WASHINGTON MUTUAL INVESTORS FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June 22, 1995
(As amended July 11, 1995)
This document is not a prospectus but should be read in conjunction with the
current Prospectus dated June 22, 1995 of Washington Mutual Investors Fund,
Inc. (the Fund or WMIF). The Prospectus may be obtained from your investment
dealer or financial planner or by writing to the Fund at the following address:
WASHINGTON MUTUAL INVESTORS FUND, INC.
Attention: Secretary
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
(202) 842-5665
The Fund has two forms of prospectuses. Each reference to the prospectus in
this Statement of Additional Information includes both of the Fund's
prospectuses. Shareholders who purchase shares at net asset value through
eligible retirement plans should note that not all of the services or features
described below may be available to them, and they should contact their
employer for details.
TABLE OF CONTENTS
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ITEM PAGE NO.
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The Fund and Its Investment Objective and Policies B- 1
Investment Restrictions B- 2
Fund Directors, Advisory Board and Officers B- 3
Director and Advisory Board Compensation B- 3
Management B- 7
Dividends, Distributions and Federal Taxes B-10
Purchase of Shares B-11
Shareholder Account Services and Privileges B-12
Redemption of Shares B-12
Execution of Portfolio Transactions B-13
General Information B-13
Investment Results B-14
Financial Statements B-21
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THE FUND AND ITS INVESTMENT OBJECTIVE AND POLICIES
The Fund has Investment Standards based upon criteria established by the
United States District Court for the District of Columbia for determining
eligibility under the Court's Legal List procedure which was in effect for many
years. The Fund has an Eligible List of investments, originally based upon the
Court's List of Legal Investments for Trust Funds in the District of Columbia.
The Investment Adviser is required to select the Fund's investments exclusively
from the Eligible List. The Investment Adviser monitors the Eligible List and
makes recommendations to the Board of Directors of changes necessary for
continued compliance with the Fund's Investment Standards. Any issue deleted
from the Eligible List and held by the Fund must be sold by the Fund as soon as
deemed practical by the Investment Adviser but in no event later than six
months following such deletion.
It is believed that in applying the above disciplines and procedures, the Fund
makes available to pension and profit-sharing trustees and other fiduciaries a
prudent stock investment and an assurance of continuity of investment quality
which it has always been the policy of the Fund to provide. However, fiduciary
investment responsibility and the Prudent Investor Rule involve a mixed
question of law and fact which cannot be conclusively determined in advance.
Moreover, recent changes to the District of Columbia's Prudent Investor Rule
speak to an allocation of funds among a variety of investments. Therefore, each
fiduciary should examine the common stock portfolio of the Fund to see that it,
along with other investments, meets the requirements of the specific trust.
INVESTMENT RESTRICTIONS
The Fund has adopted certain additional investment restrictions which may not
be changed without a vote of approval by the holders of a majority of its
outstanding shares. Such majority is defined by the Investment Company Act of
1940 (the 1940 Act) as the affirmative vote of the lesser of (i) 67% or more of
the outstanding voting securities present at a meeting, provided the holders of
more than 50% of the outstanding voting securities are present in person or by
proxy, or (ii) more than 50% of the outstanding voting securities. These
restrictions provide that:
The Fund may not purchase any security which is not legal for the investment
of trust funds in the District of Columbia.
The Fund may not purchase or sell real estate or commodities.
It is the declared policy of the Fund to maintain a fully invested position
with minimum invested cash equivalents as may be required. Such cash
equivalents may not exceed 5% of total capital assets, and shall be invested in
short-term U.S. Treasury or other U.S. Government short-term obligations of
comparable quality, at the discretion of the Fund's Investment Adviser, after
allowing for sales of portfolio securities and Fund shares within thirty days
and the accumulation of cash balances representing undistributed net investment
income and realized capital gains.
No purchase may be made which would cause more than 5% of the value of the
total assets of the Fund to be invested in the securities of any one issuer.
No issue may be purchased which would cause more than 10% of the outstanding
securities of any issuer to be held in the portfolio of the Fund.
The Fund may not invest in companies for the purpose of exercising control or
management and may not invest in securities of other investment companies.
The Fund may not purchase securities on margin or sell securities short.
The Fund may not lend money.
The Fund may not borrow money except for temporary or emergency purposes and
not for investment purposes and then only from banks in an amount not exceeding
at the time of borrowing 10% of the Fund's net assets, nor pledge or
hypothecate more than 10% of its net assets and then only to secure such
borrowing, provided that the Fund may not purchase portfolio securities during
any period when loans amounting to 5% or more of the Fund's net assets are
outstanding.
The Fund may not purchase any securities which would cause 25% or more of the
value of its total assets at the time of such purchase to be invested in the
securities of one or more issuers having their principal business activities in
the same industry. The Board of Directors, acting upon the recommendations of
the Advisory Board, may from time to time establish lower limitations on the
amount of investment in specific industries.
Notwithstanding the restriction on investing in the securities of other
investment companies, the Fund may invest in securities of other investment
companies if deemed advisable by its officers in connection with the
administration of a deferred compensation plan adopted by Directors pursuant to
an exemptive order granted by the Securities and Exchange Commission.
The Fund does not act as an underwriter of securities issued by others, except
to the extent that the disposal of an investment position may technically
constitute the Fund an underwriter as the term is defined in the Securities Act
of 1933.
FUND DIRECTORS, ADVISORY BOARD AND OFFICERS
(WITH THEIR PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS)#
DIRECTOR AND ADVISORY BOARD COMPENSATION
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NAME AND ADDRESS POSITION WITH PRINCIPAL OCCUPATION(S) AGGREGATE COMPENSATION TOTAL COMPENSATION TOTAL
NUMBER
REGISTRANT DURING PAST 5 YEARS# (INCLUDING VOLUNTARILY DEFERRED FROM ALL FUNDS OF
FUND
COMPENSATION/1/) FROM FUND AFFILIATED WITH THE BOARDS ON
DURING FISCAL YEAR ENDED AMERICAN FUNDS WHICH DIRECTOR
4/30/95 GROUP SERVES/2/
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Charles T. Akre Director Emeritus Miller & Chevalier, $12,400 $12,400 1
