497 1 filinga.txt THE TAX-EXEMPT BOND FUND OF AMERICA, INC. AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC. LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA Part B Statement of Additional Information November 1, 2001 (as amended July 15, 2002) This document is not a prospectus but should be read in conjunction with the current prospectus of The Tax-Exempt Bond Fund of America, Inc. ("TEBF"), American High-Income Municipal Bond Fund, Inc. ("AHIM"), and Limited Term Tax-Exempt Bond Fund of America ("LTEX") dated July 15, 2002. The prospectus may be obtained from your investment dealer or financial planner or by writing to the fund at the following address: The Tax-Exempt Bond Fund of America, Inc. American High-Income Municipal Bond Fund, Inc. Limited Term Tax-Exempt Bond Fund of America Attention: Secretary 333 South Hope Street Los Angeles, California 90071 (213) 486-9200 TABLE OF CONTENTS
Item Page No. ---- -------- Certain Investment Limitations and Guidelines . . . . . . . . . . . 2 Description of Certain Securities and Investment Techniques . . . . 3 Fundamental Policies and Investment Restrictions. . . . . . . . . . 8 Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 13 Fund Directors/Trustees and Other Officers. . . . . . . . . . . . . 15 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Taxes and Distributions . . . . . . . . . . . . . . . . . . . . . . 28 Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 32 Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 37 Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 40 Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Shareholder Account Services and Privileges . . . . . . . . . . . . 44 Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 46 General Information . . . . . . . . . . . . . . . . . . . . . . . . 47 Class A Share Investment Results and Related Statistics . . . . . . 49 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Financial Statements
National Tax-Exempt Income 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. THE TAX-EXEMPT BOND FUND OF AMERICA ----------------------------------- .. The fund will invest at least 80% of its assets in securities exempt from regular federal income tax. .. The fund will not invest in securities subject to alternative minimum tax. .. The fund will invest at least 80% of its assets in bonds (for purposes of this limit, bonds include any debt instrument and cash equivalents, and may include certain preferred securities). .. The fund will invest at least 65% of its assets in debt securities rated A or better by Standard & Poor's Corporation (S&P) or Moody's Investors Service, Inc. (Moody's) or unrated but determined to be of equivalent quality. .. The fund may invest up to 35% of its assets in straight debt securities rated BBB by S&P or Baa by Moody's or below or unrated but determined to be of equivalent quality (with no more than 20% of its assets in straight debt securities rated BB/Ba or below or unrated but determined to be of equivalent quality). .. The fund will invest substantially in securities with maturities in excess of three years. AMERICAN HIGH-INCOME MUNICIPAL BOND FUND ---------------------------------------- .. The fund will invest at least 80% of its assets in securities exempt from regular federal income tax (including securities subject to alternative minimum tax). .. The fund will invest at least 80% of its assets in bonds (for purposes of this limit, bonds include any debt instrument and cash equivalents, and may include certain preferred securities). .. The fund will invest at least 65% of its assets in debt securities rated A or below by S&P or Moody's or unrated but determined to be of equivalent quality. .. The fund will invest at least 50% of its assets in debt securities rated BBB/Baa or below or unrated but determined to be of equivalent quality. .. The fund may invest more than 25% of its assets in municipal obligations of issuers located in the same state or in obligations of the same type (however, the fund may not invest 25% or more in municipal securities of the same project type issued by non-governmental entities). LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA -------------------------------------------- .. The fund will invest at least 80% of its assets in securities exempt from regular federal income tax. .. The fund may invest up to 20% of its assets in securities subject to federal alternative minimum tax. .. The fund will invest at least 80% of its assets in bonds (for purposes of this limit, bonds include any debt instrument and cash equivalents, and may include certain preferred securities). .. The fund will invest at least 65% of its assets in debt securities rated A or better by S&P or Moody's or unrated but determined to be of equivalent quality. National Tax-Exempt Income Funds - Page 2 .. The fund may invest up to 35% of its assets in straight debt securities rated BBB/Baa by Moody's or S&P or unrated but determined to be of equivalent quality. The fund is not normally required to dispose of a security in the event its rating is reduced below the current minimum rating for its purchase (or it is not rated and its quality becomes equivalent to such a security). .. The dollar-weighted average effective maturity of the fund's portfolio will be between 3 and 10 years. .. The maximum dollar-weighted average nominal or stated maturity of the fund's portfolio will be 15 years. .. The maximum effective maturity of any one security in the fund's portfolio will be 10 years. .. The maximum nominal or stated maturity of any security in the fund's portfolio will be 25 years. The funds may experience difficulty liquidating certain portfolio securities during significant market declines or periods of heavy redemptions. DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES The descriptions below are intended to supplement the material in the prospectus under "Investment Objective, Strategies and Risks." THE TAX-EXEMPT BOND FUND OF AMERICA, AMERICAN HIGH-INCOME MUNICIPAL BOND FUND ----------------------------------------------------------------------------- AND LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA ------------------------------------------------ DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow money. Issuers pay investors interest and generally must repay the amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are purchased at a discount from their face values. The prices of debt securities fluctuate depending on such factors as interest rates, credit quality, and maturity. In general, their prices decline when interest rates rise and vice versa. Lower rated bonds, rated Ba or below by S&P and BB or below by Moody's or unrated but considered to be of equivalent quality, are described by the rating agencies as speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness than higher rated bonds, or they may already be in default. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. It may be more difficult to dispose of, or to determine the value of, lower rated bonds. Certain risk factors relating to lower rated bonds are discussed below. SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - Lower rated bonds, like other bonds, may be sensitive to adverse economic changes and political and corporate developments and may be sensitive to interest rate changes. During an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience increased financial stress that would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals, and to obtain additional financing. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices and yields of lower rated bonds. National Tax-Exempt Income Funds - Page 3 PAYMENT EXPECTATIONS - Lower rated bonds, like other bonds, may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, the fund would have to replace the security with a lower yielding security, resulting in a decreased return for investors. If the issuer of a bond defaults on its obligations to pay interest or principal or enters into bankruptcy proceedings, the fund may incur losses or expenses in seeking recovery of amounts owed to it. LIQUIDITY AND VALUATION - There may be little trading in the secondary market for particular bonds, which may affect adversely the fund's ability to value accurately or dispose of such bonds. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of lower rated bonds. The Investment Adviser attempts to reduce the risks described above through diversification of the portfolio and by credit analysis of each issuer, as well as by monitoring broad economic trends and corporate and legislative developments, but there can be no assurance that it will be successful in doing so. MUNICIPAL BONDS - Municipal bonds are debt obligations generally issued to obtain funds for various public purposes, including the construction of public facilities. Opinions relating to the validity of municipal bonds, their exclusion from gross income for federal income tax purposes and, where applicable, state and local income tax are rendered by bond counsel to the issuing authorities at the time of issuance. The two principal classifications of municipal bonds are general obligation bonds and limited obligation or revenue bonds. General obligation bonds are secured by the issuer's pledge of its full faith and credit including, if available, its taxing power for the payment of principal and interest. Issuers of general obligation bonds include states, counties, cities, towns and various regional or special districts. The proceeds of these obligations are used to fund a wide range of public facilities such as the construction or improvement of schools, highways and roads, water and sewer systems and facilities for a variety of other public purposes. Lease revenue bonds or certificates of participation in leases are payable from annual lease rental payments from a state or locality. Annual rental payments are payable to the extent such rental payments are appropriated annually. Typically, the only security for a limited obligation or revenue bond is the net revenue derived from a particular facility or class of facilities financed thereby or, in some cases, from the proceeds of a special tax or other special revenues. Revenue bonds have been issued to fund a wide variety of revenue-producing public capital projects including: electric, gas, water and sewer systems; highways, bridges and tunnels; port and airport facilities; colleges and universities; hospitals; and convention, recreational, 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 National Tax-Exempt Income Funds - Page 4 reserve funds and insured or subsidized mortgages, as well as the net revenues from housing or other public projects. Most of these bonds do not generally constitute the pledge of the credit of the issuer of such bonds. The credit quality of such revenue bonds is usually directly related to the credit standing of the user of the facility being financed or of an institution which provides a guarantee, letter of credit, or other credit enhancement for the bond issue. MUNICIPAL LEASE OBLIGATIONS - The funds may invest, without limitation, in municipal lease revenue obligations that are determined to be liquid by the Investment Adviser. In determining whether these securities are liquid, the Investment Adviser will consider, among other things, the credit quality and support, including strengths and weaknesses of the issuers and lessees, the terms of the lease, the frequency and volume of trading and the number of dealers trading the securities. U.S. COMMONWEALTH OBLIGATIONS - The funds may invest in obligations of the various commonwealths of the United States, such as Puerto Rico, the U.S. Virgin Islands, Guam and their agencies and authorities, to the extent such obligations are exempt from federal and state income taxes. Adverse political and economic conditions and developments affecting any commonwealth may, in turn, affect negatively the value of the funds' holdings in such obligations. ZERO COUPON BONDS - Municipalities may issue zero coupon securities which are debt obligations that do not entitle the holder to any periodic payments of interest prior to maturity or a specified date when the securities begin paying current interest. They are issued and traded at a discount from their face amount or par value, which discount varies depending on the time remaining until cash payments begin, prevailing interest rates, liquidity of the security, and the perceived credit quality of the issuer. PRE-REFUNDED BONDS - From time to time, a municipality may refund a bond that it has already issued prior to the original bond's call date by issuing a second bond, the proceeds of which are used to purchase securities. The securities are placed in an escrow account pursuant to an agreement between the municipality and an independent escrow agent. The principal and interest payments on the securities are then used to pay off the original bondholders. For the purposes of diversification, pre-refunded bonds will be treated as governmental issues. CASH AND CASH EQUIVALENTS - These securities include, but are not limited to: (i) tax-exempt commercial paper (e.g., short-term notes obligations issued by municipalities that mature, or may be redeemed in 270 days or less), (ii) municipal notes (e.g., bond anticipation notes, revenue anticipation notes, and tax anticipation notes issued by municipalities that mature, or may be redeemed in one year or less), (iii) municipal obligations backed by letters of credit issued by banks or other financial institutions or government agencies that mature, or may be redeemed in one year or less, (iv) tax-exempt variable rate debt issued by municipal conduits for corporate obligors, and (v) securities of the U.S. government, its agencies or instrumentalities that mature, or may be redeemed in one year or less. TEMPORARY INVESTMENTS - The funds may invest in short-term municipal obligations of up to one year in maturity during periods of temporary defensive strategy resulting from abnormal market conditions, or when such investments are considered advisable for liquidity. Generally, the income from all such securities is exempt from federal income tax. Further, a portion of the fund's assets, which will normally be less than 20%, may be held in cash or invested in high-quality taxable short-term securities of up to one year in maturity. Such investments may include: (1) obligations of the U.S. Treasury; (2) obligations of agencies and instrumentalities of the U.S. National Tax-Exempt Income Funds - Page 5 government; (3) money market instruments, such as certificates of deposit issued by domestic banks, corporate commercial paper, and bankers' acceptances; and (4) repurchase agreements. 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 its payment obligations in these transactions. Although these transactions will not be entered into for leveraging purposes, to the extent the funds' aggregate commitments under these transactions exceed its segregated assets, the fund temporarily could be in a leveraged position (because they may have an amount greater than their net assets subject to market risk). Should market values of the funds' portfolio securities decline while the funds are in a leveraged position, greater depreciation of its net assets would likely occur than were it not in such a position. The funds will not borrow money to settle these transactions and therefore, will liquidate other portfolio securities in advance of settlement if necessary to generate additional cash to meet its obligations thereunder. VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain securities in which the 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 rate adjustment, but the rate adjustment feature tends to limit the extent to which the market value of the obligation will fluctuate. ADJUSTMENT OF MATURITIES - The Investment Adviser seeks to anticipate movements in interest rates and adjusts the maturity distribution of the portfolio accordingly. Keeping in mind each fund's objective, the Investment Adviser will increase each fund's exposure to this price volatility only when it appears likely to increase current income without undue risk to capital. ISSUE CLASSIFICATION - Securities with the same general quality rating and maturity characteristics, but which vary according to the purpose for which they were issued, often tend to trade at different yields. Correspondingly, securities issued for similar purposes and with the same general maturity characteristics, but which vary according to the creditworthiness of their respective issuers, tend to trade at different yields. These yield differentials tend to fluctuate in response to political and economic developments, as well as temporary imbalances in normal supply/demand relationships. The Investment Adviser monitors these fluctuations closely, and will attempt to adjust portfolio concentrations in various issue classifications according to the value disparities brought about by these yield relationship fluctuations. The Investment Adviser believes that, in general, the market for municipal bonds is less liquid than that for taxable fixed-income securities. Accordingly, the ability of the funds to make purchases and sales of securities in the foregoing manner may, at any particular time and with respect to any particular securities, be limited (or non-existent). National Tax-Exempt Income Funds - Page 6 PRIVATE PLACEMENTS - Generally, municipal securities acquired in private placements are subject to contractual restrictions on resale. Accordingly, all private placements will be considered illiquid unless they have been specifically determined to be liquid, taking into account factors such as the frequency and volume of trading and the commitment of dealers to make markets under procedures adopted by each fund's board of directors. RESTRICTED SECURITIES AND LIQUIDITY - The funds may purchase securities subject to restrictions on resale. Securities not actively traded will be considered illiquid unless they have been specifically determined to be liquid under procedures which have been adopted by the funds' board of directors/trustees, taking into account factors such as the frequency and volume of trading, the commitment of dealers to make markets and the availability of qualified investors, all of which can change from time to time. The funds may incur certain additional costs in disposing of illiquid securities. REPURCHASE AGREEMENTS - The funds may enter into repurchase agreements, under which the funds buy a security and obtain a simultaneous commitment from the seller to repurchase the security at a specified time and price. Repurchase agreements permit the funds to maintain liquidity and earn income over periods of time as short as overnight. The seller must maintain with the funds' custodian collateral equal to at least 100% of the repurchase price, including accrued interest, as monitored daily by the Investment Adviser. The funds will only enter into repurchase agreements involving securities in which they 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 funds 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 funds may be delayed or limited. LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA AND AMERICAN HIGH-INCOME MUNICIPAL ------------------------------------------------------------------------------- BOND FUND --------- SECURITIES SUBJECT TO ALTERNATIVE MINIMUM 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. AMERICAN HIGH-INCOME MUNICIPAL BOND FUND ---------------------------------------- CONCENTRATION OF INVESTMENTS - The fund may invest more than 25% of its assets in municipal obligations of issuers located in the same state or in municipal obligations of the same type which pay interest on their obligations from revenue of similar projects. This may make the fund more susceptible to similar economic, political, or regulatory occurrences such as changes in healthcare regulations, environmental considerations related to construction, construction cost increases and labor problems, failure of healthcare facilities to maintain adequate occupancy levels, and inflation. As the similarity in issuers increases, the potential for fluctuations in the fund's share price may also increase. The fund may invest more than 25% of its assets in industrial development bonds. National Tax-Exempt Income Funds - Page 7 LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA -------------------------------------------- MATURITY - Under normal market conditions, the fund's dollar-weighted average effective portfolio maturity will range between 3 and 10 years. The fund will not purchase any security with an effective maturity of more than 10 years. In calculating effective maturity, a feature such as a put, call or sinking fund will be considered to the extent it results in a security whose market characteristics indicate a maturity of 10 years or less, even though the nominal or stated maturity may be beyond 10 years. The Investment Adviser will consider the impact on effective maturity of potential changes in the financial condition of issuers and in market interest rates in making investment selections for the fund. Additionally, the fund's dollar-weighted average nominal or stated portfolio maturity will not exceed 15 years, and the fund will not purchase any security with a nominal or stated maturity in excess of 25 years. For purposes of determining nominal or stated maturity, the fund will consider only the techniques approved for such purposes by the staff of the Securities and Exchange Commission which currently do not include any call or sinking fund features but are limited to those described in rule 2a-7(d) under the Investment Company Act of 1940 applicable to money market funds. * * * * * * PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the length of time particular investments may have been held. Short-term trading profits are not the funds' objective and changes in its investments are generally accomplished gradually, though short-term transactions may occasionally be made. High portfolio turnover (100% or more) involves correspondingly greater transaction costs in the form of dealer spreads or brokerage commissions, and may result in the realization of net capital gains, which are taxable when distributed to shareholders. Fixed-income securities are generally traded on a net basis and usually neither brokerage commissions nor transfer taxes are involved, although the price usually includes a profit to the dealer. A fund's portfolio turnover rate would equal 100% if each security in the fund's portfolio was replaced once per year. See "Financial Highlights" in the prospectus for the funds' annual portfolio turnover for each of the last five fiscal periods. FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS FUNDAMENTAL POLICIES - Each fund has adopted the following fundamental policies and investment restrictions which may not be changed without approval by holders of a majority of its outstanding shares. Such majority is defined in the Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67% or more of the outstanding voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities are present in person or by proxy, or (ii) more than 50% of the outstanding voting securities. All percentage limitations are considered at the time securities are purchased and are based on the fund's net assets unless otherwise indicated. None of the following investment restrictions involving a maximum percentage of assets will be considered violated unless the excess occurs immediately after, and is caused by, an acquisition by the fund. National Tax-Exempt Income Funds - Page 8 THE TAX-EXEMPT BOND FUND OF AMERICA ----------------------------------- These restrictions provide that the fund may not: 1. With respect to 75% of the fund's total assets, purchase the security of any issuer (other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in securities of that issuer, or (b) the Fund would hold more than 10% of the outstanding voting securities of that issuer; 2. Enter into any repurchase agreement if, as a result, more than 10% of the value of the fund's total assets would be subject to repurchase agreements maturing in more than seven days; 3. Buy or sell real estate in the ordinary course of its business; however, the fund may invest in securities secured by real estate or interests therein; 4. Make loans to others, except for the purchase of debt securities or entering into repurchase agreements; 5. Sell securities short, except to the extent that the fund contemporaneously owns or has the right to acquire at no additional cost securities identical to those sold short; 6. Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases or sales; 7. Borrow money, except from banks for temporary or emergency purposes, not in excess of 5% of the value of the fund's total assets, excluding the amount borrowed. This borrowing provision is intended to facilitate the orderly sale of portfolio securities to accommodate unusually heavy redemption requests, if they should occur; it is not intended for investment purposes; 8. Underwrite any issue of securities, except to the extent that the purchase of municipal bonds directly from the issuer in accordance with the fund's investment objective, policies and restrictions, and later resale may be deemed to be an underwriting; 9. Invest in companies for the purpose of exercising control or management; 10. Buy or sell commodities or commodity contracts or oil, gas or other mineral exploration or development programs; nor 11. Write, purchase or sell puts, calls, straddles, spreads or any combination thereof. These restrictions also provide that the fund will: 12. 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 the purpose of the fund's investment restrictions, the identification of the "issuer" of municipal bonds that are not general obligation bonds is made by the Investment Adviser on the basis of National Tax-Exempt Income Funds - Page 9 the characteristics of the bonds as described, the most significant of which is the ultimate source of funds for the payment of principal and interest on such bonds. For purposes of Investment Restriction #10, the term "oil, gas or other mineral exploration or development programs" includes oil, gas or other mineral exploration or development leases. NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be changed without shareholder approval: (a) The fund may not invest 25% or more of its assets in municipal bonds the issuers of which are located in the same state, unless such securities are guaranteed by the U.S. government, or more than 25% of its total assets in securities the interest on which is paid from revenues of similar type projects (such as hospitals and health facilities; turnpikes and toll roads; ports and airports; or colleges and universities). The fund may on occasion invest more than an aggregate of 25% of its total assets in industrial development bonds. There could be economic, business or political developments which might affect all municipal bonds of a similar category or type or issued by issuers within any particular geographical area or jurisdiction; (b) The fund may not invest more than 15% of its net assets in securities which are not readily marketable. (c) The fund may not invest in securities of other investment companies, except as permitted by the Investment Company Act of 1940, as amended. AMERICAN HIGH-INCOME MUNICIPAL BOND FUND ---------------------------------------- These restrictions provide that the fund may not: 1. With respect to 75% of the fund's total assets, purchase the security of any issuer (other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer. 2. Invest in companies for the purpose of exercising control or management; 3. Purchase or sell real estate (including real estate limited partnerships) unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); 4. Purchase or sell commodities unless acquired as a result of ownership of securities or other instruments or engage in futures transactions; 5. Engage in the business of underwriting securities of other issuers, except to the extent that the purchase or disposal of an investment position may technically constitute the fund as an underwriter as that term is defined under the Securities Act of 1933; National Tax-Exempt Income Funds - Page 10 6. Make loans in an aggregate amount in excess of 33(alpha)% of the value of the fund's total assets, taken at the time any loan is made, provided that the purchase of debt securities pursuant to the fund's investment objective and entering into repurchase agreements maturing in seven days or less shall not be deemed loans for the purposes of this restriction and that loans of portfolio securities may be made; 7. Issue senior securities, except as permitted under the Investment Company Act of 1940; 8. Borrow money, except from banks for temporary or emergency purposes not to exceed one-third of the value of the fund's total assets. Moreover, in the event that the asset coverage for the fund's borrowings falls below 300%, the fund will reduce, within three days (excluding Sundays and holidays), the amount of its borrowings in order to provide for 300% asset coverage; 9. Purchase or sell puts, calls, straddles, or spreads, or combinations thereof (this restriction does not prevent the fund from investing in securities with put and call features); 10. Invest 25% or more of its assets in municipal securities of the same project type issued by non-governmental entities. However, the fund may invest more than 25% of its assets in municipal obligations of issuers located in the same state or in municipal obligations of the same type, including without limitation the following: general obligations of states and localities; lease rental obligations of state and local authorities; obligations of state and local housing finance authorities, municipal utilities systems or public housing authorities; or industrial development or pollution control bonds issued for hospitals, electric utility systems, life care facilities or other purposes. As a result, the fund may be more susceptible to adverse economic, political, or regulatory occurrences affecting a particular category of issuers. As the concentration in the securities of a particular category of issuer increases, the potential for fluctuation in the value of the fund's shares also increases; nor 11. Sell securities short, except to the extent that the fund contemporaneously owns, or has the right to acquire at no additional cost, securities identical to those sold short. These restrictions also provide that the fund will: 12. Normally invest at least 80% of its assets in securities the income from which is exempt from federal income tax. For this purpose, securities subject to federal alternative minimum tax are considered tax-exempt securities. In the alternative, the fund will invest its assets so that at least 80% of the income that the fund distributes is exempt from federal income tax. NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be changed without shareholder approval: 1. The fund does not currently intend (at least for the next 12 months) to lend portfolio securities. However, if such action is authorized by the Board of Directors, loans of portfolio securities as described under "Loans of Portfolio Securities" shall be made in accordance with the terms and conditions therein set forth and consistent with fundamental investment restriction #6; 2. The fund will not invest more than 15% of the value of its net assets in illiquid securities; National Tax-Exempt Income Funds - Page 11 3. The fund does not currently intend (at least for the next 12 months) to invest in the securities of other registered management investment companies, except in connection with a merger, consolidation, acquisition, reorganization, or in connection with the implementation of any deferred compensation plan as adopted by the Board of Directors; 4. The fund does not currently intend (at least for the next 12 months) to purchase securities in the event its borrowings exceed 5% of total assets. For the purposes of the fund's investment restrictions, the identification of the "issuer" of municipal bonds that are not general obligation bonds is made by the Investment Adviser on the basis of the characteristics of the bonds as described, the most significant of which is the ultimate source of funds for the payment of principal and interest on such bonds. LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA -------------------------------------------- These restrictions provide that the fund may not: 1. With respect to 75% of the fund's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, (a) more than 5% of the fund's total assets would be invested in the securities of that issuer, or (b) the fund would hold more than 10% of the outstanding voting securities of that issuer; 2. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); 3. Purchase or sell commodities unless acquired as a result of ownership of securities or other instruments or engage in futures transactions; 4. Invest 25% or more of the fund's total assets in the securities of issuers in the same industry. Obligations of the U.S. government, its agencies and instrumentalities are not subject to this 25% limitation on industry concentration; 5. Invest more than 15% of the value of its net assets in securities which are not readily marketable (including repurchase agreements maturing in more than seven days) or engage in the business of underwriting securities of other issuers, except to the extent that the purchase or disposal of an investment position may technically constitute the fund as an underwriter as that term is defined under the Securities Act of 1933; 6. Invest in companies for the purpose of exercising control or management; 7. Make loans to others except for (a) purchasing debt securities; (b) entering into repurchase agreements; and (c) loaning portfolio securities; 8. Issue senior securities, except as permitted under the Investment Company Act of 1940; 9. Borrow money, except from banks for temporary purposes in an amount not to exceed one-third of the value of the fund's total assets. Moreover, in the event that the asset coverage for National Tax-Exempt Income Funds - Page 12 such borrowing falls below 300%, the fund will reduce, within three days, the amount of its borrowing in order to provide for 300% asset coverage; nor 10. Purchase or sell puts, calls, straddles, or spreads, or combinations thereof (this restriction does not prevent the fund from investing in securities with put and call features). These restrictions also provide that the fund will: 11. 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. NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be changed without shareholder approval: 1. The fund does not currently intend (at least for the next 12 months) to sell securities short, except to the extent that the fund contemporaneously owns, or has the right to acquire at no additional cost, securities identical to those sold short. 2. The fund does not currently intend (at least for the next 12 months) to invest in the securities of other investment companies except as permitted by the Investment Company Act of 1940, as amended. 3. The fund does not currently intend (at least for the next 12 months) to purchase securities in the event its borrowings exceed 5%. 4. The fund does not currently intend (at least for the next 12 months) to invest 25% or more of its assets in municipal bonds the issuers of which are located in the same state, unless such securities are guaranteed by the U.S. government, or more than 25% of its total assets in securities the interest on which is paid from revenues of similar type projects. The fund may on occasion invest more than an aggregate of 25% of its total assets in industrial development bonds. There could be economic, business or political developments which might affect all municipal bonds of a similar category or type or issued by issuers within any particular geographical area or jurisdiction. 5. The fund does not currently intend (at least for the next 12 months) to loan portfolio securities. For the purpose of the fund's investment restrictions, the identification of the "issuer" of municipal bonds that are not general obligation bonds is made by the Investment Adviser on the basis of the characteristics of the bonds as described, the most significant of which is the ultimate source of funds for the payment of principal and interest on such bonds. FUND ORGANIZATION AND VOTING RIGHTS Each fund is an open-end, diversified management investment company. The Tax-Exempt Bond Fund of America and American High-Income Municipal Bond Fund were each organized as a Maryland corporation on July 20, 1979 and June 14, 1994, respectively. Limited Term Tax-Exempt Bond Fund of America was organized as a Massachusetts business trust on July 12, 1993. National Tax-Exempt Income Funds - Page 13 All fund operations are supervised by each fund's Board of Directors/Trustees which meets periodically and performs duties required by applicable state and federal laws. Members of the board who are not employed by Capital Research and Management Company or its affiliates are paid certain fees for services rendered to the fund as described in "Directors/Trustees and Director/Trustee Compensation" below. They may elect to defer all or a portion of these fees through a deferred compensation plan in effect for each fund. The funds have several different classes of shares. The shares of each class represent an interest in the same investment portfolio. Each class has equal rights as to voting, redemption, dividends and liquidation, except that each class bears different distribution expenses and may bear different transfer agent fees and other expenses properly attributable to the particular class as approved by the Board of Directors/Trustees and set forth in each fund's rule 18f-3 Plan. Class A, B, C and F 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. 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. National Tax-Exempt Income Funds - Page 14 FUND DIRECTORS/TRUSTEES AND OFFICERS Directors/Trustees and Director/Trustee Compensation
AGGREGATE COMPENSATION (INCLUDING VOLUNTARILY DEFERRED COMPENSATION/1/) POSITION FROM THE FUND WITH PRINCIPAL OCCUPATION(S) DURING DURING THE NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS 2001 FISCAL YEAR/2/ ------------------------------------------------------------------------------------------------------------------- Richard G. Capen, Jr. Director/ Corporate Director and author; former TEBF $3,843/4/ 6077 San Elijo, Box 2494 Trustee United States Ambassador to Spain; AHIM $2,843/4/ Rancho Santa Fe, CA 92067 former Vice Chairman, Knight-Ridder, LTEX $2,843/4/ Age: 67 Inc., former Chairman and Publisher, The Miami Herald ---------------- ------------------------------------------------------------------------------------------------------------------- H. Frederick Christie Director/ Private Investor. Former President TEBF $3,843/4/ P.O. Box 144 Trustee and Chief Executive Officer, The AHIM $2,843/4/ Palos Verdes Estates, CA Mission Group (non-utility holding LTEX $2,843/4/ 90274 company, subsidiary of Southern Age: 68 California Edison Company) ------------------------------------------------------------------------------------------------------------------- + Don R. Conlan LTEX: Trustee President (retired), The Capital Group none/5/ 1630 Milan Avenue Companies, Inc. South Pasadena, CA 91030 Age: 65 ------------------------------------------------------------------------------------------------------------------- Diane C. Creel Director/ CEO and President, The Earth TEBF $1,259/4/ 100 W. Broadway Trustee Technology Corporation (international AHIM $2,757/4/ Suite 240 consulting engineering) LTEX $2,757/4/ Long Beach, CA 90802 Age: 52 ------------------------------------------------------------------------------------------------------------------- Martin Fenton Director/ Managing Director, Senior Resource TEBF $4,179/4/ 4660 La Jolla Village Trustee Group LLC (development and AHIM $4,177/4/ Drive management of senior living LTEX $4,177/4/ Suite 725 communities) San Diego, CA 92121-2116 Age: 66 ------------------------------------------------------------------------------------------------------------------- Leonard R. Fuller Director/ President, Fuller Consulting (financial TEBF $3,843/4/ 4337 Marina City Drive Trustee management consulting firm) AHIM $2,843/4/ Suite 841 ETN LTEX $2,843/4/ Marina del Rey, CA 90292 Age: 55 ------------------------------------------------------------------------------------------------------------------- +* Abner D. Goldstine AHIM and Senior Vice President and Director, none/5/ Age: 71 TEBF: Capital Research and Management Vice Company Chairman and Director LTEX: President and Trustee ------------------------------------------------------------------------------------------------------------------- +** Paul G. Haaga, Jr. Chairman of Executive Vice President and none/5/ Age: 52 the Board Director, Capital Research and Management Company ------------------------------------------------------------------------------------------------------------------- +*Neil L. Langberg TEBF: Vice President, Investment none/5/ Age: 48 President and Management Group, Capital Director Research and Management Company AHIM and LTEX: Senior Vice President ------------------------------------------------------------------------------------------------------------------- +*Mark R. Macdonald AHIM: Vice President, Investment none/5/ Age: 42 President and Management Group, Capital Director Research and Management Company ------------------------------------------------------------------------------------------------------------------- Richard G. Newman Director/ Chairman and CEO, AECOM TEBF $4,179/4/ 555 South Flower Street Trustee Technology Corporation (architectural AHIM $4,177/4/ Suite 3700 engineering) LTEX $4,177/4/ Los Angeles, CA 90071 Age: 66 ------------------------------------------------------------------------------------------------------------------- Frank M. Sanchez Director/ President, The Sanchez Family TEBF $3,969/4/ 5234 Via San Delarro, #1 Trustee Corporation dba McDonald's AHIM $3,467/4/ Los Angeles, CA 90022 Restaurants (McDonald's licensee) LTEX $3,467/4/ Age: 58 ------------------------------------------------------------------------------------------------------------------- TOTAL COMPENSATION (INCLUDING VOLUNTARILY DEFERRED COMPENSATION/1/) FROM TOTAL NUMBER ALL FUNDS MANAGED BY OF FUND CAPITAL RESEARCH AND BOARDS MANAGEMENT COMPANY ON WHICH OR ITS AFFILIATES/3/ FOR THE DIRECTOR/TRUSTEE NAME, ADDRESS AND AGE 2001 FISCAL YEAR END SERVES/2/ ---------------------------------------------------------------------------------- Richard G. Capen, Jr. 7/31/01 $98,620 14 6077 San Elijo, Box 2494 8/31/01 $98,620 Rancho Santa Fe, CA 92067 ------------------ Age: 67 ---------------------------------------------------------------- H. Frederick Christie 7/31/01 $205,620 19 P.O. Box 144 8/31/01 $205,620 Palos Verdes Estates, CA ------------------ 90274 Age: 68 ---------------------------------------------------------------- + Don R. Conlan none/5/ 7 1630 Milan Avenue South Pasadena, CA 91030 Age: 65 ---------------------------------------------------------------------------------- Diane C. Creel 7/31/01 $48,580 12 100 W. Broadway 8/31/01 $48,580 Suite 240 ------------------ Long Beach, CA 90802 Age: 52 ---------------------------------------------------------------- Martin Fenton 7/31/01 $182,120 17 4660 La Jolla Village 8/31/01 $184,120 Drive ------------------ Suite 725 San Diego, CA 92121-2116 Age: 66 ---------------------------------------------------------------- Leonard R. Fuller 7/31/01 $80,620 13 4337 Marina City Drive 8/31/01 $80,620 Suite 841 ETN ------------------ Marina del Rey, CA 90292 Age: 55 ---------------------------------------------------------------- +* Abner D. Goldstine none/5/ 12 Age: 71 ---------------------------------------------------------------------------------- +** Paul G. Haaga, Jr. none/5/ 15 Age: 52 ---------------------------------------------------------------------------------- +*Neil L. Langberg none/5/ 1 Age: 48 ---------------------------------------------------------------------------------- +*Mark R. Macdonald none/5/ 1 Age: 42 ---------------------------------------------------------------------------------- Richard G. Newman 7/31/01 $116,620 13 555 South Flower Street 8/31/01 $116,620 Suite 3700 ------------------ Los Angeles, CA 90071 Age: 66 ---------------------------------------------------------------- Frank M. Sanchez 7/31/01 $52,100 12 5234 Via San Delarro, #1 8/31/01 $52,100 Los Angeles, CA 90022 ------------------ Age: 58 ----------------------------------------------------------------
National Tax-Exempt Income Funds - Page 15 National Tax-Exempt Income Funds - Page 16 National Tax-Exempt Income Funds - Page 17 + "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 the parent company of the Investment Adviser, The Capital Group Companies, Inc. * Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025 ** Address is 333 South Hope Street, Los Angeles, CA 90071 1 Amounts may be deferred by eligible Directors/Trustees under a non-qualified deferred compensation plan adopted by the fund in 1993. Deferred amounts accumulate at an earnings rate determined by the total return of one or more funds in The American Funds Group as designated by the Directors/Trustees. 2 The Tax-Exempt Bond Fund of America's fiscal year ends on August 31. American High-Income Municipal Bond Fund's and Limited Term Tax-Exempt Bond Fund of America's fiscal year ends on July 31. 3 Capital Research and Management Company manages The American Funds Group consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc., American High-Income Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management Trust of America, Capital Income Builder, Inc., Capital World Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc., Intermediate Bond Fund of America, The Investment Company of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury Money Fund of America, U.S. Government Securities Fund and Washington Mutual Investors Fund, Inc. Capital Research and Management Company also manages American Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying investment vehicle for certain variable insurance contracts; and Endowments, whose shareholders are limited to (i) any entity exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("501(c)(3) organization"); (ii) any trust, the present or future beneficiary of which is a 501(c)(3) organization, and (iii) any other entity formed for the primary purpose of benefiting a 501(c)(3) organization. An affiliate of Capital Research and Management Company, Capital International, Inc., manages Emerging Markets Growth Fund, Inc. 4 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 Directors/ Trustees is as follows: TEBF - Richard G. Capen, Jr. ($5,093), H. Frederick Christie ($10,819), Diane C. Creel ($9,360), Martin Fenton ($12,931), and Leonard R. Fuller ($16,598). AHIM - Richard G. Capen, Jr. ($3,895), H. Frederick Christie ($7,323), Diane C. Creel ($3,954), Martin Fenton ($1,439) and Leonard R. Fuller ($6,686). LTEX - Richard G. Capen, Jr. ($3,895), H. Frederick Christie ($6,943), Diane C. Creel ($3,954), Martin Fenton ($10,864) and Leonard R. Fuller ($6,686). Amounts deferred and accumulated earnings thereon are not funded and are general unsecured liabilities of the fund until paid to the Directors/Trustees. 5 Don R. Conlan, Abner D. Goldstine, Paul G. Haaga, Jr., Neil L. Langberg and Mark R. Macdonald are affiliated with the Investment Adviser and, accordingly, receive no compensation from the funds. National Tax-Exempt Income Funds - Page 18 FUND SHARES OWNED BY DIRECTORS/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 DIRECTOR/TRUSTEE -------------------------------------------------------------------------------- "NON-INTERESTED" TRUSTEES -------------------------------------------------------------------------------- Richard G. Capen, Jr. TEBF: None Over $100,000 AHIM: None LTEX: None -------------------------------------------------------------------------------- H. Frederick Christie TEBF: Over $100,000 Over $100,000 AHIM: None LTEX: None -------------------------------------------------------------------------------- Diane C. Creel TEBF: $1 - $10,000 $10,001 - $50,000 AHIM: $1 - $10,000 LTEX: $1 - $10,000 -------------------------------------------------------------------------------- Martin Fenton TEBF: $1 - $10,000 Over $100,000 AHIM: None LTEX: None -------------------------------------------------------------------------------- Leonard R. Fuller TEBF: $1 - $10,000 $50,001 - $100,000 AHIM: None LTEX: $1 - $10,000 -------------------------------------------------------------------------------- Richard G. Newman TEBF: $1 - $10,000 Over $100,000 AHIM: $1 - $10,000 LTEX: $1 - $10,000 -------------------------------------------------------------------------------- Frank M. Sanchez TEBF: $1 - $10,000 $10,001 - $50,000 AHIM: $1 - $10,000 LTEX: $1 - $10,000 -------------------------------------------------------------------------------- "INTERESTED" DIRECTORS/TRUSTEES/2/ -------------------------------------------------------------------------------- Don R. Conlan TEBF: N/A Over $100,000 AHIM: None LTEX: None -------------------------------------------------------------------------------- Abner D. Goldstine TEBF: Over $100,000 Over $100,000 AHIM: Over $100,000 LTEX: $10,000 - $50,000 -------------------------------------------------------------------------------- Paul G. Haaga, Jr. TEBF: Over $100,000 Over $100,000 AHIM: $50,001 - $100,000 LTEX: None -------------------------------------------------------------------------------- Neil L. Langberg TEBF: $10,000 - $50,000 Over $100,000 AHIM: N/A LTEX: N/A -------------------------------------------------------------------------------- Mark R. Macdonald TEBF: N/A Over $100,000 AHIM: Over $100,000 LTEX: N/A --------------------------------------------------------------------------------
National Tax-Exempt Income Funds - Page 19 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" directors/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 the parent company of the Investment Adviser, The Capital Group Companies, Inc. National Tax-Exempt Income Funds - Page 20 OTHER OFFICERS
POSITION(S) PRINCIPAL OCCUPATION(S) NAME AND ADDRESS AGE WITH REGISTRANT DURING ---------------------------------------------------- PAST 5 YEARS ----------------------------- Michael J. Downer 46 Vice President Senior Vice President - Fund 333 South Hope Street Business Management Group, Los Angeles, CA 90071 Capital Research and Management Company --------------------------------------------------------------------------------- Brenda S. Ellerin 38 Senior Vice Senior Vice President and 11100 Santa Monica President -TEBF and Director, Capital Research Blvd. LTEX; Company* Los Angeles, CA 90025 Vice President - AHIM --------------------------------------------------------------------------------- David A. Hoag 36 Senior Vice Senior Vice President, 11100 Santa Monica President - TEBF and Capital Research Company* Blvd. LTEX Los Angeles, CA 90025 --------------------------------------------------------------------------------- Edward B. Nahmias 49 Vice President - Vice President and Director, 11100 Santa Monica AHIM Capital Research Company* Blvd. Los Angeles, CA 90025 --------------------------------------------------------------------------------- Julie F. Williams 53 Secretary Vice President - Fund 333 South Hope Street Business Management Group, Los Angeles, CA 90071 Capital Research and Management Company --------------------------------------------------------------------------------- Anthony W. Hynes, Jr. 38 Treasurer Vice President - Fund 135 South State Business Management Group, College Blvd. Capital Research and Brea, CA 92821 Management Company --------------------------------------------------------------------------------- Kimberly S. Verdick 37 Assistant Secretary Assistant Vice President - 333 South Hope Street Fund Business Management Los Angeles, CA 90071 Group, Capital Research and Management Company --------------------------------------------------------------------------------- Susi M. Silverman 31 Assistant Treasurer Vice President - Fund 135 South State Business Management Group, College Blvd. Capital Research and Brea, CA 92821 Management Company ---------------------------------------------------------------------------------
* Company affiliated with Capital Research and Management Company. All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as Investment Adviser. No compensation is paid by the fund to any officer or Director/Trustee who is a director, officer or employee of the Investment Adviser or affiliated companies. TEBF pays annual fees of $3,000 to Directors who are not affiliated with the Investment Adviser. AHIM and LTEX pay annual fees of $1,500 to Directors/Trustees who are not affiliated with the Investment Adviser. Each fund pays $210 for each Board of Directors/Trustees meeting attended. In addition, various Directors/ Trustees participate with directors and trustees of certain other funds in The American Funds Group in joint meetings of Contracts Committees, Audit Committees and Nominating Committees; total fees for attendance at these meetings, which are prorated among the participants in proportion to the number of funds represented, are $2,510 for each meeting of the Contracts Committee and $1,000 for each meeting of the Audit and Nominating Committees. No pension or retirement benefits are accrued as part of fund expenses. The Directors/Trustees may elect, on a voluntary basis, to defer all or a portion of their fees through a deferred compensation plan in effect for the funds. The funds also reimburse certain expenses of the Directors/Trustees National Tax-Exempt Income Funds - Page 21 who are not affiliated with the Investment Adviser. As of October 1, 2001 the officers and Directors/Trustees of each fund and their families, as a group, owned beneficially or of record less than 1% of the outstanding shares of each fund. MANAGEMENT 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 a number of years of investment experience. The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment Adviser's research professionals travel several million miles a year, making more than 5,000 research visits in more than 50 countries around the world. The Investment Adviser believes that it is able to attract and retain quality personnel. The Investment Adviser is a wholly owned subsidiary of The Capital Group Companies, Inc. The Investment Adviser is responsible for managing more than $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 corporations as well as schools, colleges, foundations and other non-profit and tax-exempt organizations. INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service Agreements (the "Agreements") between the funds and the Investment Adviser will continue in effect until May 31, 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 (i) the Board of Directors/Trustees, or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the fund, and (ii) the vote of a majority of Directors/Trustees who are not parties to the 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 each fund's Agreement each year, the Contracts Committees of the Boards evaluates information provided by the Investment Adviser in accordance with Section 15(c) of the 1940 Act, and presents its recommendations to the full Boards. At its most recent meeting, the Committees considered a number of factors in recommending renewal of the existing Agreements, including the quality of services provided to each fund, fees and expenses borne by each fund, and financial results of the Investment Adviser. In reviewing the quality of services provided to each fund, the Committees noted that during 2001, each fund's results were better than those of the funds in each fund's peer group and were well above the median for AHIM's and LTEX's five-year and lifetime periods and for TEBF's five- and ten-year periods ended December 31, 2001. The Committees also considered the quality National Tax-Exempt Income Funds - Page 22 and depth of the Investment Adviser's organization in general and of the investment professionals currently providing services to each fund. In reviewing the fees and expenses borne by each fund, the Committees noted, among other things, that each fund's advisory fees and its total expenses over various periods as a percentage of its average net assets were highly favorable in relation to each fund's peer group. The Committees also discussed steps taken by the Investment Adviser to control overall expenses during a period of market uncertainty and reviewed various scenarios involving variables in sales, redemptions, markets and expenses. Based on their review, the Committees and the Boards concluded that the advisory fees and other expenses of each 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. 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 services; costs of the designing, printing and mailing of reports, prospectuses, proxy statements, and notices to its shareholders; taxes; expenses of the issuance and redemption of shares of the 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 directors/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. For TEBF the Investment Adviser receives a monthly fee based on the following rates and net asset levels: NET ASSET LEVEL
RATE IN EXCESS OF UP TO ------------------------------------------------------------------------------ 0.30% $ 0 $ 60,000,000 ------------------------------------------------------------------------------ 0.21 60,000,000 1,000,000,000 ------------------------------------------------------------------------------ 0.18 1,000,000,000 3,000,000,000 ------------------------------------------------------------------------------ 0.16 3,000,000,000 ------------------------------------------------------------------------------
National Tax-Exempt Income Funds - Page 23 The agreement also provides for fees based on monthly gross investment income at the following rates: MONTHLY GROSS INVESTMENT
INCOME RATE IN EXCESS OF UP TO ------------------------------------------------------------------------------ 3.00% $ 0 $3,333,333 ------------------------------------------------------------------------------ 2.50 3,333,333 8,333,333 ------------------------------------------------------------------------------ 2.25 8,333,333 ------------------------------------------------------------------------------
Assuming net assets of $1.8 billion and gross investment income levels of 3%, 4%, 5%, 6% and 7%, management fees would be 0.29%, 0.31%, 0.34%, 0.36% and 0.38%, respectively. For the purposes of such computations under the Agreement, the fund's gross investment income shall be determined in accordance with generally accepted accounting principles and does not reflect any net realized gains or losses on the sale of portfolio securities but does include original-issue discount as defiined for federal income tax purposes. The Agreement provides for a management fee reduction to the extent that the annual ordinary operating expenses of the fund's Class A shares exceed the lesser of either 25% of gross income of the Fund for the preceding year or the sum or (a) 1-1/2% of the average daily net assets of the preceding year up to and including $30,000,000 and (b) 1% of any excess of average daily net assets of the preceding year over $30,000,000. Expenses which are not subject to these limitations are interest, taxes, and extraordinary expenses. Expenditures, including costs incurred in connection with the purchase or sale of portfolio securities, which are capitalized in accordance with generally accepted accounting principles applicable to investment companies are accounted for as capital items and not as expenses. To the extent each fund's management fee must be waived due to Class A share expense ratios exceeding this limit, management fees will be reduced similarly for all classes of shares of the fund or other Class A fees will be waived in lieu of management fees. For AHIM the Investment Adviser receives a monthly fee at the annual rate of 0.30% on the first $60 million of average net assets, plus 0.21% on net assets over $60 million, plus 3% of gross investment income. Assuming net assets of $600 million and gross investment income levels of 3%, 4%, 5%, 6% and 7%, management fees would be 0.31%, 0.34%, 0.37%, 0.40% and 0.43%, respectively. For the purposes of such computations under the Agreement, the fund's gross investment income shall be determined in accordance with generally accepted accounting principles and does not reflect any net realized gains or losses on the sale of portfolio securities but does include original-issue discount as defined for federal income tax purposes. The Investment Adviser has agreed that in the event the expenses of Class A shares of the fund (with the exclusion of interest, taxes, brokerage costs, extraordinary expenses such as litigation and acquisitions or other expenses excludable under applicable state securities laws or regulations) for any fiscal year ending on a date on which the Agreement is in effect, exceed the expense limitations, if any, applicable to the fund pursuant to state securities laws or any regulations thereunder, it will reduce its fee by the extent of such excess and, if required pursuant to any such laws or any regulations thereunder, will reimburse the fund in the amount of such excess. To the extent the fund's management fee must be waived due to Class A share expense National Tax-Exempt Income Funds - Page 24 ratios exceeding the above limit, management fees will be reduced similarly for all classes of shares of the fund or other Class A fees will be waived in lieu of management fees. For LTEX the Investment Adviser receives a monthly fee, at an annual rate of 0.30% per annum on the first $60 million of the fund's average net assets, plus 0.21% per annum on the portion of such net assets in excess of $60 million, plus 3% of the fund's gross investment income for the preceding month. Assuming net assets of $300 million and gross income levels of 3%, 4%, 5%, 6%, and 7%, management fees would be 0.32%, 0.35%, 0.38%, 0.41% and 0.44%, respectively. For the purposes of such computations under the Agreement, the fund's gross Investment income shall be determined in accordance with generally accepted accounting principles and does not reflect any net realized gains or losses on the sale of portfolio securities but does include original-issue discount as defined for federal income tax purposes. The Investment Adviser has agreed that in the event the expenses of Class A shares of the fund (with the exclusion of interest, taxes, brokerage costs, extraordinary expenses such as litigation and acquisitions or other expenses excludable under applicable state securities laws or regulations) for any fiscal year ending on a date on which the Agreement is in effect, exceed the expense limitations, if any, applicable to the fund pursuant to state securities laws or any regulations thereunder, it will reduce its fee by the extent of such excess and, if required pursuant to any such laws or any regulations thereunder, will reimburse the fund in the amount of such excess. To the extent the fund's management fee must be waived due to Class A share expense ratios exceeding the above limit, management fees will be reduced similarly for all classes of shares of the fund or other Class A fees will be waived in lieu of management fees. For the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from TEBF of $6,893,000, $6,502,000, and $6,526,000, respectively. For the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from AHIM of $2,451,000, $2,240,000, and $2,083,000, respectively. For the fiscal years ended 2001, 2000, and 1999, the Investment Adviser received advisory fees from LTEX of $1,025,000, $1,045,000, and $999,000, respectively. ADMINISTRATIVE SERVICES AGREEMENT - The Administrative Services Agreement (the "Administrative Agreement") between each fund and the Investment Adviser, relating to the funds' Class C and F 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 Directors/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 each fund may terminate the agreement at any time by vote of a majority of Directors/Trustees who are not interested persons of each fund. The Investment Adviser has the right to terminate the Administrative Agreement upon 60 days' written notice to each fund. 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 the funds' Class C and F shares. The Investment Adviser contracts with third parties, including American Funds Service Company, the funds' 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. National Tax-Exempt Income Funds - Page 25 As compensation for its services, the Investment Adviser receives transfer agent fees for transfer agent services provided to the funds' Class C and F shares. 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. TEBF'S Class C and F shares pay only those transfer agent fees that are attributed to accounts and activities generated by their respective share class. The Investment Adviser also receives an administrative services fee for administrative services provided to the funds' Class C and F shares. Administrative services fees are paid monthly, accrued daily and calculated at the annual rate of 0.15% of the average daily net assets of the funds' Class C and F shares. Administrative service fees paid for Class C and F shares for the fiscal periods ended 2001 were $6,000 and $3,000 for TEBF, respectively, $2,000 and $1,000 for AHIM, respectively, and $1,000 and $1,000 for LTEX, 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. 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). In addition, the Principal Underwriter receives revenues from sales of each fund's shares. For Class A shares, the Principal Underwriter receives commission revenue consisting of that portion of the Class A sales charge remaining after the allowances by the Principal Underwriter to investment dealers. For Class B shares, the Principal Underwriter sells the rights to Class B 12b-1 fees paid by each fund for distribution expenses to a third party and receives the revenue remaining after compensating investment dealers for sales of Class B shares. Each fund also pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers of Class B shares. For Class C shares, the Principal Underwriter receives any contingent deferred sales charges that apply to Class C shares during the first year after purchase. Each fund pays the Principal Underwriter for advancing the immediate service fees and commissions paid to qualified dealers of Class C shares. For Class F shares, each fund pays the Principal Underwriter for advancing the immediate service fees paid to qualified dealers and advisers of Class F shares. Commissions retained by the Principal Underwriter on sales of Class A shares during the 2001 fiscal year amounted to $947,000 after an allowance of $3,515,000 to dealers for TEBF; $306,000 after allowance of $1,182,000 to dealers for AHIM; $113,000 after allowance of $420,000 to dealers for LTEX. For TEBF during the fiscal years ended 2000 and 1999, the Principal Underwriter retained $502,000 and $1,005,000, respectively, on sales of Class A shares after an allowance of $1,952,000 and $3,987,000 to dealers, respectively. Revenue retained and service fees received by the Principal Underwriter on sales of Class B shares during the 2001 period amounted to $148,000 after compensation of $864,000 to dealers. During the fiscal year ended 2000, the Principal Underwriter retained $28,724 on sales of Class B shares after compensation of $134,323 to dealers. For AHIM during the fiscal years ended 2000 and 1999, the Principal Underwriter retained $229,000 and $450,000, respectively, on sales of Class A shares after an allowance of $901,000 and $1,829,000 to dealers, respectively. Revenue retained and service fees received by the National Tax-Exempt Income Funds - Page 26 Principal Underwriter on sales of Class B shares during the 2001 period amounted to $64,000 after compensation of $363,000 to dealers. During the fiscal year ended 2000, the Principal Underwriter retained $15,938 on sales of Class B shares after compensation of $74,986 to dealers. For LTEX during the fiscal years ended 2000 and 1999, the Principal Underwriter retained $111,000 and $189,000, respectively, on sales of Class A shares after an allowance of $443,000 and $737,000 to dealers, respectively. Revenue retained and service fees received by the Principal Underwriter on sales of Class B shares during the 2001 period amounted to $19,000 after compensation of $106,000 to dealers. During the fiscal year ended 2000, the Principal Underwriter retained $5,864 on sales of Class B shares after compensation of $28,030 to dealers. As required by rule 12b-1 and the 1940 Act, the Plans (together with the Principal Underwriting Agreement) have been approved by the full Boards of Directors/Trustees and separately by a majority of the directors/trustees who are not "interested persons" of the 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 directors/trustees who are not "interested persons" of the fund are committed to the discretion of the directors/ trustees who are not "interested persons" during the existence of the Plans. 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 Directors/Trustees. Under the Plans, each fund may annually expend (i) for Class A shares, up to 0.25%, 0.30% in the case of AHIM and LTEX, of its net assets attributable to Class A shares, (ii) for Class B shares, 1.00% of its net assets attributable to Class B shares, (iii) for Class C shares, 1.00% of its net assets attributable to Class C shares, and (iv) for Class F shares, up to 0.50% of its net assets attributable to Class F shares, to finance any activity which is primarily intended to result in the sale of fund shares, provided each fund's Board of Directors/Trustees has approved the category of expenses for which payment is being made. For Class A shares, (i) up to 0.25% is reimbursed to the Principal Underwriter for paying service-related expenses, including service fees paid to qualified dealers, and (ii) up to the amount allowable under each fund's Class A 12b-1 limit is reimbursed to the Principal Underwriter for paying distribution-related expenses, including dealer commissions and wholesaler compensation paid on sales of shares of $1 million or more purchased without a sales charge (including purchases by employer-sponsored defined contribution-type retirement plans investing $1 million or more or with 100 or more eligible employees, and retirement plans, endowments and foundations with $50 million or more in assets) ("no load purchases"). Commissions on no load purchases of Class A shares in excess of the Class A Plan limitation not reimbursed to the Principal Underwriter during the most recent fiscal quarter are recoverable for five quarters, provided that such commissions do not exceed the annual expense limit. After five quarters these commissions are not recoverable. For Class B 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 National Tax-Exempt Income Funds - Page 27 Underwriter for distribution-related expenses, including the financing of commissions paid to qualified dealers. For Class 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 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 Plan for distribution-related expenses. During the 2001 fiscal year, TEBF, AHIM and LTEX paid or accrued $4,915,000, $1,780,000 and $807,000, respectively, for compensation to dealers or the Principal Underwriter under the Plan for Class A shares, $118,000, $56,000 and $14,000, respectively, for Class B shares, $27,000, $7,000 and $6,000, respectively, for Class C shares, and $4,000, $1,000 and $375, respectively for Class F shares. As of July 31, 2001, unreimbursed expenses which were subject to reimbursement under the Plans for AHIM and LTEX Class A shares were $109,000 and $37,000, respectively. As of the end of their respective fiscal year ends, accrued and unpaid distribution expenses for Class A shares for TEBF, AHIM and LTEX were $998,000, $200,000 and $81,000, respectively. Accrued and unpaid distribution expenses for Class B shares for TEBF, AHIM and LTEX were $21,000, $9,000, and $2,000, respectively. Accrued and unpaid distribution expenses for Class C shares for TEBF, AHIM and LTEX were $10,000, $3,000, and $3,000, respectively. Accrued and unpaid distribution expenses for Class F shares for TEBF, AHIM and LTEX were $2,000, $255, and $236, respectively. 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. TAXES AND DISTRIBUTIONS FUND TAXATION - Each fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code ("Code") so that it will not be liable for federal tax on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company, and avoid being subject to federal income or excise taxes at the fund level, each fund intends to distribute substantially all of its net investment income and net realized capital gains within each calendar year as well as on a fiscal year basis, and intends to comply with other tax rules applicable to regulated investment companies. To avoid federal excise taxes, the Code requires each fund to distribute by December 31 of each year, at a minimum, the following amounts: 98% of its taxable ordinary income earned during the calendar year; 98% of its capital gain net income earned during the twelve month period ending October 31; and 100% of any undistributed amounts from the prior year. National Tax-Exempt Income Funds - Page 28 Interest on the municipal securities purchased by each fund is believed to be free from regular federal income tax. However, the Code imposes limitations on the use and investment of the proceeds of state and local governmental bonds and of other funds of the issuers of such bonds. These limitations must be satisfied on a continuing basis to maintain the exclusion from gross income of interest on such bonds. Bond counsel qualify their opinions as to the federal tax status of new issues of bonds by making such opinions contingent on the issuer's future compliance with these limitations. Any failure on the part of an issuer to comply could cause the interest on its bonds to become taxable to investors retroactive to the date the bonds were issued. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS DIVIDENDS - By meeting certain requirements of the Code, each fund qualifies to pay exempt-interest dividends to shareholders. These dividends ("exempt-interest dividends") are derived from interest income exempt from regular federal income tax, and are not subject to regular federal income tax when they are distributed to fund shareholders. In addition, to the extent that exempt-interest dividends are derived from interest on obligations of a state or its political subdivisions, or from interest on qualifying U.S. territorial obligations (including qualifying obligations of Puerto Rico, the U.S. Virgin Islands or Guam), they also may be exempt from that state's personal income taxes. CAPITAL GAIN DISTRIBUTIONS - Each fund may derive capital gains and losses in connection with sales or other dispositions of its portfolio securities. Distributions from net short-term capital gains will be taxable to shareholders as ordinary income. Distributions from net long-term capital gains will be taxable to shareholders as long-term capital gain, regardless of how long a particular shareholder has held shares in each fund. A portion of the gain on municipal bonds purchased at market discount after April 30, 1993 is taxable to shareholders as ordinary income, not as capital gains. SHAREHOLDER TAXATION - Individual shareholders are required to report to the federal government all exempt-interest dividends and all other tax-exempt interest received. Distributions by each fund result in a reduction in the net asset value of each fund's shares. Should a distribution reduce the net asset value below a shareholder's cost basis, such distribution nevertheless will be taxable to the shareholder to the extent it consists of ordinary income or capital gain as described above, even though, from an investment standpoint, it may constitute a partial return of investment capital. For this reason, investors should consider the tax implications of buying shares just prior to a distribution. The price of shares purchased at that time includes the amount of the forthcoming distribution. Those purchasing just prior to a distribution will then receive a partial return of investment capital upon the distribution, which may be taxable to them, in whole or in part. Redemptions and exchanges of fund shares are taxable transactions for federal and state income tax purposes. If a shareholder redeems fund shares, or exchanges shares for shares of a different fund, the IRS will require the shareholder to report any gain or loss on the redemption or exchange. Generally, the gain or loss realized will be capital gain or loss and will be long-term or short-term, generally depending on how long the shareholder held the shares. Any loss incurred on the redemption or exchange of shares held for six months or less will be disallowed to the extent of any exempt-interest dividends distributed to a shareholder with National Tax-Exempt Income Funds - Page 29 respect to fund shares and any remaining loss will be treated as a long-term capital loss to the extent of any long-term capital gains distributed to the shareholder by each fund on those shares. All or a portion of any loss a shareholder realizes upon the redemption of fund shares will be disallowed to the extent that shareholder buys other shares in each fund (through reinvestment of dividends or otherwise) within 30 days before or after the share redemption. Any loss disallowed under these rules will be added to the shareholder's tax basis in the new shares purchased. If a shareholder redeems shares in each fund, and then reinvests the sales proceeds in each fund or in another fund within 90 days of buying the original shares, the sales charge that would otherwise apply to the shareholder's reinvestment may be reduced or eliminated. The IRS will require the shareholder to report any gain or loss on the redemption of the original shares in each fund. In doing so, all or a portion of the sales charge paid by the shareholder for the original shares in the fund will be excluded from the shareholder's tax basis in the shares sold (for the purpose of determining gain or loss upon the sale of such shares). The portion of the sales charge excluded will equal the amount that the sales charge is reduced on the reinvestment. Any portion of the sales charge excluded from a shareholder's tax basis in the shares sold will be added to the tax basis of the shares acquired from the reinvestment. Interest on certain private activity bonds, while exempt from regular federal income tax, is a preference item for taxpayers when determining their alternative minimum tax under the Code and under the income tax provisions of several states. Private activity bond interest could subject a shareholder to or increase liability under federal and state alternative minimum taxes, depending on a shareholder's individual or corporate tax position. Persons who are defined in the Code as substantial users (or persons related to such users) of facilities financed by private activity bonds should consult with their tax advisors before buying fund shares. Each fund is not intended to constitute a balanced investment program and is not designed for investors seeking capital appreciation or maximum tax-exempt income without fluctuation of principal. Shares of each fund generally would not be suitable for tax-exempt institutions or tax-deferred retirement plans (e.g., plans qualified under Section 401 of the Code, and individual retirement accounts). Such retirement plans would not gain any benefit from the tax-exempt nature of each fund's dividends because such dividends would be ultimately taxable to beneficiaries when distributed to them. Each fund will be required to report to the IRS all distributions of investment company taxable income and capital gains as well as gross proceeds from the redemption or exchange of fund shares, except in the case of certain exempt shareholders. Under the backup withholding provisions of Section 3406 of the Code, distributions of investment company taxable income and capital gains and proceeds from the redemption or exchange of a regulated investment company may be subject to withholding of federal income tax at the rate of 31% in the case of non-exempt U.S. shareholders who fail to furnish the investment company with their taxpayer identification numbers and with required certifications regarding their status under the federal income tax law. Withholding may also be required if the fund is notified by the IRS or a broker that the taxpayer identification number furnished by the shareholder is incorrect or that the shareholder has previously failed to report interest or dividend income. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld. National Tax-Exempt Income Funds - Page 30 The foregoing discussion of U.S. federal income tax law relates solely to the application of that law to U.S. persons, i.e., U.S. citizens and residents and U.S. corporations, partnerships, trusts and estates. Each shareholder who is not a U.S. person should consider the U.S. and foreign tax consequences of ownership of shares of each fund, including the possibility that such a shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a lower rate under an applicable income tax treaty) on taxable dividends, excluding long-term capital gain distributions, received by him or her. Shareholders should consult their tax advisers about the application of federal, state and local tax law in light of their particular situation. National Tax-Exempt Income Funds - Page 31 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 and who has a sales agreement with American Funds Distributors. ------------------------------------------------------------------------------- By mail Make your check Fill out the account additions payable to the fund form at the bottom of a recent and mail to the account statement, make your address indicated on check payable to the fund, the account write your account number on application. Please your check, and mail the check indicate an investment and form in the envelope dealer on the account provided with your account application. statement. ------------------------------------------------------------------------------- By telephone Please contact your Complete the "Investments by investment dealer to Phone" section on the account open account, then application or American follow the procedures FundsLink Authorization Form. for additional Once you establish the investments. privilege, you, your financial advisor or any person with your account information can call American FundsLine(R) and make investments by telephone (subject to conditions noted in "Shareholder Account Services and Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below). ------------------------------------------------------------------------------- By computer Please contact your Complete the American FundsLink investment dealer to Authorization Form. Once you open account, then established the privilege, you, follow the procedures your financial advisor or any for additional person with your account investments. information may access American FundsLine OnLine(R) on the Internet and make investments by computer (subject to conditions noted in "Shareholder Account Services and Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below). ------------------------------------------------------------------------------- By wire Call 800/421-0180 to Your bank should wire your obtain your account additional investments in the number(s), if same manner as described under necessary. Please "Initial Investment." indicate an investment dealer on the account. Instruct your bank to wire funds to: Wells Fargo Bank 155 Fifth Street, Sixth Floor San Francisco, CA 94106 (ABA#121000248) For credit to the account of: American Funds Service Company a/c# 4600-076178 (fund name) (your fund acct. no.) -------------------------------------------------------------------------------
The funds and the Principal Underwriter reserve the right to reject any purchase order. Generally, Class F shares may only be purchased through fee-based programs of investment firms and registered investment advisers who have special agreements with the fund's distributor. Class B and C shares are generally not available to certain employer-sponsored retirement plans, such as 401(k) plans, employer-sponsored 403(b) plans, and money purchase National Tax-Exempt Income Funds - Page 32 pension and profit sharing plans. Class R-5 shares of the funds 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. 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. FUND NUMBERS - Here are the fund numbers for use with our automated phone line, American FundsLine/(R)/ (see description below):
FUND FUND FUND FUND NUMBER NUMBER NUMBER NUMBER FUND CLASS A CLASS B CLASS C CLASS F ---------------------------------------------------------------------------------------- STOCK AND STOCK/BOND FUNDS AMCAP Fund/(R)/ . . . . . . . . . . . . . . . 02 202 302 402 American Balanced Fund/(R)/ . . . . . . . . . 11 211 311 411 American Mutual Fund/(R)/ . . . . . . . . . . 03 203 303 403 Capital Income Builder/(R)/ . . . . . . . . . 12 212 312 412 Capital World Growth and Income Fund/SM/ . . 33 233 333 433 EuroPacific Growth Fund/(R)/ . . . . . . . . 16 216 316 416 Fundamental Investors/SM/ . . . . . . . . . . 10 210 310 410 The Growth Fund of America/(R)/ . . . . . . . 05 205 305 405 The Income Fund of America/(R)/ . . . . . . . 06 206 306 406 The Investment Company of America/(R)/ . . . 04 204 304 404 The New Economy Fund/(R)/ . . . . . . . . . . 14 214 314 414 New Perspective Fund/(R)/ . . . . . . . . . . 07 207 307 407 New World Fund/SM/ . . . . . . . . . . . . . 36 236 336 436 SMALLCAP World Fund/(R)/ . . . . . . . . . . 35 235 335 435 Washington Mutual Investors Fund/SM/ . . . . 01 201 301 401 BOND FUNDS American High-Income Municipal Bond Fund/(R)/ 40 240 340 440 American High-Income Trust/SM/ . . . . . . . 21 221 321 421 The Bond Fund of America/SM/ . . . . . . . . 08 208 308 408 Capital World Bond Fund/(R)/ . . . . . . . . 31 231 331 431 Intermediate Bond Fund of America/SM/ . . . . 23 223 323 423 Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 43 243 343 443 The Tax-Exempt Bond Fund of America/(R)/ . . 19 219 319 419 The Tax-Exempt Fund of California/(R)/* . . . 20 220 320 420 The Tax-Exempt Fund of Maryland/(R)/* . . . . 24 224 324 424 The Tax-Exempt Fund of Virginia/(R)/* . . . . 25 225 325 425 U.S. Government Securities Fund/SM/ . . . . . 22 222 322 422 MONEY MARKET FUNDS The Cash Management Trust of America/(R)/ . . 09 209 309 409 The Tax-Exempt Money Fund of America/SM/ . . 39 N/A N/A N/A The U.S. Treasury Money Fund of America/SM/ . 49 N/A N/A N/A ___________ *Available only in certain states.
