums. "Purchase Minimums").
- -------------------------------------------------------------------------------
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 Call 800/421-0180 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>

PURCHASE MINIMUMS - The minimum initial investment for all funds in The American
Funds Group, except the money market funds and the state tax-exempt funds, is
$250. The minimum initial investment for the money market funds (The Cash
Management Trust of America, The Tax--

National Tax-Exempt Income Funds - Page 31

<PAGE>

Exempt Money Fund of America, and The U.S. Treasury Money Fund of America) and
the state tax-exempt funds (The Tax-Exempt Fund of California, The Tax-Exempt
Fund of Maryland, and The Tax-Exempt Fund of Virginia) is $1,000. Purchase
minimums are reduced to $50 for purchases through "Automatic Investment Plans"
(except for the money market funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived for shareholders of
other funds in The American Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional investments
(except as noted above).

PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. For investments above $100,000 Class
A shares are generally a less expensive option over time due to sales charge
reductions or waivers.

FUND NUMBERS - Here are the fund numbers for use with our automated phone line,
American FundsLine/(R)/ (see description below):

<TABLE>
<CAPTION>
FUND FUND
NUMBER NUMBER
FUND CLASS A CLASS B
---- ------- -------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . 02 202
American Balanced Fund/(R)/ . . . . . . . . . . . . . . 11 211
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . 03 203
Capital Income Builder/(R)/ . . . . . . . . . . . . . . 12 212
Capital World Growth and Income Fund/SM/ . . . . . . . 33 233
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . 16 216
Fundamental Investors/SM/ . . . . . . . . . . . . . . . 10 210
The Growth Fund of America/(R)/ . . . . . . . . . . . . 05 205
The Income Fund of America/(R)/ . . . . . . . . . . . . 06 206
The Investment Company of America/(R)/ . . . . . . . . 04 204
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . 14 214
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . 07 207
New World Fund/SM/ . . . . . . . . . . . . . . . . . . 36 236
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . 35 235
Washington Mutual Investors Fund/SM/ . . . . . . . . . 01 201
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . 40 240
American High-Income Trust/SM/ . . . . . . . . . . . . 21 221
The Bond Fund of America/SM/ . . . . . . . . . . . . . 08 208
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . 31 231
Intermediate Bond Fund of America/SM/ . . . . . . . . . 23 223
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . 43 243
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . 19 219
The Tax-Exempt Fund of California/(R)/* . . . . . . . . 20 220
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . 24 224
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . 25 225
U.S. Government Securities Fund/SM/ . . . . . . . . . . 22 222

MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . 09 209
The Tax-Exempt Money Fund of America/SM/ . . . . . . . 39 N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . 49 N/A
___________
*Available only in certain states.
</TABLE>

National Tax-Exempt Income Funds - Page 32

<PAGE>

SALES CHARGES

CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares
of 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 "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 $25,000 . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
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 $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
$1 million or more . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>

CLASS A 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 (CDSC) 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, and Individual
Retirement Account rollovers from retirement plan assets invested in the
American

National Tax-Exempt Income Funds - Page 33

<PAGE>

Funds (see "Individual Retirement Account (IRA) Rollovers" below) may invest
with no sales charge and are not subject to a contingent deferred sales charge.
Investments made by investors in certain qualified fee-based programs, and
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 CDSC. 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, Class A shares of the stock, stock/bond and bond funds may be sold
at net asset value to:

(1) current or retired directors, trustees, officers and advisory board members
of, and certain lawyers who provide services to, the funds managed by Capital
Research and Management Company, current or retired employees of Washington
Management Corporation, current or retired employees and partners of The Capital
Group Companies, Inc. and its affiliated companies, certain family members and
employees 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.

CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES - A contingent deferred
sales charge of 1% applies to redemptions made from funds, other than the money
market funds, within 12 months following Class A share purchases of $1 million
or more made without an initial sales charge. 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 the longest
are assumed to be redeemed first for purposes of calculating this CDSC. The CDSC
may be waived in certain circumstances. See "CDSC Waivers for Class A Shares"
below.

DEALER COMMISSIONS ON CLASS A SHARES - The following commissions (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 defined contribution plan
investing $1 million or more, or with 100 or more eligible employees, IRA
rollover accounts (as described in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with collective assets of $50
million or more: 1.00% on amounts of

National Tax-Exempt Income Funds - Page 34

<PAGE>

$1 million to $4 million, 0.50% on amounts over $4 million to $10 million, and
0.25% on amounts over $10 million.

CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge. However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE ON
SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
------------------------------------------------------------------------------
<S> <C>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>

There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances.
See "CDSC Waivers for Class B shares" below. The CDSC is based on the original
purchase cost or the current market value of the shares being sold, whichever is
less. In processing redemptions of Class B shares, shares that are not subject
to any CDSC will be redeemed first and then shares that you have owned the
longest during the six-year period. CLASS B SHARES ARE NOT AVAILABLE TO CERTAIN
RETIREMENT PLANS, INCLUDING GROUP RETIREMENT PLANS SUCH AS 401(K) PLANS,
EMPLOYER-SPONSORED 403(B) PLANS, AND MONEY PURCHASE PENSION AND PROFIT SHARING
PLANS.

Compensation equal to 4% of the amount invested is paid by the Principal
Underwriter to dealers who sell Class B shares.

CONVERSION OF CLASS B SHARES TO CLASS A SHARES - Class B shares automatically
convert to Class A shares in the month of the eight-year anniversary of the
purchase date. The conversion of Class B shares to Class A shares after eight
years is subject to the Internal Revenue Service's continued position that the
conversion of Class B shares is not subject to federal income tax. In the event
the Internal Revenue Service no longer takes this position, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. At your
option, Class B shares may still be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee; HOWEVER, SUCH AN EXCHANGE COULD CONSTITUTE A TAXABLE EVENT FOR
YOU, AND ABSENT SUCH AN EXCHANGE, CLASS B SHARES WOULD CONTINUE TO BE SUBJECT TO
HIGHER EXPENSES FOR LONGER THAN EIGHT YEARS.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A 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

National Tax-Exempt Income Funds - Page 35

<PAGE>

qualify for a reduction in your sales charge using one or any combination of the
methods described below.

STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) 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 $25,000 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 use 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 below), as well as purchases of Class B shares, and
any individual investments in American Legacy variable annuities and
variable life insurance policies (American Legacy, American Legacy II and
American Legacy III 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 and
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. There will be no retroactive adjustments in sales charges
on investments made during the 13-month period.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.

National Tax-Exempt Income Funds - Page 36

<PAGE>

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:

. 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 Class A and/or B shares
of two or more funds in The American Funds Group, as well as individual
holdings in American Legacy variable annuities and variable life insurance
policies. 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 Class A and B 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.

CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in
the following cases:

National Tax-Exempt Income Funds - Page 37

<PAGE>

(1) Exchanges (except if shares acquired by exchange are then redeemed within
12 months of the initial purchase).

(2) Distributions from 403(b) plans or IRAs due to death, post-purchase
disability or attainment of age 59-1/2.

(3) Tax-free returns of excess contributions to IRAs.

(4) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% of the net asset value of the account
each year.

CDSC WAIVERS FOR CLASS B SHARES - Any CDSC on Class B shares may be waived in
the following cases:

(1) Systematic withdrawal plans (SWPs) - investors who set up a SWP (see
"Automatic Withdrawals" below) may withdraw up to 12% of the net asset value of
their account each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions) will be
redeemed first and will count toward the 12% limitation. If there are
insufficient shares not subject to a CDSC, shares subject to the lowest CDSC
will be redeemed next until the 12% limit is reached.

The 12% fee from CDSC limit is calculated on a pro rata basis at the time the
first payment is made and is recalculated thereafter on a pro rata basis at the
time of each SWP payment. Shareholders who establish a SWP should be aware that
the amount of that payment not subject to a CDSC may vary over time depending on
fluctuations in net asset value of their account. This privilege may be revised
or terminated at any time.

(2) Required minimum distributions taken from retirement accounts upon the
attainment of age 70-1/2.

(3) Distributions due to death or post-purchase disability of a shareholder. In
the case of joint tenant accounts, if one joint tenant dies, the surviving joint
tenant(s), at the time they notify the Transfer Agent of the decedent's death
and remove his/her name from the account, may redeem shares from the account
without incurring a CDSC. Redemptions subsequent to the notification to the
Transfer Agent of the death of one of the joint owners will be subject to a
CDSC.

INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS

Assets from an employer-sponsored retirement plan (plan assets) may be invested
in any class of shares of the American Funds (except as described below) through
an IRA rollover plan. All such rollover investments will be subject to the terms
and conditions for Class A and B shares contained in the fund's current
prospectus and statement of additional information. In the case of an IRA
rollover involving plan assets from a plan that offered the American Funds, the
assets may only be invested in Class A shares of the American Funds. Such
investments will be at net asset value and will not be subject to a contingent
deferred sales charge. Dealers who initiate and are responsible for such
investments will be compensated pursuant to the schedule applicable to
investments of $1 million or more (see "Dealer Commissions on Class A Shares"
above).

National Tax-Exempt Income Funds - Page 38

<PAGE>

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 time of the determination of the net asset
value will be entered at the next calculated offering price. Prices which appear
in the newspaper do not always indicate 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 as of approximately 4:00 p.m. New
York time, which is the normal close of trading on the New York Stock Exchange
each day the Exchange is open. If, for example, the Exchange closes at 1:00
p.m., the fund's share price would still be determined as of 4:00 p.m. New York
time. 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

National Tax-Exempt Income Funds - Page 39

<PAGE>

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 each fund without the consent of a majority of the fund's Board of
Directors/Trustees.

SELLING SHARES

Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. Sales of certain Class A and B
shares may be subject to deferred sales charges. 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).

National Tax-Exempt Income Funds - Page 40

<PAGE>

- 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).

- 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.

- Check writing is not available for Class B shares of The Cash
Management Trust.

If you sell Class B shares and request a specific dollar amount to be sold, we
will sell sufficient shares so that the sale proceeds, after deducting any
contingent deferred sales charge, equals the dollar amount requested.

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 of Class A or Class B shares without a sales charge in the Class A
shares of any fund in The American Funds Group within 90 days after the date of
the redemption or distribution (any contingent deferred sales charge on Class A
shares will be credited to your account). 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.

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. For
example, if the date you specified falls on a

National Tax-Exempt Income Funds - Page 41

<PAGE>

weekend or holiday, your money will be invested on the next business day. 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.

AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares of the same class at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, 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") of the same share class 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 only exchange shares into other funds in The
American Funds Group within the same class. However, exchanges from Class A
shares of The Cash Management Trust of America may be made to Class B shares of
any other American Fund for dollar cost averaging purposes. 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

National Tax-Exempt Income Funds - Page 42

<PAGE>

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 of the same class 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.

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 - Purchase Minimums" and "Purchase of Shares -
Fund Numbers"), personal identification number (generally 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.

National Tax-Exempt Income Funds - Page 43

<PAGE>

REDEMPTION OF SHARES - The funds' Articles of Incorporation or Declaration of
Trust permits the funds 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 Directors/Trustees
of the fund may from time to time adopt.

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 1999, 1998 and 1997
fiscal years for TEBF, amounted to $1,261,000, $1,673,000 and $771,000,
respectively.

Dealer concessions paid on underwriting transactions for the 1999, 1998 and 1997
fiscal years for AHIM, amounted to $2,083,000, $1,544,000 and $1,100,000,
respectively.

Dealer concessions paid on underwriting transactions for the 1999, 1998 and 1997
fiscal years for LTEX, 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 non-U.S. 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

National Tax-Exempt Income Funds - Page 44

<PAGE>

agent, and performs other related shareholder service functions. American Funds
Service Company was paid a fee of $499,000, $160,000, and $70,000, by TEBF, AHIM
and LTEX respectively, for the 1999 fiscal year.

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 of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountants is reviewed and
determined annually by the Board of Directors/Trustees.

PROSPECTUSES AND REPORTS TO SHAREHOLDERS - TEBF'S fiscal year ends on August 31.
AHIM's and LTEX's fiscal year ends on July 31. Shareholders are provided
updated prospectuses annually. In addition, shareholders are provided at least
semiannually with reports showing the investment portfolio, financial statements
and other information. The funds' 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 prospectuses and shareholder reports. To receive
additional copies of a prospectus or report, shareholders should contact the
Transfer Agent.

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 TEBF'S NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- AUGUST 31, 1999

<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $11.86
Maximum offering price per share
(100/96.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $12.32
</TABLE>

National Tax-Exempt Income Funds - Page 45

<PAGE>

DETERMINATION OF AHIM'S NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- JULY 31, 1999

<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $15.49
Maximum offering price per share
(100/96.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $16.09
</TABLE>

DETERMINATION OF LTEX'S NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- 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
(100/96.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $15.19
</TABLE>

CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS

TEBF's yield was 4.39% based on a 30-day (or one month) period ended August 31,
1999. AHIM's and LTEX's yield was 4.84% and 4.04%, respectively, based on a
30-day (or one month) period ended July 31, 1999. The yield was computed by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula:

YIELD = 2[( a-b/cd + 1)/6/ -1]

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

The funds 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. TEBF'S tax-equivalent yield based on the maximum
federal tax rate of 39.6% for the 30-day (or one month) period ended August 31
was 7.27%. AHIM's and LTEX's tax-equivalent yield based on the maximum federal
tax rate of 39.6% for the 30-day (or one month) period ended July 31, 1999 was
8.01 and 6.69%, respectively.

National Tax-Exempt Income Funds - Page 46

<PAGE>

As of 8/31/99, TEBF's total return over the past 12 months and average annual
total return for the five- and ten-year periods were -3.53%, 5.56% and 6.68%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on August 31 were 0.22%, 6.36% and 7.09%,
respectively.

As of July 31, 1999, AHIM's total return over the past 12 months and average
annual total return over its lifetime were -2.20% and 7.38%, respectively. Over
the fund's lifetime (September 26, 1994 to July 31, 1999), the Lehman Brothers
Municipal Bond Index<F1> and the Lipper High Yield Municipal Debt Funds
Average<F2> had average annual total returns of 7.16% and 6.84%, respectively.
The fund's total return at net asset value over the past 12 months and average
annual total return over its lifetime at July 31, 1999 were 1.63% and 8.23%,
respectively.

As of July 31, 1999, LTEX's total return over the past twelve months and average
annual total return over its lifetime were -1.27% and 4.36%, respectively. Over
the fund's lifetime (October 6, 1993 to July 31, 1999), the Lehman Brothers
7-Year Municipal Bond Index<F3> and the Lipper Intermediate Municipal Debt Funds
Average<F4> 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 funds assume: (1) deduction of
the maximum sales load of 3.75% 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 funds will provide lifetime
average total return figures. From time to time, the funds may calculate
investment results for Class B shares.

The funds 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.

[FN]
<F1> The Lehman Brothers Municipal Bond Index represents the long-term
investment grade municipal bond market. This index is unmanaged and does not
reflect sales charges, commissions or expenses.
<F2> The Lipper High Yield Municipal Debt Funds Average represents an average
of funds in the objective that invest at least 50% of their assets in lower
rated municipal debt issues. 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.
<F3> 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.
<F4> 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.

National Tax-Exempt Income Funds - Page 47

<PAGE>

The funds may include information on their investment results and/or comparisons
of their 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 funds may also, from time to time, combine their results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.

The funds 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 funds 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 funds may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.

The funds may compare their 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).

National Tax-Exempt Income Funds - Page 48

<PAGE>

APPENDIX
Description of Bond Ratings

BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.

Moody's rates the long-term debt securities issued by various entities from
- -------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:

"Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."

"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."

"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."

"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."

"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often 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. Uncertainty of position characterizes
bonds in this class."

"Bonds which are rated 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."

National Tax-Exempt Income Funds - Page 49

<PAGE>

"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."

"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."

"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."

S & P rates the long-term securities debt of various entities in categories
- -----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:

"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."

"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."

"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."

"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."

"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.

"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."

"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."

"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."

"The rating 'C1' is reserved for income bonds on which no interest is being
paid."

National Tax-Exempt Income Funds - Page 50

<PAGE>

"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."

Note Ratings

STANDARD & POOR'S CORPORATION: "SP-1" and "SP-2" are the two highest note rating
categories, and are described as follows:

"SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation."

"SP-2 Satisfactory capacity to pay principal and interest."

MOODY'S INVESTORS SERVICE, INC.: "MIG-1" and "MIG-2" are the two highest note
rating categories, and are described as follows:

"MIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad based access to the market for refinancing."

"MIG 2: This designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group."
Description of Commercial Paper Ratings

MOODY'S employs the designations "Prime-1," "Prime-2" and "Prime-3" to indicate
- -------
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity.

Issues rated Prime-2 have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

S&P ratings of commercial paper are graded into four categories ranging from "A"
- ---
for the highest quality obligations to "D" for the lowest.

A - Issues assigned its highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with numbers
1, 2, and 3 to indicate the relative degree of safety.

National Tax-Exempt Income Funds - Page 51

<PAGE>

A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.

A-2 - Capacity for timely payments on issues with this designation is strong;
however, the relative degree of safety is not as high as for issues designated
"A-1."

National Tax-Exempt Income Funds - Page 52

<PAGE>
THE TAX-EXEMPT BOND FUND OF AMERICA
Investment Portfolio
August 31, 1999
[S] [C]
Geographic Breakdown
[begin pie chart]
California 9.51%
New York 9.10%
Illinois 8.47%
Michigan 8.29%
Pennsylvania 7.20%
Louisiana 5.36%
Other States 45.07%
Cash & Short-Term Securities 7.00%
-
[end pie chart]

Quality Ratings
[begin pie chart]

Aaa/AAA 37.81%
Aa/AA 14.21%
A 12.55%
Baa/BBB 18.74%
Below Investment Grade 9.69%
Cash and Short-Term Securities 7%*

[end pie chart]
Short-term securities rated A
or better = 6.60%

<TABLE>
The Tax-Exempt Bond Fund of America, Inc.
Investment Portfolio, August 31, 1999
<S> <C> <C>
Principa Market
Amount Value
(000) (000)
- -------------------------------------------- ----------------

Tax-Exempt Securities Maturing in More Than One Year - 93.00%
Alabama - 0.20%
Daughters of Charity, National Health System, 5.25% 2015 $4,000 $3,797

Alaska - 0.64%
Housing Fin. Corp., Collateralized Bonds (Veterans 3,375 3,532
Mortgage Program), Series 1992A-1, 6.75% 2032
Municipality of Anchorage:
1995 G.O. Ref. General Purpose Bonds, Series B, 2,895 3,089
FGIC Insured, 6.00% 2012
Municipal Light & Power, Senior Lien Ref. Electric 5,000 5,585
Rev. Bonds, MBIA Insured, Series 1996, 6.50% 2014
Arizona - 0.25%
State Transportation Board, Subordinated Highway 1,850 1,986
Rev. Bonds, Series 1992B, 6.50% 2008 (Preref. 2002)
Industrial Dev. Auth. of the County of Maricopa, 2,850 2,782
Health Fac. Rev. Bonds (Catholic Healthcare West
Project), 1998 Series A, 5.25% 2006

California - 9.51%
G.O. Bonds:
6.75% 2006 1,000 1,120
5.25% 2016 7,320 7,170
Educational Facs. Auth., Rev. Bonds, Stanford 3,000 2,872
University, Series N, 5.35% 2027
Health Facs. Fncg. Auth., Hospital Rev. Bonds 2,990 2,970
(Downey Community Hospital), Series 1993, 5.75% 2015
Housing Fin. Agcy., Single Family Mortgage Rev.
Bonds, 1998 Series C-4, Class I:
5.10% 2007 1,790 1,801
5.20% 2009 3,095 3,088
Public Works Board, Lease Rev. Bonds, California 1,315 1,482
Community Colleges, 1994 Series B (Various Community
College Projects), 7.00% 2007 (Preref. 2004)
Statewide Communities Dev. Auth.:
Apartment Dev. Rev. Ref. Bonds (Irvine Apartment 4,000 3,840
Communities, LP), Series 1998A-3, 5.10% 2025 (Put 2010)
Children's Hospital of Los Angeles, MBIA Insured, 6.00% 2008 1,715 1,857
The Internext Group, Cert. of Part., 5.375% 2017 2,000 1,863
St. Joseph Health System Obligated Group, Cert. of Part.:
5.50% 2014 2,000 1,946
5.50% 2023 2,700 2,584
Alameda Public Fncg. Auth., 1999 Rev. Bonds (1997
Rev. Bond Refinancing):
5.20% 2010 2,495 2,397
5.30% 2011 1,820 1,752
5.35% 2012 1,620 1,556
5.40% 2013 500 479
5.45% 2014 1,000 957
Anaheim Public Fncg. Auth., Lease Rev. Bonds, 1,000 1,063
(Anaheim Public Improvement Project), Senior Lease
Rev. Bonds, 1997 Series A, FSA Insured, 6.00% 2024
City of Antioch, Public Fncg. Auth., 1998 Reassessment
Rev. Bonds, Subordinated Series B:
5.60% 2009 1,305 1,258
5.85% 2015 1,500 1,442
Association of Bay Area Governments, Fncg. Auth.
for Nonprofit Corps., Ref. Rev. Cert. of Part.:
(American Baptist Homes Foundation), Series 1998A, 3,000 2,993
6.10% 2017
(Episcopal Homes Foundation), Series 1998, 5.00% 2008 1,350 1,339
Bonita Canyon Public Facs. Fncg. Auth., Community 2,500 2,235
Facs. Dist. No. 98-1, Special Tax Bonds, Series
1998, 5.375% 2028
Central Valley Fncg. Auth., Cogeneration Project
Rev. Bonds (Carson Ice-Gen Project), Series 1993:
5.80% 2004 3,300 3,465
6.00% 2009 3,750 3,862
6.10% 2013 (Preref. 2003) 1,000 1,082
County of Contra Costa Public Fncg. Auth., 1999 1,000 928
Tax Allocation Rev. Bonds (Pleasant Hill BART,
N. Richmond, Bay Point, Oakley & Rodeo Redev. Projs),
5.10% 2014
Del Mar Race Track Auth., Rev. Ref. Bonds, 1,470 1,493
Series 1996, 6.00% 2001
County of El Dorado, Community Facs. Dist. 1,000 999
No. 1992-1 (El Dorado Hills Dev.), Series 1999
Special Tax Bonds, 6.125% 2016
City of Irvine, Limited Obligation Improvement Bonds:
Group One:
Assessment Dist. No. 94-13 (Oak Creek), 5.50% 2022 2,000 1,847
Assessment Dist. No. 97-17, 6.00% 2023 1,500 1,466
Group Two, Assessment Dist. No. 94-13 (Oak Creek), 1,250 1,214
6.00% 2022
Group Three, Assessment Dist. No. 95-12, Fixed 2,750 2,559
Rate Bonds, 5.50% 2021
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 4,000 4,118
6.125% 2015 7,000 7,071
6.125% 2023 14,000 14,035
City of Los Angeles:
State Building Auth., Lease Rev. Ref. Bonds, Dept.
of General Services Lease, 1993 Series A:
5.375% 2006 3,000 3,124
5.50% 2007 5,545 5,804
Community Redev. Agcy., Central Business Dist. 2,000 2,021
Redev. Project, Tax Allocation Ref. Bonds,
Series I, 5.00% 2001
Regional Airports Improvement Corp., Facs. Lease 2,000 2,119
Ref. Rev. Bonds, Issue of 1992, United Air Lines, Inc.
(Los.Angeles International Airport), 6.875% 2012
County of Los Angeles:
Capital Asset Leasing Corp., Cert. of Part.
(Marina del Rey), Series A:
6.25% 2003 4,530 4,683
6.50% 2008 4,750 5,041
Metropolitan Transportation Auth., Proposition C 1,300 1,231
Sales Tax Rev. Bonds, Second Series 1993B,
AMBAC Insured, 5.25% 2023
The Metropolitan Water Dist. of Southern California, 3,000 3,095
Waterworks G.O. Ref. Bonds, 1993 Series A1, 5.50% 2010
Northern California Power Agcy., Geothermal Project
Number 3 Special Rev. Bonds, 1993 Ref. Series A:
5.60% 2006 (Escrowed to Maturity) 1,495 1,591
5.60% 2006 1,505 1,569
County of Orange:
Aliso Viejo Special Tax Bonds of Community Facs.
Dist. No. 88-1, Series A of 1992:
7.15% 2006 (Preref. 2002) 2,000 2,209
7.35% 2018 (Preref. 2002) 10,000 11,101
Limited Obligation Improvement Bonds, Irvine Coast
Assessment Dist. No. 88-1, 1998 Series A:
5.05% 2007 1,000 975
5.15% 2008 1,000 973
5.30% 2010 1,100 1,071
Pleasanton Joint Powers Fncg. Auth., Reassessment 465 477
Rev. Bonds, 1993 Series A, 5.70% 2001
Riverside County Transportation Commission, Sales 3,600 3,824
Tax Rev. Bonds (Limited Tax Bonds), 1991 Series A,
6.50% 2009 (Preref. 2001)
City of Roseville, North Central Roseville Community
Facs. Dist. No. 1, Special Tax Ref. Bonds:
Series 1998, 5.20% 2007 1,235 1,197
Series 1999:
5.30% 2007 2,865 2,799
5.80% 2017 3,000 2,891
Sacramento Cogeneration Auth., Cogeneration
Project Rev. Bonds:
Procter & Gamble Project, 1995 Series:
6.00% 2003 2,200 2,299
7.00% 2005 1,500 1,656
6.20% 2006 1,000 1,071
6.375% 2010 500 546
6.375% 2010 (Preref. 2005) 500 556
County of Sacramento, Laguna Creek Ranch/Elliott 500 503
Ranch Community Facs. Dist. No. 1, Improvement
Area No. 2 Special Tax Ref. Bonds (Elliott Ranch),
6.30% 2021
County of San Bernardino, Housing Auth., Multi-Family 1,500 1,476
Housing Rev. Ref. Bonds (Equity Residential/Redlands
Lawn & Tennis Apartments), Issue 1999A, 5.20% 2029 (09
County of San Diego, Reassessment Dist. No. 97-1 1,000 1,021
(4-S Ranch), Limited Obligation Improvement Bonds,
6.25% 2012
San Diego Unified School Dist., 1999 G.O. Bonds 3,690 1,358
(Election of 1998, Series A), Capital Appreciation
Bonds, FGIC Insured, 0.00% 2017
Redev. Agcy. of the City and County of San Francisco, 4,000 3,979
Ref. Lease Rev. Bonds, Series 1991 (George R.
Moscone Convention Center), 5.50% 2018
San Marcos Public Facs. Auth., Ref. Rev. Bonds, 2,000 1,920
Series 1998, 5.80% 2027
San Marcos Unified School Dist., Community Facs. 3,250 2,992
Dist. No. 5 (Rancho Carrillo), Series 1999 Special
Tax Bonds, 5.60% 2029
Community Facs. Dist. No. 99-1 (Talega) of the 1,195 1,191
Santa Margarita Water Dist., Series 1999 Special
Tax Bonds, 6.10% 2014
Stanislaus Waste-To-Energy Fin. Agcy., Solid Waste 2,450 2,515
Fac. Ref. Rev. Certificates (Ogden Martin Systems
of Stanislaus, Inc. Project), Series 1990, 7.625% 2010
City of Stockton, Mello-Roos Rev. Bonds, Community 500 503
Facs. Dist. No. 90-2B (Brookside Estates),
Series 1997A, 5.40% 2004
Washington Township Health Care Dist., Rev. Bonds, 1,300 1,194
Series 1999, 5.00% 2014
The Regents of the University of California, Various 2,000 1,949
University of California Projects, 1993 Series A,
5.50% 2021
City of West Sacramento, Limited Obligation Ref.
Improvement Bonds, Reassessment Dist. of 1998:
5.30% 2009 750 719
5.30% 2010 500 476
West Sacramento Fncg. Auth., Special Tax Rev.
Bonds, Series F:
5.75% 2011 1,540 1,484
6.10% 2029 1,000 937

