(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
CHECK THE APPROPRIATE BOX:
/ / Preliminary Proxy Statement
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for use of the Commission only (Rule 14a-6(e)(2))
THE AMERICAN FUNDS TAX-EXEMPT SERIES II -
THE TAX-EXEMPT FUND OF CALIFORNIA
(Name of Registrant as Specified In Its Charter)
Julie F. Williams
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filling fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number of
the Form or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
THE TAX-EXEMPT FUND OF CALIFORNIA
333 South Hope Street, Los Angeles, California 90071
September 13, 1999
Fellow Shareholders:
We are writing to inform you of the upcoming meeting of the shareholders of The
Tax-Exempt Fund of California (the "Fund") to be held at the offices of The
Capital Group Companies, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles,
California, on Friday, October 29, 1999 at 10:00 a.m., local time (the
"Meeting"). At this meeting, you are being asked to vote on important
proposals affecting the Fund. THE BOARD OF TRUSTEES OF THE FUND BELIEVES THAT
THESE PROPOSALS ARE IN THE BEST INTERESTS OF THE FUND AND ITS SHAREHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT YOU APPROVE ALL PROPOSALS PRESENTED FOR YOUR
CONSIDERATION.
At the Meeting, you will be asked to vote on:
1. The election of a Board of 10 Trustees (Proposal 1).
2. A proposal to eliminate or revise certain of the Fund's investment
restrictions (Proposal 2).
3. The ratification of the selection, by the Board of Trustees, of Deloitte &
Touche LLP as independent accountant for the Fund for the fiscal year 2000
(Proposal 3).
4. Any other business that may come before the Meeting, although we are not
currently aware of any other items to be considered.
Some key points about Proposal 2 are described below. The proposal is
described in more detail in the full text of the proxy statement which you
should read before you vote.
ABOUT PROPOSAL 2:
Because the Fund was formed many years ago, it is subject to a number of
investment restrictions that do not reflect current conditions, practices or
legal requirements. In some cases restrictions, although described as
"fundamental" because they require shareholder approval to modify, were
originally adopted in response to state regulation that no longer applies to
the Fund. In other cases, we believe the language of the restrictions should
be modified to reflect current standards. We are also requesting that certain
restrictions be reclassified as non-fundamental, requiring only Board approval
to change. You may vote for any or all of the changes which are the subject of
Proposal 2 by so indicating on your proxy card. THIS PROPOSAL WILL NOT AFFECT
THE FUND'S INVESTMENT OBJECTIVE, WHICH REMAINS UNCHANGED. MOREOVER, THE BOARD
DOES NOT ANTICIPATE THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL
INCREASE TO A MATERIAL DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THIS
PROPOSAL.
* * *
We are sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please don't delay. When shareholders do
not return their Proxies, additional expenses are incurred to pay for follow-up
mailings and telephone calls. PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY
STATEMENT AND SIGN AND RETURN THE ENCLOSED PROXY CARD TODAY. YOU MAY ALSO VOTE
YOUR PROXY BY TELEPHONE OR THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR
ON THE ENCLOSED PROXY INSERT. Please be sure to sign and return each Proxy
card regardless of how many you receive.
If you have any questions regarding the issues to be voted on or need
assistance in completing your proxy card, please contact us at (800) 421-0180.
Thank you for investing with us and for your continuing support.
Sincerely,
/s/ Paul G. Haaga, Jr. /s/ Abner D. Goldstine
Paul G. Haaga, Jr. Abner D. Goldstine
CHAIRMAN OF THE BOARD PRESIDENT
THE AMERICAN FUNDS TAX-EXEMPT SERIES II
THE TAX-EXEMPT FUND OF CALIFORNIA
----------------
NOTICE OF MEETING OF SHAREHOLDERS
OCTOBER 29, 1999
----------------
TO THE SHAREHOLDERS OF
THE TAX-EXEMPT FUND OF CALIFORNIA:
A Meeting of Shareholders of The Tax-Exempt Fund of California (the "Fund")
will be held at the offices of The Capital Group Companies, Inc., 11100 Santa
Monica Boulevard, 15th floor, Los Angeles, California, on Friday, October 29,
1999 at 10:00 a.m., local time, to consider and vote on the following matters
described under the corresponding numbers in the accompanying Proxy Statement:
(1) election of a Board of 10 Trustees;
(2) approval of the elimination or revision of certain of the Fund's
fundamental investment policies;
(3) ratification of the selection of Deloitte & Touche LLP as independent
accountant for the Fund for the fiscal year 2000;
(4) such other matters as may properly come before the meeting.
