497 1 filing.txt THE CASH MANAGEMENT TRUST OF AMERICA(R) THE U.S. TREASURY MONEY FUND OF AMERICA(SM) THE TAX-EXEMPT MONEY FUND OF AMERICA(SM) SUPPLEMENT TO PROSPECTUS DATED July 15, 2002 Beginning July 15, 2002, Class R-5 shares of the American Funds listed above will be available to certain clients of the Personal Investment Management Group of Capital Guardian Trust Company. Accordingly, the prospectus for these funds is supplemented as follows: FEES AND EXPENSES OF THE FUND - pages 6-7 Shareholder Fees Table (paid directly from your investment) Class R-5 Maximum sales charge imposed on purchases (as a percentage of offering price) none Maximum sales charge imposed on reinvested dividends none Maximum deferred sales charge none Redemption or exchange fees none Annual Fund Operating Expenses Table (deducted from fund assets) Class R-5/1/ CASH MANAGEMENT FUND Management Fees 0.28% Distribution and/or Service (12b-1) Fees none Other Expenses 0.17% Total Annual Fund Operating Expenses 0.45% U.S. TREASURY MONEY FUND Management Fees 0.30% Distribution and/or Service (12b-1) Fees none Other Expenses 0.18% Total Annual Fund Operating Expenses 0.48% TAX-EXEMPT MONEY FUND Management Fees 0.38% Distribution and/or Service (12b-1) Fees none Other Expenses 0.15% Total Annual Fund Operating Expenses 0.53% /1/ Based on estimated amounts for the current fiscal year. Example The examples below are intended to help you compare the cost of investing in the funds with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in each fund for the time periods indicated, that your investment has a 5% return each year, that all dividend and capital gain distributions are reinvested, and that each fund's operating expenses remain the same as shown on the previous page. Although your actual costs may be higher or lower, based on these assumptions, your cumulative estimated expenses would be: One Year Three Years Five Years Ten Years CASH MANAGEMENT TRUST Class R-5 $46 $144 $252 $567 U.S. TREASURY MONEY FUND Class R-5 $49 $154 $269 $604 TAX-EXEMPT MONEY FUND Class R-5 $54 $170 $296 $665 PURCHASE AND EXCHANGE OF SHARES - pages 13-14 Class R-5 Shares Class R-5 shares of the funds are only available to certain clients of the Personal Investment Management Group of Capital Guardian Trust Company. Please contact Capital Guardian Trust Company if you wish to purchase Class R-5 shares of the funds. SALES CHARGES - page 15 Class R-5 Shares Class R-5 shares are sold with no initial or deferred sales charges. In addition, no dealer compensation is paid on sales of Class R-5 shares. THE CASH MANAGEMENT TRUST OF AMERICA THE U.S. TREASURY MONEY FUND OF AMERICA THE TAX-EXEMPT MONEY FUND OF AMERICA Part B Statement of Additional Information February 15, 2002 (as amended July 15, 2002) This document is not a prospectus but should be read in conjunction with the current prospectus of The Cash Management Trust of America ("CMTA"), The U.S. Treasury Money Fund of America ("CTRS") and The Tax-Exempt Money Fund of America ("CTEX") dated February 15, 2002. The prospectus may be obtained from your investment dealer or financial planner or by writing to the funds at the following address: The Cash Management Trust of America The U.S. Treasury Money Fund of America The Tax-Exempt Money Fund of America Attention: Secretary 333 South Hope Street Los Angeles, California 90071 (213) 486-9200 Shareholders who purchase shares at net asset value through eligible retirement plans should note that not all of the services or features described below may be available to them. They should contact their employer for details. TABLE OF CONTENTS
Item Page No. ---- -------- Certain Investment Limitations and Guidelines . . . . . . . . . . . 2 Description of Certain Securities and Investment Techniques . . . . 3 Fundamental Policies and Investment Restrictions. . . . . . . . . . 8 Management of the Funds . . . . . . . . . . . . . . . . . . . . . . 14 Taxes and Distributions . . . . . . . . . . . . . . . . . . . . . . 27 Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 30 Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 36 Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 40 Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Shareholder Account Services and Privileges . . . . . . . . . . . . 43 Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 46 General Information . . . . . . . . . . . . . . . . . . . . . . . . 46 Class A Share Investment Results and Related Statistics . . . . . . 48 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Financial Statements
Money Market Funds - Page 1 CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES The following limitations and guidelines are considered at the time of purchase, under normal circumstances, and are based on a percentage of the funds' net assets unless otherwise noted. This summary is not intended to reflect all of the funds' investment limitations. CASH MANAGEMENT TRUST OF AMERICA DEBT SECURITIES -The fund will invest substantially all of its assets in securities rated in the highest short-term rating categories (i.e., Prime-1, A-1). MATURITY -The fund's dollar-weighted average portfolio maturity will be approximately 35 days or less. U.S. TREASURY MONEY FUND OF AMERICA U.S. TREASURY SECURITIES -The fund will invest substantially all of its assets in U.S. Treasury securities. MATURITY -The fund's dollar-weighted average portfolio maturity will be approximately 90 days or less. TAX-EXEMPT MONEY FUND OF AMERICA TAX-EXEMPT SECURITIES -The fund will invest at least 80% of its assets in securities the interest on which is exempt from federal income tax. DEBT SECURITIES -The fund may invest up to 20% of its assets in securities that are subject to alternative minimum taxes. -The fund will invest substantially all of its assets in securities rated in the highest short-term rating categories (i.e., Prime-1, A-1). MATURITY -The fund's dollar-weighted average portfolio maturity will be approximately 60 days or less. The funds may experience difficulty liquidating certain portfolio securities during significant market declines or periods of heavy redemptions. Money Market Funds - Page 2 DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES The descriptions below are intended to supplement the material in the prospectus under "Investment Objectives, Strategies and Risks." INVESTMENT POLICIES - CMTA and CTEX may invest in securities that are rated in the two highest rating categories for debt obligations by at least two nationally recognized statistical rating organizations (or one rating organization if the instrument was rated by only one such organization) or, if unrated, are of comparable quality as determined in accordance with procedures established by the Board of Trustees ("eligible securities"). The nationally recognized statistical rating organizations currently rating instruments of the type each fund may purchase are Moody's Investors Service, Inc., Standard & Poor's Corporation, Fitch Investors Service, Inc., and IBCA Limited and IBCA Inc. Subsequent to its purchase, an issue of securities may cease to be rated or its rating may be reduced below the minimum rating required for its purchase. Neither event requires the elimination of such securities from a fund's portfolio, but Capital Research and Management Company (the "Investment Adviser") will consider such an event in its determination of whether the fund should continue to hold the securities. Investments in eligible securities not rated in the highest category by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization), and unrated eligible securities not determined by the Board of Trustees to be comparable quality to those rated in the highest category, will be limited to 5% of a fund's total assets, with the investment in any one such issuer being limited to no more than the greater of 1% of a fund's total assets or $1,000,000. It is the current policy of CMTA and CTEX to invest only in instruments rated in the highest short-term rating category by Moody's Investors Service ("Moody's"), Inc. and Standard & Poor's Corporation ("S&P") or in instruments that do not have short-term ratings by Moody's or S&P but determined to be of comparable quality in accordance with the U.S. government, its agencies or instrumentalities as to the payment of principal and interest. CTRS invests exclusively in U.S. Treasury securities, which are of the highest credit quality. THE CASH MANAGEMENT TRUST OF AMERICA ------------------------------------ CMTA may invest in the short-term securities described below: COMMERCIAL PAPER: Short-term notes (usually maturing in 90 days or less) issued by companies, governmental bodies, or bank/corporation sponsored conduits (asset-backed commercial paper). COMMERCIAL BANK OBLIGATIONS: Certificates of deposit (interest-bearing time deposits), bank notes, bankers' acceptances (time drafts drawn on a commercial bank where the bank accepts an irrevocable obligation to pay at maturity) representing direct or contingent obligations of commercial banks with assets in excess of $1 billion, based on latest published reports, or obligations issued by commercial banks with assets of less than $1 billion if the principal amount of such obligation is fully insured by the U.S. government. Commercial banks issuing obligations in which CMTA invests must be on an approved list that is monitored on a regular basis; currently all approved banks have assets in excess of $10 billion. SAVINGS ASSOCIATION OBLIGATIONS: Bank notes and certificates of deposit (interest-bearing time deposits) issued by savings banks or savings and loan associations that have assets in excess of $1 billion, based on latest published reports, or obligations issued by institutions with assets of less than $1 billion if the principal amount of such obligation is fully insured by the U.S. Money Market Funds - Page 3 government. Savings associations issuing obligations in which CMTA invests must be on an approved list that is monitored on a regular basis; currently all approved savings associations have assets in excess of $10 billion. U.S. TREASURY AND AGENCY SECURITIES - U.S. Treasury securities include direct obligations of the U.S. Treasury, such as Treasury bills, notes and bonds. For these securities, the payment of principal and interest is unconditionally guaranteed by the U.S. government, and thus they are of the highest possible credit quality. Such securities are subject to variations in market value due to fluctuations in interest rates, but, if held to maturity, will be paid in full. U.S. agency securities include those issued by certain U.S. government instrumentalities and certain federal agencies. These securities are neither direct obligations of, nor guaranteed by, the Treasury. However, they generally involve federal sponsorship in one way or another; some are backed by specific types of collateral; some are supported by the issuer's right to borrow from the Treasury; some are supported by the discretionary authority of the Treasury to purchase certain obligations of the issuer; and others are supported only by the credit of the issuing government agency or instrumentality. These agencies and instrumentalities include, but are not limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee Valley Authority, and Federal Farm Credit Bank System. CORPORATE BONDS AND NOTES: Corporate obligations that mature, or may be redeemed by CMTA, in 13 months or less. These obligations may originally have been issued with maturities in excess of 13 months. CMTA may currently invest only in corporate bonds or notes of issuers having outstanding short-term securities rated in the top rating category by Standard & Poor's Corporation or by Moody's Investors Service, Inc. See the Appendix for a description of high-quality ratings by Standard & Poor's Corporation and Moody's Investors Service, Inc. REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under which the fund buys a security and obtains a simultaneous commitment from the seller to repurchase the security at a specified time and price. 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 of the collateral by the fund may be delayed or limited. THE TAX-EXEMPT MONEY FUND OF AMERICA ------------------------------------ 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 Money Market Funds - Page 4 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, tribal gaming and housing facilities. Although the security behind these bonds varies widely, many provide additional security in the form of a debt service reserve fund which may also be used to make principal and interest payments on the issuer's obligations. In addition, some revenue obligations (as well as general obligations) are insured by a bond insurance company or backed by a letter of credit issued by a banking institution. Revenue bonds also include, for example, pollution control, health care and housing bonds, which, although nominally issued by municipal authorities, are generally not secured by the taxing power of the municipality but by the revenues of the authority derived from payments by the private entity which owns or operates the facility financed with the proceeds of the bonds. Obligations of housing finance authorities have a wide range of security features including reserve funds and insured or subsidized mortgages, as well as the net revenues from housing or other public projects. Most of these bonds do not generally constitute the pledge of the credit of the issuer of such bonds. The credit quality of such revenue bonds is usually directly related to the credit standing of the user of the facility being financed or of an institution which provides a guarantee, letter of credit, or other credit enhancement for the bond issue. SECURITIES SUBJECT TO ALTERNATIVE MINIMUM TAX - The funds may invest in tax-exempt securities believed to pay interest constituting an item of tax preference subject to alternative minimum tax; therefore, while each 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. TEMPORARY TAXABLE INVESTMENTS - A portion of CTEX's assets, which will normally be less than 20%, may be invested in high-quality taxable short-term securities. Such temporary investments may include: (1) obligations of the U.S. Treasury; (2) obligations of agencies and instrumentalities of the U.S. government; and (3) money market instruments, such as certificates of deposit issued by domestic banks, corporate commercial paper, and bankers' acceptances. These investments may be made when deemed advisable for temporary defensive purposes or when the Investment Adviser believes there is an unusual disparity between the after-tax income available on taxable investments and the income available on tax-exempt securities. THE TAX-EXEMPT MONEY FUND OF AMERICA AND THE U.S. TREASURY MONEY FUND OF AMERICA -------------------------------------------------------------------------------- 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 Money Market Funds - Page 5 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. REPURCHASE AGREEMENTS - Although CTEX or CTRS have no current intention of doing so during the next 12 months, each fund is authorized to enter into repurchase agreements, subject to the standards applicable to CMTA's repurchase agreement transactions as described above. THE CASH MANAGEMENT TRUST OF AMERICA, THE U.S. TREASURY MONEY FUND OF AMERICA ----------------------------------------------------------------------------- AND THE TAX-EXEMPT MONEY FUND OF AMERICA ---------------------------------------- MONEY MARKET INSTRUMENTS - The funds invest in various high-quality money market instruments that mature, or may be redeemed or resold, in 13 months or less (25 months or less in the case of U.S. government securities). For CMTA they include: (1) commercial paper (notes issued by corporations, governmental bodies, or bank/corporation sponsored conduits (asset-backed commercial paper)), (2) commercial bank obligations such as certificates of deposit, bank notes, and bankers' acceptances (time drafts on a commercial bank where the bank accepts an irrevocable obligation to pay at maturity), (3) savings association and savings bank obligations, (4) securities of the U.S. government, its agencies or instrumentalities, and (5) corporate bonds and notes. CMTA may invest in securities issued by non-U.S. entities or in securities with credit and liquidity support features provided by non-U.S. entities. Since these securities are issued by entities that may have substantial operations outside the U.S., they may involve additional risks and considerations. These securities may be affected by unfavorable political, economic, or governmental developments that could affect the repayment of principal or payment of interest. Securities of U.S. issuers with substantial operations outside the U.S. may also be subject to similar risks. CTRS may invest in instruments that include U.S. Treasury bills, notes, and bonds. CTEX invests in money market instruments that are issued by states, territories, or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities ("municipalities") to obtain funds for various public purposes. CTEX may purchase various types of municipal securities, including tax, bond, revenue, and grant anticipation notes, construction loan notes, municipal commercial paper, general obligation bonds, revenue bonds and industrial development bonds. In addition, CTEX may invest in municipal securities that are supported by credit and liquidity enhancements, which include letters of credit from domestic and non-U.S. banks and other financial institutions. Changes in the credit quality of these institutions could cause the fund to experience a loss and may affect its share price. To the extent that the credit quality of these institutions is downgraded, investments in such securities could increase the level of illiquidity of the fund's portfolio for the remaining maturity of the instruments. VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain securities in which the funds 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 funds to "lock in" the current interest rate for only the period until the next scheduled Money Market Funds - Page 6 rate adjustment, but the rate adjustment feature tends to limit the extent to which the market value of the obligation will fluctuate. "PUT" SECURITIES - CMTA and CTEX may purchase securities that provide for the right to resell them to the issuer, a bank, or a broker-dealer typically at the par value plus accrued interest within a specified period of time prior to maturity. This right is commonly known as a "put" or a "demand feature." The funds may pay a higher price for such securities than would otherwise be paid for the same security without such a right. The funds will enter into these transactions only with issuers, banks, or broker-dealers that are determined by Capital Research and Management Company to present minimal credit risks. If an issuer, bank, or broker-dealer should default on its obligation to repurchase, the funds might be unable to recover all or a portion of any loss sustained. There is no specific limit on the extent to which the funds may invest in such securities. MATURITY - Each fund determines its net asset value using the penny-rounding method, according to rules of the Securities and Exchange Commission, which permits it to maintain a constant net asset value of $1.00 per share under normal conditions. In accordance with rule 2a-7, each fund is required to maintain a dollar-weighted average portfolio maturity of 90 days or less and purchase only instruments having remaining maturities of 13 months or less (25 months or less in the case of U.S. government securities) determined in accordance with procedures established by the Board of Trustees to present minimal credit risks. For this purpose, certain variable and floating rate obligations and "put" securities which may otherwise have stated maturities in excess of 13 months (25 months in the case of U.S. government securities) will be deemed to have remaining maturities equal to the period remaining until the next readjustment of the interest rate or until the fund is entitled to repayment or repurchase of the security. CMTA, CTRS and CTEX currently intend to maintain dollar-weighted average portfolio maturities of approximately 35 days or less, 90 days or less and 60 days or less, respectively. 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. 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 their 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 their segregated assets, the funds 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 their net assets would likely occur than were they 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. Money Market Funds - Page 7 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. CMTA may not: --- 1. Invest its assets in issues, other than those of the U.S. government, its agencies or instrumentalities, obligations of commercial banks and savings institutions with total assets in excess of $1 billion, commercial paper, and investment-grade corporate obligations--all maturing in one year or less. CMTA may, however, invest in obligations issued by commercial banks and savings institutions with assets of less than $1 billion if the principal amounts of such obligations are fully insured by the U. S. government; 2. Invest more than 5% of its total assets in the securities of any one issuer, except the U.S. government, its agencies and instrumentalities. With respect to 25% of total assets, commercial banks are excluded from this 5% limitation; 3. Invest more than 25% of total assets in the securities of issuers in the same industry. Electric, natural gas distribution, natural gas pipeline, combined electric and natural gas, and telephone utilities are considered separate industries for purposes of this restriction. Obligations of the U.S. government, its agencies and instrumentalities are not subject to this 25% limitation on industry concentration. In addition, CMTA may, if deemed advisable, invest more than 25% of its assets in the obligations of commercial banks; 4. Enter into any repurchase agreement if, as a result, more than 10% of total assets would be subject to repurchase agreements maturing in more than seven days; 5. Make loans to others except for the purchase of debt securities or entering into repurchase agreements as listed above; 6. Borrow money, except from banks for temporary purposes and then in an amount not in excess of 33-1/3% of total assets. This borrowing power is reserved to facilitate the orderly sale of portfolio securities to accommodate unusually heavy redemption requests, if they should occur; it is not included for investment purposes; 7. Pledge more than 15% of its assets and then only to secure temporary borrowings from banks; 8. Sell securities short; 9. Invest in puts, calls, straddles, spreads or any combination thereof; Money Market Funds - Page 8 10. Purchase or sell securities of other investment companies (except in connection with a merger, consolidation, acquisition or reorganization), real estate, or commodities; 11. Engage in the underwriting of securities issued by others. Notwithstanding Investment Restriction #9, the fund may invest in securities with put and call features. For purposes of Investment Restriction #1, CMTA currently invests only in high quality obligations in accordance with rule 2a-7 under the 1940 Act, as described in the prospectus. (CMTA will notify shareholders 180 days in advance in the event it no longer is required to adhere to rule 2a-7 and it intends to stop relying on the rule.) For purposes of Investment Restriction #2, the fund may invest more than 5% of its total assets in the securities of any one issuer only to the extent allowed under rule 2a-7 of the Investment Company Act of 1940. For purposes of Investment Restriction #3, CMTA will not invest 25% or more of total assets in the securities of issuers in the same industry. Additionally, for purposes of Investment Restriction #3, the Investment Adviser currently interprets the term "commercial banks" to mean domestic branches of U.S. banks. These policies are non-fundamental and may be changed by the Board of Trustees without shareholder approval. CTRS may not: --- 1. Purchase any security (other than securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities), if immediately after and as a result of such investment (a) with respect to 75% of CTRS' total assets, more than 5% of CTRS' total assets would be invested in securities of the issuer, or (b) CTRS would hold more than 10% of any class of securities or of the total securities of the issuer (for this purpose all indebtedness of an issuer shall be deemed a single class). 