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Previous: FEDERATED INSTITUTIONAL TRUST, NSAR-A, 1996-04-01 |
Next: MUTUAL FUND VARIABLE ANNUITY TRUST, 497, 1996-04-01 |
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
SEMI-ANNUAL REPORT
for the six months ended January 31, 1996
[The American Funds Group(R)]
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND(R) seeks a high level of current
income exempt from regular federal income taxes through a diversified,
carefully researched portfolio of municipal bonds, including higher yielding,
lower rated, higher risk issues. It may invest up to 100% of its assets in
bonds subject to the alternative minimum tax.
[Photo Caption]
ABOUT OUR COVER: Investors in American High-Income Municipal Bond Fund help
finance municipal construction across the country.
[End Photo Caption]
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
return with all distributions reinvested for periods ended December 31, 1995
(the most recent calendar quarter), assuming payment of the 4.75% maximum sales
charge at the beginning of the stated periods - Since inception on September
26, 1994: +13.30%, or +10.39% a year; 12 months: +13.40%. Sales charges are
lower for accounts of $25,000 or more. These results reflect the effect of a
fee waiver. Without the waiver, the results would have been lower. The fund's
30-day yield as of February 29, 1996, calculated in accordance with the
Securities and Exchange Commission formula, was 5.30%. The fund's distribution
rate as of that date was 5.41%. The SEC yield reflects income the fund expects
to earn based on its current portfolio of securities, while the distribution
rate is based solely on the fund's past dividends. Accordingly, the fund's SEC
yield and distribution rate may differ.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES 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. While the fund invests for
income that is exempt from regular federal income taxes, that income may be
subject to state or local income taxes and/or federal alternative minimum
taxes. Also, distributions from gains on the disposition of certain bonds
purchased at less than par value and capital gain distributions, if any, are
taxable.
FELLOW SHAREHOLDERS:
American High-Income Municipal Bond Fund is now well into its second year. This
period has been marked by solid gains in both the broad bond market and the
fund's net asset value.
The favorable trend of lower interest rates and higher bond prices has
helped propel your fund during most of its life. These conditions continued
through much of the first half of this fiscal year. In the six months ended
January 31, the value of your holdings rose 6.6%, assuming you reinvested your
regular dividends totaling 44.2 cents a share and the capital gain distribution
of 28 cents a share paid on December 1, 1995. Over the same period, the
unmanaged Lehman Brothers Municipal Bond Index, a measure of higher rated
municipal bonds, gained 6.9% with dividends reinvested, and the 42 high-yield
municipal debt funds tracked by Lipper Analytical Services rose an average of
6.5%.
For the 12 months ended January 31, your fund produced a total return of
15.7% while the Lehman index showed a gain of 15.1% and the Lipper average rose
13.5%. American High-Income Municipal Bond Fund ranked 4th of 38 similar funds
tracked by Lipper during the same 12 months, and 2nd of 36 funds over its
lifetime with an annualized return of 13.8% or a total return of 19.0%. (Lipper
rankings do not reflect the effects of sales charges.)
When the fund began its fiscal year on August 1, the favorable trend in
bond prices appeared to be in question as interest rates on long-term
government securities had begun to rise in early July. But the economy remained
soft and interest rates soon resumed their decline. As rates fell, bond prices,
which tend to move inversely to interest rates, moved higher. At the end of the
period, the Federal Reserve Board lowered short-term interest rates again amid
further signs of economic weakness.
Following the Fed's most recent move, however, there have been conflicting
signs on the strength of the nation's economy. Some economic indicators point
to an accelerating growth rate while others signal continued weakness. We
believe that the fund's emphasis on credit research will help it continue to
find good values in times of strong economic growth or weakness.
The early success of American High-Income Municipal Bond Fund may lead to
a temptation to focus only on short-term results. We believe, however, that
maintaining a long-term perspective remains a key to successful investing.
Despite the market's recent climb, many things can derail it in the short term
including faster economic growth.
One need look no further than the bankruptcy of Orange County for an event
that temporarily disrupted the municipal bond market. Now, just a little more
than a year later, the market seems to have adjusted.
The possibility of a flat tax also sent ripples through the municipal bond
market. Such a tax in its most radical form would erode the advantage enjoyed
by tax-free municipal bonds as all interest and dividends would be untaxed.
Despite the public attention the idea is now receiving, we believe that such a
fundamental shift in the tax code faces many obstacles.
We do not foresee action on this front in the near future, but will continue to
watch political developments closely.
