[The American Funds Group(r)]
American High-Income Municipal Bond Fund
[Abstract illustration]
2000 Annual Report for the year ended July 31
American High-Income Municipal Bond Fund(r) seeks a high level of current
income exempt from regular federal income taxes through a diversified,
carefully researched portfolio of higher yielding, lower rated, higher risk
municipal bonds. It may invest without limit in bonds subject to the
alternative minimum tax.
American High-Income Municipal Bond Fund is one of the 29 American Funds, the
nation's third-largest mutual fund family. For nearly seven decades, Capital
Research and Management Company, the American Funds adviser, has invested with
a long-term focus based on thorough research and attention to risk.
[Begin Chart]
THE VALUE OF A LONG-TERM PERSPECTIVE
How a $10,000 investment has grown
(For the period September 26, 1994 to July 31, 2000, with dividends reinvested)
<TABLE>
<CAPTION>
AHIM NAV AHIM DIV REINV Lehman Muni Bond Index Lipper High-Yield Muni Debt Fun Average
<S> <C> <C> <C> <C>
9/26/94 10,000 9,625 10,000 10,000
10/31/94 9,886 9,513 9,822 9,863
1/31/95 10,287 9,899 10,139 10,122
4/30/95 10,760 10,354 10,566 10,514
7/31/95 11,162 10,741 10,910 10,799
10/31/95 11,534 11,099 11,280 11,114
1/31/96 11,904 11,455 11,665 11,500
4/30/96 11,692 11,251 11,406 11,240
7/31/96 12,108 11,652 11,630 11,446
10/31/96 12,452 11,983 11,923 11,752
1/31/97 12,687 12,208 12,113 11,947
4/30/97 12,863 12,378 12,162 12,049
7/31/97 13,484 12,975 12,822 12,653
10/31/97 13,714 13,197 12,936 12,844
1/31/98 14,123 13,590 13,338 13,259
4/30/98 14,181 13,646 13,293 13,258
7/31/98 14,435 13,890 13,591 13,509
10/31/98 14,645 14,093 13,973 13,750
1/31/99 14,758 14,201 14,224 13,923
4/30/99 14,827 14,267 14,217 13,951
7/31/99 14,669 14,116 13,982 13,749
10/31/99 14,375 13,833 13,725 13,338
1/31/2000 14,191 13,656 13,708 13,097
4/30/2000 14,524 13,976 14,086 13,345
7/31/2000 14,905 14,343 14,585 13,520
</TABLE>
$14,905
The fund at net asset value (without any sales charge)
$14,585
Lehman Brothers Municipal Bond Index(1)
$14,343
The fund at maximum offering price (with 3.75% sales charge deducted)(2)
$13,520
Lipper High-Yield Municipal Debt Funds Average(3)
(1) The index is unmanaged and does not reflect sales charges, commissions or
expenses.
(2) Results reflect payment of the maximum sales charge of 3.75% on the $10,000
investment. Thus, the net amount invested was $9,625. As outlined in the
prospectus, the sales charge is reduced for larger investments.
(3) Calculated by Lipper Inc. The average does not reflect sales charges.
[End Chart]
[Begin chart]
RESULTS AT A GLANCE
Class A Shares
<TABLE>
<CAPTION>
<S> <C> <C> <C>
average annual compound return without a sales charge Lifetime (since 9/26/94) 5 years 1 year
As of 7/31/00 +7.06% +5.95% +1.61%
</TABLE>
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual compound returns on a $1,000 investment for periods ended June 30, 2000
(the most recent calendar quarter) with all distributions reinvested.
Class A Shares
<TABLE>
<CAPTION>
<S> <C> <C> <C>
reflecting 3.75% maximum sales charge Lifetime (since 9/26/94) 5 years 1 year
As of 6/30/00 +6.22% +5.06% -3.37%
</TABLE>
Results before October 1996 reflect the effect of a voluntary fee waiver,
without which returns would have been lower.
The fund's 30-day yield for Class A shares as of August 31, 2000, calculated in
accordance with the Securities and Exchange Commission formula, was 5.40%. The
fund's distribution rate as of that date was 5.35%. The SEC yield reflects
income the fund expects to earn based on its current portfolio of securities,
while the distribution rate is based solely on the fund's past dividends.
Accordingly, the fund's SEC yield and distribution rate may differ.
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the period. Please see the back
cover for important information about Class A and B shares.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. HIGH-YIELD BONDS ARE
SUBJECT TO GREATER FLUCTUATIONS IN VALUE AND RISK OF LOSS OF INCOME AND
PRINCIPAL. Income may be subject to state or local income taxes and/or federal
alternative minimum taxes. Certain other income, as well as capital gain
distributions, may be taxable.
[End Chart]
FELLOW SHAREHOLDERS:
Bond markets in the U.S. exhibited a marked degree of volatility over the past
fiscal year. During the first half, as the economy steamed toward a record
expansion, bond yields rose, sending bond prices lower. Some nervous investors
shed fixed-income assets in pursuit of rising equity prices. But when the stock
markets corrected last spring, many investors were attracted back to the
relative stability of fixed-income securities. Prices firmed and bond returns
began to improve as tentative signs of slower economic growth emerged.
For the twelve months ended July 31, 2000, American High-Income Municipal Bond
Fund recorded a total return of 1.6%. This reflects a recovery from the 3.3%
decline for the first six months. The 1.6% annual return compares favorably
with the -1.4% average return of the 65 high-yield municipal debt funds
measured by Lipper Inc. The unmanaged Lehman Brothers Municipal Bond Index
returned 4.3% for the fiscal period; that index measures the investment grade
(high-quality) municipal bond market and does not include expenses in its
return calculations. Higher quality bonds generally posted stronger returns
than higher risk debt during this period.
Shareholders in American High-Income Municipal Bond Fund received monthly
tax-free dividends totaling 83 cents a share over the past 12 months. In
addition, a capital gain distribution of 2.8 cents a share was paid in
November. Shareholders who reinvested dividends realized an income return of
5.5%; for investors in the 39.6% federal income tax bracket, this return was
equivalent to a taxable income return of 9.1%. Those shareholders who elected
to receive their dividends in cash realized an income return of 5.3%,
equivalent to a taxable return of 8.8%, while the value of their holdings
declined 3.9% for the fiscal year.
Bonds End the Decade on a Low Note But...
The fund's fiscal year began in August 1999 during a period of relatively rich
prices and narrow quality spreads for municipal bonds. This scenario began in
early 1999 and persisted throughout the summer. At that time, the fund's
portfolio counselors increased the fund's exposure to higher rated bonds,
lifting the percentage of Triple-A rated debt to 9.37% as of July 31, 1999.
Investment grade bonds (those rated Triple-B, Single-A, Double-A, and Triple-A)
constituted roughly 57% of the fund's portfolio holdings at the beginning of
the fiscal period. Short-term interest rates had just begun to rise, as the
Federal Reserve hiked rates in June and August of 1999. Additional rate hikes
seemed likely, and the fund's counselors decided that a defensive posture was
warranted.
During the middle of the fiscal year, when bond prices were lower and spreads
had widened a bit, we sold off some of the higher rated debt in the portfolio
to purchase higher yielding bonds that offered better long-term value at newly
attractive prices. By January 31, 2000, the percentage of investment grade debt
in the fund had declined to about 50%; at the same time, higher yielding,
non-investment grade debt constituted some 46% of your portfolio, versus 37% at
the beginning of the fiscal year. This shift in holdings directly reflects one
of the strategies employed to enhance long-term value and to protect investment
returns through the ups and downs of bond cycles. (Please see our feature
article, "Managing Risk Can Fortify Returns," on page 2 for further details.)
...Year-to-Date Returns Improve
Overall, bond returns improved markedly during the second half of the fiscal
year, with the Federal Reserve still striving to engineer a soft landing for
the economy. The total return for your fund was 5% for this period, assuming
reinvestment of dividends. By contrast, the major U.S. equity market indexes
posted far weaker returns over the same six-month period. Of course, all
investment securities - whether equities or bonds - are subject to market
gyrations. That is why it is so important to maintain a long-term perspective
and to secure the expertise of an investment professional.
The portfolio counselors and analysts who manage your fund are part of Capital
Research and Management Company, which has been managing investment assets like
yours for nearly seven decades. This expertise has proven a valuable tool
through all types of volatile markets. Since its inception in 1994, American
High-Income Municipal Bond Fund has provided a steady stream of federally
tax-free income for its investors and an average annual compound total return
of 7.06%. Over the past fiscal year, your fund ranks tenth out of 65 high-yield
municipal debt funds tracked by Lipper Inc.; for the past five years, it ranks
third among 35 funds. Since its inception, your fund ranks first out of 32
funds in the same Lipper category.*
We look forward to reporting to you again in six months, and we appreciate your
ongoing support.
