PROSPECTUS SUPPLEMENT
January 10, 2000
for the following funds with prospectuses dated February 1, 1999 - December 1,
1999
<TABLE>
<CAPTION>
<S> <C>
AMCAP Fund, Inc. Limited Term Tax-Exempt Bond
American Balanced Fund, Inc. Fund of America
American High-Income Municipal The New Economy Fund
Bond Fund, Inc. New Perspective Fund, Inc.
American High-Income Trust SMALLCAP World Fund, Inc.
The Bond Fund of America, Inc. The Tax-Exempt Bond Fund of
Capital World Bond Fund, Inc. America, Inc.
Capital World Growth and The Tax-Exempt Fund of
Income Fund, Inc. California
The Cash Management Trust of The Tax-Exempt Fund of
America Maryland
EuroPacific Growth Fund The Tax-Exempt Fund of
Fundamental Investors, Inc. Virginia
The Growth Fund of America, The Tax-Exempt Money Fund
Inc. of America
The Income Fund of America, U.S. Government Securities
Inc. Fund
Intermediate Bond Fund of The U.S. Treasury Money Fund
America of America
The Investment Company of Washington Mutual Investors
America Fund, Inc.
</TABLE>
The initial investment minimum for all funds in The American Funds Group(r),
except the money market funds and the state tax-exempt funds, is now $250. The
initial investment minimum for the money market funds (The Cash Management
Trust of America, The Tax-Exempt Money Fund of America and The U.S. Treasury
Money Fund of America) and the state tax-exempt funds (The Tax-Exempt Fund of
California, The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of
Virginia) is $1,000.
In addition, effective January 10, 2000, the sales charges applied to purchases
of the equity and fixed-income funds in The American Funds Group are as
follows:
<TABLE>
<CAPTION>
EQUITY FUNDS FIXED-INCOME FUNDS
Sales Charge Dealer Sales Charge Dealer
as % of Concession as % of Concession
as a % of as a % of
Offering Offering
Price Price
AMOUNT OF SALE Offering Net Offering Net
Price Amount Price Amount
Invested Invested
<S> <C> <C> <C> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
$25,000 but less than 5.00 5.26 4.25 3.75% 3.90% 3.00%
$50,000
$50,000 but less than 4.50 4.71 3.75
$100,000
$100,000 but less than 3.50 3.63 2.75 3.50 3.63 2.75
$250,000
$250,000 but less than 2.50 2.56 2.00 2.50 2.56 2.00
$500,000
$500,000 but less than 2.00 2.04 1.60 2.00 2.04 1.60
$750,000
$750,000 but less than 1.50 1.52 1.20 1.50 1.52 1.20
$1 million
$1 million and above none none see none none see
prospectus prospectus
</TABLE>
<PAGE>
AMERICAN HIGH-INCOME MUNICIPAL BOND FUND, INC.
Part B
Statement of Additional Information
December 1, 1999
(as amended January 10, 2000)
This document is not a prospectus but should be read in conjunction with the
current prospectus of American High-Income Municipal Bond Fund (the "fund" or
"AHIM") dated December 1, 1999. The prospectus may be obtained from your
investment dealer or financial planner or by writing to the fund at the
following address:
American High-Income Municipal Bond Fund
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
(213) 486-9200
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 7
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 9
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 10
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 17
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 21
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Shareholder Account Services and Privileges . . . . . . . . . . . . 29
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 32
General Information . . . . . . . . . . . . . . . . . . . . . . . . 32
Investment Results and Related Statistics . . . . . . . . . . . . . 34
Financial Statements
</TABLE>
American High-Income Municipal Bond Fund -- Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
TAX-EXEMPT SECURITIES
- - The fund will invest at least 80% of its assets in securities exempt from
regular federal income tax (including securities subject to alternative
minimum taxes).
DEBT SECURITIES
- - The fund will invest at least 65% of its assets in debt securities rated A
or below by Standard & Poor's Corporation or Moody's Investors Services,
Inc. or unrated but determined to be of equivalent quality.
- - The fund will invest at least 50% of its assets in debt securities rated
BBB/Baa or below or unrated but determined to be of equivalent quality.
- - The fund will invest at least 65% of its assets in bonds (any debt
securities having initial maturities in excess of one year).
CONCENTRATION OF INVESTMENTS
- - The fund may invest more than 25% of its assets in municipal obligations of
issuers located in the same state or in obligations of the same type
(however, the fund may not invest 25% of more in municipal securities of
the same project type issued by non-governmental entities).
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.
High-yield, high-risk bonds rated Ba or below by Standard & Poor's Corporation
and BB or below by Moody's Investors Services, Inc. (or unrated but considered
to be of equivalent quality) are described by the rating agencies as speculative
and involve greater risk of default or price changes due to changes in the
issuer's creditworthiness than higher rated bonds, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly in periods of general economic
difficulty. It may be more difficult to dispose of, or to determine the value
of, high-yield, high-risk bonds.
American High-Income Municipal Bond Fund -- Page 2
<PAGE>
Certain risk factors relating to "high-yield, high-risk bonds" are discussed
below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and
corporate developments and may be less sensitive to interest rate changes.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain
additional financing. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices
and yields of high-yield, high-risk bonds.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercises these
provisions in a declining interest rate market, the fund would have to
replace the security with a lower yielding security, resulting in a
decreased return for investors. If the issuer of a bond defaults on its
obligations to pay interest or principal or enters into bankruptcy
proceedings, the fund may incur losses or expenses in seeking recovery of
amounts owed to it.
