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: 811-7888
Limited Term Tax-Exempt Bond Fund of America
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: July 31
Date of reporting period: July 31, 2005
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:
Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
<Page>
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA
The fund's approach to limiting risk
[photo of a wood plank footbridge meandering through a meadow]
Annual report for the year ended July 31, 2005
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA(SM) seeks current income exempt
from federal income taxes, consistent with preservation of capital, through
investments in tax-exempt securities with effective maturities not longer than
10 years.
This fund is one of the 29 American Funds. The organization ranks among the
nation's three largest mutual fund families. 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.
Contents
Letter to shareholders 1
The value of a long-term perspective 3
The fund's approach to limiting risk 5
Inside your fund's summary investment portfolio 8
Financial statements 13
Trustees and officers 24
What makes American Funds different? back cover
FIGURES SHOWN ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT PREDICTIVE OF
RESULTS IN FUTURE PERIODS. CURRENT AND FUTURE RESULTS MAY BE LOWER OR HIGHER
THAN THOSE SHOWN. SHARE PRICES AND RETURNS WILL VARY, SO INVESTORS 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. FOR THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM. FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 3.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended June 30, 2005 (the most recent
calendar quarter):
1 year 5 years 10 years
Class A shares
Reflecting 3.75% maximum sales charge +0.79% +4.46% +4.59%
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 19 for details.
The fund's 30-day yield for Class A shares as of August 31, 2005, calculated in
accordance with the Securities and Exchange Commission formula, was 2.88%, which
reflects a fee waiver (2.85% without the fee waiver). (For investors in the 35%
federal tax bracket, this is equivalent to a taxable yield of 4.43%, which
reflects the fee waiver -- 4.38% without the fee waiver.) The fund's
distribution rate for Class A shares as of that date was 3.23% (3.21% without
the fee waiver). 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 20. Please see the inside
back cover for important information about other share classes.
The return of principal in bond funds is not guaranteed. Bond funds have the
same interest rate, inflation and credit risks that are associated with the
underlying bonds owned by the fund. Income may be subject to state or local
income taxes and/or federal alternative minimum taxes. Certain other income, as
well as capital gain distributions, may be taxable. Please consult with your tax
adviser.
FELLOW SHAREHOLDERS:
[photo of a wood plank footbridge meandering through a meadow]
During the past fiscal year, Limited Term Tax-Exempt Bond Fund of America
produced a total return of 3.4%. Nearly all of this return is attributable to
the dividends accrued by the fund. For the 12 months ended July 31, 2005, the
fund's monthly dividends totaled 51 cents a share, and its share price rose one
cent to $15.34.
o If you took those dividends in cash, they represented a tax-free income
return of 3.31%.
o If you reinvested your dividends in additional fund shares, your income
return was 3.36%.
o To match a 3.36% tax-free income return, a shareholder in the top federal
tax bracket (35%) would have to earn 5.17% from a taxable investment.
The fund's return for the fiscal year matched that of its peer group average as
measured by Lipper. However, the unmanaged Lehman Brothers (7-year) Municipal
Bond Index, which serves as a proxy for the intermediate municipal bond market,
bested the fund and its peer group average with a 4.0% return. The index
includes bonds with a longer average maturity than the fund, and its return does
not include expenses. Results for longer time periods are shown in the table
below.
THE FED AND THE BOND MARKET
During the past year, the Federal Reserve Board has been steadily raising the
federal funds rate in an effort to remove the easy monetary conditions it
implemented in response to the 2001 recession. The Fed's actions suggest that
the stimulus of exceedingly low short-term rates is no longer necessary with the
economy now growing at a healthy rate. Beginning in June 2004, the Fed has
increased the target federal funds rate 10 times, bringing it to 3.5% from 1.0%.
In the past, bond market yields across the maturity spectrum have responded to
Fed rate increases by rising as well. (As a bond's yield rises, its price
declines, and vice versa.) This time, however, has been notably different. While
short-term bond yields have risen in step with the rate hikes, long-term bond
yields have instead declined over the course of the fiscal year. This atypical
response has been termed a "conundrum" by Federal Reserve Chairman Alan
Greenspan.
Limited Term Tax-Exempt Bond Fund of America invests in short- and
intermediate-term municipal bonds because of their defensive characteristics,
but so far in this cycle, those bonds were most affected by the Fed's rate
increases. Rising yields for these maturities significantly limited the fund's
opportunities for price appreciation during the past year. Ironically, longer,
more volatile maturities have done better.
PORTFOLIO REVIEW
In the face of rising interest rates, the portfolio counselors of Limited Term
Tax-Exempt Bond Fund of America have steadily maintained a conservative
investment strategy in an effort to protect shareholder principal. A key part of
this strategy involves a greater weighting in short-term bonds (or bonds with
short-term characteristics). While rising yields lower the dollar price of any
bond outstanding, the effect is typically restrained for short-term debt because
the approaching maturity date serves to limit price fluctuations.
[Begin Sidebar]
1 year 5 years 10 years Lifetime*
RESULTS AT A GLANCE
Annualized total returns for
periods ended July 31, 2005
Limited Term Tax-Exempt Bond Fund of America +3.40% +4.94% +4.86% +4.83%
Lehman Brothers (7-year) Municipal Bond Index+ +3.96 +5.84 +5.59 +5.38
Lipper Intermediate Municipal Debt Funds Average +3.44 +5.03 +4.93 +4.71
*Since October 6, 1993
+ The index is unmanaged and does not reflect sales charges, commissions or
expenses, and holds bonds with a longer average maturity than the fund.
[End Sidebar]
The fund's counselors have also boosted the quality of the fund as the
difference between yields of high-quality and lower quality bonds compressed.
Bonds rated AAA climbed to 37% of fund assets by fiscal year-end from 32% last
year. Most of this increase owes to the greater portion of insured bonds held in
the portfolio. Insured bonds are backed by a guarantee from a major municipal
bond insurer, such as Ambac or MBIA. For a fee, bond insurers guarantee an
issuer's timely payment of principal and interest, which elevates the credit
quality of the bond and broadens its appeal to investors.
The balance of the fund's holdings are spread among other investment-grade
categories as noted in the pie chart on page 8. In addition to these credit
distinctions, bonds in the portfolio encompass a multitude of funding purposes
(hospitals, electric utility projects, single-family housing, pollution control
facilities, to name a few) and some 45 states and territories. Altogether, the
portfolio holds more than 500 individual securities.
A STEADY FOCUS ON LONG-TERM RESULTS
In the months ahead, we expect further increases in bond market yields as the
Fed continues to raise rates. While this may continue to limit opportunities for
capital appreciation, it has the potential to enhance income returns over the
longer term by creating a larger universe of higher yielding bonds in which the
fund may invest. Of course, these returns may only be realized by prudent
investing, carefully analyzing and managing the risks and rewards of each bond
that goes into the fund.
Since its inception, Limited Term Tax-Exempt Bond Fund of America has taken a
decidedly cautious approach to municipal bond investing. In practice, this
approach places a greater priority on principal protection than it does on
reaching for short-term gains. It has also helped the fund produce positive
total returns for each of its fiscal years since inception. To learn more about
the fund's objectives and how it can serve the long-term investment goals of its
shareholders, please see our feature report, "The Fund's Approach to Limiting
Risk," which begins on page 5.
We thank you for this opportunity to discuss the fund and its results. We look
forward to reporting to you again in six months.
Cordially,
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Vice Chairman
/s/ Brenda S. Ellerin
Brenda S. Ellerin
President
September 14, 2005
For current information about the fund, visit americanfunds.com.
Martin Fenton, an independent Trustee of the fund since 1993, has been elected
non-executive chairman of the Board. Paul G. Haaga, Jr., the previous chairman,
has been elected vice chairman. As independent Board chair pursuant to recently
adopted Securities and Exchange Commission regulations, Mr. Fenton will chair
Board meetings, including executive sessions of the independent Trustees, and
will be responsible for Board agendas, but will not have other executive or
management responsibilities with the fund. He will remain unaffiliated with
Capital Research and Management Company, the fund's investment adviser, and any
of its affiliates.
TAX-FREE YIELDS VS. TAXABLE YIELDS
Find your estimated 2005 taxable income below to determine your federal tax
rate,* then look in the right-hand column to see what you would have had to earn
from a taxable investment to equal the fund's 3.16%+ tax-free distribution rate
as of July 31, 2005. For example, investors in the highest federal tax bracket
(35.0%) would need to receive a yield of 4.86% from a taxable investment in
order to keep as much after taxes as they would from a tax-free investment that
pays 3.16%.
As of July 31, 2005,
the fund's tax-exempt
distribution rate of
If your taxable income is ...Then your federal 3.16%+ is equal
Single Joint tax rate* is... to a taxable rate of...
$0 - 7,300 $0 - 14,600 10.0% 3.51%
7,301 - 29,700 14,601 - 59,400 15.0 3.72
29,701 - 71,950 59,401 - 119,950 25.0 4.21
71,951 - 150,150 119,951 - 182,800 28.0 4.39
150,151 - 326,450 182,801 - 326,450 33.0 4.72
Over 326,450 Over 326,450 35.0 4.86
*Based on 2005 federal tax rates. The federal rates 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.
+ Distribution rate based on the average offering price for the month of July.
THE VALUE OF A LONG-TERM PERSPECTIVE
How a $10,000 investment has grown
There have always been reasons not to invest. If you look beyond the negative
headlines, however, you will find that, despite occasional stumbles, financial
markets have tended to reward investors over the long term. Active management --
bolstered by experience and careful research -- can add even more value. As the
chart below shows, over its relatively short lifetime, Limited Term Tax-Exempt
Bond Fund of America at net asset value has done better than the average of all
intermediate municipal bond funds tracked by Lipper.
The chart shows the periods since the fund's inception on October 6, 1993, to
July 31, 2005, with dividends reinvested.
Fund figures, unless otherwise indicated, reflect deduction of the maximum sales
charge of 3.75% on the $10,000 investment.(1) Thus the net amount invested was
$9,625.
[begin mountain chart]
<s> <c> <c> <c> <c>
Date The fund
The fund at at net asset Lehman Brothers Lipper Intermediate
maximum sales value (without (7-Year) Municipal Municipal Debt
charge sales charge) Bond Index(2) Funds Average (3)
10/6/93 $9,625 $10,000 $10,000 $10,000
10/31/93 9,787 10,171 10,026 10,019
1/31/94* 10,077 10,472 10,228 10,231
4/30/94 9,670 10,049 9,810 9,782
7/31/94 9,826 10,211 9,979 9,962
10/31/94 9,713 10,094 9,836 9,784
1/31/95 9,830 10,215 10,024 9,997
4/30/95 10,152 10,549 10,384 10,332
7/31/95 10,460 10,870 10,786 10,630
10/31/95 10,711 11,131 11,051 10,903
1/31/96 10,942 11,371 11,341 11,186
4/30/96 10,877 11,303 11,171 11,017
7/31/96 11,024 11,456 11,333 11,191
10/1/96 11,250 11,691 11,565 11,410
1/31/97 11,375 11,821 11,764 11,569
4/30/97 11,440 11,888 11,768 11,607
7/31/97 11,901 12,367 12,309 12,110
10/31/97 12,003 12,474 12,424 12,199
1/31/98 12,261 12,741 12,753 12,511
4/30/98 12,255 12,735 12,691 12,465
7/31/98 12,490 12,979 12,956 12,704
10/31/98 12,783 13,284 13,342 13,026
1/31/99 12,955 13,463 13,602 13,249
4/30/99 12,940 13,448 13,553 13,209
7/31/99 12,813 13,315 13,380 13,002
10/31/99 12,738 13,237 13,343 12,840
1/31/00 12,715 13,214 13,355 12,831
4/30/00 12,874 13,379 13,548 13,071
7/31/00 13,208 13,726 13,994 13,440
10/31/00 13,435 13,962 14,254 13,666
1/31/01 13,878 14,422 14,849 14,170
4/30/01 13,995 14,543 14,844 14,183
7/31/01 14,395 14,959 15,276 14,590
10/31/01 14,681 15,256 15,659 14,927
1/31/02 14,602 15,174 15,648 14,875
4/30/02 14,782 15,361 15,888 15,060
7/31/02 15,160 15,754 16,367 15,484
10/31/02 15,295 15,895 16,641 15,667
1/31/03 15,517 16,125 16,902 15,851
4/30/03 15,799 16,418 17,257 16,169
7/31/03 15,570 16,180 17,000 15,924
10/31/03 16,030 16,659 17,597 16,365
1/31/04 16,326 16,966 17,969 16,666
4/30/04 16,133 16,765 17,660 16,439
7/31/04 16,255 16,892 17,877 16,624
10/31/04 16,644 17,296 18,414 17,040
1/31/05 16,704 17,359 18,507 17,136
4/30/05 16,725 17,381 18,569 17,149
7/31/05 16,809 17,468 18,584 17,233
Year ended July 31
[end mountain chart]
* For the period October 6, 1993, to July 31, 1994.
(1) As outlined in the prospectus, the sales charge is reduced for accounts
(and aggregated investments) of $100,000 or more and is eliminated for
purchases of $1 million or more. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares.
(2) The index is unmanaged and does not reflect sales charges, commissions or
expenses.
(3) Calculated by Lipper. The average does not reflect sales charges.
Past results are not predictive of future results. The results shown are before
taxes on fund distributions and sale of fund shares.
AVERAGE ANNUAL TOTAL RETURNS BASED ON A $1,000 INVESTMENT (for periods ended
7/31/05)*
1 year 5 years 10 years
CLASS A SHARES -0.49% +4.14% +4.46%
*Assumes reinvestment of all distributions and payment of the maximum 3.75%
sales charge. The maximum initial sales charge was 4.75% prior to January 10,
2000.
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 19 for details.
[photo: seaside landscape that includes various types of terrain: tall grass
in the foreground, clump of trees and mountain range in the background and
shoreline]
[photo caption]
Limited Term Tax-Exempt Bond Fund of America offers its shareholders a
conservative, cost-effective alternative to individual municipal bond investing.
[end photo caption]
THE FUND'S APPROACH TO LIMITING RISK
Municipal bonds are among the most sought-after debt instruments for individual
investors. One obvious reason for their popularity is the tax advantage they
offer. Most are exempt from regular federal taxes; many also provide relief from
state and local taxes. Municipal bonds, as an asset class, have also experienced
very few defaults, which has enhanced their aura of safety and security.
Investing in municipal bonds, however, is not without risks. It is just that the
risks may not be apparent to individual investors.
As with most bonds, changes in the interest rate environment can alter the value
of these securities. Rising interest rates tend to diminish the value of
outstanding bonds, while declining rates boost underlying bond prices. Changes
to the ratings, or credit quality, of the bond issuer can also impact value. In
addition, the bonds themselves may have features or provisions that permit them
to be called away from the investor, disrupting the income flow they provide and
creating challenges for reinvesting proceeds.
Limited Term Tax-Exempt Bond Fund of America offers its shareholders a
conservative, cost-effective alternative to individual municipal bond investing
- -- an approach that seeks to limit these risks, while capitalizing on
opportunities that are often beyond the reach of individual bondholders. Let's
take a look, then, at the fund's characteristics and, in the process, examine
how its objectives and management style can help shareholders attain their
long-term investment goals.
A FOCUS ON INTERMEDIATE BONDS
As its title implies, Limited Term Tax-Exempt Bond Fund of America invests
primarily in intermediate-term municipal debt. The fund's prospectus specifies
that it invests primarily in "bonds with average effective maturities between
three and 10 years." Bonds with these maturities occupy a compelling middle
ground between short-term and long-term debt. In many instances, they combine
the best qualities of the two extremes, while limiting the disadvantages
inherent in short- and long-term obligations.
Short-term bonds offer a high degree of principal protection. Price fluctuations
are usually much narrower than for comparably rated bonds with longer maturity
dates, but that protection typically comes with lower yields than intermediate
and long-term bonds provide. This is often the case in bond investing; the lower
the risk, the less the reward.
By contrast, long-term bonds tend to offer higher yields than comparably rated
short-term or intermediate debt. The higher yield helps compensate investors for
the additional risks they assume while waiting for principal to be returned.
Chief among these is inflation, which diminishes the value of an investor's
principal over time. Long-term bonds have the greatest exposure to inflation and
historically have exhibited greater price fluctuations than either intermediate
or short-term debt. These fluctuations could prove problematic for individual
investors if they choose or are forced to sell bonds into weak markets before
they mature.
With its focus on intermediate maturities, Limited Term Tax-Exempt Bond Fund of
America aims to offer its shareholders more income than short-term bonds or
money market instruments, but with less volatility than is typical with
long-term bonds. This moderate approach is also echoed in the credit quality of
the fund's investments.
QUALITY MATTERS
Municipal bonds are regarded as generally safe securities for most investors.
Unlike Treasury bonds, which have no credit risk, municipal bond ratings vary
according to the credit strength of the state or local entity issuing the debt
or an affiliated entity, which may be a private organization. Although actual
defaults are rare in the municipal market, credit ratings are also an important
guide to the bond's yield and its potential for price volatility and liquidity
under changing market conditions.
Limited Term Tax-Exempt Bond Fund of America seeks to cushion its shareholders
against credit concerns by investing in bonds with an investment-grade rating.
Such bonds are deemed suitable for most investors by bond rating agencies, such
as Standard & Poor's or Moody's. Moreover, approximately 65% of the portfolio
holdings are in the two highest rating categories -- AAA and AA -- which enhance
the credit profile of the fund.
RESEARCH IDENTIFIES OPPORTUNITIES
Credit quality and an intermediate focus are structural elements of the fund's
objective that help to moderate risk and safeguard principal. The fund's
research efforts go a full step further by locating attractive investment
opportunities, monitoring changing market conditions and continually evaluating
the prospects of each security held in the portfolio.
Careful research is a vital part of any security selection, but it is especially
important for those with long-term investment horizons. The portfolio counselors
and analysts of Limited Term Tax-Exempt Bond Fund of America thoroughly evaluate
each bond before it goes into the portfolio, and they continue to monitor its
risk profile to ensure it meets the fund's objectives. This scrutiny augments
the fund's conservative approach and helps guard against adverse credit and
market events that could impair the long-term value of the fund.
Research is not only about protection; it is equally devoted to finding the best
investment opportunities available. In some instances, these securities are
unavailable to the general public because they are for institutional purchase
only. Such bonds often contain more complex risk characteristics, which require
a high level of expertise to properly evaluate. In every instance, the fund's
analysts bring years of experience to the task, as well as a comprehensive
understanding of the municipal market. In this manner, research furthers the
fund's objectives by helping to balance opportunity with protection.
THE BENEFITS OF ACTIVE MANAGEMENT
Guided by the findings of our research analysts, the fund's three portfolio
counselors steer a course through changing market conditions. While research
serves to identify risks inherent in each security, portfolio counselors take a
broader view by determining how much risk is appropriate given prevailing and
expected market conditions and economic cycles. Their active management helps
the fund meet its current income objective, while simultaneously striving to
preserve shareholder principal.
The broad diversity of the fund's portfolio provides the counselors with an
array of tactical possibilities. The principal generated by maturing bonds can
be readily redeployed where it is most beneficial: It can shorten or extend the
average maturity of fund holdings, and it can take advantage of undervalued
sectors of the market as they appear. In this manner, the portfolio becomes a
dynamic, rather than a fixed or static, entity -- an investment that evolves in
response to economic or market changes. This facility is often not available to
individual bondholders who may own a handful of bond maturities, but frequently
lack the diversity of holdings to be nimble as markets shift direction.