Colorado - 4.38%
Housing and Fin. Auth.:
Multi-Family Housing Insured Mortgage Rev. Bonds:
1982 Series A, 9.00% 2025 1,515 1,494
1997 Series C-3, 5.65% 2015 2,300 2,345
Single Family Housing Program Senior and
Subordinate Bonds:
1997 Series:
A-3, 7.00% 2016 1,750 1,906
C-3, 6.75% 2017 1,000 1,079
B-3, 6.80% 2028 1,000 1,092
1998 Series:
A-3, 6.50% 2016 1,000 1,064
D-3, 6.125% 2023 2,000 2,063
B-3, 6.55% 2025 5,750 6,122
Student Obligation Bond Auth., Student Loan Rev. 1,065 1,096
Bonds, 1994 Series L, 6.00% 2001
Arapahoe County, Capital Improvement Trust Fund
Highway Rev. Bonds (E-470 Project):
6.90% 2015 (Preref. 2005) 5,750 6,579
6.95% 2020 (Preref. 2005) 20,500 23,510
City and County of Denver, Airport System Rev.
Bonds, Series 1992A:
7.25% 2025 (Preref. 2002) 14,210 15,717
7.25% 2025 (Preref. 2002) 5,590 6,183
Eaglebend Affordable Housing Corp., Multi-Family
Housing Project Rev. Ref. Bonds:
Series 1997 A, 6.45% 2021 1,175 1,207
Series 1998A:
6.35% 2014 1,065 1,055
6.63% 2039 2,000 1,972
Metroplitan Football Stadium Dist., Capital
Appreciation Sales Tax Rev. Bonds, MBIA Insured:
Series 1999B, 0.00% 2006 6,000 4,405
Series 1999A, 0.00% 2012 1,750 896
The Regents of the University of Colorado, Refunding 3,000 3,190
Cert. of Part. (Telecommunications and Cogeneration
Projects), Series 1996, AMBAC Insured, 6.00% 2005
University of Colorado Hospital Auth., Hospital Ref. 1,000 1,041
Rev. Bonds, Series 1997A, AMBAC Insured, 5.50% 2007

Connecticut - 1.01%
Dev. Auth., Pollution Control Rev. Ref. Bonds (The 6,025 5,674
Connecticut Light and Power Co. Project), Series
1993A, 5.85% 2028
Health and Educational Fac. Auth., Rev. Bonds, 2,800 2,881
University of Hartford Issue, Series D, 6.75% 2012
Housing Fin. Auth., Housing Mortgage Fin. Program 605 620
Bonds, Subseries B-1, 6.25% 2011
Mashantucket (Western) Pequot Tribe, Special Rev.
Bonds, 1996 Series A:(1)
6.25% 2002 (Escrowed to Maturity) 1,000 1,058
6.375% 2004 (Escrowed to Maturity) 1,985 2,157
6.50% 2005 (Escrowed to Maturity) 1,490 1,642
6.40% 2011 2,530 2,655
6.40% 2011 (Preref. 2007) 2,470 2,756

Delaware - 0.05%
Econ. Dev. Auth., First Mortgage Rev. Bonds 1,000 1,019
(Peninsula United Methodist Homes, Inc. Issue),
Series 1997A, 6.00% 2009

District of Columbia - 1.27%
G.O. Bonds:
Series 1992 B, MBIA Insured, 6.30% 2010 (Preref. 2002) 2,900 3,098
Series 1993 A, AMBAC Insured:
5.875% 2005 2,780 2,935
5.875% 2005 (Escrowed to Maturity) 220 234
Series 1993 B-1, AMBAC Insured, 5.50% 2009 3,000 3,074
Convention Center Auth. (Washington, D.C.), 1,105 1,120
Senior Lien Dedicated Tax Rev. Bonds, Series 1998,
AMBAC Insured, 5.00% 2006
Fixed Rate Rev. Bonds (National Academy of Sciences
Project), Series 1999A, AMBAC Insured:
5.00% 2009 1,300 1,294
5.00% 2010 1,810 1,785
Hospital Rev. and Ref. Bonds:
Medlantic Healthcare Group, Inc. Issue:
Series 1992 B, 6.50% 2002 (Escrowed to Maturity) 2,000 2,115
Series 1993 A, MBIA Insured, 5.25% 2012 (Escrowed 2,000 1,981
to Maturity)
Series 1996A, MBIA Insured, 6.00% 2009 (Escrowed 3,355 3,598
to Maturity)
Washington Hospital Center Issue, Series 1992A, 2,000 2,146
7.00% 2005 (Preref. 2002)
Redev. Land Agcy., Sports Arena Special Tax Rev. 890 906
Bonds, Series 1996, 5.625% 2010

Florida - 3.16%
Arbor Greene Community Dev. Dist. (City of Tampa,
Hillsborough County), Special Assessment Rev. Bonds:
Series 1996, 7.60% 2018 975 1,027
Series 1998, 5.75% 2006 1,490 1,465
Broward County, Resource Recovery Rev. Bonds,
Series 1984:
North Project, 7.95% 2008 7,350 7,626
South Project, 7.95% 2008 9,985 10,361
Championsgate Community Dev. Dist., Capital 1,515 1,485
Improvement Rev. Bonds, Series 1998B, 5.70% 2005
The Crossings at Fleming Island Community Dev. 1,065 1,143
Dist. (Clay County), Special Assessment Bonds,
Series 1995, 8.25% 2016
Heritage Harbor Community Dev. Dist. Rev. Bonds, 1,165 1,161
Series B, 6.00% 2003
Heritage Palms Community Dev. Dist. (Fort Myers), 1,935 1,891
Capital Improvement Rev. Bonds, Series 1998, 5.40% 2003
Heritage Pines Community Dev. Dist. (Pasco County), 2,925 2,846
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Lee County Industrial Dev. Auth. Healthcare Facs.
Rev. Bonds:
Series 1997A (Cypress Cove at Healthpark Florida, Inc.
Project):
5.80% 2006 1,005 994
6.25% 2017 5,550 5,518
Series 1999A (Shell Point/Alliance Obligated Group,
Shell Point Village Project):
5.25% 2006 1,150 1,132
5.50% 2010 1,500 1,468
5.75% 2012 1,360 1,336
5.75% 2015 1,000 960
Meadow Pointe II, Community Dev. Dist. (Pasco
County), Capital Improvement Rev. Bonds:
Series 1998A, 5.25% 2003 1,915 1,867
Series 1998B, 5.50% 2005 1,670 1,619
Mid-Bay Auth., Rev. Ref. Bonds:
Series 1991B, 8.50% 2022 (Subject to Crossover 4,000 4,430
Refunding)
Series 1993D, 6.10% 2022 500 507
Northern Palm Beach County Improvement Dist.,
Water Control and Improvement BondS:
Unit of Dev. No. 9A, Series 1996A:
6.80% 2006 960 1,023
7.30% 2027 1,500 1,611
Unit of Dev. No. 9B, Series 1999:
5.85% 2013 1,000 979
6.00% 2029 2,200 2,135
City of Orlando, Special Assessment Rev. Bonds
(Conroy Road Interchange Project), Series 1998A:
5.50% 2010 1,000 956
5.80% 2026 2,000 1,857
River Ridge Community Dev. Dist. (Lee County), 1,800 1,750
Capital Improvement Rev. Bonds, Series 1998,
5.75% 2008
Sarasota County Public Hospital Board, Fixed Rate 1,500 1,414
Hospital Rev. Ref. Bonds, Series 1998B (Sarasota
Memorial Hospital Project), MBIA Insured, 5.25% 2024

Georgia - 2.23%
Municipal Electric Auth.:
General Power Rev. Bonds:
Series X, 6.50% 2012 1,215 1,333
CTFS-1992B Series, 6.375% 2016 1,000 1,077
Mel Power, Project One Subordinated Bonds, Series B, 1,995 2,136
AMBAC Insured, 6.00% 2007
City of Atlanta:
Airport Facs. Rev. Ref. Bonds, Series 1994A, 1,000 1,109
AMBAC Insured, 6.50% 2009
Special Purpose Facs. Rev. Ref. Bonds (Delta Air 4,500 4,619
Lines, Inc. Project), Series 1989A, 7.50% 2019
Water and Wastewater Rev. Bonds, Series 1999, 8,500 8,461
FGIC Insured, 5.50% 2022
Housing Auth. of the County of DeKalb, Multi-Family
Housing Rev. Ref. Bonds (The Park at Briarcliff
Apartments Project):
Series 1998A, 4.55% 2028 8,000 7,793
Series 1998B, 4.70% 2028 1,985 1,945
Fulco Hospital Auth., Rev. Anticipation Certificates:
Georgia Baptist Health Care System Project:
Series 1992 A, (Preref. 2002):
6.40% 2007 1,000 1,076
6.25% 2013 2,100 2,249
6.375% 2022 1,595 1,714
Series 1992 B, 6.375% 2022 610 655
St. Joseph's Hospital of Atlanta, Inc., Series 1994, 2,305 2,335
4.80% 2001 (Escrowed to Maturity)
Dev. Auth. of Fulton County, Special Facs. Rev. 3,115 3,274
Bonds (Delta Air Lines, Inc. Project), Series 1992,
6.95% 2012
Hospital Auth. of Savannah, Rev. Bonds, St. Joseph's/ 2,895 2,898
Candler Health System, Inc. Issue, Series 1998B,
FSA Insured, 5.25% 2011

Hawaii - 0.77%
G.O. Bonds:
1997, Series CN, FGIC Insured, 5.25% 2013 10,000 9,900
1998, Series CR, MBIA Insured, 5.00% 2008 3,000 3,020
City and County of Honolulu, G.O. Bonds, Ref. And
Improvement Series, 1993B:
5.00% 2013 1,370 1,318
5.00% 2013 (Escrowed to Maturity) 630 612

Illinois - 8.47%
Build Illinois Bonds (Sales Tax Rev. Bonds), Series O, 1,000 1,044
6.00% 2002
Civic Center Bonds (Special State Obligation Bonds), 6,500 7,000
Series 1991, AMBAC Insured, 6.25% 2020
Educational Facs. Auth., Rev. Bonds:
MJH Education Assistance Illinois III LLC, Series 1,500 1,471
1999D, AMBAC Insured, 5.45% 2014
Wesleyan University, Series 1993, 5.625% 2018 1,490 1,487
Health Facs. Auth.:
Rev. Bonds:
Advocate Health Care Network:
Series 1998A:
5.00% 2007 1,620 1,591
5.00% 2008 1,870 1,821
4.50% 2009 1,930 1,759
4.625% 2010 3,000 2,727
Series 1998B, 4.875% 2013 2,460 2,215
Alexian Brothers Health System, Series 1999, FSA Insured:
5.00% 2008 1,230 1,228
5.25% 2010 3,500 3,507
5.25% 2012 6,960 6,857
5.00% 2025 2,000 1,761
Centegra Health System, Series 1998:
5.50% 2008 1,640 1,630
5.50% 2009 2,290 2,258
5.50% 2010 2,440 2,388
5.20% 2012 2,200 2,063
5.25% 2013 2,430 2,273
5.25% 2018 2,500 2,249
The Children's Memorial Hospital Series 1999A, AMBAC Insured:
5.75% 2010 1,835 1,913
5.75% 2011 1,690 1,751
Edward Hospital Association Project, Series 1992, 1,000 1,080
7.00% 2022(Preref. 2002)
Northwestern Memorial Hospital, Series 1994A, 6.00% 2024 2,000 2,008
OSF Healthcare System, Series 1993, 5.75% 2007 6,760 6,833
Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997A:
5.50% 2008 2,110 2,128
5.80% 2016 8,000 7,953
Edward Hospital Project, Series 1993 A:
5.75% 2009 1,550 1,563
6.00% 2019 1,435 1,416
Fairview Obligated General Project, 1995 Series A:
6.25% 2001 1,105 1,123
6.50% 2006 770 792
7.40% 2023 1,500 1,604
Rev. and Rev. Ref. Bonds:
Evangelical Hospitals Corp., Series C, 6.25% 2022 4,000 4,298
(Escrowed to Maturity)
Lutheran General Health, Series C, 6.00% 2018 2,705 2,814
Dev. Fin. Auth., Rev. Bonds, Series 1998A (Provena 5,000 5,087
Health), MBIA Insured, 5.50% 2010
Housing Dev. Auth., Multi-Family Housing Bonds, 1,490 1,589
1992 Series A, 7.00% 2010
Metropolitan Pier and Exposition Auth., McCormick 3,910 4,263
Place Expansion Project Bonds, Series 1992A, 6.50%
2027 (Preref. 2003)
City of Berwyn, Rev. Bonds, Series 1995 (MacNeal 3,000 3,199
Memorial Hospital Association Project), AMBAC
Insured, 6.00% 2009
City of Chicago:
General Obligation Bonds (Emergency Telephone 2,000 1,907
System), Ref. Series 1999, FGIC Insured, 5.25% 2020
Board of Trustees of Chicago State University, 1,000 979
Auxiliary Facs. System Rev. Bonds, Series 1998,
MBIA Insured, 5.50% 2023
County of Cook, G.O. Capital Improvement Bonds,
Series 1996, FGIC Insured:
6.00% 2006 3,920 4,217
6.50% 2011 4,000 4,448
Chicago O'Hare International Airport, Special Fac. 2,750 3,122
Rev. Ref. Bonds, Series 1994 (American Airlines, Inc.
Project), 8.20% 2024
Metropolitan Water Reclamation Dist. of Greater
Chicago, Series B:
Capital Improvement Bonds, 5.25% 2004 5,000 5,179
Ref. Bonds, 5.30% 2005 5,325 5,527
Sales Tax Rev. Bonds, Series 1997, FGIC Insured, 5,000 4,707
5.375% 2027
School Reform Board of Trustees of the Board of
Education of the City of Chicago, Unlimited Tax G.O.
Bonds, Series 1997A, AMBAC Insured:
5.30% 2011 2,745 1,404
6.75% 2012 1,000 1,134
Capital Appreciation Bonds, 0.00% 2015 6,485 2,541
Skyway Toll Bridge Ref. Rev. Bonds, Series 1994:
6.50% 2010 (Preref. 2004) 13,250 14,514
6.75% 2014 (Preref. 2004) 6,500 7,183
Regional Transportation Auth., Cook, Du Page, Kane,
Lake, McHenry and Will Counties, G.O. Bonds:
Series 1994D, FGIC Insured, 7.75% 2019 4,500 5,650
Series 1990A, AMBAC Insured, 7.20% 2020 1,000 1,193

Indiana - 4.87%
Educational Facs. Auth., Educational Facs. Rev. 1,000 1,014
Bonds (University of Evansville Project), Series
1996, 5.25% 2005
Health Fac. Fncg. Auth., Hospital Rev. Bonds:
Charity Obligated Group:
Series 1997D, 5.00% 2026 (Put 2007) 17,620 17,266
Series 1999D, 5.25% 2016 3,000 2,826
Clarian Health Partners, Inc., Series 1996A:
5.50% 2016 16,250 15,712
MBIA Insured, 5.25% 2008 1,700 1,724
Holy Cross Health System Corp., Series 1998, MBIA Insured:
5.375% 2009 5,340 5,436
5.375% 2010 7,095 7,169
Sisters of St. Francis Health Services, Inc. Project, 1,000 997
Series 1997A, MBIA Insured, 5.00% 2008
Housing Fin. Auth., Single Family Mortgage Ref. 1,275 1,332
Rev. Bonds, 1992 Series A, 6.75% 2010
State Dev. Fin. Auth.:
Pollution Control Rev. Bonds (Inland Steel Co. 2,500 2,485
Project No. 12), 6.85% 2012
Rev. Ref. Bonds, Exempt Fac. Inland Steel, 5.75% 2011 4,000 3,654
State Office Building Commission, Correctional Facs. 8,490 9,271
Program Rev. Bonds, Series 1995B, AMBAC Insured,
6.25% 2012
Transportation Fin. Auth., Airport Facs. Lease Rev.
Bonds, Series A:
6.50% 2007 1,160 1,239
6.50% 2007 (Preref. 2002) 3,755 4,067
6.75% 2011 (Preref. 2002) 2,400 2,617
City of East Chicago, Pollution Control Rev. Ref. 3,000 3,036
Bonds, Inland Steel Co. Project No. 11, Series 1994,
7.125% 2007
Hospital Auth. of the City of Fort Wayne, Rev. Bonds
(Parkview Memorial Hospital Inc. Project), Series 1992:
6.375% 2013 (Preref. 2002) 6,000 6,467
6.40% 2022 (Preref. 2002) 2,000 2,157
Hospital Auth. of St. Joseph County, Health System
Bonds (Memorial Health System), Series 1998A, MBIA Insured:
5.50% 2006 2,055 2,134
5.50% 2007 1,650 1,710
5.50% 2008 1,010 1,043

Iowa - 0.84%
Fin. Auth.:
Healthcare Rev. Bonds, Series 1997 (Genesis Medical 2,920 2,948
Center), MBIA Insured, 5.00% 2006
Hospital Facs. Rev. Bonds, Series 1998 A (Iowa 6,395 6,520
Health System), MBIA Insured, 5.25% 2007
Single Family Mortgage Bonds, 1997 Series F, 5.55% 2016 1,985 1,966
Polk County, Rev. Bonds, Catholic Health Initiatives:
Series 1997A, 5.50% 2007 1,520 1,565
Series A, 5.125% 2012 3,170 3,034

Kentucky - 0.91%
Econ. Dev. Fin. Auth., Hospital System Ref. And
Improvement Rev. Bonds, Series 1997 (Appalachian
Regional Healthcare, Inc. Project):
5.20% 2004 1,540 1,502
5.60% 2008 630 607
5.60% 2009 3,305 3,164
5.70% 2010 490 469
5.75% 2011 2,190 2,083
5.85% 2017 2,000 1,849
City of Ashland, Pollution Control Ref. Rev. Bonds, 5,000 5,298
Series 1992 (Ashland Oil, Inc. Project), 6.65% 2009
Kenton County Airport Board, Special Facs. Rev.
Bonds (Delta Air Lines, Inc. Project):
Series 1985, 7.80% 2015 1,000 1,027
1992 Series B, 7.25% 2022 1,350 1,430

Louisiana - 5.36%
Environmental Improvement Rev. Bonds, Parish of 1,500 1,394
St. John the Baptist (USX Corp. Project), Ref.
Series of 1998, 5.35% 2013
Health Education Auth.(Lambeth House Project):
Rev. Bonds, Series 1996, 9.00% 2026 (Preref. 2006) 9,000 11,366
Rev. Ref. Bonds, Series 1998A:
5.50% 2010 5,505 5,126
6.15% 2018 2,000 1,887
6.20% 2028 5,500 5,087
Jefferson Parish Hospital Service:
Dist. No. 1, Parish of Jefferson (West Jefferson
Medical Center),FSA Insured:
Hospital Rev. Bonds, Series 1998A:
5.25% 2010 1,965 1,966
5.25% 2011 2,070 2,033
5.25% 2012 1,930 1,876
Dist. No. 2, Parish of Jefferson, Hospital Rev. Bonds, 3,520 3,497
Series 1998, FSA Insured, 5.25% 2011
Public Facs. Auth., Hospital Rev. and Ref. Bonds
(Franciscan Missionaries of Our Lady Health System
Project), Series 1998A, FSA Insured:
5.50% 2008 6,935 7,172
5.50% 2011 5,000 5,032
5.75% 2014 3,495 3,559
5.75% 2015 3,825 3,882
Lake Charles Harbor and Terminal Dist., Port Facs. 33,500 37,036
Rev. Ref. Bonds (Trunkline LNG Co. Project), Series
1992, 7.75% 2022
City of New Orleans, Ref. Cert. of Indebtedness, 7,750 7,713
Series 1998B, FSA Insured, 5.10% 2010
Offshore Terminal Auth., Deepwater Port Ref. Rev.
Bonds (LOOP INC., Project), First Stage Series E:
7.45% 2004 1,000 1,047
7.60% 2010 415 435
7.60% 2010 (Preref. 2000) 585 618
Parish of West Feliciana, Pollution Control Rev. Bonds 2,000 2,113
(Gulf States Utilities Co. Project), Series 1985-B,
9.00% 2015

Maine - 0.10%
Housing Auth., Mortgage Purchase Bonds, 1994 Series C-1, 5.90% 2015 1,775 1,833

