[The American Funds Group(r)]
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
OUR FIRST FIVE YEARS:
RESEARCH ADDING VALUE
1999 ANNUAL REPORT
FOR THE YEAR ENDED JULY 31
[cover illustration: abstract depicting various business settings]
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 29 mutual funds in The
American Funds Group,(r) the nation's third-largest mutual fund family. For
more than six decades, Capital Research and Management Company, the American
Funds adviser, has invested with a long-term focus based on thorough research
and attention to risk.
ABOUT OUR COVER: American High-Income Municipal Bond Fund's investment
professionals rely on intensive research to uncover bonds that offer a high
current yield and the opportunity for capital appreciation.
RESULTS OF A $10,000 INVESTMENT IN AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
(For the period September 26, 1994, to July 31, 1999, for the fiscal quarters
over the fund's lifetime)
[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 /1/ Average /3/
charge
deducted)/2/
9/26/94 $10,000 $9,525 $10,000 $10,000
10/31/94 9,886 9,418 9,822 9,864
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
10/31/98 14,645 13,952 13,973 13,772
1/31/99 14,758 14,059 14,224 13,944
4/30/99 14,827 14,125 14,217 13,970
7/31/99 14,669 13,975 13,982 13,748
</TABLE>
[end chart]
$14,669 The fund at net asset value (without any sales charge)
$13,982/1/ Lehman Brothers Municipal Bond Index
$13,975/2/ The fund at maximum offering price (with 4.75% sales charge
deducted)
$13,748/3/ Lipper High-Yield Municipal Debt Fund Average
/1/The index is unmanaged and does not reflect sales charges, commissions or
expenses.
/2/Results reflect payment of the 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.
/3/Calculated by Lipper, Inc. The average does not reflect sales charges.
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 -
have updated all computer systems to process date-related information properly
following the turn of the century. Other preparations continue, including
external monitoring and contingency planning. If you'd like more detailed
information, call Shareholder Services at 800/421-0180, ext. 21, or 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, 1999 (the
most recent calendar quarter), assuming payment of the 4.75% maximum sales
charge at the beginning of the stated periods - Since inception on September
26, 1994: +39.59%, or +7.26% a year; 12 months: -2.93%. Sales charges are lower
for accounts of $25,000 or more.
The fund's 30-day yield as of August 31, 1999, calculated in accordance with
the Securities and Exchange Commission formula, was 4.77%. The fund's
distribution rate as of that date was 5.01%. 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.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. 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:
FIVE YEARS OF STEADY GROWTH AND TAX-FREE INCOME.
American High-Income Municipal Bond Fund passes a significant milestone this
month - its fifth anniversary. During those five years the fund has grown
steadily and provided shareholders with a healthy stream of tax-free income.
Shareholders who reinvested their distributions, as most do, have earned an
average annual compound return of 8.2% over the nearly five-year period,
outpacing the 6.8% average return of high-yield municipal bond funds, according
to Lipper, Inc. High-grade municipal bonds, as tracked by the unmanaged Lehman
Brothers Municipal Bond Index, have had an average annual compound return of
7.2%.
During the 12 months ended July 31, however, rising interest rates hurt the
high-yield municipal bond market. American High-Income Municipal Bond Fund
shareholders who reinvested their distributions saw the value of their holdings
increase just 1.6%. That was slightly below the similarly small 1.9% increase
of the Lipper average and the Lehman Brothers index, which rose 2.9% during the
year.
Shareholders received monthly tax-free dividends totaling 81.5 cents a share as
well as a 7.9 cents a share capital gain distribution in December. Those who
reinvested their distributions earned a tax-free income return of 5.2%,
equivalent to an 8.6% taxable income return for those in the 39.6% federal tax
bracket. Shareholders who took distributions in cash had an income return of
5.1%, equivalent to a taxable income return of 8.4%, and saw the value of their
holdings decline 3.4%. The fund expects to pay a capital gain distribution of
about 3 cents a share this December.
THE BOND MARKET SLIPS
The fund's 1999 fiscal year began just nine days after a major
Philadelphia-area hospital chain, Allegheny Health, Education and Research
Foundation - a sizable issuer of municipal bonds - declared bankruptcy, sending
a chill through the high-yield municipal bond market. Less than a month later,
the Russian government defaulted on debts and devalued the ruble. Most bond
markets around the world, even those not related to international lending,
suffered as investors demanded higher returns to offset a perceived increase in
risk.
As the fiscal year progressed, concerns over the problems in Russia and Asia
subsided and investors slowly regained confidence in many segments of the bond
market and bid prices higher. The hospital and health care sectors were held
back by the Allegheny bankruptcy and by changes in the federal budget that
reduced Medicare payments to hospitals.
American High-Income Municipal Bond Fund did not own any bonds issued by
Allegheny but it does have holdings in other hospitals and health care
facilities. Although our health care holdings trailed the market this year, we
believe they continue to offer shareholders good long-term value.
A VOLATILE MARKET
The troubles surrounding Allegheny serve as a reminder that the high-yield
municipal bond market can be volatile and your fund's holdings can lose value.
During this past fiscal year, for example, one resource recovery bond in the
fund's portfolio lost almost half its value following a near-bankruptcy. The
fund's investment professionals believe the situation has stabilized and that
recovery is a distinct possibility.
The fund was helped during the year by rising real estate prices. Bonds issued
for basic infrastructure projects rose in price as the real estate value
underlying the projects escalated. In any case, the impact on the overall
portfolio was relatively modest.
During its first five years, the investment professionals of American
High-Income Municipal Bond Fund have relied on extensive research to uncover
bonds that offer shareholders the potential for good long-term results. This
approach has served the fund well. Over its lifetime through July 31, 1999, it
ranks first of 30 high-yield municipal debt funds tracked by Lipper. For three
years it ranks 14th of 39, and for the year just ended it ranks 36th of 53.
Lipper rankings do not reflect the effect of sales charges. Beginning on page
2, we invite you to read more about how research can uncover value in a variety
of bonds.
We look forward to reporting to you again in six months.
Cordially,
/s/Paul G. Haaga, Jr. /s/Mark R. Macdonald
Paul G. Haaga, Jr. Mark R. Macdonald
Chairman of the Board President
September 15, 1999
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
OUR FIRST FIVE YEARS: RESEARCH ADDING VALUE
[illustrations: various inset views of abstract on cover]
Capital Research and Management Company launched American High-Income Municipal
Bond Fund in 1994 with a simple premise: that thorough research could uncover
bonds offering shareholders a steady stream of high tax-free income as well as
an opportunity for capital appreciation. To mark the fund's fifth anniversary
on September 26, this year's report looks back at how that premise has been
tested in a variety of economic conditions.
By almost any measure, American High-Income Municipal Bond Fund has an enviable
track record. It has earned an 8.2% average annualized rate of return and
handily outpaced the 6.8% return of the average high-yield municipal bond fund
tracked by Lipper. The fund has achieved these results by remaining true to the
notion that research combined with a long-term perspective will reward
shareholders.
In the next few pages we'll show how some of American High-Income Municipal
Bond Fund's holdings have contributed to its strong lifetime record. We'll look
at a bond that initially lost ground before rebounding, one that has provided
a steady high yield and one that quickly gained value soon after its purchase.