National Tax-Exempt Income Funds - Page 33 SALES CHARGES CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares of stock, stock/bond, and bond funds of The American Funds Group are set forth below. The money market funds of The American Funds Group are offered at net asset value. (See "Fund Numbers" for a listing of the funds.)
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) -----------------------------------------------------------------------------
National Tax-Exempt Income Funds - Page 34 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. 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 as determined by a Vice President or Senior Vice President of the Capital Research and Management Company Fund Administration and Compliance Unit; and National Tax-Exempt Income Funds - Page 35 (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 and C Shares" below. 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 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 SALES CHARGE - Class F 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. National Tax-Exempt Income Funds - Page 36 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. 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 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 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 National Tax-Exempt Income Funds - Page 37 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 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 regular monthly payroll deduction investment will be multiplied by 13 and then multiplied by 1.5. The current value of existing American Funds investments (other than money market fund investments) and any rollovers or transfers reasonably anticipated to be invested in non-money market American Funds during the 13-month period are added to the figure determined above. The sum is the Statement amount and applicable breakpoint level. On the first investment and all other investments made pursuant to the Statement, a sales charge will be assessed according to the sales charge breakpoint thus determined. There will be no retroactive adjustments in sales charges on investments 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); National Tax-Exempt Income Funds - Page 38 .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; or .endowments or foundations established and controlled by you or your immediate family. 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; . 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 - 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. National Tax-Exempt Income Funds - Page 39 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 from 403(b) plans or IRAs due to death, post-purchase disability or attainment of age 59-1/2. (3) Tax-free returns of excess contributions to IRAs. (4) Redemptions through systematic withdrawal plans (see "Automatic Withdrawals" below), not exceeding 12% 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. 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% fee from CDSC limit is calculated on a pro rata basis at the time the first payment is made and is recalculated thereafter on a pro rata basis at the time of each SWP payment. Shareholders who establish a SWP should be aware that the amount of that payment not subject to a CDSC may vary over time depending on fluctuations in net asset value of their account. This privilege may be revised or terminated at any time. (2) Required minimum distributions taken from retirement accounts upon the attainment of age 70-1/2. 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.Dividend and capital gain distributions, redemptions of appreciated shares, redemptions through SWPs, and required minimum distributions in excess of 12% of an account value will not qualify for a CDSC waiver. INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS Assets from a retirement plan (plan assets) may be invested in any class of shares of the American Funds (except as described below) through an IRA rollover plan. All such rollover investments will be subject to the terms and conditions for Class A, B, C and F shares contained in the fund's current prospectus and statement of additional information. An IRA rollover involving National Tax-Exempt Income Funds - Page 40 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 Class A shares at net asset value and will not be subject to a contingent deferred sales charge. Dealers who initiate and are responsible for such investments will be compensated pursuant to the schedule applicable to Class A share investments of $1 million or more (see "Dealers Commissions and Compensation" above). PRICE OF SHARES Shares are purchased at the offering price or sold at the net asset value price next determined after the purchase or sell order is received and accepted by the funds or the Transfer Agent; the offering or net asset value price is effective for orders received prior to the time of determination of the net asset value and, in the case of orders placed with dealers or their authorized designees, accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of their designees. In the case of orders sent directly to the fund or the Transfer Agent, an investment dealer MUST be indicated. The dealer is responsible for promptly transmitting purchase and sell orders to the Principal Underwriter. Orders received by the investment dealer or authorized designee, the Transfer Agent, or the funds after the time of the determination of the net asset value will be entered at the next calculated offering price. Prices which appear in the newspaper do not always indicate prices at which you will be purchasing and redeeming shares of the funds, since such prices generally reflect the previous day's closing price whereas purchases and redemptions are made at the next calculated price. The price you pay for shares, the offering price, is based on the net asset value per share which is calculated once daily as of approximately 4:00 p.m. New York time, which is the normal close of trading on the New York Stock Exchange each day the Exchange is open. If, for example, the Exchange closes at 1:00 p.m., the fund's share price would still be determined as of 4:00 p.m. New York time. The New York Stock Exchange is currently closed on weekends and on the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. All portfolio securities of funds managed by Capital Research and Management Company (other than money market funds) are valued, and the net asset value per share is determined as follows: 1. Equity securities, including depositary receipts, are valued at the last reported sale price on the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. In cases where equity securities are traded on more than one exchange, the securities are valued on the exchange or market determined by the Investment Adviser to be the broadest and most representative market, which may be either a securities exchange or the over-the-counter market. Fixed-income securities are valued at prices obtained from a pricing service, when such prices are available; however, in circumstances where the Investment Adviser deems it appropriate to do so, such securities will be valued at the mean quoted bid and asked prices or at prices for securities of comparable maturity, quality and type. Short-term securities maturing within 60 days are valued at amortized cost which approximates market value. National Tax-Exempt Income Funds - Page 41 Assets or liabilities initially expressed in terms of non-U.S. currencies are translated prior to the next determination of the net asset value of the fund's shares into U.S. dollars at the prevailing market rates. Securities and assets for which representative market quotations are not readily available are valued at fair value as determined in good faith under policies approved by the funds' Boards. The fair value of all other assets is added to the value of securities to arrive at the total assets; 2. Liabilities, including accruals of taxes and other expense items, are deducted from total assets; and 3. Net assets so obtained are then divided by the total number of shares outstanding, and the result, rounded to the nearer cent, is the net asset value per share. Any purchase order may be rejected by the Principal Underwriter or by each fund. The Principal Underwriter will not knowingly sell shares of each fund directly or indirectly to any person or entity, where, after the sale, such person or entity would own beneficially directly or indirectly more than 4.5% of the outstanding shares of each fund without the consent of a majority of each fund's Board of Directors/Trustees. SELLING SHARES Shares are sold at the net asset value next determined after your request is received in good order by the Transfer Agent, 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: - Over $50,000; -Made payable to someone other than the registered shareholder(s); or - Sent to an address other than the address of record, or an address of record which has been changed within the last 10 days. Your signature may be guaranteed by a domestic stock exchange or the National Association of Securities Dealers, Inc., bank, savings association or credit union National Tax-Exempt Income Funds - Page 42 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 any shares you wish to sell that are in certificate form. TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING AMERICAN FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/ -Redemptions by telephone or fax (including American FundsLine and American FundsLine OnLine) are limited to $50,000 per shareholder each day. -Checks must be made payable to the registered shareholder(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 Class B, C or F shares of The Cash Management Trust. 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. 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 National Tax-Exempt Income Funds - Page 43 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 A 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 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. For example, if the date you specified falls on a weekend or holiday, your money will be invested on the previous business day. If your bank account cannot be debited due to insufficient funds, a stop-payment or the closing of the account, the plan may be terminated and the related investment reversed. You may change the amount of the investment or discontinue the plan at any time by writing to the Transfer Agent. AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested in additional shares of the same class 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. If you have elected to receive dividends and/or capital gain distributions in cash, and the postal or other delivery service is unable to deliver checks to your address of record, or you do not respond to mailings from American Funds Service Company with regard to uncashed distribution checks, your distribution option will automatically be converted to having all dividends and other distributions reinvested in additional shares. CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest dividends and capital gains ("distributions") of the same share class into any other fund in The American Funds Group at net asset value, subject to the following conditions: (a) The aggregate value of your account(s) in the fund(s) paying distributions equals or exceeds $5,000 (this is waived if the value of the account in the fund receiving the distributions equals or exceeds that fund's minimum initial investment requirement), (b) If the value of the account of the fund receiving distributions is below the minimum initial investment requirement, distributions must be automatically reinvested, National Tax-Exempt Income Funds - Page 44 (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 and registered investment advisers with special agreements with the fund's distributor. 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" -- "Principal Underwriter and Transfer Agent" in the prospectus for the appropriate fax numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type retirement plans for which Capital Bank and Trust Company serves as trustee may not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions and purchases are processed simultaneously at the share prices next determined after the exchange order is received. (See "Purchase of Shares"--"Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES. AUTOMATIC EXCHANGES - You may automatically exchange shares of the same class in amounts of $50 or more among any of the funds in The American Funds Group on any day (or preceding business day if the day falls on a non-business day) of each month you designate. AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as dividends, yield or income. Automatic investments may not be made into a shareholder account from which there are automatic withdrawals. Withdrawals of amounts exceeding reinvested dividends and distributions and increases in share value would reduce the aggregate value of the shareholder's account. The Transfer Agent arranges for the redemption by the fund of sufficient shares, deposited by the shareholder with the Transfer Agent, to provide the withdrawal payment specified. ACCOUNT STATEMENTS - Your account is opened in accordance with your registration instructions. Transactions in the account, such as additional investments will be reflected on regular confirmation statements from the Transfer Agent. Dividend and capital gain reinvestments, 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 $50,000 National Tax-Exempt Income Funds - Page 45 per 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 Web site on the Internet at www.americanfunds.com. Redemptions and exchanges through American FundsLine and American FundsLine OnLine are subject to the conditions noted above and in "Telephone and Computer Purchases, Redemptions and Exchanges" below. You will need your fund number (see the list of funds in The American Funds Group under "Purchase of Shares - Purchase Minimums" and "Purchase of Shares - Fund Numbers"), personal identification number (generally the last four digits of your Social Security number or other tax identification number associated with your account) and account number. TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the telephone (including American FundsLine) or computer (including American FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange options, you agree to hold the fund, the Transfer Agent, any of its affiliates or mutual funds managed by such affiliates, and each of their respective directors, trustees, officers, employees and agents harmless from any losses, expenses, costs or liability (including attorney fees) which may be incurred in connection with the exercise of these privileges. Generally, all shareholders are automatically eligible to use these options. However, you may elect to opt out of these options by writing the Transfer Agent (you may also reinstate them at any time by writing the Transfer Agent). If the Transfer Agent does not employ reasonable procedures to confirm that the instructions received from any person with appropriate account information are genuine, 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' Articles of Incorporation or Declaration of Trust permits the funds to direct the Transfer Agent to redeem the shares of any shareholder for their then current net asset value per share if at such time the shareholder 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 Directors/Trustees of the fund may from time to time adopt. 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 sold shares of the fund or 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 National Tax-Exempt Income Funds - Page 46 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. Brokerage commissions paid on portfolio transactions, including dealer concessions on underwritings, for the 2001, 2000 and 1999 fiscal years for TEBF, amounted to $2,407,000, $1,036,000 and $1,261,000, respectively. Brokerage commissions paid on portfolio transactions, including dealer concessions on underwritings, for the 2001, 2000 and 1999 fiscal years for AHIM, amounted to $649,000, $602,000 and $690,000, respectively. Brokerage commissions paid on portfolio transactions, including dealer concessions on underwritings, for the 2001, 2000 and 1999 fiscal years for LTEX, amounted to $149,000, $147,000 and $221,000, respectively. 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 The Chase Manhattan Bank, 270 Park Avenue, New York, NY 10017, as Custodian. If the fund holds non- U.S. securities, the Custodian may hold these securities pursuant to sub-custodial arrangements in non-U.S. banks or non-U.S. branches of U.S. banks. TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of the Investment Adviser, maintains the records of each shareholder's account, processes purchases and redemptions of the 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 $489,000, $165,000, and $51,000, by TEBF, AHIM and LTEX, respectively, for Class A shares and $3,000, $2,000 and $1,000 for Class B shares, for the 2001 fiscal year. INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 350 South Grand Street, Los Angeles, CA 90071, serves as the fund's independent accountants providing audit services, preparation of tax returns and review of certain documents to be filed with the Securities and Exchange Commission. The financial statements included in this Statement of Additional Information from the Annual Report have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. The semi-annual financial statements are unaudited. The selection of the funds' independent accountants is reviewed and determined annually by the Board of Directors/Trustees. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS - TEBF'S fiscal year ends on August 31. AHIM's and LTEX's fiscal year ends on July 31. Shareholders are provided updated prospectuses annually 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 National Tax-Exempt Income Funds - Page 47 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 fund's 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. OTHER INFORMATION - The financial statements including the investment portfolio and the report of Independent Accountants contained in the Annual Report are included in this Statement of Additional Information. The following information is not included in the Annual Report: DETERMINATION OF TEBF'S NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- FEBRUARY 28, 2002
Net asset value and redemption price per share (Net assets divided by shares outstanding) . . . . . . . . . $12.22 Maximum offering price per share (100/96.25 of net asset value per share, which takes into account the fund's current maximum sales charge). . . . . . . . . . . . . . . . . . . . . . . . $12.70
DETERMINATION OF AHIM'S NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- JANUARY 31, 2002
Net asset value and redemption price per share (Net assets divided by shares outstanding) . . . . . . . . . $15.09 Maximum offering price per share (100/96.25 of net asset value per share, which takes into account the fund's current maximum sales charge). . . . . . . . . . . . . . . . . . . . . . . . $15.68
DETERMINATION OF LTEX'S NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- JANUARY 31, 2002
Net asset value and redemption price per share (Net assets divided by shares outstanding) . . . . . . . . . $15.00 Maximum offering price per share (100/96.25 of net asset value per share, which takes into account the fund's current maximum sales charge). . . . . . . . . . . . . . . . . . . . . . . . $15.58
National Tax-Exempt Income Funds - Page 48 CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS TEBF's yield was 3.92% based on a 30-day (or one month) period ended February 28, 2002. AHIM's and LTEX's yields were 5.16% and 3.59%, respectively, based on a 30-day (or one month) period ended January 31, 2002. The yield was computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula: YIELD = 2[( a-b/cd + 1)/6/ -1] Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = the maximum offering price per share on the last day of the period. The funds may also calculate a tax equivalent yield based on a 30-day (or one month) period ended no later than the date of the most recent balance sheet included in the registration statement, computed by dividing that portion of the yield (as computed by the formula stated above) which is tax-exempt by one minus a stated income tax rate and adding the product to that portion, if any, of the yield that is not tax-exempt. TEBF'S tax-equivalent yield based on the maximum federal tax rate of 38.6% for the 30-day (or one month) period ended February 28, 2002 was 6.38%. AHIM's and LTEX's tax-equivalent yield based on the maximum federal tax rate of 38.6% for the 30-day (or one month) period ended January 31, 2002 was 8.40% and 5.85%, respectively. As of February 28, 2002, TEBF's total return over the past 12 months and average annual total return at the maximum offering price for the five- and ten-year periods were 2.67%, 5.02% and 6.25%, respectively. The fund's one year total return and average annual total return at net asset value for the five- and ten-year periods ended on February 28, 2002 were 6.68%, 5.82% and 6.66%, respectively. As of January 31, 2002, AHIM's total return over the past 12 months and average annual total return at the maximum offering price for five years and its lifetime were 2.40%, 4.51% and 6.44%, respectively. Over the fund's lifetime (September 26, 1994 to January 31, 2002), the Lehman Brothers Municipal Bond Index and the Lipper High Yield Municipal Debt Funds Average had average annual total returns of 7.00% and 5.41%, respectively. The fund's total return at net asset value over the past 12 months and average annual total return over the past five years and its lifetime at January 31, 2002 were 6.36%, 5.32% and 7.00%, respectively. The Lehman Brothers Municipal Bond Index represents the investment grade municipal bond market. This index is unmanaged and does not reflect sales charges, commissions or expenses. The Lipper High Yield Municipal Debt Funds Average represents an average of funds in the objective that invest at least 50% of their assets in lower rated municipal debt issues. The results of the underlying funds in the average include the reinvestment of dividend and capital gain distributions and brokerage commissions paid by the funds for portfolio transactions, but do not reflect sales charges. National Tax-Exempt Income Funds - Page 49 As of January 31, 2002, LTEX's total return over the past twelve months and average annual total return at the maximum offering price over five years and its lifetime were 1.26%, 4.33% and 4.65%, respectively. Over the fund's lifetime (October 6, 1993 to January 31, 2002), the Lehman Brothers 7-Year Municipal Bond Index and the Lipper Intermediate Municipal Debt Funds Average had average annual total returns of 5.53% and 4.90%, respectively. The fund's one year total return and average annual total return at net asset value over the past five years and its lifetime at January 31, 2002 were 5.21%, 5.12% and 5.14%, respectively. The average total return ("T") is computed by equating the value at the end of the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a period of years ("n") according to the following formula as required by the Securities and Exchange Commission: P(1+T)/n/ = ERV. In calculating average annual total return at the maximum offering price, the funds assume: (1) deduction of the maximum sales load of 3.75% from the $1,000 initial investment; (2) reinvestment of dividends and distributions at net asset value on the reinvestment date determined by the Board; and (3) a complete redemption at the end of any period illustrated. In addition, the funds will provide lifetime average total return figures. From time to time, the funds may calculate investment results for Class B, C and F shares. The funds may also, at times, calculate total return based on net asset value per share (rather than the offering price), in which case the figure would not reflect the effect of any sales charges which would have been paid if shares were purchased during the period reflected in the computation. Consequently, total return calculated in this manner will be higher. These total returns may be calculated over periods in addition to those described above. Total return for the unmanaged indices will be calculated assuming reinvestment of dividends and interest, but will not reflect any deductions for advisory fees, brokerage costs or administrative expenses. The funds may include information on their investment results and/or comparisons of their investment results to various unmanaged indices (such as the Dow Jones Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock Index) or results of other mutual funds or investment or savings vehicles in advertisements or in reports furnished to present or prospective shareholders. The funds may also, from time to time, combine their results with those of other funds in The American Funds Group for purposes of illustrating investment strategies involving multiple funds. The funds may refer to results and surveys compiled by organizations such as CDA/ Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar, Inc., and by the U.S. Department of Commerce. Additionally, the funds may refer to results published in various newspapers and periodicals, including Barron's, Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The Wall Street Journal. The Lehman Brothers 7-Year Municipal Bond Index is unmanaged, reflects no expenses or management fees and consists of a large universe of municipal bonds issued as state general obligations or revenue bonds with a minimum rating of BBB by Standard & Poor's Corporation. The Lipper Intermediate Municipal Debt Funds Average is comprised of funds that invest in municipal debt issues with dollar-weighted average maturities of five to ten years. The results of the underlying funds in the average include the reinvestment of dividend and capital gain distributions and brokerage commissions paid by the funds for portfolio transactions, but do not reflect sales charges. National Tax-Exempt Income Funds - Page 50 The funds may illustrate the benefits of tax-deferral by comparing taxable investments to investments made through tax-deferred retirement plans. The funds may compare their investment results with the Consumer Price Index, which is a measure of the average change in prices over time in a fixed market basket of goods and services (e.g. food, clothing, and fuels, transportation, and other goods and services that people buy for day-to-day living). National Tax-Exempt Income Funds - Page 51 APPENDIX Description of Bond Ratings BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and Standard & Poor's Corporation (S&P) represent their opinions as to the quality of the municipal bonds which they undertake to rate. It should be emphasized, however, that ratings are general and are not absolute standards of quality. Consequently, municipal bonds with the same maturity, coupon and rating may have different yields, while municipal bonds of the same maturity and coupon with different ratings may have the same yield. Moody's rates the long-term debt securities issued by various entities from ------- "Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. Ratings are described as follows: "Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as 'gilt edge.' Interest payments are protected by a large or by an exceptionally stable margin, and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues." "Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities, or fluctuation of protective elements may be of greater amplitude, or there may be other elements present which make the long-term risks appear somewhat larger than the Aaa securities." "Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future." "Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and, in fact, have speculative characteristics as well." "Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class." "Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small." National Tax-Exempt Income Funds - Page 52 "Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest." "Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings." "Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing." S & P rates the long-term securities debt of various entities in categories ----- ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. Ratings are described as follows: "Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay interest and repay principal is extremely strong." "Debt rated 'AA' has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree." "Debt rated 'A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories." "Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories." "Debt rated 'BB' has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The 'BB' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BBB-' rating. "Debt rated 'B' has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The 'B' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-' rating." "The rating 'CC' is typically applied to debt subordinated to senior debt that is assigned an actual or implied 'CCC' rating." "The rating 'C' is typically applied to debt subordinated to senior debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued." "The rating 'C1' is reserved for income bonds on which no interest is being paid." National Tax-Exempt Income Funds - Page 53 "Debt rated 'D' is in payment default. The 'D' rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized." Note Ratings STANDARD & POOR'S CORPORATION: "SP-1" and "SP-2" are the two highest note rating categories, and are described as follows: "SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation." "SP-2 Satisfactory capacity to pay principal and interest." MOODY'S INVESTORS SERVICE, INC.: "MIG-1" and "MIG-2" are the two highest note rating categories, and are described as follows: "MIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing." "MIG 2: This designation denotes high quality. Margins of protection are ample although not as large as in the preceding group." Description of Commercial Paper Ratings MOODY'S employs the designations "Prime-1," "Prime-2" and "Prime-3" to indicate ------- commercial paper having the highest capacity for timely repayment. Issuers rated Prime-1 have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structures with moderate reliance on debt and ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity. Issues rated Prime-2 have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. S&P ratings of commercial paper are graded into four categories ranging from "A" --- for the highest quality obligations to "D" for the lowest. A - Issues assigned its highest rating are regarded as having the greatest capacity for timely payment. Issues in this category are delineated with numbers 1, 2, and 3 to indicate the relative degree of safety. National Tax-Exempt Income Funds - Page 54 A-1 - This designation indicates that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics will be denoted with a plus (+) sign designation. A-2 - Capacity for timely payments on issues with this designation is strong; however, the relative degree of safety is not as high as for issues designated "A-1." National Tax-Exempt Income Funds - Page 55 The Tax-Exempt Bond Fund of America, Inc. Investment portfolio, February 28, 2002 (unaudited) [PIE CHART Geographic Breakdown Texas 10.17% Illinois 10.16 Washington 6.89 New York 5.44 California 5.12 Florida 4.76 Other states 50.6 Cash & short-term 6.86 [end pie chart] [pie chart] Quality ratings Aaa/AAA 42.01% Aa/AA 15.61 A/A 10.12 Baa/BBB 11.05 Below investment-grade 14.35 Cash & short-term equivalents 6.86 [end chart] Principal Market amount value Fixed income securities - 93.14% (000) (000) Alabama - 1.06% Public School and College Auth., Capital Improvement Pool $ 5,255 $ 5,732 Bonds, Series 2001-A, 5.625% 2015 Special Care Fac. Fncg. Auth. of the City of 9,000 9,029 Huntsville - Carlton Cove, Retirement Fac. Rev. Bonds (Carlton Cove, Inc. Project), Series 2001, 8.125% 2031 Jefferson County, Sewer Rev. Capital Improvement Warrants, 2,865 2,840 Series 1999A, FGIC Insured, 5.125% 2029 Health Care Auth. of Lauderdale County and the City of 1,150 1,256 Florence, Coffee Health Group, Series 2000-A Bonds, MBIA Insured, 5.50% 2009 21st Century Auth., Tobacco Settlement Rev. Bonds: Series 2000, 5.75% 2020 1,500 1,520 Series 2001, 5.50% 2021 6,000 5,876 Alaska - 1.87% Housing Fin. Corp.: Collateralized Bonds (Veterans Mortgage Program): Series 1992A-1, 6.75% 2032 1,495 1,529 Series A-1, 5.30% 2017 6,740 6,867 Municipality of Anchorage: 1995 G.O. Ref. General Purpose Bonds, Series B, FGIC 2,895 3,335 Insured, 6.00% 2012 Municipal Light & Power, Senior Lien Ref. Electric Rev. 5,000 6,019 Bonds, Series 1996, MBIA Insured, 6.50% 2014 North Slope Borough, G.O. Bonds, Series 1997A, MBIA 10,935 8,497 Insured, 0% 2008 Northern Tobacco Securitization Corp., Tobacco Settlement Asset-Backed Bonds: Series 2000: 5.60% 2010 1,000 1,057 5.70% 2011 4,890 5,168 5.80% 2012 4,785 5,056 Series 2001, 5.375% 2021 9,050 8,827 Arizona - 0.35% Health Facs. Auth., Rev. Bonds (Catholic Healthcare West), 3,655 3,896 Series 1999A, 6.125% 2009 State Transportation Board, Subordinated Highway Rev. 1,850 1,910 Bonds, Series 1992B, 6.50% 2008 (Preref. 2002) Industrial Dev. Auth. of the County of Maricopa, Health 2,850 2,949 Fac. Rev. Bonds (Catholic Healthcare West Project), 1998 Series A, 5.25% 2006 Arkansas - 0.04% Dev. Fin. Auth., Tobacco Settlement Rev. Bonds 1,000 970 (Biosciences Institutes and College of Public Health Projects), Series 2001, 5.125% 2028 California - 5.12% G.O. Bonds, 5.00% 2021 7,000 6,928 Educational Facs. Auth., Rev. Bonds, Stanford University, 3,000 3,082 Series N, 5.35% 2027 Housing Fin. Agcy., Single Family Mortgage Bonds, 1997 Series C-4, Class I: 5.10% 2007 1,445 1,546 5.20% 2009 1,065 1,135 Statewide Communities Dev. Auth., Apartment Dev. Rev. 4,000 4,139 Ref. Bonds (Irvine Apartment Communities, LP), Series 1998A-3, 5.10% 2025 (Put 2010) City of Antioch, Public Fncg. Auth., 1998 Reassessment Rev. 1,460 1,517 Bonds, Subordinated Series B, 5.85% 2015 Association of Bay Area Governments , Fin. Auth. For Nonprofit Corps., Ref. Rev. Cert. of Part.: (American Baptist Homes of the West Facs. Project), Series 1997B: 5.50% 2007 1,210 1,184 6.20% 2027 1,675 1,520 (Episcopal Homes Foundation), Series 1998, 5.125% 2013 2,000 2,017 Bonita Canyon Public Facs. Fncg. Auth., Community Facs. 2,500 2,373 Dist. No. 98-1, Special Tax Bonds, Series 1998, 5.375% 2028 Central Valley Fncg. Auth., Cogeneration Project Rev. 1,000 1,081 Bonds (Carson Ice-Gen Project), Series 1993, 6.10% 2013 (Preref. 2003) County of El Dorado, Community Facs. Dist. No. 1992-1 985 1,017 (El Dorado Hills Dev.), Series 1999 Special Tax Bonds, 6.125% 2016 City of Folsom, Community Facs. Dist. No. 10, Special Tax 2,000 2,144 Bonds, Series 1999, 7.00% 2024 City of Fontana, Community Facs. Dist. No. 12 (Sierra 1,000 1,061 Lakes), Special Tax Bonds, Series 1999, 6.50% 2015 City of Irvine Limited Obligation Improvement Bonds: Assessment Dist. No. 94-13 (Oak Creek), Group One, 2,000 1,956 5.50% 2022 Assessment Dist. No. 94-13 (Oak Creek), Group Two, 1,250 1,288 6.00% 2022 Assessment Dist. No. 97-17 (Northwood), Group One, 1,500 1,546 6.00% 2023 City of Long Beach: Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), 1995 Series A: 6.10% 2010 (Preref. 2005) 4,000 4,497 6.125% 2015 (Preref. 2005) 5,000 5,625 6.125% 2023 (Preref. 2005) 12,500 14,064 MBIA Insured, 6.125% 2023 (Preref. 2005) 2,000 2,250 Bond Fin. Auth., Lease Rev. Ref. Bonds (Aquarium of the 2,150 2,376 Pacific Project), Series 2001, AMBAC Insured, 5.50% 2015 City of Los Angeles Regional Airports Improvement Corp., Facs. Lease Ref. Rev. Bonds (L.A. Intl. Airport): Delta Air Lines, Inc., Issue of 1996, 6.35% 2025 2,500 2,226 United Air Lines, Inc., Issue of 1992, 6.875% 2012 2,000 1,500 County of Los Angeles: Capital Asset Leasing Corp., Cert. of Part. (Marina del Rey), 1993 Series A: 6.25% 2003 2,400 2,476 6.50% 2008 4,750 4,975 Los Angeles Community College Dist., G.O. Bonds, 2001 10,500 11,489 Election, Series A, 5.50% 2016 County of Orange, Aliso Viejo Special Tax Bonds of Community Facs. Dist. No. 88-1, Series A of 1992: 7.15% 2006 (Preref. 2002) 2,000 2,094 7.35% 2018 (Preref. 2002) 2,000 2,095 City of Roseville: Highland Reserve North Community Facs. Dist. No. 1, 3,075 3,304 Special Tax Bonds, Series 1999, 6.00% 2011 North Central Roseville Community Facs. Dist. No. 1, Special Tax Ref. Bonds, Series 1999: 5.30% 2007 2,795 2,939 5.80% 2017 3,410 3,433 Woodcreek West Community Facs. Dist. No. 1, Special 1,465 1,572 Tax Bonds, Series 1999, 6.50% 2015 Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds (Procter & Gamble Project), 1995 Series: 6.00% 2003 2,200 2,296 6.375% 2010 500 536 6.375% 2010 (Preref. 2005) 500 574 County of Sacramento, Laguna Creek Ranch/Elliott Ranch 500 521 Community Facs. Dist. No. 1, Improvement Area No. 2 Special Tax Ref. Bonds (Elliott Ranch), 6.30% 2021 County of San Bernardino Housing Auth., Multifamily Housing 1,500 1,520 Rev. Ref. Bonds (Equity Residential/Redlands Lawn & Tennis Apartments), Issue 1999A, 5.20% 2029 (Put 2009) County of San Diego, Reassessment Dist. No. 97-1 995 1,031 (4-S Ranch), Limited Obligation Improvement Bonds, 6.25% 2012 San Marcos Public Facs. Auth., Ref. Rev. Bonds, Series 3,000 3,036 1998, 5.80% 2027 San Marcos Unified School Dist., Community Facs. Dist. 1,000 953 No. 5 (Rancho Carrillo), Series 1999 Special Tax Bonds, 5.60% 2029 Community Facs. Dist. No. 99-1 (Talega) of the Santa 1,195 1,256 Margarita Water Dist., Series 1999 Special Tax Bonds, 6.10% 2014 South Tahoe Joint Powers Fncg. Auth., Subordinate Bond Anticipation Notes (South Tahoe Redev. Project Area No. 1): Series 1999A, 7.30% 2007 7,000 7,297 Series 1999B, 7.30% 2007 1,905 1,986 The Regents of the University of California, Various 2,000 2,035 University of California Projects, 1993 Series A, 5.50% 2021 Washington Township Health Care Dist., Rev. Bonds, 1,300 1,323 Series 1999, 5.00% 2014 Colorado - 4.22% Health Facs. Auth., Hospital Rev. Bonds (PorterCare 3,800 3,981 Adventist Health System Project), Series 2001, 6.50% 2031 Catholic Health Initiatives, Series 2001: 5.50% 2014 3,000 3,146 5.50% 2015 4,250 4,424 PorterCare Adventist Health System Project, Series 2001, 6.50% 2031 Housing and Fin. Auth.: Multi-family Housing Insured Mortgage Rev. Bonds: 1982 Series A, 9.00% 2025 1,515 1,519 1997 Series C-3, 5.65% 2015 1,300 1,301 Single Family Housing Program Senior and Subordinate Bonds: 1997 Series: A-3, 7.00% 2016 1,005 1,065 B-3, 6.80% 2028 585 626 C-3, 6.75% 2017 655 699 1998 Series: B-3, 6.55% 2025 4,735 5,089 D-3, 6.125% 2023 1,840 1,977 Arapahoe County, Capital Improvement Trust Fund Highway Rev. Bonds (E-470 Project): 6.90% 2015 (Preref. 2005) 2,500 2,918 6.95% 2020 (Preref. 2005) 17,500 20,455 City and County of Denver, Airport System Rev. Bonds, Series 1992A: 7.25% 2025 (Preref. 2002) 1,920 2,037 7.25% 2025 (Preref. 2002) 14,210 15,079 E-470 Public Highway Auth. Senior Rev. Bonds, Series 7,500 690 2000B, (Capital Appreciation Bonds), 0% 2034 Eagle County, Bachelor Gulch Metropolitan Dist., 3,400 3,543 G.O. Bonds, Series 1999, 6.70% 2019 EagleBend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds, Series 1997A: 6.40% 2017 1,000 989 6.45% 2021 2,175 2,139 EagleBend Dowd Affordable Housing Corp., Multi-family Housing Project Rev. Bonds, Series 1998A: 6.35% 2014 1,010 1,007 6.63% 2039 2,000 1,934 Metropolitan Football Stadium Dist., Capital Appreciation Sales Tax Rev. Bonds, MBIA Insured: Series 1999A: 0% 2008 2,675 2,125 0% 2011 2,600 1,759 0% 2012 4,700 3,013 Series 1999B, 0% 2006 4,000 3,510 North Range Metropolitan Dist. No.1 (City of Commerce 3,775 3,709 City), Adams County, Limited Tax G.O. Bonds, Series 2001, 7.25% 2031 Northwest Parkway Public Highway Auth., Rev. Bonds, 2,800 2,872 Series 2001D, 7.125% 2041 Rampart Range Metropolitan Dist. No. 1 (City of Lone Tree), 5,415 5,370 Rev. Bonds (Rampart Range Metropolitan Dist. No. 2 Project), Series 2001, 7.75% 2026 Vista Ridge Metropolitan Dist. (Weld County), Limited Tax 7,310 7,333 G.O. Bonds, Series 2001, 7.50% 2031 Connecticut - 0.97% G.O. Bonds, 2001 Series B, 5.375% 2016 1,900 2,038 Dev. Auth., Pollution Control Rev. Ref. Bonds (The 5,025 5,136 Connecticut Light and Power Co. Project), Series 1993A, 5.85% 2028 Health and Educational Fac. Auth., Rev. Bonds, University 1,800 1,847 of Hartford Issue, Series D, 6.75% 2012 Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, 1996 Series A:/1/ 6.25% 2002 (Escrowed to Maturity) 1,000 1,025 6.375% 2004 (Escrowed to Maturity) 1,985 2,191 6.50% 2005 (Escrowed to Maturity) 1,490 1,684 6.40% 2011 2,025 2,154 6.40% 2011 (Preref. 2007) 2,470 2,883 Mohegan Tribe of Indians, Gaming Auth. Priority Distribution Payment, Public Improvement Bonds, Series 2001: 5.375% 2011 1,000 1,005 6.00% 2016 1,000 1,015 6.25% 2021 1,500 1,534 6.25% 2031 1,500 1,529 Delaware - 0.04% Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula 1,000 1,025 United Methodist Homes, Inc. Issue), Series 1997A, 6.00% 2009 District of Columbia - 0.89% G.O. Bonds: Series 1993A, AMBAC Insured, 5.875% 2005 (Escrowed 2,125 2,332 to Maturity) Series 1993B-1, AMBAC Insured, 5.50% 2009 1,500 1,645 Convention Center Auth. (Washington, D.C.), Senior Lien 5,750 5,347 Dedicated Tax Rev. Bonds, Series 1998, AMBAC Insured, 4.75% 2028 Hospital Rev. Ref. Bonds: Medlantic Healthcare Group, Inc. Issue, Series 1992B, 1,030 1,053 6.50% 2002 (Escrowed to Maturity) Washington Hospital Center Issue, Series 1992A, 7.00% 1,170 1,223 2005 (Preref. 2002) MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): Series 2001A, 6.40% 2031 (Put 2004) 1,000 1,025 Series 2001B, 6.625% 2031 (Put 2005) 4,000 4,168 Series 2001D, 6.875% 2031 (Put 2007) 5,000 5,345 Florida - 4.76% Arbor Greene Community Dev. Dist. (City of Tampa, Hillsborough County), Special Assessment Rev. Bonds: Series 1996, 7.60% 2018 915 973 Series 1998, 5.75% 2006 340 342 Series 2000, 6.50% 2007 710 722 Capital Region Community Dev. Dist. (Tallahassee), Capital 1,000 1,010 Improvement Rev. Bonds, Series 2001A-2, 6.85% 2031 Championsgate Community Dev. Dist., Capital Improvement 1,410 1,380 Rev. Bonds, Series 1998B, 5.70% 2005 The Crossings at Fleming Island Community Dev. Dist. (Clay County), Special Assessment Bonds: Series 1995, 8.25% 2016 (Preref. 2005) 1,020 1,186 Series 2000C, 7.10% 2030 7,000 7,387 Fishhawk Community Dev. Dist. (Hillsborough County), 3,000 3,043 Special Assessment Rev. Bonds, Series 2000, 6.65% 2007 Fleming Island Plantation Community Dev. Dist. 3,000 3,193 (Clay County), Series 2000B (Long Term), 7.375% 2031 The Groves Community Dev. Dist. (Pasco County), Special 1,125 1,135 Assessment Rev. Bonds, Series 2000B, 7.625% 2008 Harbor Bay Community Dev. Dist. (Hillsborough County), 1,500 1,493 Capital Improvement Rev. Bonds, Series 2001B, 6.35% 2010 Harbour Lake Estates Community Dev. Dist. (Miramar), 3,500 3,514 Special Assessment Bonds, Series 2001, 6.40% 2006 Heritage Harbor Community Dev. Dist. Rev. Bonds, 1,285 1,287 Series B, 6.00% 2003 Heritage Isles Community Dev. Dist., Special Assessment 1,000 999 Rev. Bonds, 5.90% 2006 Heritage Palms Community Dev. Dist. (Fort Myers), Capital Improvement Rev. Bonds: Series 1998, 5.40% 2003 680 677 Series 1999, 6.25% 2004 3,290 3,313 Heritage Pines Community Dev. Dist. (Pasco County), 2,325 2,297 Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Heritage Springs Community Dev. Dist. (Pasco County), 1,575 1,586 Capital Improvement Rev. Bonds, Series 1999B, 6.25% 2005 Lake Ashton Community Dev. Dist. (City of Lake Wales, Polk County), Capital Improvement Rev. Bonds: Series 2001A, 7.40% 2032 1,000 1,014 Series 2001B, 6.40% 2011 2,750 2,756 Lake Powell Residential Golf Community Dev. Dist. (Bay 3,720 3,744 County), Special Assessment Rev. Bonds, Series 2000B, 7.00% 2010 Lakewood Ranch Community Dev. Dist. 5 (Manatee County), 1,235 1,217 Special Assessment Rev. Bonds, Series 2001B, 6.00% 2011 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds: Series 1997A (Cypress Cove at Healthpark Florida, Inc. Project): 5.80% 2006 1,005 1,021 6.25% 2017 5,550 5,109 Series 1999A (Shell Point/Alliance Obligated Group, Shell Point Village Project): 5.25% 2006 1,150 1,172 5.50% 2010 1,500 1,505 5.75% 2012 1,360 1,373 5.75% 2013 1,840 1,842 5.75% 2015 1,900 1,868 5.50% 2021 1,550 1,414 5.50%, 2029 7,750 6,876 Marshall Creek Community Dev. Dist. (St. Johns County), Special Assessment Bonds: Series 2000A, 7.65% 2032 4,000 4,172 Series 2000B, 6.75% 2007 2,080 2,126 Meadow Pointe II, Community Dev. Dist. (Pasco County), Capital Improvement Rev. Bonds: Series 1998A, 5.25% 2003 60 60 Series 1998B, 5.50% 2005 465 464 Meadow Pointe III, Community Dev. Dist. (Pasco County), 1,480 1,480 Capital Improvement Rev. Bonds, Series 2001-1, 5.90% 2006 Miami-Dade County Health Facs. Auth., Hospital Rev. Ref. 5,495 5,992 Bonds, Series 2001A, (Miami Children's Hospital Project), AMBAC Insured, 5.625% 2016 Mid-Bay Bridge Auth., Rev. Ref. Bonds, Series 1993D, 500 511 6.10% 2022 North Broward Hospital Dist., Improvement Rev. Bonds, 2,500 2,547 Series 2001, 6.00% 2031 North Springs Improvement Dist. Special Assessment Bonds 35 35 (Parkland Isles Project) Series 1997B, 6.25% 2005 Northern Palm Beach County Improvement Dist., Water Control and Improvement Bonds: Unit of Dev. No. 9A, Series 1996A: 6.80% 2006 910 980 7.30% 2027 1,500 1,599 Unit of Dev. No. 9B, Series 1999: 5.85% 2013 950 969 5.90% 2019 1,085 1,092 6.00% 2029 1,100 1,104 City of Orlando, Special Assessment Rev. Bonds (Conroy Road Interchange Project), Series 1998A: 5.50% 2010 1,000 1,006 5.80% 2026 1,000 980 Palm Beach County, Health Facs. Auth. Retirement Community 2,750 2,734 Rev. Bonds (Adult Communities Total Services, Inc. Obligated Group), Series 1996, 5.625% 2020 River Ridge Community Dev. Dist. (Lee County), Capital 485 481 Improvement Rev. Bonds, Series 1998, 5.75% 2008 Sampson Creek Community Dev. Dist. (St. Johns County), 2,750 2,803 Capital Improvement Rev. Bonds, Series 2000A, 6.95% 2031 Stoneybrook West Community Dev. Dist. (City of Winter Garden, Orange County), Special Assessment Rev. Bonds: Series 2000A, 7.00% 2032 1,775 1,815 Series 2000B, 6.45% 2010 1,950 1,980 University Place Community Development Dist. (Manatee County): Series 2001A, 7.00% 2032 1,000 1,009 Series 2001B, 6.10% 2007 2,000 2,004 Urban Orlando Community Dev. Dist. (City of Orlando), Capital Improvement Rev. Bonds, Series 2001A: 6.40% 2010 6,000 6,005 6.95% 2033 4,000 3,982 Vista Lakes Community Dev. Dist. (City of Orlando), 1,375 1,383 Capital Improvement Rev. Bonds, Series 2000B, 6.35% 2005 Waterlefe Community Dev. Dist. (Manatee County), Capital Improvement Rev. Bonds: Series 2001A, 6.95% 2031 500 507 Series 2001B, 6.25% 2010 1,580 1,582 Georgia - 2.16% G.O. Bonds, Series 2001B, 5.25% 2016 10,000 10,578 Municipal Electric Auth.: General Power Rev. Bonds, Series X, 6.50% 2012 1,215 1,388 Project One Senior Bond, Fourth Crossover Series, 5,700 6,651 MBIA Insured, 6.50% 2012 City of Atlanta: Airport Facs. Rev. Ref. Bonds, Series 1994A, AMBAC 1,000 1,151 Insured, 6.50% 2009 Fulco Hospital Auth., Rev. Anticipation Certificates, Georgia Baptist Health Care System Project: Series 1992A (Preref. 2002): 6.40% 2007 1,000 1,044 6.25% 2013 2,100 2,190 6.375% 2022 1,595 1,664 Series 1992B, 6.375% 2022 (Preref. 2002) 610 637 Tax Allocation Bonds (Atlantic Station Project), Series 2001: 7.75% 2014 3,000 2,944 7.90% 2024 10,000 9,848 Water and Wastewater Rev. Bonds, Series 1999, 8,500 9,245 FGIC Insured, 5.50% 2022 Housing Auth. of the County of DeKalb, 5,995 6,083 Multi-family Housing Rev. Ref. Bonds (The Park at Briarcliff Apartments Project), Series 1998A, 4.55% 2028 (Put 2008) Hawaii - 0.43% G.O. Bonds of 1997, Series CN, FGIC Insured, 3,000 3,159 5.25% 2013 City and County of Honolulu: G.O. Bonds: Ref. and Improvement Series, 1993B: 5.00% 2013 1,370 1,450 5.00% 2013 (Escrowed to Maturity) 630 676 Series 2001A, FSA Insured, 5.375% 2012 2,000 2,172 Wastewater System Rev. Bonds (First Bond Resolution), Senior Series 2001, AMBAC Insured: 5.50% 2015 1,875 2,019 5.50% 2016 1,000 1,071 Illinois - 10.16% G.O. Bonds, Illinois FIRST, Series of 2,000 2,193 May 2001, FSA Insured, 5.50% 2016 Build Illinois Bonds (Sales Tax Rev. Bonds), Illinois FIRST: Series of March 2001, 5.50% 2016 3,000 3,213 Series of June 2001: 5.50% 2016 7,470 8,000 5.50% 2017 8,000 8,511 Series of September 2001: 5.375% 2015 2,500 2,667 5.375% 2016 1,500 1,591 Civic Center Bonds (Special State Obligation 6,500 7,514 Bonds),Series 1991, AMBAC Insured, 6.25% 2020 Dev. Fin. Auth., Rev. Bonds, Series 1998A, 5,120 5,569 (Provena Health), MBIA Insured, 5.50% 2010 Educational Facs. Auth., Rev. Bonds: MJH Education Assistance Illinois III LLC, 1,500 1,566 Series 1999D, AMBAC Insured, 5.45% 2014 Wesleyan University, Series 1993, 5.625% 2018 1,490 1,523 Health Facs. Auth.: Rev. Bonds: Advocate Health Care Network: Series 1998A: 5.00% 2007 700 735 5.00% 2007 (Escrowed to Maturity) 920 994 5.00% 2008 810 849 5.00% 2008 (Escrowed to Maturity) 1,060 1,145 4.50% 2009 840 846 4.50% 2009 (Preref. 2008) 1,090 1,156 4.625% 2010 1,310 1,318 4.625% 2010 (Preref. 2008) 1,690 1,805 Series 1998B: 4.875% 2013 2,130 2,132 4.875% 2013 (Preref. 2008) 330 358 MBIA Insured, 5.25% 2018 2,115 2,147 MBIA Insured, 5.25% 2018 (Preref. 2008) 385 425 Alexian Brothers Health System, Series 1999, FSA Insured: 5.00% 2008 1,230 1,304 5.25% 2012 6,960 7,343 5.125% 2028 2,000 1,959 Centegra Health System, Series 1998: 5.50% 2008 1,640 1,727 5.50% 2009 2,290 2,400 5.50% 2010 2,440 2,541 5.20% 2012 2,200 2,222 5.25% 2013 2,430 2,441 5.25% 2018 5,050 4,812 The Children's Memorial Hospital, Series 1999A, AMBAC Insured: 5.75% 2010 1,835 2,026 5.75% 2011 1,690 1,854 Covenant Retirement Communities, Inc., 4,500 4,410 Series 2001, 5.875% 2031 Edward Hospital Obligated Group, Series 2001A, FSA Insured: 5.50% 2012 2,545 2,767 5.50% 2017 1,500 1,571 Friendship Village of Schaumburg, Series 1997A, 4,675 3,934 5.25% 2018 Lutheran Senior Ministries Obligated Group - 2,000 2,018 Lutheran Hillside Village Project, Series 2001A, 7.375% 2031 Northwestern Memorial Hospital, Series 1994A, 2,000 2,055 6.00% 2024 OSF Healthcare System: Series 1993, 5.75% 2007 5,760 6,017 Series 1999, 6.25% 2019 4,500 4,729 Riverside Health System, Series 2000, 6.85% 2029 2,500 2,681 Sherman Health Systems, Series 1997, 2,595 2,774 AMBAC Insured, 5.50% 2010 Hospital Sisters Services, Inc. - 4,000 4,310 Obligated Group, Series 1998A, MBIA Insured, 5.25% 2008 University of Chicago Hospitals and 2,070 2,148 Health System, Series 2001, MBIA Insured, 5.375% 2017 Rev. Ref. Bonds: Advocate Health Care Network, Series 1997A: 5.50% 2008 1,000 1,076 5.80% 2016 8,000 8,323 Edward Hospital Project, Series 1993A: 5.75% 2009 1,550 1,611 6.00% 2019 1,435 1,457 Fairview Obligated General Project, 1995 Series A: 6.50% 2006 770 796 7.40% 2023 3,000 3,015 Rev. and Rev. Ref. Bonds: Evangelical Hospitals Corp., Series C, 4,000 4,610 6.25% 2022 (Escrowed to Maturity) Lutheran General Health, Series C, 6.00% 2018 2,705 2,844 Housing Dev. Auth., Multi-family Housing Bonds, 1,490 1,529 1992 Series A, 7.00% 2010 Metropolitan Pier and Exposition Auth., McCormick Place Expansion Project Bonds: Series 1992A, 6.50% 2027 (Preref. 