[Begin Sidebar]
A HISTORY OF LOW VOLATILITY
Limited Term Tax-Exempt Bond Fund of America has a history of relatively low
volatility, as measured by standard deviation. The table below compares the
fund's volatility to its benchmarks over its lifetime and for the most recent
five-year period.
[photo: tall grass in the foreground, clump of trees in the background]
Lifetime* standard deviation
Limited Term Tax-Exempt Bond Fund of America 3.21%
Lehman Brothers (7-year) Municipal Bond Index 3.85%
Lipper Intermediate Municipal Debt Funds Average 3.65%
Standard deviation for five years ended July 31, 2005
Limited Term Tax-Exempt Bond Fund of America 3.56%
Lehman Brothers (7-year) Municipal Bond Index 4.32%
Lipper Intermediate Municipal Debt Funds Average 3.91%
*From 10/31/93 to 7/31/05.
Calculated by Lipper using annualized standard deviation (based on monthly
returns), a measure of how returns over time have varied from the mean; a low
number signifies lower volatility.
[End Sidebar]
The three portfolio counselors have an average of 19 years of experience and
each manages a portion of the fund independently, but in accordance with the
fund's objectives. This allows them to act upon their own research convictions
and perspective of market conditions. The multiple portfolio counselor system,
as it is called at the American Funds, recognizes that no one manager is right
all the time. Yet over longer periods of time, this method of management has
tended to produce more consistent results with less volatility for its
shareholders by averaging together the strongest and weakest results of the
counselors.
In marrying its objectives and management style, Limited Term Tax-Exempt Bond
Fund of America forges a distinctly moderate approach to municipal bond
investing -- one that is well suited to cautious investors with long-term
investment perspectives.
[Begin Sidebar]
[photo of a wood plank footbridge meandering through a meadow]
Figures shown are past results for Class A shares and are not predictive of
results in future periods. Current and future results may be lower or higher
than those shown. Share prices and returns will vary, so investors may lose
money. For the most current information and month-end results, visit
americanfunds.com. Fund results shown, unless otherwise indicated, are at net
asset value. If a sales charge (maximum 3.75%) had been deducted, the results
would have been lower.
A HISTORY OF CONSISTENT RETURNS
One way to determine how consistently a fund has performed over time is to look
at returns over rolling time periods. The table below shows Limited Term
Tax-Exempt Bond Fund of America's average annual total returns for five-year
fiscal periods since its inception. As shown, returns have been remarkably
consistent despite significant fluctuations in the market.
Rolling five-year periods Average annual
ended July 31 total return
1994-1999 5.45%
1995-2000 4.78
1996-2001 5.48
1997-2002 4.96
1998-2003 4.51
1999-2004 4.88
2000-2005 4.94
[End Sidebar]
SUMMARY INVESTMENT PORTFOLIO July 31, 2005
The following summary investment portfolio is designed to streamline the report
and help investors better focus on a fund's principal holdings. For details on
how to obtain a complete schedule of portfolio holdings, please see the inside
back cover.
QUALITY RATINGS*
[begin pie chart]
Percent of
net assets
Aaa/AAA 37.3%
Aa/AA 27.8
A/A 11.4
Baa/BBB 19.6
Ba/BB 0.9
Cash & equivalents 3.0
[end pie chart]
* Bond ratings reflect those of a credit rating agency; if ratings are not
available, they are assigned by the fund's research analysts.
Principal Market Percent
amount value of net
Bonds & notes - 97.02% (000) (000) assets
Alaska - 1.55%
Northern Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001, 5.375% 2021 $6,365 $6,554 .60%
Other securities 10,362 .95
16,916 1.55
Arizona - 0.78%
Industrial Dev. Auth. of the County of Yavapai, Solid Waste Disposal Rev. Bonds
(Waste Management, Inc. Project), Series 2003-A-2, AMT, 4.45% 2028 (put 2008) 3,750 3,782 .35
Other securities 4,723 .43
8,505 .78
California - 5.64%
Pollution Control Fncg. Auth., AMT:
Solid Waste Disposal Rev. Bonds (Waste Management, Inc. Project), Series 2003-A,
5.00% 2038 (put 2013) 2,000 2,069
Solid Waste Disposal Rev. Ref. Bonds (USA Waste Services, Inc. Project),
Series 1998-A, 5.10% 2018 (put 2008) 4,300 4,440
Solid Waste Disposal Rev. Ref. Bonds (Waste Management, Inc. Project),
Series 2002-A, 3.125% 2022 (put 2006) 2,000 1,990 .78
Other securities 53,247 4.86
61,746 5.64
Colorado - 2.54%
Denver Convention Center Hotel Auth., Rev. Bonds, Series 2003-A, XLCA insured,
5.00% 2012 4,000 4,326 .40
Other securities 23,454 2.14
27,780 2.54
Connecticut - 1.19% 13,036 1.19
District of Columbia - 1.24% 13,545 1.24
Florida - 3.72%
Miami-Dade County Industrial Dev. Auth., Solid Waste Disposal Rev. Bonds
(Waste Management, Inc. Project), Series 2004, AMT, 4.00% 2018 (put 2009) 1,000 990 .09
Palm Beach County, Public Improvement Ref. Rev. Bonds (Convention Center
Project), Series 2004, FGIC insured, 5.00% 2030 (put 2011) 4,650 4,951 .45
Other securities 34,827 3.18
40,768 3.72
Idaho - 0.56% 6,152 .56
Illinois - 5.74%
City of Chicago, O'Hare International Airport, General Airport Rev. Ref. Bonds,
Series 2004-B, MBIA insured, 5.00% 2007 5,000 5,142 .47
Chicago Transit Auth., Capital Grant Receipts Rev. Bonds (Federal Transit Admin.
Section 5307 Formula Funds), Series 2004-B, AMBAC insured, 5.00% 2011 3,935 4,253 .39
Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds (Waste Management, Inc. Project),
Series 1997, AMT, 5.05% 2010 2,000 2,076 .19
Other securities 51,374 4.69
62,845 5.74
Indiana - 2.49% 27,287 2.49
Kentucky - 0.89%
City of Ashland, Pollution Control Rev. Ref. Bonds (Ashland Inc. Project),
Series 1999, 5.70% 2009 (escrowed to maturity) 4,150 4,545 .41
Other securities 5,216 .48
9,761 .89
Maryland - 0.72% 7,826 .72
Massachusetts - 2.66%
Housing Fin. Agcy., Single-family Housing Notes, Series S, AMT, 4.00% 2007 4,750 4,810 .44
Massachusetts Bay Transportation Auth., Sales Tax Bonds, Series 2004-C, 5.25% 2014 5,000 5,578 .51
Other securities 18,733 1.71
29,121 2.66
Michigan - 4.47%
Hospital Fin. Auth., Rev. Bonds (Ascension Health Credit Group), Series 1999-B-3,
5.30% 2033 (put 2006) 5,000 5,154 .47
Kent Hospital Fin. Auth., Rev. and Ref. Bonds (Spectrum Health), Series 2005-B,
5.00% 2011 4,000 4,279 .39
Strategic Fund, Solid Waste Disposal Limited Obligation Rev. Ref. Bonds (Waste
Management, Inc. Project), Series 2004, AMT, 3.00% 2013 (put 2007) 3,000 2,953 .27
Other securities 36,576 3.34
48,962 4.47
Missouri - 0.87%
Health and Educational Facs. Auth., Rev. Bonds (SSM Health Care), Series 2002-A,
5.00% 2011 5,255 5,615 .51
Other securities 3,884 .36
9,499 .87
Montana - 0.65%
City of Forsyth, Pollution Control Rev. Ref. Bonds (Avista Corp. Colstrip
Project), Series 1999-B, AMT, AMBAC insured, 5.125% 2034 (put 2008) 6,825 7,160 .65
Nebraska - 0.50% 5,468 .50
Nevada - 1.12% 12,206 1.12
New Jersey - 5.06%
Certs. of Part., Series 2004-A:
5.00% 2009 4,000 4,217
5.00% 2010-2012 7,000 7,461 1.07
Health Care Facs. Fin. Auth., Rev. and Ref. Bonds, Saint Clare's Hospital, Inc.
Issue, Series 2004-B, MBIA insured, 5.25% 2013 4,315 4,758 .43
Tobacco Settlement Fncg. Corp., Tobacco Settlement Asset-backed Bonds, Series 2003:
4.375% 2019 780 791
6.125% 2024 9,545 10,810 1.06
Transit Corp., Certs. of Part., Series 2003-A, AMBAC insured, 5.25% 2014 8,000 8,866 .81
Transportation Trust Fund Auth., Transportation System Bonds, Series 2004-B,
FGIC insured, 5.25% 2013 4,410 4,894 .45
Other securities 13,616 1.24
55,413 5.06
New York - 9.09%
Dormitory Auth., Third General Resolution Rev. Bonds (State University
Educational Facs. Issue), Series 2002-B, 5.25% 2023 (put 2012) 12,625 13,745 1.25
City of New York, G.O. Bonds, 4.50%-5.625% 2007-2013 13,250 14,113 1.29
Housing Fin. Agcy., Health Facs. Rev. Ref. Bonds (New York City), Series 1996-A,
6.00% 2006 5,450 5,640 .52
New York City Transitional Fin. Auth., Future Tax Secured Ref. Bonds, Series 2003-A,
5.50% 2026 11,000 12,131 1.11
Port Auth. of New York and New Jersey, Consolidated Bonds, Series 131, AMT:
5.00% 2008 4,260 4,480
5.00% 2009 4,000 4,240 .80
Urban Dev. Corp., Correctional and Youth Facs. Service Contract Rev. Bonds (Empire
State Dev. Corp.), Series 2002-A, 5.00% 2017 (put 2011) 4,000 4,256 .39
Other securities 40,861 3.73
99,466 9.09
North Carolina - 3.55%
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, 5.375%-7.00% 2007-2012 14,405 15,331 1.40
Other securities 23,580 2.15
38,911 3.55
Ohio - 2.16% 23,601 2.16
Pennsylvania - 1.53%
Erie County Industrial Dev. Auth., Environmental Improvement Rev. Ref. Bonds
(International Paper Co. Projects), Series 2002-A, 4.90% 2009 4,000 4,235 .39
Westmoreland County Industrial Dev. Auth., Rev. Bonds (National Waste and Energy
Corp.; Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 (put 2009) 2,000 2,068 .19
Other securities 10,482 .95
16,785 1.53
Puerto Rico - 1.41%
Public Fin. Corp., Commonwealth Appropriation Bonds, Series 2004-A, 5.75% 2027 (put 2012) 6,000 6,593 .60
Other securities 8,854 .81
15,447 1.41
South Carolina - 0.56% 6,123 .56
South Dakota - 0.54% 5,859 .54
Tennessee - 2.10%
Memphis-Shelby County Airport Auth., Special Facs. Rev. Ref. Bonds (Federal Express
Corp.), Series 2001, 5.00% 2009 7,490 7,866 .72
Health, Educational and Housing Fac. Board of the County of Shelby, Rev. Bonds
(Baptist Memorial Health Care), Series 2004-A, 5.00% 2020 (put 2008) 8,500 8,904 .81
Other securities 6,252 .57
23,022 2.10
Texas - 17.98%
Angelina and Neches River Auth., Pollution Control Rev. Ref. Bonds (Temple-Inland
Forest Products Corp. Project), Series 1991, 5.65% 2012 5,350 5,571 .51
Brazos River Auth., AMT:
Collateralized Pollution Control Rev. Ref. Bonds (Texas Utilities Electric Co.
Project), Series 1994-B, 5.40% 2029 (put 2006) 1,000 1,016
Pollution Control Rev. Ref. Bonds (TXU Electric Co. Project), Series 2001-C,
5.75% 2036 (put 2011) 4,550 4,865 .54
Brazos River Harbor Navigation Dist. of Brazoria County, Environmental Facs. Rev.
Bonds (Dow Chemical Co. Project), Series 2002-A-4, AMT, 5.20% 2033 (put 2008) 6,450 6,728 .61
Gulf Coast Waste Disposal Auth., Solid Waste Disposal Rev. Bonds (Waste Management
of Texas, Inc. Denton County Project), Series 2003-B, AMT, 3.50% 2028 (put 2007) 1,000 993 .09
Harris County:
Permanent Improvement and Ref. Bonds, Series 2002, 5.00% 2010 4,645 5,008 .46
Tax and Subordinate Lien Rev. Ref. Bonds, Series 2004-B, FSA insured, 5.00% 2032
(put 2012) 9,250 9,936 .91
Sabine River Auth., Pollution Control Rev. Ref. Bonds (TXU Electric Co. Project):
Series 2001-A, 5.50% 2022 (put 2011) 2,000 2,125
Series 2001-B, AMT, 5.75% 2030 (put 2011) 4,675 5,014 .65
Sam Rayburn Municipal Power Agcy., Power Supply System Rev. Ref. Bonds:
Series 2002-A, 5.50% 2010 4,740 5,160 .47
Series 2002-B, RADIAN insured, 5.00% 2009 5,200 5,486 .50
City of San Antonio:
Electric and Gas Systems Rev. Ref. Bonds:
New Series 2002, 5.25% 2011 4,500 4,901
5.25%-5.30% 2011-2014 6,000 6,405 1.03
Hotel Occupancy Tax Subordinate Lien, Rev. Ref. Bonds, Series 2004-B, AMBAC
insured, 5.00% 2034 (put 2008) 4,000 4,211 .38
Transportation Commission, G.O. Bonds, Series 2005-A, 5.00% 2013 4,250 4,640 .43
Turnpike Auth., Central Turnpike System, Second Tier Bond Anticipation Notes,
Series 2002, 5.00% 2008 7,000 7,359 .67
Other securities 117,402 10.73
196,820 17.98
Virginia - 2.02%
Fairfax County Econ. Dev. Auth., Resource Recovery Rev. Ref. Bonds, Series A, AMT,
AMBAC insured, 6.10% 2011 5,000 5,577 .51
Industrial Dev. Auth. of the County of Charles City, Tax-Exempt Adjustable Mode
Solid Waste Disposal Rev. Bonds (Waste Management, Inc.), Series 2002,
AMT, 6.25% 2027 (put 2012) 2,000 2,205 .20
Port Auth., Commonwealth Port Fund Rev. Bonds (2002 Resolution), Series 2002,
AMT, 5.00% 2011 4,345 4,680 .43
Other securities 9,667 .88
22,129 2.02
Washington - 7.02%
Energy Northwest, Columbia Generating Station Electric Rev. Ref. Bonds,
5.25%-5.50% 2008-2012 5,500 6,017 .55
G.O. Bonds, Series 1999-S-1, 5.00% 2012 4,700 4,946 .45
Public Power Supply System, Rev. Ref. Bonds (Nuclear Project No. 2):
Series 1997-B, 5.50% 2006 1,000 1,025
Series 1998-A, 5.00% 2012 4,000 4,252 .48
Public Utility Dist. No. 1 of Snohomish County, Generation System Rev. Ref. Bonds,
Series 2002-B, FSA insured, 5.25% 2011 4,000 4,393 .40
Other securities 56,188 5.14
76,821 7.02
Wisconsin - 2.61% 28,571 2.61
Other states & U.S. territories - 4.06%
State of Louisiana, Public Facs. Auth., Hospital Rev. Ref. Bonds (Franciscan
Missionaries of Our Lady Health System Project), Series 1998-A, FSA insured,
5.50% 2006 4,500 4,609 .42
Virgin Islands, Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund Loan
Notes), Senior Lien, Series 1998-A, 5.20% 2010 4,765 5,011 .46
Other securities 34,965 3.18
44,585 4.06
Total bonds & notes (cost: $1,047,419,000) 1,062,136 97.02
Principal Market Percent
amount value of net
Short-term securities - 2.26% (000) (000) assets
North Slope Borough, Exempt Fac. Industrial Rev. Bonds (BP Exploration (Alaska)
Inc. Project), Series 2001, AMT, 2.40% 2025 (1) 1,000 1,000 .09
State of Indiana, City of Whiting, Environmental Facs. Rev. Bonds (BP Products
North America Inc. Projects), Series 2003, AMT, 2.40% 2038 (1) 1,100 1,100 .10
State of Louisiana, Parish of Plaquemines, Environmental Rev. Ref. Bonds
(BP Exploration & Oil Inc. Project-British Petroleum Co. p.l.c., Guarantor),
Series 1995, AMT, 2.40% 2025 (1) 1,100 1,100 .10
State of New Mexico, Tax and Rev. Anticipation Notes, Series 2005, 4.00% 6/30/2006 5,000 5,062 .46
State of Ohio, Solid Waste Rev. Bonds (BP Exploration & Oil Inc. Project-British
Petroleum Co. p.l.c., Guarantor), Series 1998, AMT, 2.40% 2033 (1) 1,000 1,000 .09
Public Building Auth. of the City of Clarksville, Adjustable Rate Pooled Fncg.
Rev. Bonds (Tennessee Municipal Bond Fund):
Series 2001, 2.34% 2031 (1) 3,700 3,700
Series 2003, 2.34% 2033 (1) 1,390 1,390 .47
State of Texas, Gulf Coast Industrial Dev. Auth., Exempt Facs. Industrial Rev.
Bonds (BP Global Power Corp. Project), Series 2003, AMT, 2.40% 2038 (1) 1,100 1,100 .10
State of Washington, Industrial Dev. Corp. of the Port of Bellingham,
Environmental Facs. Industrial Rev. Bonds (BP West Coast Products LLC
Project), Series 2002, AMT, 2.40% 2033 (1) 1,300 1,300 .12
Other securities 7,974 .73
Total short-term securities (cost: $24,727,000) 24,726 2.26
Total investment securities (cost: $1,072,146,000) 1,086,862 99.28
Other assets less liabilities 7,833 .72
Net assets $1,094,695 100.00%
"Other securities" includes all issues that are not disclosed separately in the
summary investment portfolio, including some securities for which resale may be
limited to qualified institutional buyers or may require registration. The total
value of such restricted securities was $8,850,000, which represented 0.81% of
the net assets of the fund.
(1) Coupon rate may change periodically; the date of the next scheduled
coupon rate change is considered to be the maturity date.
See Notes to Financial Statements
Key to abbreviations
Agcy. = Agency
AMT = Alternative Minimum Tax
Auth. = Authority
Certs. 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
TECP = Tax-Exempt Commercial Paper
Financial statements
Statement of assets and liabilities
at July 31, 2005 (dollars and shares in thousands,
except per-share amounts)
Assets:
Investment securities at market (cost: $1,072,146) $1,086,862
Cash 56
Receivables for:
Sales of fund's shares $4,068
Interest 12,727 16,795
1,103,713
Liabilities:
Payables for:
Purchases of investments 5,515
Repurchases of fund's shares 1,821
Dividends on fund's shares 827
Investment advisory services 250
Services provided by affiliates 505
Deferred Trustees' compensation 75
Other fees and expenses 25 9,018
Net assets at July 31, 2005 $1,094,695
Net assets consist of:
Capital paid in on shares of beneficial interest $1,083,556
Undistributed net investment income 287
Accumulated net realized loss (3,864)
Net unrealized appreciation 14,716
Net assets at July 31, 2005 $1,094,695
Shares of beneficial interest issued and outstanding - unlimited shares
authorized (71,342 total shares outstanding)
Net assets Shares outstanding Net asset value per share (1)
Class A $857,254 55,868 $15.34
Class B 50,475 3,289 15.34
Class C 99,692 6,497 15.34
Class F 39,618 2,582 15.34
Class R-5 47,656 3,106 15.34
(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 $15.94.