Maryland - 1.29%
Community Dev. Administration, Dept. of Housing
and Community Dev., Single Family Program Bonds:
1990 First Series, 7.60% 2017 4,845 4,970
1997 First Series, 5.25% 2005 5,815 5,904
Health and Higher Educational Facs. Auth.:
First Mortgage Rev. Bonds, PUMH of Maryland, Inc.
Issue (Heron Point of Chestertown):
Series 1998A:
5.60% 2013 1,000 944
5.75% 2019 2,400 2,295
Series 1998B, 5.75% 2026 2,000 1,900
Project and Ref. Rev. Bonds:
Peninsula Regional Medical Center Issue, Series 1,000 968
1993, 5.25% 2012
Roland Park Place Issue, Series 1999, 5.50% 2013 500 484
Rev. Bonds, Howard County General Hospital Issue,
Series 1993:
5.50% 2013 2,300 2,324
5.50% 2021 1,225 1,224
Calvert County, Econ. Dev. Rev. Bonds (Ashbury- 2,500 2,987
Solomons Island Facility), Series 1995, 8.625%
2024 (Preref. 2005)
Prince George's County, Hospital Rev. Bonds, 750 823
Dimensions Health Corp. Issue, Series 1992,
7.25% 2017 (Preref. 2002)

Massachusetts - 1.34%
Massachussetts Bay Transportation Auth., General 5,000 5,688
Transportation System Bonds, 1994 Series A Ref.
Bonds, 7.00% 2007
Health and Educational Facs. Auth. Rev. Bonds:
Brigham and Women's Hospital Issue, Series D, 7,000 7,452
6.75% 2024 (Preref. 2001)
Caregroup Issue, Series A, MBIA Insured, 5.50% 2007 2,675 2,793
Housing Fin. Agcy., Single Family Housing Rev. 25 25
Bonds, Series 39, 6.50% 2014
Turnpike Auth., Metropolitan Highway System Rev. 2,500 2,169
Bonds, 1999 Series A, AMBAC Insured, 5.00% 2039
The New England Education Loan Marketing Corp.:
Student Loan Rev. Ref. Bonds, 1992 Senior Issue A, 1,000 1,051
6.50% 2002
Student Loan Ref. Bonds, 1993 Series G, 5.20% 2002 4,000 4,076
Water Resources Auth., General Rev. Ref. Bonds, 2,500 2,521
1993 Series B, 5.25% 2009

Michigan - 8.29%
Hospital Fin. Auth.:
Hospital Rev. Bonds, The Detroit Medical Center
Obligated Group, Series 1998A:
5.00% 2012 1,370 1,212
5.00% 2013 1,000 873
5.00% 2014 1,525 1,318
5.25% 2023 1,955 1,615
Hospital Rev. and Ref. Bonds:
Daughters of Charity, National Health System, 5.50% 2005 1,565 1,606
The Detroit Medical Center Obligated Group:
Series 1993A:
6.375% 2009 2,000 2,003
6.25% 2013 4,250 4,116
6.50% 2018 7,000 6,873
Series 1993B, AMBAC Insured, 5.00% 2006 1,365 1,368
Genesys Health System Obligated Group:
Series 1995A:
7.10% 2002 1,770 1,884
7.10% 2002 (Escrowed to Maturity) 285 307
7.20% 2003 (Escrowed to Maturity) 1,000 1,103
8.00% 2005 (Escrowed to Maturity) 8,880 10,443
8.10% 2013 (Preref. 2005) 5,000 5,981
8.125% 2021 (Preref. 2005) 4,500 5,388
7.50% 2027 (Preref. 2005) 4,520 5,199
Series 1998A:
5.30% 2011 5,340 5,091
5.50% 2018 3,250 3,093
5.50% 2027 4,000 3,717
Hackley Hospital Obligated Group, Series 1998A:
4.85% 2006 1,105 1,071
5.00% 2008 1,215 1,170
5.30% 2013 3,650 3,445
McLaren Obligated Group, Series 1993A, 5.375% 2013 2,985 2,879
Mercy Health Services, Series 1997T, 6.25% 2011 3,255 3,484
Pontiac Osteopathic, Series 1994 A:
5.375% 2006 1,000 968
6.00% 2014 5,905 5,647
6.00% 2024 4,775 4,452
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 2,000 1,963
6.625% 2016 5,750 5,696
6.70% 2026 2,680 2,641
Housing Dev. Auth., Rental Housing Rev. Bonds:
1992 Series A:
AMBAC Insured, 6.40% 2005 2,350 2,479
6.60% 2012 16,285 17,233
1994 Series A, 6.20% 2003 1,600 1,669
City of Detroit:
G.O. Rev. Bonds (Unlimited Tax), Series 1995-B:
6.75% 2003 2,000 2,133
7.00% 2004 2,500 2,721
6.25% 2005 2,625 2,794
6.25% 2008 1,730 1,837
6.25% 2009 1,195 1,269
6.25% 2010 1,250 1,327
Downtown Dev. Auth., Tax Increment Bonds
(Dev. Area No. 1 Projects), Series 1996C:
6.20% 2017 (Preref. 2006) 9,310 10,227
6.25% 2025 (Preref. 2006) 4,265 4,697
School Dist. of Wayne County, School Building 1,955 1,851
and Site Improvement Ref. Bonds, Series 1998C,
FGIC Insured, 5.25% 2025
Econ. Dev. Corp. of Dickinson County, Solid Waste 2,000 2,069
Disposal Ref. Rev. Bonds (Champion International
Corp. Project), Series 1989, 6.55% 2007
City of Royal Oak, Hospital Fncg. Auth., Hospital 3,000 2,763
Rev. Ref. Bonds (William Beaumont Hospital),
Series 1993 G, 5.25% 2019
Charter County of Wayne, Special Airport Facs. Rev. 6,955 7,201
Ref. Bonds (Northwest Airlines, Inc.), Series 1995,
6.75% 2015

Minnesota - 0.25%
Housing Fin. Agcy.:
Multi-Family Housing Dev. Bonds, 1991 Series A, 2,535 2,653
6.85% 2007
Single Family Mortgage Bonds, 1994 Series E, 2,085 2,097
5.60% 2013

Mississippi - 0.37%
Perry County, Pollution Control Ref. Rev. Bonds 7,500 7,048
(Leaf River Forest Products, Inc. Project),
Series 1999, 5.20% 2012

Nebraska - 0.12%
City of Kearney, Industrial Dev. Rev. Bonds 2,750 2,301
(The Great Platte River Road Memorial Foundation
Project), Series 1998, 6.75% 2028

Nevada - 0.97%
G.O. (Limited Tax) Bonds, Series A-2, 6.00% 2011 2,135 2,282
Housing Division, Single Family Mortgage Rev. Bonds, 800 771
1999 Series A-1, 4.75% 2012
City of Henderson:
Health Fac. Rev. Bonds (Catholic Healthcare West), 7,000 6,021
1998 Series A, 5.375% 2026
Local Improvement Dist. No. T-4C (Green Valley
Properties), Limited Obligation Ref. Bonds, 1999 Series A:
5.65% 2009 1,500 1,423
5.75% 2013 4,000 3,828
5.90% 2018 3,000 2,848
Local Improvement Dist. No. T-10 (Seven Hills) 1,480 1,529
Limited Obligation Improvement Bonds, 7.50% 2015

New Jersey - 2.19%
Econ. Dev. Auth.:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation
Improvement Dist. Project (City of Elizabeth),
Series 1998A:

6.375% 2018 1,000 1,012
6.375% 2031 17,405 17,476
First Mortgage Rev. Fixed-Rate Bonds:
Fellowship Village Project:
Series 1998A, 4.95% 2005 1,230 1,194
Series 1995A, 9.25% 2025 (Preref. 2005) 7,000 8,607
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 4,000 4,459
8.625% 2025 3,500 3,915
Housing and Mortgage Fin. Agcy., Section 8 Bonds,
1991 Series A:
6.80% 2005 2,570 2,695
6.85% 2006 2,500 2,624

New Mexico - 0.06%
Mortgage Fin. Auth., Single Family Mortgage Purchase 1,055 1,079
Ref. Senior Bonds, 1992 Series A-1, 6.85% 2010

New York - 9.10%
Dormitory Auth.:
Center for Nursing/Rehabilitation, Inc. Rev. Bonds, 2,100 2,024
5.45% 2017
City University System Consolidated Third General 2,000 2,050
Resolution Rev. Bonds, 1998 Series 2, AMBAC
Insured, 5.50% 2008
Court Facs., Lease Rev. Bonds, Series 1993A, 5.50% 2010 4,000 4,020
Edgar Health Care Center (Nursing Home), Rev. 2,375 2,257
Bonds, FHA Insured, 4.90% 2013
Mental Health Services Facs. Improvement Rev. Bonds:
Series 1997A, 6.00% 2007 1,750 1,864
Series 1997B:
6.00% 2007 2,500 2,663
5.60% 2008 1,300 1,346
Series 1998B:
5.375% 2008 1,345 1,371
5.375% 2009 1,270 1,287
5.00% 2010 1,495 1,461
5.00% 2010 1,530 1,494
Series 1998C:
5.375% 2008 1,250 1,275
5.00% 2010 1,760 1,720
Montefiore Medical Center, FHA-Insured Mortgage 5,250 5,144
Hospital Rev. Bonds, Series 1999, AMBAC Insured,
5.25% 2019
The New York and Presbysterian Hospital FHA-Insured
Mortgage Hospital Rev. Bonds, Series 1998, AMBAC
Insured:
5.50% 2006 5,500 5,709
5.50% 2008 8,000 8,282
Secured Hospital:
Rev. Bonds (Interfaith Medical Center), Series 1998D, 5.25% 2007 2,000 2,023
Rev. Ref. Bonds, Brookdale Hospital, Series 1998J, 5.125% 2009 2,500 2,478
Sisters of Charity Health Care System Corp., FHA- 2,070 2,023
Insured Mortgage Hospital Rev. Bonds, Series 1999,
MBIA Insured, 4.80% 2019
State University Educational Facs.:
Rev. Bonds, Series 1997, 6.00% 2007 3,000 3,201
Rev. Ref. Bonds:
Series 1990A, 7.50% 2013 3,500 4,201
Series 1990B:
7.50% 2011 1,720 1,994
7.00% 2016 1,000 1,039
Staten Island University Hospital, Insured Rev. 7,000 7,211
Bonds, Series 1998, AMBAC Insured, 5.50% 2009
Environmental Fac. Corp., State Water Pollution Control
Revolving Fund Rev. Bonds (New York City Municipal
Water Fin. Auth. Project):
Series 1990A, 7.50% 2012 500 523
Series 1991E, 6.875% 2010 (Preref. 2001) 1,270 1,354
Series 1991E, 6.875% 2010 230 244
Housing Fin. Agcy.:
Health Facs. Rev. Bonds (New York City), 1996
Series A Ref.:
6.375% 2003 4,500 4,804
6.00% 2006 4,500 4,786
Service Contract Obligation Rev. Ref. Bonds, 1,750 1,727
Series 1997C, 5.20% 2010
Local Government Assistance Corp.:
Series 1991 B, 7.50% 2020 (Preref. 2001) 6,925 7,416
Series 1991 C, Capital Appreciation Bonds, 0% 2005 5,000 3,830
Series 1991 D:
7.00% 2011 (Preref. 2002) 2,000 2,171
7.00% 2018 (Preref. 2002) 4,650 5,048
6.75% 2021 (Preref. 2002) 1,350 1,457
Series 1992 C, 5.50% 2022 1,000 968
State Medical Care Facs. Fin. Agcy.:
Hospital Insured Mortgage Rev. Bonds, 1994
Series A Ref., FHA Insured:
5.10% 2010 3,045 2,996
5.25% 2014 5,000 4,916
Mental Health Services Facs. Improvement Rev. Bonds:
1993 Series D, 5.25% 2023 1,000 924
1997 Series B, 5.30% 2004 2,220 2,286
St. Luke's-Roosevelt Hospital Center, FHA-Insured 12,830 12,985
Mortgage Rev. Bonds, 1993 Series A, 5.60% 2013
Metropolitan Transit Auth., Transit Facs. Service 4,000 4,101
Contract Bonds, Series O, 5.375% 2002
Urban Dev. Corp., Correctional Capital Facs. Rev. Bonds:
Ref. Series 1993 A, 5.30% 2005 2,800 2,867
Series 7, 5.25% 2009 1,375 1,378
Castle Rest Residential Health Care Fac., FHA 1,700 1,684
Insured Mortgage Rev. Bonds, Series 1997A, 5.60% 2017
Town of Hempstead Industrial Dev. Agcy., Resource 6,000 5,988
Recovery Rev. Bonds (American REF-FUEL Co.
of Hempstead Project), Series 1997, MBIA Insured,
5.00% 2009(2)
City of New York, G.O. Bonds:
Fiscal 1991 Series B, 8.25% 2006 1,500 1,785
Fiscal 1992 Series C, 6.50% 2004 (Preref. 2002) 470 505
Fiscal 1992 Series H:
6.875% 2002 (Escrowed to Maturity) 1,745 1,851
6.875% 2002 155 164
Fiscal 1993 Series A, 6.25% 2003 1,000 1,061
Fiscal 1995 Series F:
6.60% 2010 (Preref. 2005) 2,000 2,208
6.625% 2025 (Preref. 2005) 1,500 1,658
Fiscal 1996 Series E, 6.50% 2006 3,000 3,269
Fiscal 1996 Series I, 6.50% 2006 10,000 10,906
Municipal Water Fin. Auth., Water and Sewer
System Rev. Bonds:
Fiscal 1991 Series C, 7.75% 2020 (Preref. 2001) 5,000 5,383
Fiscal 1994 Series B, 5.50% 2019 2,000 1,952
Triborough Bridge and Tunnel Auth., General Purpose 1,000 1,070
and Rev. Bonds, Series Y, 6.00% 2012

North Carolina - 2.83%
Eastern Municipal Power Agcy., Power System Rev. Bonds:
Ref. Series 1993B:
7.25% 2007 5,425 5,901
7.00% 2008 10,720 11,523
6.125% 2009 4,000 4,063
6.00% 2026 1,700 1,659
MBIA Insured, 6.00% 2026 2,500 2,624
Series 1993 B, 6.00% 2006 3,120 3,176
Series 1993 D, 5.875% 2013 1,250 1,216
Series 1993 C, 5.00% 2021 2,300 1,939
Ref. Series 1999 B:
5.55% 2014 1,800 1,688
5.60% 2015 7,000 6,548
5.65% 2016 2,000 1,872
5.70% 2017 4,775 4,470
Municipal Power Agcy. Number 1, Catawba Electric 4,000 4,085
Rev. Bonds, Series 1992, 5.90% 2003
County of Catawba, Hospital Ref. Rev. Bonds 1,000 944
(Catawba Memorial Hospital Project), Series 1999,
AMBAC Insured, 4.60% 2010
Medical Care Commission, Health Care Rev. Ref. 2,540 2,535
Bonds (Novant Health Project), Series 1998A,
MBIA Insured, 5.10% 2010

Ohio - 0.20%
County of Franklin, Hospital Facs. Rev. Ref. And 1,750 1,808
Improvement Bonds (Doctors Hospital Project), 5.60% 2006

County of Knox, Hospital Facs. Ref. Rev. Bonds, 2,175 2,103
Series 1998 (Knox Community Hospital), Asset
Guaranty Insured, 4.60% 2007

Oklahoma - 0.55%
Health System Rev. Bonds, Baptist Medicine Center 2,500 2,718
of Oklahoma, Series 1995 C, AMBAC Insured, 6.375% 2009
Industrial Auth., Health System Rev. Ref. Bonds 2,500 2,667
(Obligated Group consisting of INTEGRIS Baptist
Medical Center, Inc., INTEGRIS South Oklahoma,
AMBAC Insured, 6.00% 2009
Industries Auth., Health Facs. Rev. Ref. Bonds 2,505 2,377
(Sisters of Mercy Health System, St. Louis, Inc.),
Series 1993A, 5.00% 2013
Tulsa Industrial Auth., Hospital Rev. and Ref. Bonds, 3,000 2,885
St. John Medical Center Project, Series 1996,
5.375% 2017

Oregon - 0.81%
City of Klamath Falls, Electric Rev. Bonds (Klamath
Cogeneration Project), Series 1999:
5.75% 2013 7,000 6,707
5.875% 2016 3,500 3,334
6.00% 2025 2,250 2,120
Hospital Facs. Auth. of the City of Medford, Rev. 3,425 3,437
Bonds (Asante Health System), Series 1998-A,
MBIA Insured, 5.25% 2010

Pennsylvania - 7.20%
Convention Center Auth., Ref. Rev. Bonds, 1994 10,000 10,369
Series A, 6.25% 2004
Higher Educational Facs. Auth.:
Rev. Bonds (Thomas Jefferson University),
1992 Series A, MBIA Insured:
6.625% 2009 375 403
6.625% 2009 (Preref. 2002) 875 946
UPMC Health System Rev. Bonds, Series 1999A, 2,000 1,967
FSA Insured, 5.00% 2009
Housing Fin. Agcy., Rev. Bonds, Rental Housing
Ref. Bonds:
Issue 1992, 6.50% 2023 7,850 8,257
Issue 1993, 5.80% 2018 4,000 4,069
Housing Fin. Auth., Single Family Mortgage Rev. 1,000 1,048
Bonds, Series 1992-33, 6.85% 2009
Industrial Dev. Auth., Econ. Dev. Rev. Bonds, 1,750 1,986
Series 1994, AMBAC Insured, 7.00% 2007
Allegheny County, Hospital Dev. Auth. Rev. Bonds:
Catholic Health Systems:
Series 1998A, AMBAC Insured, 5.50% 2008 2,445 2,524
Series A, AMBAC Insured:
5.00% 2010 2,705 2,656
5.25% 2011 2,840 2,823
UPMC Health System Rev. Ref. Bonds, Series 5,160 5,260
1999B, AMBAC Insured, 5.25% 2008
Blair County Hospital Auth., Hospital Rev. Bonds 3,415 3,445
(Altoona Hospital Project), 1998 Series A, AMBAC
Insured, 5.25% 2009
Delaware County, Auth. Rev. Bonds, Catholic Health
Systems, Series A, AMBAC Insured:
5.00% 2010 2,465 2,424
5.25% 2011 4,115 4,098
Hospitals and Higher Education Facs. Auth. Of
Philadelphia:
Frankford Hospital, Series A:
6.00% 2014 3,705 3,941
6.00% 2023 4,000 4,205
Hospital Rev. Bonds (The Children's Hospital of
Philadelphia Project):
Series A of 1992:
6.50% 2009 (Preref. 2002) 4,500 4,813
6.50% 2021 (Preref. 2002) 3,000 3,208
Series A of 1993, 5.375% 2014 1,505 1,439
Jefferson Health Systems, Series 1997 A:
5.50% 2006 2,285 2,308
5.50% 2007 1,995 2,007
5.50% 2008 2,000 2,001
5.00% 2009 1,000 957
5.00% 2010 1,000 952
Lehigh County, General Purpose Auth. Rev. Bonds 1,500 1,504
(KidsPeace Obligated Group), 5.70% 2009
Temple University Hospital, Series of 1997, 5.70% 2009 1,000 986
Hospital Auth. of Philadelphia, Hospital Rev. Bonds
(Temple University Hospital):
Series of 1993 A, 6.50% 2008 15,500 16,319
Series of 1983, 6.625% 2023 15,385 15,795
Philadelphia Auth. for Industrial Dev., Rev. Bonds 2,815 2,748
(Cathedral Village Project), Series of 1998, 5.50% 2010
Public Auditorium Auth. of Pittsburgh and Allegheny
County, Regional Asset Dist. Sales Tax Rev. Bonds,
Series of 1999, AMBAC Insured:
5.00% 2008 2,000 2,012
5.25% 2012 2,000 1,988
City of Pottsville Hospital Auth., Hospital Rev. Bonds 8,500 9,580
(The Pottsville Hospital and Warne Clinic), Series
of 1994, 7.25% 2024 (Preref. 2004)
Scranton-Lackawanna Health and Welfare Auth.,
City of Scranton, Lackawanna County, Hospital
Rev. Bonds (Moses Taylor Hospital Project), Series 1997:

6.05% 2010 1,000 981
6.15% 2012 2,245 2,182
6.15% 2014 3,000 2,874
6.20% 2017 3,000 2,955

Rhode Island - 0.70%
Convention Center Auth., Ref. Rev. Bonds, 1993 1,590 1,600
Series B, MBIA Insured, 5.00% 2008
Depositors Econ. Protection Corp., Special Obligation Bonds:
1992 Series A, FSA Insured, 6.625% 2019 (Preref. 2002) 1,000 1,083
1993 Series A:
5.75% 2021 (Escrowed to Maturity) 1,210 1,237
5.75% 2021 2,715 2,776
MBIA Insured, 5.75% 2012 4,850 5,110
Housing and Mortgage Fin. Corp., Homeownership 1,485 1,541
Opportunity Bonds, Series 3-A, 7.80% 2010

South Carolina - 1.16%
Florence County, Hospital Rev. Bonds, McLeod Regional
Medical Center Project, Series 1998A, MBIA Insured:
5.25% 2009 2,400 2,441
5.25% 2010 2,785 2,812
Lexington County Health Services Dist. Inc., Hospital
Rev. Ref. and Improvement Bonds, Series 1997, FSA Insured:
5.50% 2007 2,000 2,059
5.00% 2009 1,000 983
5.125% 2021 2,000 1,838
Piedmont Municipal Power Agcy., Electric Rev. Bonds, 13,420 12,083
1999A Ref. Series, 5.25% 2015

South Dakota - 0.88%
Building Auth., Rev. Capital Appreciation Bonds, 3,780 1,597
Series 1996A, AMBAC Insured, 0.00% 2014
Health and Educational Facs. Auth., Rev. Ref. Bonds,
Series 1999 (Rapid City Regional Hospital Issue),
MBIA Insured:
5.00% 2007 4,095 4,118
5.00% 2009 4,010 3,980
5.00% 2010 4,175 4,107
Housing Dev. Auth., Homeownership Mortgage Bonds, 3,000 3,053
1995 Series A, 5.80% 2014

Tennessee - 1.73%
Health and Educational Facs. Board of the Metropolitan 6,600 7,996
Government of Nashville and Davidson County
(Blakeford Project), 9.25% 2024 (Preref. 2004)
Memphis-Shelby County Airport Auth., Special Facs.
Rev. Bonds (Federal Express Corp.):
Rev. Bonds, Series 1984, 7.875% 2009 2,755 2,974
Rev. Bonds, Ref. Series 1992, 6.75% 2012 20,850 22,148

Texas - 2.46%
Bell County Health Facs. Dev. Corp.:
Hospital Rev. Ref. and Improvement Bonds (Cook
Children's Medical Center Project), Series 1998,
FSA Insured:
5.25% 2008 1,965 1,994
5.25% 2009 2,070 2,087
5.25% 2010 2,180 2,183
Retirement Fac. Rev. Bonds (Buckner Retirement
Services, Inc. Obligated Group Project), Series 1998:
5.25% 2009 1,620 1,584
5.00% 2010 1,705 1,614
5.25% 2028 3,400 2,948
Industrial Dev. Corp.of Port of Corpus Christi, Rev. 2,000 1,825
Ref. Bonds (Valero Refining and Marketing Co.
Project), 5.40% 2018
Dallas/Forth Worth International Airport Fac. 5,000 4,953
Improvement Corp., American Airlines, Inc., Rev.
Bonds, Series 1995, 6.00% 2014
Harris County Health Facs. Dev. Corp.:
Rev. Bonds (CHRISTUS Health), Series 1999A, 3,380 3,462
MBIA Insured, 5.50% 2010
SCH Health Care System Rev. Bonds (Sisters of Charity
of the Incarnate Word, Houston):
Series 1991A, 7.10% 2021 (Preref 2001) 3,000 3,209
Series 1997B, 6.25% 2027 1,500 1,609
Hospital Rev. Bonds (Memorial Hermann Hospital 1,890 1,912
System Project), Series 1998, FSA Insured, 5.25% 2008
Hidalgo County Health Services Corp., Hospital Rev.
Bonds, (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 1,000 1,065
6.75% 2016 1,740 1,804
Northeast Medical Clinic, Hospital Auth., County of 1,000 1,085
Humble, Rev. Bonds, FSA Insured, 6.25% 2012
Northside Independent School Dist. (Bexar, Medina 3,500 3,609
and Bandera Counties), Unlimited Tax School
Building Bonds, Series 1991, 6.375% 2008 (Preref. 2001)
Tarrant County, Health Facs. Dev. Corp., Health 4,000 4,137
Resources Systems Rev. Bonds, Series 1997A,
MBIA Insured, 5.50% 2007
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6,250 6,100
6.125% 2023

