The American Funds Tax-Exempt
Series I
The Tax-Exempt Fund of Maryland
The Tax-Exempt Fund of Virginia
Semi-Annual Report
January 31, 1995
The American Funds Group (R)
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns for periods ended December 31, 1994 (the most recent calendar
quarter) on an investment at the 4.75% maximum sales charge with all
distributions reinvested-For The Tax-Exempt Fund of Maryland's lifetime
(from 8/14/86): +53.77%, or +5.27% a year; 5 years: +26.23%, or +4.77% a
year; 12 months: -9.30%. For The Tax-Exempt Fund of Virginia's lifetime
(from 8/14/86): +59.90%, or +5.76% a year; 5 years: +28.06%, or +5.07% a
year; 12 months: -9.32%. Sales charges are lower for accounts of $25,000 or
more.
The Funds' 30-day yields as of February 28, 1995, calculated in accordance
with the Securities and Exchange Commission formula, were 4.92% for the
Maryland Fund and 4.77% for the Virginia Fund. The Funds' distribution
rates as of that date were 5.22% and 5.10%, respectively. The SEC yield
reflects income earned by the Funds, while the distribution rate reflects
dividends actually paid by the Funds.
The figures in this report reflect past results. Share price and return
will vary, so you may have a gain or loss of principal when you sell your
shares. Fund shares are not deposits or obligations of, or insured or
guaranteed by, the U.S. government, any financial institution, the Federal
Deposit Insurance Corporation, or any other agency, entity or person.
Investments in the Funds are subject to risks, including interest rate
fluctuations. Additionally, each Fund is more susceptible to factors
adversely affecting issuers of their state's tax-exempt securities than a
more widely diversified municipal bond fund. Accordingly, investors should
maintain a long-term perspective.
Fellow Shareholders
During the six-month fiscal period ended January 31, 1995, The Tax-Exempt
Fund of Maryland provided shareholders with dividends totaling 39 cents a
share and The Tax-Exempt Fund of Virginia paid dividends totaling 41 cents
a share. Both amounts were slightly greater than the respective dividend
totals paid by the Funds during the six months ended last July 31, as well
as those paid during the six-month period ended one year ago.
All dividends paid to shareholders for the 1994 calendar year are
exempt from Federal income taxes in addition to each Fund's respective
state income tax. As in prior years, however, such dividends must be
reported to the Internal Revenue Service on line 8b of Form 1040 or 1040A.
Over the past six months, the Funds' total return, which includes the
reinvestment of dividends, grew modestly: the Maryland Fund gained 0.2% and
the Virginia Fund rose 0.4%. Over the 12 months ended January 31, the
Maryland Fund declined 3.9% and the Virginia Fund fell 3.4%. These results
reflect the difficulties experienced by the fixed-income market primarily
during February and March 1994, when the Federal Reserve initiated a series
of short-term interest rate hikes to stem inflation.
Bond prices have been gradually creeping higher since November, ending
the reporting period with two solid months. During the first four months of
the semi-annual period, the Funds produced total returns of -4.48% for the
Maryland Fund and -4.45% for the Virginia Fund. The Funds then climbed into
positive territory during December and January (+4.91% for Maryland and
+5.04% for Virginia).
As interest rates rose throughout much of last year, the Funds'
investment adviser moved progressively into a more aggressive stance. It
has been looking to take advantage of the improved market outlook by buying
more research-driven, somewhat lower quality bonds. It also has been
lengthening the maturity of the Funds' portfolios, as indicated by the
following table:
Maturity The Maryland Fund The Virginia Fund
as of as of
1/31/94 1/31/95 1/31/94 1/31/95
1 to 10 years 30.2% 29.5% 39.9% 33.1%
10+ to 20 years 50.5 38.0 38.7 42.6
Over 20 years 13.6 27.4 18.9 21.7
The past reporting period has once again demonstrated that bond prices
can go down as well as up. Yet, over the long term, we believe that the
Funds will provide attractive opportunities. We are optimistic that the
current cyclical recovery is overlapping a long-term, low inflation
environment. With the continuing strength of the U.S. economy, however,
there still may be further interest rate tightening by the Fed. Therefore,
we remain cautious in our short-term outlook.
Despite recent fluctuations in bond prices, shareholders in both Funds
have been earning attractive "real," or inflation-adjusted, yields. As
indicated in the box beneath the "Highlights" section on page 5, the annual
taxable equivalent yield as of January 31, 1995, was 9.48% for the Maryland
Fund and 9.14% for the Virginia Fund at the top combined tax rate.
Moreover, shareholders who have been reinvesting their dividends have been
acquiring shares at lower prices, thereby enhancing their prospects for
longer term growth.
We take this opportunity to welcome our new shareholders, and we look
forward to reporting to you again following the close of the Funds' fiscal
year on July 31.
Sincerely,
(signature) (signature) (signature)
Stephen Hartwell James H. Lemon, Jr. Harry J. Lister
Chairman Vice Chairman President
March 17, 1995
Highlights as of January 31, 1995
The Tax-Exempt The Tax-Exempt
Fund of Maryland Fund of Virginia
Assets:
Net Assets $69,847,541 $89,087,517
Net Asset Value Per Share $14.63 $15.13
Distribution Rate<F1> 5.30% 5.20%
Quality Diversification:
Moody's/S&P Ratings (best of either)
Aaa/AAA 44.04% 46.68%
Aa/AA 21.50 40.60
A/A 13.71 6.97
Lower than A or nonrated 15.60 3.18
Cash and Equivalents 5.15 2.57
Total 100.00% 100.00%
Maturity Diversification:<F2>
Under 1 year 5.15% 2.57%
1 to 10 years 29.46 33.14
10+ to 20 years 38.04 42.59
20+ to 30 years 25.96 21.70
Over 30 years 1.39 _
Total 100.00% 100.00%
Average Life<F3> 11.32 years 11.40 years
To match Maryland's triple tax-free distribution rate of 5.30%, an investor
with a combined effective Federal/state/county tax rate of 44% would have
to earn a taxable yield of 9.48%. For Virginia investors with a combined
effective Federal/state tax rate of 43%, it would take a taxable yield of
9.14% to equal the Fund's double tax-free yield of 5.20%.