Not all the fund's investments have been good ones, of course. We'll also look
at a bond that lost ground after we bought it and did not recover, and how
research helped the fund's investment professionals determine if the lower
price was an opportunity to buy more or a warning to sell.
OPPORTUNITIES
FINDING OPPORTUNITIES WHEN PRICES FALL
In 1994, the bonds to finance Denver's new International Airport were in
trouble. As construction neared completion and opening day approached, the
baggage delivery system failed, generating nationwide publicity. In another
blow, Continental Airlines, one of the new airport's two biggest tenants,
decided not to make Denver a hub, leaving United Air Lines as the only major
carrier using the new airport as a central part of its operations.
"After Continental decided not to open there, a lot of people thought United
would leave too," says David Hoag, an American High-Income Municipal Bond Fund
portfolio counselor and research analyst. "I went and talked to management at
United. They were very pleased that Continental had left because it meant less
competition."
"Some people also thought that if the new baggage delivery system didn't get
fixed, the airport wouldn't open," adds Hoag. "But there were plenty of
alternatives for handling the baggage. The thing that most people seemed to
overlook was that the Federal Aviation Administration had already announced it
was going to shut down Denver's other airport because it wasn't safe. Not
opening the new one wasn't a viable alternative."
Amid all the bad publicity, the bonds' price declined sharply. Sensing an
opportunity, the fund added more to its portfolio. The investment proved
rewarding. After the airport opened, investors' confidence grew and the bonds
quickly gained value.
STEADY INCOME
SEEKING STEADY INCOME
A steady stream of tax-exempt income is probably the main goal of most
shareholders in American High-Income Municipal Bond Fund. Since its inception,
the fund has helped them achieve that goal, providing an average income return
of 5.6% for shareholders who reinvest their dividends (equivalent to a taxable
income of 9.3% for those in the 39.6% tax bracket).
Identifying bonds that will deliver above-average yield with acceptable risk
requires thorough research. The bonds issued to build Fairview, a continuing
care facility near Chicago, are a good example.
"We looked at the bonds when they were first issued but we weren't comfortable
that we understood the project well enough to invest," says Mark Macdonald,
president of American High-Income Municipal Bond Fund and one of its four
portfolio counselors. At that time the project, combining a skilled nursing
facility with more than 250 apartments, or "independent living units," was
still on the drawing board. After it was finished, Macdonald visited the
facility and inspected the building. He also studied the competition and
compared their fees to what Fairview would charge. He learned that Fairview's
monthly fees would be among the lowest in the area.
Because most residents must sell their homes to move into Fairview, Macdonald
also checked the local real estate market and watched the facility's occupancy
rate. After he finished his research, the fund added the bonds to its
portfolio.
"The income has been very steady," Macdonald says. The bonds are yielding
between 6.5% and 7.5%, depending on the issue. "That's what we're trying to do
- - provide good, steady tax-exempt income."
Capital Research still monitors the bonds and periodically visits the site.
"You want to make sure the buildings are being maintained and there haven't
been any major changes in the area," says Macdonald.
PROVEN VALUE
TAX-EXEMPT DIVIDENDS
GAINING VALUE QUICKLY
It's hard to believe today that in 1976 the city of New York was teetering on
the brink of financial collapse. Eighteen years later, when American
High-Income Municipal Bond Fund was launched, the city's brush with bankruptcy
was still in the minds of many bond buyers. New York's general obligation bonds
- - securities backed by its ability to generate taxes - were typically priced
cheaper than similar bonds issued by other big cities.
When Brenda Ellerin, an American High-Income Municipal Bond Fund portfolio
counselor and analyst, began researching the New York bonds, she looked below
the surface and saw something different. "Both the U.S. and the New York
economy were doing well. Wall Street, which is an important industry in the
city, was thriving too," she says.
As she further studied the city's finances and talked to its budget officers,
Ellerin was impressed with its ability to pay bills. "The budgets had been in
surplus for more than 10 years. If it ever looked like they were going to be
over-budget, the budget officers always cut spending," she says.
Ellerin got to know the city's investment officers and was given all the
information she requested. "New York is one of the best cities in the country
when it comes to fully disclosing all the information you need," she says.
American High-Income Municipal Bond Fund added New York's general obligation
bonds to its portfolio in the early days of the fund. Soon after the first
purchase, the bonds began to gain value as interest rates declined and other
investors began to appreciate the city's fiscal health.
[Begin sidebar]
TAX-FREE YIELDS VS. TAXABLE YIELDS
To use the table below, find your estimated 1999 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 4.98% tax-free
distribution rate in July.
For example, a couple with a taxable income of $160,000 faces a federal tax
rate of 36%. In this bracket, the fund's 4.98% distribution rate is equivalent
to a 7.78% return on a taxable issue. Investors in the highest tax bracket
(39.6%) would need a taxable distribution rate of 8.25% to match the fund's
distribution rate.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
If your taxable income is$ As of 7/31/99 the
$then your fund's tax-exempt
federal distribution rate of
Single Joint tax rate* is$ 4.98% is equivalent
to a taxable rate of$
$0 - 25,750 $0 - 43,050 15.0% 5.86%
25,751 - 62,450 43,051 - 104,050 28.0 6.92
62,451 - 130,250 104,051 - 158,550 31.0 7.22
130,251 - 283,150 158,551 - 283,150 36.0 7.78
Over 283,150 Over 283,150 39.6 8.25
</TABLE>
*Based on 1999 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.
[End sidebar]
GENEROUS EARNINGS
KNOWING WHEN TO SELL
Not every purchase is as successful as those described above. That's why
research is especially important when prices begin to slip. A good example is
the bonds issued in 1995 to buy a power plant in Mobile, Alabama. The plant
sold steam and electricity to paper mills that produced paper, pulp and tissue.
The three mills were major production facilities for Scott Paper Co. and S.D.
Warren. "These were very important assets for Scott, which also owned a large
stand of trees upriver," Hoag says. Research showed that even if one of the two
smaller mills closed, electricity and steam sales to the largest mill would
generate enough income to cover the bonds' interest payments
But Scott was bought by Kimberly-Clark, which announced it would shut the pulp
mill, the largest in the complex, and sell its associated timberlands. Some
investors, believing the power plant's owner would have to find a way to keep
the facility operating, held on to their bonds. "We had really studied the
details of the bond offering and knew the owners would lose very little of
their own money if they closed it. They didn't have much financial incentive to
keep the plant running," Hoag says.
The day Kimberly-Clark announced it would close the mill, the fund sold its
bonds in the power plant at a 3% loss. Although the loss was disappointing,
thorough research had helped minimize the damage. Eventually the bonds lost
more than 80% of their value. "You have to know what to do with the information
you find. You have to know the specifications of each issue," Hoag says.
At other times, thorough research helps the fund completely avoid pitfalls. In
1994, for example, more than $1 billion of bonds were issued to finance several
independent plants in different parts of the country that recycle paper in a
process called "de-inking." At the time, the bonds offered interest rates 50%
to 100% higher than other high-yield municipal securities. But American
High-Income Municipal Bond Fund's analysts saw several potential problems and
warning signs. If the price of scrap paper went up or the price of "de-inked"
paper went down, the bonds could lose value. The paper wasn't high quality, and
although supply was growing, demand wasn't keeping pace. Additionally, the
analysts noticed, traditional paper companies were showing little interest in
the new plants.