700 John Ringling Blvd. Chartered,
Apt. 1108 Of Counsel
Sarasota, FL 34236
Cyrus A. Ansary Director Investment Services $35,800 $38,725 3
1725 K Street, N.W., Suite 410 International Co.,
Washington, D.C. 20006 President
Nathan A. Baily Director Emeritus Management, Marketing, $11,500 $11,500 1
5516 Greystone Street Education Consultant
Chevy Chase, MD 20815
John A. Beck* Director Reed Smith Shaw & none/4/ none/4/ 1
1200 18th Street, N.W McClay, Of Counsel
Washington, D.C. 20036
Mary K. Bush Advisory Board Institute of International $4,500 $4,500 1
2000 Pennsylvania Avenue, N.W., Finance, Inc.
Suite 8500
Washington, D.C. 20006
Daniel J. Callahan III Advisory Board USLICO Corporation $4,500 $4,500 1
4601 Fairfax Drive Former Chairman of the
Arlington, VA 22203 Board and CEO
Frank M. Ewing Director Emeritus Frank M. Ewing Co., Inc. $13, 600 $15,725 3
P. O. Box 2248 President and Chairman of
Gaithersburg, MD 20886 the Board
Stephen Hartwell*{ Chairman of the Board Washington Management none/4/ none/4/ 3
Corporation, Chairman of
the Board
Henry W. Herzog Director Emeritus The George Washington $12,700 $12,700 1
5403 Blackistone Road University, Vice President
Bethesda, MD 20816 and Treasurer Emeritus
Vernon W. Holleman, Jr. Advisory Board Vernon W. Holleman, Jr. $4,500/3/ $4,500/3/ 1
7500 Old Georgetown Road Company, President
Suite 801
Bethesda, MD 20814
James H. Lemon, Jr.*{ Vice Chairman of the The Johnston-Lemon none/4/ none/4/ 3
Board Group, Incorporated,
Chairman of the Board and
Chief Executive Officer
Harry J. Lister*{ President Washington Management none/4/ none/4/ 3
Corporation, President and
Director
James C. Miller III Director Citizens for a Sound $33,500 $33,500 1
1250 H Street, N.W., Suite 700 Economy, Counselor
Washington, D.C. 20005
Bernard J. Nees Chairman Emeritus of Johnston, Lemon & Co. $13,600 $13,600 1
1101 Vermont Avenue, N.W. the Board Incorporated,
Washington, D.C. 20005 Executive Vice President
and
Director Emeritus
Thomas J. Owen Director Perpetual Financial $34,700 $34,700 1
6006 Onondaga Road Corporation, former
Bethesda, MD 20816 Chairman of the Board
Jean Head Sisco Director Sisco Associates, $36,400 $38,725 3
2517 Massachusetts Avenue, N.W. Management Consulting
Washington, D.C. 20008 Firm, Partner
T. Eugene Smith Director T. Eugene Smith, Inc., $34,200 $37,125 3
2830 Graham Road, Suite 200 President
Falls Church, VA 22042
William B. Snyder Advisory Board Southern Heritage $3,500 $3,500 1
P. O. Box 30690 Corporation
Bethesda, MD 20824 and Merastar Corporation
Chairman and CEO
Leonard P. Steuart II Advisory Board Steuart Investment $4,500 $4,500 1
4646 40th Street, N.W. Company, Vice President
Washington, D.C. 20016
Robert F. Tardio Advisory Board Independent Consultant $4,500 $4,500 1
11517 Highland Farm Road
Potomac, MD 20854
W. Reid Thompson Advisory Board Potomac Electric Power $4,500 $4,500 1
1900 Pennsylvania Avenue, N.W. Company, Advisory
Washington, D.C. 20006 Director
Margita E. White Director Association for Maximum $34,500 $34,500 1
1776 Massachusetts Avenue, N.W. Service Television Inc.,
Suite 310 President
Washington, D.C. 20036
Stephen G. Yeonas Director Stephen G. Yeonas $36,100/3/ $39,025/3/ 3
1611 North Kent Street, Suite 802 Company, Chairman of the
Arlington, VA 22209 Board and Chief Executive
Officer
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# Positions within the organizations listed may have changed during this
period.
* Directors who are considered "interested persons" as defined in the 1940 Act,
on the basis of their affiliation with the Fund's Business Manager, Washington
Management Corporation.
{ Address is 1101 Vermont Avenue, N.W., Washington, D.C. 20005.
/1/Amounts may be deferred by eligible directors under a non-qualified deferred
compensation plan adopted by the Fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Director.
/2/ In each instance where a Director of the Fund serves on other funds
afilliated with The American Funds Group, such service is as a trustee of The
Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of Virginia, both
portfolios of The American Funds Tax-Exempt Series I. Earnings from these
funds reflect the latest fiscal year (8/1/93 -- 7/31/94).
/3/Since the plan's adoption, the total amount of deferred compensation accrued
(plus earnings thereon) through 3/31/95, the latest calendar quarter, for
particpants is as follows: Director Stephen G. Yeonas ($44,286) and Advisory
Board member Vernon W. Holleman, Jr. ($3,804). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilites of the Fund until paid to the Director.
/4/John A. Beck, Stephen Hartwell, James H. Lemon, Jr. and Harry J. Lister are
affiliated with the Business Manager and, accordingly, receive no remuneration
from the Fund.
OTHER OFFICERS
(WITH THEIR PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS)#
1101 VERMONT AVENUE, N.W., WASHINGTON, D.C. 20005.
RALPH S. RICHARD
Vice President and Treasurer
Johnston, Lemon & Co. Incorporated,
Executive Vice President and Director
HOWARD L. KITZMILLER
Senior Vice President, Secretary
and Assistant Treasurer
Washington Management Corporation,
Senior Vice President, Secretary,
Assistant Treasurer and Director
LOIS A. ERHARD
Assistant Vice President
Washington Management Corporation,
Vice President
# Positions within the organizations listed may have changed during this
period.
All of the officers listed are officers of the Business Manager. Most
of the Directors and officers are also officers and/or directors and/or
trustees of one or more of the other funds for which Washington Management
Corporation serves as Business Manager. All unaffiliated Directors receive
from the Fund $5,250 quarterly and an attendance fee of $1,200 for each board
meeting attended. The chairman of a committee receives an attendance fee of
$1,000 and committee members receive $700 for each committee meeting attended.
Members of the Advisory Board receive $1,250 semi-annually plus $1,000 per
meeting attended. No Director compensation is paid by the Fund to any officer
or Director who is a director, officer or employee of the Business Manager, the
Investment Adviser or affiliated companies. Directors Emeritus receive from
the Fund $2,875 quarterly plus $300 per Board meeting attended. Directors and
Advisory Board Members, but not Directors Emeritus, may elect, on a voluntary
basis, to defer all or a portion of these fees through a deferred compensation
plan in effect for the Fund. The Fund also reimburses certain meeting-related
expenses of the Directors, Directors Emeritus and Advisory Board members. The
total compensation paid by the Fund to Directors, Directors Emeritus and
Advisory Board members for the fiscal year ended April 30, 1995 was $339,000.
For deferred compensation, see footnote 3 at page 6. As of May 31, 1995 the
directors, officers and Advisory Board members, as a group, owned beneficially
or of record less than 1% of the outstanding shares.
MANAGEMENT
BUSINESS MANAGER - Since its inception, the Fund has operated under a Business
Management Agreement with Washington Management Corporation or its
predecessors, 1101 Vermont Avenue, N.W., Washington, D.C. 20005.
The Business Manager provides all services required to carry on the Fund's
general administrative and corporate affairs. These services include all
executive personnel, clerical staff, office space and equipment, arrangements
for and supervision of all shareholder services, Federal and state regulatory
compliance and responsibility for accounting and record keeping facilities. The
Business Manager provides similar services to other mutual funds.
The Fund pays all expenses not specifically assumed by the Business Manager,
including, but not limited to, custodian, stock transfer and dividend
disbursing agency fees and expenses; costs of the designing, printing, and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; expenses of shareholders' meetings; taxes; insurance; expenses of
the issuance, sale (including stock certificates, registration and
qualification expenses), or repurchase of shares of the Fund; legal and
auditing expenses; expenses pursuant to the Fund's Plan of Distribution; fees
and expense reimbursements paid to Directors and Advisory Board members;
association dues; and costs of stationery
and forms prepared exclusively for the Fund.
The Business Manager has agreed to pay to the Fund annually, immediately after
the fiscal year end, the amount by which the total expenses of the Fund for any
particular fiscal year, except taxes and interest, exceed an amount equal to 1%
of the average net assets of the Fund for the year. No such reimbursement was
necessary in fiscal 1995. During the fiscal years ended April 30, 1995, 1994
and 1993, the Business Manager's fees amounted to $18,180,000, $17,344,000 and
$15,103,000, respectively.