Cordially,
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Chairman of the Board
/s/ Mark R. Macdonald
Mark R. Macdonald
President
September 15, 2000
*Lipper rankings are based on total return and do not reflect the effects of
sales charges.
MANAGING RISK CAN FORTIFY RETURNS
[Abstract illustration]
"The greater the risk, the greater the reward." This investment adage may
contain a kernel of truth, but its simplicity masks the complexity of the
venture. Those who take greater risk without attending to its perils may find
themselves without rewards of any kind. In other words, greater risk does not
guarantee greater rewards. This is a hard lesson that many short-term investors
learned over the past few years, as more individuals flocked to the financial
markets and as these markets demonstrated increased levels of volatility.
Since its inception in 1994, American High-Income Municipal Bond Fund has
sought to provide its shareholders with a high level of current income exempt
from federal income taxes. Accordingly, the fund invests in higher yielding
municipal bonds that inherently possess a greater exposure to risk. The fund's
investment professionals, however, carefully weigh these risks. That balancing
act - which few individual investors can manage on their own - has been a
critical element in containing risk and delivering solid returns over the life
of the fund.
In this article, we look at several types of risk that your fund's portfolio
counselors and analysts encounter. We also illustrate some of the measures they
employ to limit them.
The Best Offense is a Good Defense
Some portfolio risks may be described as external, in that they emanate from
broader market forces outside the actual portfolio. Interest-rate risk is one
such example. Over the past fiscal year, this type of risk has exerted
particular influence on bond portfolios.
Throughout an economic cycle, interest rates rise or fall depending on the
level of economic activity, the threat of inflation, technical factors such as
supply and demand, and the interventions of the Federal Reserve. In a rising
interest rate environment, the price of an existing fixed-income security
typically falls; when interest rates fall, a bond's price increases. These
relationships derive from the fact that a fixed-rate bond pays a stated income
return, also known as the interest rate or coupon rate: A 6% bond due in five
years, for example, will pay 6% interest to maturity. As the interest rate
environment changes, the coupon rate is constant, but the underlying value of a
bond adjusts to reflect the relative value of the stated return to prevailing
interest rates. Over the past year, we witnessed an overall rise in interest
rates as the threat of inflation grew and as the Federal Reserve responded with
short-term rate hikes. More recently, long-term interest rates have begun to
decline as the supply of new debt has ebbed and inflation concerns have eased.
[See chart on page 3.]
Diversification by maturity and quality is one tool your portfolio counselors
use to limit interest rate risks. Neil Langberg, one of the fund's counselors,
observes, "Protecting people on the downside, when bond values are declining,
may be the best thing that we do." A careful mix of higher and lower rated
bonds often provides balance and lessens the effects of volatile yield
fluctuations. This mix can be adjusted as needed to respond to interest rate
changes. In some interest rate cycles, higher quality bonds may fare better
than lower quality bonds; at other times, the reverse may be true. This same
element of diversification applies to the maturities of the bonds in your
portfolio.
[Begin Pull Quote]
"Protecting people on the downside$may be the best thing that we do."
[End Pull Quote]
TYPES OF RISK
Here are several types of risk commonly associated with bonds.
Credit Risk Refers to the ability of a bond issuer to meet the covenants of a
bond agreement and to make timely payments of interest and principal. Bond
rating agencies (such as Moody's or Standard & Poor's) assign valuations based
on underlying credit risk. The highest quality bonds are Triple-A rated and
possess the least amount of risk. Bonds rated Triple-A down to Triple-B-minus
(or Baa3) are deemed investment grade; these bonds possess acceptable levels of
risk for most investors. Bonds in the Double-B (or Ba) category, or lower, are
classified as below investment grade and possess high levels of credit risk.
Default Risk A severe form of credit risk, referring to a pending or actual
event of default. A bond issuer is said to be in default if covenants of the
bond agreement have been violated, an interest payment has been missed, or if
the repayment of principal is in jeopardy.
Interest-Rate Risk Risk related to the underlying (or macroeconomic) rate
environment. Rising interest rates diminish the value of existing bonds.
Conversely, declining interest rate cycles tend to raise the value of existing
bonds.
Liquidity Risk Bonds that are seldom traded in active markets bear liquidity
risk. As a consequence, the difference between the bid price and the asking
price (the dealer's mark-up) is usually much greater than is the case for bonds
that are "liquid" - for which active markets exist. Often, these bonds are
difficult to sell if the holder needs to raise cash. Bond issues that are small
in size, that are privately placed, or are non-rated are most subject to
liquidity risk.
Prepayment Risk The possibility that a bond may be redeemed in part or full
prior to maturity. When this occurs, the projected cash flow of a bond is
altered and that may diminish the projected return. Prepayment risk is usually
associated with mortgage-backed bonds or similar collateralized securities.
Reinvestment Risk The inability of the bondholder to reinvest cash flow (the
interest payments on a bond) at the same, or higher, yield as the original
investment. This is typically the case in a declining rate environment. This
may also result from prepayment risk.
Yield-Spread Risk This is usually associated with interest-rate risks and
volatile markets. Yield-spread risk arises as the relationship widens between
pricing benchmarks, or as spreads widen between the rating categories.
Additionally, contagion effects among like classes of debt can drive
yield-spread risk. For example: If the particular bonds of one city suffer an
event of default, then all bonds associated with that locality - perhaps even
those issued by the governing state - may experience spread widening as a
result. Market forces, such as supply and demand, may intensify yield-spread
risks.
[Begin Chart]
AAA municipal bond yields
<TABLE>
<CAPTION>
7/31/1999 1/31/2000 7/31/2000
MATURITY (IN YEARS) AAA Yields AAA Yields AAA Yields
<S> <C> <C> <C>
1 3.45 4.03 4.28
3.98 4.58 4.40
4.08 4.68 4.49
4.20 4.80 4.53
5 4.30 4.90 4.58
4.40 5.00 4.63
4.50 5.08 4.68
4.60 5.15 4.73
4.70 5.22 4.78
10 4.80 5.28 4.83
4.90 5.36 4.93
5.00 5.43 5.03
5.05 5.53 5.13
5.10 5.62 5.22
15 5.15 5.70 5.28
5.20 5.75 5.35
5.25 5.80 5.41
5.28 5.85 5.45
5.30 5.90 5.48
20 5.32 5.93 5.50
5.34 5.95 5.52
5.36 5.97 5.54
5.37 5.98 5.55
5.38 5.99 5.56
25 5.39 6.00 5.57
5.40 6.01 5.58
5.41 6.02 5.59
5.41 6.02 5.60
5.41 6.03 5.60
30 5.41 6.03 5.60
</TABLE>
Source: Municipal Market Data.
[End Chart]
Shorter maturity bonds may fare less well during some interest rate movements
than longer maturity bonds. We saw evidence of this in the past fiscal year, as
the Federal Reserve hiked short-term rates five times. "Overall, we lengthened
the average maturity of the portfolio somewhat, as interest rates began to
rise," explains Neil. This move proved beneficial, as long-term municipal bond
rates rose less over the course of the year than short-term bond rates. Knowing
how and when to adjust the blend of quality and maturities requires a
professional understanding of the bond market's behavior and an expertise that
comes with years of experience.
[Begin Pull Quote]
The yield spread acts as a barometer of a bond's risk.
[End Pull Quote]
Relativity is the Key to Value
Yield spreads, or the relationship each bond has with other bonds in its
universe, can present another type of risk. Municipal bonds are valued against
the highest-quality tax-exempt bonds - Triple-A General Obligation debt - in
each maturity category. The spread refers to the difference in yield rates, as
measured in basis points (one basis point = 0.01%). Generally, the lower the
rating on a bond and the longer its maturity, the wider the spread off of this
benchmark. Of course, there are exceptions; market forces of supply and demand
and the contagion effects of credit concerns are among the other factors that
influence yield spreads.
The yield spread acts as a barometer of a bond's risk versus all other bonds,
throughout economic and market cycles. These spreads may change daily, or
weekly or even monthly. [See charts below.] The net asset value of your fund is
directly affected by yield-spread relationships, because the price of a bond is
altered by changes in spreads.
In their effort to manage risk, your portfolio counselors constantly monitor
and, when necessary, alter the mix of credit quality and maturity to capture
those categories of bonds that afford the best spread value at any given time.
David Hoag, another portfolio counselor, provides this example: "Back when
spreads were very tight, around the middle of 1999, I was buying high-quality,
lower yielding, insured bonds because I thought spreads were too tight."
High-quality issues can provide greater protection against market downturns. "I
was less interested in lower rated issues because the yield spread wasn't large
enough to compensate for assuming the greater risk." The cycle began to shift
by the end of the year, when spreads within the municipal bond market began to
widen considerably. The fund's counselors were then in a good position to sell
some higher rated bonds to purchase the lower rated, higher yielding debt, at
more favorable prices, David explains.