LIQUIDITY AND VALUATION - There may be little trading in the secondary
market for particular bonds, which may affect adversely the fund's ability
to value accurately or dispose of such bonds. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high-yield, high-risk bonds,
especially in a thin market.
The Investment Adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as well
as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.
MUNICIPAL BONDS - Municipal bonds are debt obligations generally issued to
obtain funds for various public purposes, including the construction of public
facilities. Opinions relating to the validity of municipal bonds, their
exclusion from gross income for federal income tax purposes and, where
applicable, state and local income tax are rendered by bond counsel to the
issuing authorities at the time of issuance.
The two principal classifications of municipal bonds are general obligation
bonds and limited obligation or revenue bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit including, if
available, its taxing power for the payment of principal and interest. Issuers
of general obligation bonds include states, counties, cities, towns and various
regional or special districts. The proceeds of these obligations are used to
fund a wide range of public facilities such as the construction or improvement
of schools, highways and roads, water and sewer systems and facilities for a
variety of other public purposes. Lease revenue bonds or certificates of
participation in leases are payable from annual lease rental payments from a
state or locality. Annual rental payments are payable to the extent such rental
payments are appropriated annually.
Typically, the only security for a limited obligation or revenue bond is the net
revenue derived from a particular facility or class of facilities financed
thereby or, in some cases, from the proceeds of a special tax or other special
revenues. Revenue bonds have been issued to fund a wide variety of
revenue-producing public capital projects including: electric, gas, water and
sewer
American High-Income Municipal Bond Fund -- Page 3
<PAGE>
systems; highways, bridges and tunnels; port and airport facilities; colleges
and universities; hospitals; and convention, recreational and housing
facilities. Although the security behind these bonds varies widely, many provide
additional security in the form of a debt service reserve fund which may also be
used to make principal and interest payments on the issuer's obligations. In
addition, some revenue obligations (as well as general obligations) are insured
by a bond insurance company or backed by a letter of credit issued by a banking
institution.
Revenue bonds also include, for example, pollution control, health care and
housing bonds, which, although nominally issued by municipal authorities, are
generally not secured by the taxing power of the municipality but by the
revenues of the authority derived from payments by the private entity which owns
or operates the facility financed with the proceeds of the bonds. Obligations of
housing finance authorities have a wide range of security features including
reserve funds and insured or subsidized mortgages, as well as the net revenues
from housing or other public projects. Most of these bonds do not generally
constitute the pledge of the credit of the issuer of such bonds. The credit
quality of such revenue bonds is usually directly related to the credit standing
of the user of the facility being financed or of an institution which provides a
guarantee, letter of credit, or other credit enhancement for the bond issue.
MUNICIPAL LEASE OBLIGATIONS - The fund may invest, without limitation, in
municipal lease revenue obligations that are determined to be liquid by the
Investment Adviser. In determining whether these securities are liquid, the
Investment Adviser will consider, among other things, the credit quality and
support, including strengths and weaknesses of the issuers and lessees, the
terms of the lease, the frequency and volume of trading and the number of
dealers trading the securities.
ZERO COUPON BONDS - Municipalities may issue zero coupon securities which are
debt obligations that do not entitle the holder to any periodic payments of
interest prior to maturity or a specified date when the securities begin paying
current interest. They are issued and traded at a discount from their face
amount or par value, which discount varies depending on the time remaining until
cash payments begin, prevailing interest rates, liquidity of the security, and
the perceived credit quality of the issuer.
PRE-REFUNDED BONDS - From time to time, a municipality may refund a bond that it
has already issued prior to the original bond's call date by issuing a second
bond, the proceeds of which are used to purchase securities. The securities are
placed in an escrow account pursuant to an agreement between the municipality
and an independent escrow agent. The principal and interest payments on the
securities are then used to pay off the original bondholders. For the purposes
of diversification, pre-refunded bonds will be treated as governmental issues.
VARIABLE AND FLOATING RATE OBLIGATIONS - The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate based
upon changes in market rates. Variable and floating rate obligations bear coupon
rates that are adjusted at designated intervals, based on the then current
market rates of interest. Variable and floating rate obligations permit the fund
to "lock in" the current interest rate for only the period until the next
scheduled rate adjustment, but the rate adjustment feature tends to limit the
extent to which the market value of the obligation will fluctuate.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities it
assumes the risk of any decline in value of the security beginning on the date
of the agreement. When the fund agrees to
American High-Income Municipal Bond Fund -- Page 4
<PAGE>
sell such securities it does not participate in further gains or losses with
respect to the securities beginning on the date of the agreement. If the other
party to such a transaction fails to deliver or pay for the securities, the fund
could miss a favorable price or yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of the
fund's portfolio securities decline while the fund is in a leveraged position,
greater depreciation of its net assets would likely occur than were it not in
such a position. The fund will not borrow money to settle these transactions and
therefore, will liquidate other portfolio securities in advance of settlement if
necessary to generate additional cash to meet its obligations thereunder.
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which have been adopted by the fund's board of directors,
taking into account factors such as the frequency and volume of trading, the
commitment of dealers to make markets and the availability of qualified
investors, all of which can change from time to time. The fund may incur certain
additional costs in disposing of illiquid securities.
CONCENTRATION OF INVESTMENTS -- The fund may invest more than 25% of its assets
in municipal obligations of issuers located in the same state or in municipal
obligations of the same type which pay interest on their obligations from
revenue of similar projects. This may make the fund more susceptible to similar
economic, political, or regulatory occurrences such as changes in healthcare
regulations, environmental considerations related to construction, construction
cost increases and labor problems, failure of healthcare facilities to maintain
adequate occupancy levels, and inflation. As the similarity in issuers
increases, the potential for fluctuations in the fund's share price may
increase. The fund may invest more than 25% of its assets in industrial
development bonds.