With the projects facing so much potential trouble, analysts for American
High-Income Municipal Bond Fund decided not to invest. A few years after the
bonds were issued, the paper market turned down and the bonds lost value. Today
they're worth a fraction of their original valuation.
A LONG-TERM PERSPECTIVE
Since its inception five years ago, American High-Income Municipal Bond Fund
has provided investors with solid, tax-free income by relying on thorough
research to uncover good values and avoid pitfalls. As the fund moves into the
second half of its first decade, we will continue to rely on research to
uncover bonds that offer shareholders a steady stream of high tax-free income
and an opportunity for capital gain.
American High-Income Municipal Bond Fund
Investment Portfolio, July 31, 1999
[begin pie chart]
Quality Ratings
AAA 9.37%
AA 5.21%
A 7.06%
BBB 34.97%
BB 22.38%
B 14.88%
Cash & Equivalents 6.13%
[end chart}
<TABLE>
American High-Income Municipal Bond Fund
Investment Portfolio, July 31, 1999
<S> <C> <C>
PrincipalMarket
Amount Value
(000) (000)
- -------------------------------------------- ----------------
Tax-Exempt Securities Maturing in More Than One Year - 93.87%
Alaska - 0.35%
Industrial Dev. and Export Auth., Power Rev. Bonds, $1,850 $1,950
First Series AMT (Snettisham Hydroelectric Project),
AMBAC Insured, 6.00% 2012
California - 12.37%
Pollution Control Fncg. Auth., Solid Waste Disposal Ref.
Rev. Bonds:
CanFibre of Riverside Project, Series 1997A AMT, 9.00% 2019 1,000 1,043
USA Waste Services, Inc. Project, Series 1998A AMT, 6,000 5,948
5.10% 2018 (Put 2008)
Rural Home Mortgage Fin, Auth., Single Family Mortgage 560 614
Rev. Bonds (Mortgage-Backed Securities Program),
1995 Series B AMT, 7.75% 2026
Statewide Communities Dev. Auth., Apartment Dev.
Rev. Ref. Bonds (Irvine Apartment Communities, LP):
Series 1998A-1 AMT, 5.05% 2025 (Put 2008) 11,000 10,687
Series 1998A-3, 5.10% 2025 (Put 2010) 3,000 2,913
Alameda Public Fncg. Auth., 1999 Rev Bonds
(1997 Rev. Bond Refinancing):
5.10% 2009 1,000 975
5.35% 2012 1,000 970
City of Antioch, Public Fncg. Auth., 1998 Reassessment 1,455 1,419
Rev. Bonds, Subordinated Series B, AMBAC Insured, 5.80% 2011
Bonita Canyon Public Facs. Fncg. Auth., Community Facs. 1,000 907
Dist. No. 98-1, Special Tax
Bonds, Series 1998, 5.375% 2028
Central Valley Fncg. Auth., Cogeneration Project Rev. Bonds 1,400 1,519
(Carson Ice-Gen Project), Series 1993, 6.10% 2013 (Preref. 2003)
City of Chino Hills, Community Facs. Dist. No. 9 5,060 5,074
(Rincon Village Area), Special Tax Bonds, Series 1998, 6.45% 2023
City of Irvine, Assessment dist. No. 94-13 (Oak Creek),
Limited Obligation Improvement Bonds:
Group One, 5.50% 2022 1,000 946
Group Two, 5.875% 2017 1,000 992
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 1,039
6.125% 2015 1,000 1,032
6.125% 2023 4,000 4,090
County of Los Angeles, Capital Asset Leasing Corp., 3,060 3,180
Cert. of Part. (Marina del Rey), Series A, 6.25% 2003
City of Los Angeles:
Community Redev. Agcy., Central Business Dist. Redev. 2,000 2,032
Project, Tax Allocation Ref. Bonds, Series I, 5.00% 2001
Multifamily Housing Rev. Bonds (GNMA Collateralized - 500 517
Ridgecroft Apartments Project), Series 1997E AMT, 6.00% 2017
City of Oxnard, Assessment Dist. No. 97-1-R (Pacific 1,475 1,501
Commerce Center), Limited Obligation Ref. Bonds, 5.70% 2006
Pleasanton Joint Powers Fncg. Auth., Subordinate 3,435 3,571
Reassessment Rev. Bonds, 1993 Series B, 6.125% 2002
City of Poway, Community Facs. Dist. No. 88-1 (Parkway 2,000 2,148
Business Centre), Special Tax Ref. Bonds, Series 1998,
6.75% 2015
City of Roseville, North Central Roseville Community 1,015 1,003
Facs. Dist. No. 1, Special Tax Ref. Bonds, Series 1999,
5.40% 2008
County of Sacramento, Laguna Creek Ranch/Elliott
Ranch Community Facs. Dist. No. 1, Improvement Area
No. 2 Special Tax Ref. Bonds (Elliott Ranch):
6.125% 2014 250 256
6.30% 2021 500 511
County of San Diego, Reassessment Dist. No. 97-1
(4-S Ranch), Limited Obligation Improvement Bonds, 6.00% 2009
6.00% 2009 1,000 1,030
6.25% 2012 1,000 1,030
Redev. Agcy. of the City and County of San Francisco, 1,000 1,126
Residential Fac. Rev. Bonds (Coventry Park Project),
Series 1996A AMT, 8.50% 2026
South Tahoe Joint Powers Fin. Auth., Ref. Rev. Bonds, 1,000 1,037
(South Tahoe Redev. Project Area No. 1), 1995 Series B, 6.25% 2020
Stanislaus Waste-To-Energy Fin. Agcy., Solid 1,470 1,513
Waste Fac. Ref. Rev. Certificates (Ogden Martin Systems
of Stanislaus, Inc. Project), Series 1990, 7.625% 2010
City of Stockton, Mello-Roos Rev. Bonds, Community Facs.