2003) 3,910 4,230 Ref. Bonds, Series 1996A, MBIA Insured, 0% 2024 5,000 1,445 City of Chicago: G.O. Bonds, Series 1999, FGIC Insured: City Colleges of Chicago Capital Improvement 7,700 3,835 Project, 0% 2016 Emergency Telephone System, Ref. Bonds, 2,000 2,093 5.25% 2020 Chicago O'Hare International Airport: Rev. Ref. Senior Lien Bonds, Series 1993 A, 5,815 6,089 MBIA-IBC Insured, 5.00% 2012 Special Fac. Rev. Ref. Bonds: Series 1994 (American Airlines, Inc. Project) 2,750 2,695 8.20% 2024 Series 1999A (United Air Lines, Inc. Project) 13,355 6,677 5.35% 2016 Metropolitan Water Reclamation Dist. of Greater Chicago, Cook County, G.O. Bonds: Capital Improvement Bonds: Series of March 1993, 5.25% 2010 2,275 2,524 Series B 5.25% 2004 5,000 5,390 Ref. Bonds, Series B 5.30% 2005 5,325 5,794 School Reform Board of Trustees of the Board of Education of the City of Chicago: Unlimited Tax G.O. Bonds, AMBAC Insured: Series 1997, 6.75% 2012 1,000 1,214 Series 1997A, 0% 2011 2,745 1,766 Dedicated Tax Rev., G.O. Bonds, AMBAC Insured, Series 1997A: 0% 2014 7,085 3,797 0% 2015 3,245 1,634 Series 1998B, FGIC Insured, 0% 2014 2,000 1,072 Skyway Toll Bridge Ref. Rev. Bonds, Series 1994 (Preref. 2004): 6.50% 2010 9,750 10,692 6.75% 2014 4,500 4,955 Tax Increment Allocation Bonds (Central Loop Redev. Project), Capital Appreciation Bonds, Series 2000A, AMBAC Insured: 0% 2007 7,000 5,622 0% 2008 7,000 5,345 Water Rev. Bonds, Series 1997, FGIC Insured, 0% 2014 3,500 1,902 County of Cook, G.O. Capital Improvement Bonds: Series 1996, FGIC Insured, 6.50% 2011 4,000 4,750 Series 2002 C, AMBAC Insured, 5.00% 2025 3,000 2,911 Regional Transportation Auth., Cook, Du Page, 4,500 5,985 Kane, Lake, McHenry and Will Counties, G.O. Bonds, Series 1994D, FGIC Insured, 7.75% 2019 Township High School Dist. Number 205, Cook County 4,730 3,619 (Thornton), G.O. Limited Capital Appreciation Bonds, Series 1998D, FSA Insured, 0% 2008 University of Illinois, Cert. of Part., Series A, 3,530 3,731 AMBAC Insured, 5.375% 2015 Indiana - 3.66% State Dev. Fin. Auth.: Pollution Control Rev. Bonds (Inland Steel Co. 2,500 475 Project No. 12), 6.85% 2012 Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 4,000 560 5.75% 2011 Educational Facs. Auth., Educational Facs. Rev. Bonds 1,000 1,033 (University of Evansville Project), Series 1996, 5.25% 2005 Health Fac. Fncg. Auth., Hospital Rev. Bonds: Charity Obligated Group: Series 1997D, 5.00% 2026 (Preref. 2007) 14,685 15,520 Series 1999D, 5.25% 2016 3,000 3,058 Clarian Health Partners, Inc., Series 1996A: MBIA Insured, 5.25% 2008 1,700 1,825 MBIA Insured, 5.50% 2016 4,000 4,153 5.50% 2016 10,250 10,461 Holy Cross Health System Corp., Series 1998, 7,095 7,590 MBIA Insured, 5.375% 2010 The Methodist Hospitals, Inc., Series 2001, 2,000 1,975 5.50% 2031 Sisters of St. Francis Health Services, Inc. 1,000 1,067 Project, Series 1997A, MBIA Insured, 5.00% 2008 Housing Fin. Auth., Single Family Mortgage 1,275 1,309 Ref. Rev. Bonds, 1992 Series A, 6.75% 2010 State Office Building Commission, Correctional 8,490 9,933 Facs. Program Rev. Bonds, Series 1995B, AMBAC Insured, 6.25% 2012 State Revolving Fund Program Bonds, Series 2001A: 5.375% 2013 2,000 2,178 5.375% 2014 2,000 2,173 5.375% 2015 4,000 4,311 5.375% 2015 2,250 2,425 Transportation Fin. Auth., Airport Facs. Lease Rev. Bonds, Series A: 6.50% 2007 1,000 1,047 6.50% 2007 (Preref. 2002) 3,755 3,958 6.75% 2011 (Preref. 2002) 2,400 2,534 Boone County Hospital Association, Lease Rev. 1,255 1,319 Bonds, Series 2001, FGIC Insured, 5.00% 2010 City of East Chicago, Pollution Control 3,000 420 Rev. Ref. Bonds, Inland Steel Co. Project No. 11, Series 1994, 7.125% 2007 Hospital Auth. of the City of Fort Wayne, Rev. Bonds (Parkview Memorial Hospital Inc. Project), Series 1992: 6.375% 2013 (Preref. 2002) 4,000 4,219 6.40% 2022 (Preref. 2002) 2,000 2,110 Marion County, Convention and Recreational 3,370 3,611 Facs. Auth., Excise Taxes Lease Rental Rev. Ref. Senior Bonds, Series 2001A, MBIA Insured, 5.50% 2015 The Trustees of Purdue University, Purdue 1,250 1,331 University Student Fee Bonds, Series R, 5.375% 2015 Iowa - 1.14% Fin. Auth.: Econ. Dev. Rev. Bonds (Foundation for 1,500 1,564 Affordable Housing Project), Series 2000A, FNMA Insured, 5.65% 2033 (Put 2013) Hospital Rev. Bonds (Mercy Medical Center Project), Series 1999, FSA Insured: 5.50% 2011 1,420 1,539 5.60% 2012 1,375 1,488 Rev. and Ref. Bonds: Mercy Health Services Obligated Group, 590 627 1997 Series V, 5.00% 2010 (Escrowed to Maturity) Trinity Health Credit Group, Series 2000B, 5,000 5,344 AMBAC Insured, 6.00% 2027 Rev. Bonds (Catholic Health Initiatives), 3,000 3,164 Series 2000A, 6.00% 2018 Single Family Mortgage Bonds, 1997 Series F, 1,760 1,814 5.55% 2016 Polk County, Catholic Health Initiatives, Rev. Bonds, Series 1997A: 5.50% 2007 1,520 1,644 5.125% 2011 1,500 1,557 5.125% 2012 3,170 3,274 Tobacco Settlement Auth., Asset-Backed Bonds, Series 2001B: 5.50% 2012 3,000 3,098 5.50% 2014 3,000 3,050 Kentucky - 1.11% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), MBIA Insured, Series 2000A: 6.50% 2020 8,500 8,765 6.625% 2028 5,500 5,673 Hospital System Ref. and Improvement Rev. Bonds (Appalachian Regional Healthcare, Inc. Project), Series 1997: 5.20% 2004 1,540 1,491 5.60% 2008 630 579 5.60% 2009 3,305 2,989 5.70% 2010 490 439 5.75% 2011 2,190 1,936 5.85% 2017 2,000 1,666 City of Ashland, Pollution Control Ref. 3,750 3,969 Rev. Bonds, Series 1999 (Ashland Inc. Project), 5.70% 2009 Louisiana - 4.59% Health Education Auth. (Lambeth House Project): Rev. Bonds, Series 1996, 9.00% 2026 9,000 11,406 (Preref. 2006) Rev. Ref. Bonds, Series 1998A: 5.50% 2010 3,505 3,249 6.15% 2018 2,000 1,810 6.20% 2028 3,950 3,415 Local Government Environmental Facs. And 11,500 13,761 Community Dev. Auth., Rev. Bonds, Capital Project and Equipment Acquisition Program), Series 2000A, AMBAC Insured, 6.30% 2030 Public Facs. Auth., Hospital Rev. Ref. Bonds (Franciscan Missionaries of Our Lady Health System Project), Series 1998A, FSA Insured: 5.75% 2014 3,495 3,910 5.75% 2015 3,825 4,274 5.75% 2018 4,000 4,396 Jefferson Parish Hospital Services: Dist. No. 1 Parish of Jefferson (West Jefferson Medical Center), Hospital Rev. Bonds, Series 1998A, FSA Insured: 5.25% 2011 2,070 2,198 5.25% 2012 1,930 2,037 Dist. No. 2, Parish of Jefferson, Hospital Rev. 2,000 2,142 Bonds, Series 1998A, FSA Insured, 5.25% 2011 Lake Charles Harbor and Terminal Dist., Port 24,000 25,250 Facs. Rev. Ref. Bonds (Trunkline LNG Co. Project), Series 1992, 7.75% 2022 Parish of Morehouse, Pollution Control Rev. Ref. 5,000 5,026 Bonds, 2001 Series A, 5.25% 2013 Tobacco Settlement Auth., Asset-Backed Bonds, 15,000 14,714 Series 2001B, 5.50% 2030 Parish of West Feliciana, Pollution Control Rev. Bonds (Gulf States Utilities Co. Project): Entergy Gulf States, Inc. Project, Series 1999A, 13,500 14,004 5.65% 2028 (Put 2004) Series 1990, 9.00% 2015 2,000 2,035 Maine - 0.23% Health and Higher Educational Facs. Auth., Rev. Bonds, Piper Shores Issue, Series 1999A: 7.50% 2019 3,000 3,083 7.55% 2029 2,575 2,618 Maryland - 1.12% Community Dev. Administration, Dept. of Housing 5,815 6,162 and Community Dev., Single Family Program Bonds, 1997 First Series, 5.25% 2005 Health and Higher Educational Facs. Auth.: First Mortgage Rev. Bonds, PUMH of Maryland, 2,400 2,380 Inc. Issue (Heron Point of Chestertown), Series 1998A, 5.75% 2019 Rev. Bonds, Howard County General Hospital Issue, Series 1993 (Escrowed to Maturity): 5.50% 2013 2,000 2,131 5.50% 2021 1,225 1,279 Anne Arundel County: Econ. Dev. Corp., Rev. Bonds (Golf 2,200 2,210 Course System), Series 2001, 8.25% 2028 Special Obligation Bonds: Arundel Mills Project, Series 1999, 5,750 6,165 7.10% 2029 National Business Park Project, Series 2000, 1,000 1,075 7.375% 2028 Calvert County, Econ. Dev. Rev. Bonds 2,500 2,930 (Asbury-Solomons Island Fac.), Series 1995, 8.625% 2024 (Preref. 2005) Frederick County, Special Obligation Bonds 2,500 2,546 (Urbana Community Dev. Auth.), Series 1998, 6.625% 2025 Prince George's County, Hospital Rev. Bonds, 750 780 Dimensions Health Corp. Issue, Series 1992, 7.25% 2017 (Preref. 2002) Massachusetts - 0.73% G.O. Bonds, Consolidated Loan of 2001, Series D, 2,000 2,234 MBIA Insured, 5.50% 2012 Massachusetts Bay Transportation Auth., General 5,000 5,796 Transportation System Bonds, 1994 Series A Ref. Bonds, 7.00% 2007 Health and Educational Facs. Auth.Rev. Bonds: Massachusetts Institute of Technology Issue, Series K: 5.375% 2017 1,000 1,089 5.50% 2022 2,000 2,176 Partners HealthCare System Issue, Series C: 6.00% 2015 1,335 1,442 6.00% 2016 1,520 1,631 Municipal Wholesale Electric Company, Power 2,000 2,104 Supply Project Revenue Bonds, Nuclear Project No.4 Issue, MBIA Insured, 5.25% 2015 The New England Loan Marketing Corp., Student 1,500 1,522 Loan Ref. Bonds, 1993 Series G, 5.20% 2002 Michigan - 4.49% Building Auth., 2001 Rev. Ref. Bonds, Series I 3,000 3,229 (Facs. Program), 5.50% 2016 Hospital Fin. Auth.: Hospital Rev. Bonds: The Detroit Medical Center Obligated Group, Series 1998A: 5.00% 2013 1,000 897 5.00% 2014 1,525 1,347 5.25% 2028 3,000 2,399 Henry Ford Health System, Series 1999A: 5.70% 2011 2,985 3,196 5.80% 2012 1,075 1,151 Spectrum Health: Series 2001A, 5.50% 2014 1,000 1,055 Series 2001B, 5.50% 2017 1,100 1,136 Hospital Rev. Ref. Bonds: Daughters of Charity, National Health System, 970 1,034 5.50% 2005 (Escrowed to Maturity) The Detroit Medical Center Obligated Group: Series 1993A, 6.375% 2009 2,000 2,035 Series 1993B, AMBAC Insured, 5.00% 2006 1,000 1,058 Genesys Health System Obligated Group, Series 1995A: 7.10% 2002 (Escrowed to Maturity) 285 295 7.20% 2003 (Escrowed to Maturity) 1,000 1,082 8.00% 2005 (Escrowed to Maturity) 8,880 10,472 8.10% 2013 (Preref. 2005) 5,000 6,003 8.125% 2021 (Preref. 2005) 4,500 5,407 7.50% 2027 (Preref. 2005) 4,520 5,255 Hackley Hospital Obligated Group, Series 1998A: 5.00% 2008 1,215 1,216 5.30% 2013 2,400 2,336 McLaren Obligated Group, Series 1993A, 5.375% 2013 2,985 3,019 Pontiac Osteopathic, Series 1994A: 5.375% 2006 695 688 6.00% 2014 1,000 947 6.00% 2024 4,775 4,186 Sinai Hospital of Greater Detroit, Series 1995: 6.00% 2008 2,000 2,021 6.625% 2016 2,010 2,019 Sparrow Obligated Group, Series 2001: 5.25% 2010 1,000 1,038 5.25% 2011 1,285 1,327 Variable Rate Rev. Bonds (Ascension Health Credit Group): Series 1999B-3, 5.30% 2033 (Put 2006) 5,625 5,966 Series 1999B-4, 5.375% 2033 (Put 2007) 3,000 3,179 Housing Dev. Auth., Rental Housing Rev. Bonds 1994, 1,600 1,637 Series A, 6.20% 2003 Municipal Bond Auth., Public School Academy Facs. Program Special Obligation Rev. Bonds: Detroit Academy of Arts and Sciences Project, Series 2001A: 7.90% 2021 1,000 1,045 8.00% 2031 1,000 1,049 YMCA Service Learning Academy Project, Series 2001, 4,150 4,281 7.75% 2031 State Revolving Fund Rev. Bonds, Clean Water Revolving 5,000 5,252 Fund Rev. Bonds, Series 2001, 5.25% 2016 Strategic Fund, Limited Obligation Ref. Rev. Bonds 1,000 1,040 (Detroit Edison Co. Pollution Control Bonds Project), Series 1995CC, AMBAC Insured, 4.85% 2030 (Put 2011) Trunk Line Fund Bonds, Series 2001A, 5.50% 2015 4,000 4,329 City of Detroit: G.O. Rev. Bonds (Unlimited Tax), Series 1995B: 7.00% 2004 2,500 2,723 6.25% 2008 1,730 1,855 6.25% 2009 1,195 1,273 6.25% 2010 1,250 1,327 Downtown Dev. Auth., Tax Increment Bonds (Dev. Area No. 2,900 3,324 1 Projects), Series 1996C, 6.20% 2017 (Preref. 2006) School Dist. of the City of Detroit, Wayne County, 1,955 2,042 School Building and Site Improvement Ref. Bonds, Series 1998C, FGIC Insured, 5.25% 2025 City of Flint, Hospital Building Auth. (Hurley Medical Center): Rev. Ref. Bonds, Series 1998A, 5.25% 2016 1,250 1,166 Rev. Rental Bonds, Series 1998B, 5.375% 2028 1,000 878 City of Royal Oak, Hospital Fncg. Auth., Hospital Rev. 3,000 3,008 Ref. Bonds (William Beaumont Hospital), Series 1993G, 5.25% 2019 Minnesota - 0.06% Housing Fin. Agcy., Single Family Mortgage Bonds, 1,390 1,447 1994 Series E, 5.60% 2013 Mississippi - 0.34% Development Bank, Special Obligation Bonds (Capital 7,500 7,423 Projects and Equipment Acquisition Program), Series 2001A, AMBAC Insured, 5.00% 2031 Hospital Equipment and Facs. Auth., Rev. Bonds, Series 1,000 1,023 2000 (Forrest County General Hospital Project), FSA Insured, 5.50% 2027 Nebraska - 0.01% City of Kearney, Industrial Dev. Rev. Bonds (The Great 2,750 323 Platte River Road Memorial Foundation Project), Series 1998, 6.75% 2028 Nevada - 2.22% Housing Division, Single Family Mortgage Bonds, 720 724 1999 Series A-1, 4.75% 2012 Clark County: G.O. (Limited Tax) Bond Banks Bonds, Series 2001, 3,000 3,214 FGIC Insured, 5.50% 2016 Special Improvement Dist. No. 121 (Southern Highlands Area), Local Improvement Bonds, Series 1999: 7.00% 2009 2,500 2,655 7.50% 2019 14,000 14,889 Special Improvement Dist. No. 132 (Summerlin South Area 2,235 2,276 (Villages 15A and 18)), Local Improvement Bonds, Series 2001, 6.75% 2021 City of Henderson: Health Fac. Rev. Bonds (Catholic Healthcare West), 7,000 6,271 1998 Series A, 5.375% 2026 Local Improvement Dist. No. T-4C (Green Valley Properties), Limited Obligation Ref. Bonds, 1999 Series A: 5.65% 2009 1,495 1,529 5.75% 2013 3,990 3,918 5.90% 2018 2,990 2,906 City of Las Vegas: G.O. (Limited Tax) Sewer and Flood Control Bonds, 2,855 3,043 Series 2001, FGIC Insured, 5.375% 2015 Special Improvement Dist. No. 808 (Summerlin Area), Local Improvement Bonds, Series 2001: 6.00% 2010 1,000 1,016 6.375% 2014 2,080 2,122 6.75% 2021 4,500 4,583 Las Vegas Monorail Project Rev. Capital Appreciation 3,545 2,532 Bonds, 1st Tier Series 2000, AMBAC Insured, 0% 2010 Truckee Meadows Water Auth., Water Rev. Bonds, 3,105 3,328 Series 2001A, FSA Insured, 5.50% 2016 New Hampshire - 0.04% Health and Education Facs. Auth., Exeter Hospital 1,000 1,001 Obligated Group Issue, Series 2001A, 5.75% 2031 New Jersey - 2.15% Econ. Dev. Auth.: Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation Improvement Dist. Project (City of Elizabeth), Series 1998A: 6.375% 2018 1,000 1,121 6.375% 2031 6,500 7,286 First Mortgage Rev. Fixed-Rate Bonds: Fellowship Village Project, Series 1995A, 9.25% 2025 7,000 8,339 (Preref. 2005) Winchester Gardens at Ward Homestead Project, Series 1996A: 8.50% 2016 4,000 4,288 8.625% 2025 3,500 3,743 First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998A: 4.95% 2005 1,230 1,251 5.50% 2018 2,295 2,185 Tax-Exempt Term Bonds, 5.50% 2025 3,000 2,762 Retirement Community Rev. Bonds: Cedar Crest Village, Inc. Fac., Series A, 7.25% 2031 9,000 8,827 Seabrook Village, Inc. Fac., Series 2000A, 8.25% 2030 6,000 6,342 Housing and Mortgage Fin. Agcy., Section 8 Bonds, 1991 Series A: 6.80% 2005 2,570 2,625 6.85% 2006 2,500 2,554 Gloucester County Improvement Auth., Solid Waste Resource 1,585 1,763 Recovery Rev. Ref. Bonds (Waste Management, Inc. Project), Series 1999A, 6.85% 2029 (Put 2009) New Mexico - 0.17% Supplemental Severance Tax Bonds, Series 2002A, 3,945 4,120 5.00% 2010 New York - 5.44% Dormitory Auth.: Center for Nursing/Rehabilitation, Inc. Rev. Bonds, 2,100 2,216 FHA Insured, 5.45% 2017 City University System Consolidated Third General 2,000 2,222 Resolution Rev. Bonds, 1998 Series 2, AMBAC Insured, 5.50% 2008 Edgar Health Care Center (Nursing Home) Rev. Bonds, 2,375 2,437 FHA Insured, 4.90% 2013 Mental Health Services Facs. Improvement Rev. Bonds: Series 1997A, 6.00% 2007 1,750 1,965 Series 1997B: 6.00% 2007 2,490 2,796 6.00% 2007 (Preref. 2007) 10 12 5.60% 2008 1,300 1,433 Series 1998B: 5.375% 2009 1,270 1,390 5.00% 2010 1,495 1,596 5.00% 2010 1,530 1,633 Series 1998C, 5.00% 2010 1,760 1,878 Secured Hospital: Rev. Bonds (Interfaith Medical Center), Series 1998D, 2,000 2,156 5.25% 2007 Rev. Ref. Bonds: Bronx-Lebanon Hospital Center, Series 1998E, 8,520 8,902 MBIA Insured, 5.20% 2014 Brookdale Hospital, Series 1998J, 5.125% 2009 2,500 2,675 St. Luke's-Roosevelt Hospital Center, Mortgage Hospital 5,000 5,276 Rev. Bonds, Series 2000A, FHA Insured, 5.75% 2021 State University Educational Facs.: Rev. Bonds: Series 1990B, 7.50% 2011 1,160 1,385 Series 1990B, 7.50% 2011 (Preref. 2010) 560 706 Series 1997, 6.00% 2007 3,000 3,377 Rev. Ref. Bonds, Series 1990A, 7.50% 2013 3,500 4,479 Housing Fin. Agcy.: Health Facs. Rev. Bonds (New York City), 3,000 3,331 1996 Series A Ref., 6.00% 2006 Service Contract Obligation Rev. Ref. Bonds, 1,750 1,870 Series 1997C, 5.20% 2010 Local Government Assistance Corp.: Series 1991C, Capital Appreciation Bonds, 0% 2005 5,000 4,600 Series 1991D: 7.00% 2011 (Preref. 2002) 2,000 2,050 6.75% 2021 (Preref. 2002) 1,350 1,384 State Medical Care Facs. Fin. Agcy.: Hospital Insured Mortgage Rev. Bonds, 1994 Series A, FHA Insured: 5.10% 2010 1,845 1,956 5.25% 2014 5,000 5,225 Mental Health Services Facs. Improvement Rev. Bonds, 1,000 1,002 1993 Series D, 5.25% 2023 St. Luke's-Roosevelt Hospital Center, FHA Insured 12,005 12,847 Mortgage Rev. Bonds, 1993 Series A, 5.60% 2013 Thruway Auth., Local Highway and Bridge Service Contract 2,500 2,649 Bonds, Series 2001, 5.25% 2015 Urban Dev. Corp., Correctional Capital Facs. Rev. Bonds: Ref. Series 1993A, 5.30% 2005 1,800 1,924 Series 7, 5.25% 2009 1,375 1,480 Castle Rest Residential Health Care Fac., FHA Insured, 1,700 1,736 Mortgage Rev. Bonds, Series 1997A, 5.60% 2017 City of New York: G.O. Bonds: Fiscal 1992 Series C, 6.50% 2004 (Preref. 2002) 470 487 Fiscal 1995 Series F: 6.60% 2010 (Preref. 2005) 2,000 2,260 6.625% 2025 (Preref. 2005) 1,500 1,696 Fiscal 1996 Series E, 6.50% 2006 3,000 3,346 Fiscal 2001 Series F: 5.00% 2010 1,500 1,572 5.25% 2011 6,260 6,654 Fiscal 2001 Series H, 5.25% 2016 3,510 3,613 Fiscal 2002 Series B, 5.50% 2012 7,810 8,411 Transitional Fin. Auth., Future Tax Secured Bonds: Fiscal 1998 Series A, 5.00% 2027 1,500 1,476 Fiscal 1998 Series B, 4.50% 2027 5,000 4,488 Fiscal 1998 Series C, 5.00% 2018 2,000 2,025 Fiscal 2001 Series C, 5.375% 2015 2,000 2,148 Suffolk County Industrial Dev. Agcy., Continuing Care 2,000 2,016 Retirement Community Rev. Bonds (Peconic Landing at Southhold, Inc. Project), Series 2000, 8.00% 2030 Triborough Bridge and Tunnel Auth., General Purpose Rev. Bonds: Series 2001A, 5.25% 2016 2,500 2,638 Series Y, 6.00% 2012 1,000 1,152 North Carolina - 2.32% Eastern Municipal Power Agcy., Power System Rev. Bonds: Ref. Series 1993B: 6.00% 2006 3,120 3,346 7.25% 2007 5,425 6,118 7.00% 2008 10,720 12,094 6.125% 2009 2,000 2,165 6.00% 2022 2,000 2,056 6.00% 2026 1,990 2,038 MBIA Insured, 6.00% 2026 2,500 2,859 Series 1993C, 5.00% 2021 2,300 2,093 Ref. Series 1999B: 5.55% 2014 1,800 1,831 5.60% 2015 2,500 2,536 5.65% 2016 2,000 2,022 5.70% 2017 4,775 4,814 Series 1999D, 6.75% 2026 3,500 3,725 Municipal Power Agcy. Number One (Catawba Electric Rev. Bonds): Series 1992, 6.25% 2017 2,000 2,091 Series 1999A, MBIA Insured, 6.00% 2008 3,935 4,405 County of Catawba, Hospital Ref. Rev. Bonds (Catawba 1,000 1,041 Memorial Hospital Project), Series 1999, AMBAC Insured, 4.60% 2010 County of New Hanover, Hospital Rev. Bonds (New Hanover 1,995 2,152 Regional Medical Center Project), Series 1999, MBIA Insured, 5.25% 2011 Ohio - 0.43% Pollution Control Dev. Auth, Water Loan Rev. Bonds, 2,000 2,130 Series 2002, 5.25% 2015 County of Knox, Hospital Facs. Ref. Rev. Bonds, 2,175 2,263 Series 1998 (Knox Community Hospital), Asset Guaranty Insured, 4.60% 2007 County of Lorain, Health Care Facs. Rev. Ref. Bonds 2,000 1,758 (Kendal at Oberlin), Series 1998A, 5.25% 2021 County of Montgomery, Hospital Facs. Rev. Bonds 1,000 1,050 (Kettering Medical Center Network Obligated Group), Series 1999, 6.75% 2022 County of Richland, Hospital Facs. Rev. Improvement Bonds (MedCentral Health System Obligated Group), Series 2000B: 6.375% 2022 1,250 1,313 6.375% 2030 2,000 2,089 Oklahoma - 0.45% Health System Rev. Bonds, Baptist Medicine Center of 2,500 2,744 Oklahoma, Series 1995C, AMBAC Insured, 6.375% 2009 Industrial Auth., Health System Rev. Ref. Bonds (Obligated 2,500 2,807 Group consisting of INTEGRIS Baptist Medical Center, Inc., INTEGRIS South Oklahoma City Hospital Corp. and INTEGRIS Rural Health, Inc.), AMBAC Insured, 6.00% 2009 Industries Auth., Health Facs. Rev. Ref. Bonds (Sisters 2,505 2,531 of Mercy Health System, St. Louis, Inc.), Series 1993A, 5.00% 2013 Tulsa Industrial Auth., Hospital Rev. and Ref. Bonds, 3,000 3,035 St. John Medical Center Project, Series 1996, 5.375% 2017 Oregon - 0.89% City of Klamath Falls, Electric Rev. Ref. Bonds (Klamath Cogeneration Project), Series 1999: 5.75% 2013 3,000 3,096 5.875% 2016 3,500 3,551 6.00% 2025 15,290 15,403 Pennsylvania - 4.59% Convention Center Auth., Ref. Rev. Bonds, 1994 Series A, 6,370 6,733 6.25% 2004 Higher Educational Facs. Auth.: Rev. Bonds (Thomas Jefferson University), 1992 Series A: MBIA Insured, 6.625% 2009 375 391 6.625% 2009 (Preref. 2002) 875 913 UPMC Health System Rev. Bonds, Series 1999A, 2,000 2,132 FSA Insured, 5.00% 2009 Housing Fin. Agcy., Rental House Ref. Bonds, FNMA Insured: Issue 1992, 6.50% 2023 2,000 2,058 Issue 1993, 5.80% 2018 1,000 1,026 Housing Fin. Auth., Single Family Mortgage Rev. Bonds, 1,000 1,025 Series 1992-33, 6.85% 2009 Allegheny County, Cert. of Part. (ACJCT Fac. Holdings 2,150 2,152 L.P.), AMBAC Insured, 5.00% 2019 Allegheny County Hospital Dev. Auth.: Health System Rev. Bonds, Catholic Health East Issue, Series 1998A, AMBAC Insured: 5.50% 2008 1,000 1,101 5.00% 2010 2,705 2,868 UPMC Health System Rev. Ref. Bonds, Series 1999B, 5,160 5,609 AMBAC Insured, 5.25% 2008 Port Auth. of Allegheny County, Special Rev. 1,000 1,086 Transportation Bonds, Ref. Series of 2001, FGIC Insured, 5.50% 2015 Chester County Health and Education Facs. Auth., Health 4,150 4,088 System Rev. Bonds (Jefferson Health System), Series 1997B, 5.375% 2027 Delaware County Auth., Rev. Bonds, Catholic Health Systems, 2,465 2,590 Series A, AMBAC Insured, 5.00% 2010 Lehigh County, General Purpose Auth. Rev. Bonds 1,500 1,615 (KidsPeace Obligated Group), ACA Insured, 5.70% 2009 Montgomery County Industrial Dev. Auth.: Retirement Community Rev. Ref. Bonds (Adult Communities 1,000 1,007 Total Services, Inc. Obligated Group), Series 1996A, 5.875% 2022 Retirement Community Rev. Bonds (ACTS Retirement-Life 17,500 16,121 Communities, Inc. Obligated Group), Series 1998, 5.25% 2028 Hospitals and Higher Education Facs. Auth. of Philadelphia: Frankford Hospital, Series A (Escrowed to Maturity): 6.00% 2014 3,705 3,961 6.00% 2023 4,000 4,124 Health System Rev. Bonds (Jefferson Health System), Series 1997A: 5.50% 2006 2,285 2,447 5.50% 2007 1,995 2,133 5.50% 2008 2,000 2,141 5.00% 2009 1,000 1,034 5.00% 2010 1,000 1,026 5.00% 2018 1,475 1,411 Temple University Hospital Rev. Bonds: Series of 1993A, 6.50% 2008 13,960 14,566 Series of 1997, 5.70% 2009 1,000 1,006 Philadelphia Auth. for Industrial Dev., Rev. Bonds 2,815 2,746 (Cathedral Village Project), Series of 1998, 5.50% 2010 City of Pottsville Hospital Auth., Hospital Rev. Bonds 8,500 9,553 (The Pottsville Hospital and Warne Clinic), Series of 1994, 7.25% 2024 (Preref. 2004) Scranton-Lackawanna Health and Welfare Auth., City of Scranton, Lackawanna County, Hospital Rev. Bonds (Moses Taylor Hospital Project), Series 1997: 6.05% 2010 1,000 927 6.15% 2012 2,245 2,035 6.15% 2014 3,000 2,638 6.20% 2017 3,000 2,570 Westmoreland County, Health Care Fac. Rev. Bonds 6,500 6,832 (Redstone Presbyterian SeniorCare Obligated Group), Fixed Rate Rev. Bonds, Series 2000B, 8.125% 2030 Puerto Rico - 0.06% The Children's Trust Fund, Tobacco Settlement 1,500 1,561 Asset-Backed Bonds, Series 2000, 5.75% 2020 Rhode Island - 0.40% Depositors Econ. Protection Corp., Special Obligation Bonds, 1993 Series A: MBIA Insured, 5.75% 2012 4,850 5,530 5.75% 2021 2,715 3,018 5.75% 2021 (Escrowed to Maturity) 1,210 1,345 South Carolina - 1.56% Florence County, Hospital Rev. Bonds, McLeod Regional 2,785 3,003 Medical Center Project, MBIA Insured, Series 1998A, 5.25% 2010 Georgetown County, Pollution Control Rev. Ref. Bonds 2,500 2,496 (International Paper Company Projects), 1999 Series A, 5.125% 2012 Lexington County Health Services Dist. Inc., Hospital Rev. Ref. and Improvement Bonds, Series 1997, FSA Insured: 5.50% 2007 2,000 2,193 5.00% 2009 1,000 1,065 Piedmont Municipal Power Agcy., Electric Rev. Bonds: 1991 Ref. Series, FGIC Insured, 6.25% 2021 4,640 5,345 1999A Ref. Series, 5.25% 2015 8,420 7,931 Tobacco Settlement Rev. Management Auth., Tobacco 16,090 16,502 Settlement Asset-Backed Bonds, Series 2001B, 6.00% 2022 South Dakota - 0.64% Building Auth., Rev. Capital Appreciation Bonds, 3,780 2,051 Series 1996A, AMBAC Insured, 0% 2014 Health and Educational Facs. Auth., Rev. Ref. Bonds, Series 1999 (Rapid City Regional Hospital Issue), MBIA Insured: 5.00% 2007 2,045 2,180 5.00% 2009 4,010 4,220 5.00% 2010 4,175 4,357 Housing Dev. Auth., Homeownership Mortgage Bonds, 3,000 3,119 1995 Series A, 5.80% 2014 Tennessee - 0.96% Health and Education Facs. Board of the Metropolitan 6,600 7,730 Government of Nashville and Davidson County, Rev. Bonds (Blakeford Project), Series 1994A, 9.25% 2024 (Preref. 2004) Memphis-Shelby County Airport Auth., Special Facs. 13,100 13,465 Rev. Bonds, Ref. Series 1992 (Federal Express Corp.) 6.75% 2012 Shelby County, G.O. School Bonds, 1991 Series A, 0% 2011 3,750 2,448 Texas - 10.17% Public Fin. Auth., G.O. Ref. Bonds: Series 2001A, 5.375% 2016 2,540 2,688 Series 2002, 5.25% 2007 3,760 4,091 City of Austin (Travis and Williamson Counties), Water 6,800 7,432 and Wastewater System Rev. Ref. Bonds, Series 2001B, FSA Insured, 5.75% 2016 Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998: 5.25% 2009 1,620 1,679 5.00% 2010 1,705 1,725 5.25% 2028 9,400 8,659 Brazos River Auth., Rev. Ref. Bonds (Houston Industries 3,360 3,445 Incorporated Project), MBIA Insured, 4.90% 2015 Industrial Dev. Corp. of Port of Corpus Christi, Rev. 10,300 10,189 Ref. Bonds (Valero Refining and Marketing Co. Project), Series C, 5.40% 2018 Cypress-Fairbanks Independent School Dist. (Harris County): Unlimited Tax Ref. Bonds, Capital Appreciation Bonds, 6,675 3,985 Series 1993A, 0% 2013 Unlimited Tax Ref. and Schoolhouse Bonds, Series 2001, 3,500 3,662 5.25% 2016 City of Dallas: G.O. Limited Tax Bonds: 5.00% 2014 3,400 3,536 5.00% 2015 2,000 2,065 Waterworks and Sewer System Rev. Ref. Bonds (Dallas, 1,285 1,378 Denton, Collin and Rockwall Counties), Series 2002, 5.00% 2009 Dallas County, Unlimited Tax Ref. and Improvement Bonds, G.O. Ref. Bonds, Series 2001A: 5.375% 2013 2,465 2,660 5.375% 2015 3,725 3,972 DeSoto Independent School Dist. (Dallas County), Unlimited Tax School Building and Ref. Bonds, Series 2001 Capital Appreciation Bonds: 0% 2018 2,835 1,206 0% 2019 3,335 1,329 0% 2020 3,335 1,251 Eanes Independent School Dist. (Travis County), Unlimited Tax School Building Bonds, Series 2001: 5.50% 2014 2,050 2,217 5.50% 2015 2,150 2,313 5.50% 2016 1,125 1,204 Garland Independent School Dist. (Dallas County), Unlimited Tax Ref. and School Building Bonds, Series 2001: 5.50% 2013 2,170 2,334 5.50% 2015 2,420 2,580 Harris County, Unlimited Tax Road G.O. Ref. Bonds, 2,500 2,662 Series 2001, 5.375% 2015 Harris County Health Facs. Dev. Corp: Hospital Rev. Bonds (Memorial Hermann Hospital System Project): Series 1998, FSA Insured: 5.25% 2008 1,890 2,029 5.50% 2011 5,000 5,456 5.50% 2014 4,790 5,207 5.50% 2015 10,325 11,191 Series 2001A, 6.375% 2029 13,900 14,570 Rev. Bonds: CHRISTUS Health, Series 1999A, MBIA Insured, 3,380 3,602 5.50% 2010 St. Luke's Episcopal Hospital, Series 2001A: 5.625% 2014 1,000 1,055 5.625% 2015 2,500 2,620 5.625% 2016 2,700 2,808 5.625% 2018 2,000 2,059 5.50% 2020 4,000 4,045 5.50% 2021 5,740 5,784 Hidalgo County Health Services Corp., Hospital Rev. Bonds (Mission Hospital, Inc. Project), Series 1996: 7.00% 2008 1,000 1,028 6.75% 2016 1,740 1,673 City of Houston, Water and Sewer System, Junior Lien Rev. 3,000 1,169 Ref. Bonds, Series 1998A, FSA Insured, 0% 2019 Jefferson County, Health Facs. Dev. Corp., Baptist 4,000 3,980 Hospitals of Southeast Texas, FHA Insured Mortgage Rev. Bonds, Series 2001, AMBAC Insured, 5.20% 2021 Katy Independent School Dist. (Fort Ben, Harris and Waller Counties), Limited Tax Ref. Bonds, Series 2001: 5.50% 2015 1,290 1,384 5.50% 2016 1,805 1,927 Keller Independent School Dist. (Tarrant County), 6,040 3,749 Unlimited Tax School Building and Ref. Capital Appreciation Bonds, Series 2001, 0% 2012 Ladero Independent School Dist. (Webb County), 2,000 2,124 Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.375% 2015 Lewisville Independent School Dist. (Denton County), 2,000 2,139 Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.50% 2015 Mansfield Independent School Dist. (Tarrant and Johnson 2,635 2,813 Counties), Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.50% 2016 Midway Independent School Dist. (McLennan County), 5,000 1,993 Unlimited Tax School Building and Ref. Bonds, Capital Appreciation, Series 2000, 0% 2019 Northeast Medical Clinic, Hospital Auth., County of 1,000 1,164 Humble, Rev. Bonds, FSA Insured, 6.25% 2012 Northside Independent School Dist., Unlimited Tax 4,000 4,312 School Building and Ref. Bonds, Series 2001, 5.50% 2014 Plano Independent School District (Collin County), 2,000 2,098 Unlimited Tax School, Building and Ref. Bonds, Series 2001, 5.25% 2015 Round Rock Independent School Dist. (Williamson and Travis Counties), Unlimited Tax School Building Bonds, Series 2001-A: 5.50% 2015 2,000 2,151 5.50% 2016 2,500 2,675 Sabine River Auth., Pollution Control Rev. Ref. Bonds 2,000 2,013 (TXU Electric Company Project), Series 2001C, 5.50% 2022 (Put 2011) City of San Antonio: General Improvement and Ref. Bonds, Series 2001: 5.25% 2015 8,425 8,838 5.25% 2016 8,385 8,739 Electric and Gas Systems Rev. Ref. Bonds, New Series 1998A: 5.25% 2015 5,075 5,283 4.50% 2021 4,000 3,699 San Antonio Independent School Dist.: Unlimited Tax Ref. Bonds, Series 2001B: 5.375% 2013 4,260 4,584 5.375% 2015 4,390 4,664 Unlimited Tax School Building Bonds, Series 2001A: 5.375% 2015 1,515 1,610 5.375% 2016 1,705 1,801 Spring Branch Independent School Dist. (Harris County), Limited Tax Schoolhouse and Ref. Bonds, Series 2001: 5.375% 2015 3,875 4,106 5.375% 2016 3,070 3,234 Tarrant County, Health Facs. Dev. Corp., Texas Health Resources System Rev. Bonds, Series 1997A, MBIA Insured: 5.50% 2007 4,000 4,254 5.75% 2015 3,000 3,208 Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 2,000 1,966 6.125% 2023 Board of Regents of The University of Texas System, Rev. Fncg. System Bonds: Series 1996B, 5.00% 2011 3,750 3,941 Series 2001B, 5.375% 2016 4,000 4,231 University Permanent Fund, Rev. Bonds, Series 2002B: 5.25% 2015 5,000 5,277 5.25% 2016 2,315 2,428 Weatherford Independent School Dist. (Parker County), 2,625 1,146 Unlimited Tax School Building and Ref. Bonds, Capital Appreciation, Series 2000, 0% 2018 City of Wichita Falls, Water and Sewer System Priority 1,580 1,668 Lien Rev. Bonds, Series 2001, AMBAC Insured, 5.375% 2016 Utah - 0.89% Housing Fin. Agcy., Single Family Mortgage Bonds, 310 314 1995 Issue E (Federally Insured or Guaranteed Mortgage Loans) 5.50% 2024 Alpine School Dist., Utah County, G.O. School Building Bonds (Utah School Bond Guaranty Program), Series 2001A: 5.25% 2015 3,000 3,177 5.25% 2016 4,225 4,450 Salt Lake County, G.O. Ref. Bonds, Series 2001: 5.25% 2011 5,000 5,475 5.00% 2012 8,130 8,664 Vermont - 0.10% Educational and Health Buildings Fncg. Agcy., Hospital 2,250 2,361 Rev. Bonds (Medical Center Hospital of Vermont Project), Series 1993, FGIC Insured, 5.75% 2007 Virginia - 1.55% City of Chesapeake, G.O. Public Improvement and Ref. 3,500 3,919 Bonds, Series of 2001, 5.50% 2011 Dulles Town Center, Community Dev. Auth. (Loudoun County), 2,500 2,468 Special Assessment Bonds (Dulles Town Center Project), Series 1998, 6.25% 2026 Fairfax County: Econ. Dev. Auth., Retirement Community Rev. Bonds 15,500 16,253 (Greenspring Village, Inc. Fac.), Series 1999A, 7.50% 2029 Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Inova Health System Hospitals Project), Series 1993A: 5.00% 2011 1,300 1,371 5.00% 2023 1,200 1,198 Gateway Community Dev. Auth. (Prince William County), 2,130 2,116 Special Assessment Bonds, Series 1999, 6.25% 2026 Industrial Dev. Auth., Hanover County, Hospital Rev. 1,000 1,164 Bonds (Memorial Regional Medical Center Project at Hanover Medical Park), Series 1995, MBIA Insured, 6.50% 2009 Heritage Hunt Commercial Community Dev. Auth. (Prince William County), Special Assessment Bonds: Series 1999A, 6.85% 2019 3,178 3,318 Series 1999B, 7.00% 2029 1,000 1,051 Peninsula Ports Auth. Health System Rev. Ref. Bonds 1,000 1,060 (Riverside Health System Project), Series 1998, MBIA Insured, 5.00% 2010 Pocahontas Parkway Association, Route 895 Connector 5,000 4,438 Toll Road Rev. Bonds, Series 1998A, 5.25% 2008 Washington - 6.89% G.O. Bonds: Motor Vehicle Fuel Tax, FSA Insured, Series 2002C, 5,000 5,083 5.00% 2017 Various Purpose, Series 2001C, 5.00% 2010 7,310 7,775 Health Care Facs. Auth. Rev. Bonds: Series 2001 (Group Health Cooperative of Puget Sound), 1,500 1,621 AMBAC Insured, 5.375% 2012 Series 2001A (Providence Health System), MBIA Insured: 5.50% 2011 6,565 7,170 5.625% 2014 3,000 3,230 5.625% 2015 8,635 9,235 Public Power Supply System: Nuclear Project No. 1 Ref. Rev. Bonds, Series 1997B, 5,000 5,135 5.125% 2014 Nuclear Project No. 2 Ref. Rev. Bonds: Series 1993B, FSA Insured, 5.65% 2008 3,030 3,349 Series 1994A, 6.00% 2007 19,900 22,124 Nuclear Project No. 3 Ref. Rev. Bonds: Series 1989A, MBIA Insured, 0% 2013 4,000 2,346 Series 1989B, 7.125% 2016 5,250 6,529 Central Puget Sound Regional Transit Auth., Sales Tax and Motor Vehicle Excise Tax Bonds, Series 1999, FGIC Insured: 5.25% 2021 5,500 5,767 4.75% 2028 21,940 20,539 Public Utility Dist. No. 1 of Chelan County, Columbia 11,345 4,569 River-Rock Island Hydro-Electric System Rev. Ref. Bonds, Series 1997A , MBIA Insured, 0% 2019 Clark County, Vancouver School Dist. No. 37, Unlimited 5,000 2,385 Tax Deferred Interest G.O. Bonds, Series 2001C, FGIC Insured, 0% 2016 Columbia Generating Station Ref. Electric Rev. Bonds, 13,000 13,882 Series 2001-A, FSA Insured, 5.50% 2016 Energy Northwest, Ref. Electric Rev. Bonds: Project No.1, Series 2002-C, MBIA Insured, 5.50% 2015 5,000 5,373 Project No.1, Series 2002-C, MBIA Insured, 5.50% 2016 5,000 5,339 Project No.3, Series 2001-A, FSA Insured, 5.50% 2017 5,000 5,301 City of Seattle: Limited Tax G.O. Bonds, Series 2001 (Various Purposes): 5.00% 2013 3,835 4,018 5.00% 2014 4,040 4,198 5.25% 2015 4,255 4,483 5.375% 2016 4,485 4,746 5.375% 2017 4,440 4,671 5.375% 2018 2,000 2,089 Municipal Light and Power: Improvements and Ref. Rev. Bonds, Series 2001, FSA Insured: 5.50% 2012 2,000 2,177 5.50% 2016 5,000 5,319 Rev. Anticipation Notes, Series 2001, 4.50% 2003 2,000 2,045 Wisconsin - 1.67% G.O. Bonds: 1999, Series A, 5.00% 2012 3,390 3,555 Ref. Bonds of 1998, Series 1, 5.50% 2010 3,225 3,578 Health and Educational Facs. Auth., Rev. Bonds: Children's Hospital Project, Series 1993, 2,000 2,174 FGIC Insured, 5.50% 2006 Children's Hospital of Wisconsin, Inc., Series 1998, 1,130 1,243 AMBAC Insured, 5.625% 2015 Froedtert & Community Health Obligated Group, Series 2001: 5.625% 2014 1,000 1,031 5.625% 2015 1,100 1,127 Medical College of Wisconsin, Series 1993, 5.95% 2015 3,000 3,059 The Monroe Clinic, Inc.: Series 1998: 4.80% 2010 1,110 1,109 4.90% 2011 1,165 1,164 Series 1999: 5.125% 2016 1,000 971 5.375% 2022 2,000 1,906 Housing and Econ. Dev. Auth.: Home Ownership Rev. Bonds, 1998 Series A, 5.375% 2017 1,510 1,546 Housing Rev. Bonds, 1992 Series A, 6.40% 2003 3,480 3,561 Pollution Control and Industrial Dev. Rev. Bonds 3,650 3,918 (General Motors Corp. Projects), City of Janesville, Series 1984, 5.55% 2009 Milwaukee Metropolitan Sewerage Dist., Milwaukee, 3,590 3,819 Ozaukee, Washington and Waukesha Counties, G.O. Sewerage Systems Bonds, Series 2001A, 5.25% 2014 City of Superior, Limited Obligation Ref. Rev. Bonds 6,000 7,469 (Midwest Energy Resources Co. Project), Series E-1991 (Collateralized), FGIC Insured, 6.90% 2021 2,304,935 Short-term securities - 6.19% County of Cuyahoga, State of Ohio, Econ. Dev. Rev. Bonds 4,700 4,700 (The Cleveland Orchestra Project), Series 1998, 1.35% 2028 /2/ State of Georgia, Dev. Auth. of Cobb County (Kennesaw 6,555 6,555 State University Foundation, Inc.- Kennesaw State University Project), 1.20% 2031 /2/ State of Texas, Harris County G.O. Bonds, Series 2002 A1, 3,000 3,000 1.20% 3/6/2002 City of Houston, Texas, Tax and Rev. Anticipation Notes, 15,000 15,104 Series 2001, 3.50% 6/28/2002 Town of Hurley, New Mexico, Pollution Control Rev. Bonds 1,600 1,600 (Kennecott Santa Fe Corp. Project), Series 1985, 1.30% 2015/2/ State of Illinois, Joliet Regional Port Dist., Marine 2,200 2,200 Terminal Rev. Ref. Bonds (Exxon Project), 1989 Series, 1.35% 2024/2/ Jackson County, Mississippi, Pollution Control Ref. Rev. 2,600 2,600 Bonds (Chevron U.S.A. Inc. Project), Series 1992, 1.25% 2023 /2/ Jackson County, Mississippi, Port Fac. Ref. Rev. Bonds 2,300 2,300 (Chevron U.S.A. Inc. Project), Series 1993, 1.30% 2023 /2/ State of Kentucky, Asset/Liability Commission, General 13,500 13,613 Fund Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 6/26/2002 King County, Washington, Unlimited Tax G.O. Ref. Bonds, 3,000 3,032 1993 Series C, 5.625% 6/1/2002 Hospital Auth. No.1 of Lancaster County, Nebraska, 1,100 1,100 Variable Rate Health Facs. Rev. Bonds (Immanuel Health Systems-Williamsburg Project), Series 2000A, 1.35% 2030 /2/ Lehigh County, Pennsylvania General Purpose Auth. 2,100 2,100 (Saint Luke's Hospital of Bethlehem, PA Project), Hospital Rev. Bonds, Series of 2001, 1.30% 2031 /2/ County of Los Angeles, California, 2001-2002 Tax and 2,500 2,519 Rev. G.O. Anticipation Notes, Series A, 3.75% 6/28/2002 Maryland Health and Higher Educational Facs. Auth., 2,000 2,000 Pooled Loan Program Rev. Bonds, Series 1994 D, 1.15% 2029 /2/ State of New Jersey, G.O. Bonds, Series 2002 A1, 1,000 1,000 1.20% 3/28/2002 State of New Mexico, 01-02 Tax and Rev. Anticipation Notes, 11,000 11,097 Series 2001, 4.00% 6/28/2002 North Carolina Capital Facs. Fin. Agcy., Student Housing 2,000 2,000 Facs. Rev. Bonds (Winston-Salem State University Housing Foundation, LLP Project), Series 2001, 1.20% 2031/2/ State of Ohio, Air Quality Dev. Auth., Pollution Control 3,000 3,000 Rev. Ref. Bonds (Ohio Edison Company Project), Series 2000-C, 1.35% 2023/2/ State of Ohio, Air Quality Dev. Auth., Pollution Control 2,000 2,000 Rev. Ref. Bonds, Series 2000-A (The Toledo Edison Co. Project), 1.35% 2024 /2/ City of Princeton, Indiana (PSI Energy, Inc. Project), 2,900 2,900 Pollution Control Rev. Ref. Bonds, 1997 Series, 1.30% 2022 /2/ State of Texas, Gulf Coast Waste Disposal Auth., Pollution 4,600 4,600 Control Rev. Ref. Bonds (Amoco Oil Company Project), Series 1992, 1.25% 2017/2/ State of Texas, Lower Neches Valley Auth., Industrial Dev. 6,000 6,000 Corp., Exempt Facs. Ref. Rev. Bonds (ExxonMobil Project), Series 2001, 1.25% 2031/2/ State of Texas, Tax and Rev. G.O. Anticipation Notes, 26,900 27,211 Series 2001A, 3.75% 8/29/2002 Uinta County, Wyoming, Pollution Control Rev. Ref. Bonds 4,700 4,700 (Amoco Project), Series 1998, 1.25% 2026 /2/ Uinta County, Wyoming, Pollution Control Ref. Rev. Bonds 2,700 2,700 (Chevron U.S.A. Inc. Project), Series 1993, 1.25% 2020 /2/ City of Valdez, Alaska, Marine Terminal Ref. Rev. Bonds 12,400 12,400 (ExxonMobil Project), Series 2001, 1.25% 2031 /2/ State of Wyoming, General Fund Tax and Rev. Anticipation 11,000 11,075 Notes, Series 2001A, 3.50% 6/27/2002 153,106 Total investment securities (cost: $2,366,663,000) 2,458,041 Excess of cash and receivables over payables 16,782 Net assets $2,474,823 /1/ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to public may require registration. /2/ Coupon rate may change periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements Key to Abbreviations Agcy. = Agency Auth. = Authority Cert. of Part. = Certificates of Participation Dept. = Department Dev. = Development Dist. = District Econ. = Economic Fac. = Facility Facs. = Facilities Fin. = Finance Fncg. = Financing G.O. = General Obligation Preref. = Prerefunded Redev. = Redevelopment Ref. = Refunding Rev. = Revenue
The Tax-Exempt Bond Fund of America Financial statements Statement of assets and liabilities (unaudited) at February 28, 2002 (dollars and shares in thousands, except per share amounts) Assets: Investment securities at market (cost: $2,366,663) $2,458,041 Cash 730 Receivables for: Sales of fund's shares $17,530 Interest 32,091 49,621 Other assets 5 2,508,397 Liabilities - Payables for: Purchases of investments 24,860 Repurchases of fund's shares 3,250 Dividends on fund's shares 3,574 Investment advisory services 643 Services provided by affiliates 1,165 Deferred Directors' compensation 63 Other fees and expenses 19 33,574 Net assets at February 28, 2002 $2,474,823 Net assets consist of: Capital paid in on shares of capital stock $2,377,104 Undistributed net investment income 1,357 Undistributed net realized gain 4,984 Net unrealized appreciation 91,378 Net assets at February 28, 2002 $2,474,823 Total authorized capital stock - 500,000 shares, $.001 par value: 'Net Shares asset value Net assets outstanding per share/1/ Class A $2,367,549 193,726 $12.22 Class B 48,880 4,000 12.22 Class C 41,955 3,433 12.22 Class F 16,439 1,345 12.22 /1/ Maximum offering price and redemption price per share are equal to the net asset value per share for all share classes except for Class A, for which the maximum offering price per share is $12.70. Statement of operations for the six months ended February 28, 2002 (dollars in thousands) Investment income: (unaudited) Income- Interest $62,901 Fees and expenses: Investment advisory services $3,923 Distribution services 3,127 Transfer agent services 259 Administrative services 32 Reports to shareholders 53 Registration statement and prospectus 130 Postage, stationery and supplies 21 Directors' compensation 13 Auditing and legal 35 Custodian 21 State and local taxes 1 7,615 Net investment income 55,286 Net realized gain and unrealized depreciation on investments: Net realized gain on investments 5,187 Net unrealized depreciation on investments (28,197) Net realized gain and unrealized depreciation on investments (23,010) Net increase in net assets resulting from operations $32,276 Statement of changes in net assets (dollars in thousands) Six months ended Year ended February 28, August 31, 2002* 2001 Operations: Net investment income $55,286 $98,917 Net realized gain on investments 5,187 9,185 Net unrealized (depreciation) appreciation (28,197) 88,080 on investments Net increase in net assets resulting from operations 32,276 196,182 Dividends and distributions paid to shareholders: Dividends from net investment income (54,998) (99,323) Distributions from net realized gain on investments (6,121) - Total dividends and distributions paid to shareholders (61,119) (99,323) Capital share transactions 253,173 319,616 Total increase in net assets 224,330 416,475 Net assets: Beginning of period 2,250,493 1,834,018 End of period (including undistributed net investment income: $1,357 and $1,004, respectively) $2,474,823 $2,250,493 *Unaudited See Notes to Financial Statements
Notes to financial statements (Unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Tax-Exempt Bond Fund of America, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks a high level of federally tax-free current income, consistent with the preservation of capital, through a diversified portfolio of municipal bonds. The fund offers four retail share classes, as described below:
SHARE INITIAL SALES CONTINGENT CONVERSION FEATURE CLASS CHARGE DEFERRED SALES CHARGE UPON REDEMPTION Class A Up to 3.75% None None Class B None Declines from Class B converts 5% to zero for to Class A after redemptions eight years within six years of purchase Class C None 1% for Class C converts redemptions to Class F after within one year 10 years of purchase Class F None None None
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes may have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund: SECURITY VALUATION - Fixed-income securities are valued at prices obtained from a pricing service. However, where the investment adviser deems it appropriate, they 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 authority of the fund's Board of Directors. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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. On September 1, 2001, the fund began amortizing discount daily over the expected life of fixed-income securities to comply with a recent change in accounting principles generally accepted in the United States of America. Adopting this change did not impact the fund's net asset value but resulted in changes to the classification of certain amounts between interest income and realized and unrealized gain or loss in the accompanying financial statements. Therefore, the undistributed net investment income amounts are primarily composed of these adjustments which were based on the fixed-income securities held by the fund on September 1, 2001. Because the fund determines its required distributions under federal income tax laws, adoption of this principle for financial accounting purposes will not affect the amount of distributions paid to shareholders. CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services are charged directly to the respective share class. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date. 2. FEDERAL INCOME TAXATION AND DISTRIBUTIONS The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. DISTRIBUTIONS - Distributions are based on net investment income and net realized gains determined on a tax basis which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as amortization of discounts and short-term capital gains and losses. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes. As of February 28, 2002, the cost of investment securities for federal income tax purposes was $2,366,663,000. During the six months ended February 28, 2002, the fund reclassified $493,000 from undistributed net investment income to additional paid-in capital to align book with tax reporting. As of February 28, 2002, the components of distributable earnings on a tax basis were as follows:
(DOLLARS IN THOUSANDS) Undistributed net investment income $195 Accumulated short-term losses (135) Undistributed long-term gains 5,260 Unrealized appreciation 114,820 Unrealized depreciation (23,442)
The tax character of distributions paid was as follows: Six months ended February 28, 2002 (dollars in thousands)
DISTRIBUTIONS FROM ORDINARY INCOME DISTRIBUTIONS TOTAL FROM DISTRIBUTIONS LONG-TERM PAID CAPITAL GAINS NET INVESTMENT SHORT-TERM INCOME CAPITAL GAINS Class A $53,492 $1,666 $4,256 $59,414 Class B 717 27 68 812 Class C 524 20 53 597 Class F 265 9 22 96 Total $54,998 $1,722 $4,399 $61,119
Year ended August 31, 2001 (dollars in thousands)
DISTRIBUTIONS FROM ORDINARY INCOME DISTRIBUTIONS FROM LONG-TERM CAPITAL GAINS TOTAL DISTRIBUTIONS PAID NET INVESTMENT SHORT-TERM INCOME CAPITAL GAINS Class A $98,662 $- $- $98,662 Class B 489 - - 489 Class C /1/ 104 - - 104 Class F /1/ 68 - - 68 Total $99,323 $- $- $99,323
/1/ Class C and Class F shares were not offered before March 15, 2001. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES Capital Research and Management Company ("CRMC"), the fund's investment adviser, is the parent company of American Funds Service Company ("AFS"), the fund's transfer agent, and American Funds Distributors ("AFD"), the principal underwriter of the fund's shares. INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of annual rates beginning with 0.30% per annum on the first $60 million of daily net assets and decreasing to 0.16% on such assets in excess of $3 billion. The agreement also provides for monthly fees, accrued daily, based on a series of annual rates beginning with 3.00% per annum on the first $3,333,333 of the fund's monthly gross investment income decreasing to 2.25% on such income in excess of $8,333,333. For the six months ended February 28, 2002, the investment advisory services fee was equivalent to an annualized rate of 0.339% of average daily net assets. CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below: DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all share classes. Under the plans, the Board of Directors approves certain categories of expenses which are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets of up to 0.25% for Class A shares, 1.00% for Class B and Class C shares and 0.50% for Class F shares. In some cases, the Board of Directors approved expense amounts lower than plan limits. All share classes may use up to 0.25% of these expenses to pay service fees, or to compensate AFD for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. Additionally, the Board of Directors has approved the following categories of distribution expenses: CLASS A - Dealers and wholesalers receive commissions from AFD for certain shares sold without a sales charge. The class reimburses AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit is not exceeded. As of February 28, 2002, unreimbursed expenses which remain subject to reimbursement totaled $2,658,000. CLASS B AND CLASS C - Each class pays AFD annual fees of 0.75% of its respective average daily net assets to compensate dealers and wholesalers for shares sold. CLASS F - Although the plan has an annual expense limit of 0.50% of its respective average daily net assets, currently there are no additional approved categories of expense for this class. TRANSFER AGENT SERVICES - The fund has a transfer agency agreement with AFS for Class A and Class B shares. Under this agreement, these share classes compensate AFS for transfer agency services including shareholder record keeping, communications and transaction processing. AFS is compensated for transfer agency services provided to all other share classes from the administrative services fees paid to CRMC described below. ADMINISTRATIVE SERVICES - The fund has an administrative services agreement with CRMC to provide transfer agency and other related shareholder services for Class C and Class F. Each relevant class pays CRMC annual fees of 0.15% based on its respective average daily net assets, plus amounts payable for certain transfer agency services. CRMC may use these fees to compensate third parties for performing these services. Expenses under the agreements described above for the six months ended February 28, 2002, are as follows (dollars in thousands):
FUND DISTRIBUTION TRANSFER AGENT ADMINISTRATIVE SERVICES SHARE SERVICES SERVICES CLASSES Class A $2,801 $254 Not applicable Class B 179 5 Not applicable Class C 133 Not applicable $21 Class F 14 Not applicable 11
DEFERRED DIRECTORS' COMPENSATION - Since the adoption of the deferred compensation plan in 1993, Directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of 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. Directors' fees in the accompanying financial statements include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of the deferred amounts. AFFILIATED OFFICERS AND DIRECTORS - Officers and certain Directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or Directors received any compensation directly from the fund. 4. CAPITAL SHARE TRANSACTIONS Capital share transactions in the fund were as follows: Six months ended February 28, 2002 (dollars and shares in thousands)
SALES REINVESTMENTS REPURCHASES NET INCREASE OF DIVIDENDS AND DISTRIBUTIONS AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES Class A $323,017 26,446 $38,458 3,156 $(167,852) (13,771) $193,623 15,831 Class B 24,559 2,010 585 48 (1,951) (160) 23,193 1,898 Class C 29,024 2,376 442 36 (2,321) (191) 27,145 2,221 Class F 16,172 1,327 229 19 (7,189) (592) 9,212 754 Total net $392,772 32,159 $39,714 3,259 $(179,313) (14,714) $253,173 20,704 increase (decrease) in fund
Year ended August 31, 2001 (dollars and shares in thousands)
REINVESTMENTS OF DIVIDENDS SALES AND DISTRIBUTIONS REPURCHASES NET INCREASE AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES CLASS A $550,783 45,771 $61,021 5,083 $(335,993) (28,027 $275,811 22,827 CLASS B 23,399 1,942 340 28 (1,814) (151) 21,925 1,819 CLASS C/*/ 14,787 1,217 74 6 (136) (11) 14,725 1,212 CLASS F/*/ 15,575 1,286 51 4 (8,471) (699) 7,155 591 TOTAL NET $604,544 50,216 $61,486 5,121 $(346,414) (28,888) $319,616 26,449 INCREASE (DECREASE) IN FUND /*/ CLASS C AND CLASS F SHARES WERE NOT OFFERED BEFORE MARCH 15, 2001.