Utah - 0.52%
Housing Fin. Agcy., Single Family Mortgage Bonds, 525 529
1995 Issue E (Federally Insured or Guaranteed
Mortgage Loans), 5.50% 2024
Intermountain Power Agcy., 1997 Series A, AMBAC 1,435 1,598
Insured, 6.50% 2011
Salt Lake City, Hospital Rev. Bonds, Series 1992 8,100 7,828
(IHC Hospitals, Inc.), 5.50% 2021

Vermont - 0.12%
Educational and Health Buildings Fncg. Agcy, 2,250 2,345
Hospital Rev. Bonds (Medical Center Hospital of
Vermont Project), Series 1993, FGIC Insured, 5.75% 2007

Virginia - 1.11%
Housing Dev. Auth., Commonwealth Mortgage Bonds, Series D:
Subseries D-3:
6.00% 2012 1,430 1,471
6.00% 2012 1,470 1,512
Subseries D-4, 6.05% 2010 1,290 1,319
Big Stone Gap Redev. and Housing Auth. Correctional 1,000 1,006
Fac. Lease, Wallens Ridge Dev. Project, 5.25% 2010
Fairfax County Industrial Dev. Auth., Hospital Rev.
Ref. Bonds (Inova Health Systems Hospital Project),
Series 1993 A:
4.80% 2005 1,850 1,854
5.00% 2023 1,200 1,090
5.00% 2011 1,300 1,270
Gateway Community Dev. Auth. (Prince William 2,130 2,009
County), Special Assessment Bonds, Series 1999,
6.25% 2026
Industrial Dev. Auth., Hanover County, Hospital 1,000 1,116
Rev. Bonds (Memorial Regional Medical Center
Project at Hanover Medical Park), Series 1995,
MBIA Insured, 6.50% 2009
Industrial Dev. Auth. of the City of Norfolk, Hospital 2,500 2,712
Rev. Bonds (Sentara Hospitals-Norfolk Project),
Series 1991, 6.50% 2013
Peninsula Ports Auth., Health System Rev. Ref. Bonds 1,000 969
(Riverside Health System Project), Series 1998,
5.00% 2010
Pocahontas Parkway Association, Route 895 Connector 5,000 4,963
Toll Road Rev. Bonds, Series 1998A, 5.25% 2008

Virgin Islands - 0.18%
Public Fin. Auth., Rev. and Ref. Bonds (Matching
Fund Loan Notes), Series 1998 D:
5.50% 2001 1,600 1,609
5.50% 2002 1,840 1,849

Washington - 3.02%
G.O. Bonds, Series B, 5.50% 2010 2,000 2,066
Health Care Facs. Auth., Rev. Bonds, Ref. Series 1,500 1,609
1997A (Virginia Mason Medical Center), MBIA
Insured, 6.00% 2007
Public Power Supply System:
Nuclear Project No. 1 Ref. Rev. Bonds, Series 1997B, 5,000 4,755
5.125% 2014
Nuclear Project No. 2 Ref. Rev. Bonds:
Series 1993B, FSA Insured, 5.65% 2008 3,030 3,181
Series 1994A:
6.00% 2007 19,900 21,235
5.25% 2008 5,000 5,058
Series 1998A, 5.75% 2008 2,000 2,099
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1989 B:
5.375% 2015 3,000 2,916
7.125% 2016 5,250 6,111
Public Utility Dist. No. 1 of Chelan County, Columbia 11,345 3,619
River-Rock Island Hydro-Electric System Rev. Ref.
Capital Appreciation Bonds, Series 1997A , MBIA
Insured, 0.00% 2019
MBIA Insured, 0.00% 2019
Central Puget Sound Regional Transit Auth., Sales 5,500 5,245
Tax and Motor Vehicle Excise Tax Bonds, Series
1999, FGIC Insured, 5.25% 2021

Wisconsin - 1.53%
Health and Educational Facs. Auth., Rev. Bonds:
Children's Hospital of Wisconsin, Inc., Series 1998, 1,130 1,140
AMBAC Insured, 5.625% 2015
Children's Hospital Project, Series 1993, FGIC 2,000 2,085
Insured, 5.50% 2006
The Monroe Clinic, Inc., Series 1998:
4.80% 2010 1,110 1,019
4.90% 2011 1,165 1,069
Medical College of Wisconsin, Series 1993, 5.95% 2015 3,000 3,060
Health and Educational Facs. Auth., Rev. Ref. Bonds 2,505 2,481
(Wausau Hospital, Inc.), Series A, AMBAC Insured,
5.00% 2009
Housing and Econ. Dev. Auth., Housing Rev. Bonds, 3,480 3,636
1992 Series A, 6.40% 2003
City of Nekoosa, Pollution Control Funding Rev. Bonds 5,000 4,754
(Nekoosa Papers Inc. Project), Series 1999B, 5.50% 2015
Pollution Control and Industrial Dev. Rev. Bonds 3,000 3,068
(General Motors Corp. Projects), City of Janesville,
Series 1984, 5.55% 2009
City of Superior, Limited Obligation Ref. Rev. Bonds 6,000 6,940
(Midwest Energy Resources Co. Project), Series
E-1991 (Collateralized), FGIC Insured, 6.90% 2021

----------
1,782,979
----------

Tax-Exempt Securities Maturing in One Year or Less - 6.60%
State of Massachusetts, Boston City Hospital, 980 1,033
Series A, FHA Insured, 7.625% 2021 (Preref. 2000)
State of Florida, Broward County, Coral Springs 2,500 2,574
Improvement Dist., G.O. Water and Sewer Rev. Bonds,
1989 Series C, MBIA Insured, 7.50% 2005 (Preref. 1999)
State of Tennessee, Clarksville Public Building Auth. 3,600 3,600
Adjustable Rate-Pooled Fincg. Rev. Bonds, 3.30% 2027(1,2)
State of Pennsylvania, Deleware County Industrial 2,400 2,400
Dev. Auth., Airport Facs. Rev. Bonds, Series 1985,
3.05% 2015(2)
State of Georgia, Building Auth. of Fulton County, 1,000 1,007
Rev. Ref. Bonds (Judicial Center Facs. Project),
Series 1991, 5.70% 1/1/00
State of Texas, City of Houston, Tax and Rev. 3,000 3,014
Anticipation Notes, Series 1999, 4.25% 6/30/00
State of Idaho, Tax Anticipation Notes, Series 1999, 1,500 1,507
4.25% 6/30/00
State of Illinois:
Health Facs. Auth., Adjustable Rate Rev. Bonds, 1,300 1,300
Series 1995 (Swedish Covenant Hospital Project),
AMBAC Insured, 3.35% 2025(2)
Joliet Regional Port Dist., Marine Terminal Rev. Ref. 1,400 1,400
Bonds (Exxon Project), 1989 Series, 2.70% 2024(2)
State of Kentucky, Asset/Liability Commission, 4,000 4,020
General Fund Tax and Rev. Anticipation Notes,
1999 Series A, 4.25% 6/28/00
State of Wyoming, Lincoln County, Pollution Control
Rev. Bonds (Exxon Project):
Series 1984C, 3.05% 2014(2) 1,300 1,300
Series 1984D, 3.05% 2014(2) 1,000 1,000
County of Los Angeles, 1999-2000 Tax and Rev. 3,500 3,512
Anticipation Notes, Series A, 4.00% 6/30/00
State of Texas, Lower Neches Valley Auth., Industrial
Dev. Corp., Variable Rate Pollution Control Rev. Bonds,
Series 1994A (Neches River Treatment Corp. 1,500 1,500
Project), 3.30% 2004(2)
State of Massachusetts, Water Resources Auth. 9,500 9,896
General Rev. Bonds, 1990 Series A, 7.50% 2009
(Preref. 2000)
State of Michigan, Job Dev. Auth, Pollution Control 7,000 7,017
Rev. Bonds (Chrysler Corp. Project), Series 1984,
5.70% 11/1/99
State of New York, Transit Auth., Transit Facs. Rev. 4,000 4,131
Bonds (Livingston Plaza Project), Series 1990,
FSA Insured, 7.50% 2020 (Preref. 2000)
State of Ohio:
Franklin County Health Systems Variable Rate Rev. 1,000 1,000
Bonds, Franciscan Sisters of Charity, 3.05% 2015(1)(2)
Parks and Recreation Capital Facs. Bonds, Series 5,000 5,007
II-1997A, 4.25% 12/1/99
State of Florida, Orange County Industrial Dev. Auth., 4,000 4,000
Variable Rate Demand Rev. Bonds, Series 1998
(Lake Highland Preparatory School, Inc. Project,
3.30% 2018(2)
County of San Bernardino, 1998-99 Fixed Rate Tax 5,000 5,004
and Rev. Anticipation Notes, 4.50% 9/30/99
State of California, San Francisco Bay Area Rapid 3,250 3,398
Transit Dist., Sales Tax Rev. Ref. Bonds, Series 1990,
AMBAC Insured, 6.75% 2009 (Preref. 2000)
County of Santa Clara, 1999 Tax and Rev. 3,000 3,002
Anticipation Notes, 4.50% 10/1/99
State of South Carolina, Public Service Auth., Rev. 1,000 1,008
Bonds, 1995 Ref. Series A, AMBAC Insured, 6.25% 1/1/00
Texas National Research Laboratory Commission, 12,000 12,473
G.O. Bonds, Series 1990 (Superconducting Super
Collider Project), 7.125% 2020 (Preref. 2000)
Texas Tax and Rev. Anticipation Notes, Series 1999A, 4,000 4,031
4.50% 8/31/00
State of Alaska, City of Valdez, Marine Terminal Rev. 2,800 2,800
Ref. Bonds (Exxon Pipeline Co. Project), 1993
Series A, 2.70% 2033(2)
County of Ventura, 1999 Tax and Rev. Anticipation 6,000 6,024
Notes, 4.00% 7/6/00
State of Virginia, Industrial Dev. Auth. of the City of 1,000 1,000
Roanoke, Hospital Rev. Bonds (Carilion Health System
Obligated Group), Series 1997B, 2.95% 2027(2)
State of North Carolina, Wake County Industrial
Facs. and Pollution Control Fncg. Auth., Pollution
Control Rev. Ref. Bonds (Carolina Power & Light Co.
Project), Series 1990A, 3.10% 2014(2) 3,550 3,550
State of Washington, Public Power Supply System,
Nuclear Project No. 3 Ref. Rev. Bonds, Series 1989 B:
FGIC Insured, 7.00% 2005 (Preref. 2000) 4,500 4,638
7.25% 2015 (Preref. 2000) 3,500 3,610
State of Wyoming:
General Fund Tax and Rev. Anticipation Notes, 9,700 9,724
Series 1999, 4.00% 6/27/00
Wyoming Student Loan Corp., Student Loan Rev. 950 956
Ref. Bonds, Series 1991, 6.25% 12/1/99
State of Pennsylvania, City of York, General Auth.
Adjustable Rate Pooled Fncg. Rev. Bonds, Sub-Series
96-B (School Dist. of the City of Harrisburg Project),
AMBAC Insured, 3.25% 2026(2) 5,000 5,000
----------
126,436

----------
Total Tax-Exempt Securities 1,909,415

----------
Excess of cash and receivables over payables 7,751
----------

NET ASSETS $1,917,166
==========
(1)Purchased in a private placement transaction;
resale to the public may require registration or
sale only to qualified institutional buyers.
(2)Coupon rate may change periodically.

See Notes to Financial Statements

Key to Abbreviations

Agcy. = Agency
Auth. = Authority
Cert. Of Part = Certificates of Participation
Dept. = Department
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facilities
Fin. = Financing
G.O. = General Obligation
Prefer. = Prerefunded
Rev. = Revenue
Rev. = Revenue Refunding

</TABLE>

<TABLE>
The Tax-Exempt Bond Fund of America
Financial Statements
<S> <C> <C>
Statement of Assets and Liabilities
at August 31, 1999 (dollars in thousands)
Assets:
Tax-exempt securities (cost: $1,875,213) $1,909,415
Cash 1,050
Receivables for--
Sales of investments $1,100
Sales of fund's shares 3,676
Accrued interest 26,568 31,344
---------- -----------
1,941,809
Liabilities:
Payables for--
Purchases of investments 9,198
Repurchases of fund's shares 10,833
Dividends payable 3,074
Management services 562
Accrued expenses 976 24,643
---------- -----------
Net Assets at August 31, 1999--
Equivalent to $11.86 per share on
161,703,571 shares of $1 par value
capital stock outstanding (authorized
capital stock--200,000,000 shares) $1,917,166
===========
Statement of Operations
For the year ended August 31, 1999
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $102,930

Expenses:
Management services fee $6,526
Distribution expenses 4,721
Transfer agent fee 499
Reports to shareholders 103
Registration statement and prospectus 221
Postage, stationery and supplies 97
Directors' fees 29
Auditing and legal fees 73
Custodian fee 35
Taxes other than federal income tax 22
Other expenses 33
----------- 12,359
-----------
Net investment income 90,571
-----------
Realized Gain and Change in Unrealized
Appreciation on Investments:
Net realized gain 12,422
Net unrealized appreciation on investments:
Beginning of year 135,956
End of year 34,202
----------
Net unrealized depreciation
on investments (101,754)
-----------
Net realized gain and
unrealized depreciation on investments (89,332)
-----------
Net Increase in Net Assets Resulting
From Operations $1,239
===========
Statement of Changes in Net Assets
(dollars in thousands)

Year ended August 31

1999 1998
----------- -----------
Operations:
Net investment income $90,571 $84,097
Net realized gain on investments 12,422 25,646
Net unrealized appreciation (depreciation)
on investments (101,754) 23,687
----------- -----------
Net increase in net assets
resulting from operations 1,239 133,430
----------- -----------
Dividends and Distributions Paid to
Shareholders:
Dividends paid from net investment income (90,695) (84,100)
Distributions from net realized gain on
investments (27,512) (5,006)
----------- -----------
Total dividends and distributions (118,207) (89,106)
----------- -----------
Capital Share Transactions:
Proceeds from shares sold:
38,674,257 and 27,437,243
shares, respectively 477,680 341,812
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
6,494,510 and 4,320,816 shares,
respectively 80,021 53,787
Cost of shares repurchased:
25,928,672 and 19,085,481
shares, respectively (318,929) (237,660)
----------- -----------
Net increase in net assets
resulting from capital share
transactions 238,772 157,939
----------- -----------
Total Increase in Net Assets 121,804 202,263
Net Assets:
Beginning of year 1,795,362 1,593,099
----------- -----------
End of year (including undistributed net $1,917,166 $1,795,362
investment income of $121 and $13, =========== ===========
respectively)

See Notes to Financial Statements

</TABLE>

The Tax-Exempt Bond Fund of America, Inc.

Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION - The Tax-Exempt Bond Fund of America, Inc. (the "fund") is
registered under the Investment Company Act of 1940 as an open-end, diversified
management investment company. The fund seeks a high level of federally
tax-free current income, consistent with the preservation of capital, through a
diversified, portfolio of municipal bonds.

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 Directors.

SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities transactions
are accounted for as of the trade date. Realized gains and losses from the
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 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 August 31, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $34,202,000, of which $64,993,000
related to appreciated securities and $30,791,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended August 31, 1999. During the year
ended August 31, 1999, the fund realized, on a tax basis, a net capital gain of
$12,132,000 on securities transactions. The cost of portfolio securities for
book and federal income tax purposes was $1,875,213,000 at August 31, 1999.

3. FEES AND TRANSACTIONS WITH RELATED PARTIES

INVESTMENT ADVISORY FEE - The fee of $6,526,000 for management services
was incurred pursuant to an agreement with CRMC, with which certain officers
and Directors 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
between $60 million and $1 billion; 0.18% of such assets between $1 billion and
$3 billion; 0.16% of such assets in excess of $3 billion; plus 3.00% of the
first $40 million of annual gross income; plus 2.5% of such income between $40
million and $100 million; plus 2.25% of such income in excess of $100 million.

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
Directors. Fund expenses under the Plan include payments to dealers to
compensate them for their selling and servicing efforts. During the year ended
August 31, 1999, distribution expenses under the Plan were limited to
$4,721,000. Had no limitation been in effect, the fund would have paid
$5,427,000 in distribution expenses under the Plan. As of August 31, 1999,
accrued and unpaid distribution expenses were $894,000.

American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $1,005,000 (after allowance 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 $499,000.

DEFERRED DIRECTORS' FEES - Directors 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 August 31, 1999, aggregate amounts deferred and earnings thereon
were $74,000.

CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors 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 $486,217,000 and $261,774,000, respectively, during
the year ended August 31, 1999.

As of August 31, 1999, accumulated undistributed net realized gain on
investments was $6,784,000 and additional paid-in capital was $1,714,207,000.
The fund reclassified $232,000 and $1,808,000 to undistributed net investment
income and additional paid-in capital, respectively, from undistributed net
realized gains for the year ended August 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 $35,000 includes $9,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>

Year Ended Augus 31

1999 1998 1997 1996 1995

Net Asset Value, Beginning of Year $12.60 $12.27 $11.86 $11.94$11.65
---------- ------- --------------------
Income from Investment Operations:
Net investment income .59 .62 .64 .64 .68
Net gains or losses on securities (both
realized and unrealized) (.55) .37 .45 .01 .29
---------- ------- --------------------
Total from investment operations .04 .99 1.09 .65 .97
---------- ------- --------------------
Less Distributions:
Dividends (from net investment income) (.59) (.62) (.64) (.64) (.68)
Distributions (from capital gains) (.19) (.04) (.04) (.09) -
---------- ------- --------------------
Total distributions (.78) (.66) (.68) (.73) (.68)
---------- ------- --------------------

Net Asset Value, End of Year $11.86 $12.60 $12.27 $11.86$11.94
========== ======= ====================

Total Return* 0.22 8.26 9.39 5.51% 8.70%

Ratios/Supplemental Data:
Net assets, end of year (in millions) $1,917 $1,795 $1,593 $1,476$1,424
Ratio of expenses to average net assets .65% .66% .68% .68% .66%
Ratio of net income to average net assets 4.78% 4.98% 5.27% 5.35% 5.87%
Portfolio turnover rate 14.56% 23.19% 14.39%26.89%49.28%

*Excludes maximum sales charge of 4.75%.
</TABLE>

Report of Independent Accountant

To the Board of Directors and Shareholders of The Tax-Exempt Bond Fund of
America, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of The Tax-Exempt Bond Fund of
America, Inc.(the "Fund") at August 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 August 31, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
September 30, 1999

Tax Information (unaudited)

During the fiscal year ended August 31, 1999, the fund paid 59.2 cents per
share of exempt-interest distributions within the meaning of Section
852(b)(5)(A) of the Internal Revenue Code, a short-term capital gain of 0.4
cents per share and a long-term capital gain of 18.2 cents per share.

This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For tax return preparation purposes, please refer to the calendar
year-end information you receive from the fund's transfer agent.

<PAGE>
AMERICAN HIGH-INCOME MUNCIPIAL BOND FUND

Investment Portfolio, July 31, 1999

[begin pie chart]
Quality Ratings
AAA 9.37%
AA 5.21%
A 7.06%
BBB 34.97%
BB 22.38%
B 14.88%
Cash & Equivalents 6.13%
[end chart}

<TABLE>
American High-Income Municipal Bond Fund
Investment Portfolio, July 31, 1999
<S> <C> <C>

PrincipalMarket
Amount Value
(000) (000)
- -------------------------------------------- ----------------

Tax-Exempt Securities Maturing in More Than One Year - 93.87%
Alaska - 0.35%
Industrial Dev. and Export Auth., Power Rev. Bonds, $1,850 $1,950
First Series AMT (Snettisham Hydroelectric Project),
AMBAC Insured, 6.00% 2012

California - 12.37%
Pollution Control Fncg. Auth., Solid Waste Disposal Ref.
Rev. Bonds:
CanFibre of Riverside Project, Series 1997A AMT, 9.00% 2019 1,000 1,043
USA Waste Services, Inc. Project, Series 1998A AMT, 6,000 5,948
5.10% 2018 (Put 2008)
Rural Home Mortgage Fin, Auth., Single Family Mortgage 560 614
Rev. Bonds (Mortgage-Backed Securities Program),
1995 Series B AMT, 7.75% 2026
Statewide Communities Dev. Auth., Apartment Dev.
Rev. Ref. Bonds (Irvine Apartment Communities, LP):
Series 1998A-1 AMT, 5.05% 2025 (Put 2008) 11,000 10,687
Series 1998A-3, 5.10% 2025 (Put 2010) 3,000 2,913
Alameda Public Fncg. Auth., 1999 Rev Bonds
(1997 Rev. Bond Refinancing):
5.10% 2009 1,000 975
5.35% 2012 1,000 970
City of Antioch, Public Fncg. Auth., 1998 Reassessment 1,455 1,419
Rev. Bonds, Subordinated Series B, AMBAC Insured, 5.80% 2011
Bonita Canyon Public Facs. Fncg. Auth., Community Facs. 1,000 907
Dist. No. 98-1, Special Tax
Bonds, Series 1998, 5.375% 2028
Central Valley Fncg. Auth., Cogeneration Project Rev. Bonds 1,400 1,519
(Carson Ice-Gen Project), Series 1993, 6.10% 2013 (Preref. 2003)
City of Chino Hills, Community Facs. Dist. No. 9 5,060 5,074
(Rincon Village Area), Special Tax Bonds, Series 1998, 6.45% 2023
City of Irvine, Assessment dist. No. 94-13 (Oak Creek),
Limited Obligation Improvement Bonds:
Group One, 5.50% 2022 1,000 946
Group Two, 5.875% 2017 1,000 992
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 1,039
6.125% 2015 1,000 1,032
6.125% 2023 4,000 4,090
County of Los Angeles, Capital Asset Leasing Corp., 3,060 3,180
Cert. of Part. (Marina del Rey), Series A, 6.25% 2003
City of Los Angeles:
Community Redev. Agcy., Central Business Dist. Redev. 2,000 2,032
Project, Tax Allocation Ref. Bonds, Series I, 5.00% 2001
Multifamily Housing Rev. Bonds (GNMA Collateralized - 500 517
Ridgecroft Apartments Project), Series 1997E AMT, 6.00% 2017
City of Oxnard, Assessment Dist. No. 97-1-R (Pacific 1,475 1,501
Commerce Center), Limited Obligation Ref. Bonds, 5.70% 2006
Pleasanton Joint Powers Fncg. Auth., Subordinate 3,435 3,571
Reassessment Rev. Bonds, 1993 Series B, 6.125% 2002
City of Poway, Community Facs. Dist. No. 88-1 (Parkway 2,000 2,148
Business Centre), Special Tax Ref. Bonds, Series 1998,
6.75% 2015
City of Roseville, North Central Roseville Community 1,015 1,003
Facs. Dist. No. 1, Special Tax Ref. Bonds, Series 1999,
5.40% 2008
County of Sacramento, Laguna Creek Ranch/Elliott
Ranch Community Facs. Dist. No. 1, Improvement Area
No. 2 Special Tax Ref. Bonds (Elliott Ranch):
6.125% 2014 250 256
6.30% 2021 500 511
County of San Diego, Reassessment Dist. No. 97-1
(4-S Ranch), Limited Obligation Improvement Bonds, 6.00% 2009
6.00% 2009 1,000 1,030
6.25% 2012 1,000 1,030
Redev. Agcy. of the City and County of San Francisco, 1,000 1,126
Residential Fac. Rev. Bonds (Coventry Park Project),
Series 1996A AMT, 8.50% 2026
South Tahoe Joint Powers Fin. Auth., Ref. Rev. Bonds, 1,000 1,037
(South Tahoe Redev. Project Area No. 1), 1995 Series B, 6.25% 2020
Stanislaus Waste-To-Energy Fin. Agcy., Solid 1,470 1,513
Waste Fac. Ref. Rev. Certificates (Ogden Martin Systems
of Stanislaus, Inc. Project), Series 1990, 7.625% 2010
City of Stockton, Mello-Roos Rev. Bonds, Community Facs.
Dist. No. 90-2B (Brookside Estates), Series 1997A:
5.40% 2004 500 505
5.55% 2006 1,300 1,313
6.20% 2015 1,300 1,323
Community Facs. Dist. No. 88-12 of the City of Temecula
(Ynez Corridor), Special Tax Ref. Bonds, 1998 Series A:
5.35% 2009 940 928
5.40% 2010 860 848
5.50% 2012 1,100 1,082
City of West Sacramento, Limited Obligation Ref. Improvement
Bonds, Reassessment Dist. of 1998:
5.00% 2005 1,000 979
5.10% 2006 1,250 1,224
5.10% 2007 1,000 973

