American High-Income Municipal Bond Fund
1997 Semi-Annual Report
for the six months ended January 31
[The American Funds Group(R)]
[cover: illustration of construction man at work]
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 higher yielding, lower rated, higher risk
municipal bonds. It may invest up to 100% of its assets in bonds subject to the
alternative minimum tax.
Investment Highlights
Average annualized total return through 1/31/97
<TABLE>
<CAPTION>
Total Lipper*
Return Rankings
<S> <C> <C>
Lifetime +10.7% 2nd of 35
(Since September 26, 1994)
One year + 6.6% 1st of 43
Six months + 4.8% -
</TABLE>
*Rankings are based on total return versus the average of high-yield municipal
debt funds calculated by Lipper Analytical Services. Rankings do not reflect
the effects of sales charges.
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, 1996
(the most recent calendar quarter), assuming payment of the 4.75% maximum sales
charge at the beginning of the stated periods:
<TABLE>
<CAPTION>
Total Average Annual
Return Compound Return
<S> <C> <C>
Lifetime +20.62% +8.64%
(Since September 26, 1994)
One year + 1.41% -
</TABLE>
Sales charges are lower for accounts of $25,000 or more. Results through
November 30, 1996 reflect the effect of a voluntary fee waiver, which was in
effect from the fund's inception. Without the waiver, the results would have
been lower. The fund's 30-day yield as of February 28, 1997, calculated in
accordance with the Securities and Exchange Commission formula, was 5.10%. The
fund's distribution rate as of that date was 5.28%. 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. INCOME MAY BE SUBJECT TO
STATE OR LOCAL INCOME TAXES AND/OR FEDERAL ALTERNATIVE MINIMUM TAXES. CERTAIN
OTHER INCOME, AS WELL AS CAPITAL GAIN DISTRIBUTIONS, MAY BE TAXABLE.
FELLOW SHAREHOLDERS:
The first half of fiscal 1997 was something of a milestone for American
High-Income Municipal Bond Fund as it completed its second year of operations.
In the six months ended January 31, 1997, shareholders earned a total return of
4.8% if they reinvested their income, as most do. That outpaced the 4.3% return
of the average high-income municipal bond fund, as measured by Lipper
Analytical Services, a leading mutual fund tracking service. American
High-Income Municipal Bond Fund also outpaced the 4.2% total return of the
unmanaged Lehman Brothers Municipal Bond Index, which is composed of higher
rated bonds.
Shareholders who took their dividends in cash saw the value of their holdings
rise 1.8% and had an income return of 2.9%, which was equivalent to a taxable
income return of 4.5% (9.0% annualized) for investors in the 36% tax bracket.
The fund paid monthly dividends totaling 44 cents a share, virtually all of
which was tax-exempt, and a capital gain distribution of 14 cents a share in
November.
This was generally a good time for bond investors. After reaching a peak last
spring, interest rates declined slightly through the summer and fall with an
upturn in December and January. As rates fell, bond prices rose. Investors'
growing confidence that inflation would not accelerate with increased economic
activity appears to have been the key factor behind the higher bond prices.
Earlier in 1996, investors feared that the economy was expanding too rapidly
and that the Federal Reserve Board would raise short-term interest rates to
choke off inflation. By spring, however, it became apparent that the economy
was continuing to expand without igniting a spiral of higher prices.
The falling interest rates were particularly good news for the high-yield
municipal market. As rates fell, investors who wanted higher yields began
looking longer and harder at the high-yield market, and they bid up prices.
This was a dramatic shift from September 1994 when American High-Income
Municipal Bond Fund began operations. At that time the bond market was at the
tail end of one of its worst slumps in history. Investors were scrambling for
safety, and many attractive investments were available at good prices. Your
fund took advantage of the situation to invest in a number of issues with the
potential for solid returns. We continue to find attractive investment
opportunities, despite the renewed interest in high-yield bonds.
In the first half of this fiscal year, the fund began reaping significant
rewards from some of its early investments. The value of bonds sold to finance
a toll road in Chicago, for example, rose dramatically when they were advance
refunded and upgraded from BBB to AAA. Bonds for a life care facility in New
Jersey rose in value when it reached full occupancy well ahead of schedule.