<F1> Distribution rate for January 1995 is one month's dividend
annualized, divided by the average offering price for the month.
The 30-day yield for January, calculated per the Securities and
Exchange Commission formula, at maximum sales charge: Maryland,
5.15% and Virginia, 4.97%. For the latest yields based on actual
distributions, call toll-free 800/421-0180.
<F2> Securities are included at pre-refunded dates, not maturity dates.
<F3> Average life more accurately reflects the potential impact of
call options. Should no call options be exercised, the average
maturity of the Maryland Fund and the Virginia Fund is 17.12 years
and 17.83 years, respectively.
The Tax-Exempt Fund of Maryland
Investment Portfolio, January 31, 1995
Principal
Amount Market
Unaudited (000) Value
Tax-Exempt Securities Maturing in More than One Year-94.85%
College & University Revenue-5.18%
Frederick County, College Revenue Bonds,
(Hood College Project), 1990 Series:
7.05% 2004 $ 410 $ 442,837
7.05% 2005 455 490,344
Maryland Health and Higher Educational
Facilities Authority, Refunding Revenue
Bonds, Johns Hopkins University Issue,
Series 1988, 7.375% 2008 1,000 1,062,640
University of Maryland System Auxiliary
Facility and Tuition Revenue Bonds:
1992 Series A, 6.30% 2009 750 765,555
1993 Refunding Series C, 5.00% 2010 1,000 858,250
3,619,626
General Obligations (Local)-10.35%
Anne Arundel County, Consolidated Water and
Sewer 1993 Refunding Series, 5.25% 2011 1,000 902,690
Baltimore County:
Consolidated Public Improvement Bonds,
1990 Series, 6.75% 1999 600 634,152
Metropolitan District Bonds, 63rd Issue,
1992 Series, 6.10% 2006 250 259,778
Frederick County:
Public Facilities Bonds of 1990, 8.875% 2002 250 299,753
Public Facilities Bonds of 1993,
Series B, 5.125% 2007 995 920,126
Harford County Consolidated Public
Improvement Bonds, Series 1992, 5.80% 2010 530 518,806
Howard County Consolidated Public
Improvement Refunding Bonds, 1993
Series A, 5.25% 2007 1,500 1,415,670
Montgomery County, Consolidated Public
Improvement Refunding Bonds of 1993,
Series A, 5.00% 2010 1,000 885,310
Prince George's County, Stormwater Management
Bonds, Series 1993, 5.625% 2010 1,000 951,070
Wicomico County, Consolidated Public
Improvement Bonds of 1993, 4.60% 2005 500 440,770
7,228,125
Hospital & Health Facilities Revenue-13.82%
Maryland Health and Higher Educational
Facilities Authority:
Good Samaritan Hospital Issue, Revenue
Bonds, Series 1993, 5.70% 2009 1,000 943,640
Greater Baltimore Medical Center Issue,
Revenue Bonds, Series 1991, 6.00% 2021 625 553,575
Howard County General Hospital Issue,
Series 1993, 5.50% 2013 1,500 1,232,730
Johns Hopkins Hospital Issue, Revenue
Refunding Bonds:
Series 1993, 5.60% 2009 850 800,258
Series 1988, 7.50% 2020 400 422,884
Series 1993, 5.00% 2023 1,000 799,040
Memorial Hospital of Cumberland Issue,
Revenue Refunding Bonds, Series 1992,
6.50% 2010 750 753,083
Peninsula Regional Medical Center Issue,
Project and Refunding Revenue Bonds,
Series 1993, 5.00% 2023 2,000 1,545,520
Suburban Hospital Issue, Revenue Refunding
Bonds, Series 1993, 5.125% 2021 3,000 2,374,890
Prince George's County, Hospital Revenue Bonds
(Dimensions Health Corporation Issue),
Series 1992, 7.20% 2006 215 227,396
9,653,016
Housing Finance Authority Revenue-7.53%
Maryland Community Development
Administration, Department of Housing and
Community Development, Single-Family
Program Bonds:
1990 First Series, 7.60% 2017 500 528,120
1994 Fifth Series, 5.875% 2017 1,500 1,484,280
1988 Third Series, 8.00% 2018 1,000 1,051,750
Montgomery County, Maryland Housing
Opportunities Commission, Single Family
Mortgage Revenue, 1986 Series C, 7.25% 2013 750 770,655
Prince George's County Housing Authority,
GNMA/FNMA Collateralized Single Family
Mortgage Bonds, Series 1994 A, 6.60% 2025 1,000 975,460
Commonwealth of Puerto Rico Housing
Finance Corporation, Single Family Mortgage
Revenue Bonds:
1st Portfolio, 1988 Series A, 7.80% 2021 95 99,053
1st Portfolio, 1988 Series B, 7.65% 2022 330 348,292
5,257,610
Industrial Development Revenue - 1.45%
Mayor and City Council of Baltimore, Port
Facilities Revenue Bonds (Consolidation
Coal Sales Company Project):
Series 1984 A, 6.50% 2011 500 506,990
Series 1984 B, 6.50% 2011 500 506,990
1,013,980
Insured - 14.55%
City of Baltimore, Refunding Revenue Bonds of
1994, Series A, FGIC Insured, 6.00% 2015 1,500 1,465,425
Charles County, Consolidated Public
Improvement Bonds of 1993, Series A,
FGIC Insured, 5.25% 2003 715 702,716
City of Frederick, General Improvement
Bonds, 1992 Refunding Series, FGIC
Insured, 6.125% 2008 890 908,014
Maryland Health and Higher Educational
Facilities Authority:
Anne Arundel Medical Center Issue,
Revenue Bonds, AMBAC Insured:
Series 1993, 5.25% 2013 1,000 879,020
Series 1993, 5.00% 2023 1,000 804,460
Francis Scott Key Medical Center Issue,
Refunding Revenue Bonds, Series 1993,
FGIC Insured, 5.00% 2013 500 425,840
Holy Cross Hospital Issue, Series 1990 A,
AMBAC Insured, 7.00% 2004 750 806,993
Memorial Hospital of Easton, Series 1989 B,
MBIA Insured, 7.00% 2012 1,200 1,249,452
Sinai Hospital of Baltimore Issue Project and
Revenue Refunding Bonds, Series 1993,
AMBAC Insured, 5.25% 2019 1,650 1,395,586
Commonwealth of Puerto Rico, Public
