SEC File Nos. 33-80630
811-8576
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 [X]
Post-Effective Amendment No. 1
and
Registration Statement Under the Investment Company Act of 1940 [X]
Amendment No. 3
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2 registering an
indefinite number of shares under the Securities Act of 1933.
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 25, 1995, pursuant to
paragraph (b) of rule 485.
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of Captions in Prospectus (Part "A")
Part "A" of Form N-1A
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Financial Highlights Financial Highlights
4. General Description of Registrant Investment Objective and Policies; Certain
Securities and Investment Techniques; Fund
Organization and Management
5. Management of the Fund Summary of Expenses; Fund
Organization and Management
6. Capital Stock and Other Securities Investment Objective and Policies; Certain
Securities and Investment Techniques;
Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number of Captions in Statement of
Part "B" of Form N-1A Additional Information (Part "B")
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information; Investment Restrictions
13. Investment Objectives and Policies Description of Certain Securities and Investment
Techniques; Investment Restrictions
14. Management of the Registrant Fund Officers and Directors; Management
15. Control Persons and Principal Holders Fund Officers and Directors
of Securities
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Shareholder
Securities Being Offered Account Services and Privileges; Redemption of
Shares
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data N/A
23. Financial Statements Statement of Assets and Liabilities and Financial
Statements
</TABLE>
<TABLE>
<CAPTION>
Item in Part "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under
Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of
Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
</TABLE>
<PAGE>
[PROSPECTUS]
AMERICAN
HIGH-
INCOME
MUNICIPAL
BOND FUND(SM)
An opportunity for
current income exempt from
regular federal income taxes
through investments in municipal
bonds
[Logo of the American Funds(R)]
March 25, 1995
The fund's investment objective is to provide shareholders with a high level
of current income exempt from regular federal income taxes through investments
in municipal bonds. From time to time income may be subject to various taxes,
including federal alternative minimum and state taxes.
UNDER NORMAL MARKET CONDITIONS, THE FUND WILL INVEST AT LEAST 65% OF ITS
ASSETS IN BONDS AND DEBT SECURITIES RATED A OR BELOW AND AT LEAST 50% OF ITS
TOTAL ASSETS IN SUCH SECURITIES RATED BAA OR BBB OR BELOW BY MOODY'S INVESTORS
SERVICE, INC. OR STANDARD AND POOR'S CORPORATION OR UNRATED BUT DETERMINED TO
BE OF COMPARABLE QUALITY. SECURITIES RATED BA OR BB OR BELOW ARE COMMONLY
KNOWN AS "JUNK" BONDS AND ARE SUBJECT TO GREATER FLUCTUATIONS IN VALUE AND
RISK OF LOSS OF INCOME AND PRINCIPAL, INCLUDING RISK OF DEFAULT, THAN ARE
LOWER YIELDING, HIGHER RATED BONDS; THEREFORE, THESE INVESTMENTS MAY NOT BE
SUITABLE FOR ALL INVESTORS AND SHOULD BE CONSIDERED CAREFULLY PRIOR TO
INVESTING. (FOR ADDITIONAL INFORMATION SEE "INVESTMENT OBJECTIVE AND
POLICIES," PAGE 3; AND "CERTAIN SECURITIES AND INVESTMENT TECHNIQUES -- RISKS
OF INVESTING IN BONDS," PAGE 4.)
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference. You may obtain the statement
of additional information dated March 25, 1995, which contains the fund's
financial statements, without charge, by writing to the Secretary of the fund
at 333 South Hope Street, Los Angeles, California 90071 or telephoning
800/421-0180. These requests will be honored within three business days of
receipt.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
40-010-0395
<PAGE>
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SUMMARY OF
EXPENSES
Average annual expenses
paid over a three-year
period would be
approximately $24 per
year, assuming a $1,000
investment and a 5%
annual return.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses..... 2
Financial Highlights.... 3
Investment Objective and
Policies............... 3
Certain Securities and
Investment Techniques.. 4
Risks of Investing
in Bonds............. 4
Dividends, Distributions
and Taxes.............. 10
Fund Organization
and Management......... 11
Appendix................ 14
The American Funds
Shareholder Guide...... 16-24
Purchasing Shares..... 16
Reducing Your
Sales Charge.......... 19
Shareholder Services.. 20
Redeeming Shares...... 22
Retirement Plans...... 24
</TABLE>
IMPORTANT PHONE NUMBERS
Shareholder
Services:
800/421-0180 ext. 1
Dealer Services:
800/421-9900 ext. 11
American
FundsLine(R)
800/325-3590
(24-hour information)
This table is designed to help you understand the costs of investing in the
fund. Your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price)................................... 4.75%/1/
</TABLE>
The fund has no sales charge on reinvested dividends, deferred sales
charge,/2/ redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets after
fee waiver)
<TABLE>
<S> <C>
Management fees....................................................... 0.34%/3/
12b-1 expenses........................................................ 0.24%/4/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses - estimated)............................ 0.25%
Total fund operating expenses......................................... 0.83%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------- ------ -------
<S> <C> <C>
You would pay the following cumulative expenses on a $1,000 in-
vestment, assuming a 5% annual return./6/ $56 $73/5/
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Purchases of $1 million or more are not subject to an initial sales charge
as described in this prospectus. However, a contingent deferred sales charge
of 1% applies on certain redemptions within 12 months following such
purchases. (See "The American Funds Shareholder Guide: Redeeming Shares--
Contingent Deferred Sales Charge.")
/3/ Capital Research and Management Company will voluntarily waive fees to the
extent necessary to ensure that the fund's expenses do not exceed 0.90% of
the average daily net assets. Without such a waiver, fees (as a percentage
of average net assets) would be 0.41%.
/4/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/5/ The total for three years is cumulative. The annual average expenses paid
over a three-year period would be approximately $24 per year. Expenses are
based on the amounts listed under "Annual Fund Operating Expenses."
/6/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
Moreover, certain expenses have been estimated for purposes of this example.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
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FINANCIAL The following information for the period September 26,
HIGHLIGHTS 1994 (commencement of operations) to January 31, 1995
(For a share is unaudited. This information should be read in
outstanding conjunction with the financial statements and
throughout accompanying notes which appear in the statement of
theperiod) additional information.
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 26, 1994/1/
TO JANUARY 31, 1995
---------------------
<S> <C>
Net Asset Value, Beginning of Period.................... $14.29
------
Income from Investment Operations:
Net investment income.................................. .30
Net realized and unrealized gain on investments........ .10
------
Total income from investment operations............... .40
------
Less Distributions
Dividends from net investment income................... (.30)
------
Net Asset Value, End of Period.......................... $14.39
======
Total Return/2/ 2.87%/3/
Ratios/Supplemental Data:
Net assets, end of period (in millions)................. $106
Ratio of expenses to average net assets................. .24%/3/,/4/
Ratio of net income to average net assets............... 2.46%/3/
Portfolio turnover rate................................. 20.47%/3/
</TABLE>
--------
/1/ Commencement of operations.
/2/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
/3/ Based on operations for the period indicated and, accordingly, not
representative of a full year's operations.
/4/ Had Capital Research and Management Company not waived fees, the funds
ratio of expenses to average net assets
would have been 0.48% for the period.
INVESTMENT The fund's investment objective is to provide
OBJECTIVE shareholders with a high level of current income exempt
AND POLICIES from regular federal income taxes. In seeking to
achieve its investment objective, the fund may forego
The fund's goal is opportunities that would result in capital gains and
to provide you may accept prudent risks to capital value, in each case
with high current to take advantage of opportunities for higher current
income exempt from income. For example, the fund may purchase, at prices
regular federal above their principal amounts, bonds that provide a
income taxes. higher yield and interest income than current market
rates.
During periods of normal market conditions, at least
80% of the fund's total assets will be invested in tax-
exempt securities consisting primarily of state,
municipal and public authority bonds and notes, with an
emphasis on higher yielding, higher risk, lower rated
or unrated bonds.
Under normal market conditions, the fund will invest at
least 65% of its total assets in bonds that are rated A
or below by Moody's Investors Service, Inc. ("Moody's")
or Standard and Poor's Corporation ("S&P") or unrated
but are determined to be of comparable quality by the
fund's investment adviser, Capital Research and
Management Company. (For
3
<PAGE>
- --------------------------------------------------------------------------------
this purpose, bonds are considered to be any debt
securities having initial maturities in excess of one
year.) In addition, at least 50% of its total assets
will be invested in such securities that are rated Baa
or below by Moody's or BBB or below by S&P or unrated
but are determined to be of comparable quality.
Bonds that are rated Ba or below by Moody's or BB or
below by S&P or unrated but are determined to be of
comparable quality are commonly known as "junk" or
"high-yield, high-risk" bonds and typically are subject
to greater market fluctuations and risk of loss of
income and principal than are investments in lower
yielding, higher rated bonds. The fund may invest
without limitation in bonds rated as low as Ca by
Moody's or CC by S&P (or in unrated bonds that are
determined to be of comparable quality). In addition,
the fund may invest up to 5% of its total assets in
bonds rated C by Moody's or D by S&P (or in unrated
bonds that are determined to be of comparable quality).
The fund may invest without limitation in those tax-
exempt securities believed to pay interest constituting
an item of tax preference subject to alternative minimum
taxes; therefore, while the fund's distributions from
tax-exempt securities are not subject to regular federal
income tax, a portion or all may be included in
determining a shareholder's federal alternative minimum
tax. In addition, investments may be made in short-term
taxable obligations (generally, securities with original
or remaining maturities of one year or less) when, for
economic reasons, these investments are considered
advisable. (See "Certain Securities and Investment
Techniques--Temporary Investments.")
The fund's investment restrictions (which are described
in the statement of additional information) and
objective cannot be changed without shareholder
approval. All other investment practices may be changed
by the fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
CERTAIN RISKS OF INVESTING IN BONDS The market values of fixed-
SECURITIES AND income securities generally vary inversely with the
INVESTMENT level of interest rates--when interest rates rise, their
TECHNIQUES values will tend to decline and vice versa. The
magnitude of these changes generally will be greater the
Investing in this longer the remaining maturity of the security.
fund involves Fluctuations in the value of the fund's investments will
special risks. be reflected in its net asset value per share which will
typically decline when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba or BB or
lower or comparable unrated bonds) may be subject to
greater market fluctuations and to
4
<PAGE>
- -------------------------------------------------------------------------------
greater risk of loss of income and principal due to the
lower credit quality of the issuer than are higher
rated bonds. Their values tend to be more sensitive to
adverse economic changes than lower yielding, higher
rated bonds. In addition, it may be more difficult to
dispose of, or to determine the value of, high-yield,
high-risk bonds. Bonds rated Ba or BB or lower are
considered speculative. Bonds rated C or D are
described by the ratings agencies as "having extremely
poor prospects of ever attaining any real investment
standing" or "in default and payment of interest and/or
repayment of principal is in arrears." See the Appendix
(on page 14) for a complete description of the bond
ratings.