While these successes are gratifying, we want to remind our investors that
American High-Income Municipal Bond Fund is still relatively new. We believe
that a long-term perspective is the key to successful investing, and we caution
our investors against focusing too closely on short-term results. Changes in
the economic outlook and the political landscape can occur with little notice,
causing short-term fluctuations in the bond market, especially the lower
quality spectrum in which the fund invests.
The 1996 election, however, appears to have had little direct impact on the
municipal bond market. Nonetheless, the long-term effect on the market of some
policies debated in the election campaign is unclear. Proposals to shift some
federal government responsibilities to states and municipalities, for example,
could affect local budgets. Because your fund's holdings in bonds are for
specific projects which generate revenues independent of the political process,
we do not believe these potential changes will have a major impact on your
investment.
In the first half of the fiscal year, the number of shareholder accounts rose
by nearly 10% to 6,128, and the fund's net assets grew almost 20% to $260
million. We welcome all our new shareholders and look forward to reporting to
you again in six months.
Cordially,
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Chairman of the Board
/s/ Abner D. Goldstine
Abner D. Goldstine
President
March 24, 1997
<PAGE>
<TABLE>
<S> <C> <C>
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
Investment Portfolio, January 31, 1997
(Unaudited)
[pie chart]
Quality Ratings
AAA: 4.28%
AA: 2.59%
A: 4.68%
BBB: 46.55%
BB: 21.87%
B: 11.75%
Not rated: .51%
Cash & Equivalents: 7.77%
[end pie chart]
Principal Market
Amount Value
(000) (000)
Tax-Exempt Securities Maturing in More than
One Year - 92.23%
Alabama - 1.22%
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 $3,000 $3,183
California - 9.04%
Resource Recovery Revenue Bonds,
Waste Management Inc. Guarantee Bond, Series A AMT,
7.15% 2011 1,000 1,082
Rural Home Mortgage Finance Authority,
Single Family Mortgage Revenue Bonds
(Mortgage-Backed Securities Program),
1995 Series B AMT, 7.75% 2026 995 1,115
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 1,047
7.00% 2010 2,000 2,103
Central Valley Financing Authority, Cogeneration
Project Revenue Bonds (Carson Ice-Gen Project),
1993 Series, 6.10% 2013 1,400 1,412
Long Beach Aquarium of the Pacific, Revenue Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 999
6.125% 2015 1,000 984
6.125% 2023 2,500 2,433
Los Angeles County Capital Asset Leasing
Corp., Certificates of Participation
(Marina del Rey), Series A, 6.25% 2003 3,715 3,889
Pleasanton Joint Powers Financing Authority,
Subordinate Reassessment Revenue Bonds,
1993 Series B, 6.125% 2002 4,420 4,532
Redding Joint Powers Financing Authority, Solid
Waste and Corp. Yard Revenue Bonds, 1993
Series A, 5.00% 2023 1,000 856
Sacramento Cogeneration Authority, Cogeneration
Project Revenue Bonds, 6.00% 2003 1,000 1,038
Redevelopment Agency of the City and County of San
Francisco, Residential Facility Revenue Bonds (Coventry
Park Project), Series 1996A AMT, 8.50% 2026 1,000 1,002
South Tahoe Joint Powers Financing Authority,
Refunding Revenue Bonds (South Tahoe
Redevelopment Project Area No.1), 1995 Series B,
6.25% 2020 1,000 1,004
Colorado - 5.89%
Housing and Finance Authority, Single Family Program
