UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-2421
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
Date of fiscal year end: August 31, 2003
Date of reporting period: August 31, 2003
Julie F. Williams
Capital Research and Management Company
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
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo] American Funds(R)
The right choice for the long term(R)
The Tax-Exempt Bond Fund of America
[photograph: two hands molding something out of clay on a pottery wheel]
Shaping the fund when interest rates are rising
Annual report for the year ended August 31, 2003
The Tax-Exempt Bond Fund of America(R) is one of the 29 American Funds, the
nation's third-largest mutual fund family. For more than seven decades, Capital
Research and Management Company,SM the American Funds adviser, has invested with
a long-term focus based on thorough research and attention to risk. The
Tax-Exempt Bond Fund of America seeks a high level of federally tax-free current
income, consistent with preservation of capital, through a diversified portfolio
of municipal bonds.
Investment highlights
through August 31, 2003
12-MONTH TOTAL RETURN +2.55%
(income plus capital changes, with dividends reinvested)
TAX-FREE DISTRIBUTION RATE FOR AUGUST +4.18%
(income return only, reflecting maximum sales charge)
TAXABLE EQUIVALENT DISTRIBUTION RATE +6.43%
(for August, assuming a 35% federal tax rate)
SEC 30-DAY YIELD AS OF AUGUST 31 +3.70%
(reflecting maximum sales charge)
TAXABLE EQUIVALENT SEC YIELD +5.69%
(for August, assuming a 35% federal tax rate)
For current yield information, please call toll-free: 800/421-0180
Contents
Letter to shareholders 1
The value of a long-term perspective 3
Shaping the fund when interest rates are rising 4
Investment portfolio 10
Financial statements 35
Directors and officers 44
The American Funds family back cover
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual total returns on a $1,000 investment with all distributions reinvested
for periods ended September 30, 2003 (the most recent calendar quarter):
1 year 5 years 10 years
CLASS A SHARES
Reflecting 3.75% maximum sales charge -0.39% +4.22% +5.24%
The fund's 30-day yield for Class A shares as of September 30, 2003, calculated
in accordance with the Securities and Exchange Commission formula, was 3.56%.
The fund's distribution rate for Class A shares as of that date was 4.14%. Both
reflect the 3.75% maximum sales charge. The SEC yield reflects the rate at which
the fund is earning income on its current portfolio of securities while the
distribution rate reflects the fund's past dividends paid to shareholders.
Accordingly, the fund's SEC yield and distribution rate may differ.
Results for other share classes can be found on page 43. Please see inside back
cover for important information about other share classes. For the most current
investment results, please refer to americanfunds.com.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. Income may be subject
to state or local income taxes. Also, distributions from gains on the sale of
certain bonds purchased at less than par value and capital gain distributions,
if any, are taxable. Certain other income may also be taxable.
[photograph: three rows of clay vases]
FELLOW SHAREHOLDERS:
For The Tax-Exempt Bond Fund of America, fiscal year 2003 has been a study in
contrasts. It began with a weak economy, falling stock market and plunging
interest rates -- in short, a good environment for bonds. It ended with a
rebounding economy, sharp gains for the stock market and, beginning in June, a
sudden reversal of interest rates -- the kind of environment in which bonds tend
to struggle.
The fund's results reflect these changing economic and market conditions. For
the fiscal year ended August 31, 2003, the fund generated a total return of
2.55%, with most of that gain coming in the first half of the year. Throughout
the year, however, the fund continued to generate a steady stream of income that
is free from most federal taxes. Investors received a total of 54 cents per
share in monthly dividends and 2 cents a share in long-term capital gains, paid
last December.
If you reinvested your dividends, as most shareholders do, your income return
was 4.41%. If you're in the 35% maximum Federal tax bracket, that's equivalent
to a 6.78% return. If you took your dividends in cash, they represented an
income return of 4.32%, equivalent to a taxable 6.65% return. For other
tax-equivalent yields, please see the table on page 2. Share value fell to
$12.17 from $12.41 during the year.
The fund's 2.55% total return topped the 2.12% return of the Lipper General
Municipal Debt Funds Average of comparable funds. The unmanaged Lehman Brothers
Municipal Bond Index, which measures a wide variety of tax-exempt bonds,
generated a total return of 3.14%. But this doesn't include expenses.
MARKET AND ECONOMIC REVIEW
After falling since early 2000, the stock market bottomed out in October 2002.
But it still finished lower for the third calendar year in a row. The first half
of the fund's fiscal year was also characterized by rising oil prices and weak
consumer spending. Tensions in the Middle East and Korea and a renewal of
terrorist activity contributed to investor skittishness. Many investors fled to
the bond market, pushing the yield on the U.S. Treasury's benchmark 10-year note
to historic lows.
The latter part of the fiscal year was quite different. Business activity began
to pick up, with tax cuts and heavy spending by the federal government providing
much of the stimulus. The stock market rose sharply and major fighting in Iraq
was declared over. All of this appeared to boost investor confidence. In
mid-June, the bond market turned swiftly and sharply. After reaching 3.11% --
its lowest level in 45 years -- the 10-year Treasury note yield climbed as high
as 4.60%.
[begin sidebar]
RESULTS AT A GLANCE for periods ended August 31, 2003
(with all distributions reinvested)
Average annual total returns
1 year 5 years 10 years
THE TAX-EXEMPT BOND FUND OF AMERICA +2.55% +4.66% +5.46%
LEHMAN BROTHERS MUNICIPAL BOND INDEX(1) +3.14 +5.32 +5.84
LIPPER GENERAL MUNICIPAL DEBT FUNDS AVERAGE(2) +2.12 +3.90 +4.79
(1) The index is unmanaged and does not reflect sales charges, commissions or
expenses.
(2) The average does not reflect sales charges.
[end sidebar]
CAPITAL PRESERVATION, ATTENTION TO RISK
In addition to seeking high levels of tax-free income, part of The Tax-Exempt
Bond Fund of America's mandate is to preserve shareholder capital. This is
particularly important when interest rates go up, since rising rates can erode
the value of existing bonds. As long-term rates have been rising in recent
months, we thought it would be a good time to look at how we manage your fund in
such an environment. It's the subject of this year's feature, which begins on
page 4.
Preserving shareholder capital implies conservatism and careful attention to
risk. This has tended to be an effective investment strategy, especially during
times of market uncertainty. Accordingly, we tend to hold municipal bonds with
short to intermediate lengths of maturity. As we'll explain in detail in the
feature, the price of shorter maturity bonds tends to hold up better with less
volatility when rates are rising. We also invest the bulk of the fund's assets
in securities rated A or better by Moody's or Standard & Poor's, the principal
ratings agencies for municipal bonds in the United States.
LONG-TERM PERSPECTIVE
Because of that conservative approach, the fund sometimes lags its benchmarks
when interest rates are falling. But when those rates are falling, we can buy
longer term securities which tend to boost returns. In short, over full interest
rate cycles, we have generally been able to produce solid investment results for
our shareholders over a period of many years. Since its inception in 1979, the
fund has averaged a total annual return of 7.77%. The average of municipal bond
funds, as measured by Lipper, is 7.70%. This long-term difference has also been
achieved with a lower expense ratio than the fund's peers.
Municipal bonds tend to be stable securities that generate steady streams of
mostly tax-free income. They remain attractive investments that should be a core
part of any investment portfolio.
Thank you for your continued support. We are committed to helping you achieve
your long-term financial goals.
Cordially,
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Chairman of the Board
/s/ Neil L. Langberg
Neil L. Langberg
President
October 10, 2003
[begin sidebar]
Why tax-free investing can be worthwhile
The fund's 4.8%
tax-exempt distribution
Your taxable income (1) rate in August(3) is
Current federal equivalent to a taxable
Single Joint tax rate (2) distribution rate of:
$0 - 7,000 $0 - 14,000 10.0% 4.64%
7,001 - 28,400 14,001 - 56,800 15.0 4.92
28,401 - 68,800 56,801 - 114,650 25.0 5.57
68,801 - 143,500 114,651 - 174,700 28.0 5.81
143,501 - 311,950 174,701 - 311,950 33.0 6.24
Over 311,950 Over 311,950 35.0 6.43
(1) 2003 federal tax brackets used are projected.
(2) The federal rates are marginal rates. They do not include an adjustment for
the loss of personal exemptions and the phase-out of itemized deductions
that are applicable to certain taxable income levels.
(3) The fund's distribution rate here and in the Investment Highlights table is
based on offering price and therefore reflects the effects of the maximum
sales charge on the initial investment. It is not a projection of future
results, which will be affected by, among other things, interest rate
levels, changes in the value of portfolio securities, the effects of
portfolio transactions and fund expenses.
[end sidebar]
THE VALUE OF A LONG-TERM PERSPECTIVE
Here's how a $10,000 investment in The Tax-Exempt Bond Fund of America grew
between October 3, 1979, when the fund began operations, and August 31, 2003,
the end of the fund's latest fiscal year.
As you can see, the $10,000 investment would have grown to $57,654 with the
3.75% maximum sales charge included and all distributions reinvested, an average
annual increase of 7.60%.
Average annual total returns (periods ended August 31, 2003)*
CLASS A SHARES
1 year -1.26%
5 years +3.87%
10 years +5.06%
Lifetime (since October 3, 1979) +7.60%
*Assumes reinvestment of all distributions and payment of the 3.75% maximum
sales charge at the beginning of the stated periods.
[begin mountain chart]
<table>
<s> <c> <c> <c> <c> <c> <c>
The fund Lipper
Lehman at net The fund General
Brothers asset value at maximum Municipal
Municipal (without any offering Debt Funds Original
Year Bond Index sales charge) price Average CPI Investment
1979 $10,000 $10,000 $9,625 $10,000 $10,000 $10,000
1980# $9,543 $9,815 $9,447 $9,467 $11,166 $10,000
1981 $8,017 $8,933 $8,598 $8,307 $12,373 $10,000
1982 $10,544 $11,230 $10,809 $10,628 $13,097 $10,000
1983 $12,179 $13,066 $12,576 $12,689 $13,432 $10,000
1984 $13,234 $14,028 $13,502 $13,705 $14,008 $10,000
1985 $15,435 $16,332 $15,719 $16,159 $14,477 $10,000
1986 $18,999 $20,298 $19,536 $20,038 $14,705 $10,000
1987 $19,879 $20,511 $19,741 $20,476 $15,335 $10,000
1988 $21,246 $21,888 $21,067 $21,962 $15,952 $10,000
1989 $23,580 $24,130 $23,224 $24,487 $16,702 $10,000
1990 $25,093 $25,302 $24,353 $25,678 $17,641 $10,000
1991 $28,052 $28,265 $27,204 $28,780 $18,311 $10,000
1992 $31,184 $31,307 $30,132 $32,039 $18,887 $10,000
1993 $34,989 $35,189 $33,869 $35,988 $19,410 $10,000
1994 $35,038 $35,114 $33,796 $35,696 $19,973 $10,000
1995 $38,144 $38,170 $36,737 $38,398 $20,496 $10,000
1996 $40,142 $40,274 $38,763 $40,364 $21,086 $10,000
1997 $43,853 $44,055 $42,402 $44,073 $21,555 $10,000
1998 $47,646 $47,695 $45,905 $47,803 $21,903 $10,000
1999 $47,884 $47,801 $46,007 $47,328 $22,399 $10,000
2000 $51,128 $50,320 $48,432 $49,868 $23,164 $10,000
2001 $56,339 $55,462 $53,381 $54,973 $23,794 $10,000
2002 $59,856 $58,410 $56,218 $57,494 $24,223 $10,000
2003 $61,734(1) $59,902(2) $57,654(4) $58,929(3) $24,745(5) $10,000
Year ended August 31
Past results are not predictive of future results. The results shown are before
taxes on fund distributions and sale of fund shares.
# For the period October 3, 1979 through August 31, 1980.
(1) With interest compounded. The index, which started on January 1, 1980, is
unmanaged and does not reflect sales charges, commissions or expenses.
(2) Includes reinvested dividends of $41,898 and reinvested capital gain
distributions of $2,462.
(3) With dividends reinvested. The average does not reflect sales charges.
(4) This figure, unlike those shown elsewhere in this report, reflects payment
of the maximum sales charge of 3.75% on the $10,000 investment. Thus, the
net amount invested was $9,625. The maximum sales charge was 4.75% prior to
January 10, 2000. As outlined in the prospectus, the sales charge is
reduced for larger investments. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares.
Includes reinvested dividends of $40,326 and reinvested capital gain
distributions of $2,370. No adjustments have been made for income or
capital gain taxes.
(5) Consumer Price Index (inflation). Computed from data supplied by the U.S.
Department of Labor, Bureau of Labor Statistics.
[photograph: two hands molding something out of clay on a pottery wheel]
Shaping the fund when interest rates are rising
After dropping sharply for more than three years--and reaching their lowest
levels in 45 years--long-term interest rates have apparently begun to move
higher. Just like falling rates, rising rates present both a challenge and an
opportunity for municipal bond investors. In our feature this year, we'll show
how The Tax-Exempt Bond Fund of America's portfolio is shaped during a time of
rising interest rates.
"When someone invests in The Tax-Exempt Bond Fund of America, they should know
that it is run by a group of seasoned professionals who work diligently to
protect that investment and make it grow," says Neil Langberg, the fund's
president and one of its portfolio counselors. "The best way for us to do that
is by conducting solid, meticulous research and acting accordingly."
ONE SIMPLE RULE
As calendar year returns on the bottom of page 5 show, that emphasis on research
has helped the fund do well since its inception. As you can see from the chart,
interest rates have fluctuated widely during that time. Rates generally move in
response to inflationary pressures and economic conditions. It is important to
remember that when rates move in one direction, bond prices usually move in the
opposite direction. To better understand this cardinal rule of bond investing,
think of a seesaw: When one side goes up, the other goes down.
On the surface, you might think that higher interest rates would be good for
existing bonds, but they aren't. That's because when interest rates rise, the
coupons (how much an investor will earn) on those bonds will be less than the
coupons on comparable new bonds. Thus, older bonds are typically discounted to
account for their lower coupons, and their prices fall.
In turn, if some bonds lose their value, you might think that would be bad for a
bond fund. Not entirely. "Although it's true that the value of existing bonds is
diminished when interest rates rise," notes portfolio counselor and director of
fixed-income research Ed Nahmias, "their interest can be reinvested in newer
bonds with higher interest rates. So over the long term, higher rates can
generate more income for investors."
The seesaw analogy comes in handy in another way. Just as its far ends rise and
fall the most, so do prices of bonds with longer term maturities. So when
interest rates move up or down, bonds with longer maturities tend to fluctuate
more in price than short-term bonds. "Bonds with longer maturities have higher
interest rates because the longer your money is at risk, the more you should be
rewarded for taking on that risk," says portfolio counselor Brenda Ellerin.
"That's why we favor shorter term securities when we think interest rates will
rise. Their prices tend to hold up better than longer term bonds."
But length of maturity isn't the only way in which municipal bonds differ. Some
bonds are judged to be of higher quality -- in other words, not as risky -- than
others. Because of this, bonds with high ratings -- AAA is the highest -- tend
to pay lower interest rates. The opposite is true for lower quality bonds.
"Again, it's a risk-reward proposition," Brenda adds.
