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
Post-Effective Amendment No. 5
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 7
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:
ROBERT E. CARLSON, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street
Los Angeles, CA 90071-2371
(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.
On September 23, 1997, it filed its 24f-2 notice for fiscal 1997
Approximate date of proposed public offering:
It is proposed that this filing become effective on October 1, 1997, 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 Expenses
3. Financial Highlights Financial Highlights; Investment Results
4. General Description of Registrant Fund Organization and Management; Investment
Policies and Risks; Securities and Investment Techniques
5. Management of the Fund Financial Highlights; Fund
Organization and Management
6. Capital Stock and Other Securities Investment Policies and Risks;
Fund Organization and Management;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management;
Other Important Things to Remember
8. Redemption or Repurchase Selling 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 N/A
13. Investment Objectives and Policies Description of Certain Securities; Investment Restrictions
14. Management of the Registrant Fund Officers and Directors
15. Control Persons and Principal Holders Fund Officers and Directors
of Securities
16. Investment Advisory and Other Services Fund Officers and Directors; Fund Organization and Management
(Part "A"); General Information; Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions; Fund Organization
and Management (Part "A")
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Redeeming Shares;Shareholder
Securities Being Offered Account Services and Privileges; Purchasing Shares (Part "A");
General Information
20. Tax Status Dividends and Distributions
21. Underwriter Management -- Principal Underwriter; Fund Organization and
Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements 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>
[LOGO OF AMERICAN FUNDS GROUP APPEARS HERE]
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American High-Income Municipal Bond Fund(R)
Prospectus
OCTOBER 1, 1997
<PAGE>
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
333 South Hope Street
Los Angeles, CA 90071
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Expenses 3
................................................................................
Financial Highlights 4
................................................................................
Investment Policies and Risks 5
................................................................................
Securities and Investment Techniques 6
................................................................................
Multiple Portfolio Counselor System 9
................................................................................
Investment Results 10
................................................................................
Dividends, Distributions and Taxes 12
................................................................................
Fund Organization and Management 13
................................................................................
Appendix 16
................................................................................
Shareholder Services 18
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The fund's investment objective is to provide investors 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.
Normally, the fund will invest at least 50% of its assets in bonds rated Baa or
BBB or below or unrated but determined to be of comparable quality. Securities
rated Ba and BB or below are commonly known as "junk" bonds and are subject to
greater fluctuations in risk and of loss of income and principal.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
40-010-1097
<PAGE>
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price and return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
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<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price) 4.75%
</TABLE>
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
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<S> <C>
Management fees 0.42%
................................................................................
12b-1 expenses 0.29%/1/
................................................................................
Other expenses 0.16%
................................................................................
Total fund operating expenses 0.87%
</TABLE>
/1/ 12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 56
................................................................................
Three years $ 75
................................................................................
Five years $ 95
................................................................................
Ten years $153
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 3
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<PAGE>
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FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse LLP, independent
accountants. This table should be read together with the financial statements
which are included in the statement of additional information and the annual
report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
..................
1997 1996 1995/1/
-------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $15.23 $15.14 $14.29
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INCOME FROM
INVESTMENT
OPERATIONS:
Net investment income .87 .88 .76
...........................................................................
Net realized and unrealized gain on investments .80 .37 .85
...........................................................................
Total income from investment operations 1.67 1.25 1.61
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LESS DISTRIBUTIONS:
Dividends from net investment income (.86) (.88) (.76)
...........................................................................
From net realized gains (.14) (.28) --
...........................................................................
Total distributions (1.00) (1.16) (.76)
...........................................................................
Net Asset Value, End of Period $15.90 $15.23 $15.14
...........................................................................
Total Return /2/ 11.36% 8.48% 11.62% /3/
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RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period (in millions) $ 316 $ 217 $ 157
...........................................................................
Ratio of expenses to average net assets before fee .87% .88% .94%
waiver
...........................................................................
Ratio of expenses to average net assets after fee .87% .86% .62% /3/
waiver
...........................................................................
Ratio of net income to average net assets 5.51% 5.74% 5.66% /3/
...........................................................................
Portfolio turnover rate 15.31% 35.22% 46.42% /3/
</TABLE>
/1/The period ended July 31, 1995 represents the initial period of operations
from September 26, 1994 to July 31, 1995.
/2/Excludes maximum sales charge of 4.75%.
/3/Based on operations for the period shown and, accordingly, not representative
of a full year's operations.
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4 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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<PAGE>
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INVESTMENT POLICIES AND RISKS
The fund's investment objective is to provide you with a high level of current
income exempt from regular federal income taxes.