High-yield, high-risk bonds are very sensitive to
adverse economic changes. During an economic downturn
or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that
would adversely affect their ability to service their
principal and interest payment obligations, to meet
projected financial goals, and to obtain additional
financing. If the issuer of a bond defaulted on its
obligations to pay interest or principal, the fund may
incur losses or expenses in seeking recovery of amounts
owed to it. In addition, periods of economic
uncertainty and changes can be expected to result in
increased volatility of market prices and yields of
high-yield, high-risk bonds and the fund's net asset
value. From time to time legislation has been proposed
that would limit the use of high-yield, high-risk bonds
in certain instances. The impact that such legislation,
if enacted, could have on the market for such bonds
cannot be predicted.
High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these
provisions in a declining interest rate market, the
fund would have to replace the security with a lower
yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's
value will decrease in a rising interest rate market,
as will the value of the fund's assets. If the fund
experiences unexpected net redemptions, this may force
it to sell high-yield, high-risk bonds without regard
to their investment merits, thereby decreasing the
asset base upon which expenses can be spread and
possibly reducing the fund's rate of return.
There may be little trading in the secondary market for
particular bonds, which may affect adversely the fund's
ability to value accurately or dispose of such bonds.
Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds,
especially in a thin market.
Capital Research and Management Company attempts to
reduce the risks described above through
diversification of the portfolio and by credit analysis
of each issuer as well as by monitoring broad economic
trends and other relevant developments.
5
<PAGE>
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MUNICIPAL BONDS Municipal bonds are debt obligations
generally issued to obtain funds for various public
purposes, including the construction of public
facilities. Municipal bonds may be used to refund
outstanding obligations, to obtain funds for general
operating expenses or for public improvements or for
lending private institutions or corporations funds for
the construction of educational facilities, hospitals,
housing, industrial facilities or for other public
purposes. The interest on these obligations is
generally not included in gross income for federal
income tax purposes. (See "Additional Information
Concerning Taxes" in the statement of additional
information.) Opinions relating to the validity of
municipal bonds and to the exclusion from gross income
for federal income tax purposes and, where applicable,
the exemption from state and local income tax are
rendered by bond counsel to the respective issuing
authorities at the time of issuance.
The two principal classifications of municipal bonds
are general obligation and limited obligation (or
revenue) bonds. General obligation bonds are secured by
the issuer's pledge of its full faith and credit
including, if available, its taxing power for the
payment of principal and interest. Issuers of general
obligation bonds include states, counties, cities,
towns and various regional or special districts. The
proceeds of these obligations are used to fund a wide
range of public facilities such as the construction or
improvement of schools, highways and roads, water and
sewer systems and facilities for a variety of other
public purposes. Limited obligation or revenue bonds
are secured by the net revenue derived from a
particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a
special tax or other special revenues. Revenue bonds
have been issued to fund a wide variety of revenue-
producing public capital projects including: electric,
gas, water and sewer systems; highways, bridges and
tunnels; port and airport facilities; colleges and
universities; hospitals; and convention, recreational
and housing facilities. Although the security behind
these bonds varies widely, many provide additional
security in the form of a debt service reserve fund
which may also be used to make principal and interest
payments on the issuer's obligations.
Revenue bonds also include, for example, pollution
control, health care and housing bonds, which, although
nominally issued by municipal authorities, are
generally not secured by the taxing power of the
municipality but are secured by the revenues of the
authority derived from payments by the private entity
which owns or operates the facility financed with the
proceeds of the bonds. Obligations of housing finance
authorities have a wide range of security features
including reserve funds and insured or subsidized
mortgages, as well as the net revenues from housing or
other public projects. Most of these bonds do not
generally constitute the pledge of the credit of the
issuer of such bonds. The credit
6
<PAGE>
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quality of such revenue bonds is usually directly
related to the credit standing of the user of the
facility being financed or of an institution which
provides a guarantee, letter of credit, or other credit
enhancement for the bond issue. Lease revenue bonds or
certificates of participation in leases are another
type of limited obligation or revenue bond. These are
payable from annual lease rental payments from a state
or locality. Annual rental payments are payable to the
extent such rental payments are appropriated annually.
(Of course, these instruments are subject to the risk
that such funds will not be appropriated or that, as a
result of damage or destruction to the leased facility,
the lessee may be relieved of its obligation to make
lease payments.)
There are, in addition, a variety of hybrid and special
types of municipal obligations, such as zero coupon and
pre-refunded bonds (see the statement of additional
information) as well as numerous differences in the
security of municipal bonds, both within and between
the two primary classifications described above.
The amount of information about the financial condition
of an issuer of municipal bonds may not be as extensive
as that which is made available by corporations whose
equity securities are publicly traded.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT
AGREEMENTS The fund may purchase securities on a
delayed delivery or "when-issued" basis and enter into
firm commitment agreements (transactions whereby the
payment obligation and interest rate are fixed at the
time of the transaction but the settlement is delayed).
The fund as purchaser assumes the risk of any decline
in the value of the security beginning on the date of
the agreement or purchase. As the fund's aggregate
commitments under these transactions increase, the
opportunity for leverage similarly may increase.
The fund will not use these transactions for leveraging
purposes, and will maintain in a segregated account
(with the value adjusted daily based on market
valuations) cash or high-grade debt securities in an
amount sufficient to meet its payment obligations in
these transactions. Although these transactions will
not be entered into for leveraging purposes, to the
extent the fund's aggregate commitments under these
transactions exceed its holdings of cash and securities
that do not fluctuate in value (such as money market
instruments), the fund temporarily will be in a
leveraged position (in other words, it will have an
amount greater than its net assets subject to market
risk). Should the fund be in a leveraged position
during a period of declining bond prices, greater
depreciation of its net assets would likely occur than
were it not in such a position. The fund will not
borrow money to settle these transactions and,
therefore, will liquidate other portfolio securities in
advance of settlement if necessary to generate
additional cash to meet its obligations thereunder.
7
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VARIABLE AND FLOATING RATE OBLIGATIONS The fund may
invest in variable and floating rate obligations which
have interest rates that are adjusted at designated
intervals, or whenever there are changes in the market
rates of interest on which the interest rates are
based. The rate adjustment feature tends to limit the
extent to which the market value of the obligation will
fluctuate.
MATURITY There are no restrictions on the maturity
composition of the portfolio, although it is
anticipated that the fund normally will be invested
substantially in intermediate-term (3 to 10 years to
maturity) and long-term (over 10 years to maturity)
securities.
ILLIQUID SECURITIES The fund will invest no more than
15% of its net assets, in aggregate, in illiquid
securities (generally securities that are not readily
marketable), including securities acquired in private
placements and municipal lease obligations.
Private placements may be either purchased from another
institutional investor that originally acquired the
securities in a private placement or directly from the
issuers of the securities. Generally, securities
acquired in private placements are subject to
contractual restrictions on resale. Accordingly, any
such obligation may be deemed illiquid and the fund may
incur certain additional costs in disposing of such
securities.
The fund may invest in municipal lease revenue
obligations, some of which may be illiquid subject to
the above described limitation. The fund may purchase,
without limitation, municipal lease revenue obligations
that are determined to be liquid by Capital Research
and Management Company. In determining whether these
securities are liquid, Capital Research and Management
Company will consider, among other things, the credit
quality and support, including strengths and weaknesses
of the issuer and lessees, the terms of the lease,
frequency and volume of trading and number of dealers.
CONCENTRATION OF INVESTMENTS The fund may invest more
than 25% of its assets in municipal obligations of
issuers located in the same state or in municipal
obligations of the same type which pay interest on
their obligations from revenue of similar projects such
as hospitals, electric utility systems, multi-family
housing, nursing homes, commercial facilities
(including hotels), or life care facilities. This may
make the fund more susceptible to similar economic,
political, or regulatory occurrences such as changes in
health care regulations, environmental considerations
related to construction, construction cost increases
and labor problems, failure of health care facilities
to maintain adequate occupancy levels, and inflation.
As the similarity in issuers increases, the potential
for fluctuation of the net asset value of shares of the
fund also increases. The fund will not invest 25% or
more of its assets in municipal securities of the same
project type issued by non-governmental entities.
8
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TEMPORARY INVESTMENTS The fund may invest all or a
portion of its assets in short-term municipal
obligations of up to one year in maturity for temporary
defensive purposes. Generally, the income from all such
securities is exempt from federal income tax. (See
"Additional Information Concerning Taxes" in the
statement of additional information.) Further, a
portion of the fund's assets, which will normally be
less than 20%, may be held in cash or invested in high
quality taxable short-term securities of up to one year
in maturity. Such temporary investments may include:
(1) obligations of the U.S. Treasury; (2) obligations
of agencies and instrumentalities of the U.S.
Government; (3) money market instruments, such as
certificates of deposit issued by domestic banks,
corporate commercial paper, and bankers' acceptances;
and (4) repurchase agreements (which are subject to the
limitations described in the statement of additional
information).
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments which are managed by individual counselors.
Each counselor decides how the segment will be invested
(within the limits provided by the fund's objective and
policies and by Capital Research and Management
Company's investment committee). In addition, Capital
Research and Management Company's research
professionals make investment decisions with respect to
a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed
below.
<TABLE>
<CAPTION>
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YEARS OF EXPERIENCE AS
PORTFOLIO COUNSELORS YEARS OF EXPERIENCE AS INVESTMENT PROFESSIONAL
FOR PORTFOLIO COUNSELOR (APPROXIMATE)
AMERICAN FOR AMERICAN
HIGH-INCOME PRIMARY TITLE(S) HIGH-INCOME WITH CAPITAL
MUNICIPAL MUNICIPAL RESEARCH AND
BOND FUND BOND FUND MANAGEMENT
COMPANY OR TOTAL
ITS AFFILIATES YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Neil L. Langberg Senior Vice President of Since the fund began 16 years 16 years
the fund. operations*
Vice President--
Investment Management
Group, Capital
Research and Management
Company
- ----------------------------------------------------------------------------------------------------
John H. Smet Vice President, Capital Since the fund began 11 years 12 years
Research and operations*
Management Company
- ----------------------------------------------------------------------------------------------------
Mark R. Macdonald Vice President--Investment Since the fund began Less than 9 years
Management Group, Capital operations* 1 year
Research and Management
Company
- ----------------------------------------------------------------------------------------------------
</TABLE>
* THE FUND BEGAN OPERATIONS ON SEPTEMBER 26, 1994
9
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DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund declares dividends
DISTRIBUTIONS from its net investment income daily and distributes
AND TAXES the accrued dividends to shareholders each month.
Dividends begin accruing one day after payment for
Income shares is received by the fund or American Funds
distributions are Service Company. All capital gains, if any, are
made each month. distributed annually, usually in December. When a
capital gain is declared, the net asset value per share
is reduced by the amount of the payment.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. For any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax.
As a regulated investment company, the fund is
permitted to pass through to its shareholders federally
tax-exempt income subject to certain requirements which
the fund intends to satisfy.
The fund may invest in obligations which pay interest
that is subject to state and local taxes when
distributed by the fund even though the interest, if
realized directly, would be exempt from these taxes.
For example, a state may require that a fund hold a
specified percentage of that state's bonds in order for
the fund to pass through interest paid on these bonds
to its shareholders on a state tax-exempt basis,
whereas if the bonds were held directly by shareholders
the interest would be exempt from state tax. In
addition, to the extent shareholders receive dividends
derived from taxable interest income or distributions
of capital gains, these dividends or distributions will
not be exempt from federal (or state or local) income
tax.