Subordinate Bonds:
1995 Series A AMT, 8.00% 2025 1,605 1,775
1995 Series B AMT, 7.90% 2025 1,155 1,279
Student Obligation Bond Authority,
Student Loan Asset-Backed Bonds, Senior
Subordinate 1995 Series II-B AMT, 6.20% 2008 1,000 1,013
Arapahoe County, Capital Improvement
Trust Fund Highway Revenue Bonds (E-470 Project):
6.90% 2015 1,250 1,372
6.95% 2020 4,500 4,936
City and County of Denver, Airport System
Revenue Bonds:
Series 1991D AMT, 7.75% 2013 1,000 1,202
Series 1992C AMT:
6.55% 2003 2,000 2,136
6.75% 2013 1,000 1,051
Series 1994A, 7.50% 2023 500 553
Connecticut - 3.68%
Health and Educational Facilities Authority Revenue Bonds,
University of Hartford Issue, Series D, 6.75% 2012 1,000 1,004
Eastern Connecticut Resource Recovery Authority,
Solid Waste Revenue Bonds (Wheelabrator Lisbon
Project) Series 1993 A AMT, 5.50% 2020 1,500 1,389
Mashantucket (Western) Pequot Tribe Special Revenue Bonds,
1996 Series A:
6.375% 2004 1,000 1,040
6.40% 2011 6,000 6,130
District of Columbia - 0.61%
Hospital Revenue Refunding Bonds (Washington
Hospital Center Issue), Series 1992A,
7.00% 2005 1,500 1,596
Florida - 7.00%
Arbor Green Community Development District (City of Tampa,
Hillsborough County), Special Assessment Revenue Bonds,
Series 1996, 7.00% 2003 3,000 2,995
The Crossings at Fleming Island Community
Development District (Clay County), Special
Assessment Bonds, Series 1995, 8.25% 2016 5,000 5,359
Meadow Pointe II, Community Development District
(Pasco County) Capital Improvement
Revenue Bonds, Series 1995, 7.25% 2002 4,845 4,887
Northern Palm Beach County Improvement District, Water
Control and Improvement Bonds, Unit of Development No. 9A,
Series 1996A:
6.80% 2006 1,000 1,022
7.30% 2027 1,500 1,542
Ocean Highway and Port Authority, Solid Waste/Pollution
Control Revenue Refunding Bonds, Series 1996 (Jefferson
Smurfit Corp. (U.S.) Project), 6.50% 2006 1,305 1,321
Polk County Industrial Development Authority, Industrial
Development Revenue Bonds (IMC Fertilizer, Inc. Project),
1991 Tax-Exempt Series A AMT, 7.525% 2015 1,000 1,067
Illinois - 11.19%
Health Facilities Authority:
Revenue Refunding Bonds:
Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 984
Advocate Health Care Network, Series 1997A:
5.70% 2011 750 745
5.80% 2016 3,000 2,926
Revenue Bonds (Fairview Obligated Group Project):
1992 Series A 9.50% 2022 (Prerefunded 2002) 2,750 3,433
1995 Series A 7.40% 2022 (Prerefunded 2002) 2,630 2,662
City of Chicago:
Chicago-O'Hare International
Airport, Special Facility Revenue Bonds
(United Air Lines, Inc. Project):
Series 1988A AMT, 8.95% 2018 3,395 3,855
Series 1988B, 8.85% 2018 1,155 1,310
Skyway Toll Bridge Refunding
Revenue Bonds, Series 1994:
6.50% 2010 (Prerefunded 2004) 1,500 1,667
6.75% 2017 (Prerefunded 2004) 1,500 1,689
Village of Robbins, Cook County, Resource Recovery Revenue
Bond (Robbins Resource Recovery Partners, L.P. Project),
Series 1994A AMT:
8.375% 2010 1,000 1,040
8.375% 2016 8,430 8,770
Indiana - 2.62%
City of East Chicago, Pollution Control
Refunding Revenue Bonds:
Inland Steel Co.:
Project No. 11, Series 1994, 7.125% 2007 2,000 2,088
Project No. 10, Series 1993, 6.80% 2013 1,000 1,023
Indianapolis Airport Authority, Special Facilities Revenue
Bonds, Series 1994 (Federal Express Corporation Project)
AMT, 7.10% 2017 2,500 2,694
City of Sullivan, Pollution Control Revenue
Refunding Bonds (Indiana Michigan Power Co.