One of the reasons your fund has done so well is that a number of its
portfolio holdings have benefited from improved credit status. We believe that
as a result of our thorough research and analysis the fund can continue to reap
those benefits. It is important, though, to keep in mind that higher returns
inevitably mean higher risk.
In closing, we would like to thank all our shareholders for their support.
In the last six months, the number of shareholder accounts increased about 23%
and the fund's assets grew nearly 29% to slightly more than $200 million.
We look forward to reporting to you again in six months.
Cordially,
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
March 11, 1996
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
Investment Portfolio, January 31, 1996
<TABLE>
<CAPTION>
Unaudited
QUALITY RATINGS
<S> <C> <C>
AAA: 4.67%
A: 6.57%
BBB: 46.31%
BB: 26.08%
B: 7.63%
Cash Equivalents: 8.74%
Principal Market
Amount Value
(000) (000)
TAX-EXEMPT SECURITIES MATURING IN MORE THAN
ONE YEAR - 91.26%
ALABAMA - 0.53%
The Industrial Development Board of the City of
Mobile, Solid Waste Revenue Refunding
Bonds (Mobile Energy Services Company, L.L.C.
Projects), Series 1995, 6.95% 2020 $1,000 $1,075
CALIFORNIA - 9.25%
California Rural Home Mortgage Finance Authority,
Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program),
1995 Series B AMT, 7.75% 2026 1,000 1,128
Student Education Loan Marketing Corp. (A
Non-Profit Public Benefit Corp. Organized Under
the Laws of the State of California) AMT, Student
Loan Program Revenue Bonds:
7.00% 2005 1,000 1,058
7.00% 2010 2,000 2,120
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A (Fixed
Rate) Senior Lien Current Interest Bonds,
5.00% 2035 1,250 1,063
Long Beach Aquarium of the Pacific, Revenue Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 1,008
6.125% 2015 1,000 1,000
6.125% 2023 1,000 1,000
Los Angeles County Capital Asset Leasing
Corporation, Certificates of Participation
(Marina del Rey), Series A, 6.25% 2003 3,715 3,754
Pleasanton Joint Powers Financing Authority,
Subordinate Reassessment Revenue Bonds,
1993 Series B, 6.125% 2002 4,525 4,674
Redding Joint Powers Financing Authority, Solid
Waste and Corporation Yard Revenue Bonds, 1993
Series A, 5.00% 2023 1,000 865
South Tahoe Joint Powers Financing Authority,
Refunding Revenue Bonds (South Tahoe
Redevelopment Project Area No.1), 1995 Series B,
6.25% 2020 1,000 1,009
COLORADO - 7.15%
Student Obligation Bond Authority,
Student Loan Asset-Backed Bonds, Senior
Subordinate 1995 Series II-B AMT, 6.20% 2008 1,000 1,027
Arapahoe County, Capital Improvement
Trust Fund Highway Revenue Bonds (E-470 Project):
6.90% 2015 1,250 1,375
6.95% 2020 4,500 4,936
City and County of Denver, Airport System
Revenue Bonds:
Series 1991D AMT, 7.75% 2013 1,000 1,195
Series 1992C AMT:
6.55% 2003 4,000 4,284
6.75% 2013 1,000 1,055
Series 1994A, 7.50% 2023 500 566
CONNECTICUT - 2.15%
Eastern Connecticut Resource Recovery Authority,
Solid Waste Revenue Bonds (Wheelabrator Lisbon
Project) Series 1993 A AMT, 5.50% 2020 4,700 4,347
DISTRICT OF COLUMBIA - 0.79%
Hospital Revenue Refunding Bonds (Washington
Hospital Center Issue), Series 1992A,
7.00%, 2005 1,500 1,598
FLORIDA - 5.10%
The Crossings at Fleming Island Community
Development District (Clay County), Special
Assessment Bonds, Series 1995, 8.25% 2016 5,000 5,356
Meadow Pointe II, Community Development District
(Pasco County, Florida) Capital Improvement
Revenue Bonds, Series 1995, 7.25% 2002 4,845 4,931
GEORGIA - 0.10%
Fulco Hospital Authority, Revenue Anticipation
Certificates (Georgia Baptist Health Care
System Project), Series 1992B, 6.375% 2022 200 201
ILLINOIS - 10.58%
Health Facilities Authority:
Revenue Refunding Bonds (Edward Hospital