[begin sidebar]
"Over the long term, rising rates can generate
more income for investors." - Ed Nahmias
[photograph: two hands molding something out of clay]
[photograph: Ed Nahmias]
[end sidebar]
[begin sidebar]
30-year U.S. Treasury Bond yield vs. Federal funds rate (effective)
[begin line chart]
Date 30-year U.S. Federal funds rate
Treasury Bond Yield (effective)
9/30/1979 9.17 11.43
10/31/1979 9.85 13.77
11/30/1979 10.30 13.18
12/31/1979 10.12 13.78
1/31/1980 10.60 13.82
2/29/1980 12.13 14.13
3/31/1980 12.34 17.19
4/30/1980 11.40 17.61
5/31/1980 10.36 10.98
6/30/1980 9.81 9.47
7/31/1980 10.24 9.03
8/31/1980 11.00 9.61
9/30/1980 11.34 10.87
10/31/1980 11.59 12.81
11/30/1980 12.37 15.85
12/31/1980 11.982 18.90
1/31/1981 12.282 19.08
2/28/1981 12.972 15.93
3/31/1981 12.652 14.70
4/30/1981 13.652 15.72
5/31/1981 13.062 18.52
6/30/1981 13.302 19.10
7/31/1981 13.962 19.04
8/31/1981 14.782 17.82
9/30/1981 15.192 15.87
10/31/1981 14.362 15.08
11/30/1981 12.912 13.31
12/31/1981 13.652 12.37
1/31/1982 13.912 13.22
2/28/1982 13.832 14.78
3/31/1982 13.682 14.68
4/30/1982 13.392 14.94
5/31/1982 13.392 14.45
6/30/1982 13.912 14.15
7/31/1982 13.422 12.59
8/31/1982 12.502 10.12
9/30/1982 11.792 10.31
10/31/1982 11.012 9.71
11/30/1982 10.702 9.20
12/31/1982 10.432 8.95
1/31/1983 10.992 8.68
2/28/1983 10.512 8.51
3/31/1983 10.692 8.77
4/30/1983 10.382 8.80
5/31/1983 10.955 8.63
6/30/1983 10.976 8.98
7/31/1983 11.823 9.37
8/31/1983 11.931 9.56
9/30/1983 11.405 9.45
10/31/1983 11.793 9.48
11/30/1983 11.64 9.34
12/31/1983 11.872 9.47
1/31/1984 11.75 9.56
2/29/1984 12.173 9.59
3/31/1984 12.479 9.91
4/30/1984 12.836 10.29
5/31/1984 13.735 10.32
6/30/1984 13.638 11.06
7/31/1984 12.768 11.23
8/31/1984 12.508 11.64
9/30/1984 12.247 11.30
10/31/1984 11.558 9.99
11/30/1984 11.528 9.43
12/31/1984 11.526 8.38
1/31/1985 11.207 8.35
2/28/1985 11.875 8.50
3/31/1985 11.64 8.58
4/30/1985 11.463 8.27
5/31/1985 10.556 7.97
6/30/1985 10.439 7.53
7/31/1985 10.657 7.88
8/31/1985 10.468 7.90
9/30/1985 10.555 7.92
10/31/1985 10.246 7.99
11/30/1985 9.837 8.05
12/31/1985 9.267 8.27
1/31/1986 9.319 8.14
2/28/1986 8.281 7.86
3/31/1986 7.44 7.48
4/30/1986 7.45 6.99
5/31/1986 7.748 6.85
6/30/1986 7.23 6.92
7/31/1986 7.418 6.56
8/31/1986 7.197 6.17
9/30/1986 7.592 5.89
10/31/1986 7.607 5.85
11/30/1986 7.403 6.04
12/31/1986 7.485 6.91
1/31/1987 7.474 6.43
2/28/1987 7.459 6.10
3/31/1987 7.913 6.13
4/30/1987 8.437 6.37
5/31/1987 8.636 6.85
6/30/1987 8.492 6.73
7/31/1987 8.896 6.58
8/31/1987 9.152 6.73
9/30/1987 9.744 7.22
10/31/1987 9.032 7.29
11/30/1987 9.101 6.69
12/31/1987 8.978 6.77
1/31/1988 8.415 6.83
2/29/1988 8.338 6.58
3/31/1988 8.756 6.58
4/30/1988 9.095 6.87
5/31/1988 9.237 7.09
6/30/1988 8.914 7.51
7/31/1988 9.207 7.75
8/31/1988 9.298 8.01
9/30/1988 9.051 8.19
10/31/1988 8.74 8.30
11/30/1988 9.068 8.35
12/31/1988 8.991 8.76
1/31/1989 8.82 9.12
2/28/1989 9.114 9.36
3/31/1989 9.092 9.85
4/30/1989 8.928 9.84
5/31/1989 8.595 9.81
6/30/1989 8.037 9.53
7/31/1989 7.92 9.24
8/31/1989 8.204 8.99
9/30/1989 8.236 9.02
10/31/1989 7.906 8.84
11/30/1989 7.89 8.55
12/31/1989 7.978 8.45
1/31/1990 8.452 8.23
2/28/1990 8.542 8.24
3/31/1990 8.626 8.28
4/30/1990 8.994 8.26
5/31/1990 8.578 8.18
6/30/1990 8.4 8.29
7/31/1990 8.411 8.15
8/31/1990 8.984 8.13
9/30/1990 8.949 8.20
10/31/1990 8.759 8.11
11/30/1990 8.486 7.81
12/31/1990 8.249 7.31
1/31/1991 8.195 6.91
2/28/1991 8.203 6.25
3/31/1991 8.246 6.12
4/30/1991 8.182 5.91
5/31/1991 8.265 5.78
6/30/1991 8.406 5.90
7/31/1991 8.341 5.82
8/31/1991 8.06 5.66
9/30/1991 7.809 5.45
10/31/1991 7.914 5.21
11/30/1991 7.942 4.81
12/31/1991 7.401 4.43
1/31/1992 7.758 4.03
2/29/1992 7.789 4.06
3/31/1992 7.958 3.98
4/30/1992 8.036 3.73
5/31/1992 7.837 3.82
6/30/1992 7.78 3.76
7/31/1992 7.458 3.25
8/31/1992 7.409 3.30
9/30/1992 7.381 3.22
10/31/1992 7.626 3.10
11/30/1992 7.597 3.09
12/31/1992 7.396 2.92
1/31/1993 7.197 3.02
2/28/1993 6.897 3.03
3/31/1993 6.926 3.07
4/30/1993 6.933 2.96
5/31/1993 6.98 3.00
6/30/1993 6.672 3.04
7/31/1993 6.564 3.06
8/31/1993 6.092 3.03
9/30/1993 6.025 3.09
10/31/1993 5.97 2.99
11/30/1993 6.301 3.02
12/31/1993 6.348 2.96
1/31/1994 6.238 3.05
2/28/1994 6.661 3.25
3/31/1994 7.092 3.34
4/30/1994 7.307 3.56
5/31/1994 7.428 4.01
6/30/1994 7.608 4.25
7/31/1994 7.396 4.26
8/31/1994 7.451 4.47
9/30/1994 7.817 4.73
10/31/1994 7.97 4.76
11/30/1994 7.999 5.29
12/31/1994 7.881 5.45
1/31/1995 7.698 5.53
2/28/1995 7.443 5.92
3/31/1995 7.431 5.98
4/30/1995 7.336 6.05
5/31/1995 6.649 6.01
6/30/1995 6.617 6.00
7/31/1995 6.846 5.85
8/31/1995 6.647 5.74
9/30/1995 6.501 5.80
10/31/1995 6.328 5.76
11/30/1995 6.131 5.80
12/31/1995 5.948 5.60
1/31/1996 6.028 5.56
2/29/1996 6.469 5.22
3/31/1996 6.667 5.31
4/30/1996 6.906 5.22
5/31/1996 6.989 5.24
6/30/1996 6.871 5.27
7/31/1996 6.97 5.40
8/31/1996 7.118 5.22
9/30/1996 6.923 5.30
10/31/1996 6.642 5.24
11/30/1996 6.35 5.31
12/31/1996 6.642 5.29
1/31/1997 6.789 5.25
2/28/1997 6.803 5.19
3/31/1997 7.096 5.39
4/30/1997 6.957 5.51
5/31/1997 6.906 5.50
6/30/1997 6.785 5.56
7/31/1997 6.298 5.52
8/31/1997 6.611 5.54
9/30/1997 6.399 5.54
10/31/1997 6.153 5.50
11/30/1997 6.054 5.52
12/31/1997 5.923 5.50
1/31/1998 5.8 5.56
2/28/1998 5.923 5.51
3/31/1998 5.933 5.49
4/30/1998 5.949 5.45
5/31/1998 5.802 5.49
6/30/1998 5.627 5.56
7/31/1998 5.713 5.54
8/31/1998 5.267 5.55
9/30/1998 4.978 5.51
10/31/1998 5.157 5.07
11/30/1998 5.063 4.83
12/31/1998 5.095 4.68
1/31/1999 5.086 4.63
2/28/1999 5.576 4.76
3/31/1999 5.625 4.81
4/30/1999 5.662 4.74
5/31/1999 5.828 4.74
6/30/1999 5.963 4.76
7/31/1999 6.103 4.99
8/31/1999 6.059 5.07
9/30/1999 6.051 5.22
10/31/1999 6.163 5.20
11/30/1999 6.293 5.42
12/31/1999 6.478 5.30
1/31/2000 6.491 5.45
2/29/2000 6.14 5.73
3/31/2000 5.828 5.85
4/30/2000 5.96 6.02
5/31/2000 6.008 6.27
6/30/2000 5.896 6.53
7/31/2000 5.782 6.54
8/31/2000 5.668 6.50
9/30/2000 5.885 6.52
10/31/2000 5.788 6.51
11/30/2000 5.608 6.51
12/31/2000 5.457 6.40
1/31/2001 5.501 5.98
2/28/2001 5.314 5.49
3/31/2001 5.444 5.31
4/30/2001 5.788 4.80
5/31/2001 5.753 4.21
6/30/2001 5.759 3.97
7/31/2001 5.522 3.77
8/31/2001 5.368 3.65
9/30/2001 5.421 3.07
10/31/2001 4.874 2.49
11/30/2001 5.286 2.09
12/31/2001 5.466 1.82
1/31/2002 5.431 1.73
2/28/2002 5.417 1.74
3/31/2002 5.795 1.73
4/30/2002 5.593 1.75
5/31/2002 5.616 1.75
6/30/2002 5.509 1.75
7/31/2002 5.302 1.73
8/31/2002 4.926 1.74
9/30/2002 4.669 1.75
10/31/2002 4.987 1.75
11/30/2002 5.036 1.34
12/31/2002 4.779 1.24
1/31/2003 4.842 1.24
2/28/2003 4.67 1.26
3/31/2003 4.816 1.25
4/30/2003 4.765 1.26
5/31/2003 4.377 1.26
6/30/2003 4.558 1.22
7/31/2003 5.358 1.01
8/31/2003 5.224 1.03
[end line chart]
Sources: The Federal Reserve Board, Bloomberg
Calendar year returns with distributions reinvested
CALENDAR August 31,
YEAR ENDING 79(1) 80 81 82 83 84 85 86 87 88
The fund (%) 0.22 -6.5 -4.3 38.4 8.6 8.7 19.9 18.7 0.1 9.3
Lehman Muni
Bond Index (%) n/a(3) -8.9 -10.2 40.9 8.0 10.5 20.0 19.3 1.5 10.2
Lipper General
Muni Debt Funds
Average (%) 0.4(4) -10.4 -6.7 40.1 10.9 9.2 20.1 18.5 -0.9 11.4
CALENDAR August 31,
YEAR ENDING 89 90 91 92 93 94 95 96 97 98
The fund (%) 9.5 6.1 11.2 9.0 11.6 -4.8 17.3 4.6 9.0 6.0
Lehman Muni
Bond Index (%) 10.8 7.3 12.1 8.8 12.3 -5.2 17.5 4.4 9.2 6.5
Lipper General
Muni Debt Funds
Average (%) 9.7 6.2 12.1 8.9 12.4 -6.5 16.9 3.4 9.2 5.4
CALENDAR August 31,
YEAR ENDING 99 00 01 02 03(1)
The fund (%) -2.3 9.7 5.6 8.4 0.8
Lehman Muni
Bond Index (%) -2.1 11.7 5.1 9.6 0.9
Lipper General
Muni Debt Funds
Average (%) -4.6 10.9 3.9 8.4 0.4
(1)Partial year
(2)Fund inception 10/3/79
(3)Index inception 12/31/79
(4)From 10/31/79
[end sidebar]
[begin pull quote]
"We favor shorter term securities when we think interest rates will rise. Their
prices tend to hold up better than longer term bonds." - Brenda Ellerin
[end pull quote]
[photograph: two hands molding clay vase]
[photograph: Brenda Ellerin]
In addition to individual characteristics like maturity date and quality,
economic factors such as inflation can affect bond prices. Inflation erodes the
value of money, making a bond's principal and interest worth less over time.
Inflation tends to be low when the economy is weaker, but can heat up when the
economy grows.
So as the economy expands and contracts and interest rates move up and down, the
challenge and opportunity for The Tax-Exempt Bond Fund of America is to find
municipal bonds with the best mix of characteristics that are consistent with
the fund's overall objectives -- capital preservation and a high level of
tax-free income.
DOING WELL WHEN RATES RISE
When it comes to interest rates, change is the only constant, as the chart on
page 5 shows. Generally, the last quarter-century has been a time of declining
rates punctuated by a series of upward moves. It's during the latter periods
that The Tax-Exempt Bond Fund of America tends to prove its mettle.
"Sometimes when rates are falling, and bond prices rising, we leave a little bit
of total return on the table," says Neil. "It's a reflection of our investment
posture, which tends to be conservative. So during those periods, it's not
uncommon for us to trail our peers -- but usually not by much. That's because
that conservative stance helps us preserve shareholder capital when rates are
rising."
A good example of how the fund's cautiousness helped preserve shareholder
capital can be found in its response to the interest rate environment of
1990-1994. In 1990, the U.S. economy began to weaken. Trying to boost growth,
the Federal Reserve began lowering short-term interest rates. Remember the
seesaw: When interest rates fall, bond prices rise, especially longer term
bonds. In our semi-annual report published in the spring of 1991, we reported
that "we had already started to lengthen maturities and further upgrade the
credit quality of the portfolio."
The weak economy also squeezed the budgets of a number of municipalities, making
some bonds less credit-worthy. Some were downgraded, resulting in lower bond
prices. The fund was invested in a number of highly rated bonds, many for
essential services, whose revenues tend to be reliable and largely immune to
budgetary pressures from states and municipalities. The result: The fund was
able to preserve and add to shareholder capital. "At the same time," Neil
recalls, "we kept an eye on those downgraded bonds. If we thought their fortunes
were likely to improve, we'd begin to buy them. That's because when a bond's
credit is improving, its price begins to rise."
Fast forward to February 1994. With the economy picking up, inflation became a
concern. The Fed began raising short-term rates. That put pressure on long-term
rates; they rose sharply, pushing bond prices lower. The portfolio counselors
began to shorten the average maturity of the fund's holdings.
How did The Tax-Exempt Bond Fund of America fare in that difficult market
environment? In calendar year 1994, its total return was -4.8%. "Although this
was negative," Neil says, "our risk-averse posture -- investing in shorter
maturities and shifting to higher quality bonds -- helped keep the downturn
relatively mild." In contrast, the average municipal bond fund suffered a -6.5%
return, according to Lipper.
Taking the entire interest-rate cycle into account -- from April 1990 to
November 1994 -- the fund posted a total return of 36.3%. The unmanaged Lehman
Brothers Municipal Bond Index rose 36.8%, though that doesn't include expenses.
The Lipper average return for the period was 35.2%. Looking at the actual period
in which rates spiked, the fund lost 5.9%, compared to 7.8% for the Lipper
average and 6.1% for the Lehman index.
[begin sidebar]
The fund's high distribution rates
The chart below shows the margin of difference as expressed in percentage points
between The Tax-Exempt Bond Fund of America's distribution rate and the rate
paid by the average municipal bond fund since June 1992.* As you can see, for
more than 10 years, the fund's rate has surpassed the rate paid by the average
municipal bond fund. This is due in part to a December 1993 change in investment
policy, which has allowed the fund greater flexibility to invest in securities
rated Baa and BBB (the lowest "investment-grade" categories). Distribution rates
are calculated by dividing dividends paid during the previous 12 months by the
sum of the net asset value and any capital gains paid.
*As calculated by Lipper Inc.
[begin bar chart]
Date
6/30/92 -0.22
7/31/92 -0.19
8/31/92 -0.13
9/30/92 -0.13
10/31/92 -0.18
11/30/92 -0.09
12/31/92 -0.09
1/31/93 -0.05
2/28/93 -0.03
3/31/93 -0.06
4/30/93 -0.07
5/31/93 0.01
6/30/93 -0.03
7/31/93 -0.02
8/31/93 0.00
9/30/93 0.01
10/31/93 0.07
11/30/93 0.12
12/31/93 0.14
1/31/94 0.16
2/28/94 0.18
3/31/94 0.14
4/30/94 0.24
5/31/94 0.24
6/30/94 0.28
7/31/94 0.32
8/31/94 0.31
9/30/94 0.35
10/31/94 0.39
11/30/94 0.32
12/31/94 0.36
1/31/95 0.40
2/28/95 0.40
3/31/95 0.40
4/30/95 0.37
5/31/95 0.38
6/30/95 0.38
7/31/95 0.40
8/31/95 0.40
9/30/95 0.38
10/31/95 0.39
11/30/95 0.37
12/31/95 0.40
1/31/96 0.36
2/29/96 0.35
3/31/96 0.35
4/30/96 0.37
5/31/96 0.31
6/30/96 0.32
7/31/96 0.27
8/31/96 0.26
9/30/96 0.29
10/31/96 0.28
11/30/96 0.29
12/31/96 0.27
1/31/97 0.26
2/28/97 0.26
3/31/97 0.27
4/30/97 0.27
5/31/97 0.29
6/30/97 0.31
7/31/97 0.34
8/31/97 0.35
9/30/97 0.34
10/31/97 0.36
11/30/97 0.32
12/31/97 0.36
1/31/98 0.39
2/28/98 0.37
3/31/98 0.39
4/30/98 0.38
5/31/98 0.40
6/30/98 0.40
7/31/98 0.40
8/31/98 0.40
9/30/98 0.40
10/31/98 0.40
11/30/98 0.42
12/31/98 0.40
1/31/99 0.38
2/28/99 0.39
3/31/99 0.39
4/30/99 0.38
5/31/99 0.37
6/30/99 0.35
7/31/99 0.33
8/31/99 0.31
9/30/99 0.30
10/31/99 0.31
11/30/99 0.33
12/31/99 0.30
1/31/00 0.33
2/29/00 0.34
3/31/00 0.39
4/30/00 0.40
5/31/00 0.41
6/30/00 0.40
7/31/00 0.41
8/31/00 0.40
9/30/00 0.39
10/30/00 0.41
11/30/00 0.45
12/31/00 0.50
1/31/01 0.48
2/28/01 0.49
3/31/01 0.49
4/30/01 0.47
5/31/01 0.46
6/30/01 0.48
7/31/01 0.47
8/31/01 0.48
9/30/01 0.44
10/31/01 0.43
11/30/01 0.40
12/31/01 0.40
1/31/02 0.40
2/28/02 0.41
3/31/02 0.41
4/30/02 0.41
5/31/02 0.39
6/30/02 0.39
7/31/02 0.39
8/31/02 0.39
9/30/02 0.40
10/31/02 0.40
11/30/02 0.40
12/31/02 0.38
1/31/03 0.37
2/28/03 0.32
3/31/03 0.30
4/30/03 0.31
5/31/03 0.31
6/30/03 0.31
7/31/03 0.31
8/31/03 0.31
[end bar chart]
[end sidebar]
As the table on page 8 shows, that was just one of nine major periods of rising
rates the fund has endured during its lifetime. Each time, it has held up
reasonably well -- again, thanks to its conservative, risk-averse philosophy.
"We're so focused on not losing money when rates are rising," points out
portfolio counselor David Hoag, "because it's so hard to make up that lost
ground. For example, if you have an investment that loses 10%, you have to gain
more than 11% just to get back to where you started. Sometimes in a down market,
it's impossible not to lose money. But if you can minimize those losses, you're
going to recover much faster. That's why we're conservative. And that's why we
have tended to do quite well over the long run."
[begin pull quote]
"Being conservative helps our investors sleep at night. How much is that worth?"
- - David Hoag
[end pull quote]
[photograph: two hands molding clay vase]
[photograph: David Hoag]
Having lower expenses doesn't hurt, either. At 0.61% for Class A shares, The
Tax-Exempt Bond Fund of America's expense ratio (a calculation of the percentage
of their investment that shareholders pay annually for operating expenses and
management fees) is significantly lower than its peer group, which averaged
0.90%, according to Lipper. "That might not sound like a huge amount," says
Brenda. "But it's important, because the less we spend on expenses, the more we
have to invest. It's like having a little extra gas in the tank -- you can go
farther."
[begin pull quote]
"Income acts as a cushion and helps the fund's overall return. We've been able
to provide that whether interest rates are climbing or falling." -Neil Langberg
[end pull quote]
[photograph: two hands molding clay vase]
[photograph: Neil Langberg]
EMPHASIS ON RESEARCH
With more than 50,000 municipal bonds on the market in the United States -- six
times the number of publicly traded stocks -- the municipal bond market is as
giant as it is complex. Two companies -- Standard & Poor's and Moody's -- rate
most of these bonds on their ability to pay interest and return principal to
investors.
"S&P and Moody's are excellent," says David. "But they only look at default
risk, not supply and demand factors or how these bonds are structured to respond
to interest rate changes. So for us, in terms of evaluating a municipal bond,
they're just a starting point."
Neil, Ed, Brenda and David meet every Monday with bond traders and research
analysts of Capital Research and Management Company, the fund's adviser. The
group looks at the "calendar" -- a schedule of bonds that are expected to come
to market. They also discuss current investments and market trends.
"The collective insight is really something," Ed says. "We have one group that
looks at duration (a measure of a bond's potential price volatility) and
another, a macro group, that looks at the economy. We also look at a bond's
particulars, such as its pricing and whether it's callable (when a bond issuer
redeems the value of a bond before its scheduled maturity). Every single person
is an integral part of the process. I think it's impossible to overestimate the
value they bring to the fund."
[begin sidebar]
When rates are rising: The fund vs. its benchmarks
Lipper General
Lehman Muni Muni Debt
The fund Bond Index Funds Average
October 31, 1979 - March 31, 1980 -4.7% n/a(1) -13.0%
June 30, 1980 - September 30, 1981 -14.0 -19.8% -18.4
April 30, 1983 - May 31, 1984 -3.7 -4.4 -3.2
August 31, 1986 - September 30, 1987 -3.0 0.8 -1.9
November 30, 1989 - April 30, 1990 -0.9 0.5 -0.6
October 31, 1993 - November 30, 1994 -5.9 -6.1 -7.8
December 31, 1995 - August 31, 1996 0.5 0.4 -0.5
September 30, 1998 - January 31, 2000 -2.6 -1.9 -5.4
May 31, 2003 - August 31, 2003 -3.1 -3.2 -3.4
Dates determined using 30-year U.S. Treasury bond yield
(1)Index inception 12/31/79
[end sidebar]
Arguably, however, the most important part of the research process takes place
not in a conference room, but in the field. Bond analysts travel extensively,
meeting with management and other municipal officials. "This onsite research is
a crucial part of the due-diligence process," says Brenda. "And since municipal
bonds can be issued for a wide variety of purposes-- to build schools,
hospitals, bridges, or simply to raise money for a state or local government,
for example -- having industry- or topic-specific knowledge is also extremely
useful. It really helps us find what we think are the best municipal bonds for
our investors."
It is this experience, knowledge and teamwork that has helped the fund weather
countless market fluctuations while providing shareholders with a consistent
stream of income and preserving shareholder capital when interest rates are
climbing.
The bond market may be in such a period now. With the economy recovering from
its mild 2001 recession, long-term interest rates -- which had been falling
sharply -- reversed course in June of this year.
Even so, the fund's portfolio counselors generally think that bond yields are
still too low for them to begin moving back into longer term municipals. "I know
we keep hammering away on this point," says David, "but in a rising-rate
environment, capital preservation is so important. We just don't like to lose
money. Sometimes we'll come across a municipal bond that may be appealing, but
we'll pass if we think it's too risky. Down the road, if it turns out that we
were wrong, it's because we erred on the side of caution. Being conservative
helps our investors sleep at night. How much is that worth?"
Over a period of many years, which is a fair way to be judged, The Tax-Exempt
Bond Fund of America has generally produced solid long-term investment results
for its shareholders. "It is a reflection of our emphasis on research and on
generating a steady stream of tax-free income," says Neil. "Income acts as a
cushion and helps the fund's overall return. We've been able to provide that
whether interest rates are climbing or falling. But it's important to remember
that past results are no guarantee of the future."
[begin sidebar]
The multiple portfolio counselor system
The Tax-Exempt Bond Fund of America's portfolio counselors average 17 years of
investment experience. Why four people to manage one fund? Because like all 29
of the American Funds, the fund is managed by a unique method we call the
multiple portfolio counselor system. We believe it helps our funds achieve
consistently superior long-term investment results.
Here's how it works: Assets of the fund are divided into portions, each managed
by a portfolio counselor. Another portion is managed by the fund's research
analysts, who bring their own investment expertise to the table.
The advantages to this system are many:
o DIVERSITY. Within the fund's overall guidelines, the counselors get to act
on their own convictions. This offers the best attributes of both
individualism and teamwork, with no need for consensus.
o CONSISTENCY. Over time, having more than one person managing assets tends
to smooth out the peaks and valleys of investing.
o CONTINUITY. Since the fund is not dependent on any single individual, when
one person leaves or retires, only a portion of the portfolio changes
hands. Smooth, gradual transitions help the fund maintain a steady
investment approach.
[end sidebar]
THE TAX-EXEMPT BOND FUND OF AMERICA, INC.