You will be advised as to the tax consequences of
dividends and capital gain distributions. You are
required by the Internal Revenue Code to report to the
federal government all fund exempt-interest dividends
(and all other tax-exempt interest).
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS
NOTIFIED THE FUND THAT THE TAXPAYER IDENTIFICATION
NUMBER LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO
ITS RECORDS OR THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING, FEDERAL LAW GENERALLY REQUIRES THE FUND TO
WITHHOLD 31% FROM ANY DIVIDENDS (OTHER THAN TAX-EXEMPT
DIVIDENDS) AND/OR REDEMPTIONS (INCLUDING EXCHANGE
REDEMPTIONS). Amounts withheld are applied to your
federal tax liability; a refund may be obtained from
the Service if withholding results in overpayment of
taxes. Federal law also requires the fund to withhold
30% or the applicable tax treaty rate from dividends
paid to certain nonresident alien, non-U.S. partnership
and non-U.S. corporation shareholder accounts.
10
<PAGE>
- -------------------------------------------------------------------------------
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax
adviser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end diversified management investment company, was
AND organized as a Maryland corporation on June 14, 1994.
MANAGEMENT The fund's board supervises fund operations and
performs duties required by applicable state and
The fund is a federal law. Members of the board who are not employed
member of The by Capital Research and Management Company or its
American Funds affiliates are paid certain fees for services rendered
Group, which is to the fund as described in the statement of additional
managed by one of information. They may elect to defer all or a portion
the largest and of these fees through a deferred compensation plan in
most experienced effect for the fund. Shareholders have one vote per
investment share owned and, at the request of the holders of at
advisers. least 10% of the shares of the fund, the fund will hold
a meeting at which any member of the board could be
removed by a majority vote. There will not usually be a
shareholder meeting in any year except, for example,
when the election of the board is required to be acted
upon by shareholders under the Investment Company Act
of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. (See "The American Funds
Shareholder Guide: Purchasing Shares--Investment
Minimums and Fund Numbers" for a listing of funds in
The American Funds Group.) Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.30% on the first $60 million of
average net assets, plus 0.21% on net assets over $60
million, plus 3% of gross investment income. Assuming
net assets of $150 million and gross investment income
levels of 3%, 4%, 5%, 6% and 7%, management fees would
be 0.34%, 0.37%, 0.40%, 0.43% and 0.46%, respectively.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the
11
<PAGE>
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recommendations contained in the report dated May 9,
1994 issued by the Investment Company Institute"s
Advisory Group on Personal Investing. (See the
statement of additional information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes an amount of compensation to the dealer,
generally referred to as a concession or discount. On
occasion, securities may be purchased directly from an
issuer, in which case no commissions or discounts are
paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or of other
funds served by Capital Research and Management
Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071-1447;
135 South State College Boulevard, Brea, CA 92621-5804;
8000 IH-10 West, San Antonio, TX 78230-3874; 8332
Woodfield Crossing Boulevard, Indianapolis, IN 46240-
4319 and 5300 Robin Hood Road, Norfolk, VA 23513-2407.
Telephone conversations with American Funds
Distributors may be recorded or monitored for
verification, recordkeeping and quality assurance
purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the fund under
the plan may not exceed 0.30% of its average net assets
annually (0.25% of which may be for service fees). (See
"Purchasing Shares--Sales Charges" below.)
12
<PAGE>
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TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. Telephone conversations with American
Funds Service Company may be recorded or monitored for
verification, recordkeeping and quality assurance
purposes.
<TABLE>
<CAPTION>
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
---------------------------------------------------------------
SERVICE ADDRESS STATES SERVED
AREA
---------------------------------------------------------------
<S> <C> <C>
WEST P.O. Box 2205 AK, AZ, CA, HI, ID,
Brea, CA 92622-2205 MT, NV, OR, UT, WA
Fax: 714/671-7080 and outside the U.S.
---------------------------------------------------------------
CENTRAL- P.O. Box 659522 AR, CO, IA, KS, LA,
WEST San Antonio, TX 78265-9522 MN, MO, ND, NE, NM,
Fax: 210/530-4050 OK, SD, TX and WY
---------------------------------------------------------------
CENTRAL- P.O. Box 6007 AL, IL, IN, KY, MI,
EAST Indianapolis, IN 46206-6007 MS, OH, TNand WI
Fax: 317/735-6620
---------------------------------------------------------------
EAST P.O. Box 2280 CT, DE, FL, GA, MA,
Norfolk, VA 23501-2280 MD, ME, NC, NH, NJ,
Fax: 804/670-4773 NY, PA, RI, SC, VA,
VT, WV and Washington,
D.C.
---------------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
---------------------------------------------------------------
[MAP OF UNITED STATES OF AMERICA]
---------------------------------------------------------------
</TABLE>
West (light grey); Central-West (white); Central-East
(dark grey), East (blue)
13
<PAGE>
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APPENDIX Moody's Investors Service, Inc. rates the long-term
debt securities issued by various entities in
Description of categories ranging from "Aaa" to "C," according to
bond ratings. quality as described below.
"AAA -- Best quality. These securities carry the
smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are
protected by a large, or by an exceptionally stable
margin and principal is secure. While the various
protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the
fundamentally strong position of such shares."
"AA -- High quality by all standards. They are rated
lower than the best bond because margins of protection
may not be as large as in Aaa securities, fluctuation
of protective elements may be of greater amplitude, or
there may be other elements present which make the
long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds
possess many favorable investment attributes. Factors
giving security to principal and interest are
considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the
future."
"BAA -- Medium grade obligations. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative
characteristics as well."
"BA -- Have speculative elements; future cannot be
considered as well assured. The protection of interest
and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times
over the future. Bonds in this class are characterized
by uncertainty of position."
"B -- Generally lack characteristics of the desirable
investment; assurance of interest and principal
payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or
there may be present elements of danger with respect to
principal or interest."
"CA -- Speculative in a high degree; often in default
or having other marked shortcomings."
"C -- Lowest rated class of bonds; can be regarded as
having extremely poor prospects of ever attaining any
real investment standing."
14
<PAGE>
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Standard & Poor's Corporation rates the long-term debt
securities issued by various entities in categories
ranging from "AAA" to "D," according to quality as
described below.
"AAA -- Highest rating. Capacity to pay interest and
repay principal is extremely strong."
"AA -- High grade. Very strong capacity to pay interest
and repay principal. Generally, these bonds differ from
AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible
to the adverse effects of change in circumstances and
economic conditions, than debt in higher rated
categories."
"BBB -- Regarded as having adequate capacity to pay
interest and repay principal. These bonds normally
exhibit adequate protection parameters, but adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest
and repay principal than for debt in higher rated
categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as
predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation.
While such debt will likely have some quality and
protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions."
"C1 -- Reserved for income bonds on which no interest
is being paid."
"D -- In default and payment of interest and/or
repayment of principal is in arrears."
15
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
---------------------------------------------------------
Your investment See "Investment $50 minimum (except
dealer can help Minimums and Fund where a lower
you establish your Numbers" for minimum is noted
account--and help initial under "Investment
you add to it investment Minimums and Fund
whenever you like. minimums. Numbers").
---------------------------------------------------------
By Visit any Mail directly to
contacting investment dealer your investment
your who is registered dealer's address
investment in the state printed on your
dealer where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,
CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
SHARE PRICE Shares are purchased at the next offering
price after the order is received by the fund or
American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares on the basis of the penny-
rounding method in accordance with rules of the
Securities and Exchange Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
16
<PAGE>
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If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT
AVAILABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R).......................... $1,000 02
American Balanced Fund(R).............. 500 11
American Mutual Fund(R)................ 250 03
Capital Income Builder(R).............. 1,000 12
Capital World Growth and Income
Fund(SM)............................. 1,000 33
EuroPacific Growth Fund(R)............. 250 16
Fundamental Investors(SM).............. 250 10
The Growth Fund of America(R).......... 1,000 05
The Income Fund of America(R).......... 1,000 06
The Investment Company of America(R)... 250 04
The New Economy Fund(R)................ 1,000 14
New Perspective Fund(R)................ 250 07
SMALLCAP World Fund(SM)................ 1,000 35
Washington Mutual Investors Fund(SM)... 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond
Fund(SM)................................. $1,000 40
American High-Income Trust(R).............. 1,000 21
The Bond Fund of America(SM)............... 1,000 08
Capital World Bond Fund(R)................. 1,000 31
Intermediate Bond Fund of America(R)....... 1,000 23
Limited Term Tax-Exempt Bond Fund of
America(SM).............................. 1,000 43
The Tax-Exempt Bond Fund of America(SM).... 1,000 19
The Tax-Exempt Fund of California(R)*...... 1,000 20
The Tax-Exempt Fund of Maryland(R)*........ 1,000 24
The Tax-Exempt Fund of Virginia(R)*........ 1,000 25
U.S. Government Securities Fund(SM)........ 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R).... 2,500 09
The Tax-Exempt Money Fund of America(SM)... 2,500 39
The U.S. Treasury Money Fund of America(SM) 2,500 49
</TABLE>
--------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs).
Minimums are reduced to $50 for purchases through
"Automatic Investment Plans" (except for the money
market funds) or to $25 for purchases by retirement
plans through payroll deductions and may be reduced or
waived for shareholders of other funds in The American
Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
17
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees (paid pursuant to the
fund's plan of distribution), and for purchases made at
net asset value by certain retirement plans of
organizations with collective retirement plan assets of
$100 million or more as set forth in the statement of
additional information (paid by American Funds
Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will provide
additional promotional incentives to dealers. Currently
these incentives are limited to the top one hundred
dealers who have sold shares of the fund or other funds
in The American Funds Group. These incentive payments
will be based on a pro rata share of a qualifying
dealer's sales.
Any defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or
any other purchaser investing at least $1 million in
shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the
money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of
1% is imposed on certain redemptions within one year of
the purchase. (See "Redeeming Shares--Contingent
Deferred Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--
18
<PAGE>
- -------------------------------------------------------------------------------
Plan of Distribution.") These services include
processing purchase and redemption transactions,
establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current or retired registered
representatives or full-time employees and their
spouses and minor children of dealers having sales
agreements with American Funds Distributors and plans
for such persons; (3) companies exchanging securities
with the fund through a merger, acquisition or exchange
offer; (4) trustees or other fiduciaries purchasing
shares for certain retirement plans of organizations
with retirement plan assets of $100 million or more;
(5) insurance company separate accounts; (6) accounts
managed by subsidiaries of The Capital Group Companies,
Inc.; and (7) The Capital Group Companies, Inc., its
affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to
these persons and organizations due to anticipated
economies in sales effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for other accounts and may
not be aggregated with other nominee or street name
accounts unless otherwise qualified as described above.
19
<PAGE>
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CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application.)