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have a number of years of investment experience. The Investment
Adviser's professionals travel several million miles a year, making more than
5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for approximately $100 billion of
stocks, bonds and money market instruments and serves over five million
investors of all types. These investors include privately owned businesses and
large corporations, as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
The Investment Adviser manages the investment portfolio of the Fund subject to
the policies established by the Board of Directors and places orders for the
Fund's portfolio securities transactions. During the fiscal years ended April
30, 1995, 1994 and 1993, the Investment Adviser's fees amounted to $27,370,000,
$25,679,000 and $20,939,000, respectively.
BUSINESS MANAGEMENT AGREEMENT AND INVESTMENT ADVISORY AGREEMENT - The current
Business Management Agreement and Investment Advisory Agreement, unless sooner
terminated, will continue in effect until August 31, 1995 and may be renewed
from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by
the vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund, and (ii) the vote of a majority of directors who are
not parties to the Agreements or interested persons (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The Agreements provide that the Investment Adviser
and Business Manager have no liability to the Fund for their acts or omissions
in the performance of their obligations to the Fund not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of their
obligations under the Agreements. The Agreements also provide that either party
has the right to terminate them, without penalty, upon sixty (60) days' written
notice to the other party and that the Agreements automatically terminate in
the event of their assignment (as defined in the 1940 Act).
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the Fund's shares. The Fund has
adopted a Plan of Distribution (the Plan), pursuant to rule 12b-1 under the
1940 Act (see Fund Organization and Management "Principal Underwriter" in the
Prospectus). The Principal Underwriter receives amounts payable pursuant to
the Plan (see below) and commissions consisting of that portion of the sales
charge remaining after the discounts which it allows to investment dealers.
Commissions retained by the Principal Underwriter on sales of Fund shares
during the fiscal year ended April 30, 1995 amounted to $7,073,000 after
allowance of $36,996,000 to dealers including $496,000 earned by Johnston,
Lemon & Co. Incorporated on its retail sales of shares and the Distribution
Plan of the Fund. During the fiscal years ended April 30, 1994 and 1993, the
Principal Underwriter retained $12,119,000 and $11,668,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors and separately by a
majority of the Directors who are not "interested persons" of the Fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the Fund. The
officers and Directors who are "interested persons" of the Fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan. Potential benefits of the Plan to the Fund include improved
shareholder services, savings to the Fund in transfer agency costs, savings to
the Fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the Fund are committed to the discretion of the
Directors who are not "interested persons" during the existence of the Plan.
Expenses under the Plan are reviewed quarterly and the Plan must be considered
for renewal annually by the Board of Directors.
Under the Plan the Fund may expend up to 0.25% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of Fund shares, provided the Fund's Board of Directors has approved the
category of expenses for which payment is being made. The following categories
of expenses have been approved: service fees for qualified dealers; dealer
commissions and wholesaler compensation on sales of shares exceeding $1 million
(including purchases by any defined contribution plan qualified under Section
401(a) of the Internal Revenue Code including a "401(k) plan with 200 or more
eligible employees); expenses of the Principal Underwriter for providing
shareholder services (including supporting those by dealers); and payments to
wholesalers for efforts to support shareholder services by dealers. Only
expenses incurred during the preceeding 12 months and accrued while the Plan is
in effect are paid by the Fund. During the fiscal year ended April 30, 1995,
the Fund paid or accrued $27,375,000 under the Plan, for compensation to
dealers. As of April 30, 1995, distribution expenses accrued but unbilled
amounted to $4,924,000.
The Glass-Steagal Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries or affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities. If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means of servicing such shareholders
would be sought. In such event, changes in the operation of the fund might
occur and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being provided by
such bank. It is not expected that shareholders would suffer adverse financial
consequences as a result of any of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The Fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the Fund
distributes within specified times at least 90% of the sum of its investment
company taxable investment income, it will be taxed only on the portion of the
investment company taxable income which it retains.
To qualify under Subchapter M, the Fund must (a) derive at least 90% of its
gross income from dividends, interest, certain payments with respect to
securities loans and gains from the sale or other disposition of stock or
securities or other income derived with respect to its business of investing in
such stock or securities; (b) derive less than 30% of its gross income from the
sale or other disposition of stock or securities held for less than three
months; and (c) diversify its holdings so that at the end of each fiscal
quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash, U.S. Government securities and other securities which must
be limited, in respect of any one issuer, to an amount not greater than 5% of
the Fund's assets and 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain net income (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the sum of any untaxed, undistributed net investment
income and capital gain net income of the regulated investment company for
prior periods. The term "distributed amount" generally means the sum of (i)
amounts actually distributed by the Fund from its current year's ordinary
income and capital gain net income and (ii) any amount on which the Fund pays
income tax during the periods described above. The Fund intends, to the extent
practicable, to meet these distribution requirements to minimize or avoid the
excise tax liability.
The Fund intends to distribute to shareholders all of its capital gain net
income. If the net asset value of shares of the Fund should, by reason of a
distribution of realized capital gains, be reduced below a shareholder's cost,
such distribution would to that extent be taxable to the shareholder even
though it is a return of capital to that shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Under the Code, if, within 90 days after Fund shares are purchased, such
shares are redeemed and either reinstated in the same fund or exchanged for
shares of any other fund in The American Funds Group and the otherwise
applicable sales charge is waived, then the amount of the sales charge
previously incurred in purchasing Fund shares shall not be taken into account
for purposes of determining the amount of any gain or loss on the redemption,
but will be treated as having been incurred in the purchase of the fund shares
acquired in the reinstatement or exchange.
The tax status of a gain realized on a redemption will not be affected by
exercise of the reinstatement privilege, but a loss may be nullified if you
reinvest in the same fund within 30 days.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared payable as of a date in October, November and
December are deemed under the Code to have been received by the shareholder on
December 31 of that calendar year and subject to income tax for that year even
though the dividend is actually paid no later than the following January.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gain is 28%; and the maximum corporate tax applicable
to ordinary income and net capital gain is 35%. Naturally, the amount of tax
payable by an individual will be affected by a combination of tax law rules
covering, E.G., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish an
IRA each year (prior to the tax return filing deadline for that year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary discussion of federal taxation and
should not be viewed as a comprehensive discussion of all provisions of the
Code relevant to investors. Dividends and capital gain distributions may also
be subject to state or local taxes. Shareholders should consult their own tax
advisers for additional details as to their particular tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received. This offering price is
effective for orders received by the Fund or American Funds Service Company
prior to the time of determination of the net asset value and, in the case of
orders placed with dealers, accepted by the Principal Underwriter prior to its
close of business. The dealer is responsible for promptly transmitting
purchase orders to the Principal Underwriter. Orders received by the
investment dealer, the Transfer Agent, or the Fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will be purchasing and redeeming shares of the Fund,
since such prices generally reflect the previous day's closing price whereas
purchases and redemptions are made at the next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of regular trading
(currently 4:00 p.m., New York Time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Securities listed or traded on the New York Stock Exchange are valued at
the last sale price or, if no sale, at the last-reported bid price. U.S.
