[The American Funds Group (r)]
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
1998 ANNUAL REPORT FOR THE YEAR ENDED JULY 31
[illustration: construction crew on roof of tall building]
[Begin Sidebar]
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.
American High-Income Municipal Bond Fund is one of the 28 mutual funds in The
American Funds Group(r), managed by Capital Research and Management Company.
Since 1931, Capital has invested with a long-term focus based on thorough
research and attention to risk.
ABOUT OUR COVER: American High-Income Municipal Bond Fund helps finance public
works across the country, including vital infrastructure projects that help
cities grow and prosper.
[End Sidebar]
Results of a $10,000 Investment in American High-Income Municipal Bond Fund
(For the period September 26, 1994, to July 31, 1998, for the fiscal quarters
over the fund's lifetime)
$14,435
The fund at net asset value (without any sales charge)
$13,751/1/
The fund at maximum offering price (with 4.75% sales charge deducted)
$13,591/2/
Lehman Brothers Municipal Bond Index
$13,527/3/
Lipper High-Yield Municipal Debt Fund Average
[begin mountain chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The fund at net The fund at Lehman Lipper
asset value maximum Brothers High-Yield
(without any offering Municipal Municipal
sales charge) price (with Bond Index Debt Fund
4.75% sales /2/ Average /3/
charge
deducted)
9/26/94 $10,000 $ 9,525 $10,000 $10,000
10/31/94 9,886 9,418 9,822 9,863
1/31/95 10,287 9,800 10,139 10,121
4/30/95 10,760 10,251 10,566 10,515
7/31/95 11,162 10,634 10,910 10,799
10/31/95 11,534 10,988 11,280 11,121
1/31/96 11,904 11,340 11,665 11,509
4/30/96 11,692 11,139 11,406 11,248
7/31/96 12,108 11,535 11,630 11,462
10/31/96 12,452 11,863 11,923 11,769
1/31/97 12,687 12,086 12,113 11,964
4/30/97 12,863 12,254 12,162 12,067
7/31/97 13,484 12,845 12,822 12,668
10/31/97 13,714 13,065 12,936 12,862
01/31/98 14,123 13,455 13,338 13,278
04/30/98 14,181 13,510 13,293 13,276
07/31/98 14,435 13,751 13,591 13,527
</TABLE>
/1/Results reflect payment of maximum sales charge of 4.75% on the $10,000
investment. Thus, the net amount invested was $9,525. As outlined in the
prospectus, the sales charge is reduced for larger investments.
/2/The index is unmanaged and does not reflect sales charges, commissions or
expenses.
/3/Calculated by Lipper Analytical Services. The average does not reflect sales
charges.
Past results are not predictive of future results.
[end chart]
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
are updating their computer systems to process date-related information
properly following the turn of the century. Both are on track to complete
modifications of significant internal systems by the end of 1998. Testing with
business partners, vendors and other service/ providers is already under way.
We will continue to keep you up-to-date in our regular publications. If you'd
like more detailed information, visit our Web site at www.americanfunds.com.
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 June 30, 1998 (the
most recent calendar quarter) assuming payment of the 4.75% maximum sales
charge. Since inception on September 26, 1994: +37.02%, or +8.74% a year; 12
months: +4.05%. Sales charges are lower for accounts of $25,000 or more.
The fund's 30-day yield as of August 31, 1998, calculated in accordance with
the Securities and Exchange Commission formula, was 4.17%. The fund's
distribution rate as of that date was 4.84%. 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:
Events at home and abroad strengthened the U.S. bond market and helped American
High-Income Municipal Bond Fund earn solid returns during the fiscal year ended
July 31. Shareholders who reinvested their dividends saw the value of their
holdings in the fund increase 7.1%.
In fiscal 1998, the fund paid monthly dividends totaling 83.5 cents a share,
resulting in an income return of 5.4% on a reinvested basis. That is equivalent
to an 8.4% taxable return for investors in the 36% federal tax bracket.
Investors who took their dividends in cash earned an income return of 5.3%,
equal to an 8.2% taxable return for those in the 36% tax bracket, and saw the
value of their shares rise 1.6%. The fund also paid a 4-cents-a-share capital
gain last November and expects to pay a 6-cents-a-share capital gain this
December.
The fund was ahead of the majority of its peers and outpaced the broader
unmanaged tax-exempt market during the year. The average high-yield municipal
bond fund had a total return of 6.9%, according to Lipper Analytical Services,
a leading mutual fund tracking service. The unmanaged Lehman Brothers Municipal
Bond Index, which measures the broad municipal market, had a 6.0% total return.
Favorable economic trends in the U.S. - particularly low inflation combined
with a healthy economy and healthy corporate earnings - proved good news for
bond prices during the year. In addition, economic troubles outside the U.S.,
most notably in Asia, caused a "flight to quality" as overseas investors sold
other assets and bought U.S. Treasury bonds, driving down yields in most U.S.
bond markets. Other segments of the U.S. bond market, including both municipal
and corporate bonds, showed gains but did not keep pace with Treasury bonds.
Many municipalities and corporations took advantage of lower interest rates to
sell new bonds at lower rates and use the proceeds to retire outstanding,
higher interest debts, a process called advance refunding. A municipal bond's
credit rating usually rises after a refunding, giving investors an opportunity
to earn solid profits when a bond is advance refunded. Recently, several of
American High-Income Municipal Bond Fund's holdings have been advance refunded,
helping the fund maintain its record of strong returns. Since its inception,
the fund has earned a 10% average annual compound return. We are pleased with
these results but caution our investors that such returns are abnormally high
by historical standards.
The recent fluctuation in the stock market has not been shared by the municipal
bond market. While the equity markets have been volatile, the municipal bond
market has steadily gained strength.
As interest rates have declined, the yield spreads - or difference between
yields paid by higher rated and lower rated municipal bonds - have narrowed.
The rising prices and narrowing yields helped the fund's investment results. In
this environment, finding lower rated bonds that properly reward investors for
the risk they assume becomes progressively more difficult. As a result, the
fund's holding of higher rated investment-grade bonds has increased. At the end
of the year, 25% of the fund's portfolio was invested in bonds rated A or
higher, up from 13% a year earlier.