You are entitled to vote at the meeting if you held shares of the Fund at
August 26, 1999.
THE PROPOSED BUSINESS CANNOT BE CONDUCTED AT THE MEETING UNLESS THE HOLDERS OF
A MAJORITY OF THE SHARES OF THE FUND OUTSTANDING ON THE RECORD DATE ARE PRESENT
IN PERSON OR BY PROXY. THEREFORE, PLEASE MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF TRUSTEES. THE PROXY IS
REVOCABLE, AND YOUR SIGNING WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
By Order of the Board of Trustees,
Julie F. Williams
Secretary
September 13, 1999
IMPORTANT
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE
MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY
BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. You may also vote by telephone or the internet by
following instructions that appear on the enclosed Proxy insert.
THE TAX-EXEMPT FUND OF CALIFORNIA
333 South Hope Street, Los Angeles, California
----------------
PROXY STATEMENT
MEETING OF SHAREHOLDERS
OCTOBER 29, 1999
- ----------------
The enclosed Proxy is solicited by the Board of Trustees of the Fund in
connection with the Meeting of Shareholders to be held on Friday, October 29,
1999. Every Proxy returned in time to be voted at the meeting will be voted
and, if a specification is made with respect to any proposal, the Proxy will be
voted accordingly. If no specification is made, the Proxy will be voted in
favor of the proposal. You can revoke a Proxy prior to its exercise, either by
filing with the Fund a written notice of revocation, by delivering a duly
executed Proxy bearing a later date, or by attending the meeting and voting in
person. This Proxy was first mailed to shareholders on or about September 13,
1999.
At the close of business on August 26, 1999, the record date fixed by the
Board of Trustees for the determination of shareholders entitled to notice of
and to vote at the meeting, there were outstanding 24,351,687 shares of
beneficial interest, the only authorized class of securities of the Fund (the
"Shares"). Each Share is entitled to one vote. There is no provision for
cumulative voting. No person owned of record or was known by the Fund to own
beneficially 5% or more of the outstanding shares of the Fund.
With respect to the election of Trustees (Item 1), the 10 nominees receiving
the highest number of votes will be elected. The vote required to approve Item
2 is the affirmative vote of the lesser of (a) 67% or more of all Shares
present and entitled to vote at the meeting, provided the holders of more than
50% of all outstanding Shares are present or represented by proxy, or (b) more
than 50% of all outstanding Shares on the record date. The vote required to
approve Item 3 is the affirmative vote of a majority of the Shares present or
represented by proxy.
If sufficient votes are not received by the meeting date, a person named as
proxy may propose one or more adjournments of the meeting for up to 120 days in
the aggregate to permit further solicitation of Proxies. The persons named as
proxies may vote all Proxies in favor of such adjournment. Signed but unmarked
Proxies will be voted for the directors nominated below and in favor of all
proposals. Shareholders who return Proxies marked as abstaining from voting on
one or more proposals are treated as being present at the meeting for purposes
of obtaining the quorum necessary to hold the meeting, but are not counted as
part of the vote necessary to approve the proposal(s). If brokers holding Fund
shares for their customers in Street Name have not received instructions and
are not authorized to vote without instruction, those Shares also will be
treated as abstentions.