Treasury Bills with original or remaining maturities in excess of 60 days are
valued at the mean of quoted bid and asked prices obtained from a major dealer
in short-term securities. Other Treasury Bills with 60 days or less to
maturity are amortized to maturity based on their cost to the Fund if acquired
within 60 days of maturity or, if already held by the Fund on the 60th day,
based on the value determined on the 61st day. Other securities are valued on
the basis of last sale or bid prices in what is, in the opinion of the
Investment Adviser, the broadest and most representative market, which may be
either a securities exchange or the over-the-counter market. Where quotations
are not readily available, securities are valued at fair value as determined in
good faith by the Board of Directors. The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or by
the Fund. The Fund will not knowingly sell shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
own beneficially directly, indirectly, or through a unit investment trust more
than 3% of the outstanding shares of the Fund without the consent of a majority
of the Board of Directors.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period pursuant to the terms of a written Statement of Intention (the
Statement) in the form provided by the Principal Underwriter and signed by the
purchaser. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder signs a Statement in order to qualify for a reduced
sales charge, shares in an amount up to 5% of the dollar amount specified in
the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and capital gain distributions on these escrowed shares will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 20 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
escrowed shares will be redeemed to pay such difference. If the proceeds from
this redemption are inadequate, the purchaser will be liable to the Principal
Underwriter for the balance still outstanding. The Statement may be revised
upward at any time during the 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be based on the following: the investment made the first
month of the 13-month period will be multiplied by 13 and then multiplied by
1.5. On the first investment and on all other investments made pursuant to the
statement of intention, a sales charge will be assessed according to the sales
charge breakpoint thus determined. There will be no retroactive adjustments in
sales charges on investments previously made during the 13-month period.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more and for
purchases made at net asset value by certain retirement plans of organizations
with collective retirement plan assets of $100 million or more: 1.00% on
amounts of $1 million to $2 million, 0.80% on amounts over $2 million to $3
million, 0.50% on amounts over $3 million to $50 million, 0.25% on amounts over
$50 million to $100 million, and 0.15% on amounts over $100 million. The level
of dealer commissions will be determined based on sales made over a 12-month
period commencing from the date of the first sale at net asset value. See "The
American Funds Shareholder Guide" in the Fund's Prospectus for more
information. For certain tax-exempt accounts opened prior to September 1,
1969, sales charges and dealer commissions, as a percent of offering price, are
respectively 3% and 2.5% (under $50,000); 2.5% and 2% ($50,000 but less than
$100,000); 2% and 1.5% ($100,000 but less than $250,000) and 1.5% and 1.25%
($250,000 but less than $1 million).
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of accounts for retirement plans where
Capital Guardian Trust Company serves as trustee or custodian.) Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement showing the current transaction. Participation in the
plan will begin within 30 days after receipt of the account application. If
the shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of your account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing the Transfer Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the Fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 60 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
REDEMPTION OF SHARES
The Fund's Articles of Incorporation permit the Fund to direct the Transfer
Agent to redeem the shares of any shareholder if the value of shares in the
account is less than the minimum initial investment amount set forth in the
Fund's current registration statement under the 1940 Act, subject to such
further terms and conditions as the Board of Directors may adopt. Prior notice
of at least 60 days will be given to a shareholder before the involuntary
redemption provision is made effective with respect to the shareholder's
account. The shareholder will have not less than 30 days from the date of such
notice within which to bring the account up to the minimum determined as set
forth above.
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the Fund may
be executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the Fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the Fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended April 30, 1995, 1994
and 1993 amounted to $11,529,000, $11,819,000 and $8,541,000, respectively.
During fiscal years 1995, 1994 and 1993 Johnston, Lemon & Co. Incorporated
received no commissions for executing portfolio transactions for the Fund.
Johnston, Lemon & Co. Incorporated will not participate in commissions paid by
the Fund to other brokers or dealers and will not receive any reciprocal
business, directly or indirectly, as a result of such commissions.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the Fund, including proceeds
from the sale of shares of the Fund and of securities in the Fund's portfolio,
are held by The Chase Manhattan Bank, N.A., 3 Metrotech Center, Brooklyn, NY
11245, as Custodian.
INDEPENDENT ACCOUNTANTS - Price Waterhouse LLP, 400 South Hope Street, Los
Angeles, CA 90071, has served as the Fund's independent accountants since its
inception, providing audit services, preparation of tax returns and review of
certain documents to be filed with the Securities and Exchange Commission. The
financial statements included in this Statement of Additional Information, have
been so included in reliance on the report of Price Waterhouse given on the
authority of said firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS - The Fund's fiscal year ends on April 30.
Shareholders are provided at least semi-annually with reports containing the
financial statements, including the investment portfolio and other information.
The Fund's annual financial statements are audited by the Fund's independent
accountants, Price Waterhouse, whose selection is determined annually by the
Board of Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute Guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- APRIL 30, 1995
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . $18.87
Maximum offering price per share (100/94.25 of
net asset value per share, which takes into
account the Fund's current maximum sales charge). . . . . $20.02
INVESTMENT RESULTS
The Fund's yield is 3.14% based on a 30-day (or one month) period ended April
30, 1995, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
The Fund's average annual total return for the one-, five- and ten-year
periods ending on April 30, 1995 was +10.31%, +10.93% and +13.69%,
respectively. The average annual total return (T) is computed by equating the
value at the end of the period (ERV) with a hypothetical initial investment of
$1,000 (P) over a period of years (n) according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are reinvested at net asset value on
the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the periods. Total return may be calculated for the one-, five-,
ten-year and for other periods. The average annual total return over periods
greater than one year may also be computed by utilizing ending values as
determined above.
The following assumptions will be reflected in computations made in
accordance with the formulas stated above: (1) deduction of the maximum sales
charge of 5.75% from the $1,000 initial investment; (2) reinvestment of
dividends and distributions at net asset value on the reinvestment date
determined by the Board; and (3) a complete redemption at the end of any period
illustrated. In addition, the Fund will provide lifetime average total return
figures.
The Fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. Total return for the
unmanaged indices will be calculated assuming reinvestment of dividends and
interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The Fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard & Poor's 500 Composite Index)
or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The Fund may also refer to results compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services,
Morningstar, Inc. and Wiesenberger Investment Companies Services and the U.S.
Department of Commerce. Additionally, the Fund may, from time to time, refer
to results published in various newspapers or periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The Fund may from time to time compare its investment results with the
following:
(1) Average of Savings Institutions deposits, which is a measure of all kinds
of savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions and the Federal Reserve
Board). Savings deposits offer a guaranteed rate of return on principal, but
no opportunity for capital growth. The period shown may include periods during
which the maximum rates paid on some savings deposits were fixed by law.
(2) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
The Fund may also from time to time illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the rolling
10-year periods since 1964 (115 in all), those funds have had better total
returns than the Standard & Poor's 500 Composite Index in 94 of the 115
periods.
Note that past results are not an indication of future investment results.
Also, the Fund has different investment policies than some of the funds
mentioned above. These results are included solely for the purpose of
informing investors about the experience and history of Capital Research and
Management Company.
The investment results set forth below were calculated as described in the
Fund's Prospectus. The Fund's results will vary from time to time depending
upon market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund, so that any investment results reported by the Fund
should not be considered representative of what an investment in the Fund may
earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the Fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The Fund's results also should be considered relative
to the risks associated with the Fund's investment objective and policies.
The investment results set forth below were calculated as described in the
Fund's Prospectus.