2. Buy or sell real estate (including real estate limited partnerships) in the ordinary course of its business; however, CTRS may invest in securities secured by real estate or interests therein; 3. Acquire securities for which there is no readily available market or enter into repurchase agreements or purchase time deposits maturing in more than seven days, if, immediately after and as a result, the value of such securities would exceed, in the aggregate, 10% of CTRS' total assets; 4. Make loans to others, except by the purchase of debt securities, entering into repurchase agreements or making loans of portfolio securities; 5. Sell securities short; 6. Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases or sales of securities; 7. Borrow money, except from banks for temporary or emergency purposes, not in excess of 5% of the value of CTRS' 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. In the event that the asset coverage for CTRS' borrowings falls below 300%, CTRS will reduce within three Money Market Funds - Page 9 days (excluding Sundays and holidays), the amount of its borrowings in order to provide for 300% asset coverage, and except that CTRS may enter into reverse repurchase agreements, provided that reverse repurchase agreements and any other transactions constituting borrowing by CTRS may not exceed one-third of CTRS' total assets; 8. Mortgage, pledge, or hypothecate its assets, except in an amount up to 5% of the value of its total assets, but only to secure borrowings for temporary or emergency purposes; 9. Underwrite any issue of securities, except to the extent that the purchase of securities directly from the issuer in accordance with CTRS' investment objective, policies and restrictions, and later resale, may be deemed to be an underwriting; 10. Knowingly purchase securities of other managed investment companies, except in connection with a merger, consolidation, acquisition, or reorganization; 11. Buy or sell commodities or commodity contracts (including futures contracts) or oil, gas or other mineral exploration or development programs; 12. Write, purchase or sell puts, calls, straddles, spreads or any combination thereof, except that this shall not prevent the purchase of securities which have "put" or "stand-by commitment" features; 13. Purchase or retain the securities of any issuer, if, to the knowledge of CTRS, those individual officers and Board members of CTRS, its Investment Adviser, or principal underwriter, each owning beneficially more than 1/2 of 1% of the securities of such issuer, together own more than 5% of the securities of such issuer; 14. Invest more than 5% of the value of CTRS' total assets in securities of any issuer with a record of less than three years continuous operation, including predecessors; 15. Invest 25% or more of total assets in the securities of issuers in the same industry. Electric, natural gas distribution, natural gas pipeline, combined electric and natural gas, and telephone utilities are considered separate industries for purposes of this restriction. Obligations of the U.S. Government, its agencies and instrumentalities, are not subject to this 25% or more limitation on industry concentration. In addition, CTRS may, if deemed advisable, invest 25% or more of its assets in the obligations of commercial banks. Notwithstanding Investment Restriction #10, the fund may invest in securities of other investment companies if deemed advisable by its officers in connection with the administration of a deferred compensation plan adopted by Trustees pursuant to an exemptive order granted by the Securities and Exchange Commission. For purposes of Investment Restriction #11, the term "oil, gas or other mineral exploration or development programs" includes oil, gas or other mineral exploration or development leases. For purposes of Investment Restriction #15, the Investment Adviser currently interprets the term "commercial banks" to mean domestic branches of U.S. banks. Finally, CTRS will not invest more than 5% of its net assets valued at market at the time of purchase, in warrants including not more than 2% of such net assets in warrants that are not listed on either the New York Stock Exchange or the American Stock Exchange; however, warrants acquired in units or attached to securities may be deemed to be without value for the purpose of this restriction. These policies Money Market Funds - Page 10 are not deemed fundamental and may be changed by the Board of Trustees without shareholder approval. CTEX may not: --- 1. Purchase any security (other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities), if immediately after and as a result of such investment (a) with respect to 75% of CTEX's total assets, more than 5% of CTEX's total assets would be invested in securities of the issuer, or (b) CTEX would hold more than 10% of any class of securities or of the total securities of the issuer (for this purpose all indebtedness of an issuer shall be deemed a single class). 2. Enter into any repurchase agreement if, as a result, more than 10% of the value of CTEX's total assets would be subject to repurchase agreements maturing in more than seven days; 3. Buy or sell real estate (including real estate limited partnerships) in the ordinary course of its business; however, CTEX may invest in securities secured by real estate or interests therein; 4. Acquire securities subject to restrictions on disposition or securities for which there is no readily available market (including securities of foreign issuers not listed on any recognized foreign or domestic exchange), or enter into repurchase agreements or purchase time deposits maturing in more than seven days, if, immediately after and as a result, the value of such securities would exceed, in the aggregate, 10% of CTEX's total assets; 5. Make loans to others, except for the purchase of debt securities, entering into repurchase agreements or making loans of portfolio securities; 6. Sell securities short, except to the extent that CTEX contemporaneously owns or has the right to acquire at no additional cost securities identical to those sold short; 7. Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases or sales of securities; 8. Borrow money, except from banks for temporary or emergency purposes, not in excess of 5% of the value of CTEX'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. In the event that the asset coverage for CTEX's borrowings falls below 300%, CTEX will reduce within three days (excluding Sundays and holidays), the amount of its borrowings in order to provide for 300% asset coverage; 9. Mortgage, pledge, or hypothecate its assets, except in an amount up to 5% of the value of its total assets, but only to secure borrowings for temporary or emergency purposes; 10. Underwrite any issue of securities, except to the extent that the purchase of municipal securities directly from the issuer in accordance with CTEX's investment objective, policies and restrictions, and later resale, may be deemed to be an underwriting; 11. Invest in companies for the purpose of exercising control or management; Money Market Funds - Page 11 12. Knowingly purchase securities of other managed investment companies, except in connection with a merger, consolidation, acquisition, or reorganization; 13. Buy or sell commodities or commodity contracts or oil, gas or other mineral exploration or development programs; 14. Write, purchase or sell puts, calls, straddles, spreads or any combination thereof, except that this shall not prevent the purchase of municipal securities which have "put" or "stand-by commitment" features; 15. Purchase or retain the securities of any issuer, if, to the knowledge of CTEX, those individual officers and Board members of CTEX, its Investment Adviser, or principal underwriter, each owning beneficially more than 1/2 of 1% of the securities of such issuer, together own more than 5% of the securities of such issuer; 16. Invest more than 5% of the value of CTEX's total assets in securities of any issuer with a record of less than three years continuous operation, including predecessors; 17. Invest 25% or more of the value of its total assets in the securities of issuers conducting their principal business activities in the same industry. CTEX will: 18. Normally invest at least 80% of its assets in securities the income from which is exempt from federal income tax, or will invest its assets so that at least 80% of the income that the fund distributes is exempt from federal income tax. For purposes of Investment Restriction #2, the fund will not enter into any repurchase agreement if, as a result, more than 10% of net assets would be subject to repurchase agreements maturing in more than seven days. For the purpose of CTEX's investment restrictions, the identification of the "issuer" of municipal securities that are not general obligation securities is made by the Investment Adviser on the basis of the characteristics of the securities as described, the most significant of which is the ultimate source of funds for the payment of principal and interest on such securities. For purposes of investment restriction #13 the term "commodities contract" includes futures contracts. Notwithstanding Investment Restriction #12, the fund may invest in securities of other investment companies if deemed advisable by its officers in connection with the administration of a deferred compensation plan adopted by Trustees pursuant to an exemptive order granted by the Securities and Exchange Commission. For purposes of Investment Restriction #16, the fund may invest more than 5% of its total assets in the securities of any one issuer only to the extent allowed under rule 2a-7 of the Investment Company Act of 1940. The following policies of CTEX are not deemed fundamental, and thus may be changed by the Board of Trustees without shareholder approval: CTEX may not invest 25% or more of its assets in municipal securities the issuers of which are located in the same state, unless such securities Money Market Funds - Page 12 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. CTEX may invest no more than an aggregate of 20% of its total assets in industrial development securities. There could be economic, business or political developments which might affect all municipal securities of a similar category or type or issued by issuers within any particular geographical area or jurisdiction. Finally, CTEX will not invest more than 5% of its net assets valued at market at the time of purchase, in warrants including not more than 2% of such net assets in warrants that are not listed on either the New York Stock Exchange or the American Stock Exchange; however, warrants acquired in units or attached to securities may be deemed to be without value for the purpose of this restriction. Money Market Funds - Page 13 MANAGEMENT OF THE FUNDS
YEAR FIRST NUMBER OF BOARDS POSITION ELECTED WITHIN THE FUND OTHER DIRECTORSHIPS/3/ WITH THE A TRUSTEE PRINCIPAL OCCUPATION(S) DURING COMPLEX/2/ ON WHICH HELD NAME AND AGE FUNDS OF THE FUNDS/1/ PAST 5 YEARS TRUSTEE SERVES BY TRUSTEE ----------------------------------------------------------------------------------------------------------------------------------- "NON-INTERESTED" TRUSTEES ----------------------------------------------------------------------------------------------------------------------------------- Richard G. Capen, Trustee 1999 Corporate Director and author; 14 Carnival Corporation Jr. former United States Age: 67 Ambassador to Spain; former Vice Chairman, Knight Ridder, Inc.; former Chairman and Publisher, The --- Miami ----- Herald ------ ----------------------------------------------------------------------------------------------------------------------------------- H. Frederick Trustee 1976 Private Investor; former 19 Ducommun Incorporated; Christie President IHOP Corporation; Age: 68 and Chief Executive Officer, Southwest Water The Company; Valero L.P. Mission Group (non-utility holding company subsidiary of Southern California Edison Company) ----------------------------------------------------------------------------------------------------------------------------------- Diane C. Creel Trustee 1994 CEO and President, The Earth 12 Allegheny Technologies; Age: 53 Technology Corporation BF Goodrich;Teledyne (international consulting Technologies engineering) ----------------------------------------------------------------------------------------------------------------------------------- Martin Fenton Trustee 1989 Managing Director, Senior 16 None Age: 66 Resource Group LLC (development and management of senior living communities) ----------------------------------------------------------------------------------------------------------------------------------- Leonard R. Fuller Trustee 1994 President, Fuller Consulting 13 None Age: 55 (financial management consulting firm) ----------------------------------------------------------------------------------------------------------------------------------- Richard G. Newman Trustee 1991 Chairman and CEO, AECOM 13 Southwest Water Company Age: 67 Technology Corporation (engineering, consulting and professional services) ----------------------------------------------------------------------------------------------------------------------------------- Frank M. Sanchez Trustee 1999 President, The Sanchez Family 12 None Age: 58 Corporation dba McDonald's Restaurants (McDonald's licensee) -----------------------------------------------------------------------------------------------------------------------------------
BOARDS OF TRUSTEE AND OFFICERS Money Market Funds - Page 14
PRINCIPAL OCCUPATION(S) DURING YEAR FIRST PAST 5 YEARS AND ELECTED POSITIONS HELD NUMBER OF BOARDS POSITION A TRUSTEE WITH AFFILIATED ENTITIES WITHIN THE FUND OTHER DIRECTORSHIPS/3/ WITH THE AND/OR OFFICER OR THE PRINCIPAL UNDERWRITER COMPLEX/2/ ON WHICH HELD NAME AND AGE FUNDS OF THE FUNDS/1/ OF THE FUNDS TRUSTEE SERVES BY TRUSTEE OR OFFICER ----------------------------------------------------------------------------------------------------------------------------------- "INTERESTED" TRUSTEES/4,//5/ ----------------------------------------------------------------------------------------------------------------------------------- Don R. Conlan Trustee 1996 President (retired), The 12 None Age: 66 Capital Group Companies, Inc.* ----------------------------------------------------------------------------------------------------------------------------------- Abner D. President, CMTA: 1976 - Senior Vice President and 12 None Goldstine PEO 1978; 1981 Director, Age: 72 and CTEX: 1989 Capital Research and Trustee CTRS:1991 Management Company ----------------------------------------------------------------------------------------------------------------------------------- Paul G. Haaga, Chairman CMTA: 1985 Executive Vice President and 16 None Jr. of the CTEX: 1988 Director, Capital Research and Age: 53 Board and CTRS: 1990 Management Company; Director, Trustee American Funds Distributors, Inc.*; Director, The Capital Group Companies, Inc.* -----------------------------------------------------------------------------------------------------------------------------------
Money Market Funds - Page 15
PRINCIPAL OCCUPATION(S) DURING POSITION YEAR FIRST ELECTED PAST 5 YEARS AND POSITIONS HELD WITH THE AN OFFICER WITH AFFILIATED ENTITIES NAME AND AGE FUNDS OF THE FUNDS/1/ OR THE PRINCIPAL UNDERWRITER OF THE FUNDS ----------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS/5/ ----------------------------------------------------------------------------------------------------------------------------------- Neil L. Langberg Senior Vice 1989 Vice President - Investment Management Group, Capital Age: 48 President (CTEX) Research and Management Company ----------------------------------------------------------------------------------------------------------------------------------- Teresa S. Cook Vice President 1991 Senior Vice President - Investment Management Group, Age: 49 (CMTA and CTRS Capital only) Research and Management Company ----------------------------------------------------------------------------------------------------------------------------------- Michael J. Downer Vice President 1994 Vice President and Secretary, Capital Research and Age: 46 Management Company; Secretary, American Funds Distributors, Inc.*; Director, Capital Bank and Trust Company** ----------------------------------------------------------------------------------------------------------------------------------- Karen F. Hall Assistant 1999 Assistant Vice President - Investment Management Group, Age: 36 Vice President Capital Research and Management Company (CMTA and CTRS only) ----------------------------------------------------------------------------------------------------------------------------------- Julie F. Williams Secretary CMTA: 1982 Vice President - Fund Business Management Group, Capital Age: 53 CTEX: 1989 Research and Management Company CTRS: 1991 ----------------------------------------------------------------------------------------------------------------------------------- Susi M. Silverman Treasurer 2000 Vice President - Fund Business Management Group, Capital Age: 31 Research and Management Company ----------------------------------------------------------------------------------------------------------------------------------- Kimberly S. Verdick Assistant 1994 Assistant Vice President - Fund Business Management Group, Age: 37 Secretary Capital Research and Management Company ----------------------------------------------------------------------------------------------------------------------------------- Anthony W. Hynes, Assistant CMTA: 1993 Vice President - Fund Business Management Group, Capital Jr. Treasurer - 2000; 2001 Research and Management Company Age: 39 CTEX: 2001 CTRS: 2001 -----------------------------------------------------------------------------------------------------------------------------------
Money Market Funds - Page 16 * Company affiliated with Capital Research and Management Company. 1 Trustees and officers of the funds serve until their resignation, removal or retirement. 2 Capital Research and Management Company manages the American Funds consisting of 29 funds. Capital Research and Management Company also manages American Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying investment vehicles for certain variable insurance contracts, and Endowments, whose shareholders are limited to certain non-profit organizations. 3 This includes all directorships (other than those in the American Funds Group) that are held by each trustee as a director of a public company or a registered investment company. 4 "Interested persons" within the meaning of the 1940 Act on the basis of their affiliation with the funds' Investment Adviser, Capital Research and Management Company, or its affiliated entities (including each fund's principal underwriter). 5 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. THE ADDRESS FOR ALL TRUSTEES AND OFFICERS OF THE FUNDS IS 333 SOUTH HOPE STREET - 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY. Money Market Funds - Page 17 FUND SHARES OWNED BY TRUSTEES AS OF DECEMBER 31, 2001
AGGREGATE DOLLAR RANGE/1/ OF SHARES OWNED IN ALL FUNDS WITHIN AMERICAN FUNDS DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN NAME SHARES OWNED BY TRUSTEE -------------------------------------------------------------------------------- "NON-INTERESTED" TRUSTEES -------------------------------------------------------------------------------- Richard G. Capen, Jr. CMTA: Over $100,000 Over $100,000 CTRS: None CTEX: $50,001 - $100,000 -------------------------------------------------------------------------------- H. Frederick Christie CMTA: $10,001 - $50,000 Over $100,000 CTRS: None CTEX: None -------------------------------------------------------------------------------- Diane C. Creel CMTA: $1 - $10,000 $10,001 - $50,000 CTRS: $1 - $10,000 CTEX: $1 - $10,000 -------------------------------------------------------------------------------- Martin Fenton CMTA: $1 - $10,000 Over $100,000 CTRS: None CTEX: $10,001 - $50,000 -------------------------------------------------------------------------------- Leonard R. Fuller CMTA: $10,001 - $50,000 $50,001 - $100,000 CTRS: $1 - $10,000 CTEX: $1 - $10,000 -------------------------------------------------------------------------------- Richard G. Newman CMTA: $1 - $10,000 Over $100,000 CTRS: $1 - $10,000 CTEX: $1 - $10,000 -------------------------------------------------------------------------------- Frank M. Sanchez CMTA: $1 - $10,000 $10,001 - $50,000 CTRS: $1 - $10,000 CTEX: $1 - $10,000 -------------------------------------------------------------------------------- "INTERESTED" TRUSTEES/2/ -------------------------------------------------------------------------------- Don R. Conlan CMTA: Over $100,000 Over $100,000 CTRS: None CTEX: None -------------------------------------------------------------------------------- Abner D. Goldstine CMTA: Over $100,000 Over $100,000 CTRS: Over $100,000 CTEX: $10,000 - $50,000 -------------------------------------------------------------------------------- Paul G. Haaga, Jr. CMTA: Over $100,000 Over $100,000 CTRS: $50,001 - $100,000 CTEX: None --------------------------------------------------------------------------------
1 Ownership disclosure is made using the following ranges: None; $1 - $10,000; $10,001 - $50,000; $50,001 - $100,000 and Over $100,000. The amounts listed for "interested" trustees include shares owned through The Capital Group Companies, Inc. retirement plan and 401(k) plan. 2 "Interested persons" within the meaning of the 1940 Act on the basis of their affiliation with the funds' Investment Adviser, Capital Research and Management Company, or its affiliated entities (including each fund's principal underwriter). Money Market Funds - Page 18 TRUSTEE COMPENSATION PAID DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 2001 No compensation is paid by the fund to any officer or Trustee who is a director, officer or employee of the Investment Adviser or its affiliates. The fund pays annual fees of CMTA - $6,500; CTEX - $1,500 and CTRS - $1,500 to Trustees who are not affiliated with the Investment Adviser, plus $210 for each Board of Trustees meeting attended, $2,520 per Contracts Committee meeting attended; and $1,000 per Audit and Nominating Committee meeting attended. Certain of the funds' trustees may also serve as Committee members for other American Funds whose Committees meet jointly with those of the fund. Accordingly, the Committee fees are allocated among the funds participating. No pension or retirement benefits are accrued as part of fund expenses. The Trustees may elect, on a voluntary basis, to defer all or a portion of their fees through a deferred compensation plan in effect for the funds. The funds also reimburse certain expenses of the Trustees who are not affiliated with the Investment Adviser.