INVESTMENT PORTFOLIO
August 31, 2003
[begin pie chart]
GEOGRAPHIC BREAKDOWN
Texas 12.1 %
Illinois 9.9 %
New York 9.7 %
Washington 7.4 %
Florida 6.1 %
California 4.7 %
Other states 44.8 %
Cash & equivalents 5.3 %
[end pie chart]
[begin pie chart]
QUALITY RATINGS
Aaa/AAA 38.6 %
Aa/AA 20.3 %
A/A 8.5 %
Baa/BBB 14.1 %
Below investment grade 13.2 %
Cash & equivalents 5.3 %
[end pie chart]
INVESTMENT PORTFOLIO, August 31, 2003
PRINCIPAL MARKET
AMOUNT VALUE
FIXED INCOME SECURITIES (000) (000)
ALABAMA - 0.80%
Public School and College Auth., Capital Improvement Pool Bonds, Series 2001-A, 5.625% 2015 $ 5,255 $ 5,766
Industrial Dev. Board of the Town of Courtland, Industrial Dev. Rev. Ref. Bonds (International
Paper Co. Projects), Series 2003-A, 5.00% 2013 1,000 1,003
Special Care Fac. Fncg. Auth. of the City of Huntsville - Carlton Cove, Retirement Fac. Rev.
Bonds (Carlton Cove Project) Series 2001, 8.125% 2031 9,000 8,221
Jefferson County, Sewer Rev. Capital Improvement Warrants, Series 1999-A, FGIC insured,
5.125% 2029 (preref. 2009) 2,865 3,189
Health Care Auth. of Lauderdale County and the City of Florence, Coffee Health Group,
Series 2000-A Bonds, MBIA insured, 5.50% 2009 1,150 1,278
21st Century Auth., Tobacco Settlement Rev. Bonds:
Series 2000, 5.75% 2020 2,000 1,699
Series 2001, 5.50% 2021 6,000 4,880
ALASKA - 1.28%
Housing Fin. Corp.:
Collateralized Bonds (Veterans Mortgage Program), Series 1992-A1, 6.75% 2032 890 898
Rev. Bonds, Series 1998-A1, 5.30% 2017 5,380 5,525
Municipality of Anchorage:
G.O. Ref. General Purpose Bonds, Series 1995-B, FGIC insured, 6.00% 2012 2,895 3,349
Municipal Light & Power, Senior Lien Ref. Electric Rev. Bonds, Series 1996, MBIA insured,
6.50% 2014 5,000 5,990
North Slope Borough, G.O. Bonds, Series 1997-A, MBIA insured, 0% 2008 10,935 9,401
Northern Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds:
Series 2000:
5.80% 2012 4,785 4,544
6.20% 2022 2,035 1,792
Series 2001, 5.375% 2021 (expected maturity 2012) 12,850 10,103
ARIZONA - 0.52%
Health Facs. Auth., Rev. Bonds (Catholic Healthcare West), Series 1999-A, 6.125% 2009 2,900 3,150
Transportation Excise Tax Rev. Bonds (Maricopa County Regional Area Road Fund),
Series 2002, 3.00% 2005 5,000 5,178
Industrial Dev. Auth. of the County of Maricopa, Health Fac. Rev. Bonds (Catholic Healthcare
West Project), Series 1998-A:
5.25% 2006 2,850 3,007
5.00% 2016 1,000 955
Industrial Dev. Auth. of the County of Pima, Education Rev. Bonds (Charter Schools Project),
Series 2002-E, 7.25% 2031 4,520 4,624
CALIFORNIA - 4.68%
G.O. Bonds, 6.00% 2019 5,000 5,454
Educational Facs. Auth., Rev. Bonds, Stanford University, Series N, 5.35% 2027 3,000 3,070
Housing Fin. Agcy., Single-family Mortgage Bonds, Series 1997-C4, Class I:
5.10% 2007 925 985
5.20% 2009 625 659
Joint Powers Health Fncg. Auth., Centers Cert. of Part., Community Medical (Community Hospitals
of Central California Project), Series 2001, 5.00% 2011 1,115 1,138
Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bonds (Irvine Apartment Communities, LP),
Series 1998-A3, 5.10% 2025 (put 2010) 4,000 4,166
Dept. of Water Resources, Power Supply Rev. Bonds, Series 2002-A:
FSA insured, 5.25% 2011 4,000 4,385
5.75% 2017 5,550 5,960
5.375% 2022 3,000 3,037
AMBAC insured:
5.50% 2015 2,000 2,187
5.50% 2016 4,000 4,349
City of Antioch, Public Fncg. Auth., 1998 Reassessment Rev. Bonds, Subordinated Series B, 5.85% 2015 1,415 1,467
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps.:
Multi-family Housing Rev. Ref. Bonds (Archstone/Redwood Shores Apartments), Series 2000-A,
5.30% 2008 1,000 1,062
Rev. Ref. Cert. of Part.:
American Baptist Homes of the West Facs. Project, Series 1997-A:
5.50% 2007 950 977
5.75% 2017 1,500 1,407
6.20% 2027 1,675 1,579
Episcopal Homes Foundation, Series 1998, 5.125% 2013 2,000 2,000
Southern California Presbyterian Homes Obligated Group (Redwood Senior Homes and Services),
Rev. Bonds, Series 2002:
6.00% 2022 1,750 1,747
6.125% 2032 1,000 992
Bonita Canyon Public Facs. Fncg. Auth., Community Facs. Dist. No. 98-1, Special Tax Bonds,
Series 1998, 5.375% 2028 2,500 2,358
Burbank Unified School Dist., G.O. Bonds, 1997 Election, Series C, FGIC insured:
0% 2018 5,000 2,316
0% 2019 5,705 2,467
Cerritos Public Fncg. Auth., 2002 Tax Allocation Rev. Bonds (Cerritos Redev. Projects), Series A,
AMBAC insured, 5.00% 2017 2,880 3,043
County of El Dorado, Community Facs. Dist. No. 1992-1 (El Dorado Hills Dev.), Series 1999
Special Tax Bonds, 6.125% 2016 975 1,008
City of Folsom, Community Facs. Dist. No. 10, Special Tax Bonds, Series 1999, 7.00% 2024 2,000 2,124
City of Fontana, Community Facs. Dist. No. 12 (Sierra Lakes), Special Tax Bonds, Series 1999:
6.50% 2015 1,000 1,059
6.625% 2030 1,000 1,046
Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2003-A1,
6.25% 2033 2,000 1,617
City of Irvine, Assessment Dist. No. 00-18, Limited Obligation Improvement Bonds, Group Two,
5.60% 2022 1,715 1,714
City of La Verne, Rev. Cert. of Part. (Brethren Hillcrest Homes), Series 2003-B, 6.625% 2025 1,250 1,237
City of Lincoln, Community Facs. Dist. No. 2003-1 (Lincoln Crossing Project), Special Tax Bonds,
Series-2003-A, 6.125% 20333 2,000 1,968
Long Beach Bond Fin. Auth., Lease Rev. Ref. Bonds (Aquarium of the Pacific Project), Series 2001,
AMBAC insured, 5.50% 2015 2,150 2,351
Long Beach Aquarium of the Pacific, Rev. Bonds (Aquarium of the Pacific Project), Series 1995-A
(preref. 2005):
6.10% 2010 4,000 4,407
6.125% 2015 5,000 5,511
6.125% 2023 12,500 13,777
MBIA insured, 6.125% 2023 2,000 2,204
City of Los Angeles, Regional Airports Improvement Corp., Facs. Sublease Rev. Bonds, American
Airlines, Inc., Terminal Project (Los Angeles International Airport), Series 2002-A, 7.125% 2024 750 601
County of Los Angeles:
Capital Asset Leasing Corp., Cert. of Part. (Marina del Rey), Series 1993-A, 6.50% 2008 4,750 4,893
Los Angeles Community College Dist., G.O. Bonds, 2001 Election, Series A, 5.50% 2016 10,500 11,438
Modesto High School Dist. (Stanislaus County), Election of 2001 G.O. Bonds, Series A,
FGIC insured, 0% 2015 2,000 1,129
Community Facs. Dist. No. 2002-1 of the County of Orange (Ladera Ranch), Series 2003-A,
Special Tax Bonds, 5.55% 2033 2,000 1,902
City of Roseville, Special Tax Bonds:
Highland Reserve North Community Facs. Dist. No. 1, Series 1999:
6.00% 2011 3,075 3,266
6.30% 2025 2,750 2,815
North Central Roseville Community Facs. Dist. No. 1, Ref. Bonds, Series 1999:
5.30% 2007 2,795 2,981
5.80% 2017 3,410 3,443
Woodcreek West Community Facs. Dist. No. 1, Series 1999, 6.50% 2015 1,465 1,542
Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds (Procter & Gamble Project), Series 1995:
6.375% 2010 500 529
6.375% 2010 (preref. 2005) 500 556
County of Sacramento, Laguna Creek Ranch/Elliott Ranch Community Facs. Dist. No. 1, Improvement
Area No. 2, Special Tax Ref. Bonds (Elliott Ranch), 6.30% 2021 500 513
County of San Bernardino Housing Auth., Multi-family Housing Rev. Ref. Bonds (Equity Residential/
Redlands Lawn and Tennis Apartments), Issue 1999-A, 5.20% 2029 (put 2009) 1,500 1,580
County of San Diego, Reassessment Dist. No. 97-1 (4-S Ranch), Limited Obligation Improvement Bonds,
6.25% 2012 995 1,032
San Marcos Public Facs. Auth., Rev. Ref. Bonds, Series 1998, 5.80% 2027 3,000 3,061
San Marcos Unified School Dist., Community Facs. Dist. No. 5 (Rancho Carrillo), Special Tax Bonds,
Series 1999, 5.60% 2029 1,000 1,020
Community Facs. Dist. No. 99-1 (Talega) of the Santa Margarita Water Dist., Special Tax Bonds,
Series 1999, 6.10% 2014 1,195 1,239
South Tahoe Joint Powers Fncg. Auth., Subordinate Bond Anticipation Notes (South Tahoe Redev.
Project Area No. 1):
Series 1999-A, 7.30% 2007 (preref. 2004) 3,000 3,201
Series 1999-B, 7.30% 2007 (preref. 2004) 1,905 2,032
Series 2003-B, 5.125% 2009 3,000 2,974
The Regents of the University of California, Various University of California Projects,
Series 1993-A, 5.50% 2021 2,000 2,012
Washington Township Health Care Dist., Rev. Bonds, Series 1999, 5.00% 2014 1,300 1,323
COLORADO - 3.61%
Health Facs. Auth.:
Health Facs. Rev. Bonds (The Evangelical Lutheran Good Samaritan Society Project):
Series 2000, 6.60% 2016 5,250 5,745
Series 2002, 5.90% 2027 7,000 6,912
Hospital Rev. Bonds:
Catholic Health Initiatives, Series 2001:
5.375% 2010 1,500 1,623
5.50% 2014 3,000 3,176
5.50% 2015 4,250 4,476
PorterCare Adventist Health System Project, Series 2001, 6.50% 2031 3,800 4,066
Rev. Bonds :
Catholic Health Initiatives, Series 2002-A, 5.00% 2009 1,000 1,071
Covenant Retirement Communities, Inc.:
Series 1995, 6.75% 2025 4,160 4,239
Series 2002-B, 6.125% 2033 9,000 8,769
Housing and Fin. Auth., Single-family Program Senior and Subordinate Bonds:
Series 1997-A3, 7.00% 2016 475 480
Series 1997-B3, 6.80% 2028 265 268
Series 1997-C3, 6.75% 2017 345 348
Series 1998-B3, 6.55% 2025 2,640 2,719
Series 1998-D3, 6.125% 2023 2,620 2,778
Arapahoe County:
Capital Improvement Trust Fund Highway Rev. Bonds (E-470 Project)(preref. 2005):
6.90% 2015 2,500 2,847
6.95% 2020 17,500 19,944
E-470 Public Highway Auth., Senior Rev. Bonds (Capital Appreciation Bonds), Series 2000-B,
0% 2034 7,500 754
Denver Convention Center Hotel Auth. Rev. Bonds, Series 2003-A, XLCA insured:
5.00% 2016 6,925 7,227
5.00% 2017 5,000 5,176
Eagle County, Bachelor Gulch Metropolitan Dist., G.O. Bonds, Series 1999, 6.70% 2019 3,400 3,562
EagleBend Affordable Housing Corp., Multi-family Housing Project Rev. Ref. Bonds, Series 1997-A:
6.20% 2012 1,000 1,007
6.40% 2017 2,000 1,991
6.45% 2021 3,175 3,108
EagleBend Dowd Affordable Housing Corp., Multi-family Housing Project Rev. Bonds, Series 1998-A:
6.35% 2014 950 939
6.63% 2039 2,000 1,903
Metropolitan Football Stadium Dist., Capital Appreciation Sales Tax Rev. Bonds, Series 1999-A,
MBIA insured:
0% 2011 2,600 1,912
0% 2012 4,700 3,256
North Range Metropolitan Dist. No. 1 (City of Commerce City), Adams County, Limited Tax G.O.
Bonds, Series 2001, 7.25% 2031 3,775 3,754
Rampart Range Metropolitan Dist. No. 1 (City of Lone Tree), Rev. Bonds (Rampart Range
Metropolitan Dist. No. 2 Project) Series 2001, 7.75% 2026 5,415 5,570
Vista Ridge Metropolitan Dist. (Weld County), Limited Tax G.O. Bonds, Series 2001, 7.50% 2031 7,310 7,408
CONNECTICUT - 0.70%
G.O. Bonds, Series 2001-B, 5.375% 2016 1,900 2,051
Dev. Auth., Pollution Control Rev. Ref. Bonds (The Connecticut Light and Power Co. Project),
Series 1993-A, 5.85% 2028 5,025 5,235
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, Series 1996-A:(1)
6.375% 2004 (escrowed to maturity) 1,985 2,091
6.50% 2005 (escrowed to maturity) 1,490 1,642
6.40% 2011 2,025 2,163
6.40% 2011 (preref. 2007) 2,470 2,846
Mohegan Tribe of Indians, Gaming Auth. Priority Distribution Payment, Public Improvement
Bonds, Series 2001:
5.375% 2011 1,000 1,034
6.00% 2016 1,000 1,052
6.25% 2021 3,000 3,131
6.25% 2031 1,500 1,545
DISTRICT OF COLUMBIA - 0.55%
G.O. Ref. Bonds:
AMBAC insured:
Series 1993-A, 5.875% 2005 (escrowed to maturity) 2,125 2,293
Series 1993-B1, 5.50% 2009 1,500 1,680
Series 2002-C, XLCA insured, 5.25% 2013 1,000 1,066
Cert. of Part., Series 2002, AMBAC insured, 5.25% 2013 1,000 1,066
Gallery Place Project, Tax Increment Rev. Bonds, Series 2002, FSA insured, 5.50% 2016 1,000 1,077
MedStar Health, Inc. Issue, Multimodal Rev. Bonds (Georgetown University Hospital and
Washington Hospital Center Projects):
Series 2001-A, 6.40% 2031 (put 2004) 1,000 1,013
Series 2001-B, 6.625% 2031 (put 2005) 4,000 4,168
Series 2001-D, 6.875% 2031 (put 2007) 5,000 5,412
FLORIDA - 6.07%
State Board of Education, Public Education Capital Outlay Bonds (preref. 2004):
Series 1994-A, 5.70% 2008 1,000 1,046
Series 1994-E, 5.70% 2014 1,600 1,673
Capital Projects Fin. Auth., Continuing Care Retirement Community Rev. Bonds (Capital Projects
Loan Program - The Glenridge on Palmer Ranch Project), Series 2002-A, 8.00% 2032 11,535 11,596
Arbor Greene Community Dev. Dist. (City of Tampa, Hillsborough County), Special Assessment Rev. Bonds:
Series 1996, 7.60% 2018 860 898
Series 1998, 5.75% 2006 235 235
Series 2000, 6.50% 2007 350 352
Bay County, Pollution Control Rev. Ref. Bonds (International Paper), Series 1998-A, 5.10% 2012 3,500 3,561
Beacon Tradeport Community Dev. Dist. (Miami-Dade County), Special Assessment Bonds
(Industrial Project), Series 2002-B:
7.00% 2014 1,025 1,026
7.25% 2033 1,000 1,004
School Dist. of Broward County, G.O. Ref. Bonds, Series 2002-A, 5.00% 2004 2,075 2,114
Capital Region Community Dev. Dist. (Tallahassee), Capital Improvement Rev. Bonds, Series 2001-A2,
6.85% 2031 1,000 1,018
Championsgate Community Dev. Dist., Capital Improvement Rev. Bonds, Series 1998-B, 5.70% 2005 1,225 1,213
The Crossings at Fleming Island Community Dev. Dist. (Clay County), Special Assessment Ref. Bonds:
Series 1995, 8.25% 2016 (preref. 2005) 960 1,066
Series 2000-C, 7.10% 2030 8,300 8,670
Escambia County Health Facs. Auth., Rev. Bonds (Ascension Health Credit Group), Series 2003-A:
5.25% 2012 1,000 1,063
5.25% 2013 4,000 4,228
Fishhawk Community Dev. (Hillsborough County), Special Assessment Rev. Bonds:
Dist., Series 2000, 6.65% 2007 1,100 1,107
Dist. II, Series 2003-B, 5.00% 2007 1,000 995
Fleming Island Plantation Community Dev. Dist. (Clay County), Series 2000-B (Long Term), 7.375% 2031 2,995 3,135
Gateway Services Community Dev. Dist., Special Assessment Bonds:
Stoneybrook Project, Series 2003, 5.50% 2008 1,500 1,495
Sun City Center Fort Myers Project, Series 2003-B, 5.50% 2010 5,100 5,039
Grand Haven Community Dev. Dist. (City of Palm Coast, Flagler County), Special Assessment Bonds:
Series 2002, 6.125% 2007 3,700 3,700
Series 2003, 5.20% 2007 2,000 1,974
Greyhawk Landing, Community Dev. Dist. (Manatee County), Special Assessment Rev. Bonds:
Series 2002-A, 7.00% 2033 1,000 1,020
Series 2002-B, 6.25% 2009 950 954
The Groves Community Dev. Dist. (Pasco County), Special Assessment Rev. Bonds, Series 2000-B,
7.625% 2008 910 881
Harbor Bay Community Dev. Dist. (Hillsborough County), Capital Improvement Rev. Bonds:
Series 2001-B, 6.35% 2010 1,430 1,443
Series 2002, 6.75% 2034 3,000 2,994
Harbour Lake Estates Community Dev. Dist. (Miramar), Special Assessment Bonds, Series 2001,
6.40% 2006 2,420 2,420
Heritage Harbour Community Dev. Dist. (Manatee County), Special Assessment Rev. Bonds,
Series 1997-B, 6.00% 2006 1,000 996
Heritage Harbour South Community Dev. Dist. (Manatee County), Capital Improvement Rev. Bonds:
Series 2002-A, 6.50% 2034 500 491
Series 2002-B, 5.40% 2008 2,335 2,319
Heritage Isles Community Dev. Dist., Special Assessment Rev. Bonds, 5.90% 2006 700 699
Heritage Palms Community Dev. Dist. (Fort Myers), Capital Improvement Rev. Bonds:
Series 1998, 5.40% 2003 385 385
Series 1999, 6.25% 2004 2,110 2,115
Heritage Pines Community Dev. Dist. (Pasco County), Capital Improvement Rev. Bonds, Series 1998-B,
5.50% 2005 1,425 1,418
Highlands County Health Facs. Auth., Hospital Rev. Bonds (Adventist Health System/Sunbelt Obligated
Group), Series 2002-B:
5.00% 2010 1,055 1,116
5.00% 2011 1,205 1,260
5.00% 2012 2,000 2,082
Hillsborough County, Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Tampa General Hospital
Project), Series 2003-A:
5.00% 2012 1,000 1,014
5.25% 2015 3,500 3,538
5.00% 2018 2,500 2,401
Jacksonville Electric Auth., St. Johns River Power Park System, Rev. Ref. Bonds, Issue Two,
Series Seventeen, 5.00% 2015 4,000 4,180
Lake Ashton Community Dev. Dist. (City of Lake Wales, Polk County), Capital Improvement Rev. Bonds:
Series 2001-A, 7.40% 2032 970 1,015
Series 2001-B, 6.40% 2011 2,695 2,713
Series 2003-A, 6.50% 2032 2,500 2,422
Series 2003-B, 5.40% 2008 3,000 2,972
Lake Powell Residential Golf Community Dev. Dist. (Bay County), Special Assessment Rev. Bonds,
Series 2000-B, 7.00% 2010 2,395 2,409
Lakewood Ranch Community Dev. Dist. 5 (Manatee County), Special Assessment Rev. Bonds:
Series 2001-B, 6.00% 2011 615 619
