Tax Exempt Bond Fund of America, et al. – ‘485BPOS’ on 10/29/01

On:  Monday, 10/29/01   ·   Effective:  11/1/01   ·   Accession #:  794389-1-500005   ·   File #s:  2-49291, 811-02421

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Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Post-Effective Amendment                             146±   607K 
 2: EX-1        Ex-99.G Cust Agreemt                                  20±    87K 
 3: EX-2        Ex-99.J Other Opinin                                   1      5K 

485BPOS   —   Post-Effective Amendment
Document Table of Contents

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SEC. FILE NOS. 2-49291                                                          
811-2421                                                                        

SECURITIES AND EXCHANGE COMMISSION                                              
Washington, D.C. 20549                                                          

FORM N-1A                                                                       
Registration Statement                                                          
Under                                                                           
the Securities Act of 1933                                                      
Post-Effective Amendment No. 30                                                 
and                                                                             
Registration Statement                                                          
Under                                                                           
The Investment Company Act of 1940                                              
Amendment No. 30                                                                

THE TAX-EXEMPT BOND FUND OF AMERICA, INC.                                       
(Exact Name of Registrant as specified in charter)                              
333 South Hope Street                                                           
Los Angeles, California 90071                                                   
(Address of principal executive offices)                                        

Registrant's telephone number, including area code:                             
(213) 486-9200                                                                  

JULIE F. WILLIAMS, Secretary                                                    
The Tax-Exempt Bond Fund of America, Inc.                                       
333 South Hope Street                                                           
Los Angeles, California 90071                                                   
(name and address of agent for service)                                         

Copies to:                                                                      
Robert E. Carlson, Esq.                                                         
PAUL, HASTINGS, JANOFSKY & WALKER LLP                                           
555 S. Flower Street, 23rd Floor                                                
Los Angeles, CA  90071-2371                                                     
(Counsel for the Registrant)                                                    

Approximate date of proposed public offering:                                   
It is proposed that this filing become effective on November 1, 2001, pursuant  
to paragraph (b) of rule 485.                                                   

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

Prospectus

                                                                [Download Table]

         TABLE OF CONTENTS                            
------------------------------------------------------
                                                      
 1        Risk/Return Summary                         
------------------------------------------------------
 6        Fees and Expenses of the Funds              
------------------------------------------------------
 8        Investment Objectives, Strategies and Risks 
------------------------------------------------------
12        Management and Organization                 
------------------------------------------------------
14        Shareholder Information                     
------------------------------------------------------
15        Choosing a Share Class                      
------------------------------------------------------
17        Purchase and Exchange of Shares             
------------------------------------------------------
18        Sales Charges                               
------------------------------------------------------
20        Sales Charge Reductions and Waivers         
------------------------------------------------------
21        Plans of Distribution                       
------------------------------------------------------
22        How to Sell Shares                          
------------------------------------------------------
23        Distributions and Taxes                     
------------------------------------------------------
24        Financial Highlights                        
------------------------------------------------------

NOVEMBER 1, 2001

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED                       
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS  
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS     
A CRIMINAL OFFENSE.                                                           

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RISK/RETURN SUMMARY                                                           

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

The funds are designed for investors seeking a high level of current income   
exempt from federal income tax and, in the case of American High-Income       
 Municipal Bond Fund, investors who are able to tolerate greater credit risk and
price fluctuations than funds investing in higher quality bonds. An investment
in the funds is subject to risks, including the possibility that a fund's     
income and the value of its investments may fluctuate in response to economic,
 political or social events in the U.S. or abroad. The values of debt securities
may be affected by changing interest rates and credit risk assessments. Lower 
quality or longer maturity bonds may be subject to greater price fluctuations 
than higher quality or shorter maturity bonds.                                

Your investment in the funds is not a bank deposit and is not insured or      
 guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.                                                     

 YOU MAY LOSE MONEY BY INVESTING IN THE FUNDS. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.                                   

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                                   NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

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HISTORICAL INVESTMENT RESULTS                                                 

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

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

Since the funds' Class B shares began investment operations on March 15, 2000 
and Class C and F shares began investment operations on March 15, 2001,       
comparable results are not available for the 2000 calendar year.              

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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 THE TAX-EXEMPT BOND FUND OF AMERICA
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would be
 lower.)
[bar chart]                                                                     
1991  11.17%                                                                    
1992   9.03                                                                     
1993  11.72                                                                     
1994  -4.82                                                                     
1995  17.28                                                                     
1996   4.57                                                                     
1997   8.98                                                                     
1998   6.04                                                                     
1999  -2.32                                                                     
2000   9.69                                                                     
[end bar chart]                                                                 

Highest/lowest quarterly results during this time period were:    

                                                                [Download Table]

                                                           
HIGHEST              6.87%  (quarter ended March 31, 1995) 
LOWEST               -4.93%  (quarter ended March 31, 1994)

 The year-to-date result was 6.58% for the nine months ended September 30, 2001.

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:             
------------------------------------------------------------------------------
                               ONE YEAR   FIVE YEARS   TEN YEARS    LIFETIME  
                                                                              
Class A - began 10/3/79                                                       
(with the maximum sales          5.56%       4.50%       6.54%        7.87%   
charge imposed)                                                               
------------------------------------------------------------------------------
Lehman Municipal Bond           11.68%       5.84%       7.32%         N/A    
Index/1/                                                                      
------------------------------------------------------------------------------
Lipper General                  10.83%       4.66%       6.68%        8.05%   
Municipal Debt Average/2/                                                     
------------------------------------------------------------------------------
Class A 30-day yield:  4.66%                                                  
(For current yield information, please call American FundsLine at             
1-800-325-3590.)                                                              
------------------------------------------------------------------------------

1 The Lehman Brothers Municipal Bond Index represents the national investment 
grade municipal bond market. This index is unmanaged and does not reflect   
 sales charges, commissions or expenses. This index was not in existence as of
the date the fund's Class A shares began investment operations, therefore,  
lifetime results are not available.                                         
2 The Lipper General Municipal Debt Funds Average represent funds that invest 
at least 65% of assets in municipal debt issues in the top four rating      
categories. The results of the underlying funds in the 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.                                                              

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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would be
 lower.)
[bar chart]                                                                     
1995  19.05%                                                                    
1996   6.45                                                                     
1997  10.37                                                                     
1998   4.89                                                                     
1999  -2.31                                                                     
2000   7.31                                                                     
[end bar chart]                                                                 

Highest/lowest quarterly results during this time period were:    

                                                                [Download Table]

                                                              
HIGHEST              7.46%  (quarter ended March 31, 1995)    
LOWEST               -1.40%  (quarter ended December 31, 1999)

 The year-to-date result was 6.72% for the nine months ended September 30, 2001.

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:             
------------------------------------------------------------------------------
                                         ONE YEAR    FIVE YEARS     LIFETIME  
                                                                              
Class A - began 9/26/94                                                       
(with the maximum sales charge             3.25%       4.46%         6.44%    
imposed)                                                                      
------------------------------------------------------------------------------
Lehman Municipal Bond Index/1/            11.68%       5.84%         7.11%    
------------------------------------------------------------------------------
Lipper High Yield Municipal Debt           3.08%       3.83%         5.25%    
Average/2/                                                                    
------------------------------------------------------------------------------
Class A 30-day yield:  5.27%                                                  
(For current yield information, please call American FundsLine at             
1-800-325-3590.)                                                              
------------------------------------------------------------------------------

1 The Lehman Brothers Municipal Bond Index represents the national investment 
grade municipal bond market. This index is unmanaged and does not reflect   
sales charges, commissions or expenses.                                     
2 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.                                                      

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would be
 lower.)
[bar chart]                                                                     
1994  -2.90%                                                                    
1995  12.35                                                                     
1996   4.46                                                                     
1997   7.30                                                                     
1998   5.50                                                                     
1999  -0.60                                                                     
2000   7.45                                                                     
[end bar chart]                                                                 

Highest/lowest quarterly results during this time period were:    

                                                                [Download Table]

                                                        
HIGHEST           4.38%  (quarter ended March 31, 1995) 
LOWEST            -3.44%  (quarter ended March 31, 1994)

 The year-to-date result was 6.34% for the nine months ended September 30, 2001.

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:             
------------------------------------------------------------------------------
                                         ONE YEAR    FIVE YEARS     LIFETIME  
                                                                              
Class A - began 10/6/93                                                       
(with the maximum sales charge            3.40%        3.98%         4.47%    
imposed)                                                                      
------------------------------------------------------------------------------
Lehman 7-Year Municipal Bond Index/1/     9.07%        5.39%         5.37%    
------------------------------------------------------------------------------
Lipper Intermediate Municipal Debt        8.55%        4.67%         4.78%    
Average/2/                                                                    
------------------------------------------------------------------------------
Class A 30-day yield:  4.13%                                                  
(For current yield information, please call American FundsLine at             
1-800-325-3590.)                                                              
------------------------------------------------------------------------------

1 The Lehman Brothers 7-Year Municipal Bond Index represents the national     
 investment grade municipal bond market.  This index is unmanaged and does not
reflect sales charges, commissions or expenses.                             
2 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.                                                      

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FEES AND EXPENSES OF THE FUNDS                                                

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)                         

                                                        [Enlarge/Download Table]

                                                       CLASS A    CLASS B   CLASS C    CLASS F 
-----------------------------------------------------------------------------------------------
                                                                                               
Maximum sales charge imposed on purchases (as a       3.75  %/1/   none      none       none   
percentage of offering price)                                                                  
-----------------------------------------------------------------------------------------------
Maximum sales charge imposed on reinvested                  none   none      none       none   
dividends                                                                                      
-----------------------------------------------------------------------------------------------
Maximum deferred sales charge                              none/2/ 5.00%/3/  1.00%/4/   none   
-----------------------------------------------------------------------------------------------
Redemption or exchange fees                                 none   none      none       none   
-----------------------------------------------------------------------------------------------

1 Sales charges are reduced or eliminated for purchases of $100,000 or more.  
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a   
sales charge.                                                               
3 Deferred sales charges are reduced after 12 months and eliminated after six 
years.                                                                      
4 Deferred sales charge is eliminated after 12 months.                        

                                                                [Download Table]

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)                    
------------------------------------------------------------------------------
                                    CLASS A  CLASS B  CLASS C/1/   CLASS F/1/ 
------------------------------------------------------------------------------
                                                                              
THE TAX-EXEMPT BOND FUND OF AMERICA                                           
------------------------------------------------------------------------------
Management Fees                      0.35%    0.35%     0.35%        0.35%    
Distribution and/or Service                                                   
(12b-1) Fees/2/                      0.25%    1.00%     1.00%        0.25%    
Other Expenses                       0.06%    0.05%     0.20%        0.19%    
Total Annual Fund Operating                                                   
Expenses                             0.66%    1.40%     1.55%        0.79%    
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND                                      
------------------------------------------------------------------------------
Management Fees                      0.41%    0.41%     0.41%        0.41%    
Distribution and/or Service                                                   
(12b-1) Fees/3/                      0.30%    1.00%     1.00%        0.25%    
Other Expenses                       0.09%    0.07%     0.21%        0.21%    
Total Annual Fund Operating                                                   
Expenses                             0.80%    1.48%     1.62%        0.87%    
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA                                  
------------------------------------------------------------------------------
Management Fees                      0.38%    0.38%     0.38%        0.38%    
Distribution and/or Service                                                   
(12b-1) Fees/3/                      0.30%    1.00%     1.00%        0.25%    
Other Expenses                       0.12%    0.21%     0.24%        0.24%    
Total Annual Fund Operating                                                   
Expenses                             0.80%    1.59%     1.62%        0.87%    
Expense Reimbursement/4/             0.05%     N/A       N/A          N/A     
Net Expenses                         0.75%    1.59%     1.62%        0.87%    
------------------------------------------------------------------------------

1 Based on estimated amounts for the current fiscal year.                     
 2 Class A and F 12b-1 fees may not exceed 0.25% and 0.50%, respectively, of the
class' average net assets annually.                                         
 3 Class A and F 12b-1 fees may not exceed 0.30% and 0.50%, respectively, of the
class' average net assets annually.                                         