Project), Series C, 5.95% 2009 1,000 1,004
Kentucky - 3.29%
City of Ashland, Sewage and Solid Waste Revenue Bonds,
Series 1995 (Ashland Inc. Project) AMT, 7.125% 2022 1,000 1,082
Kenton County Airport Board, Special Facilities
Revenue Bonds (Delta Air Lines, Inc. Project),
1992 Series A AMT:
6.75% 2002 2,000 2,112
7.50% 2012 2,225 2,407
6.125% 2022 3,000 2,956
Louisiana - 2.35%
Health Education Authority, Revenue Bonds (Lambeth
House Project), Series 1996, 9.00% 2026 2,850 2,870
Housing Finance Agency, Single Family Mortgage
Revenue Bonds, Series 1995A-2 AMT, 7.80% 2026 2,920 3,234
Maine - 0.36%
Educational Loan Marketing Corp., Student Loan Revenue
Refunding Bonds, Series 1991 AMT, 6.90% 2003 910 933
Maryland - 1.31%
Health and Higher Educational Facilities
Authority, Revenue Bonds, Howard County General
Hospital Issue, Series 1993, 5.50% 2021 2,000 1,827
Housing Opportunities Commission of Montgomery
County, Multifamily Revenue Bonds (Strathmore
Court at White Flint), 1994 Issue A-2:
7.50% 2024 1,000 1,047
7.50% 2027 500 523
Massachusetts - 2.13%
Industrial Finance Agency Revenue
Bonds, Edgewood Retirement Community Project,
Series 1995A, 9.00% 2025 5,300 5,539
Michigan - 8.86%
Hospital Finance Authority,
Hospital Revenue Refunding Bonds:
Genesys Health System Obligated Group,
Series 1995A:
7.50% 2005 1,500 1,665
8.00% 2005 2,000 2,262
8.10% 2013 1,000 1,142
7.50% 2027 2,200 2,396
Pontiac Osteopathic, Series 1994 A:
5.375% 2006 1,000 976
6.00% 2014 1,500 1,464
Sinai Hospital of Greater Detroit, Series 1995
6.625% 2016 2,755 2,786
City of Detroit:
Limited Tax General Obligation:
Series 1995 B, 6.75% 2003 1,000 1,071
Series 1995 A, 6.40% 2005 1,145 1,210
Downtown Development Authority, Tax
Increment Bonds (Development Area No.1 Projects),
Series 1996C, 6.20% 2017 1,000 1,026
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 4,100 4,482
Charter County of Wayne, Special
Airport Facilities Revenue Refunding Bonds,
(Northwest Airlines, Inc., Facilities),
Series 1995, 6.75% 2015 2,495 2,554
Mississippi - 0.49%
Clairborne County, Adjustable/Fixed-Rate Polution Control
Revenue Bonds (Middle South Energy, Inc. Project),
Series C, 9.875% 2014 1,150 1,270
Nevada - 2.16%
City of Henderson, Local Improvement
District No. T-10 (Seven Hills) Limited Obligation
Improvement Bonds, 7.50% 2015 5,500 5,615
New Jersey - 3.33%
Economic Development Authority, First Mortgage
Revenue Fixed-Rate Bonds:
Fellowship Village Project,
Series 1995A, 9.25% 2025 3,000 3,400
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 1,000 1,037
8.625% 2025 1,000 1,043
The Union County Utilities Authority, Solid Waste
System Revenue Bonds, 1991 Series A AMT, 7.10% 2006 3,090 3,171
New York - 11.80%
State Environmental Facilities Corp. AMT,
Solid Waste Disposal Revenue Bonds, (Occidental
Petroleum Corp. Project), Series 1993 Subseries A:
5.50% 2003 2,500 2,505
5.70% 2028 1,235 1,163
State Thruway Authority, Local Highway and
Bridge Service Contract Bonds, Series 1992,
6.25% 2006 1,000 1,044
The City of New York, General Obligation Bonds:
Series A, 6.25% 2003 1,000 1,051
Series A, 7.00% 2005 2,000 2,193
Fiscal 1996 Series C, 6.40% 2003 1,000 1,056
Fiscal 1996 Series E, 6.50% 2004 2,500 2,653
Fiscal 1995 Series B, 7.00% 2016 1,000 1,072
New York City Industrial Development Agency, Solid
Waste Disposal Revenue Bonds (1995 Visy Paper
(NY), Inc. Project) AMT, 7.55% 2005 9,000 9,528
The Port Authority of New York and New Jersey, Special
Project Bonds, Series 4 AMT, KIAC Partners Project:
7.00% 2007 4,000 4,300
6.75% 2011 4,000 4,115
North Carolina - 0.38%
Eastearn Municipal Power Agency, Power System Revenue
Bonds, Refunding Series 1993B, 6.00% 2026 1,000 987
Ohio - 0.67%
The Student Loan Funding Corporation,
Cincinnati, Student Loan Revenue
Refunding Bonds,Series 1991A AMT, 7.20% 2003 1,630 1,753
Pennsylvania - 3.50%
Economic Development Financing Authority,
Resource Recovery Revenue Bonds (Colver Project),
Series 1994 D AMT, 7.15% 2018 3,000 3,154
Lehigh County General Purpose Authority, College Revenue
and Refunding Bonds, Series A and B of 1996 (Cedar Crest
College), 6.65% 2017 1,750 1,779
The Hospitals Authority of Philadelphia,
Hospital Revenue Bonds (Temple University
Hospital), Series of 1983, 6.625% 2023 1,000 1,031
Schuylkill County Industrial Development
Authority, Resource Recovery Revenue Refunding
Bonds (Schuylkill Energy Resources, Inc.