In seeking to achieve its investment objective, the fund may forego
opportunities that would result in capital gains and may accept prudent risks
to capital value, in each case to take advantage of opportunities for higher
current income. Under normal market conditions, at least 80% of the fund's
assets will be invested in tax-exempt securities (including securities subject
to alternative minimum taxes), and at least 65% in bonds. For these purposes,
bonds are considered to be any debt securities having initial maturities in
excess of one year. In addition, at least 65% of the fund's assets will be
invested in debt securities rated A or below by Moody's Investors Service, Inc.
or Standard and Poor's Corporation or unrated but determined to be of
comparable quality, and at least 50% in debt securities rated Baa by Moody's or
BBB by S&P or below or unrated but determined to be of comparable quality.
The fund may invest without limitation in tax-exempt securities, the interest
on which would constitute an item of tax preference subject to federal
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. When in the opinion of Capital Research and Management Company, the fund's
investment adviser, abnormal market conditions require a temporary defensive
position, the fund may invest in taxable short-term fixed-income securities
(generally, securities with maturities of one year or less). The fund's
investment policies are described below. Limits on the fund's investment
policies are determined at the time of purchase and are based on the fund's net
assets unless otherwise stated. MORE INFORMATION ON THE FUND'S INVESTMENT
POLICIES IS CONTAINED IN ITS STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval.
THE FUND MAY NOT ACHIEVE ITS INVESTMENT OBJECTIVE DUE TO MARKET CONDITIONS AND
OTHER FACTORS.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 5
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
SECURITIES AND INVESTMENT TECHNIQUES
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. The prices of
debt securities fluctuate depending on such factors as interest rates, credit
quality, and maturity. In general their prices decline when interest rates rise
and vice versa.
The fund may invest in debt securities rated Ba and BB or below by Moody's or
S&P or in unrated securities that are determined to be of equivalent quality by
Capital Research and Management Company. These securities are commonly known as
"high-yield, high-risk" or "junk" bonds. High-yield, high-risk bonds are
described by the rating agencies as speculative and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness, or
they may already be in default. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly. It
may be more difficult to dispose of, or to determine the value of, high-yield,
high-risk bonds.
High-yield, high-risk bonds may be very sensitive to adverse economic changes
and may be less sensitive to interest rate changes. In addition, periods of
economic uncertainty and changes may increase volatility of market prices and
yields of high-yield high-risk bonds and in turn the fund's net asset value.
High-yield, high-risk bonds may contain redemption or call provisions which, if
exercised during a period of declining interest rates, may cause the fund to
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. Furthermore, 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.
The fund may invest in bonds rated as low as C by Moody's or D by S&P. See the
Appendix for a complete description of the bond ratings.
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 corporate and
legislative developments.
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6 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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<PAGE>
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PORTFOLIO COMPOSITION
The average monthly composition of the fund's portfolio based on the higher of
Moody's or S&P ratings for the fiscal year ended July 31, 1997 was as follows:
<TABLE>
- --------------
<S> <C>
Aaa/AAA 4.07%
................................................................................
Aa/AA 1.87%
................................................................................
A/A 4.89%
................................................................................
Baa/BBB 44.46%
................................................................................
Ba/BB 2.84%
................................................................................
B/B 0.03%
................................................................................
Non-rated 34.99%
</TABLE>
Some or all of these non-rated securities were determined to be equivalent to
securities rated by Moody's or S&P as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Baa/BBB 3.09%
................................................................................
Ba/BB 20.00%
................................................................................
B/B 11.89%
................................................................................
C/C 0.01%
</TABLE>
Money market instruments and cash made up an average of 6.85% of the fund's
portfolio.
MUNICIPAL BONDS
Municipal bonds are debt obligations generally issued to obtain funds for
various public purposes, including the construction of public facilities. The
interest on these obligations is generally not included in gross income for
federal income tax purposes. 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. 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.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 7
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
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.
There are, in addition, a variety of hybrid and special types of municipal
obligations, such as zero coupon and pre-refunded bonds, 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.
FORWARD COMMITMENTS
The fund may enter into commitments to purchase or sell securities at a future
date. When the fund agrees to purchase such securities, it assumes the risk of
any decline in value of the securities beginning on the date of the agreement.
When the fund agrees to sell such securities, it does not participate in
further gains or losses with respect to the securities beginning on the date of
the agreement. If the other party to such a transaction fails to deliver or pay
for the securities, the fund could miss a favorable price or yield opportunity,
or could experience a loss.
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 interest
rates change. 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 securities with maturities in excess of three years.
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. This
may make the fund more susceptible to similar economic, political, or
regulatory occurrences such as changes in healthcare regulations, environmental
- --------------------------------------------------------------------------------
8 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
considerations related to construction, construction cost increases and labor
problems, failure of healthcare 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.
SPECIAL CONSIDERATIONS
The fund may invest without limitation in 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.