Dist. No. 90-2B (Brookside Estates), Series 1997A:
5.40% 2004 500 505
5.55% 2006 1,300 1,313
6.20% 2015 1,300 1,323
Community Facs. Dist. No. 88-12 of the City of Temecula
(Ynez Corridor), Special Tax Ref. Bonds, 1998 Series A:
5.35% 2009 940 928
5.40% 2010 860 848
5.50% 2012 1,100 1,082
City of West Sacramento, Limited Obligation Ref. Improvement
Bonds, Reassessment Dist. of 1998:
5.00% 2005 1,000 979
5.10% 2006 1,250 1,224
5.10% 2007 1,000 973
Colorado - 3.38%
Housing and Fin. Auth., Single Family Program Senior Bonds:
1995 Series A AMT, 8.00% 2025 850 903
1995 Series B AMT, 7.90% 2025 600 649
1997 Series B AMT, 7.00% 2026 1,000 1,095
1998 Series B-3, 6.55% 2025 1,575 1,729
Student Obligation Bond Auth., Student Loan Asset-Backed 1,000 1,037
Bonds, Senior Subordinate 1995 Series II-B AMT, 6.20% 2008
Arapahoe County, Capital Improvement Trust Fund Highway
Rev. Bonds (E-470 Project):
6.90% 2015 (Preref. 2005) 1,250 1,439
6.95% 2020 (Preref. 2005) 3,000 3,462
City and County of Denver, Airport System Rev. Bonds, AMT:
Series 1991D 7.75% 2013 1,000 1,206
Series 1992C:
6.75% 2013 885 947
6.75% 2013 (Preref. 2002) 115 126
Series 1994A:
7.50% 2023 415 463
7.50% 2023 (Preref. 2004) 85 98
Eaglebend Dowd Affordable Housing Corp., Multifamily
Housing Project Rev. Bonds, Series 1998A:
6.53% 2024 1,665 1,668
6.53% 2029 1,320 1,316
6.63% 2039 2,950 2,959
Connecticut - 3.51%
Dev. Auth., Pollution Control Rev. Ref. Bonds (The
Connecticut Light and Power Co. Project):
Series 1993A, 5.85% 2028 1,375 1,332
Series 1993B AMT, 5.95% 2028 1,500 1,433
Health and Educational Fac. Auth., Rev. Bonds, University 1,000 1,037
of Hartford Issue, Series D, 6.75% 2012
Mashantucket (Western) Pequot Tribe, Special Rev. Bonds:(1)
1996 Series A:
6.375% 2004 (Escrowed to Maturity) 500 546
6.40% 2011 3,530 3,752
6.40% 2011 (Preref. 2007) 3,470 3,903
1997 Series B:
5.60% 2009 1,000 1,002
5.75% 2018 6,000 5,847
5.75% 2027 1,000 968
Delaware - 0.89%
Econ. Dev. Auth., First Mortgage Rev. Bonds (Peninsula
United Methodist Homes, Inc. Issue), Series 1997A:
6.00% 2008 500 517
6.10% 2010 500 523
6.20% 2015 2,875 2,953
6.30% 2022 1,000 1,031
District of Columbia - 0.29%
Hospital Rev. Ref. Bonds (Washington Hospital Center 1,500 1,616
Issue), Series 1992A, 7.00% 2005 (Preref. 2002)
Florida - 7.30%
Arbor Greene Community Dev. Dist. (City of Tampa, Hillsborough 115 117
County), Special Assessment Rev. Bonds, Series 1996, 7.00% 2003
Broward County, Resource Recovery Rev. Bonds, 950 989
Series 1984, South Project, 7.95% 2008
Championsgate Community Dev. Dist., Capital Improvement 2,850 2,788
Rev. Bonds, Series 1998A,6.25% 2020
The Crossings at Fleming Island Community Dev. Dist. 4,725 5,120
(Clay County), Special Assessment Bonds, Series 1995, 8.25% 2016
The City of Daytona Beach, Capital Improvement Rev. Bond 7,875 7,693
Anicipation Notes (Ocean Walk Project), Series A, 6.875% 2004
Heritage Isles Community Dev. Dist. (Hillsborough County), 3,055 3,043
Special Assessment Rev. Bonds, Series 1998A, 5.75% 2005
Heritage Palms Community Dev. Dist. (Fort Myers), 2,710 2,666
Capital Improvement Rev. Bonds, Series 1998, 5.40% 2003
Heritage Pines Community Dev. Dist. (Pasco County), 975 957
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Lee County Industrial Dev. Auth., Healthcare Facs. Rev. Bonds:
Series 1997A(Cypress Cove at Healthpark Florida, Inc. 2,500 2,548
Project), 6.25% 2017
Series 1999A (Shell Point/Alliance Obligated Group,
Shell Point Village Project):
5.25% 2007 1,000 991
5.50% 2009 1,000 1,002
Meadow Pointe II, Community Dev. Dist. (Pasco County), 2,000 1,957
Capital Improvement Rev. Bonds, Series 1998B, 5.50% 2005
Northern Palm Beach County Improvement Dist.,
Water Control and Improvement Bonds: Unit of Dev. No. 9A,
Series 1996A:
6.80% 2006 885 947
7.30% 2027 1,500 1,629
Unit of Dev. No. 9B, Series 1999, 5.85% 2013 1,000 996
North Springs Improvement Dist. Special Assessment Bonds:
Broward County, Series 1997A, 7.00% 2019 1,000 1,027
Parkland Isles Project, Series 1997B, 6.25% 2005 1,900 1,914
Ocean Highway and Port Auth., Solid Waste/Pollution 1,305 1,332
Control Rev. Ref. Bonds, Series 1996 (Jefferson Smurfit Corp.
(U.S.) Project), 6.50% 2006
City of Orlando, Special Assessment Rev. Bonds (Conroy 1,000 952
Road Interchange Project), Series 1998A, 5.80% 2026
River Ridge Community Dev. Dist. (Lee County), Capital 2,540 2,500
Improvement Rev. Bonds, Series 1998, 5.75% 2008
Idaho - 1.33%
Housing and Fin. Association, Single Family Mortgage
Subordinate Bonds AMT:
1997 Series H-2 AMT, 5.40% 2010 1,530 1,540
1997 Series I-2, 5.55% 2010 940 957
1998 Series A-2, 5.35% 2011 1,265 1,264
1998 Series B-2, 5.20% 2011 1,000 990
1998 Series G, 5.05% 2012 750 742
1999 Series B-2, 5.00% 2013 1,000 980
1999 Series D-3, 5.15% 2013 1,030 1,009
Illinois - 5.70%
Health Facs. Auth., Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997 A:
5.70% 2011 500 508
5.70% 2011 (Preref. 2009) 250 265
5.80% 2016 3,000 3,047
Centegra Health System, Series 1998:
5.50% 2008 1,000 1,010
5.25% 2014 1,500 1,426
Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 1,005
Fairview Obligated General Project:
1992 Series A, 9.50% 2022 (Preref. 2002) 2,750 3,208
1995 Series A:
6.25% 2003 1,245 1,280
7.40% 2023 3,130 3,386
State Dev. Fin. Auth., Solid Waste Disposal Rev. Bonds 2,000 1,946
(Waste Management, Inc. Project), Series 1997, 5.05% 2010
City of Chicago:
General Obligation Bonds (Emergency Telephone system), 1,000 978
Ref. Series 1999, FGIC Insured, 5.25% 2020
Chicago O'Hare International Airport, Special Fac. Rev. Bonds
(United Air Lines, Inc. Project):
Series 1988A AMT, 8.95% 2018 1,440 1,555
Series 1988B, 8.85% 2018 1,085 1,172
Series 1999B AMT, 5.20% 2011 1,000 969
Collateralized Single Family Mortgage Rev. Bonds, Series 1997-B 2,565 2,781
AMT, 6.95% 2028
Skyway Toll Bridge Ref. Rev. Bonds, Series 1994, 6.75% 2017 1,500 1,666
(Preref. 2004)
Village of Robbins, Cook County, Resource Recovery 10,990 5,935
Rev. Bonds (Robbins Resource
Recovery Partners, L.P. Project), Series 1994A AMT, 8.375% 2016
Indiana - 1.69%
State Dev. Fin. Auth. Rev. Ref. Bonds, Exempt Fac.-Inland Steel, 1,000 928
5.75% 2011
City of East Chicago, Pollution Control Rev. Ref. Bonds, 2,000 2,047
Inland Steel Co. Project No. 11, Series 1994, 7.125% 2007
Indianapolis Airport Auth., Special Facs. Rev. Bonds, AMT:
Series 1994 Federal Express Corp. Project, 7.10% 2017 1,000 1,096
Series 1995 A, United Air Lines, Inc., Indianapolis Maintenance 1,500 1,569
Center Project, 6.50% 2031
The Indianapolis Local Public Improvement Bond Bank, 4,500 1,316
Series 1999 E Capital Appreciation Bonds, 0.00% 2021 (2)
City of Sullivan, Pollution Control Rev. Ref. Bonds (Indiana 2,500 2,602
Michigan Power Co. Project), Series C, 5.95% 2009
Kentucky - 2.36%
Econ. Dev. Fin. Auth., Hospital System Ref. and Improvement
Rev. Bonds, Series 1997 (Appalachian Regional Healthcare, Inc.