See Notes to Financial Statements
Statement of operations
for the year ended July 31, 2005 (dollars in thousands)
Investment income:
Income:
Interest $42,409
Fees and expenses:(1)
Investment advisory services $3,251
Distribution services 4,172
Transfer agent services 193
Administrative services 269
Reports to shareholders 72
Registration statement and prospectus 118
Postage, stationery and supplies 32
Trustees' compensation 40
Auditing and legal 67
Custodian 8
State and local taxes 13
Other 51
Total fees and expenses before waiver 8,286
Less waiver of fees and expenses:
Investment advisory services 204
Total fees and expenses after waiver 8,082
Net investment income 34,327
Net realized gain and unrealized depreciation on investments:
Net realized gain on investments 1,273
Net unrealized depreciation on investments (1,396)
Net realized gain and unrealized depreciation (123)
Net increase in net assets resulting from operations $34,204
(1) Additional information related to class-specific fees and expenses
is included in the Notes to Financial Statements.
See Notes to Financial Statements
Statements of changes in net assets
(dollars in thousands)
Year ended July 31
2005 2004
Operations:
Net investment income $34,327 $32,078
Net realized gain on investments 1,273 399
Net unrealized (depreciation) appreciation on investments (1,396) 7,334
Net increase in net assets resulting from operations 34,204 39,811
Dividends paid or accrued to
shareholders from net investment income (34,263) (32,008)
Capital share transactions 59,391 63,598
Total increase in net assets 59,332 71,401
Net assets:
Beginning of year 1,035,363 963,962
End of year (including undistributed
net investment income: $287 and $256, respectively) $1,094,695 $1,035,363
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Limited Term Tax-Exempt Bond Fund of America (the "fund") is
registered under the Investment Company Act of 1940 as an open-end, diversified
management investment company. The fund seeks high current income exempt from
federal income taxes, consistent with preservation of capital, through
investments in tax-exempt securities with effective maturities between three and
10 years.
The fund offers five share classes consisting of four retail share classes and
one retirement plan share class. The retirement plan share class (R-5) is sold
without any sales charges and does not carry any conversion rights. The fund's
share classes are described below:
- ---------------------------------------------------------------------------------------------------------
Share class Initial sales charge Contingent deferred sales Conversion feature
charge upon redemption
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class A Up to 3.75% None (except 1% for None
certain redemptions
within one year of
purchase without an
initial sales charge)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class B None Declines from 5% to 0% Class B converts to Class A
for redemptions within after eight years
six years of purchase
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase 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 proceeds. 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, including short-term
securities purchased with more than 60 days left to maturity, 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 bid prices, if asked prices are not available) or
at prices for securities of comparable maturity, quality and type.
Some securities may be valued based on their effective maturity, the
date the security is expected to be called or refunded by the issuer
or the date at which the investor can redeem the security with the
issuer. Short-term securities purchased within 60 days to maturity are
valued at amortized cost, which approximates market value. The value
of short-term securities originally purchased with maturities greater
than 60 days are determined based on an amortized value to par when
they reach 60 days or less remaining to maturity. 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 fair
valued as determined in good faith under procedures adopted by
authority of the fund's Board of Trustees. Various factors may be
reviewed in order to make a good faith determination of a security's
fair value. These factors include, but are not limited to, the type
and cost of the security; contractual or legal restrictions on resale
of the security; relevant financial or business developments of the
issuer; actively traded similar or related securities; conversion or
exchange rights on the security; related corporate actions;
significant events occurring after the close of trading in the
security; and changes in overall market conditions.
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) are allocated daily among the
various share classes based on the relative value of their settled
shares. 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 for financial reporting purposes. As of
July 31, 2005, the cost of investment securities for federal income tax purposes
was $1,071,805,000.
During the year ended July 31, 2005, the fund reclassified $33,000 from
undistributed net investment income to capital paid in on shares of beneficial
interest to align financial reporting with tax reporting.
As of July 31, 2005, the components of distributable earnings on a tax basis
were as follows (dollars in thousands):
Undistributed net investment income $848
Short-term and long-term capital loss deferrals (3,864)
Gross unrealized appreciation on investment securities 19,894
Gross unrealized depreciation on investment securities (4,837)
Net unrealized appreciation on investment securities 15,057
Short-term and long-term capital loss deferrals above include capital loss
carryforwards of $80,000, $3,146,000 and $638,000 expiring in 2009, 2011 and
2012, respectively. These numbers reflect the utilization of capital loss
carryforwards of $1,273,000. The capital loss carryforwards will be used to
offset any capital gains realized by the fund in future years through the
expiration dates. The fund will not make distributions from capital gains while
capital loss carryforwards remain. During the year ended July 31, 2005, the fund
realized, on a tax basis, a net capital gain of $1,273,000.
Tax-exempt income distributions paid or accrued to shareholders were as follows
(dollars in thousands):
Year ended July 31
Share class 2005 2004
Class A $ 27,357 $ 25,390
Class B 1,348 1,359
Class C 2,610 2,691
Class F 1,182 973
Class R-5 1,766 1,595
Total $ 34,263 $ 32,008
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 0.15% on such assets in excess of $1
billion. The agreement also provides for monthly fees, accrued daily, of 3.00%
on the first $3,333,333 of the fund's monthly gross income and 2.50% on such
income in excess of $3,333,333. CRMC is currently waiving a portion of
investment advisory services fees. From September 1, 2004, through March 31,
2005, CRMC waived 5% of these fees and increased the waiver to 10% on April 1,
2005. During the year ended July 31, 2005, total investment advisory services
fees waived by CRMC were $204,000. As a result, the fee shown on the
accompanying financial statements of $3,251,000, which was equivalent to an
annualized rate of 0.301%, was reduced to $3,047,000, or 0.282% 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
Trustees approves certain categories of expenses that are used to
finance activities primarily intended to sell fund shares and service
existing accounts. The plans provide for payments, based on an
annualized percentage of average daily net assets, ranging from 0.30%
to 1.00% as noted below. In some cases, the Board of Trustees has
limited the amounts that may be paid to less than the maximum allowed
by the plans. 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 in agreements with AFD for
providing certain shareholder services. The remaining amounts
available to be paid under each plan are paid to selling dealers to
compensate them for their selling activities.
For Class A, the Board of Trustees 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 0.30% is not exceeded. As of July 31,
2005, unreimbursed expenses subject to reimbursement totaled
$1,513,000 for Class A.
------------------------------------------------ ----------------------------- -----------------------------
Share class Currently approved limits Plan limits
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class A 0.30% 0.30%
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class B 1.00 1.00
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class C 1.00 1.00
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class F 0.25 0.50
------------------------------------------------ ----------------------------- -----------------------------
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 share classes other than classes A and B.
Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for
Class R-5) based on its respective average daily net assets. Each
relevant share 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 July
31, 2005, were as follows (dollars in thousands):
-----------------------------------------------------------------------------------------------
Share class Distribution Transfer agent Administrative services
services services
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
CRMC administrative Transfer agent
services services
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Class A $2,503 $178 Not applicable Not applicable
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Class B 520 15 Not applicable Not applicable
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Class C 1,057 Included $152 $9
in
administrative
services
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Class F 92 Included 52 4
in
administrative
services
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 50 2
in
administrative
services
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Total $4,172 $193 $254 $15
-----------------------------------------------------------------------------------------------
DEFERRED TRUSTEES' COMPENSATION - Since the adoption of the deferred
compensation plan in 1994, Trustees 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. Trustees' compensation of $40,000, shown on the accompanying
financial statements, includes $33,000 in current fees (either paid in cash or
deferred) and a net increase of $7,000 in the value of the deferred amounts.
AFFILIATED OFFICERS AND TRUSTEES - Officers and certain Trustees of the fund are
or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated
officers or Trustees 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):
Share class Sales(1) Reinvestments of dividends
Amount Shares Amount Shares
Year ended July 31, 2005
Class A $ 245,921 15,908 $ 21,168 1,371
Class B 5,192 336 938 60
Class C 21,921 1,418 1,911 124
Class F 18,028 1,166 890 57
Class R-5 14,312 926 887 58
Total net increase
(decrease) $ 305,374 19,754 $ 25,794 1,670
Year ended July 31, 2004
Class A $ 306,758 19,782 $ 19,963 1,289
Class B 10,841 701 992 64
Class C 36,609 2,360 2,114 137
Class F 19,277 1,244 722 47
Class R-5 22,006 1,412 762 49
Total net increase
(decrease) $ 395,491 25,499 $ 24,553 1,586
Share class Repurchases(1) Net increase (decrease)
Amount Shares Amount Shares
Year ended July 31, 2005
Class A $ (203,111) (13,151) $ 63,978 4,128
Class B (7,850) (508) (1,720) (112)
Class C (31,723) (2,054) (7,891) (512)
Class F (11,956) (774) 6,962 449
Class R-5 (17,137) (1,113) (1,938) (129)
Total net increase
(decrease) $ (271,777) (17,600) $ 59,391 3,824
Year ended July 31, 2004
Class A $ (277,216) (17,961) $ 49,505 3,110
Class B (10,932) (707) 901 58
Class C (37,982) (2,459) 741 38
Class F (16,473) (1,066) 3,526 225
Class R-5 (13,843) (898) 8,925 563
Total net increase
(decrease) $ (356,446) (23,091) $ 63,598 3,994
(1) Includes exchanges between share classes of the fund.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $219,220,000 and $128,928,000, respectively, during the year
ended July 31, 2005.
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 July 31, 2005, the custodian fee of $8,000, shown on the accompanying
financial statements, includes $3,000 that was offset by this reduction, rather
than paid in cash.
Financial highlights (1)
Income from investment operations(2)
Net
Net asset gains (losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
Class A:
Year ended 7/31/2005 $15.33 $.51 $.01 $.52
Year ended 7/31/2004 15.17 .51 .16 .67
Year ended 7/31/2003 15.28 .52 (.11) .41
Year ended 7/31/2002 15.08 .58 .20 .78
Year ended 7/31/2001 14.43 .62 .65 1.27
Class B:
Year ended 7/31/2005 15.33 .40 .01 .41
Year ended 7/31/2004 15.17 .40 .16 .56
Year ended 7/31/2003 15.28 .42 (.11) .31
Year ended 7/31/2002 15.08 .47 .20 .67
Year ended 7/31/2001 14.43 .48 .69 1.17
Class C:
Year ended 7/31/2005 15.33 .38 .01 .39
Year ended 7/31/2004 15.17 .38 .16 .54
Year ended 7/31/2003 15.28 .40 (.11) .29
Year ended 7/31/2002 15.08 .45 .20 .65
Period from 3/15/2001 to 7/31/2001 14.92 .15 .17 .32
Class F:
Year ended 7/31/2005 15.33 .50 .01 .51
Year ended 7/31/2004 15.17 .49 .16 .65
Year ended 7/31/2003 15.28 .51 (.11) .40
Year ended 7/31/2002 15.08 .55 .20 .75
Period from 3/15/2001 to 7/31/2001 14.92 .16 .19 .35
Class R-5:
Year ended 7/31/2005 15.33 .54 .01 .55
Year ended 7/31/2004 15.17 .54 .16 .70
Year ended 7/31/2003 15.28 .56 (.11) .45
Period from 7/15/2002 to 7/31/2002 15.27 .02 .01 .03
Financial highlights (1)
Dividends
(from net Net asset Net assets,
investment value, end Total end of period
income) of period return(3) (in millions)
Class A:
Year ended 7/31/2005 $(.51) $15.34 3.40% $857
Year ended 7/31/2004 (.51) 15.33 4.40 793
Year ended 7/31/2003 (.52) 15.17 2.71 738
Year ended 7/31/2002 (.58) 15.28 5.32 497
Year ended 7/31/2001 (.62) 15.08 8.99 306
Class B:
Year ended 7/31/2005 (.40) 15.34 2.69 50
Year ended 7/31/2004 (.40) 15.33 3.69 52
Year ended 7/31/2003 (.42) 15.17 1.98 51
Year ended 7/31/2002 (.47) 15.28 4.52 17
Year ended 7/31/2001 (.52) 15.08 8.24 2
Class C:
Year ended 7/31/2005 (.38) 15.34 2.57 100
Year ended 7/31/2004 (.38) 15.33 3.55 107
Year ended 7/31/2003 (.40) 15.17 1.86 106
Year ended 7/31/2002 (.45) 15.28 4.38 49
Period from 3/15/2001 to 7/31/2001 (.16) 15.08 2.14 4
Class F:
Year ended 7/31/2005 (.50) 15.34 3.32 40
Year ended 7/31/2004 (.49) 15.33 4.32 33
Year ended 7/31/2003 (.51) 15.17 2.61 29
Year ended 7/31/2002 (.55) 15.28 5.11 13
Period from 3/15/2001 to 7/31/2001 (.19) 15.08 2.34 2
Class R-5:
Year ended 7/31/2005 (.54) 15.34 3.63 48
Year ended 7/31/2004 (.54) 15.33 4.63 50
Year ended 7/31/2003 (.56) 15.17 2.93 40
Period from 7/15/2002 to 7/31/2002 (.02) 15.28 .23 27
Financial highlights (1)
Ratio of expenses Ratio of expenses
to average to average Ratio of
net assets net assets net income
before after to average
waivers waivers (4) net assets
Class A:
Year ended 7/31/2005 .66% .64% 3.29%
Year ended 7/31/2004 .68 .66 3.27
Year ended 7/31/2003 .71 .66 3.37
Year ended 7/31/2002 .75 .70 3.86
Year ended 7/31/2001 .80 .75 4.18
Class B:
Year ended 7/31/2005 1.37 1.35 2.59
Year ended 7/31/2004 1.38 1.37 2.57
Year ended 7/31/2003 1.40 1.35 2.63
Year ended 7/31/2002 1.45 1.40 3.06
Year ended 7/31/2001 1.60 1.59 3.24
Class C:
Year ended 7/31/2005 1.49 1.47 2.46
Year ended 7/31/2004 1.51 1.50 2.43
Year ended 7/31/2003 1.54 1.49 2.51
Year ended 7/31/2002 1.58 1.52 2.92
Period from 3/15/2001 to 7/31/2001 .75 .75 1.05
Class F:
Year ended 7/31/2005 .74 .72 3.20
Year ended 7/31/2004 .76 .75 3.17
Year ended 7/31/2003 .79 .74 3.27
Year ended 7/31/2002 .87 .82 3.69
Period from 3/15/2001 to 7/31/2001 .60 .60 1.18
Class R-5:
Year ended 7/31/2005 .44 .42 3.51
Year ended 7/31/2004 .46 .44 3.49
Year ended 7/31/2003 .49 .44 3.61
Period from 7/15/2002 to 7/31/2002 .02 .02 .16
Year ended July 31
2005 2004 2003 2002 2001
Portfolio turnover rate for all classes of shares 12% 10% 10% 9% 21%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) The ratios in this column reflect the impact, if any, of certain waivers
from CRMC. During the periods shown, CRMC reduced fees for investment
advisory services for all share classes.
See Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of Limited Term Tax-Exempt Bond Fund
of America:
In our opinion, the accompanying statement of assets and liabilities, including
the summary investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Limited Term Tax-Exempt Bond Fund
of America (the "Fund") at July 31, 2005, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at July 31, 2005 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Los Angeles, California
September 9, 2005
OTHER SHARE CLASS RESULTS unaudited
Class B, Class C and Class F
Figures shown are past results and are not predictive of results in future
periods. Current and future results may be lower or higher than those shown.
Share prices and returns will vary, so investors may lose money. For the most
current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended Life
June 30, 2005 (the most recent calendar quarter): 1 year 5 years of class
Class B shares -- first sold 3/15/00
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares
are sold within six years of purchase -1.03% +4.19% +4.41%
Not reflecting CDSC +3.97% +4.53% +4.57%
Class C shares -- first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only if
shares are sold within one year of purchase +2.84% -- +3.50%
Not reflecting CDSC +3.84% -- +3.50%
Class F shares* -- first sold 3/15/01
Not reflecting annual asset-based fee charged
by sponsoring firm +4.60% -- +4.23%
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 19 for details.
*These shares are sold without any initial or contingent deferred sales charge.
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. The information below is provided for the
fund's fiscal year ending July 31, 2005.
Shareholders may exclude from federal taxable income any exempt-interest
dividends paid by the fund from net investment income. The fund designates 100%
of the dividends paid by the fund earned during the fiscal year as
exempt-interest dividends.
INDIVIDUAL SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2006 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2005 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
EXPENSE EXAMPLE
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs such as initial sales charges on purchase payments and contingent deferred
sales charges on redemptions (loads); and (2) ongoing costs, including
management fees; distribution and service (12b-1) fees; and other expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the fund so you can compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
invested at the beginning of the period and held for the entire period (February
1, 2005, through July 31, 2005).
ACTUAL EXPENSES:
The first line of each share class in the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses paid during
period" to estimate the expenses you paid on your account during this period.
There are some account fees that are charged to certain types of accounts, such
as Individual Retirement Accounts (generally, a $10 fee is charged to set up the
account and an additional $10 fee is charged to the account annually) that would
increase the amount of expenses paid on your account. In addition, retirement
plan participants may be subject to certain fees charged by the plan sponsor,
and Class F shareholders may be subject to fees charged by financial
intermediaries, typically ranging from 0.75% to 1.50% of assets annually
depending on services offered. You can estimate the impact of these fees by
adding the amount of the fees to the total estimated expenses you paid on your
account during the period as calculated above. In addition, your ending account
value would also be lower by the amount of these fees.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second line of each share class in the table below provides information
about hypothetical account values and hypothetical expenses based on the actual
expense ratio for the share class and an assumed rate of return of 5.00% per
year before expenses, which is not the actual return of the share class. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the fund and other
funds. To do so, compare this 5.00% hypothetical example with the 5.00%
hypothetical examples that appear in the shareholder reports of the other funds.
There are some account fees that are charged to certain shareholders, such as
Individual Retirement Accounts (generally, a $10 fee is charged to set up the
account and an additional $10 fee is charged to the account annually) that would
increase the amount of expenses paid on your account. In addition, retirement
plan participants may be subject to certain fees charged by the plan sponsor,
and Class F shareholders may be subject to fees charged by financial
intermediaries, typically ranging from 0.75% to 1.50% of assets annually
depending on services offered. You can estimate the impact of these fees by
adding the amount of the fees to the total estimated expenses you paid on your
account during the period as calculated above. In addition, your ending account
value would also be lower by the amount of these fees.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of each share class in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning account Ending account Expenses paid Annualized
value 2/1/2005 value 7/31/2005 during period(1) expense ratio
Class A -- actual return $1,000.00 $1,006.24 $3.13 .63%
Class A -- assumed 5% return 1,000.00 1,021.67 3.16 .63
Class B -- actual return 1,000.00 1,002.78 6.65 1.34
Class B -- assumed 5% return 1,000.00 1,018.15 6.71 1.34
Class C -- actual return 1,000.00 1,002.22 7.25 1.46
Class C -- assumed 5% return 1,000.00 1,017.55 7.30 1.46
Class F -- actual return 1,000.00 1,005.89 3.53 .71
Class F -- assumed 5% return 1,000.00 1,021.27 3.56 .71
Class R-5 -- actual return 1,000.00 1,007.33 2.09 .42
Class R-5 -- assumed 5% return 1,000.00 1,022.71 2.11 .42
(1) Expenses are equal to the annualized expense ratio, multiplied by the
average account value over the period, multiplied by the number of days in
the period (181), and divided by 365 (to reflect the one-half year period).