The fund continues to grow, attracting new assets and shareholders. In the past
year assets have grown 47% to $464 million and the number of shareholder
accounts grew 30% to more than 8,800.
We wish to 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
September 16, 1998
AMERICAN HIGH-INCOME
MUNICIPAL BOND FUND
A MOSAIC OF OPPORTUNITIES
[illustration: construction crew on roof of tall building]
Finding value in the high-yield municipal bond market requires choosing among
thousands of issues offered by municipalities and government agencies across
the country. Corporations also can issue bonds in the municipal market to
finance projects that benefit the public. With so many choices, how does an
investor begin to look for good opportunities? At Capital Research and
Management Company, the adviser to American High-Income Municipal Bond Fund,
the selection process begins with research.
In the next few pages we'll look at three investments and the research that led
to Capital Research's decision to add them to American High-Income Municipal
Bond Fund's portfolio. The issues - a Wisconsin paper mill, a Texas hospital
and a New York waste disposal plant - also illustrate two advantages of
investing in a bond fund instead of individual high-yield bonds: research and
diversification. While a single default could be devastating for individuals,
the diversification of a fund that invests in hundreds of high-yield issues
after thorough research may offer investors a level of confidence they would
not have on their own.
FINANCING A STAND-ALONE PROJECT:
OCONTO FALLS, WISCONSIN
Municipal bonds are often used to finance specific projects such as a new
highway or school. In Oconto Falls, Wisconsin, a city of about 2,700 about 20
miles north of Green Bay, Oconto Falls Tissue, Inc. used municipal bonds to
finance the purchase of equipment to recycle wastepaper into products such as
tablecloths and hospital gowns.
Oconto Falls Tissue's project will boost recycling and save space in local
landfills. But what sets the Oconto Falls issue apart from many municipal bonds
is the unusual collateral it offers investors. The paper mill is what analysts
call a "stand-alone" project. The recycling plant is the company's only source
of income and the only collateral for the bonds; the bonds are not backed by
the municipality's ability to collect taxes or the deep pockets of a large
multinational corporation.
[illustration: city skyline]
[Begin Caption]
Municipal bonds are often used to finance individual projects, such as new
highways, bridges and power plants, by municipalities and government agencies
across the country.
[End Caption]
"If the company defaults, the plant is all the bondholders get," says David
Hoag, an analyst and portfolio counselor for the fund. "This type of
stand-alone project requires extra care and understanding."
Initially, Capital Research's investment professionals faced a challenge in
evaluating the paper mill. The factory is owned by a small, privately held
company and information about it wasn't as readily available as for larger,
publicly traded firms.
"We had to go out and get all the information ourselves. We visited the plant
and met the managers. We looked at the company's financial statements, talked
to other companies it had worked with and talked to our stock and bond analysts
who follow similar companies about their outlook for the paper industry," Hoag
says.
After thoroughly researching Oconto Falls Tissue, the fund's managers concluded
that it was a well-run company with valuable assets that are excellent
collateral for bondholders. Its bonds were added to American High-Income
Municipal Bond Fund's portfolio.
[Begin Sidebar]
While a single default can be devastating for individual investors, a fund that
invests in hundreds of high-yield issues can more easily absorb a setback
should it occur.
[End Sidebar]
A NOT-FOR-PROFIT HOSPITAL COMPETES: MISSION, TEXAS
The City of Mission sits near the Mexican border in the southernmost part of
Texas. The area's residents are served by three hospitals: the not-for-profit
Mission Hospital, Inc. and two for-profit institutions. Evaluating the bonds of
a nonprofit hospital in direct competition with for-profit rivals requires
special research.
[illustration: city skyline]
Unlike for-profit hospitals, which are typically part of large systems
operating health facilities across the country, Mission Hospital serves only
its local community, so community support is critical to the hospital's
success, says Brenda Ellerin, an analyst for American High-Income Municipal
Bond Fund.
"Access to capital is also a very big concern. Mission relies only on revenues
it receives from providing care in the community. Its competitors have much
deeper pockets. They can raise money in the corporate bond market or by selling
stock through their parent corporations. With Mission, I had to make sure it
could survive competitive pressures."
She traveled to Mission to visit the hospital and meet the managers, doctors
and board members, many of whom are community leaders. She also studied the
region's demographics, the hospital's finances and the state's commitment to
health care for the poor because many of Mission's patients rely on state and
federal health care programs.
The visit to Mission was only part of her research. She also consulted with her
colleague David Daigle, who analyzes the bonds of for-profit hospitals and had
recently visited Mission's competitors.
"One benefit of working for a large research organization such as Capital
Research is access to our group of analysts, who look at investments from
different angles," says Ellerin.
Her visit and discussions with other analysts convinced her that the community
supported Mission and that the hospital was in solid financial shape. As a
result of her recommendations, the fund purchased Mission Hospital bonds.
INVESTING IN LARGE CORPORATIONS:
NIAGARA FALLS, NEW YORK
Sprinkled throughout the fund's portfolio are the names of corporations
familiar in almost every American household: United Air Lines, Inland Steel and
Occidental Petroleum, for example. Portfolio counselor Mark Macdonald studied
Occidental Petroleum bonds for a solid-waste disposal plant in Niagara Falls,
New York.
Before investing in Occidental's bonds, however, the fund's investment
professionals studied the firm's capital structure, examined the bonds' yield
and talked to Capital Research stock analysts who follow oil companies. Capital
structure - that is, how much of a firm's capital was raised by selling stock,
issuing bonds or borrowing from banks - is often one of the first things
analysts look at when evaluating a company. When a company's capital structure
changes, the value of its bonds often changes as well. Occidental Petroleum's
bonds offer a good example.
"At one time, Occidental was a highly leveraged company," says Mike Kerr, an
oil industries analyst at Capital Research. "But over the last several years,
the company sold both stock and assets and paid off its debts."
Occidental also took advantage of lower interest rates to refinance some of its
bonds. As it paid off its debts and raised money in the stock market, the value
of its bonds rose.
After Macdonald's research, he decided the bonds offered a good investment
opportunity.
ACCESS TO DIVERSE ISSUES
As these examples show, the high-yield municipal bond market is a mosaic of
opportunities offered by a variety of issuers. It would be virtually impossible
for individual investors to do the necessary in-depth research on such
economically and geographically diverse issues. Indeed, many of these bonds are
not even available to individuals. But American High-Income Municipal Bond
Fund's research gives shareholders access to portions of the bond market that
few would have as individual investors.