Improvement Bonds of 1987, MBIA Insured,
6.75% 2006 500 525,140
Washington, D.C. Metropolitan Area Transit
Authority, Gross Revenue Transit Refunding
Bonds, Series 1993, FGIC Insured,
6.00% 2008 1,000 1,003,590
10,166,236
Life Care Facilities Revenue - 9.62%
Calvert County, Economic Development
Revenue Bonds (Asbury-Solomons Island
Facility), Series 1995, 8.625% 2024 2,000 2,003,420
Maryland Health and Higher Educational
Facilities Authority, First Mortgage
Refunding Revenue Bonds, Roland Park
Place Issue, Series 1989, 7.75% 2012 2,000 2,098,360
Prince George's County Refunding Revenue
Bonds, Collington Episcopal Life Care
Community, Inc., Series 1994 A, 6.00% 2013 3,000 2,616,060
6,717,840
Multi-Family Housing - 2.89%
Montgomery County, Maryland Housing
Opportunities Commission, Single Family
Mortgage Revenue, 1994 Series A-2,
7.50% 2024 2,000 2,016,580
Pre-Refunded<F1> - 23.24%
Carroll County, Consolidated Public
Improvement Bonds of 1991, 6.25%
2007 (2001) 495 523,373
Frederick County:
Public Facilities Bonds of 1989, 7.20%
2006 (1999) 350 378,931
Public Facilities Bonds of 1991, Series B,
6.30% 2011 (2002) 1,370 1,452,529
Public Facilities Bonds of 1986 Series,
7.40% 2012 (2001) 310 347,309
Harford County, Consolidated Public
Improvement Bonds, Series 1992,
5.80% 2010 (2002) 970 998,819
Howard County:
Consolidated Public Improvement Bonds,
1990 Series A, 7.00% 2009 (2000) 500 534,900
Metropolitan District Refunding Bonds,
1991 Series A, 6.625% 2021 (2001) 500 532,425
Maryland Department of Transportation,
Consolidated Transportation Bonds,
1989 Series, 6.50% 2003 (1998) 500 525,840
State of Maryland, General Obligation
Bonds, State and Local Facilities:
1989 First Series, 6.80% 2004 (1999) 1,000 1,070,140
1990 Third Series, 6.80% 2005 (2000) 500 539,170
Loan of 1990, Third Series, 6.75% 2003
(2000) 400 427,420
Maryland State Health and Higher Educational
Facilities Authority:
Junior Lien Revenue Bonds, Francis Scott Key
Medical Center Issue, 1990 Series A,
7.00% 2025 (2000) 250 271,440
Sinai Hospital of Baltimore Issue, Revenue
Bonds, 1990 Series, AMBAC Insured,
7.00% 2019 (2000) 700 760,375
Suburban Hospital Issue Revenue Bonds:
Series 1988, 7.50% 2008 (1998) 1,250 1,353,288
Series 1992, 6.50% 2017 (2002) 500 535,505
University of Maryland Medical System
Issue, Revenue Bonds, Series 1991 A,
FGIC Insured, 6.50% 2021 (2001) 1,000 1,052,290
Morgan State University Academic Fees and
Auxiliary Facilities Fees Revenue Bonds,
1990 Series A, MBIA Insured,
7.00% 2020 (2000) 475 515,969
Prince George's County, Hospital Revenue
Bonds (Dimensions Health Corporation
Issue), Series 1992, 7.20% 2006 (2002) 1,035 1,148,726
Commonwealth of Puerto Rico, Housing Bank
and Finance Agency, Single Family Mortgage
Revenue Bonds, Homeownership 5th Portfolio,
1986 Series, 7.50% 2015 (2000) 495 534,011
Commonwealth of Puerto Rico, Public
Improvement Bonds of 1992, MBIA Insured,
6.50% 2009 (2002) 1,000 1,075,270
University of Maryland System Auxiliary
Facility and Tuition Revenue Bonds,
1989 Series B, 7.00% 2007 (1999) 600 648,174
Washington County, Public Improvement and
Refunding Bonds of 1991, 6.375% 2008 (2002) 250 263,853
Washington Suburban Sanitary District,
General Construction Bonds of 1986,
7.375% 2007 (1997) 700 740,206
16,229,963
Resource Recovery - 1.34%
Montgomery County, Northeast Maryland Waste
Disposal Authority, Solid Waste Revenue
Bonds, Series 1993 A, 6.30% 2016 1,000 935,420
Transportation - 1.39%
Maryland Department of Transportation,
Consolidated Transportation Bonds, Series
1992, 5.25% 2003 1,000 970,750
Turnpikes & Toll Roads Revenue - 2.57%
Maryland Transportation Authority Facilities
Project:
Revenue Bonds, Series 1985, 7.00% 2016 300 301,188
Revenue Refunding Bonds, Series 1992,
5.50% 2003 500 494,675
Transportation Facilities Projects Revenue
Bonds, Series 1992, 5.80% 2006 1,000 1,002,420
1,798,283
Water & Sewer Revenue - .92%
Maryland Water Quality Financing
Administration, Revolving Loan Fund
Revenue Bonds, Series 1991 B:
0.00% 2005 700 379,470
0.00% 2008 600 262,824
642,294
66,249,723
Tax-Exempt Securities Maturing in One Year or Less - 3.83%
Ports - 2.15%
Anne Arundel County, Baltimore Gas and
Electric Co., Economic Development
Revenue Bonds, Series 1988, 3.70% 1995 1,500 1,500,000
Pre-Refunded<F1> - 1.68%
Baltimore County Pension Fund, 1988 Series,
7.75% 2016 (1996) 1,125 1,176,199
2,676,199
TOTAL TAX-EXEMPT SECURITIES
(cost: $69,281,000) 68,925,922
Excess of cash and receivables over payables 921,619
NET ASSETS $69,847,541
<F1> Parenthetical year represents date of pre-refunding
See Notes to Financial Statements
The Tax-Exempt Fund of Virginia
Investment Portfolio, January 31, 1995
Principal
Amount Market
Unaudited (000) Value
Tax-Exempt Securities Maturing in More than One Year - 97.43%
College & University Revenue - 2.13%
Rockingham County Industrial Development
Authority, Educational Facilities Revenue
Bonds (Bridgewater College), Series 1993,
6.00% 2023 $1,100 $ 969,485
University of Virginia, General Revenue
Pledge Bonds, Series 1993 B, 5.375% 2010 1,000 931,180
1,900,665
General Obligations (Local) - 18.29%
Arlington County Public Improvement Bonds,
Series 1993, 5.30% 2009 2,500 2,323,200
Chesapeake:
Public Improvement Bonds, Series of 1992,
6.00% 2006 1,600 1,655,088
Refunding Bonds, Series of 1993, 5.40% 2008 1,000 947,640
Covington, Water and Sewer Refunding Bonds,
Series of 1994, 5.25% 2013 250 216,953
Leesburg Refunding Bonds, Series 1993,
5.60% 2008 1,195 1,143,734
Lynchburg Public Improvement Refunding
Bonds, Series 1993, 5.25% 2009 1,000 913,840
Newport News General Obligation:
General Improvement Refunding Bonds,
Series B of 1993, 5.10% 2003 1,500 1,427,610
Water Bonds, Series A of 1992, 6.125% 2009 1,170 1,181,560
Norfolk Capital Improvement and Refunding
Bonds, Series 1992 A, 6.00% 2011 500 494,430
Richmond Public Improvement Bonds:
Refunding Bonds, Series 1991 B, 6.25% 2018 2,000 1,975,920
Series 1991 A, 6.25% 2021 1,375 1,337,132
Roanoke Public Improvement and
Refunding Bonds, Series 1992 A and B:
6.375% 2009 250 258,388
6.40% 2011 500 514,150
Spotsylvania Public Improvement Bonds,
Series of 1992:
5.875% 2010 500 483,490
5.75% 2011 1,500 1,420,575
16,293,710
General Obligations (State) - 1.65%
Commonwealth of Virginia, Public Facilities
Bonds, 1993 Series A, 5.40% 2005 1,500 1,471,965
Hospital & Health Facilities Revenue - 12.03%
Arlington County Industrial Development
Authority, Hospital Revenue Refunding
Bonds (The Arlington Hospital), Series 1993:
5.125% 2008 1,000 858,500
5.00% 2021 1,000 758,150
Fairfax County Industrial Development
Authority, Hospital Revenue Refunding
Bonds (INOVA Health Systems Hospital
Project), Series 1993 A:
5.00% 2007 1,500 1,336,215
5.00% 2023 2,000 1,518,640
Lynchburg Industrial Development Authority,
Hospital Facilities, Revenue Refunding
Bonds, Centra Health, Inc., Series 1988,
8.125% 2016 1,000 1,087,820
Norfolk Industrial Development Authority,
Hospital Revenue Bonds (Sentara Hospitals-
Norfolk Project), Series A of 1994,
5.00% 2020 2,500 1,981,625
Peninsula Ports Authority:
Health Care Facilities Revenue and Refunding
Bonds (Mary Immaculate Project),
1994 Series, 6.875% 2010 1,900 1,854,970
Health System Revenue and Refunding Bonds
(Riverside Health System Project),
Series 1992 A, 6.625% 2010 1,300 1,317,602
10,713,522
Housing Finance Authority Revenue - 4.33%
Commonwealth of Puerto Rico Housing
Finance Corporation, Single Family
Mortgage Revenue Bonds, Portfolio 1:
1988 Series A, 7.80% 2021 80 83,413
1988 Series B, 7.65% 2022 355 374,678
Virginia Housing Development Authority,
Commonwealth Mortgage Bonds:
1992 Series C, Sub-Series C-6, 5.65% 2004 1,000 963,350
1994 Series I-AMT, Sub-Series I-1,
6.40% 2005 800 802,352
1989 Series B, Sub-Series B-2, 7.625% 2017 250 261,068
1994 Series H, Sub-Series H-2, 6.55% 2017 1,000 980,560
1992 Series A, 7.10% 2022 380 388,769
3,854,190
Insured - 13.97%
Chesapeake Certificates of Participation,
MBIA Insured, 1993 Series, 5.40% 2005 1,000 958,440
Danville, Virginia Industrial Development
Authority, Hospital Revenue Bonds,
Danville Regional Medical Center, Series 1994,
FGIC Insured, 6.00% 2007 1,000 1,013,300
Henry County Public Service Authority,
Water and Sewer Refunding Revenue
Bonds, FGIC Insured, Series 1991, 6.25% 2019 500 498,065
Loudoun County Sanitation Authority,
Water and Sewer System Revenue Bonds,
Refunding Series 1992, FGIC Insured:
6.25% 2010 2,000 2,026,400
6.25% 2016 1,000 1,000,660
Metropolitan Washington, D.C. Airports
Authority, Airport System Revenue and
Refunding Bonds:
Series 1993 A, MBIA Insured, 5.375% 2013 1,465 1,309,944
Series 1992 A, MBIA Insured AMT,
6.625% 2019 1,500 1,506,720
Series 1994 A, MBIA Insured AMT,
5.75% 2020 2,000 1,788,600
Nelson County Service Authority, Water and
Sewer Revenue Refunding Bonds, Series 1993,
FGIC Insured, 5.50% 2018 500 446,295
City of Virginia Beach Development Authority,
Hospital Revenue Bonds, (Virginia Beach
General Hospital Project), Series 1993,
AMBAC Insured, 6.00% 2011 1,000 983,800
Washington, D.C. Metropolitan Area Transit
Authority, Gross Revenue Transit Refunding
Bonds, Series 1993, FGIC Insured, 4.70% 2003 1,000 916,250
12,448,474
Lease Revenue (State) - 2.01%
Virginia Public Building Authority, State Building
Revenue Bonds, Series 1991 A, 6.50% 2011 1,750 1,790,075
Local Appropriation - .83%
Fairfax County Economic Development
Authority, Parking Revenue Bonds (Huntington
Metrorail Station Project), Series 1990 A,
6.75% 2015 500 506,160
Hampton Museum Revenue Refunding Bonds,
Series 1994, 4.40% 2000 255 236,502
742,662
Pre-Refunded<F1> - 29.52%
Albemarle County Service Authority Water
and Sewer System, Revenue Bonds, Series
of 1986, 7.60% 2000 (1996) 55 58,500
Arlington County Industrial Development
Authority, Hospital Revenue Bonds
(The Arlington Hospital), Series 1991 A:
7.00% 2011 (2001) 500 546,755
7.125% 2021 (2001) 250 275,228
Bedford Electric System Revenue Refunding
Bonds, Series 1986, AMBAC Insured,
7.25% 2025 (1996) 1,000 1,046,370
Chesapeake:
Certificates of Participation, 1986 Series,
7.75% 2006 (1996) 1,000 1,053,910
Hospital Authority Facility for Chesapeake
General Hospital First Mortgage Revenue,
BIG Insured, Series 1988, 7.625%
2018 (1998) 1,000 1,086,480
Water and Sewer System Revenue Bonds,
Series of 1990, 7.10% 2005 (1998) 250 268,230
Chesterfield County Refunding Bonds,
1986 Series, 7.50% 2001 (1996) 50 52,520
Fairfax County Industrial Development