[Abstract illustration]
This intricate and ever-shifting set of spread relationships creates unique
challenges - and opportunities - for the portfolio counselors. When the
Allegheny Health, Education and Research Foundation declared bankruptcy in
1998, the news sent tremors through the high-yield municipal bond market.
Spreads on lower rated municipal bonds widened sharply in response; the debt of
healthcare issuers was especially impacted by this event. To this day, yield
spreads on municipal healthcare bonds remain wide versus other sectors as a
result of Allegheny's troubles. In some instances, these wider spreads deliver
a yield that may well reward the risk.
One such opportunity arose early in 2000. Research analyst Karl Zeile has long
had a high regard for the bonds of the Fellowship Village Project, a continuing
care facility in New Jersey. We first purchased bonds from this issuer in 1995.
In March of this year, Karl was able to acquire additional bonds of the
Fellowship Village at an even more attractive price - a wider spread - than was
available only last summer. Knowing when to buy can be an important factor in
managing risk.
[Begin Chart]
BBB YIELD SPREADS OFF AAA DEBT
<TABLE>
<CAPTION>
<S> <C>
7/31/1999
MATURITY (IN YEARS) BASIS POINTS
1 48
47
52
55
5 58
58
58
58
58
10 58
58
55
55
55
15 53
50
48
47
46
20 45
44
43
43
43
25 43
42
42
42
30 42
1/31/2000
MATURITY (IN YEARS) BASIS POINTS
1 42
47
52
55
5 55
55
57
60
63
10 67
69
70
67
63
15 60
60
60
59
57
20 56
56
56
56
56
25 56
56
56
56
56
30 56
7/31/2000
MATURITY (IN YEARS) BASIS POINTS
1 52
55
56
60
5 65
70
75
74
75
10 75
75
75
75
76
15 75
73
72
73
75
20 77
77
77
77
77
25 77
77
77
77
77
30 77
</TABLE>
Source: Municipal Market Data.
[End Chart]
Good Things Come to Those Who Evaluate... and Wait
Knowing what to buy is even more important. In addition to monitoring the mix
of quality and maturity, portfolio counselors and analysts are constantly alert
to internal risks based on the creditworthiness of each holding. Credit risk is
the most common risk associated with individual bonds. At the most basic level,
it refers to the ability of a bond issuer to make timely payments of principal
and interest.
Because the American High-Income Municipal Bond Fund seeks to attain higher
returns by investing in lower rated bonds, each holding in your portfolio is
carefully and thoroughly researched. The fund's relatively high level of credit
risk demands a high level of attention to individual credits. Before they make
any investment, your portfolio counselors and analysts rigorously examine each
bond's credit risks to ensure that shareholders will be properly rewarded.
Although bonds are rated by independent rating agencies, the fund's managers
strive to uncover risks or opportunities that others may have missed. Once a
bond is added to the portfolio, it must then be periodically evaluated to
assess whether its creditworthiness has changed.
[Abstract illustration]
Rigorous credit analysis accompanied by a willingness to assume risk can
occasionally lead to greater-than-expected rewards. One of our healthcare
holdings provides a notable example. In 1995, your fund purchased bonds issued
by the Edgewood Retirement Community Project, a continuing care facility in
Massachusetts. Although the project was still a "field of dreams" when the
bonds were purchased, portfolio counselor Mark Macdonald, who is also President
of your fund, had studied the project closely and believed that the bonds
offered good long-term value. "I spent weeks researching the investment." His
analysis concluded that the facility would thrive based upon the needs of the
area and its demographics, and that the management team was well equipped to
shepherd the development. Indeed, the project grew increasingly successful over
the years, and management expanded the facility. Because of Edgewood's success,
our original investment has increased both in quality and in market value; its
rating has increased to Triple-A from Single-B, lifting the price of the bonds
20%. Not all investments work out so well, but in some instances, thorough
research, time, and patience can deliver rewards well beyond the initial risks.
A Long-Term Perspective
Over its six-year lifetime, American High-Income Municipal Bond Fund has
rewarded investors through careful credit selection and vigilant risk
management. As financial markets become increasingly complex, diverse and
volatile, these skills will assume even greater importance in helping us meet
the fund's objective. Professional management, research, and attention to the
nuances of risk are three compelling reasons that fixed-income investors can
benefit by turning to American Funds' bond funds.
[Begin Pull Quote]
The Fund has rewarded investors through careful credit selection and vigilant
risk management.
[End Pull Quote]
[Begin chart]
Tax-free yields vs. taxable yields
To use the table below, find your estimated 2000 taxable income to determine
your federal tax rate. Then look in the right-hand column to see what you would
have had to earn from a taxable investment to equal the fund's 5.48% tax-free
distribution rate in July.
For example, a couple with a taxable income of $162,000 is subject to a federal
tax rate of 36%. In this bracket, the fund's 5.48% distribution rate is
equivalent to an 8.56% return on a taxable investment. Investors in the highest
tax bracket (39.6%) would need a taxable distribution rate of 9.07% to match
the fund's distribution rate.
<TABLE>
<CAPTION>
IF YOUR TAXABLE INCOME IS... ...THEN YOUR FEDERAL AS OF 7/31/2000, YOUR
TAX RATE(1) IS TAX-EXEMPT DISTRIBUTION
RATE OF 5.48%(2) IS
SINGLE JOINT EQUIVALENT TO A TAXABLE
RATE OF...
<S> <C> <C> <C>
$0 - $26,250 $0 - $43,850 15.0% 6.45%
26,251 - 63,550 43,851 - 105,950 28.0 7.61
63,551 - 132,600 105,951 - 161,450 31.0 7.94
132,601 - 288,350 161,451 - 288,350 36.0 8.56
Over 288,350 Over 288,350 39.6 9.07
</TABLE>
(1) Based on 2000 federal tax rates. The federal rates do not include an
adjustment for the loss of personal exemptions and the phase-out of itemized
deductions applicable to certain taxable income levels.
(2) Distribution rate based on the average offering price for the month of
July.
[End chart]
INVESTMENT PORTFOLIO
July 31, 2000
[Begin pie chart]
<TABLE>
Quality Ratings
<S> <C>
AAA 8.65%
AA 4.38%
A 5.20%
BBB 33.96%
BB 29.24%
B 14.41%
CCC or less 0.44%
Cash & Equivalents 3.72%
</TABLE>
[End pie chart]
<TABLE> Principal Market
Amount Value
(000) (000)
-------- --------
<S> <C> <C>
Tax-Exempt Securities Maturing in More Than One Year - 96.28%
Arizona - 0.89%
Industrial Dev. Auth. of the County of Navajo, 5,100 4,929
Industrial Dev. Rev. Bonds (Stone Container
Corporation Project), Series 1997, 7.20% 2027
California - 11.99%
Pollution Control Fncg. Auth., Solid Waste 6,000 5,490
Disposal Ref. Rev. Bonds (USA Waste Services,
Inc. Project), Series 1998A AMT, 5.10% 2018 (Put 2008)
Rural Home Mortgage Fin. Auth., Single Family 460 488
Mortgage 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) 7,000 6,721
Series 1998A-3, 5.10% 2025 (Put 2010) 3,000 2,866
City of Antioch, Public Fncg. Auth., 1998 1,435 1,451
Reassessment Rev. Bonds, Subordinated Series B,
AMBAC Insured, 5.80% 2011
Bonita Canyon Public Facs. Fncg. Auth., Community 1,000 876
Facs. Dist. No. 98-1, Special Tax Bonds,
Series 1998, 5.375% 2028
City of Chino Hills, Community Facs.:
Dist. No. 9 (Rincon Village Area), Special Tax 4,435 4,515
Bonds, Series 1998, 6.45% 2023
Dist. No. 10 (Fairfield Ranch), Special Tax 1,000 1,015
Bonds, 6.95% 2030
County of El Dorado, Community Facs. Dist. No. 1992-1 995 976
(El Dorado Hills Dev.), Series 1999 Special Tax Bonds,
6.125% 2016
City of Fontana, Community Facs. Dist. No. 12 1,000 1,023
(Sierra Lakes), Special Tax Bonds, Series 1999,
6.50% 2015
City of Irvine, Assessment Dist.:
No. 94-13 (Oak Creek), Limited Obligation
Improvement Bonds:
Group One, 5.50% 2022 1,000 920
Group Two, 5.875% 2017 1,000 980
No. 95-12 Limited Obligation Improvement Bonds, 1,250 1,157
Group Three, 5.50% 2021
Long Beach Aquarium of the Pacific, Rev. Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 1,000 1,017
6.125% 2015 3,500 3,519
6.125% 2023 5,000 4,744
County of Los Angeles, Capital Asset Leasing Corp., 2,360 2,420
Cert. of Part. (Marina del Rey), 1993 Series A,
6.25% 2003
City of Los Angeles:
Multi-family Housing Rev. Bonds (GNMA Collateralized 500 508
- Ridgecroft Apartments Project), Series 1997E AMT,
6.00% 2017
Regional Airports Improvement Corp., Facs. Sublease 2,500 2,262
Ref. Rev. Bonds, Airport Terminal 6 Facs. (Los Angeles
International Airport), Series 1999 AMT, 5.65% 2017
Pleasanton Joint Powers Fncg. Auth., Subordinate 2,635 2,698
Reassessment Rev. Bonds, 1993 Series B, 6.125% 2002
City of Poway, Community Facs. Dist. No. 88-1 2,000 2,108
(Parkway Business Centre), Special Tax Ref. Bonds,
Series 1998, 6.75% 2015
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 500 504
County of San Diego, Reassessment Dist. No. 97-1
(4-S Ranch), Limited Obligation Improvement Bonds:
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 1,015
Residential Fac. Rev. Bonds (Coventry Park Project),
Series 1996A AMT, 8.50% 2026
Community Facs. Dist. No. 99-1 (Talega) of the Santa 2,390 2,398
Margarita Water Dist., Series 1999 Special Tax Bonds,
6.10% 2014
South Tahoe Joint Powers Fncg. Auth., Subordinate
Bond Anticipation Notes (South Tahoe Redev.