TEMPORARY INVESTMENTS - The fund may invest in short-term municipal obligations
of up to one year in maturity during periods of temporary defensive strategy
resulting from abnormal market conditions, or when such investments are
considered advisable for liquidity. Generally, the income from all such
securities is exempt from federal income tax. Further, a portion of the fund's
assets, which will normally be less than 20%, may be held in cash or invested in
high-quality taxable short-term securities of up to one year in maturity. Such
investments may include: (1) obligations of the U.S. Treasury; (2) obligations
of agencies and instrumentalities of the U.S. Government; (3) money market
instruments, such as certificates of deposit issued by domestic banks, corporate
commercial paper, and bankers' acceptances; and (4) repurchase agreements.
SECURITIES SUBJECT TO ALTERNATIVE MINIMUM TAXES -- The fund may invest in
tax-exempt securities believed to pay interest constituting an item of tax
preference subject to alternative minimum taxes; therefore, while the fund's
distributions from tax-exempt securities are not
American High-Income Municipal Bond Fund -- Page 5
<PAGE>
subject to regular federal income tax, a portion or all may be included in
determining a shareholder's federal alternative minimum tax.
ADJUSTMENT OF MATURITIES - The Investment Adviser seeks to anticipate movements
in interest rates and adjusts the maturity distribution of the portfolio
accordingly. Keeping in mind the fund's objective, the Investment Adviser will
increase the fund's exposure to this price volatility only when it appears
likely to increase current income without undue risk to capital.
ISSUE CLASSIFICATION - Securities with the same general quality rating and
maturity characteristics, but which vary according to the purpose for which they
were issued, often tend to trade at different yields. Correspondingly,
securities issued for similar purposes and with the same general maturity
characteristics, but which vary according to the creditworthiness of their
respective issuers, tend to trade at different yields. These yield differentials
tend to fluctuate in response to political and economic developments, as well as
temporary imbalances in normal supply/demand relationships. The Investment
Adviser monitors these fluctuations closely, and will attempt to adjust
portfolio concentrations in various issue classifications according to the value
disparities brought about by these yield relationship fluctuations.
The Investment Adviser believes that, in general, the market for municipal bonds
is less liquid than that for taxable fixed-income securities. Accordingly, the
ability of the fund to make purchases and sales of securities in the foregoing
manner may, at any particular time and with respect to any particular
securities, be limited (or non-existent).
The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:
REPURCHASE AGREEMENTS - The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. Repurchase agreements
permit the fund to maintain liquidity and earn income over periods of time as
short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the Investment Adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the Investment Adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization upon the collateral by the
fund may be delayed or limited.
LOANS OF PORTFOLIO SECURITIES -- The fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the Investment Adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. Government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The Investment Adviser will
monitor the adequacy of the collateral on a daily basis. The fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. The fund will receive any interest paid on the loaned securities and
a fee or a portion of the interest earned on the collateral. The fund will limit
its loans of portfolio securities to an aggregate of 33 1/3% of the value of its
total assets, measured at the time any such loan is made.
American High-Income Municipal Bond Fund -- Page 6
<PAGE>
* * * * * *
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the length
of time particular investments may have been held. Short-term trading profits
are not the fund's objective and changes in its investments are generally
accomplished gradually, though short-term transactions may occasionally be made.
High portfolio turnover (100% or more) involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved.
The fund's portfolio turnover rate would equal 100% if each security in the
fund's portfolio were replaced once per year. See "Financial Highlights" in the
prospectus for the fund's annual portfolio turnover for each of the last five
fiscal periods.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
These restrictions provide that the fund may not:
1. With respect to 75% of the fund's total assets, purchase the security of
any issuer (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities) if, as a result, (a) more than 5% of the
fund's total assets would be invested in securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of that
issuer.
2. Invest in companies for the purpose of exercising control or management;
3. Purchase or sell real estate (including real estate limited partnerships)
unless acquired as a result of ownership of securities or other instruments (but
this shall not prevent the fund from investing in securities or other
instruments backed by real estate or securities of companies engaged in the real
estate business);
4. Purchase or sell commodities unless acquired as a result of ownership of
securities or other instruments or engage in futures transactions;
American High-Income Municipal Bond Fund -- Page 7
<PAGE>
5. Engage in the business of underwriting securities of other issuers, except
to the extent that the purchase or disposal of an investment position may
technically constitute the fund as an underwriter as that term is defined under
the Securities Act of 1933;
6. Make loans in an aggregate amount in excess of 33(alpha)% of the value of
the fund's total assets, taken at the time any loan is made, provided that the
purchase of debt securities pursuant to the fund's investment objective and
entering into repurchase agreements maturing in seven days or less shall not be
deemed loans for the purposes of this restriction and that loans of portfolio
securities may be made;
7. Issue senior securities, except as permitted under the Investment Company
Act of 1940;
8. Borrow money, except from banks for temporary or emergency purposes not to
exceed one-third of the value of the fund's total assets. Moreover, in the event
that the asset coverage for the fund's borrowings falls below 300%, the fund
will reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage;
9. Purchase or sell puts, calls, straddles, or spreads, or combinations
thereof (this restriction does not prevent the fund from investing in securities
with put and call features);
10. Invest 25% or more of its assets in municipal securities of the same
project type issued by non-governmental entities. However, the fund may invest
more than 25% of its assets in municipal obligations of issuers located in the
same state or in municipal obligations of the same type, including without
limitation the following: general obligations of states and localities; lease
rental obligations of state and local authorities; obligations of state and
local housing finance authorities, municipal utilities systems or public housing
authorities; or industrial development or pollution control bonds issued for
hospitals, electric utility systems, life care facilities or other purposes. As
a result, the fund may be more susceptible to adverse economic, political, or
regulatory occurrences affecting a particular category of issuers. As the
concentration in the securities of a particular category of issuer increases,
the potential for fluctuation in the value of the fund's shares also increases;
nor
11. Sell securities short, except to the extent that the fund contemporaneously
owns, or has the right to acquire at no additional cost, securities identical to
those sold short.
