(Logo)
The American Funds Group (R)
The American Funds
Tax-Exempt Series I
The Tax-Exempt Fund of Maryland
The Tax-Exempt Fund of Virginia
Semi-Annual Report
January 31, 1998
The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of Virginia
seek a high level of current income free from Federal and their respective
state income taxes. Additionally, each Fund seeks to preserve capital.
The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of Virginia
are two of the 28 mutual funds in the American Funds Group(R), managed by
Capital Research and Management Company. Since 1931, Capital has invested
with a long-term focus based on thorough research and attention to risk.
Fund results in this report were computed without a sales charge
unless otherwise indicated. Here are the total returns and average annual
compound returns with all distributions reinvested for periods ended
December 31, 1997 (the most recent calendar quarter), assuming payment of
the 4.75% maximum sales charge at the beginning of the stated periods - for
The Tax-Exempt Fund of Maryland: 10 years: +99.89% (or +7.17% a year), 5
years: +31.73% (or +5.67% a year), 12 months: +3.77%; for The Tax-Exempt
Fund of Virginia: 10 years: +97.16% (or +7.02% a year), 5 years: +31.09%
(or +5.56% a year), 12 months: +3.14%. Sales charges are lower for
accounts of $25,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE
OF FUTURE RESULTS. ALL INVESTMENTS ARE SUBJECT TO CERTAIN RISKS.
INVESTMENTS IN THE FUNDS ARE SUBJECT TO INTEREST RATE FLUCTUATIONS.
ADDITIONALLY, EACH FUND IS MORE SUSCEPTIBLE TO FACTORS ADVERSELY AFFECTING
ISSUERS OF ITS STATE'S TAX-EXEMPT SECURITIES THAN A MORE WIDELY DIVERSIFIED
MUNICIPAL BOND FUND. SHARE PRICE AND RETURN WILL VARY; THEREFORE, YOU MAY
GAIN OR LOSE MONEY BY INVESTING IN A FUND. INVESTORS SHOULD MAINTAIN A
LONG-TERM INVESTMENT PERSPECTIVE. FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY
FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY
OTHER AGENCY, ENTITY OR PERSON.
INCOME MAY BE SUBJECT TO FEDERAL ALTERNATIVE MINIMUM TAXES. CERTAIN
OTHER INCOME, AS WELL AS CAPITAL GAIN DISTRIBUTIONS, MAY BE TAXABLE.
Fellow Shareholders
For the six months ended January 31, The Tax-Exempt Fund of Maryland and
The Tax-Exempt Fund of Virginia continued to provide a high level of
tax-free income. The net asset value of the Maryland Fund rose from $16.02
to $16.13 a share and the Virginia Fund rose from $16.37 to $16.46 a share.
Your total return from the Maryland Fund was 4.0% for the period,
assuming that you reinvested all distributions, as most shareholders do.
These results compare to the 3.7% average for Maryland tax-exempt bond
funds, as measured by Lipper Analytical Services.
The Maryland Fund paid monthly dividends totaling 39.6 cents a share
and, in November, a taxable long-term capital gain distribution of 11.6
cents a share. If you took your dividends in cash, you had an income
return of 2.5%, or 5.0% on an annualized basis - equal to 8.9% a year from
a taxable investment, if you are in the highest combined Federal, state and
local tax bracket.
Your total return from the Virginia Fund was 3.3% for the period,
assuming that you reinvested all distributions. These results compare to
the 4.1% average for Virginia tax-exempt bond funds, as measured by Lipper.
The Virginia Fund paid monthly dividends totaling 39.8 cents a share
and, in November, a taxable long-term capital gain distribution of 3.9
cents a share. If you took your dividends in cash, you had an income
return of 2.4%, or 4.9% on an annualized basis - equal to 8.6% a year from
a taxable investment, if you are in the highest combined Federal and state
tax bracket.
The biggest economic news during the period came from Southeast Asia,
where speculative real estate markets and overextended banks collapsed,
sending currencies and stock markets reeling. Effects of the crisis
rippled around the world, causing a "flight to quality" as some U.S.
investors shifted assets from stocks into bonds. It also created
expectations of an economic slowdown.
Despite this, the U.S. economy continued to grow at a brisk pace.
Interest rates were stable. Inflation remained low - rising only 1.4% on
an annualized basis - yet unemployment was minimal. Meanwhile, the Federal
deficit continued to dwindle, with high tax revenues reducing the
Treasury's need to borrow.
Maryland and Virginia remained in a similarly good position, with both
states continuing to benefit from growing reserves, strong tax collections
and budget surpluses. As a result, both states retired a number of
outstanding bonds early, substantially reducing average maturities in the
market and in your Funds' portfolio. The states also issued fewer new
bonds, and those new bonds were issued at lower rates, providing lower
income. In this environment, finding attractive new opportunities was
especially challenging.
Among developments in the Maryland portfolio, the credit rating of a
Calvert County issuer responsible for a nursing home at Solomons Island was
upgraded from B to AAA. We had first invested in the project in 1995, when
it was in the planning stages. It survived the usual construction risks
and has attracted more tenants than expected, enabling the developer to
refinance at lower rates and set the proceeds aside in a special account
backing the initial bond issue.
In Virginia, our handful of new investments included a bond which
helped to finance mortgage obligations for an assisted living facility -
Our Lady of Hope, sponsored by the Catholic Diocese in northwest Richmond.
The Fund's investment adviser visited the site and worked with the bond's
underwriters to create favorable terms, seeking and receiving 11 years of
"call protection" (assurance that the issuer will not pay off the
obligation for at least that long). Purchasers of similar 20-year issues
typically get only five years of call protection. That difference
represents one of the advantages of investing in the Fund rather than in
individual municipal bonds.