TOTAL COMPENSATION (INCLUDING AGGREGATE COMPENSATION VOLUNTARILY DEFERRED COMPENSATION/1/) (INCLUDING VOLUNTARILY FROM ALL FUNDS MANAGED BY DEFERRED COMPENSATION/1/) CAPITAL RESEARCH AND MANAGEMENT NAME FROM THE FUNDS COMPANY OR ITS AFFILIATES/2/ ------------------------------------------------------------------------------------------ Richard G. Capen, $7,675/3 /CMTA $94,620/3/ Jr. $3,175/3/ CTRS $3,176/3/ CTEX ------------------------------------------------------------------------------------------ H. Frederick $ 7,675 CMTA $ 199,620 Christie $ 3,175 CTRS $ 3,176 CTEX ------------------------------------------------------------------------------------------ Diane C. Creel $ 7,133 CMTA $ 51,600 $ 2,633 CTRS $ 2,633 CTEX ------------------------------------------------------------------------------------------ Martin Fenton $7,343/3/ CMTA $183,120/3/ $2,843/3/ CTRS $2,843/3/ CTEX ------------------------------------------------------------------------------------------ Leonard R. Fuller $ 7,675 CMTA $ 80,120 $ 3,175 CTRS $ 3,176 CTEX ------------------------------------------------------------------------------------------ Richard G. Newman $ 7,343 CMTA $ 116,120 $ 2,843 CTRS $ 2,843 CTEX ------------------------------------------------------------------------------------------ Frank M. Sanchez $7,343/ /CMTA $ 55,120 $ 2,843 CTRS $ 2,843 CTEX ------------------------------------------------------------------------------------------
1 Amounts may be deferred by eligible Trustees under a non-qualified deferred compensation plan adopted by the fund in 1993/ 1994. Deferred amounts accumulate at an earnings rate determined by the total return of one or more funds in The American Funds Group as designated by the Trustees. 2 Capital Research and Management Company manages the American Funds consisting of 29 funds. Capital Research and Management Company also manages American Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying investment vehicles for certain variable insurance contracts, and Endowments, whose shareholders are limited to certain non-profit organizations. Money Market Funds - Page 19 3 Since the deferred compensation plans' adoption, the total amount of deferred compensation accrued by each fund (plus earnings thereon) through the 2001 fiscal year for participating Trustees is as follows: Richard G. Capen ($3,642 - CMTA; $1,773 - CTRS and $3,695 - CTEX) and Martin Fenton ($5,047 - CMTA; $1,110 - CTRS and $459 - CTEX). Amounts deferred and accumulated earnings thereon are not funded and are general unsecured liabilities of the fund until paid to the Trustee. Amounts deferred and accumulated earnings thereon are not funded and are general unsecured liabilities of the fund until paid to the Trustees. As of January 15, 2002, the officers and Trustees of each fund and their families, as a group, owned beneficially or of record less than 1% of the outstanding shares of each fund. FUND ORGANIZATION AND THE BOARD OF TRUSTEES Each fund, an open-end, diversified management investment company, was organized as a Massachusetts business trust (CMTA on March 1, 1976, CTEX on December 5, 1988 and CTRS on December 19, 1990). All fund operations are supervised by each fund's Board of Trustees, which meets periodically and performs duties required by applicable state and federal laws. Members of the board who are not employed by Capital Research and Management Company or its affiliates are paid certain fees for services rendered to the fund as described above. They may elect to defer all or a portion of these fees through a deferred compensation plan in effect for each fund. Cash Management Trust has several different classes of shares, including classes A, B, C, F, 529-A, 529-B, 529-C, 529-E and 529-F. The 529 share classes are available only through CollegeAmerica to investors establishing qualified higher education savings accounts. The shares of each class represent an interest in the same investment portfolio. Each class has pro rata 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 Trustees and set forth in the fund's rule 18f-3 Plan. Each class' shareholders have exclusive voting rights with respect to the respective class' 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. Note, CollegeAmerica account owners are technically not shareholders of the fund and accordingly, do not have the rights of a shareholder, including the right to vote any proxies relating to fund shares. 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 funds will hold a meeting at which any member of the board could be removed by a majority vote. Money Market Funds - Page 20 COMMITTEES OF THE BOARD OF TRUSTEES The funds have an Audit Committee comprised of Richard G. Capen, Jr., H. Frederick Christie and Leonard R. Fuller, none of whom is considered an "interested person" of the funds within the meaning of the 1940 Act. The Committee oversees the funds' accounting and financial reporting policies and practices, their internal controls and the internal controls of the funds' principal service providers. The Committee acts as a liaison between the funds' independent accountants and the full Board of Trustees. There were two Audit Committee meetings held during the 2001 fiscal year. The funds have a Contracts Committee comprised of Richard G. Capen, Jr., H. Frederick Christie, Diane C. Creel, Martin Fenton, Leonard R. Fuller, Richard G. Newman and Frank M. Sanchez, none of whom is considered an "interested person" of the funds within the meaning of the 1940 Act. The Committee's function is to request, review and consider the information deemed necessary to evaluate the terms of certain agreements between each fund and its Investment Adviser or the Investment Adviser's affiliates, such as the investment advisory and service agreement, principal underwriting agreement, and plans of distribution under rule 12b-1, that the funds may enter into, renew or continue, and to make its recommendations to the full Board of Trustees on these matters. There was one Contracts Committee meeting during the 2001 fiscal year. The funds have a Nominating Committee comprised of Richard G. Capen, Jr., H. Frederick Christie, Diane C. Creel, Martin Fenton, Leonard R. Fuller, Richard G. Newman and Frank M. Sanchez, none of whom is considered an "interested person" of the funds within the meaning of the 1940 Act. The Committee periodically reviews such issues as the Board's composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full Board of Trustees. The Committee also evaluates, selects and nominates candidates for independent trustees to the full Board of Trustees. While the Committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the Board. Such suggestions must be sent in writing to the Nominating Committee of the funds, c/o the funds' Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the Committee. There was one Nominating Committee meeting during the 2001 fiscal year. INVESTMENT ADVISER - The Investment Adviser, Capital Research and Management Company, 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 significant 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 $350 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 Money Market Funds - Page 21 corporations as well as schools, colleges, foundations and other non-profit and tax-exempt organizations. INVESTMENT ADVISORY AND SERVICE AGREEMENT - Each fund has an Investment Advisory and Service Agreement (the "Agreement") with the Investment Adviser which provides that the Investment Adviser shall determine which securities shall be purchased or sold by each fund and provides certain services to each fund. The CMTA Agreement will continue in effect until May 31, 2003, unless sooner terminated. The CTEX Agreement will continue in effect until October 1, 2002, unless sooner terminated, and the CTRS Agreement will continue in effect until October 31, 2002, unless sooner terminated. Each Agreement may be renewed from year to year thereafter, provided that any such renewal has been specifically approved at least annually by (i) the Board of Trustees, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the fund, and (ii) the vote of a majority of Trustees who are not parties to the Agreements 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 Agreements provide that the Investment Adviser has no liability to the funds for its acts or omissions in the performance of its obligations to the funds not involving willful misconduct, bad faith, gross negligence or reckless disregard of its obligations under the Agreements. The Agreements also provide that either party has the right to terminate them, without penalty, upon 60 days' written notice to the other party, and that the Agreements automatically terminate in the event of their assignment (as defined in the 1940 Act). In determining whether to renew the Agreements each year, the Contracts Committee of each fund's Board of Trustees evaluates information provided by the Investment Adviser in accordance with Section 15(c) of the 1940 Act, and presents its recommendations to the full Board of Trustees. At its most recent meeting, the Committees considered a number of factors in recommending renewal of the existing Agreement, including the quality of services provided to the funds, fees and expenses borne by the funds, and financial results of the Investment Adviser. In reviewing the quality of services provided to the funds, the Committees noted that the investment results for CMTA, CTEX and CTRS were slightly below the average for each fund's peer group during 2000 and for the five- and ten-year periods ended December 31, 2000. In discussing each fund's results during 2000, it was observed that the relatively high credit quality of each fund's portfolio could cause its results to lag behind its peers on occasion. The Committees also considered the quality and depth of the Investment Adviser's organization in general and of the investment professionals currently providing services to the fund. In reviewing the fees and expenses borne by each fund, the Committees noted, among other things, that each fund's advisory fees over various periods (as a percentage of its average net assets) were at or below the median for the relevant peer group. The Committees observed that although total expenses for the funds were slightly above the relevant medians, they were well within the range of expenses for comparable funds. The Committees also considered steps taken in recent years by the Investment Adviser to help control the funds' transfer agency expenses. Based on their review, the Committees and the Boards concluded that the advisory fees and other expenses of the fund are fair, both absolutely and in comparison with those of other funds in the industry, and that shareholders have received reasonable value in return for paying such fees and expenses. Money Market Funds - Page 22 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 funds, and provides suitable office space, necessary small office equipment and utilities, general purpose accounting forms, supplies, and postage used at the offices of the funds. The funds pay all expenses not assumed by the Investment Adviser, including, but not limited to: custodian, stock transfer and dividend disbursing fees and expenses; shareholder recordkeeping and administrative expenses; costs of the designing, printing and mailing of reports, prospectuses, proxy statements, and notices to their shareholders; taxes; expenses of the issuance and redemption of shares of the funds (including stock certificates, registration and qualification fees and expenses); expenses pursuant to the funds' Plans of Distribution (described below); legal and auditing expenses; compensation, fees and expenses paid to trustees unaffiliated with the Investment Adviser; association dues; costs of stationery and forms prepared exclusively for the funds; and costs of assembling and storing shareholder account data. Capital Research and Management Company manages the investment portfolios and business affairs of the funds and receives an annual fee from each fund as follows: Cash Management Trust: 0.32% on the first $1 billion of average net assets; plus 0.29% on average net assets between $1 billion and $2 billion; plus 0.27% on average net assets in excess of $2 billion; U.S. Treasury Money Fund: 0.30% on the first $800 million of average net assets; plus 0.285% on average net assets in excess of $800 million; Tax-Exempt Money Fund: 0.39% on the first $200 million of average net assets; plus 0.37% on average net assets between $200 million and $600 million; plus 0.33% on the portion of average net assets between $600 million and $1.2 billion; plus 0.29% on average net assets in excess of $1.2 billion. The Investment Adviser has agreed to waive its fees by any amount necessary to assure that such expenses do not exceed applicable expense limitations in any state in which the funds' shares are being offered for sale. CMTA The Agreement provides that the Investment Adviser will reimburse CMTA for ---- any expenses incurred by CMTA in any fiscal year, exclusive of interest, taxes, brokerage costs and extraordinary items such as litigation and acquisitions, to the extent such expenses exceed the lesser of 25% of gross income for the preceding year or the sum of (a) 1-1/2% of the average daily net assets of the preceding year up to and including $30 million, and (b) 1% of any excess of average daily net assets of preceding year over $30 million. The Investment Advisory fee is included as an expense of CMTA and is subject to the expense limitation described in the preceding sentence. CTEX The Investment Adviser has agreed that in the event the expenses of the ---- fund (with the exclusion of interest, taxes, brokerage costs, extraordinary expenses such as litigation and acquisitions or other expenses excludable under applicable state securities laws or regulations) for any fiscal year ending on a date on which the Agreement is in effect, exceed the expense limitations, if any, applicable to the fund pursuant to state securities laws or any regulations thereunder, it will reduce its fee by the extent of such excess and, if required pursuant to any such laws or any regulations thereunder, will reimburse the fund in the amount of such excess. Money Market Funds - Page 23 CTRS The Investment Adviser has agreed that in the event the expenses of the ---- fund (with the exclusion of interest, taxes, brokerage costs, extraordinary expenses such as litigation and acquisitions or other expenses excludable under applicable state securities laws or regulations) for any fiscal year ending on a date on which the Agreement is in effect, exceed the expense limitations, if any, applicable to the fund pursuant to state securities laws or any regulations thereunder, it will reduce its fee by the extent of such excess and, if required pursuant to any such laws or any regulations thereunder, will reimburse the fund in the amount of such excess. 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 CMTA'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 the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from CMTA of $17,312,000, $16,005,000, and $14,593,000, respectively. For the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from CTRS of $1,208,000, $1,296,000, and $1,272,000, respectively. For the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from CTEX of $1,169,000, $1,055,000, and $1,003,000, respectively. ADMINISTRATIVE SERVICES AGREEMENT - The Administrative Services Agreement (the "Administrative Agreement") between CMTA and the Investment Adviser relating to CMTA's Class C, F and 529 shares will continue in effect until May 31, 2003, 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 the vote of a majority of Trustees who are not parties to the Administrative 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 Administrative Agreement provides that CMTA may terminate the agreement at any time by vote of a majority of Trustees who are not interested persons of CMTA. The Investment Adviser has the right to terminate the Administrative Agreement upon 60 days' written notice to CMTA. The Administrative Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act). Under the Administrative Agreement, the Investment Adviser provides certain transfer agent and administrative services for shareholders of CMTA's Class C and F shares, and all Class 529 shares. The Investment Adviser contracts with third parties, including American Funds Service Company, CMTA's Transfer Agent, to provide these services. Services include, but are not limited to, shareholder account maintenance, transaction processing, tax information reporting, and shareholder and fund communications. In addition, the Investment Adviser monitors, coordinates and oversees the activities performed by third parties providing such services. As compensation for its services, the Investment Adviser receives transfer agent fees for transfer agent services provided to CMTA's applicable share classes. Transfer agent fees are paid monthly according to a fee schedule contained in a Shareholder Services Agreement between the funds and American Funds Service Company. The Investment Adviser also receives an administrative services fee for administrative services provided to CMTA's applicable share Money Market Funds - Page 24 classes. Administrative services fees are paid monthly, accrued daily and calculated at the annual rate of 0.15% of the average daily net assets of each respective applicable share class. Administrative service fees paid for Class C and F shares for the fiscal period ended 2001 were $4,000 and $3,000, respectively. PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION - American Funds Distributors, Inc. (the "Principal Underwriter") is the principal underwriter of each fund's shares. The Principal Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071; 135 South State College Boulevard, Brea, CA 92821; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513. The Principal Underwriter receives revenues from sales of each fund's shares. For Class B and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees paid by CMTA for distribution expenses to a third party and receives the revenue remaining after compensating investment dealers for sales of Class B and 529-B shares. CMTA also pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers of Class B and 529-B shares. For Class C and 529-C shares, the Principal Underwriter receives any contingent deferred sales charges that apply during the first year after purchase. CMTA pays the Principal Underwriter for advancing the immediate service fees and commissions paid to qualified dealers of Class C and 529-C shares. For Class 529-E shares, CMTA pays the Principal Underwriter for advancing the immediate service fees and commissions paid to qualified dealers. For Class F and 529-F shares, CMTA pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers and advisers who sell Class F and 529-F shares. 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). 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 Trustees and separately by a majority of the trustees who are not "interested persons" of the funds and who have no direct or indirect financial interest in the operation of the Plans or the Principal Underwriting Agreement. Potential benefits of the Plans to the funds include: shareholder services; savings to the fund in transfer agency costs; savings to the funds in advisory fees and other expenses; benefits to the investment process from growth or stability of assets; and maintenance of a financially healthy management organization. The selection and nomination of trustees who are not "interested persons" of the fund are committed to the discretion of the trustees who are not "interested persons" during the existence of the Plans. The Plans may not be amended to increase materially the amount spent for distribution without shareholder approval. Plan expenses are reviewed quarterly and the Plans must be renewed annually by the Boards of Trustees. Under the Plans, each fund may annually expend the following amounts to finance any activity which is primarily intended to result in the sale of fund shares, provided each fund's Board of Trustees has approved the category of expenses for which payment is being made: (i) for Class A shares, up to 0.15% of its average daily net assets attributable to Class A shares; (ii) for Class 529-A shares for CMTA only, up to 0.50% of its net assets attributable to Class 529-A shares; (iii) for Class B and 529-B shares, for CMTA only, 0.90% of its average daily net assets attributable to Class B and 529-B shares, respectively; (iv) for Class C and 529-C shares for CMTA only, 1.00% of its average daily net assets attributable to Class C and 529-C shares, respectively; (v) for Class 529-E shares for Cash Management Trust only, up to 0.75% of its average daily net assets Money Market Funds - Page 25 attributable to Class 529-E shares; and (vi) for Class F and 529-F shares for CMTA only, up to 0.50% of its average daily net assets attributable to Class F and 529-F shares, respectively.For Class A and 529-A shares, (i) up to 0.15% is reimbursed to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers. For Class B and 529-B shares, (i) 0.15% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.75% is paid to the Principal Underwriter for distribution-related expenses, including the financing of commissions paid to qualified dealers. For Class C and 529-C shares, (i) 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.75% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers. For Class 529-E shares, (i) 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) 0.25% is paid to the Principal Underwriter for paying distribution-related expenses, including commissions paid to qualified dealers. For Class F and 529-F shares, 0.25% is paid to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers or advisers. Currently, no compensation is paid under each fund's Class F and 529-F Plans for distribution-related expenses. During the 2001 fiscal year, 12b-1 expenses accrued and paid, and if applicable, unpaid, were:
12B-1 EXPENSES 12B-1 EXPENSES -------------------------- ACCRUED AND PAID ACCRUED AND UNPAID ---------------------------------------------------- $4,473,000 CMTA $410,000 CMTA CLASS A $ 385,000 CTRS $ 36,000 CTRS $ 113,000 CTEX $ 10,000 CTEX ------------------------------------------------------------------------------ CLASS B $ 100,000 CMTA $ 22,000 CMTA ------------------------------------------------------------------------------ CLASS C $ 12,000 CMTA $ 6,000 CMTA ------------------------------------------------------------------------------ CLASS F $ 3,000 CMTA $ 0 CMTA ------------------------------------------------------------------------------