1. ELECTION OF TRUSTEES.
Ten Trustees are to be elected at the meeting, each to hold office until their
resignation or removal and until a successor is elected and qualified. Because
we do not expect meetings of shareholders to be held each year, the Trustees'
terms will be indefinite in length. All of the nominees for Trustee except
Richard G. Capen, Jr., Don R. Conlan, and Frank M. Sanchez were elected by the
shareholders at the meeting held on February 29, 1996. Don R. Conlan was
elected by the Trustees on December 16, 1996; and Richard G. Capen, Jr. and
Frank M. Sanchez were elected by the Trustees effective January 1, 1999.
Herbert Hoover III, a Trustee since 1986, having reached retirement age, is not
seeking re-election.
Each of the nominees has agreed to serve as Trustee if elected. If, due to
presently unforeseen circumstances, any nominee is not available for election,
the persons named as proxies will vote the signed but unmarked Proxies and
those marked for the nominated directors for such other nominee as the present
directors may recommend. The table below sets forth certain information
regarding the nominees.
<TABLE>
<CAPTION>
Name of Current Year Memberships on Shares of the Fund
Nominee Principal First Board Beneficially Owned, Directly
(Position Occupation and elected of Other or Indirectly, at August 26,
with Fund) Principal a Registered 1999
and Age Employment Trustee Investment
During past of the Companies and
Five Years # Fund Publicly Held
Companies
Fund The American
Funds Group
<S> <C> <C> <C> <C> <C>
Richard G. Corporate 1999 The American 64 33,192
Capen, Jr. Director and Funds Group:
(Trustee) author; former (Director/Trustee
63 United States - 4 other funds)
Ambassador to
Spain; former
Vice Chairman
of the Board,
Knight Ridder,
Inc.; former
Chairman and
Publisher, The
Miami Herald
H. Private 1986 The American 11,398 382,158
Frederick investor. Funds Group:
Christie Former President and (Director/Trustee
(Trustee) Chief Executive - 18 other funds)
66 Officer, the The American
Mission Group Variable Insurance
(non-utility Series
holding
company,
subsidiary of
Southern
California
Edison Company)
Don R. President 1996 The American 64 1,754,112
Conlan * (retired), The Funds Group:
(Trustee) Capital Group (Director/Trustee
63 Companies, Inc. - 11 other funds)
Diane C. CEO and 1994 The American 64 2,759
Creel President, The Funds Group:
(Trustee) Earth Technology (Director/Trustee - 11 other funds)
50 Corporation Allegheny Teledyne
(international Incorporated
consulting B. F. Goodrich
engineering)
Martin Chairman, 1989 The American 318 28,734
Fenton Senior Resource Funds Group:
(Trustee) Group, LLC (Director/Trustee
64 (development - 13 other funds)
and management The American
of senior Variable Insurance
living Series
communities)
Leonard R. President, 1994 The American 75 5,027
Fuller Fuller Funds Group:
(Trustee) Consulting (Director/Trustee - 11 other
52 (financial funds)
management consulting The American Variable
firm) Insurance
Series
Abner D. Capital 1986 The American 2,256 2,832,493
Goldstine* Research and Funds Group:
(President Management (Director/Trustee
and Company, Senior - 11 other funds)
Trustee) Vice President
69 and Director
Paul G. Capital 1986 The American 9,332 461,806
Haaga, Jr. Research and Funds Group:
* (Chairman Management (Director/Trustee
of the Company, - 13 other funds)
Board) Executive Vice
50 President and
Director
Richard G. Chairman, 1991 The American 2,040 43,392
Newman President and Funds Group:
(Trustee) CEO AECOM (Director/Trustee
64 Technology - 12 other funds)
Corporation
(architectural
engineering)
Frank M. Principal, The 1999 The American 127 8,838
Sanchez Sanchez Family Funds Group:
(Trustee) Corporation dba (Director/Trustee
55 McDonald's - 2 other funds)
Restaurants
(McDonald's
licensee)
</TABLE>
* Is considered an interested person of the Fund within the meaning of the
Investment Company Act of 1940 (the 1940 Act), on the basis of his
affiliation with Capital Research and Management Company (the Investment
Adviser).