NON-FUNDAMENTAL POLICIES -- The following non-fundamental policies may be
changed without shareholder approval:
1. The fund does not currently intend (at least for the next 12 months) to
lend portfolio securities. However, if such action is authorized by the Board of
Directors, loans of portfolio securities as described under "Loans of Portfolio
Securities" shall be made in accordance with the terms and conditions therein
set forth and consistent with fundamental investment restriction #6;
2. The fund will not invest more than 15% of the value of its net assets in
securities which are not readily marketable (including repurchase agreements
maturing in more than seven days), nor invest more than 5% of its net assets in
restricted securities (excluding Rule 144A securities);
3. The fund will not invest more than 15% of its total assets in the
securities of issuers (excluding securities issued or guaranteed by the U.S.
government or its agencies or instrumen-
American High-Income Municipal Bond Fund -- Page 8
<PAGE>
talities) which together with any predecessors have a record of less than three
years continuous operation;
4. The fund does not currently intend (at least for the next 12 months) to
invest in the securities of other registered management investment companies,
except in connection with a merger, consolidation, acquisition, reorganization,
or in connection with the implementation of any deferred compensation plan as
adopted by the Board of Directors;
5. The fund does not currently intend (at least for the next 12 months) to
purchase securities in the event its borrowings exceed 5% of total assets.
For the purposes of the fund's investment restrictions, the identification of
the "issuer" of municipal bonds that are not general obligation bonds is made by
the Investment Adviser on the basis of the characteristics of the bonds as
described, the most significant of which is the ultimate source of funds for the
payment of principal and interest on such bonds.
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Maryland corporation on June 14, 1994.
All fund operations are supervised by the fund's board of directors which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Directors and Director Compensation" below. They may elect
to defer all or a portion of these fees through a deferred compensation plan in
effect for the fund.
The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
American High-Income Municipal Bond Fund -- Page 9
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS JULY 31, 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Capen, Jr. Director Corporate Director and author; former none/3/
6077 San Elijo, Box 2494 United States Ambassador to Spain;
Rancho Santa Fe, CA 92067 former Vice Chairman of the Board;
Age: 65 Knight Ridder, Inc., former Chairman and
Publisher, The Miami Herald
----------------
- -------------------------------------------------------------------------------------------------------------------
H. Frederick Christie Director Private Investor. Former President and $2,611/4/
P.O. Box 144 Chief Executive Officer, The Mission
Palos Verdes Estates, CA Group (non-utility holding company,
90274 subsidiary of Southern California Edison
Age: 66 Company)
- -------------------------------------------------------------------------------------------------------------------
+ Don R. Conlan Director President (retired), The Capital Group none/5/
Age: 63 Companies, Inc.
- -------------------------------------------------------------------------------------------------------------------
Diane C. Creel Director CEO and President, The Earth Technology $2,500/4/
100 W. Broadway Corporation (international consulting
Suite 5000 engineering)
Long Beach, CA 90802
Age: 51
- -------------------------------------------------------------------------------------------------------------------
Martin Fenton Director Chairman, Senior Resource Group LLC $3,025/4/
4660 La Jolla Village Drive (development and management of senior
Suite 725 living communities)
San Diego, CA 92122
Age: 64
- -------------------------------------------------------------------------------------------------------------------
Leonard R. Fuller Director President, Fuller Consulting (financial $2,677/4/
4337 Marina City Drive management consulting firm)
Suite 841 ETN
Marina del Rey, CA 90292
Age: 53
- -------------------------------------------------------------------------------------------------------------------
+* Abner D. Goldstine President, Senior Vice President and Director, none/5/
Age: 69 PEO and Capital Research and Management Company
Director
- -------------------------------------------------------------------------------------------------------------------
+** Paul G. Haaga, Jr. Chairman Executive Vice President and Director, none/5/
Age: 50 of Capital Research and Management Company
the Board
- -------------------------------------------------------------------------------------------------------------------
Richard G. Newman Director Chairman, President and CEO, AECOM $3,053/4/
3250 Wilshire Boulevard Technology Corporation (architectural
Los Angeles, CA 90010-1599 engineering)
Age: 65
- -------------------------------------------------------------------------------------------------------------------
Frank M. Sanchez Director President, The Sanchez Family none/3/
5234 Via San Delarro, #1 Corporation dba McDonald's Restaurants
Los Angeles, CA 90022 (McDonald's licensee)
Age: 56
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED JULY 31, 1999 SERVES/2/
- -----------------------------------------------------------------------------
<S> <C> <C>
Richard G. Capen, Jr. $42,700/3/ 14
6077 San Elijo, Box 2494
Rancho Santa Fe, CA 92067
Age: 65
- -----------------------------------------------------------------------------
H. Frederick Christie $171,100 19
P.O. Box 144
Palos Verdes Estates, CA
90274
Age: 66
- -----------------------------------------------------------------------------
+ Don R. Conlan none/5/ 12
Age: 63
- -----------------------------------------------------------------------------
Diane C. Creel $ 44,650 12
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Age: 51
- -----------------------------------------------------------------------------
Martin Fenton $122,684 15
4660 La Jolla Village Drive
Suite 725
San Diego, CA 92122
Age: 64
- -----------------------------------------------------------------------------