WMIF VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
10-Year Periods WMIF DJIA/1/ S&P 500/2/ Average Savings
5/01 - 4/30 Deposit/3/
<S> <C> <C> <C> <C>
1985-1995 +261% +385% +296% +75%
1984-1994 +273 +355 +297 +85
1983-1993 +275 +312 +284 +96
1982-1992 +409 +498 +424 +109
1981-1991 +356 +351 +325 +119
1980-1990 +453 +418 +375 +124
1979-1989 +426 +360 +374 +125
1978-1988 +386 +302 +327 +125
1977-1987 +419 +319 +372 +125
1976-1986 +353 +207 +277 +123
1975-1985 +334 +162 +235 +120
1974-1984 +300 +140 +189 +114
1973-1983 +281 +127 +148 +108
1972-1982 +133 +49 +70 +98
1971-1981 +132 +72 +96 +88
1970-1980 +117 +77 +98 +80
1969-1979 +80 +40 +46 +76
1968-1978 +87 +40 +44 +72
1967-1977 +103 +54 +49 +70
1966-1976 +98 +58 +58 +67
1965-1975 +61 +30 +37 +64
1964-1974 +76 +48 +57 +61
1963-1973 +100 +83 +111 +58
1962-1972 +138 +105 +129 +55
1961-1971 +144 +98 +120 +53
1960-1970 +133 +73 +107 +50
1959-1969 +160 +115 +148 +48
1958-1968 +226 +183 +211 +45
1957-1967 +182 +159 +187 +42
1956-1966 +182 +161 +164 +40
1955-1965 +233 +217 +232 +38
1954-1964 +286 +277 +305 +35
1953-1963 +327 +298 +320 +33
1952*-1962 +277 +264 +282 +30
</TABLE>
* From July 31, 1952, the date the Fund commenced operation.
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard & Poor's 500 Composite Index is comprised of industrial,
transportation, public utilities and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
/3/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings deposits offer a guaranteed return
of principal and a fixed rate of interest, but no opportunity for capital
growth.
Maximum allowable rates were imposed by law during a part of this period.
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
If you had invested Periods ...and taken all
$10,000 in the Fund distributions in shares,
this many years ago... your investment would
have been worth this
much at April 30, 1995
Number of Years 5/1-4/30 Value
<S> <C> <C>
1 1994 - 1995 $11,030
2 1993 - 1995 11,311
3 1992 - 1995 12,820
4 1991 - 1995 14,643
5 1990 - 1995 16,797
6 1989 - 1995 17,894
7 1988 - 1995 21,950
8 1987 - 1995 21,134
9 1986 - 1995 26,146
10 1985 - 1995 36,066
11 1984 - 1995 43,649
12 1983 - 1995 45,026
13 1982 - 1995 69,152
14 1981 - 1995 70,823
15 1980 - 1995 98,545
16 1979 - 1995 99,924
17 1978 - 1995 113,158
18 1977 - 1995 116,299
19 1976 - 1995 125,600
20 1975 - 1995 166,041
21 1974 - 1995 185,288
22 1973 -1995 182,196
23 1972 - 1995 170,847
24 1971 - 1995 174,529
25 1970 - 1995 226,513
26 1969 - 1995 190,801
27 1968 - 1995 224,557
28 1967 - 1995 250,055
29 1966 - 1995 264,136
30 1965 - 1995 283,678
31 1964 - 1995 346,475
32 1963 - 1995 386,087
33 1962 - 1995 431,532
34 1961 - 1995 451,941
35 1960 - 1995 562,710
36 1959 - 1995 525,027
37 1958 - 1995 776,194
38 1957 - 1995 747,312
39 1956 - 1995 791,145
40 1955 - 1995 1,001,068
41 1954- 1995 1,419,336
42 1953- 1995 1,748,831
43 1952*- 1995 1,730,691
</TABLE>
*From July 31, 1952, the date the Fund commenced operation.
ILLUSTRATION OF A $10,000 INVESTMENT IN WMIF WITH
DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES
(For the lifetime of the Fund July 31, 1952 through April 30, 1995)
<TABLE>
<CAPTION>
COST OF SHARES VALUE
OF SHARES
Fiscal Annual Total From From From Total
Year End Dividends Dividends Investment Initial Capital Gains Dividends Value
4/30 (cumulative) Cost Investment Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1953* $ 170 $ 170 $ 10,170 $ 9,161 ---- $ 169 $ 9,330
1954 450 620 10,620 10,781 ---- 713 11,494
1955 542 1,162 11,162 14,732 ---- 1,556 16,288
1956 654 1,816 11,816 17,447 $ 613 2,505 20,565
1957 756 2,572 12,572 17,145 1,553 3,179 21,877
1958 825 3,397 13,397 15,056 2,339 3,660 21,055
1959 885 4,282 14,282 21,119 3,915 6,037 31,071
1960 947 5,229 15,229 18,644 4,411 5,986 29,041
1961 1,097 6,326 16,326 21,113 6,918 8,136 36,167
1962 1,145 7,471 17,471 20,880 7,903 8,871 37,654
1963 1,279 8,750 18,750 21,292 10,289 10,697 42,278
1964 1,368 10,118 20,118 22,614 11,980 12,515 47,109
1965 1,463 11,581 21,581 25,782 15,757 15,951 57,490
1966 1,648 13,229 23,229 26,237 17,691 17,675 61,603
1967 1,906 15,135 25,135 25,833 19,766 19,671 65,270
1968 2,231 17,366 27,366 28,313 21,945 22,434 72,692
1969 2,626 19,992 29,992 31,708 27,163 26,705 85,576
1970 2,874 22,866 32,866 23,523 24,878 23,201 71,602
1971 3,193 26,059 36,059 26,927 33,989 32,471 93,387
1972 3,456 29,515 39,515 27,419 33,511 34,591 95,521
1973 3,671 33,186 43,186 23,933 31,776 33,813 89,522
1974 3,907 37,093 47,093 21,893 31,023 35,040 87,956
1975 4,829 41,922 51,922 22,959 33,179 42,177 98,315
1976 5,498 47,420 57,420 30,739 41,142 58,068 129,949
1977 6,171 53,591 63,591 31,274 44,673 64,401 140,348
1978 6,849 60,440 70,440 29,078 46,414 68,847 144,339
1979 7,785 68,225 78,225 33,575 50,187 79,313 163,075
1980 9,167 77,392 87,392 34,433 50,777 80,637 165,847
1981 14,603 91,995 101,995 28,652 86,269 115,502 230,423
1982 13,326 105,321 115,321 26,352 90,133 119,283 235,768
1983 15,516 120,837 130,837 36,494 142,811 182,987 362,292
1984 17,526 138,363 148,363 32,460 162,054 178,994 373,508
1985 20,783 159,146 169,146 34,910 204,484 213,103 452,497
1986 24,381 183,527 193,527 44,373 281,961 297,433 623,767
1987 28,229 211,756 221,756 50,179 356,068 365,700 771,947
1988 30,815 242,571 252,571 44,826 341,861 356,167 742,854
1989 27,837 270,408 280,408 53,157 405,403 453,047 911,607
1990 41,689 312,097 322,097 51,838 438,105 481,106 971,049
1991 44,572 356,669 366,669 56,626 482,927 574,191 1,113,744
1992 42,318 398,987 408,987 61,150 546,304 664,916 1,272,370
1993 44,627 443,614 453,614 66,315 607,607 768,464 1,442,386
1994 46,718 490,332 500,332 64,505 622,162 792,442 1,479,109
1995 55,058 545,390 555,390 71,140 726,340 933,211 1,730,691
</TABLE>
The dollar amount of capital gain distributions from inception was $399,745
/*/From July 31, 1952, the date the Fund commenced operation.