# Corporate positions, in some instances, may have changed during this period.
Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal
Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., The
Bond Fund of America, Inc. The Cash Management Trust of America, Capital Income
Builder, Inc., Capital World Growth and Income Fund, Inc., Capital World Bond
Fund, Inc., EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth
Fund of America, Inc., The Income Fund of America, Inc., Intermediate Bond Fund
of America, The Investment Company of America, Limited Term Tax-Exempt Bond
Fund of America, The New Economy Fund, New Perspective Fund, Inc., New World
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The
Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of America, The U.S.
Treasury Money Fund of America, U.S. Government Securities Fund and Washington
Mutual Investors Fund, Inc., managed by Capital Research and Management
Company. Capital Research and Management Company also manages American
Variable Insurance Series and Anchor Pathway Fund which serve as the underlying
investment vehicles for certain variable insurance contracts and Endowments,
whose shareholders are limited to (i) any entity exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("501(c)(3)
organization"), (ii) any trust, the present or future beneficiary of which is a
501(c)(3) organization, and (iii) any other entity formed for the primary
purpose of benefiting a 501(c)(3) organization. An affiliate of Capital
Research and Management Company, Capital International, Inc., manages Emerging
Markets Growth Fund, Inc..
The Fund has an Audit Committee composed of Diane C. Creel, Martin Fenton and
Richard G. Newman. The function of the Committee includes such specific
matters as recommending the independent accountant to the Board of Trustees,
reviewing the audit plan and results of the audits and considering other
matters deemed appropriate for consideration by the Board of Trustees and/or
the Committee.
The Fund has a Nominating Committee which is composed of all Trustees who are
not considered to be "interested persons" of the Fund within the meaning of the
1940 Act. The Committee's functions include selecting and recommending to the
Board of Trustees nominees for election as Trustees of the Fund. While the
Committee normally is able to identify from its own resources an ample number
of qualified candidates, it will consider shareholder suggestions of persons to
be considered as nominees to fill future vacancies on the board. Such
suggestions must be sent in writing to the Nominating Committee of the Fund,
c/o the Fund's Secretary, and must be accompanied by complete biographical and
occupational data on the prospective nominee, along with a written consent of
the prospective nominee to consideration of his or her name by the Committee.
The Fund has a Contracts Committee which is composed of all Trustees who are
not considered to be "interested persons" of the Fund within the meaning of the
1940 Act. The Contracts Committee's function is to request, review and
consider the information deemed necessary to evaluate the terms of the
investment advisory and principal underwriting agreements and the Plan of
Distribution under rule 12b-1 that the Fund proposes to enter into, renew or
continue and to make its recommendations to the full Board of Trustees on these
matters.
Each Trustee is paid a fee of $900 per annum plus $200 for each Board of
Trustees meeting attended and $200 for each meeting attended as a member of a
committee of the Board of Trustees.
There were four Board of Trustees, two Audit Committee, one Contracts
Committee, and two Nominating Committee meetings during the year ended August
31, 1998. All incumbent Trustees attended at least 75% of all Board meetings
and meetings of the committees of which they were members.
The Fund pays no salaries or other compensation to its Trustees other than
Trustees fees, which are paid to those Trustees who are unaffiliated with the
Investment Adviser as described below.
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
Trustee Aggregate Total Compensation Total Number
Compensation (including of Fund
(including Voluntarily Deferred Boards on
Voluntarily Compensation) which Trustee
Deferred from all Funds Managed Serves/2/
Compensation/1/) by Capital Research and
from the Fund Management Company
during during the Fiscal Year
Fiscal Year ended ended 8/31/98
8/31/98
<S> <C> <C> <C>
Richard G. Capen, Jr. none/3/ $ 30,250 5
H. Frederick Christie $2,611/4/ 171,100 19
Don R. Conlan none/5/ none/5/ 12
Diane C. Creel 2,300/4/ 44,650 12
Martin Fenton 3,025/4/ 121,084 15
Leonard R. Fuller 2,666/4/ 51,850 13
Abner D. Goldstine none/5/ none/5/ 12
Paul G. Haaga, Jr. none/5/ none/5/ 14
Richard G. Newman 3,054/4/ 102,650 13
Frank M. Sanchez none/3/ none/3/ 3
</TABLE>
1 Amounts may be deferred by eligible Trustees under a non-qualified deferred
compensation plan adopted by the Fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Trustee.