TAX-FREE YIELDS VS. TAXABLE YIELDS
To use the table below, find your estimated 1998 taxable income to determine
your federal tax rate. Then look in the right-hand column to see what you would
have had to earn from a taxable investment to equal the fund's 4.85% tax-free
distribution rate in July.
For example, a couple with a taxable income of $160,000 faces a federal tax
rate of 36%. In this bracket, the fund's 4.85% distribution rate is equivalent
to a 7.58% return on a taxable issue. Investors in the highest tax bracket
(39.6%) would need a taxable distribution rate of 8.03% to match the fund's
distribution rate.
<TABLE>
<CAPTION>
If Your Taxable ...As Of 7/31/98 Your
Income Is...
...Then your Tax-Exempt Distribution
Single Joint Federal Tax Rate* Of 4.85% Is Equivalent
Is... to A Taxable Rate Of
<S> <C> <C> <C>
$0-25,350 $0-42,350 15.0% 5.71%
25,351- 61,400 42,351-102,300 28.0 6.74
61,401-128,100 102,301-155,950 31.0 7.03
128,101-278,450 155,951-278,450 36.0 7.58
Over 278,450 Over 278,450 39.6 8.03
</TABLE>
*Based on 1998 federal tax rates. The federal rates do not include an
adjustment for the loss of personal exemptions and the phase-out of itemized
deductions applicable to certain taxable income levels.
<TABLE>
<S> <C> <C>
American High-Income Municipal Bond Fund
Investment Portfolio
July 31, 1998
Quality Ratings
AAA: 11.30%
AA: 4.94%
A: 9.12%
BBB: 33.98%
BB: 22.41%
B: 12.00%
Cash & Equivalents: 6.25%
Principal Market
Amount Value
Tax-Exempt Securities Maturing in More than One Year (000) (000)
One Year - 93.26%
Alabama - 0.35%
The Industrial Dev. Board of the Town of Courtland, Variable Rate Demand Industrial Dev. $1,475 $1,632
Ref. Rev. Bonds (Champion International Corp.), 7.20% 2013
California - 13.18%
Pollution Control Fin. Auth., Solid Waste Disposal Ref. Rev. Bonds:
CanFibre of Riverside Project, Series 1997A AMT, 9.00% 2019 1,000 1,045
USA Waste Services, Inc. Project, Series 1998A AMT, 5.10% 2018 (Put 2008) 6,000 6,013
Rural Home Mortgage Finance Auth., Single Family Mortgage Rev. Bonds 945 1,102
(Mortgage-Backed Securities Program), 1995 Series B AMT, 7.75% 2026
Statwide Communities Dev. Auth., Apartment Dev.
Ref. Bonds (Irvine Apartment Communities, L.P.):
Series 1998A-1 AMT, 5.05% 2008 5,000 5,040
Series 1998A-3, 5.10% 2010 4,000 4,037
Student Education Loan Marketing Corp., Student Loan Program Rev. Bonds:
Junior Subordinate Series One Bonds AMT, 7.00% 2005 1,000 1,006
Senior Subordinate Series One Bonds AMT, 7.00% 2010 2,000 2,197
Central Valley Fin. Auth., Cogeneration Project Rev. 1,400 1,489
Bonds (Carson Ice-Gen Project), Series 1993, 6.10% 2013
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 1,065
6.125% 2015 1,000 1,050
6.125% 2023 4,000 4,190
County of Los Angeles, Cert. of Part. Captial Asset 3,715 3,911
Leasing Corp. (Marina del Rey), Series A, 6.25% 2003
City of Los Angeles:
Community Redevelopment Agcy., Central Business Dist. Redevelopment Project, 2,000 2,042
Tax Allocation Refunding Bonds, Series I, 5.00% 2001
Multifamily Housing Rev. Bonds (GNMA Collateralized - 500 524
Ridgecroft Apartments Project), Series 1997E AMT, 6.00% 2017
City of Oxnard, Assessment Dist. No. 97-1R (Pacific Commerce Center), 1,490 1,535
Limited Obligation Ref. Bonds, 5.70% 2006
Pleasanton Joint Powers Fin. Auth., Subordinate Reassessment 4,250 4,497
Rev. Bonds, 1993 Series B, 6.125% 2002
City of Poway, Community Fac. District No. 88-1 (Parkway Business Centre), 2,000 2,177
Special Tax Refunding Bonds, Series 1998, 6.75% 2015
County of Sacramento, Laguna Creek Ranch/Elliott Ranch Community Fac. Dist. No. 1:
Improvement Area No. 1 Special Tax Refunding Bonds, 5.20% 2006 1,110 1,115
Improvement Area No. 2 Special Tax Refunding Bonds:
6.125% 2014 250 260
6.30% 2021 500 523
Sacramento Cogeneration Auth., Cogeneration Project Rev. Bonds, 6.00% 2003
County of San Diego Reassessment Dist. No. 97-1 (4-S Ranch),
Limited Obligation Improvement Bonds: 1,000 1,070
6.00% 2009 1,000 1,030
6.25% 2012 1,000 1,030
Redevelopment Agcy. of the City and County of San Francisco, Residential Facility
Rev. Bonds (Coventry Park Project), Series 1996A AMT, 8.50% 2026 1,000 1,120
South Tahoe Joint Powers Fin. Auth. Ref. Rev. Bonds,
(South Tahoe Redevelopment Project Area No. 1), 1995 Series B, 6.25% 2020 1,000 1,069
Stanislaus Waste-To-Energy Finance Agcy., Solid Waste Facility Ref. Rev. Cert.