We look forward to bringing you up to date on these and other
investments in our annual report, six months from now. In the meantime,
the Funds' investment adviser will continue to watch the economy for signs
of inflation and to study the Maryland and Virginia municipal bond markets
for promising opportunities.
As always, we welcome your questions and comments.
Sincerely,
(Signature) (Signature)
James H. Lemon, Jr. Harry J. Lister
Chairman President
March 16, 1998
Highlights as of January 31, 1998
The Tax-Exempt The Tax-Exempt
Fund of Maryland Fund of Virginia
Assets:
Net Assets $93,992,082 $105,230,142
Net Asset Value Per Share $16.13 $16.46
Quality Diversification:
Moody's/S&P Ratings (best of either)
Aaa/AAA 34.86% 36.83%
Aa/AA 25.63 37.56
A/A 16.10 9.71
Baa/BBB 13.10 4.85
Lower than BBB or nonrated 6.78 5.64
Cash and Equivalents 3.53 5.41
Total 100.00% 100.00%
Maturity Diversification<F1>:
Under 1 year 3.53% 5.41%
1 to 10 years 68.46 64.97
10+ to 20 years 20.35 17.19
20+ to 30 years 7.66 11.96
30+ years - .47
Total 100.00% 100.00%
Average Life<F2> 8.75 years 8.80 years
[FN]
<F1> Securities are included at pre-refunded dates, not maturity dates.
<F2> 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 15.54 years and 15.02 years,
respectively.
</FN>
The Funds' 30-day yields as of February 28, 1998, calculated in
accordance with the Securities and Exchange Commission formula, at maximum
sales charge, were 3.81% for the Maryland Fund and 3.74% for the Virginia
Fund. The Funds' distribution rates as of that date were 4.57% and 4.52%,
respectively. The SEC yield reflects income each Fund expects to earn
based on its current portfolio of securities, while the distribution rate
is based solely on the Funds' past dividends. Accordingly, the Funds' SEC
yields and distribution rates may differ. For the latest yields based on
actual distributions, call toll-free 800/421-0180.
The Tax-Exempt Fund of Maryland
Investment Portfolio, January 31, 1998
Principal
Amount Market
Unaudited (000) Value
Tax-Exempt Securities Maturing in More than One Year - 96.47%
College & University Revenue - 3.30%
Frederick County, College Revenue Bonds
(Hood College Project), 1990 Series:
7.05% 2004 $ 410 $ 439,590
7.05% 2005 455 492,856
University of Maryland System Auxiliary
Facility and Tuition Revenue Bonds:
1992 Series A, 6.30% 2009 1,050 1,133,538
1993 Refunding Series C, 5.00% 2010 1,000 1,031,410
3,097,394
General Obligations (Local) - 1.76%
Anne Arundel County, Consolidated Water and
Sewer, 1993 Refunding Series, 5.30% 2016 500 511,010
Baltimore County, Metropolitan District Bonds,
63rd Issue, 1992 Series, 6.10% 2006 250 273,873
Frederick County, Public Facilities Bonds
1990, 8.875% 2002 250 299,483
Harford County Consolidated Public
Improvement Bonds, Series 1992, 5.80% 2010 530 573,778
1,658,144
General Obligations (State) - 1.66%
Commonwealth of Puerto Rico, Public Improvement
Refunding Bonds, Series 1998, 5.00% 2007 1,500 1,561,110
Hospital & Health Facilities Revenue - 14.69%
Maryland Health and Higher Educational
Facilities Authority:
(Charity Obligated Group-Daughters of
Charity National Health System),
Variable Rate Hospital Revenue Bonds,
Series 1997D, 4.60% 2026 1,750 1,787,135
Good Samaritan Hospital Issue, Revenue Bonds,
Series 1993, 5.70% 2009 1,000 1,109,320
Howard County, General Hospital Issue,
Series 1993:
5.50% 2013 2,000 2,034,000
5.50% 2021 2,000 2,021,740
Hospital & Health Facilities Revenue - (continued)
Johns Hopkins Hospital Issue, Revenue
Refunding Bonds, Series 1993:
5.60% 2009 $ 850 $ 903,984
5.00% 2023 1,500 1,478,700
Suburban Hospital Issue, Revenue Refunding
Bonds, Series 1993, 5.125% 2021 1,500 1,480,800
Prince George's County (Dimensions Health
Corporation Issue):
Hospital Revenue Bonds, Series
1992, 7.20% 2006 215 245,463
Project and Refunding Revenue
Bonds, Series 1994,
5.375% 2014 1,600 1,644,064
Puerto Rico Industrial,Tourist,Educational,Medical
and Environmental Control Facilities Financing
Authority, Hospital Revenue Bonds (Mennonite
General Hospital Project), 1996 Series A,
6.375% 2006 1,000 1,097,460
13,802,666
Housing Finance Authority Revenue - 13.83%
Maryland Community Development
Administration, Department of Housing and
Community Development:
Residential Revenue Bonds:
1998 Series B, AMT, 5.00% 2008<F1> 1,610 1,659,347
1998 Series B, AMT, 5.00% 2009<F1> 1,680 1,720,034
Single-Family Program Bonds:
1994 First Series, 5.80% 2009 2,000 2,112,940
1994 First Series, 5.70% 2017 2,630 2,716,422
1994 Fifth Series, AMT, 5.875% 2017 1,210 1,247,462
1990 First Series, 7.60% 2017 495 517,988
1988 Third Series, 8.00% 2018 1,000 1,021,440
Montgomery County, Housing Opportunities
Commission, Single Family Mortgage Revenue
Bonds, 1997 Series A, 5.50% 2009 750 777,338
Prince George's County Housing Authority,
GNMA/FNMA Collateralized Single Family
Mortgage Bonds, Series 1994 A, AMT,
6.60% 2025 930 994,374
Housing Finance Authority Revenue - (continued)
Commonwealth of Puerto Rico Housing
Finance Corporation, Single Family Mortgage
Revenue Bonds, 1st Portfolio:
1988 Series A, 7.80% 2021 $ 10 $ 10,260
1988 Series B, 7.65% 2022 205 219,026