4 During the year, Capital Research and Management Company paid certain       
  expenses of the fund to ensure the expense ratio of the Class A shares did not
 exceed 0.75% of average net assets annually.  Under certain circumstances, as
  described in the statement of additional information, the fund may be required
to repay amounts waived.                                                    

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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EXAMPLE                                                                       

The examples below are intended to help you compare the cost of investing in  
 the funds with the cost of investing in other mutual funds. The examples assume
that you invest $10,000 in each fund for the time periods indicated, that your
investment has a 5% return each year and that each fund's operating expenses  
remain the same as shown above.  The "Class A" example reflects the maximum   
initial sales charge in the first year. The "Class B- and Class C-assuming    
redemption" examples reflect applicable contingent deferred sales charges     
through six years and one year, respectively (after which times they are      
eliminated). The examples do not include fees charged by financial            
intermediaries, typically applicable mainly to Class F shares. Both Class B   
examples reflect Class A expenses for years 9 and 10 since Class B shares     
automatically convert to Class A after eight years. Although your actual costs
may be higher or lower, based on these assumptions, your cumulative expenses  
would be:                                                                     

                                                                [Download Table]

                                ONE YEAR  THREE YEARS  FIVE YEARS   TEN YEARS 
------------------------------------------------------------------------------
                                                                              
THE TAX-EXEMPT BOND FUND OF AMERICA                                           
------------------------------------------------------------------------------
Class A                           $440       $578        $  729      $1,167   
------------------------------------------------------------------------------
Class B - assuming redemption     $643       $843        $  966      $1,477   
Class B - assuming no             $143       $443        $  766      $1,477   
redemption                                                                    
------------------------------------------------------------------------------
Class C - assuming redemption     $258       $490        $  845      $1,845   
Class C - assuming no             $158       $490        $  845      $1,845   
redemption                                                                    
------------------------------------------------------------------------------
Class F - excludes                $ 81       $252        $  439      $  978   
intermediary fees/*/                                                          
------------------------------------------------------------------------------
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND                                      
------------------------------------------------------------------------------
Class A                           $454       $621        $  803      $1,328   
------------------------------------------------------------------------------
Class B - assuming redemption     $651       $868        $1,008      $1,584   
Class B - assuming no             $151       $468        $  808      $1,584   
redemption                                                                    
------------------------------------------------------------------------------
Class C - assuming redemption     $265       $511        $  881      $1,922   
Class C - assuming no             $165       $511        $  881      $1,922   
redemption                                                                    
------------------------------------------------------------------------------
Class F - excludes                $ 89       $278        $  482      $1,073   
intermediary fees/*/                                                          
------------------------------------------------------------------------------
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA                                  
------------------------------------------------------------------------------
Class A/**/                       $454       $621        $  803      $1,328   
------------------------------------------------------------------------------
Class B - assuming redemption     $662       $902        $1,066      $1,677   
Class B - assuming no             $162       $502        $  866      $1,677   
redemption                                                                    
------------------------------------------------------------------------------
Class C - assuming redemption     $265       $511        $  881      $1,922   
Class C - assuming no             $165       $511        $  881      $1,922   
redemption                                                                    
------------------------------------------------------------------------------
Class F - excludes                $ 89       $278        $  482      $1,073   
intermediary fees/*/                                                          
------------------------------------------------------------------------------

 * Fees charged by financial intermediaries are independent of fund expenses and
will increase the overall cost of your investment.  Intermediary fees       
typically range from 0.50% to 3.00% of assets annually depending on services
offered.                                                                    

/**/ Does not reflect expense reimbursement.                                  

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INVESTMENT OBJECTIVES, STRATEGIES AND RISKS                                   

THE TAX-EXEMPT BOND FUND OF AMERICA                                           

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

Normally, the fund will invest at least 80% of its assets in securities exempt
 from regular federal income tax. The fund will not invest in securities subject
to alternative minimum tax. The fund will invest at least 65% of its assets in
debt securities rated A or better. The fund may also invest up to 35% of its  
assets in debt securities rated Baa or BBB or below by Moody's Investors      
Service, Inc. or Standard & Poor's Corporation or unrated but determined to be
of equivalent quality (however, no more than 20% of its assets may be invested
in debt securities rated Ba and BB or below).                                 

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND                                      

The fund's investment objective is to provide you with a high level of current
income exempt from regular federal income tax.  In seeking to achieve its     
 objective, the fund may forego opportunities that would result in capital gains
and may accept prudent risks to capital value, in each case to take advantage 
of opportunities for higher current income.                                   

Normally, the fund will invest at least 80% of its assets in securities exempt
from regular federal income tax. The fund may invest, without limit, in       
securities that may subject you to federal alternative minimum taxes;         
therefore, while the fund's distributions from tax-exempt securities are not  
subject to regular federal income tax, a portion or all may be included in    
determining a shareholder's federal alternative minimum tax. The fund invests 
primarily in municipal bonds and will invest at least 50% of its assets in    
lower quality debt securities (rated Baa or BBB or below or unrated but       
determined to be of equivalent quality).                                      

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

LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA                                  

The fund's investment objective is to provide you with current income that is 
 exempt from regular federal income tax, consistent with its stated maturity and
quality standards and preservation of capital.  The fund invests primarily in 
municipal bonds with average effective maturities between 3 and 10 years and  
with quality ratings of A or better.                                          

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Normally, 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 that may subject you to federal alternative minimum taxes;         
therefore, while the fund's distributions from tax-exempt securities are not  
subject to regular federal income tax, a portion or all may be included in    
determining a shareholder's federal alternative minimum tax. The fund may also
invest significantly in municipal bonds rated Baa or BBB or unrated but       
determined to be of equivalent quality.                                       

*               *              *

Municipal bonds are debt obligations generally issued to obtain funds for     
various public purposes, including the construction of public facilities. The 
values of and the income generated by most debt securities held by the funds  
 may be affected by changing interest rates and individual securities by changes
in their effective maturities and credit ratings. For example, as with other  
debt securities, the values of bonds in each fund's portfolio generally will  
decline when interest rates rise and vice versa. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated    
 maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities. Debt securities are also subject to credit risk, which is
the possibility that the credit strength of an issuer will weaken and/or an   
issuer of a debt security will fail to make timely payments of principal or   
interest and the security will go into default. Lower quality or longer       
maturity securities generally have higher rates of interest but may be subject
to greater price fluctuations than higher quality or shorter maturity         
securities. See the Appendix in the statement of additional information for   
credit rating descriptions.                                                   

A bond's effective maturity is the market's trading assessment of its maturity
and represents an estimate of the most likely time period an investor in that 
bond will receive payment of principal.  For example, as market interest rates
decline, issuers may exercise call provisions which acts to shorten the bond's
effective maturity.  Conversely, if interest rates rise, effective maturities 
tend to lengthen.  The average effective maturity is the market-weighted      
average (i.e., more weight is given to larger holdings) of all effective      
maturities in the portfolio.                                                  

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

The funds may also hold cash, money market instruments or taxable debt        
securities. The size of each fund's cash position will vary and will depend on
various factors, including market conditions and purchases and redemptions of 
fund shares. A larger cash position could detract from the achievement of each
fund's objective in a period of rising market prices, but it also could reduce
the fund's exposure in the event of a market downturn and provide liquidity to
make additional investments or to meet redemptions.                           

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

ADDITIONAL INVESTMENT RESULTS                                                 

 Unlike the investment results tables shown on an earlier page, the tables below
reflect each fund's results calculated without a sales charge.                

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:              
                         ONE YEAR     FIVE YEARS     TEN YEARS      LIFETIME   
                                                                               
Class A - began                                                                
10/3/79                                                                        
(with no sales charge      9.69%         5.30%         6.95%          8.06%    
imposed)                                                                       
-------------------------------------------------------------------------------
Lehman Municipal Bond     11.68%         5.84%         7.32%           N/A     
Index/1/                                                                       
-------------------------------------------------------------------------------
Lipper General                                                                 
Municipal Debt            10.83%         4.66%         6.68%          8.05%    
Average/2/                                                                     
-------------------------------------------------------------------------------
Class A distribution rate/3/:  5.20%                                           
(For current distribution rate information, please call American FundsLine at  
1-800-325-3590.)                                                               
-------------------------------------------------------------------------------

THE TAX-EXEMPT BOND FUND OF AMERICA                                           

1 The Lehman Brothers Municipal Bond Index represents the national investment 
grade municipal bond market. This index is unmanaged and does not reflect   
 sales charges, commissions or expenses. This index was not in existence as of
the date the fund's Class A shares began investment operations, therefore,  
lifetime results are not available.                                         
2 The Lipper General Municipal Debt Funds Average represent funds that invest 
at least 65% of assets in municipal debt issues in the top four rating      
categories. The results of the underlying funds in the 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.                                                              
3 The distribution rate represents actual distributions paid by the fund. It  
was calculated at net asset value by annualizing dividends paid by the fund 
 over one month and dividing that number by the fund's average net asset value
for the month.                                                              

AMERICAN HIGH-INCOME MUNICIPAL BOND FUND                                      

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:             
------------------------------------------------------------------------------
                                 ONE YEAR       FIVE YEARS        LIFETIME    
                                                                              
Class A - began 9/26/94                                                       
(with no sales charge              7.31%           5.25%            7.10%     
imposed)                                                                      
------------------------------------------------------------------------------
Lehman Municipal Bond             11.68%           5.84%            7.11%     
Index/1/                                                                      
------------------------------------------------------------------------------
Lipper High Yield Municipal        3.08%           3.83%            5.25%     
Debt Average/2/                                                               
------------------------------------------------------------------------------
Class A distribution rate/3/:  5.50%                                          
(For current distribution rate information, please call American FundsLine    
at 1-800-325-3590.)                                                           
------------------------------------------------------------------------------

1 The Lehman Brothers Municipal Bond Index represents the national investment 
grade municipal bond market. This index is unmanaged and does not reflect   
sales charges, commissions or expenses.                                     
2 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.                                                      
3 The distribution rate represents actual distributions paid by the fund. It  
was calculated at net asset value by annualizing dividends paid by the fund 
 over one month and dividing that number by the fund's average net asset value
for the month.                                                              

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LIMITED TERM TAX-EXEMPT BOND FUND                                             

                                                                [Download Table]

AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000:             
------------------------------------------------------------------------------
                                 ONE YEAR       FIVE YEARS        LIFETIME    
                                                                              
Class A - began 10/6/93                                                       
(with no sales charge              7.45%           4.78%            5.02%     
imposed)                                                                      
------------------------------------------------------------------------------
Lehman 7-Year Municipal Bond       9.07%           5.39%            5.37%     
Index/1/                                                                      
------------------------------------------------------------------------------
Lipper Intermediate Municipal      8.55%           4.67%            4.78%     
Debt Average/2/                                                               
------------------------------------------------------------------------------
Class A distribution rate/3/:  4.21%                                          
(For current distribution rate information, please call American FundsLine    
at 1-800-325-3590.)                                                           
------------------------------------------------------------------------------

OF AMERICA                                                                    

1 The Lehman Brothers 7-Year Municipal Bond Index represents the national     
 investment grade municipal bond market.  This index is unmanaged and does not
reflect sales charges, commissions or expenses.                             
2 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.                                                      
3 The distribution rate represents actual distributions paid by the fund. It  
was calculated at net asset value by annualizing dividends paid by the fund 
 over one month and dividing that number by the fund's average net asset value
for the month.                                                              

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MANAGEMENT AND ORGANIZATION                                                   

INVESTMENT ADVISER                                                            

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

MULTIPLE PORTFOLIO COUNSELOR SYSTEM                                           

Capital Research and Management Company uses a system of multiple portfolio   
 counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments managed by individual counselors. Counselors  
decide how their respective segments will be invested, within the limits      
provided by a fund's objective(s) and policies and by Capital Research and    
Management Company's investment committee. In addition, Capital Research and  
Management Company's research professionals may make investment decisions with
respect to a portion of a fund's portfolio. The primary individual portfolio  
counselors for The Tax-Exempt Bond Fund of America, American High-Income      
Municipal Bond Fund, and Limited Term Tax-Exempt Bond Fund of America are:    

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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                                                        [Enlarge/Download Table]