5. RESTRICTED SECURITIES The fund has invested in certain securities for which resale may be limited to qualified buyers or which are otherwise restricted. These securities are identified in the investment portfolio. Any costs incurred in connection with the disposition of such securities will be recorded in the fund on the date of disposition. As of February 28, 2002, the total value of restricted securities was $9,937,000 which represents 0.40% of the net assets of the fund. 6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $320,166,000 and $109,850,000, respectively, during the six months ended February 28, 2002. The fund receives a reduction in its custodian fee equal to the amount of interest calculated on certain cash balances held at the custodian bank. For the six months ended February, the custodian fee of $21,000 includes $3,000 that was offset by this reduction rather than paid in cash. Financial Highlights /1/ Income from investment operations Net (losses) Net asset gains on value, Net securities (both beginning investment realized and of period income /3/ unrealized)/3/ Class A: Six months ended 2/28/2002 /2/ $12.38 $.29 $(.13) Year ended 8/31/2001 11.81 .60 .57 Year ended 8/31/2000 11.86 .60 (.01) Year ended 8/31/1999 12.60 .59 (.55) Year ended 8/31/1998 12.27 .62 .37 Year ended 8/31/1997 11.86 .64 .45 Class B: Six months ended 2/28/2002 /2/ 12.38 .25 (.13) Year ended 8/31/2001 11.81 .52 .57 Period from 3/15/2000 to 8/31/2000 11.50 .21 .34 Class C: Six months ended 2/28/2002 /2/ 12.38 .24 (.13) Period from 3/15/2001 to 8/31/2001 12.10 .21 .29 Class F: Six months ended 2/28/2002 /2/ 12.38 .28 (.13) Period from 3/15/2001 to 8/31/2001 12.10 .24 .29 Income from investment Dividends and Distributions operations Dividends Total from (from net Distributions investment investment (from capital operations income) gains) Class A: Six months ended 2/28/2002 /2/ $.16 $(.29) $(.03) Year ended 8/31/2001 1.17 (.60) - Year ended 8/31/2000 .59 (.60) (.04) Year ended 8/31/1999 .04 (.59) (.19) Year ended 8/31/1998 .99 (.62) (.04) Year ended 8/31/1997 1.09 (.64) (.04) Class B: Six months ended 2/28/2002 /2/ .12 (.25) (.03) Year ended 8/31/2001 1.09 (.52) - Period from 3/15/2000 to 8/31/2000 .55 (.24) - Class C: Six months ended 2/28/2002 /2/ .11 (.24) (.03) Period from 3/15/2001 to 8/31/2001 .50 (.22) - Class F: Six months ended 2/28/2002 /2/ .15 (.28) (.03) Period from 3/15/2001 to 8/31/2001 .53 (.25) - Dividends and distributions Net asset Total value, end Total distributions of period return/4/ Class A: Six months ended 2/28/2002 /2/ $(.32) $12.22 1.34% Year ended 8/31/2001 (.60) 12.38 10.22 Year ended 8/31/2000 (.64) 11.81 5.27 Year ended 8/31/1999 (.78) 11.86 .23 Year ended 8/31/1998 (.66) 12.60 8.26 Year ended 8/31/1997 (.68) 12.27 9.39 Class B: Six months ended 2/28/2002 /2/ (.28) 12.22 .96 Year ended 8/31/2001 (.52) 12.38 9.45 Period from 3/15/2000 to 8/31/2000 (.24) 11.81 4.89 Class C: Six months ended 2/28/2002 /2/ (.27) 12.22 .90 Period from 3/15/2001 to 8/31/2001 (.22) 12.38 4.20 Class F: Six months ended 2/28/2002 /2/ (.31) 12.22 1.26 Period from 3/15/2001 to 8/31/2001 (.25) 12.38 4.45 Ratio of Ratio of Net assets, expenses net income end of period to average to average (in millions) net assets net assets Class A: Six months ended 2/28/2002 /2/ $2,368 .64%/5/ 4.80%/5/ Year ended 8/31/2001 2,202 .66 5.00 Year ended 8/31/2000 1,831 .67 5.22 Year ended 8/31/1999 1,917 .65 4.78 Year ended 8/31/1998 1,795 .66 4.98 Year ended 8/31/1997 1,593 .68 5.27 Class B: Six months ended 2/28/2002 /2/ 49 1.38/5/ 4.01/5/ Year ended 8/31/2001 26 1.40 4.06 Period from 3/15/2000 to 8/31/2000 3 .64 1.99 Class C: Six months ended 2/28/2002 /2/ 42 1.52/5/ 3.96/5/ Period from 3/15/2001 to 8/31/2001 15 .73 1.77 Class F: Six months ended 2/28/2002 /2/ 16 .79/5/ 4.67/5/ Period from 3/15/2001 to 8/31/2001 7 .40 2.11 Supplemental data - all classes Six months Year Year ended ended ended February 28, August 31, August 31, 2002 2001 2000 Portfolio turnover rate 9% 21% 29% Supplemental data - all classes Year Year Year ended ended ended August 31, August 31, August 31, 1999 1998 1997 Portfolio turnover rate 15% 23% 14% /1/ Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year. /2/ Unaudited. /3/ Years ended 1999, 1998 and 1997 are based on shares outstanding on the last day of the year, all other periods are based on average shares outstanding. /4/ Total returns exclude all sales charges, including contingent deferred sales charges. /5/ Annualized.
American High-Income Municipal Bond Fund Unaudited Investment Portfolio, January 31, 2002 Quality ratings* [pie chart and table] AAA 10.0% AA 6.9% A 8.1% BBB 24.0% BB 25.5% B 17.9% CCC or less 0.1% Cash & equivalents 7.5% *Bond ratings reflect those of a credit rating agency; if ratings are not available, they are assigned by the fund's research analysts. [end chart] Principal Market Amount Value Fixed-Income Securities - 92.46% (000) (000) Alabama - 0.81% Special Care Fac. Fncg. Auth. of the City of Huntsville - $ 6,000 $ 5,995 Carlton Cove, Retirement Fac. Rev. Bonds (Carlton Cove, Inc. Project), Series 2001, 8.125% 2031 Alaska - 0.68% Northern Tobacco Securitization Corp., Tobacco Settlement Asset-Backed Bonds: Series 2000, 6.20% 2022 2,000 2,097 Series 2001, 5.375% 2021 3,000 2,885 Arizona - 0.53% Industrial Dev. Auth. of the County of Navajo, Industrial 4,100 3,927 Dev. Rev. Bonds (Stone Container Corp. Project), Series 1997, AMT, 7.20% 2027 California - 7.13% Pollution Control Fncg. Auth., Solid Waste Disposal Ref. 4,000 4,017 Rev. Bonds (USA Waste Services, Inc. Project), Series 1998A, AMT, 5.10% 2018 (Put 2008) Rural Home Mortgage Fin. Auth., Single Family Mortgage 300 320 Rev. Bonds (Mortgage-Backed Securities Program), 1995 Series B, AMT, 7.75% 2026 Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bonds (Irvine Apartment Communities, LP): Series 1998A-1, AMT, 5.05% 2025 (Put 2008) 7,000 7,143 Series 1998A-3, 5.10% 2025 (Put 2010) 3,000 3,044 City of Antioch, Public Fncg. Auth., 1998 Reassessment 1,420 1,503 Rev. Bonds, Subordinated Series B, 5.80% 2011 City of Chino Hills, Community Facs.: Dist. No. 9 (Rincon Village Area), Special Tax Bonds, 2,430 2,470 Series 1998, 6.45% 2023 Dist. No. 10 (Fairfield Ranch), Special Tax Bonds, 1,000 1,059 6.95% 2030 County of El Dorado, Community Facs. Dist. No. 1992-1 995 1,021 (El Dorado Hills Dev.), Series 1999 Special Tax Bonds, 6.125% 2016 City of Fontana, Community Facs. Dist. No. 12 1,000 1,054 (Sierra Lakes), Special Tax Bonds, Series 1999, 6.50% 2015 City of Irvine, Assessment Dist. No. 94-13 (Oak Creek), 1,000 1,012 Limited Obligation Improvement Bonds, Group Two, 5.875% 2017 Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), 1995 Series A: 6.10% 2010 (Preref. 2005) 1,000 1,118 6.125% 2015 (Preref. 2005) 2,500 2,797 6.125% 2023 (Preref. 2005) 1,500 1,678 MBIA Insured, 6.125% 2015 (Preref. 2005) 1,000 1,119 MBIA Insured, 6.125% 2023 (Preref. 2005) 2,500 2,797 City of Los Angeles, Multi-family Housing Rev. Bonds 500 525 (GNMA Collateralized - Ridgecroft Apartments Project), Series 1997E, AMT, 6.00% 2017 County of Los Angeles, Capital Asset Leasing Corp., 970 1,003 Cert. of Part. (Marina del Rey), 1993 Series A, 6.25% 2003 Pleasanton Joint Powers Fncg. Auth., Subordinate 925 943 Reassessment Rev. Bonds, 1993 Series B, 6.125% 2002 City of Poway, Community Facs. Dist. No. 88-1 (Parkway 2,800 3,024 Business Centre), Special Tax Ref. Bonds, Series 1998, 6.75% 2015 County of Sacramento, Laguna Creek Ranch/Elliott Ranch Community Facs. Dist. No. 1, Improvement Area No. 2 Special Tax Ref. Bonds (Elliott Ranch): 6.125% 2014 250 264 6.30% 2021 500 519 County of San Diego, Reassessment Dist. No. 97-1 (4-S Ranch), Limited Obligation Improvement Bonds: 6.00% 2009 995 1,026 6.25% 2012 995 1,026 Redev. Agcy. of the City and County of San Francisco, 1,000 834 Residential Fac. Rev. Bonds (Coventry Park Project), Series 1996A, AMT, 8.50% 2026 Community Facs. Dist. No. 99-1 (Talega) of the Santa 2,390 2,494 Margarita Water Dist., Series 1999 Special Tax Bonds, 6.10% 2014 South Tahoe Joint Powers Fncg. Auth. (South Tahoe Redev. Project Area No. 1): Ref. Rev. Bonds, Series 1995B, 6.25% 2020 1,000 1,029 Subordinate Bond Anticipation Notes: Series 1999A, 7.30% 2007 5,500 5,725 Series 1999B, 7.30% 2007 1,000 1,041 Community Facs. Dist. No. 88-12 of the City of Temecula 940 954 (Ynez Corridor), Special Tax Ref. Bonds, 1998 Series A, 5.35% 2009 Colorado - 4.81% Housing and Fin. Auth., Single Family Program Senior Bonds, AMT: 1995 Series A, 8.00% 2025 390 411 1995 Series B-1, 7.90% 2025 295 312 1997 Series B-2, 7.00% 2026 590 617 City and County of Denver, Airport System Rev. Bonds, 885 927 Series 1992C, AMT, 6.75% 2013 EagleBend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds, Series 1997A: 6.20% 2012 1,000 998 6.45% 2021 2,000 1,959 EagleBend Dowd Affordable Housing Corp., Multi-family Housing Project Rev. Bonds, Series 1998A: 6.53% 2024 1,665 1,625 6.53% 2029 1,320 1,278 6.63% 2039 2,950 2,838 Eagle County, Bachelor Gulch Metropolitan Dist., G.O. Bonds, 3,500 3,633 Series 1999, 6.70% 2019 E-470 Public Highway Auth. Senior Rev. Bonds (Capital 7,500 682 Appreciation Bonds), Series 2000B, 0% 2034 Lincoln Park Metropolitan Dist. (Douglas County), G.O. 3,000 3,017 Limited Tax Ref. and Improvement Bond, Series 2001, 7.75% 2026 North Range Metropolitan Dist. No.1 (City of Commerce City), 1,000 974 Adams County, Limited Tax G.O. Bonds, Series 2001, 7.25% 2031 Northwest Parkway Public Highway Auth., Rev. Bonds, 4,500 4,591 Series 2001D, 7.125% 2041 Rampart Range Metropolitan Dist. No. 1 (City of Lone Tree), 7,660 7,498 Rev. Bonds (Rampart Range Metropolitan Dist. No. 2 Project), Series 2001, 7.75% 2026 Vista Ridge Metropolitan Dist. (Weld County), Limited 4,110 4,097 Tax G.O. Bonds, Series 2001, 7.50% 2031 Connecticut - 2.70% Dev. Auth., Pollution Control Rev. Ref. Bonds (The Connecticut Light and Power Co. Project): Series 1993A, 5.85% 2028 1,375 1,401 Series 1993B, AMT, 5.95% 2028 1,500 1,520 Health and Educational Fac. Auth., Rev. Bonds, University 1,000 1,025 of Hartford Issue, Series D, 6.75% 2012 Mashantucket (Western) Pequot Tribe, Special Rev. Bonds: /1/ 1996 Series A: 6.375% 2004 (Escrowed to Maturity) 500 550 6.40% 2011 (Preref. 2007) 3,470 4,008 6.40% 2011 3,025 3,206 1997 Series B: 5.60% 2009 1,000 1,025 5.75% 2018 3,000 2,940 Mohegan Tribe of Indians, Gaming Auth. Priority Distribution Payment, Public Improvement Bonds, Series 2001: 6.00% 2016 1,200 1,192 6.25% 2021 1,000 1,001 6.25% 2031 2,000 2,001 Delaware - 0.14% Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula United Methodist Homes, Inc. Issue), Series 1997A: 6.00% 2008 500 513 6.10% 2010 500 509 District of Columbia - 0.91% Hospital Rev. Ref. Bonds (Washington Hospital Center Issue), 880 923 Series 1992A, 7.00% 2005 (Preref. 2002) MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): Series 2001A, 6.40% 2031 (Put 2004) 1,000 1,025 Series 2001B, 6.625% 2031 (Put 2005) 1,000 1,042 Series 2001C, 6.80% 2031 (Put 2006) 1,500 1,588 Series 2001D, 6.875% 2031 (Put 2007) 2,000 2,135 Florida - 10.97% Arbor Greene Community Dev. Dist. (City of Tampa, 705 715 Hillsborough County), Special Assessment Rev. Bonds, Series 2000, 6.50% 2007 Championsgate Community Dev. Dist., Capital Improvement Rev. 2,850 2,624 Bonds, Series 1998A, 6.25% 2020 The Crossings at Fleming Island Community Dev. Dist. (Clay County): Special Assessment Bonds, Series 1995, 8.25% 2016 4,500 5,244 (Preref. 2005) Special Assessment Ref. Bonds, Series 2000C, 7.10% 2030 5,000 5,253 Fleming Island Plantation Community Dev. Dist. (Clay County), 1,000 1,060 Series 2000B, 7.375% 2031 The Groves Community Dev. Dist. (Pasco County), Special 3,450 3,470 Assessment Rev. Bonds, Series 2000B, 7.625% 2008 Harbor Bay Community Dev. Dist. (Hillsborough County), 4,000 3,963 Capital Improvement Rev. Bonds, Series 2001B, 6.35% 2010 Heritage Isles Community Dev. Dist. (Hillsborough County), 1,415 1,404 Special Assessment Rev. Bonds, Series 1998A, 5.75% 2005 Heritage Palms Community Dev. Dist. (Fort Myers), Capital Improvement Rev. Bonds: Series 1998, 5.40% 2003 960 955 Series 1999, 6.25% 2004 1,405 1,412 Heritage Pines Community Dev. Dist. (Pasco County), Capital 775 764 Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Heritage Springs Community Dev. Dist. (Pasco County), 425 427 Capital Improvement Rev. Bonds, Series 1999B, 6.25% 2005 Lake Ashton Community Dev. Dist. (City of Lake Wales, Polk County), Capital Improvement Rev. Bonds: Series 2001A, 7.40% 2032 1,000 1,009 Series 2001B, 6.40% 2011 1,000 997 Lake Powell Residential Golf Community Dev. Dist. (Bay 7,000 7,014 County), Special Assessment Rev. Bonds, Series 2000B, 7.00% 2010 Lakewood Ranch Community Dev. Dist. 5 (Manatee County), Special Assessment Rev. Bonds: Series 2001A, 6.70% 2031 935 920 Series 2001B, 6.00% 2011 1,980 1,942 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds: Series 1997A (Cypress Cove at Healthpark Florida, Inc. 2,500 2,287 Project), 6.25% 2017 Series 1999A (Shell Point/Alliance Obligated Group, Shell Point Village Project): 5.25% 2007 1,000 1,006 5.50% 2009 1,000 1,001 5.75% 2011 500 502 5.75% 2013 1,410 1,396 5.75% 2015 500 486 5.50% 2021 3,800 3,443 Marshall Creek Community Dev. Dist., Special Assessment 3,020 3,136 Bonds, Series 2000A, 7.65% 2032 Meadow Pointe II, Community Dev. Dist. (Pasco County), 2,030 2,020 Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Meadow Pointe III, Community Dev. Dist. (Pasco County), 2,265 2,201 Capital Improvement Rev. Bonds, Series 2001A, 6.85% 2033 Northern Palm Beach County Improvement Dist., Water Control and Improvement Bonds: Unit of Dev. No. 9A, Series 1996A: 6.80% 2006 790 854 7.30% 2027 1,500 1,596 Unit of Dev. No. 9B, Series 1999, 5.85% 2013 945 957 North Springs Improvement Dist. Special Assessment Bonds, Parkland Isles Project: Series 1997A, 7.00% 2019 1,000 1,044 Series 1997B, 6.25% 2005 110 110 Ocean Highway and Port Auth., Solid Waste/Pollution Control 1,305 1,276 Rev. Ref. Bonds, Series 1996 (Jefferson Smurfit Corp. (U.S.) Project), 6.50% 2006 City of Orlando, Special Assessment Rev. Bonds (Conroy Road 3,250 3,157 Interchange Project), Series 1998A, 5.80% 2026 River Ridge Community Dev. Dist. (Lee County), Capital 1,585 1,565 Improvement Rev. Bonds, Series 1998, 5.75% 2008 Stoneybrook West Community Dev. Dist. (City of Winter Garden, 1,295 1,309 Orange County), Special Assessment Rev. Bonds, Series 2000B, 6.45% 2010 University Place Community Dev. Dist. (Manatee County), 2,535 2,532 Series 2001B, 6.10% 2007 Urban Orlando Community Dev. Dist. (City of Orlando), Capital Improvement Rev. Bonds, Series 2001A: 6.40% 2010 4,780 4,763 6.95% 2033 3,500 3,453 Waterlefe Community Dev. Dist. (Manatee County), Capital 1,555 1,550 Improvement Rev. Bonds, Series 2001B, 6.25% 2010 Georgia - 0.80% City of Atlanta, Tax Allocation Bonds (Atlantic Station Project), Series 2001: 7.75% 2014 1,000 976 7.90% 2024 5,000 4,888 Idaho - 1.57% Housing and Fin. Association, AMT: Single Family Mortgage Bonds: 1998 Series B-2, 5.20% 2011 765 782 1999 Series B-2, 5.00% 2013 880 884 1999 Series D-3, 5.15% 2013 920 911 1999 Series G-2, 5.75% 2014 465 478 2001 Series B-III, 5.75% 2020 2,760 2,809 2001 Series F, 5.30% 2021 1,865 1,822 Single Family Mortgage Subordinate Bonds: 1997 Series H-2, 5.40% 2010 1,140 1,181 1997 Series I-2, 5.55% 2010 720 753 Single Family Programs Disclosure Report, 1978 Series A, 2,000 1,977 5.40% 2021 Illinois - 6.19% Build Illinois Bonds (Sales Tax Rev. Bonds), Illinois FIRST, 1,500 1,566 Series of September 2001, 5.375% 2016 Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds (Waste 3,035 2,967 Management, Inc. Project), Series 1997, AMT, 5.05% 2010 Health Facs. Auth.: Rev. Bonds: Alexian Brothers Health System, Series 1999, FSA Insured, 1,000 969 5.125% 2028 Centegra Health System, Series 1998: 5.50% 2008 1,000 1,040 5.25% 2014 1,500 1,467 Edward Hospital Obligated Group, Series 2001A, FSA Insured, 1,500 1,551 5.50% 2017 Fairview Obligated Group Project, 1992 Series A, 2,675 2,831 9.50% 2022 (Preref. 2002) Friendship Village of Schaumburg, Series 1997A, 5.25% 2018 2,000 1,674 Lutheran Senior Ministries Obligated Group - Lutheran 3,000 3,013 Hillside Village Project, Series 2001A, 7.375% 2031 OSF Healthcare System, Series 1999, 6.25% 2019 1,500 1,564 Rev. Ref. Bonds: Advocate Health Care Network, Series 1997A: 5.70% 2011 500 529 5.80% 2016 2,000 2,066 Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 1,011 Fairview Obligated Group Project, 1995 Series A: 6.25% 2003 1,245 1,271 7.40% 2023 3,130 3,136 City of Chicago: G.O. Bonds (Emergency Telephone System), Ref. Series 1999, 1,000 1,033 FGIC Insured, 5.25% 2020 Chicago O'Hare International Airport: Second Lien Passenger Fac. Charge Rev. Bonds, Series 2001C, 4,030 4,175 AMBAC Insured, AMT, 5.50% 2015 Special Facs. Rev. Ref. Bonds (United Air Lines, Inc. 7,875 4,383 Project), Series 1999B, AMT, 5.20% 2011 Midway Airport Rev. Bonds, Series 2001A, FSA Insured, AMT, 2,000 2,072 5.50% 2015 School Reform Board of Trustees of the Board of Education 1,000 995 of the City of Chicago, Unlimited Tax G.O. Bonds (Dedicated Tax Rev.), Series 1997A, AMBAC Insured, 5.25% 2030 Village of Montgomery, Kane and Kendall Counties, Special 4,000 4,158 Assessment Improvement Bonds (Lakewood Creek Project), Series 2001, 7.75% 2030 Village of Robbins, Cook County, Resource Recovery Rev. Bonds (Robbins Resource Recovery Partners, L.P. Projects), AMT: Series 1999A, 8.375% 2016 /2/ 3,950 35 Series 1999B, 8.375% 2016 /2/ 1,545 14 Series 1999C, 7.25% 2009 521 297 Series 1999C, 7.25% 2024 2,650 1,378 Series 1999D, 0% 2009 1,230 406 Indiana - 0.45% Dev. Fin. Auth. Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 1,000 168 5.75% 2011 Health Fac. Fncg. Auth., Hospital Rev. Bonds (Charity 2,805 2,825 Obligated Group), Series 1999D, 5.25% 2016 City of East Chicago, Pollution Control Rev. Ref. Bonds, 2,000 335 Inland Steel Co. Project No. 11, Series 1994, 7.125% 2007 Iowa - 0.70% Fin. Auth., Ref. Rev. Bonds (Trinity Health Credit Group), 2,000 2,125 Series 2000B, AMBAC Insured, 6.00% 2027 Tobacco Settlement Auth., Asset-Backed Bonds, Series 2001B: 5.50% 2011 1,000 1,036 5.50% 2014 2,000 1,999 Kentucky - 1.76% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), Series 2000, MBIA Insured: 6.50% 2020 2,000 2,047 6.625% 2028 1,000 1,027 Hospital System Ref. and Improvement Rev. Bonds, Series 1997 (Appalachian Regional Healthcare, Inc. Project): 5.60% 2008 1,000 916 5.80% 2012 1,000 869 5.85% 2017 7,000 5,799 City of Ashland, Sewage and Solid Waste Rev. Bonds, Series 2,200 2,322 1995 (Ashland Inc. Project), AMT, 7.125% 2022 Louisiana - 2.51% Health Education Auth., Rev. Ref. Bonds (Lambeth House Project): Series 1996, 9.00% 2026 (Preref. 2006) 1,850 2,327 Series 1998A, 6.20% 2028 5,000 4,297 Parish of Morehouse, Pollution Control Rev. Ref. Bonds, 1,000 1,002 2001 Series A, 5.25% 2013 Parish of West Feliciana: Pollution Control Rev. Bonds (Gulf States Utilities Co. 1,500 1,556 Project), Series 1984-II, 7.70% 2014 Pollution Control Rev. Ref. Bonds (Entergy Gulf States, Inc. 2,500 2,580 Project), Series 1999A, 5.65% 2028 (Put 2004) Tobacco Settlement Auth., Asset-Backed Bonds, Series 7,000 6,723 2001B, 5.50% 2030 Maine - 0.41% Health and Higher Educational Facs. Auth., Rev. Bonds, Piper Shores Issue, Series 1999A: 7.50% 2019 1,000 1,025 7.55% 2029 2,000 2,029 Maryland - 1.19% Econ. Dev. Corp., Rev. Bonds (Anne Arundel County, Golf 1,000 1,002 Course System), Series 2001, 8.25% 2028 Anne Arundel County, Special Obligation Bonds (Arundel Mills 1,000 1,065 Project), Series 1999, 7.10% 2029 Frederick County, Special Obligation Bonds (Urbana Community 3,000 3,044 Dev. Auth.), Series 1998, 6.625% 2025 Housing Opportunities Commission of Montgomery County, Multi-family Rev. Bonds (Strathmore Court at White Flint), 1994 Issue A-2: 7.50% 2024 1,000 1,042 7.50% 2027 950 989 Housing Auth. of Prince George's County, Mortgage Rev. Bonds, 1,000 1,022 Series 1997A (GNMA Collateralized - Langley Gardens Apartments Project), 5.75% 2029 Prince George's County (Dimensions Health Corp. Issue), 1,250 638 Project and Ref. Rev. Bonds, Series 1994, 5.375% 2014 Massachusetts - 2.65% G.O. Bonds, Consolidated Loan of 2001, Series D, 5.50% 2017 5,000 5,403 Dev. Fin. Agcy., Resource Recovery Rev. Bonds (Waste 1,000 1,099 Management, Inc. Project), Series 1999B, AMT, 6.90% 2029 (Put 2009) Health and Educational Facs. Auth., Rev. Bonds, Partners 1,000 1,070 HealthCare System Issue, Series C, 6.00% 2015 Industrial Fin. Agcy.: Resource Recovery Rev. Ref. Bonds (Ogden Haverhill Project), 6,300 5,333 Series 1998A, AMT, 5.30% 2009 Rev. Bonds, Edgewood Retirement Community Project, Series 5,400 6,642 1995A, 9.00% 2025 (Preref. 2005) Michigan - 6.48% State Cert. of Part. (New Center Development Inc.), MBIA 2,380 2,476 Insured, 5.375% 2016 Hospital Fin. Auth.: Hospital Rev. Bonds (The Detroit Medical Center Obligated Group), Series 1998A: 5.125% 2018 1,550 1,285 5.25% 2028 500 397 Hospital Rev. and Ref. Bonds (Henry Ford Health System), 1,000 956 Series 1995A, 5.25% 2025 Hospital Rev .Ref. Bonds: Genesys Health System Obligated Group, Series 1995A: 8.00% 2005 (Escrowed to Maturity) 2,000 2,346 8.10% 2013 (Preref. 2005) 1,100 1,314 7.50% 2027 (Preref. 2005) 2,265 2,618 Hackley Hospital Obligated Group, Series 1998A, 5.30% 2013 1,000 960 Pontiac Osteopathic, Series 1994A: 5.375% 2006 2,550 2,527 6.00% 2014 2,500 2,409 6.00% 2024 1,000 900 Sinai Hospital of Greater Detroit, Series 1995, 6.00% 2008 1,000 1,002 Housing Dev. Auth., Single-Family Mortgage Rev. Bonds, 2001 2,110 2,126 Series A, AMT, MBIA Insured, 5.30% 2016 Municipal Bond Auth., Public School Academy Facs. Program Rev. Bonds (Detroit Academy of Arts and Sciences Project), Series 2001A: 7.90% 2021 3,400 3,543 8.00% 2031 2,300 2,404 Strategic Fund Limited Obligation Rev. Bonds (United Waste 4,250 4,180 Systems, Inc. Project), Series 1995, 5.20% 2010 City of Detroit Limited Tax G.O. Bonds, Series 1995A, 1,145 1,263 6.40% 2005 City of Flint, Hospital Building Auth. (Hurley Medical Center): Rev. Ref. Bonds, Series 1998A: 5.00% 2008 2,030 2,007 5.25% 2016 3,035 2,789 Rev. Rental Bonds, Series 1998B: 5.375% 2018 1,000 913 5.375% 2028 3,250 2,832 The Econ. Dev. Corp. of the County of Midland, Subordinate 6,305 6,542 Pollution Control Limited Obligation Rev. Ref. Bonds (Midland Cogeneration Project), Series A, AMT, 6.875% 2009 Minnesota - 1.25% Minneapolis-St. Paul Metropolitan Airports Commission, 2,000 1,595 Special Facs. Rev. Bonds (Northwest Airlines, Inc. Project), Series 2001A, AMT, 7.00% 2025 Port Auth. of the City of Saint Paul, Hotel Fac. Rev. Bonds 8,000 7,629 (Radisson Kellogg Project), Series 1999-2, 7.375% 2029 Mississippi - 0.15% G.O. Ref. Bonds, Series 2002A, 5.50% 2018 1,000 1,076 Nebraska - 0.40% City of Kearney, Industrial Dev. Rev. Bonds (The Great Platte River Road Memorial Foundation Project), Series 1998: 6.75% 2023 12,890 1,521 6.75% 2028 12,200 1,440 Nevada - 3.78% Housing Division, Single Family Mortgage Bonds: 1999 Series B-1, 4.95% 2012 535 535 1999 Series D-2, AMT, 5.90% 2013 1,280 1,356 Clark County: Special Improvement Dist. No. 121 (Southern Highlands Area), Local Improvement Bonds, Series 1999: 7.00% 2009 2,500 2,639 7.50% 2019 9,040 9,570 Special Improvement Dist. No. 132 (Summerlin South Area (Villages 15A and 18)), Local Improvement Bonds, Series 2001: 6.125% 2011 1,040 1,048 6.40% 2014 1,255 1,262 6.50% 2015 1,000 1,009 6.875% 2021 2,550 2,586 City of Henderson: Health Fac. Rev. Bonds (Catholic Healthcare West), 1998 2,000 1,778 Series A, 5.375% 2026 Local Improvement Dist. No. T-4C (Green Valley Properties), Limited Obligation Ref. Bonds, 1999 Series A: 5.75% 2013 1,705 1,660 5.90% 2018 1,000 965 City of Las Vegas, Special Improvement Dist. No. 808 (Summerlin Area), Local Improvement Bonds, Series 2001: 6.40% 2015 1,395 1,409 6.75% 2021 2,000 2,026 New Hampshire - 0.49% Business Fin. Auth., Pollution Control Ref. Rev. Bonds 2,000 2,004 (Public Service Co. of New Hampshire Project - 1992 Tax-Exempt Series D), AMT, 6.00% 2021 Health and Education Facs. Auth., Exeter Hospital Obligated 1,000 992 Group Issue, Series 2001A, 5.75% 2031 Housing Fin. Auth., Single Family Mortgage Acquisition Rev. 590 616 Bonds, 1997 Series D, AMT, 5.60% 2012 New Jersey - 4.17% Econ. Dev. Auth.: Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation 4,750 4,989 Improvement Dist. Project (City of Elizabeth), Series 1998A, 6.375% 2031 First Mortgage Rev. Fixed-Rate Bonds: Fellowship Village Project, Series 1995A, 9.25% 2025 2,000 2,377 (Preref. 2005) Winchester Gardens at Ward Homestead Project, Series 1996A: 8.50% 2016 1,000 1,071 8.625% 2025 3,000 3,204 First Mortgage Rev. Bonds (Fellowship Village Project), Series 1998C: 5.50% 2018 1,000 947 5.50% 2028 1,500 1,365 First Mortgage Rev. Ref. Bonds (Fellowship Village Project): Series 1998A: 5.10% 2008 1,250 1,248 5.20% 2009 1,000 992 5.30% 2010 1,000 989 Tax-Exempt Term Bonds: 5.50% 2018 1,000 947 5.50% 2025 1,000 915 Retirement Community Rev. Bonds: Cedar Crest Village, Inc. Fac., Series A, 7.25% 2031 2,250 2,193 Seabrook Village, Inc. Fac., Series 2000A, 8.25% 2030 9,000 9,486 New Mexico - 1.05% Dona Ana County, Improvement Dist. Bonds (Santa Teresa Improvement Dist.): Airport Road Business Center, Phase III, Series 2001A, 2,215 2,196 8.375% 2021 Border Industrial Park, Phase I & II, Series 2001B, 5,560 5,514 8.875% 2021 New York - 4.07% Dormitory Auth.: Cert. of Part., City University of New York (John Jay 1,475 1,636 College of Criminal Justice Project Ref.), 6.00% 2006 Mental Health Services Fac. Improvement Rev. Bonds, 1,930 2,034 Series 1998C, 5.00% 2010 Housing Fin. Agcy.: Health Facs. Rev. Bonds (New York City), 1996 Series A Ref., 1,000 1,100 6.00% 2006 Service Contract Obligation Rev. Ref. Bonds, 1997 Series C, 800 849 5.10% 2009 City of New York, G.O. Bonds: Fiscal 2001 Series F: 5.00% 2008 2,000 2,097 5.00% 2009 2,510 2,605 Fiscal 2002 Series B, 5.50% 2012 3,000 3,183 New York City Industrial Dev. Agcy., AMT: Industrial Dev. Rev. Bonds (Brooklyn Navy Yard Cogeneration 2,000 2,081 Partners, L.P. Project), Series 1997, 6.20% 2022 Solid Waste Disposal Rev. Bonds (1995 Visy Paper (NY), Inc. 2,000 2,034 Project), 7.55% 2005 Onondaga County Industrial Dev. Agcy., Solid Waste Disposal Fac. Rev. Ref. Bonds (Solvay Paperboard LLC Project), Series 1998, AMT: 6.80% 2014 1,500 1,546 7.00% 2030 3,000 3,117 Port Auth. of New York and New Jersey, Special Project Bonds, Series 4, AMT, KIAC Partners Project: 7.00% 2007 1,500 1,572 6.75% 2011 4,000 4,159 Suffolk County Industrial Dev. Agcy., Continuing Care 2,000 2,007 Retirement Community Rev. Bonds (Peconic Landing at Southhold, Inc. Project), Series 2000, 8.00% 2030 North Carolina - 2.05% Eastern Municipal Power Agcy., Power System Rev. Bonds: Ref. Series 1993B: 7.25% 2007 1,500 1,678 7.00% 2008 1,000 1,117 6.125% 2009 3,950 4,224 6.00% 2026 1,000 1,009 Ref. Series 1999A, 5.20% 2010 2,000 2,018 Ref. Series 1999B: 5.55% 2014 1,000 1,002 5.70% 2017 2,000 1,990 Series 1999D, 6.75% 2026 1,000 1,056 Municipal Power Agcy. Number 1, Catawba Electric Rev. Bonds, 1,000 1,048 Series 1999B, 6.50% 2020 North Dakota - 0.12% Housing Fin. Agcy., Rev. Bonds, 1998 Series A, AMT, 875 871 5.25% 2018 Ohio - 1.58% The Student Loan Funding Corp., Cincinnati, Student Loan 145 145 Rev. Ref. Bonds, Series 1991A, AMT, 7.20% 2003 Water Dev. Auth., Solid Waste Disposal Rev. Bonds (Bay 4,000 3,664 Shore Power Project), Series 1998A, AMT, 5.875% 2020 City of Cleveland, Airport Special Rev. Bonds (Continental Airlines, Inc. Project), AMT: Series 1998, 5.375% 2027 2,750 1,799 Series 1999, 5.70% 2019 1,500 1,088 County of Montgomery, Hospital Facs. Rev. Bonds (Kettering Medical Center Network Obligated Group), Series 1999: 6.75% 2018 1,000 1,049 6.75% 2022 1,000 1,046 County of Richland, Hospital Facs. Rev. Improvement Bonds (MedCentral Health System Obligated Group), Series 2000B: 6.375% 2022 1,000 1,043 6.375% 2030 1,750 1,811 Oklahoma - 1.85% Langston Econ. Dev. Auth., Student Housing Rev. Bonds (Langston Community Dev. Corp. Project), Series 2000A: 7.40% 2017 2,710 2,622 7.75% 2030 6,050 5,904 Trustees of the Tulsa Municipal Airport Trust, Rev. Bonds, 6,000 5,121 Ref. Series 2001B, AMT, 5.65% 2035 (Put 2008) Oregon - 1.68% City of Klamath Falls, Electric Rev. Ref. Bonds (Klamath Cogeneration Project), Series 1999: 5.75% 2013 2,000 2,059 5.875% 2016 3,500 3,542 6.00% 2025 6,750 6,782 Pennsylvania - 3.09% Housing Fin. Agcy., Rev. Bonds, Single Housing Family 1,400 1,448 Mortgage, Series 1997-58A, AMT, 5.85% 2017 Allegheny County Hospital Dev. Auth., Health System Rev. 2,000 2,110 Bonds (West Penn Allegheny Health System), Series 2000B, 9.25% 2030 Lehigh County, General Purpose Auth. Rev. Bonds (KidsPeace 1,000 1,064 Obligated Group), ACA Insured, 5.70% 2009 Hospitals and Higher Education Facs. Auth. of Philadelphia: Frankford Hospital, Series A, 6.00% 2014 (Escrowed to 500 536 Maturity) Hospital Rev. Bonds (Temple University Hospital), Series of 1,000 1,001 1997, 5.70% 2009 Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral Village Project), Series of 1998: 5.30% 2007 1,145 1,137 5.50% 2010 1,000 971 Scranton-Lackawanna Health and Welfare Auth., City of Scranton, Lackawanna County, Hospital Rev. Bonds (Moses Taylor Hospital Project), Series 1997: 5.75% 2006 1,585 1,525 5.80% 2007 1,680 1,599 5.90% 2008 1,730 1,628 6.00% 2009 940 877 6.10% 2011 2,005 1,832 6.20% 2017 1,000 851 Westmoreland County: Health Care Fac. Rev. Bonds (Redstone Presbyterian 4,000 4,190 SeniorCare Obligated Group), Fixed Rate Rev. Bonds, Series 2000B, 8.125% 2030 Indust. Dev. Auth., Variable Rate Rev. Bonds (National Waste 2,000 1,970 and Energy Corp.; Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 (Put 2009) Rhode Island - 0.28% Housing and Mortgage Fin. Corp., Homeownership Opportunity 2,000 2,034 Bonds, Series 9-B-1, AMT, 5.55% 2013 South Carolina - 1.72% Piedmont Municipal Power Agcy., Electric Rev. Bonds, 6,000 5,630 1999A Ref. Series, 5.25% 2015 Tobacco Settlement Rev. Management Auth., Tobacco Settlement 4,500 4,591 Asset-Backed Bonds, Series 2001B, 6.00% 2022 York County, Pollution Control Facs. Rev. Bonds (Bowater 2,300 2,441 Inc. Project), Series 1990, AMT, 7.625% 2006 Tennessee - 0.13% Health and Educational Facs. Board of the Metropolitan 1,160 986 Government of Nashville and Davidson County, Rev. Ref. Bonds, Series 1998, 5.65% 2024 Texas - 5.95% Alliance Airport Auth., Inc., Special Facs. Rev. Bonds 1,500 1,355 (American Airlines, Inc. Project), Series 1990, AMT, 7.00% 2011 Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. 1,000 911 Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998, 5.25% 2028 Brazos River Auth.: Collateralized Pollution Control Rev. Ref. Bonds (Texas 2,000 2,004 Utilities Electric Co. Project), Series 1995B, AMT, 5.05% 2030 (Put 2006) Pollution Control Rev. Ref. Bonds (TXU Electric Company 9,375 9,326 Project), Series 2001B, AMT, 5.75% 2036 (Put 2011) Industrial Dev. Corp. of Port of Corpus Christi, Rev. Ref. 5,250 5,264 Bonds (Valero Refining and Marketing Co. Project), Series 1997D, AMT, 5.125% 2009 Cities of Dallas and Fort Worth, Dallas/Fort Worth International Airport, Joint Rev. Improvement and Ref. Bonds, Series 2001A, AMT, FGIC Insured: 5.625% 2011 2,000 2,128 5.75% 2015 1,185 1,244 Donna Independent School Dist. (Hidalgo County), Unlimited 1,000 1,008 Tax School Building Bonds, Series 1998, 5.20% 2018 Fort Worth International Airport Fac. Improvement Corp., 3,000 2,689 American Airlines, Inc., Rev. Ref. Bonds, Series 2000C, AMT, American Airlines Insured, 6.15% 2029 (Put 2007) Harris County Health Facs. Dev. Corp.: Hospital Rev. Bonds (Memorial Hermann Healthcare System), 4,100 4,270 Series 2001A, 6.375% 2029 Rev. Bonds (St. Luke's Episcopal Hospital), Series 2001A: 5.625% 2014 1,500 1,561 5.50% 2020 2,850 2,855 Hidalgo County Health Services Corp., Hospital Rev. Bonds (Mission Hospital, Inc. Project), Series 1996: 7.00% 2008 2,365 2,423 6.75% 2016 1,000 956 City of Houston, Airport System Subordinate Lien, Rev. Ref. 2,855 2,942 Bonds, Series 2001A, AMT, FGIC Insured, 5.50% 2015 San Antonio Independent School Dist., Unlimited Tax Ref. 1,500 1,594 Bonds, Series 2001B, 5.375% 2013 Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 1,390 1,357 6.125% 2023 Utah - 1.35% Housing Corp., Single Family Mortgage Bonds, AMT: 2001 Series E, 5.20% 2018 2,500 2,472 2001 Series F, 4.95% 2018 2,000 1,951 2002 Series B, 5.30% 2018 1,000 993 Housing Fin. Agcy., Single Family Mortgage Bonds, AMT: 1997 Series G-2, Class III, 5.60% 2010 730 763 1998 Series G-2, Class III, 4.90% 2012 795 813 1999 Series B-2, Class III, 5.10% 2012 935 960 1999 Series C-3, Class III, 5.60% 2013 1,235 1,294 Federally Insured or Guaranteed Mortgage Loans, 1999 655 686 Issue D, AMT, 5.60% 2013 Virginia - 2.03% Dulles Town Center Community Dev. Auth. (Loudoun County), 4,000 3,915 Special Assessment Bonds (Dulles Town Center Project), Series 1998, 6.25% 2026 Fairfax County Econ. Dev. Auth., Retirement Community Rev. Bonds (Greenspring Village, Inc. Fac.), Series 1999A: 6.75% 2012 1,500 1,575 7.50% 2029 4,000 4,181 Gateway Community Dev. Auth. (Prince William County), 2,000 1,969 Special Assessment Bonds, Series 1999, 6.25% 2026 Industrial Dev. Auth. of Henrico County, Solid Waste Disposal 500 476 Rev. Bonds (Browning-Ferris Industries of South Atlantic, Inc. Project), Series 1995, AMT, 5.30% 2011 (Put 2005) Heritage Hunt Commercial Community Dev. Auth. (Prince 1,000 1,046 William County), Special Assessment Bonds, Series 1999B, 7.00% 2029 Pocahontas Parkway Association, Route 895 Connector Toll Road Rev. Bonds, Series 1998A: 5.25% 2008 1,100 975 5.00% 2011 1,000 815 Washington - 0.36% Health Care Facs. Auth. Rev. Bonds, (Group Health 1,500 1,591 Cooperative of Puget Sound), Series 2001, AMBAC Insured, 5.375% 2012 Port of Seattle, Rev. Bonds, Series B, AMT, FGIC Insured, 1,000 1,064 5.50% 2010 Wisconsin - 1.52% Health Educational Facs. Auth. Rev. Bonds (Froedtert & 1,000 1,030 Community Health Obligated Group), Series 2001, 5.625% 2013 Housing and Econ. Dev. Auth.: Home Ownership Rev. Bonds, 1998 Series A, 5.375% 2017 1,400 1,422 Housing Rev. Bonds, 1993 Series B, AMT, 5.30% 2006 1,000 1,036 City of Oconto Falls, Community Dev. Auth., Dev. Rev. Bonds (Oconto Falls Tissue, Inc. Project), Series 1997, AMT: 7.75% 2022 8,600 6,927 8.125% 2022 /1/ 970 805 681,472 Short-Term Securities - 6.12% Gulf Coast Waste Disposal Auth., Texas, Environmental Facs. 3,200 3,200 Rev. Bonds (ExxonMobil Project), Series 2001B, AMT, 1.50% 2025 /3/ City of Houston, Texas, Tax and Rev. Anticipation Notes, 3,500 3,529 Series 2001, 3.50% 6/28/2002 State of Kentucky, Asset/Liability Commission, General Fund 5,000 5,051 Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 6/26/2002 Lincoln County, Wyoming, Pollution Control Rev. Bonds 2,200 2,200 (Exxon Project), Series 1984C, 1.41% 2014 /3/ County of Los Angeles, California, 2001-2002 Tax and Rev. 1,500 1,514 Anticipation Notes, Series A, 3.75% 6/28/2002 Lower Neches Valley Auth., Texas, Industrial Dev. Corp., 3,700 3,700 Exempt Facs. Ref. Rev. Bonds (ExxonMobil Project), Series 2001, Subseries 2001A, 1.40% 2031 /3/ Massachusetts Health and Educational Facs. Auth., Rev. Bonds 2,000 2,000 (Harvard University Issue), Series L, 1.25% 2024 /3/ State of New Mexico, 2001-2002 Tax and Rev. Anticipation 3,000 3,032 Notes, Series 2001, 4.00% 6/28/2002 North Carolina Medical Care Commission, Variable Rate 2,500 2,500 Hospital Rev. Bonds (Pooled Fncg. Project), Series 1996A, 1.50% 2016 /3/ Sublette County, Wyoming: Adjustable Tender Pollution Control Rev. Bonds (Exxon 2,600 2,600 Project), Series 1987B, AMT, 1.50% 2017 /3/ Pollution Control Rev. Bonds (Exxon Project), 1987 Series A, 1,100 1,100 AMT, 1.50% 2017 /3/ State of Texas, Tax and Rev. Anticipation Notes, Series 9,800 9,931 2001A, 3.75% 8/29/2002 Uinta County, Wyoming Pollution Control Ref. Rev. Bonds 1,600 1,600 (Chevron U.S.A. Inc Project), Series 1992, 1.50% 2022 /3/ City of Valdez, Alaska, Marine Terminal Rev. Ref. Bonds 2,130 2,130 (Exxon Pipeline Co. Project), 1993 Series A, 1.40% 2033 /3/ State of Wyoming, General Fund Tax and Rev. Anticipation 1,000 1,008 Notes, Series 2001A, 3.50% 6/27/2002 45,095 TOTAL INVESTMENT SECURITIES (cost: $730,467,000) 726,567 Excess of cash and receivables over payables 10,444 NET ASSETS $737,011 /1/ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. /2/ Company not making interest payments; bankruptcy proceedings pending. /3/ Coupon rate may change periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements Key to abbreviations Agcy. - Agency AMT - Alternative Minimum Tax Auth. - Authority Cert. of Part. - Certificates of Participation Dev. - Development Dist. - District Econ. - Economic Fac. - Facility Facs. - Facilities Fin. - Finance Fncg. - Financing G.O. - General Obligation Preref. - Prerefunded Redev. - Redevelopment Ref. - Refunding Rev. - Revenue
American High-Income Municipal Bond Fund Financial statements Statement of assets and liabilities Unaudited at January 31, 2002 (dollars in thousands) Assets: Investment securities at market (cost: $730,467) $726,567 Cash 1 Receivables for - Sales of fund's shares $ 2,418 Interest 11,492 13,910 740,478 Liabilities: Payables for - Purchases of investments 1,011 Repurchases of fund's shares 524 Dividends on fund's shares 1,317 Management services 250 Other expenses 365 3,467 Net assets at January 31, 2002 $737,011 Total authorized capital stock - 200,000,000 shares, $.001 par value Class A shares: Net assets $698,263 Shares outstanding 46,276,200 Net asset value per share $15.09 Class B shares: Net assets $19,847 Shares outstanding 1,315,380 Net asset value per share $15.09 Class C shares: Net assets $12,686 Shares outstanding 840,730 Net asset value per share $15.09 Class F shares: Net assets $6,215 Shares outstanding 411,900 Net asset value per share $15.09 Statement of operations Unaudited for the six months ended January 31, 2002 (dollars in thousands) Investment income: Income: Interest $21,987 Expenses: Management services fee $1,454 Distribution expenses - Class A 1,027 Distribution expenses - Class B 79 Distribution expenses - Class C 42 Distribution expenses - Class F 4 Transfer agent fee - Class A 94 Transfer agent fee - Class B 3 Administrative services fees - Class C 7 Administrative services fees - Class F 4 Reports to shareholders 31 Registration statement and prospectus 66 Postage, stationery and supplies 16 Directors' fees 9 Auditing and legal fees 41 Custodian fee 7 Taxes other than federal income tax 1 Other expenses 4 2,889 Net investment income 19,098 Realized loss and unrealized depreciation on investments: Net realized loss (460) Net unrealized depreciation on investments (11,716) Net realized loss and unrealized depreciation on investments (12,176) Net increase in net assets resulting from operations $6,922 Statement of changes in net assets (dollars in thousands) Six months Year ended ended January 31, July 31, 2002 /1/ 2001 Operations: Net investment income $19,098 $32,944 Net realized loss on investments (460) (36) Net unrealized (depreciation) appreciation on investments (11,716) 19,734 Net increase in net assets resulting from operations 6,922 52,642 Dividends paid to shareholders: Dividends from net investment income: Class A (18,686) (32,744) Class B (371) (270) Class C (189) (33) Class F (91) (15) Total dividends (19,337) (33,062) Capital share transactions: Proceeds from shares sold 188,522 215,865 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments 11,837 20,280 Cost of shares repurchased (117,896) (140,379) Net increase in net assets resulting from capital share transactions 82,463 95,766 Total increase in net assets 70,048 115,346 Net assets: Beginning of period 666,963 551,617 End of period (including undistributed net investment income: $368 and $707, respectively) $737,011 $666,963 /1/ Unaudited. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - American High-Income Municipal Bond Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks a high level of current income exempt from regular federal income taxes through a diversified, carefully researched portfolio of higher yielding, lower rated, higher risk municipal bonds. The fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 3.75%. 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: 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 authority of the fund's Board of Directors. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or when-issued basis, the fund will instruct the custodian to segregate liquid assets sufficient to meet its payment obligations in these transactions. Interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security. On August 1, 2001, the fund began amortizing discount daily over the expected life of fixed-income securities to conform with a recent change in accounting principles generally accepted in the United States of America for mutual funds. Adopting this change did not impact the fund's net asset value but resulted in changes to the classification of certain amounts between interest income and realized and unrealized gain or loss in the Statement of Operations. Therefore, the undistributed net investment income amount is primarily comprised of these adjustments which were based on the fixed-income securities held by the fund on August 1, 2001. Because the fund determines its required distributions under federal income tax laws, adoption of this principle will not affect the amount of distributions paid to shareholders. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date. CLASS ALLOCATIONS - Income, expenses (other than class-specific expenses) and realized 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 and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are based on net investment income and net realized gains 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 and the net gains are realized by the fund. As of January 31, 2002, the cost of investment securities for book and federal income tax reporting purposes was $730,467,000. Net unrealized depreciation on investments aggregated $3,900,000; $22,449,000 related to appreciated securities and $26,349,000 related to depreciated securities. For the six months ended January 31, 2002, the fund realized tax basis net capital gains of $222,000. The fund had available at July 31, 2001, a net capital loss carryforward totaling $6,620,000 which may be used to offset capital gains realized during subsequent years through 2009 and thereby relieve the fund and its shareholders of any federal income tax liability with respect to the capital gains that are so offset. The fund will not make distributions from capital gains while a capital loss carryforward remains. In addition, the fund has recognized, for tax purposes, net capital losses totaling $169,000 which were realized during the period November 1, 2000 through July 31, 2001. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $1,454,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which officers and certain Directors of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on an annual rate of 0.30% of the first $60 million of daily net assets and 0.21% of such assets in excess of $60 million. The agreement also provides for monthly fees, accrued daily, of 3.00% of the fund's monthly gross investment income. For the six months ended January 31, 2002, the management services fee was equivalent to an annualized rate of 0.408% 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 Directors. The plans provide for annual expenses, based on average daily net assets, of up to 0.30% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares. All share classes may use up to 0.25% 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 - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.30% annual expense limit for Class A shares is not exceeded. For the six months ended January 31, 2002, aggregate distribution expenses were limited to $1,027,000, equivalent to an annualized rate of 0.30% of average daily net assets attributable to Class A shares. As of January 31, 2002, unreimbursed expenses which remain subject to reimbursement totaled $342,000. CLASS B SHARES - In addition to service fees of 0.25%, 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 six months ended January 31, 2002, aggregate distribution expenses were $79,000, equivalent to an annualized rate of 1.00% of average daily net assets attributable to Class B shares. CLASS C SHARES - In addition to service fees of 0.25%, the Board of Directors 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 six months ended January 31, 2002, aggregate distribution expenses were $42,000, equivalent to an annualized rate of 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 Directors has presently approved expenses under the plan of 0.25% per annum of average daily net assets attributable to Class F shares. For the six months ended January 31, 2002, aggregate distribution expenses were $4,000, equivalent to an annualized rate of 0.25% of average daily net assets attributable to Class F shares. As of January 31, 2002, aggregate distribution expenses payable to AFD for all share classes were $236,000. AFD received $282,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the six months ended January 31, 2002. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations. TRANSFER AGENT FEE - A fee of $97,000 was incurred during the six months ended January 31, 2002, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of January 31, 2002, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $16,000. 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 six months ended January 31, 2002, total fees under the agreement were $11,000. As of January 31, 2002, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $3,000. DEFERRED DIRECTORS' FEES - Since the adoption of the deferred compensation plan in 1994, Directors 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 January 31, 2002, the cumulative amount of these liabilities was $25,000. Directors' 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 DIRECTORS - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers and certain Directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No such persons received any remuneration directly from the fund. 4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $123,846,000 and $59,389,000, respectively, during the six months ended January 31, 2002. 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 six months ended January 31, 2002, the custodian fee of $7,000 includes $1,000 that was paid by these credits rather than in cash. For the six months ended January 31, 2002, the fund reclassified $18,000 from undistributed net investment income to undistributed net realized gains. The fund also reclassified $82,000 from undistributed net investment income to additional paid-in capital to reflect permanent differences between book and tax reporting. As of January 31, 2002, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of capital stock $747,757 Undistributed net investment income 368 Accumulated net realized loss (7,214) Net unrealized depreciation (3,900) Net assets $737,011
Capital share transactions in the fund were as follows: Six Months Six Months ended ended January 31, January 31, 2002 2002 Amount (000) Shares Class A Shares: Sold $ 163,364 10,703,915 Reinvestment of dividends and distributions 11,386 747,034 Repurchased (115,008) (7,549,579) Net increase in Class A 59,742 3,901,370 Class B Shares: Sold 10,050 658,625 Reinvestment of dividends and distributions 249 16,322 Repurchased (1,056) (69,287) Net increase in Class B 9,243 605,660 Class C Shares: /1/ Sold 9,166 600,573 Reinvestment of dividends and distributions 130 8,579 Repurchased (616) (40,452) Net increase in Class C 8,680 568,700 Class F Shares: /1/ Sold 5,942 389,946 Reinvestment of dividends and distributions 72 4,730 Repurchased (1,216) (79,336) Net increase in Class F 4,798 315,340 Total net increase in fund $ 82,463 5,391,070 Year ended Year ended July 31, July 31, 2001 2001 Amount (000) Shares Class A Shares: Sold $ 199,249 13,256,036 Reinvestment of dividends and distributions 20,047 1,332,347 Repurchased (138,032) (9,188,783) Net increase in Class A 81,264 5,399,600 Class B Shares: Sold 9,884 656,159 Reinvestment of dividends and distributions 199 13,211 Repurchased (1,171) (77,890) Net increase in Class B 8,912 591,480 Class C Shares: /1/ Sold 4,325 285,173 Reinvestment of dividends and distributions 22 1,461 Repurchased (221) (14,604) Net increase in Class C 4,126 272,030 Class F Shares: /1/ Sold 2,407 159,012 Reinvestment of dividends and distributions 12 807 Repurchased (955) (63,259) Net increase in Class F 1,464 96,560 Total net increase in fund $ 95,766 6,359,670 /1/ Class C and Class F shares were not offered before March 15, 2001.