Colorado - 3.38%
Housing and Fin. Auth., Single Family Program Senior Bonds:
1995 Series A AMT, 8.00% 2025 850 903
1995 Series B AMT, 7.90% 2025 600 649
1997 Series B AMT, 7.00% 2026 1,000 1,095
1998 Series B-3, 6.55% 2025 1,575 1,729
Student Obligation Bond Auth., Student Loan Asset-Backed 1,000 1,037
Bonds, Senior Subordinate 1995 Series II-B AMT, 6.20% 2008
Arapahoe County, Capital Improvement Trust Fund Highway
Rev. Bonds (E-470 Project):
6.90% 2015 (Preref. 2005) 1,250 1,439
6.95% 2020 (Preref. 2005) 3,000 3,462
City and County of Denver, Airport System Rev. Bonds, AMT:
Series 1991D 7.75% 2013 1,000 1,206
Series 1992C:
6.75% 2013 885 947
6.75% 2013 (Preref. 2002) 115 126
Series 1994A:
7.50% 2023 415 463
7.50% 2023 (Preref. 2004) 85 98
Eaglebend Dowd Affordable Housing Corp., Multifamily
Housing Project Rev. Bonds, Series 1998A:
6.53% 2024 1,665 1,668
6.53% 2029 1,320 1,316
6.63% 2039 2,950 2,959

Connecticut - 3.51%
Dev. Auth., Pollution Control Rev. Ref. Bonds (The
Connecticut Light and Power Co. Project):
Series 1993A, 5.85% 2028 1,375 1,332
Series 1993B AMT, 5.95% 2028 1,500 1,433
Health and Educational Fac. Auth., Rev. Bonds, University 1,000 1,037
of Hartford Issue, Series D, 6.75% 2012
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds:(1)
1996 Series A:
6.375% 2004 (Escrowed to Maturity) 500 546
6.40% 2011 3,530 3,752
6.40% 2011 (Preref. 2007) 3,470 3,903
1997 Series B:
5.60% 2009 1,000 1,002
5.75% 2018 6,000 5,847
5.75% 2027 1,000 968

Delaware - 0.89%
Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula
United Methodist Homes, Inc. Issue), Series 1997A:
6.00% 2008 500 517
6.10% 2010 500 523
6.20% 2015 2,875 2,953
6.30% 2022 1,000 1,031

District of Columbia - 0.29%
Hospital Rev. Ref. Bonds (Washington Hospital Center 1,500 1,616
Issue), Series 1992A, 7.00% 2005 (Preref. 2002)

Florida - 7.30%
Arbor Greene Community Dev. Dist. (City of Tampa, Hillsborough 115 117
County), Special Assessment Rev. Bonds, Series 1996, 7.00% 2003
Broward County, Resource Recovery Rev. Bonds, 950 989
Series 1984, South Project, 7.95% 2008
Championsgate Community Dev. Dist., Capital Improvement 2,850 2,788
Rev. Bonds, Series 1998A,6.25% 2020
The Crossings at Fleming Island Community Dev. Dist. 4,725 5,120
(Clay County), Special Assessment Bonds, Series 1995, 8.25% 2016
The City of Daytona Beach, Capital Improvement Rev. Bond 7,875 7,693
Anicipation Notes (Ocean Walk Project), Series A, 6.875% 2004
Heritage Isles Community Dev. Dist. (Hillsborough County), 3,055 3,043
Special Assessment Rev. Bonds, Series 1998A, 5.75% 2005
Heritage Palms Community Dev. Dist. (Fort Myers), 2,710 2,666
Capital Improvement Rev. Bonds, Series 1998, 5.40% 2003
Heritage Pines Community Dev. Dist. (Pasco County), 975 957
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds:
Series 1997A(Cypress Cove at Healthpark Florida, Inc. 2,500 2,548
Project), 6.25% 2017
Series 1999A (Shell Point/Alliance Obligated Group,
Shell Point Village Project):
5.25% 2007 1,000 991
5.50% 2009 1,000 1,002
Meadow Pointe II, Community Dev. Dist. (Pasco County), 2,000 1,957
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Northern Palm Beach County Improvement Dist.,
Water Control and Improvement Bonds: Unit of Dev. No. 9A,
Series 1996A:
6.80% 2006 885 947
7.30% 2027 1,500 1,629
Unit of Dev. No. 9B, Series 1999, 5.85% 2013 1,000 996
North Springs Improvement Dist. Special Assessment Bonds:
Broward County, Series 1997A, 7.00% 2019 1,000 1,027
Parkland Isles Project, Series 1997B, 6.25% 2005 1,900 1,914
Ocean Highway and Port Auth., Solid Waste/Pollution 1,305 1,332
Control Rev. Ref. Bonds, Series 1996 (Jefferson Smurfit Corp.
(U.S.) Project), 6.50% 2006
City of Orlando, Special Assessment Rev. Bonds (Conroy 1,000 952
Road Interchange Project), Series 1998A, 5.80% 2026
River Ridge Community Dev. Dist. (Lee County), Capital 2,540 2,500
Improvement Rev. Bonds, Series 1998, 5.75% 2008
Idaho - 1.33%
Housing and Fin. Association, Single Family Mortgage
Subordinate Bonds AMT:
1997 Series H-2 AMT, 5.40% 2010 1,530 1,540
1997 Series I-2, 5.55% 2010 940 957
1998 Series A-2, 5.35% 2011 1,265 1,264
1998 Series B-2, 5.20% 2011 1,000 990
1998 Series G, 5.05% 2012 750 742
1999 Series B-2, 5.00% 2013 1,000 980
1999 Series D-3, 5.15% 2013 1,030 1,009

Illinois - 5.70%
Health Facs. Auth., Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997 A:
5.70% 2011 500 508
5.70% 2011 (Preref. 2009) 250 265
5.80% 2016 3,000 3,047
Centegra Health System, Series 1998:
5.50% 2008 1,000 1,010
5.25% 2014 1,500 1,426
Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 1,005
Fairview Obligated General Project:
1992 Series A, 9.50% 2022 (Preref. 2002) 2,750 3,208
1995 Series A:
6.25% 2003 1,245 1,280
7.40% 2023 3,130 3,386
State Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds 2,000 1,946
(Waste Management, Inc. Project), Series 1997, 5.05% 2010
City of Chicago:
General Obligation Bonds (Emergency Telephone system), 1,000 978
Ref. Series 1999, FGIC Insured, 5.25% 2020
Chicago O'Hare International Airport, Special Fac. Rev. Bonds
(United Air Lines, Inc. Project):
Series 1988A AMT, 8.95% 2018 1,440 1,555
Series 1988B, 8.85% 2018 1,085 1,172
Series 1999B AMT, 5.20% 2011 1,000 969
Collateralized Single Family Mortgage Rev. Bonds, Series 1997-B 2,565 2,781
AMT, 6.95% 2028
Skyway Toll Bridge Ref. Rev. Bonds, Series 1994, 6.75% 2017 1,500 1,666
(Preref. 2004)
Village of Robbins, Cook County, Resource Recovery 10,990 5,935
Rev. Bonds (Robbins Resource
Recovery Partners, L.P. Project), Series 1994A AMT, 8.375% 2016

Indiana - 1.69%
State Dev. Fin. Auth. Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 1,000 928
5.75% 2011
City of East Chicago, Pollution Control Rev. Ref. Bonds, 2,000 2,047
Inland Steel Co. Project No. 11, Series 1994, 7.125% 2007
Indianapolis Airport Auth., Special Facs. Rev. Bonds, AMT:
Series 1994 Federal Express Corp. Project, 7.10% 2017 1,000 1,096
Series 1995 A, United Air Lines, Inc., Indianapolis Maintenance 1,500 1,569
Center Project, 6.50% 2031
The Indianapolis Local Public Improvement Bond Bank, 4,500 1,316
Series 1999 E Capital Appreciation Bonds, 0.00% 2021 (2)
City of Sullivan, Pollution Control Rev. Ref. Bonds (Indiana 2,500 2,602
Michigan Power Co. Project), Series C, 5.95% 2009

Kentucky - 2.36%
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement
Rev. Bonds, Series 1997 (Appalachian Regional Healthcare, Inc.
Project):
5.60% 2008 1,000 976
5.80% 2012 1,000 962
5.85% 2017 4,000 3,819
Kenton County Airport Board, Special Facs. Rev. Bonds
(Delta Air Lines, Inc. Project), 1992 Series A AMT:
7.50% 2012 4,225 4,532
6.125% 2022 3,000 3,033

Louisiana - 2.87%
Health Education Auth., Rev. Bonds (Lambeth House Project):
Series 1996, 9.00% 2026 (Preref. 2006) 2,850 3,626
Series 1998A, 6.20% 2028 4,500 4,265
Housing Fin. Agcy., Single Family Mortgage Rev. Bonds, 2,575 2,849
Series 1995A-2 AMT, 7.80% 2026
Lake Charles Harbor and Terminal Dist., Port Facs. Rev. 2,000 2,223
Ref. Bonds (Trunkline LNG Co. Project), Series 1992, 7.75% 2022
Parish of West Feliciana, Pollution Control Rev. Bonds 3,000 3,237
(Gulf States Utilities Co. Project), Series 1984-II, 7.70% 2014

Maine - 0.15%
Educational Loan Marketing Corp., Senior Student Loan 840 875
Rev. Bonds, Series 1991 AMT, 6.90% 2003

Maryland - 1.58%
Health and Higher Educational Facs. Auth.:
First Mortgage Rev. Bonds, PUMH of Maryland, Inc. Issue 1,500 1,456
(Heron Point of Chestertown), Series 1998B, 5.75% 2026
Ref. and Project Rev. Bonds, Roland Park Place Issue, 1,000 965
Series 1999, 5.30% 2010
Frederick County, Special Obligation Bonds (Urbana Community 3,000 2,989
Dev. Auth.), Series 1998, 6.625% 2025
Housing Opportunities Commission of Montgomery County,
Multifamily Rev. Bonds (Strathmore Court at White Flint),
1994 Issue A-2:
7.50% 2024 1,000 1,060
7.50% 2027 700 742
Housing Auth. of Prince George's County, Mortgage Rev. 1,000 1,025
Bonds, Series 1997A (GNMA Collateralized - Langley
Gardens Apartments Project), 5.75% 2029
Prince George's County (Dimensions Health Corp. Issue), 750 692
Project and Ref. Rev. Bonds, Series 1994, 5.375% 2014

Massachusetts - 2.63%
Industrial Fin. Agcy.:
Resource Recovery Rev. Ref. Bonds (Ogden Haverhill Project),
Series 1998A AMT:
5.20% 2008 2,300 2,270
5.30% 2009 6,300 6,222
Rev. Bonds, Edgewood Retirement Community Project, 5,400 6,375
Series 1995A, 9.00% 2025

Michigan - 8.27%
Hospital Fin. Auth., Hospital Rev. and Ref. Bonds:
The Detroit Medical Center Obligated Group:
Series 1993A:
6.25% 2013 3,000 2,970
6.50% 2018 1,000 1,007
Series 1998A, 5.125% 2018 2,550 2,205
Genesys Health System Obligated Group, Series 1995A:
8.00% 2005 (Escrowed to Maturity) 2,000 2,368
8.10% 2013 (Preref. 2005) 1,100 1,325
7.50% 2027 (Preref. 2005) 2,265 2,623
Genesys Regional Medical Center Obligated Group, Series 1998A:
5.30% 2011 2,000 1,940
5.50% 2018 1,000 959
5.50% 2027 2,000 1,887
Hackley Hospital Obligated Group, Series 1998A, 5.30% 2013 1,000 963
Pontiac Osteopathic, Series 1994A:
5.375% 2006 3,000 2,941
6.00% 2014 2,500 2,462
6.00% 2024 1,000 965
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 1,000 994
6.625% 2016 2,755 2,802
6.70% 2026 3,250 3,321
Housing Dev. Auth., Rental Housing Rev. Bonds, 5,210 5,540
1992 Series A, 6.60% 2012
City of Detroit:
Limited Tax G.O. Bonds, Series 1995 A, 6.40% 2005 1,145 1,235
Downtown Dev. Auth., Tax Increment Bonds (Dev. Area 1,000 1,106
No.1 Projects), Series 1996C, 6.20% 2017 (Preref. 2006)
City of Flint, Hospital Building Auth.,(Hurley Medical Center):
Rev. Ref. Bonds, Series 1998A:
5.00% 2008 2,030 1,942
5.25% 2016 1,000 907
Rev. Rental Bonds, Series 1998B, 5.375% 2018 1,000 931
The Econ. Dev. Corp. of the County of Midland, 3,100 3,255
Subordinate Pollution Control Limited Obligation Rev. Ref.
Bonds (Midland Cogeneration Project) 9.50% 2009

Mississippi - 0.17%
Perry County, Pollution Control Ref. Rev. Bonds (Leaf River 1,000 967
Forest Products, Inc. Project), Series 1999, 5.20% 2012

Nebraska - 1.05%
City of Kearney, Industrial Dev. Rev. Bonds (The Great
Platte River Road Memorial Foundation Project), Series 1998:
6.75% 2023 2,000 1,697
6.75% 2028 5,000 4,243

Nevada - 2.39%
Housing Division, Single Family Mortgage Bonds:
1998 Series A-1 AMT, 5.20% 2011 1,000 990
1999 Series B-1, 4.95% 2012 600 588
City of Henderson, Health Fac. Rev. Bonds (Catholic 1,000 884
Healthcare West), 1998 Series A, 5.375% 2026
City of Henderson, Local Improvement Dist.:
No. T-4C (Green Valley Properties), Limited Obligation
Ref. Bonds, 1999 Series A:
5.75% 2013 1,710 1,666
5.90% 2018 1,000 970
No. T-10 (Seven Hills) Limited Obligation Improvement 5,445 5,633
Bonds, 7.50% 2015
City of Las Vegas, Special Improvement Bonds, (Summerlin 2,635 2,733
Area), Local Improvement Bonds, 7.10% 2016

New Hampshire - 0.58%
Housing Fin. Auth., Single Family Mortgage Acquisition
Rev. Bonds, 1997 Series D AMT:
5.60% 2012 675 686
5.80% 2017 670 686
Industrial Dev. Auth., Pollution Control Ref. Rev. Bonds 2,000 1,892
(The Connecticut Light and Power Co. Project), Series
1988 AMT, 5.90% 2018

New Jersey - 4.06%
Econ. Dev. Auth.:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation 9,250 9,399
Improvement Dist. Project (City of Elizabeth), Series 1998A,
6.375 2031
First Mortgage Rev. Fixed-Rate Bonds:
Fellowship Village Project:
Series 1995A, 9.25% 2025 (Preref. 2005) 3,000 3,712
Series 1998A:
5.10% 2008 1,250 1,200
5.20% 2009 1,000 960
5.30% 2010 1,000 962
Series 1998C:
5.50% 2018 1,000 950
5.50% 2028 1,500 1,396
Keswick Pines, Series 1998, 5.60% 2012 2,100 2,052
Winchester Gardens at Ward Homestead Project, Series 1996A:
8.50% 2016 1,000 1,127
8.625% 2025 1,000 1,131

New York - 9.37%
Dormitory Auth.:
Cert. of Part., on behalf of the City University of New York, 1,975 2,110
as Lessee (John Jay College of Criminal Justice Project Ref.),
6.00% 2006
Mental Health Services Facs. Improvement Rev. Bonds:
Series 1997B, 5.60% 2008 1,445 1,508
Series 1998C:
5.00% 2009 1,390 1,383
5.00% 2010 1,930 1,903
Montefiore Medical Center, FHA-Insured Mortgage Hospital 1,250 1,244
Rev. Bonds, Series 1999, AMBAC Insured, 5.25% 2019
Secured Hospital Rev. Ref. Bonds, Brookdale Hospital, 3,500 3,495
Series 1998J, 5.125% 2009 Housing Fin. Agcy.:
Health Facs. Rev. Bonds (New York City), 1996 Series A Ref., 2,500 2,679
6.00% 2006
Service Contract Obligation Rev. Ref. Bonds, 1997 Series C, 800 797
5.10% 2009
Erie County Industrial Dev. Agcy., Solid Waste Disposal Fac. 4,000 4,200
Rev. Bonds (1998 CanFibre of Lackawanna Project) AMT, 9.05% 2025
City of New York, G.O. Bonds:
Series A:
7.00% 2005 1,000 1,120
6.25% 2009 1,000 1,089
Fiscal 1995 Series B1, 7.00% 2016 (Preref. 2004) 1,000 1,127
Solid Waste Disposal Rev. Bonds (1995 Visy Paper (NY), Inc. Project) 6,100 6,385
AMT, 7.55% 2005
Port Auth. of New York and New Jersey, Special Project Bonds,
Series 4 AMT, KIAC Partners Project:
7.00% 2007 5,000 5,437
6.75% 2011 4,000 4,361
Onondaga County Industrial Dev. Agcy, Solid Waste
Disposal Fac. Rev. Ref. Bonds (Solvay Paperboard LLC
Project), Series 1998:
6.80% 2014 3,000 3,056
7.00% 2030 9,000 9,292
Suffolk County Industrial Dev. Agcy., 1998 Industrial Dev. 1,750 1,692
Rev. Bonds (Nissequogue Cogen Partners Fac.) AMT, 5.30% 2013

North Carolina - 3.46%
Eastern Municipal Power Agcy., Power System Rev. Bonds:
Ref. Series 1993B:
7.25% 2007 2,500 2,742
7.00% 2008 1,000 1,085
6.125% 2009 3,950 4,056
6.00% 2026 1,000 1,006
Series 1993 D, 5.875% 2013 1,000 990
Ref. Series 1999 A, 5.20% 2010 2,000 1,903
Ref. Series 1999 B:
5.55% 2014 1,000 955
5.60% 2015 2,500 2,386
5.65% 2016 1,000 954
5.70% 2017 2,000 1,911
Municipal Power Agcy. Number 1, Catawba Electric Rev. 1,500 1,537
Bonds, Series 1992, 5.90% 2003

North Dakota - 0.17%
Housing Fin. Agcy., Rev. Bonds, 1998 Series A AMT, 5.25% 2018 990 954

Ohio - 0.76%
The Student Loan Funding Corp., Cincinnati, Student 370 377
Loan Rev. Ref. Bonds, Series 1991A AMT, 7.20% 2003
Water Dev. Auth., Solid Waste Disposal Rev. Bonds (Bay 4,000 3,903
Series 1998 A AMT, 5.875% 2020

Oregon - 0.61%
City of Klamath Falls, Electric Rev. Bonds (Klamath Cogeneration
Project), Series 1999:
5.75% 2013 2,000 1,971
5.875% 2016 1,500 1,480

Pennsylvania - 5.65%
Econ. Dev. Fncg. Auth., Resource Recovery Rev. Bonds
(Colver Project), Series 1994 D AMT:
7.05% 2010 1,000 1,094
7.15% 2018 3,500 3,844
Housing Fin. Agcy., Rev. Bonds:
Rental Housing Ref. Bonds, Issue 1993, 5.80% 2018 3,500 3,653
Single Housing Family Mortgage, Series 1997-58A AMT, 5.85% 2017 2,500 2,561
Blair County Hospital Auth., Hospital Rev. Bonds (Altoona 1,500 1,526
Hospital Project), 1998 Series A, AMBAC Insured, 5.50% 2016
Lehigh County General Purpose Auth., College Rev. and Ref. Bonds, 1,750 1,865
Series B of 1996 (Cedar Crest College), 6.65% 2017
Hospitals and Higher Education Facs. Auth. of Philadelphia:
Frankford Hospital, Series A, 6.00% 2014 500 539
Hospital Rev. Bonds (Temple University Hospital), Series of 1,000 1,002
1997, 5.70% 2009
Jefferson Health Systems, Series 1997 A, 5.50% 2007 1,400 1,428
Hospital Auth. of Philadelphia, Hospital Rev. Bonds (Temple 1,000 1,042
University Hospital), Series of 1983, 6.625% 2023
Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral
Village Project), Series of 1998:
5.30% 2007 1,145 1,135
5.50% 2010 1,000 992
Scranton-Lachawanna Health and Welfare Auth., City of
Scranton, Lackawanna County, Hospital Rev. Bonds (Moses
Taylor Hospital Project), Series 1997, 5.75% 2006
5.75% 2006 1,585 1,570
5.80% 2007 1,680 1,664
5.90% 2008 1,730 1,718
6.00% 2009 940 937
6.10% 2011 2,005 1,991
6.20% 2017 2,305 2,329
Westmoreland County Indust. Dev. Auth., Variable 1,000 982
Rate Rev. Bonds, Series 1993 AMT (Nat'l Waste and Energy Corp.;
Valley Landfill Expansion Project) x.xx% 2018

Rhode Island - 0.36%
Housing and Mortgage Fin. Corp., Homeownership Opportunity 2,000 2,020
Bonds, Series 9-B-1 AMT, 5.55% 2013

South Carolina - 1.78%
Piedmont Municipal Power Agcy., Electric Rev. Bonds, 8,000 7,447
1999A Ref. Series, 5.25% 2015
York County, Pollution Control Facs. Rev. Bonds (Bowater Inc. 2,300 2,574
Project), Series 1990 AMT, 7.625% 2006

Tennessee - 0.86%
The Industrial Dev. Board of the County of McMinn, 2,000 2,115
Solid Waste Recycling Facs. Rev. Bonds, Series 1992
(Calhoun Newsprint Co. Project - Bowater), 7.625% 2016
Memphis-Shelby County Airport Auth., Special Facs. 2,500 2,714
Rev. Bonds (Federal Express Corp.), Series 1984, 7.875% 2009

Texas - 2.77%
Alliance Airport Auth., Inc., Special Facs. Rev. Bonds 1,500 1,708
(American Airlines, Inc. Project), Series 1990 AMT,
7.00% 2011
Industrial Dev. Corp. of Port of Corpus Christi, Rev. 3,250 3,186
Ref. Bonds (Valero Refining and Marketing Co. Project),
Series 1997D AMT, 5.125% 2009
Hidalgo County Health Services Corp., Hospital Rev.
Bonds, (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 2,365 2,560
6.75% 2016 1,000 1,064
Matagorda County, Navigation Dist. Number One, Rev. 2,500 2,335
Ref. Bonds (Houston Lighting & Power Co. Project),
Series 1997 AMT, AMBAC Insured, 5.125% 2028
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6.125% 2023 4,740 4,764

Utah - 0.80%
Housing Fin. Agcy., Single Family Mortgage Bonds:
1997 Series G-2 Class III AMT, 5.60% 2010 1,035 1,049
1998 Series G-2, Class III, 4.90% 2012 1,000 973
1999 Series B-2, Class III, 5.10% 2012 1,100 1,074
Housing Fin. Agcy., Single Family Mortgage Bonds, 1,400 1,406
1999 Series C-2, Class III, 5.60% 2013

Vermont - 0.27%
Housing Fin. Agcy., Single Family Housing Bonds, Series 9
AMT (Adjusted Rate Bonds), MBIA Insured:
4.90% 2012 575 566
5.70% 2012 925 952

Virginia - 0.90%
Dulles Town Center Community Dev. Auth. (Loudoun 1,000 1,005
County), Special Assessment Bonds (Dulles Town
Center Project), Series 1998, 6.25% 2026
Gateway Community Dev. Auth., Special Assessment Bonds, 2,000 1,932
Series 1999, 6.25% 2026 Pocahontas Parkway Association, 2,100 2,116
Route 895 Connector Toll Road Rev. Bonds, Series 1998A,
5.25% 2008

Virgin Islands - 0.60%
Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund
Loan Notes), Series 1998 D:
6.00% 2006 1,500 1,562
6.00% 2007 1,750 1,824

West Virginia - 0.20%
City of South Charleston, Pollution Control Rev. Ref. Bonds 1,000 1,130
(Union Carbide Corp. Project), Series 1985, 7.625% 2005

Wisconsin - 2.20%
Housing and Econ. Dev. Auth., Housing Rev. Bonds, 3,000 3,050
1993 Series B AMT, 5.30% 2006
City of Oconto Falls, Community Dev. Auth., Dev. Rev. 9,000 9,393
Bonds, Series 1997 (Oconto Falls Tissue, Inc. Project),
7.75% 2022

Wyoming - 0.19%
Sweetwater County, Solid Waste Disposal Rev. Bonds 1,000 1,082
(FMC Corp. Project), Series 1994A AMT, 7.00% 2024

----------
529,576
----------

Tax-Exempt Securities Maturing in One Year or Less - 5.44%
City of Houston, Tax and Rev. Anticipation Notes, 1,000 1,008
Series 1999, 4.25% 6/30/00
State of Idaho, Tax Anticipation Notes, Series 1999 1,500 1,511
, 4.25% 6/30/00
State of Kentucky, Asset/Liability Commission, General Fund 1,000 1,008
Tax and Rev. Anicipation Notes, 1999 Series A, 4.25% 6/28/00
County of Los Angeles, Tax and Rev. Anticipation Notes, 1,000 1,006
Series A, 4.00% 6/30/00
County of Santa Clara, 1999 Tax and Rev. Anticipation Notes, 2,000 2,003
4.50% 10/1/99
State of South Carolina, Public Service Auth., Rev. Bonds, 1,000 1,012
1995 Ref. Series A, AMBAC Insured, 6.25% 1/1/00
State of Texas, Tax and Rev. Anticipation Notes, 17,500 17,514
Series 1998, 4.50% 8/31/99
State of Wyoming, General Fund Tax and Rev. Anticipation 2,500 2,514
Notes, Series 1999, 4.00% 6/27/00
State of Wyoming, Uinta County, Pollution Control Rev. 3,100 3,100
Ref. Bonds (Amoco Project), Series 1998, 3.40% 2026 (3)
----------
30,676
----------

TOTAL TAX-EXEMPT SECURITIES (cost: $556,713,000) 560,252

Excess of cash, prepaids and receivables over payables 3,919
----------

NET ASSETS $564,171
========

(1) Purchased in a private placement transaction;
resale may be limited to qualified institutional buyers;
resale to the public may require registration.
(2) Represents a when-issued security.
(3) Coupon rate may change periodically.