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales
20
<PAGE>
- -------------------------------------------------------------------------------
charge generally applies. However, exchanges of shares
from the money market funds are subject to applicable
sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange
from a fund having a sales charge, or by reinvestment
or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
21
<PAGE>
- -------------------------------------------------------------------------------
AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
--------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
--------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
22
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, any
of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The
charge is 1% of the lesser of the value of the shares
redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit
plans; for distributions from 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; for
tax-free returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without sales charge (any contingent deferred sales
charge paid will be credited to your account) in any
fund in The American Funds Group. Send a written
23
<PAGE>
- -------------------------------------------------------------------------------
request and a check to American Funds Service Company
within 90 days after the date of the redemption or
distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
24
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
Part B
Statement of Additional Information
March 25, 1995
This document is not a prospectus but should be read in conjunction with
the current prospectus dated March 25, 1995 of American High-Income Municipal
Bond Fund, Inc. (the "fund"). The prospectus may be obtained from your
investment dealer or financial planner or by writing to the fund at the
following address:
American High-Income Municipal Bond Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE NO.
<S> <C>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES 1
INVESTMENT RESTRICTIONS 4
FUND OFFICERS AND DIRECTORS 7
MANAGEMENT 10
DIVIDENDS AND DISTRIBUTIONS 13
ADDITIONAL INFORMATION CONCERNING TAXES 13
PURCHASE OF SHARES 16
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 18
EXECUTION OF PORTFOLIO TRANSACTIONS 19
GENERAL INFORMATION 19
STATEMENT OF ASSETS AND LIABILITIES 21
FINANCIAL STATEMENTS 22
</TABLE>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Objective and Policies."
PORTFOLIO TRADING - The fund intends to engage in portfolio trading when it is
believed that the sale of a security owned by the fund and the purchase of
another security of better value can enhance principal and/or increase income.
A security may be sold to avoid any prospective decline in market value in
light of what is evaluated as an expected rise in prevailing yields, or a
security may be purchased in anticipation of a market rise (a decline in
prevailing yields). A security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two
securities.
ZERO COUPON BONDS - Municipalities may issue zero coupon securities which are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest. They are issued and traded at a discount from their face
amount or par value, which discount varies depending on the time remaining
until cash payments begin, prevailing interest rates, liquidity of the
security, and the perceived credit quality of the issuer.
PRE-REFUNDED BONDS - From time to time, a municipality may refund a bond that
it has already issued prior to the original bond's call date by issuing a
second bond, the proceeds of which are used to purchase securities. The
securities are placed in an escrow account pursuant to an agreement between the
municipality and an independent escrow agent. The principal and interest
payments on the securities are then used to pay off the original bondholders.
For the purposes of diversification, pre-refunded bonds will be treated as
governmental issues.
VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate
based upon changes in market rates. Variable and floating rate obligations
bear coupon rates that are adjusted at designated intervals, based on the then
current market rates of interest on which the coupon rates are based. Variable
and floating rate obligations only ensure the current interest rate for only
the period until the next scheduled rate adjustment, but the rate adjustment
feature tends to limit the extent to which the market value of the obligation
will fluctuate.
LOANS OF PORTFOLIO SECURITIES - Although the fund has no current intention to
do so during the next 12 months, the fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors
whose financial condition is monitored by Capital Research and Management
Company (the "Investment Adviser"). The borrower must maintain with the fund's
custodian collateral consisting of cash, cash equivalents or U.S. Government
securities equal to at least 100% of the value of the borrowed securities, plus
any accrued interest. The Investment Adviser will monitor the adequacy of the
collateral on a daily basis. The fund may at any time call a loan of its
portfolio securities and obtain the return of the loaned securities. The fund
will receive any interest paid on the loaned securities and a fee or a portion
of the interest earned on the collateral. The fund will limit its loans of
portfolio securities to an aggregate of 33 1/3% of the value of its total
assets, taken at the time any such loan is made.
REPURCHASE AGREEMENTS - Although the fund has no current intention to do so
during the next 12 months, the fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. The seller must
maintain with the fund's custodian collateral equal to at least 100% of the
repurchase price including accrued interest, as monitored daily by Capital
Research and Management Company. If the seller under the repurchase agreement
defaults, the fund may incur a loss if the value of the collateral securing the
repurchase agreement has declined and may incur disposition costs in connection
with liquidating the collateral. If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be delayed
or limited.
PORTFOLIO MANAGEMENT - In seeking to achieve the fund's objectives, the
Investment Adviser causes the fund to purchase securities that it believes
represent the best values then currently available in the marketplace. Such
values are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the economy, movements in
the general level and term structure of interest rates, political developments,
and variations in the supply of funds available for investment in the
tax-exempt market relative to the demand for the funds placed upon it. These
latter factors change continuously and should be met with a dynamic, responsive
approach to the investment process. Some of the more important portfolio
management techniques that are utilized by the Investment Adviser are set forth
below.
ADJUSTMENT OF MATURITIES - The Investment Adviser seeks to anticipate movements
in interest rates and adjusts the maturity distribution of the portfolio
accordingly. Longer term securities ordinarily yield more than shorter term
securities but are subject to greater and more rapid price fluctuation.
Keeping in mind the fund's objective of producing a high level of current
income, the Investment Adviser will increase the fund's exposure to this price
volatility only when it appears likely to increase current income without undue
risk to capital.
ISSUE CLASSIFICATION - Securities with the same general quality rating and
maturity characteristics, but which vary according to the purpose for which
they were issued, often tend to trade at different yields. These yield
differentials tend to fluctuate in response to political and economic
developments, as well as temporary imbalances in normal supply/demand
relationships. The Investment Adviser monitors these fluctuations closely, and
will attempt to adjust portfolio concentrations in various issue
classifications according to the value disparities brought about by these yield
relationship fluctuations.
QUALITY - Securities issued for similar purposes and with the same general
maturity characteristics, but which vary according to the creditworthiness of
their respective issuers, tend to trade at different yields. These yield
differentials also tend to fluctuate in response to political, economic and
supply/demand factors. The Investment Adviser will attempt to take advantage
of these fluctuations by adjusting the concentration of portfolio securities in
any given quality category according to the value disparities produced by these
yield relationship fluctuations.
The Investment Adviser believes that, in general, the market for municipal
bonds is less liquid than that for taxable fixed-income securities.
Accordingly, the ability of the fund to make purchases and sales of securities
in the foregoing manner may, at any particular time and with respect to any
particular securities, be limited (or non-existent.)
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the
length of time particular investments may have been held. High portfolio
turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions, and may result in the realization of
net capital gains, which are taxable when distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. The fund does not
anticipate its portfolio turnover to exceed 100% annually. The fund's
portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year.
INVESTMENT RESTRICTIONS
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the 1940 Act as the vote of
the lesser of (i) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations expressed in the following
investment restrictions are measured immediately after and giving effect to the
relevant transaction. These restrictions provide that the fund may not:
1. With respect to 75% of the fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities) if, as a result, (a) more than 5% of the
fund's total assets would be invested in securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of that
issuer. For the purpose of this restriction, the fund will regard each state,
each political subdivision, agency or instrumentality of such state, each
multi-state agency of which such state is a member, and each public authority
which issues industrial development bonds on behalf of a private entity as a
separate issuer;
2. Invest in companies for the purpose of exercising control or management;
3. Purchase or sell real estate (including real estate limited partnerships)
unless acquired as a result of ownership of securities or other instruments
(but this shall not prevent the fund from investing in securities or other
instruments backed by real estate or securities of companies engaged in the
real estate business);
4. Purchase or sell commodities unless acquired as a result of ownership of
securities or other instruments or engage in futures transactions;
5. Engage in the business of underwriting securities of other issuers, except
to the extent that the purchase or disposal of an investment position may
technically constitute the fund as an underwriter as that term is defined under
the Securities Act of 1933;
6. Make loans in an aggregate amount in excess of 33 1/3% of the value of the
fund's total assets, taken at the time any loan is made, provided that the
purchase of debt securities pursuant to the fund's investment objective and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction and that loans of portfolio
securities may be made;
7. Issue senior securities, except as permitted under the Investment Company
Act of 1940;
8. Borrow money, except from banks for temporary or emergency purposes not to
exceed one-third of the value of the fund's total assets. Moreover, in the
event that the asset coverage for the fund's borrowings falls below 300%, the
fund will reduce, within three days (excluding Sundays and holidays), the
amount of its borrowings in order to provide for 300% asset coverage;
9. Pledge, or hypothecate any of its assets, except in an amount up to
one-third of the value of its total assets, but only to secure borrowings for
temporary or emergency purposes;
10. Invest in interests in oil, gas, or other mineral exploration or
development programs (or leases);
11. Purchase or sell puts, calls, straddles, or spreads, or combinations
thereof (this restriction does not prevent the fund from investing in
securities with put and call features);
12. Invest 25% or more of its assets in municipal securities of the same
project type issued by non-governmental entities. However, the fund may invest
more than 25% of its assets in municipal obligations of issuers located in the
same state or in municipal obligations of the same type, including without
limitation the following: general obligations of states and localities; lease
rental obligations of state and local authorities; obligations of state and
local housing finance authorities, municipal utilities systems or public
housing authorities; or industrial development or pollution control bonds
issued for hospitals, electric utility systems, life care facilities or other
purposes. As a result, the fund may be more susceptible to adverse economic,
political, or regulatory occurrences affecting a particular category of
issuers. As the concentration in the securities of a particular category of
issuer increases, the potential for fluctuation in the value of the fund's
shares also increases; nor
13. Sell securities short, except to the extent that the fund
contemporaneously owns, or has the right to acquire at no additional cost,
securities identical to those sold short.
For the purposes of the fund's investment restrictions, the identification of
the "issuer" of municipal bonds that are not general obligation bonds is made
by the Investment Adviser on the basis of the characteristics of the bonds as
described, the most significant of which is the ultimate source of funds for
the payment of principal and interest on such bonds.