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. Money Market Funds - Page 26 DIVIDENDS, DISTRIBUTIONS AND TAXES DAILY INCOME DIVIDENDS - A dividend from net investment income is declared each day on shares of each fund. This dividend is payable to everyone who was a shareholder at the close of business the previous day. Accordingly, when shares are purchased dividends begin to accrue on the day following receipt by the Transfer Agent of payment for the shares; when shares are redeemed, the shares are entitled to the dividend declared on the day the redemption request is received by the Transfer Agent. Dividends are automatically reinvested in shares of the same class, on the last business day of the month, at net asset value (without sales charge), unless a shareholder otherwise instructs the Transfer Agent in writing. Shareholders so requesting will be mailed checks in the amount of the accumulated dividends. Under the penny-rounding method of pricing (see "Purchase of Shares"), each fund rounds its per share net asset value to the nearer cent to maintain a stable net asset value of $1.00 per share. Accordingly its share price ordinarily would not reflect realized or unrealized gains or losses unless such gains or losses were to cause the net asset value to deviate from $1.00 by one half-cent or more. Pursuant to Securities and Exchange Commission regulations, the Trustees have undertaken, as a particular responsibility within their overall duty of care owed to shareholders, to assure to the extent reasonably practicable that each fund's net asset value per share, rounded to the nearer cent, will not deviate from $1.00. Among the steps that could be taken to maintain the net asset value at $1.00 when realized or unrealized gains or losses approach one half-cent per share would be to reflect all or a portion of such gains or losses in the daily dividends declared. This would cause the amount of the daily dividends to fluctuate and to deviate from a fund's net investment income for those days, and could cause the dividend for a particular day to be negative. In that event a fund would offset any such amount against the dividends that had been accrued but not yet paid for that month. Alternatively, each fund has reserved the right to adjust its total number of shares outstanding, if deemed advisable by the Trustees, in order to maintain the net asset value of its shares at $1.00. This would be done either by regarding each shareholder as having contributed to the capital of the fund the number of full and fractional shares that proportionately represents the excess, thereby reducing the number of outstanding shares, or by declaring a stock dividend and increasing the number of outstanding shares. Each shareholder will be deemed to have agreed to such procedure by investing in a fund. Such action would not change a shareholder's pro rata share of net assets, but would reflect the increase or decrease in the value of the shareholder's holdings which resulted from the change in net asset value. The funds do not ordinarily realize short- or long-term capital gains or losses on sales of securities. If a fund should realize gains or losses, it would distribute to shareholders all of the excess of net long-term capital gain over net short-term capital loss on sales of securities. Although each fund generally maintains a stable net asset value of $1.00 per share, if the net asset value of shares of a fund should, by reason of a distribution of realized capital gains, be reduced below a shareholder's cost, such distribution would in effect be a return of capital to that shareholder even though taxable to the shareholder, and a sale of shares by a shareholder at net asset value at that time would establish a capital loss for federal tax purposes. See also "Purchase of Shares" below. STATE TAXES - Information relating to the percentage of CTEX's income derived from securities issued in a particular state is provided after year end. Money Market Funds - Page 27 Since all of CTRS' dividends are expected to be attributable to income on U.S. Treasury securities, they are generally exempt from state personal income taxes. Also, some states do not have personal income taxes. CTRS believes that, as of the date of this publication, neither the District of Columbia nor any state imposes an income tax on dividends attributable to income on U.S. Treasury securities paid by the fund to individuals. However, other taxes may apply to dividends paid by CTRS to individual shareholders. Further, any distributions of capital gains may not be exempt from income taxes. Because tax laws vary from state to state and may change over time, you should consult your tax adviser or state tax authorities regarding the tax status of distributions from CTRS. Corporate shareholders may be subject to income tax or other types of tax on dividends they receive, even in those states that do not impose an income tax on distributions to individual shareholders of CTRS. Corporate shareholders should therefore seek advice from their tax adviser regarding the tax treatment of distributions from CTRS. ADDITIONAL INFORMATION CONCERNING TAXES The following is only a summary of certain additional federal, state and local tax considerations generally affecting CTEX and its shareholders. No attempt is made to present a detailed explanation of the tax treatment of CTEX or its shareholders, and the discussion here and in the funds' prospectus is not intended as a substitute for careful tax planning. Investors should consult their own tax advisers for additional details as to their particular tax situations. CTEX GENERAL - CTEX 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 CTEX would generally not be suitable for tax-exempt institutions or tax-deferred retirement plans (e.g., employer-sponsored plans and IRAs). Such retirement plans would not gain any benefit from the tax-exempt nature of CTEX's dividends because such dividends would be ultimately taxable to beneficiaries when distributed to them. In addition, CTEX 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, partnerships and their partners and S Corporations and their shareholders. The percentage of total dividends paid by CTEX 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 CTEX to pay exempt-interest dividends during any taxable year, at the close of each fiscal quarter at least 50% of the aggregate value of CTEX's assets must consist of tax-exempt securities. Not later than 60 days after the close of its taxable year, CTEX will notify each shareholder of the portion of the dividends paid by CTEX to the shareholder with respect to such taxable year which constitutes exempt-interest dividends. Shareholders are required by the Code to report to the federal government all exempt-interest dividends received from the fund. The aggregate amount of dividends so designated cannot, however, exceed the excess of the amount of interest excludable from gross income from tax Money Market Funds - Page 28 under Section 103 of the Code received by CTEX 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 CTEX shares is not deductible for federal income tax purposes if CTEX distributes exempt-interest dividends during the shareholder's taxable year. Although CTEX normally maintains a constant net asset value of $1.00 per share, in the event a shareholder receives an exempt-interest dividend with respect to any share and such share is held for six months or less, and is sold or exchanged at a loss, such loss will be disallowed to the extent of the amount of such exempt-interest dividend. UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO COLLEGEAMERICA ACCOUNTS. Money Market Funds - Page 29 PURCHASE OF SHARES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS ------------------------------------------------------------------------------- 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, has a sales agreement with American Funds Distributors and is authorized to sell a CollegeAmerica account in the case of 529 shares. ------------------------------------------------------------------------------- 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 Internet Purchases, Redemptions and Exchanges" below). ------------------------------------------------------------------------------- By Internet Please contact your Complete the American FundsLink investment dealer to Authorization Form. Once you open account, then establish 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 Internet 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 the Principal Underwriter reserve the right to reject any purchase order. Generally, Class F shares are generally only available to fee-based programs of investment firms that have special agreements with the funds' distributor and certain registered investment advisers. Class B and C shares are generally not available to certain employer-sponsored retirement plans, such as 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money Money Market Funds - Page 30 purchase pension and profit sharing plans. Class 529 shares may be purchased by investors only through CollegeAmerica accounts. Class 529-E shares may only be purchased by investors participating in CollegeAmerica through an eligible employer plan. Class R-5 shares of each fund are available to clients of the Personal Investment Management Group of Capital Guardian Trust Company who do not have an intermediary associated with their accounts. In addition, the state tax-exempt funds are only offered in certain states, and tax-exempt funds in general should not serve as retirement plan investments. 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-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. The minimum is $50 for additional investments (except for retirement plan payroll deductions as noted above). PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B shares for all American Funds is $100,000. Direct purchases of Class B shares of The Cash Management Trust of America are not permitted; shares may be acquired only by exchanging from Class B shares of other American Funds. For investments above $100,000, Class A shares are generally a less expensive option over time due to sales charge reductions or waivers. PURCHASE MAXIMUM FOR CLASS C SHARES - The maximum purchase order for Class C shares for all American Funds is $500,000. Direct purchases of Class C shares of The Cash Management Trust of America are not permitted; shares may be acquired only by exchanging from Class C shares of other American Funds. FUND NUMBERS - Here are the fund numbers for use with our automated telephone line, American FundsLine/(R)/ (see description below):
FUND NUMBERS ---------------------------------------- FUND CLASS A CLASS B CLASS C CLASS F ---------------------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . 002 202 302 402 American Balanced Fund/(R)/ . . . . . . . . . . . . 011 211 311 411 American Mutual Fund/(R)/ . . . . . . . . . . . . . 003 203 303 403 Capital Income Builder/(R)/ . . . . . . . . . . . . 012 212 312 412 Capital World Growth and Income Fund/SM/ . . . . . 033 233 333 433 EuroPacific Growth Fund/(R)/ . . . . . . . . . . . 016 216 316 416 Fundamental Investors/SM/ . . . . . . . . . . . . . 010 210 310 410 The Growth Fund of America/(R)/ . . . . . . . . . . 005 205 305 405 The Income Fund of America/(R)/ . . . . . . . . . . 006 206 306 406 The Investment Company of America/(R)/ . . . . . . 004 204 304 404 The New Economy Fund/(R)/ . . . . . . . . . . . . . 014 214 314 414 New Perspective Fund/(R)/ . . . . . . . . . . . . . 007 207 307 407 New World Fund/SM/ . . . . . . . . . . . . . . . . 036 236 336 436 SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . 035 235 335 435 Washington Mutual Investors Fund/SM/ . . . . . . . 001 201 301 401 BOND FUNDS American High-Income Municipal Bond Fund/(R)/ . . . 040 240 340 440 American High-Income Trust/SM/ . . . . . . . . . . 021 221 321 421 The Bond Fund of America/SM/ . . . . . . . . . . . 008 208 308 408 Capital World Bond Fund/(R)/ . . . . . . . . . . . 031 231 331 431 Intermediate Bond Fund of America/SM/ . . . . . . . 023 223 323 423 Limited Term Tax-Exempt Bond Fund of America/SM/ . 043 243 343 443 The Tax-Exempt Bond Fund of America/(R)/ . . . . . 019 219 319 419 The Tax-Exempt Fund of California/(R)/* . . . . . . 020 220 320 420 The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . 024 224 324 424 The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . 025 225 325 425 U.S. Government Securities Fund/SM/ . . . . . . . . 022 222 322 422 MONEY MARKET FUNDS The Cash Management Trust of America/(R)/ . . . . . 009 209 309 409 The Tax-Exempt Money Fund of America/SM/ . . . . . 039 N/A N/A N/A The U.S. Treasury Money Fund of America/SM/ . . . . 049 N/A N/A N/A ___________ *Available only in certain states.
Money Market Funds - Page 31
FUND NUMBERS --------------------------------------------- CLASS CLASS CLASS CLASS CLASS FUND 529-A 529-B 529-C 529-E 529-F ------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund/(R)/ . . . . . . . . 1002 1202 1302 1502 1402 American Balanced Fund/(R)/ . . 1011 1211 1311 1511 1411 American Mutual Fund/(R)/ . . . 1003 1203 1303 1503 1403 Capital Income Builder/(R)/ . . 1012 1212 1312 1512 1412 Capital World Growth and Income Fund/SM/ . . . . . . . . . . . 1033 1233 1333 1533 1433 EuroPacific Growth Fund/(R)/ . 1016 1216 1316 1516 1416 Fundamental Investors/SM/ . . . 1010 1210 1310 1510 1410 The Growth Fund of America/(R)/ 1005 1205 1305 1505 1405 The Income Fund of America/(R)/ 1006 1206 1306 1506 1406 The Investment Company of America/(R)/. . . . . . . . . . 1004 1204 1304 1504 1404 The New Economy Fund/(R)/ . . . 1014 1214 1314 1514 1414 New Perspective Fund/(R)/ . . . 1007 1207 1307 1507 1407 New World Fund/SM/ . . . . . . 1036 1236 1336 1536 1436 SMALLCAP World Fund/(R)/ . . . 1035 1235 1335 1535 1435 Washington Mutual Investors Fund/SM/ . . . . . . . . . . . 1001 1201 1301 1501 1401 BOND FUNDS American High-Income Trust/SM/ 1021 1221 1321 1521 1421 The Bond Fund of America/SM/ . 1008 1208 1308 1508 1408 Capital World Bond Fund/(R)/ . 1031 1231 1331 1531 1431 Intermediate Bond Fund of America/SM/ . . . . . . . . . . 1023 1223 1323 1523 1423 U.S. Government Securities Fund/SM/. . . . . . . . . . . . 1022 1222 1322 1522 1422 MONEY MARKET FUND The Cash Management Trust of America/(R)/. . . . . . . . . . 1009 1209 1309 1509 1409
Money Market Funds - Page 32 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" above for a listing of the funds.)
DEALER SALES CHARGE AS COMMISSION PERCENTAGE OF THE: AS PERCENTAGE ------------------ OF THE AMOUNT OF PURCHASE AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING -INVESTED- PRICE PRICE ------------------------------------------------------------------- -------- ----- ----- 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) ------------------------------------------------------------------------------
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 plans with assets invested in the American Funds (see "Individual Retirement Account (IRA) Rollovers" below) may invest with no sales charge and are not subject to a CDSC. 403(b) plans may be treated as employer-sponsored plans for sales charge purposes if: (i) the American Funds are principal investment options; (ii) the employer facilitates the enrollment process by, for example, allowing for onsite group enrollment meetings held during working hours; and (iii) there is only one dealer firm assigned to the plans. 403(b) plans meeting these criteria may invest with no sales charge and are not subject to a CDSC if investing $1 million or more or having 100 or more eligible employees. Investments made through accounts that purchased Class A shares of the fund before March 15, 2001 and are part of 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 Class A Plan of Distribution on investments made with no initial sales charge. Money Market Funds - Page 33 A transfer from the Virginia Prepaid Education Program or the Virginia Education Savings Trust to a CollegeAmerica account will be made with no sales charge. No commission will be paid to the dealer on such a transfer. 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) insurance company separate accounts; (5) accounts managed by subsidiaries of The Capital Group Companies, Inc.; (6) The Capital Group Companies, Inc., its affiliated companies and Washington Management Corporation; (7) an individual or entity with a substantial business relationship with The Capital Group Companies, Inc. or its affiliates, as determined by a Vice President or more senior officer of the Capital Research and Management Company Fund Administration and Compliance Unit; and (8) wholesalers and full-time employees directly supporting wholesalers involved in the distribution of insurance company separate accounts whose underlying investments are managed by any affiliate of The Capital Group Companies, Inc. 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 AND C SHARES - Except as described above, a CDSC of 1% applies to redemptions of Class A shares of the American Funds, other than the money market funds, made within 12 months following the purchase of Class A shares of $1 million or more made without an initial sales charge. A CDSC of 1% also applies to redemptions of Class C shares of the American Funds made within 12 months following the purchase of the Class C shares. 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" and "CDSC Waivers for Class B and C Shares" below. Money Market Funds - Page 34 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:
CONTINGENT DEFERRED SALES CHARGE ON SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD -------------------------------------------------------------------------- 1 5.00% 2 4.00 3 4.00 4 3.00 5 2.00 6 1.00
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 and C 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 followed by shares that you have owned the longest during the six-year period. CLASS F AND CLASS 529-E SALES CHARGE - Class F and 529-E shares are sold with no initial or contingent deferred sales charge. DEALER COMMISSIONS AND COMPENSATION - For Class A shares, commissions (up to 1%) are paid to dealers who initiate and are responsible for purchases of $1 million or more, for purchases by any employer-sponsored defined contribution-type 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 assets of $50 million or more. Commissions on investments in Class A shares are paid at the following rates: 1.00% on amounts of $1 million to $4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on amounts over $10 million. Commissions are based on cumulative investments and are not annually reset. For Class B shares, compensation equal to 4.00% of the amount invested is paid by the Principal Underwriter to dealers who sell Class B shares. For Class C shares, compensation equal to 1.00% of the amount invested is paid by the Principal Underwriter to dealers who sell Class C shares. CONVERSION OF CLASS B AND C SHARES - Class B shares automatically convert to Class A shares in the month of the eight-year anniversary of the purchase date. Class C shares automatically convert to Class F shares in the month of the ten-year anniversary of the purchase date. Class 529-C shares will not convert to Class 529-F shares. The conversion of shares is subject to the Internal Revenue Service's continued position that the conversions are not subject to federal income tax. In the event the Internal Revenue Service no longer takes this position, the Money Market Funds - Page 35 automatic conversion feature may be suspended, in which event no further conversions of Class B or C shares would occur while such suspension remained in effect. In that event, at your option, Class B shares could be exchanged for Class A shares and Class C shares for Class F shares on the basis of the relative net asset values of the two classes, without the imposition of a sales charge or fee; however, such an exchange could constitute a taxable event for you. Absent such an exchange, Class B and C shares would continue to be subject to higher expenses for longer than eight years and ten years, respectively. 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 at the time you purchase shares if you 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 future 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 for equity funds and $100,000 or more for bond funds 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. The dealer assigned to the account at the end of the period will receive an appropriate commission adjustment. If the difference is not paid by the close of the Statement 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. Accordingly, upon your request, the sales charge paid on investments made 90 days prior to the Statement revision will be adjusted to reflect the revised Statement. Existing holdings eligible for rights of accumulation (see below), including Class A shares held in a fee-based arrangement, other classes of shares of the American Funds, and any individual investments in American Legacy variable annuities and variable life insurance policies (American Legacy, American Legacy II and American Legacy III Money Market Funds - Page 36 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. The Statement will be considered completed if the shareholder dies within the 13-month Statement period. Commissions will not be adjusted or paid on the difference between the Statement amount and the amount actually invested before the shareholder's death. 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 total monthly investment will be multiplied by 13 and then multiplied by 1.5. The current value of existing American Funds investments (other than money market fund investments) and any rollovers or transfers reasonably anticipated to be invested in non-money market American Funds during the 13-month period are added to the figure determined above. The sum is the Statement amount and applicable breakpoint level. On the first investment and all other investments made pursuant to the Statement, a sales charge will be assessed according to the sales charge breakpoint thus determined. There will be no retroactive adjustments in sales charges on investments made during the 13-month period. Shareholders purchasing shares at a reduced sales charge under a Statement indicate their acceptance of these terms with their first purchase. AGGREGATION - Sales charge discounts are available for certain aggregated investments. Qualifying investments include those made by you and your immediate family (your spouse and your children under the age of 21), if all parties are purchasing shares for their own accounts and/or: -individual-type employee benefit plan(s), such as an IRA, 403(b) plan (see exception below), or single-participant Keogh-type plan; -business accounts solely controlled by you or your immediate family (for example, you own the entire business); -trust accounts established by you or your immediate family. 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; -endowments or foundations established and controlled by you or your immediate family; or -CollegeAmerica accounts. Accounts will be aggregated at the account owner level. Class 529-E accounts may only be aggregated with an eligible employer plan. 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 employee benefit plans other than the individual-type employee benefit plans described above; Money Market Funds - Page 37 -made for two or more employee benefit plans of a single employer or of affiliated employers as defined in the 1940 Act, again excluding individual-type employee benefit plans described above; -for a diversified common trust fund or other diversified pooled account not specifically formed for the purpose of accumulating fund shares; -for non-profit, charitable or educational organizations (or any employer-sponsored retirement plan for such an endowment or foundation) or any endowments or foundations established and controlled by the organization; or -for participant accounts of a 403(b) plan that is treated as an employer-sponsored plan (see "Class A Purchases Not Subject to Sales Charges" above), or made for two or more 403(b) plans that are treated as employer-sponsored plans of a single employer or affiliated employers as defined in the 1940 Act. 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 all classes of 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. Shares of money market funds purchased through an exchange, reinvestment or cross-reinvestment from a fund having a sales charge also qualify. However, direct purchases of the money market funds are excluded. RIGHTS OF ACCUMULATION - Subject to the limitations described under the aggregation policy, you may take into account the current value (or if greater, the amount you invested less any withdrawals) of your existing holdings in all share classes of 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: (1) Exchanges (except if shares acquired by exchange are then redeemed within 12 months of the initial purchase). (2) 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. Money Market Funds - Page 38 (3) Distributions from 403(b) plans or IRAs due to attainment of age 59-1/2, and required minimum distributions from retirement accounts upon the attainment of age 70-1/2. Such distributions may not exceed 12% of the value of the account annually.