APPROVAL OF RENEWAL OF INVESTMENT ADVISORY AND SERVICE AGREEMENT
The fund's Board has approved the renewal of the fund's Investment Advisory and
Service Agreement (the "agreement") with Capital Research and Management Company
("CRMC") for an additional one-year term through May 31, 2006. The renewal of
the agreement was approved by the Board following the recommendation of the
fund's Contracts Committee (the "committee"), which is comprised of all of the
fund's independent Board members. The information, material facts and
conclusions that formed the basis for the committee's recommendation and the
Board's subsequent approval are described below.
1. INFORMATION RECEIVED
Materials reviewed -- During the course of each year, the independent Board
members receive a wide variety of materials relating to the services provided by
CRMC, including reports on the fund's investment results, portfolio composition,
portfolio trading practices, shareholder services, and other information
relating to the nature, extent and quality of services provided by CRMC to the
fund. In addition, the committee requests and reviews supplementary information
that includes extensive materials regarding the fund's investment results,
advisory fee and expense comparisons (including comparisons to advisory fees
charged by an affiliate of CRMC to institutional clients), financial and
profitability information regarding CRMC, descriptions of various functions such
as compliance monitoring and portfolio trading practices, and information about
the personnel providing investment management and administrative services to the
fund.
Review process -- The committee received assistance and advice regarding legal
and industry standards from independent counsel to the independent Board
members. The committee discussed the renewal of the agreement with CRMC
representatives and in a private session with independent legal counsel at which
no representatives of CRMC were present. In deciding to recommend the renewal of
the agreement, the committee did not identify any single or particular
information that, in isolation, was the controlling factor. This summary
describes the most important, but not all, of the factors considered by the
Board and the committee.
2. NATURE, EXTENT AND QUALITY OF SERVICES
CRMC, its personnel and its resources -- The Board and the committee considered
the depth and quality of CRMC's investment management process, including its
global research capabilities; the experience, capability and integrity of its
senior management and other personnel; the low turnover rates of its key
personnel; the overall financial strength and stability of its organization; and
the ability of its organizational structure to address the recent growth in
assets under management. The Board and the committee also considered that CRMC
made available to its investment professionals a variety of resources and
systems relating to investment management, compliance, trading, results and
portfolio accounting. They considered CRMC's commitment to investing in
information technology supporting investment management and compliance. They
further considered CRMC's continuing need to attract and retain qualified
personnel and to maintain and enhance its resources and systems.
Other services -- The Board and the committee considered CRMC's policies,
procedures and systems to ensure compliance with applicable laws and regulations
and its commitment to these programs; its efforts to keep the Board members
informed; and its attention to matters that may involve conflicts of interest
with the fund. The Board and the committee also considered the nature, extent,
quality and cost of administrative, distribution and shareholder services
provided by CRMC to the fund under the agreement and other agreements, including
the information technology, legal, and fund accounting and treasury functions.
The Board and the committee concluded that the nature, extent and quality of the
services provided by CRMC has benefited and will continue to benefit the fund
and its shareholders.
3. INVESTMENT RESULTS
The Board and committee considered the investment results of the fund in light
of its objective of providing current income that is exempt from regular federal
income tax, consistent with its stated maturity and quality standards and
preservation of capital. They compared the fund's total returns with the total
returns of the Lipper Intermediate Municipal Debt Funds Index (the Lipper
category that includes the fund), the averages of the funds included in the
index each year and the funds included for the entire 10-year period ended
December 31, 2004, and the Lehman (7-Year) Municipal Bond Index (another
relevant index given the composition of the fund's investment portfolio). The
Board and the committee noted that for the one-, three-, five- and 10-year
periods ended December 31, 2004, the fund's investment results approximated the
Lipper Intermediate Municipal Debt Funds Index and the funds' averages, and
slightly lagged those of the Lehman bond index. The Board and the committee
further noted that the fund's relative results were affected by its goal of
preserving capital and its broad maturity standard (average effective maturities
between three and 10 years). The Board and the committee ultimately concluded
that CRMC's record in managing the fund indicates that its continued management
will benefit the fund and its shareholders.
4. ADVISORY FEES AND TOTAL EXPENSES
The Board and the committee reviewed the advisory fees and total expenses of the
fund (each as a percentage of average net assets) and compared such amounts with
the median fee and expense levels of all other funds in the Lipper Intermediate
Municipal Debt Funds Index and the funds included in the index for the entire
10-year period ended December 31, 2004. The Board and the committee observed
that the fund's advisory fee was well below the median fee for all such other
funds; that the fund's expense level (excluding 12b-1 and other distribution
expenses) was well below the median for the funds in the index; and that the
fund's total expense level was well below the median of all funds in the index
and approximated the level of the other funds included in the index for the
entire 10-year period. The Board and the committee also noted the complexwide 5%
voluntary advisory fee waiver that CRMC put into effect during 2004, and the
additional 5% advisory fee waiver it proposed to implement during the
forthcoming year. The Board and the committee concluded that the relatively low
level of the fees charged by CRMC will benefit the fund and its shareholders.
The Board and the committee also reviewed information regarding the advisory
fees paid by institutional clients of an affiliate of CRMC with similar
investment mandates. They concluded that although the fees paid by those clients
generally were lower than those paid by the American Funds, the differences
appropriately reflected CRMC's significantly greater responsibilities with
respect to the American Funds and the more comprehensive regulatory regime
applicable to mutual funds.
5. ADVISER COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board and the committee reviewed information regarding CRMC's costs of
providing services to the American Funds, as well as the resulting level of
profits to CRMC, noting that those results were comparable to the reported
results of several large publicly held investment management companies. The
committee also received information during the past year regarding the structure
and manner in which CRMC's investment professionals were compensated and CRMC's
view of the relationship of such compensation to the attraction and retention of
quality personnel. The Board and the committee considered CRMC's need to invest
in technology, infrastructure and staff to reinforce and offer new services and
to accommodate changing regulatory requirements. They further considered that
breakpoints in the fund's advisory fee structure provide for reductions in the
level of fees charged by CRMC to the fund as fund assets increase, reflecting
economies of scale in the cost of operations that are shared with fund
shareholders. The Board and the committee concluded that the fund's cost
structure was reasonable and that CRMC was sharing economies of scale with the
fund and its shareholders, to their benefit.
6. ANCILLARY BENEFITS
The Board and the committee considered a variety of other benefits received by
CRMC and its affiliates as a result of CRMC's relationship with the fund and the
other American Funds, including fees for administrative services provided to
certain share classes; fees paid to CRMC's affiliated transfer agent; sales
charges and distribution fees received and retained by the fund's principal
underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC's
institutional management affiliate. The Board and the committee reviewed CRMC's
portfolio trading practices, noting that while CRMC receives the benefit of
research provided by broker-dealers executing portfolio transactions on behalf
of the fund, it does not obtain third-party research or other services in return
for allocating brokerage to such broker-dealers.
7. CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board and the committee concluded that the agreement is
fair and reasonable to the fund and its shareholders, that the fund's
shareholders received reasonable value in return for the advisory fees and other
amounts paid to CRMC by the fund, and that the renewal of the agreement was in
the best interests of the fund and its shareholders.
BOARD OF TRUSTEES
"NON-INTERESTED" TRUSTEES
Year first
elected
a Trustee
Name and age of the fund(1) Principal occupation(s) during past five years
Ambassador 1999 Corporate director and author; former U.S.
Richard G. Capen, Jr., 71 Ambassador to Spain; former Vice Chairman, Knight-Ridder, Inc.
(communications company); former Chairman and Publisher, The Miami
Herald
H. Frederick Christie, 72 1993 Private investor; former President and CEO, The Mission Group
(non-utility holding company, subsidiary of Southern California
Edison Company)
Diane C. Creel, 56 1994 Chairman of the Board and CEO, Ecovation, Inc. (organic waste
management)
Martin Fenton, 70 1993 Chairman of the Board and CEO, Senior Resource
Chairman of the Board Group LLC (development and management of senior
(Independent and Non-Executive) living communities)
Leonard R. Fuller, 59 1994 President and CEO, Fuller Consulting (financial management consulting
firm)
R. Clark Hooper, 59 2005 President, Dumbarton Group LLC (consulting); former Executive Vice
President -- Policy and Oversight, NASD
Richard G. Newman, 70 1993 Chairman of the Board and CEO, AECOM Technology Corporation
(engineering, consulting and professional technical services)
Frank M. Sanchez, 61 1999 Principal, The Sanchez Family Corporation dba McDonald's Restaurants
(McDonald's licensee)
"NON-INTERESTED" TRUSTEES
Number of
portfolios
in fund
complex(2)
overseen by
Name and age Trustee Other directorships(3) held by Trustee
Ambassador 14 Carnival Corporation
Richard G. Capen, Jr., 71
H. Frederick Christie, 72 19 Ducommun Incorporated; IHOP Corporation; Southwest Water Company
Diane C. Creel, 56 12 Allegheny Technologies; BF Goodrich; Foster Wheeler Ltd.; Teledyne
Technologies
Martin Fenton, 70 16 None
Chairman of the Board
(Independent and Non-Executive)
Leonard R. Fuller, 59 14 None
R. Clark Hooper, 59 13 None
Richard G. Newman, 70 13 Sempra Energy; Southwest Water Company
Frank M. Sanchez, 61 12 None
"INTERESTED" TRUSTEES(4)
Year first
elected a
Trustee or Principal occupation(s) during past five years and
Name, age and officer of positions held with affiliated entities or the principal
position with fund the fund(1) underwriter of the fund
Abner D. Goldstine, 75 1993 Senior Vice President and Director, Capital
Vice Chairman of the Board Research and Management Company
Paul G. Haaga, Jr., 56 1993 Executive Vice President and Director, Capital
Vice Chairman of the Board Research and Management Company; Director, The Capital Group
Companies, Inc.(5)
Brenda S. Ellerin, 42 1997 Senior Vice President, Capital Research Company(5)
President
"INTERESTED" TRUSTEES(4)
Number of
portfolios
in fund
complex(2)
Name, age and overseen by
position with fund Trustee Other directorships(3) held by Trustee
Abner D. Goldstine, 75 12 None
Vice Chairman of the Board
Paul G. Haaga, Jr., 56 16 None
Vice Chairman of the Board
Brenda S. Ellerin, 42 1 None
President
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
FUND TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING AMERICAN
FUNDS SERVICE COMPANY AT 800/421-0180. THE ADDRESS FOR ALL TRUSTEES AND OFFICERS
OF THE FUND IS 333 SOUTH HOPE STREET, LOS ANGELES, CA 90071, ATTENTION: FUND
SECRETARY.
(1) Trustees 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) which serves as the underlying
investment vehicle 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 Trustee as a director of a public company or a
registered investment company.
(4) "Interested persons" within the meaning of the 1940 Act, on the basis of
their affiliation with the 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.
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 principal
position with fund the fund(1) underwriter of the fund
Neil L. Langberg, 52 1993 Vice President -- Investment Management Group,
Senior Vice President Capital Research and Management Company
Kristine M. Nishiyama, 35 2003 Vice President and Counsel -- Fund Business
Vice President Management Group, Capital Research and
Management Company; Vice President and Counsel, Capital Bank and
Trust Company(5)
Karl J. Zeile, 38 2004 Vice President and Director, Capital Research
Vice President Company(5)
Julie F. Williams, 57 1993 Vice President -- Fund Business Management
Secretary Group, Capital Research and Management Company
Sharon G. Moseley, 37 2003 Vice President -- Fund Business Management
Treasurer Group, Capital Research and Management Company
Kimberly S. Verdick, 40 1994 Assistant Vice President -- Fund Business
Assistant Secretary Management Group, Capital Research
and Management Company
Susi M. Silverman, 35 2001 Vice President -- Fund Business Management
Assistant Treasurer Group, 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
CUSTODIAN OF ASSETS
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
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
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 Limited Term Tax-Exempt Bond Fund of
America. Class A shares are subject to a 3.75% maximum up-front sales charge
that declines for accounts (and aggregated investments) of $100,000 or more and
is eliminated for purchases of $1 million 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 0.71 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 0.83 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 0.08 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.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE AMERICAN FUNDS. THIS AND OTHER IMPORTANT INFORMATION IS
CONTAINED IN THE FUND'S PROSPECTUS, WHICH CAN BE OBTAINED FROM YOUR FINANCIAL
ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY ALSO CALL
AMERICAN FUNDS SERVICE COMPANY (AFS) AT 800/421-0180 OR VISIT THE AMERICAN FUNDS
WEBSITE AT AMERICANFUNDS.COM.
"American Funds Proxy Voting Guidelines" -- which describes how we vote proxies
relating to portfolio securities -- is available free of charge on the U.S.
Securities and Exchange Commission (SEC) website at www.sec.gov, on the American
Funds website or upon request by calling AFS. The fund files its proxy voting
record with the SEC for the 12 months ended June 30 by August 31. The report
also is available on the SEC and American Funds websites.
A complete July 31, 2005, portfolio of Limited Term Tax-Exempt Bond Fund of
America's investments is available free of charge on the SEC website or upon
request by calling AFS.
Limited Term Tax-Exempt Bond Fund of America files a complete list of its
portfolio holdings with the SEC for the first and third quarters of each fiscal
year on Form N-Q. This form is available free of charge on the SEC website or
upon request by calling AFS. You may also review or, for a fee, copy the form at
the SEC's Public Reference Room in Washington, D.C. (800/SEC-0330).
This report is for the information of shareholders of Limited Term 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 September 30, 2005, 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 30 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. More than half 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 Fund(SM)
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 Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(R)
Washington Mutual Investors Fund(SM)
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 Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities Fund(SM)
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 America(SM)
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
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-943-0905P
Litho in USA WG/PNL/8062-S4882
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 Richard G. Newman, 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
Registrant:
a) Audit Fees:
2004 $42,000
2005 $44,000
b) Audit- Related Fees:
2004 none
2005 none
c) Tax Fees:
2004 $6,000
2005 $6,000
The tax fees consist of professional services relating to the
preparation of the Registrant's tax returns.
d) All Other Fees:
2004 none
2005 none
Adviser and affiliates (includes only fees for non-audit services billed to
the adviser and affiliates for engagements that relate directly to the
operations and financial reporting of the Registrant and were subject to
the pre-approval policies described below):
a) Not Applicable
b) Audit- Related Fees:
2004 none
2005 none
c) Tax Fees:
2004 none
2005 none
d) All Other Fees:
2004 none
2005 none
The Registrant's Audit Committee will pre-approve all audit and permissible
non-audit services that the Committee considers compatible with maintaining the
auditors' independence. The pre-approval requirement will extend to all
non-audit services provided to the Registrant, the investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Registrant, if the engagement
relates directly to the operations and financial reporting of the Registrant.
The Committee will not delegate its responsibility to pre-approve these services
to the investment adviser. The Committee may delegate to one or more Committee
members the authority to review and pre-approve audit and permissible non-audit
services. Actions taken under any such delegation will be reported to the full
Committee at its next meeting. The pre-approval requirement is waived with
respect to non-audit services if certain conditions are met. The pre-approval
requirement was not waived for any of the non-audit services listed above
provided to the Registrant, adviser, and affiliates.
Aggregate non-audit fees paid to the Registrant's auditors, including fees for
all services billed to the Registrant and the adviser and affiliates that
provide ongoing services to the Registrant were $6,000 for fiscal year 2004 and
$6,000 for fiscal year 2005. The non-audit services represented by these amounts
were brought to the attention of the Committee and considered to be compatible
with maintaining the auditors' independence.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed
issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 - Schedule of Investments
[logo - American Funds(R)]
LIMITED TERM TAX-EXEMPT BOND FUND OF AMERICA(SM)
Investment portfolio
July 31, 2005
Principal amount Market value
Bonds & notes -- 97.02% (000) (000)
ALABAMA -- 0.42%
21st Century Auth., Tobacco Settlement Asset-backed Rev. Bonds, Series 2001, 5.25% 2006 $1,000 $ 1,021
Industrial Dev. Board of the City of Butler, Pollution Control Rev. Ref. Bonds
(James River Project), Series 1993, 5.50% 2005 1,000 1,005
Industrial Dev. Board of the City of Selma, Environmental Improvement Rev. Ref. Bonds
(International Paper Co. Projects), Series 2003-A, 4.75% 2011 2,500 2,606
4,632
ALASKA -- 1.55%
Industrial Dev. and Export Auth., Revolving Fund Ref. Bonds, Series 2002-A, AMT,
MBIA insured, 5.50% 2009 1,685 1,805
Northern Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2000, 5.60% 2010 1,000 1,073
Northern Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2001, 4.75% 2015 1,955 1,985
Northern Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds, Series 2001, 5.375% 2021 6,365 6,554
Student Loan Corp., Capital Project Rev. Bonds, Series 2004-A, MBIA insured, 4.00% 2011 1,000 1,022
Student Loan Corp., Student Loan Rev. Bonds, Series 2000-A, AMT, AMBAC insured, 5.65% 2010 2,140 2,329
Student Loan Corp., Educational Loan Rev. Bonds, Series 2004-A-3, AMT, 5.25% 2011 2,000 2,148
16,916
ARIZONA -- 0.78%
Industrial Dev. Auth. of the County of Mohave, Correctional Facs. Contract Rev. Bonds
(Mohave Prison, LLC Project), Series 2004-A, XLCA insured, 5.00% 2011 1,345 1,442
Industrial Dev. Auth. of the County of Yavapai, Solid Waste Disposal Rev. Bonds
(Waste Management, Inc. Project), Series 2003-A-2, AMT, 4.45% 2028 (put 2008) 3,750 3,782
Water Infrastructure Fin. Auth., Water Quality Rev. Ref. Bonds, Series 2004-A, 5.00% 2012 3,000 3,281
8,505
CALIFORNIA -- 5.64%
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 2,700 2,839
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Bonds (San Diego
Hospital Association), Series 2001-A, 5.25% 2006 1,025 1,047
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(American Baptist Homes of the West Facs. Project), Series 1997-A, 5.25% 2007 435 447
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(American Baptist Homes of the West Facs. Project), Series 1997-A, 5.50% 2007 510 526
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(Episcopal Homes Foundation), Series 1998, 4.80% 2006 2,000 2,021
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(Episcopal Homes Foundation), Series 1998, 5.00% 2007 1,405 1,439
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(Episcopal Homes Foundation), Series 1998, 5.00% 2008 2,455 2,531
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Rev. Ref. Certs. of Part.