12,996,631
Industrial Development Revenue - 2.33%
Mayor and City Council of Baltimore, Port
Facilities Revenue Bonds (Consolidation
Coal Sales Company Project):
Series 1984 A, 6.50% 2011 500 552,680
Series 1984 B, 6.50% 2011 500 552,680
Puerto Rico Ports Authority, Special Facilities
Revenue Bonds (American Airlines, Inc. Project),
1996 Series A, 6.25% 2026 1,000 1,087,870
2,193,230
Insured - 16.09%
City of Baltimore, Refunding Revenue Bonds,
FGIC Insured, 1994, Series A:
6.00% 2015 1,500 1,712,715
5.00% 2024 1,220 1,232,493
Calvert County, Economic Development
Refunding Revenue Bonds (Asbury-Solomons
Island Facility), Series 1997, MBIA Insured:
5.00% 2017 1,000 992,710
5.00% 2027 1,000 984,920
Charles County, Consolidated Public
Improvement Bonds of 1993, Series A,
FGIC Insured, 5.25% 2003 715 753,224
City of Frederick, General Improvement Bonds,
1992 Refunding Series, FGIC Insured,
6.125% 2008 890 979,605
Maryland Health and Higher Educational
Facilities Authority:
Johns Hopkins Medical Institutions Parking
Facilities Issue, Parking Revenue Bonds,
Series 1996, AMBAC Insured, 5.50% 2011 1,200 1,284,456
Memorial Hospital of Easton, Series 1989 B,
MBIA Insured, 7.00% 2012 1,200 1,271,484
Insured - (continued)
Mercy Medical Center Issue Project and
Refunding Revenue Bonds, Series 1996,
FSA Insured, 6.50% 2013 $2,000 $ 2,389,200
Prince George's County, Solid Waste Management
System Revenue Bonds, Series 1993, 6.50% 2007 2,000 2,253,220
Commonwealth of Puerto Rico:
Electric & Power Authority, MBIA Insured,
7.00% 2007 1,000 1,205,550
Public Improvement Bonds of 1987,
MBIA Insured, 6.75% 2006 65 66,440
15,126,017
Lease Revenue (State) - 1.72%
Maryland Stadium Authority, Sports Facilities
Lease Revenue Bonds, Series 1989 D, 7.50% 2010 1,500 1,614,135
Life Care Facilities Revenue - 5.03%
Maryland Health and Higher Educational
Facilities Authority, First Mortgage
Refunding Revenue Bonds, Roland Park
Place Issue, Series 1989, 7.75% 2012 2,000 2,098,500
Prince George's County, Refunding Revenue
Bonds, Collington Episcopal Life Care
Community, Inc., Series 1994 A, 6.00% 2013 2,500 2,629,825
4,728,325
Multi-Family Housing - 5.79%
Montgomery County, Maryland Housing
Opportunities Commission, Multi-Family
Revenue Bonds:
1995 Series A, 6.10% 2015 2,025 2,151,522
1994 Series A-2, 7.50% 2024 2,000 2,138,660
Prince George's County, Mortgage Revenue Bonds
(GNMA Collateralized-Langley Gardens
Apartments Project), Series 1997 A, 5.60% 2017 1,130 1,156,589
5,446,771
Pre-Refunded<F2> - 14.24%
Calvert County, Economic Development
Revenue Bonds (Asbury-Solomons Island
Facility), Series 1995, 8.625% 2024 (2005) 2,300 2,915,319
Pre-Refunded<F2> - (continued)
Frederick County, Public Facilities Bonds:
1991, Series B, 6.30% 2011 (2002) $1,370 $ 1,519,138
1986 Series, 7.40% 2012 (2001) 310 351,751
Harford County, Consolidated Public
Improvement Bonds, Series 1992,
5.80% 2010 (2002) 970 1,058,425
Howard County, Metropolitan District Refunding
Bonds, 1991 Series A, 6.625% 2021 (2001) 500 542,335
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) 250 272,605
Memorial Hospital of Cumberland Issue,
Revenue Refunding Bonds, Series 1992,
6.50% 2010 (2004) 750 845,033
Sinai Hospital of Baltimore Issue, Revenue
Bonds, 1990 Series, AMBAC Insured,
7.00% 2019 (2000) 700 763,294
Suburban Hospital Issue Revenue Bonds,
Series 1992, 6.50% 2017 (2002) 500 558,445
University of Maryland Medical System
Issue, Revenue Bonds, Series 1991 A,
FGIC Insured, 6.50% 2021 (2001) 1,000 1,080,610
Prince George's County, Hospital Revenue Bonds
(Dimensions Health Corporation Issue),
Series 1992, 7.20% 2006 (2002) 1,035 1,182,332
Commonwealth of Puerto Rico:
Housing Bank and Finance Agency,
Single Family Mortgage Revenue Bonds,
Homeownership 5th Portfolio,
1986 Series, 7.50% 2015 (2000) 495 533,407
Public Improvement Bonds of 1992,
MBIA Insured, 6.50% 2009 (2002) 1,000 1,114,410
University of Maryland System Auxiliary
Facility and Tuition Revenue Bonds,
1989 Series B, 7.00% 2007 (1999) 600 642,810
13,379,914
Resource Recovery - 7.59%
Maryland Energy Financing Administration,
Limited Obligation Solid Waste Disposal
Revenue Bonds (Wheelabrator Water
Technologies Baltimore L.L.C. Projects),
1996 Series, AMT, 6.30% 2010 $3,500 $ 3,866,485
Montgomery County, Northeast Maryland
Waste Disposal Authority, Solid Waste
Revenue Bonds AMT:
6.00% 2006 1,000 1,096,410
6.00% 2007 1,000 1,100,780
Series 1993 A, 6.30% 2016 1,000 1,073,830
7,137,505
Special Obligations - 2.67%
Montgomery County Revenue Authority,
Golf Course System Revenue Bonds,
Series 1996 A, 6.00% 2014 2,355 2,506,403
Tax Assessment Bonds - 2.27%
Prince George's County, Special Obligation
Bonds (Woodview Village Infrastructure
Improvements), Series 1997 A, 8.00% 2026 2,000 2,136,778
Turnpikes & Toll Roads Revenue - 1.18%
Maryland Transportation Authority Facilities
Project, Transportation Facilities Projects
Revenue Bonds, Series 1992, 5.80% 2006 1,000 1,107,210
Water & Sewer Revenue - 2.32%
Maryland Water Quality Financing
Administration, Revolving Loan Fund
Revenue Bonds, Series 1991 B, 0.00% 2005 700 507,290
Washington Suburban Sanitary District,