NON-FUNDAMENTAL POLICIES - The fund has adopted the following non-fundamental
investment policies, which may be changed by action of the Board of Directors
without shareholder approval:
1. The fund does not currently intend to lend portfolio securities. However,
if such action is authorized by the Board of Directors, loans of portfolio
securities as described under "Loans of Portfolio Securities" shall be made in
accordance with the terms and conditions therein set forth and consistent with
fundamental investment restriction #6;
2. The fund will not invest more than 15% of the value of its net assets in
securities which are not readily marketable (including repurchase agreements
maturing in more than seven days), nor invest more than 5% of its net assets in
restricted securities (excluding Rule 144A securities);
3. The fund will not invest more than 15% of its total assets in the
securities of issuers (excluding securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities) which together with any
predecessors have a record of less than three years continuous operation;
4. The fund does not currently intend to purchase or retain the securities of
any issuer, if those individual officers and Directors of the fund, its
investment adviser, or principal underwriter who individually own more than 1/2
of 1% of the securities of such issuer, together own more than 5% of such
issuer's securities;
5. The fund does not currently intend to invest in the securities of other
registered management investment companies, except in connection with a merger,
consolidation, acquisition, reorganization, or in connection with the
implementation of any deferred compensation plan as adopted by the Board of
Directors;
6. The fund will not invest more than 5% of its net assets, valued at the
lower of cost or market at the time of purchase, in warrants, including not
more than 2% of such net assets in warrants that are not listed on a major
stock exchange. However, warrants acquired in units or attached to securities
may be deemed to be without value for the purpose of this restriction; and
7. The fund does not currently intend to purchase securities in the event its
borrowings exceed 5% of total assets.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION FROM ALL FUNDS OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING MANAGED BY CAPITAL BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED RESEARCH AND WHICH
COMPENSATION/1/) FOR MANAGEMENT COMPANY/2/ DIRECTOR
THE PERIOD FOR THE PERIOD SERVES/2/
SEPTEMBER 26, 1994 SEPTEMBER 26, 1994 TO
TO JANUARY 31, 1995 JANUARY 31, 1995
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Director Private Investor. The Mission $0 $50,100 18
P.O. Box 144 Group (non-utility holding
Palos Verdes Estates, CA 90274 Company, subsidiary of Southern
Age: 61 California Edison Company),
former President and Chief
Executive Officer
Diane C. Creel Director Chairwoman, CEO and President, $200 $9,200 12
100 W. Broadway The Earth Technology Corporation
Suite 5000
Long Beach, CA 90802
Age: 46
Martin Fenton, Jr. Director Chairman, Senior Resource Group $0 $24,550 15
4350 Executive Drive (management of senior living
Suite 101 centers)
San Diego, CA 92121-2116
Age: 59
Leonard R. Fuller Director President, Fuller & Company, Inc. $200 $9,200 12
4337 Marina City Drive (financial management consulting
Suite 841 ETN firm)
Marina del Rey, CA 90292
Age: 48
+* Abner D. Goldstine President, Capital Research and Management none/3/ none/3/ 12
Age: 65 PEO and Company, Senior Vice President
Director and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management none/3/ none/3/ 14
Age: 46 the Board Company, Senior Vice President
and Director
Herbert Hoover III Director Private Investor $0 $15,450 14
200 S. Los Robles Avenue
Suite 520
Pasadena, CA 91101-2431
Age: 67
Richard G. Newman Director Chairman, President and CEO, $0 $9,650 12
3250 Wilshire Boulevard AECOM Technology Corporation
Los Angeles, CA 90010-1599 (architectural engineering)
Age: 60
Peter Valli Director Chairman and CEO, BW/IP $0 $9,650 12
200 Oceangate Boulevard International Inc. (industrial
Suite 900 manufacturing)
Long Beach, CA 90802
Age: 68
</TABLE>
# Positions within the organizations listed may have changed during this
period.
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on
the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071//
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the Fund in 1994. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the Director. As of January
31, 1995, this fund had not deferred compensation for any director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the Fund.
OFFICERS
*** Neil L. Langberg, SENIOR VICE PRESIDENT. Capital Research and Management
Company,
Vice President - Investment Management Group
** Mary C. Cremin, VICE PRESIDENT AND TREASURER. Capital Research and
Management Company,
Senior Vice President - Fund Business Management Group
* Michael J. Downer, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* Julie F. Williams, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
* Kimberly S. Verdick, ASSISTANT SECRETARY. Capital Research and Management
Company, Compliance Associate - Fund Business Management Group
** Anthony W. Hynes, Jr., ASSISTANT TREASURER. Capital Research and
Management
Company, Vice President - Fund Business Management Group
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
No compensation is paid by the fund to any officer or Director who is a
director or officer of the Investment Adviser. The fund pays annual fees of
$1,200 to Directors who are not affiliated with the Investment Adviser. No
fees are paid for attendance at Board of Directors meetings or meetings of a
committee of the Board of Directors. The Directors may elect, on a voluntary
basis, to defer all or a portion of their fees through a deferred compensation
plan in effect for the fund. The fund also reimburses certain expenses of the
Directors who are not affiliated with the Investment Adviser.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have years of investment experience. The Investment Adviser's research
professionals travel several million miles a year, making more than 5,000
research visits in more than 50 countries around the world. The Investment
Adviser believes that it is able to attract and retain quality personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for approximately $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement"), between the fund and the Investment Adviser will
continue in effect until September 25, 1996, unless sooner terminated, and may
be renewed from year to year thereafter provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are
not parties to the Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person, at a meeting called for the purpose of
voting on such approval. The Agreement provides that the Investment Adviser
has no liability to the fund for its acts or omissions in the performance of
its obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it without
penalty, upon 60 days' written notice to the other party and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
For the purposes of such computations under the Agreement, the fund's gross
investment income does not reflect any net realized gains or losses on the sale
of portfolio securities but does include original-issue discount as defined for
federal income tax purposes.
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform the executive and related administrative, clerical
and bookkeeping functions of the fund, provides suitable office space,
necessary small office equipment and general purpose accounting forms,
supplies, and postage used at the offices of the fund. The fund pays all
expenses not assumed by the Investment Adviser, including, but not limited to,
custodian, stock transfer and dividend disbursing fees and expenses; costs of
the designing, printing and mailing of reports, prospectuses, proxy statements,
and notices to its shareholders, taxes; expenses of the issuance and redemption
of shares (including stock certificates, registration and qualification fees
and expenses); legal and auditing expenses; compensation, fees, and expenses
paid to directors unaffiliated with the Investment Adviser; association dues;
and costs of stationery and forms prepared exclusively for the fund.
The Investment Adviser has agreed to waive its fees by any amount necessary to
assure that such expenses do not exceed applicable expense limitations in any
state in which the funds' shares are being offered for sale. Only one state
(California) continues to impose expense limitations on funds registered for
sale therein. The California provision currently limits annual expenses to the
sum of 2-1/2% of the first $30 million of average net assets, 2% of the next
$70 million and 1-1/2% of the remaining average net assets. Rule 12b-1
distribution expenses would be excluded from this limit. Other expenses which
are not subject to these limitations include interest, taxes, brokerage
commissions, transaction costs, and extraordinary items such as litigation, as
well as, for purposes of the state expense limitations, any amounts excludable
under the applicable regulation. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses.
The Investment Adviser has agreed to bear any fund expenses (with the
exception of interest, taxes, brokerage costs and extraordinary expenses such
as litigation and acquisitions) in excess of 0.90% of the fund's average net
assets per annum, subject to reimbursement by the fund, during a period which
will terminate at the earlier of (i) such time as no reimbursement has been
required for a period of 12 consecutive months, provided no advances are
outstanding, or (ii) October 1, 2004. Each month, to the extent the fund
owes money to the Investment Adviser pursuant to this provision of the
Agreement and the fund's annualized expense ratio for the month is below 0.90%,
the fund will reimburse the Investment Adviser until the fund's annualized
expense ratio equals 0.90% or the debt is repaid, whichever comes first.
During the period, the Investment Adviser's total fees amounted to $99,000.
Voluntary fee waivers amounted to $119,000 for the period ended January 31,
1995.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the period ended January
31, 1995 amounted to $34,000 after allowance of $1,759,000 to dealers.
As required by rule 12b-1 the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors and separately by a
majority of the Directors who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by a vote
of a majority of the outstanding voting securities of the fund. The officers
and Directors who are "interested persons" of the fund due to present or past
affiliations with the Investment Adviser and related companies may be
considered to have a direct or indirect financial interest in the operation of
the Plan. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the fund shall be committed to the discretion
of the Directors who are not "interested persons" during the existence of the
Plan. The Plan is reviewed quarterly and must be renewed annually by the Board
of Directors.
Under the Plan the fund may expend up to 0.30% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Directors has approved the
category of expenses for which payment is made. These include service fees for
qualified dealers and dealers commissions and wholesaler compensation on sales
of shares exceeding $1 million. Only expenses incurred during the preceding 12
months and accrued while the Plan is in effect may be paid by the fund. During
the period, the fund paid $67,000 under the plan as compensation to dealers.
As of January 31, 1995, accrued and unpaid distribution expenses were
$6,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer with adverse financial consequences as a result of
any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS AND DISTRIBUTIONS - The fund declares dividends from its net
investment income daily and distributes the accrued dividends to shareholders
each month. The percentage of the distribution that is tax-exempt may vary
from year to year. For the purpose of calculating dividends, daily net
investment income of the fund consists of: (a) all interest income accrued on
the fund's investments including any original issue discount or market premium
ratably amortized to the date of maturity or determined in such other manner as
may be deemed appropriate; minus (b) all liabilities accrued, including
interest, taxes and other expense items, amounts determined and declared as
dividends or distributions and reserves for contingent or undetermined
liabilities, all determined in accordance with generally accepted accounting
principles.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional federal, state and local
tax considerations generally affecting the fund and its shareholders. No
attempt is made to present a detailed explanation of the tax treatment of the
fund or its shareholders, and the discussion here and in the fund's Prospectus
is not intended as a substitute for careful tax planning. Investors are urged
to consult their tax advisers with specific reference to their own tax
situations.
The fund is not intended to constitute a balanced investment program and is
not designed for investors seeking capital appreciation or maximum tax-exempt
income irrespective of fluctuations in principal. Shares of the fund would
generally not be suitable for tax-exempt institutions or tax-deferred
retirement plans (e.g., plans qualified under Section 401 of the Internal
Revenue Code, Keogh-type plans and individual retirement accounts.) Such
retirement plans would not gain any benefit from the tax-exempt nature of the
fund's dividends because such dividends would be ultimately taxable to
beneficiaries when distributed to them. In addition, the fund may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a non-exempt person
who regularly uses a part of such facilities in his trade or business and whose
gross revenues derived with respect to the facilities financed by the issuance
of bonds are more than 5% of the total revenues derived by all users of such
facilities, or who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" include certain related natural
persons, affiliated corporations, a partnership and its partners and an S
Corporation and its shareholders.
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its taxable and tax-exempt
net investment income, it will be taxed only on that portion, if any, which it
retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; (b) derive less than 30% of its gross income from the gains on sale
or other disposition of stock or securities held less than three months; and
(c) diversify its holdings so that, at the end of each fiscal quarter, (i) at
least 50% of the market value of the fund's assets is represented by cash, cash
items, U.S. Government securities, securities of other regulated investment
companies, and other securities which must be limited, in respect of any one
issuer to an amount not greater than 5% of the fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities or the securities of other regulated investment
companies) or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
The percentage of total dividends paid by the fund with respect to any taxable
year which qualify for exclusion from gross income ("exempt-interest
dividends") will be the same for all shareholders receiving dividends during
such year. In order for the fund to pay exempt-interest dividends during any
taxable year, at the close of each fiscal quarter at least 50% of the aggregate
value of the fund's assets must consist of tax-exempt obligations. Not later
than 60 days after the close of its taxable year, the fund will notify each
shareholder of the portion of the dividends paid by the fund to the shareholder
with respect to such taxable year which constitutes exempt-interest dividends.
The aggregate amount of dividends so designated cannot, however, exceed the
excess of the amount of interest excludable from gross income from tax under
Section 103 of the Code received by the fund during the taxable year over any
amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Code.
Interest on indebtedness incurred by a shareholder to purchase or carry fund
shares is not deductible for federal income tax purposes if the fund
distributes exempt-interest dividends during the shareholder's taxable year.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held for six months or less, any loss on the sale or exchange
of such share will be disallowed to the extent of the amount of such
exempt-interest dividend.
While the fund does not expect to realize substantial long-term capital
gains, any net realized long-term capital gains will be distributed annually.