Series 2003, 5.30% 2007 1,000 1,006
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds:
Cypress Cove at Healthpark Florida, Inc. Project, Series 1997-A:
5.80% 2006 1,005 1,037
6.25% 2017 5,550 5,470
Shell Point/Alliance Obligated Group, Shell Point Village Project, Series 1999-A:
5.25% 2006 1,150 1,218
5.50% 2010 1,500 1,561
5.75% 2012 1,360 1,408
5.75% 2013 1,840 1,890
5.75% 2014 500 510
5.75% 2015 1,900 1,926
5.50% 2021 1,550 1,458
5.50% 2029 7,750 7,055
Marshall Creek Community Dev. Dist. (St. Johns County), Special Assessment Bonds:
Series 2000-A, 7.65% 2032 3,960 4,252
Series 2000-B, 6.75% 2007 735 738
Series 2002, 6.625% 2032 2,615 2,591
Meadow Pointe III Community Dev. Dist. (Pasco County), Capital Improvement Rev. Bonds:
Series 2001-1, 5.90% 2006 200 200
Series 2003-A, 6.40% 2034 2,000 1,975
Series 2003-B, 5.25% 2007 1,200 1,191
Meadow Pointe IV Community Dev. Dist. (Pasco County), Capital Improvement Rev. Bonds,
Series 2003-B, 5.125% 2007 2,000 1,976
Miami-Dade County:
Health Facs. Auth., Hospital Rev. Ref. Bonds (Miami Children's Hospital Project), Series 2001-A,
AMBAC insured, 5.625% 2016 5,495 6,026
School Board, Cert. of Part., Series 2003-C, MBIA insured, 5.00% 2027 (put 2008) 2,200 2,401
Mid-Bay Bridge Auth., Rev. Ref. Bonds, Series 1993-D, 6.10% 2022 500 507
Northern Palm Beach County Improvement Dist., Water Control and Improvement Bonds:
Unit of Dev. No. 9A, Series 1996-A:
6.80% 2006 (escrowed to maturity) 590 669
7.30% 2027 (preref. 2006) 1,500 1,751
Unit of Dev. No. 9B, Series 1999:
5.85% 2013 830 849
5.90% 2019 1,085 1,095
6.00% 2029 1,100 1,101
City of Orlando:
Special Assessment Rev. Bonds (Conroy Road Interchange Project), Series 1998-A:
5.50% 2010 1,000 1,000
5.80% 2026 1,000 970
Utilities Commission, Water and Electric Rev. Ref. Bonds, Series 2001, 5.25% 2014 4,135 4,542
Palm Beach County, Health Facs. Auth. Retirement Community Rev. Bonds (Adult Communities Total
Services, Inc. Obligated Group), Series 1996, 5.625% 2020 2,750 2,727
Pine Air Lakes Community Dev. Dist., Collier County, Special Assessment Rev. Bonds,
Series 2002, 7.25% 1,500 1,521
Sampson Creek Community Dev. Dist. (St. Johns County), Capital Improvement Rev. Bonds,
Series 2000-A, 6.95% 2031 2,695 2,745
South-Dade Venture Community Dev. Dist. (Homestead), Special Assessment Rev. Bonds,
Series 2002, 6.90% 2033 2,000 2,008
Stoneybrook West Community Dev. Dist. (City of Winter Garden, Orange County),
Special Assessment Rev. Bonds:
Series 2000-A, 7.00% 2032 1,775 1,828
Series 2000-B, 6.45% 2010 1,175 1,185
Sumter Landing Community Dev. Dist. (Sumter County), Special Assessment Rev. Bonds,
Series 2003:
6.25% 2013 1,000 987
6.875% 2023 1,000 987
6.95% 2033 1,000 976
University Place Community Development Dist. (Manatee County):
Series 2001-A, 7.00% 2032 990 1,004
Series 2001-B, 6.10% 2007 1,820 1,820
Urban Orlando Community Dev. Dist. (City of Orlando), Capital Improvement Rev. Bonds,
Series 2001-A:
6.40% 2010 4,840 4,864
6.95% 2033 4,000 4,053
Venetian Community Dev. Dist., Sarasota County, Capital Improvement Rev. Bonds:
Series 2002-A, 6.75% 2034 1,000 1,000
Series 2002-B, 5.95% 2012 4,000 3,982
Vista Lakes Community Dev. Dist. (City of Orlando), Capital Improvement Rev. Bonds:
Series 2000-B, 6.35% 2005 240 240
Series 2002-B, 5.80% 2008 925 927
Waterlefe Community Dev. Dist. (Manatee County), Capital Improvement Rev. Bonds:
Series 2001-A, 6.95% 2031 490 499
Series 2001-B, 6.25% 2010 1,205 1,206
GEORGIA - 1.55%
G.O. Bonds, Series 2001-B, 5.25% 2016 8,000 8,615
G.O. Ref. Bonds, Series 1998-E, 5.00% 2005 3,505 3,690
Municipal Electric Auth.:
General Power Rev. Bonds, Series X, 6.50% 2012 1,215 1,395
Project One Senior Bond, Fourth Crossover Series, MBIA insured, 6.50% 2012 5,700 6,577
City of Atlanta:
Airport Facs. Rev. Ref. Bonds, Series 1994-A, AMBAC insured, 6.50% 2009 1,000 1,174
Tax Allocation Bonds (Atlantic Station Project), Series 2001:
7.75% 2014 3,000 3,062
7.90% 2024 10,000 10,232
Water and Wastewater Rev. Bonds, Series 1999-A, FGIC insured, 5.50% 2022 8,500 9,212
Housing Auth. of the County of DeKalb, Multi-family Housing Rev. Ref. Bonds (The Park
at Briarcliff Apartments Project), Series 1998-A, 4.55% 2028 (put 2008) 5,985 6,198
HAWAII - 0.33%
G.O. Bonds of 1997, Series CN, FGIC insured, 5.25% 2013 3,000 3,230
City and County of Honolulu:
G.O. Bonds:
Ref. and Improvement Series 1993-B:
5.00% 2013 1,370 1,468
5.00% 2013 (escrowed to maturity) 630 686
Series 2001-A, FSA insured, 5.375% 2012 2,000 2,193
Wastewater System Rev. Bonds (First Bond Resolution), Senior Series 2001, AMBAC insured:
5.50% 2015 1,875 2,044
5.50% 2016 1,000 1,088
ILLINOIS - 9.91%
G.O. Bonds, Illinois FIRST, Series of May 2001, FSA insured, 5.50% 2016 2,000 2,217
Build Illinois Bonds (Sales Tax Rev. Bonds), Illinois FIRST:
Series of March 2001, 5.50% 2016 3,000 3,251
Series of June 2001:
5.50% 2016 7,470 8,094
5.50% 2017 8,000 8,621
Series of September 2001:
5.375% 2015 2,500 2,692
5.375% 2016 1,500 1,610
Civic Center Bonds (Special State Obligation Bonds), Series 1991, AMBAC insured, 6.25% 2020 6,500 7,623
Dev. Fin. Auth:
Rev. Bonds (Provena Health), Series 1998-A, MBIA insured, 5.50% 2010 5,120 5,593
Revolving Fund Rev. Bonds, Series 2002 (Master Trust):
5.50% 2016 7,165 7,760
5.50% 2017 2,885 3,104
Educational Facs. Auth.:
Adjustable Medium Term Rev. Bonds, Field Museum of Natural History, Series 2002:
4.45% 2036 (put 2014) 1,000 976
4.60% 2036 (put 2015) 6,000 5,879
4.75% 2036 (put 2016) 2,000 1,965
Rev. Bonds:
Loyola University of Chicago, Series 2003-A, 5.00% 2026 5,000 4,805
MJH Education Assistance Illinois III LLC, Series 1999-D, AMBAC insured, 5.45% 2014 1,500 1,582
Wesleyan University, Series 1993, 5.625% 2018 1,490 1,524
Rev. Ref. Bonds, The Art Institute of Chicago, Series 2003-A:
5.375% 2018 1,000 1,028
5.375% 2023 1,500 1,513
Student Housing Rev. Bonds, Educational Advancement Fund, Inc. (University Center Project),
Series 2002:
6.625% 2017 3,860 4,083
6.00% 2022 1,250 1,251
6.25% 2030 7,000 7,083
6.25% 2034 4,000 4,008
Health Facs. Auth.:
Rev. Bonds:
Advocate Health Care Network:
Series 1998-A:
5.00% 2007 700 752
5.00% 2007 (escrowed to maturity) 920 1,012
5.00% 2008 810 869
5.00% 2008 (escrowed to maturity) 1,060 1,172
4.50% 2009 840 874
4.50% 2009 (preref. 2008) 1,090 1,189
4.625% 2010 1,310 1,345
4.625% 2010 (preref. 2008) 1,690 1,854
Series 1998-B:
4.875% 2013 2,130 2,153
4.875% 2013 (preref. 2008) 330 366
MBIA insured, 5.25% 2018 2,115 2,152
MBIA insured, 5.25% 2018 (preref. 2008) 385 433
Series 2000:
6.125% 2011 2,835 3,134
6.25% 2012 4,425 4,882
Alexian Brothers Health System, Series 1999, FSA insured:
5.00% 2008 1,230 1,333
5.25% 2012 6,960 7,334
5.125% 2028 2,000 1,997
Centegra Health System, Series 1998:
5.50% 2008 1,640 1,776
5.50% 2009 2,290 2,448
5.50% 2010 2,440 2,572
5.20% 2012 2,200 2,243
5.25% 2013 2,430 2,466
5.25% 2018 5,050 4,915
The Children's Memorial Hospital, Series 1999-A, AMBAC insured:
5.75% 2010 1,835 2,036
5.75% 2011 1,690 1,853
Covenant Retirement Communities, Inc.:
Series 2001, 5.875% 2031 3,500 3,274
Series 2002-B, 6.125% 2028 1,000 973
Edward Hospital Obligated Group, Series 2001-A, FSA insured:
5.50% 2012 2,545 2,771
5.50% 2017 1,500 1,590
Evangelical Hospitals Corp., Series 1992-C, 6.25% 2022 (escrowed to maturity) 4,000 4,604
Friendship Village of Schaumburg, Series 1997-A, 5.25% 2018 4,675 4,162
Hospital Sisters Services, Inc. - Obligated Group, Series 1998-A, MBIA insured:
5.25% 2008 4,000 4,377
5.375% 2013 1,785 1,888
Lutheran Senior Ministries Obligated Group - Lutheran Hillside Village Project,
Series 2001-A, 7.375% 2031 2,000 2,013
Northwestern Memorial Hospital, Series 1994-A, 6.00% 2024 2,000 2,059
OSF Healthcare System:
Series 1993, 5.75% 2007 5,760 5,905
Series 1999, 6.25% 2019 4,500 4,768
Riverside Health System:
Series 2000, 6.85% 2029 2,500 2,681
Series 2002, 5.75% 2022 5,000 5,023
Sherman Health Systems, Series 1997, AMBAC insured, 5.50% 2010 2,595 2,804
Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997-A:
5.50% 2008 1,000 1,095
5.80% 2016 8,000 8,353
Edward Hospital Project, Series 1993-A:
5.75% 2009 1,550 1,604
6.00% 2019 1,435 1,489
Fairview Obligated Group Project, Series 1995-A:
6.50% 2006 770 795
7.40% 2023 3,000 2,975
Lutheran General Health, Series 1993-C, 6.00% 2018 2,705 2,908
Housing Dev. Auth., Multi-family Housing Bonds, Series 1992-A, 7.00% 2010 1,490 1,507
Metropolitan Pier and Exposition Auth., McCormick Place Expansion Project:
Capital Appreciation Rev. Ref. Bonds, Series 1996-A, MBIA insured, 0% 2024 5,000 1,536
Ref. Bonds, Series 2002-B, MBIA insured, 5.25% 2011 2,000 2,195
Central Lake County, Joint Action Water Agcy., Water Rev. Ref. Bonds, Series 2003,
AMBAC insured, 5.25% 2015 5,095 5,481
City of Chicago:
G.O. Bonds, Series 1999, FGIC insured:
City Colleges of Chicago Capital Improvement Project, 0% 2016 7,700 4,191
Emergency Telephone System, Ref. Bonds, 5.25% 2020 2,000 2,126
Chicago O'Hare International Airport:
General Airport Rev. Ref. Bonds, Series 1993-A, MBIA insured, 5.00% 2012 5,815 6,145
Passenger Fac. Charge Rev. Bonds, Series 1996-A, AMBAC insured, 5.60% 2010 2,000 2,193
Special Facs. Rev. Ref. Bonds (United Air Lines, Inc. Project), Series 1999-A, 5.35% 2016 (2) 3,685 737
Metropolitan Water Reclamation Dist. of Greater Chicago, Cook County:
G.O. Capital Improvement Bonds:
Series of March 1993, 5.25% 2004 5,000 5,263
Limited Tax Series D of December 2002, 5.00% 2012 2,650 2,855
G.O. Ref. Bonds, Series of March 1993:
5.30% 2005 5,325 5,778
5.50% 2010 2,275 2,575
School Reform Board of Trustees of the Board of Education, Unlimited Tax G.O. Bonds
(Dedicated Tax Rev.):
Series 1997, AMBAC insured, 6.75% 2012 1,000 1,210
Series 1997-A, AMBAC insured:
0% 2011 2,745 1,935
0% 2014 7,085 4,174
0% 2015 3,245 1,797
Series 1998-B, FGIC insured, 0% 2014 2,000 1,175
Skyway Toll Bridge Rev. Ref. Bonds, Series 1994 (preref. 2004):
6.50% 2010 9,750 10,127
6.75% 2014 4,500 4,678
Tax Increment Allocation Bonds (Central Loop Redev. Project), Capital Appreciation Bonds,
Series 2000-A, AMBAC insured:
0% 2007 7,000 6,218
0% 2008 7,000 5,914
Water Rev. Bonds, Series 1997, FGIC insured, 0% 2014 3,500 2,074
County of Cook, G.O. Capital Improvement Bonds, Series 1996, FGIC insured, 6.50% 2011 4,000 4,758
Community Unit School Dist. Number 308, Kendall, Kane and Will Counties, G.O. School Bonds,
Series 2002-B, FGIC insured, 5.25% 2015 2,775 2,983
Regional Transportation Auth., Cook, DuPage, Kane, Lake, McHenry and Will Counties, G.O. Bonds,
FGIC insured:
Series 1994-D, 7.75% 2019 4,500 6,009
Series 2002-B, 5.375% 2014 4,000 4,380
Township High School Dist. Number 205, Cook County (Thornton), G.O. Limited Capital
Appreciation Bonds,Series 1998-D, FSA insured, 0% 2008 4,730 3,996
Board of Trustees of the University of Illinois, Series 2001-A, AMBAC insured:
Auxiliary Facs. System Rev. Ref. Bonds, 5.50% 2021 2,670 2,902
Cert. of Part. (Utility Infrastructure Projects), 5.375% 2015 3,530 3,770
Community Unit School Dist. Number 365-U, Will County (Valley View), G.O. Capital Appreciation
School Bonds, Series 2002, FSA insured, 0% 2017 7,000 3,433
INDIANA - 3.09%
Dev. Fin. Auth., Rev. Ref. Bonds:
Exempt Facs. (Inland Steel Co. Project No. 15), Series 1997-A, 5.75% 2011 4,000 2,085
Pollution Control Bonds (Inland Steel Co. Project No. 12), Series 1995, 6.85% 2012 2,500 1,703
Educational Facs. Auth., Educational Facs. Rev. Bonds (University of Evansville Project),
Series 1996, 5.25% 2005 1,000 1,034
Health Fac. Fncg. Auth.:
Hospital Rev. Bonds:
Charity Obligated Group:
Series 1997-D, 5.00% 2026 (preref. 2007) 14,345 15,482
Series 1999-D, 5.25% 2016 (preref. 2009) 3,000 3,403
Clarian Health Partners, Inc., Series 1996-A, MBIA insured:
5.25% 2008 1,700 1,858
5.50% 2016 4,000 4,191
5.50% 2016 10,250 10,573
Holy Cross Health System Corp., Series 1998, MBIA insured, 5.375% 2010 7,095 7,636
Sisters of St. Francis Health Services, Inc. Project, Series 1997-A, MBIA insured, 5.00% 2008 1,000 1,088
Rev. Bonds (Ascension Health Credit Group), Series 2002-F:
5.50% 2015 1,275 1,353
5.50% 2016 1,605 1,690
5.00% 2018 1,735 1,728
State Office Building Commission:
Correctional Facs. Program Rev. Bonds, Series 1995-B, AMBAC insured, 6.25% 2012 8,490 9,938
Facs. Rev. Bonds (New Castle Correctional Fac.), Series 2002-A, FGIC insured,:
5.25% 2012 2,590 2,826
5.50% 2016 5,650 6,107
State Revolving Fund Program Bonds, Series 2001-A:
5.375% 2013 2,000 2,190
5.375% 2014 2,000 2,199
5.375% 2015 4,000 4,374
5.375% 2015 2,250 2,461
Transportation Fin. Auth., Airport Facs. Lease Rev. Bonds, Series A, 6.50% 2007 1,000 1,024
Boone County Hospital Association, Lease Rev. Bonds, Series 2001, FGIC insured, 5.00% 2010 1,255 1,362
Indianapolis Local Public Improvement Bond Bank, Series 1992-D, 6.30% 2004 2,800 2,861
The Trustees of Indiana University, Indiana University Student Fee Bonds, Series O, FGIC insured,
5.375% 2016 4,690 5,139
Trustees of Ivy Tech State College, Ivy Tech State College Student Fee Bonds, Series H, AMBAC
insured, 5.00% 2014 1,000 1,055
Marion County, Convention and Recreational Facs. Auth., Excise Taxes Lease Rental Rev. Ref.
Senior Bonds, Series 2001-A, MBIA insured, 5.50% 2015 3,370 3,666
The Trustees of Purdue University, Purdue University Student Fee Bonds, Series R, 5.375% 2015 1,250 1,349
IOWA - 0.75%
Fin. Auth.:
Hospital Rev. Bonds (Mercy Medical Center Project), Series 1999, FSA insured:
5.50% 2011 1,420 1,540
5.60% 2012 1,375 1,485
Rev. and Ref. Bonds (Mercy Health Services Obligated Group), Series 1997-V, 5.00% 2010
(escrowed to maturity) 590 636
Rev. Bonds:
Catholic Health Initiatives, Series 2000-A, 6.00% 2018 4,395 4,748
Rev. Ref. Bonds (Trinity Health Credit Group), Series 2000-B, AMBAC insured, 6.00% 2027 5,000 5,353
Single-family Mortgage Bonds, Series 1997-F, 5.55% 2016 1,475 1,522
City of Ames, Iowa, Hospital Rev. Ref. Bonds (Mary Greeley Medical Center), Series 2003,
AMBAC insured,5.00% 2013 1,000 1,053
Polk County, Rev. Bonds, Catholic Health Initiatives, Series 1997-A:
5.50% 2007 1,520 1,674
5.125% 2011 1,500 1,563
5.125% 2012 3,170 3,284
Tobacco Settlement Auth., Asset-backed bonds, Series 2001-B, 5.50% 2012 1,500 1,371
KANSAS - 0.03%
City of Lenexa (Lakeview Village, Inc. - Southridge Project), Health Care Fac. Rev. Bonds,
Series 2002-C, 6875% 2032 1,000 1,037
KENTUCKY - 0.53%
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement Rev. Bonds (Appalachian Regional
Healthcare, Inc. Project), Series 1997:
5.20% 2004 1,540 1,535
5.60% 2008 630 607
5.60% 2009 3,305 3,124
5.70% 2010 490 459
5.75% 2011 2,190 2,033
5.85% 2017 2,000 1,790
State Property and Buildings Commission, Rev. and Rev. Ref. Bonds, Project No. 69, Series C,
FSA insured, 5.00% 2004 2,090 2,167
City of Ashland, Pollution Control Rev. Ref. Bonds (Ashland Inc. Project), Series 1999, 5.70% 2009 5,250 5,355
LOUISIANA - 3.90%
Health Education Auth., (Lambeth House Project):
Rev. Bonds, Series 1996, 9.00% 2026 (preref. 2006) 9,000 11,058
Rev. Ref. Bonds, Series 1998-A:
5.50% 2010 3,265 3,117
6.15% 2018 2,000 1,851
6.20% 2028 3,950 3,487
Local Government Environmental Facs. and Community Dev. Auth., Rev. Bonds (Capital Project
and Equipment Acquisition Program), Series 2000-A, AMBAC insured, 6.30% 2030 11,500 13,305
Public Facs. Auth.:
Hospital Rev. Ref. Bonds (Franciscan Missionaries of Our Lady Health System Project),
Series 1998-A, FSA insured:
5.75% 2014 3,495 3,909
5.75% 2015 3,825 4,280
5.75% 2018 4,000 4,433
Rev. Bonds (Ochsner Clinic Foundation Project), Series 2002-A, MBIA insured, 5.375% 2015 3,000 3,247
Jefferson Parish Hospital Services (West Jefferson Medical Center), Hospital Rev. Bonds,
Series 1998-A, FSA insured:
Dist. No. 1:
5.25% 2011 2,070 2,196
5.25% 2012 1,930 2,034
Dist. No. 2, 5.25% 2011 2,000 2,139
Lake Charles Harbor and Terminal Dist., Port Facs. Rev. Ref. Bonds (Trunkline LNG Co.