================================================================================
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. Counselors decide how their respective segments 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 may make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed on the following page.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 9
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<PAGE>
<TABLE>
<CAPTION>
=======================================================================================
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
..........................
PORTFOLIO
COUNSELORS YEARS OF EXPERIENCE WITH CAPITAL
FOR AMERICAN AS PORTFOLIO COUNSELOR FOR RESEARCH AND
HIGH-INCOME AMERICAN HIGH-INCOME MANAGEMENT
MUNICIPAL MUNICIPAL BOND FUND COMPANY OR
BOND FUND PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES TOTAL YEARS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEIL L. Senior Vice 3 years (since 19 years 19 years
LANGBERG President of the fund began
the fund. Vice operations)
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ---------------------------------------------------------------------------------------
MARK R. Vice President 3 years (since 3 years 12 years
MACDONALD of the fund. the fund began
Vice operations)
President--
Investment
Management
Group, Capital
Research and
Management
Company
- ---------------------------------------------------------------------------------------
DAVID A. Vice President, 1 year 6 years 9 years
HOAG Capital
Research
Company*
========================================================================================
</TABLE>
The fund began operations on September 26, 1994
* A wholly owned subsidiary of Capital Research and Management Company
================================================================================
INVESTMENT RESULTS
The fund may from time to time compare investment results on a taxable and tax
equivalent basis to various indices or other mutual funds. Fund results may be
calculated on a total return, yield, and/or distribution rate basis. Results
calculated without a sales charge will be higher.
X TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by annualizing the current month's dividend
and dividing by the average price for the month.
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10 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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<PAGE>
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INVESTMENT RESULTS
(FOR PERIODS ENDED JUNE 30, 1997)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
TOTAL THE FUND AT NET THE FUND AT MAXIMUM LIPPER
RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ LEHMAN INDEX/3/ AVERAGE/4/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year 9.88% 4.63% 8.25% 8.53
................................................................................
Lifetime/5/ 10.47% 8.55% 8.35% 7.86
- --------------------------------------------------------------------------------
</TABLE>
Yield/1/,/2/: 4.90%
Distribution Rate: 5.08%
/1/These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/The maximum sales charge has been deducted.
/3/Lehman Brothers Municipal Bond Index represents the long-term investment
grade municipal bond market. This index is unmanaged and does not reflect
sales charges, commissions or expenses.
/4/The Lipper High Yield Municipal Debt Average is comprised of funds that
invest at least 50% of their assets in lower rated municipal debt issues.
/5/The fund began investment operations on September 26, 1994.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 11
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<PAGE>
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[GRAPH APPEARS HERE]
Here are the fund's annual total returns calculated without a sales charge.
This information is being supplied on a calendar year basis.
1994 -0.09
1995 19.05
1996 6.45
Past results are not an indication of future results and may reflect a fee
waiver. See "Expenses."
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends from its net investment income daily and
distributes the accrued dividends to shareholders each month. Dividends begin
accruing one day after payment for shares is received by the fund or American
Funds Service Company. Capital gains, if any, are usually distributed in
November or December. When a capital gain is distributed, the net asset value
per share is reduced by the amount of the payment.
TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax. The fund
is permitted to pass through to its shareholders federally tax-exempt income
subject to certain requirements. However, the fund may invest in obligations
which pay interest that is subject to state and local taxes when distributed by
the fund. Dividends derived from taxable interest income, distributions of
capital gains and
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12 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
dividends on gains from the disposition of certain market discount bonds will
not be exempt from federal, state or local income tax.
Capital gains are taxable whether they are reinvested or received in cash--
unless you are exempt from taxation or entitled to tax deferral. Early each
year, you will be notified as to the amount and tax status of all income
distributions paid during the prior year. 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).
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
certain dividends paid to nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
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 ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation on June 14, 1994. All fund operations are supervised
by the fund's board of directors who meet periodically and perform duties
required by applicable state and federal laws. Members of the board who are not
employed by Capital Research and Management Company or its affiliates are paid
certain fees for services rendered to the fund as described in the statement of
additional information. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund does not
hold annual meetings of shareholders. However, significant matters which
require shareholder approval, such as certain elections of board members or a
change in a fundamental investment policy, will be presented to shareholders at
a meeting called for such purpose. Shareholders have one vote per share owned.
At the request of the holders of at least 10% of the shares, the fund will hold
a meeting at which any member of the Board could be removed by a majority vote.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 13
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<PAGE>
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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, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
and business affairs of the fund. The management fee paid by the fund to
Capital Research and Management Company is composed of a basic management fee
which may not exceed 0.30% of the fund's average net assets annually and
declines at certain asset levels, plus 3% of the fund's annual gross income.
The total management fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
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 preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the last fiscal year is discussed earlier under "Expenses."