The fund will have no tax liability with respect to such gains, and the
distributions will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held fund shares. Such distributions
will be designated as a capital gains distribution in a written notice, in the
form of the fund's annual report, mailed by the fund to shareholders not later
than 60 days after the close of the fund's taxable year. If a shareholder
receives a designated capital gain distribution (treated by the shareholder as
a long-term capital gain) with respect to any fund share and such fund share is
held for six months or less, then (unless otherwise disallowed) any loss on the
sale or exchange of that fund share will be treated as long-term capital loss
to the extent of the designated capital gain distribution. The fund also may
make a distribution of net realized long-term capital gains near the end of the
calendar year to comply with certain requirements of the Code. Gain recognized
on the disposition of a debt obligation (including tax-exempt obligations
purchased after April 30, 1993) purchased by the fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the fund held the debt obligation.
Similarly, while the fund does not expect to earn any significant investment
company taxable income, in the event that any taxable income is earned by the
fund it will be distributed. In general, the fund's investment company taxable
income will be its taxable income subject to certain adjustments and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The fund would be taxed on any
undistributed investment company taxable income. Since any such income will be
distributed, it will be taxable to shareholders as ordinary income (whether
distributed in cash or additional shares).
The Code imposes limitations on the use and investment of the proceeds of
state and local governmental bonds and upon other funds of the issuers of such
bonds. These limitations must be satisfied on a continuing basis to maintain
the exclusion from gross income of interest on such bonds. These provisions of
the Code generally apply to bonds issued after August 15, 1986. Bond counsel
qualify their opinions as to the federal tax status of new issues of bonds by
making such opinions contingent on the issuer's future compliance with these
limitations. Any failure on the part of an issuer to comply could cause the
interest on its bonds to become taxable to investors retroactive to the date
the bonds were issued.
In most cases, the interest on "private activity" bonds as defined under
the Code is an item of tax preference subject to the alternative minimum tax
("AMT") on corporations and individuals. The fund may invest without
limitation in "private activity" bonds. As of the date of this statement of
additional information, individuals are subject to an AMT at a maximum marginal
rate of 28% and corporations at a rate of 20%. Shareholders will not be
permitted to deduct any of their share of fund expenses in computing
alternative minimum tax income. With respect to corporate shareholders of the
fund, all interest on municipal bonds and other tax-exempt obligations,
including exempt-interest dividends paid by the fund, is included in adjusted
current earnings in calculating federal alternative minimum taxable income, and
may also affect corporate federal "environmental tax" liability.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually
distributed by the fund from its current year's ordinary income and capital
gain net income and (ii) any amount on which the fund pays income tax during
the periods described above. The fund intends to distribute net investment
income and net capital gains so as to minimize or avoid the excise tax
liability.
If for any taxable year the fund does not qualify for the special tax
treatment afforded regulated investment companies, all of its taxable income
will be subject to tax at regular corporate rates (without any deduction for
distributions to its shareholders). In such event, dividend distributions
would be taxable to shareholders to the extent of earnings and profits, and may
be eligible for the dividends- received deduction for corporations. Under
normal circumstances, no part of the distributions to shareholders by the fund
is expected to qualify for the dividends-received deduction allowed to
corporate shareholders.
If a shareholder exchanges or otherwise disposes of shares of the fund
within 90 days of having acquired such shares, and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
for shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purposes of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other funds. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
As of the date of this statement of additional information, the maximum
individual tax rate applicable to ordinary income is 39.6% (effective tax rates
may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gains is 35%. However, to eliminate the benefit of
lower marginal corporate income tax rates, corporations which have taxable
income in excess of $100,000 for a taxable year will be required to pay an
additional amount of income tax of up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of income tax of up to $100,000. Naturally, the
amount of tax payable by a taxpayer will be affected by a combination of tax
law rules covering deductions, credits, deferrals, exemptions, sources of
income and other matters.
Under the Code, distributions of net investment income by the Fund to a
resident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership (a "foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or a lower treaty rate, if
applicable). Withholding will not apply if a dividend paid by the fund is
"effectively connected" with a U.S. trade or business, in which case the
reporting and withholding requirements applicable to U.S. citizens, U.S.
residents, or domestic corporations will apply.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of the determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated closing price.
The price you pay for fund shares, the public offering price, is based on the
net asset value per share which is calculated once daily at the close of
trading (currently 4:00 p.m., New York time) each day the New York Stock
Exchange is open as set forth below. The New York Stock Exchange is currently
closed on weekends and on the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day. The net asset value per share is determined as follows:
1. Municipal bonds and notes and any other securities with more than 60
days remaining to maturity normally are valued at prices obtained from a
national municipal bond pricing service, except that, where such pricers are
not available or determined by the fund's officers not to represent market
value, they are valued at prices representing the mean between bid and asked
quotations (on the sale of similar issues) obtained from one or more
broker/dealers dealing in such municipal bonds and notes.
All securities with 60 days or less to maturity are amortized to maturity
based on their cost to the fund if acquired within 60 days of maturity or, if
already held by the fund on the 60th day, based on the value determined on the
61st day. The maturities of variable or floating rate instruments, or
instruments with the right to sell them at par to the issuer or dealer, are
deemed to be the time remaining until the next interest adjustment date or
until they can be redeemed at par.
Where market prices or market quotations are not readily available, securities
are valued at fair value as determined in good faith by the Board of Directors
or a committee thereof. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of expense items; and
3. The value of the net assets so obtained are then divided by the total
number of shares outstanding and the result, rounded to the nearer cent, is the
net asset value per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell fund shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Directors.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the prospectus apply to purchases of $25,000 or more made within a
13-month period pursuant to the terms of a written statement of intention (the
"Statement") in the form provided by the Principal Underwriter and signed by
the purchaser. The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder signs a Statement in order to qualify for
a reduced sales charge, shares equal to 5% of the dollar amount specified in
the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and capital gain distributions on these shares held in escrow
will be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser must remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total purchases had been made at a single time. If
the difference is not paid within 20 days after written request by the
Principal Underwriter or the investment dealer, the appropriate number of
escrowed shares will be redeemed to pay such difference. If the proceeds from
this redemption are inadequate, the purchaser will be liable to the Principal
Underwriter for the balance still outstanding. The Statement may be revised
upward at any time during the 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
DEALER COMMISSIONS - The following commissions will be paid, as described in
the prospectus, to dealers who initiate and are responsible for purchases of $1
million or more, for purchases by any defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees, and for purchases made at net asset value by
certain retirement plans of organizations with collective retirement plan
assets of $100 million or more: 1.00% on amounts of $1 million to $2 million,
0.80% on amounts over $2 million to $3 million, 0.50% on amounts over $3
million to $50 million, 0.25% on amounts over $50 million to $100 million, and
0.15% on amounts over $100 million. The level of dealer commissions will be
determined based on sales made over a 12-month period commencing from the date
of the first sale at net asset value. See "The American Funds Shareholder
Guide" in the fund's Prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of retirement plans for which Capital
Guardian Trust Company serves as trustee or custodian). Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
showing the current transaction. Participation in the plan will begin within
30 days after receipt of the account application. If the shareholder's bank
account cannot be charged due to insufficient funds, a stop-payment order or
closing of the account, the plan may be terminated and the related investment
reversed. The shareholder may change the amount of the investment or
discontinue the plan at any time by writing the Transfer Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund does not intend to pay a mark-up
in exchange for research in connection with principal transactions.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, NY 10081, as Custodian.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as the fund's independent auditors, providing audit
services, preparation of tax returns and review of certain documents to be
filed with the Securities and Exchange Commission. The Statement of Assets
and Liabilities included in this Statement of Additional Information have been
so included in reliance on the report of the independent auditors given on the
authority of said firm as experts in accounting and auditing.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors, as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on July 31. Shareholders
are provided at least semiannually with reports showing the investment
portfolio, financial statements and other information audited annually by the
fund's independent auditors, Price Waterhouse LLP, whose selection is
determined annually by the Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages seven common stock funds that are at least 10 years old. In all of the
10-year periods since 1962 during which those funds were managed by Capital
Research and Management Company (104 in all), those funds have had better total
returns than the Standard and Poor's 500 Stock Composite Index in 90 of the 104
periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
The fund may also refer to results compiled by organizations such as Lipper
Analytical Services, Morningstar, Inc. and Wiesenberger Investment Companies
Services. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
Statement of Assets and Liabilities
August 26, 1994
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash in bank $100,000
Prepaid registration fees (Note 4) 58,445
Deferred organization expenses (Note 5) 16,000
Total Assets 174,445
LIABILITIES - Accrued expenses 74,445
NET ASSETS - Equivalent to $14.20 per share on $100,000
6,998 shares of $0.01 par value capital stock
outstanding (200,000,000 shares authorized) (Note 1)
</TABLE>
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
1. American High-Income Municipal Bond Fund, Inc. (the "fund") was organized
on June 14, 1994 as a Maryland Corporation. To date, the fund has had no
transactions other than those relating to organization matters and the sale of
6,998 shares of capital stock to Capital Research and Management Company
("CRMC"), the Investment Advisor. The fund's fiscal year ends on July 31. The
fund is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company.
2. The fund has entered into an Investment Advisory and Service Agreement
with CRMC and a Principal Underwriting Agreement with American Funds
Distributors, Inc. ("AFD"). Pursuant to the Investment Advisory and Service
Agreement with CRMC, the fund will pay a monthly fee, accrued daily, based on
an annual rate of 0.30% of the first $60 million of average net assets; 0.21%
of such assets in excess of $60 million; plus 3.00% of the fund's monthly gross
investment income. The Investment Advisory contract provides for fee
reductions to the extent that annual operating expenses exceed 0.90% of the
average net assets of the fund, during a period which will terminate at the
earlier of such time as no reimbursement has been required for period of twelve
consecutive months, provided no advances are outstanding, or October 1, 2004.
CRMC has also voluntarily agreed to waive its fees to the extent necessary to
ensure that the fund's expenses do not exceed 0.60% of the average net assets
until December 30, 1994. Expenses that are not subject to these limitations
are interest, taxes, brokerage commissions, transaction costs, and
extraordinary expenses. The fund has also entered into a Shareholder Services
Agreement with American Funds Service Company ("AFS") to provide transfer
agency services to the fund. In addition, the fund has adopted a Plan of
Distribution (the "Plan"), pursuant to rule 12b-1 under the 1940 Act. Under
the Plan the fund may reimburse AFD for its direct expenses to finance any
activity primarily intended to result in the sale of the fund's shares.
Expenditures by the fund pursuant to the Plan may not exceed 0.30% of its
average daily net assets per annum. CRMC is owned by The Capital Group, Inc.
AFD and AFS are both wholly owned subsidiaries of CRMC. Certain officers
and/or Directors of the fund are Officers and/or Directors of CRMC.
3. The fund intends to comply in its initial fiscal year and thereafter with
the requirements of Sections 851-855 of the Internal Revenue Code necessary to
qualify as a regulated investment company and as such will not be subject to
federal income tax on taxable income (including net realized capital gains)
which is distributed to shareholders.
4. Prepaid registration fees will be amortized over a period of one year
following the commencement of operations. These fees have been paid by CRMC on
behalf of the fund and will be repaid by the fund upon commencement of
operations.