Project), Series 1993A, 6.00% 2019 1,000 1,001
Revenue Bonds (Fairview Obligated Group Project),
Series 1992A:
9.50% 2022 (Prerefunded 2002) 2,750 3,565
7.40% 2023 2,630 2,618
City of Chicago, Chicago-O'Hare International
Airport, Special Facility Revenue Bonds
(United Air Lines, Inc. Project):
Series 1988A AMT, 8.95% 2018 1,925 2,226
Series 1988B, 8.85% 2018 1,170 1,354
City of Chicago, Skyway Toll Bridge Refunding
Revenue Bonds, Series 1994:
6.50% 2010 1,500 1,568
6.75% 2017 1,500 1,577
Village of Robbins, Cook County, Resource
Recovery Revenue Bonds (Robbins Resource
Recovery Partners, L.P. Project), Series 1994A AMT:
8.75% 2005 1,000 977
9.25% 2014 6,600 6,478
INDIANA - 2.06%
City of East Chicago, Pollution Control
Refunding Revenue Bonds:
(Inland Steel Company Project No. 10),
Series 1993, 6.80% 2013 1,000 1,035
(Inland Steel Company Project No. 11),
Series 1994, 7.125% 2007 2,000 2,118
City of Sullivan, Pollution Control Revenue
Refunding Bonds (Indiana Michigan Power Company
Project), Series C, 5.95% 2009 1,000 1,009
KENTUCKY - 4.16%
Kenton County Airport Board, Special Facilities
Revenue Bonds (Delta Air Lines, Inc. Project),
1992 Series A AMT:
6.75% 2002 1,000 1,065
7.50% 2012 2,225 2,414
6.125% 2022 5,000 4,925
LOUISIANA - 5.92%
Housing Finance Agency, Single Family Mortgage
Revenue Bonds, Series 1995A-2 AMT, 7.80% 2026 4,145 4,720
Parish of Beauregard, Solid Waste Disposal
Revenue Bonds (Boise Cascade Corporation
Project), Series 1993 AMT, 6.30% 2023 1,000 1,003
Orleans Levee District, Levee Improvement Fixed-
Rate Refunding Bonds, Series 1987A, 8.25% 2014 5,000 5,114
Parish of St. Charles, Adjustable/Fixed-Rate
Pollution Control Revenue Bonds (Louisiana
Power & Light Company Project), Series 1984,
8.25% 2014 1,000 1,122
MARYLAND - 2.23%
Health and Higher Educational Facilities
Authority, Revenue Bonds, Howard County General
Hospital Issue, Series 1993, 5.50% 2021 2,000 1,853
Housing Opportunities Commission of Montgomery
County, Multifamily Revenue Bonds (Strathmore
Court at White Flint), 1994 Issue A-2:
7.50% 2024 1,000 1,055
7.50% 2027 500 525
Northeast Maryland Waste Disposal Authority, Solid
Waste Revenue Bonds(Montgomery County Resource
Recovery Project), Series 1993A AMT, 6.00% 2006 1,000 1,072
MASSACHUSETTS - 2.63%
Industrial Finance Agency Revenue
Bonds, Edgewood Retirement Community Project,
Series 1995A, 9.00% 2025 5,300 5,315
MICHIGAN - 9.15%
State Hospital Finance Authority,
Hospital Revenue Refunding Bonds, (Sinai
Hospital of Greater Detroit), Series 1995
6.625% 2016 1,755 1,761
Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Genesys Health System
Obligated Group), Series 1995A:
8.00% 2005 2,000 2,262
7.50% 2027 2,200 2,346
City of Detroit, (Limited Tax General
Obligation), Series 1995 A, 6.40% 2005 1,145 1,221
The Economic Development Corporation of the
County of Midland, Subordinated Pollution
Control Limited Obligation Revenue Refunding
Bonds (Midland Cogeneration Project),
Series 1990B AMT, 9.50% 2009 6,600 7,272
Charter County of Wayne, Michigan, Special
Airport Facilities Revenue Refunding Bonds,
(Northwest Airlines, Inc., Facilities),
Series 1995, 6.75% 2015 3,500 3,607
MISSISSIPPI - 0.85%
Claiborne County Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy,
Inc. Project), Series C, 9.875% 2014 1,500 1,716
NEVADA - 2.73%
City of Henderson, Local Improvement
District No. T-10 (Seven Hills) Limited Obligation
Improvement Bonds, 7.50% 2015 5,500 5,500
NEW HAMPSHIRE - 1.11%
Business Finance Authority, Pollution control
Refunding Revenue Bonds (The United Illuminating
Company Project), 1993 Series A, 5.875% 2033 2,350 2,236
NEW JERSEY - 1.63%
Economic Development Authority, First Mortgage
Revenue Fixed-Rate Bonds (Fellowship Village