Project), Series 1993 AMT, 6.50% 2010 3,260 3,133
South Carolina - 1.01%
York County, Pollution Control Facilities
Revenue Bonds (Bowater Inc. Project),
Series 1990 AMT, 7.625% 2006 2,300 2,640
Tennessee - 2.33%
The Industrial Development Board of the County of McMinn,
Solid Waste Recycling Facilities Revenue Bonds,
Series 1992 (Calhoun Newsprint Co. Project -
Bowater Inc. Obligor) AMT, 7.625% 2016 3,000 3,264
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds (Federal Express
Corp.), Series 1984, 7.875% 2009 2,500 2,787
Texas - 5.73%
Alliance Airport Authority, Inc., Special
Facilities Revenue Bonds (American Airlines,
Inc. Project), Series 1990 AMT, 7.00% 2011 5,250 5,818
Hidalgo County Health Services Corp., Hospital Revenue
Bonds (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 2,365 2,490
6.75% 2016 1,000 1,008
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, 6.125% 2023 5,740 5,574
Virginia - 0.40%
Virginia College Building Authority, Educational
Facilities Revenue Bonds (Marymount University
Project) Series of 1992, 7.00% 2022 1,000 1,053
West Virginia - 0.88%
City of South Charleston, Pollution Control
Revenue Refunding Bonds (Union Carbide
Corp. Project), Series 1985, 7.625% 2005 2,000 2,301
---------
239,790
---------
Tax-Exempt Securities Maturing in
One Year or Less - 6.05%
State of California, 1996-97 Revenue Anticipation Notes,
Series A, 4.50% 6/30/97 3,700 3,714
State of Colorado, General Fund Tax and Revenue
Anticipation Notes, Series 1996A, 4.50% 6/27/97 1,200 1,204
County of Los Angeles, California, 1996-97 Tax and
Revenue Anticipation Notes, Series A, 4.50% 6/30/97 3,400 3,412
State of Montana, Tax and Revenue Anticipation Notes,
Series 1996, 4.50% 6/27/97 1,000 1,004
State of Texas, Tax and Revenue Anticipation Notes,
Series 1996, 4.75% 8/29/97 5,250 5,286
State of Wisconsin, Operating Notes of 1996, 4.50% 6/16/97 1,100 1,104
---------
15,724
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $244,137,000) 255,514
Excess of cash, prepaids and receivables over
payables 4,472
---------
NET ASSETS $259,986
=========
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
American High-Income Municipal Bond Fund
Financial Statements
(Unaudited)
Statement of Assets and Liabilities
at January 31, 1997 (dollars in thousands)
Assets:
Tax-exempt securities
(cost: $244,137) $255,514
Cash 13
Prepaid organization expense 7
Receivables for--
Sales of investments $2,076
Sales of fund's shares 1,550
Accrued interest 4,656 8,282
--------- ---------
263,816
Liabilities:
Payables for--
Purchases of investments 3,121
Repurchases of fund's shares 63
Dividends payable 421
Management services 90
Accrued expenses 135 3,830
--------- ---------
Net Assets at January 31, 1997
Equivalent to $15.37 per share on 16,916,771
shares of $0.01 par value capital stock
outstanding (authorized capital stock -- $259,986
200,000,000 shares) =========
Statement of Operations
for the six months ended January 31, 1997 (Unaudited)
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $7,721
---------
Expenses:
Management services fee $508
Distribution expenses 307
Transfer agent fee 48
Reports to shareholders 62
Registration statement and prospectus 82
Postage, stationery and supplies 11
Director's fees 10
Auditing and legal fees 29
Custodian fee 6
Taxes other than federal income tax 1
Organization expense 1
Other expenses 5
---------
Total expenses before reimbursement 1,070
Reimbursement of expenses - 1,070
--------- ---------
Net investment income 6,651
---------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 466
Net unrealized appreciation
on investments:
Beginning of period 7,574
End of period 11,377
---------
Net increase in unrealized appreciation
on investments 3,803
Net realized gain and unrealized ---------
appreciation on investments 4,269
Net Increase in Net Assets Resulting ---------
from Operations $10,920
=========
Statement of Changes in Net Assets
(dollars in thousands) Six months
ended Year ended
January 31, July 31,
1997* 1996
Operations:
Net investment income $6,651 $11,033
Net realized gain on investments 466 3,233
Net unrealized appreciation
on investments 3,803 783
--------- ---------
Net increase in net assets
resulting from operations 10,920 15,049
--------- ---------
Dividends and Distributions Paid to
Shareholders:
Dividends Paid from net
investment income (6,713) (11,032)
Distributions from net realized gain on
investments (2,176) (3,336)
--------- ---------
Total dividends and distributions (8,889) (14,368)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold:
3,574,706 and 6,164,069 shares, respectiv 54,928 93,928