Per-share data and ratios Class A Class A Class A Six months ended Year ended Year ended January 31, July 31, July 31, 2002 /1/,/2/ 2001 2000 Net asset value, beginning of period $15.35 $14.87 $15.49 Income from investment operations: Net investment income .41 /3/ .83 /3/ .82 /3/ Net (losses) gains on securities (.25)/3/ .48 /3/ (.58)/3/ (both realized and unrealized) Total from investment operations .16 1.31 .24 Less distributions: Dividends (from net investment income) (.42) (.83) (.83) Distributions (from capital gains) - - (.03) Total distributions (.42) (.83) (.86) Net asset value, end of period $15.09 $15.35 $14.87 Total return /4/ 1.05% 9.14% 1.61% Ratios/supplemental data: Net assets, end of period (in millions) $698 $650 $550 Ratio of expenses to average net assets .78%/5/ .80% .80% Ratio of net income to average net assets 5.39%/5/ 5.50% 5.53% Class A Class A Class A Year ended Year ended Year ended July 31, July 31, July 31, 1999 1998 1997 Net asset value, beginning of period $16.12 $15.90 $15.23 Income from investment operations: Net investment income .81 .84 .87 Net (losses) gains on securities (.54) .26 .80 (both realized and unrealized) Total from investment operations .27 1.10 1.67 Less distributions: Dividends (from net investment income) (.82) (.84) (.86) Distributions (from capital gains) (.08) (.04) (.14) Total distributions (.90) (.88) (1.00) Net asset value, end of period $15.49 $16.12 $15.90 Total return /4/ 1.63% 7.05% 11.36% Ratios/supplemental data: Net assets, end of period (in millions) $564 $464 $316 Ratio of expenses to average net assets .78% .79% .87% Ratio of net income to average net assets 5.09% 5.19% 5.51% Class B Class B Class B Six months Year ended ended March 15 to January 31, July 31, July 31, 2002 /1/,/2/ 2001 2000 /1/ Net asset value, beginning of period $15.35 $14.87 $14.79 Income from investment operations: /3/ Net investment income .36 .71 .23 Net (losses) gains on securities (.25) .50 .14 (both realized and unrealized) Total from investment operations .11 1.21 .37 Less distributions: Dividends (from net investment income) (.37) (.73) (.29) Net asset value, end of period $15.09 $15.35 $14.87 Total return /4/ .70% 8.45% 3.16% Ratios/supplemental data: Net assets, end of period (in millions) $20 $11 $2 Ratio of expenses to average net assets 1.49%/5/ 1.48% .55% Ratio of net income to average net assets 4.64%/5/ 4.72% 1.77% Class C Class C Six months ended March 15 to January 31, July 31, 2002 /1/,/2/ 2001 /1/ Net asset value, beginning of period $15.35 $15.11 Income from investment operations: /3/ Net investment income .35 .25 Net (losses) gains on securities (.25) .25 (both realized and unrealized) Total from investment operations .10 .50 Less distributions: Dividends (from net investment income) (.36) (.26) Net asset value, end of period $15.09 $15.35 Total return /4/ .62% 3.34% Ratios/supplemental data: Net assets, end of period (in millions) $13 $4 Ratio of expenses to average net assets 1.63%/5/ .59% Ratio of net income to average net assets 4.54%/5/ 1.75% Class F Class F Six months ended March 19 to January 31, July 31, 2002 /1/,/2/ 2001 /1/ Net asset value, beginning of period $15.35 $15.12 Income from investment operations: /3/ Net investment income .40 .26 Net (losses) gains on securities (.25) .25 (both realized and unrealized) Total from investment operations .15 .51 Less distributions: Dividends (from net investment income) (.41) (.28) Net asset value, end of period $15.09 $15.35 Total return /4/ .98% 3.43% Ratios/supplemental data: Net assets, end of period (in millions) $6 $1 Ratio of expenses to average net assets .93%/5/ .35% Ratio of net income to average net assets 5.30%/5/ 1.88% Supplemental data - all classes Six months Year Year ended ended ended January 31, July 31, July 31, 2002 /1/,/2/ 2001 2000 Portfolio turnover rate 9.02% 18.23% 33.20% Supplemental data - all classes Year Year Year ended ended ended July 31, July 31, July 31, 1999 1998 1997 Portfolio turnover rate 16.67% 16.38% 15.31% /1/ Based on operations for the period shown and, accordingly, not representative of a full year (unless otherwise noted). /2/ Unaudited. /3/ Based on average shares outstanding. /4/ Total returns exclude all sales charges, including contingent deferred sales charges. /5/ Annualized.
Limited Term Tax-Exempt Bond Fund of America Investment Portfolio January 31, 2002 Portfolio composition [pie chart and table] Percent of Net Assets Texas 14.33% Michigan 7.58 Illinois 6.04 California 6.02 Indiana 5.44 Washington 5.37 New York 4.78 North Carolina 3.92 District of Columbia 3.52 Louisiana 3.25 Other states 34.49 Cash & equivalents 5.26
Limited Term Tax-Exempt Bond Fund of America Unaudited Investment Portfolio, January 31, 2002 Principal Market Amount Value Fixed-Income Securities - 94.74% (000) (000) Alabama - 0.24% Industrial Dev. Board of the City of Butler, Pollution $1,000 $1,004 Control Ref. Rev. Bonds (James River Project), Series 1993, 5.50% 2005 Alaska - 1.71% Industrial Dev. and Export Auth. Power Rev. Bonds (Snettisham Hydroelectric Project), First Series, AMT, AMBAC Insured: 5.25% 2005 930 979 5.25% 2005 (Escrowed to Maturity) 70 74 Northern Tobacco Securitization Corp., Tobacco Settlement Asset-Backed Bonds, Series 2000: 5.60% 2009 1,000 1,052 5.60% 2010 1,000 1,055 4.75% 2015 1,750 1,689 Student Loan Corp., Student Loan Rev. Bonds, 2,140 2,265 2000 Series A, AMT, AMBAC Insured, 5.65% 2010 Arizona - 0.71% Industrial Dev. Auth. of the County of Maricopa, Health 1,950 1,935 Fac. Rev. Bonds (Catholic Healthcare West Project), 1998 Series A, 4.30% 2005 City of Phoenix, Senior Lien Street and Highway User 1,000 1,035 Rev. Ref. Bonds, Series 1993, 5.00% 2008 California - 6.02% Pollution Control Fncg. Auth., Solid Waste Disposal Ref. 4,300 4,318 Rev. Bonds (USA Waste Services, Inc. Project), Series 1998A, AMT, 5.10% 2018 (Put 2008) Statewide Communities Dev. Auth.: Apartment Dev. Rev. Ref. Bonds (Irvine Apartment 4,000 4,082 Communities, LP),Series 1998A-1, AMT, 5.05% 2025 (Put 2008) Cert. of Part. (Catholic Healthcare West Project), 915 962 1999 Series A, 6.00% 2009 Veterans G.O. Bonds, Series BL, AMT, 4.95% 2007 2,560 2,651 Association of Bay Area Governments, Fin. Auth. For Nonprofit Corps.: Rev. Bonds (San Diego Hospital Association), Series 2001A, 1,025 1,059 5.25% 2006 Rev. Ref. Cert. of Part.: American Baptist Homes of the West Facs. Project: Series 1997A, 5.25% 2007 655 638 Series 1997B, 5.50% 2007 915 893 Episcopal Homes Foundation, Series 1998: 5.00% 2007 1,405 1,448 5.00% 2008 2,455 2,521 Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of 3,500 3,811 the Pacific Project), 1995 Series A, 5.75% 2005 (Escrowed to Maturity) County of Los Angeles, Capital Asset Leasing Corp., Cert. 695 718 of Part. (Marina del Rey), 1993 Series A, 6.25% 2003 City of Torrance, Hospital Rev. Bonds (Torrance Memorial Medical Center), Series 2001A: 4.70% 2009 1,010 1,016 4.80% 2010 940 943 Colorado - 1.46% Health Facs. Auth., Rev. Bonds (Catholic Health Initiatives), 2,000 2,098 Series 2001, 5.375% 2010 Housing and Fin. Auth., Single Family Program Senior Bonds, 295 302 1995 Series C-2, 5.625% 2009 EagleBend Affordable Housing Corp., Multi-family Housing 2,585 2,582 Project Rev. Ref. Bonds, Series 1997A, 5.75% 2007 University of Colorado Hospital Auth., Hospital Ref. Rev. 1,000 1,088 Bonds, Series 1997A, AMBAC Insured, 5.50% 2007 Connecticut - 1.10% Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, 1996 Series A (Escrowed to Maturity): /1/ 6.25% 2002 500 514 6.375% 2004 995 1,095 Mohegan Tribe of Indians, Gaming Auth. Priority Distribution 3,000 2,959 Payment, Public Improvement Bonds, Series 2001, 5.375% 2011 Delaware - 0.49% Econ. Dev. Auth., Pollution Control Ref. Rev. Bonds 2,000 2,042 (Delmarva Power & Light Co. Project), Series 2001C, AMBAC Insured, 4.90% 2026 (Put 2011) District of Columbia - 3.52% G.O. Ref. Bonds: Series 1993B-2, FSA Insured, 5.50% 2010 2,500 2,711 Series 1993D, FGIC Insured: 5.10% 2002 (Escrowed to Maturity) 932 959 5.10% 2002 68 70 Series 1999, FSA Insured: 5.50% 2009 695 754 5.50% 2009 (Escrowed to Maturity) 195 214 Fixed Rate Rev. Bonds (National Academy of Sciences Project), 1,065 1,122 Series 1999A, AMBAC Insured, 5.00% 2007 Hospital Rev. Ref. Bonds (Medlantic Healthcare Group, Inc. Issue), Series 1997A, MBIA Insured (Escrowed to Maturity): 6.00% 2006 1,000 1,112 6.00% 2007 1,250 1,396 MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): Series 2001A, 6.40% 2031 (Put 2004) 1,000 1,025 Series 2001B, 6.625% 2031 (Put 2005) 2,000 2,083 Series 2001D, 6.875% 2031 (Put 2007) 3,000 3,203 Florida - 2.19% Dade County, Resource Recovery Fac. Ref. Rev. Bonds, Series 3,500 3,830 1996, AMT, AMBAC Insured, 6.00% 2006 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. 1,500 1,526 Bonds (Shell Point/Alliance Obligated Group, Shell Point Village Project), Series 1999A, 5.25% 2005 Lee County, Solid Waste System Ref. Rev. Bonds, Series 2001, AMT, MBIA Insured: 5.25% 2009 1,500 1,579 5.25% 2010 2,000 2,097 Meadow Pointe II, Community Dev. Dist. (Pasco County), 110 110 Capital Improvement Rev. Bonds, Series 1998A, 5.25% 2003 Hawaii - 0.51% Cert. of Part. (Kapolei State Office Building), 1998 1,000 1,058 Series A, AMBAC Insured, 5.00% 2005 Housing and Community Dev. Corp., Single Family Mortgage 1,000 1,071 Purchase Rev. Bonds, Series 2000A, AMT, 5.90% 2008 Idaho - 0.89% Housing and Fin. Association, AMT: Single Family Mortgage Bonds: 1998 Series C-2, 5.25% 2011 420 430 1998 Series E-3, 5.125% 2011 585 596 1998 Series H, 4.65% 2012 1,115 1,141 1998 Series I-2, 4.70% 2012 555 566 Single Family Programs Disclosure Report, 1978 Series A, 1,000 988 5.40% 2021 Illinois - 6.04% G.O. Bonds, Series of April 1998, FSA Insured, 5.50% 2009 4,000 4,332 Health Facs. Auth., Rev. Bonds: Advocate Health Care Network: Series 1998A: 5.00% 2006 (Escrowed to Maturity) 980 1,049 5.00% 2006 750 782 Series 2000: 5.25% 2007 1,000 1,054 5.30% 2008 2,000 2,110 Centegra Health System, Series 1998, 5.50% 2007 2,480 2,583 Highland Park Hospital Project, Series 1997A, FGIC Insured, 1,490 1,618 5.50% 2005 OSF Healthcare System, Series 1999: 5.25% 2005 855 894 5.375% 2006 900 944 5.50% 2008 1,000 1,056 Victory Health Services, Series 1997A, 5.25% 2004 1,755 1,823 Health Facs. Auth., Rev. Ref. Bonds: Advocate Health Care Network, Series 1997A: 5.50% 2004 1,250 1,324 5.10% 2005 1,815 1,904 Northwestern Medical Faculty Foundation, Inc., Series 1998, 1,810 1,942 MBIA Insured, 5.25% 2006 Housing Dev. Auth., Multi-family Housing Bonds, 1992 1,165 1,188 Series A, 6.55% 2003 City of Chicago, Chicago O'Hare International Airport, 1,000 557 Special Facs. Rev. Ref. Bonds (United Air Lines, Inc. Project), Series 1999B, AMT, 5.20% 2011 Indiana - 5.44% Health Fac. Fncg. Auth., Hospital Rev. Bonds: Charity Obligated Group: Series 1997D, 5.00% 2026 (Preref. 2007) 1,500 1,566 Series 1999D, 5.50% 2008 1,000 1,078 Clarian Health Partners, Inc., Series 1996A, MBIA Insured, 1,000 1,062 5.25% 2008 The Methodist Hospitals, Inc., Series 2001: 5.25% 2009 1,000 1,042 5.25% 2010 1,445 1,498 5.25% 2011 1,525 1,573 Housing Fin. Auth., Multi-family Housing Rev. Bonds 1,400 1,420 (Indiana Affordable Housing, Inc.), Series 1999A, 5.40% 2009 State Revolving Fund Program Bonds, Series 2001A: 5.25% 2009 1,825 1,953 5.50% 2011 1,500 1,636 Transportation Fin. Auth., Toll Road Lease Rev. Ref. Bonds, 4,970 5,234 Series 1996, AMBAC Insured 5.25% 2010 Boone County Hospital Association, Lease Rev. Bonds, 1,200 1,251 Series 2001, FGIC Insured, 5.00% 2009 The Trustees of Purdue University, Cert. of Part., Series 2001A: 5.00% 2009 1,000 1,055 5.00% 2010 1,135 1,193 Hospital Auth. of St. Joseph County, Health System Bonds 1,010 1,092 (Memorial Health System), Series 1998A, MBIA Insured, 5.50% 2008 Iowa - 1.99% Fin. Auth., Hospital Facs. Rev. Bonds: Iowa Health System, Series 1998A, MBIA Insured, 5.25% 2007 1,895 2,023 Mercy Medical Center Project, Series 1999, FSA Insured, 1,000 1,067 5.30% 2009 Tobacco Settlement Auth., Asset-Backed Bonds, Series 2001B, 5,000 5,182 5.50% 2011 Kentucky - 1.86% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), 3,000 3,131 Series 2000A, MBIA Insured, 6.125% 2010 Hospital System Ref. and Improvement Rev. Bonds (Appalachian Regional Healthcare, Inc. Project), Series 1997: 5.20% 2004 1,000 966 5.40% 2006 1,500 1,405 5.50% 2007 465 431 City of Ashland, Pollution Control Ref. Rev. Bonds 1,750 1,820 (Ashland Inc. Project), Series 1999, 5.70% 2009 Louisiana - 3.25% Public Facs. Auth., Hospital Rev. and Ref. Bonds (Franciscan 4,500 4,857 Missionaries of Our Lady Health System Project), Series 1998A, FSA Insured, 5.50% 2006 Jefferson Parish Hospital Service Dist. No. 2, Parish of 1,000 1,058 Jefferson, Hospital Rev. Bonds, Series 1998, FSA Insured, 5.00% 2005 Plaquemines Port, Harbor and Terminal Dist., Marine Terminal Facs. Rev. Ref. Bonds (Electro-Coal Transfer Corp. Project): Series 1985A, 5.00% 2007 1,525 1,540 Series 1985C, 5.00% 2007 3,000 3,030 Series 1985D, 5.00% 2007 1,000 1,010 Parish of St. Charles, Pollution Control Rev. Ref. Bonds 2,000 2,039 (Entergy Louisiana, Inc. Project), Series 1999-C, 5.35% 2029 (Put 2003) Maine - 1.32% Educational Loan Marketing Corp., Senior Student Loan Rev. Bonds, Series 1994A-4, AMT: 5.95% 2003 1,000 1,052 6.05% 2004 1,500 1,589 Housing Auth., Mortgage Purchase Bonds: 1994 Series E, 6.30% 2002 455 459 2001 Series E-1 (Non-AMT), 4.125% 2010 1,000 982 Student Loan Rev. Ref. Bonds, Series 1992A-1, AMT: 6.20% 2003 515 524 6.30% 2004 880 895 Maryland - 0.37% G.O. Bonds, State and Local Facs. Loan of 2000, Series F, 1,000 1,101 5.50% 2008 Community Dev. Administration, Dept. of Housing and Community 450 454 Dev., Single Family Program Bonds, 1994 First Series, 5.70% 2017 Massachusetts - 1.93% Educational Fncg. Auth., Education Loan Rev. and Ref. Bonds, 2,335 2,514 Issue G, Series 2000A, AMT, MBIA Insured, 5.55% 2008 Industrial Fin. Agcy. Resource Recovery Rev. Ref. Bonds 1,550 1,349 (Ogden Haverhill Project), Series 1998A, AMT, 5.15% 2007 Municipal Wholesale Electric Co., Power Supply Project Rev. 2,000 2,089 Bonds, Project No.6 Issue, Series A, 5.00% 2011 Port Auth. Special Facs. Rev. Bonds (United Air Lines, Inc. 3,000 2,076 Project), Series 1999A, AMT, 5.75% 2029 (Put 2007) Michigan - 7.58% Building Auth., 2001 Rev. Bonds, Series II (Facs. Program), 2,000 2,147 5.25% 2011 Hospital Fin. Auth.: Hospital Rev. Bonds (Henry Ford Health System), Series 1,000 1,063 1999A, 5.50% 2008 Hospital Rev. and Ref. Bonds: The Detroit Medical Center Obligated Group, Series 1993B, 1,000 1,053 AMBAC Insured, 5.00% 2006 MidMichigan Obligated Group, Series 1997A, FSA Insured, 2,775 2,999 5.50% 2007 Sparrow Obligated Group, Series 2001, 5.25% 2009 1,000 1,034 Hospital Rev. Ref. Bonds: Hackley Hospital Obligated Group, Series 1998A, 4.90% 2007 1,140 1,133 Henry Ford Hospital, Series 1984A, AMBAC Insured, 1,250 1,410 6.00% 2011 Genesys Health System Obligated Group, Series 1995A, 1,375 1,490 7.20% 2003 (Escrowed to Maturity) Pontiac Osteopathic, Series 1994A, 5.375% 2006 3,695 3,662 Sinai Hospital of Greater Detroit, Series 1995, 6.00% 2008 1,000 1,002 Variable Rate Rev. Bonds (Ascension Health Credit Group): Series 1999B-3, 5.30% 2033 (Put 2006) 5,000 5,252 Series 1999B-4, 5.375% 2033 (Put 2007) 2,000 2,098 Housing Dev. Auth., Rental Housing Rev. Bonds, 1992 1,200 1,244 Series A, AMBAC Insured, 6.40% 2005 City of Detroit, G.O. Ref. Bonds (Unlimited Tax): Series 1995A, 6.25% 2004 1,000 1,080 Series 1995B, 6.75% 2003 2,000 2,109 City of Flint Hospital Building Auth., Rev. Ref. Bonds 680 689 (Hurley Medical Center), Series 1998A, 5.00% 2003 Kent Hospital Fin. Auth. Rev. Bonds (Spectrum Health), 2,020 2,116 Series 2001A, 5.25% 2010 Minnesota - 0.75% Housing Fin. Agcy., Single Family Mortgage Bonds, 2000 1,475 1,501 Series H, AMT, 4.25% 2006 Minneapolis-St. Paul Metropolitan Airports Commission, 1,500 1,602 AMT, AMBAC Insured, 5.50% 2008 Nevada - 0.97% Highway Improvement Rev. (Motor Vehicle Fuel Tax) Bonds, 2,000 2,126 Series December 1, 2000A, 5.00% 2009 Housing Division, Single Family Mortgage Bonds, 795 820 1998 Series B-1, 5.20% 2011 City of Henderson, Health Fac. Rev. Bonds (Catholic 1,050 1,112 Healthcare West), 1998 Series A, 6.20% 2009 New Jersey - 0.64% Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998A: 5.00% 2006 1,275 1,284 5.05% 2007 1,375 1,381 New Mexico - 1.46% Supplemental Severance Tax Bonds, Series 2002A: 5.00% 2009 3,500 3,666 5.00% 2010 2,000 2,068 Educational Assistance Foundation, Student Loan Rev. Bonds, 340 353 Subordinate 1992 Series One-B, AMT, 6.85% 2005 New York - 4.78% Dormitory Auth.: Center for Nursing & Rehabilitation, Inc., FHA-Insured 560 578 Mortgage Nursing Home Rev. Bonds, Series 1997, 4.75% 2007 Mental Health Services Facs. Improvement Rev. Bonds, Series 1997B: 6.00% 2007 995 1,098 6.00% 2007 (Escrowed to Maturity) 5 6 Secured Hospital Rev. Bonds: Saint Agnes Hospital, Series 1998A, 4.80% 2006 1,000 1,047 Wyckoff Heights Medical Center, Series 1998H, 5.125% 2008 1,000 1,060 Housing Fin. Agcy., Health Facs. Rev. Bonds (New York City), 5,450 5,995 1996 Series A Ref., 6.00% 2006 Castle Rest Residential Health Care Fac., FHA-Insured 1,090 1,112 Mortgage Rev. Bonds, Series 1997A, 4.875% 2007 City of New York, G.O. Bonds: Fiscal 1997 Series L, MBIA Insured, 5.625% 2007 1,000 1,084 Fiscal 2001 Series B, MBIA Insured: 4.80% 2008 2,000 2,074 4.90% 2009 1,000 1,032 5.50% 2010 1,000 1,067 Fiscal 2001 Series D, 5.50% 2009 1,000 1,070 Fiscal 2001 Series F, 5.00% 2010 1,000 1,032 Cert. of Part., City University of New York (John Jay 1,500 1,664 College of Criminal Justice Project Ref.), 6.00% 2006 North Carolina - 3.92% Eastern Municipal Power Agcy., Power System Rev. Bonds: Ref. Series 1993B: 6.00% 2005 1,330 1,381 6.125% 2009 1,750 1,871 Ref. Series 1993C, 5.50% 2007 3,550 3,703 Municipal Power Agcy. Number 1, Catawba Electric Rev. Bonds, Series 1992: 5.90% 2003 1,000 1,031 6.00% 2004 3,525 3,678 6.00% 2005 1,250 1,298 MBIA Insured, 6.00% 2010 3,000 3,349 Ohio - 0.52% The Student Loan Funding Corp., Cincinnati, Student Loan 1,000 1,004 Rev. Bonds, Series 1988B-3, AMT, AMBAC Insured, 5.125% 2005 County of Knox, Hospital Facs. Ref. Rev. Bonds (Knox 1,155 1,182 Community Hospital), Series 1998, Asset Guaranty Insured, 4.70% 2008 Oklahoma - 0.20% Trustees of the Tulsa Municipal Airport Trust, Rev. Bonds, 1,000 853 Ref. Series 2001B, AMT, 5.65% 2035 (Put 2008) Oregon - 0.51% Salem-Keizer School Dist. No. 24J, Marion and Polk Counties, 2,000 2,132 G.O. Bonds, Series 1999, 5.25% 2010 Pennsylvania - 2.42% Hospitals and Higher Education Facs. Auth. of Philadelphia, Health System Rev. Bonds (Jefferson Health System), Series 1997A: 5.50% 2006 2,045 2,162 5.50% 2008 1,000 1,053 Philadelphia Auth. for Industrial Dev., Airport Rev. Bonds 3,410 3,580 (Philadelphia Airport System Project), Series 1998A, AMT, FGIC Insured, 5.25% 2009 Scranton-Lackawanna Health and Welfare Auth. Hospital Rev. 1,250 1,333 Ref. Bonds (The Community Medical Center Project), MBIA Insured, 5.25% 2005 Westmoreland County Industrial Dev. Auth., Variable Rate 2,000 1,970 Rev. Bonds (National Waste and Energy Corp., Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 (Put 2009) Puerto Rico - 1.21% Children's Trust Fund, Tobacco Settlement Asset-Backed Bonds, 4,855 5,036 Series 2000, 5.75% 2020 Rhode Island - 0.32% Student Loan Auth., Student Loan Rev. Ref. Bonds, Series 1,300 1,329 1992B, AMT, 6.90% 2003 South Carolina - 1.25% Housing Fin. and Dev. Auth. Mortgage Rev. Bonds, Series 1,450 1,563 2000 A-2, AMT, FSA Insured, 5.875% 2009 Georgetown County, Pollution Control Rev. Ref. Bonds 2,500 2,566 (International Paper Company Project), 1992 Series A, 6.25% 2005 Piedmont Municipal Power Agcy., Electric Rev. Bonds, 1,000 1,076 1993 Ref. Series, MBIA Insured, 5.50% 2011 South Dakota - 0.90% Housing Dev. Auth., Homeownership Mortgage Bonds: 1996 Series A: 5.20% 2003 1,155 1,166 5.50% 2010 235 238 2000 Series H, 5.00% 2009 1,300 1,345 2001 Series C, 4.55% 2010 1,000 1,000 Tennessee - 0.98% Memphis-Shelby County Airport Auth., Special Facs. Rev. 3,000 3,019 Ref. Bonds (Federal Express Corp.), Series 2001, 5.00% 2009 Metropolitan Government of Nashville and Davidson County, 1,000 1,059 G.O. Multi-Purpose Improvement Bonds, Series 1997A, 5.125% 2010 Texas - 14.33% College Student Loan Bonds, Series 2000, AMT, 5.50% 2010 1,000 1,064 City of Austin, Public Improvement Bonds: Series 1999, 5.75% 2011 1,500 1,636 Series 2001, 5.00% 2010 2,000 2,109 Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998: 5.00% 2005 1,330 1,369 5.00% 2007 1,470 1,500 Bexar County, Tax-Exempt Venue Project Rev. Bonds, 2,000 2,171 Series 2000, MBIA Insured, 5.50% 2009 Brazos River Auth., AMT: Collateralized Pollution Control Rev. Ref. Bonds (Texas Utilities Electric Co. Project): Series 1994B, 5.40% 2029 (Put 2006) 1,000 1,011 Series 1995B, 5.05% 2030 (Put 2006) 3,000 3,006 Pollution Control Rev. Ref. Bonds (TXU Electric Company 1,000 995 Project), Series 2001C, 5.75% 2036 (Put 2011) Cypress-Fairbanks Independent School Dist., Unlimited Tax 2,000 2,133 Ref. and Schoolhouse Bonds, Series 2001, 5.25% 2011 City of Dallas (Dallas, Denton, Collin and Rockwall 1,800 1,869 Counties), Waterworks and Sewer System Rev. Ref. Bonds, Series 1998, FSA Insured, 5.00% 2011 City of Fort Worth (Tarrant and Denton Counties), General 1,000 1,052 Purpose Ref. Bonds, Series 2002, 5.00% 2010 Fort Worth Independent School Dist. (Tarrant County), 3,560 3,730 School Building Unlimited Tax Bonds, Series 2001A, 5.00% 2011 Fort Worth International Airport Fac. Improvement Corp., 2,000 1,793 American Airlines, Inc., Rev. Ref. Bonds, Series 2000C, AMT, American Airlines Insured, 6.15% 2029 (Put 2007) Harris County Health Facs. Dev. Corp.: Hospital Rev. Bonds: Memorial Hermann Hospital System Project, Series 1998, 1,000 1,061 FSA Insured, 5.25% 2008 Memorial Hospital System Project, Series 1997A, MBIA Insured: 6.00% 2009 3,215 3,544 6.00% 2010 1,500 1,654 Hospital Rev. Ref. Bonds, Children's Hospital Project, 1,000 1,090 Series 1995, MBIA Insured, 6.00% 2004 (Escrowed to Maturity) Rev. Bonds (St. Luke's Episcopal Hospital), Series 2001A, 1,000 1,055 5.50% 2011 City of Houston, Airport System, Subordinate Lien Rev. Bonds, 2,500 2,608 Series 1998B, AMT, FGIC Insured, 5.25% 2009 Jefferson County, Health Facs. Dev. Corp., Baptist Hospitals 1,000 998 of Southeast Texas, FHA-Insured Mortgage Rev. Bonds, Series 2001, AMBAC Insured, 4.50% 2010 Plano Independent School Dist. (Collin County, Texas), 1,000 1,048 Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.00% 2011 Sabine River Auth., Pollution Control Rev. Ref. Bonds 2,000 1,984 (TXU Electric Company Project), Series 2001C, 5.50% 2022 (Put 2011) City of San Antonio: General Improvement and Ref. Bonds, Series 2001, 5.00% 2010 2,000 2,100 Tax-Exempt Obligations, 5.00% 2009 2,000 2,093 Electric and Gas Systems Rev. Ref. Bonds: Series 1997, 5.30% 2011 3,500 3,667 Series 1998B, 5.125% 2009 2,455 2,597 San Antonio Independent School Dist., Unlimited Tax School 1,000 992 Building Bonds, Series 2001A, 4.25% 2011 Socorro Independent School Dist. (El Paso County), Unlimited 1,255 1,326 Tax School Building Ref. Bonds, Series 2001, 5.00% 2009 Tarrant County, Health Facs. Dev. Corp., Health Resources 1,000 1,054 Systems Rev. Bonds, Series 1997A, MBIA Insured, 5.50% 2007 Board of Regents of the Texas A&M University System, Rev. 2,000 2,105 Fncg. System Bonds, 5.10% 2010 Board of Regents of The University of Texas System, Rev. Fncg. System Bonds: Series 1996B, 5.00% 2011 2,000 2,081 Series 2001B, 5.00% 2011 1,150 1,209 Utah - 0.55% Housing Fin. Agcy. (Federally Insured or Guaranteed Mortgage Loans): Single Family Mortgage Bonds, AMT: 1998 Issue D-2, 5.25% 2012 285 291 1998 Issue E-1, 5.25% 2012 305 312 1998 Issue F-2, 4.25% 2008 1,260 1,267 Single Family Mortgage Purchase Ref. Bonds, Series 1996, 395 417 5.45% 2004 Vermont - 0.63% Educational and Health Buildings Fncg. Agcy., Hospital Rev. 2,500 2,619 Bonds (Medical Center Hospital of Vermont Project), Series 1993, FGIC Insured, 5.75% 2007 Virginia - 1.05% Housing Dev. Auth., AMT: Commonwealth Mortgage Bonds, 2000 Series A-1, 5.55% 2008 1,175 1,257 Rental Housing Bonds, 2000 Series D, 5.50% 2008 1,070 1,143 Industrial Dev. Auth. of the City of Norfolk, Hospital Rev. 1,000 1,061 Bonds (Daughters of Charity National Health System DePaul Medical Center), Series 1992A, 6.50% 2007 (Escrowed to Maturity) Pocahontas Parkway Association, Route 895 Connector Toll 1,000 905 Road Rev. Bonds, Senior Current Interest Bonds, Series 1998A, 5.25% 2007 Virgin Islands - 1.18% Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund 4,765 4,929 Loan Notes), Series 1998A, 5.20% 2010 Washington - 5.37% Various Purpose G.O. Bonds, Series 2000B, 6.00% 2010 1,130 1,261 Health Care Facs. Auth., Weekly Rate Demand Rev. Bonds 1,000 1,100 (Virginia Mason Medical Center), 1997 Series A, MBIA Insured, 6.00% 2006 Catholic Health Initiatives, Series 1997A, MBIA Insured, 1,000 1,043 5.10% 2010 Public Power Supply System, Nuclear Project No. 2 Ref. Rev. Bonds: Series 1997B, 5.50% 2006 1,000 1,077 Series 1998A, 5.00% 2005 1,000 1,054 King County, Limited Tax G.O. Bonds: 1991 Series A, 5.00% 2009 2,500 2,603 Baseball Stadium, 1997 Series D, 5.60% 2009 3,710 4,039 Port of Seattle, Rev. Bonds, Series 2001B, FGIC Insured, AMT: 5.50% 2009 1,605 1,712 5.50% 2010 3,000 3,193 Snohomish County, Limited Tax G.O. Bonds, 2001, 5.00% 2010 5,015 5,284 Wisconsin - 2.18% Health and Educational Facs. Auth.: Rev. Bonds: Froedtert & Community Health Obligated Group, 1,935 2,032 Series 2001, 5.65% 2009 The Monroe Clinic, Inc., Series 1999, 4.60% 2008 1,010 1,004 Var. Rate Hospital Rev. Bonds (Charity Obligated Group, 3,395 3,621 Daughters of Charity National Health System), Series 1997D, 4.90% 2015 (Preref. 2005/Put 2005) City of Milwaukee, G.O. Corporate Purpose Bonds, 2,200 2,403 Series R, 5.50% 2010 394,646 Short-Term Securities - 4.03% Gulf Coast Waste Disposal Auth., Texas, Pollution Control 1,100 1,100 Rev. Ref. Bonds (Amoco Oil Company Project), Series 1992, 1.40% 2017 /2/ City of Houston, Texas, Tax and Rev. Anticipation Notes, 1,500 1,513 Series 2001, 3.50% 6/28/2002 State of Kentucky, Asset/Liability Commission, General 1,000 1,010 Fund Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 6/26/2002 State of Missouri, Health and Educational Facs. Auth., 500 500 Health Facs. Adjustable Demand Rev. Bonds (Barnes Hospital Project), Series 1985B, 1.30% 2015 /2/ State of New Mexico, 01-02 Tax and Rev. Anticipation Notes, 2,000 2,021 Series 2001, 4.00% 6/28/2002 City of New York, G.O. Bonds, Fiscal 1994 Series B, 2,500 2,500 Subseries B-2, 1.40% 2020 /2/ State of Texas, Tax and Rev. Anticipation Notes, 3,500 3,547 Series 2001A, 3.75% 8/29/2002 City of Valdez, Alaska, Marine Terminal Ref. Rev. Bonds: /2/ ExxonMobil Project, Series 2001, 1.40% 2031 1,200 1,200 Exxon Pipeline Company Project, 1993 Series A, 1.40% 2033 2,400 2,400 State of Wyoming, General Fund Tax and Rev. Anticipation 1,000 1,008 Notes, Series 2001A, 3.50% 6/27/2002 16,799 TOTAL INVESTMENT SECURITIES (cost: $405,553,000) 411,445 Excess of cash and receivables over payables 5,113 NET ASSETS $416,558 /1/ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. /2/ Coupon rate may change periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements. Agcy. - Agency AMT - Alternative Minimum Tax Auth. - Authority Cert. of Part. - Certificates of Participation Dept. - Department Dev. - Development Dist. - District Econ. - Economic Fac. - Facility Facs. - Facilities Fin. - Finance Fncg. - Financing G.O. - General Obligation Preref. - Prerefunded Ref. - Refunding Rev. - Revenue
Limited Term Tax-Exempt Bond Fund of America Financial statements Statement of assets and liabilities Unaudited at January 31, 2002 (dollars in thousands) Assets: Investment securities at market (cost: $405,553) $411,445 Receivables for - Sales of investments $1,267 Sales of fund's shares 3,836 Interest 5,397 10,500 421,945 Liabilities: Payables for - Bank overdraft 350 Purchases of investments 2,958 Repurchases of fund's shares 1,389 Dividends on fund's shares 437 Management services 106 Other expenses 147 5,387 Net assets at January 31, 2002 $416,558 Shares of beneficial interest issued and outstanding - unlimited shares authorized Class A shares: Net assets $387,194 Shares outstanding 25,817,172 Net asset value per share $15.00 Class B shares: Net assets $6,939 Shares outstanding 462,724 Net asset value per share $15.00 Class C shares: Net assets $16,089 Shares outstanding 1,072,771 Net asset value per share $15.00 Class F shares: Net assets $6,336 Shares outstanding 422,465 Net asset value per share $15.00 See Notes to Financial Statements. Statement of operations Unaudited for the six months ended January 31, 2002 (dollars in thousands) Investment income: Income: Interest $8,508 Expenses: Management services fee $587 Distribution expenses - Class A 529 Distribution expenses - Class B 22 Distribution expenses - Class C 45 Distribution expenses - Class F 4 Transfer agent fee - Class A 31 Transfer agent fee - Class B - Administrative services fees - Class C 7 Administrative services fees - Class F 3 Reports to shareholders 37 Registration statement and prospectus 74 Postage, stationery and supplies 8 Trustees' fees 10 Auditing and legal fees 41 Custodian fee 4 Other expenses 1 1,403 Net investment income 7,105 Realized gain and unrealized depreciation on investments: Net realized gain 343 Net unrealized depreciation on investments (2,912) Net realized gain and unrealized depreciation on investments (2,569) Net increase in net assets resulting from operations $4,536 See Notes to Financial Statements. Statement of changes in net assets (dollars in thousands) Six months Year ended ended January 31, July 31, 2002 /1/ 2001 Operations: Net investment income $7,105 $11,327 Net realized gain on investments 343 396 Net unrealized (depreciation) appreciation on investments (2,912) 11,802 Net increase in net assets resulting from operations 4,536 23,525 Dividends paid to shareholders: Dividends from net investment income: Class A (6,817) (11,306) Class B (69) (46) Class C (132) (17) Class F (57) (5) Total dividends (7,075) (11,374) Capital share transactions: Proceeds from shares sold 164,078 141,223 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments 4,932 8,134 Cost of shares repurchased (63,742) (106,055) Net increase in net assets resulting from capital share transactions 105,268 43,302 Total increase in net assets 102,729 55,453 Net assets: Beginning of period 313,829 258,376 End of period (including undistributed net investment income: $183 and $153, respectively) $416,558 $313,829 /1/ Unaudited. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS (unaudited) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - Limited Term Tax-Exempt Bond Fund of America (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks current income exempt from federal income taxes, consistent with preservation of capital, through investments in fixed-income securities with effective maturities between three and 10 years. The fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 3.75%. 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: 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. Some securities may be valued on the basis of effective maturity; that is the date at which the security is expected to be called or refunded by the issuer or the date at which the investor can put the security to the issuer for redemption. 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 authority of the fund's Board of Trustees. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or when-issued basis, the fund will instruct the custodian to segregate liquid assets sufficient to meet its payment obligations in these transactions. Interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security. On August 1, 2001, the fund began amortizing discount daily over the expected life of fixed-income securities to conform with a recent change in accounting principles generally accepted in the United States of America for mutual funds. Adopting this change did not impact the fund's net asset value but resulted in changes to the classification of certain amounts between interest income and realized and unrealized gain or loss in the Statement of Operations. Therefore, the undistributed net investment income amount is primarily composed of these adjustments which were based on the fixed-income securities held by the fund on August 1, 2001. Because the fund determines its required distributions under federal income tax laws, adoption of this principle will not affect the amount of distributions paid to shareholders. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date. CLASS ALLOCATIONS - Income, expenses (other than class-specific expenses) and realized 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 and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are based on net investment income and net realized gains 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 and the net gains are realized by the fund. As of January 31, 2002, the cost of investment securities for book and federal income tax reporting purposes was $405,553,000. Net unrealized appreciation on investments aggregated $5,892,000; $9,117,000 related to appreciated securities and $3,225,000 related to depreciated securities. There was no difference between book and tax realized gains on securities transactions for the six months ended January 31, 2002. The fund had available at July 31, 2001, a net capital loss carryforward totaling $2,795,000 which may be used to offset capital gains realized during subsequent years through 2009 and thereby relieve the fund and its shareholders of any federal income tax liability with respect to the capital gains that are so offset. The fund will not make distributions from capital gains while a capital loss carryforward remains. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $587,000 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 0.30% of the first $60 million of daily net assets and 0.21% of such assets in excess of $60 million. The agreement also provides for monthly fees, accrued daily, of 3.00% of the fund's monthly gross investment income. For the six months ended January 31, 2002, the management services fee was equivalent to an annualized rate of 0.318% of average daily net assets. Effective September 1, 2001, CRMC voluntarily reduced management fees to 0.30% of the first $60 million of daily net assets and 0.15% of such assets in excess of $60 million. The gross investment income portion of the fee was unchanged. The Investment Advisory and Service Agreement provides for a fee reduction to the extent that annual operating expenses exceed 0.75% of the average daily net assets of the fund. Expenses that are not subject to these limitations are interest, taxes, brokerage commissions, transaction costs and extraordinary expenses. There were no fee reductions for the six months ended January 31, 2002. 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 0.30% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares. All share classes may use up to 0.25% 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 - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.30% annual expense limit for Class A shares is not exceeded. For the six months ended January 31, 2002, aggregate distribution expenses were limited to $529,000, equivalent to an annualized rate of 0.30% of average daily net assets attributable to Class A shares. As of January 31, 2002, unreimbursed expenses which remain subject to reimbursement totaled $864,000. CLASS B SHARES - In addition to service fees of 0.25%, 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 six months ended January 31, 2002, aggregate distribution expenses were $22,000, equivalent to an annualized rate of 1.00% 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 six months ended January 31, 2002, aggregate distribution expenses were $45,000, equivalent to an annualized rate of 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 six months ended January 31, 2002, aggregate distribution expenses were $4,000, equivalent to an annualized rate of 0.25% of average daily net assets attributable to Class F shares. As of January 31, 2002, aggregate distribution expenses payable to AFD for all share classes were $105,000. AFD received $163,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the six months ended January 31, 2002. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations. TRANSFER AGENT FEE - A fee of $31,000 was incurred during the six months ended January 31, 2002, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of January 31, 2002, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $4,000. 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 six months ended January 31, 2002, total fees under the agreement were $10,000. As of January 31, 2002, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $3,000. DEFERRED TRUSTEES' FEES - Since the adoption of the deferred compensation plan in 1994, 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 January 31, 2002, the cumulative amount of these liabilities was $34,000. 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, excluding short-term securities, of $117,207,000 and $18,368,000, respectively, during the six months ended January 31, 2002. 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 six months ended January 31, 2002, the custodian fee of $4,000 includes $2,000 that was paid by these credits rather than in cash. As of January 31, 2002, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of beneficial interest $412,935 Undistributed net investment income 183 Accumulated net realized loss (2,452) Net unrealized appreciation 5,892 Net assets $416,558
Capital share transactions in the fund were as follows: Six Months Six Months Ended Ended January 31, January 31, 2002 2002 Amount (000) Shares Class A shares: Sold $ 139,173 9,211,525 Reinvestment of dividends and distributions 4,729 313,492 Repurchased (60,114) (3,990,295) Net increase in Class A 83,788 5,534,722 Class B shares: Sold 4,824 319,916 Reinvestment of dividends and distributions 56 3,709 Repurchased (396) (26,305) Net increase in Class B 4,484 297,320 Class C shares: /1/ Sold 13,105 868,666 Reinvestment of dividends and distributions 99 6,586 Repurchased (1,024) (68,404) Net increase in Class C 12,180 806,848 Class F shares: /1/ Sold 6,976 463,651 Reinvestment of dividends and distributions 48 3,181 Repurchased (2,208) (146,541) Net increase in Class F 4,816 320,291 Total net increase in fund $ 105,268 6,959,181 Year Ended Year Ended July 31, July 31, 2001 2001 Amount (000) Shares Class A shares: Sold $ 132,019 8,952,431 Reinvestment of dividends and distributions 8,078 547,212 Repurchased (104,121) (7,077,728) Net increase in Class A 35,976 2,421,915 Class B shares: Sold 3,709 251,676 Reinvestment of dividends and distributions 40 2,738 Repurchased (1,921) (130,017) Net increase in Class B 1,828 124,397 Class C shares: /1/ Sold 3,959 265,097 Reinvestment of dividends and distributions 12 829 Repurchased - (3) Net increase in Class C 3,971 265,923 Class F shares: /1/ Sold 1,536 102,759 Reinvestment of dividends and distributions 4 310 Repurchased (13) (895) Net increase in Class F 1,527 102,174 Total net increase in fund $ 43,302 2,914,409 /1/ Class C and Class F shares were not offered before March 15, 2001.
Per-share data and ratios Class A Class A Class A Six months Year Year ended ended ended January 31, July 31, July 31, 2002/1/,/2/ 2001 2000 Net asset value, beginning of period $15.08 $14.43 $14.62 Income from investment operations: Net investment income .30 /3/ .62 /3/ .73 /3/ Net (losses) gains on securities (both (.08)/3/ .65 /3/ (.30)/3/ realized and unrealized) Total from investment operations .22 1.27 .43 Less distributions: Dividends (from net investment income) (.30) (.62) (.62) Net asset value, end of period $15.00 $15.08 $14.43 Total return /4/ 1.44% 8.99% 3.09% Ratios/supplemental data: Net assets, end of period (in millions) $387 $306 $258 Ratio of expenses to average net assets .73%/5/ .75%/6/ .75%/6/ Ratio of net income to average net assets 3.88%/5/ 4.18% 5.08% Class A Class A Class A Year Year Year ended ended ended July 31, July 31, July 31, 1999 1998 1997 Net asset value, beginning of period $14.85 $14.79 $14.36 Income from investment operations: Net investment income .61 .66 .68 Net (losses) gains on securities (both (.23) .06 .43 realized and unrealized) Total from investment operations .38 .72 1.11 Less distributions: Dividends (from net investment income) (.61) (.66) (.68) Net asset value, end of period $14.62 $14.85 $14.79 Total return /4/ 2.59% 4.94% 7.96% Ratios/supplemental data: Net assets, end of period (in millions) $283 $227 $203 Ratio of expenses to average net assets .75%/6/ .75%/6/ .75%/6/ Ratio of net income to average net assets 4.12% 4.40% 4.70% Class B Class B Class B Six months Year March 15, ended ended to January 31, July 31, July 31, 2002/1/,/2/ 2001 2000 /1/ Net asset value, beginning of period $15.08 $14.43 $14.27 Income from investment operations: /3/ Net investment income .23 .48 .24 Net (losses) gains on securities (both (.08) .69 .13 realized and unrealized) Total from investment operations .15 1.17 .37 Less distributions: Dividends (from net investment income) (.23) (.52) (.21) Net asset value, end of period $15.00 $15.08 $14.43 Total return /4/ 1.01% 8.24% 2.59% Ratios/supplemental data: Net assets, end of period (in millions) $7 $2 $1 Ratio of expenses to average net assets 1.47%/5/ 1.59%/6/ .61% /6/ Ratio of net income to average net assets 3.05%/5/ 3.24% 1.84% Class C Class C Six months March 15, ended to January 31, July 31, 2002/1/,/2/ 2001 /1/ Net asset value, beginning of period $15.08 $14.92 Income from investment operations: /3/ Net investment income .22 .15 Net (losses) gains on securities (both (.08) .17 realized and unrealized) Total from investment operations .14 .32 Less distributions: Dividends (from net investment income) (.22) (.16) Net asset value, end of period $15.00 $15.08 Total return /4/ .95% 2.14% Ratios/supplemental data: Net assets, end of period (in millions) $16 $4 Ratio of expenses to average net assets 1.60%/5/ .75% Ratio of net income to average net assets 2.94%/5/ 1.05% Class F Class F Six months March 15, ended to January 31, July 31, 2002/1/,/2/ 2001 /1/ Net asset value, beginning of period $15.08 $14.92 Income from investment operations: /3/ Net investment income .27 .16 Net (losses) gains on securities (both (.08) .19 realized and unrealized) Total from investment operations .19 .35 Less distributions: Dividends (from net investment income) (.27) (.19) Net asset value, end of period $15.00 $15.08 Total return /4/ 1.28% 2.34% Ratios/supplemental data: Net assets, end of period (in millions) $7 $2 Ratio of expenses to average net assets .92% /5/ .60% Ratio of net income to average net assets 3.67%/5/ 1.18% Supplemental data - all classes Six months Year Year ended ended ended January 31, July 31, July 31, 2002/1/,/2/ 2001 2000 Portfolio turnover rate 5.28% 21.42% 34.38% Supplemental data - all classes Year Year Year ended ended ended July 31, July 31, July 31, 1999 1998 1997 Portfolio turnover rate 17.00% 34.07% 31.89% /1/ Based on operations for the period shown and, accordingly, not representative of a full year (unless otherwise noted). /2/ Unaudited. /3/ Based on average shares outstanding. /4/ Total returns exclude all sales charges, including contingent deferred sales charges. /5/ Annualized. /6/ Had CRMC not waived management services fees, the fund's expense ratio would have been 0.80%, 0.81%, 0.77%, 0.83%, and 0.83% for the fiscal years ended 2001, 2000, 1999, 1998, and 1997, respectively, for Class A and 1.60% and 0.71% for the fiscal years ended 2001 and 2000, respectively, for Class B.