Project):
5.60% 2008 1,000 976
5.80% 2012 1,000 962
5.85% 2017 4,000 3,819
Kenton County Airport Board, Special Facs. Rev. Bonds
(Delta Air Lines, Inc. Project), 1992 Series A AMT:
7.50% 2012 4,225 4,532
6.125% 2022 3,000 3,033
Louisiana - 2.87%
Health Education Auth., Rev. Bonds (Lambeth House Project):
Series 1996, 9.00% 2026 (Preref. 2006) 2,850 3,626
Series 1998A, 6.20% 2028 4,500 4,265
Housing Fin. Agcy., Single Family Mortgage Rev. Bonds, 2,575 2,849
Series 1995A-2 AMT, 7.80% 2026
Lake Charles Harbor and Terminal Dist., Port Facs. Rev. 2,000 2,223
Ref. Bonds (Trunkline LNG Co. Project), Series 1992, 7.75% 2022
Parish of West Feliciana, Pollution Control Rev. Bonds 3,000 3,237
(Gulf States Utilities Co. Project), Series 1984-II, 7.70% 2014
Maine - 0.15%
Educational Loan Marketing Corp., Senior Student Loan 840 875
Rev. Bonds, Series 1991 AMT, 6.90% 2003
Maryland - 1.58%
Health and Higher Educational Facs. Auth.:
First Mortgage Rev. Bonds, PUMH of Maryland, Inc. Issue 1,500 1,456
(Heron Point of Chestertown), Series 1998B, 5.75% 2026
Ref. and Project Rev. Bonds, Roland Park Place Issue, 1,000 965
Series 1999, 5.30% 2010
Frederick County, Special Obligation Bonds (Urbana Community 3,000 2,989
Dev. Auth.), Series 1998, 6.625% 2025
Housing Opportunities Commission of Montgomery County,
Multifamily Rev. Bonds (Strathmore Court at White Flint),
1994 Issue A-2:
7.50% 2024 1,000 1,060
7.50% 2027 700 742
Housing Auth. of Prince George's County, Mortgage Rev. 1,000 1,025
Bonds, Series 1997A (GNMA Collateralized - Langley
Gardens Apartments Project), 5.75% 2029
Prince George's County (Dimensions Health Corp. Issue), 750 692
Project and Ref. Rev. Bonds, Series 1994, 5.375% 2014
Massachusetts - 2.63%
Industrial Fin. Agcy.:
Resource Recovery Rev. Ref. Bonds (Ogden Haverhill Project),
Series 1998A AMT:
5.20% 2008 2,300 2,270
5.30% 2009 6,300 6,222
Rev. Bonds, Edgewood Retirement Community Project, 5,400 6,375
Series 1995A, 9.00% 2025
Michigan - 8.27%
Hospital Fin. Auth., Hospital Rev. and Ref. Bonds:
The Detroit Medical Center Obligated Group:
Series 1993A:
6.25% 2013 3,000 2,970
6.50% 2018 1,000 1,007
Series 1998A, 5.125% 2018 2,550 2,205
Genesys Health System Obligated Group, Series 1995A:
8.00% 2005 (Escrowed to Maturity) 2,000 2,368
8.10% 2013 (Preref. 2005) 1,100 1,325
7.50% 2027 (Preref. 2005) 2,265 2,623
Genesys Regional Medical Center Obligated Group, Series 1998A:
5.30% 2011 2,000 1,940
5.50% 2018 1,000 959
5.50% 2027 2,000 1,887
Hackley Hospital Obligated Group, Series 1998A, 5.30% 2013 1,000 963
Pontiac Osteopathic, Series 1994A:
5.375% 2006 3,000 2,941
6.00% 2014 2,500 2,462
6.00% 2024 1,000 965
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 1,000 994
6.625% 2016 2,755 2,802
6.70% 2026 3,250 3,321
Housing Dev. Auth., Rental Housing Rev. Bonds, 5,210 5,540
1992 Series A, 6.60% 2012
City of Detroit:
Limited Tax G.O. Bonds, Series 1995 A, 6.40% 2005 1,145 1,235
Downtown Dev. Auth., Tax Increment Bonds (Dev. Area 1,000 1,106
No.1 Projects), Series 1996C, 6.20% 2017 (Preref. 2006)
City of Flint, Hospital Building Auth.,(Hurley Medical Center):
Rev. Ref. Bonds, Series 1998A:
5.00% 2008 2,030 1,942
5.25% 2016 1,000 907
Rev. Rental Bonds, Series 1998B, 5.375% 2018 1,000 931
The Econ. Dev. Corp. of the County of Midland, 3,100 3,255
Subordinate Pollution Control Limited Obligation Rev. Ref.