PORTFOLIO COUNSELOR/ FUND         PORTFOLIO COUNSELOR          PRIMARY TITLE WITH INVESTMENT ADVISER            
TITLE (IF APPLICABLE)                  EXPERIENCE              (OR AFFILIATE) AND INVESTMENT EXPERIENCE         
----------------------------------------------------------------------------------------------------------------
                                                                                                                
BRENDA S. ELLERIN                       3 years                Senior Vice President and Director, Capital      
                             (plus 6 years prior experience    Research Company                                 
Senior Vice President,      as a research professional) for                                                     
Tax-Exempt Bond Fund of     Tax-Exempt Bond Fund of America    Investment professional for 12 years in total;10 
America and Limited Term                                       years with Capital Research and Management       
Tax-Exempt Bond Fund;                    3 years               Company or affiliate                             
Vice President, American     (plus 4 years prior experience                                                     
High-Income Municipal Bond  as a research professional) for                                                     
Fund                         American High-Income Municipal                                                     
                                       Bond Fund                                                                

                                5 years for Limited Term                                                        
                                  Tax-Exempt Bond Fund                                                          
----------------------------------------------------------------------------------------------------------------
DAVID A. HOAG                           3 years                Senior Vice President, Capital Research Company  
                             (plus 6 years prior experience                                                     
Senior Vice President,      as a research professional) for    Investment professional for 13 years in total;10 
Tax-Exempt Bond Fund of     Tax-Exempt Bond Fund of America    years with Capital Research and Management       
America and American                                           Company or affiliate                             
High-Income Municipal Bond              5 years                                                                 
Fund                         (plus 2 years prior experience                                                     
                            as a research professional) for                                                     
                             American High-Income Municipal                                                     
                                       Bond Fund                                                                
----------------------------------------------------------------------------------------------------------------
NEIL L. LANGBERG              22 years for Tax-Exempt Bond     Vice President, Investment Management Group,     
                                    Fund of America            Capital Research and Management Company          
President, Principal                                                                                            
Executive Officer and       7 years for American High-Income   Investment professional for 23 years, all with   
Director, Tax-Exempt Bond         Municipal Bond Fund          Capital Research and Management Company or       
Fund of America; Senior                                        affiliate                                        
Vice President, American        8 years for Limited Term                                                        
High-Income Municipal Bond        Tax-Exempt Bond Fund                                                          
Fund and Limited Term                                                                                           
Tax-Exempt Bond Fund                                                                                            
----------------------------------------------------------------------------------------------------------------
EDWARD B. NAHMIAS           1 year for Tax-Exempt Bond Fund    Vice President and Director, Capital Research    
                                       of America              Company                                          
Vice President, American                                                                                        
High-Income Municipal Bond                                     Investment professional for 12 years in total;5  
Fund                                                           years with Capital Research and Management       
                                                               Company or affiliate                             
----------------------------------------------------------------------------------------------------------------

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SHAREHOLDER INFORMATION                                                       

SHAREHOLDER SERVICES                                                          

American Funds Service Company, the funds' transfer agent, offers you a wide  
range of services you can use to alter your investment program should your    
 needs and circumstances change. These services may be terminated or modified at
any time upon 60 days written notice. For your convenience, American Funds    
Service Company has four service centers across the country.                  

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS

      Call toll-Free from anywhere in the U.S.
      (8 a.m. to 8 p.m. ET):
    800/421-0180

     Access the American Funds Website
     www.americanfunds.com

    [map of the United States]

                                                                [Download Table]

                                                                               
Western            Western Central     Eastern Central        Eastern          
Service Center     Service Center      Service Center         Service Center   
American Funds     American Funds      American Funds         American Funds   
Service Company    Service Company     Service Company        Service Company  
P.O. Box 25065     P.O. Box 659522     P.O. Box 6007          P.O. Box 2280    
Santa Ana,         San Antonio, Texas  Indianapolis, Indiana  Norfolk, Virginia
California         78265-9522          46206-6007             23501-2280       
92799-9508         Fax: 210/474-4050   Fax: 317/735-6620      Fax: 757/670-4773
Fax: 714/671-7080                                                              

A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUNDS'
STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN
FUNDS SHAREHOLDERS TITLED "WELCOME TO THE FAMILY." Both are available by      
writing or calling American Funds Service Company.                            

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CHOOSING A SHARE CLASS                                                        

 Each fund offers four different classes of shares.  Each share class represents
investments in the same portfolio of securities, but each class has its own   
sales charge and expense structure, allowing you to choose the class that best
meets your situation. WHEN YOU PURCHASE SHARES OF EACH FUND, YOU MUST CHOOSE A
SHARE CLASS.  IF NONE IS CHOSEN, YOUR INVESTMENT WILL BE MADE IN CLASS A      
SHARES.                                                                       

Shares of each fund may be purchased through various investment programs or   
accounts, including many types of retirement plans.  HOWEVER, TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The services or share classes
available to you may vary depending upon how you wish to purchase shares of   
each fund.                                                                    

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

. how long you expect to own the shares;                                      

. how much you intend to invest;                                              

. total expenses associated with owning shares of each class;                 

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

 . Class B and C shares generally are not available to certain retirement plans,
including employer-sponsored retirement plans such as 401(k) plans,         
  employer-sponsored 403(b) plans, and money purchase pension and profit sharing
plans;                                                                      

. Class F shares are generally only available to fee-based programs of        
  investment firms that have special agreements with each fund's distributor and
certain registered investment advisers.                                     

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

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SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES                        

                                                                [Download Table]

 CLASS A SHARES                                                               
------------------------------------------------------------------------------
                                                                              
 Initial sales charge       up to 3.75% (reduced or eliminated for purchases  
                            of $100,000 or more)                              
 Contingent deferred        none (except on certain redemptions on purchases  
 sales charge               of $1 million or more bought without an initial   
                            sales charge)                                     
 12b-1 fees                 up to 0.25% or 0.30% annually                     
 Dividends                  higher than other classes due to lower annual     
                            expenses                                          
 Purchase maximum           none                                              
 Conversion                 none                                              
 CLASS B SHARES                                                               
------------------------------------------------------------------------------
 Initial sales charge       none                                              
 Contingent deferred        starts at 5.00% and declines until it reaches 0%  
 sales charge               after six years                                   
 12b-1 fees                 1.00% annually                                    
 Dividends                  lower than Class A and F shares due to higher     
                             distribution fees and other expenses, but higher 
                            than Class C shares due to lower other expenses   
 Purchase maximum           $100,000                                          
 Conversion                 automatic conversion to Class A shares after eight
                            years, reducing future annual expenses            
 CLASS C SHARES                                                               
------------------------------------------------------------------------------
 Initial sales charge       none                                              
 Contingent deferred        1.00% if shares are sold within one year after    
 sales charge               being purchased                                   
 12b-1 fees                 1.00% annually                                    
 Dividends                  lower than other classes due to higher            
                            distribution fees and other expenses              
 Purchase maximum           $500,000                                          
 Conversion                 automatic conversion to Class F shares after ten  
                            years, reducing future annual expenses            
 CLASS F SHARES                                                               
------------------------------------------------------------------------------
 Initial sales charge       none                                              
 Contingent deferred        none                                              
 sales charge                                                                 
 12b-1 fees                 currently 0.25% annually (may not exceed 0.50%    
                            annually)                                         
 Dividends                  higher than Class B and C shares due to lower     
                               distribution fees, but typically lower than    
                            Class A shares due to higher other expenses       
 Purchase maximum           none                                              
 Conversion                 none                                              
------------------------------------------------------------------------------

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PURCHASE AND EXCHANGE OF SHARES                                               

PURCHASE OF CLASS A, B AND C SHARES                                           

Generally, you may open an account and purchase Class A, B and C shares by    
contacting any investment dealer (who may impose transaction charges in       
addition to those described in this prospectus) authorized to sell each fund's
shares. You may purchase additional shares in various ways, including through 
your investment dealer and by mail, telephone, the Internet and bank wire.    

PURCHASE OF CLASS F SHARES                                                    

Generally, you may only open an account and purchase Class F shares through   
fee-based programs of investment firms that have special agreements with the  
fund's distributor and certain registered investment advisers. These firms and
advisers typically charge ongoing fees for services they provide.             

EXCHANGE                                                                      

Generally, you may exchange your shares into shares of the same class of other
funds in The American Funds Group without a sales charge. For purposes of     
computing the contingent deferred sales charge on Class B and C shares, the   
length of time you have owned your shares will be measured from the date of   
original purchase and will not be affected by any exchange.                   

Exchanges of shares from the money market funds initially purchased without a 
sales charge generally will be subject to the appropriate sales charge.       
Exchanges have the same tax consequences as ordinary sales and purchases. See 
"Transactions by Telephone..." for information regarding electronic exchanges.

 THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS, EACH FUND'S DISTRIBUTOR, RESERVE THE
RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON, INCLUDING PURCHASES WHICH  
ARE PART OF EXCHANGE ACTIVITY THAT COULD INVOLVE ACTUAL OR POTENTIAL HARM TO  
THE FUNDS.                                                                    

                                                                [Download Table]

PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES                
                                                           
To establish an account                           $    250 
To add to an account                              $     50 
-----------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS B SHARES               $100,000 
-----------------------------------------------------------
PURCHASE MAXIMUM FOR CLASS C SHARES               $500,000 
-----------------------------------------------------------

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VALUING SHARES                                                                

Each fund's net asset value is the value of a single share. Each fund         
calculates its net asset value, each day the New York Stock Exchange is open, 
as of 4:00 p.m. New York time, the close of regular trading. Assets are valued
primarily on the basis of market quotations. However, the funds' board has    
adopted procedures to make "fair value" determinations in certain             
circumstances, for example, if market quotations are not readily available or 
do not accurately reflect fair value.                                         

 Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares), or sold at the net asset value next    
determined after American Funds Service Company receives and accepts your     
request. A contingent deferred sales charge may apply at the time you sell    
certain Class A, B and C shares.                                              

SALES CHARGES                                                                 

CLASS A                                                                       

The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced or eliminated for larger        
purchases as indicated below.                                                 

                                                                [Download Table]

                            SALES CHARGE AS A PERCENTAGE OF                   
                            ----------------------------------                
                                                                   DEALER     
                                                   NET           COMMISSION   
                               OFFERING          AMOUNT           AS % OF     
INVESTMENT                       PRICE          INVESTED       OFFERING PRICE 
------------------------------------------------------------------------------
                                                                              
Less than $100,000               3.75%            3.90%            3.00%      
------------------------------------------------------------------------------
$100,000 but less than           3.50%            3.63%            2.75%      
$250,000                                                                      
------------------------------------------------------------------------------
$250,000 but less than           2.50%            2.56%            2.00%      
$500,000                                                                      
------------------------------------------------------------------------------
$500,000 but less than           2.00%            2.04%            1.60%      
$750,000                                                                      
------------------------------------------------------------------------------
$750,000 but less than $1        1.50%            1.52%            1.20%      
million                                                                       
------------------------------------------------------------------------------
$1 million or more and                                                        
certain other investments        none             none             none       
described below                                                               
------------------------------------------------------------------------------

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE                                 

INVESTMENTS OF $1 MILLION OR MORE MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED  
SALES CHARGE IF SHARES ARE SOLD WITHIN ONE YEAR OF PURCHASE.                  
Employer-sponsored defined contribution-type plans investing $1 million or  
 more, or with 100 or more eligible employees, and Individual Retirement Account
rollovers involving retirement plan assets invested in the American Funds, may
invest with no sales charge and are not subject to a contingent deferred sales
charge.  Also exempt are investments made through retirement plans, endowments
 or foundations with $50 million or more in assets, and investments made through
accounts that purchased fund shares before March 15, 2001 and are part of     
certain qualified fee-based programs. The distributor may pay dealers up to 1%

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on investments made in Class A shares with no initial sales charge. Each fund 
may reimburse the distributor for these payments through its Plan of          
Distribution (see below).                                                     

CLASS B AND C                                                                 

 Class B and C shares are sold without any initial sales charge.  American Funds
Distributors pays 4% of the amount invested to dealers who sell Class B shares
and 1% to dealers who sell Class C shares.                                    