5. Deferred organization expenses will be amortized over a period not
exceeding five years from commencement of operations. In the event that CRMC
redeems any of its original shares prior to the end of the five-year period,
the proceeds of the redemption payable with respect to such shares shall be
reduced by the pro rata share (based on the proportionate share of the original
shares redeemed to the total number of original shares outstanding at the time
of such redemption) of the unamortized deferred organization expenses as of the
date of such redemption. In the event that the fund liquidates prior to the
end of the five-year period, CRMC shall bear any unamortized deferred
organization expenses.
Report of Independent Accountants
To the Shareholder and
Board of Directors of
American High-Income Municipal Bond Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of American
High-Income Municipal Bond Fund, Inc. (the "Fund") at August 26, 1994, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Fund's management; our responsibility is
to express and opinion on this financial statement based on our audit. We
conducted our audit of this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Los Angeles, California
August 31, 1994
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
Investment Portfolio, January 31, 1995
<TABLE>
<CAPTION>
Principal Market
Amount Value
(000) (000)
<S> <C> <C>
Tax-Exempt Securities Maturing in More than
One Year - 95.36%
California - 4.10%
Pleasanton Joint Powers Financing Authority,
Subordinate Reassessment Revenue Bonds,
1993 Series B, 6.125% 2002 4,535 4,356
Colorado - 4.64%
City and County of Denver, Airport System
Revenue Bonds:
Series 1994A:
6.90% 1998 2,000 1,990
7.00% 1999 1,000 997
7.50% 2023 1,000 994
Series 1992C, 6.35% 2001 1,000 955
District of Columbia - 3.10%
Hospital Revenue Refunding Bonds (Washington
Hospital Center Issue), Series 1992A:
7.00%, 2005 1,500 1,510
7.125% 2019 1,890 1,791
Florida - 0.89%
Broward County, Resource Recovery Revenue Bonds,
Series 1984 North Project, 7.95% 2008 865 949
Georgia - 1.79%
Fulco Hospital Authority, Revenue Anticipation
Certificates (Georgia Baptist Health Care
System Project), Series 1992A, 6.375% 2022 2,250 1,902
Illinois - 11.63%
City of Chicago, Chicago-O'Hare International
Airport, Special Facility Revenue Bonds
(United Air Lines, Inc. Project):
Series 1988A, 8.95% 2018 1,950 2,104
Series 1988B, 8.85% 2018 1,185 1,285
City of Chicago, Skyway Toll Bridge Refunding
Revenue Bonds, Series 1994, 6.75% 2017 3,000 2,926
Health Facilities Authority, Revenue Bonds,
(Fairview Obligated Group Project),
Series 1992A, 9.50% 2022 2,750 2,921
Village of Robbins, Cook County, Resource
Recovery Revenue Bonds (Robbins Resource
Recovery Partners, L.P. Project), Series 1994A:
8.75% 2005 1,000 1,036
9.25% 2014 2,000 2,102
Indiana - 3.99%
City of East Chicago, Pollution Control
Refunding Revenue Bonds:
(Inland Steel Company Project No. 10),
Series 1993, 6.80% 2013 2,400 2,256
(Inland Steel Company Project No. 11),
Series 1994, 7.125% 2007 2,000 1,988
Kentucky - 4.32%
Kenton County Airport Board (Commonwealth of
Kentucky), Special Facilities Revenue Bonds
(Delta Air Lines, Inc. Project), 1992 Series A,
7.50% 2012 4,625 4,590
Louisiana - 9.30%
Parish of Beauregard, Solid Waste Disposal
Revenue Bonds (Boise Cascade Corporation
Project), Series 1993, 6.30% 2023 3,500 2,969
Industrial Development Board of the Parish of
Calcasieu, Inc., Pollution Control Revenue
Refunding Bonds (Gulf States Utilities Company
Project), Series 1992, 6.75% 2012 2,000 1,946
Orleans Levee District, Levee Improvement Fixed
Rate Refunding Bonds, Series 1987A, 8.25% 2014 5,000 4,975
Maine - 2.21%
Town of Bucksport, Solid Waste Disposal Revenue
Bonds (Champion International Corporation
Project), Series 1985, 6.25% 2010 2,500 2,350
Maryland - 3.31%
Baltimore County, Pollution Control Revenue
Refunding Bonds (Bethlehem Steel Corporation
Project), Series 1994A, 7.55% 2017 2,000 2,007
Housing Opportunities Commission of Montgomery
County, Multifamily Revenue Bonds (Strathmore
Court at White Flint), 1994 Issue A-2:
7.50 2024 1,000 1,008
7.50 2027 500 503
Michigan - 9.75%
The Economic Development Corporation of
Dickinson County, Solid Waste Disposal
Refunding Revenue Bonds (Champion International
Corporation Project), Series 1989, 6.55% 2007 2,500 2,473
Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Genesys Health System
Obligated Group), Series 1995A:
8.00% 2005 2,000 2,087
7.50% 2027 1,000 939
The Economic Development Corporation of the
County of Midland, Subordinated Pollution
Control Limited Obligation Revenue Refunding
Bonds (Midland Cogeneration Project),
Series 1990B, 9.50% 2009 4,600 4,869
Mississippi - 1.60%
Claiborne County Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy,
Inc. Project), Series C, 9.875% 2014 1,500 1,698
Montana - 1.74%
Board of Investments, Resource Recovery Revenue
Bonds (Yellowstone Energy Limited Partnership
Project), Series 1993, 7.00% 2019 2,000 1,852
New Jersey - 2.85%
Economic Development Authority, First Mortgage
Revenue Fixed Rate Bonds (Fellowship Village
Project), Series 1995A, 9.25% 2025 3,000 3,032
New York - 0.93%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, 7.00% 2016 1,000 990
Pennsylvania - 11.62%
Economic Development Financing Authority,
Resource Recovery Revenue Bonds (Colver Project),
Series 1994 D, 7.15% 2018 3,000 2,929
The Hospitals Authority of Philadelphia,
Hospital Revenue Bonds (Temple University
Hospital), Series of 1983, 6.625% 2023 2,250 2,045
Cambria County Industrial Development Authority,
Pollution Control Revenue Refunding Bonds
(Bethlehem Steel Corporation Project),
Series 1994, 7.50% 2015 2,500 2,500
Schuylkill County Industrial Development
Authority, Resource Recovery Revenue Refunding
Bonds (Schuylkill Energy Resources, Inc.
Project), Series 1993, 6.50% 2010 5,375 4,888
South Carolina - 4.01%
York County, Pollution Control Facilities
Revenue Bonds (Bowater Incorporated Project),
Series 1990, 7.625% 2006 4,000 4,270
Tennessee - 1.01%
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds (Federal Express
Corporation), Series 1984, 7.875% 2009 1,000 1,077
Texas - 6.79%
Alliance Airport Authority, Inc., Special
Facilities Revenue Bonds (American Airlines,
Inc. Project), Series 1990, 7.50% 2029 1,800 1,769
Dallas-Fort Worth International Airport
Facility Improvement Corporation, American
Airlines, Inc., Revenue Bonds, Series 1992,
7.25% 2030 1,500 1,425
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, 6.125% 2023 2,780 2,245
West Side Calhoun County Navigation District,
Solid Waste Disposal Revenue Bonds (Union
Carbide Chemicals and Plastics Company Inc.
Project), Series 1993, 6.40% 2023 1,980 1,783
Washington - 2.20%
The Public Industrial Corporation (Port of
Camas-Washougal), Pollution Control Refunding
Revenue Bonds (James River Project),
Series 1993, 6.70% 2023 2,500 2,336
Wyoming - 3.58%
Sweetwater County, Solid Waste Disposal Revenue
Bonds (FMC Corporation Project):
Series 1994A, 7.00% 2024 2,000 1,916
Series 1994B, 6.90% 2024 2,000 1,892
---------
$101,425
---------
Tax-Exempt Securities Maturing in
One Year or Less - 3.62%
County of Los Angeles, California, 1994-95 Tax
and Revenue Anticipation Notes, Series A,
4.50% 6/30/95 400 400
Commonwealth of Pennsylvania, Tax Anticipation
Notes, First Series of 1994-1995, 4.75% 6/30/95 1,300 1,301
North Central Texas, Health Facilities
Development Corporation, Hospital Revenue Bonds
(Presbyterian Medical Center Project),
Variable Rate Demand Note,
Series 1985C, 3.90% 2015 100 100
State of Texas, Tax and Revenue Anticipation
Notes, Series 1994, 5.00% 8/31/95 2,050 2,054
---------
3,855
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $102,206,000) $105,280
Excess of cash, prepaids and receivables over
payables 1,081
---------
NET ASSETS $106,361
=========
</TABLE>
See Notes to Financial Statements
American High-Income Municipal Bond Fund
Financial Statements
Statement of Assets and Liabilities
at January 31, 1995 (dollars in thousands)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Tax-exempt securities
(cost: $102,206) $105,280
Cash 59
Prepaid organization expense 50
Receivables for-
Sales of investments 2,907
Sales of fund's shares 1,487
Accrued interest 1,924 6,318
--------- ---------
111,707
Liabilities:
Payables for-
Purchases of investments 5,028
Repurchases of fund's shares 125
Dividends payable 187
Accrued Expenses 6 5,346
--------- ---------
Net Assets at January 31, 1995-
Equivalent to $14.39 per share on 7,391,167
shares of beneficial interest issued and
outstanding;
unlimited shares authorized $106,361
=========
Statement of Operations
for the period September 26, 1994*
to January 31, 1995 (dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $1,390
---------
Expenses:
Management services fee $99
Distribution expenses 67
Transfer agent fee 7
Registration statement and prospectus 36
Postage, stationery and supplies 6
Auditing and legal fees 5
Custodian fee 1
Taxes other than federal income tax 1
Organization expense 20
Other expenses 2
---------
Total expenses before reimbursement 244
Reimbursement of expenses 119 125
--------- ---------
Net investment income 1,265
---------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (283)
Net unrealized appreciation
on investments 3,074
---------
Net realized loss and unrealized
appreciation on investments 2,791
---------
Net Increase in Net Assets Resulting
from Operations $4,056
=========
Statement of Changes in Net Assets
for the period September 26, 1994*
to January 31, 1995 (dollars in thousands)
Operations:
Net investment income $1,265
Net realized loss on investments (283)
Net unrealized appreciation
on investments 3,074
---------
Net increase in net assets
resulting from operations 4,056
---------
Dividends Paid from Net
Investment Income (1,261)
---------
Capital Share Transactions:
Proceeds from shares sold:
7,682,651 shares 107,648
Proceeds from shares issued in
reinvestment of net investment
income dividends: 60,196 shares 848
Cost of shares repurchased:
358,680 shares (5,030)
---------
Net increase in net assets
resulting from capital share
transactions 103,466
---------
Total Increase in Net Assets 106,261
Net Assets:
Beginning of period 100
---------
End of period $106,361
=========
</TABLE>
*Commencement of operations
See Notes to Financial Statements
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Period September 26, 1994/1/ to January 31, 1995
<S> <C>
Net Asset Value, Beginning
of Period 14.29
-------
Income From Investment
Operations:
Net investment income 0.3
Net realized and
unrealized gain
on investments 0.1
-------
Total income from
investment operations 0.4
-------
Less Distributions:
Dividends from net
investment income -0.3
-------
Net Asset Value, End of Period $14.39
=======
Total Return/2/ 2.87%/3/
Ratios/Supplemental Data:
Net assets, end of period (in millions) $106
Ratio of expenses to average net assets .24%/3/,/4/
Ratio of net income to average net assets 2.46%/3/
Portfolio turnover rate 20.47%/3/
</TABLE>
/1/Commencement of operations.