(Ogden Martin Systems of Stanislaus, Inc. Project), Series 1990, 7.625% 2010 1,500 1,586
City of Stockton, Mello-Roos Rev. Bonds, Series 1997A, Community Fac. A170
Dist. No. 90-2B (Brookside Estates):
5.40% 2004 500 511
5.55% 2006 1,300 1,334
6.20% 2015 1,300 1,353
Community Fac. District No. 88-12 of the City of Temecula (Ynez Corridor), A45
Special Tax Refunding Bonds, 1998 Series A:
5.35% 2009 940 936
5.40% 2010 860 857
5.50% 2012 1,100 1,095
City of West Sacramento, Limited Obligation Refunding Improvement Bonds,
Reassessment District of 1998:
5.00% 2005 1,000 989
5.10% 2006 1,250 1,239
5.10% 2007 1,000 987
Colorado - 5.23%
Housing and Fin.Auth., Single Family Program Senior Bonds:
1995 Series A AMT 8.00% 2025 1,265 1,404
1995 Series B AMT:
7.90% 2025 930 1,032
7.00% 2026 1,000 1,115
Series B-3, 6.55% 2025 1,575 1,729
Student Obligation Bond Auth., Student Loan Asset-Backed Bonds,
Senior Subordinate 1995 Series II-B AMT, 6.20% 2008 1,000 1,052
Arapahoe County, Capital Improvement Trust Fund Highway Rev. Bonds (E-470 Project):
6.90% 2015 (Preref. 2005) 1,250 1,477
6.95% 2020 (Preref. 2005) 4,500 5,332
City and County of Denver, Airport System Rev. Bonds:
Series 1991D AMT, 7.75% 2013 1,000 1,251
Series 1992C AMT:
6.55% 2003 2,000 2,196
6.75% 2013 885 967
6.75% 2013 (Preref. 2002) 115 129
Series 1994A AMT:
7.50% 2023 85 101
7.50% 2023 415 480
Eaglebend Dowd Affordable Housing Corp., Multifamily
Housing Project Rev. Bonds, Series 1998A:
6.53% 2024 1,665 1,672
6.53% 2029 1,320 1,325
6.63% 2039 2,950 2,962
Connecticut - 4.05%
Health and Educational Fac. Auth. Rev. Bonds,
University of Hartford Issue, Series D, 6.75% 2012 1,000 1,061
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds:(1)
1996 Series A:
6.25% 2003 505 546
6.375% 2004 (Escrowed to Maturity) 500 549
6.375% 2004 500 555
6.40% 2011 3,530 3,858
6.40% 2011 (Preref. 2007) 3,470 3,987
1997 Series B:
5.60% 2009 1,000 1,035
5.75% 2018 6,000 6,161
5.75% 2027 1,000 1,023
Delaware - 1.12%
Econ. Dev. Auth., First Mortgage Rev. Bonds
(Peninsula United Methodist Homes, Inc. Issue), Series 1997A:
6.00% 2008 500 534
6.10% 2010 500 530
6.20% 2015 2,875 3,041
6.30% 2022 1,000 1,062
District of Columbia - 0.00%
Hospital Rev. Ref. Bonds (Washington Hospital Center Issue),
Series 1992A, 7.00% 2005 1,500 1,629
Florida - 4.30%
Arbor Green Community Dev. Dist. (City of Tampa, Hillsborough County),
Special Assessment Rev. Bonds, Series 1996, 7.00% 2003 550 565
Broward County, Resource Recovery Rev. Bonds, Series 1984,
South Project, 7.95% 2008 1,000 1,073
The Crossings at Fleming Island Community Dev. Dist. (Clay County),
Special Assessment Bonds, Series 1995, 8.25% 2016 4,825 5,332
Heritage Isles Community Dev. District (Hillsborough County),
Special Assessment Rev. Bonds, Series 1998A, 5.75% 2005 2,455 2,465
Lee County Industrial Dev. Auth., Healthcare Fac. Rev. Bonds,
(Cypress Cove at Healthpark Florida, Inc. Project), Series 1997A, 6.25% 2017 2,500 2,605
Meadow Pointe II Community Dev. Dist. (Pasco County),
Capital Improvement Rev. Bonds, Series 1995, 7.25% 2002 2,050 2,064
North Springs Improvement Dist. Special Assessment Bonds:
Broward County, Series 1997A, 7.00% 2019 1,000 1,032
Parkland Isles Project, Series 1997B, 6.25% 2005 2,000 2,039
Northern Palm Beach County Improvement Dist, Water Control
and Improvement Bonds, Unit of Dev. No. 9A, Series 1996A:
6.80% 2006 1,000 1,076
7.30% 2027 1,500 1,647
Ocean Highway and Port Auth., Solid Waste/Pollution Control Rev. Ref. Bonds,
Series 1996 (Jefferson Smurfit Corp. (U.S.) Project), 6.50% 2006 1,305 1,370
Idaho - 1.07%
Housing and Finance Association, Single Family Mortgage Subordinate Bonds AMT:
1997 Series I-2, 5.55% 2010 1,000 1,031
1997 Series H-2, 5.40% 2010 1,615 1,646
1998 Series A-2, 5.35% 2011 1,265 1,284
1998 Series B, 5.20% 2011 1,000 1,004
Illinois - 5.13%
Health Fac. Auth Rev. and Ref. Bonds:
Advcocate Health Care Network, Series 1997A:
5.70% 2011 750 792
5.80% 2016 3,000 3,179
Centegra Health System, Series 1998, 5.25% 2007 1,500 1,486
Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 1,040
Fairview Obligated Group Project:
1992 Series A, 9.50% 2022 (Preref. 2002) 2,750 3,340
1995 Series A:
6.25% 2003 1,245 1,304
7.40% 2023 3,130 3,481
City of Chicago:
Collateralized Single Family Mortgage Rev. Bonds, Series 1997-B AMT, 6.95% 2028 1,620 1,826
Chicago-O'Hare International Airport, Special Facility Rev. Bonds
(United Air Lines, Inc. Project):
Series 1984C, 8.20% 2018 980 1,035
Series 1988B, 8.85% 2018 1,110 1,238
Series 1988A AMT, 8.95% 2018 1,470 1,640
Skyway Toll Bridge Ref. Rev. Bonds, Series 1994:
6.50% 2010 (Preref. 2004) 1,500 1,687
6.75% 2017 (Preref. 2004) 1,500 1,705
Village of Robbins, Cook County, Resource Recovery Rev. Bond (Robbins
Resource Recovery Partners, LP Project), Series 1994A AMT, 8.375% 2016 10,990 11,434
Indiana - 1.41%
State Dev. Finance Auth. Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 5.75% 2011 1,000 1,019
City of East Chicago, Pollution Control Rev. Ref. Bonds, Inland Steel Co:
Project No. 11, Series 1994, 7.125% 2007 2,000 2,237
Project No. 10, Series 1993, 6.80% 2013 2,000 2,142
Indianapolis Airport Auth., Special Fac. Rev. Bonds, Series 1994
(Federal Express Corp. Project) AMT, 7.10% 2017 1,000 1,125
City of Sullivan, Pollution Control Rev. Ref. Bonds (Indiana
Michigan Power Co. Project), Series C, 5.95% 2009 2,500 2,622
Kentucky - 1.67%
Econ. Dev. Finance Auth., Hospital System Refunding and Improvement Rev. Bonds,
Series 1997 (Appalachian Regional Healthcare, Inc. Project), 5.85% 2017 1,000 1,029
City of Ashland, Sewage and Solid Waste Rev. Bonds, Series 1995
(Ashland Inc. Project) AMT, 7.125% 2022 1,000 1,130
Kenton County Airport Board, Special Fac. Rev. Bonds
(Delta Air Lines, Inc. Project), 1992 Series A AMT:
7.50% 2012 2,225 2,447
6.125% 2022 3,000 3,074
Louisiana - 3.18%
Health Education Auth., Rev. Bonds (Lambeth House Project):
Series 1996, 9.00% 2026 (Preref. 2006) 2,850 3,770
Series 1998A, 6.20% 2028 4,500 4,488
Housing Finance Agcy., Single Family Mortgage Rev. Bonds,
Series 1995A-2 AMT, 7.80% 2026 2,775 3,112
Parish of West Feliciana, Pollution Control Rev. Bonds (Gulf States
Utilities Co. Project), Series 1984-II, 7.70% 2014 3,000 3,348
Maine - 0.00%
Educational Loan Marketing Corp., Senior Student Loan Rev.