(Episcopal Homes Foundation), Series 1998, 5.125% 2013 1,000 1,031
Association of Bay Area Governments, Fin. Auth. for Nonprofit Corps., Southern California
Presbyterian Homes Obligated Group, Rev. Bonds (Redwood Senior Homes and Services),
Series 2002, 5.50% 2012 1,695 1,803
City of Cathedral, Cove Improvement Dist. No. 2004-02, Limited Obligation Improvement Bonds, 4.15% 2012 500 500
City of Cathedral, Cove Improvement Dist. No. 2004-02, Limited Obligation Improvement Bonds, 4.40% 2014 715 715
Econ. Recovery Bonds, Series 2004-B-4, 5.00% 2023 (put 2008) 500 526
Golden State Tobacco Securitization Corp., Enhanced Tobacco Settlement Asset-backed Bonds,
Series 2003-B, 5.00% 2011 1,000 1,084
Health Facs. Fncg. Auth., Rev. Bonds (Catholic Healthcare West), Series 2004-H, 4.45% 2026 (put 2011) 1,000 1,026
Statewide Communities Dev. Auth., Certs. of Part. (Catholic Healthcare West Project),
Series 1999-A, 6.00% 2009 510 536
Joint Powers Health Fncg. Auth., Certs. of Part. (Community Hospitals of Central California Project),
Series 2001, 4.75% 2007 1,005 1,021
City of Long Beach, Harbor Rev. Bonds, Series 2002-B, AMT, MBIA insured, 5.25% 2013 2,550 2,787
City of Long Beach, Harbor Rev. Ref. Bonds, Series 2005-A, AMT, MBIA insured, 5.00% 2014 2,000 2,156
Community Redev. Agcy. of the City of Los Angeles, Lease Rev. Bonds (Vermont Manchester
Social Services Project), Series 2005, AMBAC insured, 5.00% 2013 1,900 2,054
Pollution Control Fncg. Auth., Solid Waste Disposal Rev. Bonds (Waste Management, Inc. Project),
Series 2003-A, AMT, 5.00% 2038 (put 2013) 2,000 2,069
Pollution Control Fncg. Auth., Solid Waste Disposal Rev. Ref. Bonds (USA Waste Services, Inc. Project),
Series 1998-A, AMT, 5.10% 2018 (put 2008) 4,300 4,440
Pollution Control Fncg. Auth., Solid Waste Disposal Rev. Ref. Bonds (Waste Management, Inc. Project),
Series 2002-A, AMT, 3.125% 2022 (put 2006) 2,000 1,990
Public Works Board, Lease Rev. Bonds (Dept. of Corrections, State Prison, Kern County at Delano II),
Series 2003-C, 5.00% 2011 1,350 1,449
Public Works Board, Lease Rev. Bonds (Dept. of Mental Health-Coalinga State Hospital),
Series 2004-A, 5.00% 2011 1,500 1,610
San Diego Unified Port Dist., Rev. Bonds, Series A, AMT, MBIA insured, 5.00% 2009 1,000 1,063
San Diego Unified Port Dist., Rev. Bonds, Series A, AMT, MBIA insured, 5.00% 2011 1,420 1,525
Statewide Communities Dev. Auth., Apartment Dev. Rev. Ref. Bonds (Irvine Apartment Communities, LP),
Series 1998-A-1, AMT, 5.05% 2025 (put 2008) 4,000 4,129
Statewide Communities Dev. Auth., Multi-family Housing Rev. Ref. Bonds
(Equity Residential/Parkview Terrace Club Apartments), Issue 1999-B, 5.20% 2029 (put 2009) 1,150 1,212
Statewide Communities Dev. Auth., Multi-family Housing Rev. Ref. Bonds
(Equity Residential/Skylark Apartments), Issue 1999-D, 5.20% 2029 (put 2009) 1,500 1,581
Statewide Communities Dev. Auth., Rev. Bonds (Daughters of Charity Health System),
Series 2005-G, 5.25% 2011 2,210 2,386
Statewide Communities Dev. Auth., Rev. Bonds (Kaiser Permanente), Series 2002-D, 4.35% 2036 (put 2007) 220 223
Statewide Communities Dev. Auth., Rev. Bonds (Kaiser Permanente), Series 2004-I, 3.45% 2035 (put 2011) 1,000 980
Statewide Communities Dev. Auth., Rev. Bonds (Redlands Community Hospital),
Series 2005-A, RADIAN insured, 5.00% 2014 1,300 1,392
City of Torrance, Hospital Rev. Bonds (Torrance Memorial Medical Center), Series 2001-A, 4.70% 2009 1,010 1,051
City of Torrance, Hospital Rev. Bonds (Torrance Memorial Medical Center), Series 2001-A, 4.80% 2010 940 987
Val Verde Unified School Dist., Certs. of Part. (Ref. and School Construction Project),
Series 2005-B, FGIC insured, 5.00% 2014 1,000 1,086
Dept. of Water Resources, Power Supply Rev. Bonds, Series 2002-A, 5.50% 2008 2,000 2,121
Dept. of Water Resources, Power Supply Rev. Bonds, Series 2002-A, 5.50% 2010 1,000 1,089
Dept. of Water Resources, Power Supply Rev. Bonds, Series 2002-A, FSA insured, 5.25% 2012 1,000 1,102
Dept. of Water Resources, Power Supply Rev. Bonds, Series 2002-A, MBIA insured, 5.25% 2010 2,000 2,172
61,746
COLORADO -- 2.54%
City and County of Denver, Airport System Rev. Ref. Bonds, Series 2001-A, AMT, FGIC insured, 5.50% 2008 2,340 2,491
City and County of Denver, Airport System Rev. Ref. Bonds, Series 2002-E, AMT, FGIC insured, 5.00% 2010 2,000 2,127
City and County of Denver, Airport System Rev. Ref. Bonds, Series 2002-E, AMT, FGIC insured, 5.00% 2011 2,000 2,132
City and County of Denver, Airport System Rev. Ref. Bonds, Series 2002-E, AMT, FGIC insured, 5.00% 2012 1,500 1,600
Denver Convention Center Hotel Auth., Rev. Bonds, Series 2003-A, XLCA insured, 5.00% 2012 4,000 4,326
EagleBend Affordable Housing Corp., Rev. Ref. Bonds (Multi-family Housing Project),
Series 1997-A, 5.75% 2007 1,125 1,134
Health Facs. Auth., Rev. Bonds (Catholic Health Initiatives), Series 1998-A, 5.375% 2010 2,145 2,285
Health Facs. Auth., Rev. Bonds (Catholic Health Initiatives), Series 2001, 5.375% 2010 2,000 2,167
Health Facs. Auth., Rev. Bonds (Catholic Health Initiatives), Series 2002-A, 5.00% 2010 1,500 1,593
Health Facs. Auth., Rev. Bonds (Catholic Health Initiatives), Series 2002-A, 5.00% 2012 1,000 1,074
Health Facs. Auth., Rev. Bonds (Covenant Retirement Communities, Inc.), Series 2002-B, 5.25% 2011 1,450 1,535
Health Facs. Auth., Rev. Bonds (Evangelical Lutheran Good Samaritan Society Project),
Series 2002, 5.00% 2010 1,000 1,048
Health Facs. Auth., Rev. Bonds (Evangelical Lutheran Good Samaritan Society Project),
Series 2002, 5.00% 2011 1,100 1,150
Health Facs. Auth., Rev. Bonds (Evangelical Lutheran Good Samaritan Society Project),
Series 2004-B, 3.75% 2034 (put 2009) 1,200 1,187
Housing and Fin. Auth., Single-family Program Senior and Subordinate Bonds, Series 1998-D-3, 6.125% 2023 870 877
University of Colorado Hospital Auth., Hospital Rev. Ref. Bonds, Series 1997-A, AMBAC insured, 5.50% 2007 1,000 1,054
27,780
CONNECTICUT -- 1.19%
Higher Education Supplemental Loan Auth., Rev. Bonds (Connecticut Family Education Loan Program),
Series 2005-A, AMT, MBIA insured, 4.20% 2014 1,000 1,013
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, Series 1996-A, 6.40% 2011(1) 4,000 4,188
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, Series 1997-B, 5.55% 2008(1) 1,000 1,063
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds, Series 1997-B, 5.70% 2012(1) 3,400 3,599
Mohegan Tribe of Indians, Gaming Auth. Priority Distribution Payment, Public Improvement Bonds,
Series 2001, 5.375% 2011 3,000 3,173
13,036
DELAWARE -- 0.19%
Econ. Dev. Auth., Pollution Control Rev. Ref. Bonds (Delmarva Power & Light Co. Project),
Series 2001-C, AMBAC insured, 4.90% 2026 (put 2011) 2,000 2,126
DISTRICT OF COLUMBIA -- 1.24%
Certs. of Part., Lease Rev. Bonds, Series 2002, AMBAC insured, 5.25% 2010 1,000 1,072
Certs. of Part., Lease Rev. Bonds, Series 2002, AMBAC insured, 5.25% 2013 2,000 2,176
Friendship Public Charter School, Inc. Issue Rev. Bonds, Series 2003, ACA insured, 5.00% 2012 1,000 1,053
G.O. Ref. Bonds, Series 1993-B-2, FSA insured, 5.50% 2010 2,500 2,725
G.O. Ref. Bonds, Series 1999, FSA insured, 5.50% 2009 695 751
G.O. Ref. Bonds, Series 1999, FSA insured, 5.50% 2009 (escrowed to maturity) 195 212
Hospital Rev. Ref. Bonds (Medlantic Healthcare Group, Inc. Issue),
Series 1997-A, MBIA insured, 6.00% 2006 (escrowed to maturity) 1,000 1,033
Hospital Rev. Ref. Bonds (Medlantic Healthcare Group, Inc. Issue),
Series 1997-A, MBIA insured, 6.00% 2007 (escrowed to maturity) 1,250 1,325
Tax Increment Rev. Bonds (Gallery Place Project), Series 2002, FSA insured, 5.25% 2009 1,570 1,682
Tax Increment Rev. Bonds (Gallery Place Project), Series 2002, FSA insured, 5.25% 2010 1,400 1,516
13,545
FLORIDA -- 3.72%
Broward County Resource Recovery Rev. Ref. Bonds (Wheelabrator North Broward Inc. Project),
Series 2001-A, 5.50% 2008 1,000 1,068
Dade County, Resource Recovery Fac. Rev. Ref. Bonds, Series 1996, AMT, AMBAC insured, 6.00% 2006 3,500 3,620
Escambia County Health Facs. Auth., Rev. Bonds (Ascension Health Credit Group),
Series 2003-A, 5.25% 2012 1,535 1,679
Highlands County Health Facs. Auth., Hospital Rev. Bonds (Adventist Health System/Sunbelt
Obligated Group), Series 2002-B, 5.00% 2010 2,000 2,120
Hillsborough County Aviation Auth., Tampa International Airport Rev. Bonds,
Series 2003-A, AMT, MBIA insured, 5.25% 2012 1,500 1,629
Hillsborough County Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Tampa General Hospital Project),
Series 2003-A, 5.00% 2010 2,905 3,077
Hillsborough County Industrial Dev. Auth., Hospital Rev. Ref. Bonds (Tampa General Hospital Project),
Series 2003-A, 5.00% 2012 2,195 2,334
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds (Shell Point/Alliance Obligated Group,
Shell Point Village Project), Series 1999-A, 5.25% 2005 2,185 2,195
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds (Shell Point/Alliance Obligated Group,
Shell Point Village Project), Series 1999-A, 5.25% 2007 1,250 1,286
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds (Shell Point/Alliance Obligated Group,
Shell Point Village Project), Series 1999-A, 5.50% 2008 1,000 1,042
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds (Shell Point/Alliance Obligated Group,
Shell Point Village Project), Series 1999-A, 5.50% 2010 1,200 1,264
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds (Shell Point/Alliance Obligated Group,
Shell Point Village Project), Series 1999-A, 5.75% 2012 1,800 1,898
Lee County, Solid Waste System Rev. Ref. Bonds, Series 2001, AMT, MBIA insured, 5.25% 2009 3,000 3,206
Lee County, Solid Waste System Rev. Ref. Bonds, Series 2001, AMT, MBIA insured, 5.25% 2010 2,000 2,155
Miami-Dade County Industrial Dev. Auth., Solid Waste Disposal Rev. Bonds (Waste Management, Inc.
Project), Series 2004, AMT, 4.00% 2018 (put 2009) 1,000 990
School Board of Miami-Dade County, Certs. of Part., Series 2003-B, MBIA insured, 5.00% 2031 (put 2011) 2,915 3,117
School Board of Miami-Dade County, Certs. of Part., Series 2003-C, MBIA insured, 5.00% 2027 (put 2008) 1,000 1,049
Palm Beach County, Public Improvement Ref. Rev. Bonds (Convention Center Project), Series 2004,
FGIC insured, 5.00% 2030 (put 2011) 4,650 4,951
St. Johns River Power Park System (JEA), Rev. Ref. Bonds, Issue Two, Series Eighteen, 5.00% 2009 1,000 1,066
Village Community Dev. Dist. No. 5 (Sumter County), Special Assessment Rev. Bonds,
Series 2003-B, 5.00% 2008 1,015 1,022
40,768
GEORGIA -- 0.41%
City of Atlanta, Water and Wastewater Rev. Bonds, Series 2004, FSA insured, 5.00% 2012 2,000 2,178
Dev. Auth. of Cartersville, Sewage Facs. Rev. Ref. Bonds (Anheuser-Busch Project),
Series 1997, AMT, 5.625% 2009 1,250 1,334
Housing Auth. of the County of DeKalb, Multi-family Housing Rev. Ref. Bonds (Park at
Briarcliff Apartments Project), Series 1998-A, 4.55% 2028 (put 2008) 995 1,025
4,537
IDAHO -- 0.56%
Housing and Fin. Association, Single-family Mortgage Bonds, Series 1998-C-2, AMT,
FHA insured, 5.25% 2011 205 206
Housing and Fin. Association, Single-family Mortgage Bonds, Series 1998-E-3, AMT, 5.125% 2011 285 286
Housing and Fin. Association, Single-family Mortgage Bonds, Series 1998-H, AMT, 4.65% 2012 495 497
Housing and Fin. Association, Single-family Mortgage Bonds, Series 1998-I-2, AMT, 4.70% 2012 245 245
Housing and Fin. Association, Single-family Mortgage Bonds, Series 2001-E, Class III, AMT, 5.40% 2021 785 809
Housing and Fin. Association, Single-family Mortgage Bonds, Series 2002-F, Class III, AMT, 4.875% 2023 2,045 2,055
Housing and Fin. Association, Single-family Mortgage Bonds, Series 2003-C, Class III, AMT, 4.50% 2023 1,060 1,039
Housing and Fin. Association, Single-family Mortgage Bonds, Series 2003-E, Class III, AMT, 5.15% 2023 985 1,015
6,152
ILLINOIS -- 5.74%
Chicago Board of Education, Unlimited Tax G.O. Bonds (Dedicated Revenues), Series 2001-C,
FSA insured, 5.25% 2010 1,000 1,091
City of Chicago, O'Hare International Airport, General Airport Rev. Ref. Bonds, Series 2004-B,
MBIA insured, 5.00% 2007 5,000 5,142
City of Chicago, O'Hare International Airport, Passenger Fac. Charge Rev. Bonds, Series 1996-A,
AMBAC insured, 5.60% 2010 3,000 3,094
Chicago Transit Auth., Capital Grant Receipts Rev. Bonds (Federal Transit Admin. Section
5307 Formula Funds), Series 2004-B, AMBAC insured, 5.00% 2011 3,935 4,253
Metropolitan Water Reclamation Dist. of Greater Chicago, G.O. Capital Improvement Bonds,
Limited Tax Series D of December 2002, 5.00% 2010 2,700 2,913
Community College Dist. No. 502, Counties of DuPage, Cook and Will, G.O. Bonds,
Series 2003-A, 5.00% 2011 1,000 1,085
Dev. Fin. Auth., Revolving Fund Rev. Bonds, Series 2002 (Master Trust), 5.00% 2009 2,000 2,131
Dev. Fin. Auth., Revolving Fund Rev. Bonds, Series 2002 (Master Trust), 5.00% 2010 1,500 1,612
Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds (Waste Management, Inc. Project),
Series 1997, AMT, 5.05% 2010 2,000 2,076
Educational Facs. Auth., Adjustable Medium Term Rev. Bonds (Field Museum of Natural History),
Series 2002, 4.05% 2036 (put 2011) 4,000 4,032
Educational Facs. Auth., Adjustable Medium Term Rev. Bonds (Northwestern University),
Series 1997, 5.00% 2032 (put 2009) 2,500 2,653
Educational Facs. Auth., Student Housing Rev. Bonds, Educational Advancement Fund, Inc.