Project), Serie 1992, 7.75% 2022 4,000 4,562
Parish of Morehouse, Pollution Control Rev. Ref. Bonds, Series 2001-A, 5.25% 2013 8,500 8,640
Parish of West Feliciana:
Pollution Control Rev. Bonds (Gulf States Utilities Co. Project), Series 1985-B, 9.00% 2015 2,000 2,019
Pollution Control Rev. Ref. Bonds (Entergy Gulf States, Inc. Project), Series 1999-A,
5.65% 2028 (put 2004) 13,500 13,770
Tobacco Settlement Auth., Asset-backed Bonds, Series 2001-B, 5.50% 2030 (expected maturity 2013) 29,920 22,544
MAINE - 0.18%
Health and Higher Educational Facs. Auth., Rev. Bonds, Piper Shores Issue, Series 1999-A:
7.50% 2019 3,000 3,061
7.55% 2029 2,575 2,611
MARYLAND - 0.85%
Community Dev. Administration, Dept. of Housing and Community Dev., Single-family Program Bonds,
1997 First Series, 5.25% 2005 5,815 6,111
Health and Higher Educational Facs. Auth.:
Howard County General Hospital Issue, Rev. Bonds, Series 1993 (escrowed to maturity):
5.50% 2013 2,000 2,048
5.50% 2021 1,225 1,254
PUMH of Maryland, Inc. Issue, First Mortgage Rev. Bonds (Heron Point of Chestertown),
Series 1998-A, 5.75% 2019 2,400 2,345
Anne Arundel County:
Econ. Dev. Corp., Rev. Bonds (Golf Course System), Series 2001, 8.25% 2028 2,200 2,133
Special Obligation Bonds:
Arundel Mills Project, Series 1999, 7.10% 2029 5,750 6,193
National Business Park Project, Series 2000, 7.375% 2028 1,000 1,072
Calvert County, Econ. Dev. Rev. Bonds (Asbury-Solomons Island Fac.), Series 1995, 8.625% 2024
(preref. 2005) 2,500 2,791
Frederick County, Special Obligation Bonds (Urbana Community Dev. Auth.), Series 1998, 6.625% 2025 2,500 2,546
Montgomery County, Special Obligation Bonds (West Germantown Dev. Dist.), Senior Series 2002-A,
Radian insured, 5.375% 2020 1,000 1,027
MASSACHUSETTS - 1.14%
G.O. Bonds:
Consolidated Loan of 2001, Series D, MBIA insured, 5.50% 2012 2,000 2,238
Consolidated Loan, Series 2003-A, 5.25% 2017 5,000 5,281
Massachusetts Bay Transportation Auth., General Transportation System Ref. Bonds, Series 1994-A,
7.00% 2007 5,000 5,770
Health and Educational Facs. Auth. Rev. Bonds:
Massachusetts Institute of Technology Issue, Series K, 5.50% 2022 2,000 2,179
Partners HealthCare System Issue:
Series C, 6.00% 2015 1,335 1,466
Series E, 5.00% 2014 1,085 1,119
Housing Fin. Agcy., Housing Bonds, Series 2003-B1, 4.50% 2014 1,000 1,003
Municipal Wholesale Electric Co., Power Supply Project Rev. Bonds, MBIA insured:
Nuclear Project No. 4, 5.25% 2015 2,000 2,136
Nuclear Project No. 6, Series A:
5.00% 2010 1,000 1,083
5.25% 2015 5,000 5,340
State College Building Auth., Project and Rev. Ref. Bonds, Series 2003-B, XLCA insured:
5.375% 2017 3,550 3,847
5.375% 2018 5,045 5,444
MICHIGAN - 4.04%
Hospital Fin. Auth.:
Hospital Rev. Bonds:
Detroit Medical Center Obligated Group, Series 1998-A:
5.00% 2013 1,000 686
5.00% 2014 1,525 1,019
Henry Ford Health System, Series 1999-A:
5.70% 2011 2,985 3,194
5.80% 2012 1,075 1,147
Hospital Rev. Ref. Bonds:
Daughters of Charity, National Health System, 5.50% 2005 (escrowed to maturity) 745 780
Detroit Medical Center Obligated Group, Series 1993-B, AMBAC insured, 5.00% 2006 1,000 1,045
Genesys Health System Obligated Group, Series 1995-A:
7.20% 2003 (escrowed to maturity) 1,000 1,006
8.00% 2005 (escrowed to maturity) 8,880 9,770
8.10% 2013 (preref. 2005) 5,000 5,786
8.125% 2021 (preref. 2005) 4,500 5,209
7.50% 2027 (preref. 2005) 4,520 5,088
Genesys Regional Medical Center Obligated Group, Series 1998-A, 5.50% 2004 (escrowed to maturity) 2,305 2,415
Hackley Hospital Obligated Group, Series 1998-A:
5.00% 2008 1,215 1,263
5.30% 2013 2,400 2,395
Henry Ford Health System, Series 2003-A:
5.50% 2014 2,440 2,542
5.50% 2015 5,000 5,159
5.50% 2016 2,500 2,566
McLaren Obligated Group, Series 1993-A, 5.375% 2013 2,985 3,016
Pontiac Osteopathic, Series 1994-A:
5.375% 2006 525 523
6.00% 2014 1,000 965
6.00% 2024 3,000 2,655
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 2,000 1,719
6.625% 2016 2,010 1,538
Sparrow Obligated Group, Series 2001:
5.25% 2010 1,000 1,058
5.25% 2011 1,285 1,348
Trinity Health Credit Group, Series 2002-C, 5.375% 2023 1,000 1,005
Variable Rate Rev. Bonds (Ascension Health Credit Group):
Series 1999-B3, 5.30% 2033 (put 2006) 5,625 6,222
Series 1999-B4, 5.375% 2033 (put 2007) 3,000 3,295
Municipal Bond Auth.:
Public School Academy Facs. Program Rev. Bonds:
Detroit Academy of Arts and Sciences Project, Series 2001-A:
7.90% 2021 1,000 946
8.00% 2031 1,000 936
YMCA Service Learning Academy Project, Series 2001, 7.75% 2031 4,150 4,133
State Revolving Fund Rev. Bonds, Clean Water Revolving Fund Rev. Bonds, Series 2001, 5.25% 2016 3,000 3,203
Public Power Agency, Belle River Project Rev. Ref. Bonds, Series 2002-A, MBIA insured, 5.25% 2018 2,000 2,145
South Central Power Agcy., Power Supply System Rev. Ref. Bonds, Series 2002, AMBAC insured,
5.00% 2009 2,000 2,211
State Building Auth., Rev. Ref. Bonds (Facs. Program), Series 2001-I, 5.50% 2016 3,000 3,268
State Trunk Line Fund Bonds, Series 2001-A, 5.50% 2015 4,000 4,362
Strategic Fund, Limited Obligation Rev. Ref. Bonds (Detroit Edison Co. Pollution Control
Bonds Project)Series 1995-CC, AMBAC insured, 4.85% 2030 (put 2011) 2,500 2,651
Econ. Dev. Corp. of the Township of Cornell, Environmental Improvement Rev. Ref. Bonds
(MeadWestvaco-Escanaba Paper Company Project), Series 2002, 5.875% 2018 4,500 4,563
City of Detroit:
G.O. Rev. Bonds (Unlimited Tax), Series 1995-B:
7.00% 2004 2,500 2,580
6.25% 2008 1,730 1,823
6.25% 2009 1,195 1,251
6.25% 2010 1,250 1,301
Downtown Dev. Auth., Tax Increment Bonds (Dev. Area No. 1 Projects), Series 1996-C,
6.20% 2017 (preref. 2006) 2,900 3,305
School Dist. of the City of Detroit, Wayne County, School Building and Site Improvement Bonds:
Ref. Bonds, Series 1998-C, FGIC insured, 5.25% 2025 1,955 2,042
Unlimited Tax G.O., Series 2001-A, Michigan School Bond Loan Fund insured, 5.00% 2004 2,420 2,486
City of Flint, Hospital Building Auth. (Hurley Medical Center):
Rev. Ref. Bonds, Series 1998-A, 5.25% 2016 1,250 1,106
Rev. Rental Bonds, Series 1998-B, 5.375% 2028 1,000 811
Kent Hospital Fin. Auth. Rev. Bonds (Spectrum Health):
Series 2001-A, 5.50% 2014 1,000 1,062
Series 2001-B, 5.50% 2017 1,100 1,146
Regents of the University of Michigan, Hospital Rev. Ref. Bonds, Series 2002, 5.00% 2005 5,975 6,399
City of Royal Oak, Hospital Fncg. Auth., Hospital Rev. Ref. Bonds (William Beaumont Hospital),
Series 1993-G, 5.25% 2019 3,000 3,007
MINNESOTA - 0.04%
Housing Fin. Agcy., Single-family Mortgage Bonds, Series 1994-E, 5.60% 2013 1,195 1,225
MISSISSIPPI - 0.83%
G.O. Ref. Bonds, Series 2003-A:
5.25% 2013 2,000 2,201
5.25% 2014 4,000 4,377
5.25% 2015 3,000 3,278
5.25% 2017 8,000 8,671
Dev. Bank, Special Obligation Bonds (Capital Projects and Equipment Acquisition Program),
Series 2001-A, AMBAC insured, 5.00% 2031 7,500 7,411
Hospital Equipment and Facs. Auth., Rev. Bonds (Forrest County General Hospital Project),
Series 2000, FSA insured, 5.50% 2027 1,000 1,029
MISSOURI - 0.17%
Transportation Dev. Dist., 370 Missouri Bottom Road/Taussig Road (Hazelwood, St. Louis County),
Transpoon Rev. B Series 2002, 7.20% 2033 5,500 5,489
NEBRASKA - 0.00%
City of Kearney, Industrial Dev. Rev. Bonds (The Great Platte River Road Memorial Foundation
Project), Series 1998, 6.75% 2028 (2) 2,750 47
NEVADA - 2.41%
Housing Division, Single-family Mortgage Bonds, Series 1999-A1, 4.75% 2012 570 593
Clark County:
G.O. (Limited Tax) Banks Bonds, Series 2001, FGIC insured, 5.50% 2016 3,000 3,262
Special Improvement, Local Improvement Bonds:
Dist. No. 121 (Southern Highlands Area), Series 1999:
7.00% 2009 2,440 2,525
7.50% 2019 13,665 14,645
Dist. No. 128 (The Summerlin Centre), Series 2001-B, 6.75% 2021 1,815 1,864
City of Henderson:
Health Fac. Rev. Bonds (Catholic Healthcare West):
Series 1998-A, 5.375% 2026 7,000 6,283
Series 1999-A, 6.75% 2020 1,480 1,556
Local Improvement, Limited Obligation Improvement Bonds:
Dist. No. T-4C (Green Valley Properties), Limited Obligation Ref. Bonds, Series 1999-A:
5.65% 2009 1,495 1,542
5.75% 2013 3,990 3,952
5.90% 2018 2,990 2,944
Dist. No. T-14 (Anthem Master Planned Community):
5.10% 2012 1,640 1,576
5.55% 2017 3,730 3,550
5.80% 2023 6,000 5,718
City of Las Vegas:
G.O. (Limited Tax) Sewer and Flood Control Bonds, Series 2001, FGIC insured, 5.375% 2015 2,855 3,082
Redev. Agcy., Tax Increment Rev. Ref. Bonds (Fremont Street Project), Series 2003-A, 5.00% 2014 3,920 3,824
Summerlin Area, Local Improvement Bonds:
Special Improvement Dist. No. 808, Series 2001:
6.00% 2010 1,000 1,033
6.375% 2014 2,075 2,143
6.75% 2021 4,500 4,645
Special Improvement Dist. No. 809, Series 2003, 5.65% 2023 1,400 1,308
Las Vegas Monorail Project Rev. Capital Appreciation Bonds, 1st Tier Series 2000, AMBAC insured,
0% 2010 3,545 2,754
City of North Las Vegas, Special Improvement Dist. No. 60 (Aliante), Local Improvement Bonds,
Series 2002:
6.125% 2017 5,000 4,967
6.40% 2022 1,000 990
Truckee Meadows Water Auth., Water Rev. Bonds, Series 2001-A, FSA insured, 5.50% 2016 3,105 3,371
NEW HAMPSHIRE - 0.03%
Health and Education Facs. Auth., Exeter Hospital Obligated Group Issue, Series 2001-A, 5.75% 2031 1,000 1,013
NEW JERSEY - 2.07%
G.O. Bonds (Various Purposes), Series E, 5.50% 2004 6,145 6,332
G.O. Ref. Bonds, Series E, 5.00% 2004 7,540 7,805
Econ. Dev. Auth:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation Improvement Dist. Project
(City of Elizabeth), Series 1998-A, (preref. 2014):
6.375% 2018 1,000 1,192
6.375% 2031 6,500 7,805
First Mortgage Rev. Fixed-rate Bonds:
Fellowship Village Project, Series 1995-A, 9.25% 2025 (preref. 2005) 7,000 7,871
Winchester Gardens at Ward Homestead Project, Series 1996-A:
8.50% 2016 4,000 4,211
8.625% 2025 3,500 3,678
First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998-A:
4.95% 2005 1,230 1,261
5.50% 2025 3,000 2,775
5.50% 2018 2,295 2,225
Retirement Community Rev. Bonds:
Cedar Crest Village, Inc. Fac.:
Series 2001-A, 7.25% 2031 9,000 9,162
Series 2001-B, 5.50% 2006 1,000 985
Seabrook Village, Inc. Fac., Series 2000-A, 8.25% 2030 6,000 6,254
Education Facs. Auth. Dormitory Safety Trust Fund Bonds, Series 2001-A, 5.00% 2005 3,785 3,990
Gloucester County Improvement Auth., Solid Waste Resource Recovery Rev. Ref. Bonds
(Waste Management, Inc. Project), Series 1999-A, 6.85% 2029 (put 2009) 1,585 1,777
NEW MEXICO - 0.13%
Supplemental Severance Tax Bonds, Series 2002-A, 5.00% 2010 3,945 4,245
NEW YORK - 9.71%
Dormitory Auth.:
Center for Nursing/Rehabilitation, Inc. Rev. Bonds, FHA insured, 5.45% 2017 2,100 2,232
City University System Consolidated Third General Resolution Rev. Bonds, Series 1998-2,
AMBAC insured, 5.50% 2008 2,000 2,225
Edgar Health Care Center (Nursing Home) Rev. Bonds, FHA insured, 4.90% 2013 2,375 2,488
Mental Health Services Facs. Improvement Rev. Bonds:
Series 1997-A, 6.00% 2007 1,750 1,970
Series 1997-B:
6.00% 2007 2,490 2,803
6.00% 2007 (preref. 2007) 10 11
5.60% 2008 1,300 1,434
Series 1998-B:
5.375% 2009 1,270 1,399
5.00% 2010 1,495 1,598
5.00% 2010 1,530 1,635
Series 1998-C, 5.00% 2010 1,760 1,882
Secured Hospital:
Rev. Bonds (Interfaith Medical Center), Series 1998-D, 5.25% 2007 2,000 2,179
Rev. Ref. Bonds:
Bronx-Lebanon Hospital Center, Series 1998-E, MBIA insured, 5.20% 2014 8,520 8,909
Brookdale Hospital, Series 1998-J, 5.125% 2009 2,500 2,728
St. Luke's-Roosevelt Hospital Center, Mortgage Hospital Rev. Bonds, Series 2000-A,
FHA insured, 5.75% 2021 5,000 5,438
State University Educational Facs. Rev. Bonds:
Series 1990-A, 7.50% 2013 3,500 4,401
Series 1990-B:
7.50% 2011 1,160 1,402
7.50% 2011 (preref. 2010) 560 699
Series 1997, 6.00% 2007 3,000 3,369
Third General Resolution Rev. Bonds (State University Educational Facs. Issue),
Series 2002-B (put 2012):
5.25% 2023 13,000 13,860
6.00% 2029 10,000 11,240
Environmental Facs. Corp., State Clean Water and Drinking Water, Revolving Funds Rev. Bonds:
Series 2002-I, 5.25% 2016 2,295 2,461
New York City Municipal Water Fin. Auth. Projects, Second Resolution Bonds, Series 2002-K,
5.50% 2017 5,000 5,594
Health and Hospitals Corp., Health System Bonds, Series 2002-A, FSA insured:
5.50% 2015 2,000 2,180
5.50% 2016 2,605 2,828
Housing Fin. Agcy.:
Health Facs. Rev. Ref. Bonds (New York City), Series 1996-A, 6.00% 2006 3,000 3,312
Service Contract Obligation Rev. Ref. Bonds, Series 1997-C, 5.20% 2010 1,750 1,874
Local Government Assistance Corp., Series 1991-C, Capital Appreciation Bonds, 0% 2005 5,000 4,881
Metropolitan Transportation Auth., State Service Contract Ref. Bonds, Series 2002-A, 5.125% 2024 8,000 8,022
State Medical Care Facs. Fin. Agcy.:
Hospital Insured Mortgage Rev. Ref. Bonds, Series 1994-A, FHA insured:
5.10% 2010 1,045 1,082
5.25% 2014 5,000 5,183
St. Luke's-Roosevelt Hospital Center, Mortgage Rev. Bonds, Series 1993-A, FHA insured,
5.60% 2013 11,120 11,376
State Thruway Auth.:
Local Highway and Bridge Service Contract Bonds:
Series 2001, 5.25% 2015 2,500 2,676
Series 2002, 5.50% 2015 13,250 14,416
State Personal Income Tax Rev. Bonds:
Econ. Dev. and Housing, Series 2003-A, 5.00% 2011 5,000 5,418
Transportation, Series 2002-A:
5.50% 2015 5,000 5,442
5.50% 2016 7,000 7,587
Urban Dev. Corp.:
Correctional Capital Facs. Rev. Bonds:
Ref. Series 1993-A, 5.30% 2005 1,800 1,893
Series 7, 5.25% 2009 1,375 1,489
Correctional and Youth Facs. Service Contract Rev. Bonds (Empire State Dev. Corp.),
Series 2002-A (put 2011):
5.00% 2017 13,000 13,840
5.50% 2017 5,000 5,481
Castle Rest Residential Health Care Fac., Mortgage Rev. Bonds, Series 1997-A, FHA insured,
5.60% 2017 1,700 1,744
Long Island Power Auth., Electric System General Rev. Bonds:
Series 2003-B:
5.25% 2012 8,615 9,224
5.25% 2013 1,500 1,592
5.25% 2014 4,500 4,744
Series 2003-C:
5.50% 2014 2,400 2,571
5.50% 2021 1,000 1,033
City of New York:
G.O. Bonds:
Fiscal 1995 Series F (preref. 2005):
6.60% 2010 2,000 2,175
6.625% 2025 1,500 1,632
Fiscal 1996 Series E, 6.50% 2006 3,000 3,298
Fiscal 2001:
Series F, 5.25% 2011 6,260 6,657
Series H, 5.25% 2016 3,510 3,584
Fiscal 2002:
Series B, 5.50% 2012 7,810 8,357
Series C, 5.25% 2021 6,720 6,768
Series E, 5.75% 2012 1,500 1,640