(4) Tax-free returns of excess contributions to IRAs. (4) Redemptions through systematic withdrawal plans (see "Automatic Withdrawals" below), not exceeding 12% each year of the lesser of the original purchase cost or the current market value of the shares being sold that would otherwise be subject to a CDSC. (5) For Class 529-A shareholders only, redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship. CDSC WAIVERS FOR CLASS B AND C SHARES - Any CDSC on Class B and C shares may be waived in the following cases: (1) Redemptions through systematic withdrawal plans ("SWPs") (see "Automatic Withdrawals" below) not exceeding 12% each year of the lesser of the original purchase cost or the current market value of the shares being sold that would otherwise be subject to a 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% SWP 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. Such distributions may not exceed 12% of the value of the account annually. (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. (4) For Class 529-B and 529-C shareholders only, redemptions due to a beneficiary's death, post-purchase disability or receipt of a scholarship. CDSC waivers on Class A, B and C shares are allowed only in the cases listed above. For example, CDSC waivers will not be allowed for: -Redemptions of dividend and capital gain distributions, redemptions of appreciated shares, redemptions through SWPs, and required minimum distributions, to the extent in aggregate they exceed 12% of an account value; or -Redemptions of Class 529-B and 529-C shares due to: termination of CollegeAmerica; a determination by the Internal Revenue Service that CollegeAmerica does not qualify as a qualified tuition program under the Code; Money Market Funds - Page 39 proposal or enactment of law that eliminates or limits the tax-favored status of CollegeAmerica; or the Virginia College Savings Plan eliminating the fund as an option for additional investment within CollegeAmerica. INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS Assets from a retirement plan (plan assets) may be invested in any class of shares of the American Funds through an IRA rollover plan. All such rollover investments will be subject to the terms and conditions for Class A, B, C and F shares contained in the funds' current prospectus and statement of additional information. An IRA rollover involving plan assets that offered an investment option managed by any affiliate of The Capital Group Companies, Inc., including any of the American Funds, may be invested in: 1) Class A shares at net asset value; 2) Class A shares subject to the applicable initial sales charge; 3) Class B shares; 4) Class C shares; or 5) Class F shares. Plan assets invested in Class A shares with a sales charge, B, C or F shares are subject to the terms and conditions contained in the funds' current prospectus and statement of additional information. Advisers will be compensated according to the policies associated with each share class and described in the funds' current prospectus and statement of additional information. Plan assets invested in Class A shares at net asset value will not be subject to a contingent deferred sales charge and will immediately begin to accrue service fees (i.e., shares do not have to age). Dealer commissions will be paid only on IRA rollovers of $1 million or more according to the schedule applicable to Class A share investments of $1 million or more (see "Dealer Commissions and Compensation" above). IRA rollovers that do not indicate which share class plan assets should be invested in and which do not have an adviser associated with the account will be invested in Class F shares. Additional plan assets may be rolled into the account holding F shares; however, subsequent contributions will not be allowed to be invested in F shares. PRICE OF SHARES The price you pay for fund shares (normally $1.00) is the net asset value per share which is calculated once daily at the normal close of trading (currently approximately 4:00 p.m., New York time) each day the New York Stock Exchange is open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00 p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New York time on both days. Each fund may also calculate its share price on days the New York Stock Exchange is closed when deemed prudent to do so by the funds' officers. The New York Stock Exchange is currently closed on weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.'s Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The valuation of each fund's portfolio securities and calculation of its net asset value are based upon the penny-rounding method of pricing pursuant to Securities and Exchange Commission regulations. Under the Securities and Exchange Commission regulations permitting the use of the penny-rounding method of pricing, each fund must maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase instruments having remaining maturities of 13 months or less only (25 months or less in the case of U.S. Government securities), and invest Money Market Funds - Page 40 only in securities determined by the Board of Trustees to be of high quality with minimal credit risks. 1. All securities with 60 days or less to maturity are amortized to maturity based on their cost if acquired within 60 days of maturity, or if already held on the 60th day, based on the value determined on the 61st day. The maturities of variable or floating rate instruments, with the right to resell them at an agreed-upon price to the issuer or dealer, are deemed to be the time remaining until the later of the next interest adjustment date or until they can be resold. Other securities with more than 60 days remaining to maturity are valued at prices obtained from a pricing service selected by the Investment Adviser, except that, where such prices are not available or where the Investment Adviser has determined that such prices do not reflect current market value, they are valued at the mean between current bid and ask quotations obtained from one or more dealers in such securities. Where market prices or market quotations are not readily available, securities are valued at fair value as determined in good faith by the Board of Trustees or a committee thereof. The fair value of all other assets is added to the value of securities to arrive at the total assets; 2. There are deducted from the total assets, thus determined, the liabilities, including proper accruals of expense items; and 3. The 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. The net asset value of each share will normally remain constant at $1.00. In case of orders sent directly to a fund or American Funds Service Company, an investment dealer MUST be indicated. Any purchase order may be rejected by the Principal Underwriter or by the funds. SELLING SHARES Shares are sold at the net asset value next determined after your request is received in good order by the Transfer Agent, dealer or any of their designees. Sales of certain Class A, B and C shares may be subject to a CDSC. Generally, Class F shares may only be sold through fee-based programs of investment firms and registered investment advisers with special agreements with the fund's distributor. You may sell (redeem) other classes of 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: Money Market Funds - Page 41 - Over $75,000; -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. The Transfer Agent reserves the right to require a signature guarantee on any redemptions. -Additional documentation may be required for sales of shares held in corporate, partnership or fiduciary accounts. -You must include with your written request any shares you wish to sell that are in certificate form. TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING THE INTERNET -Redemptions by telephone, fax or the Internet (including American FundsLine/(R)/ and American FundsLine OnLine/(R)/) are limited to $75,000 per shareholder each day. -Checks must be made payable to the registered shareholder(s). -Checks must be mailed to an address of record that has been used with the account for at least 10 days. MONEY MARKET FUNDS -You may have redemptions of $1,000 or more wired to your bank by writing American Funds Service Company. -You may establish check writing privileges (use the money market funds application). - If you request check writing privileges, you will be provided with checks that you may use to draw against your account. These checks may be made payable to anyone you designate and must be signed by the authorized number of registered shareholders exactly as indicated on your checking account signature card. - Check writing is not available for any of the 529 share classes or B, C or F share classes of The Cash Management Trust of America. If you sell Class A, B or C shares and request a specific dollar amount to be sold, we will sell sufficient shares so that the sale proceeds, after deducting any applicable CDSC, equals the dollar amount requested. Money Market Funds - Page 42 Redemption proceeds will not be mailed until sufficient time has passed to provide reasonable assurance that checks or drafts (including certified or cashier's checks) for shares purchased have cleared (which may take up to 15 calendar days from the purchase date). Except for delays relating to clearance of checks for share purchases or in extraordinary circumstances (and as permissible under the 1940 Act), sale proceeds will be paid on or before the seventh day following receipt and acceptance of an order. Interest will not accrue or be paid on amounts that represent uncashed distribution or redemption checks. You may reinvest proceeds from a redemption or a dividend or capital gain distribution without a sales charge in any fund in The American Funds Group within 90 days after the date of the redemption or distribution. Proceeds from a Class B share redemption where a CDSC was charged will be reinvested in Class A shares. Proceeds from any other type of redemption and all dividend and capital gain distributions will be reinvested in the same share class from which the original redemption or distribution was made. Any CDSC on Class B or C shares will be credited to your account. Redemption proceeds of Class A shares representing direct purchases in the money market funds that are reinvested in non-money market funds will be subject to a sales charge. 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 The following services and privileges are generally available to all shareholders. However, certain services and privileges may not be available for Class 529 shareholders or if your account is held with an investment dealer. AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make monthly or quarterly investments in The American Funds through automatic debits from your bank account. To set up a plan you must fill out an account application and specify the amount you would like to invest ($50 minimum) and the date on which you would like your investments to occur. The plan will begin within 30 days after your account application is received. Your bank account will be debited on the day or a few days before your investment is made, depending on the bank's capabilities. The Transfer Agent will then invest your money into the fund you specified on or around the date you specified. If the date you specified falls on a weekend or holiday, your money will be invested on the following business day. However, if the following business day falls in the next month, your money will be invested on the business day immediately preceding the weekend or holiday. 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 and fund at net asset value 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. Dividend and capital gain distributions paid by the 529 share classes will automatically be reinvested. 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 Money Market Funds - Page 43 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 - For all share classes, except the 529 classes of shares, 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 or C 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. Exchanges of Class F shares generally may only be done through fee-based programs of investment firms that have special agreements with the funds' distributor and certain registered investment advisers. Exchanges from Class A, C or F shares to the corresponding 529 share class, particularly in the case of Uniform Gifts to Minors Act or Uniform Transfer to Minors Act custodial accounts, may result in significant legal and tax consequences as described in the CollegeAmerica Program Description. Please consult your financial adviser prior to making such an exchange. You may exchange shares of other classes by writing to the Transfer Agent (see "Selling 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 "American Funds Service Company Service Areas" in the prospectus for the appropriate fax numbers) or telegraphing the Transfer Agent. (See "Telephone and Internet Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type retirement plans for which Capital Bank and Trust Company serves as trustee may not be exchanged by telephone, Internet, fax or telegraph. Exchange redemptions and purchases are processed simultaneously at the share prices next determined after the exchange order is received. (See "Price of Shares" above.) THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES. Money Market Funds - Page 44 AUTOMATIC EXCHANGES - For all share classes, except the 529 classes of shares, 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 - For all share classes, except the 529 classes of shares, you may automatically withdraw shares from any of the funds in The American Funds Group. You can make automatic withdrawals of $50 or more as often as you wish if your account is worth at least $10,000, or up to four times a year for an account worth at least $5,000. You can designate the day of each period for withdrawals and request that checks be sent to you or someone else. Withdrawals may also be electronically deposited to your bank account. The Transfer Agent will withdraw your money from the fund you specify on or around the date you specify. If the date you specified falls on a weekend or holiday, the redemption will take place on the previous business day. However, if the previous business day falls in the preceding month, the redemption will take place on the following business day after the weekend or holiday. 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, purchases through automatic investment plans and certain retirement plans, as well as automatic exchanges and withdrawals 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 $75,000 per American Funds shareholder each day) from non-retirement plan accounts, 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 website 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 "Telephone and Internet 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 - 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 INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES - By using the telephone (including American FundsLine) or the Internet (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 Money Market Funds - Page 45 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, it and/or the fund may be liable for losses due to unauthorized or fraudulent instructions. In the event that shareholders are unable to reach the fund by telephone because of technical difficulties, market conditions, or a natural disaster, redemption and exchange requests may be made in writing only. REDEMPTION OF SHARES - The funds' Declaration of Trust permit 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 of record owns shares having an aggregate net asset value of less than the minimum initial investment amount required of new shareholders as set forth in the fund's current registration statement under the 1940 Act, and subject to such further terms and conditions as the Board of Trustees of the fund may from time to time adopt. CHECK WRITING -- When the checks you write are presented to The Chase Manhattan Bank for payment, the bank will instruct the Transfer Agent to withdraw the appropriate number of shares from your account (provided payment for the shares has been collected). The bank's rules and regulations governing such checking accounts include the right of the bank not to honor checks in amounts exceeding the value of the account at the time the check is presented for payment. Each month canceled checks will be returned to you. Generally, you pay no fee for this check writing service; however, reasonable service charges for "regular or frequent use" of this service may be assessed in the future. Besides being convenient, this procedure enables you to continue earning daily income dividends on your money until your checks actually clear. EXECUTION OF PORTFOLIO TRANSACTIONS The Investment Adviser places orders for the funds' 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 provided investment research, statistical, or other related services to the Investment Adviser. The funds do not consider that they have 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 funds 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 funds, they are effected only when the Investment Adviser believes that to do so is in the interest of the funds. When such concurrent authorizations occur, the objective is to allocate the executions in an equitable manner. The funds will not pay a mark-up for research in principal transactions. GENERAL INFORMATION CUSTODIAN OF ASSETS - Securities and cash owned by the funds, including proceeds from the sale of shares of the funds and of securities in the funds' portfolio, are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as Custodian. If the fund holds non-U.S. Money Market Funds - Page 46 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 funds' shares, acts as dividend and capital gain distribution disbursing agent, and performs other related shareholder service functions. American Funds Service Company was paid a fee of $10,781,000, $753,000, and $184,000, by CMTA, CTRS and CTEX, for Class A shares, respectively, and $20,000 for CMTA Class B shares for the 2001 fiscal year. INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 350 South Grand Avenue, 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 funds' independent accountants is reviewed and determined annually by the Board of Trustees. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS - The funds' fiscal year ends on September 30. Shareholders are provided updated prospectuses annually and at least semiannually with reports showing the investment portfolio, financial statements and other information. The funds' annual financial statements are audited by the funds' independent accountants, PricewaterhouseCoopers LLP. In addition, shareholders may also receive proxy statements for the funds. In an effort to reduce the volume of mail shareholders receive from the funds when a household owns more than one account, the Transfer Agent has taken steps to eliminate duplicate mailings of prospectuses, shareholder reports and proxy statements. To receive additional copies of a prospectus, report or proxy statement, shareholders should contact the Transfer Agent. PERSONAL INVESTING POLICY - The funds, Capital Research and Management Company and its affiliated companies, including the funds' principal underwriter, have adopted codes of ethics which allow for personal investments, including securities in which the funds may invest from time to time. 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. SHAREHOLDER AND TRUSTEE RESPONSIBILITY - Under the laws of certain states, including Massachusetts where each fund was organized and California where each fund's principal office is located, shareholders of a Massachusetts business trust may, under certain circumstances, be held personally liable as partners for the obligations of the fund. However, the risk of a shareholder incurring any financial loss on account of shareholder liability is limited to circumstances in which a fund itself would be unable to meet its obligations. The Declaration of Trust contains an express disclaimer of shareholder liability for acts, omissions, obligations or affairs of the fund and provides that notice of the disclaimer may be given in each agreement, obligation, or instrument which is entered into or executed by the fund or Trustees. The Declaration of Trust provides for indemnification out of fund property of any shareholder held Money Market Funds - Page 47 personally liable for the obligations of each fund and also provides for each fund to reimburse such shareholder for all legal and other expenses reasonably incurred in connection with any such claim or liability. Under the Declaration of Trust, the Trustees, officers, employees or agents of each fund are not liable for actions or failure to act; however, they are not protected from liability by reason of their willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office. INVESTMENT RESULTS AND RELATED STATISTICS Each fund may from time to time provide yield information (including CTEX tax-equivalent yield information) or comparisons of the fund's yield to various averages in advertisements or in reports furnished to current or prospective shareholders. Yield will be calculated on a seven-day, tax-equivalent and effective basis, as appropriate, pursuant to formulas prescribed by the Securities and Exchange Commission: Seven-day yield = (net change in account value x /365//\\7\\) Tax-equivalent yield = tax-exempt portion of seven-day yield/(1-stated income tax rate) + taxable portion of seven day yield Effective yield* = ([1 + (net change in account value) /1//\\7\\]/365/) - 1 *The effective yield will assume a year's compounding of the seven-day yield. CMTA Class A ------------ The seven-day current and effective yields for the period ended March 31, 2002 are calculated as follows: ASSUMPTIONS: Value of hypothetical pre-existing account with exactly one share at the beginning of the period: $1.0000000 Value of same account* (excluding capital changes) at the end of the seven-day period ending March 31, 2002: $1.0002253 *Value includes additional shares acquired with dividends paid on the original share. CALCULATION: Ending account value: $1.0002253 Less beginning account value: $1.0000000 Net change in account value: $0.0002253 Seven-day yield = (0.0002253 X 365/7) = 1.17% Money Market Funds - Page 48 Effective yield = ([1 + (0.0002253) /1//\\7\\]/365/) - 1 = 1.18% CTRS ---- The seven-day current and effective yields for the period ended March 31, 2002 are calculated as follows: ASSUMPTIONS: Value of hypothetical pre-existing account with exactly one share at the beginning of the period: $1.0000000 Value of same account* (excluding capital changes) at the end of the seven-day period ending March 31, 2002: $1.0002184 *Value includes additional shares acquired with dividends paid on the original share. CALCULATION: Ending account value: $1.0002184 Less beginning account value: $1.0000000 Net change in account value: $0.0002184 Seven-day yield = (0.0002184 X 365/7) = 1.14% Effective yield = ([1 + (0.0002184)/1//\\7\\]/365/) - 1 = 1.15% CTEX ---- The seven-day current, effective and tax-equivalent yields for the period ended March 31, 2002 are calculated as follows: ASSUMPTIONS: Value of hypothetical pre-existing account with exactly one share at the beginning of the period: $1.0000000 Value of same account* (excluding capital changes) at the end of the seven-day period ending March 31, 2002: $1.0001544 *Value includes additional shares acquired with dividends paid on the original share. CALCULATION: Ending account value: $1.0001544 Less beginning account value: $1.0000000 Money Market Funds - Page 49 Net change in account value: $0.0001544 Tax-exempt portion of net change: $0.0001544 Taxable portion of net change: $ -0- Seven-day yield = ($0.0001544 X 365/7) = 0.81% Seven-day tax equivalent yield = ($0.0001544 X 365/7/(1-0.386)) = 1.32% Effective yield = [1 + ($0.0001544) 1/7]/365/-1 = 0.81% Each fund's investment results may also be calculated for longer periods in accordance with the following method: by subtracting (a) the net asset value of one share at the beginning of the period, from (b) the net asset value of all shares an investor would own at the end of the period for the share held at the beginning of the period (assuming reinvestment of all dividends and distributions) and dividing by (c) the net asset value per share at the beginning of the period. The resulting percentage indicates the positive or negative rate of return that an investor would have earned from reinvested dividends and distributions and any changes in share price during the period. Based on the foregoing formula, the lifetime return of CMTA was 467.3% (for the period 11/3/76 through 3/31/02), the lifetime return of CTEX was 44.9% (for the period 10/24/89 through 3/31/02), and the lifetime return of CTRS was 56.0% (for the period 2/1/91 through 3/31/02). Each fund's investment results will vary from time to time depending upon market conditions, the composition of the fund's portfolio and operating expenses of the fund, so that any yield figure should not be considered representative of what an investment in a fund may earn in any future period. These factors and possible differences in calculation methods should be considered when comparing each fund's investment results with those published for other investment companies, other investment vehicles and averages. Investment results also should be considered relative to the risks associated with the investment objective and policies. Money Market Funds - Page 50 APPENDIX 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. 