Bonds (Midland Cogeneration Project) 9.50% 2009
Mississippi - 0.17%
Perry County, Pollution Control Ref. Rev. Bonds (Leaf River 1,000 967
Forest Products, Inc. Project), Series 1999, 5.20% 2012
Nebraska - 1.05%
City of Kearney, Industrial Dev. Rev. Bonds (The Great
Platte River Road Memorial Foundation Project), Series 1998:
6.75% 2023 2,000 1,697
6.75% 2028 5,000 4,243
Nevada - 2.39%
Housing Division, Single Family Mortgage Bonds:
1998 Series A-1 AMT, 5.20% 2011 1,000 990
1999 Series B-1, 4.95% 2012 600 588
City of Henderson, Health Fac. Rev. Bonds (Catholic 1,000 884
Healthcare West), 1998 Series A, 5.375% 2026
City of Henderson, Local Improvement Dist.:
No. T-4C (Green Valley Properties), Limited Obligation
Ref. Bonds, 1999 Series A:
5.75% 2013 1,710 1,666
5.90% 2018 1,000 970
No. T-10 (Seven Hills) Limited Obligation Improvement 5,445 5,633
Bonds, 7.50% 2015
City of Las Vegas, Special Improvement Bonds, (Summerlin 2,635 2,733
Area), Local Improvement Bonds, 7.10% 2016
New Hampshire - 0.58%
Housing Fin. Auth., Single Family Mortgage Acquisition
Rev. Bonds, 1997 Series D AMT:
5.60% 2012 675 686
5.80% 2017 670 686
Industrial Dev. Auth., Pollution Control Ref. Rev. Bonds 2,000 1,892
(The Connecticut Light and Power Co. Project), Series
1988 AMT, 5.90% 2018
New Jersey - 4.06%
Econ. Dev. Auth.:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation 9,250 9,399
Improvement Dist. Project (City of Elizabeth), Series 1998A,
6.375 2031
First Mortgage Rev. Fixed-Rate Bonds:
Fellowship Village Project:
Series 1995A, 9.25% 2025 (Preref. 2005) 3,000 3,712
Series 1998A:
5.10% 2008 1,250 1,200
5.20% 2009 1,000 960
5.30% 2010 1,000 962
Series 1998C:
5.50% 2018 1,000 950
5.50% 2028 1,500 1,396
Keswick Pines, Series 1998, 5.60% 2012 2,100 2,052
Winchester Gardens at Ward Homestead Project, Series 1996A:
8.50% 2016 1,000 1,127
8.625% 2025 1,000 1,131
New York - 9.37%
Dormitory Auth.:
Cert. of Part., on behalf of the City University of New York, 1,975 2,110
as Lessee (John Jay College of Criminal Justice Project Ref.),
6.00% 2006
Mental Health Services Facs. Improvement Rev. Bonds:
Series 1997B, 5.60% 2008 1,445 1,508
Series 1998C:
5.00% 2009 1,390 1,383
5.00% 2010 1,930 1,903
Montefiore Medical Center, FHA-Insured Mortgage Hospital 1,250 1,244
Rev. Bonds, Series 1999, AMBAC Insured, 5.25% 2019
Secured Hospital Rev. Ref. Bonds, Brookdale Hospital, 3,500 3,495
Series 1998J, 5.125% 2009 Housing Fin. Agcy.:
Health Facs. Rev. Bonds (New York City), 1996 Series A Ref., 2,500 2,679
6.00% 2006
Service Contract Obligation Rev. Ref. Bonds, 1997 Series C, 800 797
5.10% 2009
Erie County Industrial Dev. Agcy., Solid Waste Disposal Fac. 4,000 4,200
Rev. Bonds (1998 CanFibre of Lackawanna Project) AMT, 9.05% 2025
City of New York, G.O. Bonds:
Series A:
7.00% 2005 1,000 1,120
6.25% 2009 1,000 1,089
Fiscal 1995 Series B1, 7.00% 2016 (Preref. 2004) 1,000 1,127
Solid Waste Disposal Rev. Bonds (1995 Visy Paper (NY), Inc. Project) 6,100 6,385
AMT, 7.55% 2005
Port Auth. of New York and New Jersey, Special Project Bonds,
Series 4 AMT, KIAC Partners Project:
7.00% 2007 5,000 5,437
6.75% 2011 4,000 4,361
Onondaga County Industrial Dev. Agcy, Solid Waste
Disposal Fac. Rev. Ref. Bonds (Solvay Paperboard LLC
Project), Series 1998:
6.80% 2014 3,000 3,056
7.00% 2030 9,000 9,292
Suffolk County Industrial Dev. Agcy., 1998 Industrial Dev. 1,750 1,692
Rev. Bonds (Nissequogue Cogen Partners Fac.) AMT, 5.30% 2013
North Carolina - 3.46%
Eastern Municipal Power Agcy., Power System Rev. Bonds:
Ref. Series 1993B:
7.25% 2007 2,500 2,742
7.00% 2008 1,000 1,085
6.125% 2009 3,950 4,056
6.00% 2026 1,000 1,006
Series 1993 D, 5.875% 2013 1,000 990
Ref. Series 1999 A, 5.20% 2010 2,000 1,903
Ref. Series 1999 B:
5.55% 2014 1,000 955
5.60% 2015 2,500 2,386
5.65% 2016 1,000 954
5.70% 2017 2,000 1,911
Municipal Power Agcy. Number 1, Catawba Electric Rev. 1,500 1,537
Bonds, Series 1992, 5.90% 2003
North Dakota - 0.17%
Housing Fin. Agcy., Rev. Bonds, 1998 Series A AMT, 5.25% 2018 990 954
Ohio - 0.76%
The Student Loan Funding Corp., Cincinnati, Student 370 377
Loan Rev. Ref. Bonds, Series 1991A AMT, 7.20% 2003
Water Dev. Auth., Solid Waste Disposal Rev. Bonds (Bay 4,000 3,903
Series 1998 A AMT, 5.875% 2020
Oregon - 0.61%
City of Klamath Falls, Electric Rev. Bonds (Klamath Cogeneration
Project), Series 1999:
5.75% 2013 2,000 1,971
5.875% 2016 1,500 1,480
Pennsylvania - 5.65%
Econ. Dev. Fncg. Auth., Resource Recovery Rev. Bonds
(Colver Project), Series 1994 D AMT:
7.05% 2010 1,000 1,094
7.15% 2018 3,500 3,844
Housing Fin. Agcy., Rev. Bonds:
Rental Housing Ref. Bonds, Issue 1993, 5.80% 2018 3,500 3,653
Single Housing Family Mortgage, Series 1997-58A AMT, 5.85% 2017 2,500 2,561
Blair County Hospital Auth., Hospital Rev. Bonds (Altoona 1,500 1,526
Hospital Project), 1998 Series A, AMBAC Insured, 5.50% 2016
Lehigh County General Purpose Auth., College Rev. and Ref. Bonds, 1,750 1,865
Series B of 1996 (Cedar Crest College), 6.65% 2017
Hospitals and Higher Education Facs. Auth. of Philadelphia:
Frankford Hospital, Series A, 6.00% 2014 500 539
Hospital Rev. Bonds (Temple University Hospital), Series of 1,000 1,002
1997, 5.70% 2009
Jefferson Health Systems, Series 1997 A, 5.50% 2007 1,400 1,428
Hospital Auth. of Philadelphia, Hospital Rev. Bonds (Temple 1,000 1,042
University Hospital), Series of 1983, 6.625% 2023
Philadelphia Auth. for Industrial Dev., Rev. Bonds (Cathedral
Village Project), Series of 1998:
5.30% 2007 1,145 1,135
5.50% 2010 1,000 992
Scranton-Lachawanna Health and Welfare Auth., City of
Scranton, Lackawanna County, Hospital Rev. Bonds (Moses
Taylor Hospital Project), Series 1997, 5.75% 2006
5.75% 2006 1,585 1,570
5.80% 2007 1,680 1,664
5.90% 2008 1,730 1,718
6.00% 2009 940 937
6.10% 2011 2,005 1,991
6.20% 2017 2,305 2,329
Westmoreland County Indust. Dev. Auth., Variable 1,000 982
Rate Rev. Bonds, Series 1993 AMT (Nat'l Waste and Energy Corp.;
Valley Landfill Expansion Project) x.xx% 2018
Rhode Island - 0.36%
Housing and Mortgage Fin. Corp., Homeownership Opportunity 2,000 2,020
Bonds, Series 9-B-1 AMT, 5.55% 2013
South Carolina - 1.78%
Piedmont Municipal Power Agcy., Electric Rev. Bonds, 8,000 7,447
1999A Ref. Series, 5.25% 2015
York County, Pollution Control Facs. Rev. Bonds (Bowater Inc. 2,300 2,574
Project), Series 1990 AMT, 7.625% 2006
Tennessee - 0.86%
The Industrial Dev. Board of the County of McMinn, 2,000 2,115
Solid Waste Recycling Facs. Rev. Bonds, Series 1992
(Calhoun Newsprint Co. Project - Bowater), 7.625% 2016
Memphis-Shelby County Airport Auth., Special Facs. 2,500 2,714
Rev. Bonds (Federal Express Corp.), Series 1984, 7.875% 2009
Texas - 2.77%
Alliance Airport Auth., Inc., Special Facs. Rev. Bonds 1,500 1,708
(American Airlines, Inc. Project), Series 1990 AMT,
7.00% 2011
Industrial Dev. Corp. of Port of Corpus Christi, Rev. 3,250 3,186
Ref. Bonds (Valero Refining and Marketing Co. Project),
Series 1997D AMT, 5.125% 2009
Hidalgo County Health Services Corp., Hospital Rev.