Project Area No. 1):
Series 1995B, 6.25% 2020 1,000 1,006
Series 1999A, 7.30% 2007 5,500 5,516
Series 1999B, 7.30% 2007 1,000 1,003
City of Stockton, Mello-Roos Rev. Bonds,
Community Facs. Dist. No. 90-2B (Brookside Estates),
Series 1997A:
5.55% 2006 1,300 1,319
6.20% 2015 1,300 1,320
Community Facs. Dist. No. 88-12 of the City of
Temecula (Ynez Corridor), Special Tax Ref. Bonds,
1998 Series A:
5.35% 2009 940 910
5.50% 2012 1,100 1,057
Colorado - 2.61%
Housing and Fin. Auth., Single Family Program
Senior Bonds, AMT:
1995 Series A, 8.00% 2025 685 729
1995 Series B, 7.90% 2025 465 486
1997 Series B-2, 7.00% 2026 860 916
City and County of Denver, Airport System Rev.
Bonds, AMT:
Series 1992C:
6.75% 2013 885 928
6.75% 2013 (Preref. 2002) 115 123
Series 1994A:
7.50% 2023 415 454
7.50% 2023 (Preref. 2004) 85 96
Eagle County, Bachelor Gulch Metropolitan Dist., 2,500 2,489
G.O. Bonds, Series 1999, 6.70% 2019
Eaglebend Dowd Affordable Housing Corp., Multi-family
Housing Project Rev. Ref. Bonds
Series 1997A:
6.20% 2012 1,000 992
6.45% 2021 1,000 963
Series 1998A:
6.53% 2024 1,665 1,586
6.53% 2029 1,320 1,247
6.63% 2039 2,950 2,797
E-470 Public Highway Auth. Senior Rev. Bonds, Series, 7,500 588
2000B (Capital Appreciation Bonds), MBIA Insured,
0% 2034
Connecticut - 2.72%
Dev. Auth., Pollution Control Rev. Ref. Bonds
(The Connecticut Light and Power Co. Project):
Series 1993A, 5.85% 2028 1,375 1,282
Series 1993B AMT, 5.95% 2028 1,500 1,381
Health and Educational Fac. Auth., Rev. Bonds, 1,000 1,025
University 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) 500 533
6.40% 2011 3,025 3,156
6.40% 2011 (Preref. 2007) 3,470 3,843
1997 Series B:
5.60% 2009 1,000 990
5.75% 2018 3,000 2,802
Delaware - 0.18%
Econ. Dev. Auth., First Mortgage Rev. Bonds
(Peninsula United Methodist Homes, Inc. Issue),
Series 1997A:
6.00% 2008 500 492
6.10% 2010 500 487
District of Columbia - 0.29%
Hospital Rev. Ref. Bonds (Washington Hospital Center 1,500 1,574
Issue), Series 1992A, 7.00% 2005 (Preref. 2002)
Florida - 10.53%
Arbor Greene Community Dev. Dist. (City of Tampa,
Hillsborough County), Special Assessment Rev. Bonds:
Series 1996, 7.00% 2003 40 41
Series 2000, 6.50% 2007 1,000 1,002
Broward County, Resource Recovery Rev. Bonds, 895 924
Series 1984, South Project, 7.95% 2008
Championsgate Community Dev. Dist., Capital 2,850 2,630
Improvement Rev. Bonds, Series 1998A, 6.25% 2020
The Crossings at Fleming Island Community Dev.Dist.
(Clay County):
Special Assessment Bonds, Series 1995, 8.25% 2016 4,615 5,334
Special Assessment Ref. Bonds, Series 2000C, 5,000 5,072
MBIA Insured, 7.10% 2030
The City of Daytona Beach, Capital Improvement Rev. 7,875 7,643
Bond Anticipation Notes (Ocean Walk Project),
Series A, 6.875% 2004
Fleming Island Plantation Community Dev. Dist. 2,000 2,024
(Clay County), Series 2000B (Long Term), 7.375% 2031
Heritage Isles Community Dev. Dist. (Hillsborough 2,635 2,589
County), Special Assessment Rev. Bonds, Series
1998A, 5.75% 2005
Heritage Palms Community Dev. Dist. (Fort Myers),
Capital Improvement Rev. Bonds:
Series 1998, 5.40% 2003 1,895 1,870
Series 1999, 6.25% 2004 1,500 1,497
Heritage Pines Community Dev. Dist. (Pasco County), 900 871
Capital Improvement Rev. Bonds, Series 1998B,
5.50% 2005
Heritage Springs Community Dev. Dist. (Pasco County), 850 845
Capital Improvement Rev. Bonds, Series 1999B,
6.25% 2005
Lee County Industrial Dev. Auth., Healthcare Facs.
Rev. Bonds:
Series 1997A (Cypress Cove at Healthpark Florida, 2,500 2,214
Inc. Project), 6.25% 2017
Series 1999A (Shell Point/Alliance Obligated Group,
Shell Point Village Project):
5.25% 2007 1,000 926
5.50% 2009 1,000 915
5.75% 2011 500 455
5.75% 2013 1,410 1,251
5.50%, 2021 3,000 2,428
Marshall Creek Community Dev. Dist., Special 3,020 3,062
Assessment Bonds, Series 2000A, 7.65% 2032
Meadow Pointe II, Community Dev. Dist. (Pasco County), 2,000 1,951
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 840 882
7.30% 2027 1,500 1,581
Unit of Dev. No. 9B, Series 1999, 5.85% 2013 1,000 969
North Springs Improvement Dist. Special Assessment
Bonds:
Broward County, Series 1997A, 7.00% 2019 1,000 1,011
Parkland Isles Project, Series 1997B, 6.25% 2005 1,450 1,443
Ocean Highway and Port Auth., Solid Waste/Pollution 1,305 1,282
Control Rev. Ref. Bonds, Series 1996 (Jefferson
Smurfit Corp. (U.S.) Project), 6.50% 2006
City or Orlando, Special Assessment Rev. Bonds 4,250 3,734
(Conroy Road Interchange Project), Series 1998A,
5.80% 2026
River Ridge Community Dev. Dist. (Lee County), 1,725 1,665
Capital Improvement Rev. Bonds, Series 1998, 5.75% 2008
Idaho - 1.30%
Housing and Fin. Association, Single Family Mortgage
Subordinate Bonds, AMT:
1997 Series H-2, 5.40% 2010 1,365 1,354
1997 Series I-2, 5.55% 2010 855 852
1998 Series B-2, 5.20% 2011 905 889
1999 Series B-2, 5.00% 2013 1,000 939
1999 Series D-3, 5.15% 2013 1,030 972
1999 Series F, 5.625% 2014 1,700 1,686
1999 Series G, 5.75% 2014 500 499
Illinois - 6.54%
Health Facs. Auth., Rev. Ref. Bonds:
Advocate Health Care Network, Series 1997 A:
5.70% 2011 500 503
5.80% 2016 2,000 1,960
Alexian Brothers Health System, Series 1999, 1,000 886
5.125% 2028
Centegra Health System, Series 1998:
5.50% 2008 1,000 972
5.25% 2014 1,500 1,329
Edward Hospital Project, Series 1993A, 6.00% 2019 1,000 961
Fairview Obligated Group Project:
1992 Series A, 9.50% 2022 (Preref. 2002) 2,750 3,088
1995 Series A:
6.25% 2003 1,245 1,250
7.40% 2023 3,130 3,091
OSF Healthcare System, Series 1999 6.25% 2019 1,500 1,471
State Dev. Fin. Auth., Solid Waste Disposal Rev. 2,000 1,737
Bonds (Waste Management, Inc. Project), Series
1997 AMT, 5.05% 2010
City of Chicago:
G. O. Bonds (Emergency Telephone System), Ref. 1,000 963
Series 1999, FGIC Insured, 5.25% 2020
Chicago O'Hare International Airport, Special Fac.