THE BENEFITS OF SYSTEMATIC INVESTING IN WMIF.......
<TABLE>
<CAPTION>
An initial investment of $1,000 in WMIF on May 1 would have grown to
these amounts over the past 10, 20, 30 and 40 years:
<S> <C> <C> <C>
10 Years 20 Years 30 Years 40 Years
(5/1/85-4/30/95) (5/1/75 - 4/30/95) (5/1/65 - 4/30/95) (5/1/55-4/30/95)
$3,607 $16,604 $28,368 $100,103
</TABLE>
<TABLE>
<CAPTION>
$1,000 invested in WMIF followed by annual $500 investments (all
investments made on May 1) would have grown to these amounts over
the past 10, 20, 30 and 40 years:
<S> <C> <C> <C>
10 Years 20 Years 30 Years 40 Years
(5/1/85-4/30/95) (5/1/75 - 4/30/95) (5/1/65 - 4/30/95) (5/1/55-4/30/95)
$11,289 $65,213 $178,841 $516,019
</TABLE>
<TABLE>
<CAPTION>
$2,000 invested in WMIF on May 1 of each year would have grown to these
amounts over the past 10, 20, 30 and 40 years:
<S> <C> <C> <C>
10 Years 20 Years 30 Years 40 Years
(5/1/85-4/30/95) (5/1/75 - 4/30/95) (5/1/65 - 4/30/95) (5/1/55-4/30/95)
$37,941 $228,264 $660,598 $1,871,533
</TABLE>
Washington Mutual Investors Fund
Investment Portfolio
April 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Market Percent
Value of Net
Securities * Shares (000) Assets
ENERGY
ENERGY SOURCES (7.84%)
Amoco Corp. 4,995,000 $ 327,797 2.27 %
Atlantic Richfield Co. 750,000 85,875 .59
Chevron Corp. 2,850,000 135,019 .94
Exxon Corp. 2,025,000 140,991 .98
Kerr-McGee Corp. 1,300,000 67,437 .47
Mobil Corp. 1,800,000 170,775 1.18
Texaco Inc. 2,690,000 183,929 1.27
Unocal Corp. 680,000 19,550 .14
----------- -------
1,131,373 7.84
----------- -------
UTILITIES: ELECTRIC & GAS (7.02%)
Allegheny Power System, Inc. 2,640,000 62,040 .43
American Electric Power Company, Inc. 700,000 22,925 .16
Atlantic Energy, Inc. 1,950,000 35,344 .24
Brooklyn Union Gas Co. 352,000 8,536 .06
Carolina Power & Light Co. 3,207,000 88,192 .61
Central and South West Corp. 4,850,000 119,431 .83
CINergy Corp. 700,000 17,588 .12
Consolidated Edison Co. of
New York, Inc. 4,865,500 135,018 .94
Consolidated Natural Gas Co. 904,900 35,630 .25
Detroit Edison Co. 2,344,800 66,241 .46
Dominion Resources, Inc. 1,095,000 39,968 .28
Duke Power Co. 500,000 19,750 .14
Houston Industries Inc. 3,015,000 119,092 .83
Kansas City Power & Light Co. 1,400,000 31,850 .22
Northeast Utilities 2,258,500 49,405 .34
Pacific Gas and Electric Co. 1,200,000 32,250 .22
PECO Energy Co. 1,350,000 34,762 .24
Puget Sound Power & Light Co. 810,000 17,212 .12
SCEcorp. 3,125,000 52,344 .36
Unicom Corp. 955,000 25,069 .17
----------- -------
1,012,647 7.02
----------- -------
Total Energy 2,144,020 14.86
----------- -------
MATERIALS
BUILDING MATERIALS & COMPONENTS (.23%)
Masco Corp. 1,300,000 33,150 .23
----------- -------
CHEMICALS (3.55%)
E.I. du Pont de Nemours and Co. 4,100,000 270,087 1.87
Monsanto Co. 2,760,700 229,828 1.60
PPG Industries, Inc. 300,000 11,813 .08
----------- -------
511,728 3.55
----------- -------
FOREST PRODUCTS & PAPER (1.52%)
International Paper Co. 2,200,000 169,400 1.17
Westvaco Corp. 1,200,900 50,438 .35
----------- -------
219,838 1.52
----------- -------
Total Materials 764,716 5.30
----------- -------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY (3.54%)
Boeing Co. 1,850,000 101,750 .70
Raytheon Co. 1,619,400 117,811 .82
United Technologies Corp. 3,990,000 291,769 2.02
----------- -------
511,330 3.54
----------- -------
DATA PROCESSING & REPRODUCTION (2.24%)
Xerox Corp. 2,625,000 323,203 2.24
----------- -------
ELECTRICAL & ELECTRONICS (1.67%)
General Electric Co. 4,300,000 240,800 1.67
----------- -------
ELECTRONIC COMPONENTS (.23%)
Thomas & Betts Corp. 510,000 32,512 .23
----------- -------
ELECTRONIC INSTRUMENTS (.38%)
Johnson Controls, Inc. 1,000,000 54,250 .38
----------- -------
INDUSTRIAL COMPONENTS (1.25%)
Dana Corp. 2,000,000 51,500 .36
Eaton Corp. 1,250,000 71,719 .50
TRW Inc. 765,000 56,897 .39
----------- -------
180,116 1.25
----------- -------
Total Capital Equipment 1,342,211 9.31
----------- -------
CONSUMER GOODS
APPLIANCES & HOUSEHOLD DURABLES (.33%)
Maytag Corp. 2,750,000 47,438 .33
----------- -------
BEVERAGES (.29%)
PepsiCo, Inc. 1,000,000 41,625 .29
----------- -------
FOOD & HOUSEHOLD PRODUCTS (2.54%)
Clorox Co. 1,119,500 65,770 .46
CPC International Inc. 1,840,000 107,870 .74
General Mills, Inc. 3,174,700 193,657 1.34
----------- -------
367,297 2.54
----------- -------
HEALTH & PERSONAL CARE (12.69%)
American Home Products Corp. 4,280,000 330,095 2.29
Bristol-Myers Squibb Co. 4,575,000 297,947 2.07
Johnson & Johnson 1,000,000 65,000 .45
Kimberly-Clark Corp. 336,000 19,026 .13
Eli Lilly and Co. 3,922,000 293,169 2.03
McKesson Corp. 750,000 29,719 .21
Merck & Co., Inc. 6,050,000 259,394 1.80
Schering-Plough Corp. 450,000 33,919 .23
Tambrands Inc. 1,022,500 42,561 .29
Upjohn Co. 4,650,000 168,562 1.17
Warner-Lambert Co. 3,645,000 290,689 2.02
----------- -------
1,830,081 12.69
----------- -------
RECREATION & OTHER CONSUMER
PRODUCTS (.20%)
Eastman Kodak Co. 500,000 28,750 .20
----------- -------
TEXTILES & APPAREL (.21%)
VF Corp. 600,000 30,300 .21
----------- -------
Total Consumer Goods 2,345,491 16.26
----------- -------
SERVICES
BROADCASTING & PUBLISHING (1.55%)
CBS Inc. 455,075 29,182 .20
Cox Communications, Inc. Class A 1,413,407 21,554 .15
Gannett Co., Inc. 1,820,000 95,778 .66
McGraw-Hill, Inc. 175,000 13,059 .09
Times Mirror Co. (New) 2,192,553 39,740 .28
Times Mirror Co., preferred equity
redemption cumulative stock series B 1,195,747 24,064 .17
----------- -------
223,377 1.55
----------- -------
BUSINESS & PUBLIC SERVICES (4.32%)
Browning-Ferris Industries, Inc. 1,000,000 33,000 .23
Deluxe Corp. 2,509,900 77,493 .54
Dun & Bradstreet Corp. 4,513,000 235,240 1.63
Pitney Bowes Inc. 5,375,000 199,547 1.38
WMX Technologies, Inc. 2,850,000 77,663 .54
----------- -------
622,943 4.32
----------- -------
MERCHANDISING (1.25%)
Melville Corp. 2,850,000 101,887 .71
J.C. Penney Co., Inc. 500,000 21,875 .15
Walgreen Co. 600,000 28,200 .19
Winn-Dixie Stores, Inc. 527,600 29,216 .20
----------- -------
181,178 1.25
----------- -------
TELECOMMUNICATIONS (13.13%)
ALLTEL Corp. 1,500,000 37,125 .26
Ameritech Corp. 4,950,000 222,750 1.54
AT&T Corp. 4,634,000 235,176 1.63
Bell Atlantic Corp. 3,160,000 173,405 1.20
BellSouth Corp. 1,000,000 61,250 .43
GTE Corp. 6,600,000 225,225 1.56
NYNEX Corp. 1,600,000 65,400 .45
Pacific Telesis Group 10,650,000 328,819 2.28
Southwestern Bell Corp. 1,410,000 62,216 .43
Sprint Corp. 3,710,000 122,430 .85
U S WEST, Inc. 8,710,000 360,376 2.50
----------- -------
1,894,172 13.13
----------- -------
TRANSPORTATION: RAIL (2.45%)
Norfolk Southern Corp. 3,535,000 238,171 1.65
Union Pacific Corp. 2,100,000 115,237 .80