Refunding Bonds of 1997, 5.75% 2017 1,510 1,675,119
2,182,409
90,674,642
Tax-Exempt Securities Maturing in One Year or Less - 5.38%
General Obligation (Local) - 3.73%
Frederick County, Consolidated Public Improvement
Variable Rate Demand Bond Anticipation Notes,
1997 Series, 3.35% 2007 <F3> $2,800 $ 2,800,000
The Maryland-National Capital Park and
Planning Commission, Prince George's County,
Park Acquisition and Development Variable
Rate Bond Anticipation Notes, Series V-2,
3.70% 2002 <F3> 700 700,000
3,500,000
Pre-Refunded<F2> - 1.65%
Maryland Health and Higher Educational Facilities
Authority, Refunding Revenue Bonds, Johns
Hopkins University Issue, Series 1988,
7.375% 2008 (1998) 500 516,555
Suburban Hospital Issue Revenue Bonds,
Series 1988, 7.50% 2008 (1998) 1,000 1,035,790
1,552,345
5,052,345
TOTAL TAX-EXEMPT SECURITIES
(cost: $88,776,000) 95,726,987
Excess of payables over cash and receivables 1,734,905
NET ASSETS $93,992,082
[FN]
<F1> Represents a when-issued security.
<F2> Parenthetical year represents date of pre-refunding.
<F3> Coupon rate may change periodically.
</FN>
See Notes to Financial Statements
The Tax-Exempt Fund of Virginia
Investment Portfolio, January 31, 1998
Principal
Amount Market
Unaudited (000) Value
Tax-Exempt Securities Maturing in More than One Year - 94.59%
College & University Revenue - 2.74%
Virginia College Building Authority Educational
Facilities Revenue Bonds (Marymount
University Project), Series 1992, 6.875% 2007 $1,650 $ 1,818,515
Virginia Polytechnic Institute and State University,
University Services System and General
Revenue Pledge Bonds, Series C 1996,
5.35% 2009 1,000 1,069,580
2,888,095
General Obligations (Local) - 8.80%
Arlington County:
Public Improvement Bonds, Series 1996,
6.00% 2011 1,000 1,147,500
Refunding Bonds, Series 1993, 6.00% 2012 1,000 1,147,980
Chesapeake:
Public Improvement Bonds, Series 1992,
6.00% 2006 1,600 1,744,960
Refunding Bonds, Series 1993, 5.40% 2008 1,000 1,087,640
Leesburg Refunding Bonds, Series 1993,
5.60% 2008 1,195 1,280,180
Lynchburg Public Improvement Refunding
Bonds, Series 1993, 5.25% 2009 1,000 1,047,330
Newport News General Obligation,
Water Bonds, Series A 1992, 6.125% 2009 1,170 1,274,972
Norfolk Capital Improvement and Refunding Bonds,
Series 1992 A, 6.00% 2011 500 529,305
9,259,867
General Obligations (State) - .77%
Commonwealth of Virginia, Public Facilities
Bonds, 1993 Series A, 5.40% 2005 750 807,218
Hospital & Health Facilities Revenue - 16.85%
Fairfax County Industrial Development Authority,
Hospital Revenue Refunding Bonds (INOVA
Health Systems Hospital Project), Series 1993 A:
5.00% 2007 750 784,448
5.25% 2019 2,500 2,595,225
5.00% 2023 500 502,145
Hospital & Health Facilities Revenue - (continued)
Industrial Development Authority of Halifax County,
Virginia Hospital Refunding Revenue Bonds
(Halifax Regional Hospital, Inc.), Series 1998:
4.65% 2007<F1> $ 600 $ 598,830
4.80% 2009<F1> 1,000 995,830
Hampton Industrial Development Authority,
Hospital Revenue Bonds (Sentara Hospitals),
5.125% 2016 1,000 1,000,270
Industrial Development Authority of Henry
County, Hospital Revenue Bonds (Memorial
Hospital of Martinsville and Henry County),
Series 1997, 6.00% 2017 2,000 2,132,960
Lynchburg Industrial Development Authority,
Hospital Facilities, Revenue Refunding
Bonds, Centra Health, Inc., Series 1988,
8.125% 2016 1,000 1,036,190
Norfolk Industrial Development Authority,
Hospital Revenue Bonds (Sentara Hospitals-
Norfolk Project), Series A 1994, 5.00% 2020 2,315 2,262,519
Industrial Development Authority of the City
of Norfolk, Hospital Revenue Bonds
(Daughters of Charity National Health
System-DePaul Medical Center),
Series 1992 A, 6.50% 2007 1,000 1,108,100
Peninsula Ports Authority, Health System Revenue
and Refunding Bonds (Riverside Health System
Project), Series 1992 A, 6.625% 2010 1,300 1,424,852
Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority, Hospital Revenue Bonds
(Mennonite General Hospital Project),
1996 Series A, 6.375% 2006 2,000 2,194,920
Virginia Beach, Virginia Development Authority
(Sentara Bayside Hospital), 6.60% 2009 1,000 1,093,699
17,729,988
Housing Finance Authority Revenue - 4.02%
Commonwealth of Puerto Rico Housing
Finance Corporation, Single Family
Mortgage Revenue Bonds, 1st Portfolio:
1988 Series A, 7.80% 2021 10 10,260
1988 Series B, 7.65% 2022 245 261,763
Housing Finance Authority Revenue - (continued)
Virginia Housing Development Authority,
Commonwealth Mortgage Bonds:
1994 Series H, Sub-Series H-1, 6.10% 2003 $ 500 $ 530,670
1995 Series A-AMT, Sub-Series A-1,
6.60% 2004 1,000 1,080,340
1994 Series I-AMT, Sub-Series I-1,
6.40% 2005 800 872,816
1994 Series H, Sub-Series H-2, 6.55% 2017 1,000 1,074,630
1992 Series A, 7.10% 2022 380 399,137
4,229,616
Industrial Development Revenue - 3.01%
Industrial Development Authority of the
County of Henrico, Solid Waste Disposal
Revenue Bonds (Browning-Ferris Industries of
South Atlantic, Inc. Project):
Series 1996 A AMT, 5.30% 2011 1,000 1,046,960
Series 1996 A AMT, 5.45% 2014 1,000 1,033,380
Puerto Rico Ports Authority, Special Facilities
Revenue Bonds (American Airlines, Inc.