Proceeds from shares issued in reinvestment
of net investment income dividends
and distributions of net realized gain
on investments:
403,878 and 645,325 shares, repectively 6,217 9,858
Cost of shares repurchased: 1,323,366 and
2,910,852 shares, respectively (20,330) (44,191)
--------- ---------
Net increase in net assets
resulting from capital share
transactions 40,815 59,595
--------- ---------
Total Increase in Net Assets 42,846 60,276
Net Assets:
Beginning of period 217,140 156,864
--------- ---------
End of period $259,986 $217,140
========= =========
*Unaudited
See Notes to Financial Statements
</TABLE>
<PAGE>
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 higher yielding, lower rated, higher risk municipal bonds. 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 prices for securities of
comparable maturity, quality and type. Securities for which market quotations
are not readily available are valued at fair value by the Board of Directors or
a committee thereof. All securities with 60 days or less to maturity are valued
at amortized cost, which approximates market value.
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 organization 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 $6,000 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 taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of January 31, 1997, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $11,377,000, of which $11,528,000
related to appreciated securities and $151,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended January 31, 1997. The cost of
portfolio securities for book and federal income tax purposes was $244,137,000
at January 31, 1997.
3. The fee of $508,000 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 fee reductions 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. Expenses that are not subject to these
limitation are interest, taxes, brokerage commissions, transaction costs and
extraordinary expenses.
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,
1997, distribution expenses under the Plan were $307,000. As of January 31,
1997, accrued and unpaid distribution expenses were $65,000.
American Funds Service Company (AFS), the transfer agent for the fund, was paid
a fee of $48,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $167,000 (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 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,
1997, aggregate amounts deferred and earnings thereon were $17,000.
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, 1997, accumulated undistributed net realized gain on
investments was $368,000 and additional paid-in capital was $231,320,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $54,734,000 and $21,961,000, respectively, during the
six months ended January 31, 1997.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Per-Share Data and Ratios
Six Period
months Year September 26
ended ended 1994 /2/ to
January 31, July 31, July 31,
1997 /1/ 1996 1995
Net Asset Value, Beginning
of Period 15.23 $15.14 $14.29
------------ ------------ ------------
Income From Investment
Operations:
Net investment income .44 .88 .76
Net realized and
unrealized gain
on investments .28 .37 .85
------------ ------------ ------------
Total income from investment operations .72 1.25 1.61
------------ ------------ ------------
Less Distributions:
Dividends from net investment income (.44) (.88) (.76)
Distributions from net realized gains (.14) (.28) --
------------ ------------ ------------
Total distributions (.58) (1.16) #VALUE!
------------ ------------ ------------
Net Asset Value, End of Period $15.37 $15.23 $15.14
============ ============ ============
Total Return /3/ 4.78% /4/ 8.48% 11.62% /4/
Ratios/Supplemental Data:
Net assets, end of period (in millions) $260 $217 $157
Ratio of expenses to average net assets before fee waiver .45% /4/ .88% .94% /4/
Ratio of expenses to average net assets after fee waiver .45% /4/ .86% .62% /4/
Ratio of net income to average net assets 2.81% /4/ 5.74% 5.66% /4/
Portfolio turnover rate 9.90% /4/ 35.22% 46.42% /4/
/1/ Unaudited
/2/ Commencement of operations.
/3/ 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.
</TABLE>
<PAGE>
The American Funds Group(R) Shareholder Services
ARE YOU AWARE OF YOUR RIGHTS?
Did you know you may be eligible for a sales charge discount when you buy
shares of most American Funds? The discounts begin when your investments total
$25,000 for bond funds or $50,000 for stock and stock/bond funds - and the good
news is you don't have to invest the whole amount at one time.