For Class C shares, a contingent deferred sales charge of 1% applies if shares
are sold within one year of purchase.  For Class B shares, a contingent       
deferred sales charge may be applied to shares you sell within six years of   
purchase, as shown in the table below.                                        

                                                                [Download Table]

                                                                    
CLASS B SHARES SOLD WITHIN YEAR       1    2    3    4    5     6   
--------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE      5%   4%   4%   3%   2%    1%  

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

See "Plans of Distribution" below for ongoing compensation paid to your dealer
or financial adviser for all share classes.                                   

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 Internal Revenue Service currently takes the position that
these automatic conversions are not taxable. Should its position change,      
 shareholders would still have the option of converting but may face certain tax
consequences.                                                                 

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SALES CHARGE REDUCTIONS AND WAIVERS                                           

You must let your investment dealer or American Funds Service Company know if 
you qualify for a reduction in your Class A sales charge or waiver of your    
Class B or C contingent deferred sales charge.                                

REDUCING YOUR CLASS A SALES CHARGE                                            

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

AGGREGATING ACCOUNTS                                                          

To receive a reduced Class A sales charge, investments made by you and your   
immediate family (see above) may be aggregated if made for your own account(s)
and/or, for instance:                                                         

. trust accounts established by the above individuals. However, if the        
person(s) who established the trust is deceased, the trust account may be   
aggregated with accounts of the person who is the primary beneficiary of the
trust;                                                                      

. solely controlled business accounts;                                        

. single-participant retirement plans.                                        

CONCURRENT PURCHASES                                                          

You may combine simultaneous purchases of any class of shares of two or more  
American Funds, as well as individual holdings in various American Legacy     
variable annuities or variable life insurance policies, to qualify for a      
reduced Class A sales charge.  Direct purchases of money market funds are     
excluded.                                                                     

RIGHTS OF ACCUMULATION                                                        

You may take into account the current value (or if greater, the amount you    
 invested less any withdrawals) of your existing holdings in any class of shares
of the American Funds, as well as individual holdings in various American     
Legacy variable annuities or variable life insurance policies, to determine   
 your Class A sales charge. Direct purchases of money market funds are excluded.

STATEMENT OF INTENTION                                                        

You can reduce the sales charge you pay on your Class A share purchases by    
establishing a Statement of Intention. A Statement of Intention allows you to 
combine all non-money market fund purchases of all share classes, as well as  
individual American Legacy variable annuity and life insurance policies you   
intend to make over a 13-month period, to determine the applicable sales      
charge. At your request, purchases made during the previous 90 days may be    
included; however, capital appreciation and reinvested dividends and capital  
gains do not apply toward these combined purchases. A portion of your account 
may be held in escrow to cover additional Class A sales charges which may be  
due if your total investments over the 13-month period do not qualify for the 
applicable sales charge reduction.                                            

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CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B AND C SHARES             

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

 . when receiving payments through systematic withdrawal plans (up to 12% of the
value of each fund account);                                                

. when receiving required minimum distributions from retirement accounts upon 
reaching age 70 1/2; or                                                     

. for redemptions due to death or post-purchase disability of the shareholder 
(this generally excludes trusts).                                           

PLANS OF DISTRIBUTION                                                         

 Each fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of      
expenses are approved in advance by each fund's board of directors/trustees.  
The plans provide for annual expenses of up to 0.25% or 0.30% for Class A     
 shares, 1.00% for Class B and C shares, and up to 0.50% for Class F shares. For
all share classes, up to 0.25% of these expenses may be used to pay service   
fees to qualified dealers for providing certain shareholder services.  The    
remaining expense for each share class may be used for distribution expenses. 

The 12b-1 fees paid by each fund, as a percentage of average net assets, for  
the previous fiscal year are indicated earlier under "Fees and Expenses of the
Funds." Since these fees are paid out of each fund's assets or income on an   
ongoing basis, over time they will increase the cost and reduce the return of 
an investment. The higher fees for Class B and C shares may cost you more over
time than paying the initial sales charge for Class A shares.                 

OTHER COMPENSATION TO DEALERS                                                 

American Funds Distributors may pay, or sponsor informational meetings for,   
dealers as described in the statement of additional information.              

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HOW TO SELL SHARES                                                            

 Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have    
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:                                                        

THROUGH YOUR DEALER OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)          

. Shares held for you in your dealer's name must be sold through the dealer.  

. Class F shares must be sold through your dealer or financial adviser.       

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.              

. American Funds Service Company reserves the right to require signature      
guarantee(s) on any redemptions.                                            

. Additional documentation may be required for sales of shares held in        
corporate, partnership or fiduciary accounts.                               

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING AMERICAN       
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:                             

. Redemptions by telephone, fax, or computer (including American FundsLine and
American FundsLine OnLine) are limited to $50,000 per shareholder each day. 

. Checks must be made payable to the registered shareholder.                  

. Checks must be mailed to an address of record that has been used with the   
account for at least 10 days.                                               

TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE        

 Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all 
of these services. You may reinstate these services at any time.              

Unless you decide not to have telephone, fax, or computer services on your    
 account(s), you agree to hold each fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their  
respective directors, trustees, officers, employees and agents harmless from  
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided     
American Funds Service Company employs reasonable procedures to confirm that  
the instructions received from any person with appropriate account information
 are genuine. If reasonable procedures are not employed, it and/or each fund may
be liable for losses due to unauthorized or fraudulent instructions.          

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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DISTRIBUTIONS AND TAXES                                                       

DIVIDENDS AND DISTRIBUTIONS                                                   

Each fund declares dividends from net investment income daily and distributes 
the accrued dividends, which may fluctuate, to shareholders each month.       
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. Capital gains, if any, are usually    
distributed in November or December. When a capital gain is distributed, the  
net asset value per share is reduced by the amount of the payment.            

You may elect to reinvest dividends and/or capital gain distributions to      
purchase additional shares of these funds or any other American Fund, or you  
may elect to receive them in cash. Most shareholders do not elect to take     
 capital gain distributions in cash because these distributions reduce principal
value.                                                                        

TAX CONSEQUENCES                                                              

Interest on municipal bonds is generally not included in gross income for     
federal income tax purposes. Each fund is permitted to pass through to its    
shareholders federally tax-exempt income subject to certain requirements.     
However, each fund may invest in obligations which pay interest that is     
subject to state and local taxes when distributed by each fund.               

TAXES ON DISTRIBUTIONS                                                        

Distributions you receive from the funds may be subject to income tax and may 
also be subject to state or local taxes - unless you are exempt from taxation.

 For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The funds' distributions of net 
long-term capital gains are taxable to you as long-term capital gains. Any    
taxable distributions you receive from the funds will normally be taxable to  
 you when made, regardless of whether you reinvest distributions or receive them
in cash.                                                                      

TAXES ON TRANSACTIONS                                                         

 Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the        
difference between the cost of your shares, including any sales charges, and  
the price you receive when you sell them.                                     

Please see your tax adviser for further information.                          

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FINANCIAL HIGHLIGHTS                                                          

The financial highlights table is intended to help you understand each fund's 
 results for the past five years. Certain information reflects financial results
 for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the funds (assuming 
reinvestment of all dividends and distributions). This information has been   
audited by PricewaterhouseCoopers LLP, whose report, along with each fund's   
financial statements, is included in the statement of additional information, 
which is available upon request.                                              

THE TAX-EXEMPT BOND FUND OF AMERICA                                             

                                                                [Download Table]

                                                 CLASS A                      
                              ------------------------------------------------
                                           YEAR ENDED AUGUST 31               
                                2001      2000      1999     1998      1997   
                              ------------------------------------------------
                                                                              
NET ASSET VALUE,              $11.81    $11.86     $12.60   $12.27    $11.86  
BEGINNING OF YEAR                                                             
------------------------------------------------------------------------------
INCOME FROM INVESTMENT                                                        
OPERATIONS:                                                                   
Net investment income            .60/1/    .60/1/     .59      .62       .64  
Net gains (losses) on                                                         
securities (both                 .57 /1/  (.01 )/1/  (.55)     .37       .45  
realized and unrealized)                                                      
------------------------------------------------------------------------------
Total from investment           1.17       .59        .04      .99      1.09  
operations                                                                    
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:                                                           
Dividends (from net                                                           
investment income)              (.60 )    (.60 )     (.59)    (.62)     (.64) 
Distributions (from capital               (.04 )     (.19)    (.04)     (.04) 
gains)                                                                        
------------------------------------------------------------------------------
Total distributions             (.60 )    (.64 )     (.78)    (.66)     (.68) 
------------------------------------------------------------------------------
NET ASSET VALUE,              $12.38    $11.81     $11.86   $12.60    $12.27  
END OF YEAR                                                                   
------------------------------------------------------------------------------
TOTAL RETURN/2/                10.22 %    5.27 %      .22%    8.26%     9.39% 
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:                                                     
Net assets, end of year (in   $2,202    $1,831     $1,917   $1,795    $1,593  
millions)                                                                     
------------------------------------------------------------------------------
Ratio of expenses to             .66 %     .67 %      .65%     .66%      .68% 
average net assets                                                            
------------------------------------------------------------------------------
Ratio of net income                                                           
to average net assets           5.00 %    5.22 %     4.78%    4.98%     5.27% 

1 Based on average shares outstanding.                                        
2 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    
3                                                                             

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                                                        [Enlarge/Download Table]

                                CLASS B            CLASS C      CLASS F                
                        ---------------------------------------------------            
                           Year                                                        
                           ended    March 15 to  March 15 to  March 15 to   March 15 to
                        August 31,  August 31,   August 31,   August 31,      July 31, 
                           2001       2000/1/      2001/1/      2001/1/       2001/3/  
                        ---------------------------------------------------            
                                                                                       
NET ASSET VALUE,         $11.81       $11.50       $12.10       $12.10                 
BEGINNING OF PERIOD                                                                    
---------------------------------------------------------------------------            
INCOME FROM INVESTMENT                                                                 
OPERATIONS:                                                                            
Net investment                                                                         
income/2/                   .52          .21          .21          .24                 
Net gains on                                                                           
securities (both                                                                       
realized and                .57          .34          .29          .29                 
unrealized)/2/                                                                         
---------------------------------------------------------------------------            
Total from investment      1.09          .55          .50          .53                 
operations                                                                             
---------------------------------------------------------------------------            
LESS DISTRIBUTIONS:                                                                    
Dividends (from net                                                                    
investment income)         (.52)        (.24)        (.22)        (.25)                
Distributions (from                                                                    
capital gains)                                                                         
---------------------------------------------------------------------------            
Total distributions        (.52)        (.24)        (.22)        (.25)                
---------------------------------------------------------------------------            
NET ASSET VALUE,         $12.38       $11.81       $12.38       $12.38                 
END OF PERIOD                                                                          
---------------------------------------------------------------------------            
TOTAL RETURN/3/            9.45%        4.88%        4.20%        4.45%                
---------------------------------------------------------------------------            
RATIOS/SUPPLEMENTAL                                                                    
DATA:                                                                                  
Net assets, end of       $   26       $    3       $   15       $    7                 
period (in millions)                                                                   
---------------------------------------------------------------------------            
Ratio of expenses to       1.40%         .64%         .73%         .40%                
average net assets                                                                     
---------------------------------------------------------------------------            
Ratio of net income                                                                    
to average net assets      4.06%        1.99%        1.77%        2.11%                

 1 Based on operations for the period shown and, accordingly, not representative
of a full year.                                                             
2 Based on average shares outstanding.                                        

3 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    

                                                                [Download Table]

                                           YEAR ENDED AUGUST 31           
                                                                          
                                    2001    2000    1999    1998     1997 
                                  ----------------------------------------
Portfolio turnover rate for all                                           
classes of shares                 21.41%  28.64%  14.56%  23.19%   14.39% 

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                                   NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS

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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND                                        

                                                                [Download Table]

                                                 CLASS A                      
                              ------------------------------------------------
                                            YEAR ENDED JULY 31                
                                2001      2000      1999     1998      1997   
                              ------------------------------------------------
                                                                              