(University Center Project), Series 2002, 5.25% 2010 1,015 1,060
G.O. Bonds, Illinois FIRST, Series of December 2002, 5.25% 2010 2,000 2,182
G.O. Ref. Bonds, Illinois FIRST, Series of August 2002, 5.25% 2008 1,000 1,062
G.O. Bonds, Series of April 1998, FSA insured, 5.50% 2009 1,945 2,077
G.O. Bonds, Series of April 1998, FSA insured, 5.50% 2009 (preref. 2008) 2,055 2,206
Health Facs. Auth., Rev. Bonds (Advocate Health Care Network), Series 1998-A, 5.25% 2005 1,615 1,617
Health Facs. Auth., Rev. Bonds (Advocate Health Care Network), Series 1998-A, 5.00% 2006 750 765
Health Facs. Auth., Rev. Bonds (Advocate Health Care Network), Series 1998-A, 5.00% 2006
(escrowed to maturity) 980 1,002
Health Facs. Auth., Rev. Bonds (Advocate Health Care Network), Series 2000, 5.30% 2008 2,000 2,115
Health Facs. Auth., Rev. Bonds (Advocate Health Care Network), Series 2000, 6.125% 2011 (preref. 2010) 1,000 1,134
Health Facs. Auth., Rev. Ref. Bonds (Advocate Health Care Network), Series 1997-A, 5.10% 2005 1,815 1,817
Health Facs. Auth., Rev. Bonds (Centegra Health System), Series 1998, 5.50% 2007 2,480 2,584
Health Facs. Auth., Rev. Bonds (Highland Park Hospital Project), Series 1997-A,
FGIC insured, 5.50% 2005 765 769
Health Facs. Auth., Rev. Bonds (OSF Healthcare System), Series 1999, 5.25% 2005 855 860
Health Facs. Auth., Rev. Bonds (OSF Healthcare System), Series 1999, 5.375% 2006 900 924
Health Facs. Auth., Rev. Bonds (OSF Healthcare System), Series 1999, 5.50% 2008 1,000 1,060
Health Facs. Auth., Rev. Ref. Bonds (OSF Healthcare System), Series 2004, 5.00% 2007 3,000 3,107
Health Facs. Auth., Rev. Ref. Bonds (OSF Healthcare System), Series 2004, 5.25% 2010 2,000 2,143
Health Facs. Auth., Rev. Ref. Bonds (Northwestern Medical Faculty Foundation, Inc.),
Series 1998, MBIA insured, 5.25% 2006 1,810 1,864
Health Facs. Auth., Rev. Ref. Bonds (University of Chicago Hospitals and Health System),
Series 2003, MBIA insured, 5.00% 2008 1,000 1,051
Indian Prairie Community, Unit School Dist. No. 204, DuPage and Will Counties, School Building Bonds
(Naperville/Aurora), Series 1998, 5.25% 2011 (preref. 2008) 1,275 1,364
62,845
INDIANA -- 2.49%
Boone County Hospital Association, Lease Rev. Bonds, Series 2001, FGIC insured, 5.00% 2009 1,200 1,272
Health Fac. Fncg. Auth., Rev. Bonds (Ascension Health Credit Group), Series 2002-F, 5.50% 2011 1,640 1,803
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Charity Obligated Group), Series 1999-D, 5.50% 2008 1,000 1,062
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Charity Obligated Group), Series 1999-D, 5.50% 2011 2,000 2,158
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Charity Obligated Group, Daughters of
Charity National Health System), Series 1997-D, 5.00% 2026 (preref. 2007) 1,390 1,447
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Clarian Health Partners, Inc.), Series 1996-A,
MBIA insured, 5.25% 2008 1,000 1,050
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Community Health Network Project), Series 2005-A,
AMBAC insured, 5.00% 2012 1,195 1,291
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Methodist Hospitals, Inc.), Series 2001, 5.25% 2008 1,000 1,048
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Methodist Hospitals, Inc.), Series 2001, 5.25% 2009 2,415 2,552
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Methodist Hospitals, Inc.), Series 2001, 5.25% 2010 1,445 1,537
Health Fac. Fncg. Auth., Hospital Rev. Bonds (Methodist Hospitals, Inc.), Series 2001, 5.25% 2011 1,525 1,630
State Revolving Fund Program Bonds, Series 1998-A, 5.00% 2010 3,085 3,251
State Revolving Fund Program Bonds, Series 2001-A, 5.50% 2011 1,500 1,660
Trustees of Ivy Tech State College, Student Fee Bonds, Series H, AMBAC insured, 5.00% 2011 2,000 2,160
Trustees of Ivy Tech State College, Student Fee Bonds, Series H, AMBAC insured, 5.00% 2012 1,000 1,084
Trustees of Purdue University, Certs. of Part., Series 2001-A, 5.00% 2009 1,000 1,064
Trustees of Purdue University, Certs. of Part., Series 2001-A, 5.00% 2010 1,135 1,218
27,287
IOWA -- 0.29%
Fin. Auth., Hospital Rev. Bonds (Mercy Medical Center Project), Series 1999, FSA insured, 5.30% 2009 1,000 1,073
Tobacco Settlement Auth., Asset-backed Bonds, Series 2001-B, 5.50% 2011 1,000 1,075
Tobacco Settlement Auth., Asset-backed Bonds, Series 2001-B, 5.50% 2014 1,000 1,066
3,214
KANSAS -- 0.23%
Unified Government of Wyandotte County/Kansas City, Tax-Exempt Sales Tax Special Obligation
Rev. Ref. Bonds (Redev. Project Area B), 1st Lien Series 2005-B, 3.75% 2012 1,000 1,003
Unified Government of Wyandotte County/Kansas City, Tax-Exempt Sales Tax Special Obligation
Rev. Ref. Bonds (Redev. Project Area B), 1st Lien Series 2005-C, 3.85% 2013 1,500 1,500
2,503
KENTUCKY -- 0.89%
City of Ashland, Pollution Control Rev. Ref. Bonds (Ashland Inc. Project), Series 1999,
5.70% 2009 (escrowed to maturity) 4,150 4,545
Econ. Dev. Fin. Auth., Health System Rev. Bonds (Norton Healthcare, Inc.), Series 2000-A, 6.125% 2010 3,000 3,233
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement Rev. Bonds (Appalachian
Regional Healthcare, Inc. Project), Series 1997, 5.40% 2006 1,500 1,512
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement Rev. Bonds (Appalachian Regional
Healthcare, Inc. Project), Series 1997, 5.50% 2007 465 471
9,761
LOUISIANA -- 0.42%
Public Facs. Auth., Hospital Rev. Ref. Bonds (Franciscan Missionaries of Our Lady
Health System Project), Series 1998-A, FSA insured, 5.50% 2006 4,500 4,609
MAINE -- 0.09%
Housing Auth., Mortgage Purchase Bonds, Series 2001-E-1 (Non-AMT), 4.125% 2010 1,000 1,029
MARYLAND -- 0.72%
Anne Arundel County, Tax Increment Fncg. Bonds (Parole Town Center Project), Series 2002, 5.00% 2012 2,500 2,509
Health and Higher Educational Facs. Auth., Rev. Ref. Bonds (MedStar Health Issue), Series 2004, 5.00% 2010 1,755 1,844
Health and Higher Educational Facs. Auth., Rev. Ref. Bonds (MedStar Health Issue), Series 2004, 5.00% 2011 1,775 1,866
Health and Higher Educational Facs. Auth., Rev. Ref. Bonds (MedStar Health Issue), Series 2004, 5.00% 2013 1,530 1,607
7,826
MASSACHUSETTS -- 2.66%
Educational Fncg. Auth., Education Loan Rev. Ref. Bonds, Issue G, Series 2000-A, AMT,
MBIA insured, 5.55% 2008 1,415 1,470
Federal Highway Grant Anticipation Notes, Series 1998-A, 5.50% 2013 1,000 1,128
G.O. Bonds, Consolidated Loan of 2003, Series A, 5.25% 2013 2,000 2,206
G.O. Bonds, Consolidated Loan of 2004, Series A, 5.00% 2012 2,000 2,171
Health and Educational Facs. Auth., Rev. Bonds (Partners HealthCare System Issue), Series E, 5.00% 2010 1,000 1,069
Health and Educational Facs. Auth., Rev. Bonds (Partners HealthCare System Issue), Series E, 5.00% 2011 1,000 1,075
Health and Educational Facs. Auth., Rev. Bonds (Partners HealthCare System Issue), Series E, 5.00% 2012 1,500 1,618
Housing Fin. Agcy., Housing Bonds, Series 2003-D, 4.20% 2010 4,000 4,040
Housing Fin. Agcy., Single-family Housing Notes, Series S, AMT, 4.00% 2007 4,750 4,810
Industrial Fin. Agcy., Resource Recovery Rev. Ref. Bonds (Ogden Haverhill Project),
Series 1998-A, AMT, 5.15% 2007 1,550 1,591
Massachusetts Bay Transportation Auth., Sales Tax Bonds, Series 2004-C, 5.25% 2014 5,000 5,578
Municipal Wholesale Electric Co., Power Supply Project Rev. Bonds (Nuclear Project No. 5), Series A,
MBIA insured, 5.00% 2010 1,205 1,292
Municipal Wholesale Electric Co., Power Supply Project Rev. Bonds (Nuclear Project No. 6), Series A,
MBIA insured, 5.00% 2010 1,000 1,073
29,121
MICHIGAN -- 4.47%
Charter County of Wayne, Airport Rev. Ref. Bonds (Detroit Metropolitan Wayne County Airport),
Series 2002-D, AMT, FGIC insured, 5.25% 2011 3,530 3,814
Higher Education Student Loan Auth., Student Loan Rev. Ref. Bonds, Series XVII-F, AMT,
AMBAC insured, 4.45% 2010 2,000 2,062
Hospital Fin. Auth., Hospital Rev. Bonds (Henry Ford Health System), Series 1999-A, 5.50% 2008 1,000 1,061
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Henry Ford Health System), Series 2003-A, 5.25% 2010 2,000 2,125
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Henry Ford Health System), Series 2003-A, 5.25% 2011 2,000 2,137
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Detroit Medical Center Obligated Group),
Series 1993-A, 6.375% 2009 1,015 1,015
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Sinai Hospital of Greater Detroit), Series 1995, 6.00% 2008 635 633
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Detroit Medical Center Obligated Group),
Series 1993-B, AMBAC insured, 5.00% 2006 1,000 1,012
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Henry Ford Hospital), Series 1984-A,
AMBAC insured, 6.00% 2011 1,250 1,421
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Pontiac Osteopathic), Series 1994-A, 5.375% 2006 720 723
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Sparrow Obligated Group), Series 2001, 5.25% 2009 1,900 2,027
Hospital Fin. Auth., Hospital Rev. Ref. Bonds (Trinity Health Credit Group), Series 2000-A, 5.75% 2007 1,940 2,052
Hospital Fin. Auth., Rev. Bonds (Ascension Health Credit Group), Series 1999-B-3, 5.30% 2033 (put 2006) 5,000 5,154
Hospital Fin. Auth., Rev. Ref. Bonds (Hackley Hospital Obligated Group), Series 1998-A, 4.90% 2007 1,140 1,158
Hospital Fin. Auth., Rev. Ref. Bonds (MidMichigan Obligated Group), Series 1997-A, FSA insured, 5.50% 2007 2,775 2,896
Kent Hospital Fin. Auth., Rev. and Ref. Bonds (Spectrum Health), Series 2005-B, 5.00% 2011 4,000 4,279
Kent Hospital Fin. Auth., Rev. Bonds (Spectrum Health), Series 2001-A, 5.25% 2010 2,020 2,182
Municipal Bond Auth., Local Government Loan Program Rev. Bonds, Series 2003-C, 5.00% 2010 1,000 1,073
New Center Dev., Inc., Certs. of Part., Series 2004-A, MBIA insured, 5.00% 2031 (put 2011) 3,000 3,201
City of Saginaw Hospital Fin. Auth., Rev. Ref. Bonds (Covenant Medical Center, Inc.),
Series 2004-G, 5.00% 2011 1,395 1,478
City of Saginaw Hospital Fin. Auth., Rev. Ref. Bonds (Covenant Medical Center, Inc.),
Series 2004-G, 5.00% 2013 1,040 1,102
South Central Power Agcy., Power Supply System Rev. Ref. Bonds, Series 2002,
AMBAC insured, 5.00% 2010 1,110 1,197
State Trunk Line Fund Ref. Bonds, Series 1998-A, 5.25% 2011 1,000 1,099
Strategic Fund, Solid Waste Disposal Limited Obligation Rev. Ref. Bonds (Waste
Management, Inc. Project), Series 2004, AMT, 3.00% 2013 (put 2007) 3,000 2,953
Underground Storage, Tank Financial Assurance Auth., Rev. Ref. Bonds,
Series 1996-I, AMBAC insured, 5.50% 2009 (preref. 2006) 1,075 1,108
48,962
MINNESOTA -- 0.34%
Housing and Redev. Auth. of St. Paul and Minneapolis, Health Care Fac. Rev. Bonds,
Series 2003, 5.25% 2010 1,050 1,124
Housing Fin. Agcy., Single-family Mortgage Bonds, Series 2000-H, AMT, 4.25% 2006 980 990
Minneapolis - St. Paul Metropolitan Airports Commission, AMT, AMBAC insured, 5.50% 2008 1,500 1,577
3,691
MISSOURI -- 0.87%
Health and Educational Facs. Auth., Rev. Bonds (SSM Health Care), Series 2002-A, 5.00% 2011 5,255 5,615
Industrial Dev. Auth. of the City of Lee's Summit, Health Facs. Rev. Bonds (John Knox Village),
Series 2002, 5.75% 2009 1,255 1,339
Industrial Dev. Auth. of the City of Lee's Summit, Health Facs. Rev. Bonds (John Knox Village),
Series 2002, 5.875% 2010 1,325 1,443
City of St. Louis, Airport Rev. Ref. Bonds (Lambert-St. Louis International Airport),
Series 2003-A, FSA insured, 5.25% 2012 1,000 1,102
9,499
MONTANA -- 0.65%
City of Forsyth, Pollution Control Rev. Ref. Bonds (Avista Corp. Colstrip Project),
Series 1999-B, AMT, AMBAC insured, 5.125% 2034 (put 2008) 6,825 7,160
NEBRASKA -- 0.50%
Investment Fin. Auth., Single-family Housing Rev. Bonds, Series 2002-D, AMT, 3.90% 2009 1,045 1,055
Omaha Airport Auth., Airport Facs. Rev. Ref. Bonds, Series 2001, FSA insured, 5.50% 2012 1,155 1,263
Public Power Dist., General Rev. Bonds, Series 2005-B-1, FGIC insured, 5.00% 2015 2,875 3,150
5,468
NEVADA -- 1.12%
Clark County, Pollution Control Rev. Ref. Bonds (Southern California Edison Co.), AMT,
3.25% 2031 (put 2009) 3,000 2,940
Clark County School Dist., G.O. (Limited Tax) Ref. Bonds, Series 2002-A, FSA insured, 5.00% 2010 1,000 1,074
City of Henderson, Health Fac. Rev. Bonds (Catholic Healthcare West Project), Series 1998-A, 6.20% 2009 585 620
Housing Division, Single-family Mortgage Bonds, Series 1998-B-1, 5.20% 2011 300 304
City of Las Vegas, Redev. Agcy., Tax Increment Rev. Ref. Bonds (Fremont Street Project),
Series 2003-A, 5.00% 2011 3,450 3,598
City of Las Vegas, Redev. Agcy., Tax Increment Rev. Ref. Bonds (Fremont Street Project),
Series 2003-A, 4.50% 2012 3,625 3,670
12,206
NEW JERSEY -- 5.06%
Certs. of Part., Series 2004-A, 5.00% 2009 4,000 4,217
Certs. of Part., Series 2004-A, 5.00% 2010 3,500 3,718
Certs. of Part., Series 2004-A, 5.00% 2012 3,500 3,743
Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998-A, 5.00% 2006 1,275 1,280
Econ. Dev. Auth., First Mortgage Rev. Ref. Bonds (Fellowship Village Project), Series 1998-A, 5.05% 2007 1,375 1,392
Econ. Dev. Auth., School Facs. Construction Bonds, Series 2004-G, 4.00% 2010 3,000 3,083
Educational Facs. Auth., Rider University Issue Rev. Bonds, Series 2002-A, RADIAN insured, 5.25% 2012 1,795 1,936
Health Care Facs. Fin. Auth., Rev. and Ref. Bonds, Saint Clare's Hospital, Inc. Issue,
Series 2004-B, MBIA insured, 5.25% 2013 4,315 4,758
Tobacco Settlement Fncg. Corp., Tobacco Settlement Asset-backed Bonds, Series 2003, 4.375% 2019 780 791
Tobacco Settlement Fncg. Corp., Tobacco Settlement Asset-backed Bonds, Series 2003, 6.125% 2024 9,545 10,810
Transit Corp., Certs. of Part., Series 2003-A, AMBAC insured, 5.25% 2014 8,000 8,866
Transportation Trust Fund Auth., Transportation System Bonds, Series 2003-C, 5.00% 2008 2,000 2,098
Transportation Trust Fund Auth., Transportation System Bonds, Series 2003-C, 5.00% 2009 2,000 2,118
Transportation Trust Fund Auth., Transportation System Bonds, Series 2003-C, 5.00% 2010 1,600 1,709
Transportation Trust Fund Auth., Transportation System Bonds, Series 2004-B, FGIC insured, 5.25% 2013 4,410 4,894
55,413
NEW MEXICO -- 0.29%
Supplemental Severance Tax Bonds, Series 2002-A, 5.00% 2009 2,000 2,079
Supplemental Severance Tax Bonds, Series 2002-A, 5.00% 2010 (preref. 2007) 1,000 1,036
3,115
NEW YORK -- 9.09%
Castle Rest Residential Health Care Fac., Mortgage Rev. Bonds, Series 1997-A, FHA insured, 4.875% 2007 440 441
Dormitory Auth., Lease Rev. Bonds (State University Educational Facs. Issue),
Series 2003, XLCA insured, 5.25% 2032 (put 2013) 2,000 2,212
Dormitory Auth., Mental Health Services Facs. Improvement Rev. Bonds,
Series 1997-B, 6.00% 2007 990 1,034
Dormitory Auth., Mental Health Services Facs. Improvement Rev. Bonds,
Series 1997-B, 6.00% 2007 (escrowed to maturity) 10 10
Dormitory Auth., Rochester General Hospital Insured Rev. Bonds, Series 2005, RADIAN insured, 5.00% 2012 1,175 1,256
Dormitory Auth., Secured Hospital Rev. Ref. Bonds (Wyckoff Heights Medical Center),
Series 1998-H, 5.125% 2008 1,000 1,048
Dormitory Auth., State Personal Income Tax Rev. Bonds (Econ. Dev. and Housing), Series 2003-A, 5.00% 2012 3,500 3,805
Dormitory Auth., Third General Resolution Rev. Bonds (State University Educational Facs. Issue),
Series 2002-B, 5.25% 2023 (put 2012) 12,625 13,745
Housing Fin. Agcy., Health Facs. Rev. Ref. Bonds (New York City), Series 1996-A, 6.00% 2006 5,450 5,640
Housing Fin. Agcy., Health Facs. Rev. Ref. Bonds (New York City), Series 1996-A, 6.00% 2007 1,000 1,036
Local Government Assistance Corp. (A Public Benefit Corp.), Subordinate Lien Ref. Bonds,
Series 2003-A-2, 5.00% 2010 1,500 1,607
Long Island Power Auth., Electric System General Rev. Bonds, Series 2003-B, 5.00% 2006 2,000 2,058
Long Island Power Auth., Electric System General Rev. Bonds, Series 2003-B, 5.00% 2008 1,615 1,696
Long Island Power Auth., Electric System General Rev. Bonds, Series 2003-B, 5.00% 2010 3,000 3,200
Long Island Power Auth., Electric System General Rev. Bonds, Series 2003-B, 5.00% 2011 2,000 2,143
Metropolitan Transportation Auth., State Service Contract Ref. Bonds, Series 2002-A, 5.00% 2012 1,000 1,076
City of New York, G.O. Bonds, Fiscal 1997 Series L, 5.625% 2007 1,000 1,050
City of New York, G.O. Bonds, Fiscal 2001 Series B, 4.90% 2009 1,000 1,058
City of New York, G.O. Bonds, Fiscal 2001 Series B, 5.50% 2010 1,000 1,091
City of New York, G.O. Bonds, Fiscal 2001 Series D, 5.50% 2009 1,000 1,079
City of New York, G.O. Bonds, Fiscal 2001 Series F, 5.00% 2010 1,000 1,069
City of New York, G.O. Bonds, Fiscal 2002 Series G, 5.25% 2008 890 943
City of New York, G.O. Bonds, Fiscal 2002 Series G, 5.25% 2008 (escrowed to maturity) 110 117
City of New York, G.O. Bonds, Fiscal 2003 Series A, 5.125% 2010 2,000 2,149
City of New York, G.O. Bonds, Fiscal 2004 Series I, 4.50% 2012 3,000 3,138
City of New York, G.O. Bonds, Fiscal 2005 Series H, 5.00% 2011 1,250 1,342
City of New York, G.O. Bonds, Fiscal 2005 Series J, 5.00% 2013 1,000 1,077
New York City Transitional Fin. Auth., Future Tax Secured Ref. Bonds, Series 2003-A, 5.50% 2026 11,000 12,131
Port Auth. of New York and New Jersey, Consolidated Bonds, Series 131, AMT, 5.00% 2008 4,260 4,480
Port Auth. of New York and New Jersey, Consolidated Bonds, Series 131, AMT, 5.00% 2009 4,000 4,240
Thruway Auth., Local Highway and Bridge Service Contract Bonds, Series 2002, 5.25% 2010 2,000 2,159
Thruway Auth., State Personal Income Tax Rev. Bonds (Transportation), Series 2002-A, 5.25% 2010 1,500 1,624
Tobacco Settlement Fncg. Corp., Asset-backed Rev. Bonds, Series 2003-B-1, 5.00% 2008 2,000 2,097
Tobacco Settlement Fncg. Corp., Asset-backed Rev. Bonds, Series 2003-B-1, 5.00% 2009 2,000 2,121
Tobacco Settlement Fncg. Corp., Asset-backed Rev. Bonds, Series 2003-B-1, 5.00% 2010 2,000 2,141
Triborough Bridge and Tunnel Auth., General Rev. Ref. Bonds, Series 2002-B, 5.00% 2009 2,000 2,139
Triborough Bridge and Tunnel Auth., General Rev. Ref. Bonds, Series 2002-B, 5.00% 2010 3,000 3,237
Urban Dev. Corp., Correctional and Youth Facs. Service Contract Rev. Bonds (Empire State Dev. Corp.),
Series 2002-A, 5.00% 2017 (put 2011) 4,000 4,256
Urban Dev. Corp., Correctional and Youth Facs. Service Contract Rev. Bonds (Empire State Dev. Corp.),
Series 2002-A, 5.50% 2017 (put 2011) 2,500 2,721
99,466
NORTH CAROLINA -- 3.55%
City of Charlotte, Airport Rev. Bonds, Series 1999-B, AMT, MBIA insured, 5.125% 2009 1,035 1,096
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 1993-B, 7.00% 2008 1,950 2,106
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 1993-B, 6.125% 2009 1,750 1,888
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 1993-C, 5.50% 2007 3,800 3,914
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 2003-A, 5.50% 2010 1,500 1,606
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 2003-A, 5.50% 2011 1,000 1,078
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 2003-A, 5.50% 2012 2,155 2,342
Eastern Municipal Power Agcy., Power System Rev. Ref. Bonds, Series 2003-D, 5.375% 2010 2,250 2,397
G.O. Bonds, Certs. of Part. (Repair and Renovation Project), Series 2004-B, 5.00% 2011 1,000 1,080
Infrastructure Fin. Corp., Certs. of Part. (2005 Capital Improvements), Series 2005-A, 5.00% 2013 3,005 3,261
Infrastructure Fin. Corp., Lease-Purchase Rev. Bonds (North Carolina Correctional Facs.