Project), 1996 Series A, 6.25% 2026 1,000 1,087,870
3,168,210
Insured - 21.37%
Chesapeake Certificates of Participation,
MBIA Insured, 1993 Series, 5.40% 2005 1,000 1,063,570
Danville, Virginia Industrial Development
Authority, Hospital Revenue Bonds,
Danville Regional Medical Center, Series 1994,
FGIC Insured, 6.00% 2007 1,000 1,103,290
Fairfax County Industrial Development
Authority, Hospital Revenue Refunding
Bonds (INOVA Health System Hospitals Project),
Series 1993 A, FSA Insured, 5.25% 2019 1,000 1,031,380
Industrial Development Authority of the
County of Hanover, Hospital Revenue Bonds
(Memorial Regional Medical Center Project
at Hanover Medical Park), Series 1995,
MBIA Insured:
6.50% 2010 1,375 1,638,533
6.375% 2018 1,000 1,181,840
Insured - (continued)
Loudoun County:
Industrial Development Authority, Hospital
Revenue Bonds, FSA Insured, 6.00% 2005 $1,000 $ 1,103,940
Sanitation Authority, Water and Sewer System
Revenue Bonds, FGIC Insured:
Series 1992, 6.25% 2010 2,000 2,198,020
Series 1996, 5.125% 2030 500 495,705
Industrial Development Authority of the
City of Norfolk, Health Care Revenue Bonds
(Bon Secours Health System), Series 1997:
5.00% 2006 1,190 1,235,637
5.00% 2007 1,250 1,304,925
Pamunkey Regional Jail Authority, Jail Facility
Revenue Bonds, Series 1996, MBIA Insured,
5.70% 2010 1,000 1,092,310
Industrial Development Authority of the
County of Prince William (Virginia),
Hospital Facility Refunding Revenue Bonds
(Potomac Hospital Corporation of Prince
William), Series 1998, 5.00% 2008<F1> 1,975 2,052,736
Richmond, FGIC Insured, 5.00% 2021 1,000 985,210
County of Roanoke, Water System Refunding
Revenue Bonds, Series 1993, 5.00% 2021 3,100 3,045,285
Upper Occoquan Sewage Authority, Regional
Sewerage System Revenue Bonds,
Series 1995 A, MBIA Insured, 5.00% 2025 1,000 983,829
City of Virginia Beach Development Authority,
Hospital Revenue Bonds (Virginia Beach
General Hospital Project), Series 1993,
AMBAC Insured, 6.00% 2011 1,000 1,140,900
Washington, D.C. Metropolitan Area Airports
Authority, Airport System Revenue and
Refunding Bonds, MBIA Insured AMT,
Series 1992 A, 6.625% 2019 750 831,930
22,489,040
Lease Revenue (Local) - 1.92%
Fairfax County Economic Development
Authority, Lease Revenue Bonds
(Government Center Properties),
Series 1994, 5.25% 2018 2,000 2,022,620
Lease Revenue (State) - 1.46%
Virginia Public Building Authority, State
Building Revenue Bonds, Series 1995,
5.20% 2015 $1,500 $ 1,532,265
Life Care Facilities Revenue - 5.64%
Industrial Development Authority of the
County of Henrico, Virginia, Residential
and Health Care Facility Mortgage Revenue
Refunding Bonds (Our Lady of Hope), Series 1997,
6.00% 2016 2,730 2,791,289
Industrial Development Authority of the
County of James City, Virginia, Residential
Care Facility First Mortgage Revenue Bonds
(Williamsburg Landing, Inc.), Series 1996A,
6.625% 2019 3,000 3,140,040
5,931,329
Local Appropriation - .51%
Fairfax County Economic Development
Authority, Parking Revenue Bonds (Huntington
Metrorail Station Project), Series 1990 A,
6.75% 2015 500 532,935
Multi-Family Housing - 2.18%
Virginia Housing Development Authority,
Multi-Family Housing Bonds:
1997 Series B-AMT, 5.80% 2010 1,185 1,244,297
1997 Series B, 5.95% 2016 1,000 1,053,540
2,297,837
Pre-Refunded<F2> - 14.87%
Fairfax County:
Industrial Development Authority Hospital
Revenue Bonds (Fairfax Hospital System
Project), INOVA Health Systems, Series 1991 C,
6.801% 2023 (2001) 1,000 1,107,000
Water Authority Revenue, Series 1989,
7.30% 2021 (2000) 1,250 1,352,113
Henry County Public Service Authority, Water and
Sewer Revenue Bonds, FGIC Insured, Series 1990,
7.20% 2019 (2000) 1,250 1,370,800
Pre-Refunded<F2> - (continued)
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 $ 443,912
(Sentara Hospitals-Norfolk Project),
Series 1991, 7.00% 2020 (2000) 250 274,415
Peninsula Ports Authority, Health Care Facilities
Revenue and Refunding Bonds (Mary Immaculate
Project), 1994 Series, 6.875% 2010 (2004) 1,900 2,244,033