2 Includes funds managed by Capital Research and Management Company and
affiliates.
3 Richard G. Capen, Jr. and Frank M. Sanchez became Trustees of the Fund in
1999 and had not received any remuneration from the Fund as of its 8/31/98
fiscal year end.
4 Since the plan's adoption, the total amount of deferred compensation accrued
by the Fund (plus earnings thereon) for participating Trustees is as follows:
H. Frederick Christie ($4,366), Diane C. Creel ($397), Martin Fenton ($8,952),
Leonard R. Fuller ($2,012) and Richard G. Newman ($17,719).
5 Don R. Conlan, Abner D. Goldstine and Paul G. Haaga, Jr. are affiliated with
the Fund's Investment Adviser and, therefore, receive no remuneration from the
Fund.
Other Executive Officers
<TABLE>
<CAPTION>
Name (Position Occupation(1) Officer
with Fund) and Age Continuously
Principal Since (2)
<S> <C> <C> <C>
Michael J. Downer 44 Senior Vice President - Fund 1994
(Vice President) Business Management Group,
Capital Research and Management
Company
David A. Hoag 33 Director and Vice President, 1999
(Vice President) Capital Research Company
Neil L. Langberg 46 Vice President - Investment 1986
(Vice President) Management Group,
Capital Research and Management
Company
Julie F. Williams 51 Vice President, Fund Business 1986
(Secretary) Management Group,
Capital Research and Management
Company
Anthony W. Hynes, 36 Vice President, Fund Business 1993
Jr. Management Group,
(Treasurer) Capital Research and Management
Company
</TABLE>
(1) The occupations shown reflect the principal employment of each individual
during the past five years. Corporate positions, in some instances, may have
changed during this period.
(2) Officers hold office until their respective successors are elected, or
until they resign or are removed.
NO OFFICER, DIRECTOR OR EMPLOYEE OF THE INVESTMENT ADVISER RECEIVES ANY
REMUNERATION FROM THE FUND. ALL TRUSTEES AND OFFICERS AS A GROUP OWNED
BENEFICIALLY FEWER THAN 1% OF THE SHARES OUTSTANDING ON AUGUST 26, 1999.
2. APPROVAL OF THE ELIMINATION OR REVISION OF CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES
INTRODUCTION AND SUMMARY
The Fund is subject to investment restrictions which establish percentage and
other limits that govern its investment activities. Under the Investment
Company Act of 1940 (the "1940 Act"), investment restrictions relating to
certain activities are required to be "fundamental," which means that any
changes require shareholder approval. Investment companies, including the
Fund, are permitted to designate additional restrictions as fundamental. They
may also adopt "non-fundamental" investment restrictions, which may be changed
by the Fund's Board of Trustees without shareholder approval.
Some of its existing fundamental investment restrictions reflect regulatory,
business or industry conditions, practices or requirements that have changed or
no longer exist. With the passage of time, the development of new practices,
and changes in regulatory standards, management believes certain fundamental
restrictions should be revised, eliminated or reclassified as
non-fundamental.
The Board of Trustees, together with the Fund's senior officers, have analyzed
the current fundamental investment restrictions, and have concluded that five
restrictions should be amended. Three restrictions would be eliminated and two
restrictions would be revised and reclassified as non-fundamental.
The proposed investment restrictions have been drafted to maintain important
investor protections while providing flexibility to respond to future legal,
regulatory and market changes. By reducing the number of policies that can be
changed only by shareholder vote, the Board of Trustees and the Fund will have
greater flexibility to modify Fund policies, as appropriate, in response to
changing markets and in light of new investment opportunities and instruments.