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." 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: Money Market Funds - Page 51 "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." "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 debt securities 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: AAA "An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong." Money Market Funds - Page 52 AA "An obligation rated 'AA' differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong." A "An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions that obligations in higher rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong." BBB "An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions." BB "An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation." B "An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB' but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation." CCC "An obligation rated 'CCC' is currently vulnerable to nonpayment and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation." CC "An obligation rated 'CC' is currently highly vulnerable to nonpayment." C "A subordinated debt or preferred stock obligation rated 'C' is CURRENTLY HIGHLY VULNERABLE to nonpayment. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken but payments on this obligation are being continued. A 'C' also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments but that is currently paying." Money Market Funds - Page 53 D "An obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's 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 or the taking of a similar action if payments on an obligation 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." Money Market Funds - Page 54 The Cash Management Trust of America Investment Portfolio, September 30, 2001 Principal Market Yield at Amount Value Acquisition (000) (000) Certificates of Deposit - 2.38% ABN AMRO Bank NV October 2, 2001 3.53 $50,000 $50,000 Bayerische Hypo-und Vereinsbank AG October 2, 2001 3.58 20,000 20,000 Toronto-Dominion Bank October 2, 2001 3.51 25,000 25,000 October 24, 2001 2.52 75,000 75,000 Total certificates of deposit 170,000 Commercial Paper - 65.84% AB Spintab October 3, 2001 3.58 50,000 49,985 October 11, 2001 3.52 25,000 24,973 November 20, 2001 2.47 25,000 24,913 Abbey National North America October 24, 2001 2.43 50,000 49,919 Abbott Laboratories (1) October 18, 2001 3.46 50,000 49,914 AIG Funding Inc. October 18, 2001 2.65 25,000 24,967 Alcoa Inc. October 12, 2001 3.23 44,500 44,452 October 19, 2001 3.43 30,000 29,946 November 6, 2001 3.45 20,000 19,929 American Express Credit Corp. October 9, 2001 3.50 25,000 24,978 October 10, 2001 3.48 50,000 49,952 American Honda Finance Corp. October 10, 2001 3.49 40,000 39,961 October 11, 2001 3.50 35,000 34,963 October 31, 2001 2.86 24,000 23,941 Archer Daniels Midland Co.(1) October 9, 2001 3.51 30,000 29,974 Asset Securitization Cooperative Corp.(1) October 18, 2001 2.45 25,000 24,969 October 23, 2001 2.96 60,000 59,887 November 7, 2001 2.61 25,000 24,931 Bank of Nova Scotia October 10, 2001 3.53 25,000 24,976 November 26, 2001 2.52 25,000 24,901 Bayer Corp.(1) October 9, 2001 3.52 25,000 24,978 BellSouth Corp.(1) October 5, 2001 3.55 30,000 29,985 October 22, 2001 2.98 75,000 74,864 October 25, 2001 3.44 20,000 19,952 November 1, 2001 2.66 25,000 24,937 BMW US Capital Corp. October 3, 2001 3.47 50,000 49,986 November 26, 2001 2.53 25,000 24,900 BNP Paribas Finance, Inc. November 5, 2001 3.45 25,000 24,914 Bristol-Myers Squibb Co.(1) October 25, 2001 2.63 25,000 24,951 Canadian Wheat Board November 5, 2001 3.42 50,000 49,830 CBA (Delaware) Finance Inc. October 4, 2001 3.53 35,000 34,986 Chevron U.K. Investment PLC November 5, 2001 3.45 20,000 19,931 Coca-Cola Co. October 9, 2001 3.44 50,000 49,957 Colgate-Palmolive Co. (1) October 15, 2001 3.41 25,500 25,464 Corporate Asset Funding Co. Inc.(1) October 3, 2001 2.40 17,500 17,497 October 24, 2001 3.01 50,000 49,900 October 26, 2001 3.42 45,000 44,889 November 1, 2001 2.61 12,500 12,471 Diageo Capital PLC(1) October 4, 2001 3.53 25,000 24,990 October 19, 2001 3.43 25,000 24,955 E.I. du Pont de Nemours & Co. October 2, 2001 2.90 15,000 14,998 October 5, 2001 3.00 50,000 49,979 October 11, 2001 2.75 60,000 59,950 E.W. Scripps Co.(1) October 2, 2001 3.57 20,000 19,996 Emerson Electric Co.(1) October 26, 2001 2.51 50,000 49,910 Equilon Enterprises LLC October 16, 2001 3.43 50,000 49,924 October 18, 2001 3.01 16,400 16,375 October 22, 2001 2.45 15,000 14,978 October 23, 2001 3.39 5,000 4,989 November 2, 2001 2.58 14,000 13,967 Estee Lauder Companies Inc.(1) October 5, 2001 3.00 13,300 13,294 October 11, 2001 3.49 5,500 5,494 November 2, 2001 3.43 6,200 6,181 Export Development Corp. October 15, 2001 3.42 25,000 24,965 October 25, 2001 2.36 25,000 24,959 Exxon Imperial U.S. Inc.(1) October 10, 2001 3.01 30,000 29,975 Gannett Co., Inc.(1) October 12, 2001 3.44 50,000 49,943 October 16, 2001 2.45 75,000 74,918 Gaz de France October 5, 2001 3.51 25,000 24,988 General Electric Capital Corp. October 31, 2001 3.46 50,000 49,852 November 16, 2001 2.41 75,000 74,765 Glaxo Wellcome PLC (1) November 2, 2001 3.03 75,000 74,792 H.J. Heinz Finance Co.(1) October 9, 2001 2.65 20,167 20,154 October 12, 2001 2.96 50,000 49,951 Halifax PLC October 29, 2001 2.51 50,000 49,899 Hershey Foods Corp. October 18, 2001 2.35 25,000 24,971 Household Finance Corp. October 12, 2001 3.48 40,000 39,954 October 25, 2001 3.47 35,000 34,916 November 2, 2001 2.91 50,000 49,867 IBM Credit Corp. October 2, 2001 3.47 50,000 49,990 International Lease Finance Corp. October 24, 2001 3.43 30,000 29,932 October 29, 2001 3.43 40,000 39,890 John Hancock Capital Corp.(1) October 9, 2001 3.48 15,000 14,987 November 26, 2001 2.54 10,000 9,960 J.P. Morgan Chase & Co. October 11, 2001 3.50 25,000 24,973 October 16, 2001 3.48 25,000 24,962 October 23, 2001 3.46 50,000 49,890 October 25, 2001 2.46 25,000 24,957 KfW International Finance Inc. October 4, 2001 3.57 25,000 24,990 Kimberly-Clark Worldwide Inc. (1) October 18, 2001 3.01 20,000 19,970 Lloyds Bank PLC October 26, 2001 3.44 75,000 74,815 Marsh USA Inc.(1) October 26, 2001 3.42 25,000 24,939 Merck & Co., Inc. October 19, 2001 3.38 25,000 24,956 October 22, 2001 2.89 50,000 49,912 October 25, 2001 3.44 50,000 49,881 Monsanto Co. (1) October 24, 2001 2.89 30,000 29,942 Monte Rosa Capital Corp.(1) October 18, 2001 2.99 39,000 38,942 October 22, 2001 2.61 20,000 19,968 October 23, 2001 2.49 25,000 24,960 October 29, 2001 2.76 41,000 40,909 Novartis Finance Corp. (1) October 9, 2001 3.43 25,000 24,979 Pfizer Inc. (1) October 12, 2001 3.45 25,000 24,971 November 26, 2001 2.51 50,000 49,802 Preferred Receivables Funding Corp.(1) October 9, 2001 3.50 45,000 44,961 October 15, 2001 3.00 50,000 49,938 October 19, 2001 2.56 25,000 24,966 Private Export Funding Corp.(1) October 5, 2001 3.49 22,000 21,989 October 11, 2001 3.48 28,000 27,970 Procter & Gamble Co. October 4, 2001 3.45 50,000 49,981 October 25, 2001 2.46 50,000 49,915 Rio Tinto America, Inc.(1) October 12, 2001 3.49 10,000 9,988 November 2, 2001 3.42 30,000 29,906 November 21, 2001 2.46 20,000 19,929 Royal Bank of Canada October 5, 2001 3.50 35,000 34,983 SBC Communications Inc.(1) October 11, 2001 3.50 25,000 24,973 November 20, 2001 2.41 50,000 49,830 November 26, 2001 2.51 25,000 24,901 Societe Generale N.A. Inc. October 22, 2001 2.43 50,000 49,926 Sony Capital Corp.(1) October 16, 2001 3.49 30,000 29,954 October 25, 2001 2.96 25,000 24,949 Svenska Handelsbanken Inc. October 2, 2001 3.50 50,000 49,990 October 9, 2001 3.52 25,000 24,978 Texaco Inc. October 10, 2001 3.49 50,000 49,952 Textron Inc. (1) October 26, 2001 2.54 25,000 24,954 Three Rivers Funding Corp.(1) October 1, 2001 3.54 20,000 19,998 October 2, 2001 3.53 28,036 28,031 October 4, 2001 3.51 50,000 49,981 October 15, 2001 2.96 25,000 24,969 Toyota Motor Credit Corp. (1) November 2, 2001 2.86 50,000 49,869 Tribune Co.(1) October 12, 2001 3.50 35,000 34,959 October 26, 2001 2.47 20,000 19,964 October 29, 2001 2.61 10,000 9,978 Triple-A One Funding Corp.(1) October 1, 2001 3.50 50,000 49,995 October 4, 2001 3.01 25,000 24,992 October 17, 2001 3.51 50,000 49,917 UBS Finance (Delaware) Inc. October 16, 2001 3.48 50,000 49,923 Unilever Capital Corp.(1) October 11, 2001 3.03 25,000 24,977 October 12, 2001 3.41 25,000 24,972 United Parcel Service of America, Inc. October 12, 2001 2.56 25,000 24,979 United Technologies Corp. (1) October 5, 2001 3.61 25,000 24,988 Verizon Network Funding Co. October 9, 2001 3.01 35,000 34,974 October 10, 2001 3.41 20,000 19,981 October 22, 2001 3.36 15,000 14,969 November 7, 2001 3.35 30,000 29,894 November 27, 2001 2.52 20,000 19,916 Wachovia Corp. October 5, 2001 3.45 25,000 24,988 Wells Fargo & Co. October 26, 2001 2.90 50,000 49,896 November 15, 2001 2.39 50,000 49,848 Westpac Trust Securities NZ Ltd. October 10, 2001 3.51 50,000 49,951 November 27, 2001 2.51 25,000 24,896 Total Commercial Paper 4,699,887 Federal Agency Discount Notes - 27.79% Fannie Mae October 1, 2001 3.55 100,000 99,990 October 2, 2001 3.55 50,000 49,990 October 3, 2001 3.58 50,000 49,985 October 4, 2001 3.53 50,000 49,980 October 5, 2001 3.47 30,000 29,986 November 1, 2001 3.35 75,000 74,779 November 2, 2001 3.29 25,000 24,925 November 8, 2001 3.32 50,000 49,821 November 9, 2001 2.31 100,000 99,745 November 15, 2001 2.06 50,000 49,869 November 21, 2001 2.51 25,000 24,910 Federal Farm Credit Bank October 15, 2001 3.31 20,000 19,973 November 26, 2001 2.46 20,000 19,920 Federal Home Loan Banks October 1, 2001 3.44 42,400 42,396 October 3, 2001 3.58 50,000 49,985 October 5, 2001 3.52 50,000 49,976 October 12, 2001 3.46 50,000 49,943 October 17, 2001 3.38 50,000 49,921 October 19, 2001 3.39 21,200 21,162 October 26, 2001 3.41 50,000 49,877 October 31, 2001 2.55 60,000 59,869 Freddie Mac October 2, 2001 3.47 50,000 49,990 October 12, 2001 2.70 50,000 49,955 October 16, 2001 3.40 100,000 99,850 October 19, 2001 2.30 50,000 49,939 October 23, 2001 3.43 97,700 97,487 October 30, 2001 3.39 150,000 149,579 November 6, 2001 3.12 125,000 124,580 November 13, 2001 2.49 38,100 37,985 November 20, 2001 2.55 108,000 107,611 Sallie Mae (2) November 15, 2001 2.80 30,000 30,000 December 20, 2001 2.73 40,000 40,000 January 17, 2002 2.61 30,000 29,989 Tennessee Valley Authority October 11, 2001 3.43 50,000 49,948 October 26, 2001 3.42 50,000 49,877 Total Federal Agency Discount Notes 1,983,792 U.S. Treasuries - 1.40% U.S. Treasury Bills October 4, 2001 3.52 50,000 49,981 October 11, 2001 3.40 50,000 49,949 Total U.S. Treasury Securities 99,930 Other - 2.56% International Bank for Reconstruction and Development October 16, 2001 3.44 72,800 72,689 October 19, 2001 2.62 50,000 49,931 November 20, 2001 2.51 60,000 59,787 Total Other 182,407 Total Investment Securities: (cost: $7,136,045,000) 7,136,016 Excess of cash and receivables over payables 2,244 NET ASSETS $7,138,260 (1) Restricted securities that can be resold only to institutional investors. In practice, these securities are as liquid as unrestricted securities in the portfolio. (2) Coupon rate changes periodically; "yield at acquisition" reflects current coupon rate. See Notes to Financial Statements
The Cash Management Trust of America Financial statements Statement of assets and liabilities at September 30, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $7,136,045) $7,136,016 Cash 1,882 Receivables for - Sales of fund's shares 70,047 Dividends and interest 1,445 Other 4 71,496 7,209,394 Liabilities: Payables for - Repurchases of fund's shares 67,232 Dividends on fund's shares 827 Management services 1,538 Other expenses 1,537 71,134 Net assets at September 30, 2001 $7,138,260 Shares of beneficial interest issued and outstanding - unlimited shares authorized Class A shares: Net assets $7,075,224 Shares outstanding 7,075,250,923 Net asset value per share $1.00 Class B shares: Net assets $46,295 Shares outstanding 46,295,699 Net asset value per share $1.00 Class C shares: Net assets $13,336 Shares outstanding 13,336,386 Net asset value per share $1.00 Class F shares: Net assets $3,405 Shares outstanding 3,405,746 Net asset value per share $1.00 Statement of operations for the year ended September 30, 2001 (dollars in thousands) Investment income: Income: Interest $311,920 Expenses: Management services fee 17,312 Distribution expenses - Class A 4,473 Distribution expenses - Class B 100 Distribution expenses - Class C 12 Distribution expenses - Class F 3 Transfer agent fee - Class A 10,781 Transfer agent fee - Class B 20 Administrative services fees - Class C 4 Administrative services fees - Class F 3 Reports to shareholders 216 Registration statement and prospectus 675 Postage, stationery and supplies 2,064 Trustees' fees 53 Auditing and legal fees 53 Custodian fee 284 Taxes other than federal income tax 76 Other expenses 70 36,199 Net investment income 275,721 Unrealized appreciation on investments: Net unrealized appreciation on investments 21 Net increase in net assets resulting from operations $275,742 Statement of changes in net assets (dollars in thousands) Year ended September 30, September 30, 2001 2000 Operations: Net investment income $275,721 $311,066 Net unrealized appreciation (depreciation) on investments 21 (82) Net increase in net assets resulting from operations 275,742 310,984 Dividends paid to shareholders Dividends from net investment income: Class A (275,386) (310,985) Class B (337) (10) Class C (26) 0 Class F (43) 0 Total dividends (275,792) (310,995) Capital share transactions: Proceeds from shares sold 15,957,398 15,732,691 Proceeds from shares issued in reinvestment of net investment income dividends 255,470 285,391 Cost of shares repurchased (14,492,556) (16,463,123) Net increase (decrease) in net assets resulting from capital share transactions 1,720,312 (445,041) Total increase (decrease) in net assets 1,720,262 (445,052) Net assets: Beginning of year 5,417,998 5,863,050 End of year $7,138,260 $5,417,998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Cash Management Trust of America(the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks to provide income on cash reserves, while preserving capital and maintaining liquidity, through investments in high-quality short-term money market instruments. The fund offers four classes of shares as described below: Class A shares are sold without an initial sales charge. Class B shares are sold without an initial sales charge but are subject to a contingent deferred sales charge ("CDSC") paid upon redemption. This charge declines from 5% to zero over a period of six years. Class B shares automatically convert to Class A shares after eight years. Class C shares are sold without an initial sales charge but are subject to a CDSC of 1% for redemptions within one year of purchase. Class C shares automatically convert to Class F shares after ten years. Class F shares, which are sold exclusively through fee-based programs, are sold without an initial sales charge or CDSC. Holders of all classes of shares have equal pro rata rights to assets, dividends, liquidation and other rights. Each class has identical voting rights, except for exclusive rights to vote on matters affecting only its class. Each class of shares may have different distribution, administrative services and transfer agent fees and expenses. Differences in class-specific expenses will result in the payment of different per share dividends by each class. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles 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: NET ASSET VALUE - The fund uses the penny-rounding method of valuing its shares, in accordance with Securities and Exchange Commission ("SEC") rules. This method permits the fund to maintain a constant net asset value of $1.00 per share, provided the market value of the fund's shares does not deviate from $1.00 by more than one-half of 1% and the fund complies with other restrictions set forth in the SEC rules. SECURITY VALUATION - 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. 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. Securities and other 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 fund's Board of Trustees. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Interest income is recognized on an accrual baSIS. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security. DIVIDENDS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. CLASS ALLOCATIONS - Income, expenses (other than class-specific expenses) and unrealized gains and losses are allocated daily among the various share classes based on their relative net asset values. Distribution expenses, administrative services fees, certain transfer agent fees and other applicable class-specific expenses are accrued daily and charged to the respective share class. 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 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 based on net investment income determined on a tax basis and may differ from such amounts 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 is earned by the fund. As of September 30, 2001, the cost of investment securities for book and federal income tax reporting purposes was $7,136,045,000. Net unrealized depreciation on investments aggregated $29,000, all of which related to depreciated securities. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES The fee of $17,312,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which officers and certain Trustees of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on a series of rates beginning with 0.320% per annum of the first $1 billion of net assets decreasing to 0.270% of such assets in excess of $2 billion. For the year ended September 30, 2001, the management services fee was equivalent to an annualized rate of 0.281% of average net assets. DISTRIBUTION EXPENSES - The fund has adopted plans of distribution under which it may finance activities primarily intended to sell fund shares, provided the categories of expenses are approved in advance by the fund's Board of Trustees. The plans provide for annual expenses, based on average daily net assets, of up to 0.15% for Class A shares, 0.90% for Class B shares, 1.00% for Class C shares, and up to 0.50% for Class F shares. All share classes may use a portion (0.15% for Class A and Class B shares and 0.25% for Class C and Class F shares) of these expenses to pay service fees, or to compensate American Funds Distributors, Inc.("AFD"), the principal underwriter of the fund's shares, for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. The balance may be used for approved distribution expenses as follows: CLASS A SHARES - There are no additional approved categories of expense for Class A shares. For the year ended September 30, 2001, aggregate distribution expenses were $4,473,000, or 0.073% of average daily net assets attributable to Class A shares. CLASS B SHARES - In addition to service fees of 0.15%, approved categories of expense include fees of 0.75% per annum of average daily net assets attributable to Class B shares payable to AFD. AFD sells the rights to receive such payments (as well as any contingent deferred sales charges payable in respect of shares sold during the period) in order to finance the payment of dealer commissions. For the year ended September 30, 2001, aggregate distribution expenses were $100,000, or 0.90% of average daily net assets attributable to Class B shares. CLASS C SHARES - In addition to service fees of 0.25%, the Board of Trustees has approved the payment of 0.75% per annum of average daily net assets attributable to Class C shares to AFD to compensate firms selling Class C shares of the fund. For the period ended September 30, 2001, aggregate distribution expenses were $12,000, or 1.00% of average daily net assets attributable to Class C shares. CLASS F SHARES - The plan has an expense limit of 0.50%. However, the Board of Trustees has presently approved expenses under the plan of 0.25% per annum of average daily net assets attributable to Class F shares. For the period ended September 30, 2001, aggregate distribution expenses were $3,000, or 0.25% of average daily net assets attributable to Class F shares. As of September 30, 2001, aggregate distribution expenses payable to AFD for all share classes were $438,000. TRANSFER AGENT FEE - A fee of $10,801,000 was incurred during the year ended September 30, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of September 30, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $958,000. ADMINISTRATIVE SERVICES FEES - The fund has an administrative services agreement with CRMC for Class C and Class F shares. Pursuant to this agreement, CRMC provides transfer agency and other related shareholder services. CRMC may contract with third parties to perform these services. Under the agreement, the fund pays CRMC a fee equal to 0.15% per annum of average daily net assets of Class C and Class F shares, plus amounts payable for certain transfer agency services according to a specified schedule. For the period ended September 30, 2001, total fees under the agreement were $7,000. As of September 30, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $2,000. DEFERRED TRUSTEES' FEES - Since the adoption of the deferred compensation plan in 1993, Trustees who are unaffiliated with CRMC may elect to defer the receipt of part or all of their compensation. Deferred compensation amounts, which remain in the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. As of September 30, 2001, the cumulative amount of these liabilities was $8,000. Trustees' fees on the Statement of Operations include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of deferred compensation. AFFILIATED OFFICERS AND TRUSTEES - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers and certain Trustees 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, including maturities,of $54,063,920,000 and $52,620,477,000, respectively, during the year ended September 30, 2001. Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. For the year ended September 30, 2001, the custodian fee of $284,000 includes $10,000 that was paid by these credits rather than in cash. As of September 30, 2001, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of beneficial interest $7,138,289 Net unrealized depreciation (29) Net assets $7,138,260
Year ended Year ended September 30, September 30, 2001 2000 Amount (000) Shares Amount (000) Shares Class A Shares: Sold $15,815,836 15,815,836,185 $15,730,750 15,730,750,102 Reinvestment of dividends 255,149 255,149,335 285,383 285,383,370 Repurchased (14,412,914) (14,412,914,174) (16,461,971) (16,461,971,145) Net increase (decrease) in Class A 1,658,071 1,658,071,346 (445,838) (445,837,673) Class B Shares: (1) Sold 70,259 70,258,666 1,941 1,940,764 Reinvestment of dividends 297 296,913 8 8,464 Repurchased (25,057) (25,056,871) (1,152) (1,152,237) Net increase in Class B 45,499 45,498,708 797 796,991 Class C Shares: (2) Sold 28,020 28,020,481 - - Reinvestment of dividends 21 20,561 - - Repurchased (14,705) (14,704,656) - - Net increase in Class C 13,336 13,336,386 - - Class F Shares: (2) Sold 43,283 43,282,937 - - Reinvestment of dividends 3 3,031 - - Repurchased (39,880) (39,880,222) - - Net increase in Class F 3,406 3,405,746 - - Total net increase (decrease) in fund $ 1,720,312 1,720,312,186 $ (445,041) (445,040,682) (1) Class B shares were not offered before March 15, 2000. (2) Class C and Class F shares were not offered before March 15, 2001.