Rev. Ref. Bonds (United Air Lines, Inc. Project):
Series 1988A AMT, 8.95% 2018 1,405 1,455
Series 1988B, 8.85% 2018 1,055 1,092
Series 1999B AMT, 5.20% 2011 9,375 8,314
School Reform Board of Trustees of the Board of 1,000 925
Education of the City of Chicago, Unlimited Tax
G.O. Bonds (Dedicated Tax Rev.), Series 1997A,
AMBAC Insured, 5.25% 2030
Village of Robbins, Cook County, Resource Recovery
Rev. Bonds, (Robbins Resource Recovery Partners,
L.P. Project):
Series 1999A AMT, 8.375% 2016 3,950 1,754
Series 1999B AMT, 8.375% 2016 1,545 686
Series 1999C AMT, 7.25% 2009 613 590
Series 1999C AMT, 7.25% 2024 2,650 2,485
Series 1999D AMT, 0% 2009 1,230 577
Indiana - 1.23%
Health Fac. Fncg. Auth., Hospital Rev. Bonds 2,805 2,606
(Charity Obligated Group), Series 1999D, 5.25% 2016
State Dev. Fin. Auth. Rev. Ref. Bonds, Exempt 1,000 861
Fac.-Inland Steel, 5.75% 2011
City of East Chicago, Pollution Control Rev. 2,000 1,958
Ref. Bonds, Inland Steel Co. Project No. 11,
Series 1994, 7.125% 2007
The Indianapolis Local Public Improvement Bond Bank, 4,500 1,358
Series 1999 E Capital Appreciation Bonds, 0.00% 2021
Kentucky - 2.14%
Econ. Dev. Fin. Auth., Hospital System Ref. and
Improvement Rev. Bonds, Series 1997 (Appalachian
Regional Healthcare, Inc. Project):
5.60% 2008 1,000 802
5.80% 2012 1,000 746
5.85% 2017 7,000 4,908
City of Ashland, Pollution Control Ref. Rev. Bonds, 1,000 1,004
Series 1999 (Ashland Inc. Project), 5.70% 2009
Kenton County Airport Board, Special Facs. Rev. Bonds 4,225 4,337
(Delta Air Lines, Inc. Project), 1992 Series A AMT,
7.50% 2012
Louisiana - 3.00%
Health Education Auth., Rev. Ref. Bonds (Lambeth
House Project):
Series 1996, 9.00% 2026 (Preref. 2006) 1,850 2,291
Series 1998A, 6.20% 2028 5,000 4,022
Housing Fin. Agcy., Single Family Mortgage Rev. 2,315 2,529
Bonds, Series 1995A-2 AMT, 7.80% 2026
Parish of Iberville, Pollution Control Rev. Ref. 1,000 912
Bonds (Entergy Gulf States, Inc. Project), Series
1998, 5.70% 2014
Environmental Improvement Rev. Bonds, Parish of St. 3,000 2,753
John the Baptist (USX Corp. Project), Ref. Series of
1998, 5.35% 2013
Parish of West Feliciana, Pollution Control Rev.
Bonds:
(Entergy Gulf States, Inc. Project), Series 1999A, 2,500 2,495
5.65% 2028 (Put 2004)
(Gulf States Utilities Co. Project), Series 1,500 1,564
1984-II, 7.70% 2014
Maine - 0.53%
Health and Higher Educational Facs. Auth., Rev.
Bonds, Piper Shores Issue, Series 1999A:
7.50% 2019 1,000 978
7.55% 2029 2,000 1,947
Maryland - 1.29%
Anne Arundel County, Special Obligation Bonds 1,000 1,004
(Arundel Mills Project), Series 1999, 7.10% 2029 (1)
Frederick County, Special Obligation Bonds (Urbana 3,000 2,883
Community Dev. Auth.), Series 1998, 6.625% 2025
Housing Opportunities Commission of Montgomery County,
Multi-family Rev. Bonds (Strathmore Court at White
Flint), 1994 Issue A-2:
7.50% 2024 1,000 1,032
7.50% 2027 700 722
Housing Auth. of Prince George's County, Mortgage 1,000 972
Rev. Bonds, Series 1997A (GNMA Collateralized -
Langley Gardens Apartments Project), 5.75% 2029
Prince George's County (Dimensions Health Corp. 750 484
Issue), Project and Ref. Rev. Bonds, Series 1994,
5.375% 2014
Massachusetts - 2.84%
Dev. Fin. Agcy., Resource Recovery Rev. Bonds 1,000 1,033
(Waste Management, Inc. Project), Series 1999B
AMT, 6.90% 2029 (Put 2009)
Industrial Fin. Agcy.:
Resource Recovery Rev. Ref. Bonds (Ogden Haverhill
Project), Series 1998A AMT:
5.20% 2008 2,300 2,170
5.30% 2009 6,300 5,941
Rev. Bonds, Edgewood Retirement Community Project, 5,400 6,525
Series 1995A, 9.00% 2025
Michigan - 6.92%
Hospital Fin. Auth., Hospital Rev. and Ref. Bonds:
The Detroit Medical Center Obligated Group:
Series 1993A:
6.25% 2013 3,000 2,664
6.50% 2018 1,000 882
Series 1998A, 5.125% 2018 2,550 1,911
Genesys Health System Obligated Group, Series 1995A:
8.00% 2005 (Escrowed to Maturity) 2,000 2,305
8.10% 2013 (Preref. 2005) 1,100 1,290
7.50% 2027 (Preref. 2005) 2,265 2,558
Hackley Hospital Obligated Group, Series 1998A, 1,000 906
5.30% 2013
Henry Ford Health System, Series 1995A, 5.25% 2025 3,000 2,636
Pontiac Osteopathic, Series 1994 A:
5.375% 2006 3,000 2,813
6.00% 2014 2,500 2,204
6.00% 2024 1,000 828
Sinai Hospital of Greater Detroit, Series 1995:
6.00% 2008 1,000 946
6.625% 2016 1,795 1,634
Strategic Fund Limited Obligation Bonds (United 3,000 2,633
Waste Systems, Inc. Project), Series 1995, 5.20% 2010
City of Detroit Limited Tax G.O. Bonds, Series 1,145 1,209
1995 A, 6.40% 2005
City of Flint, Hospital Building Auth., (Hurley
Medical Center):
Rev. Ref. Bonds, Series 1998A:
5.00% 2008 2,030 1,839
5.25% 2016 1,000 818
Rev. Rental Bonds, Series 1998B:
5.375% 2018 1,000 778
5.375% 2028 1,250 905
The Econ. Dev. Corp. of the County of Midland, 6,305 6,377
Subordinate Pollution Control Limited Obligation
Rev. Ref. Bonds (Midland Cogeneration Project) Series
B AMT, 6.875% 2009
Minnesota - 1.44%
City of Minneapolis, G.O. Various Purpose Bonds, 1,100 1,109
Series 2000, 5.00% 2001
Port Auth. of the City of Saint Paul, Hotel Fac. 7,000 6,832
Rev. Bonds (Radisson Kellogg Project), Series
1999-2, 7.375% 2029
Mississippi - 0.50%
Perry County, Pollution Control Ref. Rev. Bonds 3,000 2,765
(Leaf River Forest Products, Inc. Project),
Series 1999, 5.20% 2012
Nebraska - 1.00%
City of Kearney, Industrial Dev. Rev. Bonds
(The Great Platte River Road Memorial Foundation
Project), Series 1998:
6.75% 2023 2,000 1,588
6.75% 2028 5,000 3,913
Nevada - 5.09%
Housing Division, Single Family Mortgage Bonds:
1999 Series B-1, 4.95% 2012 600 574
1999 Series D-2 AMT, 5.90% 2013 1,355 1,390
Clark County, Special Improvement Dist. No. 121
(Southern Highlands Area), Local Improvement Bonds,
Series 1999:
7.00% 2009 2,500 2,518
7.50% 2019 9,040 9,152
City of Henderson:
Health Fac. Rev. Bonds (Catholic Healthcare West), 1,000 797
1998 Series A, 5.375% 2026
Local Improvement Dist.:
No. T-4C (Green Valley Properties), Limited Obligation
Ref. Bonds, 1999 Series A:
5.75% 2013 1,705 1,596
5.90% 2018 1,000 924
No. T-10 (Seven Hills) Limited Obligation
Improvement Bonds:
6.90% 2006 990 1,023
7.50% 2015 5,400 5,584
City of Las Vegas, Special Improvement Bonds,
(Summerlin Area), Local Improvement Bonds:
7.10% 2016 3,590 3,718
No. 707, Series July 1, 1996, 6.50% 2004 790 816
New Hampshire - 0.79%
Business Fin. Auth., 6% Pollution Control Ref. 2,000 1,850