Leonard R. Fuller $ 51,850 12
4337 Marina City Drive
Suite 841 ETN
Marina del Rey, CA 90292
Age: 53
- -----------------------------------------------------------------------------
+* Abner D. Goldstine none/5/ 12
Age: 69
- -----------------------------------------------------------------------------
+** Paul G. Haaga, Jr. none/5/ 14
Age: 50
- -----------------------------------------------------------------------------
Richard G. Newman $102,250 13
3250 Wilshire Boulevard
Los Angeles, CA 90010-1599
Age: 65
- -----------------------------------------------------------------------------
Frank M. Sanchez $ 3,000 12
5234 Via San Delarro, #1
Los Angeles, CA 90022
Age: 56
- -----------------------------------------------------------------------------
</TABLE>
American High-Income Municipal Bond Fund -- Page 10
<PAGE>
American High-Income Municipal Bond Fund -- Page 11
<PAGE>
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Richard G. Capen, Jr. and Frank M. Sanchez did not serve as Directors of
American High-Income Municipal Bond Fund during the fund's fiscal year ended
July 31, 1999 and, therefore, received no compensation. Both were elected by
shareholders as Directors on December 1, 1999.
4 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of fiscal year
ended July 31, 1999 for participating Directors is as follows: H. Frederick
Christie ($6,512), Diane C. Creel ($1,597), Martin Fenton ($1,344), Leonard R.
Fuller ($3,531), and Richard G. Newman ($17,311). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Directors.
5 Don R. Conlan, Paul G. Haaga, Jr., and Abner D. Goldstine are affiliated with
the Investment Adviser and, accordingly, receive no compensation from the
fund.
American High-Income Municipal Bond Fund -- Page 12
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Mark R. Macdonald 40 President and PEO Vice President - Investment
11100 Santa Monica Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Neil L. Langberg 46 Senior Vice Vice President - Investment
11100 Santa Monica President Management Group, Capital
Blvd. Research and Management Company
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Michael J. Downer 44 Vice President Senior Vice President - Fund
333 South Hope Street Business
Los Angeles, CA 90071 Management Group, Capital
Research
and Management Company
- -------------------------------------------------------------------------------
David A. Hoag 34 Vice President Vice President and Director,
11100 Santa Monica Capital Research Company*
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Edward B. Nahmias 47 Vice President Vice President, Capital
11100 Santa Monica Research Company
Blvd.
Los Angeles, CA 90025
- -------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research
and Management Company
- -------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 37 Treasurer Vice President - Fund Business
135 South State Management Group, Capital
College Blvd. Research
Brea, CA 92821 and Management Company
- -------------------------------------------------------------------------------
Kimberly S. Verdick 35 Assistant Assistant Vice President - Fund
333 South Hope Street Secretary Business
Los Angeles, CA 90071 Management Group, Capital
Research
and Management Company
- -------------------------------------------------------------------------------
Todd L. Miller 41 Assistant Assistant Vice President - Fund
135 South State Treasurer Business
College Blvd. Management Group, Capital
Brea, CA 92821 Research
and Management Company
- -------------------------------------------------------------------------------
</TABLE>
All of the officers listed are officers, and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or affiliated companies.
The fund pays annual fees of $900 to Directors who are not affiliated with the
Investment Adviser, plus $200 for each Board of Directors meeting attended, plus
$200 for each meeting attended as a member of a committee of the Board of
Directors. No pension or retirement benefits are accrued as part of fund
expenses. The Directors may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of
American High-Income Municipal Bond Fund -- Page 13
<PAGE>
the Directors who are not affiliated with the Investment Adviser. As of November
1, 1999 the officers and Directors of the fund and their families, as a group,
owned beneficially or of record less than 1% of the outstanding shares of the
fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital International
Perspective, providing financial and market information about more than 2,400
companies around the world.
The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until May 31, 2000, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
American High-Income Municipal Bond Fund -- Page 14
<PAGE>
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors unaffiliated with the Investment Adviser; association dues; costs of
stationery and forms prepared exclusively for the fund; and costs of assembling
and storing shareholder account data.
The management fee is based upon the net assets of the fund and monthly gross
investment income. Gross investment income means gross income, computed without
taking account of gains or losses from sales of capital assets, but including
original issue discount as defined for federal income tax purposes. The Internal
Revenue Code in general defines original issue discount to mean the difference
between the issue price and the stated redemption price at maturity of certain
debt obligations. The holder of such indebtedness is in general required to
treat as ordinary income the proportionate part of the original issue discount
attributable to the period during which the holder held the indebtedness.
The Investment Adviser receives a fee at the annual rate of 0.30% on the first
$60 million of average net assets, plus 0.21% on net assets over $60 million,
plus 3% of gross investment income. Assuming net assets of $600 million and
gross investment income levels of 3%, 4%, 5%, 6% and 7%, management fees would
be 0.31%, 0.34%, 0.37%, 0.40% and 0.43%, respectively. For the purposes of such
computations under the Agreement, the fund's gross investment income does not
reflect any net realized gains or losses on the sale of portfolio securities but
does include original-issue discount as defined for federal income tax purposes.