Series G:
XLCA insured, 5.50% 2012 1,000 1,106
5.625% 2013 5,000 5,360
Fiscal 2003 Series A, 5.125% 2010 3,000 3,199
Transitional Fin. Auth., Future Tax Secured Bonds:
Fiscal 1998:
Series A, 5.00% 2027 (preref. 2007) 1,440 1,601
Series B, 4.50% 2027 5,000 4,530
Series C, 5.00% 2018 2,000 2,046
Fiscal 2001 Series C, 5.375% 2015 2,000 2,155
Ref. Bonds, Fiscal 2003:
Series A, 5.50% 2026 29,300 32,160
Series B, 5.25% 2029 (expected maturity 2011) 11,600 12,462
Suffolk County Industrial Dev. Agcy., Continuing Care Retirement Community Rev. Bonds
(Peconic Landing at Southhold, Inc. Project), Series 2000, 8.00% 2030 2,000 1,967
Triborough Bridge and Tunnel Auth.:
General Purpose and Rev. Bonds, Series Y, 6.00% 2012 1,000 1,156
General Rev. Ref. Bonds, Series 2002-B:
5.00% 2010 3,500 3,818
5.25% 2015 3,000 3,273
5.25% 2016 4,100 4,366
NORTH CAROLINA - 2.46%
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds:
Series 1993-B:
6.00% 2006 3,120 3,354
7.25% 2007 5,425 6,139
7.00% 2008 10,720 12,162
6.125% 2009 2,000 2,203
6.00% 2022 2,815 2,986
6.00% 2026 1,990 2,085
MBIA insured, 6.00% 2026 2,500 2,832
Series 1993-C, 5.00% 2021 2,300 2,177
Series 1993-D, 5.60% 2016 1,000 1,006
Series 1999-B:
5.55% 2014 2,800 2,895
5.60% 2015 2,500 2,580
5.65% 2016 2,000 2,058
5.70% 2017 4,775 4,904
Series 1999-D, 6.75% 2026 3,500 3,730
Series 2003-A:
5.50% 2011 1,000 1,052
5.50% 2012 2,500 2,617
Series 2003-C:
5.25% 2013 2,000 2,044
5.375% 2016 2,500 2,537
Series 2003-D:
5.375% 2010 1,000 1,053
5.50% 2014 2,500 2,602
5.50% 2014 2,000 2,081
Municipal Power Agcy. Number 1 (Catawba Electric Rev. Bonds):
Series 1999-A, MBIA insured, 6.00% 2008 3,935 4,461
Series 1999-B, 6.625% 2010 1,475 1,681
Series 2003-A:
AMBAC insured, 5.25% 2015 2,000 2,154
FSA insured, 5.25% 2016 3,000 3,209
County of Catawba, Hospital Rev. Ref. Bonds (Catawba Memorial Hospital Project), Series 1999
AMBAC insured, 4.60% 2010 1,000 1,069
County of New Hanover, Hospital Rev. Bonds (New Hanover Regional Medical Center Project),
Series 1999, MBIA insured, 5.25% 2011 1,995 2,157
OHIO - 0.65%
Higher Educational Fac. Commission, Adjustable Rev. Bonds (Kenyon College 2002 Project):
4.85% 2037 (put 2014) 2,000 2,012
5.05% 2037 (put 2016) 2,300 2,327
Water Dev. Auth., Water Pollution Control Loan Fund Rev. Bonds, Water Quality, Series 2002,
5.25% 2015 2,000 2,158
County of Knox, Hospital Facs. Rev. Ref. Bonds (Knox Community Hospital), Series 1998,
Radian insured, 4.60% 2007 2,175 2,300
County of Lorain:
Health Care Facs. Rev. Ref. Bonds (Kendal at Oberlin), Series 1998-A, 5.25% 2021 2,000 1,791
Hospital Facs. Rev. Bonds (Catholic Healthcare Partners):
Ref. and Improvement Bonds, Series 2001-A, 5.25% 2008 2,000 2,155
Series 2002-A:
5.50% 2013 1,000 1,058
5.50% 2016 2,665 2,774
County of Montgomery, Hospital Facs. Rev. Bonds (Kettering Medical Center Network Obligated
Group), Series 1999, 6.75% 2022 1,000 1,059
County of Richland, Hospital Facs. Rev. Improvement Bonds (MedCentral Health System
Obligated Group), Series 2000-B:
6.375% 2022 1,250 1,312
6.375% 2030 2,000 2,090
OKLAHOMA - 0.34%
Health System Rev. Bonds, Baptist Medicine Center of Oklahoma, Series 1995-C, AMBAC insured,
6.375% 2009 2,500 2,740
Industries Auth., Rev. Ref. Bonds:
Health Facs. (Sisters of Mercy Health System, St. Louis, Inc.), Series 1993-A, 5.00% 2013 2,505 2,525
Health System (Obligated Group consisting of INTEGRIS Baptist Medical Center, Inc.,
INTEGRIS South Oklahoma City Hospital Corp. and INTEGRIS Rural Health, Inc.), Series 1995-D,
AMBAC insured, 6.00% 2009 2,500 2,837
Tulsa Industrial Auth., Hospital Rev. and Ref. Bonds, St. John Medical Center Project,
Series 1996, 5.375% 2017 3,000 3,053
OREGON - 0.46%
City of Klamath Falls, Electric Rev. Ref. Bonds (Klamath Cogeneration Project), Series 1999:
5.75% 2013 3,000 2,979
5.875% 2016 3,500 3,392
6.00% 2025 9,090 8,641
PENNSYLVANIA - 3.59%
Convention Center Auth., Rev. Ref. Bonds, Series 1994-A, 6.25% 2004 4,375 4,474
Higher Educational Facs. Auth., UPMC Health System Rev. Bonds, Series 1999-A, FSA insured,
5.00% 2009 2,000 2,173
Turnpike Commission, Oil Franchise Tax Senior Rev. Bonds, Series 2003-A, MBIA insured,
3.00% 2004 3,450 3,536
Allegheny County:
Cert. of Part. (ACJCT Fac. Holdings L.P.), AMBAC insured, 5.00% 2019 2,150 2,189
Hospital Dev. Auth., AMBAC insured:
Health System Rev. Bonds, Catholic Health East Issue, Series 1998-A,:
5.50% 2008 1,000 1,118
5.00% 2010 2,705 2,891
UPMC Health System Rev. Ref. Bonds, Series 1999-B, 5.25% 2008 5,160 5,719
Port Auth. of Allegheny County, Special Rev. Transportation Bonds, Ref. Series 2001,
FGIC insured, 5.50% 2015 1,000 1,089
Chester County, Health and Education Facs. Auth., Health System Rev. Bonds (Jefferson Health
System), Series 1997-B, 5.375% 2027 4,150 4,095
Delaware County Auth., Rev. Bonds, Catholic Health Systems, Series A, AMBAC insured, 5.00% 2010 2,465 2,634
Erie County, Industrial Dev. Auth., Environmental Improvement Rev. Ref. Bonds (International
Paper Co. Projects), Series 2002-A, 4.90% 2009 2,200 2,299
Lehigh County, General Purpose Auth. Rev. Bonds (KidsPeace Obligated Group), Series 1998,
ACA insured, 5.70% 2009 1,500 1,653
Montgomery County Industrial Dev. Auth. Retirement Community Rev. Bonds (ACTS Retirement
Life Communities, Inc. Obligated Group):
Series 1996-B, 5.75% 2017 2,000 2,055
Series 1998, 5.25% 2028 17,500 16,221
Ref. Bonds, Series 1996-A, 5.875% 2022 2,890 2,927
Hospitals and Higher Education Facs. Auth. of Philadelphia:
Frankford Hospital, Series A (escrowed to maturity):
6.00% 2014 3,640 3,807
6.00% 2023 4,000 4,203
Health System Rev. Bonds (Jefferson Health System):
Series 1997-A:
5.50% 2006 2,285 2,456
5.50% 2007 1,995 2,163
5.50% 2008 2,000 2,177
5.00% 2009 1,000 1,059
5.00% 2010 1,000 1,040
Series 1999-A, 5.00% 2018 1,475 1,440
Hospital Rev. Bonds (Temple University Hospital):
Series 1993-A, 6.50% 2008 12,320 13,031
Series 1997, 5.70% 2009 1,000 1,009
Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral Village Project), Series 1998,
5.50% 2010 2,815 2,810
City of Pittsburgh, G.O. Ref. Bonds, Series 1996-A, MBIA insured, 6.00% 2005 4,000 4,276
City of Pottsville Hospital Auth., Hospital Rev. Bonds (The Pottsville Hospital and Warne
Clinic), Series 1994, 7.25% 2024 (preref. 2004) 8,500 9,081
Scranton-Lackawanna Health and Welfare Auth., City of Scranton, Lackawanna County, Hospital
Rev. Bonds (Moses Taylor Hospital Project), Series 1997:
6.05% 2010 1,000 634
6.15% 2012 2,245 1,409
6.15% 2014 3,000 1,870
6.20% 2017 3,000 1,857
Westmoreland County, Health Care Fac. Rev. Bonds (Redstone Presbyterian SeniorCare
Obligated Group), Fixed Rate Rev. Bonds, Series 2000-B, 8.125% 2030 6,500 7,020
PUERTO RICO - 0.04%
The Children's Trust Fund, Tobacco Settlement Asset-backed Bonds, Series 2000,
5.75% 2020 (preref. 2010) 1,245 1,390
RHODE ISLAND - 0.60%
Depositors Econ. Protection Corp., Special Obligation Bonds, Series 1993-A:
MBIA insured, 5.75% 2012 4,850 5,567
5.75% 2021 2,715 3,021
5.75% 2021 (escrowed to maturity) 1,210 1,346
Health and Educational Building Corp., Hospital Fncg. Rev. Bonds, Lifespan Obligated
Group Issue, Series 2002:
6.375% 2021 4,000 4,070
6.50% 2032 5,385 5,387
SOUTH CAROLINA - 1.22%
Econ. Dev. Auth.:
Hospital Ref. and Improvement Rev. Bonds (Palmetto Health Alliance), Series 2003-C, 6.375% 2034 3,000 2,940
Hospital Rev. Bonds (Georgetown Memorial Hospital), Series 1998, AMBAC insured, 5.75% 2010 2,000 2,079
Florence County, Hospital Rev. Bonds (McLeod Regional Medical Center Project), Series 1998-A,
MBIA insured, 5.25% 2010 2,785 3,008
Georgetown County, Pollution Control Rev. Ref. Bonds (International Paper Company Projects),
Series 1999-A, 5.125% 2012 3,000 3,054
Lexington County Health Services Dist. Inc., Hospital Rev. Ref. and Improvement Bonds,
Series 1997, FSA insured:
5.50% 2007 2,000 2,226
5.00% 2009 1,000 1,092
Piedmont Municipal Power Agcy., Electric Rev. Bonds:
Ref. Series 1991, FGIC insured, 6.25% 2021 4,640 5,363
Ref. Series 1999-A, 5.25% 2015 8,420 8,059
Tobacco Settlement Rev. Management Auth., Tobacco Settlement Asset-backed Bonds,
Series 2001-B, 6.00% 2022 (expected maturity 2012) 14,090 11,813
SOUTH DAKOTA - 0.53%
Building Auth., Rev. Capital Appreciation Bonds, Series 1996-A, AMBAC insured, 0% 2014 3,780 2,233
Health and Educational Facs. Auth., Rev. Ref. Bonds (Rapid City Regional Hospital Issue),
Series 1999, MBIA insured:
5.00% 2007 2,045 2,218
5.00% 2009 4,010 4,282
5.00% 2010 4,175 4,390
Housing Dev. Auth., Homeownership Mortgage Bonds:
Series 1995-A, 5.80% 2014 3,000 3,065
Series 2002-F, 4.30% 2014 1,030 1,018
TENNESSEE - 1.73%
Fort Sanders Alliance Obligated Group, The Health, Educational and Housing Facs. Board of
the County of Knox, Hospital Rev. Bonds, Series 1990-A, MBIA insured, 6.25% 2013 2,000 2,277
Memphis-Shelby County Airport Auth., Special Facs. Rev. Ref. Bonds (Federal Express Corp.):
Series 2001, 5.00% 2009 1,000 1,069
Series 2002, 5.05% 2012 9,500 9,875
Health and Education Facs. Board of the Metropolitan Governernment of Nashville and Davidson
County, Rev. Bonds (Blakeford Project), Series 1994-A, 9.25% 2024 (preref. 2004) 6,600 7,167
Shelby County, G.O. Ref. Capital Appreciation Bonds, Series 1996-B, 0% 2011 3,750 2,685
The Health, Educational and Housing Fac. Board of the County of Shelby, Hospital Rev. Bonds
(Methodist Healthcare), Series 2002, 6.00% 2020 9,500 9,890
The Health, Educational and Housing Facs. Board of the County of Sullivan, (Wellmonth Health
System Project):
Hospital Rev. Bonds, Series 2002:
6.75% 2014 2,360 2,627
6.75% 2016 2,690 2,961
6.25% 2022 2,000 2,061
6.25% 2032 6,000 6,109
Hospital Rev. Ref. Bonds, Series 2003, Radian insured:
5.00% 2011 6,000 6,235
5.00% 2013 3,000 3,068
TEXAS - 12.15%
Public Fin. Auth., G.O. Ref. Bonds, Series 2001-A, 5.375% 2016 2,540 2,728
Turnpike Auth., Central Turnpike System, Second Tier Bond Anticipation Notes, Series 2002,
5.00% 2008 10,000 10,972
Water Financial Assistance and Ref. Bonds, Series 2003-C, 5.00% 2015 1,500 1,590
Amarillo Health Facs. Corp., Hospital Rev. Bonds (Baptist St. Anthony's Hospital Corp. Project),
Series 1998, FSA insured, 5.50% 2015 6,320 6,844
City of Austin (Travis and Williamson Counties):
Electric Utility Rev. Ref. Bonds, Series 2003, MBIA insured, 5.00% 2011 1,000 1,082
Water and Wastewater System Rev. Ref. Bonds, Series 2001-B, FSA insured, 5.75% 2016 6,800 7,521
Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement
Services, Inc. Obligated Group Project), Series 1998 :
5.25% 2009 1,620 1,724
5.00% 2010 1,705 1,766
5.25% 2028 9,400 8,760
Brazos River Auth., Rev. Ref. Bonds (Houston Industries Incorporated Project), MBIA insured,
4.90% 2015 3,360 3,486
Brazos River Harbor Navigation, Dist. of Brazoria County, Environmental Facs. Rev. Bonds
(The Dow Chemical Company Project), Series 2002-B3, 5.15% 2033 (put 2009) 6,600 6,824
Industrial Dev. Corp. of Port of Corpus Christi, Rev. Ref. Bonds (Valero Refining and
Marketing Co. Project), Series 1997-C, 5.40% 2018 7,800 7,717
Cypress-Fairbanks Independent School Dist. (Harris County):
Unlimited Tax Ref., Capital Appreciation Bonds, Series 1993-A, 0% 2013 6,675 4,341
Unlimited Tax Ref. and Schoolhouse Bonds, Series 2001, 5.25% 2016 3,500 3,709
City of Dallas :
G.O. Limited Tax:
5.00% 2014 3,400 3,585
5.00% 2015 2,000 2,098
Dallas, Denton, Collin and Rockwall Counties:
G.O. Ref. and Improvement Bonds, Series 1998, 5.00% 2012 1,000 1,057
Waterworks and Sewer System Rev. Ref. Bonds, Series 2002, 5.00% 2009 1,285 1,418
Dallas County, Unlimited Tax Ref. and Improvement Bonds, G.O. Ref. Bonds, Series 2001-A:
5.375% 2013 2,465 2,683
5.375% 2015 3,725 4,015
DeSoto Independent School Dist. (Dallas County), Unlimited Tax School Building and
Ref. Bonds, Series 2001:
0% 2018 2,835 1,308
0% 2019 3,335 1,439
0% 2020 3,335 1,344
Eanes Independent School Dist. (Travis County), Unlimited Tax School Building Bonds, Series 2001:
5.50% 2014 2,050 2,239
5.50% 2015 2,150 2,337
5.50% 2016 1,125 1,219
Garland Independent School Dist. (Dallas County), Unlimited Tax Ref. and School Building Bonds,
Series 2001:
5.50% 2013 2,170 2,373
5.50% 2015 2,420 2,624
Harris County :
G.O. and Rev. Ref. Bonds, Series 2002, MBIA insured, 0% 2015 6,000 3,363
Unlimited Tax Road G.O. Ref. Bonds, Series 2001, 5.375% 2015 2,500 2,696
Health Facs. Dev. Corp.:
Hospital Rev. Bonds:
Memorial Hermann Healthcare System, Series 2001-A, 6.375% 2029 13,900 14,740
Memorial Hermann Hospital System Project, Series 1998, FSA insured:
5.25% 2008 1,890 2,066
5.50% 2011 5,000 5,476
5.50% 2014 4,790 5,214
5.50% 2015 10,325 11,264
Rev. Bonds:
CHRISTUS Health, Series 1999-A, MBIA insured, 5.50% 2010 3,380 3,675
St. Luke's Episcopal Hospital:
Series 2001-A:
5.625% 2014 1,000 1,063
5.625% 2015 2,500 2,643
5.625% 2016 2,700 2,836
5.625% 2018 2,000 2,077
5.50% 2020 4,000 4,079
5.50% 2021 5,740 5,834
Series 2002:
5.50% 2015 1,000 1,055
5.50% 2016 1,000 1,048
5.50% 2018 1,105 1,142
Permanent Improvement and Ref. Bonds, Series 2002:
5.00% 2010 2,000 2,184
5.25% 2016 2,700 2,878
Hidalgo County Health Services Corp., Hospital Rev. Bonds (Mission Hospital, Inc. Project),
Series 1996:
7.00% 2008 760 800
6.75% 2016 1,740 1,736
City of Houston, FSA insured:
Airport System Subordinate Lien Rev. Bonds, Series 2002-A:
5.50% 2015 3,000 3,259
5.00% 2022 3,000 2,998
Water and Sewer System, Junior Lien Rev. Ref. Bonds, Series 1998-A, 0% 2019 3,000 1,275
Jefferson County, Health Facs. Dev. Corp., Baptist Hospitals of Southeast Texas, FHA insured
Mortgage Rev. Bonds, Series 2001, AMBAC insured, 5.20% 2021 4,000 4,056
Katy Independent School Dist. (Fort Ben, Harris and Waller Counties):
Limited Tax Ref. Bonds, Series 2001:
5.50% 2015 1,290 1,399
5.50% 2016 1,805 1,951
Unlimited Tax School Building Bonds:
Ref. Capital Appreciation Bonds, Series 2001, 0% 2012 6,040 4,054
Series 2003-A, 5.00% 2016 2,575 2,690
Ladero Independent School Dist. (Webb County), Unlimited Tax School Building and Ref. Bonds,
Series 2001, 5.375% 2015 2,000 2,155
Lewisville Independent School Dist. (Denton County), Unlimited Tax School Building and Ref.