Per-share data and ratios Class A Year ended September 30, 2001 2000 1999 Net asset value, beginning of year $1.00 $1.00 $1.00 Income from investment operations : Net investment income .045 (1) .055 (1) .045 Less distributions : Dividends from net investment income (.045) (.055) (.045) Net asset value, end of year $1.00 $1.00 $1.00 Total return (2) 4.63% 5.66% 4.59% Ratios/supplemental data: Net assets, end of year (in millions) $7,075 $5,417 $5,863 Ratio of expenses to average net assets .59% .61% .58% Ratio of net income to average net assets 4.48% 5.53% 4.52% Year ended September 30, 1998 1997 Net asset value, beginning of year $1.00 $1.00 Income from investment operations : Net investment income .050 .049 Less distributions : Dividends from net investment income (.050) (.049) Net asset value, end of year $1.00 $1.00 Total return (2) 5.15% 5.03% Ratios/supplemental data: Net assets, end of year (in millions) $4,604 $3,527 Ratio of expenses to average net assets .58% .57% Ratio of net income to average net assets 5.02% 4.93% Class B Year ended March 15 to September 30, September 30, 2001 2000 (3) Net asset value, beginning of period $1.00 $1.00 Income from investment operations : Net investment income (1) .037 .027 Less distributions : Dividends from net investment income (.037) (.027) Net asset value, end of period $1.00 $1.00 Total return (2) 3.75% 2.73% Ratios/supplemental data: Net assets, end of period (in millions) $46 $1 Ratio of expenses to average net assets 1.41% 1.43% ($) Ratio of net income to average net assets 3.01% 5.21% (4) Class C Class F March 15 to March 15 to September 30, September 30, 2001 (3) 2001 (3) Net asset value, beginning of period $1.00 $1.00 Income from investment operations : Net investment income (1) .014 .017 Less distributions : Dividends from net investment income (.014) (.017) Net asset value, end of period $1.00 $1.00 Total return (2) 1.40% 1.71% Ratios/supplemental data: Net assets, end of period (in millions) $13 $4 Ratio of expenses to average net assets 1.55% (4) .80% Ratio of net income to average net assets 2.05% (4) 3.09% 1) Based on average shares outstanding. 2) Total returns exclude all sales charges, including contingent deferred sales charges. 3) Based on operations for the period shown and, accordingly, not representative of a full year (unless otherwise noted). 4) Annualized.
CLASS B, CLASS C AND CLASS F Average annual compound returns for periods ended September 30, 2001: One Life of Year Class CLASS B SHARES Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%, payable only if shares are sold within six years of purchase -1.26% +1.66%(1) Not reflecting CDSC +3.75% +4.21%(1) CLASS C SHARES Reflecting applicable CDSC, maximum of 1%, payable only if shares are sold within one year of purchase - +0.40%(2) Not reflecting CDSC - +1.40%(2) CLASS F SHARES Not reflecting annual asset-based fee - +1.71%(2) charged by sponsoring firm (1) From March 15, 2000, when Class B shares first became available. (2) From March 15, 2001 when Class C and Class F shares first became available.
Report of Independent Accountants To the Board of Trustees and Shareholders of The Cash Management Trust 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 Cash Management Trust of America (the "Fund") at September 30, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios for each of the periods presented in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 September 30, 2001, by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, California October 31, 2001 Tax Information (unaudited) We are required to advise you within 60 days of the fund's fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. Certain states may exempt from income taxation that portion of the dividends paid from net investment income that was derived from direct U.S. Treasury obligations. For purposes of computing this exclusion, none of the dividends paid by the fund from net investment income were derived from interest on direct U.S. Treasury obligations. Dividends and distributions received by retirement plans such as IRAs, Keogh-type plans and 403(b) plans need not be reported as taxable income. However, many retirement plan trusts may need this information for their annual information reporting. SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX INFORMATION WHICH WILL BE MAILED IN JANUARY 2002 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR 2001 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS. The Tax-Exempt Money Fund of America Investment Portfolio, September 30, 2001 Principal Market Yield at Amount Value Municipal Securities Acquisition (000) (000) Alabama - 1.20% Public School and College Authority, Capital 2.92 2,815 2,837 Improvement Pool Bonds, Series 2001-A, 4.50% 2/1/02 The Industrial Development Board of the City of Phenix City, Environmental Improvement Revenue Bonds (Mead Coated Board Project), Series 1988, AMT, 2.25 1,000 1,000 TECP, 2.25% 10/16/01 Alaska - 2.82% City of Valdez Marine Terminal Revenue Refunding Bonds (ARCO Transportation Alaska, Inc. Project), Series 1994A, TECP: 2.25% 10/3/01 2.25 4,000 4,000 2.45% 10/5/01 2.45 1,000 1,000 2.20% 10/15/01 2.20 2,000 2,000 2.45% 10/18/01 2.45 2,000 2,000 Arizona - 5.65% Salt River Project Agricultural Improvement and Power District, Promissory Notes, TECP: Series A: 2.45% 10/3/01 2.45 1,500 1,500 2.45% 10/9/01 2.45 2,300 2,300 2.20% 10/12/01 2.20 2,450 2,450 2.35% 10/12/01 2.35 1,750 1,750 2.45% 10/17/01 2.45 1,000 1,000 Series B: 2.45% 10/4/01 2.45 1,000 1,000 2.45% 10/16/01 2.45 4,000 4,000 Industrial Development Authority of the City of Phoenix, Multifamily Housing Revenue Refunding Bonds (Del Mar Terrace Apts Project), Series 1999A, 2.25 4,000 4,000 FHLMC Secured, 2.25% 10/1/29* Colorado - 0.63% City of Colorado Springs, Sales and Use Tax Revenue 2.98 2,000 2,007 Bonds, Series 1999, 4.25% 12/1/01 Delaware - 0.63% Economic Development Authority, Industrial Development Revenue Bonds (Delaware Clean Power Project), Series 1997D, AMT, 2.45% 8/1/29* 2.45 2,000 2,000 District of Columbia - 7.40% Multimodal Revenue Bonds (American National Red Cross Issue), Series 2000, TECP: 2.45% 10/2/01 2.45 5,000 5,000 2.40% 10/3/01 2.40 3,600 3,600 2.45% 10/5/01 2.45 1,000 1,000 2.45% 10/22/01 2.45 3,000 3,000 2.35% 12/4/01 2.35 1,000 1,000 Revenue Bonds (National Academy of Sciences Project), Series 1999 B, AMBAC Insured, TECP: 2.50% 10/10/01 2.50 1,000 1,000 2.25% 10/24/01 2.25 2,500 2,500 2.35% 10/30/01 2.35 2,000 2,000 2.35% 11/21/01 2.35 2,500 2,500 2.05% 12/6/01 2.05 2,000 2,000 Florida - 2.20% Florida Gas Utility, Gas Project No. 1 Revenue Bonds, 2.36 2,000 2,010 Series 1998, FSA Insured, 5.00% 12/1/01 Dade County: Seaport General Obligation Bonds, Series 1992, 3.22 1,000 1,010 6.25% 10/1/21(Prerefunded 10/1/01) Aviation Revenue Refunding Bonds, Series 1996C, 2.79 1,000 1,000 MBIA Insured, 5.00% 10/1/01 Orange County, Tourist Development Tax Revenue 3.25 1,000 1,000 Bonds, Series 2000, AMBAC Insured, 5.25% 10/1/01 Reedy Creek Improvement District (Located in Orange and Osceola Counties), Utilities Revenue Bonds, Series 1991-1, MBIA Insured, 6.50% 10/1/16 2.62 1,000 1,010 (Prerefunded 10/1/01) City of South Miami Health Facilities Authority, Hospital Revenue Refunding Bonds, Series 1995 (Baptist Health Systems Obligated Group), MBIA 2.74 1,000 1,000 Insured, 4.40% 10/1/01 Georgia - 1.46% General Obligation Bonds, Series 1995B, 7.20% 3/1/02 2.72 4,550 4,646 Illinois - 1.25% School District Number 130 Cook County (Blue Island), General Obligation Refunding Bonds, Series 2001 A, FSA Insured, 4.25% 12/1/01 2.08 1,000 1,004 Chicago O'Hare International Airport, Series A, ATM, 2.30 3,000 3,000 TECP, 2.30% 11/19/01 Indiana - 1.66% Health Facility Financing Authority, Variable Rate Demand Revenue Bonds (Community Mental Health and Rehabilitation Facilities Designated Pool Program), 2.30 3,300 3,300 Series 1990, 2.30% 11/1/20* County of Gibson, Pollution Control Revenue Bonds (Toyota Motor Manufacturing Project), Series 2000A, AMT, 2.30% 1/1/30* 2.30 2,000 2,000 Kentucky - 1.91% Asset/Liability Commission, General Fund Tax and Revenue Anticipation Notes, 2001 Series A, 4.00% 6/26/02 2.53 6,000 6,079 Louisiana - 0.41% Parish of Plaquemines, Environmental Revenue Refunding Bonds (BP Exploration & Oil Inc. Project-The British Petroleum Co. p.l.c., 2.75 1,300 1,300 Guarantor),Series 1995, AMT, 2.75% 5/1/25* Maryland - 3.84% Health and Higher Education Facilities Authority, Pooled Loan Program Revenue Notes (The John Hopkins Hospital): Series A, TECP: 2.00% 11/2/01 2.00 4,308 4,308 2.35% 12/3/01 2.35 3,921 3,923 Series C, 2.45% 10/11/01 2.45 4,000 4,000 Massachusetts - 0.97% General Obligations Bonds, Consolidated Loan of 2.64 2,000 2,079 1992, Series B, 6.50% 6/1/13 (Prerefunded 6/1/02) General Obligations Refunding Bonds, 1996 Series A, 2.58 1,000 1,003 5.50% 11/1/01 Michigan - 3.04% State Building Authority, 1998 Revenue Refunding 3.00 3,180 3,183 Bonds (Facilities Program), Series I, 4.50% 10/15/01 City of Detroit, Michigan, Sewage Disposal System Revenue Refunding Bonds, Series 1998-A, MBIA Insured, 2.25% 7/1/23* 2.25 2,500 2,500 Regents of the University of Michigan, Series C, TECP: 2.30% 10/15/01 2.30 2,000 2,000 2.30% 10/17/01 2.30 2,000 2,000 Minnesota - 4.08% City of Rochester, Health Care Facilities Revenue Bonds (Mayo Foundation/Mayo Medical Center), Adjustable Tender, TECP: Series 1992A, 2.30% 10/22/01 2.30 1,900 1,900 Series 1992B, 2.30% 11/13/01 2.30 1,000 1,000 Series 2000A, 2.50% 10/3/01 2.50 4,500 4,500 Series 2000C, 2.20% 11/5/01 2.20 5,600 5,600 Missouri - 0.50% Health and Educational Facilities Authority, Health Facilities Adjustable Demand Revenue Bonds (Barnes Hospital Project), Series 1985 B, 2.20 1,000 1,000 2.20% 12/1/15* Higher Education Loan Authority (A Public Instrumentality and Body Corporate and Politic of the State of Missouri), Adjustable Rate Demand 2.35 600 600 Student Loan Revenue Bonds, Series 1990B, AMT, 2.35% 6/1/20* Nevada - 1.06% Clark County Sanitation District, General Obligation (Limited Tax) Sanitary Sewer Bonds (Additionally Secured by Pledged Revenues), 2.43 1,310 1,369 Series 1992A, 6.75% 7/1/10 (Prerefunded 7/1/02) Las Vegas Valley Water District, General Obligation 2.05 2,000 2,000 (Limited Tax) Water, Series A, TECP, 2.05% 12/12/01 New Jersey - 3.07% General Obligation State Various Purpose Bonds, 2.14 4,065 4,173 5.50% 7/15/02 General Obligation Bond, Tax and Revenue Anticipation 2.30 5,600 5,600 Notes, Series Fiscal 1999A, TECP, 2.30% 11/8/01 New Mexico - 2.22% Capital Projects General Obligation Bonds, 2.66 1,000 1,010 Series 2001, 4.50% 3/1/02 State Highway Commission, Senior Subordinate Lien Tax Revenue Highway Bonds, Series 2000A, 5.50% 6/15/02 2.22 1,960 2,007 Tax and Revenue Anticipation Notes, Series 2.59 4,000 4,053 2000-2001, 4.00% 6/28/02 North Carolina - 1.37% Educational Facilities Finance Agency Revenue Bonds (Duke University Project), Series 1992A, 2.45% 6/1/27* 2.45 2,800 2,800 City of Charlotte, General Obligation Water and Sewer Bonds, Series 1992, 6.20% 6/1/17 (Prerefunded 6/1/02) 2.31 1,500 1,571 Ohio - 5.34% County of Cuyahoga, Hospital Revenue Bonds (The 2.20 1,325 1,325 Cleveland Clinic Foundation), Series 1996A, 2.20% 1/1/26* County of Hamilton, Hospital Revenue Bonds 2.20 2,000 2,000 (Bethesda Hospital, Inc.), Series 1995, 2.20% 2/15/24* Ohio State University, Revenue Bonds, Series 2000C, TECP: 2.35% 10/2/01 2.35 2,000 2,000 2.35% 10/2/01 2.35 1,200 1,200 2.30% 10/3/01 2.30 4,000 4,000 2.35% 10/3/01 2.35 2,000 2,000 2.30% 10/10/01 2.30 4,500 4,500 Oregon - 2.95% Health, Educational and Housing Facility, Series 2001A, TECP: 2.30% 11/6/01 2.30 5,000 5,000 2.25% 11/7/01 2.25 4,400 4,400 Pennsylvania - 1.62% General Obligation Bonds: Third Series A and B of 1991, 5.90% 11/15/01 2.12 1,000 1,005 First Series of 1999, MBIA Insured, 5.00% 6/1/02 2.55 1,000 1,019 Intergovernmental Cooperation Authority, Special Tax Revenue Bonds (City of Philadelphia Funding Program), Series of 1992, FGIC Insured, 6.00% 2.16 2,055 2,112 6/15/02 (Escrowed to maturity) City of Philadelphia, Water and Wastewater Revenue Bonds, CTFS Eligible, Series 1993, FSA Insured, 5.00% 6/15/02 2.60 1,000 1,020 South Carolina - 4.33% Public Service Authority (Santee Cooper Hydroelectric Project), Series 1983, TECP: 2.35% 10/2/01 2.35 4,000 4,000 2.40% 10/4/01 2.40 1,000 1,000 2.45% 10/4/01 2.45 1,800 1,800 2.40% 10/18/01 2.40 1,000 1,000 2.45% 10/18/01 2.45 1,000 1,000 2.30% 10/23/01 2.30 2,500 2,500 2.30% 10/23/01 2.30 2,500 2,500 Tennessee - 3.61% General Obligation Bond Anticipation Notes, 2.40 6,000 6,000 Series A, TECP, 2.40% 10/5/01 Health, Educational and Housing Facility Board of the County of Shelby, Revenue Bonds (Baptist Memorial Hospital Project), Series 2000, TECP: 2.50% 10/10/01 2.50 1,500 1,500 2.30% 11/20/01 2.30 2,000 2,000 2.35% 11/23/01 2.35 2,000 2,000 Texas - 21.14% Texas Public Finance Authority, TECP: Series 1993A: 2.30% 10/9/01 2.30 6,500 6,500 2.40% 10/9/01 2.40 2,000 2,000 Series 1996B: 2.45% 10/10/01 2.45 1,000 1,000 2.45% 10/16/01 2.45 4,000 4,000 City of Austin, Utility System Revenue Bonds, 2.63 3,000 3,020 7.30% 5/15/17 (Prerefunded 11/15/01) Brazos Higher Education Authority, Inc., Student Loan Revenue Bonds, Series 1993 B-1, AMT, 2.40% 6/1/23* 2.40 1,000 1,000 Brazos River Harbor Navigation District of Brazoria County, Texas Environmental Facilities Revenue Bonds (Merey Sweeny, L.P. Project), Series 2001B, 2.80 1,700 1,700 AMT, 2.80% 4/1/21* Canadian River Municipal Water Authority, Contract Revenue and Refunding Bonds, Series 1999 (Conjunctive Use Groundwater Supply Project), 2.92 1,000 1,008 MBIA Insured, 4.30% 2/15/02 Gulf Coast Waste Disposal Authority, Pollution Control Revenue Refunding Bonds (Exxon Mobil Project),Series 2001B, AMT, 2.75% 6/1/25* 2.75 1,000 1,000 Harris County General Obligation Notes, TECP: Series A, 2.40% 10/19/01 2.40 1,500 1,500 Series C, 2.30% 10/1/01 2.30 1,500 1,500 Series D: 2.45% 10/10/01 2.45 4,000 4,000 2.45% 10/19/01 2.45 3,150 3,150 Series D-1, 2.40% 10/11/01 2.40 3,000 3,000 Harris County Flood Control District, Improvement 3.15 1,000 1,000 and Refunding Bonds, Series 1993, 5.60% 10/1/01 City of Houston: General Obligation Bond, Public Improvement 2.62 1,000 1,012 Refunding, Series 1998A, 5.00% 3/1/02 General Obligation Commercial Paper Notes, 2.05 2,000 2,000 Series C, TECP, 2.05% 12/5/01 City of Midlothian Industrial Development Corp., Variable Rate Demand Pollution Control Revenue Bonds (Box-Crow Cement Company Project), 2.25 4,300 4,300 2.25% 12/1/09* South Texas Higher Education Authority, Inc., Student Loan Revenue Bonds, Series 1999, AMT, MBIA Insured: 2.40% 12/1/27* 2.40 6,200 6,200 2.40% 12/1/29* 2.40 8,000 8,000 Board of Regents of the University of Texas System, Permanent University Flexible Rate Notes, Series A, TECP: 2.45% 10/18/01 2.45 2,000 2,000 2.45% 10/18/01 2.45 2,500 2,500 2.45% 10/19/01 2.45 3,000 3,000 2.45% 10/22/01 2.45 3,000 3,000 Utah - 4.20% Intermountain Power Agency, Power Supply Revenue Bonds, 1985 Series F, AMBAC Insured, TECP: 2.45% 10/1/01 2.45 3,000 3,000 2.20% 10/5/01 2.20 1,000 1,000 2.55% 10/5/01 2.55 1,500 1,500 2.45% 10/17/01 2.45 2,400 2,400 2.45% 10/17/01 2.45 2,000 2,000 2.45% 10/23/01 2.45 3,500 3,500 Virginia - 0.88% Metropolitan Washington Airports Authority, Flexible 2.35 2,800 2,800 Term PFC Revenue Notes, AMT, TECP, 2.35% 10/25/01 Washington - 2.54% Public Power Supply System, Project No. 1 Refunding 2.20 2,180 2,180 Electric Revenue Bonds, Series 1993-1A, 2.20% 7/1/17* Industrial Development Corp. of The Port of Anacortes, Variable Rate Refunding Revenue Bonds (Texaco Project), Series 1985, TECP, 2.35% 11/7/01 2.35 2,000 2,000 Port of Seattle: General Obligation Bonds, Series 1985, 2.28% 1/1/05* 2.28 1,900 1,900 Subordinate Lien Revenue Notes, Series 2001B-1, AMT, TECP: 2.30% 10/9/01 2.30 860 860 2.45% 10/9/01 2.45 1,165 1,165 West Virginia - 2.04% The County Commission of Marion County, Solid Waste Disposal Facility Revenue Bonds, 1990 Series A (Grant Town Cogeneration Project), 2.35 1,500 1,500 AMT, 2.35% 10/1/17* The County Commission of Putnam County, Solid Waste Disposal Revenue Bonds (Toyota Motor Manufacturing Project), 2000 2.30 5,000 5,000 Series A, AMT, 2.30% 4/1/30* Wisconsin - 4.13% General Obligation Bonds, TECP: Series 1997B, 2.55% 10/4/01 2.55 2,000 2,000 Series 1998A: 2.55% 10/4/01 2.55 900 900 2.45% 10/5/01 2.45 1,000 1,000 2.45% 10/11/01 2.45 4,474 4,474 Housing and Economic Develoment Authority, Housing 2.89 3,770 3,779 Revenue Bonds, Series 1993C, 4.90% 11/1/01 City of Milwaukee, Milwaukee County, General 2.22 1,000 1,013 Obligation Refunding Bonds, Series of 1996, 6.00% 2/1/02 Wyoming - 1.74% General Fund Tax and Revenue Anticipation Notes, 2.52 5,500 5,553 Series 2001A, 3.50% 6/27/02 TOTAL INVESTMENT SECURITIES (cost: $324,708,000) 324,777 Excess of payables over cash and receivables 6,033 NET ASSETS $318,744 *Coupon rate may change periodically. Key to Abbreviations AMT = Alternative Minimum Tax TECP = Tax-Exempt Commercial Paper See Notes to Financial Statements