Bonds, (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 2,365 2,560
6.75% 2016 1,000 1,064
Matagorda County, Navigation Dist. Number One, Rev. 2,500 2,335
Ref. Bonds (Houston Lighting & Power Co. Project),
Series 1997 AMT, AMBAC Insured, 5.125% 2028
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 6.125% 2023 4,740 4,764
Utah - 0.80%
Housing Fin. Agcy., Single Family Mortgage Bonds:
1997 Series G-2 Class III AMT, 5.60% 2010 1,035 1,049
1998 Series G-2, Class III, 4.90% 2012 1,000 973
1999 Series B-2, Class III, 5.10% 2012 1,100 1,074
Housing Fin. Agcy., Single Family Mortgage Bonds, 1,400 1,406
1999 Series C-2, Class III, 5.60% 2013
Vermont - 0.27%
Housing Fin. Agcy., Single Family Housing Bonds, Series 9
AMT (Adjusted Rate Bonds), MBIA Insured:
4.90% 2012 575 566
5.70% 2012 925 952
Virginia - 0.90%
Dulles Town Center Community Dev. Auth. (Loudoun 1,000 1,005
County), Special Assessment Bonds (Dulles Town
Center Project), Series 1998, 6.25% 2026
Gateway Community Dev. Auth., Special Assessment Bonds, 2,000 1,932
Series 1999, 6.25% 2026 Pocahontas Parkway Association, 2,100 2,116
Route 895 Connector Toll Road Rev. Bonds, Series 1998A,
5.25% 2008
Virgin Islands - 0.60%
Public Fin. Auth., Rev. and Ref. Bonds (Matching Fund
Loan Notes), Series 1998 D:
6.00% 2006 1,500 1,562
6.00% 2007 1,750 1,824
West Virginia - 0.20%
City of South Charleston, Pollution Control Rev. Ref. Bonds 1,000 1,130
(Union Carbide Corp. Project), Series 1985, 7.625% 2005
Wisconsin - 2.20%
Housing and Econ. Dev. Auth., Housing Rev. Bonds, 3,000 3,050
1993 Series B AMT, 5.30% 2006
City of Oconto Falls, Community Dev. Auth., Dev. Rev. 9,000 9,393
Bonds, Series 1997 (Oconto Falls Tissue, Inc. Project),
7.75% 2022
Wyoming - 0.19%
Sweetwater County, Solid Waste Disposal Rev. Bonds 1,000 1,082
(FMC Corp. Project), Series 1994A AMT, 7.00% 2024
----------
529,576
----------
Tax-Exempt Securities Maturing in One Year or Less - 5.44%
City of Houston, Tax and Rev. Anticipation Notes, 1,000 1,008
Series 1999, 4.25% 6/30/00
State of Idaho, Tax Anticipation Notes, Series 1999 1,500 1,511
, 4.25% 6/30/00
State of Kentucky, Asset/Liability Commission, General Fund 1,000 1,008
Tax and Rev. Anicipation Notes, 1999 Series A, 4.25% 6/28/00
County of Los Angeles, Tax and Rev. Anticipation Notes, 1,000 1,006
Series A, 4.00% 6/30/00
County of Santa Clara, 1999 Tax and Rev. Anticipation Notes, 2,000 2,003
4.50% 10/1/99
State of South Carolina, Public Service Auth., Rev. Bonds, 1,000 1,012
1995 Ref. Series A, AMBAC Insured, 6.25% 1/1/00
State of Texas, Tax and Rev. Anticipation Notes, 17,500 17,514
Series 1998, 4.50% 8/31/99
State of Wyoming, General Fund Tax and Rev. Anticipation 2,500 2,514
Notes, Series 1999, 4.00% 6/27/00
State of Wyoming, Uinta County, Pollution Control Rev. 3,100 3,100
Ref. Bonds (Amoco Project), Series 1998, 3.40% 2026 (3)
----------
30,676
----------
TOTAL TAX-EXEMPT SECURITIES (cost: $556,713,000) 560,252
Excess of cash, prepaids and receivables over payables 3,919
----------
NET ASSETS $564,171
========
(1) Purchased in a 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 may change periodically.
See Notes to Financial Statements
Key to Abbreviations
Agcy. = Agency
Auth. = Authority
Cert. of Part. = Certificates of Participation
Dev. = Development
Dist. = District
Econ. = Economic
Fac. = Facility
Facs. = Facilities
Fin. = Finance
Fncg. = Financing
G.O. = General Obligation
Preref. = Prerefunded
Redev. = Redevelopment
Ref. = Refunding
Rev. = Revenue
</TABLE>
<TABLE>
American High-Income Municipal Bond Fund
Financial Statements
Statement of Assets and Liabilities
at July 31, 1999 (dollars in thousands)
<S> <C> <C>
Assets:
Tax-exempt securities
(cost: $556,713) $560,252
Cash 93
Receivables for --
Sales of fund's shares $ 842
Accrued interest 9,431 10,273
------------ ------------
570,618
Liabilities:
Payables for --
Purchases of investments 4,001
Repurchases of fund's shares 1,220
Dividends payable 839
Management services 189
Accrued expenses 198 6,447
------------ ------------
Net Assets at July 31, 1999 --
Equivalent to $15.49 per share on 36,432,430
shares of $0.01 par value capital stock
outstanding (authorized capital stock -- $564,171
200,000,000 shares) ============
Statement of Operations
for the year ended July 31, 1999
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $30,854
Expenses:
Management services fee $2,083
Distribution expenses 1,574
Transfer agent fee 160
Reports to shareholders 63
Registration statement and prospectus 87
Postage, stationery and supplies 29
Director's fees 17
Auditing and legal fees 33
Custodian fee 11
Taxes other than federal income tax 8
Organization expense 2
Other expenses 27 4,094
------------ ------------
Net investment income 26,760
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 1,809
Net unrealized appreciation
on investments:
Beginning of year 24,628
End of year 3,539
------------
Change in unrealized appreciation
on investments (21,089)
Net realized gain and change in unrealized ------------
appreciation on investments (19,280)
Net Increase in Net Assets Resulting ------------
from Operations $7,480
============
Statement of Changes in Net Assets
(dollars in thousands)
Year ended July 31
1999 1998
Operations: ------------ ------------
Net investment income $26,760 $19,841
Net realized gain on investments 1,809 2,244
Net change in unrealized appreciation
on investments (21,089) 3,403
------------ ------------
Net increase in net assets
resulting from operations 7,480 25,488
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends Paid from net
investment income (26,849) (19,820)
Distributions from net realized gain on
investments (2,559) (881)
------------ ------------
Total dividends and distributions (29,408) (20,701)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold: 205,017 195,199
12,855,092 and 12,159,660 shares, respectively
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments:
1,270,760 and 833,529 shares, respectively 20,209 13,370
Cost of shares repurchased: 6,483,571 and
4,072,064 shares, respectively (103,179) (65,298)
------------ ------------
Net increase in net assets
resulting from capital share
transactions 122,047 143,271
Total Increase in Net Assets 100,119 148,058
Net Assets: ------------ ------------
Beginning of year 464,052 315,994
------------ ------------
End of year (including undistributed $564,171 $464,052
Net investment income: $104 and ============ ============
$79, respectively)
See Notes to Financial Statements
</TABLE>
American High-Income Municipal Bond Fund
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepare in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - 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. The ability of the
issuers of the debt Securities held by the fund to meet their obligations may
be affected by economic developments in a specific industry, state or region.