Bonds, Series 2001, 5.50% 2015 2,000 2,174
Mansfield Independent School Dist. (Tarrant and Johnson Counties), Unlimited Tax School
Building and Ref. Bonds, Series 2001, 5.50% 2016 2,635 2,849
McKinney Independent School Dist. (Collin County), School Building Unlimited Tax Bonds,
Series 2001, 5.125% 2016 2,075 2,175
Midway Independent School Dist. (McLennan County), Unlimited Tax School Building and Ref. Bonds,
Capital Appreciation, Series 2000, 0% 2019 5,000 2,173
Northeast Medical Clinic, Hospital Auth., County of Humble, Rev. Bonds, FSA insured, 6.25% 2012 1,000 1,158
Northside Independent School Dist.:
Unlimited Tax School Building and Ref. Bonds, Series 2001, 5.50% 2014 4,000 4,357
Variable Rate Unlimited Tax School Building Bonds, Series 2001-A:
5.375% 2016 2,560 2,745
5.375% 2017 2,695 2,872
5.375% 2018 2,835 3,002
City of Plano (Collin and Denton Counties), G.O. Ref. and Improvement Bonds, Series 2002,
4.00% 2004 5,975 6,153
Round Rock Independent School Dist. (Williamson and Travis Counties), Unlimited Tax School
Building Bonds, Series 2001-A,:
5.50% 2015 2,000 2,174
5.50% 2016 2,500 2,708
5.50% 2022 (put 2011) 9,000 9,317
Sam Rayburn Municipal Power Agcy., Power Supply System Rev. Ref. Bonds, Series 2002:
RADIAN insured, 5.125% 2017 8,000 8,023
6.00% 2021 1,000 1,018
City of San Antonio:
General Improvement and Ref. Bonds:
Series 2001:
5.25% 2015 8,425 8,972
5.25% 2016 8,385 8,891
Series 2002, 3.00% 2004 1,000 1,009
General Improvement Forward Ref. Bonds, Series 2002, 5.00% 2011 4,000 4,336
Electric and Gas Rev. Ref. Bonds (Forward Delivery), New Series 2003, 5.25% 2011 9,000 9,708
Electric and Gas Systems Rev. and Ref. Bonds:
New Series 1998-A:
5.25% 2015 3,300 3,516
5.25% 2015 (preref. 2009) 1,775 1,992
New Series 2002:
5.375% 2015 9,000 9,844
5.375% 2016 4,650 4,978
Bexar County, Water System Rev. and Ref. Bonds, Series 2001, 5.00% 2016 1,000 1,038
San Antonio Independent School Dist.:
Unlimited Tax Ref. Bonds, Series 2001-B:
5.375% 2013 4,260 4,634
5.375% 2015 4,390 4,732
Unlimited Tax School Building Bonds, Series 2001-A:
5.375% 2015 1,515 1,633
5.375% 2016 1,705 1,830
Spring Branch Independent School Dist. (Harris County), Limited Tax Schoolhouse and
Ref. Bonds, Series 2001:
5.375% 2015 3,875 4,166
5.375% 2016 3,070 3,288
Tarrant County, Health Facs. Dev. Corp.:
Health Resources System Rev. Bonds, Series 1997-A, MBIA insured:
5.50% 2007 4,000 4,381
5.75% 2015 3,000 3,334
Hospital Rev. Bonds (Baylor Health Care System Project), Series 2002-A:
5.00% 2019 5,500 5,365
5.25% 2022 3,000 2,976
Tarrant Regional Water Dist., A Water Control and Improvement Dist., Water Rev. Ref.
and Improvement Bonds, Series 2002, FSA insured:
5.00% 2010 1,000 1,085
5.00% 2013 3,000 3,204
Board of Regents of the Texas A&M University System, Permanent University Fund Ref. Bonds,
Series 2003,5.25% 2016 5,000 5,371
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6.125% 2023 2,000 1,992
Board of Regents of The University of Texas System:
Permanent University Fund Bonds, Series 2002-B:
5.25% 2015 7,435 7,971
5.25% 2016 2,315 2,465
Rev. Fncg. System Bonds
Series 1996-B, 5.00% 2011 3,750 4,008
Series 2001-B, 5.375% 2013 2,000 2,177
Series 2001-C, 5.375% 2016 4,000 4,294
Series 2003-B:
5.25% 2010 1,895 2,100
5.25% 2011 3,105 3,424
5.375% 2016 1,000 1,086
Rev. Ref. Fncg. System Bonds, Series 2002-B, 5.25% 2016 7,280 7,912
Waco Health Facs. Dev. Corp., Rev. Ref. Bonds (Hillcrest Health System), Series 2003,
MBIA insured, 5.00% 2012 1,895 2,004
Weatherford Independent School Dist. (Parker County), Unlimited Tax School Building and
Ref. Bonds, Capital Appreciation, Series 2000, 0% 2018 2,625 1,251
UTAH - 0.68%
Alpine School Dist., Utah County, G.O. School Building Bonds (Utah School Bond Guaranty Program),
Series 2001-A:
5.25% 2015 3,000 3,219
5.25% 2016 4,225 4,519
Salt Lake County, G.O. Ref. Bonds, Series 2001:
5.25% 2011 5,000 5,544
5.00% 2012 8,130 8,756
VERMONT - 0.07%
Educational and Health Buildings Fncg. Agcy., Hospital Rev. Bonds (Medical Center Hospital
of Vermont Project), Series 1993, FGIC insured, 5.75% 2007 2,250 2,300
VIRGINIA - 1.12%
City of Chesapeake, G.O. Public Improvement and Ref. Bonds, Series 2001, 5.50% 2011 3,500 3,949
Dulles Town Center, Community Dev. Auth. (Loudoun County), Special Assessment Bonds (Dulles
Town Center Project), Series 1998, 6.25% 2026 2,495 2,467
Fairfax County:
Econ. Dev. Auth., Retirement Community Rev. Bonds (Greenspring Village, Inc. Fac.),
Series 1999-A, 7.50% 2029 15,500 16,087
Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Inova Health System Hospitals Project),
Series 1993-A:
5.00% 2011 1,300 1,377
5.00% 2023 1,200 1,199
Gateway Community Dev. Auth. (Prince William County), Special Assessment Bonds, Series 1999,
6.25% 2026 2,119 2,121
Industrial Dev. Auth., Hanover County, Hospital Rev. Bonds (Memorial Regional Medical Center
Project at Hanover Medical Park), Series 1995, MBIA insured, 6.50% 2009 1,000 1,174
Heritage Hunt Commercial Community Dev. Auth. (Prince William County), Special Assessment Bonds:
Series 1999-A, 6.85% 2019 2,482 2,586
Series 1999-B, 7.00% 2029 974 1,020
City of Newport News, G.O. General Improvement Bonds, Series 2000-A, 5.50% 2004 3,300 3,400
Peninsula Ports Auth. Health System Rev. Ref. Bonds (Riverside Health System Project), Series 1998,
MBIA insured, 5.00% 2010 1,000 1,076
WASHINGTON - 7.38%
G.O. Bonds:
Motor Vehicle Fuel Tax, Series 2002-C, FSA insured, 5.00% 2017 5,000 5,177
Series 2003-A, 5.00% 2013 6,260 6,679
Various Purpose, Series 2001-C, 5.00% 2010 7,310 7,922
Health Care Facs. Auth., Rev. Bonds :
Providence Health System, Series 2001-A, MBIA insured:
5.50% 2011 6,565 7,202
5.625% 2014 3,000 3,236
5.625% 2015 8,635 9,336
Group Health Cooperative of Puget Sound, Series 2001, AMBAC insured, 5.375% 2012 1,500 1,628
Public Power Supply System, Rev. Ref. Bonds:
Nuclear Project No. 1, Series 1997-B, 5.125% 2014 5,000 5,175
Nuclear Project No. 2:
Series 1993-B, FSA insured, 5.65% 2008 3,030 3,416
Series 1994-A, 6.00% 2007 19,900 22,337
Series 1998-A, 5.00% 2012 6,200 6,479
Nuclear Project No. 3:
Series 1989-A, MBIA insured, 0% 2013 4,000 2,533
Series 1989-B, 7.125% 2016 5,250 6,553
Central Puget Sound Regional Transit Auth., Sales Tax and Motor Vehicle Excise Tax Bonds,
Series 1999, FGIC insured:
5.25% 2021 5,500 5,780
4.75% 2028 21,940 20,580
Clark County, Vancouver School Dist. No. 37, Unlimited Tax Deferred Interest G.O. Bonds,
Series 2001-C, FGIC insured, 0% 2016 5,000 2,605
Energy Northwest:
Columbia Generating Station Ref. Electric Rev. Bonds:
Series 2001-A, FSA insured:
5.375% 2013 3,000 3,270
5.50% 2016 13,000 14,071
Series 2003-A, 5.50% 2015 3,000 3,292
Ref. Electric Rev. Bonds:
Project No. 1:
Series 2002-A, MBIA insured:
5.50% 2015 5,000 5,447
5.50% 2016 5,000 5,416
Series 2003-A:
5.50% 2014 5,000 5,490
5.50% 2016 7,000 7,531
Project No. 3, Series 2001-A, FSA insured, 5.50% 2017 5,000 5,381
King County:
Limited Tax G.O. Ref. Bonds (Baseball Stadium), Series 2002:
5.50% 2012 2,675 2,991
5.50% 2012 (escrowed to maturity) 325 368
Sewer Rev. Bonds, Rev. Ref. Bonds:
Series 2001, FGIC insured, 5.25% 2015 2,000 2,138
Series 2002-B, FSA insured, 5.50% 2015 4,500 4,896
Public Utility Dist. No. 1:
Chelan County, Columbia River-Rock Island Hydro-Electric System Rev. Ref. Bonds, Series 1997-A,
MBIA insured, 0% 2019 11,345 4,857
Lewis County, Cowlitz Falls Hydroelectric Project Rev. Ref. Bonds, Series 2003, XLCA insured,
5.00% 25,000 5,338
Snohomish County, FSA insured:
Electric System Rev. Bonds, Series 2002, 5.25% 2014 1,500 1,615
Generation System Rev. Ref. Bonds, Series 2002-B, 5.25% 2012 2,250 2,461
City of Seattle:
Limited Tax G.O. Bonds, 2001 (Various Purposes):
5.00% 2013 3,835 4,077
5.00% 2014 4,040 4,260
5.25% 2015 4,255 4,545
5.375% 2016 4,485 4,822
5.375% 2017 4,440 4,750
5.375% 2018 2,000 2,126
Municipal Light and Power Improvements and Rev. Ref. Bonds, Series 2001, FSA insured:
5.50% 2012 2,000 2,194
5.50% 2016 5,000 5,406
Port of Seattle, Subordinate Lien Rev. Bonds, Series 1999-A, FGIC insured:
5.50% 2016 3,080 3,405
5.50% 2018 7,920 8,691
5.50% 2019 3,630 3,969
WISCONSIN - 1.76%
G.O. Bonds:
Ref. Bonds, Series 1998-1, 5.50% 2010 3,225 3,627
Series 1999-A, 5.00% 2012 3,390 3,567
Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds:
Rev. Bonds, 5.50% 2006 1,000 1,013
6.125% 2027 (expected maturity 2014) 20,875 17,440
Health and Educational Facs. Auth., Rev. Bonds:
Children's Hospital Project, Series 1993, FGIC insured, 5.50% 2006 2,000 2,188
Children's Hospital of Wisconsin, Inc., Series 1998, AMBAC insured, 5.625% 2015 1,130 1,247
Froedtert & Community Health Obligated Group, Series 2001:
5.625% 2014 1,000 1,051
5.625% 2015 1,100 1,151
Medical College of Wisconsin, Series 1993, 5.95% 2015 3,000 3,091
The Monroe Clinic, Inc.:
Series 1998:
4.80% 2010 1,110 1,144
4.90% 2011 1,165 1,190
Series 1999:
5.125% 2016 1,000 999
5.375% 2022 2,000 1,946
Housing and Econ. Dev. Auth.:
Home Ownership Rev. Bonds, Series 1998-A, 5.375% 2017 1,510 1,553
Housing Rev. Bonds, Series 1992-A, 6.40% 2003 725 730
Pollution Control and Industrial Dev. Rev. Bonds (General Motors Corp. Projects), City of
Janesville, Series 1984, 5.55% 2009 3,650 3,898
Milwaukee Metropolitan Sewerage Dist., Milwaukee, Ozaukee, Washington and Waukesha Counties,
G.O. Sewerage Systems Bonds, Series 2001-A, 5.25% 2014 3,590 3,870
City of Superior, Limited Obligation Rev. Ref. Bonds (Midwest Energy Resources Co.
Project), Series 1991-E (collateralized), FGIC insured, 6.90% 2021 6,000 7,447
3,072,581
PRINCIPAL MARKET
AMOUNT VALUE
SHORT-TERM SECURITIES - 4.76% (000) (000)
Alexandria, Virginia, Redev. and Housing Auth., Residential Care Fac. First Mortgage Rev. Bonds
(Goodwin House), Multi-Mode Series 1996-B, 0.80% 2006 (3) $ 1,300 1,300
Public Building Auth. of the City of Clarksville, Tennessee, Pooled Fncg. Rev. Bonds: (3)
Series 2001, 0.85% 2031 3,415 3,415
Tennessee Municipal Bond Fund, Series 2003, 0.85% 2033 10,600 10,600
City of Detroit, Michigan, Sewage Disposal System, Rev. Bonds, Series 2003-B, FSA insured,
0.80% 2033 (3) 1,700 1,700
Howard County, Maryland, Consolidated Public Improvement Commercial Paper Bond Anticipation Notes,
Seri 2003-C, 0.85% 9/8/2003 5,500 5,500
Intermountain Power Agcy., State of Utah, Power Supply Rev. Bonds, Series 1985-F, 0.85% 9/4/2003 8,900 8,900
Lehigh County, Pennsylvania General Purpose Auth. (Saint Luke's Hospital of Bethlehem, PA Project),
Hospital Rev. Bonds, Series of 2001, 0.80% 2031 (3) 2,200 2,200
Maryland Health and Higher Educational Facs. Auth., Pooled Loan Program Rev. Bonds, Series 1994-D,
0.80% 2029 (3) (4) 6,295 6,295
The Commonwealth of Massachusetts: (3)
G.O. Ref. Bonds:
Series 1998-A, 0.80% 2016 17,500 17,500
Series 1998-B, 0.80% 2016 (4) 6,000 6,000
Water Resources Auth., Multi-Modal Subordinated G.O. Rev. Ref. Bonds, FGIC insured:
Series 1998-D, 0.78% 2026 20,700 20,700
Series 2000-C, 0.78% 2037 3,000 3,000
State of Michigan, FSA insured: (3)
Grant Anticipation Notes, Series 2001-D, 0.80% 2008 10,000 10,000
State Building Auth., Multi-Modal Rev. Bonds (Facs. Program), Series 2002-II, 0.80% 2036 5,000 5,000
County of Montgomery, Tennessee, The Public Building Auth., Pooled Fncg. Rev. Bonds
(Tennessee County Loan Pool): (3)
Series 1999, 0.85% 2029 13,700 13,700
Series 2002, 0.85% 2032 2,200 2,200
Metropolitan Transportation Auth., New York, Transportation Rev. Ref. Bonds, Series 2002-D2,
FSA insured, 0.85% 2032 (3) 11,000 11,000
County of Riverside, California, Cert. of Part. ACES (Riverside County Public Facs. Project),
Series 196,000 0.85% 206,000)
Industrial Dev. Auth. of the City of Roanoke, Virginia, Hospital Rev. Ref. Bonds (Carilion
Health System Obligated Group): (3)
Series 2002-B, 0.80% 2027 1,800 1,800
Series 2002-C, 0.80% 2027 2,320 2,320
San Diego Community College Dist., San Diego County, California, G.O. Obligation Bonds,
Election 2002, Series 2003-A, FSA insured, 3.00% 5/1/2004 3,740 3,790
Sweetwater County, Wyoming, Customized Purchase Pollution Control Rev. Ref. Bonds (Pacificorp
Project), Series 1988-B, 0.90% 2014 (3) 1,700 1,700
154,620
Total investment securities (cost: $3,146,409,000) 3,227,201
Other assets less liabilities 18,151
Net assets $3,245,352
(1) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration.
(2) Company not making scheduled interest payments; bankruptcy proceedings
pending.
(3) Coupon rate may change periodically; the date of the next scheduled coupon
rate change is considered to be the maturity date.
(4) This security, or a portion of this security, has been segregated to cover
funding requirements on investment transactions settling in the future.
See Notes to Financial Statements
Key to Abbreviations
Agcy. = Agency
AMT = Alternative Minimum Tax
Auth. = Authority
Cert. of Part. = Certificates of Participation
Dept. = Department
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facility
Facs. = Facilities
Fin. = Finance
Fncg. = Financing
G.O. = General Obligation
Preref. = Prerefunded
Redev. = Redevelopment
Ref. = Refunding
Rev. = Revenue
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES at August 31, 2003
(dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market (cost: $3,146,409) $3,227,201
Cash 65
Receivables for:
Sales of fund's shares $6,714
Interest 40,995 47,709
Other assets 5
3,274,980
LIABILITIES:
Payables for:
Purchases of investments 16,057
Repurchases of fund's shares 7,326
Dividends on fund's shares 3,590
Investment advisory services 865
Services provided by affiliates 1,706
Deferred Directors' compensation 79
Other fees and expenses 5 29,628
NET ASSETS AT AUGUST 31, 2003 $3,245,352
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $3,168,942
Undistributed net investment income 2,940
Accumulated net realized loss (7,322)
Net unrealized appreciation 80,792
NET ASSETS AT AUGUST 31, 2003 $3,245,352
TOTAL AUTHORIZED CAPITAL STOCK - 500,000 SHARES, $.001 PAR VALUE
Net asset
Shares value per
Net assets outstanding share (1)
Class A $2,904,592 238,619 $12.17
Class B 114,043 9,369 12.17
Class C 120,528 9,902 12.17
Class F 68,014 5,587 12.17
Class R-5 38,175 3,136 12.17
(1) Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for Class A, for which
the maximum offering price per share was $12.64.
See Notes to Financial Statements
STATEMENT OF OPERATIONS for the year ended August 31, 2003
(dollars in thousands)
INVESTMENT INCOME:
Income:
Interest $156,417
Fees and expenses:
Investment advisory services $9,983
Distribution services 9,388
Transfer agent services 708
Administrative services 304
Reports to shareholders 140
Registration statement and prospectus 278
Postage, stationery and supplies 100
Directors' compensation 41
Auditing and legal 70
Custodian 56
State and local taxes 33 21,101
Net investment income 135,316
NET REALIZED LOSS AND UNREALIZED
DEPRECIATION ON INVESTMENTS:
Net realized loss on investments (7,442)
Net unrealized depreciation on investments (53,242)
Net realized loss and
unrealized depreciation on investments (60,684)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $74,632
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended August 31
2003 2002
OPERATIONS:
Net investment income $135,316 $117,023
Net realized (loss) gain on investments (7,442) 5,452
Net unrealized (depreciation)
appreciation on investments (53,242) 14,459
Net increase in net assets
resulting from operations 74,632 136,934
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (134,482) (115,494)
Distributions from net realized gain on investments (4,888) (6,122)
Total dividends and distributions paid
to shareholders (139,370) (121,616)
CAPITAL SHARE TRANSACTIONS 379,173 665,106
TOTAL INCREASE IN NET ASSETS 314,435 680,424
NET ASSETS:
Beginning of year 2,930,917 2,250,493
End of year (including undistributed
net investment income:
$2,940 and $2,400, respectively) $3,245,352 $2,930,917
See Notes to Financial Statements
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 five share classes consisting of four retail share classes and
one retirement plan share class. The fund's share classes are described below:
- ---------------------------------------------------------------------------------------------------------
INITIAL SALES CONTINGENT DEFERRED SALES
SHARE CLASS CHARGE CHARGE UPON REDEMPTION CONVERSION FEATURE
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class A Up to 3.75% None (except 1% for certain None
certain redemptions within one
year of purchase without an
initial sales charge)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Class B None Declines from 5% to zero for Class B converts to
redemptions within six years Class A after eight
of purchase years
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within one Class C converts to
year of purchase Class F after 10
years
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Class F None None None
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Class R-5 None None None
- ---------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. Each share class has identical voting rights, except for the
exclusive right to vote on matters affecting only its class. Share classes have
different fees and expenses ("class-specific fees and expenses"), primarily due
to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to
comply with accounting principles generally accepted in the United States of
America. These principles require management to make estimates and assumptions
that affect reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Fixed-income securities are valued at prices obtained
from an independent pricing service, when such prices are available.
However, where the investment adviser deems it appropriate, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. Short-term securities
maturing within 60 days are valued at amortized cost, which approximates
market value. The ability of the issuers of the debt securities held by the
fund to meet their obligations may be affected by economic developments in
a specific industry, state or region. Securities and other assets for which
representative market quotations are not readily available are valued at
fair value as determined in good faith by authority of the fund's Board of
Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are recorded by the fund as of the date the trades are executed with
brokers. Realized gains and losses from security transactions are
determined based on the specific identified cost of the securities. In the
event a security is purchased with a delayed payment date, the fund will
segregate liquid assets sufficient to meet its payment obligations.
Interest income is recognized on an accrual basis. Market discounts,
premiums and original issue discounts on fixed-income securities are
amortized daily over the expected life of the security.
CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific
fees and expenses) and realized and unrealized gains and losses are
allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution,
administrative and shareholder services, are charged directly to the
respective share class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends paid to
shareholders are declared daily after the determination of the fund's net
investment income and are paid to shareholders monthly. Distributions paid
to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
The fund complies with the requirements under Subchapter M of the Internal
Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not
subject to income taxes to the extent such distributions are made. Generally,
income earned by the fund is exempt from federal income taxes; however, the fund
might earn taxable income from the sale of certain securities purchased at a
market discount.
DISTRIBUTIONS - Distributions paid to shareholders are based on net investment
income and net realized gains determined on a tax basis, which may differ from
net investment income and net realized gains for financial reporting purposes.
These differences are due primarily to differing treatment for items such as
short-term capital gains and losses; deferred expenses; net capital losses; and
amortization of market discounts. The fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund. As of August 31, 2003, the cost of
investment securities for federal income tax purposes was $3,143,419,000.
During the year ended August 31, 2003, the fund reclassified $170,000 and
$124,000 from undistributed net investment income to accumulated net realized
loss and additional paid-in capital, respectively, to align financial reporting
with tax reporting.