NET ASSET VALUE,              $14.87    $15.49     $16.12   $15.90    $15.23  
BEGINNING OF YEAR                                                             
------------------------------------------------------------------------------
INCOME FROM INVESTMENT                                                        
OPERATIONS:                                                                   
Net investment income            .83/1/    .82/1/     .81      .84       .87  
Net gains (losses) on                                                         
securities (both                 .48/1/   (.58 )/1/  (.54)     .26       .80  
realized and unrealized)                                                      
------------------------------------------------------------------------------
Total from investment           1.31       .24        .27     1.10      1.67  
operations                                                                    
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:                                                           
Dividends (from net                                                           
investment income)              (.83 )    (.83 )     (.82)    (.84)     (.86) 
Distributions (from capital        -      (.03 )     (.08)    (.04)     (.14) 
gains)                                                                        
------------------------------------------------------------------------------
Total distributions             (.83 )    (.86 )     (.90)    (.88)    (1.00) 
------------------------------------------------------------------------------
NET ASSET VALUE,              $15.35    $14.87     $15.49   $16.12    $15.90  
END OF YEAR                                                                   
------------------------------------------------------------------------------
TOTAL RETURN/2/                 9.14 %    1.61 %     1.63%    7.05%    11.36% 
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:                                                     
Net assets, end of year (in   $  650    $  550     $  564   $  464    $  316  
millions)                                                                     
------------------------------------------------------------------------------
Ratio of expenses to             .80 %     .80 %      .78%     .79%      .87% 
average net assets                                                            
------------------------------------------------------------------------------
Ratio of net income                                                           
to average net assets           5.50 %    5.53 %     5.09%    5.19%     5.51% 

1 Based on average shares outstanding.                                        
2 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    
3                                                                             

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                               CLASS B           CLASS C      CLASS F                
                        -------------------------------------------------            
                          Year                                                       
                          ended   March 15 to  March 15 to  March 15 to   March 15 to
                        July 31,   July 31,     July 31,     July 31,       July 31, 
                          2001      2000/1/      2001/1/      2001/1/       2001/3/  
                        -------------------------------------------------            
                                                                                     
NET ASSET VALUE,        $14.87      $14.79       $15.11       $15.11                 
BEGINNING OF PERIOD                                                                  
-------------------------------------------------------------------------            
INCOME FROM INVESTMENT                                                               
OPERATIONS:                                                                          
Net investment                                                                       
income/2/                  .71         .23          .25          .27                 
Net gains on                                                                         
securities (both                                                                     
realized and               .50         .14          .25          .25                 
unrealized)/2/                                                                       
-------------------------------------------------------------------------            
Total from investment     1.21         .37          .50          .52                 
operations                                                                           
-------------------------------------------------------------------------            
LESS DISTRIBUTIONS:                                                                  
Dividends (from net                                                                  
investment income)        (.73)       (.29)        (.26)        (.28)                
Distributions (from          -           -            -            -                 
capital gains)                                                                       
-------------------------------------------------------------------------            
Total distributions       (.73)       (.29)        (.26)        (.28)                
-------------------------------------------------------------------------            
NET ASSET VALUE,        $15.35      $14.87       $15.35       $15.35                 
END OF PERIOD                                                                        
-------------------------------------------------------------------------            
TOTAL RETURN/3/           8.45%       3.16%        3.34%        3.50%                
-------------------------------------------------------------------------            
RATIOS/SUPPLEMENTAL                                                                  
DATA:                                                                                
Net assets, end of      $   11      $    2       $    4       $    1                 
period (in millions)                                                                 
-------------------------------------------------------------------------            
Ratio of expenses to      1.48%        .55%         .59%         .37%                
average net assets                                                                   
-------------------------------------------------------------------------            
Ratio of net income                                                                  
to average net assets     4.72%       1.77%        1.75%        1.98%                

 1 Based on operations for the period shown and, accordingly, not representative
of a full year.                                                             
2 Based on average shares outstanding.                                        
3 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    

                                                                [Download Table]

                                            YEAR ENDED JULY 31            
                                                                          
                                    2001    2000    1999    1998     1997 
                                  ----------------------------------------
Portfolio turnover rate for all                                           
classes of shares                 18.23%  33.20%  16.67%  16.38%   15.31% 

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LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA                                    

                                                                [Download Table]

                                                 CLASS A                      
                              ------------------------------------------------
                                            YEAR ENDED JULY 31                
                                2001      2000      1999     1998      1997   
                              ------------------------------------------------
                                                                              
NET ASSET VALUE,              $14.43    $14.62     $14.85   $14.79    $14.36  
BEGINNING OF YEAR                                                             
------------------------------------------------------------------------------
INCOME FROM INVESTMENT                                                        
OPERATIONS:                                                                   
Net investment income            .62/1/    .73/1/     .61      .66       .68  
Net gains (losses) on                                                         
securities (both                 .65/1/   (.30 )/1/  (.23)     .06       .43  
realized and unrealized)                                                      
------------------------------------------------------------------------------
Total from investment           1.27       .43        .38      .72      1.11  
operations                                                                    
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:                                                           
Dividends (from net                                                           
investment income)              (.62 )    (.62 )     (.61)    (.66)     (.68) 
Total distributions             (.62 )    (.62 )     (.61)    (.66)     (.68) 
------------------------------------------------------------------------------
NET ASSET VALUE,              $15.08    $14.43     $14.62   $14.85    $14.79  
END OF YEAR                                                                   
------------------------------------------------------------------------------
TOTAL RETURN/2/                 8.99 %    3.09 %     2.59%    4.95%     7.96% 
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:                                                     
Net assets, end of year (in   $  306    $  258     $  283   $  227    $  203  
millions)                                                                     
------------------------------------------------------------------------------
Ratio of expenses to             .75 %     .75 %      .75%     .75%      .75% 
average net assets/3/                                                         
------------------------------------------------------------------------------
Ratio of net income                                                           
to average net assets           4.18 %    5.08 %     4.12%    4.40%     4.70% 

1 Based on average shares outstanding.                                        
2 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    
3 Had Capital Research and Management Company 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.                                                               

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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                               CLASS B           CLASS C      CLASS F                
                        -------------------------------------------------            
                          Year                                                       
                          ended   March 15 to  March 15 to  March 15 to   March 15 to
                        July 31,   July 31,     July 31,     July 31,       July 31, 
                          2001      2000/1/      2001/1/      2001/1/       2001/3/  
                        -------------------------------------------------            
                                                                                     
NET ASSET VALUE,        $14.43      $14.27       $14.92       $14.92                 
BEGINNING OF PERIOD                                                                  
-------------------------------------------------------------------------            
INCOME FROM INVESTMENT                                                               
OPERATIONS:                                                                          
Net investment                                                                       
income/2/                  .48         .24          .15          .16                 
Net gains on                                                                         
securities (both                                                                     
realized and               .69         .13          .17          .19                 
unrealized)/2/                                                                       
-------------------------------------------------------------------------            
Total from investment     1.17         .37          .32          .35                 
operations                                                                           
-------------------------------------------------------------------------            
LESS DISTRIBUTIONS:                                                                  
Dividends (from net                                                                  
investment income)        (.52)       (.21)        (.16)        (.19)                
Total distributions       (.52)       (.21)        (.16)        (.19)                
-------------------------------------------------------------------------            
NET ASSET VALUE,        $15.08      $14.43       $15.08       $15.08                 
END OF PERIOD                                                                        
-------------------------------------------------------------------------            
TOTAL RETURN/3/           8.24%       2.59%        2.14%        2.34%                
-------------------------------------------------------------------------            
RATIOS/SUPPLEMENTAL                                                                  
DATA:                                                                                
Net assets, end of      $    2      $    1       $    4       $    2                 
period (in millions)                                                                 
-------------------------------------------------------------------------            
Ratio of expenses to      1.59%/4/     .61%/4/      .75%         .60%                
average net assets                                                                   
-------------------------------------------------------------------------            
Ratio of net income                                                                  
to average net assets     3.24%       1.84%        1.05%        1.18%                

 1 Based on operations for the period shown and, accordingly, not representative
of a full year.                                                             
2 Based on average shares outstanding.                                        
3 Total returns exclude all sales charges, including contingent deferred sales
charges.                                                                    
4 Had Capital Research and Management Company not waived management services  
 fees, the fund's expense ratio would have been 1.60% and 0.71% for the fiscal
year ended 2001 and 2000, respectively.                                     

                                                                [Download Table]

                                           YEAR ENDED AUGUST 31           
                                                                          
                                    2001    2000    1999    1998     1997 
                                  ----------------------------------------
Portfolio turnover rate for all                                           
classes of shares                 21.42%  34.38%  17.00%  34.07%   31.89% 

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NATIONAL TAX-EXEMPT INCOME FUNDS / PROSPECTUS                                   

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                                                                [Download Table]

                                                                        
FOR SHAREHOLDER SERVICES                  American Funds Service Company
                                                            800/421-0180
FOR RETIREMENT PLAN SERVICES    Call your employer or plan administrator
FOR DEALER SERVICES                          American Funds Distributors
                                                    800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION                            American FundsLine(R)
                                                            800/325-3590
                                            American FundsLine OnLine(R)
                                            http://www.americanfunds.com


Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes. 

 *     *     *     *     *

MULTIPLE TRANSLATIONS  This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or   
phrase in a translation, the English text will prevail.                       

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

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

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

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

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

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

Printed on Recycled Paper                                                     

                                                          TEX-010-1101/B

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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

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 November 1, 2001. 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 

                                                                [Download Table]

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       20  
Taxes and Distributions . . . . . . . . . . . . . . . . . . . . . .       26  
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . .       29  
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . .       31  
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . .       34  
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . .       37  
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .       38  
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .       39  
Shareholder Account Services and Privileges . . . . . . . . . . . .       41  
Execution of Portfolio Transactions . . . . . . . . . . . . . . . .       43  
General Information . . . . . . . . . . . . . . . . . . . . . . . .       44  
Class A Share Investment Results and Related Statistics . . . . . .       46  
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       49  
Financial Statements                                                          

National Tax-Exempt Income Funds - Page 1 

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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.                                                              
.    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).                                       

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 .   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.                               

 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 obli-              

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     gations 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    
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                    

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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. government; (3) money market      
instruments, such as certificates of deposit issued by domestic banks, corporate
commercial paper, and bankers' acceptances; and (4) repurchase agreements.      

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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).                                       

PRIVATE PLACEMENTS - Generally, municipal securities acquired in private        
placements are subject to contractual restrictions on resale. Accordingly, all  
private placements will be considered illiquid                                  

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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.                                                              

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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.                                                 

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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;                                            

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

For the purpose of the fund's investment restrictions, the identification of the
"issuer" of municipal bonds that are not general obligation bonds is made by the
Investment Adviser on the basis of the characteristics of the bonds as          
described, the most significant of which is the ultimate source of funds for the
payment of principal and interest on such bonds.                                

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

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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;                                                     

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;                                                                    

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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.                                                               

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

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

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

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

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

For the purposes of the fund's investment restrictions, the identification of   
the "issuer" of municipal bonds that are not general obligation bonds is made by
the Investment Adviser on the basis of the characteristics of the bonds as      
described, the most significant of which is the ultimate source of funds for the
payment of principal and interest on such bonds.                                

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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 such borrowing falls below 300%, the fund will      
reduce, within three days, the amount of its borrowing in order to provide for  
300% asset coverage; nor                                                        

10.  Purchase or sell puts, calls, straddles, or spreads, or combinations       
thereof (this restriction does not prevent the fund from investing in securities
with put and call features).                                                    

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

1.    The fund does not currently intend (at least for the next 12 months) to   
sell securities short, except to the extent that the fund contemporaneously     
owns, or has the right to acquire at no additional cost, securities identical to
those sold short.                                                               

National Tax-Exempt Income Funds - Page 12

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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.                             

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 four classes of shares - Class A, B, C and F. 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.    