The Tax-Exempt Bond Fund of America, Inc. Investment Portfolio, August 31, 2001 Principal Market Amount Value Fixed Income Securities - 93.73% (000) (000) Alabama - 0.51% Public School and College Auth., Capital Improvement 5,255 5,766 Pool Bonds, Series 2001-A, 5.625% 2015 Health Care Auth. of Lauderdale County and the 1,150 1,269 City of Florence, Coffee Health Group, Series 2000-A Bonds, MBIA Insured, 5.50% 2009 Jefferson County, Sewer Rev. Capital Improvement 2,865 2,862 Warrants, Series 1999A, FGIC Insured, 5.125% 2029 21st Century Auth., Tobacco Settlement Rev. Bonds, 1,500 1,548 Series 2000, 5.75% 2020 Alaska - 1.40% Housing Fin. Corp., Collateralized Bonds 1,815 1,868 (Veterans Mortgage Program), Series 1992A-1, 6.75% 2032 Municipality of Anchorage: 1995 G.O. Ref. General Purpose Bonds, Series B, 2,895 3,374 FGIC Insured, 6.00% 2012 Municipal Light & Power, Senior Lien Ref. Electric 5,000 6,082 Rev. Bonds, Series 1996, MBIA Insured, 6.50% 2014 North Slope Borough, G.O. Bonds, Series 1997A, 10,935 8,292 MBIA Insured, 0% 2008 Northern Tobacco Securitization Corp., Tobacco Settlement Asset-Backed Bonds, Series 2000: 5.60% 2010 1,000 1,078 5.70% 2011 4,890 5,268 5.80% 2012 4,785 5,153 5.375% 2021 500 506 Arizona - 0.39% Health Facs. Auth., Rev. Bonds (Catholic Healthcare 3,655 3,843 West), Series 1999A, 6.125% 2009 State Transportation Board, Subordinated Highway 1,850 1,939 Rev. Bonds, Series 1992B, 6.50% 2008 (Preref. 2002) Industrial Dev. Auth. of the County of Maricopa, 2,850 2,916 Health Fac. Rev. Bonds (Catholic Healthcare West Project), 1998 Series A, 5.25% 2006 California - 5.86% Educational Facs. Auth., Rev. Bonds, Stanford 3,000 3,120 University, Series N, 5.35% 2027 Housing Fin. Agcy., Single Family Mortgage Bonds, 1997 Series C-4, Class I: 5.10% 2007 1,565 1,673 5.20% 2009 1,155 1,238 Public Works Board, Lease Rev. Bonds, California 1,315 1,480 Community Colleges, 1994 Series B (Various Community College Projects), 7.00% 2007 (Preref. 2004) Statewide Communities Dev. Auth., Apartment Dev. Rev. 4,000 4,081 Ref. Bonds (Irvine Apartment Communities, LP), Series 1998A-3, 5.10% 2025 (Put 2010) City of Antioch, Public Fncg. Auth., 1998 Reassessment 1,475 1,553 Rev. Bonds, Subordinated Series B, 5.85% 2015 Association of Bay Area Governments, Fin. Auth. For Nonprofit Corps., Ref. Rev. Cert. of Part.: (American Baptist Homes of the West Facs. Project), Series 1997B: 5.50% 2007 1,210 1,183 6.20% 2027 1,545 1,408 (Episcopal Homes Foundation), Series 1998, 5.125% 2013 2,000 2,041 Bonita Canyon Public Facs. Fncg. Auth., Community Facs. 3,500 3,384 Dist. No. 98-1, Special Tax Bonds, Series 1998, 5.375% 2028 Central Valley Fncg. Auth., Cogeneration Project 1,000 1,085 Rev. Bonds (Carson Ice-Gen Project), Series 1993, 6.10% 2013 (Preref. 2003) County of El Dorado, Community Facs. Dist. No. 1992-1 985 1,027 (El Dorado Hills Dev.), Series 1999 Special Tax Bonds, 6.125% 2016 City of Folsom, Community Facs. Dist. No. 10, Special 2,000 2,185 Tax Bonds, Series 1999, 7.00% 2024 City of Fontana, Community Facs. Dist. No. 12 (Sierra 1,000 1,073 Lakes), Special Tax Bonds, Series 1999, 6.50% 2015 City of Irvine, Limited Obligation Improvement Bonds: Assessment Dist. No. 94-13 (Oak Creek), Group One, 5.50% 2022 2,000 1,989 Assessment Dist. No. 94-13 (Oak Creek), Group Two, 6.00% 2022 1,250 1,282 Assessment Dist. No. 95-12, Group Three, 5.50% 2021 2,740 2,732 Assessment Dist. No. 97-17 (Northwood), Group One, 6.00% 2023 1,500 1,547 City of Long Beach: Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), 1995 Series A: 6.10% 2010 (Preref. 2005) 4,000 4,527 6.125% 2015 (Preref. 2005) 5,000 5,664 6.125% 2023 (Preref. 2005) 12,500 14,159 MBIA Insured, 6.125% 2023 (Preref. 2005) 2,000 2,265 Bond Fin. Auth., Lease Rev. Ref. Bonds (Aquarium of 2,150 2,399 the Pacific Project), Series 2001, AMBAC Insured, 5.50% 2015 City of Los Angeles: Community Redev. Agcy., Central Business Dist. Redev. 2,000 2,008 Project, Tax Allocation Ref. Bonds, Series I, 5.00% 2001 Regional Airports Improvement Corp., Facs. Lease Ref. Rev. Bonds (L.A. Intl. Airport): Delta Air Lines, Inc., Issue of 1996, 6.35% 2025 2,500 2,561 United Air Lines, Inc., Issue of 1992, 6.875% 2012 2,000 2,053 County of Los Angeles: Capital Asset Leasing Corp., Cert. of Part. (Marina del Rey), 1993 Series A: 6.25% 2003 2,400 2,497 6.50% 2008 4,750 5,031 Los Angeles Community College Dist., G.O. Bonds, 2001 10,500 11,611 Election, Series A, 5.50% 2016 County of Orange, Aliso Viejo Special Tax Bonds of Community Facs. Dist. No. 88-1, Series A of 1992: 7.15% 2006 (Preref. 2002) 2,000 2,130 7.35% 2018 (Preref. 2002) 2,000 2,133 Pleasanton Joint Powers Fncg. Auth., Reassessment Rev. 465 465 Bonds, 1993 Series A, 5.70% 2001 City of Roseville: Highland Reserve North Community Facs. Dist. No. 1, 3,085 3,363 Special Tax Bonds, Series 1999, 6.00% 2011 North Central Roseville Community Facs. Dist. No. 1, Special Tax Ref. Bonds, Series 1999: 5.30% 2007 2,865 3,034 5.80% 2017 3,500 3,567 Woodcreek West Community Facs. Dist. No. 1, 1,465 1,591 Special Tax Bonds, Series 1999, 6.50% 2015 Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds (Procter & Gamble Project), 1995 Series: 6.00% 2003 2,200 2,299 6.375% 2010 500 541 6.375% 2010 (Preref. 2005) 500 576 County of Sacramento, Laguna Creek Ranch/Elliott 500 526 Ranch Community Facs. Dist. No. 1, Improvement Area No. 2 Special Tax Ref. Bonds (Elliott Ranch), 6.30% 2021 County of San Bernardino Housing Auth., Multifamily 1,500 1,535 Housing Rev. Ref. Bonds (Equity Residential/Redlands Lawn & Tennis Apartments), Issue 1999A, 5.20% 2029 (Put 2009) County of San Diego, Reassessment Dist. No. 97-1 995 1,031 (4-S Ranch), Limited Obligation Improvement Bonds, 6.25% 2012 San Marcos Public Facs. Auth., Ref. Rev. Bonds, 3,000 3,006 Series 1998, 5.80% 2027 San Marcos Unified School Dist., Community Facs. 3,150 3,112 Dist. No. 5 (Rancho Carrillo), Series 1999 Special Tax Bonds, 5.60% 2029 Community Facs. Dist. No. 99-1 (Talega) of the 1,195 1,273 Santa Margarita Water Dist., Series 1999 Special Tax Bonds, 6.10% 2014 South Tahoe Joint Powers Fncg. Auth., Subordinate Bond Anticipation Notes (South Tahoe Redev. Project Area No. 1): Series 1999A, 7.30% 2007 7,000 7,364 Series 1999B, 7.30% 2007 1,905 2,004 The Regents of the University of California, 2,000 2,053 Various University of California Projects, 1993 Series A, 5.50% 2021 Washington Township Health Care Dist., Rev. 1,300 1,336 Bonds, Series 1999, 5.00% 2014 Colorado - 4.35% Health Facs. Auth., Hospital Rev. Bonds (PorterCare 3,800 4,027 Adventist Health System Project), Series 2001, 6.50% 2031 Housing and Fin. Auth.: Multi-family Housing Insured Mortgage Rev. Bonds: 1982 Series A, 9.00% 2025 1,515 1,519 1997 Series C-3, 5.65% 2015 1,300 1,300 Single Family Housing Program Senior and Subordinate Bonds: 1997 Series: A-3, 7.00% 2016 1,270 1,359 B-3, 6.80% 2028 740 798 C-3, 6.75% 2017 840 915 1998 Series: B-3, 6.55% 2025 4,580 4,958 D-3, 6.125% 2023 1,920 2,096 Arapahoe County, Capital Improvement Trust Fund Highway Rev. Bonds (E-470 Project): 6.90% 2015 (Preref. 2005) 2,500 2,920 6.95% 2020 (Preref. 2005) 17,500 20,468 City and County of Denver, Airport System Rev. Bonds, Series 1992A: 7.25% 2025 (Preref. 2002) 5,590 6,012 7.25% 2025 (Preref. 2002) 14,210 15,283 E-470 Public Highway Auth. Senior Rev. Bonds, 7,500 680 Series 2000B (Capital Appreciation Bonds), 0% 2034 Eagle County, Bachelor Gulch Metropolitan Dist., 3,400 3,582 G.O. Bonds, Series 1999, 6.70% 2019 EagleBend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds, Series 1997A: 6.40% 2017 1,000 1,001 6.45% 2021 2,175 2,168 EagleBend Dowd Affordable Housing Corp., Multi-family Housing Project Rev. Bonds, Series 1998A: 6.35% 2014 1,065 1,073 6.63% 2039 2,000 1,966 Metropolitan Football Stadium Dist., Capital Appreciation Sales Tax Rev. Bonds, MBIA Insured: Series 1999A: 0% 2008 2,675 2,074 0% 2011 2,600 1,729 0% 2012 4,700 2,956 Series 1999B, 0% 2006 4,000 3,417 Northwest Parkway Public Highway Auth., Rev. 2,800 2,885 Bonds, Series 2001D, 7.125% 2041 Rampart Range Metropolitan Dist. No. 1 (City of 5,415 5,420 Lone Tree), Rev. Bonds (Rampart Range Metropolitan Dist. No. 2 Project), Series 2001, 7.75% 2026 Vista Ridge Metropolitan Dist. (Weld County), 7,310 7,411 Limited Tax G.O. Bonds, Series 2001, 7.50% 2031 Connecticut - 0.85% G.O. Bonds, 2001 Series B, 5.375% 2016 1,900 2,055 Dev. Auth., Pollution Control Rev. Ref. Bonds (The 5,025 5,161 Connecticut Light and Power Co. Project), Series 1993A, 5.85% 2028 Health and Educational Fac. Auth., Rev. Bonds, 1,800 1,856 University of Hartford Issue, Series D, 6.75% 2012 Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, 1996 Series A: (1) 6.25% 2002 (Escrowed to Maturity) 1,000 1,038 6.375% 2004 (Escrowed to Maturity) 1,985 2,185 6.50% 2005 (Escrowed to Maturity) 1,490 1,681 6.40% 2011 2,025 2,206 6.40% 2011 (Preref. 2007) 2,470 2,881 Delaware - 0.04% Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula 1,000 1,024 United Methodist Homes, Inc. Issue), Series 1997A, 6.00% 2009 District of Columbia - 0.98% G.O. Bonds: Series 1993A, AMBAC Insured, 5.875% 2005 2,125 2,332 (Escrowed to Maturity) Series 1993 B-1, AMBAC Insured, 5.50% 2009 1,500 1,651 Convention Center Auth. (Washington D.C.), Senior 5,750 5,439 Lien Dedicated Tax Rev. Bonds, Series 1998, AMBAC Insured, 4.75% 2028 Hospital Rev. Ref. Bonds: Medlantic Healthcare Group, Inc. Issue, 1,030 1,068 Series 1992B, 6.50% 2002 (Escrowed to Maturity) Washington Hospital Center Issue, Series 1992A, 1,170 1,225 7.00% 2005 (Preref. 2002) MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): Series 2001B, 6.625% 2031 (Put 2005) 4,000 4,191 Series 2001D, 6.875% 2031 (Put 2007) 5,000 5,336 Redev. Land Agcy., Sports Arena Special Tax Rev. 785 787 Bonds, Series 1996, 5.625% 2010 Florida - 4.51% Arbor Greene Community Dev. Dist. (City of Tampa, Hillsborough County), Special Assessment Rev. Bonds: Series 1996, 7.60% 2018 915 981 Series 1998, 5.75% 2006 375 379 Series 2000, 6.50% 2007 805 825 Capital Region Community Dev. Dist. (Tallahassee), 1,000 1,021 Capital Improvement Rev. Bonds, Series 2001A-2, 6.85% 2031 Championsgate Community Dev. Dist., Capital 1,515 1,487 Improvement Rev. Bonds, Series 1998B, 5.70% 2005 The Crossings at Fleming Island Community Dev. Dist. (Clay County), Special Assessment Bonds: Series 1995, 8.25% 2016 (Preref. 2005) 1,020 1,201 Series 2000C, 7.10% 2030 7,000 7,418 Fishhawk Community Dev. Dist. (Hillsborough County), 3,000 3,068 Special Assessment Rev. Bonds, Series 2000, 6.65% 2007 Fleming Island Plantation Community Dev. Dist. 3,000 3,227 (Clay County), Series 2000B (Long Term), 7.375% 2031 The Groves Community Dev. Dist. (Pasco County), 1,170 1,192 Special Assessment Rev. Bonds, Series 2000B, 7.625% 2008 Harbor Bay Community Dev. Dist. (Hillsborough 1,500 1,508 County), Capital Improvement Rev. Bonds, Series 2001B, 6.35% 2010 Harbour Lake Estates Community Dev. Dist. (Miramar), 3,500 3,538 Special Assessment Bonds, Series 2001, 6.40% 2006 Heritage Harbor Community Dev. Dist. Rev. 1,475 1,481 Bonds, Series B, 6.00% 2003 Heritage Palms Community Dev. Dist. (Fort Myers), Capital Improvement Rev. Bonds: Series 1998, 5.40% 2003 850 848 Series 1999, 6.25% 2004 3,470 3,513 Heritage Pines Community Dev. Dist. (Pasco County), 2,550 2,528 Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Heritage Springs Community Dev. Dist. (Pasco County), 1,540 1,556 Capital Improvement Rev. Bonds, Series 1999B, 6.25% 2005 Lake Ashton Community Dev. Dist. (City of Lake Wales, Polk County), Capital Improvement Rev. Bonds: Series 2001A, 7.40% 2032 1,000 1,025 Series 2001B, 6.40% 2011 2,750 2,792 Lake Powell Residential Golf Community Dev. Dist. 3,720 3,788 (Bay County), Special Assessment Rev. Bonds, Series 2000B, 7.00% 2010 Lakewood Ranch Community Dev. Dist. 5 (Manatee County), 1,250 1,246 Special Assessment Rev. Bonds, Series 2001B, 6.00% 2011 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds: Series 1997A (Cypress Cove at Healthpark Florida, Inc. Project): 5.80% 2006 1,005 1,019 6.25% 2017 5,550 5,092 Series 1999A (Shell Point/Alliance Obligated Group, Shell Point Village Project): 5.25% 2006 1,150 1,163 5.50% 2010 1,500 1,495 5.75% 2012 1,360 1,365 5.75% 2013 1,840 1,839 5.75% 2015 1,575 1,549 5.50% 2021 1,550 1,395 5.50% 2029 2,000 1,757 Marshall Creek Community Dev. Dist. (St. Johns County), Special Assessment Bonds: Series 2000A, 7.65% 2032 4,000 4,219 Series 2000B, 6.75% 2007 2,080 2,146 Meadow Pointe II, Community Dev. Dist. (Pasco County), Capital Improvement Rev. Bonds: Series 1998A, 5.25% 2003 160 161 Series 1998B, 5.50% 2005 845 849 Meadow Pointe III, Community Dev. Dist. (Pasco County), 1,480 1,491 Capital Improvement Rev. Bonds, Series 2001-1, 5.90% 2006 Miami-Dade County Health Facs. Auth., Hospital Rev. 5,495 6,020 Ref. Bonds, Series 2001A (Miami Children's Hospital Project), AMBAC Insured, 5.625% 2016 Mid-Bay Bridge Auth., Rev. Ref. Bonds: Series 1991B, 8.50% 2022 (Subject to Crossover 2,000 2,069 Refunding) Series 1993D, 6.10% 2022 500 518 North Broward Hospital Dist., Improvement Rev. 2,500 2,613 Bonds, Series 2001, 6.00% 2031 Northern Palm Beach County Improvement Dist., Water Control and Improvement Bonds: Unit of Dev. No. 9A, Series 1996A: 6.80% 2006 910 988 7.30% 2027 1,500 1,613 Unit of Dev. No. 9B, Series 1999: 5.85% 2013 950 977 6.00% 2029 2,200 2,226 North Springs Improvement Dist. Special Assessment 220 222 Bonds (Parkland Isles Project), Series 1997B, 6.25% 2005 City of Orlando, Special Assessment Rev. Bonds (Conroy Road Interchange Project), Series 1998A: 5.50% 2010 1,000 999 5.80% 2026 2,000 1,920 River Ridge Community Dev. Dist. (Lee County), 700 707 Capital Improvement Rev. Bonds, Series 1998, 5.75% 2008 Sampson Creek Community Dev. Dist. (St. Johns County), 2,750 2,825 Capital Improvement Rev. Bonds, Series 2000A, 6.95% 2031 Stoneybrook West Community Dev. Dist. (City of Winter Garden, Orange County), Special Assessment Rev. Bonds: Series 2000A, 7.00% 2032 1,775 1,829 Series 2000B, 6.45% 2010 2,060 2,114 Vista Lakes Community Dev. Dist. (City of Orlando), 1,615 1,632 Capital Improvement Rev. Bonds, Series 2000B, 6.35% 2005 Waterlefe Community Dev. Dist. (Manatee County), Capital Improvement Rev. Bonds: Series 2001A, 6.95% 2031 500 511 Series 2001B, 6.25% 2010 1,620 1,639 Georgia - 1.82% G.O. Bonds, Series 2001B, 5.25% 2016 10,000 10,651 Municipal Electric Auth.: General Power Rev. Bonds, Series X, 6.50% 2012 1,215 1,395 Project One Senior Bond, Fourth Crossover Series, 5,700 6,678 MBIA Insured, 6.50% 2012 City of Atlanta: Airport Facs. Rev. Ref. Bonds, Series 1994A, AMBAC 1,000 1,169 Insured, 6.50% 2009 Fulco Hospital Auth., Rev. Anticipation Certificates, Georgia Baptist Health Care System Project: Series 1992A (Preref. 2002): 6.40% 2007 1,000 1,058 6.25% 2013 2,100 2,216 6.375% 2022 1,595 1,685 Series 1992B, 6.375% 2022 (Preref. 2002) 610 645 Water and Wastewater Rev. Bonds, Series 1999, FGIC 8,500 9,375 Insured, 5.50% 2022 Housing Auth. of the County of DeKalb, Multi-family 6,000 6,100 Housing Rev. Ref. Bonds (The Park at Briarcliff Apartments Project), Series 1998A, 4.55% 2028 (Put 2008) Hawaii - 0.47% G.O. Bonds of 1997, Series CN, FGIC Insured, 5.25% 2013 3,000 3,176 City and County of Honolulu: G.O. Bonds: Ref. and Improvement Series, 1993B: 5.00% 2013 1,370 1,459 5.00% 2013 (Escrowed to Maturity) 630 677 Series 2001A, FSA Insured, 5.375% 2012 2,000 2,188 Wastewater System Rev. Bonds (First Bond Resolution), Senior Series 2001, AMBAC Insured: 5.50% 2015 1,875 2,037 5.50% 2016 1,000 1,080 Illinois - 10.96% G.O. Bonds, Illinois FIRST, Series of May 2001, 2,000 2,214 FSA Insured, 5.50% 2016 Build Illinois Bonds (Sales Tax Rev. Bonds), Illinois FIRST: Series of March 2001, 5.50% 2016 3,000 3,239 Series of June 2001: 5.50% 2016 7,470 8,065 5.50% 2017 8,000 8,591 Civic Center Bonds (Special State Obligation 6,500 7,544 Bonds), Series 1991, AMBAC Insured, 6.25% 2020 Dev. Fin. Auth., Rev. Bonds, Series 1998A 5,120 5,622 (Provena Health), MBIA Insured, 5.50% 2010 Educational Facs. Auth., Rev. Bonds: MJH Education Assistance Illinois III 1,500 1,583 LLC, Series 1999D, AMBAC Insured, 5.45% 2014 Wesleyan University, Series 1993, 5.625% 2018 1,490 1,535 Health Facs. Auth.: Rev. Bonds: Advocate Health Care Network: Series 1998A: 5.00% 2007 700 740 5.00% 2007 (Escrowed to Maturity) 920 992 5.00% 2008 810 853 5.00% 2008 (Escrowed to Maturity) 1,060 1,143 4.50% 2009 840 851 4.50% 2009 (Preref. 2008) 1,090 1,152 4.625% 2010 1,310 1,329 4.625% 2010 (Preref. 2008) 1,690 1,799 Series 1998B: 4.875% 2013 2,130 2,155 4.875% 2013 (Preref. 2008) 330 357 MBIA Insured, 5.25% 2018 2,115 2,172 MBIA Insured, 5.25% 2018 (Preref. 2008) 385 424 Alexian Brothers Health System, Series 1999, FSA Insured: 5.00% 2008 1,230 1,305 5.25% 2012 6,960 7,389 5.00% 2025 2,000 1,963 5.125% 2028 2,000 1,991 Centegra Health System, Series 1998: 5.50% 2008 1,640 1,724 5.50% 2009 2,290 2,407 5.50% 2010 2,440 2,554 5.20% 2012 2,200 2,226 5.25% 2013 2,430 2,448 5.25% 2018 5,050 4,887 The Children's Memorial Hospital, Series 1999A, AMBAC Insured: 5.75% 2010 1,835 2,049 5.75% 2011 1,690 1,875 Edward Hospital Association Project, 1,000 1,040 Series 1992, 7.00% 2022 (Preref. 2002) Edward Hospital Obligated Group, Series 2001A, FSA Insured: 5.50% 2012 2,545 2,796 5.50% 2017 1,500 1,591 Friendship Village of Schaumburg, 3,675 3,078 Series 1997A, 5.25% 2018 Lutheran Senior Ministries Obligated Group 2,000 2,002 - Lutheran Hillside Village Project, Series 2001A, 7.375% 2031 Northwestern Memorial Hospital, 2,000 2,086 Series 1994A, 6.00% 2024 OSF Healthcare System: Series 1993, 5.75% 2007 5,760 6,060 Series 1999, 6.25% 2019 4,500 4,796 Riverside Health System, Series 2000, 2,500 2,756 6.85% 2029 Sherman Health Systems, Series 1997, 2,595 2,798 AMBAC Insured, 5.50% 2010 Hospital Sisters Services, Inc. - Obligated 4,000 4,311 Group, Series 1998A, MBIA Insured, 5.25% 2008 Rev. Ref. Bonds: Advocate Health Care Network, Series 1997A: 5.50% 2008 1,000 1,083 5.80% 2016 8,000 8,447 Edward Hospital Project, Series 1993A: 5.75% 2009 1,550 1,622 6.00% 2019 1,435 1,471 Fairview Obligated General Project, 1995 Series A: 6.50% 2006 770 795 7.40% 2023 3,000 3,018 Rev. and Rev. Ref. Bonds: Evangelical Hospitals Corp., Series C, 4,000 4,676 6.25% 2022 (Escrowed to Maturity) Lutheran General Health, Series C, 2,705 2,923 6.00% 2018 Housing Dev. Auth., Multi-family Housing 1,490 1,544 Bonds, 1992 Series A, 7.00% 2010 Metropolitan Pier and Exposition Auth., McCormick Place Expansion Project Bonds: Series 1992A, 6.50% 2027 (Preref. 2003) 3,910 4,248 Ref. Bonds, Series 1996A, MBIA Insured, 0% 2024 10,000 2,958 City of Chicago: G.O. Bonds, Series 1999, FGIC Insured: City Colleges of Chicago Capital 7,700 3,824 Improvement Project, 0% 2016 Emergency Telephone System, Ref. Bonds, 2,000 2,120 5.25% 2020 Chicago O'Hare International Airport, Special Fac. Rev. Ref. Bonds: Series 1994 (American Airlines, Inc. 2,750 3,069 Project), 8.20% 2024 Series 1999A (United Air Lines, Inc. 14,605 13,257 Project), 5.35% 2016 Metropolitan Water Reclamation Dist. of Greater Chicago, Series B: Capital Improvement Bonds, 5.25% 2004 5,000 5,351 Ref. Bonds, 5.30% 2005 5,325 5,771 School Reform Board of Trustees of the Board of Education of the City of Chicago, Unlimited Tax G.O. Bonds: Series 1997A, AMBAC Insured: 0% 2011 2,745 1,754 Capital Appreciation Bonds, 0% 2015 3,245 1,637 Dedicated Tax Rev., AMBAC Insured: Series 1997, 6.75% 2012 1,000 1,222 Series 1997A, 0% 2014 7,085 3,799 Series 1998B, FGIC Insured, 0% 2014 2,000 1,072 Skyway Toll Bridge Ref. Rev. Bonds, Series 1994 (Preref. 2004): 6.50% 2010 13,250 14,571 6.75% 2014 6,500 7,184 Tax Increment Allocation Bonds (Central Loop Redev. Project), Capital Appreciation Bonds, Series 2000A, AMBAC Insured: 0% 2007 7,000 5,505 0% 2008 7,000 5,227 Water Rev. Bonds, Series 1997, FGIC Insured, 3,500 1,884 0% 2014 County of Cook, G.O. Capital Improvement Bonds, 4,000 4,777 Series 1996, FGIC Insured, 6.50% 2011 Regional Transportation Auth., Cook, Du Page, 4,500 6,023 Kane, Lake, McHenry and Will Counties, G.O. Bonds, Series 1994D, FGIC Insured, 7.75% 2019 Township High School Dist. Number 205, Cook 4,730 3,532 County (Thornton), G.O. Limited Capital Appreciation Bonds, Series 1998D, FSA Insured, 0% 2008 University of Illinois, Cert. of Part., 3,530 3,774 Series A, AMBAC Insured, 5.375% 2015 Indiana - 3.71% State Dev. Fin. Auth.: Pollution Control Rev. Bonds (Inland Steel Co. 2,500 1,397 Project No. 12), 6.85% 2012 Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 5.75% 2011 4,000 2,135 Educational Facs. Auth., Educational Facs. Rev. 1,000 1,025 Bonds (University of Evansville Project), Series 1996, 5.25% 2005 Health Fac. Fncg. Auth., Hospital Rev. Bonds: Charity Obligated Group: Series 1997D, 5.00% 2026 (Preref. 2007) 15,010 16,227 Series 1999D, 5.25% 2016 3,000 3,089 Clarian Health Partners, Inc., Series 1996A: MBIA Insured, 5.25% 2008 1,700 1,831 MBIA Insured, 5.50% 2016 4,000 4,198 5.50% 2016 10,250 10,562 Holy Cross Health System Corp., Series 1998, 7,095 7,666 MBIA Insured, 5.375% 2010 The Methodist Hospitals, Inc., Series 2001, 5.50% 2031 2,000 2,006 Sisters of St. Francis Health Services, Inc. 1,000 1,069 Project, Series 1997A, MBIA Insured, 5.00% 2008 Housing Fin. Auth., Single Family Mortgage Ref. 1,275 1,324 Rev. Bonds, 1992 Series A, 6.75% 2010 State Office Building Commission, Correctional 8,490 10,036 Facs. Program Rev. Bonds, Series 1995B, AMBAC Insured, 6.25% 2012 Transportation Fin. Auth., Airport Facs. Lease Rev. Bonds, Series A: 6.50% 2007 1,160 1,217 6.50% 2007 (Preref. 2002) 3,755 4,001 6.75% 2011 (Preref. 2002) 2,400 2,564 Boone County Hospital Association, Lease Rev. 1,255 1,332 Bonds, Series 2001, FGIC Insured, 5.00% 2010 City of East Chicago, Pollution Control Rev. 3,000 1,893 Ref. Bonds, Inland Steel Co. Project No.11, Series 1994, 7.125% 2007 Hospital Auth. of the City of Fort Wayne, Rev. Bonds (Parkview Memorial Hospital Inc. Project), Series 1992: 6.375% 2013 (Preref. 2002) 4,000 4,259 6.40% 2022 (Preref. 2002) 2,000 2,130 Marion County, Convention and Recreational Facs. 3,370 3,638 Auth., Excise Taxes Lease Rental Rev. Ref. Senior Bonds, Series 2001A, MBIA Insured, 5.50% 2015 Iowa - 0.99% Fin. Auth.: Econ. Dev. Rev. Bonds (Foundation for Affordable 1,500 1,587 Housing Project), Series 2000A, FNMA Insured, 5.65% 2033 (Put 2013) Hospital Rev. Bonds (Mercy Medical Center Project), Series 1999, FSA Insured: 5.50% 2011 1,420 1,554 5.60% 2012 1,375 1,504 Rev. and Ref. Bonds: Mercy Health Services Obligated Group, 1997 590 629 Series V, 5.00% 2010 (Escrowed to Maturity) Trinity Health Credit Group, Series 2000B, 5,000 5,482 AMBAC Insured, 6.00% 2027 Rev. Bonds (Catholic Health Initiatives), 3,000 3,197 Series 2000A, 6.00% 2018 Single Family Mortgage Bonds, 1997 Series F, 1,840 1,909 5.55% 2016 Polk County, Catholic Health Initiatives, Rev. Bonds, Series 1997A: 5.50% 2007 1,520 1,641 5.125% 2011 1,500 1,556 5.125% 2012 3,170 3,262 Kentucky - 1.32% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), MBIA Insured: Series 2000, 6.50% 2020 8,500 8,952 Series 2000, 6.625% 2028 5,500 5,811 Series 2000A, 6.125% 2010 2,000 2,138 Hospital System Ref. and Improvement Rev. Bonds (Appalachian Regional Healthcare, Inc. Project), Series 1997: 5.20% 2004 1,540 1,457 5.60% 2008 630 561 5.60% 2009 3,305 2,878 5.70% 2010 490 422 5.75% 2011 2,190 1,856 5.85% 2017 2,000 1,572 City of Ashland, Pollution Control Ref. Rev. Bonds, 3,750 4,023 Series 1999 (Ashland Inc. Project), 5.70% 2009 Louisiana - 4.29% Health Education Auth. (Lambeth House Project): Rev. Bonds, Series 1996, 9.00% 2026 (Preref. 2006) 9,000 11,483 Rev. Ref. Bonds, Series 1998A: 5.50% 2010 5,505 5,091 6.15% 2018 2,000 1,777 6.20% 2028 3,950 3,395 Public Facs. Auth., Hospital Rev. Ref. Bonds (Franciscan Missionaries of Our Lady Health System Project), Series 1998A, FSA Insured: 5.75% 2014 3,495 3,923 5.75% 2015 3,825 4,286 5.75% 2018 4,000 4,433 Jefferson Parish Hospital Services: Dist. No. 1, Parish of Jefferson (West Jefferson Medical Center), Hospital Rev. Bonds, Series 1998A, FSA Insured: 5.25% 2011 2,070 2,220 5.25% 2012 1,930 2,055 Dist. No. 2, Parish of Jefferson, Hospital 2,000 2,164 Rev. Bonds, Series 1998, FSA Insured, 5.25% 2011 Lake Charles Harbor and Terminal Dist., Port 24,000 25,647 Facs. Rev. Ref. Bonds (Trunkline LNG Co. Project), Series 1992, 7.75% 2022 Local Government Environmental Facs. And 11,500 13,936 Community Dev. Auth., Rev. Bonds (Capital Projects and Equipment Acquisition Program), Series 2000A, AMBAC Insured, 6.30% 2030 Parish of West Feliciana, Pollution Control Rev. Bonds (Gulf States Utilities Co. Project): Gulf States Utilities Co. Project, Series 2,000 2,055 1985B, 9.00% 2015 Entergy Gulf States, Inc. Project, Series 13,500 14,019 1999A, 5.65% 2028 (Put 2004) Maine - 0.25% Health and Higher Educational Facs. Auth., Rev. Bonds, Piper Shores Issue, Series 1999A: 7.50% 2019 3,000 3,031 7.55% 2029 2,575 2,596 Maryland - 1.13% Community Dev. Administration, Dept. of Housing 5,815 6,167 and Community Dev., Single Family Program Bonds, 1997 First Series, 5.25% 2005 Health and Higher Educational Facs. Auth.: First Mortgage Rev. Bonds, PUMH of Maryland, 2,400 2,208 Inc. Issue (Heron Point of Chestertown), Series 1998A, 5.75% 2019 Rev. Bonds, Howard County General Hospital Issue, Series 1993 (Escrowed to Maturity): 5.50% 2013 2,000 2,133 5.50% 2021 1,225 1,282 Anne Arundel County, Special Obligation Bonds: Arundel Mills Project, Series 1999, 7.10% 2029 5,750 6,226 National Business Park Project, Series 2000, 1,000 1,089 7.375% 2028 Calvert County, Econ. Dev. Rev. Bonds 2,500 2,959 (Asbury-Solomons Island Fac.), Series 1995, 8.625% 2024 (Preref. 2005) Frederick County, Special Obligation Bonds 2,500 2,563 (Urbana Community Dev. Auth.), Series 1998, 6.625% 2025 Prince George's County, Hospital Rev. Bonds, 750 794 Dimensions Health Corp. Issue, Series 1992, 7.25% 2017 (Preref. 2002) Massachusetts - 0.89% Massachusetts Bay Transportation Auth., General 5,000 5,851 Transportation System Bonds, 1994 Series A Ref. Bonds, 7.00% 2007 Health and Educational Facs. Auth., Rev. Bonds, Partners HealthCare System Issue: Series B, 5.25% 2029 2,000 1,978 Series C: 6.00% 2015 1,335 1,469 6.00% 2016 1,520 1,662 5.75% 2032 2,000 2,065 Turnpike Auth., Metropolitan Highway System Rev. 5,500 5,368 Bonds, Series 1999A, AMBAC Insured, 5.00% 2039 The New England Loan Marketing Corp., Student 1,500 1,534 Loan Ref. Bonds, 1993 Series G, 5.20% 2002 Michigan - 4.49% Building Auth., 2001 Rev. Ref. Bonds, Series I 3,000 3,251 (Facs. Program), 5.50% 2016 Hospital Fin. Auth.: Hospital Rev. Bonds: The Detroit Medical Center Obligated Group, Series 1998A: 5.00% 2013 1,000 911 5.00% 2014 1,525 1,375 5.25% 2028 3,000 2,556 Henry Ford Health System, Series 1999A: 5.70% 2011 2,985 3,246 5.80% 2012 1,075 1,169 Hospital Rev. Ref. Bonds: Daughters of Charity, National Health System, 1,180 1,248 5.50% 2005 (Escrowed to Maturity) The Detroit Medical Center Obligated Group: Series 1993A, 6.375% 2009 2,000 2,046 Series 1993B, AMBAC Insured, 5.00% 2006 1,000 1,061 Genesys Health System Obligated Group, Series 1995A: 7.10% 2002 (Escrowed to Maturity) 285 299 7.20% 2003 (Escrowed to Maturity) 1,000 1,091 8.00% 2005 (Escrowed to Maturity) 8,880 10,512 8.10% 2013 (Preref. 2005) 5,000 6,026 8.125% 2021 (Preref. 2005) 4,500 5,428 7.50% 2027 (Preref. 2005) 4,520 5,265 Hackley Hospital Obligated Group, Series 1998A: 5.00% 2008 1,215 1,202 5.30% 2013 2,400 2,305 McLaren Obligated Group, Series 1993A, 2,985 3,044 5.375% 2013 Pontiac Osteopathic, Series 1994A: 5.375% 2006 850 844 6.00% 2014 2,545 2,465 6.00% 2024 4,775 4,328 Sinai Hospital of Greater Detroit, Series 1995: 6.00% 2008 2,000 1,994 6.625% 2016 3,190 3,235 Variable Rate Rev. Bonds (Ascension Health Credit Group): Series 1999B-3, 5.30% 2033 (Put 2006) 2,000 2,091 Series 1999B-4, 5.375% 2033 (Put 2007) 3,000 3,144 Housing Dev. Auth., Rental Housing Rev. Bonds, 1,600 1,657 1994 Series A, 6.20% 2003 Municipal Bond Auth., Public School Academy Facs. Program Rev. Bonds: Detroit Academy of Arts and Sciences Project, Series 2001A: 7.90% 2021 1,000 1,016 8.00% 2031 1,000 1,016 YMCA Service Learning Academy Project, 4,150 4,218 Series 2001, 7.75% 2031 Strategic Fund, Limited Obligation Ref. Rev. 1,000 1,046 Bonds (Detroit Edison Co. Pollution Control Bonds Project), Series 1995CC, AMBAC Insured, 4.85% 2030 (Put 2011) Trunk Line Fund Bonds, Series 2001A, 5.50% 2015 4,000 4,345 City of Detroit: G.O. Rev. Bonds (Unlimited Tax), Series 1995B: 7.00% 2004 2,500 2,718 6.25% 2008 1,730 1,862 6.25% 2009 1,195 1,280 6.25% 2010 1,250 1,334 Downtown Dev. Auth., Tax Increment Bonds (Dev. 2,900 3,320 Area No. 1 Projects), Series 1996C, 6.20% 2017 (Preref. 2006) School Dist. of the City of Detroit, Wayne County, 1,955 2,060 School Building and Site Improvement Ref. Bonds, Series 1998C, FGIC Insured, 5.25% 2025 City of Flint, Hospital Building Auth. (Hurley Medical Center): Rev. Ref. Bonds, Series 1998A, 5.25% 2016 1,250 1,160 Rev. Rental Bonds, Series 1998B, 5.375% 2028 1,000 876 City of Royal Oak, Hospital Fncg. Auth., Hospital 3,000 3,022 Rev. Ref. Bonds (William Beaumont Hospital), Series 1993G, 5.25% 2019 Minnesota - 0.26% Housing Fin. Agcy., Single Family Mortgage Bonds, 1,765 1,843 1994 Series E, 5.60% 2013 City of Minneapolis, G.O. Various Purpose Bonds, 4,000 4,025 Series 2000, 5.00% 2001 Mississippi - 0.38% Development Bank, Special Obligation Bonds (Capital 7,500 7,561 Projects and Equipment Acquisition Program), Series 2001A, AMBAC Insured, 5.00% 2031 Hospital Equipment and Facs. Auth., Rev. Bonds, 1,000 1,043 Series 2000 (Forrest County General Hospital Project), FSA Insured, 5.50% 2027 Nebraska - 0.01% City of Kearney, Industrial Dev. Rev. Bonds (The 2,750 330 Great Platte River Road Memorial Foundation Project), Series 1998, 6.75% 2028 Nevada - 2.41% Housing Division, Single Family Mortgage Bonds, 755 761 1999 Series A-1, 4.75% 2012 Clark County: G.O. (Limited Tax) Bond Banks Bonds, Series 2001, 3,000 3,238 FGIC Insured, 5.50% 2016 Special Improvement Dist. No. 121 (Southern Highlands Area), Local Improvement Bonds, Series 1999: 7.00% 2009 2,500 2,697 7.50% 2019 14,000 15,028 Special Improvement Dist. No. 132 (Summerlin 2,235 2,295 South Area (Villages 15A and 18)), Local Improvement Bonds, Series 2001, 6.75% 2021 City of Henderson: Health Fac. Rev. Bonds (Catholic Healthcare 7,000 6,105 West), 1998 Series A, 5.375% 2026 Local Improvement Dist. No. T-4C (Green Valley Properties), Limited Obligation Ref. Bonds, 1999 Series A: 5.65% 2009 1,495 1,540 5.75% 2013 3,990 3,954 5.90% 2018 2,990 2,934 City of Las Vegas: G.O. (Limited Tax) Sewer and Flood Control 2,855 3,063 Bonds, Series 2001, FGIC Insured, 5.375% 2015 Special Improvement Dist. No. 808 (Summerlin Area), Local Improvement Bonds, Series 2001: 6.375% 2014 2,080 2,139 6.75% 2021 4,500 4,622 Las Vegas Monorail Project Rev. Capital 3,545 2,485 Appreciation Bonds, 1st Tier Series 2000, AMBAC Insured, 0% 2010 Truckee Meadows Water Auth., Water Rev. Bonds, 3,105 3,340 Series 2001A, FSA Insured, 5.50% 2016 New Jersey - 2.00% Econ. Dev. Auth.: Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation Improvement Dist. Project (City of Elizabeth), Series 1998A: 6.375% 2018 1,000 1,058 6.375% 2031 7,500 7,908 First Mortgage Rev. Fixed-Rate Bonds: Fellowship Village Project, Series 1995A, 7,000 8,434 9.25% 2025 (Preref. 2005) Winchester Gardens at Ward Homestead Project, Series 1996A: 8.50% 2016 4,000 4,296 8.625% 2025 3,500 3,762 First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998A: 4.95% 2005 1,230 1,242 5.50% 2018 2,295 2,188 Tax-Exempt Term Bonds, 5.50% 2025 3,000 2,767 Retirement Community Rev. Bonds (Seabrook 6,000 6,288 Village, Inc. Fac.), Series 2000A, 8.25% 2030 Housing and Mortgage Fin. Agcy., Section 8 Bonds, 1991 Series A: 6.80% 2005 2,570 2,628 6.85% 2006 2,500 2,557 Gloucester County Improvement Auth., Solid 1,585 1,802 Waste Resource Recovery Rev. Ref. Bonds (Waste Management, Inc. Project), Series 1999A, 6.85% 2029 (Put 2009) New York - 5.82% Dormitory Auth.: Center for Nursing/Rehabilitation, Inc. Rev. 2,100 2,218 Bonds, FHA Insured, 5.45% 2017 City University System Consolidated Third 2,000 2,224 General Resolution Rev. Bonds, 1998 Series 2, AMBAC Insured, 5.50% 2008 Edgar Health Care Center (Nursing Home) 2,375 2,434 Rev. Bonds, FHA Insured, 4.90% 2013 Mental Health Services Facs. Improvement Rev. Bonds: Series 1997A, 6.00% 2007 1,750 1,984 Series 1997B: 6.00% 2007 2,490 2,823 6.00% 2007 (Preref. 2007) 10 12 5.60% 2008 1,300 1,445 Series 1998B: 5.375% 2009 1,270 1,397 5.00% 2010 1,495 1,606 5.00% 2010 1,530 1,644 Series 1998C, 5.00% 2010 1,760 1,891 Secured Hospital: Rev. Bonds (Interfaith Medical Center), 2,000 2,169 Series 1998D, 5.25% 2007 Rev. Ref. Bonds: Bronx-Lebanon Hospital Center, Series 1998E, 8,520 8,963 MBIA Insured, 5.20% 2014 Brookdale Hospital, Series 1998J, 5.125% 2009 2,500 2,707 State University Educational Facs.: Rev. Bonds: Series 1990B, 7.50% 2011 1,160 1,399 Series 1990B, 7.50% 2011 (Preref. 2010) 560 713 Series 1997, 6.00% 2007 3,000 3,394 Rev. Ref. Bonds, Series 1990A, 7.50% 2013 3,500 4,546 St. Luke's-Roosevelt Hospital Center, Mortgage 5,000 5,281 Hospital Rev. Bonds, Series 2000A, FHA Insured, 5.75% 2021 Housing Fin. Agcy.: Health Facs. Rev. Bonds (New York City), 1996 3,000 3,339 Series A Ref., 6.00% 2006 Service Contract Obligation Rev. Ref. Bonds, 1,750 1,891 Series 1997C, 5.20% 2010 Local Government Assistance Corp.: Series 1991C, Capital Appreciation Bonds, 0% 2005 5,000 4,482 Series 1991D: 7.00% 2011 (Preref. 2002) 2,000 2,093 6.75% 2021 (Preref. 2002) 1,350 1,411 State Medical Care Facs. Fin. Agcy.: Hospital Insured Mortgage Rev. Bonds, 1994 Series A Ref., FHA Insured: 5.10% 2010 2,095 2,185 5.25% 2014 5,000 5,238 Mental Health Services Facs. Improvement Rev. 1,000 1,009 Bonds, 1993 Series D, 5.25% 2023 St. Luke's-Roosevelt Hospital Center, FHA Insured 12,215 13,047 Mortgage Rev. Bonds, 1993 Series A, 5.60% 2013 Urban Dev. Corp., Correctional Capital Facs. Rev. Bonds: Ref. Series 1993A, 5.30% 2005 1,800 1,924 Series 7, 5.25% 2009 1,375 1,495 Castle Rest Residential Health Care Fac., FHA 1,700 1,813 Insured Mortgage Rev. Bonds, Series 1997A, 5.60% 2017 City of New York: G.O. Bonds: Fiscal 1992 Series C, 6.50% 2004 (Preref. 2002) 470 494 Fiscal 1992 Series H, 6.875% 2002 155 158 Fiscal 1995 Series F: 6.60% 2010 (Preref. 2005) 2,000 2,262 6.625% 2025 (Preref. 2005) 1,500 1,698 Fiscal 1996 Series E, 6.50% 2006 3,000 3,391 Fiscal 1999 Series H, 5.00% 2029 3,000 2,976 Fiscal 2001 Series F: 5.00% 2010 1,500 1,617 5.25% 2011 6,260 6,866 Fiscal 2001 Series H, 5.25% 2016 3,510 3,703 Transitional Fin. Auth., Future Tax Secured Bonds: Fiscal 1998 Series A, 5.00% 2027 1,500 1,493 Fiscal 1998 Series B, 4.50% 2027 5,000 4,592 Fiscal 1998 Series C, 5.00% 2018 2,000 2,043 Fiscal 1999 Series B, 4.75% 2023 5,725 5,538 Fiscal 2001 Series C, 5.375% 2015 2,000 2,176 Suffolk County Industrial Dev. Agcy., Continuing 2,000 2,018 Care Retirement Community Rev. Bonds (Peconic Landing at Southhold, Inc. Project), Series 2000, 8.00% 2030 Triborough Bridge and Tunnel Auth., General 1,000 1,167 Purpose and Rev. Bonds, Series Y, 6.00% 2012 North Carolina - 2.59% Eastern Municipal Power Agcy., Power System Rev. Bonds: Ref. Series 1993B: 6.00% 2006 3,120 3,367 7.25% 2007 5,425 6,205 7.00% 2008 10,720 12,283 6.125% 2009 2,000 2,204 6.00% 2022 2,000 2,144 6.00% 2026 1,990 2,131 MBIA Insured, 6.00% 2026 2,500 2,902 Series 1993C, 5.00% 2021 2,300 2,154 Ref. Series 1999B: 5.55% 2014 1,800 1,865 5.60% 2015 2,500 2,582 5.65% 2016 2,000 2,060 5.70% 2017 4,775 4,909 Series 1999D, 6.75% 2026 3,500 3,856 Municipal Power Agcy. Number One (Catawba Electric Rev. Bonds): Series 1992, 6.25% 2017 2,000 2,082 Series 1999A, MBIA Insured, 6.00% 2008 3,935 4,422 County of Catawba, Hospital Ref. Rev. Bonds 1,000 1,044 (Catawba Memorial Hospital Project), Series 1999, AMBAC Insured, 4.60% 2010 County of New Hanover, Hospital Rev. Bonds 1,995 2,167 (New Hanover Regional Medical Center Project), Series 1999, MBIA Insured, 5.25% 2011 Ohio - 0.42% County of Knox, Hospital Facs. Ref. Rev. Bonds, 2,175 2,250 Series 1998 (Knox Community Hospital), Asset Guaranty Insured, 4.60% 2007 County of Lorain, Health Care Facs. Rev. Ref. 2,000 1,758 Bonds (Kendal at Oberlin), Series 1998A, 5.25% 2021 County of Montgomery, Hospital Facs. Rev. Bonds (Kettering Medical Center Network Obligated Group), Series 1999: 6.75% 2018 1,000 1,068 6.75% 2022 1,000 1,051 County of Richland, Hospital Facs. Rev. Improvement Bonds (MedCentral Health System Obligated Group), Series 2000B: 6.375% 2022 1,250 1,294 6.375% 2030 2,000 2,051 Oklahoma - 0.50% Health System Rev. Bonds, Baptist Medicine 2,500 2,764 Center of Oklahoma, Series 1995C, AMBAC Insured, 6.375% 2009 Industrial Auth., Health System Rev. Ref. 2,500 2,830 Bonds (Obligated Group consisting of INTEGRIS Baptist Medical Center, Inc., INTEGRIS South Oklahoma City Hospital Corp. and INTEGRIS Rural Health, Inc.), AMBAC Insured, 6.00% 2009 Industries Auth., Health Facs. Rev. Ref. Bonds 2,505 2,541 (Sisters of Mercy Health System, St. Louis, Inc.), Series 1993A, 5.00% 2013 Tulsa Industrial Auth., Hospital Rev. and Ref. 3,000 3,036 Bonds, St. John Medical Center Project, Series 1996, 5.375% 2017 Oregon - 0.94% City of Klamath Falls, Electric Rev. Ref. Bonds (Klamath Cogeneration Project), Series 1999: 5.75% 2013 7,000 6,953 5.875% 2016 3,500 3,465 6.00% 2025 11,000 10,729 Pennsylvania - 5.82% Convention Center Auth., Ref. Rev. Bonds, 8,240 8,591 1994 Series A, 6.25% 2004 Higher Educational Facs. Auth.: Rev. Bonds (Thomas Jefferson University), 1992 Series A: MBIA Insured, 6.625% 2009 375 396 6.625% 2009 (Preref. 2002) 875 926 UPMC Health System Rev. Bonds, Series 1999A, 2,000 2,148 FSA Insured, 5.00% 2009 Housing Fin. Agcy., Rental House Ref. Bonds, FNMA Insured: Issue 1992, 6.50% 2023 2,000 2,062 Issue 1993, 5.80% 2018 1,000 1,030 Housing Fin. Auth., Single Family Mortgage 1,000 1,033 Rev. Bonds, Series 1992-33, 6.85% 2009 Allegheny County, Cert. of Part. (ACJCT Fac. 2,150 2,165 Holdings L.P.), AMBAC Insured, 5.00% 2019 Allegheny County Hospital Dev. Auth.: Health System Rev. Bonds, Catholic Health East Issue, Series 1998A, AMBAC Insured: 5.50% 2008 1,000 1,099 5.00% 2010 2,705 2,880 UPMC Health System Rev. Ref. Bonds, Series 5,160 5,624 1999B, AMBAC Insured, 5.25% 2008 Port Auth. of Allegheny County, Special Rev. 1,000 1,093 Transportation Bonds, Ref. Series of 2001, FGIC Insured, 5.50% 2015 Chester County Health and Education Facs. Auth., 4,150 4,160 Health System Rev. Bonds (Jefferson Health System), Series 1997B, 5.375% 2027 Delaware County Auth., Rev. Bonds, Catholic 2,465 2,615 Health Systems, Series A, AMBAC Insured, 5.00% 2010 Lehigh County, General Purpose Auth. Rev. Bonds 1,500 1,633 (KidsPeace Obligated Group), 5.70% 2009 Montgomery County Industrial Dev. Auth.: Retirement Community Rev. Ref. Bonds (Adult 1,000 1,021 Communities Total Services, Inc. Obligated Group), Series 1996A, 5.875% 2022 Retirement Community Rev. Bonds (ACTS 17,500 16,618 Retirement-Life Communities, Inc. Obligated Group), Series 1998, 5.25% 2028 City of Philadelphia, G.O. Ref. Bonds, 3,300 3,238 Series 1998, FGIC Insured, 4.75% 2020 Hospitals and Higher Education Facs. Auth. of Philadelphia: The Children's Hospital of Philadelphia Project, Rev. Bonds, Series A of 1992: 6.50% 2009 (Preref. 2002) 4,500 4,671 6.50% 2021 (Preref. 2002) 3,000 3,114 Frankford Hospital, Series A (Escrowed to Maturity): 6.00% 2014 3,705 3,932 6.00% 2023 4,000 4,150 Health System Rev. Bonds (Jefferson Health System), Series 1997A: 5.50% 2006 2,285 2,440 5.50% 2007 1,995 2,138 5.50% 2008 2,000 2,144 5.00% 2009 1,000 1,038 5.00% 2010 1,000 1,034 5.00% 2018 1,475 1,448 Temple University Hospital Rev. Bonds: Series of 1983, 6.625% 2023 2,000 2,000 Series of 1993A, 6.50% 2008 15,500 16,210 Series of 1997, 5.70% 2009 1,000 990 Philadelphia Auth. for Industrial Dev., Rev. 2,815 2,737 Bonds (Cathedral Village Project), Series of 1998, 5.50% 2010 City of Pottsville Hospital Auth., Hospital 8,500 9,614 Rev. Bonds (The Pottsville Hospital and Warne Clinic), Series of 1994, 7.25% 2024 (Preref. 2004) Scranton-Lackawanna Health and Welfare Auth., City of Scranton, Lackawanna County, Hospital Rev. Bonds (Moses Taylor Hospital Project), Series 1997: 6.05% 2010 1,000 923 6.15% 2012 2,245 2,027 6.15% 2014 3,000 2,627 6.20% 2017 3,000 2,560 Westmoreland County, Health Care Fac. Rev. Bonds 6,500 6,738 (Redstone Presbyterian SeniorCare Obligated Group), Fixed Rate Rev. Bonds, Series 2000B, 8.125% 2030 Rhode Island - 0.44% Depositors Econ. Protection Corp., Special Obligation Bonds, 1993 Series A: MBIA Insured, 5.75% 2012 4,850 5,546 5.75% 2021 2,715 3,060 5.75% 2021 (Escrowed to Maturity) 1,210 1,364 South Carolina - 1.53% Florence County, Hospital Rev. Bonds, 2,785 3,035 McLeod Regional Medical Center Project, MBIA Insured, Series 1998A, 5.25% 2010 Lexington County Health Services Dist. Inc., Hospital Rev. Ref. and Improvement Bonds, Series 1997, FSA Insured: 5.50% 2007 2,000 2,210 5.00% 2009 1,000 1,075 5.125% 2021 2,000 2,023 Piedmont Municipal Power Agcy., Electric Rev. Bonds: 1991 Ref. Series, FGIC Insured, 6.25% 2021 4,640 5,471 1999A Ref. Series, 5.25% 2015 8,420 8,035 Tobacco Settlement Rev. Management Auth., 12,000 12,653 Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.00% 2022 South Dakota - 0.71% Building Auth., Rev. Capital Appreciation Bonds, 3,780 2,027 Series 1996A, AMBAC Insured, 0% 2014 Health and Educational Facs. Auth., Rev. Ref. Bonds, Series 1999 (Rapid City Regional Hospital Issue), MBIA Insured: 5.00% 2007 2,045 2,190 5.00% 2009 4,010 4,251 5.00% 2010 4,175 4,398 Housing Dev. Auth., Homeownership Mortgage Bonds, 3,000 3,136 1995 Series A, 5.80% 2014 Tennessee - 0.95% Health and Educational Facs. Board of the 6,600 7,805 Metropolitan Government of Nashville and Davidson County, Rev. Bonds (Blakeford Project), Series 1994A, 9.25% 2024 (Preref. 2004) Memphis-Shelby County Airport Auth., Special 13,100 13,594 Facs. Rev. Bonds, Ref. Series 1992 (Federal Express Corp.), 6.75% 2012 Texas - 8.96% Public Fin. Auth., G.O. Ref. Bonds, Series 2,540 2,705 2001A, 5.375% 2016 City of Austin (Travis and Williamson Counties), 6,800 7,476 Water and Wastewater System Rev. Ref. Bonds, Series 2001B, FSA Insured, 5.75% 2016 Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998: 5.25% 2009 1,620 1,683 5.00% 2010 1,705 1,733 5.25% 2028 9,400 8,914 Brazos River Auth., Rev. Ref. Bonds (Houston 3,360 3,437 Industries Incorporated Project), MBIA Insured, 4.90% 2015 Industrial Dev. Corp. of Port of Corpus 10,300 10,107 Christi, Rev. Ref. Bonds (Valero Refining and Marketing Co. Project), Series C, 5.40% 2018 Cypress-Fairbanks Independent School Dist. 6,675 3,938 (Harris County), Unlimited Tax Ref. Bonds, Capital Appreciation Bonds, Series 1993A, 0% 2013 Dallas County, Unlimited Tax Ref. And Improvement Bonds, G.O. Ref. Bonds, Series 2001A: 5.375% 2013 2,465 2,691 5.375% 2015 3,725 4,017 DeSoto Independent School Dist. (Dallas County), Unlimited Tax School Building and Ref. Bonds, Series 2001 Capital Appreciation Bonds: 0% 2018 2,835 1,207 0% 2019 3,335 1,336 0% 2020 3,335 1,258 Eanes Independent School Dist. (Travis County), Unlimited Tax School Building Bonds, Series 2001: 5.50% 2014 2,050 2,241 5.50% 2015 2,150 2,332 5.50% 2016 1,125 1,212 El Paso Independent School Dist. (El Paso County), 3,420 3,399 Unlimited Tax Ref. Bonds, Series 1999, 4.75% 2018 Garland Independent School Dist. (Dallas County), Unlimited Tax Ref. and School Building Bonds, Series 2001: 5.50% 2013 2,170 2,351 5.50% 2015 2,420 2,591 Harris County Health Facs. Dev. Corp.: Hospital Rev. Bonds (Memorial Hermann Hospital System Project): Series 1998, FSA Insured: 5.25% 2008 1,890 2,036 5.50% 2011 5,000 5,459 5.50% 2015 10,325 11,214 Series 2001A, 6.375% 2029 13,900 14,893 Rev. Bonds (CHRISTUS Health), Series 1999A, MBIA 3,380 3,630 Insured, 5.50% 2010 Rev. Bonds (St. Luke's Episcopal Hospital), Series 2001A: 5.625% 2014 1,000 1,068 5.625% 2015 2,500 2,648 5.625% 2016 2,700 2,839 5.625% 2018 2,000 2,080 5.50% 2020 4,000 4,084 5.50% 2021 5,740 5,852 Hidalgo County Health Services Corp., Hospital Rev. Bonds (Mission Hospital, Inc. Project), Series 1996: 7.00% 2008 1,000 1,029 6.75% 2016 1,740 1,670 City of Houston, Water and Sewer System, Junior Lien 3,000 1,184 Rev. Ref. Bonds, Series 1998A, FSA Insured, 0% 2019 Jefferson County, Health Facs. Dev. Corp., Baptist 4,000 4,039 Hospitals of Southeast Texas, FHA Insured Mortgage Rev. Bonds, Series 2001, AMBAC Insured, 5.20% 2021 Katy Independent School Dist. (Fort Ben, Harris and Waller Counties), Limited Tax Ref. Bonds, Series 2001: 5.50% 2015 1,290 1,395 5.50% 2016 1,805 1,939 Keller Independent School Dist. (Tarrant County), 6,040 3,690 Unlimited Tax School Building and Ref. Capital Appreciation Bonds, Series 2001, 0% 2012 Lewisville Independent School Dist. (Denton County), 2,000 2,156 Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.50% 2015 Mansfield Independent School Dist. (Tarrant and 2,635 2,825 Johnson Counties), Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.50% 2016 Midway Independent School Dist. (McLennan County), 5,000 2,007 Unlimited Tax School Building and Ref. Bonds, Capital Appreciation, Series 2000, 0% 2019 Northeast Medical Clinic, Hospital Auth., County 1,000 1,168 of Humble, Rev. Bonds, FSA Insured, 6.25% 2012 Northside Independent School Dist., Unlimited Tax 4,000 4,358 School Building and Ref. Bonds, Series 2001, 5.50% 2014 Round Rock Independent School Dist. (Williamson and Travis Counties), Unlimited Tax School Building Bonds, Series 2001-A: 5.50% 2015 2,000 2,169 5.50% 2016 2,500 2,693 City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds, New Series 1998A: 5.25% 2015 5,075 5,312 4.50% 2021 6,205 5,833 San Antonio Independent School Dist.: Unlimited Tax Ref. Bonds, Series 2001B: 5.375% 2013 4,260 4,633 5.375% 2015 4,390 4,701 Unlimited Tax School Building Bonds, Series 2001A: 5.375% 2015 1,515 1,622 5.375% 2016 1,705 1,812 Spring Branch Independent School Dist. (Harris County), Limited Tax Schoolhouse and Ref. Bonds, Series 2001: 5.375% 2015 3,875 4,137 5.375% 2016 3,070 3,254 Tarrant County Health Facs. Dev. Corp., Texas Health Resources System Rev. Bonds, Series 1997A, MBIA Insured: 5.50% 2007 4,000 4,274 5.75% 2015 3,000 3,226 Tomball Hospital Auth., Rev. Ref. Bonds, 5,250 4,969 Series 1993, 6.125% 2023 Board of Regents of the University of Texas 3,750 3,949 System, Rev. Fncg. System Bonds, Series 1996B, 5.00% 2011 Weatherford Independent School Dist. (Parker County), 2,625 1,148 Unlimited Tax School Building and Ref. Bonds, Capital Appreciation, Series 2000, 0% 2018 Utah - 0.99% Housing Fin. Agcy., Single Family Mortgage Bonds, 360 367 1995 Issue E (Federally Insured or Guaranteed Mortgage Loans), 5.50% 2024 Alpine School Dist., Utah County, G.O. School Building Bonds (Utah School Bond Guaranty Program), Series 2001A: 5.25% 2015 3,000 3,189 5.25% 2016 4,225 4,459 Salt Lake County, G.O. Ref. Bonds, Series 2001: 5.25% 2011 5,000 5,529 5.00% 2012 8,130 8,735 Vermont - 0.11% Educational and Health Buildings Fncg. Agcy., 2,250 2,381 Hospital Rev. Bonds (Medical Center Hospital of Vermont Project), Series 1993, FGIC Insured, 5.75% 2007 Virginia - 1.57% Dulles Town Center Community Dev. Auth. (Loudoun 2,500 2,502 County), Special Assessment Bonds (Dulles Town Center Project), Series 1998, 6.25% 2026 Fairfax County: Econ. Dev. Auth., Retirement Community Rev. 15,500 16,303 Bonds (Greenspring Village, Inc. Fac.), Series 1999A, 7.50% 2029 Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Inova Health Systems Hospital Project), Series 1993A: 5.00% 2011 1,300 1,384 5.00% 2023 1,200 1,218 Gateway Community Dev. Auth. (Prince William 2,130 2,135 County), Special Assessment Bonds, Series 1999, 6.25% 2026 Industrial Dev. Auth., Hanover County, Hospital 1,000 1,175 Rev. Bonds (Memorial Regional Medical Center Project at Hanover Medical Park), Series 1995, MBIA Insured, 6.50% 2009 Heritage Hunt Commercial Community Dev. Auth. (Prince William County), Special Assessment Bonds: Series 1999A, 6.85% 2019 3,399 3,565 Series 1999B, 7.00% 2029 1,000 1,056 Peninsula Ports Auth. Health System Rev. Ref. Bonds 1,000 1,060 (Riverside Health System Project), Series 1998, MBIA Insured, 5.00% 2010 Pocahontas Parkway Association, Route 895 Connector 5,000 4,840 Toll Road Rev. Bonds, Series 1998A, 5.25% 2008 Washington - 6.69% G.O. Bonds: Series B, 5.50% 2010 2,000 2,215 Series 2001C, 5.00% 2010 7,310 7,815 Health Care Facs. Auth., Rev. Bonds, Series 2001A (Providence Health System), MBIA Insured: 5.50% 2011 6,565 7,224 5.625% 2014 3,000 3,262 5.625% 2015 8,635 9,368 Public Power Supply System: Nuclear Project No. 1 Ref. Rev. Bonds, Series 5,000 5,169 1997B, 5.125% 2014 Nuclear Project No. 2 Ref. Rev. Bonds: Series 1993B, FSA Insured, 5.65% 2008 3,030 3,358 Series 1994A, 6.00% 2007 19,900 22,198 Nuclear Project No. 3 Ref. Rev. Bonds: Series 1989A, MBIA Insured, 0% 2013 4,000 2,316 Series 1989B, 7.125% 2016 5,250 6,618 Central Puget Sound Regional Transit Auth., Sales Tax and Motor Vehicle Excise Tax Bonds, Series 1999, FGIC Insured: 5.25% 2021 5,500 5,785 4.75% 2028 21,940 20,632 Public Utility Dist. No. 1 of Chelan County, 11,345 4,606 Columbia River-Rock Island Hydro-Electric System Rev. Ref. Capital Appreciation Bonds, Series 1997A, MBIA Insured, 0% 2019 Energy Northwest, Columbia Generating Station Ref. Electric Rev. Bonds, Series 2001-A, FSA Insured: 5.50% 2016 13,000 14,029 5.50% 2017 5,000 5,365 City of Seattle: Limited Tax G.O. Bonds, Series 2001 (Various Purposes): 5.00% 2013 3,835 4,048 5.00% 2014 4,040 4,228 5.25% 2015 4,255 4,520 5.375% 2016 2,000 2,135 5.375% 2017 4,440 4,707 Municipal Light and Power: Improvements and Ref. Rev. Bonds, Series 2001, 5,000 5,357 FSA Insured, 5.50% 2016 Ref. Rev. Bonds, 1998 Series A, 5.00% 2016 3,410 3,439 Rev. Anticipation Notes, Series 2001, 4.50% 2003 2,000 2,054 Wisconsin - 1.58% G.O. Bonds of 1999, Series A, 5.00% 2012 3,390 3,569 G.O. Ref. Bonds of 1998, Series 1, 5.50% 2010 3,225 3,597 Health and Educational Facs. Auth., Rev. Bonds: Children's Hospital Project, Series 1993, FGIC 2,000 2,180 Insured, 5.50% 2006 Children's Hospital of Wisconsin, Inc., Series 1998, 1,130 1,257 AMBAC Insured, 5.625% 2015 Medical College of Wisconsin, Series 1993, 5.95% 2015 3,000 3,102 The Monroe Clinic, Inc.: Series 1998: 4.80% 2010 1,110 1,114 4.90% 2011 1,165 1,173 Series 1999: 5.125% 2016 1,000 983 5.375% 2022 2,000 1,966 Housing and Econ. Dev. Auth.: Home Ownership Rev. Bonds, 1998 Series A, 5.375% 2017 1,510 1,549 Housing Rev. Bonds, 1992 Series A, 6.40% 2003 3,480 3,583 Pollution Control and Industrial Dev. Rev. Bonds 3,650 3,956 (General Motors Corp. Projects), City of Janesville, Series 1984, 5.55% 2009 City of Superior, Limited Obligation Ref. Rev. 6,000 7,562 Bonds (Midwest Energy Resources Co. Project), Series E-1991 (Collateralized), FGIC Insured, 6.90% 2021 2,112,979 Principal Market Amount Value Short-Term Securities - 5.73% (000) (000) Beaver County, Pennsylvania, Industrial Dev. Auth., 1,800 1,800 Pollution Control Rev. Ref. Bonds (Atlantic Richfield Co. Projects), Series 1995, 2.05% 2020 (2) City of Chicago, Illinois, Chicago-O'Hare International 1,200 1,200 Airport, Special Fac. Rev. Bonds (American Airlines, Inc. Project), Series 1983D, 2.55% 2017 (2) City of Columbia, Missouri, Special Obligation 3,400 3,400 Insurance Reserve Bonds, Series 1998A, 2.05% 2008 (2) City of Columbus, Ohio, G.O. Bonds, Sewer Improvement 1,000 1,002 No. 26 (E-U) Bonds, 6.50% 9/15/2001 City of Detroit, Michigan, Sewage Disposal System 2,700 2,700 Rev. Ref. Bonds, Series 1998-A, MBIA Insured , 2.00% 2023 (2) City of Hammond, Indiana, Pollution Control Rev. 1,620 1,620 Ref. Bonds (Amoco Oil Co. Project), Series 1994, 2.50% 2022 (2) Harrison County, Mississippi, Pollution Control Rev. 1,500 1,500 Ref. Bonds (E. I. du Pont de Nemours and Company Project), Series 1990, 2.55% 2010 (2) City of Houston, Texas, Tax and Rev. Anticipation 15,000 15,128 Notes, Series 2001, 3.50% 6/28/2002 City of Huntsville, Alabama, G.O. Ref. Warrants, 1,410 1,413 Series 1998-B, 4.00% 11/1/2001 Jackson County, Mississippi, Pollution Control 3,800 3,800 Ref. Rev. Bonds (Chevron U.S.A. Inc. Project), Series 1992, 2.50% 2016 (2) State of Kentucky, Asset/Liability Commission, 15,000 15,187 General Fund Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 6/26/2002 King County, Washington, Unlimited Tax G.O. Ref. 3,000 3,071 Bonds, 1993 Series C, 5.625% 6/1/2002 County of Los Angeles, California, 2001-2002 Tax 2,500 2,528 and Rev. Anticipation Notes, Series A, 3.75% 6/28/2002 Lower Neches Valley Auth., Industrial Dev. Corp. 6,775 6,775 (Texas), Exempt Facs. Ref. Rev. Bonds (ExxonMobil Project), Series 2001, Subseries 2001A, 2.50% 2031 (2) Maricopa County, Arizona Pollution Control Corp., 1,800 1,800 Pollution Control Rev. Ref. Bonds (Arizona Public Service Co. Palo Verde Project), 1994 Series A-F, 2.45% 2029 (2) Maryland Health and Higher Educational Facs. Auth., 8,190 8,190 Pooled Loan Program Rev. Bonds, Series 1994 D, 2.05% 2029 (2) The Commonwealth of Massachusetts, G.O. Bond 5,000 5,000 Anticipation Notes, 2000 Series A, 5.00% 9/6/2001 State of New Mexico, 01-02 Tax and Rev. 11,000 11,138 Anticipation Notes, Series 2001, 4.00% 6/28/2002 North Carolina Medical Care Commission, Variable Rate Hospital Rev. Bonds: (2) Pooled Fncg. Project, Series 1996A, 2.55% 2016 1,000 1,000 Lexington Memorial Hospital Project, Series 1997, 1,300 1,300 2.55% 2010 Ohio Air Quality Dev. Auth., Air Quality Dev. Rev. 1,900 1,900 Ref. Bonds (The Cincinnati Gas and Electric Compay Project), 1995 Series A, 2.55% 2030 (2) Industrial Dev. Auth. of the City of Phoenix, Arizona, 4,050 4,050 Multifamily Housing Rev. Ref. Bonds (Del Mar Terrace Apartments Project), Series 1999A, FHLMC Secured, 2.00% 2029 (2) City of Princeton, Indiana, Pollution Control Rev. 1,500 1,500 Ref. Bonds, 1996 Series (PSI Energy, Inc. Project), 2.55% 2019 (2) City of San Antonio, Texas, Water System Commercial 6,000 6,000 Paper Notes, Series A, 2.30% 10/3/2001 State of Texas, Tax and Rev. Anticipation Notes, 10,000 10,128 Series 2001A, 3.75% 8/29/2002 Uinta County, Wyoming, Pollution Control Ref. Rev. 2,100 2,100 Bonds (Chevron U.S.A. Inc. Project), Series 1993, 2.50% 2020 (2) Industrial Dev. Auth. of the City of Waynesboro, 2,600 2,600 Virginia, Variable Rate Residential Care Facs. Rev. Bonds (Sunnyside Presbyterian Home), Series 1997, 2.55% 2028 (2) State of Wyoming, General Fund Tax and Rev. 11,000 11,093 Anticipation Notes, Series 2001A, 3.50% 6/27/2002 128,923 TOTAL INVESTMENT SECURITIES (cost: $2,121,305,000) 2,241,902 Excess of cash and receivables over payables 8,591 NET ASSETS $2,250,493 (1) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. (2) Coupon rate changes periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements Key to Abbreviations Agcy. = Agency Auth. = Authority Cert. of Part. = Certificates of Participation Dept. = Department Dev. = Development Dist. = District Econ. = Economic Fac. = Facility Facs. = Facilities Fin. = Finance Fncg. = Financing G.O. = General Obligation Preref. = Prerefunded Redev. = Redevelopment Ref. = Refunding Rev. = Revenue