The Investment Adviser has agreed that in the event the expenses of the fund
(with the exclusion of interest, taxes, brokerage costs, extraordinary expenses
such as litigation and acquisitions or other expenses excludable under
applicable state securities laws or regulations) for any fiscal year ending on a
date on which the Agreement is in effect, exceed the expense limitations, if
any, applicable to the fund pursuant to state securities laws or any regulations
thereunder, it will reduce its fee by the extent of such excess and, if required
pursuant to any such laws or any regulations thereunder, will reimburse the fund
in the amount of such excess.
For the fiscal years ended July 31, 1999, 1998, and 1997, the Investment Adviser
received advisory fees of $2,083,000, $1,544,000, and $1,100,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended July
31, 1999 amounted to $450,000 after allowance of $1,829,000 to dealers. During
the fiscal years ended 1998 and 1997 the Principal Underwriter retained $487,000
and $345,000, respectively after an allowance of $2,007,000 and $1,424,000 to
dealers, respectively.
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Directors and separately by a majority of the directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting securities
of the fund. The
American High-Income Municipal Bond Fund -- Page 15
<PAGE>
officers and directors who are "interested persons" of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment process
from growth or stability of assets and maintenance of a financially healthy
management organization. The selection and nomination of directors who are not
"interested persons" of the fund are committed to the discretion of the
directors who are not "interested persons" during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.30% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made.
These include service fees for qualified dealers and dealer commissions and
wholesaler compensation on sales of shares exceeding $1 million (including
purchases by any employer-sponsored 403(b) plan, any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a "401(k)"
plan with 100 or more eligible employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During the
fiscal year ended July 31, 1999, the fund paid or accrued $1,574,000 for
compensation to dealers under the Plan. As of July 31, 1999, accrued and unpaid
distribution expenses were $161,000.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting, selling
or distributing securities, but permit banks to make shares of mutual funds
available to their customers and to perform administrative and shareholder
servicing functions. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited from so acting,
shareholder clients of such bank would be permitted to remain shareholders of
the fund and alternate means for continuing the servicing of such shareholders
would be sought. In such event, changes in the operation of the fund might occur
and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being provided by
such bank. It is not expected that shareholders would suffer adverse financial
consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
American High-Income Municipal Bond Fund -- Page 16
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute the amount
of capital gain and/or net investment income required to be distributed by an
excise tax provision of the Code, the fund may be subject to that excise tax. In
certain circumstances, the fund may determine that it is in the interest of
shareholders to distribute less than the required amount. In this case, the fund
will pay any income or excise taxes due.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
TAXES - The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The fund intends to distribute annually all
of its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by the fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund
American High-Income Municipal Bond Fund -- Page 17
<PAGE>
intends to elect to treat such capital gains as having been distributed to
shareholders. As a result, each shareholder will report such capital gains as
long-term capital gains taxable to individual shareholders at a maximum 20%
capital gains rate, will be able to claim a pro rata share of federal income
taxes paid by the fund on such gains as a credit against personal federal income
tax liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
their related tax credit.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a
American High-Income Municipal Bond Fund -- Page 18
<PAGE>
partial return of investment capital upon the distribution, which will
nevertheless be taxable to them.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund which must
be distributed to shareholders in order to maintain the qualification of the
fund as a regulated investment company and to avoid federal income tax at the
level of the fund. Shareholders will be subject to income tax on such original
issue discount, whether or not they elect to receive their distributions in
cash.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company may be subject to withholding of federal income tax at the rate of 31%
in the case of non-exempt U.S. shareholders who fail to furnish the investment
company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.
In most cases, the interest on "private activity" bonds as defined under the
Code is an item of tax preference subject to the alternative minimum tax ("AMT")
on corporations and individuals. The fund may invest without limitation in
"private activity" bonds. As of the date of this statement of additional
information, individuals are subject to an AMT at a maximum marginal rate of 28%
(20% on capital gains with respect to assets held more than one year) and
corporations at a rate of 20%. Shareholders will not be permitted to deduct any
of their share of fund expenses in computing alternative minimum tax income.
With respect to corporate shareholders of the fund, all interest on municipal
bonds and other tax-exempt obligations, including exempt-interest dividends paid
by the fund, is included in adjusted current earnings in calculating federal
American High-Income Municipal Bond Fund -- Page 19
<PAGE>
alternative minimum taxable income, and may also affect corporate federal
"environmental tax" liability.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
American High-Income Municipal Bond Fund -- Page 20
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers "for initial "Investment Minimums and Fund
investment minimums. Numbers").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)
For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>
American High-Income Municipal Bond Fund -- Page 21
<PAGE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine/(R)/ (see description
below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 02
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 11
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 03
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 12
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . . . . . . 250 33
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 16
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . . . . . . 250 10
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 05
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 06
The Investment Company of America/(R)/ . . . . . . . . . . . . . . . . . 250 04
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 14
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 07
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 36
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . 250 35
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . . . . . . 250 01
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . . . . . . 250 40
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . . . . . . 250 21
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . . . . . . 250 08
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 31
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 250 23
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . 250 43
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . . . . . . 250 19
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . . . . . . 1,000 20
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . . . . . . 1,000 24
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . . . . . . 1,000 25
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . . . . . . 250 22
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . . . . . . 1,000 09
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . . . . . . 1,000 39
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . . . . . . 1,000 49
___________
*Available only in certain states.