Authority Hospital Revenue Bonds:
(Fairfax Hospital Association System),
Series 1985 A, 7.875% 2017 (1996) 1,000 1,071,940
(Fairfax Hospital System Project),
INOVA Health Systems:
Series 1991 A, 6.50% 2007 (2001) 750 801,645
Series 1991 C, 6.664% 2023 (2001) 1,000 1,081,660
Water Authority Revenue, Series 1989,
7.30% 2021 (2000) 1,250 1,367,675
Henrico County Water and Sewer System
Refunding Revenue Bonds, Series 1986,
7.80% 2008 (1996) 100 105,133
Henry County Public Service Authority,
Water and Sewer Revenue Bonds, FGIC
Insured, Series 1990, 7.20% 2019 (2000) 1,250 1,367,012
Loudoun County Sanitation Authority,
Water and Sewer System Revenue Bonds,
Series 1989, AMBAC Insured:
7.50% 2010 (1999) 900 982,134
7.50% 2017 (1999) 375 409,223
Norfolk Industrial Development Authority,
Hospital Revenue Bonds:
(Children's Hospital of the King's Daughters
Obligated Group), Series 1991,
AMBAC Insured, 7.00% 2011 (2001) 400 436,680
Medical Center Hospital Project, Series 1987 A,
7.00% 2017 (1997) 500 521,560
(Sentara Hospitals-Norfolk Project),
Series 1991, 7.00% 2020 (2000) 250 272,290
Portsmouth Improvement Bonds:
Public Improvement Refunding Bonds,
Series 1987, 7.50% 2012 (1997) 500 539,240
Series 1991, 6.80% 2010 (2000) 280 301,921
Prince William County Service Authority,
Water and Sewer System Revenue Bonds,
Series 1991, FGIC Insured, 6.50% 2021 (2001) 680 726,288
Puerto Rico Housing Bank and Finance Agency
Single Mortgage Revenue Homeownership
Bonds, Series 1986, 5th Portfolio:
7.375% 2007 (2000) 320 350,154
7.50% 2015 (2000) 105 113,275
Richmond Public Utility Revenue Bonds,
Series 1988 A, 8.00% 2018 (1998) 1,500 1,635,960
Roanoke:
Industrial Development Authority, Hospital
Revenue Bonds, Carilion Health System
(Roanoke Memorial Hospital Projects),
Series 1990, MBIA Insured, 7.25%
2017 (2000) 750 823,005
Water System Revenue Bonds, Series 1991,
FGIC Insured:
6.50% 2021 (2001) 1,000 1,066,390
6.00% 2031 (2001) 500 511,435
Southeastern Public Service Authority, Regional
Solid Waste System, Senior Revenue
Refunding Bonds, Series 1989, BIG Insured:
7.00% 2006 (1999) 500 539,140
7.00% 2013 (1999) 1,000 1,077,050
Suffolk, Series 1989, 7.00% 2005 (1998) 1,000 1,070,650
University of Virginia, Hospital Revenue Bonds,
1984 Series A, HIBI Insured,
9.875% 2001 (2001) 25 28,899
University of Virginia Hospital (The Rectors
and Visitors Hospital), Revenue Refunding
Bonds, Series 1985 D, 7.15% 2017 (1998) 500 535,480
Upper Occoquan Sewage Authority, Regional
Sewerage System Revenue Bonds, Series 1991,
MBIA Insured, 6.00% 2021 (2001) 700 720,573
Virginia Public Building Authority (Correctional
Facilities Project), State Building Revenue
Bonds, Series 1988 A, 7.375% 2004 (1998) 235 253,835
Virginia Public Schools Authority, 1989 Series A,
7.45% 2003 (1997) 300 317,637
Virginia Resources Authority, Water and
Sewer System Revenue Bonds:
Series 1985 A, 8.75% 2010 (2010) 300 314,607
Series 1990, 7.25% 2011 (2000) 250 275,088
Commonwealth of Virginia Transportation
Board, Transportation Contract Revenue
Bonds, Route 28 Project, Series 1988:
7.70% 2008 (1998) 890 965,116
7.80% 2016 (1998) 500 543,455
Warrenton, Series of 1990:
7.10% 2003 (1998) 230 247,006
7.20% 2004 (1998) 250 269,308
7.25% 2005 (1998) 245 264,320
26,294,777
State Authority - 5.51%
Virginia Public School Authority, School
Financing Bonds:
(1987 Resolution), 1991 Refunding Series C,
6.25% 2007 1,500 1,550,595
(1991 Resolution), Series 1994 A,
6.20% 2014 1,500 1,507,335
Virginia Resources Authority:
Solid Waste Disposal System Revenue Bonds,
1990 Series A, 7.30% 2015 1,000 1,043,380
Water and Sewer System Revenue Bonds
(Pooled Loan Program), 1986 Series A,
7.50% 2017 50 53,242
Water System Refunding Revenue Bonds,
1992 Series A, 6.45% 2013 750 756,098
4,910,650
Transportation - 4.10%
Commonwealth of Virginia Transportation Board,
Transportation Revenue Refunding Bonds:
(Northern Virginia Transportation District
Program), Series 1993 C, 5.30% 2009 2,565 2,365,135
(U.S. Route 58 Corridor Development
Program), Series 1993 A, 5.25% 2012 1,455 1,286,933
3,652,068
Water & Sewer Revenue - 3.06%
Chesterfield County Water and Sewer Revenue
Refunding Bonds, Series 1992, 6.375% 2009 $1,250 $ 1,284,075
Fairfax County Water Authority Refunding Bonds,
Series 1992, 6.00% 2022 815 777,200
Rivanna Water and Sewer Authority, Regional
Water and Sewer System Refunding Revenue
Bonds, Series 1991, 6.40% 2007 645 669,227
2,730,502
86,803,260
Tax-Exempt Securities Maturing in One Year or Less - 1.19%
General Obligations (Local) - .28%
Suffolk, Series 1988, 8.25% 1995 250 254,110
Ports - .79%
Peninsula Ports Authority:
Coal Terminal Revenue Refunding Bonds
(Dominion Terminal Associates Project),
Variable Rate Demand Note, 1-day put,
Series 1987 C, 3.85% 2016 300 300,000
Refunding Port Facilities (Shell Oil Company),
Variable Rate Demand Note, 1987 Series,
1-day put, 3.75% 2005 400 400,000
700,000
Pre-Refunded<F1> - .12%
Henrico County Public Improvement Bonds,
Series 1985, 8.20% 2002 (1995) 100 103,256
1,057,366
TOTAL TAX-EXEMPT SECURITIES
(cost: $87,789,000) 87,860,626
Excess of cash and receivables over payables 1,226,891
NET ASSETS $89,087,517
<F1> Parenthetical year represents date of pre-refunding
See Notes to Financial Statements