Through your right of accumulation, when you purchase additional shares you can
add the purchase amount to the value of shares you already own - in any of our
eligible funds* - in order to qualify for a sales charge discount on the new
investment.
Sales charges are reduced on a sliding scale as your investments increase.
You'll find a detailed breakdown of all discounts in your fund's prospectus,
which you can obtain from your financial adviser or by calling a Shareholder
Services Representative.
OTHER WAYS TO REDUCE SALES CHARGES
You can establish a statement of intention that allows you to invest at a
reduced sales charge immediately, based on purchases you intend to make over a
13-month period.* Or you can aggregate accounts by adding your purchase amount
to the total value of accounts you, your spouse and your minor children have
with The American Funds Group. Call a Shareholder Services Representative for
details and restrictions.
Whether you accumulate, aggregate or establish a statement of intention, it all
adds up to more purchasing power for you.
SERVICES TO MATCH YOUR LIFESTYLE
Our many free services are designed to accommodate your needs quickly and
efficiently.
AMERICAN FUNDSLINE(R) AND FUNDSLINE ONLINE (SM) - Handle transactions using
your phone or computer 24 hours a day. Obtain current prices and investment
returns, exchange shares between funds, redeem shares, check your share
balances and confirm your most recent transactions. Request duplicate
statements and order checks (by phone only). All on your timetable. Just call
800/325-3590 or reach us on the World Wide Web at www.americanfunds.com.
AMERICAN FUNDSLINK (SM) - Link your American Funds accounts with your bank
account. You can have fund dividends or automatic fund withdrawals deposited
directly into your bank account for fast, convenient, worry-free banking. Or
you can invest money directly from your bank account into your fund account on
either a systematic or on-demand basis.
Other automatic transactions - You can reinvest dividends into the same fund or
another fund, make withdrawals, and exchange shares between funds - quarterly,
monthly or during the months you specify.
Dividend and capital gain options - Use your dividend and capital gain
distributions to meet your changing needs. You may:
- - Automatically reinvest distributions back into the fund at no sales charge.
- - Cross-reinvest dividends into another fund at no sales charge for added
diversification. You can cross-reinvest if you have a balance of at least
$5,000 in the originating fund or meet the minimum initial investment for the
receiving fund.
- - Have dividends mailed or sent electronically to you or to someone else to
help meet your obligations.
EXCHANGE PRIVILEGES - When you and your investment adviser feel it's time to
adjust your portfolio to meet your changing investment goals, you can easily
exchange shares from one American Fund to another - without paying a sales
charge.* If you are opening an account in a different fund, you must meet that
fund's minimum investment requirement. Please remember that fund exchanges
among many types of accounts constitute a sale and purchase for tax purposes.
OTHER SERVICES - Stay on top of your investments with account statements that
keep you abreast of the activity in your account, consolidated quarterly
statements to reduce paper- work if you have multiple accounts and year-end tax
reports that show the dividends and capital gain distributions paid to you
during the year.
To reduce paperwork and avoid the problem of lost or destroyed certificates,
your shares are credited to your account and certificates are not issued unless
specifically requested.
*Investments in our money market funds - The Cash Management Trust of America,
The Tax-Exempt Money Fund of America and The U.S. Treasury Money Fund of
America - which are purchased without a sales charge generally do not apply
when determining your sales charges. If, however, the shares were originally
purchased in another American Fund that required a sales charge, then later
exchanged into our money market funds, the value of the shares would apply
toward reducing sales charges.
FOR MORE COMPLETE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN
FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR
FINANCIAL ADVISER OR PHONE AMERICAN FUNDS SERVICE COMPANY. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. THESE SERVICES ARE
SUBJECT TO CHANGE OR TERMINATION.
To talk to a Shareholder Services Representative, call toll-free (8 a.m. to 8
p.m. ET) from anywhere in the U.S.: 800/421-0180. Visit www.americanfunds.com
on the World Wide Web.
[map of United States of America]
Western Service Center
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
West Central Service Center
American Funds Service Company
P.O. Box 659522
San Antonio, Texas 78265-9522
East Central Service Center
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana 46206-6007
Eastern Service Center
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia 23501-2280
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 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
(Please write to the address nearest you.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
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
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
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, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA AGD/ALI/3368
Lit. No. AHIM-013-0397
[The American Funds Group(R)]
Printed on recycled paper