National Tax-Exempt Income Funds - Page 13

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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

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FUND DIRECTORS/TRUSTEES AND OFFICERS

Directors/Trustees and Director/Trustee Compensation

                                                        [Enlarge/Download Table]


                                                                                                 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 and              TEBF $3,843/4/
 P.O. Box 144                  Trustee          Chief Executive Officer, The Mission                 AHIM $2,843/4/
 Palos Verdes Estates, CA                       Group (non-utility holding company,                  LTEX $2,843/4/
 90274                                          subsidiary of Southern California                                  
 Age: 68                                        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 Technology              TEBF $1,259/4/
 100 W. Broadway               Trustee          Corporation (international consulting                AHIM $2,757/4/
 Suite 240                                      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 management                AHIM $4,177/4/
 Drive                                          of senior living communities)                        LTEX $4,177/4/
 Suite 725                                                                                                         
 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 Company                            
                               Vice                                                                                
                               Chairman                                                                            
                               and                                                                                 
                               Director                                                                            

                               LTEX:                                                                               
                               President                                                                           
                               and                                                                                 
                               Trustee                                                                             
-------------------------------------------------------------------------------------------------------------------
 +** Paul G. Haaga, Jr.        Chairman of      Executive Vice President and Director,          none/5/            
      Age: 52                  the Board        Capital Research and Management Company                            

-------------------------------------------------------------------------------------------------------------------
 +*Neil L. Langberg            TEBF:            Vice President, Investment Management           none/5/            
 Age: 48                       President and    Group, Capital Research and Management                             
                               Director         Company                                                            

                               AHIM and                                                                            
                               LTEX: Senior                                                                        
                               Vice                                                                                
                               President                                                                           
-------------------------------------------------------------------------------------------------------------------
 +*Mark R. Macdonald           AHIM:            Vice President, Investment Management           none/5/            
 Age: 42                       President and    Group, Capital Research and Management                             
                               Director         Company                                                            
                                                                                          -------------------------
------------------------------------------------------------------------------------------                         
 Richard G. Newman             Director/        Chairman and CEO, AECOM Technology                   TEBF $4,179/4/
 555 South Flower Street       Trustee          Corporation (architectural engineering)              AHIM $4,177/4/
 Suite 3700                                                                                          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 Restaurants               AHIM $3,467/4/
 Los Angeles, CA  90022                         (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

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+ "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.                                     

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OTHER OFFICERS

                                                                [Download Table]

                                  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 $2,500 to Directors/Trustees who are not affiliated    
with the Investment Adviser, plus $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. AHIM and LTEX pay annual fees of $1,500 
to Directors/Trustees who are not affiliated with the Investment Adviser. In    
addition, each fund pays $210 for each Board of Directors/Trustees meeting      
attended, plus a pro rata portion of $2,520 for each meeting of the Contracts   
Committee attended and a pro rata portion of $1,000 for each meeting of the     
Audit and Nominating Committees attended. No pension or retirement benefits     

National Tax-Exempt Income Funds - Page 19

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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 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, 2002, 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).                                  

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       

National Tax-Exempt Income Funds - Page 20

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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 

                                                                [Download Table]

          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                                 
------------------------------------------------------------------------------

The agreement also provides for fees based on monthly gross investment income at
the following rates:                                                            

MONTHLY GROSS INVESTMENT

                                                                [Download Table]

         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       

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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 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.  

National Tax-Exempt Income Funds - Page 22

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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, 2002, 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.             

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                                  

National Tax-Exempt Income Funds - Page 23

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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 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                                                

National Tax-Exempt Income Funds - Page 24

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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 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.                                           

National Tax-Exempt Income Funds - Page 25

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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.                                  

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.                                                        

National Tax-Exempt Income Funds - Page 26

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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 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.                                             

National Tax-Exempt Income Funds - Page 27

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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.                                                                 

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 28

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PURCHASE OF SHARES

                                                                [Download Table]

        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 29

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pension and profit sharing plans.  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):                                

                                                        [Enlarge/Download Table]

                                                  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.                                                      

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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.)                   

                                                        [Enlarge/Download Table]

                                                                                      DEALER    
                                                               SALES CHARGE AS      COMMISSION  
                                                              PERCENTAGE OF THE:   AS PERCENTAGE
                                                              ------------------      OF THE    
AMOUNT OF PURCHASE                                                                              
AT THE OFFERING PRICE                                        NET AMOUNT  OFFERING    OFFERING   
                                                             -INVESTED-   PRICE        PRICE    
------------------------------------------------------------- --------    -----        -----    
                                                                                                
STOCK AND STOCK/BOND FUNDS                                                                      
Less than $25,000  . . . . . . . . . . . . . . . . . . . .     6.10%      5.75%        5.00%    
$25,000 but less than $50,000  . . . . . . . . . . . . . .     5.26       5.00         4.25     
$50,000 but less than $100,000. .                              4.71       4.50         3.75     
BOND FUNDS                                                                                      
Less than $100,000 . . . . . . . .                             3.90       3.75         3.00     
STOCK, STOCK/BOND, AND BOND FUNDS                                                               
$100,000 but less than $250,000 .                              3.63       3.50         2.75     
$250,000 but less than $500,000 .                              2.56       2.50         2.00     
$500,000 but less than $750,000 .                              2.04       2.00         1.60     
$750,000 but less than $1 million                              1.52       1.50         1.20     
$1 million or more . . . . . . . . . .        none     none    (see below)                      
-----------------------------------------------------------------------------                   

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or   
more are sold with no initial sales charge.  HOWEVER, A 1% CONTINGENT DEFERRED  
SALES CHARGE (CDSC) MAY BE                                                      

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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                                                            

(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.                                                                 

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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:                                          

                                                                [Download Table]

 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.
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.                              

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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  
 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.                                                    

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     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);                 

    .    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                        

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  .    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.                                                             

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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                                        

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in the fund's current prospectus and statement of additional information. An IRA
rollover involving plan assets that offered an investment option managed by any 
affiliate of The Capital Group Companies, Inc., including any of the American   
Funds, may be invested in 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.                                                      

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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                                 

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          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                                            

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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,                                                                     

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(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                                                    

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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             

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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 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 Transfer Agent has taken steps to eliminate duplicate     
mailings of prospectuses, shareholder                                           

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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 -- AUGUST 31, 2001    

                                                                [Download Table]

                                                                          
Net asset value and redemption price per share                            
  (Net assets divided by shares outstanding) . . . . . . . . .      $12.38
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). . . . . . . . . . . . . . . . . . . . . . . .      $12.86

DETERMINATION OF AHIM'S NET ASSET VALUE, REDEMPTION PRICE AND 

MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- JULY 31, 2001    

                                                                [Download Table]

                                                                          
Net asset value and redemption price per share                            
  (Net assets divided by shares outstanding) . . . . . . . . .      $15.35
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). . . . . . . . . . . . . . . . . . . . . . . .      $15.95

DETERMINATION OF LTEX'S NET ASSET VALUE, REDEMPTION PRICE AND 

MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- JULY 31, 2001  

                                                                [Download Table]

                                                                          
Net asset value and redemption price per share                            
  (Net assets divided by shares outstanding) . . . . . . . . .      $15.08
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). . . . . . . . . . . . . . . . . . . . . . . .      $15.67

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CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS 

TEBF's yield was 4.06% based on a 30-day (or one month) period ended August 31, 
2001.  AHIM's and LTEX's yield were 5.57% and 3.67%, respectively, based on a   
30-day (or one month) period ended July 31, 2001. The yield was computed by     
dividing the net investment income per share earned during the period by the    
maximum offering price per share on the last day of the period, according to the
following formula:                                                              

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

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

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

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

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

The funds may also calculate a tax equivalent yield based on a 30-day (or one   
month) period ended no later than the date of the most recent balance sheet     
included in the registration statement, computed by dividing that portion of the
yield (as computed by the formula stated above) which is tax-exempt by one minus
a stated income tax rate and adding the product to that portion, if any, of the 
yield that is not tax-exempt. TEBF'S tax-equivalent yield based on the maximum  
federal tax rate of 39.1% for the 30-day (or one month) period ended August 31, 
2001 was 6.67%. AHIM's and LTEX's tax-equivalent yield based on the maximum     
federal tax rate of 39.1% for the 30-day (or one month) period ended July 31,   
2001 was 9.15% and 6.03%, respectively.                                         

As of August 31, 2001, 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 6.09%, 5.80% and 6.58%, 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 August 31, 2001 were 10.22%, 6.61% and 6.99%,         
respectively.                                                                   

As of July 31, 2001, 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 5.04%, 5.28% and 6.77%, respectively.  Over the fund's lifetime   
(September 26, 1994 to July 31, 2001), the Lehman Brothers Municipal Bond       
Index<F1> and the Lipper High Yield Municipal Debt Funds Average<F2> had average
annual total returns of 7.16% and 5.43%, 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 July 31, 2001 were 9.14%, 6.08% and     
7.37%, respectively.                                                            
<FN>                                                                            
<F1>  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.                                               
<F2>  The Lipper High Yield Municipal Debt Funds Average represents an average  
of funds in the objective that invest at least 50% of their assets in lower     
rated municipal debt issues. The results of the underlying funds in the 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.                                                          

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As of July 31, 2001, 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 4.92%, 4.68% and 4.77%, respectively.  Over the fund's lifetime   
(October 6, 1993 to July 31, 2001), the Lehman Brothers 7-Year Municipal Bond   
Index<F1> and the Lipper Intermediate Municipal Debt Funds Average<F2> had      
average annual total returns of 5.57% and 4.96%, 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 July 31, 2001 were 8.99%, 5.48% and 5.29%,  
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.                  
<FN>                                                                            
<F1>  The Lehman Brothers 7-Year Municipal Bond Index is unmanaged, reflects no 
expenses or management fees and consists of a large universe of municipal bonds 
issued as state general obligations or revenue bonds with a minimum rating of   
BBB by Standard & Poor's Corporation.                                           
<F2>  The Lipper Intermediate Municipal Debt Funds Average is comprised of funds
that invest in municipal debt issues with dollar-weighted average maturities of 
five to ten years. 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.                                                                  

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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).            

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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."         

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"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."                                                                          

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"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.                          

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

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

National Tax-Exempt Income Funds - Page 52

                                                        [Enlarge/Download Table]
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                                                                         


                                                                [Download Table]
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:                   

                                                                [Download Table]
                                                                         
                                                  (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:                         

                                                        [Enlarge/Download Table]
                                               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.                                                                

                                                                [Download Table]
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.                                                             

PART C
OTHER INFORMATION 
THE TAX-EXEMPT BOND FUND OF AMERICA, INC. 

ITEM 23. EXHIBITS                                                               

(a) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(b) Previously filed (see Post-Effective Amendment No. 23 filed 10/29/97)       
(c) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(d) Previously filed (see Post-Effective Amendment No. 27 filed 3/14/00)        
(e) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(f) None                                                                        
(g) Form of Global Custody Agreement                                            
(h) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(i) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(j) Consent of Independent Accountants                                          
(k) None                                                                        
(l) Previously filed (see Post-Effective Amendment No. 23 filed 10/29/97)       
(m) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(n) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        
(o) None                                                                        
(p) Previously filed (see Post-Effective Amendment No. 29 filed 3/13/01)        

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT          

None                                                                        

ITEM 25.  INDEMNIFICATION                                                       

 Registrant is a joint-insured under Investment Advisor/Mutual fund Errors and
Omissions Policies written by American International Surplus Lines Insurance    
Company, Chubb Custom Insurance Company, and ICI Mutual Insurance Company which 
insures its officers and  directors against certain liabilities.  However, in   
no event will Registrant maintain insurance to indemnify any such person for    
any act for which Registrant itself if not permitted to indemnify the           
individual.                                                                     

ITEM 25.  INDEMNIFICATION (CONTINUED)                                           

Subsection (b) of Section 2-418 of the General Corporation Law of Maryland  
empowers a corporation to indemnify any person who was or is party or is        
threatened to be made a party to any threatened, pending or completed action,   
suit or proceeding, whether civil, criminal, administrative or investigative    
(other than an action by or in the right of the corporation) by reason  of the  
fact that he is or was a director, officer, employee or agent of the            
corporation or is or was serving at the request of the corporation as a         
director, officer, employee or agent of another corporation or enterprise,      
against reasonable expenses (including attorneys' fees), judgments, fines and   
amounts paid in settlement actually and reasonably incurred by him in           
connection with such action, suit or proceeding unless it is established that:  
(i) the act or omission of the person was material to the matter giving rise to 
the proceeding and was committed in bad faith or was the result of active and   
deliberate dishonesty; (ii) the person actually received an improper personal   
benefit of money, property or services; or (iii) with respect to any criminal   
action or proceeding, the person had reasonable cause to believe his act or     
omission was unlawful.                                                          

Indemnification under subsection (b) of Section 2-418 may not be made by a  
corporation unless authorized for a specific proceeding after a determination   
has been made that indemnification is permissible in the circumstances because  
the party to be indemnified has met the standard of conduct set forth in        
subsection (b).  This determination shall be made (i) by the Board of Directors 
by a majority vote of a quorum consisting of directors not, at the time,        
parties to the proceeding, or, if such quorum cannot be obtained, then by a     
majority vote of a committee of the Board consisting solely of two or more      
directors not, at the time, parties to such proceeding and who were duly        
designated to act in the matter by a majority vote of the full Board in which   
the designated directors who are parties may participate; (ii) by special legal 
counsel selected by the Board of Directors of a committee of the Board by vote  
as set forth in subparagraph (i), or, if the requisite quorum of the full Board 
cannot be obtained therefor and the committee cannot be established, by a       
majority vote of the full Board in which any director who is a party may        
participate; or (iii) by the stockholders (except that shares held by any party 
to the specific proceeding may not be voted).  A court of appropriate           
jurisdiction may also order indemnification if the court determines that a      
person seeking indemnification is entitled to reimbursement under subsection    
(b).                                                                            

 Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any other rights to which the            
indemnified party may be entitled; that the scope of indemnification extends to 
directors, officers, employees or agents of a constituent corporation absorbed  
in a consolidation, or merger and persons serving in that capacity at the       
request of the constituent corporation for another; and empowers the            
corporation to purchase and maintain insurance on behalf of a director,         
officer, employee or agent of the corporation against any liability asserted    
against or incurred by such person in any such capacity or arising out of such  
person's status as such whether or not the corporation would have the power to  
indemnify such person against such liabilities under Section 2-418.             