Project), Series 1995A, 9.25% 2025 3,000 3,283
NEW YORK - 6.68%
The City of New York, General Obligation Bonds:
Fiscal 1996 Series E, 6.50% 2004 3,000 3,219
Fiscal 1995 Series B, 7.00% 2016 1,000 1,096
New York City Industrial Development Agency, Solid
Waste Disposal Revenue Bonds (1995 Visy Paper
(NY), Inc. Project) AMT, 7.55% 2005 9,000 9,159
OHIO - 0.88%
The Student Loan Funding Corporation,
Cincinnati, Student Loan Revenue
Refunding Bonds,Series 1991A AMT, 7.20% 2003 1,655 1,781
PENNSYLVANIA - 4.53%
Economic Development Financing Authority,
Resource Recovery Revenue Bonds (Colver Project),
Series 1994 D AMT, 7.15% 2018 3,000 3,254
Cambria County Industrial Development Authority,
Pollution Control Revenue Refunding Bonds
(Bethlehem Steel Corporation Project),
Series 1994, 7.50% 2015 1,250 1,315
The Hospitals Authority of Philadelphia,
Hospital Revenue Bonds (Temple University
Hospital), Series of 1983, 6.625% 2023 1,000 1,053
Schuylkill County Industrial Development
Authority, Resource Recovery Revenue Refunding
Bonds (Schuylkill Energy Resources, Inc.
Project), Series 1993, 6.50% 2010 3,425 3,525
SOUTH CAROLINA - 1.33%
York County, Pollution Control Facilities
Revenue Bonds (Bowater Incorporated Project),
Series 1990, 7.625% 2006 2,300 2,682
TENNESSEE - 1.41%
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds (Federal Express
Corporation), Series 1984, 7.875% 2009 2,500 2,836
TEXAS - 7.15%
Alliance Airport Authority, Inc., Special
Facilities Revenue Bonds (American Airlines,
Inc. Project), Series 1990 AMT, 7.00% 2011 6,250 6,927
Dallas-Fort Worth International Airport
Facility Improvement Corporation, American
Airlines, Inc., Revenue Bonds, Series 1992,
6.00% 2014 2,000 1,994
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, 6.125% 2023 5,740 5,508
WEST VIRGINIA - 1.16%
City of South Charleston, Pollution Control
Revenue Refunding Bonds (Union Carbide
Corporation Project), Series 1985, 7.625% 2005 2,000 2,342
---------
184,229
---------
TAX-EXEMPT SECURITIES MATURING IN
ONE YEAR OR LESS - 8.59%
State of California, 1994 Revenue Anticipation
Warrants, Series C, FGIC Insured 5.75% 4/25/96 4,480 4,502
California Pollution Control Financing Authority,
Resource Recovery Revenue Bonds, Burney Forest
Products, PJ-A AMT, Daily Adjustable Rate, 3.75%
2/1/96* 1,300 1,300
Parish of East Baton Rouge, State of
Louisiana, Pollution Control Revenue Refunding
Bonds (Exxon Project), 1993 Series, Daily
Adjustable Rate, 3.60% 2/1/96* 1,800 1,800
City of Houston, Texas, Tax and Revenue
Anticipation Notes, Series 1995, 4.50% 6/27/96 750 753
County of Los Angeles, California, 1995-96 Tax
and Revenue Anticipation Notes, Series A,
4.50% 7/1/96 2,650 2,662
State of Montana, Tax and Revenue Anticipation
Notes, Series 1995, 4.50% 6/30/96 200 201
New York City General Obligation Bonds (Unlimited
Tax) Fiscal 1992, Series B, FGIC Insured, Daily
Adjustable Rate, 3.80% 2/1/96* 700 700
Peninsula Ports Authority of Virginia, Port
Facility Refunding Revenue Bonds (Shell Coal and
Terminal Company Project), 1987 Series,
Daily Adjustable Rate, 3.45% 2/1/96* 500 500
Commonwealth of Pennsylvania, Tax Anticipation
Notes, First Series of 1995-1996, 4.50% 6/28/96 100 100
State of Texas Tax and Revenue Anticipation
Notes, Series 1995 A, 4.75% 8/30/96 2,100 2,117
State of Wisconsin, Operating Notes of 1995,
4.50% 6/17/96 2,700 2,711
---------
17,346
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $191,780,000) 201,575
Excess of cash, prepaids and receivables over
payables 301
---------
NET ASSETS $201,876
=========
</TABLE>
*These are valued on the basis of their effective maturity--that is, the date
at which the investor can put the securities to the issuer for redemption.