The Tax-Exempt Money Fund of America Financial statements Statement of assets and liabilities at September 30, 2001 (dollars in thousands) Assets: Investment securities at market. (cost: $324,708) $324,777 Cash 5,518 Receivables for - Sales of investments $2,000 Sales of fund's shares 836 Interest 1,714 4,550 334,845 Liabilities: Payables for - Purchases of investments 14,410 Repurchases of fund's shares 1,525 Dividends on fund's shares 27 Management services 99 Other expenses 40 16,101 Net assets at September 30, 2001 $318,744 Shares of beneficial interest issued and outstanding - unlimited shares authorized Shares outstanding 318,766,479 Net asset value per share $1.00 Statement of operations for the year ended September 30, 2001 (dollars in thousands) Investment income: Income: Interest $10,338 Expenses: Management services fee $1,169 Distribution expenses 113 Transfer agent fee 184 Reports to shareholders 5 Registration statement and prospectus 35 Postage, stationery and supplies 31 Trustees' fees 20 Auditing and legal fees 18 Custodian fee 22 Taxes other than federal income tax 2 1,599 Net investment income 8,739 Unrealized Appreciation Investments: Net unrealized appreciation on investments 94 Net increase in net assets resulting from operations $8,833 Statement of changes in net assets (dollars in thousands) Year ended September 30, 2001 2000 Operations: Net investment income $8,739 $8,866 Net unrealized appreciation (depreciation) on investments 94 (11) Net increase in net assets resulting from operations 8,833 8,855 Dividends paid to shareholders (8,760) (8,875) Capital share transactions: Proceeds from shares sold: 505,303,633 and 516,723,462 shares, respectively 505,304 516,723 Proceeds from shares issued in reinvestment of net investment income dividends: 8,085,193 and 8,238,698 shares, respectively 8,085 8,239 Cost of shares repurchased: 470,220,156 and 504,879,768 shares, respectively (470,220) (504,880) Net increase in net assets resulting from capital share transactions 43,169 20,082 Total increase in net assets 43,242 20,062 Net assets: Beginning of year 275,502 255,440 End of year $318,744 $275,502 See notes to financial statements
The Tax-Exempt Money Fund of America Notes to financial statements 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Tax-Exempt Money 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 to provide income free from federal taxes, while preserving capital and maintaining liquidity, through investments in high-quality municipal securities with effective maturities of one year or less. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles 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: NET ASSET VALUE - The fund uses the penny-rounding method of valuing its shares, in accordance with Securities and Exchange Commission ("SEC") rules. This method permits the fund to maintain a constant net asset value of $1.00 per share, provided the market value of the fund's shares does not deviate from $1.00 by more than one-half of 1% and the fund complies with other restrictions set forth in the SEC rules. SECURITY VALUATION - 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. 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. Securities and other 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 fund's Board of Trustees. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security. DIVIDENDS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. 2. FEDERAL INCOME TAXATION The fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and intends to distribute all of its net taxable income 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 based on net investment income determined on a tax basis and may differ from such amounts 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 is earned by the fund. As of September 30, 2001, the cost of investment securities for book and federal income tax reporting purposes was $324,708,000. Net unrealized appreciation on investments aggregated $69,000; $101,000 related to appreciated securities and $32,000 related to depreciated securities. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $1,169,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which officers and certain Trustees of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on a series of rates beginning with 0.390% per annum of the first $200 million of daily net assets decreasing to 0.290% of such assets in excess of $1.2 billion. For the year ended September 30, 2001, the management services fee was equivalent to an annualized rate of 0.383% of average net assets. DISTRIBUTION EXPENSES - The fund has adopted plans of distribution under which it may finance activities primarily intended to sell fund shares, provided the categories of expenses are approved in advance by the fund's Board of Trustees. The plans provide for annual expenses, based on average daily net assets, of up to 0.15%. The fund may use these expenses to pay service fees, or to compensate American Funds Distributors, Inc.("AFD"), the principal underwriter of the fund's shares, for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. For the year ended September 30, 2001, aggregate distribution expenses were $113,000, or 0.04% of average daily net assets. As of September 30, 2001, aggregate distribution expenses payable to AFD were $10,000. TRANSFER AGENT FEE - A fee of $184,000 was incurred during the year ended September 30, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of September 30, 2001, aggregate transfer agent fees payable to AFS were $25,000. DEFERRED TRUSTEES' FEES - Since the adoption of the deferred compensation plan in 1993, Trustees who are unaffiliated with CRMC may elect to defer the receipt of part or all of their compensation. Deferred compensation amounts, which remain in the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. As of September 30, 2001, the cumulative amount of these liabilities was $4,000. Trustees' fees on the Statement of Operations include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of deferred compensation. AFFILIATED OFFICERS AND TRUSTEES - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers and certain Trustees 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, including maturities, of $1,532,431,000 and $1,476,402,000, respectively, during the year ended September 30, 2001. Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. For the year ended September 30, 2001, the custodian fee of $22,000 includes $19,000 that was paid by these credits rather than in cash. As of September 30, 2001, net assets consisted of the following: dollars in thousands Capital paid in on shares of beneficial interest $318,767 Distributions in excess of net investment income (92) Net unrealized appreciation 69 Net assets $318,744
Per-share data and ratios Year ended September 30 2001 2000 1999 1998 1997 Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations : Net investment income .042 (1) .049 (1) .039 .045 .046 Less distributions : Dividends from net investment income (.042) (.049) (.039) (.045) (.046) Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 Total return 4.27% 5.00% 4.00% 4.63% 4.71% Ratios/supplemental data: Net assets, end of year (in millions) $489 $369 $467 $356 $279 Ratio of expenses to average net assets .66% .62% .59% .59% .53% Ratio of net income to average net assets 4.12% 4.81% 3.95% 4.49% 4.61% 1) Based on average shares outstanding.
Report of Independent Accountants To the Board of Trustees and Shareholders of The Tax-Exempt Money 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 The Tax-Exempt Money Fund of America (the "Fund") at September 30, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios the each of the periods presented in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 September 30, 2001, by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, California October 31, 2001 Tax Information (unaudited) We are required to advise you within 60 days of the fund's fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. Shareholders may exclude from federal taxable income any exempt-interest dividends paid from net investment income. For purposes of computing this exclusion, all of the dividends paid from net investment income qualify as exempt-interest dividends. Any distributions paid from realized net short-term or long-term capital gains are not exempt from federal taxation. SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX INFORMATION WHICH WILL BE MAILED IN JANUARY 2002 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR 2001 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS. The U.S. Treasury Money Fund of America Investment Portfolio, September 30, 2001 Principal Market Yield at Amount Value U.S. Treasury Securities - 100.01% Acquisition (000) (000) U.S. Treasury Bills 10-04-01 2.59% - 3.61% $69,295 $ 69,272 U.S. Treasury Bills 10-11-01 3.38% - 3.53% 27,250 27,221 U.S. Treasury Bills 10-18-01 2.03% - 3.51% 43,750 43,683 U.S. Treasury Bills 10-25-01 2.40% - 3.54% 38,065 37,984 U.S. Treasury Bills 11-01-01 3.38% - 3.52% 38,145 38,031 U.S. Treasury Bills 11-08-01 3.42% - 3.51% 28,925 28,819 U.S. Treasury Bills 11-15-01 2.19% - 3.41% 71,630 71,371 U.S. Treasury Bills 11-23-01 2.24% - 3.42% 30,000 29,892 U.S. Treasury Bills 11-29-01 3.36% - 3.42% 59,605 59,377 U.S. Treasury Bills 12-06-01 2.33% - 3.37% 17,220 17,147 U.S. Treasury Bills 12-13-01 2.32% - 2.45% 31,615 31,465 U.S. Treasury Bills 12-20-01 2.16% - 2.19% 35,000 34,819 TOTAL INVESTMENT SECURITIES: (cost: $488,961,000) 489,081 Excess of payables over cash and receivables 30 NET ASSETS $489,051 See Notes to Financial Statements
The U.S. Treasury Money Fund of America Financial statements Statement of assets and liabilities at September 30, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $488,961) $489,081 Cash 604 Receivables for - Sales of fund's shares 2,201 491,886 Liabilities: Payables for - Repurchases of fund's shares 2,584 Dividends on fund's shares 40 Management services 111 Other expenses 100 2,835 Net assets at September 30, 2001 $489,051 Shares of beneficial interest issued and outstanding - unlimited shares authorized Class A shares: Shares outstanding 488,913,487 Net asset value per share $1.00 Statement of operations for the year ended September 30, 2001 (dollars in thousands) Investment income: Income: Interest $19,330 Expenses: Management services fee 1,208 Distribution expenses 385 Transfer agent fee 753 Reports to shareholders 15 Registration statement and prospectus 99 Postage, stationery and supplies 103 Trustees' fees 21 Auditing and legal fees 33 Custodian fee 26 Taxes other than federal income tax 6 2,649 Net investment income 16,681 Unrealized appreciation on investments: Net unrealized appreciation on investments 36 Net increase in net assets resulting from operations $16,717 Statement of changes in net assets (dollars in thousands) Year ended September 30 September 30 2001 2000 Operations: Net investment income $16,681 $20,880 Net unrealized appreciation on investments 36 6 Net increase in net assets resulting from operations 16,717 20,886 Dividends paid to shareholders (16,665) (20,879) Capital share transactions: Proceeds from shares sold: 757,690,684 and 840,272,661 shares, respectively 757,691 840,272 Proceeds from shares issued in reinvestment of net investment income dividends: 15,678,228 and 19,526,770 shares, respectively 15,678 19,527 Cost of shares repurchased: 653,742,552 and 957,128,378 shares, respectively (653,743) (957,128) Net increase (decrease) in net assets resulting from capital share transactions 119,626 (97,329) Total increase (decrease) in net assets 119,678 (97,322) Net assets: Beginning of year 369,373 466,695 End of year $489,051 $369,373 See notes to financial statements
Notes to financial statements 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The U.S. Treasury Money 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 to provide income on cash reserves, while preserving capital and maintaining liquidity, through investments in U.S. Treasury securities maturing in one year or less. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles 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: NET ASSET VALUE - The fund uses the penny-rounding method of valuing its shares, in accordance with Securities and Exchange Commission ("SEC") rules. This method permits the fund to maintain a constant net asset value of $1.00 per share, provided the market value of the fund's shares does not deviate from $1.00 by more than one-half of 1% and the fund complies with other restrictions set forth in the SEC rules. SECURITY VALUATION - 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. 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. Securities and other 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 fund's Board of Trustees. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security. DIVIDENDS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. 2. FEDERAL INCOME TAXATION The fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and intends to distribute all of its net taxable income 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 based on net investment income determined on a tax basis and may differ from such amounts 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 is earned by the fund. As of September 30, 2001, the cost of investment securities for book and federal income tax reporting purposes was $488,961,000. Net unrealized depreciation on investments aggregated $120,000; $133,000 related to appreciated securities and $13,000 related to depreciated securities. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $1,208,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which officers and certain Trustees of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on an annual rate of 0.300% of the first $800 million of daily net assets and 0.285% of such assets in excess of $800 million. For the year ended September 30, 2001, the management services fee was equivalent to an annualized rate of 0.300% of average daily net assets. DISTRIBUTION EXPENSES - The fund has adopted plans of distribution under which it may finance activities primarily intended to sell fund shares, provided the categories of expenses are approved in advance by the fund's Board of Trustees. The plans provide for annual expenses, based on average daily net assets, of up to 0.15%. The fund may use these expenses to pay service fees, or to compensate American Funds Distributors, Inc. ("AFD"), the principal underwriter of the fund's shares, for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. For the year ended September 30, 2001, aggregate distribution expenses were $385,000, or 0.10% of average daily net assets. As of September 30, 2001, aggregate distribution expenses payable to AFD were $36,000. TRANSFER AGENT FEE - A fee of $753,000 was incurred during the year ended September 30 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of September 30, 2001, aggregate transfer agent fees payable to AFS were $60,000. DEFERRED TRUSTEES' FEES - Since the adoption of the deferred compensation plan in 1993, Trustees who are unaffiliated with CRMC may elect to defer the receipt of part or all of their compensation. Deferred compensation amounts, which remain in the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. As of September 30, 2001, the cumulative amount of these liabilities was $3,000. Trustees' fees on the Statement of Operations include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of deferred compensation. AFFILIATED TRUSTEES AND OFFICERS - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers and certain Trustees 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, including maturities, of $2,234,680,000 and $2,141,524,000, respectively, during the year ended September 30, 2001. Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. For the year ended September 30, 2001, the custodian fee of $26,000 includes $8,000 that was paid by these credits rather than in cash. As of September 30, 2001, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of beneficial interest $488,914 Undistributed net investment income 17 Net unrealized appreciation 120 Net assets $489,051
Per-share data and ratios Year ended September 30 2001 2000 1999 1998 1997 Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations : Net investment income .029 (1) .032 (1) .025 .029 .029 Less distributions : Dividends from net investment income (.029) (.032) (.025) (.029) (.029) Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 Total return 2.92% 3.29% 2.51% 2.97% 2.94% Ratios/supplemental data: Net assets, end of year (in millions) $319 $276 $255 $198 $160 Ratio of expenses to average net assets .52% .64% .65% (2) .65% (2) .65% (2) Ratio of net income to average net assets 2.86% 3.23% 2.33% 2.94% 2.94% 1) Based on average shares outstanding. 2) Had CRMC not waived management services fees, the fund's expense ratio would have been 0.68%, 0.71% and 0.74% for the fiscal years ended 1999, 1998 and 1997, respectively.
Report of Independent Accountants To the Board of Trustees and Shareholders of The U.S. Treasury Money 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 The U.S. Treasury Money Fund of America (the "Fund") at September 30, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios for each of the periods presented in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 September 30, 2001, by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, California October 31, 2001 Tax Information (unaudited) We are required to advise you within 60 days of the fund's fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. Shareholders may exclude from federal taxable income any exempt-interest dividends paid from net investment income. For purposes of computing this exclusion, all of the dividends paid from net investment income qualify as exempt-interest dividends. Any distributions paid from realized net short-term or long-term capital gains are not exempt from federal taxation. SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX INFORMATION WHICH WILL BE MAILED IN JANUARY 2002 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR 2001 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.