Article VI of the Articles of Incorporation of the Fund provides that       
"Nothing in these Articles of Incorporation or in the By-Laws shall be deemed   
to protect any director or officer of the Corporation against any liability to  
the Corporation or to its security holders to which he would otherwise be       
subject by reason of willful malfeasance, bad faith, gross negligence, or       
reckless disregard of the duties involved in the conduct of his office."        

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER                   

None                                                                        

ITEM 27. PRINCIPAL UNDERWRITERS                                                 

(a)  American Funds Distributors, Inc. is also the Principal Underwriter of 
shares of:  AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds  
Income Series, The American Funds Tax-Exempt Series I, The American Funds       
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American  
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,  
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World      
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific 
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The 
Income Fund of America, Inc., The Investment Company of America, Intermediate   
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, The New     
Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World  
Fund, Inc., The Tax-Exempt Money Fund of America, U.S. Treasury Money Fund of   
America and Washington Mutual Investors Fund, Inc.                              

                                                        [Enlarge/Download Table]

(B)               (1)                                                    (2)                (3)

     NAME AND PRINCIPAL                 POSITIONS AND OFFICES            POSITIONS AND OFFICES 

        BUSINESS ADDRESS                  WITH UNDERWRITER                 WITH REGISTRANT     

                                                                                               
     David L. Abzug                     Vice President                   None                  

     P.O. Box 2248                                                                             

     Agoura Hills, CA 91376                                                                    

     John A. Agar                       Vice President                   None                  

     1501 N. University, Suite 227A                                                            

     Little Rock, AR 72207                                                                     

     Robert B. Aprison                  Vice President                   None                  

     2983 Bryn Wood Drive                                                                      

     Madison, WI  53711                                                                        

L    William W. Bagnard                 Vice President                   None                  

     Steven L. Barnes                   Senior Vice President            None                  

     5400 Mount Meeker Road                                                                    

     Suite 1                                                                                   

     Boulder, CO  80301-3508                                                                   

B    Carl R. Bauer                      Vice President                   None                  

     Michelle A. Bergeron               Senior Vice President            None                  

     4160 Gateswalk Drive                                                                      

     Smyrna, GA 30080                                                                          

     J. Walter Best, Jr.                Regional Vice President          None                  

     9013 Brentmeade Blvd.                                                                     

     Brentwood, TN 37027                                                                       

     Joseph T. Blair                    Senior Vice President            None                  

     148 E. Shore Ave.                                                                         

     Groton Long Point, CT 06340                                                               

     John A. Blanchard                  Vice President                   None                  

     6421 Aberdeen Road                                                                        

     Mission Hills, KS  66208                                                                  

     Ian B. Bodell                      Senior Vice President            None                  

     P.O. Box 1665                                                                             

     Brentwood, TN  37024-1665                                                                 

     Mick L. Brethower                  Senior Vice President            None                  

     601 E. Whitestone Blvd.                                                                   

     Building 6, Suite 115                                                                     

     Cedar Park, TX 78613                                                                      

     Alan Brown                         Vice President                   None                  

     4129 Laclede Avenue                                                                       

     St. Louis, MO 63108                                                                       

B    J. Peter Burns                     Vice President                   None                  

     Cody Callaway                      Regional Vice President          None                  

     803 South Desert Palm Place                                                               

     Broken Arrow, OK 74012                                                                    

     Matthew Carlisle                   Regional Vice President          None                  

     4500 Fairvista Drive                                                                      

     Charlotte, NC 28269                                                                       

     Damian Carroll                     Regional Vice President          None                  

     40 Ten Acre Road                                                                          

     New Britain, CT 06052                                                                     

     Brian C. Casey                     Vice President                   None                  

     8002 Greentree Road                                                                       

     Bethesda, MD  20817                                                                       

     Victor C. Cassato                  Senior Vice President            None                  

     609 W. Littleton Blvd., Suite 310                                                         

     Littleton, CO  80120                                                                      

     Christopher J. Cassin              Senior Vice President            None                  

     19 North Grant Street                                                                     

     Hinsdale, IL  60521                                                                       

     Denise M. Cassin                   Vice President                   None                  

     1301 Stoney Creek Drive                                                                   

     San Ramon, CA  94583                                                                      

L    David Charlton                     Senior Vice President            None                  

L    Larry P. Clemmensen                Director                         None                  

L    Kevin G. Clifford                  Director, President and Co-Chief    None               

                                        Executive Officer                                      

H    Cheri Coleman                      Assistant Vice President         None                  

     Ruth M. Collier                    Senior Vice President            None                  

     29 Landsdowne Drive                                                                       

     Larchmont, NY 10538                                                                       

S    David Coolbaugh                    Vice President                   None                  

     Carlo O. Cordasco                  Assistant Vice President         None                  

     101 Five Forks Lane                                                                       

     Hampton, VA 23669                                                                         

     Thomas E. Cournoyer                Vice President                   None                  

     2333 Granada Boulevard                                                                    

     Coral Gables, FL  33134                                                                   

     Douglas A. Critchell               Senior Vice President            None                  

     3521 Rittenhouse Street, N.W.                                                             

     Washington, D.C.  20015                                                                   

     William F. Daugherty               Regional Vice President          None                  

     1216 Highlander Way                                                                       

     Mechanicsburg, PA 17055                                                                   

     Guy E. Decker                      Regional Vice President          None                  

     2990 Topaz Lane                                                                           

     Carmel, IN 46032                                                                          

     Daniel J. Delianedis               Vice President                   None                  

     Edina Executive Plaza                                                                     

     5200 Willson Road, Suite 150                                                              

     Edina, MN  55424                                                                          

     James A. DePerno, Jr.              Regional Vice President          None                  

     91 Church Street                                                                          

     East Aurora, NY 14052                                                                     

L    Bruce DePriester                   Senior Vice President            None                  

     Tom Dickson                        Regional Vice President          None                  

     108 Wilmington Court                                                                      

     Southlake, TX 76092                                                                       

     Michael A. DiLella                 Vice President                   None                  

     P. O. Box 661                                                                             

     Ramsey, NJ  07446                                                                         

     G. Michael Dill                    Senior Vice President            None                  
     505 E. Main Street                                                                        

     Jenks, OK  74037                                                                          

     Kirk D. Dodge                      Senior Vice President            None                  

     2627 Mission Street                                                                       

     San Marino, CA  91108                                                                     

     Peter J. Doran                     Director, Executive Vice         None                  
                                        President                                              

     100 Merrick Road, Suite 216W                                                              

     Rockville Centre, NY 11570                                                                

L    Michael J. Downer                  Secretary                        Vice President        

     Michael J. Dullaghan               Regional Vice President          None                  

     5040 Plantation Grove Lane                                                                

     Roanoke, VA 24012                                                                         

S    J. Steven Duncan                   Senior Vice President            None                  

     Robert W. Durbin                   Vice President                   None                  

     74 Sunny Lane                                                                             

     Tiffin, OH  44883                                                                         

I    Lloyd G. Edwards                   Senior Vice President            None                  

     Timothy L. Ellis                   Regional Vice President          None                  

     1441 Canton Mart Road, Suite 9                                                            

     Jackson, MS 39211                                                                         

     John R. Fodor                      Senior Vice President            None                  

     15 Latisquama Road                                                                        

     Southborough, MA  01772                                                                   

     Daniel B. Frick                    Regional Vice President          None                  

     845 Western Avenue                                                                        

     Glen Ellyn, IL 60137                                                                      

     Clyde E. Gardner                   Senior Vice President            None                  

     Route 2, Box 3162                                                                         

     Osage Beach, MO  65065                                                                    

L    Linda Gardner                      Assistant Vice President         None                  

B    Evelyn K. Glassford                Vice President                   None                  

     Jeffrey J. Greiner                 Vice President                   None                  

     12210 Taylor Road                                                                         

     Plain City, OH  43064                                                                     

L    Paul G. Haaga, Jr.                 Director                         Chairman and Director 

B    Mariellen Hamann                   Vice President                   None                  

     Derek S. Hansen                    Regional Vice President          None                  

     13033 Ridgedale Drive, PMB 147                                                            
     Minnetonka, MN 55305                                                                      

     David E. Harper                    Senior Vice President            None                  

     150 Old Franklin School Road                                                              

     Pittstown, NJ 08867                                                                       

H    Mary Pat Harris                    Vice President                   None                  

     Steve Hipsley                      Regional Vice President          None                  

     100 Kaydeross Park Road                                                                   

     Saratoga Springs, NY 12866                                                                

     Ronald R. Hulsey                   Senior Vice President            None                  

     6744 Avalon                                                                               

     Dallas, TX  75214                                                                         

     Robert S. Irish                    Vice President                   None                  

     1225 Vista Del Mar Drive                                                                  

     Delray Beach, FL  33483                                                                   

     Michael J. Johnston                Director                         None                  

     630 Fifth Avenue, 36th Floor                                                              

     New York, NY  10111                                                                       

B    Damien M. Jordan                   Senior Vice President            None                  

     John P. Keating                    Regional Vice President          None                  

     2285 Eagle Harbor Parkway                                                                 

     Orange Park, FL 32003                                                                     

     Dorothy Klock                      Vice President                   None                  

     555 Madison Avenue, 29th Floor                                                            

     New York, NY 10022                                                                        

H    Dianne L. Koske                    Assistant Vice President                               

     Andrew R. LeBlanc                  Regional Vice President          None                  

     78 Eton Road                                                                              

     Garden City, NY 11530                                                                     

B    Karl A. Lewis                      Vice President                   None                  

     T. Blake Liberty                   Vice President                   None                  

     5506 East Mineral Lane                                                                    

     Littleton, CO  80122                                                                      

     Mark J. Lien                       Regional Vice President          None                  

     1103 Tulip Tree Lane                                                                      

     West Des Moines, IA 50266                                                                 

L    Lorin E. Liesy                     Vice President                   None                  

I    Kelle Lindenberg                   Assistant Vice President         None                  

     Louis K. Linquata                  Regional Vice President          None                  

     5214 Cass Street                                                                          

     Omaha, NE 68132                                                                           

LW   Robert W. Lovelace                 Director                         None                  

     Stephen A. Malbasa                 Director, Senior Vice            None                  
                                        President                                              

     13405 Lake Shore Blvd.                                                                    

     Cleveland, OH  44110                                                                      

     Steven M. Markel                   Senior Vice President            None                  

     5241 South Race Street                                                                    

     Greenwood Village, CO  80121                                                              

L    J. Clifton Massar                  Director, Senior Vice            None                  
                                        President                                              