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Undistributed net investment income $3,619
Short-term and long-term capital loss deferrals (7,322)
Gross unrealized appreciation on investment securities
125,953
Gross unrealized depreciation on investment securities (42,171)
Short-term and long-term capital loss deferrals above include a capital loss
carryforward of $382,000 expiring in 2011. The capital loss carryforward will be
used to offset any capital gains realized by the fund in future years through
the expiration date. The fund will not make distributions from capital gains
while a capital loss carryforward remains. Also included are capital losses of
$6,940,000, that were realized during the period November 1, 2002 through August
31, 2003.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
YEAR ENDED AUGUST 31, 2003 Distributions from ordinary income
Distributions Total
Distributions from Net investment Short-term from long-term distributions
Share class(1) tax-exempt income income capital gains capital gains paid
Class A $ 123,155 - - $ 4,448 $ 127,603
Class B 3,663 - - 151 3,814
Class C 3,647 - - 154 3,801
Class F 2,357 - - 77 2,434
Class R-5 1,660 - - 58 1,718
Total $ 134,482 - - $ 4,888 $ 139,370
YEAR ENDED AUGUST 31, 2002
Class A $ 110,878 - $ 1,666 $ 4,256 $ 116,800
Class B 1,923 - 27 68 2,018
Class C 1,628 - 21 53 1,702
Class F 852 - 9 22 883
Class R-5 213 - - - 213
Total $ 115,494 - $ 1,723 $ 4,399 $ 121,616
(1) Class R-5 shares were offered beginning July 15, 2002.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement
with CRMC provides for monthly fees accrued daily. These fees are based on a
declining series of annual rates beginning with 0.30% on the first $60 million
of daily net assets and decreasing to 0.16% on such assets in excess of $3
billion. The agreement also provides for monthly fees, accrued daily, based on a
declining series of annual rates beginning with 3.00% on the first $3,333,333 of
the fund's monthly gross investment income and decreasing to 2.25% on such
income in excess of $8,333,333. For the year ended August 31, 2003, the
investment advisory services fee was equivalent to an annualized rate of 0.316%
of average daily net assets.
CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all
share classes, except Class R-5. Under the plans, the Board of Directors
approves certain categories of expenses that are used to finance activities
primarily intended to sell fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.25% to 1.00% as noted below. In some cases, the Board of Directors has
approved expense amounts lower than plan limits.
- ----------------------------------------------------------------------------
Share class Currently approved limits Plan limits
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Class A 0.25% 0.25%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Class B 1.00 1.00
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Class C 1.00 1.00
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Class F 0.25 0.50
- ----------------------------------------------------------------------------
All share classes may use up to 0.25% of average daily net assets to pay
service fees, or to compensate AFD for paying service fees, to firms that
have entered into agreements with AFD for providing certain shareholder
services. Expenses in excess of these amounts, up to approved limits, may
be used to compensate dealers and wholesalers for shares sold.
For Class A, the Board of Directors has also approved the reimbursement of
dealer and wholesaler commissions paid by AFD for certain shares sold
without a sales charge. This class reimburses AFD for amounts billed within
the prior 15 months but only to the extent that the overall annual expense
limit of 0.25% is not exceeded. As of August 31, 2003, unreimbursed
expenses subject to reimbursement totaled $3,564,000 for Class A.
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with AFS
for classes A and B. Under this agreement, these share classes compensate
AFS for transfer agent services including shareholder recordkeeping,
communications and transaction processing. AFS is also compensated for
certain transfer agent services provided to all other share classes from
the administrative services fees paid to CRMC described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services agreement
with CRMC to provide transfer agent and other related shareholder services
for all classes of shares other than classes A and B. Each relevant class
pays CRMC annual fees of 0.15% (0.10% for Class R-5) based on its
respective average daily net assets. Each relevant class also pays AFS
additional amounts for certain transfer agent services. CRMC and AFS may
use these fees to compensate third parties for performing these services.
Expenses under the agreements described above for the year ended August 31,
2003, were as follows (dollars in thousands):
- --------------------------------------------------------------------------------
Administrative services
----------------------------------
CRMC
Distribution Transfer agent administrative Transfer agent
Share class services services services services
- --------------------------------------------------------------------------------
Class A $7,148 $678 Not applicable Not applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B 1,032 30 Not applicable Not applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C 1,067 Included $160 $11
in
administrative
services
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class F 141 Included 85 10
in
administrative
services
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class R-5 Not applicable Included 37 1
in
administrative
services
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $9,388 $708 $282 $22
================================================================================
DEFERRED DIRECTORS' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, Directors who are unaffiliated with CRMC may elect to
defer the cash payment of part or all of their compensation. These deferred
amounts, which remain as liabilities of the fund, are treated as if invested in
shares of the fund or other American Funds. These amounts represent general,
unsecured liabilities of the fund and vary according to the total returns of the
selected funds. Directors' compensation in the accompanying financial statements
includes the current fees (either paid in cash or deferred) and the net increase
or decrease in the value of the deferred amounts.
AFFILIATED OFFICERS AND DIRECTORS - Officers and certain Directors of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated
officers or Directors received any compensation directly from the fund.
4. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
Reinvestments of
Sales(2) dividends and distributions Repurchases(2) Net increase
Share class(1) Amount Shares Amount Shares Amount Shares Amount Shares
Year ended August 31, 2003
Class A $ 846,258 68,133 $ 89,131 7,193 $ (662,081) (53,454) $273,308 21,872
Class B 48,940 3,937 2,832 229 (16,493) (1,333) 35,279 2,833
Class C 73,715 5,935 2,960 239 (35,983) (2,906) 40,692 3,268
Class F 135,210 10,898 1,922 155 (109,667) (8,840) 27,465 2,213
Class R-5 11,168 897 224 18 (8,963) (727) 2,429 188
Total net increase
(decrease) $1,115,291 89,800 $ 97,069 7,834 $ (833,187) (67,260) $379,173 30,374
Year ended August 31, 2002
Class A $ 813,424 66,622 $ 75,729 6,208 $ (414,673) (33,978) $474,480 38,852
Class B 59,851 4,902 1,432 117 (7,149) (584) 54,134 4,435
Class C 74,616 6,112 1,232 101 (9,672) (792) 66,176 5,421
Class F 74,565 6,104 677 55 (41,273) (3,376) 33,969 2,783
Class R-5 36,573 2,966 23 2 (249) (20) 36,347 2,948
Total net increase
(decrease) $1,059,029 86,706 $ 79,093 6,483 $ (473,016) (38,750) $665,106 54,439
(1) Class R-5 shares were offered beginning July 15, 2002.
(2) Includes exchanges between share classes of the fund.
5. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of August 31, 2003, the total value
of restricted securities was $8,742,000, which represents 0.27% of the net
assets of the fund.
6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $659,332,000 and $231,380,000, respectively, during the year
ended August 31, 2003.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
year ended August 31, 2003, the custodian fee of $56,000 includes $5,000 that
was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
Income from investment operations(2)
Net(losses)
Net asset gains on
value, Net securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
CLASS A:
Year ended 8/31/2003 $12.41 $.54 $(.22) $.32
Year ended 8/31/2002 12.38 .57 .06 .63
Year ended 8/31/2001 11.81 .60 .57 1.17
Year ended 8/31/2000 11.86 .60 (.01) .59
Year ended 8/31/1999 12.60 .59 (.55) .04
CLASS B:
Year ended 8/31/2003 12.41 .44 (.22) .22
Year ended 8/31/2002 12.38 .48 .06 .54
Year ended 8/31/2001 11.81 .52 .57 1.09
Period from 3/15/2000 to 8/31/2000 11.50 .21 .34 .55
CLASS C:
Year ended 8/31/2003 12.41 .43 (.22) .21
Year ended 8/31/2002 12.38 .47 .06 .53
Period from 3/15/2001 to 8/31/2001 12.10 .21 .29 .50
CLASS F:
Year ended 8/31/2003 12.41 .52 (.22) .30
Year ended 8/31/2002 12.38 .55 .06 .61
Period from 3/15/2001 to 8/31/2001 12.10 .24 .29 .53
CLASS R-5:
Year ended 8/31/2003 12.41 .56 (.22) .34
Period from 7/15/2002 to 8/31/2002 12.33 .07 .08 .15
Dividends and distributions
Dividends
Total from (from net Distributions Total
investment investment (from capital dividends and
operations income) gains) distributions
CLASS A:
Year ended 8/31/2003 $.32 $(.54) $(.02) $(.56)
Year ended 8/31/2002 .63 (.57) (.03) (.60)
Year ended 8/31/2001 1.17 (.60) - (.60)
Year ended 8/31/2000 .59 (.60) (.04) (.64)
Year ended 8/31/1999 .04 (.59) (.19) (.78)
CLASS B:
Year ended 8/31/2003 .22 (.44) (.02) (.46)
Year ended 8/31/2002 .54 (.48) (.03) (.51)
Year ended 8/31/2001 1.09 (.52) - (.52)
Period from 3/15/2000 to 8/31/2000 .55 (.24) - (.24)
CLASS C:
Year ended 8/31/2003 .21 (.43) (.02) (.45)
Year ended 8/31/2002 .53 (.47) (.03) (.50)
Period from 3/15/2001 to 8/31/2001 .50 (.22) - (.22)
CLASS F:
Year ended 8/31/2003 .30 (.52) (.02) (.54)
Year ended 8/31/2002 .61 (.55) (.03) (.58)
Period from 3/15/2001 to 8/31/2001 .53 (.25) - (.25)
CLASS R-5:
Year ended 8/31/2003 .34 (.56) (.02) (.58)
Period from 7/15/2002 to 8/31/2002 .15 (.07) - (.07)
Ratio of Ratio of
Net asset Net assets, expenses net income
value, end Total end of period to average to average
of period return(3) (in millions) net assets net assets
CLASS A:
Year ended 8/31/2003 $12.17 2.55% $2,905 .61% 4.33%
Year ended 8/31/2002 12.41 5.31 2,689 .63 4.73
Year ended 8/31/2001 12.38 10.22 2,202 .66 5.00
Year ended 8/31/2000 11.81 5.27 1,831 .67 5.22
Year ended 8/31/1999 11.86 .23 1,917 .65 4.78
CLASS B:
Year ended 8/31/2003 12.17 1.79 114 1.37 3.56
Year ended 8/31/2002 12.41 4.53 81 1.38 3.91
Year ended 8/31/2001 12.38 9.45 26 1.40 4.06
Period from 3/15/2000 to 8/31/2000 11.81 4.89 3 .64 1.99
CLASS C:
Year ended 8/31/2003 12.17 1.66 120 1.50 3.43
Year ended 8/31/2002 12.41 4.40 82 1.51 3.79
Period from 3/15/2001 to 8/31/2001 12.38 4.20 15 .73 1.77
CLASS F:
Year ended 8/31/2003 12.17 2.41 68 .75 4.19
Year ended 8/31/2002 12.41 5.15 42 .78 4.54
Period from 3/15/2001 to 8/31/2001 12.38 4.45 7 .40 2.11
CLASS R-5:
Year ended 8/31/2003 12.17 2.72 38 .44 4.51
Period from 7/15/2002 to 8/31/2002 12.41 1.23 37 .06 .59
Year ended August 31
2003 2002 2001 2000 1999
Portfolio turnover rate
for all classes of shares 8% 8% 21% 29% 15%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of the year;
all other periods are based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
REPORT OF INDEPENDENT AUDITORS
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 changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of The Tax-Exempt Bond Fund of America, Inc.
(the "Fund") at August 31, 2003, and the results of its operations, the changes
in its net assets and its financial highlights for each of the periods presented
in conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (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 audits 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 owned at August 31, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
September 30, 2003
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.
During the fiscal year ended August 31, 2003, the fund paid a long-term capital
gain distribution of $4,888,000. The fund also designated as a capital gain
distribution a portion of earnings and profits paid to shareholders in
redemption of their shares.
Shareholders may exclude from federal taxable income any exempt-interest
dividends paid from net investment income. For purposes of computing this
exclusion, all of the dividends paid from net investment income qualify as
exempt-interest dividends. Any distributions paid from realized net short-term
or long-term capital gains are not exempt from federal taxation.
SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2004 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2003 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
OTHER SHARE CLASS RESULTS (unaudited)
Class B, Class C and Class F
Returns for periods ended September 30, 2003 (the
most recent calendar quarter): 1 YEAR LIFE OF CLASS
CLASS B SHARES
Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%,
payable only if shares are
sold within six years of purchase -2.23% +5.90%(1)
Not reflecting CDSC +2.72% +6.62%(1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if
shares are sold within one year of purchase +1.60% +5.15%(2)
Not reflecting CDSC +2.59% +5.15%(2)
CLASS F SHARES(3)
Not reflecting annual asset-based fee charged by sponsoring firm +3.34% +5.88%(2)
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
BOARD OF DIRECTORS
"Non-interested" Directors
Year first
elected
a Director
Name and age of the fund(1) Principal occupation(s) during past five years
AMBASSADOR RICHARD G. 1999 Corporate director and author; former U.S.
CAPEN, JR., 69 Ambassador to Spain; former Vice Chairman,
Knight-Ridder, Inc. (communications company);
former Chairman and Publisher, The Miami Herald
H. FREDERICK CHRISTIE, 70 1979 Private investor; former President and CEO,
The Mission Group (non-utility holding company,
subsidiary of Southern California Edison Company)
DIANE C. CREEL, 54 1994 Chairman of the Board and CEO, AnAerobics, Inc.
(organic waste management)
MARTIN FENTON, 68 1989 Chairman of the Board and CEO, Senior
Resource Group LLC (development and
management of senior living communities)
LEONARD R. FULLER, 57 1994 President and CEO, Fuller Consulting
(financial management consulting firm)
RICHARD G. NEWMAN, 68 1991 Chairman of the Board and CEO, AECOM
Technology Corporation (engineering, consulting
and professional services)
FRANK M. SANCHEZ, 60 1999 Principal, The Sanchez Family Corporation dba
McDonald's Restaurants (McDonald's licensee)
"Non-interested" Directors
Number of boards
within the fund
complex(2) on which
Name and age Director serves Other directorships(3) held by Director
AMBASSADOR RICHARD G. 14 Carnival Corporation
CAPEN, JR., 69
H. FREDERICK CHRISTIE, 70 19 Ducommun Incorporated;
IHOP Corporation;
Southwest Water Company;
Valero L.P.
DIANE C. CREEL, 54 12 Allegheny Technologies;
BF Goodrich;
Teledyne Technologies
MARTIN FENTON, 68 16 None
LEONARD R. FULLER, 57 14 None
RICHARD G. NEWMAN, 68 13 Sempra Energy;
Southwest Water Company
FRANK M. SANCHEZ, 60 12 None
"Interested" Directors(4)
Year first
elected a
Director or Principal occupation(s) during past five years
Name, age and officer of and positions held with affiliated entities or
position with fund the fund(1) the principal underwriter of the fund
PAUL G. HAAGA, JR., 54 1986 Executive Vice President and Director,
Chairman of the Board Capital Research and Management Company;
Director, The Capital Group Companies, Inc.(5);
Director, American Funds Distributors, Inc.(5)
ABNER D. GOLDSTINE, 73 1979 Senior Vice President and Director,
Vice Chairman of the Board Capital Research and Management Company
NEIL L. LANGBERG, 50 1985 Vice President-- Investment Management Group,
President and Principal Capital Research and Management Company
Executive Officer
"Interested" Directors(4)
Number of boards
within the fund
Name, age and complex(2) on which
position with fund Director serves Other directorships(3) held by Director
PAUL G. HAAGA, JR., 54 17 None
Chairman of the Board
ABNER D. GOLDSTINE, 73 12 None
Vice Chairman of the Board
NEIL L. LANGBERG, 50 1 None
President and Principal
Executive Officer
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
FUND DIRECTORS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING AMERICAN
FUNDS SERVICE COMPANY AT 800/421-0180. THE ADDRESS FOR ALL DIRECTORS AND
OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET, LOS ANGELES, CA 90071, ATTENTION:
FUND SECRETARY.
OTHER OFFICERS
Year first
elected an Principal occupation(s) during past five years and
Name, age and officer of positions held with affiliated entities or the
position with fund the fund(1) principal underwriter of the fund
BRENDA S. ELLERIN, 40 1999 Senior Vice President, Capital Research Company(5)
Senior Vice President
DAVID A. HOAG, 38 1999 Senior Vice President, Capital Research Company(5)
Senior Vice President
MICHAEL J. DOWNER, 48 1994 Vice President and Secretary, Capital Research and
Vice President Management Company; Secretary, American Funds Distributors,
Inc.(5); Director, Capital Bank and Trust Company(5)
JULIE F. WILLIAMS, 55 1982 Vice President-- Fund Business Management
Secretary Group, Capital Research and Management Company
ANTHONY W. HYNES, JR., 40 1993 Vice President-- Fund Business Management
Treasurer Group, Capital Research and Management Company
KIMBERLY S. VERDICK, 39 1994 Assistant Vice President-- Fund Business
Assistant Secretary Management Group, Capital Research and Management Company
SUSI M. SILVERMAN, 33 2001 Vice President-- Fund Business Management
Assistant Treasurer Group, Capital Research and Management Company
(1) Directors and officers of the fund serve until their resignation, removal
or retirement.
(2) Capital Research and Management Company manages the American Funds,
consisting of 29 funds. Capital Research and Management Company also
manages American Funds Insurance Series(R) and Anchor Pathway Fund, which
serve as the underlying investment vehicles for certain variable insurance
contracts; and Endowments, whose shareholders are limited to certain
nonprofit organizations.
(3) This includes all directorships (other than those in the American Funds)
that are held by each Director as a director of a public company or a
registered investment company.
(4) "Interested persons" within the meaning of the 1940 Act on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
(5) Company affiliated with Capital Research and Management Company.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065 Santa Ana, CA 92799-5065
P.O. Box 659522 San Antonio, TX 78265-9522
P.O. Box 6007 Indianapolis, IN 46206-6007
P.O. Box 2280 Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071-2889
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in The Tax-Exempt Bond Fund of America. Class A
shares are subject to a 3.75% maximum up-front sales charge that declines for
accounts of $100,000 or more. Other share classes have no up-front sales charges
but are subject to additional annual expenses and fees. Annual expenses for
Class B shares were 0.76 percentage points higher than for Class A shares; Class
B shares convert to Class A shares after eight years of ownership. If redeemed
within six years, Class B shares may also be subject to a contingent deferred
sales charge ("CDSC") of up to 5% that declines over time. Class C shares were
subject to annual expenses 0.89 percentage points higher than those for Class A
shares and a 1% CDSC if redeemed within the first year after purchase. Class C
shares convert to Class F shares after 10 years. Class F shares, which are
available only through certain fee-based programs offered by broker-dealer firms
and registered investment advisers, had higher annual expenses (by 0.14
percentage points) than did Class A shares, and an annual asset-based fee
charged by the sponsoring firm. Expenses are deducted from income earned by the
fund. As a result, dividends and investment results will differ for each share
class.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISER.
YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT US AT
AMERICANFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
THE AMERICAN FUNDS PROXY VOTING GUIDELINES -- USED TO DETERMINE HOW TO VOTE
PROXIES RELATING TO PORTFOLIO SECURITIES -- ARE AVAILABLE UPON REQUEST, FREE OF
CHARGE, BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS
WEBSITE OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT
WWW.SEC.GOV.
This report is for the information of shareholders of The Tax-Exempt Bond Fund
of America, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after December 31, 2003, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
[logo] American Funds(R)
The right choice for the long term(R)
What makes American Funds different?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 20 million shareholder accounts.
Our unique combination of strengths includes these five factors:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
Smallcap World Fund(R)
o GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(R)
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
o EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(R)
o BOND FUNDS
Emphasis on current income through bonds
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
o TAX-EXEMPT BOND FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
THE TAX-EXEMPT BOND FUND OF AMERICA(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
Seeking stable monthly income through money market instruments
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGEAR-919-1003
Litho in USA BDC/CG/8068
Printed on recycled paper
ITEM 2 - Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal
Executive Officer and Principal Financial Officer. The Registrant undertakes to
provide to any person without charge, upon request, a copy of the Code of
Ethics. Such request can be made to American Funds Service Company at
800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los
Angeles, California 90071.
ITEM 3 - Audit Committee Financial Expert
The Registrant's Board has determined that Martin Fenton, a member of the
Registrant's Audit Committee, is an "audit committee financial expert" and
"independent," as such terms are defined in this Item. This designation will not
increase the designee's duties, obligations or liability as compared to his
duties, obligations and liability as a member of the Audit Committee and of the
Board; nor will it reduce the responsibility of the other Audit Committee
members. There may be other individuals who, through education or experience,
would qualify as "audit committee financial experts" if the Board had designated
them as such. Most importantly, the Board believes each member of the Audit
Committee contributes significantly to the effective oversight of the
Registrant's financial statements and condition.
ITEM 4 - Principal Accountant Fees and Services
Form N-CSR disclosure requirement not yet effective with respect to Registrant.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 8 - Reserved
ITEM 9 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), that such controls and procedures
are adequate and reasonably designed to achieve the purposes described in
paragraph (c) of such rule.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 10 - Exhibits
(a) The Code of Ethics that is the subject of the disclosure required by Item 2
is attached as an exhibit hereto.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Tax-Exempt Bond Fund
of America, Inc.
By: /s/ Neil L. Langberg
------------------------------------
Neil L. Langberg, President and PEO
Date: November 7, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Neil L. Langberg
--------------------------------------------------
Neil L. Langberg, President and PEO
Date: November 7, 2003
By /s/ Anthony W. Hynes, Jr.
--------------------------------------------------
Anthony W. Hynes, Jr., Treasurer
Date: November 7, 2003