Rev. Bonds (Public Service Company of New
Hampshire Project - 1992 Tax-Exempt Series D), 6.0% 2021
Housing Fin. Auth., Single Family Mortgage 675 678
Acquisition Rev. Bonds, 1997 Series D AMT, 5.60% 2012
Industrial Dev. Auth., Pollution Control Ref. Rev. 2,000 1,848
Bonds (The Connecticut Light and Power Co. Project),
Series 1988 AMT, 5.90% 2018
New Jersey - 3.69%
Econ. Dev. Auth.,:
Econ. Dev. Bonds, Kapkowski Road Landfill Reclamation 8,250 7,975
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) 2,000 2,383
Series 1998A:
5.10% 2008 1,250 1,144
5.20% 2009 1,000 907
5.30% 2010 1,000 898
5.50% 2018 1,000 823
Series 1998C:
5.50% 2018 1,000 825
5.50% 2028 1,500 1,168
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 1,000 1,055
8.625% 2025 3,000 3,176
New York - 5.65%
Dormitory Auth.:
Cert. of Part., on behalf of the City University of 1,975 2,087
New York, as Lessee (John Jay College of Criminal
Justice Project Ref.), 6.00% 2006
Mental Health Services Fac. Improvement Rev. Bonds, 1,930 1,905
Series 1998C, 5.00% 2010
Montefiore Medical Center, FHA-Insured Mortgage 1,250 1,191
Hospital Rev. Bonds, Series 1999, AMBAC Insured,
5.25% 2019
State University Educational Facs. Rev. Bonds, 2,000 1,846
Series 1998 B, 5.0% 2018
Housing Fin. Agcy.:
Health Facs. Rev. Bonds (New York City), 1996 1,000 1,049
Series A Ref., 6.00% 2006
Service Contract Obligation Rev. Ref. Bonds, 1997 800 800
Series C, 5.10% 2009
New York City Industrial Dev. Agcy.:
Industrial Dev. Rev. Bonds (Brooklyn Navy Yard 1,000 881
Cogeneration Partners, L.P. Project), Series 1997
AMT, 5.65% 2028
Solid Waste Disposal Rev. Bonds (1995 Visy Paper 3,000 3,059
(NY), Inc. Project) AMT, 7.55% 2005
Onondaga County Industrial Dev. Agcy., Solid Waste
Disposal Fac. Rev. Ref. Bonds (Solvay Paperboard LLC
Project), Series 1998 AMT:
6.80% 2014 3,000 2,894
7.00% 2030 8,500 8,189
Port Auth. of New York and New Jersey, Special Project
Bonds, Series 4 AMT, KIAC Partners Project:
7.00% 2007 1,500 1,562
6.75% 2011 4,000 4,108
Suffolk County Industrial Dev. Agcy., 1998 1,750 1,579
Industrial Dev. Rev. Bonds (Nissequogue Cogen
Partners Fac.) AMT, 5.30% 2013
North Carolina - 3.60%
Eastern Municipal Power Agcy., Power System Rev. Bonds:
Ref. Series 1993B:
7.25% 2007 2,500 2,725
7.00% 2008 1,000 1,084
6.125% 2009 3,950 4,074
6.00% 2022 1,000 955
6.00% 2026 1,000 946
Ref. Series 1999 A, 5.20% 2010 2,000 1,921
Ref. Series 1999 B:
5.55% 2014 1,000 948
5.60% 2015 2,500 2,362
5.65% 2016 1,000 943
5.70% 2017 2,000 1,884
Series 1999 D, 6.75% 2026 1,000 1,024
Municipal Power Agcy. Number 1, Catawba Electric 1,000 1,010
Rev. Bonds, Series 1999B, 6.50% 2020
North Dakota - 0.39%
Housing Fin. Agcy., Rev. Bonds, 1998 Series A 965 878
AMT, 5.25% 2018
City of Grand Forks, Health Care System Rev. Bonds, 1,250 1,249
(Altru Health System Obligated Group), Series 2000,
7.125% 2024
Ohio - 1.68%
The Student Loan Funding Corp., Cincinnati, 145 146
Student Loan Rev. Ref. Bonds, Series 1991A AMT,
7.20% 2003
Water Dev. Auth., Solid Waste Disposal Rev. Bonds 4,000 3,177
(Bay Shore Power Project), Series 1998 A AMT,
5.875% 2020
City of Cleveland, Airport Special Rev. Bonds 1,500 1,289
(Continental Airlines, Inc. Project), Series 1998
AMT, 5.70% 2019
County of Montgomery, Hospital Facs. Rev. Bonds
(Kettering Medical Center Network Obligated Group),
Series 1999:
6.75% 2018 1,000 982
6.75% 2022 1,000 970
County of Richland, Hospital Facs. Rev. Improvement
Bonds (MedCentral Health System Obligated Group),
Series 2000B:
6.375% 2022 1,000 986
6.375% 2030 1,750 1,710
Oregon - 1.27%
City of Klamath Falls, Electric Rev. Bonds
(Klamath Cogeneration Project), Series 1999:
5.75% 2013 2,000 1,835
5.875% 2016 4,500 4,070
6.00% 2025 1,250 1,113
Pennsylvania - 4.02%
Econ. Dev. Fncg. Auth., Resource Recovery Rev. 1,000 1,022
Bonds (Colver Project), Series 1994 D AMT, 7.05% 2010
Housing Fin. Agcy., Rev. Bonds, Single Housing 1,400 1,394
Family Mortgage, Series 1997-58A AMT, 5.85% 2017
Allegheny County Hospital Dev. Auth., Health System 2,000 1,855
Rev. Bonds (West Penn Allegheny Health System),
Series 2000B, 9.25% 2030
Lehigh County, General Purpose Auth. Rev. Bonds 1,000 1,003
(KidsPeace Obligated Group), 5.70% 2009
Hospitals and Higher Education Facs. Auth.
of Philadelphia:
Frankford Hospital, Series A, 6.00% 2014 500 515
Hospital Rev. Bonds (Temple University Hospital), 1,000 926
Series of 1997, 5.70% 2009
Jefferson Health System, Series 1997 A, 5.50% 2007 1,400 1,400
Hospital Auth. of Philadelphia, Hospital Rev. Bonds 1,000 921
(Temple 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 1,084
5.50% 2010 1,000 920
Scranton-Lackawanna Health and Welfare Auth., City
of Scranton, Lackawanna County, Hospital Rev. Bonds
(Moses Taylor Hospital Project), Series 1997:
5.75% 2006 1,585 1,504
5.80% 2007 1,680 1,579
5.90% 2008 1,730 1,615
6.00% 2009 940 872
6.10% 2011 2,005 1,827
6.20% 2017 2,305 1,989
Westmoreland County Industrial Dev. Auth., Variable 2,000 1,767
Rate Rev. Bonds, Series 1993 AMT (National Waste and
Energy Corp.; Valley Landfill Expansion Project)
5.10% 2018
Rhode Island - 0.35%
Housing and Mortgage Fin. Corp., Homeownership 2,000 1,938
Opportunity Bonds, Series 9-B-1 AMT, 5.55% 2013
South Carolina - 1.91%
Piedmont Municipal Power Agcy., Electric Rev. Bonds:
1991 Ref. Series, 6.25% 2021 1,000 1,083
1999A Ref. Series, 5.25% 2015 8,000 6,998
York County, Pollution Control Facs. Rev. Bonds 2,300 2,451
(Bowater Inc. Project), Series 1990 AMT, 7.625% 2006
Tennessee - 0.29%
Memphis-Shelby County Airport Auth., Special Facs. 1,500 1,586
Rev. Bonds (Federal Express Corp.), Series 1984,
7.875% 2009
Texas - 3.56%
Alliance Airport Auth., Inc., Special Facs. Rev. 1,500 1,624
Bonds (American Airlines, Inc. Project), Series
1990 AMT, 7.00% 2011
Bell County Health Facs. Dev. Corp., Retirement Fac. 1,000 810
Rev. Bonds (Buckner Retirement Services, Inc.
Obligated Group Project), Series 1998, 5.25% 2028
Brazos River Auth., Rev. Ref. Bonds (Houston 1,000 925
Industries Incorporated Project), MBIA Insured,
4.90% 2015
Industrial Dev. Corp. of Port of Corpus Christi,
Rev. Ref. Bonds (Valero Refining and Marketing Co.
Project):
Series 1997D AMT, 5.125% 2009 5,250 4,823
Series C, 5.40% 2018 2,000 1,735
Hidalgo County Health Services Corp., Hospital Rev.