Statement of Assets and Liabilities
January 31, 1995
(dollars in thousands)
Unaudited The Tax-Exempt The Tax-Exempt
Fund of Maryland Fund of Virginia
Assets:
Tax-exempt securities:
Maturing in more than one year
(cost: $66,660 and $86,735,
respectively) $66,250 $86,803
Maturing in one year or less
(cost: $2,621 and $1,054,
respectively) 2,676 1,058
Cash 58 81
Receivables for -
Sales of investments 2,324 -
Sales of Funds' shares 43 147
Accrued interest 726 1,287
Total Assets 72,077 89,376
Liabilities:
Payables for -
Purchases of investments 1,973 -
Repurchases of Funds' shares 81 69
Dividends 107 135
Adviser and management
services 29 35
Accrued expenses 39 49
Total Liabilities 2,229 288
Net Assets:
Net assets applicable to Funds'
shares issued and outstanding $69,848 $89,088
Funds' shares outstanding<F1> 4,774,846 5,887,252
Net asset value per share $14.63 $15.13
<F1> Shares of beneficial interest, unlimited shares authorized
See Notes to Financial Statements
Statement of Operations
For the six months ended January 31, 1995
(dollars in thousands)
The Tax-Exempt The Tax-Exempt
Unaudited Fund of Maryland Fund of Virginia
Investment Income:
Income:
Interest on tax-exempt securities $2,217 $2,779
Expenses:
Investment adviser fee 92 113
Business management fee 75 92
Distribution fee 74 109
Transfer agent fee 10 14
Reports to shareholders 3 7
Registration statements and
prospectus 5 10
Postage, stationery and supplies 5 9
Trustees' fees 2 2
Custodian fee 1 2
Auditing and legal fees 8 8
Total expenses 275 366
Net investment income 1,942 2,413
Realized Gain (Loss) and
Unrealized Appreciation
(Depreciation) on Investments:
Net realized gain (loss) (44) 64
Net change in unrealized appreciation
(depreciation) on investments:
Beginning of period 1,598 2,345
End of period (355) 72
Net change in unrealized appreciation
(depreciation)
on investments (1,953) (2,273)
Net realized gain (loss) and change in
unrealized appreciation (depreciation)
on investments (1,997) (2,209)
Net Increase (Decrease) in Net Assets
Resulting from Operations $ (55) $ 204
See Notes to Financial Statements
Statement of Changes in Net Assets
The Tax-Exempt Fund of Maryland
(dollars in thousands)
Six Months Ended Year Ended
January 31, 1995<F1> July 31, 1994
Operations:
Net investment income $ 1,942 $ 3,533
Net realized gain (loss) on
investments (44) 15
Net change in unrealized appreciation
(depreciation) on investments (1,953) (2,776)
Net increase (decrease) in net assets
resulting from operations (55) 772
Dividends Paid to Shareholders
from Net Investment Income (1,952) (3,523)
Capital Share Transactions:
Proceeds from shares sold:
346,972 and 1,205,365
shares, respectively 5,038 18,790
Proceeds from shares issued in
reinvestment of net investment
income dividends:
85,291 and 148,181 shares,
respectively 1,236 2,289
Cost of shares repurchased:
640,700 and 521,577
shares, respectively (9,193) (8,023)
Net increase (decrease) in net assets
resulting from capital share
transactions (2,919) 13,056
Total Increase (Decrease) in Net Assets (4,926) 10,305
Net Assets:
Beginning of period 74,774 64,469
End of period (includes undistributed
net investment income of
$10 at year end) $69,848 $74,774
<F1> Unaudited
See Notes to Financial Statements
Statement of Changes in Net Assets
The Tax-Exempt Fund of Virginia
(dollars in thousands)
Six Months Ended Year Ended
January 31, 1995<F1> July 31, 1994
Operations:
Net investment income $ 2,413 $ 4,528
Net realized gain on investments 64 75
Net change in unrealized appreciation
on investments (2,273) (3,590)
Net increase in net assets
resulting from operations 204 1,013
Dividends Paid to Shareholders
from Net Investment Income (2,427) (4,514)
Capital Share Transactions:
Proceeds from shares sold:
580,191 and 1,670,010
shares, respectively 8,631 26,882
Proceeds from shares issued in
reinvestment of net investment
income dividends:
91,840 and 167,755 shares,
respectively 1,372 2,674
Cost of shares repurchased:
820,996 and 779,481
shares, respectively (12,176) (12,284)
Net increase (decrease) in net assets
resulting from capital share
transactions (2,173) 17,272
Total Increase (Decrease) in Net Assets (4,396) 13,771
Net Assets:
Beginning of period 93,484 79,713
End of period (includes undistributed
net investment income of
$14 at year end) $89,088 $93,484
<F1> Unaudited
See Notes to Financial Statements
Notes to Financial Statements
1 The American Funds Tax-Exempt Series I (the "Trust") is registered
under the Investment Company Act of 1940 as an open-end, diversified
management investment company and has initially issued two series of
shares, The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of Virginia
(the "Funds"). The following paragraphs summarize the significant
accounting policies consistently followed by the Trust in the preparation
of its financial statements:
Tax-exempt securities with original or remaining maturities in excess
of 60 days are valued at prices obtained from a national municipal bond
pricing service. The pricing service takes into account various factors
such as quality, yield and maturity of tax-exempt securities comparable to
those held by the Trust, as well as actual bid and asked prices on a
particular day.