The Fund will then be able to avoid the costs and delays associated with a
shareholder meeting when making changes to the non-fundamental investment
policies that the Board may consider desirable.
IMPORTANTLY, THE PROPOSED AMENDMENTS DO NOT AFFECT THE INVESTMENT OBJECTIVES OF
YOUR FUND, WHICH REMAIN UNCHANGED. MOREOVER, THE BOARD DOES NOT ANTICIPATE
THAT THE CHANGES, INDIVIDUALLY OR IN THE AGGREGATE, WILL CHANGE TO A MATERIAL
DEGREE THE LEVEL OF INVESTMENT RISK ASSOCIATED WITH AN INVESTMENT IN THE FUND.
The text of each proposed change to the Fund's fundamental restrictions is set
forth below. Shareholders may vote for any or all of the changes which are the
subject of Proposal 2. If the proposed changes are approved by the Fund's
shareholders, the Fund's prospectus and statement of additional information
will be revised to reflect those changes.
RESTRICTIONS PROPOSED TO BE ELIMINATED
None of the following investment restrictions is required under the 1940 Act.
Many were originally adopted in response to state law restrictions or
interpretations which no longer apply to the Fund. Therefore, in order to
increase the ability of Fund management to manage the Funds' assets effectively
and efficiently in response to market and regulatory change, it is proposed
that these investment restrictions, which are currently listed as fundamental,
be eliminated. Further explanations pertaining to specific restrictions are
set forth below.
2A. AFFILIATED OWNERSHIP
The purposes intended to be served by this restriction are covered by the
Fund's Code of Ethics and by separate provisions of the 1940 Act.
CURRENT TEXT
[The Fund may not$] purchase or retain the securities of any issuer if, to the
knowledge of the fund, those individual officers and Trustees of the Trust, its
investment adviser or principal underwriter, each owning beneficially more than
1/2 of 1% of the shares of such issuer, together own more than 5% of the
securities of such issuer.
2B. UNSEASONED ISSUERS
This restriction was adopted in response to state regulation which no longer
applies. Because newly formed companies have no proven track record in
business, their prospects may be uncertain. Their securities may fluctuate in
price more widely than securities of established companies. Elimination of
this restriction will provide the Fund with greater investment flexibility,
subject to its investment objectives and policies. Retaining such a
restriction could, among other things, preclude the Fund from making otherwise
attractive investments in newly-formed companies issuing asset-backed
securities.
CURRENT TEXT
[The Fund may not$] invest more than 5% of the value of the fund's total assets
in securities of any issuer with a record of less than three years continuous
operation, including predecessors, except those issued or guaranteed by the
U.S. Government or its agencies and instrumentalities, or municipal bonds rated
at least "A" by either Moody's Investors Service, Inc. or Standard & Poor's
Corporation.
2C. PLEDGING ASSETS
In certain circumstances this restriction could interfere with the Fund's
ability to borrow temporarily for extraordinary or emergency purposes. The
Fund's current borrowing limit of 5% of total assets would remain unchanged.
CURRENT TEXT
[The Fund may not$] mortgage, pledge or hypothecate its assets, except in an
amount up to 10% of the value of its total assets, but only to secure
borrowings for temporary or emergency purposes.
RESTRICTIONS PROPOSED TO BE REVISED AND RECLASSIFIED AS NON-FUNDAMENTAL
2D. RESTRICTED/ILLIQUID SECURITIES
The Fund has a fundamental policy prohibiting the acquisition of "restricted
securities" (I.E., securities with legal or contractual limitations on
transfer) and a separate policy covering "illiquid" securities. Neither of
these restrictions are required to be classified as fundamental under the 1940
Act. Historically, there has been a concern that restricted securities, which
typically cannot be resold to the public, may be difficult for a mutual fund to
sell at approximately the value at which the fund is carrying the investment.
Restricted securities may or may not be illiquid, however. Some restricted
securities are actively traded among institutional investors and thus highly
liquid in the marketplace. Investor protection would be afforded by the
proposed, non-fundamental investment restriction covering illiquid securities.