Bonds, Series 1991 AMT, 6.90% 2003 865 909
Maryland - 1.20%
Health and Higher Educational Fac. Auth., First Mortgage Rev. Bonds, PUMH
of Maryland, Inc. Issue (Heron Point of Chestertown), Series 1998B, 5.75% 2026 3,000 2,918
Housing Opportunities Commission of Montgomery County, Multifamily
Rev. Bonds (Strathmore Court at White Flint), 1994 Issue A-2:
7.50% 2024 1,000 1,068
7.50% 2027 500 534
Housing Auth. of Prince George's County, Mortgage Rev. Bonds, Series 1997A
(GNMA Collateralized - Langley Gardens Apartments Project), 5.75% 2029 1,000 1,038
Massachusetts - 0.43%
Housing Finance Agcy., Housing Dev. Bonds, 1998 Series A AMT,
MBIA Insured 4.80% 2007 2,000 2,013
Industrial Finance Agcy., Rev. Bonds, Edgewood Retirement
Community Project, Series 1995A, 9.00% 2025 5,400 6,627
Michigan - 6.43%
Hospital Finance Auth., Hospital Rev. Ref. Bonds:
Genesys Health System Obligated Group, Series 1995A:
8.00% 2005 (Escrowed to Maturity) 2,000 2,449
7.50% 2007 (Preref. 2005) 1,600 1,934
8.10% 2013 (Preref. 2005) 1,100 1,370
7.50% 2027 (Preref. 2005) 2,265 2,704
Genesys Regional Medical Center Obligated Group, Series 1998A, 5.30% 2011 2,000 2,021
Pontiac Osteopathic:
Series A, 5.375% 2006 1,000 1,027
Series 1994A, 6.00% 2014 1,500 1,551
Sinai Hospital of Greater Detroit, Series 1995, 6.625% 2016 2,755 3,054
Housing Dev. Auth., Rental Housing Rev. Bonds, 1992 Series A, 6.60% 2012 5,500 5,942
City of Detroit:
G.O. Rev. Bonds (Unlimited Tax), Series 1995-A, 5.60% 2001 1,000 1,035
Limited Tax G.O. Bonds, Series 1995 A, 6.40% 2005 1,145 1,261
Downtown Dev. Auth., Tax Increment Bonds (Dev. Area No.1 Projects),
Series 1996C, 6.20% 2017 1,000 1,087
City of Flint, Hospital Building Auth. (Hurley Medical Center):
Rev. Ref. Bonds, Series 1998A, 5.00% 2008 2,030 2,037
Rev. Rental Bonds, Series 1998B:
5.00% 2008 1,275 1,279
5.375% 2018 1,000 983
The Econ. Dev. Corp. of the County of Midland, Subordinate Pollution Control
Limited Obligation Rev. Ref. Bonds (Midland Cogeneration Project) 9.50% 2009 3,100 3,376
Nebraska - 1.48%
City of Kearney, Industrial Dev. Rev. Bonds (The Great Platte
River Road Memorial Foundation Project), Series 1998:
6.75% 2023 2,000 1,968
6.75% 2028 5,000 4,903
Nevada - 1.46%
Housing Division, Single Family Mortgage Bonds, 1998 Series A-1 AMT, 5.20% 2011 1,000 1,006
City of Henderson, Local Improvement Dist. No. T-10 (Seven Hills)
Limited Obligation Improvement Bonds, 7.50% 2015 5,490 5,732
City of Las Vegas, Special Improvement Bonds, (Summerlin Area),
Local Improvement Bonds, 7.10% 2016 2,635 2,756
New Hampshire - 0.45%
Housing Finance Auth., Single Family Mortgage Acquisition Rev. Bonds, 1997 Series D AMT:
5.60% 2012 1,000 1,038
5.80% 2017 1,000 1,043
New Jersey - 3.82%
Econ. Dev. Auth:
Econ. Dev. Bonds, Kapdowski road Landfill Reclamation Improvement
District Project (City of Elizabeth), Series 1998A, 6.375% 2031 6,250 6,211
First Mortgage Rev. Fixed-Rate Bonds:
Fellowship Village Project:
Series 1995A, 9.25% 2025 (Preref. 2005) 3,000 3,856
Series 1998A Bonds:
5.10% 2008 1,250 1,254
5.20% 2009 1,000 1,004
5.30% 2010 1,000 1,005
Keswick Pines, Series 1998, 5.60% 2012 2,100 2,101
Winchester Gardens at Ward Homestead Project, Series 1996A:
8.50% 2016 1,000 1,122
8.625% 2025 1,000 1,130
New York - 9.66%
Dormitory Auth:
Cert. of Part., on behalf of the City University of New York, As Lessee
(John Jay College of Criminal Justice Project Refunding), 6.00% 2006 1,975 2,148
Mental Health Services Fac. Improvement Rev. Bonds:
Series 1998B, 5.60% 2008 2,945 3,144
Series 1998C:
5.00% 2009 1,390 1,409
5.00% 2010 1,930 1,939
Secured Hospital Rev. Ref. Bonds:
Brookdale Hospital, Series J, 5.125% 2009 3,500 3,567
Wyckoff Heights Medical Center, Series H, 5.125% 2008 1,000 1,025
Environmental Fac. Corp., Solid Waste Disposal Rev. Bonds, (Occidental
Petroleum Corp. Project), Series 1993 Subseries B AMT, 5.50% 2003 2,500 2,605
Housing Finance Agcy., Service Contract Obligation Rev. Ref. Bonds,
1997 Series C, 5.10% 2009 800 816
State Medical Care Fac. Finance Agcy., Mental Health Services Fac.