The Tax-Exempt Bond Fund of America Financial statements Statement of assets and liabilities at August 31, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $2,121,305) $2,241,902 Cash 1,941 Receivables for - Sales of investments $1,448 Sales of fund's shares 8,489 Interest 28,606 Other 4 38,547 2,282,390 Liabilities: Payables for - Purchases of investments 24,314 Repurchases of fund's shares 2,317 Dividends on fund's shares 3,372 Management services 625 Other expenses 1,269 31,897 Net assets at August 31, 2001 $2,250,493 Total authorized capital stock - 500,000,000 shares, $.001 par value Class A shares: Net assets $2,202,158 Shares outstanding 177,895,320 Net asset value per share $12.38 Class B shares: Net assets $26,010 Shares outstanding 2,101,370 Net asset value per share $12.38 Class C shares: Net assets $15,009 Shares outstanding 1,212,460 Net asset value per share $12.38 Class F shares: Net assets $7,316 Shares outstanding 591,080 Net asset value per share $12.38 Statement of operations for the year ended August 31, 2001 (dollars in thousands) Investment income: Income: Interest $112,024 Expenses: Management services fee $6,893 Distribution expenses - Class A 4,915 Distribution expenses - Class B 118 Distribution expenses - Class C 27 Distribution expenses - Class F 4 Transfer agent fee - Class A 489 Transfer agent fee - Class B 3 Administrative services fees - Class C 6 Administrative services fees - Class F 3 Reports to shareholders 116 Registration statement and prospectus 282 Postage, stationery and supplies 99 Directors' fees 18 Auditing and legal fees 46 Custodian fee 37 Taxes other than federal income tax 31 Other 20 13,107 Net investment income 98,917 Realized gain and unrealized appreciation on investments: Net realized gain 9,185 Net unrealized appreciation on investments 88,080 Net realized gain and unrealized appreciation on investments 97,265 Net increase in net assets resulting from operations $196,182 Statement of changes in net assets (dollars in thousands) Year ended August 31 2001 2000 Operations: Net investment income $98,917 $95,126 Net realized gain(loss) on investments 9,185 (2,279) Net unrealized appreciation (depreciation) on investments 88,080 (1,685) Net increase (decrease) in net assets resulting from operations 196,182 91,162 Dividends and distributions paid to shareholders: Dividends from net investment income: Class A (98,662) (94,620) Class B (489) (32) Class C (104) - Class F (68) - Distributions from net realized gain on investments: Class A - (6,722) Total dividends and distributions (99,323) (101,374) Capital share transactions: Proceeds from shares sold 604,544 353,333 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized 61,486 64,719 gain on investments Cost of shares repurchased (346,414) (490,988) Net increase (decrease) in net assets resulting from capital share transactions 319,616 (72,936) Total increase (decrease) in net assets 416,475 (83,148) Net assets: Beginning of year 1,834,018 1,917,166 End of year (including distributions in excess of net investment income and undistributed net investment income: $18 and $36, respectively) $2,250,493 $1,834,018 See Notes to Financial Statements
The Tax-Exempt Bond Fund of America Notes to financial statements 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Tax-Exempt Bond Fund of America, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks a high level of federally tax-free current income, consistent with the preservation of capital, through a diversified portfolio of municipal bonds. The fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 3.75%. 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: 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 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 Directors. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or when-issued basis, the fund will instruct the custodian to segregate liquid assets sufficient to meet its payment obligations in these transactions. Interest income is recognized on an accrual basis. Premiums and original issue discounts on securities are amortized daily over the expected life of the security. Amortization of market discounts on securities is recognized upon disposition. On September 1, 2001, the fund will begin amortizing discounts daily over the expected life of fixed-income securities to conform with a recent change in generally accepted accounting principles for mutual funds. Adopting this change will not impact the fund's net asset value but will result in changes to the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. These adjustments will be based on the fixed-income securities held by the fund on September 1, 2001. Because the fund determines its required distributions under federal income tax laws, adoption of this principle will not affect the amount of distributions paid to shareholders. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date. Class allocations - Income, expenses (other than class-specific expenses) and realized 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 and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are based on net investment income and net realized gains 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 and the net gains are realized by the fund. As of August 31, 2001, the cost of investment securities for book and federal income tax reporting purposes was $2,121,305,000. Net unrealized appreciation on investments aggregated $120,597,000; $133,371,000 related to appreciated securities and $12,774,000 related to depreciated securities. For the year ended August 31, 2001, the fund realized tax basis net capital gains of $8,627,000. For the year ended August 31, 2001, the fund utilized the remaining capital loss carryforward totaling $1,792,000 to offset, for tax purposes, capital gains realized during the year up to such amount. In addition, the fund has recognized, for tax purposes, capital losses totaling $917,000 which were realized during the period November 1, 1999 through August 31, 2000. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $6,893,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which certain officers and Directors of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on a series of rates beginning with 0.30% per annum of the first $60 million of daily net assets decreasing to 0.16% of such assets in excess of $3 billion. The agreement also provides for monthly fees, accrued daily, based on a series of rates beginning with 3.00% per annum of the first $3,333,333 of the fund's monthly gross investment income decreasing to 2.25% of such income in excess of $8,333,333. For the year ended August 31, 2001, the management services fee was equivalent to an annualized rate of 0.347% 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 Directors. The plans provide for annual expenses, based on average daily net assets, of up to 0.25% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares. All share classes may use up to 0.25% 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 - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.25% annual expense limit for Class A shares is not exceeded. For the year ended August 31, 2001, aggregate distribution expenses were limited to $4,915,000, or 0.25% of average daily net assets attributable to Class A shares. As of August 31, 2001, unreimbursed expenses which remain subject to reimbursement totaled $2,322,000. CLASS B SHARES - In addition to service fees of 0.25%, 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 August 31, 2001, aggregate distribution expenses were $118,000, or 1.00% of average daily net assets attributable to Class B shares. CLASS C SHARES - In addition to service fees of 0.25%, the Board of Directors 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 August 31, 2001, aggregate distribution expenses were $27,000, 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 Directors 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 August 31, 2001, aggregate distribution expenses were $4,000, or 0.25% of average daily net assets attributable to Class F shares. As of August 31, 2001, aggregate distribution expenses payable to AFD for all share classes were $1,031,000. AFD received $947,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the year ended August 31, 2001. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations. TRANSFER AGENT FEE - A fee of $492,000 was incurred during the year ended August 31, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of August 31, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $48,000. 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 August 31, 2001, total fees under the agreement were $9,000. As of August 31, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $3,000. DEFERRED DIRECTORS' FEES - Since the adoption of the deferred compensation plan in 1993, Directors 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 August 31, 2001, the cumulative amount of these liabilities was $55,000. Directors' 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 DIRECTORS AND OFFICERS - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers of the fund and certain Directors are or may be considered to be affiliated with CRMC, AFS and AFD. No such persons received any remuneration directly from the fund. 4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $676,756,000 and $392,114,000, respectively, during the year ended August 31, 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 August 31, 2001, the custodian fee of $37,000 includes $13,000 that was paid by these credits rather than in cash. For the year ended August 31, 2001, the fund reclassified $352,000 from undistributed net realized gains to undistributed net investment income to reflect permanent differences between book and tax reporting. As of August 31, 2001, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of capital stock $2,123,438 Distributions in excess of net investment income (18) Undistributed net realized gain 6,476 Net unrealized appreciation 120,597 Net assets $2,250,493
Capital share transactions in the fund were as follows: Year ended August 31, Year ended August 31, Amount 2001 Amount 2000 (000) Shares (000) Shares Class A Shares: Sold $550,783 45,771,317 $349,973 30,217,094 Reinvestment of dividends and distributions 61,021 5,082,782 64,695 5,585,672 Repurchased (335,993) (28,026,829) (490,875) (42,438,287) Net increase (decrease) in Class A 275,811 22,827,270 (76,207) (6,635,521) Class B Shares: (1) Sold 23,399 1,941,478 3,360 290,305 Reinvestment of dividends and distributions 340 28,097 24 2,086 Repurchased (1,814) (150,785) (113) (9,811) Net increase in Class B 21,925 1,818,790 3,271 282,580 Class C Shares: (2) Sold 14,787 1,217,593 - - Reinvestment of dividends and distributions 74 6,059 - - Repurchased (136) (11,192) - - Net increase in Class C 14,725 1,212,460 - - Class F Shares: (2) Sold 15,575 1,285,726 - - Reinvestment of dividends and distributions 51 4,161 - - Repurchased (8,471) (698,807) - - Net increase in Class F 7,155 591,080 - - Total net increase (decrease) in fund $319,616 26,449,600 $(72,936) (6,352,941) (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 August 31 2001 2000 1999 Net asset value, beginning of year $11.81 $11.86 $12.60 Income from investment operations : Net investment income .60 (1) .60 (1) .59 Net gains (losses) on securities .57 (1) (.01) (1) (.55) (both realized and unrealized) Total from investment operations 1.17 .59 .04 Less distributions : Dividends (from net investment income) (.60) (.60) (.59) Distributions (from capital gains) .00 (.04) (.19) Total distributions (.60) (.64) (.78) Net asset value, end of year $12.38 $11.81 $11.86 Total return (2) 10.22% 5.27% .22% Ratios/supplemental data: Net assets, end of year (in millions) $2,202 $1,831 $1,917 Ratio of expenses to average net assets .66% .67% .65% Ratio of net income to average net assets 5.00% 5.22% 4.78% Year ended August 31 1998 1997 Net asset value, beginning of year $12.27 $11.86 Income from investment operations : Net investment income .62 .64 Net gains (losses) on securities .37 .45 (both realized and unrealized) Total from investment operations .99 1.09 Less distributions : Dividends (from net investment income) (.62) (.64) Distributions (from capital gains) (.04) (.04) Total distributions (.66) (.68) Net asset value, end of year $12.60 $12.27 Total return (2) 8.26% 9.39% Ratios/supplemental data: Net assets, end of year (in millions) $1,795 $1,593 Ratio of expenses to average net assets .66% .68% Ratio of net income to average net assets 4.98% 5.27% Class B Year ended March 15 to August 31, August 31, 2001 2000 (3) Net asset value, beginning of period $11.81 $11.50 Income from investment operations : Net investment income (1) .52 .21 Net gains on securities .57 .34 (both realized and unrealized) (1) Total from investment operations 1.09 .55 Less distributions : Dividends (from net investment income) (.52) (.24) Distributions (from capital gains) .00 .00 Total distributions (.52) (.24) Net asset value, end of period $12.38 $11.81 Total return (2) 9.45% 4.88% Ratios/supplemental data: Net assets, end of period (in millions) $26 $3 Ratio of expenses to average net assets 1.40% .64% Ratio of net income to average net assets 4.06% 1.99% Class C Class F March 15 to March 15 to August 31, August 31, 2001 (3) 2001 (3) Net asset value, beginning of period $12.10 $12.10 Income from investment operations : Net investment income (1) .21 .24 Net gains on securities .29 .29 (both realized and unrealized) (1) Total from investment operations .50 .53 Less distributions : Dividends (from net investment income) (.22) (.25) Distributions (from capital gains) .00 .00 Total distributions (.22) (.25) Net asset value, end of period $12.38 $12.38 Total return (2) 4.20% 4.45% Ratios/supplemental data: Net assets, end of period (in millions) $15 $7 Ratio of expenses to average net assets .73% .40% Ratio of net income to average net assets 1.77% 2.11% Supplemental data - all classes Year ended August 31 2001 2000 Portfolio turnover rate 22.41% 28.64% 1999 1998 1997 Portfolio turnover rate 14.56% 23.19% 14.39% 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).
Report of Independent Accountants To the Board of Directors and Shareholders of The Tax-Exempt Bond Fund of America, Inc.: In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the per-share data and ratios present fairly, in all material respects, the financial position of The Tax-Exempt Bond Fund of America, Inc.(the "Fund") at August 31, 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 August 31, 2001 by correspondence with the custodian, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP Los Angeles, California September 28, 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, 99.7% 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. AMERICAN HIGH-INCOME MUNICIPAL BOND FUND Investment Portfolio, July 31, 2001 [begin pie chart] Quality ratings* AAA 8.81% AA 4.82% A 5.89% BBB 26.23% BB 29.52% B 18.86% CCC or less 0.06% Cash & equivalents 5.81% * Bond ratings reflect those of a credit rating agency; if ratings are not available, they are assigned by the fund's research analysts. [end pie chart] Principal Market Amount Value (000) (000) Fixed-Income Securities - 94.19% Alaska - 0.31% Northern Tobacco Securitization Corp., Tobacco Settlement $2,000 $ 2,076 Asset-Backed Bonds, Series 2000, 6.20% 2022 Arizona - 0.60% Industrial Dev. Auth. of the County of Navajo, Industrial 4,100 3,996 Dev. Rev. Bonds (Stone Container Corp. Project), Series 1997, AMT, 7.20% 2027 California - 8.84% Pollution Control Fncg. Auth., Solid Waste Disposal Ref. 6,000 5,935 Rev. Bonds (USA Waste Services, Inc. Project), Series 1998A, AMT, 5.10% 2018 (Put 2008) Rural Home Mortgage Fin. Auth., Single Family Mortgage 385 414 Rev. Bonds (Mortgage-Backed Securities Program), 1995 Series B, AMT, 7.75% 2026 Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bonds (Irvine Apartment Communities, LP): Series 1998A-1, AMT, 5.05% 2025 (Put 2008) 7,000 7,043 Series 1998A-3, 5.10% 2025 (Put 2010) 3,000 3,027 City of Antioch, Public Fncg. Auth., 1998 Reassessment 1,430 1,525 Rev. Bonds, Subordinated Series B, 5.80% 2011 City of Chino Hills, Community Facs.: Dist. No. 9 (Rincon Village Area), Special Tax Bonds, 3,410 3,525 Series 1998, 6.45% 2023 Dist. No. 10 (Fairfield Ranch), Special Tax Bonds, 1,000 1,058 6.95% 2030 County of El Dorado, Community Facs. Dist. No. 1992-1 995 1,025 (El Dorado Hills Dev.), Series 1999 Special Tax Bonds, 6.125% 2016 City of Fontana, Community Facs. Dist. No. 12 (Sierra 1,000 1,061 Lakes), Special Tax Bonds, Series 1999, 6.50% 2015 City of Irvine, Assessment Dist. No. 94-13 (Oak Creek), 1,000 1,017 Limited Obligation Improvement Bonds, Group Two, 5.875% 2017 Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), 1995 Series A: 6.10% 2010 (Preref. 2005) 1,000 1,121 6.125% 2015 (Preref. 2005) 2,500 2,806 6.125% 2015, MBIA Insured (Preref. 2005) 1,000 1,122 6.125% 2023 (Preref. 2005) 1,500 1,683 6.125% 2023, MBIA Insured (Preref. 2005) 2,500 2,806 County of Los Angeles, Capital Asset Leasing Corp., 970 1,006 Cert. of Part. (Marina del Rey), 1993 Series A, 6.25% 2003 City of Los Angeles, Multi-family Housing Rev. Bonds 500 526 (GNMA Collateralized - Ridgecroft Apartments Project), Series 1997E, AMT, 6.00% 2017 Regional Airports Improvement Corp., Facs. Sublease Ref. 2,500 2,256 Rev. Bonds, Airport Terminal 6 Facs. (Los Angeles International Airport), Series 1999, AMT, 5.65% 2017 Pleasanton Joint Powers Fncg. Auth., Subordinate 1,805 1,852 Reassessment Rev. Bonds, 1993 Series B, 6.125% 2002 City of Poway, Community Facs. Dist. No. 88-1 (Parkway 2,800 3,049 Business Centre), Special Tax Ref. Bonds, Series 1998, 6.75% 2015 County of Sacramento, Laguna Creek Ranch/Elliott Ranch Community Facs. Dist. No. 1, Improvement Area No. 2 Special Tax Ref. Bonds (Elliott Ranch): 6.125% 2014 250 266 6.30% 2021 500 521 County of San Diego, Reassessment Dist. No. 97-1 (4-S Ranch), Limited Obligation Improvement Bonds: 6.00% 2009 995 1,026 6.25% 2012 995 1,026 Redev. Agcy. of the City and County of San Francisco, 1,000 950 Residential Fac. Rev. Bonds (Coventry Park Project), Series 1996A, AMT, 8.50% 2026 Community Facs. Dist. No. 99-1 (Talega) of the Santa 2,390 2,510 Margarita Water Dist., Series 1999 Special Tax Bonds, 6.10% 2014 South Tahoe Joint Powers Fncg. Auth., (South Tahoe Redev. Project Area No. 1): Series 1995B, 6.25% 2020 1,000 1,033 Bond Anticipation Notes: Series 1999A, 7.30% 2007 5,500 5,748 Series 1999B, 7.30% 2007 1,000 1,045 Community Facs. Dist. No. 88-12 of the City of Temecula 940 965 (Ynez Corridor), Special Tax Ref. Bonds, 1998 Series A, 5.35% 2009 Colorado - 5.25% Housing and Fin. Auth., Single Family Program Senior Bonds, AMT: 1995 Series A, 8.00% 2025 495 529 1995 Series B, 7.90% 2025 370 396 1997 Series B-2, 7.00% 2026 740 781 City and County of Denver, Airport System Rev. Bonds, 885 936 Series 1992C, AMT, 6.75% 2013 Eaglebend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds: Series 1997A: 6.20% 2012 1,000 1,006 6.45% 2021 2,000 1,978 EagleBend Dowd Affordable Housing Corp., Multi-family Housing Project Rev. Bonds: Series 1998A: 6.53% 2024 1,665 1,642 6.53% 2029 1,320 1,292 6.63% 2039 2,950 2,872 Eagle County, Bachelor Gulch Metropolitan Dist., 3,500 3,664 Limited Tax G.O. Bonds, Series 1999, 6.70% 2019 E-470 Public Highway Auth. Senior Rev. Bonds, 7,500 667 Series 2000B (Capital Appreciation Bonds), 0% 2034 Lincoln Park Metropolitan Dist. (Douglas County), 3,000 3,029 G.O. Limited Tax Ref. and Improvement Bond, Series 2001, 7.75% 2026 Northwest Parkway Public Highway Auth., Rev. Bonds, 4,500 4,535 Series 2001D, 7.125% 2041 Rampart Range Metropolitan Dist. No. 1 (City of Lone 7,660 7,554 Tree), Rev. Bonds (Rampart Range Metropolitan Dist. No. 2 Project), Series 2001, 7.75% 2026 Vista Ridge Metropolitan Dist. (Weld County), 4,110 4,133 Limited Tax G.O. Bonds, Series 2001, 7.50% 2031 Connecticut - 2.59% Dev. Auth., Pollution Control Rev. Ref. Bonds (The Connecticut Light and Power Co. Project): Series 1993A, 5.85% 2028 1,375 1,390 Series 1993B, AMT, 5.95% 2028 1,500 1,507 Health and Educational Fac. Auth., Rev. Bonds, 1,000 1,031 University of Hartford Issue, Series D, 6.75% 2012 Mashantucket (Western) Pequot Tribe, Special Rev. Bonds: /1/ 1996 Series A: 6.375% 2004 (Escrowed to Maturity) 500 547 6.40% 2011 (Preref. 2007) 3,470 4,004 6.40% 2011 3,025 3,264 5.50% 2028 1,500 1,437 1997 Series B: 5.60% 2009 1,000 1,055 5.75% 2018 3,000 3,017 Delaware - 0.15% Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula United Methodist Homes, Inc. Issue), Series 1997A: 6.00% 2008 500 510 6.10% 2010 500 507 District of Columbia - 0.90% Hospital Rev. Ref. Bonds (Washington Hospital Center 1,200 1,261 Issue), Series 1992A, 7.00% 2005 (Preref. 2002) MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): Series 2001B, 6.625% 2031 (Put 2005) 1,000 1,045 Series 2001C, 6.80% 2031 (Put 2006) 1,500 1,582 Series 2001D, 6.875% 2031 (Put 2007) 2,000 2,124 Florida - 11.74% Arbor Greene Community Dev. Dist. (City of Tampa, 800 817 Hillsborough County), Special Assessment Rev. Bonds, Series 2000, 6.50% 2007 Championsgate Community Dev. Dist., Capital Improvement 2,850 2,661 Rev. Bonds, Series 1998A, 6.25% 2020 The Crossings at Fleming Island Community Dev. Dist. (Clay County): Special Assessment Bonds, Series 1995, 8.25% 4,500 5,268 2016 (Preref. 2005) Special Assessment Ref. Bonds, Series 2000C, 7.10% 2030 5,000 5,252 The City of Daytona Beach, Capital Improvement Rev. 7,875 7,900 Bond Anticipation Notes (Ocean Walk Project), Series A, 6.875% 2004 Fleming Island Plantation Community Dev. Dist. 1,000 1,068 (Clay County), Series 2000B, 7.375% 2031 The Groves Community Dev. Dist. (Pasco County), 3,585 3,624 Special Assessment Rev. Bonds, Series 2000B, 7.625% 2008 Harbor Bay Community Dev. Dist. (Hillsborough County), 4,000 3,986 Capital Improvement Rev. Bond, Series 2001B, 6.35% 2010 Heritage Isles Community Dev. Dist. (Hillsborough 2,210 2,212 County), Special Assessment Rev. Bonds, Series 1998A, 5.75% 2005 Heritage Palms Community Dev. Dist. (Fort Myers), Capital Improvement Rev. Bonds: Series 1998, 5.40% 2003 1,195 1,190 Series 1999, 6.25% 2004 1,485 1,499 Heritage Pines Community Dev. Dist. (Pasco County), 850 840 Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Heritage Springs Community Dev. Dist. (Pasco County), 555 559 Capital Improvement Rev. Bonds, Series 1999B, 6.25% 2005 Lake Ashton Community Dev. Dist. (City of Lake Wales, Polk County), Capital Improvement Rev. Bonds: Series 2001A, 7.40% 2032 1,000 1,014 Series 2001B, 6.40% 2011 1,000 1,007 Lake Powell Residential Golf Community Dev. Dist. (Bay 7,000 7,083 County), Special Assessment Rev. Bonds, Series 2000B, 7.00% 2010 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds: Series 1997A (Cypress Cove at Healthpark Florida, 2,500 2,255 Inc. Project), 6.25% 2017 Series 1999A (Shell Point/Alliance Obligated Group, Shell Point Village Project): 5.25% 2007 1,000 992 5.50% 2009 1,000 988 5.75% 2011 500 496 5.75% 2013 1,410 1,379 5.75% 2015 500 480 5.50% 2021 3,800 3,302 Marshall Creek Community Dev. Dist., Special Assessment 3,020 3,155 Bonds, Series 2000A, 7.65% 2032 Meadow Pointe II, Community Dev. Dist. (Pasco County), 3,485 3,489 Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005 Northern Palm Beach County Improvement Dist., Water Control and Improvement Bonds: Unit of Dev. No. 9A, Series 1996A: 6.80% 2006 790 850 7.30% 2027 1,500 1,607 Unit of Dev. No. 9B, Series 1999, 5.85% 2013 1,000 1,018 North Springs Improvement Dist. Special Assessment Bonds, Parkland Isles Project: Series 1997A, 7.00% 2019 1,000 1,052 Series 1997B, 6.25% 2005 630 635 Ocean Highway and Port Auth., Solid Waste/Pollution 1,305 1,281 Control Rev. Ref. Bonds, Series 1996 (Jefferson Smurfit Corp. (U.S.) Project), 6.50% 2006 City of Orlando, Special Assessment Rev. Bonds (Conroy 4,250 3,987 Road Interchange Project), Series 1998A, 5.80% 2026 River Ridge Community Dev. Dist. (Lee County), Capital 2,305 2,317 Improvement Rev. Bonds, Series 1998, 5.75% 2008 Stoneybrook West Community Dev. Dist. (City of Winter 1,375 1,403 Garden, Orange County), Special Assessment Rev. Bonds, Series 2000B, 6.45% 2010 Waterlefe Community Dev. Dist. (Manatee County), 1,600 1,607 Capital Improvement Rev. Bonds, Series 2001B, 6.25% 2010 Idaho - 1.20% Housing and Fin. Association, AMT: Single Family Mortgage: 1998 Series B-2, 5.20% 2011 810 832 1999 Series B-2, 5.00% 2013 930 906 1999 Series D-3, 5.15% 2013 965 945 1999 Series G-2, 5.75% 2014 480 504 2001 Series B-III, 5.75% 2020 2,760 2,815 Single Family Mortgage Subordinate Bonds: 1997 Series H-2, 5.40% 2010 1,195 1,229 1997 Series I-2, 5.55% 2010 760 788 Illinois - 6.36% Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds (Waste 3,035 2,891 Management, Inc. Project), Series 1997, AMT, 5.05% 2010 Health Facs. Auth., Rev. Ref. Bonds: Advocate Health Care Network, Series 1997A: 5.70% 2011 500 534 5.80% 2016 2,000 2,076 Alexian Brothers Health System, Series 1999, FSA 1,000 977 Insured, 5.125% 2028 Centegra Health System, Series 1998: 5.50% 2008 1,000 1,036 5.25% 2014 1,500 1,463 Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 1,016 Obligated Group, Series 2001A, FSA Insured, 5.50% 2017 1,500 1,563 Fairview Obligated Group Project: 1992 Series A, 9.50% 2022 (Preref. 2002) 2,715 2,946 1995 Series A: 6.25% 2003 1,245 1,271 7.40% 2023 3,130 3,125 Friendship Village of Schaumburg, Series 1997A, 1,500 1,248 5.25% 2018 Lutheran Senior Ministries Obligated Group - Lutheran 3,000 2,950 Hillside Village Project, Series 2001A, 7.375% 2031 OSF Healthcare System, Series 1999, 6.25% 2019 1,500 1,576 City of Chicago: G.O. Bonds (Emergency Telephone System), 1,000 1,043 Ref. Series 1999, FGIC Insured, 5.25% 2020 Chicago O'Hare International Airport, Special Facs. 9,375 8,582 Rev. Ref. Bonds (United Air Lines, Inc. Project), Series 1999B, AMT, 5.20% 2011 School Reform Board of Trustees of the Board of 1,000 995 Education of the City of Chicago, Unlimited Tax G.O. Bonds (Dedicated Tax Rev.), Series 1997A, AMBAC Insured, 5.25% 2030 Village of Montgomery, Kane and Kendall Counties, 4,000 4,053 Special Assessment Improvement Bonds, Series 2001 (Lakewood Creek Project), 7.75% 2030 Village of Robbins, Cook County, Resource Recovery Rev. Bonds (Robbins Resource Recovery Partners, L.P. Project), AMT: Series 1999A, 8.375% 2016 /2/ 3,950 296 Series 1999B, 8.375% 2016 /2/ 1,545 116 Series 1999C, 7.25% 2009 569 435 Series 1999C, 7.25% 2024 2,650 1,736 Series 1999D, 0% 2009 1,230 479 Indiana - 0.94% Dev. Fin. Auth. Rev. Ref. Bonds, Exempt Fac.-Inland 1,000 541 Steel, 5.75% 2011 Health Fac. Fncg. Auth., Hospital Rev. Bonds (Charity 2,805 2,841 Obligated Group), Series 1999D, 5.25% 2016 City of East Chicago, Pollution Control Rev. Ref. Bonds, 2,000 1,283 Inland Steel Co. Project No. 11, Series 1994, 7.125% 2007 The Indianapolis Local Public Improvement Bond Bank, 4,500 1,577 Series 1999 E Capital Appreciation Bonds, AMBAC Insured, 0% 2021 Iowa - 0.32% Fin. Auth., Ref. Rev. Bonds (Trinity Health Credit 2,000 2,162 Group), Series 2000B, AMBAC Insured, 6.00% 2027 Kentucky - 1.90% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), Series 2000, MBIA Insured: 6.50% 2020 2,000 2,074 6.625% 2028 1,000 1,041 Hospital System Ref. and Improvement Rev. Bonds, Series 1997 (Appalachian Regional Healthcare, Inc. Project): 5.60% 2008 1,000 887 5.80% 2012 1,000 831 5.85% 2017 7,000 5,472 City of Ashland, Sewage and Solid Waste Rev. Bonds, 2,200 2,335 Series 1995 (Ashland Inc. Project), AMT, 7.125% 2022 Louisiana - 1.61% Health Education Auth., Rev. Bonds (Lambeth House Project): Series 1996, 9.00% 2026 (Prefef. 2006) 1,850 2,342 Series 1998A, 6.20% 2028 5,000 4,267 Parish of West Feliciana, Pollution Control Rev. Ref. Bonds: (Entergy Gulf States, Inc. Project), Series 1999A, 2,500 2,561 5.65% 2028 (Put 2004) (Gulf States Utilities Co. Project), Series 1984-II, 1,500 1,557 7.70% 2014 Maine - 0.45% Health and Higher Educational Facs. Auth., Rev. Bonds, Piper Shores Issue, Series 1999A: 7.50% 2019 1,000 1,007 7.55% 2029 2,000 2,010 Maryland - 1.17% Anne Arundel County, Special Obligation Bonds (Arundel 1,000 1,075 Mills Project), Series 1999, 7.10% 2029 Frederick County, Special Obligation Bonds (Urbana 3,000 3,022 Community Dev. Auth.), Series 1998, 6.625% 2025 Housing Opportunities Commission of Montgomery County, Multi-family Rev. Bonds (Strathmore Court at White Flint), 1994 Issue A-2: 7.50% 2024 1,000 1,048 7.50% 2027 950 995 Housing Auth. of Prince George's County, Mortgage 1,000 1,027 Rev. Bonds, Series 1997A (GNMA Collateralized - Langley Gardens Apartments Project), 5.75% 2029 Prince George's County (Dimensions Health Corp. Issue), 1,250 630 Project and Ref. Rev. Bonds, Series 1994, 5.375% 2014 Massachusetts - 2.48% Dev. Fin. Agcy., Resource Recovery Rev. Bonds (Waste 1,000 1,095 Management, Inc. Project), Series 1999B, AMT, 6.90% 2029 (Put 2009) Health and Educational Facs. Auth., Rev. Bonds, 1,000 1,083 Partners HealthCare System Issue, Series C, 6.00% 2015 Industrial Fin. Agcy.: Resource Recovery Rev. Ref. Bonds (Ogden Haverhill Project), Series 1998A, AMT: 5.20% 2008 1,300 1,320 5.30% 2009 6,300 6,356 Rev. Bonds, Edgewood Retirement Community Project, 5,400 6,677 Series 1995A, 9.00% 2025 (Preref. 2005) Michigan - 7.10% Hospital Fin. Auth., Hospital Rev. and Ref. Bonds: The Detroit Medical Center Obligated Group, Series 1998A: 5.125% 2018 2,550 2,150 5.25% 2028 1,500 1,186 Genesys Health System Obligated Group, Series 1995A: 8.00% 2005 (Escrowed to Maturity) 2,000 2,351 8.10% 2013 (Preref. 2005) 1,100 1,316 7.50% 2027 (Preref. 2005) 2,265 2,619 Hackley Hospital Obligated Group, Series 1998A, 1,000 948 5.30% 2013 Henry Ford Health System, Series 1995A, 5.25% 2025 2,000 1,940 Pontiac Osteopathic, Series 1994A: 5.375% 2006 2,550 2,427 6.00% 2014 2,500 2,254 6.00% 2024 1,000 837 Sinai Hospital of Greater Detroit, Series 1995: 6.00% 2008 1,000 994 6.625% 2016 500 504 Housing Dev. Auth., Single-Family Mortgage Rev. Bonds, 2,110 2,129 2001 Series A, AMT, MBIA Insured, 5.30% 2016 Municipal Bond Auth., Public School Academy Facs. Program Rev. Bonds (Detroit Academy of Arts and Sciences Project), Series 2001A: 7.90% 2021 3,400 3,438 8.00% 2031 2,300 2,326 Strategic Fund Limited Obligation Rev. Bonds (United 4,250 4,128 Waste Systems, Inc. Project), Series 1995, 5.20% 2010 City of Detroit Limited Tax G.O. Bonds, Series 1995 A, 1,145 1,240 6.40% 2005 City of Flint, Hospital Building Auth. (Hurley Medical Center): Rev. Ref. Bonds, Series 1998A: 5.00% 2008 2,030 1,940 5.25% 2016 3,035 2,674 Rev. Rental Bonds, Series 1998B: 5.375% 2018 1,000 858 5.375% 2028 3,250 2,630 The Econ. Dev. Corp. of the County of Midland, 6,305 6,468 Subordinate Pollution Control Limited Obligation Rev. Ref. Bonds (Midland Cogeneration Project), Series B, AMT, 6.875% 2009 Minnesota - 1.66% City of Minneapolis, G.O. Various Purpose Bonds, 1,100 1,109 Series 2000, 5.00% 2001 Minneapolis-St. Paul Metropolitan Airports Commission, 2,000 1,933 Special Facs. Rev. Bonds (Northwest Airlines, Inc. Project), Series 2001A, AMT, 7.00% 2025 Port Auth. of the City of Saint Paul, Hotel Fac. Rev. 8,000 8,033 Bonds (Radisson Kellogg Project), Series 1999-2, 7.375% 2029 Nebraska - 0.58% City of Kearney, Industrial Dev. Rev. Bonds (The Great Platte River Road Memorial Foundation Project), Series 1998: 6.75% 2023 2,000 1,100 6.75% 2028 5,000 2,747 Nevada - 4.99% Housing Division, Single Family Mortgage Bonds: 1999 Series B-1, 4.95% 2012 565 564 1999 Series D-2, AMT, 5.90% 2013 1,340 1,431 Clark County: Special Improvement Dist. No. 121 (Southern Highlands Area), Local Improvement Bonds, Series 1999: 7.00% 2009 2,500 2,669 7.50% 2019 9,040 9,624 Special Improvement Dist. No. 132 (Summerlin South Area (Villages 15A and 18)), Local Improvement Bonds, Series 2001: 6.40% 2014 1,255 1,264 6.50% 2015 1,000 1,007 6.875% 2021 2,550 2,590 City of Henderson: Health Fac. Rev. Bonds (Catholic Healthcare West), 2,000 1,712 1998 Series A, 5.375% 2026 Local Improvement Dist.: No. T-4C (Green Valley Properties), Limited Obligation Ref. Bonds, 1999 Series A: 5.75% 2013 1,705 1,669 5.90% 2018 1,000 968 No. T-10 (Seven Hills) Limited Obligation Improvement Bonds: 6.90% 2006 955 984 7.50% 2015 5,210 5,366 City of Las Vegas, Special Improvement Dist. No. 808 (Summerlin Area), Local Improvement Bonds, Series 2001: 6.40% 2015 1,395 1,405 6.75% 2021 2,000 2,031 New Hampshire - 0.40% Business Fin. Auth., 6% Pollution Control Ref. Rev. 2,000 2,003 Bonds (Public Service Co. of New Hampshire Project - 1992 Tax-Exempt Series D), AMT, 6.00% 2021 Housing Fin. Auth., Single Family Mortgage Acquisition 650 682 Rev. Bonds, 1997 Series D, AMT, 5.60% 2012 New Jersey - 4.19% Econ. Dev. Auth.: Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation 4,750 4,897 Improvement Dist. Project (City of Elizabeth), Series 1998A, 6.375% 2031 First Mortgage Rev. Fixed-Rate Bonds (Fellowship 2,000 2,398 Village Project), Series 1995A, 9.25% 2025 (Preref. 2005) First Mortgage Rev. Ref. Bonds (Fellowship Village Project): Series 1998A: 5.10% 2008 1,250 1,217 5.20% 2009 1,000 967 5.30% 2010 1,000 963 Tax-Exempt Term Bonds: 5.50% 2018 1,000 914 5.50% 2025 1,000 883 First Mortgage Rev. Bonds (Fellowship Village Project): Series 1998C: 5.50% 2018 1,000 909 5.50% 2028 1,500 1,312 Retirement Community Rev. Bonds (Seabrook Village, 9,000 9,224 Inc. Fac.), Series 2000 A, 8.25% 2030 Winchester Gardens at Ward Homestead Project, Series 1996A: 8.50% 2016 1,000 1,070 8.625% 2025 3,000 3,211 New Mexico - 1.18% Dona Ana County, Improvement Dist. Bonds, (Santa Teresa Improvement Dist.): Airport Road Business Center, Phase III, 2,215 2,240 Series 2001A 8.375% 2021 Border Industrial Park, Phase I & II, 5,560 5,620 Series 2001B 8.875% 2021 New York - 4.47% Dormitory Auth.: Cert. of Part., on behalf of the City University of 1,475 1,631 New York, as Lessee (John Jay College of Criminal Justice Project Ref.), 6.00% 2006 Mental Health Services Fac. Improvement Rev. Bonds, 1,930 2,032 Series 1998C, 5.00% 2010 Housing Fin. Agcy.: Health Facs. Rev. Bonds (New York City), 1,000 1,098 1996 Series A Ref., 6.00% 2006 Service Contract Obligation Rev. Ref. Bonds, 800 851 1997 Series C, 5.10% 2009 City of New York: G.O. Bonds, Fiscal 2001 Series F: 5.00% 2008 2,000 2,118 5.00% 2009 2,510 2,655 Industrial Dev. Agcy., AMT: Industrial Dev. Rev. Bonds (Brooklyn Navy Yard 2,000 2,092 Cogeneration Partners, L.P. Project), Series 1997, 6.20% 2022 Solid Waste Disposal Rev. Bonds (1995 Visy Paper (NY), 2,300 2,353 Inc. Project), 7.55% 2005 Onondaga County Industrial Dev. Agcy., Solid Waste Disposal Fac. Rev. Ref. Bonds (Solvay Paperboard LLC Project), Series 1998, AMT: 6.80% 2014 1,500 1,530 7.00% 2030 5,500 5,596 Port Auth. of New York and New Jersey, Special Project Bonds, Series 4, AMT, KIAC Partners Project: 7.00% 2007 1,500 1,589 6.75% 2011 4,000 4,266 Suffolk County Industrial Dev. Agcy., Continuing 2,000 2,009 Care Retirement Community Rev. Bonds (Peconic Landing at Southhold, Inc. Project), Series 2000, 8.00% 2030 North Carolina - 2.45% Eastern Municipal Power Agcy., Power System Rev. Bonds: Ref. Series 1993B: 7.25% 2007 1,500 1,686 7.00% 2008 1,000 1,124 6.125% 2009 3,950 4,260 6.00% 2022 1,000 1,032 6.00% 2026 1,000 1,029 Ref. Series 1999A, 5.20% 2010 2,000 2,042 Ref. Series 1999B: 5.55% 2014 1,000 1,017 5.70% 2017 2,000 2,018 Series 1999 D, 6.75% 2026 1,000 1,076 Municipal Power Agcy. Number 1, Catawba Electric Rev. 1,000 1,064 Bonds, Series 1999B, 6.50% 2020 North Dakota - 0.13% Housing Fin. Agcy., Rev. Bonds, 1998 Series A, AMT, 910 900 5.25% 2018 Ohio - 1.58% The Student Loan Funding Corp., Cincinnati, Student Loan 145 146 Rev. Ref. Bonds, Series 1991A, AMT, 7.20% 2003 Water Dev. Auth., Solid Waste Disposal Rev. Bonds (Bay 4,000 3,447 Shore Power Project), Series 1998 A, AMT, 5.875% 2020 City of Cleveland, Airport Special Rev. Bonds (Continental Airlines, Inc. Project): Series 1998, 5.375% 2027 1,000 801 Series 1999, AMT, 5.70% 2019 1,500 1,314 County of Montgomery, Hospital Facs. Rev. Bonds (Kettering Medical Center Network Obligated Group), Series 1999: 6.75% 2018 1,000 1,036 6.75% 2022 1,000 1,018 County of Richland, Hospital Fac. Rev. Improvement Bonds (MedCentral Health System Obligated Group), Series 2000B: 6.375% 2022 1,000 1,054 6.375% 2030 1,750 1,737 Oklahoma - 1.46% Langston Econ. Dev. Auth., Student Housing Rev. Bonds (Langston Community Dev. Corp. Project), Series 2000A: 7.40% 2017 2,710 2,679 7.75% 2030 6,050 6,061 Trustees of the Tulsa Municipal Airport Trust, 1,000 1,006 Rev. Bonds, Ref. Series 2001B, AMT, 5.65% 2035 (Put 2008) Oregon - 1.77% City of Klamath Falls (Klamath Cogeneration Project), Series 1999: 5.75% 2013 2,000 1,945 5.875% 2016 4,500 4,337 6.00% 2025 5,750 5,520 Pennsylvania - 3.40% Health Care Fac. Rev. Bonds (Redstone Presbyterian 4,000 4,129 SeniorCare Obligated Group), Fixed Rate Rev. Bonds, Series 2000B, 8.125% 2030 Housing Fin. Agcy., Rev. Bonds, Single Housing Family 1,400 1,448 Mortgage, Series 1997-58A, AMT, 5.85% 2017 Allegheny County Hospital Dev. Auth., Health System 2,000 2,074 Rev. Bonds (West Penn Allegheny Health System), Series 2000B, 9.25% 2030 Lehigh County, General Purpose Auth. Rev. Bonds 1,000 1,072 (KidsPeace Obligated Group), ACA Insured, 5.70% 2009 Hospitals and Higher Education Facs. Auth. of Philadelphia: Frankford Hospital, Series A, 6.00% 2014 (Escrowed 500 532 to Maturity) Hospital Rev. Bonds (Temple University Hospital), 1,000 981 Series of 1997, 5.70% 2009 Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral Village Project), Series of 1998: 5.30% 2007 1,145 1,128 5.50% 2010 1,000 962 Scranton-Lackawanna Health and Welfare Auth., City of Scranton, Lackawanna County, Hospital Rev. Bonds (Moses Taylor Hospital Project), Series 1997: 5.75% 2006 1,585 1,519 5.80% 2007 1,680 1,594 5.90% 2008 1,730 1,635 6.00% 2009 940 886 6.10% 2011 2,005 1,871 6.20% 2017 1,000 893 Westmoreland County Industrial Dev. Auth., Variable 2,000 1,954 Rate Rev. Bonds (Nat'l Waste and Energy Corp.; Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 Rhode Island - 0.31% Housing and Mortgage Fin. Corp., Homeownership 2,000 2,041 Opportunity Bonds, Series 9-B-1, AMT, 5.55% 2013 South Carolina - 1.86% Tobacco Settlement Rev. Management Auth., Tobacco 2,500 2,569 Settlement Asset-Backed Bonds, Series 2001B, 6.00% 2022 Piedmont Municipal Power Agcy., Electric Rev. Bonds, 8,000 7,393 1999A Ref. Series, 5.25% 2015 York County, Pollution Control Facs. Rev. Bonds 2,300 2,458 (Bowater Inc. Project), Series 1990, AMT, 7.625% 2006 Tennessee - 0.38% Health and Educational Facs. Board of the Metropolitan 1,160 955 Government of Nashville and Davidson County, Rev. Ref. Bonds, Series 1998, 5.65% 2024 Memphis-Shelby County Airport Auth., Special Facs. Rev. 1,500 1,548 Bonds (Federal Express Corp.), Series 1984, 7.875% 2009 Texas - 5.07% Alliance Airport Auth., Inc., Special Facs. Rev. Bonds 1,500 1,659 (American Airlines, Inc. Project), Series 1990, AMT, 7.00% 2011 Bell County Health Facs. Dev. Corp., Retirement Fac. 1,000 920 Rev. Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998, 5.25% 2028 Brazos River Auth., Collateralized Pollution Control 2,000 2,022 Rev. Ref. Bonds (Texas Utilities Electric Co. Project), Series 1995B, AMT, 5.05% 2030 (Put 2006) Industrial Dev. Corp. of Port of Corpus Christi, Rev. Ref. Bonds (Valero Refining and Marketing Co. Project): Series 1997D, AMT, 5.125% 2009 5,250 5,178 Series C, 5.40% 2018 1,000 957 Donna Independent School Dist. (Hidalgo County), 1,000 1,015 Unlimited Tax School Building Bonds, Series 1998, 5.20% 2018 Fort Worth International Airport Fac. Improvement Corp., 3,000 3,126 American Airlines, Inc., Rev. Ref. Bonds, Series 2000C, AMT, American Airlines Insured, 6.15% 2029 Harris County Health Facs. Dev. Corp.: Hospital Rev. Bonds (Memorial Hermann Healthcare 4,100 4,319 System), Series 2001A, 6.375% 2029 Rev. Bonds (St. Luke's Episcopal Hospital), Series 2001A: 5.625% 2014 1,500 1,575 5.50% 2020 2,850 2,868 Hidalgo County Health Services Corp., Hospital Rev. Bonds, (Mission Hospital, Inc. Project), Series 1996: 7.00% 2008 2,365 2,425 6.75% 2016 1,000 955 Matagorda County, Navigation Dist. Number One, Rev. Ref. 2,500 2,443 Bonds (Houston Lighting & Power Co. Project), Series 1997, AMT, AMBAC Insured, 5.125% 2028 Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 4,740 4,353 6.125% 2023 Utah - 0.72% Housing Fin. Agcy., Single Family Mortgage Bonds, AMT: 1997 Series G-2, Class III, 5.60% 2010 805 837 1998 Series G-2, Class III, 4.90% 2012 865 877 1999 Series B-2, Class III, 5.10% 2012 990 1,010 1999 Series C-3, Class III, 5.60% 2013 1,310 1,362 Federally Insured or Guaranteed Mortgage Loans, 695 725 1999 Issue D, AMT, 5.60% 2013 Virginia - 2.28% Dulles Town Center Community Dev. Auth. (Loudoun County), 4,000 3,963 Special Assessment Bonds (Dulles Town Center Project), Series 1998, 6.25% 2026 Fairfax County Econ. Dev. Auth., Retirement Community Rev. Bonds (Greenspring Village, Inc. Fac.), Series 1999 A: 6.75% 2012 1,500 1,573 7.50% 2029 4,000 4,190 Gateway Community Dev. Auth. (Prince William County), 2,000 1,969 Special Assessment Bonds, Series 1999, 6.25% 2026 Industrial Dev. Auth. of the County of Henrico, Solid 500 477 Waste Disposal Rev. Bonds (Browning-Ferris Industries of South Atlantic, Inc. Project), Series 1995, AMT, 5.30% 2011 (Put 2005) Heritage Hunt Commercial Community Dev. Auth. (Prince 1,000 1,044 William County), Special Assessment Bonds, Series 1999B, 7.00% 2029 Pocahontas Parkway Association, Route 895 Connector Toll Road Rev. Bonds, Series 1998A: 5.25% 2008 1,100 1,065 5.00% 2011 1,000 925 Wisconsin - 1.40% Housing and Econ. Dev. Auth., Housing Rev. Bonds, 1,000 1,016 1993 Series B, AMT, 5.30% 2006 City of Oconto Falls, Community Dev. Auth., Dev. Rev. Bonds (Oconto Falls Tissue, Inc. Project), Series 1997, AMT: 7.75% 2022 8,800 7,463 8.125% 2022 /1/ 990 869 628,193 Principal Market Amount Value (000) (000) Short-Term Securities - 5.69% City and County of Denver, G.O. Various Purpose Bonds, 1,000 1,000 Series 1999B, 4.75% 2001 Gulf Coast Waste Disposal Auth., Texas, Environmental Facs. Rev. Bonds (ExxonMobil Project), AMT: Series 2001A, 2.85% 2030 /3/ 1,000 1,000 Series 2001B, 2.85% 2025 /3/ 3,900 3,900 Hampton, Virginia, Redev. and Housing Auth., 200 200 Multifamily Housing Rev. Bonds, 1996 Series (Avalon Pointe Project), AMT, 2.70% 2026 /3/ City of Houston, Texas, Tax and Rev. Anticipation Notes, 3,500 3,528 Series 2001, 3.50% 2002 State of Kentucky, Asset/Liability Commission, General 5,000 5,061 Fund Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 2002 Lincoln County, Wyoming, Pollution Control Rev. Bonds 2,100 2,100 (Exxon Project), Series 1984A, 2.70% 2014 /3/ County of Los Angeles, 2001-2002 Tax and Rev. 4,500 4,546 Anticipation Notes, Series A, 3.75% 2002 Madison County, Illinois, Environmental Improvement Rev. 2,400 2,400 Bonds (Shell Wood River Refining Co. Project), Series 1997, AMT, 2.85% 2032 /3/ Maryland Health and Higher Educational Facs. Auth., 3,600 3,600 Pooled Loan Program Rev. Bonds, Series D, 2.60% 2029 /3/ The Commonwealth of Massachusetts, G.O. Bond 3,000 3,002 Anticipation Notes, 2000 Series A, 5.00% 2001 State of New Mexico, 2001-2002 Tax and Rev. 3,000 3,037 Anticipation Notes, Series 2001, 4.00% 2002 North Carolina Medical Care Commission Variable Rate 1,800 1,800 Hospital Rev. Bonds (Pooled Fncg. Project), Series 1996A, 2.75% 2016 /3/ State of Texas, Tax and Rev. Anticipation Notes, 1,800 1,801 Series 2000, 5.25% 2001 State of Wyoming, General Fund Tax and Rev. 1,000 1,008 Anticipation Notes, Series 2001A, 3.50% 2002 37,983 TOTAL INVESTMENT SECURITIES: (cost: $657,717,000) 666,176 Excess of cash and receivables over payables 787 NET ASSETS $666,963 /1/ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. /2/ Company not making interest payments; bankruptcy proceedings pending. /3/ Coupon rate changes periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements Key to Abbreviations Agcy. = Agency AMT = Alternative Minimum Tax Auth. = Authority Cert. of Part. = Certificates of Participation Dept. = Department Dev. = Development Dist. = District Econ. = Economic Fac. = Facility Facs. = Facilities Fin. = Finance Fncg. = Financing G.O. = General Obligation Preref. = Prerefunded Redev. = Redevelopment Ref. = Refunding Rev. = Revenue