The proposed restriction is consistent with current regulatory standards
applicable to all non-money market mutual funds.
CURRENT TEXT
[The Fund may not$] enter into any repurchase agreement maturing in more than
seven days (unless subject to a demand feature of seven days or less) if any
such investment, together with any illiquid securities held by the fund,
exceeds 10% of the value of its total assets.
[The Fund may not$] acquire securities subject to legal or contractual
restrictions on disposition.
PROPOSED TEXT
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities.
2E. PURCHASING SECURITIES OF OTHER INVESTMENT COMPANIES
This restriction deals with certain anti-pyramiding concerns addressed by the
1940 Act. The proposed revision would allow the Fund to invest to a limited
degree in entities falling within the technical definition of an investment
company. On occasion, certain issuers in various lines of business, primarily
financial, fall within this definition but otherwise represent attractive
investment opportunities, consistent with the Fund's investment objective.
Current industry practice is to rely on the 1940 Act for investor
protection.
CURRENT TEXT
[The Fund may not$] purchase securities of other investment companies, except
in connection with a merger, consolidation, acquisition, or reorganization.
PROPOSED TEXT
[The Fund may not$] invest in securities of other investment companies, except
as permitted by the Investment Company Act of 1940, as amended.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS.
0. RATIFICATION OF THE SELECTION BY THE BOARD OF TRUSTEES OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANT
Shareholders are requested to ratify the selection by the Board of Trustees
(including a majority of the directors who are not "interested persons"of the
Fund as that term is defined in the 1940 Act) of the firm of Deloitte & Touche
LLP as independent accountant for the Fund for the fiscal year 2000. In
addition to the normal audit services, Deloitte & Touche LLP provides services
in connection with the preparation and review of federal and state tax returns
for the Fund. Deloitte & Touche LLP has served as the Fund's independent
accountant since the Fund's inception and has advised the Fund that it has no
material direct or indirect financial interest in the Fund or its affiliates.
The Fund's Audit Committee recommended that Deloitte & Touche LLP be selected
as the Fund's independent accountant for the current fiscal year. The
employment of the accountant is conditioned upon the right of the Fund to
terminate such employment forthwith without any penalty. No representative of
the firm of Deloitte & Touche LLP is expected to attend the Meeting of
Shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
ITS SELECTION OF DELOITTE & TOUCHE LLP
OTHER MATTERS
Neither the persons named in the enclosed Proxy nor the Board of Trustees are
aware of any matters that will be presented for action at the meeting other
than the matters described above. If any other matters requiring a vote of
shareholders arise, the Proxies will confer upon the person or persons entitled
to vote the Shares they present a discretionary authority to vote the Shares in
respect to any such other matters in accordance with their est judgment in the
interest of the Fund and its shareholders.
SHAREHOLDER PROPOSALS
Any shareholder proposals for inclusion in Proxy solicitation material for a
shareholders meeting should be submitted to the Secretary of the Fund, at the
Fund's principal executive offices, 333 South Hope Street, Los Angeles, CA
90071. Any such proposals must comply with the requirements of rule 14a-8 under
the Securities Exchange Act of 1934.
Under the laws of Massachusetts, where the Fund is organized, the Fund is not
required to hold regular meetings of shareholders. Under the 1940 Act, a vote
of shareholders is required from time to time for particular matters but not
necessarily on an annual basis. As a result, the Fund does not expect to hold
shareholders meetings on a regular basis, and any shareholder proposal received
may not be considered until such a meeting is held.
GENERAL INFORMATION
Capital Research and Management Company is the investment adviser to the Fund
and is located at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821. American Funds Distributors, Inc. is
the principal underwriter of the Fund's shares and is located at the Los
Angeles and Brea addresses above and also at 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513.