Improvement Rev. Bonds, Series B, 5.30% 2004 1,000 1,044
State Thruway Auth., Local Highway and Bridge Service Contract Bonds:
Series 1992, 6.25% 2006 1,000 1,084
Series 1994, MBIA Insured, 5.75% 2008 1,000 1,063
City of New York, G.O. Bonds:
Series A:
7.00% 2005 1,000 1,143
6.25% 2009 1,000 1,117
Series E, 6.50% 2004 1,500 1,648
Fiscal 1995 Series B1, 7.00% 2016 (Preref. 2004) 1,000 1,157
New York City Industrial Dev. Agcy:
Rev. Bonds (Brooklyn Navy Yard Cogeneration Partners, LP Project),
Series 1997 AMT, 5.65% 2028
Solid Waste Disposal Rev. Bonds (1995 Visy Paper (NY), Inc. Project) AMT, 7.55% 2005 9,000 9,763
The Port Auth. of New York and New Jersey, Special Project Bonds,
Series 4 AMT, KIAC Partners Project:
7.00% 2007 5,000 5,651
6.75% 2011 4,000 4,420
North Carolina - 1.67%
Eastern Municipal Power Agcy., Power System Rev. Bonds, Refunding Series 1993B:
7.25% 2007 2,500 2,895
7.00% 2008 1,000 1,150
6.125% 2009 1,450 1,577
5.875% 2013 1,000 1,033
6.00% 2026 1,000 1,073
City of Charlotte, Charlotte/Douglas International Airport,
Special Facility Ref. Rev. Bonds,
Series 1998 (US Airways, Inc. Project), 5.60% 2027 3,000 3,002
North Dakota - 0.22%
Housing Finance Agcy. Rev. Bonds, 1998 Series A AMT, 5.25% 2018 1,000 1,002
Ohio - 0.26%
The Student Loan Funding Corp., Cincinnati, Student Loan Rev.
Ref. Bonds, Series 1991A AMT, 7.20% 2003 1,135 1,210
Water Dev. Auth., Solid Waste Disposal Rev. Bonds (Bay Shore
Power Project), Series 1998 A AMT, 5.875% 2020 4,000 4,051
Pennsylvania - 7.17%
Econ. Dev. Fin. Auth., Resource Recovery Rev. Bonds
(Colver Project), Series 1994 D AMT:
7.05% 2010 2,000 2,225
7.15% 2018 5,500 6,148
Housing Finance Agcy., Rev. Bonds:
Rental Housing Refunding Bonds, Issue 1993, 5.80% 2018 3,500 3,660
Single Housing Family Mortgage, Series 1997-58A AMT, 5.85% 2017 2,500 2,609
Blair County Hospital Auth., Hospital Rev. Bonds (Altoona Hospital Project),
1998 Series A, AMBAC Insured, 5.50% 2016(2) 1,500 1,570
Lehigh County General Purpose Auth., College Rev. and Refunding Bonds,
Series A and B of 1996 (Cedar Crest College), 6.65% 2017 1,750 1,901
Hospitals and Higher Education Fac. Auth. of Philadelphia, Hospital Rev. Bonds
(Temple University Hospital), Series of 1997, 5.70% 2009 1,000 1,053
Hospital Auth. of Philadelphia, Hospital Rev. Bonds (Temple University Hospital),
Series of 1983, 6.625% 2023 1,000 1,073
Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral Village Project), Series of 1998:
5.30% 2007 1,145 1,165
5.50% 2010 1,000 1,018
Scranton-Lachawanna Health and Welfare Auth., City of Scranton, Lackawanna
County, Hospital Rev. Bonds (Moses Taylor Hospital Project), Series of 1997:
5.75% 2006 1,585 1,662
5.80% 2007 1,680 1,769
5.90% 2008 1,730 1,837
6.00% 2009 940 1,004
6.10% 2011 2,005 2,101
6.20% 2017 2,305 2,413
Rhode Island - 0.00%
Housing and Mortgage Finance Corp., Homeownership Opportunity Bonds,
Series 9-B-1 AMT, 5.55% 2013 2,000 2,062
South Carolina - 0.00%
York County, Pollution Control Fac. Rev. Bonds (Bowater Inc. Project),
Series 1990 AMT, 7.625% 2006 2,300 2,714
South Dakota - 0.70%
Student Loan Finance Corp., Rev. Bonds, Series A AMT, 6.45% 2006 (Preref. 2001) 3,000 3,244
Tennessee - 0.47%
The Industrial Dev. Board of the County of McMinn, Solid Waste Recycling Fac. Rev.