Projects), Series 2003, 4.50% 2007 2,000 2,067
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 1992, MBIA insured, 6.00% 2010 3,000 3,325
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 1997-A, MBIA insured, 5.125% 2011 2,750 2,884
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 1999-B, 6.50% 2009 1,660 1,822
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 1999-B, 6.625% 2010 2,500 2,812
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 2003-A, 5.50% 2012 2,500 2,748
Municipal Power Agcy. No. 1, Catawba Electric Rev. Bonds, Series 2003-A, 5.50% 2013 2,250 2,485
38,911
OHIO -- 2.16%
Higher Educational Fac. Commission, Rev. Bonds (Kenyon College 2002 Project), 4.30% 2037 (put 2010) 2,000 2,063
Higher Educational Fac. Commission, Rev. Bonds (Kenyon College 2002 Project), 4.60% 2037 (put 2012) 2,000 2,086
County of Knox, Hospital Facs. Rev. Ref. Bonds (Knox Community Hospital),
Series 1998, ASSET GUARANTY insured, RADIAN insured, 4.70% 2008 1,155 1,195
County of Lorain, Hospital Facs. Rev. Bonds (Catholic Healthcare Partners), Series 2002-A, 5.00% 2010 1,945 2,060
County of Lorain, Hospital Facs. Rev. Bonds (Catholic Healthcare Partners), Series 2002-A, 5.50% 2011 2,040 2,224
County of Lorain, Hospital Facs. Rev. Bonds (Catholic Healthcare Partners), Series 2002-A, 5.50% 2012 2,150 2,360
County of Lorain, Hospital Facs. Rev. Ref. and Improvement Bonds (Catholic Healthcare Partners),
Series 2001-A, 5.25% 2009 1,170 1,250
County of Lorain, Hospital Facs. Rev. Ref. and Improvement Bonds (Catholic Healthcare Partners),
Series 2001-A, 5.25% 2010 2,275 2,449
County of Lucas, Hospital Rev. Ref. Bonds (ProMedica Healthcare Obligated Group),
Series 2005-B, AMBAC insured, 5.00% 2011 2,000 2,147
County of Lucas, Hospital Rev. Ref. Bonds (ProMedica Healthcare Obligated Group),
Series 2005-B, AMBAC insured, 5.00% 2012 2,560 2,757
County of Montgomery, Rev. Bonds (Catholic Health Initiatives), Series 2001, 4.00% 2005 2,000 2,002
Student Loan Funding Corp. (Cincinnati), Student Loan Rev. Bonds,
Series 1988-B-3, AMT, AMBAC insured, 5.125% 2005 1,000 1,008
23,601
OKLAHOMA -- 0.12%
Industries Auth., Health System Rev. Ref. Bonds (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 1,240 1,361
OREGON -- 0.20%
Salem-Keizer School Dist. No. 24J, Marion and Polk Counties, G.O. Bonds, Series 1999,
5.25% 2010 (preref. 2009) 2,000 2,152
PENNSYLVANIA -- 1.53%
Harrisburg Auth., Dauphin County, Recovery Fac. Rev. Bonds,
Series D, Subseries D-2, FSA insured, 5.00% 2033 (put 2013) 3,500 3,764
Erie County Industrial Dev. Auth., Environmental Improvement Rev. Ref. Bonds
(International Paper Co. Projects), Series 2002-A, 4.90% 2009 4,000 4,235
Higher Educational Facs. Auth. (Commonwealth of Pennsylvania), Health System Rev. Bonds
(University of Pennsylvania), Series 2005-A, AMBAC insured, 5.00% 2014 2,000 2,185
Housing Fin. Agcy., Single-family Mortgage Rev. Bonds, Series 2002-74, AMT, 4.25% 2012 910 927
Philadelphia Auth. for Industrial Dev., Airport Rev. Bonds (Philadelphia Airport System Project),
Series 1998-A, AMT, FGIC insured, 5.25% 2009 3,410 3,606
Westmoreland County Industrial Dev. Auth., Rev. Bonds (National Waste and Energy Corp.;
Valley Landfill Expansion Project), Series 1993, AMT, 5.10% 2018 (put 2009) 2,000 2,068
16,785
PUERTO RICO -- 1.41%
Children's Trust Fund, Tobacco Settlement Asset-backed Bonds, Series 2000, 5.75% 2020 (preref. 2010) 3,205 3,412
Public Buildings Auth., Government Facs. Rev. Bonds, Series D, 5.25% 2036 (preref. 2012) 3,000 3,304
Public Fin. Corp., Commonwealth Appropriation Bonds, Series 2004-A, 5.75% 2027 (put 2012) 6,000 6,593
Public Fin. Corp., Commonwealth Appropriation Bonds, Series 2004-A, FGIC insured, 5.25% 2031 (put 2012) 1,000 1,094
Public Improvement Ref. G.O. Bonds, Series 2003-C, 5.00% 2018 (put 2008) 1,000 1,044
15,447
RHODE ISLAND -- 0.23%
Health and Educational Building Corp., Hospital Fncg. Rev. Bonds (Lifespan Obligated Group Issue),
Series 2002, 5.75% 2009 1,340 1,438
Health and Educational Building Corp., Hospital Fncg. Rev. Bonds (Lifespan Obligated Group Issue),
Series 2002, 5.75% 2010 1,020 1,107
2,545
SOUTH CAROLINA -- 0.56%
Georgetown County, Pollution Control Rev. Ref. Bonds (International Paper Co. Projects),
Series 1999-A, 5.125% 2012 2,500 2,649
Housing Fin. and Dev. Auth. Mortgage Rev. Bonds, Series 2000-A-2, AMT, FSA insured, 5.875% 2009 820 857
Tobacco Settlement Rev. Management Auth., Tobacco Settlement Asset-backed Bonds, Series 2001-B, 6.00% 2022 1,500 1,599
York County Pollution Control Facs., Rev. Bonds (Bowater Inc. Project), Series 1990, AMT, 7.625% 2006 1,000 1,018
6,123
SOUTH DAKOTA -- 0.54%
Education Loans Incorporated, Student Loan Asset-backed Callable Notes, Series 1998-1, AMT, 4.95% 2010 3,500 3,670
Housing Dev. Auth., Homeownership Mortgage Bonds, Series 2001-C, 4.55% 2010 975 1,019
Housing Dev. Auth., Multiple Purpose Bonds, Series 2002-A, FSA insured, 4.15% 2009 1,135 1,170
5,859
TENNESSEE -- 2.10%
Memphis-Shelby County Airport Auth., Special Facs. Rev. Ref. Bonds (Federal Express Corp.),
Series 2001, 5.00% 2009 7,490 7,866
Health, Educational and Housing Fac. Board of the County of Shelby, Rev. Bonds (Baptist
Memorial Health Care), Series 2004-A, 5.00% 2020 (put 2008) 8,500 8,904
Health, Educational and Housing Facs. Board of the County of Sullivan, Hospital Rev. Bonds
(Wellmont Health System Project), Series 2002, 5.50% 2006 1,475 1,502
Health, Educational and Housing Facs. Board of the County of Sullivan, Hospital Rev. Bonds
(Wellmont Health System Project), Series 2002, 5.75% 2007 1,555 1,615
Health, Educational and Housing Facs. Board of the County of Sullivan, Hospital Rev. Ref. Bonds
(Wellmont Health System Project), Series 2003, 5.00% 2007 1,000 1,023
Health, Educational and Housing Facs. Board of the County of Sullivan, Hospital Rev. Ref. Bonds
(Wellmont Health System Project), Series 2003, RADIAN insured, 5.00% 2009 2,000 2,112
23,022
TEXAS -- 17.98%
Angelina and Neches River Auth., Pollution Control Rev. Ref. Bonds (Temple-Inland Forest
Products Corp. Project), Series 1991, 5.65% 2012 5,350 5,571
City of Austin (Travis and Williamson Counties), Public Improvement Ref. Bonds, Series 2003, 5.00% 2011 1,220 1,319
City of Austin (Travis and Williamson Counties), Public Improvement Ref. Bonds, Series 2003, 5.00% 2012 1,000 1,087
City of Austin, Public Improvement Bonds, 5.75% 2011 (preref. 2009) 1,500 1,647
City of Austin, Public Improvement Bonds, Series 2001, 5.00% 2010 2,000 2,155
Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc.
Obligated Group Project), Series 1998, 5.00% 2005 1,330 1,337
Bell County Health Facs. Dev. Corp., Retirement Fac. Rev. Bonds (Buckner Retirement Services, Inc.
Obligated Group Project), Series 1998, 5.00% 2007 1,470 1,516
Bexar County, Rev. Bonds (Tax-Exempt Venue Project), Series 2000, MBIA insured, 5.50% 2009 2,000 2,166
Brazos River Auth., Collateralized Pollution Control Rev. Ref. Bonds (Texas Utilities Electric Co.
Project), Series 1994-B, AMT, 5.40% 2029 (put 2006) 1,000 1,016
Brazos River Auth., Pollution Control Rev. Ref. Bonds (TXU Electric Co. Project),
Series 2001-C, AMT, 5.75% 2036 (put 2011) 4,550 4,865
Brazos River Harbor Navigation Dist. of Brazoria County, Environmental Facs. Rev. Bonds (Dow
Chemical Co. Project), Series 2002-A-4, AMT, 5.20% 2033 (put 2008) 6,450 6,728
Sabine River Auth., Pollution Control Rev. Ref. Bonds (TXU Electric Co. Project),
Series 2001-A, 5.50% 2022 (put 2011) 2,000 2,125
Sabine River Auth., Pollution Control Rev. Ref. Bonds (TXU Electric Co. Project),
Series 2001-B, AMT, 5.75% 2030 (put 2011) 4,675 5,014
Canadian River Municipal Water Auth., Contract Rev. Ref. Bonds (Conjunctive Use Groundwater Supply
Project), Series 2005, AMBAC insured, 5.00% 2014 2,045 2,227
Central Texas Regional Mobility Auth., Rev. Bonds, Series 2005, FGIC insured, 0%/4.20% 2015(2) 1,700 1,180
College Student Loan Bonds, Series 2000, AMT, 5.50% 2010 1,000 1,086
Industrial Dev. Corp. of Port of Corpus Christi, Rev. Ref. Bonds (Valero Refining and Marketing Co.
Project), Series 1997-D, AMT, 5.125% 2009 1,000 1,059
Cypress-Fairbanks Independent School Dist., Unlimited Tax Ref. and Schoolhouse Bonds,
Series 2001, 5.25% 2011 2,000 2,179
City of Dallas (Dallas, Denton, Collin and Rockwall Counties), G.O. Ref. and Improvement Bonds,
Series 1998, 5.00% 2012 1,010 1,056
City of Dallas (Dallas, Denton, Collin and Rockwall Counties), G.O. Ref. and Improvement Bonds,
Series 1998, 5.00% 2012 (preref. 2008) 990 1,038
City of Dallas (Dallas, Denton, Collin and Rockwall Counties), Waterworks and Sewer System Rev.
Ref. Bonds, Series 1998, 5.125% 2010 1,490 1,612
City of Dallas (Dallas, Denton, Collin and Rockwall Counties), Waterworks and Sewer System Rev.
Ref. Bonds, Series 1998, 5.00% 2011 1,800 1,911
Dallas Independent School Dist. (Dallas County), Unlimited Tax Ref. Bonds (Delayed Delivery),
Series 2005, 5.25% 2010 1,000 1,086
Donna Independent School Dist. (Hidalgo County), Unlimited Tax Ref. Bonds, Series 2005, 5.00% 2014 1,000 1,089
City of Fort Worth (Tarrant and Denton Counties), General Purpose Ref. Bonds, Series 2002, 5.00% 2010 1,000 1,070
City of Fort Worth (Tarrant and Denton Counties), Water and Sewer System Rev. Ref. and Improvement
Bonds, Series 2003, 5.00% 2011 1,000 1,077
Fort Worth Independent School Dist. (Tarrant County), School Building Unlimited Tax Bonds,
Series 2001-A, 5.00% 2011 3,560 3,834
G.O. Bonds, Water Financial Assistance and Ref. Bonds, Series 2003-C, 5.00% 2011 2,205 2,389
Gulf Coast Waste Disposal Auth., Solid Waste Disposal Rev. Bonds (Waste Management of Texas, Inc.
Denton County Project), Series 2003-B, AMT, 3.50% 2028 (put 2007) 1,000 993
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hermann Healthcare System),
Series 2004-A, 5.25% 2011 1,500 1,613
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hermann Healthcare System),
Series 2004-A, 5.25% 2012 1,750 1,888
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hermann Healthcare System),
Series 2004-A, 5.25% 2013 1,000 1,078
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hermann Hospital System Project),
Series 1998, FSA insured, 5.25% 2008 1,000 1,055
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hospital System Project),
Series 1997-A, MBIA insured, 6.00% 2009 3,215 3,516
Harris County Health Facs. Dev. Corp., Hospital Rev. Bonds (Memorial Hospital System Project),
Series 1997-A, MBIA insured, 6.00% 2010 1,500 1,665
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital),
Series 2001-A, 5.50% 2010 1,705 1,833
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital),
Series 2001-A, 5.50% 2011 1,000 1,085
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital), Series 2002, 5.00% 2009 700 732
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital), Series 2002, 5.00% 2010 735 774
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital), Series 2002, 5.00% 2011 770 814
Harris County Health Facs. Dev. Corp., Rev. Bonds (St. Luke's Episcopal Hospital), Series 2002, 5.00% 2012 810 860
Harris County, G.O. and Rev. Ref. Bonds, Series 2002, 5.25% 2010 1,585 1,725
Harris County, Permanent Improvement and Ref. Bonds, Series 2002, 5.00% 2010 4,645 5,008
Harris County, Permanent Improvement and Ref. Bonds, Series 2003-B, 5.00% 2011 2,000 2,169
Harris County, Tax and Subordinate Lien Rev. Ref. Bonds, Series 2004-B, FSA insured, 5.00% 2032 (put 2012) 9,250 9,936
City of Houston, Airport System Subordinate Lien Rev. Bonds, Series 1998-B, AMT, FGIC insured, 5.25% 2009 2,500 2,641
City of Houston, Airport System Subordinate Lien Rev. Bonds, Series 1998-B, AMT, FGIC insured, 5.25% 2012 2,915 3,078
City of Houston, Airport System Subordinate Lien Rev. Bonds, Series 2002-B, FSA insured, 5.25% 2011 2,000 2,184
Jefferson County, Health Facs. Dev. Corp., Baptist Hospitals of Southeast Texas, FHA insured
Mortgage Rev. Bonds, Series 2001, AMBAC insured, 4.50% 2010 1,000 1,044
Katy Independent School Dist. (Fort Bend, Harris and Waller Counties), Unlimited Tax School
Building Bonds, Series 2002-A, 5.25% 2011 1,000 1,089
Lower Colorado River Auth., Rev. Ref. Bonds, Series 2002, MBIA insured, 5.00% 2010 1,500 1,608
North Central Health Facs. Dev. Corp., Hospital Rev. Bonds (Baylor Health Care System Project),
Series 2002, 5.50% 2006 3,000 3,058
North Central Health Facs. Dev. Corp., Hospital Rev. Bonds (Baylor Health Care System Project),
Series 2002, 5.50% 2009 960 1,026
North Central Health Facs. Dev. Corp., Hospital Rev. Bonds (Baylor Health Care System Project),
Series 2002, 5.50% 2010 1,140 1,232
Tarrant County Health Facs. Dev. Corp., Hospital Rev. Bonds (Baylor Health Care System Project),
Series 2002-A, 5.00% 2008 1,635 1,714
North Central Health Facs. Dev. Corp., Hospital Rev. Bonds (Children's Medical Center of Dallas Project),
AMBAC insured, 5.00% 2009 1,100 1,167
North Texas Tollway Auth., Dallas North Tollway System, Series 2003, AMBAC insured, 5.00% 2038 (put 2008) 1,000 1,052
North Texas Tollway Auth., Dallas North Tollway System, Series 2003, FSA insured, 5.00% 2018 (put 2008) 1,000 1,050
City of Plano (Collin and Denton Counties), G.O. Ref. and Improvement Bonds, Series 2003, 5.00% 2010 3,300 3,555
Plano Independent School Dist. (Collin County, Texas), Unlimited Tax School Building and Ref. Bonds,
Series 2001, 5.00% 2011 1,000 1,077
Public Fin. Auth., G.O. Ref. Bonds, Series 1997, 5.25% 2011 2,000 2,108
Public Fin. Auth., G.O. Ref. Bonds, Series 2002, 5.25% 2007 1,500 1,572
Public Fin. Auth., G.O. Ref. Bonds, Series 2003, 5.00% 2010 1,100 1,184
Transportation Commission, G.O. Bonds, Series 2005-A, 5.00% 2013 4,250 4,640
Sam Rayburn Municipal Power Agcy., Power Supply System Rev. Ref. Bonds,
Series 2002-A, 5.50% 2010 4,740 5,160
Sam Rayburn Municipal Power Agcy., Power Supply System Rev. Ref. Bonds,
Series 2002-B, RADIAN insured, 5.00% 2009 5,200 5,486
City of San Antonio, Airport System Rev. Improvement Bonds, Series 2002, AMT, FGIC insured, 5.50% 2009 1,000 1,071
City of San Antonio, Airport System Rev. Improvement Bonds, Series 2002, AMT, FGIC insured, 5.50% 2010 1,000 1,081
City of San Antonio (Bexar County), General Improvement and Ref. Bonds, Series 1998, 5.00% 2009 1,985 2,070
City of San Antonio, General Improvement and Ref. Bonds, Series 1998, 5.00% 2009 (preref. 2008) 15 16
City of San Antonio, General Improvement and Ref. Bonds, Series 2001, 5.00% 2010 2,000 2,138
City of San Antonio, General Improvement Forward Ref. Bonds, Series 2002, 5.00% 2011 2,950 3,187
City of San Antonio, General Improvement Forward Ref. Bonds, Series 2002, 5.00% 2011 (escrowed to maturity) 50 54
City of San Antonio, Electric and Gas Rev. Ref. Bonds (Forward Delivery), New Series 2003, 5.25% 2011 1,000 1,089
City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds, New Series 1997, 5.30% 2011 1,555 1,622
City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds, New Series 1997, 5.30% 2011 (preref. 2007) 1,945 2,034
City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds, New Series 2002, 5.25% 2011 4,500 4,901
City of San Antonio, Electric and Gas Systems Rev. Ref. Bonds, New Series 2003-A, 5.25% 2014 1,500 1,660
City of San Antonio, Hotel Occupancy Tax Subordinate Lien, Rev. Ref. Bonds,
Series 2004-B, AMBAC insured, 5.00% 2034 (put 2008) 4,000 4,211
Socorro Independent School Dist. (El Paso County), Unlimited Tax School Building Ref. Bonds,
Series 2001, 5.00% 2009 1,255 1,337
Tarrant County Health Facs. Dev. Corp., Health Resources System Rev. Bonds,
Series 1997-A, MBIA insured, 5.50% 2007 1,000 1,037
Tarrant Regional Water Dist., A Water Control and Improvement Dist., Water Rev. Ref. and
Improvement Bonds, Series 2002, FSA insured, 5.00% 2010 2,000 2,140
Board of Regents of the Texas A&M University System, Rev. Fncg. System Bonds, 5.10% 2010 (preref. 2009) 2,000 2,139