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 a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the underwriter, 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. In the over-the-
counter market, purchases and sales are transacted directly with principal
market-makers except in those circumstances where it appears better prices and
executions are available elsewhere.
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14 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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<PAGE>
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Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the fund or have provided investment research, statistical, and
other related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET);
800/421-0180
[REGIONAL MAP OF THE UNITED STATES APPEARS HERE]
Western Service Center
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax: 714/671-7080
Western Central Service Center
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax: 210/530-4050
Eastern Central Service Center
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
Fax: 317/735-6620''Eastern Service Center
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 15
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<PAGE>
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APPENDIX
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C," according to 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."
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16 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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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 interest is being paid."
"D--In default and payment of interest and/or repayment of principal is in
arrears."
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 17
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<PAGE>
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
================================================================================
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, computer,
wire, or bank debit. You may also establish or add to your account by
exchanging shares from any of your other accounts in The American Funds Group.
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. This includes the exchange purchase orders that
may place an unfair burden on other shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
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18 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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X Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
X Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone or computer including American
FundsLine (R) or American FundsLine OnLine (SM) (see below), or by fax.
EXCHANGES HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
Tax-exempt funds should not serve as retirement plan investments.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
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<TABLE>
<S> <C>
To establish an account $1,000
To add to an account $ 50
</TABLE>
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 19
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<PAGE>
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SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
..................
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.00%
................................................................................
$25,000 but less than $50,000 4.50% 4.71% 3.75%
................................................................................
$50,000 but less than $100,000 4.00% 4.17% 3.25%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution and/or by American Funds Distributors on these investments.
Investments by retirement plans, foundations or endowments with $50 million or
more in assets may be made with no sales charge and are not subject to a
contingent deferred sales charge. A dealer concession of up to 1% may be paid
by the fund from its Plan of Distribution and/or by American Funds Distributors
on these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund and Capital Research and Management Company and its affiliated
companies are not subject to a sales charge.
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During the current fiscal year, American Funds
Distributors will also provide additional compensation to the top one hundred
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20 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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<PAGE>
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dealers who have sold shares of funds in The American Funds Group based on the
pro rata share of a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. 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 below.
X Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by", as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
X Concurrent Purchases
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.
X Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
X Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which at your request, may include purchases made during the previous
90 days) in non-money market fund shares over a 13-month period. A portion
of your account may 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 the applicable sales charge reduction.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 21
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<PAGE>
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SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) or American FundsLine OnLine(SM) (see below). In addition, you may
sell shares in amounts of $50 or more automatically. If you sell shares through
your investment dealer you may be charged for this service. Shares held for you
in your dealer's street name must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone or computer, including American FundsLine(R) or
American FundsLine OnLine(SM) (see below), or by fax. Sales by telephone,
computer or fax are limited to $50,000 in accounts registered to individual(s)
(including non-retirement trust accounts). In addition, checks must be made
payable to the registered shareholder(s) and mailed to an address of record
that has been used with the account for at least 10 days.
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), sale proceeds will be paid on or before
the seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
The fund may, with 60 days' written notice, close your account if due to a sale
of shares the account has a value of less than the minimum required initial
investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made payable to the registered shareholder(s) and is
mailed to the address of record on the account, and provided the address has
been used with the account for at least 10 days. Additional documentation may
be required for sale of shares held in corporate, partnership or fiduciary
accounts.
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22 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded. Reinvestment will be at the next calculated net asset value after
receipt and acceptance by American Funds Service Company.
================================================================================
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINE(SM)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R) or American
FundsLine OnLine(SM). To use this service, call 800/325-3590 from a
TouchTone(TM) telephone or access the American Funds Web site on the Internet at
www.americanfunds.com.
TELEPHONE AND COMPUTER PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone or computer (including American
FundsLine(R) at American FundsLine OnLine(SM) or fax purchase, sale and/or
exchange options (see below), 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 liabilities
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
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 also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans, dividend and
capital gain reinvestments, and certain retirement plans will be confirmed at
least quarterly.
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AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS 23
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<PAGE>
<TABLE>
<CAPTION>
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
<S> <C>
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
============================================================================
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the
independent accountants'
report (in the annual
report).
CODE OF ETHICS A current SAI has been filed
with the Securities and
Includes a description of the fund's Exchange Commission ("SEC").
personal investing policy. It is incorporated by
reference into this
prospectus and is available
along with other related
materials on the SEC's
Internet Web site at
http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company the fund 333 South Hope Street
800/421-0180 ext. 1 Los Angeles, CA 90071
[LOGO FOR RECYCLING APPEARS HERE]
This prospectus has been printed on recycled paper.
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24 AMERICAN HIGH-INCOME MUNICIPAL BOND FUND / PROSPECTUS
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