See Notes to Financial Statements

Key to Abbreviations

Agcy. = Agency
Auth. = Authority
Cert. of Part. = Certificates of Participation
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facility
Facs. = Facilities
Fin. = Finance
Fncg. = Financing
G.O. = General Obligation
Preref. = Prerefunded
Redev. = Redevelopment
Ref. = Refunding
Rev. = Revenue

</TABLE>

<TABLE>
American High-Income Municipal Bond Fund
Financial Statements

Statement of Assets and Liabilities
at July 31, 1999 (dollars in thousands)
<S> <C> <C>
Assets:
Tax-exempt securities
(cost: $556,713) $560,252
Cash 93
Receivables for --
Sales of fund's shares $ 842
Accrued interest 9,431 10,273
------------ ------------
570,618
Liabilities:
Payables for --
Purchases of investments 4,001
Repurchases of fund's shares 1,220
Dividends payable 839
Management services 189
Accrued expenses 198 6,447
------------ ------------
Net Assets at July 31, 1999 --
Equivalent to $15.49 per share on 36,432,430
shares of $0.01 par value capital stock
outstanding (authorized capital stock -- $564,171
200,000,000 shares) ============

Statement of Operations
for the year ended July 31, 1999
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $30,854

Expenses:
Management services fee $2,083
Distribution expenses 1,574
Transfer agent fee 160
Reports to shareholders 63
Registration statement and prospectus 87
Postage, stationery and supplies 29
Director's fees 17
Auditing and legal fees 33
Custodian fee 11
Taxes other than federal income tax 8
Organization expense 2
Other expenses 27 4,094
------------ ------------
Net investment income 26,760
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 1,809
Net unrealized appreciation
on investments:
Beginning of year 24,628
End of year 3,539
------------
Change in unrealized appreciation
on investments (21,089)
Net realized gain and change in unrealized ------------
appreciation on investments (19,280)
Net Increase in Net Assets Resulting ------------
from Operations $7,480
============

Statement of Changes in Net Assets
(dollars in thousands)

Year ended July 31
1999 1998
Operations: ------------ ------------
Net investment income $26,760 $19,841
Net realized gain on investments 1,809 2,244
Net change in unrealized appreciation
on investments (21,089) 3,403
------------ ------------
Net increase in net assets
resulting from operations 7,480 25,488
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends Paid from net
investment income (26,849) (19,820)
Distributions from net realized gain on
investments (2,559) (881)
------------ ------------
Total dividends and distributions (29,408) (20,701)
------------ ------------

Capital Share Transactions:
Proceeds from shares sold: 205,017 195,199
12,855,092 and 12,159,660 shares, respectively
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments:
1,270,760 and 833,529 shares, respectively 20,209 13,370
Cost of shares repurchased: 6,483,571 and
4,072,064 shares, respectively (103,179) (65,298)
------------ ------------
Net increase in net assets
resulting from capital share
transactions 122,047 143,271

Total Increase in Net Assets 100,119 148,058
Net Assets: ------------ ------------
Beginning of year 464,052 315,994
------------ ------------
End of year (including undistributed $564,171 $464,052
Net investment income: $104 and ============ ============
$79, respectively)

See Notes to Financial Statements
</TABLE>

American High-Income Municipal Bond Fund

Notes to Financial Statements

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION - American High-Income Municipal Bond Fund, Inc. (the "fund")
is registered under the Investment Company Act of 1940 as an open-end,
diversified management investment company. The fund seeks a high level of
current income exempt from regular federal income taxes through a diversified,
carefully researched portfolio of higher yielding, lower rated, higher risk
municipal bonds.

SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepare 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 Directors.

SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
transactions are accounted for as of the trade date. Realized gains and losses
from the 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 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

As of July 31, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $3,539,000, of which $15,248,000
related to appreciated securities and $11,709,000 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 realized, on a tax basis, a net capital gain of
$1,724,000 on securities transactions. The cost of portfolio securities for
book and federal income tax purposes was $556,713,000 at July 31, 1999.

3. FEES AND TRANSACTIONS WITH RELATED PARTIES

INVESTMENT ADVISORY FEE - The fee of $2,083,000 for management services
was incurred pursuant to an agreement with CRMC, with which certain officers
and Directors of the fund are affiliated. The Investment Advisory and Service
Agreement provides for monthly fees, accrued daily, based on an annual rate of
0.30% of the first $60 million of average net assets; 0.21% of such assets in
excess of $60 million; and 3.00% of the fund's monthly gross investment income.

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
Directors. 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 limited to $1,574,000.
Had no limitation been in effect, the fund would have paid $1,777,000 in
distribution expenses under the Plan. As of July 31, 1999, accrued and unpaid
distribution expenses were $161,000.

American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $450,000 (after allowance 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 $160,000.

DEFERRED DIRECTORS' FEES - Directors 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 amounts deferred and earnings thereon
since the deferred compensation plan's adoption (1994), net of any payments to
Directors, were $30,000.

4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES

The fund made purchases and sales of investment securities, excluding
short-term securities, of $198,328,000 and $82,978,000, respectively, during
the year ended July 31, 1999.

As of July 31, 1999, accumulated undistributed net realized gain on
investments was $1,026,000 and additional paid-in capital was $523,071,000. The
fund reclassified $114,000 and $213,000 to undistributed net investment income
and additional paid-in capital, respectively, 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 $11,000 includes $10,000 that was paid by these credits
rather than in cash.

<TABLE>
Per-Share Data and Ratios
<S> <C> <C> <C> <C> <C> <C>
Period
Year ended July 31 September 26,
1994(1) to
1999 1998 1997 1996 July 31, 1995

Net Asset Value, Beginning of Period $16.12 $15.90 $15.23 $15.14 $14.29
-------- ----- ----- ------ ----------
Income From Investment Operations:
Net investment income .81 .84 .87 .88 .76
Net gains or losses on securities (both
realized and unrealized) (.54) .26 .80 .37 .85
-------- ----- ----- ------ ----------
Total from investment operations .27 1.10 1.67 1.25 1.61
-------- ----- ----- ------ ----------
Less Distributions:
Dividends (from net investment income (.82) (.84) (.86) (.88) (.76)
Distributions (from capital gains) (.08) (.04) (.14) (.28) --
-------- ----- ----- ------ ----------
Total distributions (.90) (.88) (1.00) (1.16) #VALUE!
-------- ----- ----- ------ ----------

Net Asset Value, End of Period $15.49 $16.12 $15.90 $15.23 $15.14
========= ====== ====== ======= ==========

Total Return (2) 1.63% 7.05% 11.36% 8.48% 11.62% (3)

Ratios/Supplemental Data:
Net assets, end of period (in millions $564 $464 $316 $217 $157
Ratio of expenses to average net asset .78% .79% .87% .88% .94% (3)
before fee waiver
Ratio of expenses to average net asset .78% .79% .87% .86% .62% (3)
after fee waiver
Ratio of net income to average net ass 5.09% 5.19% 5.51% 5.74% 5.66% (3)
Portfolio turnover rate 16.67% 16.38% 15.31% 35.22% 46.42% (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>

REPORT OF INDEPENDENT ACCOUNTANT

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF AMERICAN HIGH-INCOME MUNICIPAL
BOND FUND, INC.

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 American High-Income Municipal
Bond Fund, Inc.(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 81.5 cents per share
of exempt-interest distributions within the meaning of Section 852(b)(5)(A) of
the Internal Revenue Code, a short-term capital gain of 0.3 cents per share and
a long-term capital gain of 7.6 cents per share.

The fund designates as a capital gain distribution a portion of earnings and
profits paid to shareholders in redemption of their shares.

<PAGE>
<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.

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.

<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

<PAGE>

PART C
OTHER INFORMATION
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA

ITEM 23. EXHIBITS

(a) Establishment and Designation of Class of Shares of Beneficial Interest
Without Par Value dated 1/10/00
(b) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(c) Share Certificate
(d) Investment Advisory and Service Agreement dated 3/1/2000
(e) Amended and Restated Principal Underwriting Agreement dated 12/14/99
(f) None
(g) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(h) None
(i) Legal Opinion for Class B Shares
(j) Consent of Independent Accountants
(k) None
(l) Previously filed (see Post-Effective Amendment No. 6 filed 9/29/97)
(m) Plan of Distribution relating to Class B Shares dated 12/14/99
(n) Multiple Class Plan dated 12/14/99
(o) None
(p) Codes 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

ITEM 25. INDEMNIFICATION (CONTINUED)

is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer of controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, officer of controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

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., EuroPacific Growth Fund, The Growth Fund of America, Inc., The
Income Fund of America, Inc., The Investment Company of America, Intermediate
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

29003 Colonial Drive

Georgetown, TX 78628

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 Co-Chief None

Executive Officer

Ruth M. Collier Senior Vice President None

29 Landsdowne Drive

Larchmont, NY 10538

S David Coolbaugh Assistant Vice President None

H Carlo O. Cordasco 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

William Daugherty Regional Vice President None

1216 Highlander Way

Mechanicsburg, PA 17055

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, Executive Vice None
President

100 Merrick Road, Suite 216W

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 and Trustee

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 - Institutional None

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 President None

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 - Institutional None

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 A. 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

244 Lambeau Lane

Glenville, NC 28736

George S. Ross Senior Vice President None

55 Madison Avenue

Morristown, NJ 07960

L Julie D. Roth Vice President None

L James F. Rothenberg Director None

Douglas F. Rowe 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

Brad W. Short Regional Vice President None

306 15th Street

Seal Beach, CA 90740

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 L. Snyder-Senft Assistant Vice President None

Anthony L. Soave Regional Vice President None

8831 Morning Mist Drive

Clarkston, MI 48348

Therese L. 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 J. Wenzel Regional Vice President None

3406 Shakespeare Drive

Troy, MI 48084

J. D. Wiedmaier Assistant Vice President None

3513 Riverstone Way

Chesapeake, VA 23325

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 President None

L Robert L. Winston Director, Senior Vice President None

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

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

<PAGE>
SIGNATURE OF REGISTRANT

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
7/th/ day of March, 2000.

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 March 7, 2000, by the following
persons in the capacities indicated.

<TABLE>
<CAPTION>
Signature Title

(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:

Richard G. Capen, Jr.* Trustee

H. Frederick Christie* Trustee
Don R. Conlan* Trustee
Diane C. Creel* Trustee

Martin Fenton* 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

Frank M. Sanchez* Trustee

</TABLE>

*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact

Counsel represents that this amendment does not contain diesclosures that
would make the amendment ineligible for effectiveness under the provisions of
rule 485(b).

/s/ Michael J. Downer
Michael J. Downer

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
Figure Box 0
Figure Box 0
Establishment and Designation of Classes
of Shares of Beneficial Interest Without Par Value
(the "Instrument")
The undersigned, being a majority of the Trustees of Limited Term Tax-Exempt
Bond Fund of America, a Massachusetts business trust (the "Trust"), acting
pursuant to Section 6.1 of the Trust's Declaration of Trust dated July 8, 1993,
as amended on September 30, 1993, (the "Declaration of Trust"), hereby further
divide and classify the authorized and unissued shares of beneficial interest
(together with the shares of beneficial interest without par value, now
outstanding, the "Shares") of the Trust, into the two classes of shares
designated below in paragraph 1 (each a "Class" and, collectively, the
"Classes"). Each Class (including all currently issued and outstanding Shares,
which shall be redesignated "Class A Shares") shall be unlimited in number and
have the special and relative rights specified in this Instrument:
1. The Classes shall be designated as follows:
Class A
Class B
2. Each Share shall represent a pro rata beneficial interest in the assets
attributable to its Class, and shall be entitled to receive its pro rata share
of net assets attributable to that Class of Shares of the Trust upon
liquidation of the Trust, all as provided in or not inconsistent with the
Declaration of Trust. Unless otherwise provided in this Instrument, each Share
shall have the voting, dividend, liquidation and other rights, preferences,
powers, restrictions, limitations, qualifications, terms and conditions, as set
forth in the Declaration of Trust.
3. Upon the effective date of this Instrument:
a. Each Share of each Class of the Trust shall be entitled to one vote (or
fraction thereof in respect of a fractional Share) on matters which those
Shares (or Class of Shares) shall be entitled to vote. Shareholders of the
Trust shall vote together on any matter, except to the extent otherwise
required by the Investment Company Act of 1940 (the "Investment Company Act"),
and the rules thereunder, in which case only the Shareholders of that Class or
those Classes shall be entitled to vote thereon.
b. Class A Shares and Class B Shares may be issued and sold subject to
different sales loads or charges, whether initial, deferred or contingent, or
any combination thereof, as may be established from time to time by the
Trustees of the Trust in accordance with the Investment Company Act and
applicable rules and regulations of self-regulatory organizations and as shall
be set forth in the applicable prospectus for the Shares.
c. Liabilities, expenses, costs, charges or reserves that should be properly
allocated to the Shares of a particular Class of the Trust may, pursuant to a
Plan adopted by the Trustees to conform with Rule 18f-3 under the Investment
Company Act, or a similar rule, provision, interpretation or order under the
Investment Company Act, be charged to and borne solely by that Class and the
bearing of expenses solely by a Class of Shares may be appropriately reflected
and cause differences in net asset value attributable to, and the dividend,
redemption and liquidation rights of, the Shares of different Classes.
d. Except as otherwise provided hereinafter, on the first Friday of the first
calendar month following the expiration of a 96-month period commencing on the
first day of the calendar month during which Class B Shares were purchased by a
holder thereof (if such Friday is not a business day, on the next succeeding
business day), such Shares (as well as a pro rata portion of any Class B Shares
purchased through the reinvestment of dividends or other distributions paid on
all Class B Shares held by such holder) shall automatically convert to Class A
Shares on the basis of the respective net asset values of the Class B Shares
and the Class A Shares on the conversion date; PROVIDED, HOWEVER, that the
Trustees, in their sole discretion, may suspend the conversion of Class B
Shares if any conversion of such Shares would constitute a taxable event under
federal income tax law (in which case the holder of such Class B Shares shall
have the right to exchange from time to time any or all of such Class B Shares
held by such holder for Class A Shares on the basis of the respective net asset
values of the Class B Shares and the Class A Shares on the applicable exchange
date and without the imposition of a sales charge or fee); and PROVIDED,
FURTHER, that conversion (or exchange) of Class B Shares represented by share
certificates shall be subject to tender of such certificates; and
e. Subject to the foregoing paragraph, Class A Shares and Class B Shares may
have such different exchange rights as the Trustees shall determine in
compliance with the Investment Company Act.
4. The Trustees (including any successor Trustees) of the Trust shall have
the right at any time and from time to time to reallocate assets, liabilities
and expenses or to change the designation of any Class now or hereafter
created, or to otherwise change the special and relative rights of any Class,
provided that no change shall adversely affect the rights of Shareholders of
such Class.
Except as otherwise provided in this Instrument, the foregoing shall be
effective as of the date set forth below.
Richard G. Capen, Jr., as Trustee
H. Frederick Christie, as Trustee
Don R. Conlan, as Trustee
Diane C. Creel, as Trustee
Martin Fenton, as Trustee
Leonard R. Fuller, as Trustee
Abner D. Goldstine, as Trustee
Paul G. Haaga, Jr., as Trustee
Richard G. Newman, as Trustee
Frank M. Sanchez, as Trustee
Dated: January 10, 2000

NUMBER (certificate number)
SHARES (number of shares)
CUSIP (cusip number)
CLASS (class of shares)
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
A MASSACHUSETTS BUSINESS TRUST
This Certifies that (shareholder name and address) is the owner of (number of
shares) fully paid Shares of Beneficial Interest, of the Class and number
indicated above, Limited Term Tax-Exempt Bond Fund of America, without par
value, transferable on the books of the Trust by the holder thereof in person
or by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent. (See reverse for certain abbreviations.)
Witness, the facsimile signatures of duly authorized officers of the Trust.
Dated: (date issued)
S/Julie F. Williams
Secretary
S/Abner D. Goldstine
President
Countersigned
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY ___________________
AUTHORIZED SIGNATURE

THE ISSUER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL FURNISH TO ANY
SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF
EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, THE VARIATIONS IN THE RELATIVE
RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH CLASS AND SERIES INSOFAR AS
THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OR TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES
OF CLASSES AND SERIES OF SHARES OF THE ISSUER. IF YOU WOULD LIKE A COPY OF THE
FULL STATEMENT, PLEASE WRITE TO THE SECRETARY OF THE ISSUER OR ITS TRANSFER
AGENT.

CLASS B AND SERIES B SHARES REDEEMED WITHIN SIX YEARS OF THEIR PURCHASE ARE
SUBJECT TO A DEFERRED SALES CHARGE OF UP TO 5%. IN ADDITION, DURING THE MONTH
FOLLOWING THE 96-MONTH PERIOD THAT BEGINS ON THE FIRST DAY OF THE MONTH IN
WHICH SUCH SHARES ARE PURCHASED, CLASS B AND SERIES B SHARES (ALONG WITH SHARES
OF THE SAME CLASS AND SERIES PURCHASED THROUGH REINVESTMENT OF DIVIDENDS AND
OTHER DISTRIBUTIONS ON SUCH SHARES) WILL AUTOMATICALLY CONVERT TO CLASS A
SHARES (OR COMMON SHARES) ON THE BASIS OF THEN CURRENT RELATIVE NET ASSET
VALUES PER SHARE. THE ISSUER MAY SUSPEND SUCH CONVERSION IN CERTAIN LIMITED
CIRCUMSTANCES, IN WHICH CASE AN EXCHANGE PRIVILEGE WILL APPLY. THE ISSUER MAY
REQUIRE TENDER OF THIS CERTIFICATE PRIOR TO ANY CONVERSION OR EXCHANGE. IF
SUCH TENDER IS NOT REQUIRED, THE NUMBER OF SHARES REPRESENTED BY THIS
CERTIFICATE AFTER SUCH CONVERSION OR EXCHANGE WILL BE DIFFERENT THAN THE NUMBER
INDICATED ON THE FACE OF THIS CERTIFICATE. SHAREHOLDERS MAY RETURN THIS
CERTIFICATE AFTER ANY CONVERSION OR EXCHANGE AND OBTAIN A NEW CERTIFICATE (OR
CERTIFICATES) REPRESENTING THE ACTUAL NUMBER AND TYPE OF SHARES OWNED.

NOTE: SHARES REPRESENTED BY THIS CERTIFICATE MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.

EXPLANATION OF ABBREVIATIONS

The following abbreviations, when used in the registration on the face of this
certificate, shall have the meanings assigned below:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADM - Administratrix FBO - For the TTEE - Trustee
benefit
of

Administrator GDN - Guardian U/A - Under
agreement

COM - Community JT TEN - Joint UGMA/ - Uniform
PROP property tenants (State) Gift
with to Minors
right Act
of in

CUST - Custodian survivorship effect in
the
state
indicated

DTD - Dated LIFE TEN - Life UTMA/ - Uniform
tenant (State) Transfers
to
Minors Act

EST - Estate (State)/TOD - Uniform in effect
Transfer in
on the state
Death indicated

Of the estate Act in U/W - Last will
of effect and
in testament
the
state

ET - And others indicated Under last
AL will and
testament
of

EXEC - Executor TR - Trust Under the
will of

Executrix TEN COM - Tenants
in common

TEN ENT - Tenants
by the
entireties

Note: Abbreviations refer where appropriate to the
singular or plural, male
or female. Other abbreviations may also be used,
including U.S. Postal
Service two-letter state abbreviations.

</TABLE>

REQUIREMENTS: THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND EXACTLY WITH
THE NAME(S) WRITTEN ON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR.
SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR," SUCH AS A BANK,
SAVINGS ASSOCIATION OR CREDIT UNION THAT IS FEDERALLY INSURED OR A MEMBER FIRM
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. A NOTARY PUBLIC IS NOT
AN ACCEPTABLE GUARANTOR.

FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELL, ASSIGN, AND TRANSFER
SHARES OF THE ISSUER REPRESENTED BY THIS
CERTIFICATE TO:
_______________________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE)
AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
_____________________________________________________ ATTORNEY TO TRANSFER
THESE SHARES ON THE BOOKS OF THE ISSUER WITH FULL POWER OF
SUBSTITUTION._________________________________________________________________
__________________________ _______________________________
Signature of owner Date
______________________________________________________________________________
_____________ _______________________________ Signature of
co-owner, if any Date

IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH THE REQUIREMENTS
PRINTED ABOVE.