Board of Regents of the Texas State University System, Rev. Fncg. System Rev. Ref. Bonds,
Series 2002, FSA insured, 5.00% 2010 1,400 1,498
Turnpike Auth., Central Turnpike System, Second Tier Bond Anticipation Notes, Series 2002, 5.00% 2008 7,000 7,359
Board of Regents of the University of Texas System, Rev. Fncg. System Bonds, Series 1996-B,
5.00% 2011 (preref. 2006) 1,000 1,043
Board of Regents of the University of Texas System, Rev. Fncg. System Bonds, Series 2001-B, 5.00% 2011 1,150 1,246
Board of Regents of the University of Texas System, Rev. Fncg. System Bonds, Series 2003-A, 5.00% 2009 1,000 1,067
Board of Regents of the University of Texas System, Rev. Fncg. System Bonds, Series 2003-B, 5.25% 2010 1,500 1,633
Board of Regents of the University of Texas System, Rev. Ref. Fncg. System Bonds, Series 2002-B, 5.25% 2012 1,000 1,104
Waco Health Facs. Dev. Corp., Rev. Ref. Bonds (Hillcrest Health System), Series 2003,
MBIA insured, 5.00% 2010 2,040 2,182
Waco Health Facs. Dev. Corp., Rev. Ref. Bonds (Hillcrest Health System), Series 2003,
MBIA insured, 5.00% 2011 3,715 3,993
196,820
UTAH -- 0.37%
Housing Corp., Single-family Mortgage Bonds, Series 2002-C-2, Class III, AMT, 5.25% 2018 1,760 1,824
Housing Corp., Single-family Mortgage Bonds, Series 2002-D-2, Class III, AMT, 5.00% 2018 865 890
Housing Corp., Single-family Mortgage Bonds, Series 2002-E-2, Class III, AMT, 4.95% 2019 895 907
Housing Fin. Agcy., Single-family Mortgage Bonds (Federally Insured or Guaranteed Mortgage Loans),
1998 Issue D-2, AMT, FHA insured, 5.25% 2012 85 86
Housing Fin. Agcy., Single-family Mortgage Bonds (Federally Insured or Guaranteed Mortgage Loans),
1998 Issue E-1, AMT, FHA insured, 5.25% 2012 95 97
Housing Fin. Agcy., Single-family Mortgage Bonds (Federally Insured or Guaranteed Mortgage Loans),
1998 Issue F-2, AMT, FHA insured, 4.25% 2008 255 256
4,060
VIRGIN ISLANDS -- 0.46%
Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund Loan Notes), Senior Lien, Series 1998-A, 5.20% 2010 4,765 5,011
VIRGINIA -- 2.02%
Capital Region Airport Commission, Rev. Ref. Bonds, Series 2004-A, FSA insured, 5.00% 2011 1,335 1,439
Fairfax County Econ. Dev. Auth., Resource Recovery Rev. Ref. Bonds, Series A, AMT, AMBAC insured,
6.10% 2011 5,000 5,577
Housing Dev. Auth., Rental Housing Bonds, Series 2000-D, AMT, 5.50% 2008 1,070 1,108
Industrial Dev. Auth. of the County of Charles City, Tax-Exempt Adjustable Mode Solid
Waste Disposal Rev. Bonds (Waste Management, Inc.), Series 2002, AMT, 6.25% 2027 (put 2012) 2,000 2,205
Port Auth., Commonwealth Port Fund Rev. Bonds (2002 Resolution), Series 2002, AMT, 5.00% 2010 2,000 2,142
Port Auth., Commonwealth Port Fund Rev. Bonds (2002 Resolution), Series 2002, AMT, 5.00% 2011 4,345 4,680
Port Auth., Commonwealth Port Fund Rev. Bonds (2002 Resolution), Series 2002, AMT, 5.00% 2012 1,000 1,080
Resources Auth., Infrastructure Rev. Bonds (Pooled Fncg. Program), Series 2004-B, AMT, 5.00% 2010 1,035 1,111
Resources Auth., Infrastructure Rev. Bonds (Pooled Fncg. Program), Series 2004-B, AMT, 5.00% 2012 1,140 1,232
Tobacco Settlement Fncg. Corp., Tobacco Settlement Asset-Backed Bonds, Series 2005, 5.25% 2019 1,500 1,555
22,129
WASHINGTON -- 7.02%
Clark County, Evergreen School Dist. No. 114, Unlimited Tax G.O. Bonds, Series 2002,
FSA insured, 5.00% 2011 1,000 1,085
Conservation and Renewable Energy System, Conservation Project Rev. Bonds (Bonneville Power
Administration), Series 2003, 5.00% 2010 1,240 1,333
Conservation and Renewable Energy System, Conservation Project Rev. Bonds (Bonneville Power
Administration), Series 2003, 5.00% 2011 1,000 1,081
Energy Northwest, Columbia Generating Station Electric Rev. Ref. Bonds, Series 2003-A, 5.50% 2012 3,500 3,899
Energy Northwest, Columbia Generating Station Electric Rev. Ref. Bonds, Series 2004-A, 5.25% 2008 2,000 2,118
Public Power Supply System, Rev. Ref. Bonds (Nuclear Project No. 2), Series 1997-B, 5.50% 2006 1,000 1,025
Public Power Supply System, Rev. Ref. Bonds (Nuclear Project No. 2), Series 1998-A, 5.00% 2012 4,000 4,252
Energy Northwest, Rev. Ref. Bonds (Wind Project), Series 2005, MBIA insured, 5.00% 2011 1,000 1,079
G.O. Bonds and Motor Vehicle Fuel Tax G.O. Bonds, Series A, 5.375% 2007 3,000 3,073
G.O. Bonds, Series 1999-S-1, 5.00% 2012 4,700 4,946
Various Purpose G.O. Bonds, Series 1999-A, 5.25% 2010 1,000 1,055
Various Purpose G.O. Bonds, Series 2000-B, 6.00% 2010 1,130 1,252
Grays Harbor County, Public Utility Dist. No. 1, Electric Rev. Bonds, Series 2001,
AMBAC insured, 5.00% 2009 1,295 1,370
Health Care Facs. Auth., Rev. Bonds (Virginia Mason Medical Center), Series 1997-A,
MBIA insured, 6.00% 2006 1,000 1,032
Higher Education Facs. Auth., Rev. and Rev. Ref. Bonds (Gonzaga University Project),
Series 1998, MBIA insured, 4.80% 2009 1,000 1,054
King and Snohomish Counties, Unlimited Tax G.O. Ref. Bonds (Northshore School Dist. No. 417),
FSA insured, 5.00% 2010 1,275 1,375
King and Snohomish Counties, Unlimited Tax G.O. Ref. Bonds (Northshore School Dist. No. 417),
FSA insured, 5.00% 2011 1,900 2,060
King County, Limited Tax G.O. Bonds (Baseball Stadium), Series 1997-D, 5.60% 2009 2,000 2,153
King County, Various Purpose G.O. and Ref. Bonds, Series 1996-A, 5.00% 2009 550 555
King County, Various Purpose G.O. and Ref. Bonds, Series 1996-A, 5.00% 2009 (preref. 2006) 780 788
King County, Sewer Rev. Ref. Bonds, Series 1999-B, FSA insured, 5.25% 2010 2,000 2,157
King County, Sewer Rev. Ref. Bonds, Series 1999-B, FSA insured, 5.25% 2011 2,895 3,151
North Kitsap School Dist. No. 400, Kitsap County, Unlimited Tax G.O. Ref. Bonds, Series 2005,
FSA insured, 5.00% 2013 1,000 1,091
Public Power Supply System, Rev. Ref. Bonds (Nuclear Project No. 3), Series 1997-A,
FSA insured, 5.10% 2010 1,000 1,057
Public Utility Dist. No. 1 of Lewis County, Rev. Ref. Bonds (Cowlitz Falls Hydroelectric Project),
Series 2003, XLCA insured, 5.00% 2011 2,000 2,151
Public Utility Dist. No. 1 of Snohomish County, Generation System Rev. Ref. Bonds,
Series 2002-B, FSA insured, 5.25% 2009 1,000 1,079
Public Utility Dist. No. 1 of Snohomish County, Generation System Rev. Ref. Bonds,
Series 2002-B, FSA insured, 5.25% 2010 2,000 2,181
Public Utility Dist. No. 1 of Snohomish County, Generation System Rev. Ref. Bonds,
Series 2002-B, FSA insured, 5.25% 2011 4,000 4,393
Public Utility Dist. No. 2 of Grant County, Wanapum Hydroelectric Dev. Rev. and Ref. Bonds,
Series 2005-B, AMT, FGIC insured, 5.00% 2012 1,190 1,269
City of Seattle, Municipal Light and Power Improvements and Rev. Ref. Bonds, Series 2001,
FSA insured, 5.50% 2012 1,000 1,097
City of Seattle, Municipal Light and Power Rev. Bonds, Series 1997, 5.00% 2010 1,000 1,055
Port of Seattle, Passenger Fac. Charge Rev. Bonds, Series 1998-B, AMT, AMBAC insured, 5.25% 2009 1,000 1,062
Port of Seattle, Passenger Fac. Charge Rev. Bonds, Series 1998-B, AMT, AMBAC insured, 5.25% 2011 2,000 2,122
Port of Seattle, Rev. Bonds, Series 2001-B, AMT, FGIC insured, 5.50% 2009 1,605 1,717
Port of Seattle, Rev. Bonds, Series 2001-B, AMT, FGIC insured, 5.50% 2010 3,000 3,240
Port of Seattle, Subordinate Lien Rev. Bonds, Series 1999-B, AMT, FGIC insured, 5.50% 2009 1,500 1,611
Port of Seattle, Special Fac. Rev. Bonds (SEATAC Fuel Facs. LLC), Series 2003, AMT,
MBIA insured, 5.00% 2012 1,510 1,608
Snohomish County, Everett School Dist. No. 2, Unlimited Tax G.O. Ref. Bonds, Series 2003, 4.50% 2007 1,890 1,956
Snohomish County, Limited Tax G.O. Bonds, Series 2001, 5.00% 2010 3,000 3,235
City of Spokane, Regional Solid Waste Management System, Rev. Ref. Bonds, Series 2001,
AMBAC insured, 5.25% 2011 1,650 1,793
City of Tacoma, Electric System Rev. Ref. Bonds, Series 2001-A, FSA insured, 5.50% 2011 1,100 1,211
76,821
WISCONSIN -- 2.61%
Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 5.50% 2006 1,000 1,015
Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 5.50% 2010 750 807
Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 5.75% 2012 3,000 3,305
G.O. Ref. Bonds, Series 1998-1, 5.50% 2010 2,210 2,435
Health and Educational Facs. Auth., Hospital Rev. Bonds (Charity Obligated Group,
Daughters of Charity National Health System), Series 1997-D, 4.90% 2015 (preref. 2005/put 2005) 2,865 2,881
Health and Educational Facs. Auth., Rev. Bonds (Froedtert & Community Health Obligated Group),
Series 2001, 5.65% 2009 1,935 2,074
Health and Educational Facs. Auth., Rev. Bonds (Gundersen Lutheran), Series 2003-A, FSA insured, 5.00% 2009 1,500 1,584
Health and Educational Facs. Auth., Rev. Bonds (Gundersen Lutheran), Series 2003-A, FSA insured, 5.00% 2010 1,200 1,277
Health and Educational Facs. Auth., Rev. Bonds (Hospital Sisters Services, Inc. Obligated Group),
Series 1998-B, MBIA insured, 4.85% 2011 1,195 1,246
Health and Educational Facs. Auth., Rev. Bonds (Hospital Sisters Services, Inc. Obligated Group),
Series 2003-D, FSA insured, 5.00% 2011 2,515 2,708
Health and Educational Facs. Auth., Rev. Bonds (The Monroe Clinic, Inc.), Series 1999, 4.60% 2008 1,010 1,039
Health and Educational Facs. Auth., Rev. Bonds (Wheation Franciscan Services), Series 2003-A, 5.00% 2008 1,595 1,666
Health and Educational Facs. Auth., Rev. Bonds (Wheation Franciscan Services), Series 2003-A, 5.00% 2012 2,065 2,196
Housing and Econ. Dev. Auth., Single-family Mortgage Housing Rev. Bonds, Series 2000-C,
MBIA insured, 4.35% 2009 775 796
City of Milwaukee, G.O. Corporate Purpose Bonds, Series R, 5.50% 2010 2,200 2,418
Milwaukee County, Airport Rev. Bonds, Series 2004-A, AMT, AMBAC insured, 5.00% 2011 1,055 1,124
28,571
Total bonds & notes (cost: $1,047,419,000) 1,062,136
Short-term securities -- 2.26%
North Slope Borough, Exempt Fac. Industrial Rev. Bonds (BP Exploration (Alaska) Inc. Project),
Series 2001, AMT, 2.40% 2025(3) 1,000 1,000
City of Los Angeles, California, 2005 Tax and Rev. Anticipation Notes, 4.00% 6/30/2006 2,000 2,024
State of Indiana, City of Whiting, Environmental Facs. Rev. Bonds (BP Products North
America Inc. Projects), Series 2003, AMT, 2.40% 2038(3) 1,100 1,100
Regional Airport Auth. of Louisville and Jefferson County, Kentucky, Special Facs. Rev. Bonds
(UPS Worldwide Forwarding, Inc. Project), Series 1999-C, AMT, 2.32% 2029(3,4) 2,000 2,000
State of Louisiana, Parish of Plaquemines, Environmental Rev. Ref. Bonds (BP Exploration & Oil Inc.
Project-British Petroleum Co. p.l.c., Guarantor), Series 1995, AMT, 2.40% 2025(3) 1,100 1,100
Commonwealth of Massachusetts, G.O. Ref. Bonds, Series 2001-C, 2.38% 2021(3) 1,100 1,100
State of Nebraska, Hospital Auth. No. 1 of Lancaster County, Health Facs. Rev. Bonds
(Immanuel Health Systems-Williamsburg Project), Series 2000-A, 2.34% 2030(3) 1,050 1,050
State of New Mexico, Tax and Rev. Anticipation Notes, Series 2005, 4.00% 6/30/2006 5,000 5,062
State of Ohio, Solid Waste Rev. Bonds (BP Exploration & Oil Inc. Project-British
Petroleum Co. p.l.c., Guarantor), Series 1998, AMT, 2.40% 2033(3) 1,000 1,000
State of Rhode Island, Health and Educational Building Corp., Hospital Fncg. Rev. Bonds
(Care New England Issue), Series 2002-A, 2.34% 2032(3) 1,800 1,800
Public Building Auth. of the City of Clarksville, Adjustable Rate Pooled Fncg. Rev. Bonds
(Tennessee Municipal Bond Fund), Series 2001, 2.34% 2031(3) 3,700 3,700
Public Building Auth. of the City of Clarksville, Adjustable Rate Pooled Fncg. Rev. Bonds
(Tennessee Municipal Bond Fund), Series 2003, 2.34% 2033(3) 1,390 1,390
State of Texas, Gulf Coast Industrial Dev. Auth., Exempt Facs. Industrial Rev. Bonds
(BP Global Power Corp. Project), Series 2003, AMT, 2.40% 2038(3) 1,100 1,100
State of Washington, Industrial Dev. Corp. of the Port of Bellingham, Environmental Facs.
Industrial Rev. Bonds (BP West Coast Products LLC Project), Series 2002, AMT, 2.40% 2033(3) 1,300 1,300
Total short-term securities (cost: $24,727,000) 24,726
Total investment securities (cost: $1,072,146,000) 1,086,862
Other assets less liabilities 7,833
Net assets $1,094,695
(1) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration. The total value of all such restricted securities was
$8,850,000, which represented 0.81% of the net assets of the fund.
(2) Step bond; coupon rate will increase at a later date.
(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.
Key to abbreviations
Agcy. = Agency
AMT = Alternative Minimum Tax
Auth. = Authority
Certs. 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
TECP = Tax-Exempt Commercial Paper
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Limited Term Tax-Exempt Bond Fund of America:
We have audited, in accordance with standards of the Public Company Accounting
Oversight Board (United States), the financial statements of Limited Term
Tax-Exempt Bond Fund of America (the "Fund") as of July 31, 2005, and for the
year then ended and have issued our unqualified report thereon dated September
9, 2005 (which report and financial statements are included in Item 1 of this
Certified Shareholder Report on Form N-CSR). Our audit included an audit of the
Fund's investment portfolio (the "Portfolio") as of July 31, 2005 appearing in
Item 6 of this Form N-CSR. This Portfolio is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this portfolio based
on our audit.
In our opinion, the Portfolio referred to above, when read in conjunction with
the financial statements of the Fund referred to above, presents fairly, in all
material respects, the information set forth therein.
PricewaterhouseCoopers LLP
Los Angeles, California
September 9, 2005
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 - Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 10 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's Board of Trustees since the Registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The Registrant has a Nominating and Governance Committee comprised
solely of persons who are not considered ``interested persons'' of the
Registrant within the meaning of the Investment Company Act of 1940, as amended.
The committee periodically reviews such issues as the Board's composition,
responsibilities, committees, compensation and other relevant issues, and
recommends any appropriate changes to the full Board of Trustees. While the
committee normally is able to identify from its own resources an ample number of
qualified candidates, it will consider shareholder suggestions of persons to be
considered as nominees to fill future vacancies on the Board. Such suggestions
must be sent in writing to the Nominating and Governance Committee of the
Registrant, c/o the Registrant's Secretary, and must be accompanied by complete
biographical and occupational data on the prospective nominee, along with a
written consent of the prospective nominee for consideration of his or her name
by the Nominating and Governance Committee.
ITEM 11 - Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal Financial
Officer have concluded, based on their evaluation of the Registrant's
disclosure controls and procedures (as such term is defined in Rule 30a-3
under the Investment Company Act of 1940), 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 second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control
over financial reporting.
ITEM 12 - Exhibits
(a) (1) The Code of Ethics that is the subject of the disclosure required by
Item 2 is attached as an exhibit hereto.
(a) (2) 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.
LIMITED TERM TAX-EXEMPT BOND FUND
OF AMERICA
By /s/ Brenda S. Ellerin
- ------------------------------------
Brenda S. Ellerin, President and PEO
Date: October 7, 2005
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/ Brenda S. Ellerin
- ------------------------------------
Brenda S. Ellerin, President and PEO
Date: October 7, 2005
By /s/ Sharon G. Moseley
- ------------------------------------
Sharon G. Moseley, Treasurer and PFO
Date: October 7, 2005