Bonds, Series 1992 (Calhoun Newsprint Co. Project - Bowater), 7.625% 2016 2,000 2,178
Memphis-Shelby County Airport Auth., Special Fac. Rev. Bonds
(Federal Express Corp.), Series 1984, 7.875% 2009 2,500 2,792
Texas - 2.53%
Alliance Airport Auth., Inc., Special Fac. Rev. Bonds (American Airlines,
Inc. Project), Series 1990 AMT, 7.00% 2011 1,500 1,763
Industrial Dev. Corp. of Port of Corpus Christi, Rev. Ref. Bonds
(Valero Refining and Marketing Co. Project), Series 1997D AMT, 5.125% 2009 1,250 1,244
Hidalgo County Health Services Corp., Hospital Rev. Bonds,
(Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 2,365 2,639
6.750% 2016 1,000 1,095
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6.125% 2023 4,740 4,958
Utah - 0.00%
Housing Finance Agcy., Single Family Mortgage Bonds, 1997 Series
G-2 Class III AMT, 5.60% 2010 1,100 1,129
Vermont - 0.00%
Housing Finance Agcy., Single Family Housing Bonds,
Series 9 AMT, MBIA Insured, 5.70% 2012 1,500 1,560
Virginia - 0.45%
College Building Auth., Educational Fac. Rev. Bonds (Marymount
University Project), Series of 1992, 7.00% 2022 1,000 1,084
Dulles Town Center Community Dev. Auth. (Loudoun County), Special Assessment
Bonds (Dulles Town Center Project), Series 1998, 6.25% 2026 1,000 1,012
Pocahontas Parkway Association, Route 895 Connector Toll Road Rev.
Bonds, Senior Current Interest Bonds, Series 1998A, 5.25% 2008 2,100 2,139
Virgin Islands - 0.00%
Public Finance Auth., Rev. Ref. Bonds (Virgin Islands Matching Fund Loan Notes),
Series 1998 D (Subordinate Lien/Working Capital), 6.00% 2007 1,750 1,833
West Virginia - 0.00%
City of South Charleston, Pollution Control Rev. Ref. Bonds (Union Carbide Corp. Project),
Series 1985, 7.625% 2005 1,000 1,169
Wisconsin - 0.66%
Housing and Econ. Dev. Auth., Housing Rev. Bonds, Series B AMT, 5.30% 2006 3,000 3,079
City of Oconto Falls, Dev. Rev. Bonds, Series 1997 AMT (Oconto Falls
Tissue, Inc. Project), 7.75% 2022 9,000 9,438
Wyoming - 0.00%
Sweetwater County, Solid Waste Disposal Rev. Bonds (FMC Corp. Project),
Series 1994A AMT, 7.00% 2024 2,000 2,226
---------
434,062
Tax-Exempt Securities Maturing in ---------
One Year or Less - 4.87%
State of Colorado, General Fund Tax and Rev. Anticipation Notes, Series 1998A, 4.00% 6/25/99 1,000 1,004
State of Iowa, School Cash Anticipation Program, Iowa School Corporations,
Warrant Certificates, 1998-99 Series A, FSA Insured, 4.50% 6/25/99 1,000 1,007
State of Kentucky. Asset/Liability Commission, General Fund Tax and Rev.
Anticipation Notes, 1998 Series A, 4.50% 6/25/99 2,050 2,066
Los Angeles County Metropolitan Transportation Auth., Proposition C Sales Tax Rev. Ref.
Bonds, Second Senior Bonds, Series 1998-A, AMBAC Insured, 4.50% 6/30/99 4,250 4,284
State of New York, Long Island Power Auth., Electric System Subordinated
Rev. Bonds, Series 6, 3.70% 2033(3) 2,000 2,000
State of North Carolina, Raleigh-Durham Airport Auth., Special Facility Ref. Rev. Bonds
(American Airlines, Inc. Project), Series 1995 B, 3.70% 2015(3) 1,500 1,500
Power County, Idaho, Pollution Control Revenue Bonds (FMR Corp. Project), 3.70% 2010(3) 2,100 2,100
State of Texas, Tax and Rev. Anticipation Notes, Series A, 4.75% 8/31/98 4,550 4,554
State of Wisconsin, Operating Notes, 4.50% 6/15/99 4,000 4,030
---------
22,545
---------
TOTAL TAX-EXEMPT SECURITIES (cost: $432,988,000) 456,607
Excess of cash , prepaids and recievables over payables 6,436
---------
NET ASSETS 463,043
=========
(1)Purchased in private placement transaction; resale may be limited to qualified
institutional buyers; resale to the public may require registration.
(2)Represents a when-issued security.
(3)Coupon rate changes periodically.
See Notes to Financial Statements
KEY TO ABBREVIATIONS
Agcy. = Agency
Auth. = Authority
Cert. of Part. = Certificates of Participation
Co. = Company
Dept. = Department
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facilities
Fin. = Financing
G.O. = General Obligation
Preref. = Prerefunded
Ref. = Revenue
Rev. Ref. = Revenue Refunding
</TABLE>
<TABLE>
<S> <C> <C>
American High-Income Municipal Bond Fund
Financial Statements
Statement of Assets and Liabilities
at July 31, 1998 (dollars in thousands)
Assets:
Tax-exempt securities
(cost: $432,988) $457,616
Cash 40
Prepaid organization expense 3
Receivables for --
Sales of investments $1,712
Sales of fund's shares 948
Accrued interest 6,980 9,640
--------- ---------
467,299
Liabilities:
Payables for --
Purchases of investments 1,572
Repurchases of fund's shares 666
Dividends payable 715
Management services 152
Accrued expenses 142 3,247
--------- ---------
Net Assets at July 31, 1998 --
Equivalent to $16.12 per share on 28,790,149
shares of $0.01 par value capital stock
outstanding (authorized capital stock -- $464,052
200,000,000 shares) ========
Statement of Operations
for the year ended July 31, 1998
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $22,915
Expenses:
Management services fee $1,544
Distribution expenses 1,144
Transfer agent fee 121
Reports to shareholders 29
Registration statement and prospectus 152
Postage, stationery and supplies 20
Director's fees 17
Auditing and legal fees 34
Custodian fee 3
Taxes other than federal income tax 8
Organization expense 2 3,074
Other expenses --------- ---------
Net investment income 19,841
---------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 2,244
Net unrealized appreciation
on investments:
Beginning of year 21,225
End of year 24,628
---------
Net increase in unrealized appreciation
on investments 3,403
Net realized gain and unrealized ---------
appreciation on investments 5,647
Net Increase in Net Assets Resulting ---------
from Operations $25,488
=======
Statement of Changes in Net Assets
(dollars in thousands)
Year ended July 31
1998 1997
Operations: --------- ---------
Net investment income $19,841 $14,412
Net realized gain on investments 2,244 835
Net unrealized appreciation
on investments 3,403 13,651
--------- ---------
Net increase in net assets
resulting from operations 25,488 28,898
--------- ---------
Dividends and Distributions Paid to
Shareholders:
Dividends Paid from net
investment income (19,820) (14,416)
Distributions from net realized gain on
investments (881) (2,176)
--------- ---------
Total dividends and distributions (20,701) (16,592)
--------- ---------
Capital Share Transactions:
Proceeds from shares sold: 195,199 121,500
12,159,660 and 7,873,913 shares, respectively
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments:
833,529 and 720,458 shares, respectively 13,370 11,126
Cost of shares repurchased: 4,072,064 and
2,986,900 shares, respectively (65,298) (46,078)
--------- ---------
Net increase in net assets
resulting from capital share
transactions 143,271 86,548
--------- ---------
Total Increase in Net Assets 148,058 98,854
Net Assets:
Beginning of year 315,994 217,140
--------- ---------
End of year $464,052 $315,994
========= =========
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
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 are valued at prices obtained from a pricing service,
when such prices are available; however, in circumstances where the investment
adviser deems it appropriate to do so, such securities will be valued at the
mean quoted bid and asked prices or at prices for securities of comparable
maturity, quality and type. Securities with original maturities of one year or
less having 60 days or less to maturity are amortized to maturity based on
their cost if acquired within 60 days of maturity or, if already held on the
60th day, based on the value determined on the 61st day. Securities and assets
for which representative market quotations are not readily available are valued
at fair value as determined in good faith by a committee appointed by the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. 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. 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
that 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 that the fund liquidates prior
to the end of the five-year period, CRMC shall bear any unamortized prepaid
organization expenses.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of July 31, 1998, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $24,628,000, of which $24,720,000
related to appreciated securities and $92,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended July 31, 1998. The cost of portfolio
securities for book and federal income tax purposes was $432,988,000 at July
31, 1998.