SIGNATURE(S) GUARANTEED BY:
______________________________________________________________________

AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of March, 2000
is made and entered into by and between LIMITED TERM TAX-EXEMPT BOND FUND OF
AMERICA, a Massachusetts business trust, (hereinafter called the "Fund"), and
CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter
called the "Investment Adviser").
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management type,
registered under the Investment Company Act of 1940 (the "1940 Act"). The
Investment Adviser is registered under the Investment Advisers Act of 1940 and
is engaged in the business of providing investment advisory and related
services to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual
undertaking of the parties, it is covenanted and agreed as follows:
1. The Investment Adviser shall determine what securities and other
assets shall be purchased or sold by the Fund.
2. The Investment Adviser shall furnish the services of persons to
perform the executive, administrative, clerical, and bookkeeping functions of
the Fund, including the daily determination of net asset value per share. The
Investment Adviser shall pay the compensation and travel expenses of all such
persons, and they shall serve without any additional compensation from the
Fund. The Investment Adviser shall also, at its expense, provide the Fund with
necessary office space (which may be in the offices of the Investment Adviser);
all necessary office equipment and utilities; and general purpose forms,
supplies, and postage used at the offices of the Fund.
3. The Fund shall pay all its expenses not assumed by the Investment
Adviser as provided herein. Such expenses shall include, but shall not be
limited to, expenses incurred in connection with the organization of the Fund,
its qualification to do business as a foreign corporation in the State of
California, and its registration as an investment company under the 1940 Act;
custodian, stock transfer and dividend disbursing fees and expenses;
distribution expenses pursuant to a plan under rule 12b-1 under the 1940 Act;
costs of designing and of printing and mailing to its shareholders reports,
prospectuses, proxy statements, and notices to its shareholders; taxes;
expenses of the issuance, sale, redemption, or repurchase of shares of the Fund
(including registration and qualification expenses); legal and auditing fees
and expenses; compensation, fees, and expenses paid to trustees not affiliated
with the Investment Adviser; association dues; and costs of any share
certificates, stationery and forms prepared exclusively for the Fund.
4. The Fund shall pay to the Investment Adviser on or before the tenth
(10th) day of each month, as compensation for the services rendered by the
Investment Adviser during the preceding month, a fee at the annual rate of:
(a) 0.30% per annum on the first $60 million of the Fund's net assets; plus
0.21% per annum on such net assets in excess of $60 million ("Net Asset
Portion"), plus
(b) 3% of the Fund's gross investment income for such period ("Investment
Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rates set forth above. The net asset value of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund as of the close of the New York Stock Exchange on each
day of which said Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes hereof,
the Fund's gross investment income shall be determined in accordance with
Generally Accepted Accounting Principles and shall not include any net realized
gains or losses on the sale of portfolio securities.
For the purposes hereof, the net assets of the Fund shall be
determined in the manner set forth in the Declaration of Trust and Prospectus
of the Fund. The advisory fee shall be payable for the period commencing on
the date on which operations of the Fund begin and ending on the date of
termination hereof and shall be prorated for any fraction of a month at the
termination of such period.
5. The Investment Adviser agrees that in the event the expenses of the
Fund (with the exclusion of interest, taxes, brokerage costs, extraordinary
expenses such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on
a date on which this Investment Advisory and Service Agreement is in effect,
exceed the expense limitations, if any, applicable to the Fund pursuant to
state securities laws or any regulations thereunder, it will reduce its fee by
the extent of such excess and, if required pursuant to any such laws or
regulations, will reimburse the Fund in the amount of such excess.
6. The Investment Adviser agrees to pay the expenses of the Fund
referred to in paragraph 3 above (with the exclusion of interest, taxes,
brokerage costs and extraordinary expenses such as litigation and acquisitions)
attributable to the Class A shares of the Fund for a period ending not later
than October 1, 2003, all subject to reimbursement by the Fund. To accomplish
such reimbursement, the Fund shall pay the Investment Adviser an expense
reimbursement fee which on an annual basis is equivalent to the difference
between the fees of the Investment Adviser described in paragraph 4 above
attributable to the Class A shares of the Fund and .75% of the average net
assets of the Fund attributable to Class A shares of the Fund. The expense
reimbursement fees are for reimbursement of actual expenses incurred by or on
behalf of the Fund and are intended to have the effect of assuring that the
total normal operating expenses borne by the Class A shares of the Fund during
the expense reimbursement period will not exceed .75% of the Fund's average net
assets attributable to Class A shares per annum. Such expense reimbursement
fee arrangement will terminate either when all of such reimbursable expenses of
the Fund which have been paid by the Investment Adviser pursuant thereto have
been reimbursed by the Fund for a period of twelve consecutive months or on
October 1, 2003, whichever is earlier.
7. The expense limitations described in paragraph 5 and 6 above shall apply
only to Class A shares of the Fund and shall not apply to any other class(es)
of shares the Fund may issue in the future. Any new class(es) of shares issued
by the Fund will not be subject to an expense limitation. However,
notwithstanding the foregoing, to the extent the Investment Adviser is required
to reduce its fees pursuant to provisions contained in paragraph 5 or 6 due to
the expenses of the Class A shares of the Fund exceeding the stated limits, the
Investment Adviser will either (i) reduce its fee similarly for other classes
of shares of the Fund, or (ii) reimburse the Fund for other expenses to the
extent necessary to result in an expense reduction only for Class A shares of
the Fund.
8. This Agreement may be terminated at any time, without payment of any
penalty, by the Trustees of the Fund or by vote of a majority (within the
meaning of the 1940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. Unless sooner terminated in accordance
with this provision, this Agreement shall continue until May 31, 2000. It may
thereafter be renewed from year to year by mutual consent; provided that such
renewal shall be specifically approved at least annually by the Board of
Trustees of the Fund, or by vote of a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund. In either event, it
must be approved by a majority of those Trustees who are not parties to such
Agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
9. This agreement shall not be assignable by either party hereto, and
in the event of assignment (within the meaning of the 1940 Act) by the
Investment Adviser shall automatically be terminated forthwith. The term
"assignment" shall have the meaning defined in the 1940 Act.
10. Nothing contained in this Agreement shall be construed to prohibit
the Investment Adviser from performing investment advisory, management, or
distribution services for other investment companies and other persons or
companies, nor to prohibit affiliates of the Investment Adviser from engaging
in such business or in other related or unrelated businesses.
11. The Investment Adviser shall not be liable to the Fund or its
stockholders for any error of judgment, act, or omission not involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations and duties hereunder.
12. The obligations of the Fund under this Agreement are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Fund
individually, but bind only the Fund's estate. The Investment Adviser agrees
to look solely to the assets of the Fund for the satisfaction of any liability
in respect of the Fund under this Agreement and will not seek recourse against
such Trustees, officers, employees, agents or shareholders, or any of them, or
any of their personal assets for such satisfaction.
13. It is understood that the name "American Funds" or any derivative thereof
or logo associated with that name is the valuable property of the Invstment
Adviser and its affiliates, and that the Fund shall have the right to use such
name (or derivative or logo) only so long as this Agreement shall continue in
effect. Upon termination of this Agreement the Fund shall forthwith cease to
use such name (or derivative or logo) and shall promptly amend its Declaration
of Trust to change its name.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
LIMITED TERM TAX-EXEMPT BOND CAPITAL RESEARCH AND
FUND OF AMERICA MANAGEMENT COMPANY
By /s/ Paul G. Haaga, Jr. By /s/ James F. Rothenberg
Paul G. Haaga, Jr., Chairman James F. Rothenberg, President
By /s/ Julie F. Williams By /s/ Michael J. Downer
Julie F. Williams, Secretary Michael J. Downer, Secretary

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between LIMITED TERM TAX-EXEMPT BOND
FUND OF AMERICA, a Massachusetts business trust (the "Fund"), and AMERICAN
FUNDS DISTRIBUTORS, INC., a California corporation ("the Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified investment company which
offers two classes of shares of beneficial interest, designated as Class A
shares and Class B shares, and it is a part of the business of the Fund, and
affirmatively in the interest of the Fund, to offer shares of the Fund either
from time to time or continuously as determined by the Fund's officers subject
to authorization by its Board of Trustees; and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of shares of investment companies through securities
broker-dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other to promote the distribution of the shares of the Fund and of all
series or classes of the Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) The Distributor shall be the exclusive principal underwriter for the
sale of the shares of the Fund and of each series or class of the Fund which
may be established in the future, except as otherwise provided pursuant to the
following subsection (b). The terms "shares of Fund" or "shares" as used
herein shall mean shares of beneficial interest of the Fund and each series or
class which may be established in the future and become covered by this
Agreement in accordance with Section 23 of this Agreement..
(b) The Fund may, upon 60 days' written notice to the Distributor, from time to
time designate other principal underwriters of its shares with respect to areas
other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of the Distributor under this Agreement to sell shares
in the areas so designated shall terminate, but this Agreement shall remain
otherwise in full force and effect until terminated in accordance with the
other provisions hereof.
2. In the sale of shares of the Fund, the Distributor shall act as agent of the
Fund except in any transaction in which the Distributor sells such shares as a
dealer to the public, in which event the Distributor shall act as principal for
its own account.
3. The Fund shall sell shares only through the Distributor, except that the
Fund may, to the extent permitted by the 1940 Act and the rules and regulations
promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other
organization, or its, or their, security holders, beneficiaries or members, in
connection with a merger, consolidation or reorganization to which the Fund is
a party, or in connection with the acquisition of all or substantially all the
property and assets of such corporation, association, trust, partnership or
other organization;
(b) issue shares at net asset value to the holders of shares of capital stock
or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group Companies,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in connection with the
reinvestment of dividends paid and other distributions made by the Fund;
(d) issue shares at net asset value to persons entitled to purchase shares at
net asset value without sales charge or contingent deferred sales charge as
described in the current prospectus which is part of the Fund's Registration
Statement in effect under the Securities Act of 1933, as amended, for each
series issued by the Fund at the time of such offer or sale (the "Prospectus").
4. The Distributor shall devote its best efforts to the sale of shares of the
Fund and shares of any other mutual funds served as investment adviser by
affiliated companies of The Capital Group Companies, Inc., and insurance
contracts funded by shares of such mutual funds, for which the Distributor has
been authorized to act as a principal underwriter for the sale of shares. The
Distributor shall maintain a sales organization suited to the sale of shares of
the Fund and shall use its best efforts to effect such sales in jurisdictions
as to which the Fund shall have expressly waived in writing its right to
designate another principal underwriter pursuant to subsection 1(b) hereof, and
shall effect and maintain appropriate qualification to do so in all those
jurisdictions in which it sells or offers shares for sale and in which
qualification is required.
5. Within the United States of America, all dealers to whom the Distributor
shall offer and sell shares must be duly licensed and qualified to sell shares
of the Fund. Shares sold to dealers shall be for resale by such dealers only
at the public offering price set forth in the current Prospectus. The
Distributor shall not, without the consent of the Fund, sell or offer for sale
any shares of a series or class issued by the Fund other than as principal
underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of the Distributor
to insure that such dealers are appropriately qualified to transact business in
the shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is
equal to the net asset value per share, as shall be determined by the Fund in
the manner and at the time or times set forth in and subject to the provisions
of the Prospectus of the Fund.
8. All orders for shares received by the Distributor shall, unless rejected by
the Distributor or the Fund, be accepted by the Distributor immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. The Distributor shall not hold orders subject to acceptance nor
otherwise delay their execution. The provisions of this Section shall not be
construed to restrict the right of the Fund to withhold shares from sale under
Section 18 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. The Distributor shall adopt and follow procedures as approved by the
officers of the Fund for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Securities and Exchange Commission or the National Association of Securities
Dealers, Inc. ("NASD"), as such requirements may from time to time exist.
11. The Distributor, as a principal underwriter under this Agreement for Class
A shares, shall receive (i) that part of the sales charge which is retained by
the Distributor after allowance of discounts to dealers, unless waived by the
Distributor for certain qualified fee-based programs, as set forth in the
Prospectus of the Fund, and (ii) amounts payable to the Distributor pursuant to
the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to
its Class A shares.
12. The Distributor, as principal underwriter under this agreement for Class B
shares shall receive (i) distribution fees as commissions for the sale of Class
B shares and contingent deferred sales charges ("CDSC") (as defined below), as
set forth in the Fund's Prospectus, and (ii) shareholder service fees at the
rate of 0.25% per annum of the average net asset value of Class B shares
pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act
relating to its Class B shares (the "Plan").
13. (a) In accordance with the Plan, and subject to the limit on
asset-based sales charges set forth in NASD Conduct Rule 2830 (and any
successor provision thereto), the Fund shall pay to the Distributor or, at the
Distributor's direction, to a third-party, monthly in arrears on or prior to
the 10/th/ business day of the following calendar month, the Distributor's
Allocable Portion (as defined below) of a fee (the "Distribution Fee") which
shall accrue daily in an amount equal to the product of (A) the daily
equivalent of 0.75% per annum multiplied by (B) the net asset value of the
Class B shares of the Fund outstanding on such day. The Fund agrees to withhold
from redemption proceeds of the Class B shares, the Distributor's Allocable
Portion of any CDSCs payable with respect to the Class B shares, as provided in
the Fund's Prospectus, and to pay the same over to the Distributor or, at the
Distributor's direction to a third-party, at the time the redemption proceeds
are payable to the holder of such shares redeemed. Payment of these CDSC
amounts to the Distributor is not contingent upon the adoption or continuation
of any Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable with respect to Class B shares shall mean
the portion of such Distribution Fees and CDSC allocated to the Distributor in
accordance with the Allocation Schedule attached hereto as Schedule A.
(c) The Distributor shall be considered to have completely earned the right to
the payment of its Allocable Portion of the Distribution Fees and the right to
payment of its Allocable Portion of the CDSCs with respect to each "Commission
Share" (as defined in the Allocation Schedule attached hereto as Schedule A)
upon the settlement date of such Commission Share taken into account in
determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Plan (in effect on the date
hereof) relating to Class B shares, together with the related definitions are
hereby incorporated into this Section 13 by reference with the same force and
effect as if set forth herein in their entirety.
14. The Fund agrees to use its best efforts to maintain its registration as a
diversified open-end management investment company under the 1940 Act.
15. The Fund agrees to use its best efforts to maintain an effective Prospectus
under the Securities Act of 1933, as amended, and warrants that such Prospectus
will contain all statements required by and will conform with the requirements
of such Securities Act of 1933 and the rules and regulations thereunder, and
that no part of any such Prospectus, at the time the Registration Statement of
which it is a part becomes effective, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein not misleading (excluding any
information provided by the Distributor in writing for inclusion in the
Prospectus). The Distributor agrees and warrants that it will not in the sale
of shares use any Prospectus, advertising or sales literature not approved by
the Fund or its officers nor make any untrue statement of a material fact nor
omit the stating of a material fact necessary in order to make the statements
made, in the light of the circumstances under which they are made, not
misleading. The Distributor agrees to indemnify and hold the Fund harmless
from any and all loss, expense, damage and liability resulting from a breach of
the agreements and warranties contained in this Section, or from the use of any
sales literature, information, statistics or other aid or device employed in
connection with the sale of shares.
16. The expense of each printing of each Prospectus and each revision thereof
or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, the
Distributor and any other principal underwriter of the shares of the Fund as
follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, the Distributor,
and any other principal underwriter(s) in accordance with the number of copies
each receives; and
(c) expenses incurred in connection with the foregoing, other than to meet the
requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by the Distributor, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s), in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
17. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series or class it
offers for sale under the securities laws of such states as the Distributor and
the Fund may approve. Any such qualification for any series or class may be
withheld, terminated or withdrawn by the Fund at any time in its discretion.
The expense of qualification and maintenance of qualification shall be borne by
the Fund, but the Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Fund or its
counsel in connection with such qualifications.
18. The Fund may withhold shares of any series or class from sale to any person
or persons or in any jurisdiction temporarily or permanently if, in the opinion
of its counsel, such offer or sale would be contrary to law or if the Trustees
or the President or any Vice President of the Fund determines that such offer
or sale is not in the best interest of the Fund. The Fund will give prompt
notice to the Distributor of any withholding and will indemnify it against any
loss suffered by the Distributor as a result of such withholding by reason of
nondelivery of shares of any series or class after a good faith confirmation by
the Distributor of sales thereof prior to receipt of notice of such
withholding.
19. (a) This Agreement may be terminated at any time, without payment of any
penalty, as to the Fund or any series on sixty (60) days' written notice by the
Distributor to the Fund.
(b) This Agreement may be terminated as to the Fund or any series or class by
either party upon five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series or class.
(c) This Agreement may be terminated as to the Fund or any series or class by
the Fund upon five (5) days' written notice to the Distributor provided either
of the following events has occurred:
(i) The NASD has expelled the Distributor or suspended its membership in that
organization; or
(ii) the qualification, registration, license or right of the Distributor to
sell shares of any series in a particular state has been suspended or canceled
by the State of California or any other state in which sales of the shares of
the Fund or such series during the most recent 12-month period exceeded 10% of
all shares of such series sold by the Distributor during such period.
(d) This Agreement may be terminated as to the Fund or any series or class at
any time on sixty (60) days' written notice to the Distributor without the
payment of any penalty, by vote of a majority of the Independent Trustees or by
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Fund or such series or class.
20. This Agreement shall not be assignable by either party hereto and in the
event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act. Notwithstanding
this Section, this Agreement, with respect to the Fund's Class B shares, has
been approved in accordance with Section 22 in anticipation of the
Distributor's transfer of its Allocable Portion (but not its obligations under
this Agreement) to a third-party pursuant to a "Purchase and Sale Agreement" in
order to raise funds to cover distribution expenditures, and such transfer will
not cause of a termination of this Agreement.
21. No provision of this Agreement shall protect or purport to protect the
Distributor against any liability to the Fund or holders of its shares for
which the Distributor would otherwise be liable by reason of willful
misfeasance, bad faith, or gross negligence.
22. This Agreement shall become effective on March 1, 2000. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until May 31, 2000, and shall continue in effect from year
to year thereafter but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Independent
Trustees of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either a majority of the entire
Board of Trustees of the Fund or a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund.
23. If the Fund shall at any time issue shares in more than one series or
class, this Agreement shall take effect with respect to such series or class of
the Fund which may be established in the future at such time as it has been
approved as to such series or class by vote of the Board of Trustees and the
Independent Trustees in accordance with Section 22. The Agreement as approved
with respect to any series or class shall specify the compensation payable to
the Distributor pursuant to Sections 11 and 12, as well as any provisions which
may differ from those herein with respect to such series, subject to approval
in writing by the Distributor.
This Agreement may be approved, amended, continued or renewed with respect to
a series or class as provided herein notwithstanding such approval, amendment,
continuance or renewal has not been effected with respect to any one or more
other series or class of the Fund.
This Agreement shall be construed under and shall be governed by the laws of
the State of California, and the parties hereto agree that proper venue of any
action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of December 14, 1999.
AMERICAN FUNDS DISTRIBUTORS, INC. LIMITED TERM TAX-EXEMPT BOND
FUND OF AMERICA
By: /s/ Kevin G. Clifford By: /s/ Paul G. Haaga, Jr.
Kevin G. Clifford Paul G. Haaga, Jr.
President Chairman of the Board
By: /s/ Michael J. Downer By: /s/ Julie F. Williams
Michael J. Downer Julie F. Williams
Secretary Secretary

SCHEDULE A
TO THE
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class B shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class B shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class B shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall have
the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule
is a part. As used herein the following terms shall have the meanings
indicated:
"Commission Share" means each B share issued under circumstances which would
normally give rise to an obligation of the holder of such share to pay a CDSC
upon redemption of such share (including, without limitation, any B share
issued in connection with a permitted free exchange), and any such share shall
continue to be a Commission Share of the applicable Fund prior to the
redemption (including a redemption in connection with a permitted free
exchange) or conversion of such share, even though the obligation to pay the
CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date
with reference to which the amount of the CDSC payable on redemption thereof,
if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund, other than
a Commission Share (including, without limitation, any B share issued in
connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund
issued shares.
"Net Asset Value" means the net asset value determined as set forth in the
Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share
sold by one of the selling agents listed on [Exhibit I]. If, subsequent to the
Successor Distributor becoming exclusive distributor of the Class B shares, the
Distributor reasonably determines that the transfer agent is able to track all
Commission Shares and Free Shares sold by any of the selling agents listed on
Exhibit I in the same manner as Commission Shares and Free Shares are currently
tracked in respect of selling agents not listed on Exhibit I, then Exhibit I
shall be amended to delete such selling agent from Exhibit I so that Commission
Shares and Free Shares sold by such selling agent will no longer be treated as
Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that are outstanding from time to time, shall be attributed to
the Distributor and each Successor Distributor in accordance with the following
rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission
Shares") attributed to the Distributor shall be those Non-Omnibus Commission
Shares the date of Original Issuance of which occurred on or after the
Inception Date of the applicable Fund and on or prior to the date the
Distributor ceased to be exclusive distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor
shall be those Non-Omnibus Commission Shares the Date of Original Issuance of
which occurs after the date such Successor Distributor became the exclusive
distributor of Class B shares of the Fund and on or prior to the date such
Successor Distributor ceased to be the exclusive distributor of Class B shares
of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the
investment of proceeds of the redemption of a Non-Omnibus Commission Share of
another Fund (the "Redeeming Fund") in connection with a permitted free
exchange, is deemed to have a Date of Original Issuance identical to the Date
of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund,
and any such Commission Share will be attributed to the Distributor or
Successor Distributor based upon such Date of Original Issuance in accordance
with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Commission Shares are allocated to each thereof;
provided, that if the Distributor reasonably determines that the transfer agent
is able to produce monthly reports which track the Date of Original Issuance
for the Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus
Shares shall be allocated among the Distributor and any Successor Distributor
depending on whether the related redeemed Omnibus Share is attributable to the
Distributor or a Successor Distributor, as the case may be, in accordance with
Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV
hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class B shares of a Fund during any calendar month allocable to the
Distributor or a Successor Distributor is determined by multiplying the total
of such Distribution Fee by the following fraction:
(A + C)/2
- ---------
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class B shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class B shares of a Fund at the end of
such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able
to produce automated monthly reports that allocate the average Net Asset Value
of the Commission Shares (or all Class B shares if available) of a Fund among
the Distributor and any Successor Distributor in a manner consistent with the
methodology detailed in Part I and Part III(1) above, the portion of the
Distribution Fee accrued in respect of all such Class B shares of a Fund during
a particular calendar month will be allocated to the Distributor or a Successor
Distributor by multiplying the total of such Distribution Fee by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund for such
calendar month attributed to the Distributor or a Successor Distributor, as the
case may be
B= Total average Net Asset Value of all such Class B shares of a Fund for such
calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class B shares relating to a Fund shall be adjusted
by agreement among the relevant parties; provided, however, if the Distributor,
the Successor Distributor and the Fund cannot agree within thirty (30) days
after the date of any such change in applicable laws or in any distributor's
contract, distribution plan, prospectus or the Conduct Rules, they shall submit
the question to arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association and the decision reached by the
arbitrator shall be final and binding on each of them.

PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 South Flower Street
Los Angeles, California 90071
(213) 683-6000
March 7, 2000
Limited Term Tax-Exempt Bond Fund of America
333 South Hope Street
Los Angeles, CA 90071
Ladies and Gentlemen:
We have acted as counsel to the Limited Term Tax-Exempt Bond Fund of America,
a Massachusetts business trust (the "Fund") in connection with Post-Effective
Amendment No. 10 to the Fund's Registration Statement on Form N-1A
(Registration No. 33-66214) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Registration Statement"),
relating to the issuance by the Fund of an indefinite number of Class B shares
of beneficial interest of the Fund (the "Shares").
In our capacity as counsel for the Fund, we have examined the Agreement and
Declaration of Trust of the Fund dated July 8, 1993 as amended (the
"Declaration of Trust"), the bylaws of the Fund, as amended, and originals or
copies of actions of the Board of Trustees of the Fund, as furnished to us by
the Fund, certificates of public officials, and such other documents, records
and certificates as we have deemed necessary for the purposes of this opinion.
Our opinion below is limited to the federal law of the United States of
America and the business trust law of the Commonwealth of Massachusetts. We
are not licensed to practice law in the Commonwealth of Massachusetts, and we
have based our opinion solely on our review of Chapter 182 of the Massachusetts
General Laws and the case law interpreting such Chapter as reported in the
Annotated Laws of Massachusetts (Aspen Law & Business, supp. 1999). We have
not undertaken a review of other Massachusetts law or of any administrative or
court decisions in connection with rendering this opinion. We disclaim any
opinion as to any law other than as described above, and we disclaim any
opinion as to any statute, rule, regulation, ordinance, order or other
promulgation of any regional or local governmental authority.
However, we also note that Article V, Section 5.1 of the Declaration of Trust
provides that no shareholder of the Fund as such shall be subject to any
personal liability whatsoever to any person in connection with the affairs of
the Fund, and that all persons shall look solely to the property of the Fund
for satisfaction of claims of any nature arising directly or indirectly in
connection with the affairs of the Fund. Further, the Fund is required to
indemnify and hold each shareholder harmless from and against all claims and
liabilities to which the shareholder may become subject by reason of the
shareholder's being or having been a shareholder. This indemnification
provision requires the Fund to reimburse the shareholder for all legal and
other expenses reasonably incurred in connection with any such claim or
liability. In addition, Article V, Section 5.4 of the Declaration of Trust
provides that every written obligation, contract, instrument, or other
undertaking of the Fund may recite that the obligations of the Fund thereunder
are not binding upon any shareholder individually, but bind only the Fund.
Based on the foregoing and our examination of such questions of law as we
have deemed necessary and appropriate for the purpose of this opinion, we are
of the opinion that the Shares of the Fund are duly authorized and, when
purchased and paid for as described in the Registration Statement, will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion of counsel as an exhibit to
the Registration Statement.
Very truly yours,
s/ PAUL, HASTINGS, JANOFSKY & WALKER LLP

CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A 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 Registration Statement. We also consent to the references to us under
the headings "Financial Highlights", "Independent Accountants", and
"Prospectuses and Reports to Shareholders" in such Registration Statement.
PricewaterhouseCoopers LLP
Los Angeles, California
March 8, 2000

PLAN OF DISTRIBUTION
OF
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
RELATING TO ITS
CLASS B SHARES
WHEREAS, Limited Term Tax-Exempt Bond Fund of America (the "Fund") is a
Massachusetts business trust that offers two classes of shares of beneficial
interest, designated as Class A shares and Class B shares;
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity
designated by the Fund (AFD and any such successor collectively are referred to
as "Distributor") will serve as distributor of the shares of beneficial
interest of the Fund, and the Fund and Distributor are parties to a principal
underwriting agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize
the Fund to bear expenses of distribution of its Class B shares; and
WHEREAS, the Board of Trustees of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as
set forth below an aggregate amount not to exceed 1.00% per annum of the
average net assets of the Fund's Class B shares.
A. SERVICE FEES. The Fund shall pay to the Distributor monthly in arrears a
shareholder servicing fee (the "Shareholder Servicing Fee") at the rate of
0.25% per annum on the Fund's Class B shares outstanding for less than one
year. The Fund shall also pay to the Distributor quarterly a Shareholder
Servicing Fee at the rate of 0.25% per annum on Class B shares that are
outstanding for one year or more. The Shareholder Servicing Fee is designed to
compensate Distributor for paying Service Fees to broker-dealers with whom
Distributor has an agreement.
B. DISTRIBUTION FEES. The Fund shall pay to the Distributor monthly in
arrears its "Allocable Portion" (as described in Schedule A to this Plan
"Allocation Schedule", and until such time as the Fund designates a successor
to AFD as distributor, the Allocable Portion shall equal 100%) of a fee (the
"Distribution Fee"), which shall accrue each day in an amount equal to the
product of (A) the daily equivalent of 0.75% per annum multiplied by (B) the
net asset value of the Fund's Class B shares outstanding on each day.
The Distributor may sell and assign its right to its Allocable Portion (but
not its obligations to the Fund under the Agreement) of the Distribution Fee to
a third party, and such transfer shall be free and clear of offsets or claims
the Fund may have against the Distributor, it being understood that the Fund is
not releasing the Distributor from any of its obligations to the Fund under the
Agreement or any of the assets the Distributor continues to own. The Fund may
agree, at the request of the Distributor, to pay the Allocable Portion of the
Distribution Fee directly to the third party transferee.
Any Agreement between the Fund and the Distributor relating to the Fund's
Class B shares shall provide that:
(i) the Distributor will be deemed to have performed all services required to
be performed in order to be entitled to receive its Allocable Portion of the
Distribution Fee payable in respect of each "Commission Share" (as defined in
the Allocation Schedule) upon the settlement date of each sale of such
Commission Share taken into account in determining such Distributor's Allocable
Portion of the Distribution Fee;
(ii) notwithstanding anything to the contrary in this Plan or the Agreement,
the Fund's obligation to pay the Distributor its Allocable Portion of the
Distribution Fee shall not be terminated or modified (including without
limitation, by change in the rules applicable to the conversion of the Class B
shares into shares of another class) for any reason (including a termination of
this Plan or the Agreement between such Distributor and the Fund) except:
(a) to the extent required by a change in the Investment Company Act of 1940
(the "1940 Act"), the rules and regulations under the 1940 Act, the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD"), or
any judicial decisions or interpretive pronouncements by the Securities and
Exchange Commission, which is either binding upon the Distributor or generally
complied with by similarly situated distributors of mutual fund shares, in each
case enacted, promulgated, or made after March 15, 2000,
(b) on a basis which does not alter the Distributor's Allocable Portion of
the Distribution Fee computed with reference to Commission Shares of the Fund,
the Date of Original Issuance (as defined in the Allocation Schedule) of which
occurs on or prior to the adoption of such termination or modification and with
respect to Free Shares (as defined in the Allocation Schedule) which would be
attributed to the Distributor under the Allocation Schedule with reference to
such Commission Shares, or
(c) in connection with a Complete Termination (as defined below) of this Plan
by the Fund;
(iii) the Fund will not take any action to waive or change any contingent
deferred sales charge ("CDSC") in respect to the Class B shares, the Date of
Original Issuance of which occurs on or prior to the taking of such action
except as provided in the Fund's prospectus or statement of additional
information on the date such Commission Share was issued, without the consent
of the Distributor or its assigns;
(iv) notwithstanding anything to the contrary in this Plan or the Agreement,
none of the termination of the Distributor's role as principal underwriter of
the Class B shares of the Fund, the termination of the Agreement or the
termination of this Plan will terminate the Distributor's right to its
Allocable Portion of the CDSCs in respect of Class B shares of the Fund;
(v) except as provided in (ii) above and notwithstanding anything to the
contrary in this Plan or the Agreement, the Fund's obligation to pay the
Distributor's Allocable Portion of the Distribution Fees and CDSCs payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever, at law or equity, including, without limitation, any of the
foregoing based on the insolvency or bankruptcy of the Distributor; and
(vi) until the Distributor has been paid its Allocable Portion of the
Distribution Fees in respect of the Class B shares of the Fund, the Fund will
not adopt a plan of liquidation in respect of the Class B shares without the
consent of the Distributor and its assigns. For purposes of this Plan, the
term Allocable Portion of the Distribution Fees or CDSCs payable in respect of
the Class B shares as applied to any Distributor shall mean the portion of such
Distribution Fees or CDSCs payable in respect of such Class B shares of the
Fund allocated to the Distributor in accordance with the Allocation Schedule as
it relates to the Class B shares of the Fund, and until such time as the Fund
designates a successor to AFD as distributor, the Allocable Portion shall equal
100% of the Distribution Fees and CDSCs. For purposes of this Plan, the term
"Complete Termination" in respect of this Plan as it relates to the Class B
shares means a termination of this Plan involving the complete cessation of the
payment of Distribution Fees in respect of all Class B shares, the termination
of the distribution plans and principal underwriting agreements, and the
complete cessation of the payment of any asset based sales charge (within the
meaning of the Conduct Rules of the NASD) or similar fees in respect of the
Fund and any successor mutual fund or any mutual fund acquiring a substantial
portion of the assets of the Fund (the Fund and such other mutual funds
hereinafter referred to as the "Affected Funds") and in respect of the Class B
shares and every future class of shares (other than future classes of shares
established more than eight years after the date of such termination) which has
substantially similar characteristics to the Class B shares (all such classes
of shares the "Affected Classes of Shares") of such Affected Funds taking into
account the manner of payment and amount of asset based sales charge, CDSC or
other similar charges borne directly or indirectly by the holders of such
shares; provided that
(a) the Board of Trustees of such Affected Funds, including the Independent
Trustees (as defined below) of the Affected Funds, shall have determined that
such termination is in the best interest of such Affected Funds and the
shareholders of such Affected Funds, and
(b) such termination does not alter the CDSC as in effect at the time of such
termination applicable to Commission Shares of the Fund, the Date of Original
Issuance of which occurs on or prior to such termination.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been
approved, together with any related agreement, by votes of the majority of both
(i) the Board of Trustees of the Fund and (ii) those Trustees of the Fund who
are not "interested persons" of the Fund (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of Trustees shall be
provided by any person authorized to direct the disposition of monies paid or
payable by the Fund pursuant to this Plan or any related agreement, and the
Board shall review, a written report of the amounts expended pursuant to this
Plan and the purposes for which such expenditures were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class B
shares at any time by vote of a majority of the Independent Trustees, or by
vote of a majority of the outstanding Class B shares of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until May 31, 2000. It may thereafter be continued from year to year
in the manner provided for in paragraph 2 hereof.
Notwithstanding the foregoing or paragraph 6, below, any amendment or
termination of this Plan shall not affect the rights of the Distributor to
receive its Allocable Portion of the Distribution Fee, unless the termination
constitutes a Complete Termination of this Plan as described in paragraph 1
above.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in
writing, and shall provide:
(c) that such agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent Trustees or
by a vote of a majority of the outstanding Class B shares of the Fund, on not
more than sixty (60) days' written notice to any other party to the agreement;
and
b. that such agreement shall terminate automatically in the event of its
assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum
amount of fee or other distribution expenses provided for in paragraph 1 hereof
with respect to the Class B shares of the Fund unless such amendment is
approved by vote of a majority of the outstanding voting securities of the
Class B shares of the Fund and as provided in paragraph 2 hereof, and no other
material amendment to this Plan shall be made unless approved in the manner
provided for in paragraph 2 hereof.
7. NOMINATION OF TRUSTEES. While this Plan is in effect, the selection and
nomination of Independent Trustees shall be committed to the discretion of the
Independent Trustees of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares
in more than one series, this Plan may be adopted, amended, continued or
renewed with respect to a series as provided herein, notwithstanding that such
adoption, amendment, continuance or renewal has not been effected with respect
to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any
related agreement and all reports made pursuant to paragraph 3 hereof for not
less than six (6) years from the date of this Plan, or such agreement or
reports, as the case may be, the first two (2) years of which such records
shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of December 14, 1999.
LIMITED TERM TAX-EXEMPT BOND
FUND OF AMERICA
By /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr., Chairman
By /s/ Julie F. Williams
Julie F. Williams, Secretary

SCHEDULE A
TO THE
PLAN OF DISTRIBUTION OF
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
RELATING TO ITS CLASS B SHARES
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class B shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class B shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class B shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall
have the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule
is a part. As used herein the following terms shall have the meanings
indicated:
"Commission Share" means each B share issued under circumstances which would
normally give rise to an obligation of the holder of such share to pay a CDSC
upon redemption of such share (including, without limitation, any B share
issued in connection with a permitted free exchange), and any such share shall
continue to be a Commission Share of the applicable Fund prior to the
redemption (including a redemption in connection with a permitted free
exchange) or conversion of such share, even though the obligation to pay the
CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date
with reference to which the amount of the CDSC payable on redemption thereof,
if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund, other than
a Commission Share (including, without limitation, any B share issued in
connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund
issued shares.
"Net Asset Value" means the net asset value determined as set forth in the
Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share
sold by one of the selling agents listed on [Exhibit I]. If, subsequent to the
Successor Distributor becoming exclusive distributor of the Class B shares, the
Distributor reasonably determines that the transfer agent is able to track all
Commission Shares and Free Shares sold by any of the selling agents listed on
Exhibit I in the same manner as Commission Shares and Free Shares are currently
tracked in respect of selling agents not listed on Exhibit I, then Exhibit I
shall be amended to delete such selling agent from Exhibit I so that Commission
Shares and Free Shares sold by such selling agent will no longer be treated as
Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that are outstanding from time to time, shall be attributed to
the Distributor and each Successor Distributor in accordance with the following
rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission
Shares") attributed to the Distributor shall be those Non-Omnibus Commission
Shares the date of Original Issuance of which occurred on or after the
Inception Date of the applicable Fund and on or prior to the date the
Distributor ceased to be exclusive distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor
shall be those Non-Omnibus Commission Shares the Date of Original Issuance of
which occurs after the date such Successor Distributor became the exclusive
distributor of Class B shares of the Fund and on or prior to the date such
Successor Distributor ceased to be the exclusive distributor of Class B shares
of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the
investment of proceeds of the redemption of a Non-Omnibus Commission Share of
another Fund (the "Redeeming Fund") in connection with a permitted free
exchange, is deemed to have a Date of Original Issuance identical to the Date
of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund,
and any such Commission Share will be attributed to the Distributor or
Successor Distributor based upon such Date of Original Issuance in accordance
with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Commission Shares are allocated to each thereof;
provided, that if the Distributor reasonably determines that the transfer agent
is able to produce monthly reports which track the Date of Original Issuance
for the Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus
Shares shall be allocated among the Distributor and any Successor Distributor
depending on whether the related redeemed Omnibus Share is attributable to the
Distributor or a Successor Distributor, as the case may be, in accordance with
Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV
hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class B shares of a Fund during any calendar month allocable to the Distributor
or a Successor Distributor is determined by multiplying the total of such
Distribution Fee by the following fraction:
(A + C)/2
- ----------
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class B shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class B shares of a Fund at the end of
such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able
to produce automated monthly reports that allocate the average Net Asset Value
of the Commission Shares (or all Class B shares if available) of a Fund among
the Distributor and any Successor Distributor in a manner consistent with the
methodology detailed in Part I and Part III(1) above, the portion of the
Distribution Fee accrued in respect of all such Class B shares of a Fund during
a particular calendar month will be allocated to the Distributor or a Successor
Distributor by multiplying the total of such Distribution Fee by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund for such
calendar month attributed to the Distributor or a Successor Distributor, as the
case may be
B= Total average Net Asset Value of all such Class B shares of a Fund for such
calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class B shares relating to a Fund shall be adjusted
by agreement among the relevant parties; provided, however, if the Distributor,
the Successor Distributor and the Fund cannot agree within thirty (30) days
after the date of any such change in applicable laws or in any distributor's
contract, distribution plan, prospectus or the Conduct Rules, they shall submit
the question to arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association and the decision reached by the
arbitrator shall be final and binding on each of them.

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
MULTIPLE CLASS PLAN
WHEREAS, Limited Term Tax-Exempt Bond Fund of America (the "Fund"), a
Massachusetts business trust, is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
that offers shares of beneficial interest;
WHEREAS, American Funds Distributors, Inc. ("the Distributor") serves as the
principal underwriter for the Fund;
WHEREAS, the Fund has adopted Plans of Distribution (each a "12b-1 Plan")
under which the Fund may bear expenses of distribution of its shares, including
payment and/or reimbursement to the Distributor for certain of its expenses
incurred in connection with the Fund;
WHEREAS, the Fund is authorized to issue two classes of shares of beneficial
interest, designated as Class A shares and Class B shares;
WHEREAS, Rule 18f-3 under the 1940 Act permits open-end management investment
companies to issue multiple classes of voting stock representing interests in
the same portfolio if, among other things, an investment company adopts a
written Multiple Class Plan (the "Plan") setting forth the separate
arrangement and expense allocation of each class and any related conversion
features or exchange privileges; and
WHEREAS, the Board of Trustees of the Fund has determined, that it is in the
best interest of each class of shares of the Fund individually, and the Fund as
a whole, to adopt this Plan;
NOW THEREFORE, the Fund adopts this Plan as follows:
1. Each class of shares will represent interests in the same portfolio of
investments of the Fund, and be identical in all respects to each other class,
except as set forth below. The differences among the various classes of shares
of the Fund will relate to: (i) distribution, service and other charges and
expenses as provided for in paragraph 3 of this Plan; (ii) the exclusive right
of each class of shares to vote on matters submitted to shareholders that
relate solely to that class or the separate voting right of each class on
matters for which the interests of one class differ from the interests of
another class; (iii) such differences relating to eligible investors as may be
set forth in the Fund's prospectus and statement of additional information
("SAI"), as the same may be amended or supplemented from time to time; (iv) the
designation of each class of shares; (v) conversion features; and (vi) exchange
privileges.
2. (a) Certain expenses may be attributable to the Fund, but not a particular
class of shares thereof. All such expenses will be borne by each class on the
basis of the relative aggregate net assets of the classes. Notwithstanding the
foregoing, the Distributor, the investment adviser or other provider of
services to the Fund may waive or reimburse the expenses of a specific class or
classes to the extent permitted by Rule 18f-3 under the 1940 Act and any other
applicable law.
(b) A class of shares may be permitted to bear expenses that are directly
attributable to that class, including: (i) any distribution fees associated
with any rule 12b-1 Plan for a particular class and any other costs relating to
implementing or amending such rule 12b-1 Plan; (ii) any service fees associated
with any rule 12b-1 Plan attributable to such class; and (iii) any shareholder
servicing fees attributable to such class.
(c) Any additional incremental expenses not specifically identified above
that are subsequently identified and determined to be applied properly to one
class of shares of the Fund shall be so applied upon approval by votes of the
majority of both (i) the Board of Trustees of the Fund; and (ii) those Trustees
of the Fund who are not "interested persons" of the Fund (as defined in the
1940 Act) ("Independent Trustees").
3. Each class of the Fund shall differ in the amount of, and the manner in
which distribution costs are borne by shareholders and in the costs associated
with transfer agency services as follows:
(a) Class A shares
(i) Class A shares are sold at net asset value plus a front-end sales
charge, at net asset value without a front-end sales charge but subject to a
contingent deferred sales charge ("CDSC"), and at net asset value without any
sales charge, as set forth in the Fund's prospectus and SAI.
(ii) Class A shares are subject to an annual distribution expense under the
Fund's Class A Plan of Distribution of up to 0.30% of average net assets, as
set forth in the Fund's prospectus, SAI, and Plan of Distribution. This
expense consists of a service fee of up to 0.25% plus certain other
distribution costs.
(b) Class B shares
(i) Class B shares shall be sold at net asset value without a front-end
sales charge, but are subject to a CDSC and maximum purchase limits as set
forth in the Fund's prospectus and SAI.
(ii) Class B shares shall be subject to an annual distribution expense under
the Fund's Class B Plan of Distribution of up to 1.00% of average net assets,
as set forth in the Fund's prospectus, SAI, and Class B Plan of Distribution.
This expense shall consist of a distribution fee of approximately 0.75% and a
service fee of approximately 0.25% of such net assets.
(iii) Class B shares will automatically convert to Class A shares of the
Fund approximately eight years after purchase, subject to the limitations
described in the Fund's prospectus and SAI. All conversions shall be effected
on the basis of the relative net asset values of the two classes of shares
without the imposition of any sales load or other charge.
(iv) Class B shares shall be subject to a fee (included within the transfer
agency expense) for additional costs associated with tracking the age of each
Class B share.
All other rights and privileges of Fund shareholders are identical regardless
of which class of shares are held.
4. This Plan shall not take effect until it has been approved by votes of the
majority of both (i) the Board of Trustees of the Fund; and (ii) the
Independent Trustees.
5. This Plan shall become effective with respect to any class of shares of the
Fund, other than Class A or Class B shares, upon the commencement of the
initial public offering thereof (provided that the Plan has previously been
approved with respect to such additional class by votes of the majority of both
(i) the Board of Trustees of the Fund; and (ii) Independent Trustees prior to
the offering of such additional class of shares), and shall continue in effect
with respect to such additional class or classes until terminated in accordance
with paragraph 7. An addendum setting forth such specific and different terms
of such additional class or classes shall be attached to and made part of this
Plan.
6. No material amendment to the Plan shall be effective unless it is approved
by the votes of the majority of both (i) the Board of Trustees of the Fund; and
(ii) Independent Trustees.
7. This Plan may be terminated at any time with respect to the Fund as a whole
or any class of shares individually, by the votes of the majority of both (i)
the Board of Trustees of the Fund; and (ii) Independent Trustees. This Plan may
remain in effect with respect to a particular class or classes of shares of the
Fund even if it has been terminated in accordance with this paragraph with
respect to any other class of shares.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of December 14, 1999.
LIMITED TERM TAX-EXEMPT BOND
FUND OF AMERICA
By /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr., Chairman
By /s/ Julie F. Williams
Julie F. Williams, Secretary

CODE OF CONDUCT

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:
Wally Stern -- Chairman
Donnalisa Barnum
David Beevers
Jim Brown
Larry P. Clemmensen
Roberta Conroy
Bill Hurt -- (emeritus)
Sonny Kamm
Mike Kerr
Victor Kohn
John McLaughlin
Don O'Neal
Tom Rowland
John Smet
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).

CGC GIFTS POLICY -- 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.

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 (IPO). 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 Committee consider granting an exception under special
circumstances.

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 policy, 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, portfolio control associates,
and investment administration personnel (see below).

PRE-CLEARANCE OF SECURITIES TRANSACTIONS

Before buying or selling securities, covered persons must check with the CGC
Legal Group based in LAO. (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: open-end
investment companies (mutual funds); 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.. NOTE THAT INVESTMENTS IN PRIVATE PLACEMENTS AND VENTURE CAPITAL
PARTNERSHIPS ARE ALSO SUBJECT TO PRECLEARANCE AND REPORTING. Reporting forms
will be supplied at the appropriate times AND MUST BE SUBMITTED BY THE DATE
INDICATED ON THE FORM

In addition, the following transactions must be reported but need not have been
pre-cleared: gifts or bequests (either receiving or giving) of securities MUST
be reported (sales of securities received as a gift MUST be both precleared and
reported); 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).

PERSONAL INVESTING SHOULD BE VIEWED AS A PRIVILEGE, NOT A RIGHT. AS SUCH,
LIMITATIONS MAY BE PLACED ON THE NUMBER OF PRE-CLEARANCES AND/OR TRANSACTIONS
AS DEEMED APPROPRIATE BY THE PERSONAL INVESTING COMMITTEE.

BROKERAGE ACCOUNTS

Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. U.S. brokers are
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. ALL DOCUMENTS RECEIVED 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 DISCLOSURE OF PERSONAL SECURITIES HOLDINGS

Covered persons will be required to disclose all personal securities holdings
upon commencement of employment (or upon becoming a covered person) and
thereafter on an annual basis. Reporting forms will be supplied for this
purpose.

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 -- Ownership of securities
that are held professionally as well as personally will be reviewed on a
periodic basis by the Legal Group and may also be reviewed by the applicable
Management Committee and/or Investment Committee or Subcommittee. In addition,
to the extent that disclosure has not already been made by the Legal Group to
the applicable Management Committee and/or Investment Committee or
Subcommittee, any associate who is in a position to recommend the purchase or
sale of securities by the fund or client accounts that s/he personally owns
should FIRST disclose such ownership either in writing (in a company write-up)
or orally (when discussing the company at investment meetings) prior to making
a recommendation.

BLACKOUT PERIOD <UNDEF> Investment personnel 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.

SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company or CGC
Management Committee BEFORE SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY
TRADED COMPANIES. This can be arranged by calling the LAO Legal Group.

PERSONAL INVESTING COMMITTEE
Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Committee by calling
the LAO Legal Group.

/1/Note that this disclosure requirement is consistent with both AIMR standards
as well as the ICI Advisory Group Guidelines.

FORM OF FUND CODE OF ETHICS
(as adopted by the Fund's Board of Directors/Trustees)

1. No Director/Trustee shall use his or her position or the knowledge gained
therefrom as to create a conflict between his or her personal interest and that
of the Fund. No Director/Trustee shall seek or accept gifts, favors,
preferential treatment, or valuable consideration of any kind offered because
of his or her association with the Fund.

2. Each non-affiliated Director/Trustee shall report to the Secretary of the
Fund not later than ten (10) days after the end of each calendar quarter any
transaction in securities which such Director/Trustee has effected during the
quarter which the Director/Trustee then knows to have been effected within
fifteen (15) days before or after a date on which the Fund purchased or sold,
or considered the purchase or sale of, the same security.

3. For purposes of this Code of Ethics, transactions involving United States
Government securities as defined in the Investment Company Act of 1940,
bankers' acceptances, bank certificates of deposit, commercial paper, or shares
of registered open-end investment companies are exempt from reporting as are
non-volitional transactions such as dividend reimbursement programs and
transactions over which the Director/Trustee exercises no control.