See Notes to Financial Statements
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
(Unaudited)
STATEMENT OF ASSETS AND LIABILITIES
at January 31, 1996 (dollars in thousands)
<S> <C> <C>
ASSETS:
Tax-exempt securities
(cost: $191,780) $201,575
Cash 123
Prepaid organization expense 9
Receivables for--
Sales of investments $6,199
Sales of fund's shares 1,244
Accrued interest 3,341 10,784
--------- ---------
212,491
LIABILITIES:
Payables for--
Purchases of investments 9,858
Repurchases of fund's shares 269
Dividends payable 345
Management services 96
Accrued Expenses 47 10,615
--------- ---------
NET ASSETS AT JANUARY 31, 1996
Equivalent to $15.41 per share on 13,100,124
shares of $0.01 par value capital stock
outstanding (authorized capital stock - $201,876
200,000,000 shares) =========
STATEMENT OF OPERATIONS
for the six months ended January 31, 1996 (Unaudited)
(dollars in thousands)
INVESTMENT INCOME:
Income:
Interest on tax-exempt securities $5,858
---------
Expenses:
Management services fee $392
Distribution expenses 222
Transfer agent fee 43
Report to shareholders 46
Registration statement and prospectus 72
Postage, stationery and supplies 11
Director's fees 9
Auditing and legal fees 29
Custodian fee 4
Taxes other than federal income tax 1
Organization expense 11
---------
Total expenses before reimbursement 840
Reimbursement of expenses 109 731
--------- ---------
Net investment income 5,127
---------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 3,318
Net unrealized appreciation
on investments:
Beginning of period 6,791
End of period 9,795
---------
Net increase in unrealized appreciation
on investments 3,004
Net realized gain and unrealized ---------
appreciation on investments 6,322
NET INCREASE IN NET ASSETS RESULTING ---------
FROM OPERATIONS $11,449
=========
Statement of Changes in Net Assets
for the six months ended January 31, 1996 Period
(dollars in thousands) Six Months September 26
Ended 1994/2/ to
January 31, July 31,
1996/1/ 1995
OPERATIONS:
Net investment income $5,127 $5,381
Net realized gain on investments 3,318 2,246
Net unrealized appreciation
on investments 3,004 6,791
--------- ---------
Net increase in net assets
resulting from operations 11,449 14,418
--------- ---------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends Paid from net
investment income (5,127) (5,381)
Distributions from net realized gain on
investments (3,336) ---
--------- ---------
Total dividends and distributions (8,463) (5,381)
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
3,236,182 and 11,466,307 shares, respectively 49,668 164,049
Proceeds from shares issued in reinvestment
of net investment income dividends:
392,866 and 239,900 shares, respectively 6,043 3,535
Cost of shares repurchased: 891,935 and
1,350,194 shares, respectively (13,685) (19,857)
--------- ---------
Net increase in net assets
resulting from capital share
transactions 42,026 147,727
--------- ---------
TOTAL INCREASE IN NET ASSETS 45,012 156,764
NET ASSETS:
Beginning of period 156,864 100
--------- ---------
End of period $201,876 $156,864
========= =========
</TABLE>
/1/Unaudited
/2/Commencement of operations
See Notes to Financial Statements
Notes to Financial Statements
(Unaudited)
1. American High-Income Municipal Bond Fund, Inc. (the "fund") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks a high level of current income exempt from
regular federal income taxes through a diversified, carefully researched
portfolio of municipal bonds, including higher yielding, lower rated, higher
risk issues. The following paragraphs summarize the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
Tax-exempt securities with original or remaining maturities in excess of
60 days are valued at prices obtained from a national municipal bond pricing
service. The pricing service takes into account various factors such as
quality, yield and maturity of tax-exempt securities comparable to those held
by the fund, as well as actual bid and asked prices on a particular day. Other
securities with original or remaining maturities in excess of 60 days,
including securities for which pricing service values are not available, are
valued at the mean of their quoted bid and asked prices. However, in
circumstances where the investment adviser deems it appropriate to do so,
securities will be valued at the mean of their representative quoted bid and
asked prices, or, if such prices are not available, at the mean of such prices
for securities of comparable maturity, quality and type. All securities with 60
days or less to maturity are valued at amortized cost, which approximates
market value. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by the Valuation Committee
of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Premiums and
original issue discounts on securities purchased are amortized over the life of
the respective securities. Amortization of market discounts on securities is
recognized upon disposition, subject to applicable tax requirements. Dividends
to shareholders are declared daily after determination of the fund's net
investment income and paid to shareholders monthly.