</TABLE>
Minimums are reduced to $50 for purchases through "Automatic Investment Plans"
(except for the money market funds) or to $25
American High-Income Municipal Bond Fund -- Page 22
<PAGE>
for purchases by retirement plans through payroll deductions and may be reduced
or waived for shareholders of other funds in The American Funds Group.
TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is
$50 for additional investments (except as noted above).
SALES CHARGES - The sales charges you pay when purchasing the stock, stock/bond,
and bond funds of The American Funds Group are set forth below. The money market
funds of The American Funds Group are offered at net asset value. (See
"Investment Minimums and Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount of Purchase SALES CHARGE AS DEALER
at the Offering Price PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $25,000 6.10% 5.75% 5.00%
$25,000 but less than $50,000 5.26 5.00 4.25
$50,000 but less than $100,000 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND
FUNDS
$100,000 but less than 3.63 3.50 2.75
$250,000
$250,000 but less than 2.56 2.50 2.00
$500,000
$500,000 but less than 2.04 2.00 1.60
$750,000
$750,000 but less than 1.52 1.50 1.20
$1,000,000
$1,000,000 or more none none (see below)
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or more are
sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans investing $1 million or more,
or with 100 or more eligible employees, may invest with no sales charge and are
not subject to a contingent deferred sales charge. Investments made by
retirement plans, endowments or foundations with $50 million or more in assets
may also be made with no sales charge and are not subject to a contingent
deferred sales charge. A dealer concession of up to 1% may be paid by the fund
under its Plan of Distribution on investments made with no initial sales charge.
American High-Income Municipal Bond Fund -- Page 23
<PAGE>
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:
(1) current or retired directors, trustees, officers and advisory board members
of the funds managed by Capital Research and Management Company, employees of
Washington Management Corporation, employees and partners of The Capital Group
Companies, Inc. and its affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
DEALER COMMISSIONS - Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at net
asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million to
$4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the fund.
REDUCING YOUR SALES CHARGE - You and your "immediate family" (your spouse and
your children under age 21) may combine investments to reduce your costs. You
must let your
American High-Income Municipal Bond Fund -- Page 24
<PAGE>
investment dealer or American Funds Service Company (the "Transfer Agent") know
if you qualify for a reduction in your sales charge using one or any combination
of the methods described below.
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the
same sales charge as if all shares had been purchased at once. This
includes purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $25,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to utilize a Statement in order to qualify for a reduced sales
charge, shares equal to 5% of the dollar amount specified in the Statement
will be held in escrow in the shareholder's account out of the initial
purchase (or subsequent purchases, if necessary) by the Transfer Agent. All
dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see the account application) and any individual
investments in American Legacy variable annuities or variable life
insurance policies (American Legacy, American Legacy II, American Legacy
III, and American Legacy Shareholder's Advantage variable annuities,
American Legacy Life, American Legacy Variable Life, and American Legacy
Estate Builder) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy variable annuities or
variable life insurance policies are added to the figure determined above.
The sum is the Statement amount and applicable breakpoint level. On the
first investment and all other investments made pursuant to the Statement,
a sales charge will be assessed according to the sales charge breakpoint
thus determined.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
American High-Income Municipal Bond Fund -- Page 25
<PAGE>
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:
- employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
- business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
- for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
- made for two or more employee benefit plans of a single employer
or of affiliated employers as defined in the 1940 Act, again
excluding employee benefit plans described above; or
- for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of two or more funds in
The American Funds Group, as well as individual holdings in various
American Legacy variable annuities and variable life insurance policies to
qualify for a reduced sales charge. Direct purchases of the money market
funds are excluded. Shares of money market funds purchased through an
exchange, reinvestment or cross-reinvestment from a fund having a sales
charge do qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing holdings in The American Funds Group, as well as your
holdings in Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or
charity. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy variable annuities and variable
life insurance policies. Direct purchases of the money market funds are
excluded.
PRICE OF SHARES - Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; this offering price is effective for orders received prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In
American High-Income Municipal Bond Fund -- Page 26
<PAGE>
the case of orders sent directly to the fund or the Transfer Agent, an
investment dealer MUST be indicated. The dealer is responsible for promptly
transmitting purchase orders to the Principal Underwriter. Orders received by
the investment dealer, the Transfer Agent, or the fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will be purchasing and redeeming shares of the fund,
since such prices generally reflect the previous day's closing price whereas
purchases and redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New
York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or the
over-the-counter market. Fixed-income 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.
Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity,
American High-Income Municipal Bond Fund -- Page 27
<PAGE>
where, after the sale, such person or entity would own beneficially directly or
indirectly more than 4.5% of the outstanding shares of the fund without the
consent of a majority of the fund's Board of Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. You may sell (redeem) shares in
your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold through
the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered shareholder(s);
or
- Sent to an address other than the address of record, or an address
of record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in certificate
form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/ and
American FundsLine OnLine/(R)/) are limited to $50,000 per shareholder each
day.
- Checks must be made payable to the registered shareholder(s).
- Checks must be mailed to an address of record that has been used with
the account for at least 10 days.
American High-Income Municipal Bond Fund -- Page 28
<PAGE>
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application).
- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Proceeds will be reinvested at the next calculated net asset value after your
request is received and accepted by the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds made
within twelve months of purchase on investments of $1 million or more (other
than redemptions by employer-sponsored retirement plans). The charge is 1% of
the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for purposes
of calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from 403(b) plans or IRAs due to death, disability
or attainment of age 591/2; for tax-free returns of excess contributions to
IRAs; and for redemptions through certain automatic withdrawals not exceeding
10% of the amount that would otherwise be subject to the charge.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or
American High-Income Municipal Bond Fund -- Page 29
<PAGE>
around the date you specified. If your bank account cannot be debited due to
insufficient funds, a stop-payment or the closing of the account, the plan may
be terminated and the related investment reversed. You may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent. Checks that remain uncashed earn no interest.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares at no sales charge unless you indicate otherwise on the
account application. You also may elect to have dividends and/or capital gain
distributions paid in cash by informing the fund, the Transfer Agent or your
investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "Principal
Underwriter and Transfer Agent" in the prospectus for the appropriate fax
numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer
Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type
retirement plans for which Capital Guardian Trust Company serves as trustee may
not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions
and purchases are processed simultaneously at the share prices next determined
after the exchange order is received. (See "Purchase of Shares--Price of
Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.
American High-Income Municipal Bond Fund -- Page 30
<PAGE>
AUTOMATIC EXCHANGES - You may automatically exchange shares in amounts of $50 or
more among any of the funds in The American Funds Group on any day (or preceding
business day if the day falls on a non-business day of each month you designate.
You must either (a) meet the minimum initial investment requirement for the
receiving fund OR (b) the originating fund's balance must be at least $5,000 and
the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.
REDEMPTION OF SHARES - The funds' articles of incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per
American High-Income Municipal Bond Fund -- Page 31
<PAGE>
share if at such time the shareholder owns of record shares having an aggregate
net asset value of less than the minimum initial investment amount required of
new shareholders as set forth in the fund's current registration statement under
the 1940 Act, and subject to such further terms and conditions as the Board of
Directors of the fund may from time to time adopt.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.
Dealer concessions paid on underwriting transactions for the fiscal years ended
July 31, 1999, 1998 and 1997, amounted to $690,000, $642,000 and $200,000,
respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or foreign branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee of
$160,000 for the fiscal year ended July 31, 1999.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as the fund's independent accountants providing audit
services, preparation of tax returns and review of certain documents to be filed
with the Securities and Exchange Commission. The financial statements included
in this Statement of Additional
American High-Income Municipal Bond Fund -- Page 32
<PAGE>
Information from the Annual Report have been so included in reliance on the
report PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting. The selection of
the fund's independent accountants is reviewed and determined annually by the
Board of Directors.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on July 31. Shareholders
are provided at least semiannually with reports showing the investment
portfolio, financial statements and other information. The fund's annual
financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP. In an effort to reduce the volume of mail
shareholders receive from the fund when a household owns more than one account,
the Transfer Agent has taken steps to eliminate duplicate mailings of
shareholder reports. To receive additional copies of a report, shareholders
should contact the Transfer Agent.
YEAR 2000 - The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. The fund understands that these service providers
have updated all of their computer systems to process date-related information
properly following the turn of the century. However, there can be no assurance
that these steps are sufficient to avoid any adverse impact on the fund. In
addition, the fund's investments could be adversely affected by the Year 2000
problem. For example, the markets for securities in which the fund invests could
experience settlement problems and liquidity issues. Corporate and governmental
data processing errors may cause losses for individual companies and overall
economic uncertainties. Earnings of individual issuers are likely to be affected
by the costs of addressing the problem, which may be substantial and may be
reported inconsistently.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- JULY 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $15.49
Maximum offering price per share
(100/95.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $16.26
</TABLE>
American High-Income Municipal Bond Fund -- Page 33
<PAGE>
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 4.79% based on a 30-day (or one month) period ended July
31, 1999, computed by dividing the net investment income per share earned during
the period by the maximum offering price per share on the last day of the
period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
The fund may also calculate a tax equivalent yield based on a 30-day (or one
month) period ended no later than the date of the most recent balance sheet
included in the registration statement, computed by dividing that portion of the
yield (as computed by the formula stated above) which is tax-exempt by one minus
a stated income tax rate and adding the product to that portion, if any, of the
yield that is not tax-exempt. The fund's tax-equivalent yield based on the
maximum combined effective federal/state tax rate of 39.6% for the 30-day (or
one month) period ended July 31, 1999 was 7.93%.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
As of July 31, 1999, the fund's total return over the past twelve months and
average annual total return over its lifetime were -3.18% and 7.15%,
respectively. Over the fund's lifetime (September 26, 1994 to July 31, 1999),
the Lehman Brothers Municipal Bond Index /1/ and the Lipper High Yield Municipal
Debt Funds Average /2/ had average annual total returns of 7.16% and 6.84%,
respectively. The fund's average annual total return at net asset value over
the past twelve months and average annual over its lifetime at July 31, 1999
were 1.63% and 8.23%, respectively.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.
/1/ The Lehman Brothers Municipal Bond Index represents the long-term
investment grade municipal bond market. This index is unmanaged and does not
reflect sales charges, commissions or expenses.
/2/ The Lipper High Yield Municipal Debt Funds Average represents an average of
funds in the objective that invest at least 50% of their assets in lower rated
municipal debt issues. The results of the underlying funds in the index include
the reinvestment of dividend and capital gain distributions, but do not reflect
sales charges and commissions.
American High-Income Municipal Bond Fund -- Page 34
<PAGE>
In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 4.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average total return figures.
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
American High-Income Municipal Bond Fund -- Page 35
<TABLE>
American High-Income Municipal Bond Fund
Investment Portfolio, July 31, 1999
<S> <C> <C>
Principa Market
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.