3. The fee of $1,544,000 for management services was incurred 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 that 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 limitations 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 year ended July 31, 1998,
distribution expenses under the Plan were limited to $1,144,000, representing
0.30% of average net assets. Had no limitation been in effect, the fund would
have paid $1,353,000 in distribution expenses under the Plan. As of July 31,
1998, accrued and unpaid distribution expenses were $116,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $121,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $450,000 (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 July 31, 1998,
aggregate amounts deferred and earnings thereon were $24,000.
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 July 31, 1998, accumulated undistributed net realized gain on
investments was $2,103,000 and additional paid-in capital was $408,452,000.
The fund made purchases and sales of investment securities of $194,513,000
and $59,854,000, respectively, during the year ended January 31, 1998.
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 $3,000 was paid by these credits rather than in cash.
<TABLE>
<S> <C> <C> <C> <C>
Per-Share Data and Ratios
Period
Year ended July 31 September 26
1994 (1) to
July 31,
1998 1997 1996 1995
Net Asset Value, Beginning
of Period $15.90 $15.23 $15.14 $14.29
------- ------- ------- -------
Income From Investment
Operations:
Net investment income .84 .87 .88 .76
Net realized and
unrealized gain
on investments .26 .80 .37 .85
------- ------- ------- -------
Total income from investment operations 1.10 1.67 1.25 1.61
------- ------- ------- -------
Less Distributions:
Dividends from net investment income (.84) (.86) (.88) (.76)
Distributions from net realized gains (.04) (.14) (.28) --
------- ------- ------- -------
Total distributions (.88) (1.00) (1.16) (.76)
------- ------- ------- -------
Net Asset Value, End of Year $16.12 $15.90 $15.23 $15.14
======== ======== ======== ========
Total Return (2) 7.05% 11.36% 8.48% 11.62% (3)
Ratios/Supplemental Data:
Net assets, end of period (in millions) $464 $316 $217 $157
Ratio of expenses to average net assets before fee waiver .79% .87% .88% .94% (3)
Ratio of expenses to average net assets after fee waiver .79% .87% .86% .62% (3)
Ratio of net income to average net assets 5.19% 5.51% 5.74% 5.66% (3)
Portfolio turnover rate 16.38% 15.31% 35.22% 46.42% (3)
(1) Commencement of operations.
(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.
</TABLE>
To the Board of Directors and Shareholders of American High-Income Municipal
Bond Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of American High-Income Municipal
Bond Fund, Inc.(the "Fund") at July 31, 1998, the results of its operations,
the changes in its net assets and the per-share data and ratios for the years
indicated, in conformity with generally accepted accounting principles. These
financial statements and per-share data and ratios (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at July 31, 1998 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
August 28, 1998
Tax Information (unaudited)
During the fiscal year ended July 31, 1998, the fund paid 83.5 cents per share
of exempt-interest distributions within the meaning of Section 852(b)(5)(A) of
the Internal Revenue Code and a long-term capital gain of 3.4 cents per share,
of which 2.2 cents were 28% gains.
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For tax return preparation purposes, please refer to the calendar
year-end information you receive from the fund's transfer agent.
<PAGE>
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President
and Chief Executive Officer,
The Mission Group; former President,
Southern California Edison Company
DON R. CONLAN
South Pasadena, California
President (retired),
The Capital Group Companies, Inc.
DIANE C. CREEL
Long Beach, California
President and Chief Executive Officer,
The Earth Technology Corporation
(international consulting engineering)
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER
Marina del Rey, California
President, Fuller Consulting
(management consultants)
ABNER D. GOLDSTINE
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Executive Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
San Marino, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and
Chief Executive Officer,
AECOM Technology Corporation
(architectural engineering)
OTHER OFFICERS
NEIL L. LANGBERG
Los Angeles, California
Senior Vice President of the fund
Vice President -
Investment Management Group,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL
Brea, California
Vice President of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
DAVID A. HOAG
Los Angeles, California
Vice President of the fund
Vice President,
Capital Research and Management Company
MARK R. MACDONALD
Los Angeles, California
Vice President of the fund
Vice President -
Investment Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR.
Brea, California
Treasurer of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
TODD L. MILLER
Brea, California
Assistant Treasurer of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER, CAPITAL
RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)
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
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, California 90071-2889
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE
WORLD WIDE WEB.
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 September 30, 1998, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA AGD/L/3909
Lit. No. AHIM-011-0998
45006/15006