Other securities with original or remaining maturities in excess of 60
days, including securities for which pricing service values are not
available, are valued at the mean of their quoted bid and asked prices. All
securities with 60 days or less to maturity are valued at amortized cost,
which approximates market value. Securities for which market quotations
are not readily available are valued at fair value as determined in good
faith by the committee appointed by the Board of Trustees.
As is customary in the mutual fund industry, securities transactions
are accounted for on the date the securities are purchased or sold.
Realized gains and losses from securities transactions are reported on an
identified cost basis. Interest income is reported on the accrual basis.
Premiums and original issue discounts on securities purchased are amortized
over the life of the respective securities. Dividends to shareholders are
declared daily from net investment income.
Pursuant to the custodian agreement, the Funds receive credits against
their custodian fees for imputed interest on certain balances with the
custodian bank. The custodian fees of $1,000 and $2,000 for the Maryland
and Virginia Funds, respectively, include $1,000 each paid by these credits
rather than in cash.
Notes to Financial Statements
2 It is the Trust's policy to continue to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its net investment income, including any net realized
gain on investments, to its shareholders. Therefore, no federal income tax
provision is required.
As of January 31, 1995, net unrealized depreciation on investments for
book and federal income tax purposes for the Maryland Fund aggregated
$355,000, of which $2,178,000 related to appreciated securities and
$2,533,000 related to depreciated securities. For the Virginia Fund, net
unrealized appreciation aggregated $72,000, of which $2,735,000 related to
appreciated securities and $2,663,000 related to depreciated securities.
There was no difference between book and tax realized gains on securities
transactions for the six months ended January 31, 1995. During the six
months ended January 31, 1995, the Virginia Fund utilized a capital loss
carryforward totaling $64,000 to offset, for tax purposes, capital gains
realized during the six months up to such amount. The Funds have available
at January 31, 1995 net capital loss carryforwards totaling $230,000 and
$252,000 for the Maryland and Virginia Funds, respectively, which may be
used to offset capital gains realized during subsequent years through July
31, 1999. It is the intention of the Funds not to make distributions from
capital gains until the capital loss carryforwards are utilized. The cost
of portfolio securities for book and federal income tax purposes was
$69,281,000 and $87,789,000 for the Maryland and Virginia Funds,
respectively, at January 31, 1995.
3 Officers of the Trust received no remuneration from the Funds in such
capacities. Their remuneration was paid by Washington Management
Corporation (WMC), a wholly owned subsidiary of The Johnston-Lemon Group,
Incorporated. Fees of $75,000 and $92,000 were recognized by the Maryland
and Virginia Funds, respectively, and were paid or are payable to WMC as
Business Manager of the Trust pursuant to the business management contract
under which WMC provides the officer personnel, accounting, and clerical
staff of the Trust, together with office space and equipment. The business
management contract provides for monthly fees, accrued daily, based on an
annual rate of 0.135% of the first $60 million of average net assets of
each of the Funds; 0.09% of such assets in excess of $60 million; plus
1.35% of the gross investment income (excluding any net capital gains from
transactions in portfolio securities). Johnston, Lemon & Co. Incorporated,
a wholly owned subsidiary of the Johnston-Lemon Group, Incorporated, has
informed the Funds that it has earned $27,000 and $10,000 on its retail
sales of shares and under the distribution plan of the Maryland and
Virginia Funds, respectively, but received no net brokerage commissions
resulting from purchases and sales of securities for the investment account
of the Funds. All the officers of the Trust and three of its trustees are
affiliated with WMC.
Fees of $92,000 and $113,000 were recognized by the Maryland and
Virginia Funds, respectively, and were paid or are payable to Capital
Research and Management Company (CRMC) as Investment Adviser pursuant to an
investment advisory contract with the Trust. The investment advisory
contract provides for monthly fees, accrued daily, based on an annual rate
of 0.165% of the first $60 million of average net assets of each of the
Funds; 0.12% of such assets in excess of $60 million; plus 1.65% of the
gross investment income (excluding any net capital gains from transactions
in portfolio securities).
Pursuant to a Plan of Distribution, the Funds may expend up to 0.25%
of their 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 Funds' Board of Trustees.
Fund expenses under the Plan include payments to dealers to compensate them
for their selling and servicing efforts. During the six months ended
January 31, 1995, distribution expenses under the Plan were $74,000 and
$109,000, including accrued and unpaid expenses of $26,000 and $30,000, for
the Maryland and Virginia Funds, respectively.