/2/This was calculated without deducting a sales charge. The
maximum sales charge is 4.75% of the fund's offering price.
/3/Based on operations for the period shown and, accordingly,
not representative of a full year's operations.
/4/Had CRMC not waived fees, the fund's ratio of expenses to
average net assets would have been 0.48% for the period.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Balance Sheet
Report of Independent Accountants
Statement of Assets and Liabilities Notes to Financial Statements
Statement of Operations Per-Share Data and Ratios
Statement of Changes in Net Assets
(B) EXHIBITS
1. On file (see SEC file No. 33-80630, initial Registration Statement on Form
N-1A filed 6/23/94).
2. On file (see SEC file No. 33-80630, initial Registration Statement on Form
N-1A filed 6/23/94).
3. None.
4. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 1 on Form
N-1A filed 7/12/94).
5. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 1 on Form
N-1A filed 7/12/94).
6. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 1 on Form
N-1A filed 7/12/94).
7. None.
8. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 1 on Form
N-1A filed 7/12/94).
9. Form of Shareholder Services Agreement between Registrant and American
Funds Service Company, as amended 1/1/95.
10. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 2 on
Form
N-1A filed 9/2/94).
11. Consent of Independent Accountants.
12. None.
13. On file (see SEC file No.
33-80630, Pre-Effective Amendment No. 2 on Form N-1A filed 9/2/94).
14. Copies of the model plan used in the establishment of any retirement plan
- - not applicable
15. On file (see SEC file No. 33-80630, Pre-Effective Amendment No. 1 on Form
N-1A filed 7/12/94).
16. None.
C-1
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of January 31, 1995
<TABLE>
<CAPTION>
Title of Class Number of
Record
Holders
<S> <C>
Capital Stock 2,610
($0.01 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant, upon the effective date of this Registration Statement, will
become a joint-insured under an Investment Advisor/Mutual Fund Errors and
Omissions Policy. The carrier of the primary policy in the amount of $15
million is American International Surplus Lines Insurance Company and it has a
$250,000 deductible. The carrier of the secondary policy in the amount of $10
million is Chubb Custom Insurance Company. The carrier of the excess policy in
the amount of $20 million is ICI Mutual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is established that: (i) the
act or omission of the person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
ITEM 27. INDEMNIFICATION (CONT.)
Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.
Article VIII (h) of the Articles of Incorporation of the Fund provides that
"The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of this
Charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the Investment
Company Act of 1940."
Registrant will comply with the indemnification requirements contained in the
1940 Act Releases No. 7221 (June 9, 1972) and No. 11330 (September 4, 1980).
In addition, indemnification by the Corporation shall be consistent with the
requirements of rule 484 under the Securities Act of 1933.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(A) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Trust, American Mutual Fund, Inc.,
The Bond Fund of America, Inc., Capital Income Builder, Inc., Capital World
Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The Cash
Management Trust of America, EuroPacific Growth Fund, Fundamental Investors,
Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc.,
Intermediate Bond Fund of America, The Investment Company of America, Limited
Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of
America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C> <C>
# David A. Abzug Assistant Vice President None
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
% Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
5900 Robert E. Lee Court
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director and Senior Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
* Larry P. Clemmensen Treasurer and Director None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, 12K
New York, NY 10023
* Don R. Conlan Director None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
1230 31st Street
Washington, DC 20007
% Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
& Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
5 Marlborough Street
Suite 51
Boston, MA 02116
Steven S. Fogerty Regional Vice President None
535 Spring Club Drive
Altamonte Springs, FL 32714
* Mark P. Freeman, Jr. President and Director None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Chairman of the
Board
David E. Harper Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President and Controller None
* V. John Kriss Senior Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
Heather A. Maier Assistant Vice President - None
Institutional Investment Services
Division
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
575 S. Sycamore
Littleton, CO 80120
* John C. Massar Vice President None
E. Lee McClennahan Vice President None
4445 N. Highway AIA, Suite
232
Vero Beach, FL 32963
Laurie B. McCurdy Regional Vice President None
5335 E. Shea Blvd., Apt. 1033
Scottsdale, AZ 85254
% John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment Services
Division
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy
Charlotte, NC 28277
* George L. Romaine, Jr. Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
155 Willow Brook Drive
Roswell, GA 30076
Richard R. Samson Vice President None
4604 Glencoe, Ave., No. 4
Marina del Rey, CA 90292
* R. Michael Shanahan Chairman of the Board None
David W. Short Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment Services
Division
# Mark S. Smith Director and Senior Vice President None
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite
406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
2590 Oregon City Blvd.
West Linn, OR 97068
% James P. Toomey Assistant Vice President None
& Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President None
-Institutional Investment Services
Division
Thomas E. Warren Regional Vice President None
1231 Starboard Lane
Sarasota, FL 34242
# J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
* Marshall D. Wingo Senior Vice President None
* Robert L. Winston Director and Senior Vice President None
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero Center, Suite 1800, San Francisco, CA
94111
# Business Address, 135 South State College Blvd., Brea, CA 92621
% Business Address, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
& Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the Fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071. Certain accounting
records are maintained and kept in the offices of the Fund's accounting
department, 135 South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92621, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230, 8332 Woodfield
Crossing Blvd., Indianapolis, IN 46240 and 5300 Robin Hood Road, Norfolk, VA
23514.
Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the prospectus, Registrant undertakes to provide each
person to whom a prospectus is delivered with a copy of the fund's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
21st day of March, 1995.
AMERICAN HIGH-INCOME MUNICIPAL
BOND FUND, INC.
By /s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
registration statement has been signed below on March 21, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE
(1) Principal Executive Officer:
/s/ Abner D. Goldstine President and Director
(Abner D. Goldstine)
(2) Principal Financial Officer and
Principal Accounting Officer:
Vice President and Treasurer
/s/ Mary C. Cremin
(Mary C. Cremin)
(3) Directors:
H. Frederick Christie* Director
Diane C. Creel/1/ Director
Martin Fenton, Jr.* Director
Leonard R. Fuller/1/ Director
Herbert Hoover III* Director
Richard G. Newman* Director
Peter C. Valli* Director
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
</TABLE>
/1/ Powers of Attorney are attached hereto.
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
/s/ Michael J. Downer
Michael J. Downer
C-12
POWER OF ATTORNEY
I, Diane C. Creel, the undersigned Director of American High-Income Municipal
Bond Fund, Inc., a Maryland corporation, revoking all prior powers of attorney
given as a Director of American High-Income Municipal Bond Fund, Inc. do hereby
constitute and appoint Mary C. Cremin, Michael J. Downer, Paul G. Haaga, Jr.,
Kimberly S. Verdick and Julie F. Williams, or any of them, to act as
attorneys-in-fact for and in my name, place and stead (1) to sign my name as
Director of said Corporation to any and all Registration Statements of American
High-Income Municipal Bond Fund, Inc., File No. 33-80630, under the Securities
Act of 1933 as amended and/or the Investment Company Act of 1940, as amended,
and any and all amendments thereto, said Registration Statements and amendments
to be filed with the Securities and Exchange Commission, and to any and all
reports, applications or renewal of applications required by any State in the
United States of America in which this Corporation is registered to sell
shares, and (2) to deliver any and all such Registration Statements and
amendments, so signed, for filing with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933 as amended and/or the
Investment Company Act of 1940, as amended, granting to said attorneys-in-fact,
and each of them, full power and authority to do and perform every act and
thing whatsoever requisite and necessary to be done in and about the premises
as fully to all intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
Diane C. Creel, Director
POWER OF ATTORNEY
I, Leonard R. Fuller, the undersigned Director of American High-Income
Municipal Bond Fund, Inc., a Maryland corporation, revoking all prior powers of
attorney given as a Director of American High-Income Municipal Bond Fund, Inc.
do hereby constitute and appoint Mary C. Cremin, Michael J. Downer, Paul G.
Haaga, Jr., Kimberly S. Verdick and Julie F. Williams, or any of them, to act
as attorneys-in-fact for and in my name, place and stead (1) to sign my name as
Director of said Corporation to any and all Registration Statements of American
High-Income Municipal Bond Fund, Inc., File No. 33-80630, under the Securities
Act of 1933 as amended and/or the Investment Company Act of 1940, as amended,
and any and all amendments thereto, said Registration Statements and amendments
to be filed with the Securities and Exchange Commission, and to any and all
reports, applications or renewal of applications required by any State in the
United States of America in which this Corporation is registered to sell
shares, and (2) to deliver any and all such Registration Statements and
amendments, so signed, for filing with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933 as amended and/or the
Investment Company Act of 1940, as amended, granting to said attorneys-in-fact,
and each of them, full power and authority to do and perform every act and
thing whatsoever requisite and necessary to be done in and about the premises
as fully to all intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
Leonard R. Fuller, Director
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995,
are AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC. (hereinafter called "the
Fund") and American Funds Service Company, a California corporation
(hereinafter called "AFS"). AFS is a wholly owned subsidiary of Capital
Research and Management Company (hereinafter called "CRMC"). This Agreement
will continue in effect until amended or terminated in accordance with its
terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter
called "DST"), to provide AFS with electronic data processing services
sufficient for the performance of the shareholder services referred to in
paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or Level 1 or
3 Networking ($1.08 per year)
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single account
on AFS books and responds to all participant inquiries
EXHIBIT 9
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY American High-Income Municipal Bond Fund, Inc.
By_________________________________ By_________________________________
Don R. Conlan, Chairman Paul G. Haaga, Jr., Chairman
By_________________________________ By_________________________________
Kenneth R. Gorvetzian, Secretary Julie F. Williams, Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
August 31, 1994, relating to the statement of assets and liabilities of
American High-Income Municipal Bond Fund, Inc., which appears in such Statement
of Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "General Information -
Independent Accountants" and "General Information - Reports to Shareholders" in
such Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
March 21, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-1-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 102,206
<INVESTMENTS-AT-VALUE> 105,280
<RECEIVABLES> 6,318
<ASSETS-OTHER> 109
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117,707
<PAYABLE-FOR-SECURITIES> 5,028
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 318
<TOTAL-LIABILITIES> 5,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103,566,000
<SHARES-COMMON-STOCK> 7,391,167
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (283)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,074
<NET-ASSETS> 106,361
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,390
<OTHER-INCOME> 0
<EXPENSES-NET> 125
<NET-INVESTMENT-INCOME> 1,265
<REALIZED-GAINS-CURRENT> (283)
<APPREC-INCREASE-CURRENT> 2,791
<NET-CHANGE-FROM-OPS> 4,056
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,261
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,682,651
<NUMBER-OF-SHARES-REDEEMED> 358,680
<SHARES-REINVESTED> 60,196
<NET-CHANGE-IN-ASSETS> 103,361
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 125
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 14.29
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> .30
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.39
<EXPENSE-RATIO> .002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