Bonds, (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 2,365 2,401
6.75% 2016 1,000 948
Matagorda County, Navigation Dist. Number One, Rev. 2,500 2,279
Ref. Bonds (Houston Lighting & Power Co. Project),
Series 1997 AMT, AMBAC Insured, 5.125% 2028
Tomball Hospital Auth., Rev. Ref. Bonds, Series 1993, 4,740 4,101
6.125% 2023
Utah - 0.91%
Housing Fin. Agcy., Single Family Mortgage Bonds, AMT:
1997 Series G-2 Class III, 5.60% 2010 920 911
1998 Series G-2, Class III, 4.90% 2012 975 944
1999 Series B-2, Class III, 5.10% 2012 1,090 1,053
1999 Series C-2, Class III, 5.60% 2013 1,395 1,387
Federally Insured or Guaranteed Mortgage Loans, 750 743
1999 Issue D AMT, 5.60% 2013
Virginia - 2.64%
Dulles Town Center Community Dev. Auth. (Loudoun 4,000 3,712
County), Special Assessment Bonds (Dulles Town Center
Project), Series 1998, 6.25% 2026
Fairfax County Econ. Dev. Auth., Retirement Community
Rev. Bonds (Greenspring Village, Inc. Fac.), Series
1999 A:
6.75% 2012 1,500 1,484
7.50% 2029 4,000 4,069
Gateway Community Dev. Auth. (Prince William County), 2,000 1,845
Special Assessment Bonds, Series 1999, 6.25% 2026
Heritage Hunt Commercial Community Dev. Auth. 1,000 993
(Prince William County), Special Assessment Bonds,
Series 1999B, 7.00% 2029
Industrial Dev. Auth. of the County of Henrico, Solid 500 458
Waste Disposal Rev. Bonds (Browning-Ferris Industries
of South Atlantic, Inc. Project), Series, 5.30% 2011
Pocahontas Parkway Association, Route 895 Connector 2,100 1,981
Toll Road Rev. Bonds, Series 1998A, 5.25% 2008
Virgin Islands - 0.59%
Public Fin. Auth., Rev. and Ref. Bonds (Matching
Fund Loan Notes), Series 1998 D:
6.00% 2006 1,750 1,759
6.00% 2007 1,500 1,509
Wisconsin - 1.91%
Housing and Econ. Dev. Auth., Housing Rev. Bonds, 1,000 998
1993 Series B AMT, 5.30% 2006
City of Oconto Falls, Community Dev. Auth., Dev.
Rev. Bonds, Series 1997 AMT (Oconto Falls Tissue,
Inc. Project):
7.75% 2022 8,900 8,526
8.125% 2022 1,000 986
----------
531,083
----------
Tax-Exempt Securities Maturing in One Year or Less - 3.58%
Brazos River Harbor Navigation Dist. Of Brazoria 2,300 2,300
County, Texas, Environmental Facs. Rev. Bonds (Merey
Sweeny, L.P. Project), Series 1998, 4.45% 2018 (2)
Guadalupe-Blanco River Auth. (Texas) Pollution 1,400 1,400
Control Rev. Ref. Bonds, (Central Power and Light
Co. Project), Series 1995, 4.25%, 2015 (2)
Harris County Industrial Dev. Corporation, Adjustable 2,700 2,700
Tender Pollution Control Rev. Bonds (Exxon Project),
Series 1987 AMT, 4.30% 2027 (2)
Hillborough County Industrial Dev. Auth., Exempt 2,000 2,000
Facs. Rev. Bonds (national Gypsum Co., Apollo Beach
Project), Series 2000B, 4.30% 2030 (2)
City of Houston, Tax and Rev. Anticipation Notes, 2,000 2,011
Series 2000, 5.00% 2001
State of Idaho Tax Anticipation Notes, Series 1,000 1,010
2000, 5.375% 2001
Regional Airport Auth. Of Louisville and Jefferson 1,300 1,300
County, Kentucky, Special Facs. Rev. Bonds (UPS
Worldwide Forwarding, Inc. Facs. Project), 1999
Series C, 4.30% 2029(2)
Curators of the University of Missouri Capital 1,000 1,008
Projects Notes, Series FY 2000-2001, 5.25% 2001
State of New Mexico 2000-2001 Tax and Rev. 1,000 1,007
Anticipation Notes, Series 2000, 5.00% 2001
State of Texas, Tax and Rev. Anticipation Notes, 3,000 3,001
Series 1999A, 4.50% 8/31/00
State of Wyoming, General Fund Tax and Rev. 2,000 2,013
Anticipation Notes, Series 2000A, 5.00% 2001
----------
19,750
----------
----------
Total Tax-Exempt Securities (cost: $562,108,000) 550,833
Excess of cash and receivables over payables 784
----------
NET ASSETS $551,617
----------
(1) Purchased in a private placement transaction;
resale may be limited to qualified institutional buyers;
resale to public may require registration.
(2) Coupon rate may change periodically.
See Notes to Financial Statements
Key to Abbreviations
Agcy. = Agency
Auth. = Authority
Cert. of Part. = Certificates of Participation
Dept. = Department
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, 2000 (dollars in thousands)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $562,108) $550,833
Cash 33
Receivables for--
Sales of investments $1,261
Sales of fund's shares 499
Accrued interest 9,317 11,077
561,943
Liabilities:
Payables for--
Purchases of investments 7,466
Repurchases of fund's shares 1,422
Dividends on fund's shares 995
Management services 190
Other expenses 253 10,326
Net Assets at July 31, 2000-- $551,617
Total authorized capital stock--200,000,000 shares
Class A shares, $.001 par value
Net Assets $549,859
Shares outstanding 36,975,230
Net asset value per share $14.87
Class B shares, $.001 par value
Net Assets $ 1,758
Shares outstanding 118,240
Net asset value per share $14.87
STATEMENT OF OPERATIONS
for the year ended July 31, 2000 (dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $34,584
Expenses:
Management services fee $2,240
Distribution expenses - Class A 1,634
Distribution expenses - Class B 4
Transfer agent fee - Class A 190
Transfer agent fee - Class B -
Reports to shareholders 56
Registration statement and prospectus 116
Postage, stationery and supplies 54
Directors' fees 15
Auditing and legal fees 37
Custodian fee 11
Taxes other than federal income tax 10
Other expenses 27 4,394
Net investment income 30,190
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (6,554)
Net change in unrealized depreciation
on Investments (14,814)
Net realized loss and
unrealized depreciation
on investments (21,368)
Net Increase in Net Assets Resulting
from Operations $8,822
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Year ended
July 31,
2000 1999
Operations:
Net investment income $30,190 $26,760
Net realized (loss) gain on investments (6,554) 1,809
Net unrealized depreciation
on investments (14,814) (21,089)
Net increase in net assets
resulting from operations 8,822 7,480
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income:
Class A (30,284) (26,849)
Class B (18) 0
Distributions from net realized gains on investments
Class A (1,028) (2,559)
Class B 0 0
Total Dividends and Distributions (31,330) (29,408)
Capital Share Transactions:
Proceeds from shares sold 180,415 205,017
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments 20,208 20,209
Cost of shares repurchased (190,669) (103,179)
Net increase in net assets resulting from 9,954 122,047
capital share transactions
Total (Decrease) Increase in Net Assets (12,554) 100,119
Net Assets:
Beginning of year 564,171 464,052
End of year (including
undistributed net investment
income: $68 and $115,
respectively) $551,617 $564,171
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. The fund offers Class A and Class B shares. Class A shares are sold
with an initial sales charge of up to 3.75%. Class B shares are sold without
an initial sales charge but subject to a contingent deferred sales charge paid
upon redemption. This charge declines from 5% to zero over a period of six
years. Class B shares have higher distribution expenses and transfer agent fees
than Class A shares. Class B shares are automatically converted to Class A
shares eight years after the date of purchase. Holders of both classes of
shares have equal pro rata rights to assets and identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution and transfer agent expenses, and each class shall have exclusive
rights to vote on matters affecting only their class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
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. 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. The ability of the issuers of
the fixed-income securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from 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 the 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.
ALLOCATIONS - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily between the Class
A and Class B based on their relative net asset values. Distribution expenses,
transfer agent fees and any other class-specific expenses, are accrued daily
and charged to the applicable share class.
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, 2000, net unrealized depreciation on investments for book and
federal income tax purposes aggregated $11,275,000; $8,475,000 related to
appreciated securities and $19,750,000 related to depreciated securities. There
was no difference between book and tax realized gains on securities
transactions for the year ended July 31, 2000. The fund had available at July
31, 2000 a net capital loss carryforward totaling $497,000 which may be used to
offset capital gains realized during subsequent years through 2004 and thereby
relieve the fund and its shareholders of any federal income tax liability with
respect to the capital gains that are so offset. The fund will not make
distributions from capital gains while a capital loss carryforward remains. In
addition, the fund has deferred, for tax purposes, to fiscal year ending July
31, 2001, the recognition of capital losses totaling $6,126,000 which were
realized during the period November 1, 1999 through July 31, 2000. The cost of
portfolio securities for book and federal income tax purposes was $562,108,000
at July 31, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $2,240,000 for management services during
the year ended July 31, 2000, 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; plus 3.00% of the fund's
monthly gross investment income.