The enclosed Proxy is solicited by and on behalf of the Board of Trustees of
the Fund.. The Fund will pay the cost of soliciting proxies, consisting of
printing, handling and mailing of the Proxies and related materials. In
addition to solicitation by mail, certain officers and directors of the Fund,
who will receive no extra compensation for their services, may solicit by
telephone, telegram or personally. WE URGE ALL SHAREHOLDERS ARE URGED TO
MARK, DATE, SIGN, AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE YOUR
PROXY BY TELEPHONE OR THE INTERNET BY FOLLOWING INSTRUCTIONS THAT APPEAR ON THE
ENCLOSED PROXY INSERT.
YOU MAY OBTAIN A COPY OF THE FUND'S MOST RECENT ANNUAL REPORT, WITHOUT CHARGE,
BY WRITING TO THE SECRETARY OF THE FUND AT 333 SOUTH HOPE STREET, LOS ANGELES,
LOS ANGELES, CA 90071 OR BY TELEPHONING 800/421-0180. THESE REQUESTS WILL BE
HONORED WITHIN THREE BUSINESS DAYS OF RECEIPT.
By Order of the Board of Trustees
JULIE F. WILLIAMS
Secretary
September 13, 1999
THIS NOTICE OF MEETING OF SHAREHOLDERS AND PROXY STATEMENT HAS BEEN PRINTED ON
RECYCLED PAPER THAT MEETS THE GUIDELINES OF THE UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY.
[insert indicia]
PROXY CARD THE TAX-EXEMPT FUND OF CALIFORNIA PROXY CARD
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE FUND
FOR THE MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 29, 1999
The undersigned hereby appoints Michael J. Downer, Paul G. Haaga, Jr., Anthony
W. Hynes, Jr., and Julie F. Williams, and each of them, his/her true and lawful
agents and proxies with full power of substitution to represent the undersigned
at the Meeting of Shareholders to be held at the Office of The Capital Group
Companies, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, California,
on Friday, October 29, 1999 at 10:00 a.m., on all matters coming before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER YOU DIRECTED. IF
NO DIRECTION IS GIVEN, WITH RESPECT TO ANY PARTICULAR ITEM, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN ITEM 1 AND FOR ITEMS 2 AND 3.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS CARD. JOINT OWNERS
SHOULD EACH SIGN INDIVIDUALLY. CORPORATE PROXIES SHOULD BE SIGNED IN FULL
CORPORATE NAME BY AN AUTHORIZED OFFICER. FIDUCIARIES SHOULD GIVE FULL TITLES.
Signature
Signature of joint owner, if any
Date
THE TAX-EXEMPT FUND OF CALIFORNIA PROXY
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example: []
<TABLE>
<CAPTION>
1. Election of Trustees: FOR ALL WITHHOLD FOR ALL
ALL EXCEPT
<S> <C> <C> <C> <C> <C>
01 Richard G. Capen 06 Leonard R. Fuller [] [] []
02 H. Frederick Christie 07 Abner D. Goldstine
03 Don R. Conlan 08 Paul G. Haaga, Jr.
04 Diane C. Creel 09 Richard G. Newman
05 Martin Fenton 10 Frank M. Sanchez
</TABLE>
To withhold your vote for any individual nominee, mark the "For All Except"
box
and write the nominee's number on the line provided below.
_____________________________________________________________________
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
2. Approval of the proposed changes to the Fund's [] [] []
investment restrictions.
2A. Eliminate restriction regarding affiliated ownership [] [] []
2B. Eliminate restriction regarding investments in
unseasoned issuers [] [] []
2C. Eliminate restriction on pledging assets [] [] []
2D. Reclassify restriction regarding restricted/illiquid
as a non-fundamental restriction [] [] []
2E. Reclassify restriction regarding purchasing securities
of other investment companies as a non-fundamental
restriction [] [] []
3. Ratification of selection of Deloitte & Touche LLP as [] [] []
independent accountant:
</TABLE>
In their discretion, upon other matters as may properly come before the
meeting.
IMPORTANT
SHAREHOLDERS CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS BY PROMPTLY RETURNING THE ENCLOSED PROXY.