Prince William County Service Authority, Water
and Sewer System Revenue Bonds, Series 1991,
FGIC Insured, 6.50% 2021 (2001) 680 746,484
Roanoke:
Industrial Development Authority, Hospital
Revenue Bonds, Carilion Health System
(Roanoke Memorial Hospital Projects),
Series 1990, MBIA Insured, 7.25%
2017 (2000) 750 821,378
Public Improvement and Refunding Bonds,
Series 1992 B:
6.375% 2009 (2001) 250 273,623
6.40% 2011 (2001) 500 549,825
Water System Revenue Bonds, Series 1991,
FGIC Insured, 6.50% 2021 (2001) 750 823,328
Southeastern Public Service Authority, Regional
Solid Waste System, Senior Revenue
Refunding Bonds, Series 1989, BIG Insured:
7.00% 2006 (1999) 500 532,050
7.00% 2013 (1999) 1,000 1,064,100
University of Virginia, Hospital Revenue Bonds,
1984 Series A, HIBI Insured, 9.875% 2001 (2000) 10 11,109
Upper Occoquan Sewage Authority, Regional
Sewerage System Revenue Bonds, Series 1991,
MBIA Insured, 6.00% 2021 (2001) 700 745,108
Virginia Public Building Authority, State
Building Revenue Bonds, Series 1991 A,
6.50% 2011 (2001) 1,750 1,922,445
Virginia Resources Authority:
Solid Waste Disposal System Revenue Bonds,
1990 Series A, 7.30% 2015 (2000) 1,000 1,087,400
Water and Sewer System Revenue Bonds
Series 1990, 7.25% 2011 (2000) 250 275,228
15,644,351
Resource Recovery - 1.99%
Fairfax County Economic Development Authority,
Resource Recovery Revenue Bonds,
Series 1988 A AMT (Ogden Martin Systems
of Fairfax, Inc. Project), 7.55% 2003 $ 500 $ 529,035
Roanoke Valley Resource Authority, Solid
Waste System Revenue Bonds, Series 1992,
5.75% 2012 1,500 1,562,400
2,091,435
State Appropriation - 1.58%
Big Stone Gap, Virginia Redevelopment and
Housing Authority, Commonwealth of
Virginia Correctional Facility Lease Revenue
Bonds (Wallens Ridge Development Project),
Series 1995, 5.25% 2010 1,600 1,667,216
State Authority - 4.91%
Virginia Public School Authority, School
Financing Bonds:
(1987 Resolution), 1991 Refunding Series C,
6.25% 2007 1,500 1,640,625
(1991 Resolution), Series 1994 A,
6.20% 2014 1,500 1,644,330
Virginia Resources Authority:
Water and Sewer System Revenue Bonds
(Pooled Loan Program), 1986 Series A,
7.50% 2017 50 50,709
Water System Refunding Revenue Bonds,
1992 Series A, 6.45% 2013 750 816,240
Water System Revenue Bonds (Appomattox
River Water Authority Refunding),
1993 Series A, 5.25% 2013 1,000 1,018,878
5,170,782
Water & Sewer Revenue - 1.97%
Chesterfield County Water and Sewer Revenue
Refunding Bonds, Series 1992, 6.375% 2009 1,250 1,373,363
Rivanna Water and Sewer Authority,
Regional Water and Sewer System Refunding
Revenue Bonds, Series 1991, 6.40% 2007 645 702,527
2,075,890
99,538,694
Tax-Exempt Securities Maturing in One Year or Less - 7.63%
Hospital & Health Facilities Revenue - 2.57%
Industrial Development Authority of
Fairfax County, Unit Priced Demand
Adjustable Hospital Revenue Bonds (INOVA
Health Systems Hospitals Project),
Series 1993 B, 3.50% 1998 $2,700 $ 2,700,000
Industrial Development Revenue - 1.85%
Industrial Development Authority of
King George County, Virginia, Variable Rate
Demand Exempt Facility Revenue Bonds
(Birchwood Power Partners, L.P. Project):
Series 1994 A, 3.80% 2024<F3> 1,350 1,350,000
Series 1994 B, 3.80% 2024<F3> 600 600,000
1,950,000
Pre-Refunded<F2> - 3.21%
Chesapeake, Hospital Authority Facility for
Chesapeake General Hospital, First Mortgage
Revenue, BIG Insured Series 1988,
7.625% 2018 (1998) 1,000 1,036,180
Loudoun County Sanitation Authority, Water
and Sewer System Revenue Bonds, Series 1989,
AMBAC Insured, 7.50% 2017 (1999) 375 395,404
Suffolk, Series 1989, 7.00% 2005 (1998) 1,000 1,041,240
Commonwealth of Virginia Transportation Board,
Transportation Contract Revenue Bonds,
Route 28 Project, Series 1988,
7.70% 2008 (1998) 890 910,824
3,383,648
8,033,648
TOTAL TAX-EXEMPT SECURITIES
(cost: $100,056,000) 107,572,342
Excess of payables over cash and receivables 2,342,200
NET ASSETS $105,230,142
[FN]
<F1>Represents a when-issued security.
<F2>Parenthetical year represents date of pre-refunding.