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution for Class A shares,
the fund may expend up to 0.30% of Class A average daily 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 in advance 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. Pursuant to a Plan of Distribution for Class B shares, the
fund may expend up to 1.00% of Class B average daily net assets annually to
compensate dealers for their selling and servicing efforts. During the year
ended July 31, 2000, distribution expenses for Class A and Class B shares were
$1,634,000 and $4,000, respectively. As of July 31, 2000, accrued and unpaid
distribution expenses for Class A and Class B shares were $177,000 and $1,000,
respectively.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares received $229,000 (after allowances to dealers) during the year
ended July 31, 2000, as its portion of the sales charges paid by purchasers of
the fund's Class A 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 $190,000 during the year ended July 31, 2000.
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, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1994) net of any payments to
Directors, were $36,000.
AFFILIATED DIRECTORS AND OFFICERS - CRMC is owned by The Capital Group
Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC.
Officers of the fund and certain Directors and 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 $195,303,000 and $173,146,000, respectively, during
the year ended July 31, 2000.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
During the year ended July 31, 2000, the custodian fee of $11,000 includes
$5,000 that was paid by these credits rather than in cash.
As of July 31, 2000, net assets consisted of the following:
[Begin chart]
<TABLE>
dollars in thousands
<S> <C>
Capital paid in on shares of beneficial interest $ 569,445
Undistributed net Investment Income 68
Accumulated net realized loss (6,621)
Net unrealized depreciation (11,275)
Net Assets $551,617
</TABLE>
[End chart]
[Begin chart]
<TABLE>
Capital share transactions in the fund were as follows:
Year ended Year ended
July 31, 2000 July 31, 2000
Amount (000) Shares Amount (000) Shares
Class A Shares:
<S> <C> <C> <C> <C>
Sold $ 178,540 12,024,123 $ 205,017 12,855,092
Reinvestment of dividends 20,193 1,360,381 20,209 1,270,760
and distributions
Repurchased (190,515) (12,841,704) (103,179) (6,483,571)
Net increase in Class A 8,218 542,800 122,047 7,642,281
Class B Shares:*
Sold 1,875 127,641 - -
Reinvestment of dividends 15 1,043 - -
and distributions
Repurchased (154) (10,444) - -
Net increase in Class B 1,736 118,240 - -
Total net increase in fund $ 9,954 661,040 $ 122,047 7,642,281
* Class B shares not offered before March 15, 2000.
</TABLE>
[End chart]
[Begin chart]
<TABLE>
PER-SHARE DATA AND RATIOS (1)
Net gains/
(losses) on
Net asset securities
value, Net (both
beginning investment realized and
Year ended of year income unrealized)
<S> <C> <C> <C>
Class A:
2000 $15.49 $.82 (2) $(.58) (2)
1999 16.12 .81 (.54)
1998 15.90 .84 .26
1997 15.23 .87 .80
1996 15.14 .88 .37
Class B:
2000 14.79 .23 (2) .14 (2)
Dividends
Total from (from net Distributions
investment investment (from capital
Year ended operations income) gains)
Class A:
2000 $.24 $(.83) $(.03)
1999 .27 (.82) (.08)
1998 1.10 (.84) (.04)
1997 1.67 (.86) (.14)
1996 1.25 (.88) (.28)
Class B:
2000 .37 (.29) -
Net asset
Total value, end Total
Year ended distributions of year return
Class A:
2000 $(.86) $14.87 1.61%
1999 (.90) 15.49 1.63
1998 (.88) 16.12 7.05
1997 (1.00) 15.90 11.36
1996 (1.16) 15.23 8.48
Class B:
2000 (.29) 14.87 3.16
Ratio of Ratio of
expenses expenses
Net assets, to average to average
end of year net assets net assets
Year ended (in millions) before waiver after waiver
Class A:
2000 $550 .80% .80%
1999 564 .78 .78
1998 464 .79 .79
1997 316 .87 .87
1996 217 .88 .86
Class B:
2000 2 1.46 (3) 1.46 (3)
Ratio of
net income Portfolio
to average turnover
Year ended net assets rate
Class A:
2000 5.53% 33.20%
1999 5.09 16.67
1998 5.19 16.38
1997 5.51 15.31
1996 5.74 35.22
Class B:
2000 6.02 (3) 33.20 (4)
(1) The periods 1996 through 2000 represent
fiscal years ended July 31. The period ended
2000 represents, for Class B shares, the 138
day period ended July 31, 2000. Class B shares
were not offered before March 15, 2000.
Total return for Class B is based on activity
during the period and thus is not representative
of a full year. Total returns exclude all
sales charges, including contingent deferred sales charges.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Represents portfolio turnover rate
(equivalent for all share classes) for the year
ended July 31, 2000.
</TABLE>
[End chart]
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, 2000, 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 accounting principles generally accepted in the
United States. 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 auditing standards generally accepted
in the United States, 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, 2000 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
August 31, 2000
Tax Information (unaudited)
During the fiscal year ended July 31, 2000, the fund paid 83 cents per share of
exempt-interest distributions within the meaning of Section 852(b)(5)(A) of the
Internal Revenue Code and a long-term capital gain of 2.8 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.
Board of Directors
Ambassador Richard G. Capen, Jr.
Rancho Santa Fe, California
Corporate director and author; former United States
Ambassador to Spain; former Vice Chairman of the Board,
Knight-Ridder, Inc.; former Chairman of the Board and
Publisher, The Miami Herald
H. Frederick Christie
Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer, The Mission Group;
former President, Southern California Edison Company
Don R. Conlan
South Pasadena, California
President (retired), The Capital Group Companies, Inc.
Diane C. Creel
Long Beach, California
President and Chief Executive Officer,
The Earth Technology Corporation
(international consulting engineering)
Martin Fenton
San Diego, California
Managing Director, Senior Resource Group, LLC
(development and management of senior
living communities)
Leonard R. Fuller
Marina del Rey, California
President, Fuller Consulting
(financial management consulting firm)
Abner D. Goldstine
Los Angeles, California
Vice Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
Paul G. Haaga, Jr.
Los Angeles, California
Chairman of the Board of the fund
Executive Vice President and Director,
Capital Research and Management Company
Richard G. Newman
Los Angeles, California
Chairman of the Board and Chief Executive Officer,
AECOM Technology Corporation (architectural engineering)
Frank M. Sanchez
Los Angeles, California
Chairman of the Board and Chief Executive Officer,
The Sanchez Family Corporation dba McDonald's
Restaurants (McDonald's licensee)
Other Officers
Mark R. Macdonald
Los Angeles, California
President of the fund
Vice President - Investment Management Group,
Capital Research and Management Company
Neil L. Langberg
Los Angeles, California
Senior Vice President of the fund
Vice President - Investment Management Group,
Capital Research and Management Company
Michael J. Downer
Los Angeles, California
Vice President of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
David A. Hoag
Los Angeles, California
Vice President of the fund
Vice President and Director,
Capital Research Company
Edward B. Nahmias
Los Angeles, California
Vice President of the fund
Vice President, Capital Research Company
Julie F. Williams
Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
Anthony W. Hynes, Jr.
Brea, California
Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
Kimberly S. Verdick
Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
Todd L. Miller
Brea, California
Assistant Treasurer of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
Herbert Hoover III, a Director since 1994, has retired from the Board. The
Directors thank him for his many contributions to the fund.
[The American Funds Group(r)]
Offices
Offices of the fund and of the investment adviser,
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
Custodian of assets
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
Independent accountants
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, California 90071-3405
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL
ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY, TOLL-FREE, AT
800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD WIDE WEB. PLEASE READ
THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
This report is for the information of shareholders of American High-Income
Municipal Bond Fund, but it may also be used as sales literature when preceded
or accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after September 30, 2000, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
CLASS A AND B SHARES - THERE ARE TWO WAYS TO INVEST IN AMERICAN HIGH-INCOME
MUNICIPAL BOND FUND. CLASS A SHARES ARE SUBJECT TO A 3.75% MAXIMUM UP-FRONT
SALES CHARGE THAT DECLINES FOR ACCOUNTS OF $100,000 OR MORE. CLASS B SHARES,
WHICH ARE NOT AVAILABLE FOR CERTAIN EMPLOYER-SPONSORED RETIREMENT PLANS, HAVE
NO UP-FRONT SALES CHARGE. THEY ARE, HOWEVER, SUBJECT TO ADDITIONAL EXPENSES OF
APPROXIMATELY 0.75% A YEAR OVER THE FIRST EIGHT YEARS OF OWNERSHIP. IF REDEEMED
WITHIN SIX YEARS, THEY MAY ALSO BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE (5% MAXIMUM) THAT DECLINES OVER TIME.
Printed on recycled paper
Litho in USA CGD/INS/4749
Lit. No. AHIM-011-0900