FINANCIAL STATEMENTS Statements of assets and liabilities at July 31, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $657,717) $666,176 Cash 1,023 Receivables for - Sales of investments $1,000 Sales of fund's shares 2,037 Interest 10,690 13,727 680,926 Liabilities: Payables for - Purchases of investments 11,190 Repurchases of fund's shares 880 Dividends on fund's shares 1,305 Management services 223 Other expenses 365 13,963 Net assets at July 31, 2001 $666,963 Total authorized capital stock - 200,000,000 shares, $.001 par value Class A shares: Net assets $650,411 Shares outstanding 42,374,830 Net asset value per share $15.35 Class B shares: Net assets $10,894 Shares outstanding 709,720 Net asset value per share $15.35 Class C shares: Net assets $4,176 Shares outstanding 272,030 Net asset value per share $15.35 Class F shares: Net assets $1,482 Shares outstanding 96,560 Net asset value per share $15.35 Statement of operations for the year ended July 31, 2001 (dollars in thousands) Investment income: Income: Interest $37,807 Expenses: Management services fee 2,451 Distribution expenses - Class A 1,780 Distribution expenses - Class B 56 Distribution expenses - Class C 7 Distribution expenses - Class F 1 Transfer agent fee - Class A 165 Transfer agent fee - Class B 2 Administrative services fees - Class C 2 Administrative services fees - Class F 1 Reports to shareholders 28 Registration statement and prospectus 158 Postage, stationery and supplies 31 Directors' fees 22 Auditing and legal fees 42 Custodian fee 12 Taxes other than federal income tax 11 Other expenses 94 4,863 Net investment income 32,944 Realized loss and unrealized appreciation on investments: Net realized loss (36) Net unrealized appreciation 19,734 Net realized loss and unrealized appreciation on investments 19,698 Net increase in net assets resulting from operations $52,642 Statements of changes in net assets (dollars in thousands) Year ended July 31, 2001 2000 Operations: Net investment income $32,944 $30,190 Net realized loss on investments (36) (6,554) Net unrealized appreciation (depreciation) on investments 19,734 (14,814) Net increase in net assets resulting from operations 52,642 8,822 Dividends and distributions paid to shareholders: Dividends from net investment income: Class A (32,744) (30,284) Class B (270) (18) Class C (33) - Class F (15) - Distributions from net realized gain on investments: Class A - (1,028) Total dividends and distributions (33,062) (31,330) Capital share transactions: Proceeds from shares sold 215,865 180,415 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments 20,280 20,208 Cost of shares repurchased (140,379) (190,669) Net increase in net assets resulting from capital share transactions 95,766 9,954 Total increase (decrease) in net assets 115,346 (12,554) Net assets: Beginning of year 551,617 564,171 End of year (including undistributed net investment income: $64 and $68, respectively) $666,963 $551,617 See Notes to Financial Statements
Notes to Financial Statements 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - American High-Income Municipal Bond Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks a high level of current income exempt from regular federal income taxes through a diversified, carefully researched portfolio of higher yielding, lower rated, higher risk municipal bonds. The fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 3.75%. 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: 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 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 Directors. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or when-issued basis, the fund will instruct the custodian to segregate liquid assets sufficient to meet its payment obligations in these transactions. Interest income is recognized on an accrual basis. Premiums and original issue discounts on securities are amortized daily over the expected life of the security. Amortization of market discounts on securities is recognized upon disposition. On August 1, 2001, the fund will begin amortizing discount daily over the expected life of fixed-income securities to conform with a recent change in generally accepted accounting principles for mutual funds. Adopting this change will not impact the fund's net asset value and will result in changes to the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. These adjustments will be based on the fixed-income securities held by the fund on August 1, 2001. Because the fund determines its required distributions under Federal income tax laws, adoption of this principle will not affect the amount of distributions paid to shareholders. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Class Allocations - Income, expenses (other than class-specific expenses) and realized 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 and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are based on net investment income and net realized gains 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 and the net gains are realized by the fund. As of July 31, 2001, the cost of investment securities for book and federal income tax reporting purposes was $657,717,000. Net unrealized appreciation on investments aggregated $8,459,000; $23,418,000 related to appreciated securities and $14,959,000 related to depreciated securities. For the year ended July 31, 2001, the fund realized tax basis net capital losses of $167,000. The fund had available at July 31, 2001, a net capital loss carryforward totaling $6,620,000 which may be used to offset capital gains realized during subsequent years through 2009 and thereby relieve the fund and its shareholders of any federal income tax liability with respect to the capital gains that are so offset. The fund will not make distributions from capital gains while a capital loss carryforward remains. In addition, the fund has deferred, for tax purposes, to fiscal year ending July 31, 2002, the recognition of capital losses totaling $169,000 which were realized during the period November 1, 2000 through July 31, 2001. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $2,451,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which certain officers and Directors of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on an annual rate of 0.30% of the first $60 million of daily net assets and 0.21% of such assets in excess of $60 million. The agreement also provides for monthly fees, accrued daily, of 3.00% on the fund's monthly gross investment income. For the year ended July 31, 2001, the management services fee was equivalent to an annualized rate of 0.407% 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 Directors. The plans provide for annual expenses, based on average daily net assets, of up to 0.30% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares. All share classes may use up to 0.25% 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 - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.30% annual expense limits for Class shares is not exceeded. For the year ended July 31, 2001, aggregate distribution expenses were limited to $1,780,000, or 0.30% of average daily net assets attributable to Class A shares. As of July 31, 2001, unreimbursed expenses which remain subject to reimbursement totaled $109,000. CLASS B SHARES - In addition to service fees of 0.25%, 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 July 31, 2001, aggregate distribution expenses were $56,000, or 1.00% of average daily net assets attributable to Class B shares. CLASS C SHARES - In addition to service fees of 0.25%, the Board of Directors 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 July 31, 2001, aggregate distribution expenses were $7,000, 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 Directors 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 July 31, 2001, aggregate distribution expenses were $1,000, or 0.25% of average daily net assets attributable to Class F shares. As of July 31, 2001, aggregate distribution expenses payable to AFD for all share classes were $212,000. AFD received $306,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the year ended July 31, 2001. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations. TRANSFER AGENT FEE - A fee of $167,000 was incurred during the year ended July 31, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of July 31, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $12,000. 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 July 31, 2001, total fees under the agreement were $3,000. As of July 31, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $1,000. DEFERRED DIRECTORS' FEES - Since the adoption of the deferred compensation plan in 1994, Directors 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 July 31, 2001, the cumulative amount of these liabilities was $25,000. Directors 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 DIRECTORS AND OFFICERS - CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Officers of the fund and certain Directors are or may be considered to be affiliated with CRMC, AFS and AFD. No such persons received any remuneration directly from the fund. 4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $181,541,000 and $103,028,000, respectively, during the year ended July 31, 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 July 31, 2001, the custodian fee of $12,000 includes $4,000 that was paid by these credits rather than in cash. For the year ended July 31, 2001, the fund reclassified $114,000 from undistributed net realized gains to additional paid-in-capital to reflect permanent differences between book and tax reporting. As of July 31, 2001, net assets consisted of the following: (dollars in thousands) Capital paid in on shares of beneficial interest $665,211 Undistributed net investment income 64 Accumulated net realized loss (6,771) Net unrealized appreciation 8,459 Net assets $666,963
Capital share transactions in the fund were as follows: Year ended July 31, 2001 Amount (000) Shares Class A Shares: Sold $ 199,249 13,256,036 Reinvestment of dividends and distributions 20,047 1,332,347 Repurchased (138,032) (9,188,783) Net increase in Class A 81,264 5,399,600 Class B Shares: /1/ Sold 9,884 656,159 Reinvestment of dividends and distributions 199 13,211 Repurchased (1,171) (77,890) Net increase in Class B 8,912 591,480 Class C Shares: /2/ Sold 4,325 285,173 Reinvestment of dividends and distributions 22 1,461 Repurchased (221) (14,604) Net increase in Class C 4,126 272,030 Class F Shares: /2/ Sold 2,407 159,012 Reinvestment of dividends and distributions 12 807 Repurchased (955) (63,259) Net increase in Class F 1,464 96,560 Total net increase in fund $ 95,766 6,359,670 Year ended July 31, 2000 Amount (000) Shares Class A Shares: Sold $ 178,540 12,024,123 Reinvestment of dividends and distributions 20,193 1,360,381 Repurchased (190,515) (12,841,704) Net increase in Class A 8,218 542,800 Class B Shares: /1/ Sold 1,875 127,641 Reinvestment of dividends and distributions 15 1,043 Repurchased (154) (10,444) Net increase in Class B 1,736 118,240 Class C Shares: /2/ Sold - - Reinvestment of dividends and distributions - - Repurchased - - Net increase in Class C - - Class F Shares: /2/ Sold - - Reinvestment of dividends and distributions - - Repurchased - - Net increase in Class F - - Total net increase in fund $ 9,954 661,040 /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 July 31, 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Year $14.87 $15.49 $16.12 $15.90 $15.23 Income from Investment Operations : Net investment income .83 (1) .82 (1) .81 .84 .87 Net gains (losses) on securities .48 (1) (.58) (1) (.54) .26 .80 (both realized and unrealized) Total from investment operations 1.31 .24 .27 1.10 1.67 Less Distributions : Dividends (from net investment income) (.83) (.83) (.82) (.84) (.86) Distributions (from capital gains) - (.03) (.08) (.04) (.14) Total distributions (.83) (.86) (.90) (.88) (1.00) Net Asset Value, End of Year $15.35 $14.87 $15.49 $16.12 $15.90 Total Return (2) 9.14% 1.61% 1.63% 7.05% 11.36% Ratios/Supplemental Data: Net assets, end of year (in millions) $650 $550 $564 $464 $316 Ratio of expenses to average net assets .80% .80% .78% .79% .87% Ratio of net income to average net assets 5.50% 5.53% 5.09% 5.19% 5.51% Class B Class C Class F Year ended March 15 to March 15 to March 15 to July 31, July 31, July 31, July 31, 2001 2000 (3) 2001 (3) 2001 (3) Net Asset Value, Beginning of Period $14.87 $14.79 $15.11 $15.11 Income from Investment Operations : Net investment income (1) .71 .23 .25 .27 Net gains on securities .50 .14 .25 .25 (both realized and unrealized) (1) Total from investment operations 1.21 .37 .50 .52 Less Distributions : Dividends (from net investment income) (.73) (.29) (.26) (.28) Distributions (from capital gains) - - - - Total distributions (.73) (.29) (.26) (.28) Net Asset Value, End of Period $15.35 $14.87 $15.35 $15.35 Total Return (2) 8.45% 3.16% 3.34% 3.50% Ratios/Supplemental Data: Net assets, end of period (in millions) $11 $2 $4 $1 Ratio of expenses to average net assets 1.48% .55% .59% .37% Ratio of net income to average net assets 4.72% 1.77% 1.75% 1.98% Supplemental Data - All Classes Year ended July 31, 2001 2000 1999 1998 1997 Portfolio turnover rate 18.23% 33.20% 16.67% 16.38% 15.31% 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.
Report of Independent Accountants To the Board of Directors and Shareholders of American High-Income Municipal Bond Fund, Inc.: In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the per-share data and ratios present fairly, in all material respects, the financial position of American High-Income Municipal Bond Fund, Inc. (the "Fund") at July 31, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios for the each of the periods presented in conformity with accounting principles generally accepted in the United States. 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, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2001 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, California August 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. 99.9% of the dividends paid from net investment income qualify as exempt-interest dividends. 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 AMOUNTS ABOVE ARE 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. LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA Investment Portfolio, July 31, 2001 [begin pie chart] Texas (TX) 11.63% Michigan (MI) 8.49% Illinois (IL) 7.47% California (CA) 7.23% New York (NY) 7.10% North Carolina (NC) 5.21% Washington (WA) 4.42% District of Columbia (DC) 4.12% Louisiana (LA) 3.51% Pennsylvania (PA) 2.80% Other states 33.30% Cash & Equivalents 4.72% [end pie chart] Principal Market Amount Value (000) (000) Fixed-Income Securities - 95.28% Alabama - 0.97% Industrial Dev. Board of the City of Butler, Pollution $3,000 $ 3,051 Control Ref. Rev. Bonds (James River Project), Series 1993, 5.50% 2005 Alaska - 1.73% Industrial Dev. and Export Auth. Power Rev. Bonds (Snettisham Hydroelectric Project), First Series, AMBAC Insured, AMT: 5.25% 2005 930 971 5.25% 2005 (Escrowed to Maturity) 70 74 Northern Tobacco Securitization Corp., Tobacco Settlement Asset-Backed Bonds, Series 2000: 5.60% 2009 1,000 1,048 5.60% 2010 1,000 1,048 Student Loan Corp., Student Loan Rev. Bonds, 2,140 2,277 2000 Series A, AMT, AMBAC Insured, 5.65% 2010 Arizona - 0.94% Industrial Dev. Auth. of the County of Maricopa, 1,950 1,914 Health Fac. Rev. Bonds (Catholic Healthcare West Project), 1998 Series A, 4.30% 2005 City of Phoenix, Senior Lien Street and Highway User 1,000 1,038 Rev. Ref. Bonds, Series 1993, 5.00% 2008 California - 7.23% Pollution Control Fncg. Auth., Solid Waste Disposal 3,500 3,462 Ref. Rev. Bonds (USA Waste Services, Inc. Project), Series 1998A, AMT, 5.10% 2018 (Put 2008) /1/ Statewide Communities Dev. Auth.: Apartment Dev. Rev. Ref. Bonds (Irvine Apartment 4,000 4,025 Communities, LP), Series 1998A-1, AMT, 5.05% 2025 (Put 2008) /1/ Cert. of Part. (Catholic Healthcare West Project), 915 966 1999 Series A, 6.00% 2009 Association of Bay Area Governments: Fin. Auth. for Nonprofit Corps., Ref. Rev. Cert. Of Part. (Episcopal Homes Foundation), Series 1998: 5.00% 2007 1,405 1,449 5.00% 2008 2,455 2,521 Fin. Auth. Taxable Rev. Ref. Cert. of Part. (American Baptist Homes of the West Facs. Project), Series 1997B: 5.25% 2007 740 720 5.50% 2007 915 878 Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), 1995 Series A: 5.75% 2005 (Escrowed to Maturity) 3,500 3,819 5.75% 2006 (Preref. 2005) /1/ 780 865 County of Los Angeles, Capital Asset Leasing Corp., 695 721 Cert. of Part. (Marina del Rey), 1993 Series A, 6.25% 2003 Sacramento Cogeneration Auth., Cogeneration Project Rev. 1,200 1,300 Bonds (Procter & Gamble Project), 1995 Series, 7.00% 2004 City of Torrance, Hospital Rev. Bonds (Torrance Memorial Medical Center), Series 2001A: 4.70% 2009 1,010 1,014 4.80% 2010 940 945 Colorado - 1.33% Housing and Fin. Auth., Single Family Program Senior 365 374 Bonds, 1995 Series C-2, 5.625% 2009 EagleBend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds, Series 1997A: 5.45% 2002 100 100 5.75% 2007 2,585 2,599 University of Colorado Hospital Auth., Hospital Ref. 1,000 1,092 Rev. Bonds, Series 1997A, AMBAC Insured, 5.50% 2007 Connecticut - 0.51% Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, 1996 Series A, (Escrowed to Maturity): /2/ 6.25% 2002 500 519 6.375% 2004 995 1,089 Delaware - 0.65% Economic Dev. Auth., Pollution Control Ref. Rev. Bonds 2,000 2,054 (Delmarva Power & Light Co. Project), Series 2001C, AMBAC Insured, 4.90% 2026 (Put 2011) /1/ District of Columbia - 4.12% G.O. Ref. Bonds: Series 1993D, FGIC Insured: 5.10% 2002 (Escrowed to Maturity) 932 960 5.10% 2002 68 70 Series 1999, FSA Insured: 5.50% 2009 2,555 2,779 5.50% 2009 (Escrowed to Maturity) 195 214 Fixed Rate Rev. Bonds (National Academy of Sciences 1,065 1,119 Project), Series 1999A, AMBAC Insured, 5.00% 2007 Hospital Rev. Ref. Bonds (Medlantic Healthcare Group, Inc. Issue), Series 1997A, MBIA Insured, (Escrowed to Maturity): 6.00% 2006 1,000 1,109 6.00% 2007 1,250 1,399 MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and Washington Hospital Center Projects): /1/ Series 2001B, 6.625% 2031 (Put 2005) 2,000 2,089 Series 2001D, 6.875% 2031 (Put 2007) 3,000 3,187 Florida - 1.78% Dade County, Resource Recovery Fac. Ref. Rev. Bonds, 3,500 3,835 Series 1996, AMT, AMBAC Insured, 6.00% 2006 Lee County Industrial Dev. Auth., Healthcare Facs. Rev. 1,500 1,512 Bonds, Series 1999A (Shell Point/Alliance Obligated Group, Shell Point Village Project), 5.25% 2005 Meadow Pointe II, Community Dev. Dist. (Pasco County), 225 226 Capital Improvement Rev. Bonds, Series 1998A, 5.25% 2003 Hawaii - 0.68% Cert. of Part. (Kapolei State Office Building), 1,000 1,050 1998 Series A, AMBAC Insured, 5.00% 2005 Housing and Community Dev. Corp. of Hawaii, Single 1,000 1,073 Family Mortgage Purchase Rev. Bonds, Series 2000 A, AMT, 5.90% 2008 Idaho - 0.90% Housing and Fin. Association, Single Family Mortgage Bonds, AMT: 1998 Series C-2, 5.25% 2011 445 458 1998 Series E-3, 5.125% 2011 620 636 1998 Series H, 4.65% 2012 1,135 1,146 1998 Series I-2, 4.70% 2012 570 574 Illinois - 7.47% Health Facs. Auth., Rev. Bonds: Series 1997A, (Advocate Health Care Network): 5.50% 2004 1,250 1,314 5.10% 2005 1,815 1,899 Series 1998A: 5.00% 2006 (Escrowed to Maturity) 980 1,043 5.00% 2006 750 783 Series 2000: 5.25% 2007 1,000 1,058 5.30% 2008 2,000 2,118 Series 1998 (Centegra Health System), 5.50% 2007 2,480 2,579 Series 1997A (Highland Park Hospital Project), 1,490 1,609 FGIC Insured, 5.50% 2005 Series 1998 (Northwestern Medical Faculty Foundation, 1,810 1,935 Inc.), MBIA Insured, 5.25% 2006 OSF Healthcare System: Series 1993, 5.25% 2001 2,300 2,311 Series 1999: 5.25% 2005 855 891 5.375% 2006 900 944 5.50% 2008 1,000 1,052 Series 1997A (Victory Health Services), 5.25% 2004 1,755 1,808 Housing Dev. Auth., Multi-family Housing Bonds, 1,165 1,198 1992 Series A, 6.55% 2003 City of Chicago, Chicago O'Hare International Airport, 1,000 915 Special Facs. Rev. Ref. Bonds (United Air Lines, Inc. Project), Series 1999B, AMT, 5.20% 2011 Indiana - 1.89% Health Fac. Fncg. Auth., Hospital Rev. Bonds: Charity Obligated Group, Series 1999D, 5.50% 2008 1,000 1,081 Clarian Health Partners, Inc., Series 1996A, 1,000 1,064 MBIA Insured, 5.25% 2008 Housing Fin. Auth., Multi-family Housing Rev. Bonds 1,400 1,438 (Indiana Affordable Housing, Inc.), Series 1999A, 5.40% 2009 Boone County Hospital Association, Lease Rev. Bonds, 1,200 1,257 Series 2001, FGIC Insured, 5.00% 2009 Hospital Auth. of St. Joseph County, Health System 1,010 1,094 Bonds (Memorial Health System), Series 1998A, MBIA Insured, 5.50% 2008 Iowa - 0.99% Fin. Auth., Hospital Facs. Rev. Bonds: Series 1998A (Iowa Health System), MBIA Insured, 1,895 2,025 5.25% 2007 Series 1999 (Mercy Medical Center Project), 1,000 1,075 FSA Insured, 5.30% 2009 Kentucky - 2.46% Econ. Dev. Fin. Auth.: Health System Rev. Bonds (Norton Healthcare, Inc.), 3,000 3,153 Series 2000A, MBIA Insured, 6.125% 2010 Hospital System Ref. and Improvement Rev. Bonds, (Appalachian Regional Healthcare, Inc. Project), Series 1997: 5.20% 2004 1,000 943 5.40% 2006 1,500 1,371 5.50% 2007 465 419 City of Ashland, Pollution Control Ref. Rev. Bonds, 1,750 1,848 Series 1999 (Ashland Inc. Project), 5.70% 2009 Louisiana - 3.51% Public Facs. Auth., Hospital Rev. and Ref. Bonds 4,500 4,856 (Franciscan Missionaries of Our Lady Health System Project), Series 1998A, FSA Insured, 5.50% 2006 Jefferson Parish Hospital Service Dist. No. 2, Parish 1,000 1,053 of Jefferson, Hospital Rev. Bonds, Series 1998, FSA Insured, 5.00% 2005 Plaquemines Port, Harbor and Terminal Dist., Marine 3,000 3,054 Terminal Facs. Rev. Ref. Bonds (Electro-Coal Transfer Corp. Project), Series 1985 C, 5.00% 2007 Parish of St. Charles, Pollution Control Rev. Ref. 2,000 2,051 Bonds (Entergy Louisiana, Inc. Project), Series 1999-C, 5.35% 2029 (Put 2003) /1/ Maine - 1.58% Educational Loan Marketing Corp., Senior Student Loan Rev. Bonds, Series 1994A-4, AMT: 5.95% 2003 1,000 1,051 6.05% 2004 1,500 1,583 Housing Auth., Mortgage Purchase Bonds, 1994 Series E, 880 894 6.30% 2002 Student Loan Rev. Ref. Bonds, Series 1992A-1, AMT: 6.20% 2003 515 529 6.30% 2004 880 904 Maryland - 0.64% G.O. Bonds, State and Local Facs. Loan of 2000, 1,000 1,101 Series F, 5.50% 2008 Community Dev. Administration, Dept. of Housing and 895 909 Community Dev., Single Family Program Bonds, 1994 First Series, 5.70% 2017 (2004) /1/ Massachusetts - 2.26% Educational Fncg. Auth., Education Loan Rev. and Ref. 2,335 2,528 Bonds, Issue G, Series 2000A, AMT, MBIA Insured, 5.55% 2008 Industrial Fin. Agcy. Resource Recovery Rev. Ref. 1,550 1,575 Bonds (Ogden Haverhill Project), Series 1998A, AMT, 5.15% 2007 Port Auth. Special Facs. Rev. Bonds (United Air Lines, 3,000 2,999 Inc. Project), Series 1999A, AMT, 5.75% 2029 (Put 2007) /1/ Michigan - 8.49% Hospital Fin. Auth.: Rev. and Ref. Bonds: The Detroit Medical Center Obligated Group, AMBAC Insured: Series 1993B, 5.00% 2006 1,000 1,054 Series 1997A, 5.00% 2006 1,000 1,058 Genesys Health System Obligated Group, 1,375 1,496 Series 1995A, 7.20% 2003 (Escrowed to Maturity) Hackley Hospital Obligated Group, Series 1998A, 1,140 1,121 4.90% 2007 Henry Ford Health System, Series 1999A, 5.50% 2008 1,000 1,063 MidMichigan Obligated Group, Series 1997A, FSA Insured, 2,775 3,008 5.50% 2007 Pontiac Osteopathic, Series 1994A, 5.375% 2006 3,695 3,517 Sinai Hospital of Greater Detroit, Series 1995, 2,000 1,988 6.00% 2008 Variable Rate Rev. Bonds (Ascension Health Credit Group): /1/ Series 1999B-3, 5.30% 2033 (Put 2006) 5,000 5,162 Series 1999B-4, 5.375% 2033 (Put 2007) 2,000 2,067 Housing Dev. Auth., Rental Housing Rev. Bonds, 1,200 1,260 1992 Series A, AMBAC Insured, 6.40% 2005 City of Detroit, G.O. Refunding Bonds (Unlimited Tax): Series 1995-A, 6.25% 2004 1,000 1,064 Series 1995-B, 6.75% 2003 2,000 2,105 City of Flint Hospital Building Auth., Rev. Ref. Bonds 680 682 (Hurley Medical Center), Series 1998A, 5.00% 2003 Minnesota - 0.47% Housing Fin. Agcy., Single Family Mortgage Bonds, 1,475 1,485 2000 Series H, AMT, 4.25% 2006 Nebraska - 0.35% Hospital Auth. No. 1 of Lancaster County, Rev. Bonds, 1,070 1,094 Series 1991A (Sisters of Charity Health Care Systems, Inc.), MBIA Insured, 6.375% 2005 Nevada - 1.30% Highway Improvement Rev. (Motor Vehicle Fuel Tax) Bonds, 2,000 2,124 Series December 1, 2000A, 5.00% 2009 Housing Division, Single Family Mortgage Bonds, 855 876 1998 Series B-1, 5.20% 2011 City of Henderson, Health Fac. Rev. Bonds (Catholic 1,050 1,087 Healthcare West), 1998 Series A, 6.20% 2009 New Jersey - 0.83% Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998A: 5.00% 2006 1,275 1,263 5.05% 2007 1,375 1,351 New Mexico - 0.16% Educational Assistance Foundation, Student Loan Rev. 490 513 Bonds, Subordinate 1992 Series One-B, AMT, 6.85% 2005 New York - 7.10% Dormitory Auth.: Center for Nursing & Rehabilitation, Inc., 635 646 FHA-Insured Mortgage Nursing Home Rev. Bonds, Series 1997, 4.75% 2007 Mental Health Services Facs. Improvement Rev. Bonds, Series 1997B: 6.00% 2007 995 1,098 6.00% 2007 (Escrowed to Maturity) 5 6 Secured Hospital Rev. Ref. Bonds: Saint Agnes Hospital, Series 1998A, 4.80% 2006 1,000 1,044 Wyckoff Heights Medical Center, Series 1998H, 1,000 1,059 5.125% 2008 Housing Fin. Agcy., Health Facs. Rev. Bonds (New York 5,450 5,984 City), 1996 Series A Ref., 6.00% 2006 Port Auth. of New York and New Jersey, Special Project 2,000 2,075 Bonds (Delta Air Lines, Inc. Project), LaGuardia Airport Passenger Terminal, Series 1R, 6.95% 2008 Castle Rest Residential Health Care Fac., FHA-Insured 1,170 1,242 Mortgage Rev. Bonds, Series 1997A, 4.875% 2007 Cert. of Part., City University of New York (John Jay 1,500 1,659 College of Criminal Justice Project Ref.), 6.00% 2006 City of New York, G.O. Bonds: Fiscal 1997 Series L, MBIA Insured, 5.625% 2007 1,000 1,093 Fiscal 2001 Series B, MBIA Insured: 4.80% 2008 2,000 2,094 4.90% 2009 1,000 1,051 5.50% 2010 1,000 1,092 Fiscal 2001 Series D, 5.50% 2009 1,000 1,091 Fiscal 2001 Series F, 5.00% 2010 1,000 1,055 North Carolina - 5.21% Eastern Municipal Power Agcy., Power System Rev. Bonds, Ref.: Series 1993B: 6.00% 2005 (2003) /1/ 1,330 1,387 6.125% 2009 1,750 1,888 Series 1993C, 5.50% 2007 3,550 3,698 Municipal Power Agcy. Number 1, Catawba Electric Rev. Bonds, Series 1992: 5.90% 2003 1,000 1,028 6.00% 2004 3,525 3,681 6.00% 2005 1,250 1,303 MBIA Insured, 6.00% 2010 3,000 3,374 Ohio - 0.70% The Student Loan Funding Corp., Cincinnati, Student Loan 1,000 1,009 Rev. Bonds, Series 1988B-3, AMT, AMBAC Insured, 5.125% 2005 County of Knox, Hospital Facs. Ref. Rev. Bonds, 1,155 1,179 Series 1998 (Knox Community Hospital), Asset Guaranty Insured, 4.70% 2008 Oklahoma - 0.76% Industries Auth., Health System Rev. Ref. Bonds 1,300 1,387 (INTEGRIS Health), Series 1995D, AMBAC Insured, 5.25% 2006 Trustees of the Tulsa Municipal Airport Trust, Rev. 1,000 1,007 Bonds, Ref. Series 2001B, AMT, 5.65% 2035 (Put 2008) /1/ Pennsylvania - 2.80% Hospitals and Higher Education Facs. Auth. Of Philadelphia, Hospital Rev. Bonds (Jefferson Health System), Series 1997 A: 5.50% 2006 2,045 2,160 5.50% 2008 1,000 1,058 Philadelphia Auth. for Industrial Dev., Airport Rev. 3,410 3,617 Bonds (Philadelphia Airport System Project), Series 1998A, AMT, FGIC Insured, 5.25% 2009 Westmoreland County Indust. Dev. Auth., Variable Rate 2,000 1,954 Rev. Bonds (National Waste and Energy Corp.; Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 (Put 2009) /1/ Puerto Rico - 0.79% Children's Trust Fund, Tobacco Settlement Asset-Backed 2,355 2,482 Bonds, Series 2000, 5.75% 2020 Rhode Island - 0.43% Student Loan Auth., Student Loan Rev. Ref. Bonds, 1,300 1,338 Series 1992B, AMT, 6.90% 2003 (2001) /1/ South Carolina - 0.52% Housing Fin. and Dev. Auth. Mortgage Rev. Bonds, 1,490 1,622 Series 2000 A-2, AMT, FSA Insured, 5.875% 2009 South Dakota - 0.87% Housing Dev. Auth., Homeownership Mortgage Bonds: 1996 Series A, 5.50% 2010 360 368 2000 Series H, 5.00% 2009 1,300 1,353 2001 Series C, 4.55% 2010 1,000 1,003 Tennessee - 0.34% Metropolitan Government of Nashville and Davidson County, 1,000 1,052 G.O. Multi-Purpose Improvement Bonds, Series 1997A, 5.125% 2010 Texas - 11.63% Board of Regents of the Texas A&M University System, 2,000 2,111 Rev. Fncg. System Bonds, 5.10% 2010 Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc. Obligated Group Project), Series 1998: 5.00% 2005 1,330 1,364 5.00% 2007 1,470 1,495 Bexar County, Tax-Exempt Venue Project Rev. Bonds, 2,000 2,178 Series 2000, MBIA Insured, 5.50% 2009 Brazos River Auth., Collateralized Pollution Control Rev. Ref. Bonds (Texas Utilities Electric Co. Project), AMT: /1/ Series 1994B, 5.40% 2029 (Put 2006) 1,000 1,019 Series 1995B, 5.05% 2030 (Put 2006) 3,000 3,033 Fort Worth Independent School Dist. (Tarrant County), 3,560 3,746 School Building Unlimited Tax Bonds, Series 2001A, 5.00% 2011 Fort Worth International Airport Fac. Improvement Corp., 2,000 2,084 American Airlines, Inc., Rev. Ref. Bonds, Series 2000C, AMT, American Airlines Insured, 6.15% 2029 (Put 2007) /1/ Harris County Health Facs. Dev. Corp.: Hospital Rev. Bonds: Memorial Hermann Hospital System Project, Series 1998, 1,000 1,065 FSA Insured, 5.25% 2008 Memorial Hospital System Project, Series 1997A, MBIA Insured: 6.00% 2009 3,215 3,576 6.00% 2010 1,500 1,676 Hospital Rev. Ref. Bonds, Children's Hospital Project, 1,000 1,083 Series 1995, MBIA Insured, 6.00% 2004 (Escrowed to Maturity) Rev. Bonds (St. Lukes Episcopal Hospital), 1,000 1,066 Series 2001A, 5.50% 2011 Jefferson County, Health Facs. Dev. Corp., 1,000 1,003 Baptist Hospitals of Southeast Texas, FHA-Insured Mortgage Rev. Bonds, Series 2001, AMBAC Insured, 4.50% 2010 City of Houston, Airport System, Subordinate Lien Rev. 2,500 2,643 Bonds, Series 1998B, AMT, FGIC Insured, 5.25% 2009 City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds: Series 1997, 5.30% 2011 3,500 3,692 Series 1998B, 5.125% 2009 2,455 2,604 Tarrant County, Health Facs. Dev. Corp., Health Resources 1,000 1,056 Systems Rev. Bonds, Series 1997A, MBIA Insured, 5.50% 2007 Utah - 0.79% Housing Fin. Agcy. (Federally Insured or Guaranteed Mortgage Loans): Single Family Mortgage Purchase Ref. Bonds, 455 475 Series 1996, 5.45% 2004 Single Family Mortgage Bonds, AMT: 1998 Issue D-2, 5.25% 2012 /1/ 315 321 1998 Issue E-1, 5.25% 2012 /1/ 330 337 1998 Issue F-2, 4.25% 2008 1,335 1,334 Vermont - 0.84% Educational and Health Buildings Fncg. Agcy. Hospital 2,500 2,635 Rev. Bonds (Medical Center Hospital of Vermont Project), Series 1993, FGIC Insured, 5.75% 2007 Virginia - 1.41% Housing Dev. Auth., AMT: Commonwealth Mortgage Bonds, 2000 Series A-1, 5.55% 2008 1,175 1,252 Rental Housing Bonds, 2000 Series D, 5.50% 2008 1,070 1,139 Industrial Dev. Auth. of the City of Norfolk, Hospital 1,000 1,069 Rev. Bonds (Daughters of Charity National Health System DePaul Medical Center), Series 1992A,6.50% 2007 ( Escrowed to Maturity) Pocahontas Parkway Association, Route 895 Connector 1,000 975 Toll Road Rev. Bonds, Senior Current Interest Bonds, Series 1998A, 5.25% 2007 Virgin Islands - 1.57% Virgin Islands Public Fin. Auth., Rev. and Ref. Bonds 4,765 4,922 (Matching Fund Loan Notes), Series 1998 A, 5.20% 2010 Washington - 4.42% Various Purpose G.O. Bonds, Series 2000B, 6.00% 2010 1,130 1,271 Health Care Facs. Auth., Weekly Rate Demand Rev. 1,000 1,097 Bonds (Virginia Mason Medical Center), 1997 Series A, MBIA Insured, 6.00% 2006 Public Power Supply System, Nuclear Project No. 2 Ref. Rev. Bonds: Series 1997B, 5.50% 2006 1,000 1,076 Series 1998A, 5.00% 2005 1,000 1,049 King County, Limited Tax G.O. Bonds (Baseball Stadium), 3,710 4,058 1997 Series D, 5.60% 2009 Snohomish County, Limited Tax G.O. Bonds, 2001, 5.00% 2010 5,015 5,308 Wisconsin - 1.86% G.O. Ref. Bonds of 1998, Series 2, 5.00% 2008 1,000 1,060 Health and Educational Facs. Auth.: Rev. Bonds, Series 1999 (The Monroe Clinic, Inc.), 1,010 998 4.60% 2008 Var. Rate Hospital Rev. Bonds (Charity Obligated Group, 3,560 3,766 Daughters of Charity National Health Sys.), Series 1997D, 4.90% 2015 (Put 2005) /1/ 298,992 Principal Market Amount Value (000) (000) Short-Term Securities - 4.54% City of Farmington, New Mexico, Pollution Control Rev. 1,000 1,000 Ref. Bonds (Arizona Public Service Co. Four Corners Project), 1994 Series A, 2.75% 2024 /3/ City of Houston, Texas, Tax and Rev. Anticipation Notes, 1,500 1,512 Series 2001, 3.50% 2002 Jackson County, Mississippi, Pollution Control Ref. Rev. 1,900 1,900 Bonds (Chevron U.S.A. Inc. Project), Series 1992, 2.70% 2023 /3/ State of Kentucky, Asset/Liability Commission, General 1,000 1,012 Fund Tax and Rev. Anticipation Notes, 2001 Series A, 4.00% 2002 Nebraska Hospital Auth. No. 1 of Lancaster County, 1,300 1,300 Variable Rate Health Facs. Rev. Bonds (Immanuel Health Systems - Williamsburg Project), Series 2000A, 2.80% 2030 /3/ State of New Mexico, 01-02 Tax and Rev. Anticipation 2,000 2,025 Notes, Series 2001, 4.00% 2002 North Carolina Medical Care Commission Variable Rate 1,400 1,400 Hospital Rev. Bonds (Pooled Fncg. Project), Series 1996A, 2.75% 2016 /3/ State of Texas, Tax and Rev. Anticipation Notes, 1,800 1,803 Series 2000, 5.25% 2001 State of Wyoming, General Fund Tax and Rev. Anticipation 1,000 1,008 Notes, Series 2001A, 3.50% 2002 State of Wyoming, Uinta County, Pollution Control Rev. 1,300 1,300 Ref. Bonds (AMOCO Project), Series 1998, 2.75% 2026 /3/ 14,260 TOTAL INVESTMENT SECURITIES: (cost: $304,294,000) 313,252 Excess of cash and receivables over payables 577 NET ASSETS $313,829 /1/ Valued on the basis of the effective maturity - that is, the date at which the security is expected to be called or refunded by the issuer. /2/ Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to public may require registration. /3/ Coupon rate changes periodically; the date of the next scheduled coupon rate change is considered to be the maturity date. See Notes to Financial Statements Key to Abbreviations Agcy. = Agency Auth. = Authority Cert. of Part. = Certificates of Participation Dept. = Department Dev. = Development Dist. = District Econ. = Economic Fac. = Facility Facs. = Facilities Fin. = Finance Fncg. = Financing G.O. = General Obligation Preref. = Prerefunded Redev. = Redevelopment Ref. = Refunding Rev. = Revenue
FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES at July 31, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $304,294) $313,252 Cash 70 Receivables for - Sales of fund's shares $3,683 Interest 3,715 7,398 320,720 Liabilities: Payables for - Purchases of investments 4,533 Repurchases of fund's shares 1,801 Dividends on fund's shares 324 Management services 101 Other expenses 132 6,891 Net Assets at July 31, 2001 $313,829 Total authorized capital stock - unlimited shares, $1.00 par value Class A shares: Net assets $305,786 Shares outstanding 20,282,450 Net asset value per share $15.08 Class B shares: Net assets $2,494 Shares outstanding 165,404 Net asset value per share $15.08 Class C shares: Net assets $4,009 Shares outstanding 265,923 Net asset value per share $15.08 Class F shares: Net assets $1,540 Shares outstanding 102,174 Net asset value per share $15.08 See Notes to Financial Statements STATEMENT OF OPERATIONS for the year ended July 31, 2001 (dollars in thousands) Investment Income: Income: Interest $13,378 Expenses: Management services fee 1,025 Distribution expenses - Class A 807 Distribution expenses - Class B 14 Distribution expenses - Class C 6 Distribution expenses - Class F 1 Transfer agent fee - Class A 51 Transfer agent fee - Class B 1 Administrative services fees - Class C 1 Administrative services fees - Class F 1 Reports to shareholders 55 Registration statement and prospectus 128 Postage, stationery and supplies 12 Trustees' fees 19 Auditing and legal fees 42 Custodian fee 5 Taxes other than federal income tax 4 Other expenses 6 Total expenses before reimbursement 2,178 Reimbursement of expenses 127 2,051 Net investment income 11,327 Realized Gain and Unrealized Appreciation on Investments: Net realized gain 396 Net unrealized appreciation 11,802 Net realized gain and unrealized appreciation on investments 12,198 Net Increase in Net Assets Resulting from Operations $23,525 STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands) Year ended July 31, 2001 2000 Operations: Net investment income $11,327 $11,843 Net realized gain (loss) on investments 396 (1,337) Net unrealized appreciation (depreciation) on investments 11,802 (2,771) Net increase in net assets resulting from operations 23,525 7,735 Dividends Paid to Shareholders: Dividends from net investment income: Class A (11,306) (11,848) Class B (46) (4) Class C (17) - Class F (5) - Total dividends (11,374) (11,852) Capital Share Transactions: Proceeds from shares sold 141,223 143,484 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments 8,134 8,453 Cost of shares repurchased (106,055) (172,075) Net increase (decrease) in net assets resulting from capital share transactions 43,302 (20,138) Total Increase (Decrease) in Net Assets 55,453 (24,255) Net Assets: Beginning of year 258,376 282,631 End of year (including distributions in excess of net investmetn income and undistributed net investment income: $1 and $46, respectively) $313,829 $258,376 See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - Limited Term Tax-Exempt Bond Fund of America (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks current income exempt from federal income taxes, consistent with preservation of capital, through investments in fixed-income securities with effective maturities between three and 10 years. The fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 3.75%. 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: 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 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. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or when-issued basis, the fund will instruct the custodian to segregate liquid assets sufficient to meet its payment obligations in these transactions. Interest income is recognized on an accrual basis. Premiums and original issue discounts on securities are amortized daily over the expected life of the security. Amortization of market discounts on securities is recognized upon disposition. On August 1, 2001, the fund will begin amortizing discount daily over the expected life of fixed-income securities to conform with a recent change in generally accepted accounting principles for mutual funds. Adopting this change will not impact the fund's net asset value and will result in changes to the classification of certain amounts between interest income and realized and unrealized gain/loss in the Statement of Operations. These adjustments will be based on the fixed-income securities held by the fund on August 1, 2001. Because the fund determines its required distributions under federal income tax laws, adoption of this principle will not affect the amount of distributions paid to shareholders. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are declared daily after the determination of the fund's net investment income and are paid to shareholders monthly. Class Allocations - Income, expenses (other than class-specific expenses) and realized 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 and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are based on net investment income and net realized gains 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 and the net gains are realized by the fund. As of July 31, 2001, the cost of investment securities for book and federal income tax reporting purposes was $304,294,000. Net unrealized appreciation on investments aggregated $8,958,000; $9,573,000 related to appreciated securities and $615,000 related to depreciated securities. There was no difference between book and tax realized gains on securities transactions for the year ended July 31, 2001. The fund had available at July 31, 2001, a net capital loss carryforward totaling $2,795,000 which may be used to offset capital gains realized during subsequent years through 2009 and thereby relieve the fund and its shareholders of any federal income tax liability with respect to the capital gains that are so offset. The fund will not make distributions from capital gains while a capital loss carryforward remains. 3. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $1,025,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company ("CRMC") with which certain officers and Trustees of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees accrued daily, based on an annual rate of 0.30% of the first $60 million of daily net assets and 0.21% of such assets in excess of $60 million. The agreement also provides for monthly fees, accrued daily, of 3.00% on the fund's monthly gross investment income. For the year ended July 31, 2001, the management services fee was equivalent to an annualized rate of 0.376% of average daily net assets. The Investment Advisory and Service Agreement provides for a fee reduction to the extent that annual operating expenses exceed 0.75% of the average daily net assets of the fund. Expenses that are not subject to these limitations are interest, taxes, brokerage commissions, transaction costs and extraordinary expenses. Fee reductions were $127,000 for the year ended July 31, 2001. 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 0.30% for Class A shares, 1.00% for Class B and Class C shares, and up to 0.50% for Class F shares. All share classes may use up to 0.25% 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 - Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the fund within the prior 15 months but only to the extent that the overall 0.30% annual expense limits for Class A shares is not exceeded. For the year ended July 31, 2001, aggregate distribution expenses were limited to $807,000, or 0.30% of average daily net assets attributable to Class A shares. As of July 31, 2001, unreimbursed expenses that remain subject to reimbursement totaled $503,000. CLASS B SHARES - In addition to service fees of 0.25%, 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 July 31, 2001, aggregate distribution expenses were $14,000, or 1.00% 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 July 31, 2001, aggregate distribution expenses were $6,000, 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 July 31, 2001, aggregate distribution expenses were $1,000, or 0.25% of average daily net assets attributable to Class F shares. As of July 31, 2001, aggregate distribution expenses payable to AFD for all share classes were $86,000. AFD received $113,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's Class A shares for the year ended July 31, 2001. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying Statement of Operations. TRANSFER AGENT FEE - A fee of $52,000 was incurred during the year ended July 31, 2001, pursuant to an agreement with American Funds Service Company ("AFS"), the transfer agent for the fund. As of July 31, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $8,000. 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 July 31, 2001, total fees under the agreement were $2,000. As of July 31, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $1,000. DEFERRED TRUSTEES' FEES - Since the adoption of the deferred compensation plan in 1994, 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 July 31, 2001, the cumulative amount of these liabilities was $33,000. 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 of the fund and certain Trustees are or may be considered to be affiliated with CRMC, AFS and AFD. No such persons received any remuneration directly from the fund. 4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities of $94,436,000 and $55,575,000, respectively, during the year ended July 31, 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 July 31, 2001, the custodian fee of $5,000 includes $4,000 that was paid by these credits rather than in cash. As of July 31, 2001, net assets consisted of the following: see excel S:\Template\capitalshr transactions Capital share transactions in the fund were as follows: (dollars in thousands) Capital paid in on shares of beneficial interest $307,667 Distributions in excess of net investment income (1) Accumulated net realized loss (2,795) Net unrealized appreciation 8,958 Net assets $313,829
Year ended July 31, 2001 Amount (000) Shares Class A Shares: Sold $ 132,019 8,952,431 Reinvestment of dividends and distributions 8,078 547,212 Repurchased (104,121) (7,077,728) Net increase (decrease) in Class A 35,976 2,421,915 Class B Shares: /1/ Sold 3,709 251,676 Reinvestment of dividends and distributions 40 2,738 Repurchased (1,921) (130,017) Net increase in Class B 1,828 124,397 Class C Shares: /2/ Sold 3,959 265,097 Reinvestment of dividends and distributions 12 829 Repurchased - (3) Net increase in Class C 3,971 265,923 Class F Shares: /2/ Sold 1,536 102,759 Reinvestment of dividends and distributions 4 310 Repurchased (13) (895) Net increase in Class F 1,527 102,174 Total net increase (decrease) in fund $ 43,302 2,914,409 Year ended July 31, 2000 Amount (000) Shares Class A Shares: Sold $ 142,783 9,945,084 Reinvestment of dividends and distributions 8,450 589,816 Repurchased (171,956) (12,004,361) Net increase (decrease) in Class A (20,723) (1,469,461) Class B Shares: /1/ Sold 701 49,100 Reinvestment of dividends and distributions 3 232 Repurchased (119) (8,325) Net increase in Class B 585 41,007 Class C Shares: /2/ Sold - - Reinvestment of dividends and distributions - - Repurchased - - Net increase in Class C - - Class F Shares: /2/ Sold - - Reinvestment of dividends and distributions - - Repurchased - - Net increase in Class F - - Total net increase (decrease) in fund $ (20,138) (1,428,454) /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 Class A Class A Year ended July 31, 2001 2000 1999 Net Asset Value, Beginning of Year $14.43 $14.62 $14.85 Income from Investment Operations : Net investment income .62 /1/ .73 /1/ .61 Net gains/(losses) on securities (both .65 /1/ (.30) /1/ (.23) realized and unrealized) Total from investment operations 1.27 .43 .38 Less Distributions : Dividends (from net investment income) (.62) (.62) (.61) Total distributions (.62) (.62) (.61) Net Asset Value, End of Year $15.08 $14.43 $14.62 Total Return /2/ 8.99% 3.09% 2.59% Ratios/Supplemental Data: Net assets, end of year (in millions) $306 $258 $283 Ratio of expenses to average net assets /4/ .75% .75% .75% Ratio of net income to average net assets 4.18% 5.08% 4.12% Class A Class A Year ended July 31, 1998 1997 Net Asset Value, Beginning of Year $14.79 $14.36 Income from Investment Operations : Net investment income .66 .68 Net gains/(losses) on securities (both .06 .43 realized and unrealized) Total from investment operations .72 1.11 Less Distributions : Dividends (from net investment income) (.66) (.68) Total distributions (.66) (.68) Net Asset Value, End of Year $14.85 $14.79 Total Return /2/ 4.95% 7.96% Ratios/Supplemental Data: Net assets, end of year (in millions) $227 $203 Ratio of expenses to average net assets /4/ .75% .75% Ratio of net income to average net assets 4.40% 4.70% Class B Class B Year ended March 15 to July 31, July 31, 2001 2000 /3/ Net Asset Value, Beginning of Period $14.43 $14.27 Income from Investment Operations : Net investment income /1/ .48 .24 Net gains/(losses) on securities (both .69 .13 realized and unrealized) /1/ Total from investment operations 1.17 .37 Less Distributions : Dividends (from net investment income) (.52) (.21) Total distributions (.52) (.21) Net Asset Value, End of Period $15.08 $14.43 Total Return /2/ 8.24% 2.59% Ratios/Supplemental Data: Net assets, end of period (in millions) $2 $1 Ratio of expenses to average net assets 1.59% /4/ .61% /4/ Ratio of net income to average net assets 3.24% 1.84% Class C Class F March 15 to March 15 to July 31, July 31, 2001 /3/ 2001 /3/ Net Asset Value, Beginning of Period $14.92 $14.92 Income from Investment Operations : Net investment income /1/ .15 .16 Net gains/(losses) on securities (both .17 .19 realized and unrealized) /1/ Total from investment operations .32 .35 Less Distributions : Dividends (from net investment income) (.16) (.19) Total distributions (.16) (.19) Net Asset Value, End of Period $15.08 $15.08 Total Return /2/ 2.14% 2.34% Ratios/Supplemental Data: Net assets, end of period (in millions) $4 $2 Ratio of expenses to average net assets .75% .60% Ratio of net income to average net assets 1.05% 1.18% Supplemental Data - All Classes Year ended July 31, 2001 2000 1999 Portfolio turnover rate 21.42% 34.38% 17.00% Year ended July 31, 1998 1997 Portfolio turnover rate 34.07% 31.89%
/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. /4/ Had CRMC not waived management services fees, the fund's expense ratio would have been 0.80%, 0.81%, 0.77%, 0.83%, and 0.83% for the fiscal years ended 2001, 2000, 1999, 1998, and 1997, respectively,for Class A and 1.60% and 0.71% for the fiscal year ended 2001 and 2000, repesctively, for Class B. REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA: In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the per-share data and ratios present fairly, in all material respects, the financial position of Limited Term Tax-Exempt Bond Fund of America (the "Fund") at July 31, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios for 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 July 31, 2001, by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICEWATERHOUSECOOPERS LLP Los Angeles, California August 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. 99.99% 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. 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 AMOUNTS ABOVE ARE 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.