<F3>Coupon rate changes periodically.
</FN>
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
January 31, 1998
(dollars in thousands)
The Tax-Exempt The Tax-Exempt
Unaudited Fund of Maryland Fund of Virginia
Assets:
Tax-exempt securities:
Maturing in more than one year
(cost: $83,801 and $92,123,
respectively) $90,675 $ 99,539
Maturing in one year or less
(cost: $4,975 and $7,933,
respectively) 5,052 8,033
Cash 9 25
Receivables for -
Sales of Funds' shares 1,050 187
Accrued interest 859 1,419
Total Assets 97,645 109,203
Liabilities:
Payables for -
Purchases of investments 3,392 3,680
Repurchases of Funds' shares 54 51
Dividends 124 137
Adviser and management
services 34 38
Accrued expenses 49 67
Total Liabilities 3,653 3,973
Net Assets:
Net assets applicable to Funds'
shares issued and outstanding $93,992 $105,230
Funds' shares outstanding<F1> 5,827,001 6,393,582
Net asset value per share $16.13 $16.46
[FN]
<F1> Shares of beneficial interest, unlimited shares authorized.
</FN>
See Notes to Financial Statements
Statement of Operations
for the six months ended January 31, 1998
(dollars in thousands)
The Tax-Exempt The Tax-Exempt
Unaudited Fund of Maryland Fund of Virginia
Investment Income:
Income:
Interest on tax-exempt securities $2,534 $2,866
Expenses:
Investment adviser fee 109 123
Business management fee 88 99
Distribution fee 110 118
Transfer agent fee 15 18
Reports to shareholders 8 11
Registration statement and prospectus 4 3
Postage, stationery and supplies 4 5
Trustees' fees 3 3
Custodian fee 1 1
Auditing and legal fees 22 22
Other expenses 2 10
Total expenses 366 413
Net investment income 2,168 2,453
Realized Gain and
Unrealized Appreciation
on Investments:
Net realized gain 187 373
Net unrealized appreciation:
Beginning of period 5,851 7,054
End of period 6,951 7,516
Net change in unrealized
appreciation 1,100 462
Net realized gain and change
in unrealized appreciation 1,287 835
Net Increase in Net Assets
Resulting from Operations $3,455 $3,288
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, 1998<F1> July 31, 1997
Operations:
Net investment income $ 2,168 $ 4,135
Net realized gain on investments 187 561
Net change in unrealized appreciation
on investments 1,100 2,812
Net increase in net assets
resulting from operations 3,455 7,508
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment
income (2,168) (4,135)
Distributions from net realized gain
on investments (642) -
Total dividends and distributions (2,810) (4,135)
Capital Share Transactions:
Proceeds from shares sold:
553,203 and 717,812 shares,
respectively 8,863 11,169
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
119,222 and 163,465 shares,
respectively 1,900 2,544
Cost of shares repurchased:
255,248 and 671,863 shares,
respectively (4,073) (10,456)
Net increase in net assets
resulting from capital share
transactions 6,690 3,257
Total Increase in Net Assets 7,335 6,630
Net Assets:
Beginning of period 86,657 80,027
End of period $93,992 $86,657
<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, 1998<F1> July 31, 1997
Operations:
Net investment income $ 2,453 $ 4,680
Net realized gain on investments 373 118
Net change in unrealized appreciation
on investments 462 3,502
Net increase in net assets
resulting from operations 3,288 8,300
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment
income (2,453) (4,680)
Distributions from net realized gain
on investments (244) -
Total dividends and distributions (2,697) (4,680)
Capital Share Transactions:
Proceeds from shares sold:
424,716 and 1,037,170 shares,
respectively 6,924 16,514
Proceeds from shares issued in
reinvestment of net investment
income dividends and
distributions of net realized
gain on investments:
98,249 and 168,347 shares,
respectively 1,601 2,677
Cost of shares repurchased:
275,924 and 798,604 shares,
respectively (4,495) (12,694)
Net increase in net assets
resulting from capital share
transactions 4,030 6,497
Total Increase in Net Assets 4,621 10,117
Net Assets:
Beginning of period 100,609 90,492
End of period $105,230 $100,609
[FN]
<F1> Unaudited
</FN>
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 Funds seek a high level of current income exempt from
Federal and their respective state income taxes. Additionally, each Fund
seeks to preserve capital. The following paragraphs summarize the
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements:
Tax-exempt securities are valued at prices obtained from a pricing
service, when such prices are available; however, in circumstances where
the investment adviser deems it appropriate to do so, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality, and type. Securities with
original maturities of one year or less having 60 days or less to
maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on
the value determined on the 61st day. Securities for which
representative market quotations are not readily available are valued at
fair value as determined in good faith under policies approved by the
Trust's Board.
As is customary in the mutual fund industry, securities
transactions are accounted for on the date the securities are purchased
or sold. In the event the Trust purchases securities on a delayed
delivery or "when-issued" basis, it will segregate with its custodian
liquid assets in an amount sufficient to meet its payment obligations in
these transactions. Realized gains and losses from securities
transactions are reported on an identified cost basis. Interest income
is reported on the accrual basis. Premiums and original issue discounts
on securities purchased are amortized over the life of the respective
securities. Amortization of market discounts on securities is recognized
upon disposition, subject to applicable tax requirements. Dividends to
shareholders are declared daily from net investment income.
Distributions paid to shareholders are recorded on the ex-dividend date.
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, 1998, net unrealized appreciation on investments for
book and federal income tax purposes for the Maryland Fund aggregated
$6,951,000, of which $6,961,000 related to appreciated securities and
$10,000 related to depreciated securities. For the Virginia Fund, net
unrealized appreciation aggregated $7,516,000, of which $7,545,000 related
to appreciated securities and $29,000 related to depreciated securities.