Prepaid organizational expenses are amortized over the estimated period of
benefit, not to exceed five years from commencement of operations. In the
event Capital Research and Management Company (CRMC), the fund's investment
adviser, 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 prepaid organization expenses
as of the date of such redemption. In the event the fund liquidates prior to
the end of the five-year period, CRMC shall bear any unamortized prepaid
organization expenses.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $4,000 was paid by these credits rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of January 31, 1996, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $9,795,000, of which
$10,293,000 related to appreciated securities and $498,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the six months ended January 31, 1996. The
cost of portfolio securities for book and federal income tax purposes was
$191,780,000 at January 31, 1996.
3. The fee of $392,000 for management services was paid pursuant to an
agreement with CRMC, with which certain officers and Directors of the fund are
affiliated. The Investment Advisory and Service Agreement provides for monthly
fees, accrued daily, based on an annual rate of 0.30% of the first $60 million
of average net assets; 0.21% of such assets in excess of $60 million; and 3.00%
of the fund's monthly gross investment income. The Investment Advisory and
Service Agreement provides for a fee reduction to the extent annual operating
expenses exceed 0.90% of the average daily net assets of the fund, during a
period which will terminate at the earlier of such time as no reimbursement has
been required for a period of 12 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
0.76% of the average daily net assets. Expenses that are not subject to these
limitations are interest, taxes, brokerage commissions, transaction costs, and
extraordinary expenses. Fee reductions were $109,000 for the six months ended
January 31, 1996. There can be no assurance this voluntary fee waiver will
continue in the future.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended January 31,
1996, distribution expenses under the Plan were $222,000. As of January 31,
1996, accrued and unpaid distribution expenses were $37,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $43,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $188,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer
part or all of the fees earned for services as members of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of January 31, 1996, aggregate amounts deferred were $8,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of January 31, 1996, accumulated undistributed net realized gain on
investments was $2,228,000 and additional paid-in capital was $176,753,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $72,439,000 and $37,863,000, respectively, during the
six months ended January 31, 1996.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Period
Six Months September 26
Ended 1994/2/ to
January 31, July 31,
1996/1/ 1995
<S> <C> <C>
Net Asset Value, Beginning
of Period $15.14 $14.29
------------ ------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .44 .76
Net realized and
unrealized gain
on investments .55 .85
------------ ------------
Total income from investment operations .99 1.61
------------ ------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.44) (.76)
Distributions from net realized gains (.28) --
------------ ------------
Total distributions (.72) (.76)
------------ ------------
Net Asset Value, End of Period $15.41 $15.14
============ ============
Total Return/3/ 6.64% /4/ 11.62% /4/
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $202 $157
Ratio of expenses to average net assets .40% /4/ /5/ .62% /4/ /5/
Ratio of net income to average net assets 2.80% /4/ 5.66% /4/
Portfolio turnover rate 22.78% /4/ 46.42% /4/
</TABLE>
/1/Unaudited.
/2/Commencement of operations.
/3/This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
/4/ Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
/5/ Had CRMC not waived fees, the fund's ratio of expenses to average net
assets would have been 0.46% and 0.94%, respectively, for the periods shown.
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President
and Chief Executive Officer,
The Mission Group; former President,
Southern California Edison Company
DIANE C. CREEL
Long Beach, California
Chairwoman, Chief Executive
Officer and President,
The Earth Technology Corporation
(environmental engineering)
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER
Los Angeles, California
President, Fuller & Company, Inc.
(financial management consulting)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
Pasadena, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and
Chief Executive Officer,
AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI
Long Beach, California
Chairman of the Board,
BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
NEIL L. LANGBERG
Los Angeles, California
Senior Vice President of the fund
Vice President - Investment
Management Group,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL
Brea, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR.
Brea, California
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER, CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104-2675
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of American High-Income
Municipal Bond Fund, but it may also be used as sales literature when preceded
or accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after March 31, 1996, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA AGD/ALI/2910
Lit. No. AHIM-013-0396
Printed on recycled paper
[The American Funds Group(R)]
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