American Funds Service Company (AFS), the transfer agent for the
Trust, was paid fees of $10,000 and $14,000 under the terms of a contract
that provides for transfer agency services to be performed for the Funds.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
Funds' shares, has informed the Funds that it has received $16,000 and
$23,000 (after allowances to dealers) for the Maryland and Virginia Funds,
respectively, as its portion of the sales charges paid by purchasers of the
Funds' shares. Such sales charges are not an expense of the Funds and,
hence, are not reflected in the accompanying statement of operations.
Trustees of the Funds who are unaffiliated with WMC 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 Funds. As of January 31, 1995, aggregate amounts deferred were $2,000
each for the Maryland and Virginia Funds.
CRMC is owned by The Capital Group Companies, Inc.
AFS and AFD are both wholly owned subsidiaries of CRMC.
4 As of January 31, 1995:
The Tax-Exempt The Tax-Exempt
Fund of Maryland Fund of Virginia
Accumulated net realized loss
on investments $ (230,000) $ (252,000)
Paid-in capital 70,433,000 89,268,000
Purchases and sales of investment
securities, excluding short-term
securities, during the six months
ended January 31, 1995:
Purchases 7,328,000 7,460,000
Sales 7,510,000 8,359,000
<TABLE>
<CAPTION>
The Tax-Exempt Fund of Maryland
Per-Share Data and Ratios
Six Months
Ended Year Ended July 31
1/31/95<F1> 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $15.00 $15.53 $15.22 $14.29 $14.12 $14.22
Income from Investment
Operations:
Net investment income .39 .76 .79 .83 .85 .83
Net realized and
unrealized gain (loss)
on investments (.37) (.53) .31 .93 .17 (.10)
Total income from
investment operations .02 .23 1.10 1.76 1.02 .73
Less Distributions:
Dividends from net
investment income (.39) (.76) (.79) (.83) (.85) (.83)
Net Asset Value,
End of Period $14.63 $15.00 $15.53 $15.22 $14.29 $14.12
Total Return<F2> .21%<F3> 1.42% 7.45% 12.72% 7.44% 5.35%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $70 $75 $64 $48 $35 $31
Ratio of expenses to
average net assets .38%<F3> .75% .83% .91% .94% .99%
Ratio of net income to
average net assets 2.70%<F3> 4.90% 5.12% 5.60% 5.98% 5.89%
Portfolio turnover rate 10.70%<F3> 10.01% 9.05% 8.11% .88% 21.75%
<FN>
<F1> Unaudited
<F2> This was calculated without deducting a sales charge. The maximum sales charge is 4.75% of the Fund's offering
price.
<F3> Based on operations for the period shown and, accordingly, not representative of a full year's operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
The Tax-Exempt Fund of Virginia
Per-Share Data and Ratios
Six Months
Ended Year Ended July 31
1/31/95<F1> 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $15.49 $16.01 $15.72 $14.75 $14.50 $14.55
Income from Investment
Operations:
Net investment income .41 .80 .82 .85 .87 .87
Net realized and
unrealized gain (loss)
on investments (.36) (.52) .29 .97 .25 (.05)
Total income from
investment operations .05 .28 1.11 1.82 1.12 .82
Less Distributions:
Dividends from net
investment income (.41) (.80) (.82) (.85) (.87) (.87)
Net Asset Value,
End of Period $15.13 $15.49 $16.01 $15.72 $14.75 $14.50
Total Return<F2> .36%<F3> 1.74% 7.29% 12.80% 8.01% 5.87%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $89 $93 $80 $57 $39 $34
Ratio of expenses to
average net assets .41%<F3> .78% .84% .93% .97% .99%
Ratio of net income to
average net assets 2.70%<F3> 5.04% 5.18% 5.61% 6.00% 6.04%
Portfolio turnover rate 8.60%<F3> 2.36% 4.96% 6.84% 13.60% 35.37%
<FN>
<F1> Unaudited
<F2> This was calculated without deducting a sales charge. The maximum sales charge is 4.75% of
the Fund's offering price.
<F3> Based on operations for the period shown and, accordingly, not representative of a full year's operations.
</FN>
</TABLE>
The American Funds Tax-Exempt Series I
Board of Trustees
Cyrus A. Ansary
President, Investment Services International Company
Frank M. Ewing
Chairman and President,
Frank M. Ewing Co., Inc.
Stephen Hartwell
Chairman of the Trust
Chairman, Washington Management Corporation
James H. Lemon, Jr.
Vice Chairman of the Trust
Chairman and Chief Executive Officer,
The Johnston-Lemon Group, Incorporated
Harry J. Lister
President of the Trust
President, Washington Management Corporation
Jean Head Sisco
Partner, Sisco Associates
T. Eugene Smith
President, T. Eugene Smith, Inc.
Stephen G. Yeonas
Chairman and Chief Executive Officer,
Stephen G. Yeonas Company
Other Officers
Howard L. Kitzmiller
Vice President, Secretary/
Treasurer of the Trust
Senior Vice President, Secretary and Assistant Treasurer, Washington
Management Corporation
Lois A. Erhard
Vice President of the Trust
Vice President, Washington
Management Corporation
Office of the Funds and of The Business Manager
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, DC 20005
(202) 842-5665
Investment Manager
Capital Research and Management
Company
333 South Hope Street
Los Angeles, CA 90071-1443
135 South State College Boulevard
Brea, CA 92621-5804
Transfer Agent
American Funds Service Company
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081-0001
Counsel
Thompson, O'Donnell, Markham,
Norton & Hannon
805 Fifteenth Street, NW
Washington, DC 20005
Principal Underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1462
For information about your account or any of the Funds' services, please
contact your securities dealer or financial planner, or call the Funds'
transfer agent, toll-free, at 800/421-0180.
This report is for the information of shareholders in the Funds that
comprise The American Funds Tax-Exempt Series I, 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 Funds. If used as sales material after March 31,
1995, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
TEFMD/TEFVA-013-0395