There was no difference between book and tax realized gains on securities
transactions for the six months ended January 31, 1998. The cost of
portfolio securities for book and federal income tax purposes was
$88,776,000 and $100,056,000 for the Maryland and Virginia Funds,
respectively, at January 31, 1998.
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 $88,000 and $99,000 were recognized by the Maryland
and Virginia Funds, respectively, and were paid or are payable to WMC for
business management services. 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 $19,000 and $14,000 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 $109,000 and $123,000 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 and reimbursements to American
Funds Distributors, Inc. (AFD), the principal underwriter of the Funds'
shares, for its activities and expenses related to the sale of Fund shares
or servicing of shareholder accounts. During the six months ended January
31, 1998, distribution expenses under the Plan were $110,000 and $118,000,
including accrued and unpaid expenses of $34,000 and $37,000, for the
Maryland and Virginia Funds, respectively.
AFD has informed the Funds that it has received $19,000 and $30,000
(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.
American Funds Service Company (AFS), the transfer agent for the
Maryland and Virginia Funds, was paid fees of $15,000 and $18,000,
respectively.
Trustees 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, 1998, aggregate amounts deferred and earnings thereon were
$11,000 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, 1998:
The Tax-Exempt The Tax-Exempt
Fund of Maryland Fund of Virginia
Accumulated undistributed net
realized gain on investments $ 106,000 $ 243,000
Paid-in capital 86,935,000 97,471,000
Purchases and sales of
investment securities,
excluding short-term
securities, during the
six months ended
January 31, 1998:
Purchases 11,523,000 9,161,830
Sales 4,325,000 6,603,749
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 fee of $1,000 for each of the Maryland and
Virginia Funds was paid by these credits rather than
in cash.
The Tax-Exempt Fund of Maryland
Per-Share Data and Ratios
Six Months
Ended Year Ended July 31
1/31/98<F1> 1997 1996 1995 1994 1993
Net Asset Value,
Beginning of Period $16.02 $15.39 $15.29 $15.00 $15.53 $15.22
Income from Investment
Operations:
Net investment income .39 .79 .80 .80 .76 .79
Net realized and
unrealized gain (loss)
on investments .23 .63 .10 .29 (.53) .31
Total income from
investment operations .62 1.42 .90 1.09 .23 1.10
Less Distributions:
Dividends from net
investment income (.39) (.79) (.80) (.80) (.76) (.79)
Distributions from net
realized gains (.12) - - - - -
Total distributions (.51) (.79) (.80) (.80) (.76) (.79)
Net Asset Value,
End of Period $16.13 $16.02 $15.39 $15.29 $15.00 $15.53
Total Return<F2> 3.96%<F3> 9.52% 5.95% 7.58% 1.42% 7.44%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $94 $87 $80 $75 $75 $64
Ratio of expenses to
average net assets .41%<F3> .82% .81% .78% .75% .83%
Ratio of net income to
average net assets 2.44%<F3> 5.08% 5.14% 5.38% 4.90% 5.12%
Portfolio turnover rate 5.04%<F3> 15.27% 16.01% 20.91% 10.01% 9.05%
[FN]
<F1> Unaudited
<F2> Excludes maximum sales charge of 4.75%.
<F3> Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
</FN>
The Tax-Exempt Fund of Virginia
Per-Share Data and Ratios
Six Months
Ended Year Ended July 31
1/31/98<F1> 1997 1996 1995 1994 1993
Net Asset Value,
Beginning of Period $16.37 $15.77 $15.79 $15.49 $16.01 $15.72
Income from Investment
Operations:
Net investment income .39 .80 .81 .83 .80 .82
Net realized and
unrealized gain (loss)
on investments .13 .60 .03 .30 (.52) .29
Total income from
investment operations .52 1.40 .84 1.13 .28 1.11
Less Distributions:
Dividends from net
investment income (.39) (.80) (.81) (.83) (.80) (.82)
Distributions from
net realized gains (.04) - (.05) - - -
Total distributions (.43) (.80) (.86) (.83) (.80) (.82)
Net Asset Value,
End of Period $16.46 $16.37 $15.77 $15.79 $15.49 $16.01
Total Return<F2> 3.28%<F3> 9.10% 5.46% 7.56% 1.74% 7.29%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $105 $101 $90 $92 $93 $80
Ratio of expenses to
average net assets .40%<F3> .81% .79% .79% .78% .84%
Ratio of net income to
average net assets 2.40%<F3> 4.99% 5.11% 5.37% 5.04% 5.18%
Portfolio turnover rate 6.65%<F3> 18.41% 27.34% 32.18% 2.36% 4.96%
[FN]
<F1> Unaudited
<F2> Excludes maximum sales charge of 4.75%.
<F3> Based on operations for the period shown and, accordingly, not
representative of a full year's operations.
</FN>
The American Funds Tax-Exempt Series I
Board of Trustees
James H. Lemon, Jr.
Chairman of the Trust
Stephen Hartwell
Chairman Emeritus of the Trust
Harry J. Lister
President of the Trust
Cyrus A. Ansary
Jean Head Sisco
T. Eugene Smith
Stephen G. Yeonas
Other Officers
Howard L. Kitzmiller
Senior Vice President, Secretary/
Treasurer of the Trust
Lois A. Erhard
Vice President of the Trust
Michael W. Stockton
Assistant Vice President, Assistant
Secretary and Assistant Treasurer of the Trust
J. Lanier Frank
Assistant Vice President of the Trust
Office of the Funds and of the Business Manager
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, DC 20005-3585
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 92821-5804
Transfer Agent
American Funds Service Company
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081-0001
Counsel
Thompson, O'Donnell, Markham, Norton & Hannon
805 Fifteenth Street, NW
Washington, DC 20005-2216
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 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.
(Logo)
The American Funds Group(R)
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,
1998, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
(logo)
TEFMD/TEFVA-013-0398 Printed on recycled paper