Short-term securities maturing within 60 days are valued at amortized cost,
which approximates market value. 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.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
transactions are accounted for as of the trade date. Realized gains and losses
from the securities transactions are determined based on specific identified
cost. In the event securities are purchased on a delayed delivery or
$when-issued' basis, the fund will instruct the custodian to segregate liquid
assets sufficient to meet its payment obligations in these transactions.
Interest income is recognized on an accrual basis. Premiums and original issue
discounts on securities are amortized daily over the expected life of the
security. Amortization of market discounts on securities is recognized upon
disposition.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders
are declared daily after determination of the fund's net investment income and
are paid to shareholders monthly.
PREPAID ORGANIZATION EXPENSES -Expenses incurred in organizing the fund
are capitalized and amortized on a straight line basis over five years. In the
event Capital Research and Management Company (CRMC), the fund's investment
adviser, redeems any of its original shares prior to the end of the five-year
period, the proceeds of the redemption payable with respect to such shares
shall be reduced by the pro rata share (based on the proportionate share of the
original shares redeemed to the total number of original shares outstanding at
the time of such redemption) of the unamortized prepaid organization expenses
as of the date of such redemption. In the event that the fund liquidates prior
to the end of the five-year period, CRMC shall bear any unamortized prepaid
organization expenses.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As a
regulated investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of July 31, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $3,539,000, of which $15,248,000
related to appreciated securities and $11,709,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended July 31, 1999. During the year ended
July 31, 1999, the fund realized, on a tax basis, a net capital gain of
$1,724,000 on securities transactions. The cost of portfolio securities for
book and federal income tax purposes was $556,713,000 at July 31, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $2,083,000 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.
DISTRIBUTION 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, 1999, distribution expenses under the Plan were limited to $1,574,000.
Had no limitation been in effect, the fund would have paid $1,777,000 in
distribution expenses under the Plan. As of July 31, 1999, accrued and unpaid
distribution expenses were $161,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $450,000 (after allowance 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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $160,000.
DEFERRED DIRECTORS' FEES - 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, 1999, aggregate amounts deferred and earnings thereon
since the deferred compensation plan's adoption (1994), net of any payments to
Directors, were $30,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $198,328,000 and $82,978,000, respectively, during
the year ended July 31, 1999.
As of July 31, 1999, accumulated undistributed net realized gain on
investments was $1,026,000 and additional paid-in capital was $523,071,000. The
fund reclassified $114,000 and $213,000 to undistributed net investment income
and additional paid-in capital, respectively, from undistributed net realized
gains for the year ended July 31, 1999 as a result of permanent differences
between book and tax.
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 $11,000 includes $10,000 that was paid by these credits
rather than in cash.
<TABLE>
Per-Share Data and Ratios
<S> <C> <C> <C> <C> <C> <C>
Period
Year ended July 31 September 26,
1994(1) to
1999 1998 1997 1996 July 31, 1995
Net Asset Value, Beginning of Period $16.12 $15.90 $15.23 $15.14 $14.29
-------- ----- ----- ------ ----------
Income From Investment Operations:
Net investment income .81 .84 .87 .88 .76
Net gains or losses on securities (both
realized and unrealized) (.54) .26 .80 .37 .85
-------- ----- ----- ------ ----------
Total from investment operations .27 1.10 1.67 1.25 1.61
-------- ----- ----- ------ ----------
Less Distributions:
Dividends (from net investment income (.82) (.84) (.86) (.88) (.76)
Distributions (from capital gains) (.08) (.04) (.14) (.28) --
-------- ----- ----- ------ ----------
Total distributions (.90) (.88) (1.00) (1.16) #VALUE!
-------- ----- ----- ------ ----------
Net Asset Value, End of Period $15.49 $16.12 $15.90 $15.23 $15.14
========= ====== ====== ======= ==========
Total Return (2) 1.63% 7.05% 11.36% 8.48% 11.62% (3)
Ratios/Supplemental Data:
Net assets, end of period (in millions $564 $464 $316 $217 $157
Ratio of expenses to average net asset .78% .79% .87% .88% .94% (3)
before fee waiver
Ratio of expenses to average net asset .78% .79% .87% .86% .62% (3)
after fee waiver
Ratio of net income to average net ass 5.09% 5.19% 5.51% 5.74% 5.66% (3)
Portfolio turnover rate 16.67% 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.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANT
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, 1999, 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, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Los Angeles, California
August 31, 1999
TAX INFORMATION (UNAUDITED)
During the fiscal year ended July 31, 1999, the fund paid 81.5 cents per share
of exempt-interest distributions within the meaning of Section 852(b)(5)(A) of
the Internal Revenue Code, a short-term capital gain of 0.3 cents per share and
a long-term capital gain of 7.6 cents per share.
The fund designates as a capital gain distribution a portion of earnings and
profits paid to shareholders in redemption of their shares.
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.
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
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
San Diego, California
Managing Director,
Senior Resource Group, LLC
(development and management of
senior living communities)
LEONARD R. FULLER
Marina del Rey, California
President, Fuller Consulting
(management consultants)
ABNER D. GOLDSTINE
Los Angeles, California
Vice Chairman of the Board 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
Mark R. Macdonald
Los Angeles, California
President of the fund
Vice President -
Investment Management Group,
Capital Research and Management Company
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
DAVID A. HOAG
Los Angeles, California
Vice President of the fund
Vice President,
Capital Research Company
EDWARD B. NAHMIAS
Los Angeles, California
Vice President of the fund
Vice President,
Capital Research 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
[The American Funds Group(r)]
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND
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 92821-5823
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, 1999, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