L    E. Lee McClennahan                 Senior Vice President            None                  

     James R. McCrary                   Regional Vice President          None                  

     963 1st Street, #1                                                                        

     Hermosa Beach, CA 90254                                                                   

S    John V. McLaughlin                 Senior Vice President            None                  

     Terry W. McNabb                    Vice President                   None                  

     2002 Barrett Station Road                                                                 

     St. Louis, MO  63131                                                                      

     Scott Meade                        Regional Vice President          None                  

     41 South Road                                                                             

     Rye Beach, NH 03871                                                                       

     Monty Moncrief                     Regional Vice President          None                  

     55 Chandler Creek                                                                         

     The Woodlands, TX 77381                                                                   

     William E. Noe                     Vice President                   None                  

     304 River Oaks Road                                                                       

     Brentwood, TN  37027                                                                      

     Peter A. Nyhus                     Vice President                   None                  

     3084 Wilds Ridge Court                                                                    

     Prior Lake, MN  55372                                                                     

     Eric P. Olson                      Vice President                   None                  

     62 Park Drive                                                                             

     Glenview, IL  60025                                                                       

     Jeffrey A. Olson                   Regional Vice President          None                  

     930 S. Cowley Street, #305                                                                

     Spokane, WA 99202                                                                         

     Gary A. Peace                      Regional Vice President          None                  

     291 Kaanapali Drive                                                                       

     Napa, CA 94558                                                                            

     Samuel W. Perry                    Regional Vice President          None                  

     4730 East Indian School Road                                                              

     Suite 120                                                                                 

     Phoenix, AZ 85018                                                                         

     David K. Petzke                    Regional Vice President          None                  

     4016 Saint Lucia Street                                                                   

     Boulder, CO 80301                                                                         

     Fredric Phillips                   Senior Vice President            None                  

     175 Highland Avenue, 4th Floor                                                            

     Needham, MA  02494                                                                        

B    Candance D. Pilgrim                Assistant Vice President         None                  

     Carl S. Platou                     Vice President                   None                  

     7455 80th Place, S.E.                                                                     

     Mercer Island, WA  98040                                                                  

S    Richard P. Prior                   Vice President                   None                  

     Steven J. Reitman                  Senior Vice President            None                  

     212 The Lane                                                                              

     Hinsdale, IL  60521                                                                       

     Brian A. Roberts                   Vice President                   None                  

     425 South Pitt Street                                                                     

     Alexandria, VA 22314                                                                      

L    Julie D. Roth                      Vice President                   None                  

L    James F. Rothenberg                Director                         None                  

     Douglas F. Rowe                    Vice President                   None                  

     414 Logan Ranch Road                                                                      

     Georgetown, TX  78628                                                                     

     Christopher S. Rowey               Vice President                   None                  

     10538 Cheviot Drive                                                                       

     Los Angeles, CA  90064                                                                    

H    Steve Rubin                        Assistant Vice President         None                  

     Dean B. Rydquist                   Senior Vice President            None                  

     1080 Bay Pointe Crossing                                                                  

     Alpharetta, GA  30005                                                                     

     Richard R. Samson                  Senior Vice President            None                  

     4604 Glencoe Avenue, #4                                                                   

     Marina del Rey, CA  90292                                                                 

     Joseph D. Scarpitti                Vice President                   None                  

     31465 St. Andrews                                                                         

     Westlake, OH  44145                                                                       

     Shannon D. Schofield               Regional Vice President          None                  

     201 McIver Street                                                                         

     Greenville, SC 29601                                                                      

L    R. Michael Shanahan                Director                         None                  

     Brad W. Short                      Regional Vice President          None                  

     1601 Seal Way                                                                             

     Seal Beach, CA 90740                                                                      

     David W. Short                     Chairman of the Board and        None                  

     1000 RIDC Plaza, Suite 212         Co-Chief Executive Officer                             

     Pittsburgh, PA 15238                                                                      

     William P. Simon                   Senior Vice President            None                  

     912 Castlehill Lane                                                                       

     Devon, PA 19333                                                                           

     Jerry L. Slater                    Regional Vice President          None                  

     4152 42nd Avenue, NE                                                                      

     Seattle, WA 98105                                                                         

     Rodney G. Smith                    Senior Vice President            None                  

     100 N. Central Expressway                                                                 

     Suite 1214                                                                                

     Richardson, TX  75080                                                                     

S    Sherrie L. Snyder-Senft            Vice President                   None                  

     Anthony L. Soave                   Regional Vice President          None                  

     8831 Morning Mist Drive                                                                   

     Clarkston, MI 48348                                                                       

L    Therese L. Soullier                Assistant Vice President         None                  

     Nicholas D. Spadaccini             Vice President                   None                  

     855 Markley Woods Way                                                                     

     Cincinnati, OH  45230                                                                     

L    Kristen J. Spazafumo               Assistant Vice President         None                  

     Daniel S. Spradling                Senior Vice President            None                  

     181 Second Avenue                                                                         

     Suite 228                                                                                 

     San Mateo, CA  94401                                                                      

B    Raymond Stein                      Assistant Vice President         None                  

LW   Eric H. Stern                      Director                         None                  

     Brad Stillwagon                    Regional Vice President          None                  

     2438 Broadmeade Road                                                                      

     Louisville, KY 40205                                                                      

B    Max D. Stites                      Vice President                   None                  

     Thomas A. Stout                    Vice President                   None                  

     1004 Ditchley Road                                                                        

     Virginia Beach, VA 23451                                                                  

     Craig R. Strauser                  Vice President                   None                  

     3 Dover Way                                                                               

     Lake Oswego, OR  97034                                                                    

     Francis N. Strazzeri               Senior Vice President            None                  

     3021 Kensington Trace                                                                     

     Tarpon Springs, FL 34689                                                                  

L    Drew W. Taylor                     Assistant Vice President         None                  

     Gary J. Thoma                      Regional Vice President          None                  

     21 White Cloud                                                                            

     HCR 1 Box 172-A                                                                           

     Keshena, WI 54135                                                                         

     Cindy Thompson                     Regional Vice President          None                  

     8555 W. Russell Road, #1022                                                               

     Las Vegas, NV 89113                                                                       

L    James P. Toomey                    Vice President                   None                  

I    Christopher E. Trede               Vice President                   None                  

     George F. Truesdail                Senior Vice President            None                  

     400 Abbotsford Court                                                                      

     Charlotte, NC  28270                                                                      

     Scott W. Ursin-Smith               Vice President                   None                  

     60 Reedland Woods Way                                                                     

     Tiburon, CA  94920                                                                        

     J. David Viale                     Regional Vice President          None                  

     39 Old Course Drive                                                                       

     Newport Beach, CA 92660                                                                   

     Thomas E. Warren                   Vice President                   None                  

     119 Faubel Street                                                                         

     Sarasota, FL  34242                                                                       

L    J. Kelly Webb                      Senior Vice President,           None                  

                                        Treasurer and Controller                               

     Gregory J. Weimer                  Vice President                   None                  

     206 Hardwood Drive                                                                        

     Venetia, PA  15367                                                                        

B    Timothy W. Weiss                   Director                         None                  

SF   Greg Wendt                         Director                         None                  

     George J. Wenzel                   Regional Vice President          None                  

     251 Barden Road                                                                           

     Bloomfield, MI 48304                                                                      

H    J. D. Wiedmaier                    Assistant Vice President         None                  

SF   N. Dexter Williams, Jr.            Senior Vice President            None                  

     Timothy J. Wilson                  Vice President                   None                  

     113 Farmview Place                                                                        

     Venetia, PA  15367                                                                        

B    Laura L. Wimberly                  Vice President                   None                  

H    Marshall D. Wingo                  Director, Senior Vice            None                  
                                        President                                              

L    Robert L. Winston                  Director, Senior Vice            None                  
                                        President                                              

     William R. Yost                    Senior Vice President            None                  

     9320 Overlook Trail                                                                       

     Eden Prairie, MN  55347                                                                   

     Jonathan A. Young                  Regional Vice President          None                  

     329 Downing Drive                                                                         

     Chesapeake, VA 23322                                                                      

     Scott D. Zambon                    Regional Vice President          None                  

     2887 Player Lane                                                                          

     Tustin Ranch, CA  92782                                                                   


__________                                                                      

L Business Address, 333 South Hope Street, Los Angeles, CA  90071               
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA  
90025                                                                           
B Business Address, 135 South State College Boulevard, Brea, CA  92821          
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX  78251              
SF Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA   
94105-1016                                                                      
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513                     
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240       

(c) None                                                                      

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS                                       

 Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and held in the      
offices of its investment adviser, Capital Research and Management Company, 333 
South Hope Street, Los Angeles, California 90071, and/or 135 South State        
College Boulevard, Brea, California 92821.                                      

 Registrant's records covering shareholder accounts are maintained and kept by
its transfer agent, American Funds Service Company, 135 South State College     
Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,           
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and    
5300 Robin Hood Road, Norfolk, VA  23513.                                       

Registrant's records covering portfolio transactions are maintained and kept
by its custodian, The Chase Manhattan Bank, 270 Park AVenue, New                
York, New York 10017-2070.                                                      

ITEM 29. MANAGEMENT SERVICES                                                    

None                                                                        

ITEM 30. UNDERTAKINGS                                                           

n/a                                                                         

SIGNATURE OF REGISTRANT 

Pursuant to the requirements of the Securities Act of 1933 and the Investment 
Company Act of 1940, the Registrant certifies that it meets all of the          
requirements for effectiveness of this Registration Statement pursuant to Rule  
485(b) under the Securities Act of 1933 and has duly caused this amended        
Registration Statement to be signed on its behalf by the undersigned, thereunto 
duly authorized, in the City of Los Angeles, and State of California, on the    
24/TH/ day of October, 2001.                                                    

THE TAX-EXEMPT BOND FUND OF                                               
AMERICA, INC.                                                             
By /s/ Paul G. Haaga, Jr.                                                 
(Paul G. Haaga, Jr., Chairman of the Board)                           

Pursuant to the requirements of the Securities Act of 1933, this amendment to 
registration statement has been signed below on October 24, 2001, by the        
following persons in the capacities indicated.                                  

                                                                [Download Table]

                                                                            
         SIGNATURE                                TITLE                     

(1)      Principal Executive Officer:                                       

         /s/ Neil L. Langberg                     President and Director    

            (Neil L. Langberg)                                              

(2)      Principal Financial Officer                                        
         and Principal Accounting Officer:                                  

           /s/ Anthony W. Hynes, Jr.              Treasurer                 

            (Anthony W. Hynes, Jr.)                                         

(3)      Directors:                                                         

         Richard G. Capen, Jr.*                   Director                  

         H. Frederick Christie*                   Director                  

         Diane C. Creel*                          Director                  

         Martin Fenton*                           Director                  

         Leonard R. Fuller*                       Director                  

          /s/ Abner D. Goldstine                  Vice Chairman and Director

            (Abner D. Goldstine)                                            

          /s/ Paul G. Haaga, Jr.                  Chairman and Director     

            (Paul G. Haaga, Jr.)                                            

          /s/ Neil L. Langberg                    President and Director    

            (Neil L. Langberg)                                              

         Richard G. Newman*                       Director                  

         Frank M. Sanchez*                        Director                  


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

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

/s/ Kristine M. Nishiyama                                   
(Kristine M. Nishiyama)                                     

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘485BPOS’ Filing		Date		First		Last			Other Filings
		5/31/02		53		56
Effective on:		11/1/01		1		34
Filed on:		10/29/01							NSAR-B
		10/24/01		85
		10/1/01		53
		9/30/01		5		7
		9/28/01		85
		9/1/01		85
		8/31/01		78		85			24F-2NT,  N-30D,  NSAR-B
		7/31/01		58		80
		3/15/01		4		85			485BPOS
		12/31/00		5		13
		8/31/00		85					24F-2NT,  N-30D,  NSAR-B
		3/15/00		4		85
		12/31/99		6
		11/1/99		85
		3/31/95		5		7
		9/26/94		79
		6/14/94		46
		3/31/94		5		7
		10/6/93		80
		7/12/93		46
		4/30/93		59
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