----------- -------
353,408 2.45
----------- -------
Total Services 3,275,078 22.70
----------- -------
FINANCE
BANKING (15.54%)
Banc One Corp. 5,900,000 174,050 1.21
Bank of New York Co., Inc. 7,600,000 249,850 1.73
BankAmerica Corp. 2,925,000 144,787 1.00
Bankers Trust New York Corp. 3,440,000 186,620 1.29
Barnett Banks, Inc. 496,600 23,216 .16
Barnett Banks, Inc. $4.50 cumulative
convertible preferred series A 100,000 8,900 .06
Chemical Banking Corp. 3,600,000 150,300 1.04
Comerica Inc. 850,000 24,438 .17
First Chicago Corp. 1,825,000 100,831 .70
First Union Corp. 3,425,000 154,981 1.08
Fleet Financial Group, Inc. 3,300,000 108,075 .75
J.P. Morgan & Co. Inc. 2,915,200 191,310 1.33
National City Corp. 4,800,000 131,400 .91
National City Corp. 8.00% cumulative
convertible preferred 100,000 6,650 .05
NationsBank Corp. 700,000 35,000 .24
Norwest Corp. 2,500,000 66,250 .46
PNC Bank Corp. 5,100,000 128,138 .89
SunTrust Banks, Inc. 2,355,000 127,759 .89
Wachovia Corp. 2,970,000 104,321 .72
Wells Fargo & Co. 750,000 124,406 .86
----------- -------
2,241,282 15.54
----------- -------
FINANCIAL SERVICES (3.43%)
American Express Co. 3,625,000 125,969 .87
Beneficial Corp. 2,000,000 81,500 .56
Federal National Mortgage Assn. 1,325,000 116,931 .81
Household International, Inc. 3,050,000 142,969 .99
Student Loan Marketing Assn. 700,000 28,350 .20
----------- -------
495,719 3.43
----------- -------
INSURANCE (4.98%)
Aetna Life and Casualty Co. 1,870,000 106,590 .74
Allstate Corp. 7,475,000 227,053 1.57
American General Corp. 4,175,000 137,775 .96
CIGNA Corp. 1,000,000 72,625 .50
Lincoln National Corp. 2,600,000 105,950 .73
Marsh & McLennan Company, Inc. 285,000 22,337 .16
St. Paul Companies, Inc. 958,200 46,114 .32
----------- -------
718,444 4.98
----------- -------
Total Finance 3,455,445 23.95
----------- -------
MULTI-INDUSTRY
MULTI-INDUSTRY (1.40%)
AlliedSignal Inc. 800,000 31,700 .22
Minnesota Mining and Manufacturing Co. 2,865,000 170,826 1.18
----------- -------
Total Multi-Industry 202,526 1.40
----------- -------
Principal
Amount
CONVERTIBLE DEBENTURES (000)
BUSINESS & PUBLIC SERVICES (.07%)
Browning-Ferris Industries,
Inc. 6.25% 2012 $10,000 9,975 .07
----------- -------
Total Convertible Debentures 9,975 .07
----------- -------
MISCELLANEOUS
Stocks in initial period of acquisition 364,664 2.53
----------- -------
TOTAL INVESTMENT SECURITIES
(cost: $10,774,370,000) 13,904,126 96.38
Excess of United States Treasury bills,
cash, and receivables over payables 521,655 3.62
----------- -------
NET ASSETS $14,425,781 100.00 %
=========== =======
</TABLE>
*Securities listed are common stocks unless otherwise indicated
See Notes to Financial Statements
Washington Mutual Investors Fund
Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C>
Statement of Assets and Liabilities
April 30, 1995 (dollars in thousands)
Assets:
Investment securities at market
(cost: $10,774,370) $13,904,126
United States Treasury bills
(cost: $645,297) 645,357
Cash 44
Receivables for--
Sales of investments $ 40,928
Sales of Fund's shares 29,018
Dividends and interest 42,601 112,547
------------ ------------
14,662,074
Liabilities:
Payables for--
Purchases of investments 199,072
Repurchases of Fund's shares 27,097
Management services 4,024
Accrued expenses 6,100 236,293
------------ ------------
Net Assets at April 30, 1995--
Equivalent to $18.87 per share on
764,361,851 shares of $1 par value
capital stock outstanding (authorized
capital stock -- 1,000,000,000 shares) $14,425,781
============
See Notes to Financial Statements
Statement of Operations
for the year ended April 30, 1995
(dollars in thousands)
Investment Income:
Income:
Dividends $ 533,586
Interest 24,422 $ 558,008
Expenses:
Investment management fee 27,370
Business management fee 18,180
Distribution expenses 27,375
Transfer agent fee 11,583
Reports to shareholders 770
Registration statement and prospectus 607
Postage, stationery and supplies 3,169
Directors' and Advisory Board fees 339
Auditing and legal fees 113
Custodian fee 206
Other expenses 120 89,832
------------ ------------
Net investment income 468,176
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 381,437
Net increase in unrealized appreciation
on investments:
Beginning of year 1,887,797
End of year 3,129,816
------------
Net increase in unrealized
appreciation on investments 1,242,019
------------
Net realized gain and unrealized
appreciation on investments 1,623,456
------------
Net Increase in Net Assets
Resulting from Operations $2,091,632
============
See Notes to Financial Statements
Statement of Changes in Net Assets
(dollars in thousands)
Year ended April 30,
1995 1994
------------ ------------
Operations:
Net investment income $ 468,176 $ 401,374
Net realized gain on investments 381,437 422,013
Net change in unrealized
appreciation on investments 1,242,019 (544,532)
------------ ------------
Net Increase in Net Assets
Resulting from Operations 2,091,632 278,855
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (459,553) (380,066)
Distributions from net realized gain
on investments (299,287) (269,244)
------------ ------------
Total Dividends and Distributions (758,840) (649,310)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
94,281,478 and 139,959,192
shares, respectively 1,668,041 2,492,944
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
40,423,865 and 32,537,831 shares,
respectively 698,310 579,380
Cost of shares repurchased:
95,400,583 and 90,267,733
shares, respectively (1,678,501) (1,603,085)
------------ ------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 687,850 1,469,239
------------ ------------
Total Increase in Net Assets 2,020,642 1,098,784
Net Assets:
Beginning of year 12,405,139 11,306,355
------------ ------------
End of year (including undistributed
net investment income: $53,429 and
$44,806, respectively $14,425,781 $12,405,139
============ ============
</TABLE>
See Notes to Financial Statements
Notes to Financial Statements
1. Washington Mutual Investors Fund (the "Fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements:
Investment securities are stated at market value based upon closing sales
prices reported on recognized securities exchanges on the last business day of
the year or, for listed securities having no sales reported, upon last-reported
bid prices on that date. Treasury bills with original or remaining maturities
in excess of 60 days are valued at the mean of their quoted bid and asked
prices obtained from a major dealer in short-term securities. Treasury bills
with 60 days or less to maturity are valued at amortized cost, which
approximates market value.
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. Dividend and interest income is reported on the accrual basis.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Pursuant to the custodian agreement, the Fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $206,000 included $79,000 that was paid by these credits
rather than in cash.
2. It is the Fund'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 taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of April 30, 1995, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $3,129,816,000, of which $3,186,187,000
related to appreciated securities and $56,371,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended April 30, 1995. The cost of
portfolio securities for book and federal income tax purposes was
$11,419,667,000 at April 30, 1995.
3. Officers of the Fund received no remuneration from the Fund in such
capacities. Their remuneration was paid by Washington Management Corporation
(WMC), a wholly owned subsidiary of The Johnston-Lemon Group, Incorporated. A
fee of $18,180,000 was paid to WMC as business manager of the Fund pursuant to
the business management agreement under which WMC provides the officer
personnel, accounting and clerical staff of the Fund, together with office
space and equipment. The business management agreement provides for monthly
fees, accrued daily, based on an annual rate of 0.25% of the first $125 million
of net assets; 0.175% of such assets in excess of $125 million but not
exceeding $3 billion; 0.15% of such assets in excess of $3 billion but not
exceeding $5 billion; 0.135% of such assets in excess of $5 billion but not
exceeding $8 billion; 0.12% of such assets in excess of $8 billion but not
exceeding $12 billion; and 0.095% of such assets in excess of $12 billion.
Under this agreement all expenses chargeable to the Fund, including
compensation to the business manager, shall not exceed 1% of the average net
assets of the Fund on an annual basis. Johnston, Lemon & Co. Incorporated, a
wholly owned subsidiary of The Johnston-Lemon Group, Incorporated, has informed
the Fund that it has earned $496,000 on its retail sales of shares and under
the distribution plan of the Fund but received no net brokerage commissions
resulting from purchases and sales of securities for the investment account of
the Fund. All the officers of the Fund and four of its directors are
affiliated with The Johnston-Lemon Group, Incorporated. Capital Research and
Management Company, investment manager of the Fund, was paid a fee of
$27,370,000 for investment management services. The investment advisory
agreement provides for monthly fees, accrued daily, based on an annual rate of
0.25% of the first $125 million of net assets; 0.225% of such assets in excess
of $125 million but not exceeding $3 billion; 0.21% of such assets in excess of
$3 billion but not exceeding $8 billion; and 0.20% of such assets in excess of
$8 billion.
Pursuant to a Plan of Distribution, the Fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of Fund shares, provided the categories of expenses for which
reimbursement is made are approved by the Fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts and reimbursements to American Funds
Distributors, Inc. (AFD), the principal underwriter of the Fund's shares, for
its activities and expenses related to the sales of Fund shares or servicing of
shareholder accounts. During the year ended April 30, 1995, distribution
expenses under the Plan were $27,375,000 including $4,924,000 accrued and
uninvoiced distribution expenses.
American Funds Service Company (AFS), the transfer agent for the Fund, was
paid a fee of $11,583,000. AFD has informed the Fund that it has received
$7,073,000 (after allowances to dealers) as its portion of the sales charges
paid by purchasers of the Fund's shares. Such sales charges are not an expense
of the Fund and, hence, are not reflected in the accompanying statement of
operations.
Directors of the Fund 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 Fund. As
of April 30, 1995, aggregate amounts deferred were $48,000.
4. As of April 30, 1995, accumulated undistributed net realized gain on
investments was $308,426,000 and additional paid-in capital was
$10,169,748,000.
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $3,592,912,000 and $3,213,373,000, respectively,
during the year ended April 30, 1995.
Per Share Data and Ratios
<TABLE>
<CAPTION>
Year Ended April 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $17.11 $17.59 $16.22 $15.02 $13.75
---------- ---------- ---------- ---------- ----------
Income from Investment
Operations:
Net investment income .63 .59 .56 .56 .58
Net realized and
unrealized gain (loss)
on investments 2.16 (.12) 1.55 1.50 1.37
---------- ---------- ---------- ---------- ----------
Total income from
investment operations 2.79 .47 2.11 2.06 1.95
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from net
investment income (.62) (.56) (.56) (.56) (.62)
Distributions from net
realized gains (.41) (.39) (.18) (.30) (.06)
---------- ---------- ---------- ---------- ----------
Total distributions (1.03) (.95) (.74) (.86) (.68)
---------- ---------- ---------- ---------- ----------
Net Asset Value,
End of Year $18.87 $17.11 $17.59 $16.22 $15.02
========== ========== ========== ========== ==========
Total Return * 17.01% 2.55% 13.36% 14.24% 14.69%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $14,426 $12,405 $11,306 $8,896 $6,596
Ratio of expenses to
average net assets .69% .69% .70% .74% .77%
Ratio of net income to
average net assets 3.57% 3.29% 3.33% 3.58% 4.24%
Portfolio turnover rate 25.5 % 23.9 % 18.6 % 10.4 % 10.9 %
</TABLE>
*Does not take into account effect of sales charge,
at a maximum rate of 5.75%. Total return figures
for 1991, 1992 and 1993 have been revised.
Previously shown for these years were 14.71%,
14.27%, and 13.38%, respectively.
Report of Independent Accountants
To the Board of Directors and Shareholders of Washington Mutual Investors Fund,
Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Washington Mutual Investors Fund,
Inc. (the "Fund") at April 30, 1995, the results of its operations, the changes
in its net assets and the per-share data and ratios for the periods indicated,
in conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at April 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Los Angeles, California
May 31, 1995
Tax Information (Unaudited)
During the fiscal year ended April 30, 1995, all dividends paid by the Fund
from net investment income earned qualified for the corporate
dividends-received deduction. Five percent of such dividends paid by the Fund
represent interest on direct U.S. Treasury obligations. This information is
given to meet certain requirements of the Internal Revenue Code.
