=====================================================
SEC File Nos. 2-11051
811-604
=====================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 98
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 26
WASHINGTON MUTUAL INVESTORS FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1101 VERMONT AVENUE, N.W.
WASHINGTON, D.C. 20005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(202) 842-5665
STEPHEN HARTWELL
WASHINGTON MANAGEMENT CORPORATION
1101 VERMONT AVENUE, N.W.
WASHINGTON, D.C. 20005
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
JOHN JUDE O'DONNELL, ESQ.
THOMPSON, O'DONNELL, MARKHAM, NORTON & HANNON
805 FIFTEENTH STREET, N.W.
WASHINGTON, D.C. 20005
(COUNSEL FOR THE REGISTRANT)
THE REGISTRANT HAS FILED A DECLARATION PURSUANT TO RULE 24F-2 REGISTERING AN
INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES ACT OF 1933.
THE REGISTRANT FILED ITS 24F-2 NOTICE FOR FISCAL 1997 ON JUNE 4, 1997.
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
$ IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON JUNE 22, 1997,
PURSUANT TO PARAGRAPH (B) OF RULE 485.
===============================================
WASHINGTON MUTUAL INVESTORS FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER CAPTIONS IN PROSPECTUS (PART "A")
OF PART "A"
OF FORM N-1A
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Policies and Risks;
Securities and Investment Techniques; Fund
Organization and Management
5. Management of the Fund Financial Highlights; Securities and
Investment Techniques; Multiple Portfolio
Counselor System; Fund Organization and
Management
6. Capital Stock and Other Securities Investment Policies and Risks; Securities
and Investment Techniques;
Fund Organization and Management;
Dividends, Distributions and Taxes;
Shareholder Services
7. Purchase of Securities Being Offered Purchasing Shares
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
</TABLE>
__________
<TABLE>
<CAPTION>
ITEM NUMBER CAPTIONS IN STATEMENT OF
OF PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
<S> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History Fund Organization and Management
(Part "A")
13. Investment Objectives and Policies Investment Restrictions
14. Management of the Registrant Fund Directors, Advisory Board and
Officers
15. Control Persons and Principal Fund Directors, Advisory Board and Officers
Holders of Securities
16. Investment Advisory and Other Management
Services
17. Brokerage Allocation Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing Purchase of Shares; Shareholder Account
of Securities Being Offered Services and Privileges; Redeeming Shares
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriters Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
_____________
ITEM IN PART "C"
OF FORM N-1A
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
[LOGO THE AMERICAN FUNDS GROUP(R)]
- --------------------------------------------------------------------------------
Washington Mutual Investors Fund(SM)
Prospectus
JUNE 22, 1997
<PAGE>
WASHINGTON MUTUAL INVESTORS FUND, INC.
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expenses 3
............................................................................
Financial Highlights 4
............................................................................
Investment Policies and Risks 5
............................................................................
Securities and Investment Techniques 6
............................................................................
Multiple Portfolio Counselor System 6
............................................................................
Investment Results 8
............................................................................
Dividends, Distributions and Taxes 9
............................................................................
Fund Organization and Management 10
............................................................................
Shareholder Services 13
</TABLE>
- --------------------------------------------------------------------------------
The investment objective of the fund is to produce income and to provide an
opportunity for growth of principal consistent with sound common stock
investing. The fund strives to accomplish this objective by investing primarily
in a diversified portfolio of common stocks, or securities convertible into
common stocks.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
01-010-0697
<PAGE>
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
</TABLE>
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.32%
................................................................................
12b-1 expenses 0.22%/1/
................................................................................
Other expenses 0.10%
................................................................................
Total fund operating expenses 0.64%
</TABLE>
/112b-1/expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 64
................................................................................
Three years $ 77
................................................................................
Five years $ 91
................................................................................
Ten years $133
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
<PAGE>
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse llp, independent
accountants, whose unqualified report covering each of the most recent five
years is included in the statement of additional information. This table should
be read together with the financial statements which are included in the
statement of additional information and annual report.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
...................
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $22.77 $18.87 $17.11 $17.59 $16.22 $15.02 $13.75 $14.10 $11.89 $13.31
- -------------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .62 .63 .63 .59 .56 .56 .58 .59 .58 .55
.............................................................................................................
Net realized and
unrealized gain (loss)
on investments 4.36 4.98 2.16 (.12) 1.55 1.50 1.37 .36 2.07 (1.06)
.............................................................................................................
Total income (loss)
from investment
operations 4.98 5.61 2.79 .47 2.11 2.06 1.95 .95 2.65 (.51)
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
income (.62) (.62) (.62) (.56) (.56) (.56) (.62) (.62) (.44) (.52)
.............................................................................................................
Distributions from
net realized gains (1.20) (1.09) (.41) (.39) (.18) (.30) (.06) (.68) -- (.39)
.............................................................................................................
Total distributions (1.82) (1.71) (1.03) (.95) (.74) (.86) (.68) (1.30) (.44) (.91)
.............................................................................................................
Net asset value,
end of year $25.93 $22.77 $18.87 $17.11 $17.59 $16.22 $15.02 $13.75 $14.10 $11.89
- -------------------------------------------------------------------------------------------------------------
Total return/1/ 22.43% 30.40% 17.01% 2.55% 13.36% 14.24% 14.69% 6.52% 22.72% (3.77)%
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $28,165 $20,689 $14,426 $12,405 $11,306 $8,896 $6,596 $4,778 $3,250 $2,623
.............................................................................................................
Ratio of expenses to
average net assets .64% .66% .69% .69% .70% .74% .77% .69% .67% .58%
.............................................................................................................
Ratio of net income
to average net assets 2.56% 2.98% 3.57% 3.29% 3.33% 3.58% 4.24% 4.01% 4.54% 4.25%
.............................................................................................................
Average
commissions paid
per share/2/ 5.29c 6.24c 6.87c 6.85c 7.49c 7.51c 7.73c 7.53c 7.72c 6.99c
.............................................................................................................
Portfolio turnover
rate 20.41% 23.41% 25.45% 23.86% 18.60% 10.36% 10.86% 7.38% 21.27% 11.83%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Excludes maximum sales charge of 5.75% of the fund's offering price. 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.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
separately reflected in the fund's statement of operations. Shares traded
on a principal basis (without commissions), such as most fixed-income
transactions, are excluded.
4
<PAGE>
INVESTMENT POLICIES AND RISKS
The fund's investment objective is to produce income and to provide an
opportunity for growth of principal consistent with sound common stock
investing.
The fund was founded to provide fiduciaries, organizations, institutions and
individuals with a convenient and prudent medium of investment in high quality
common stocks and securities convertible into such common stocks. It is
designed to serve those individuals who are charged with the responsibility of
investing pension and profit-sharing trusts, other fiduciary-type reserves, or
family funds, but who are reluctant to undertake the selection and supervision
of stocks, although recognizing the importance of affording an opportunity for
growth in income and value over the years.
The fund's policy is at all times to maintain for its shareholders a fully
invested, widely diversified portfolio of such securities which an experienced
investor charged with fiduciary responsibility and seeking investment
objectives similar to those of the fund might select for the common stock
portion of a portfolio under the Prudent Investor Rule patterned after the
historic Prudent Man Rule.
The fund's board of directors has adopted "Investment Standards" based on
criteria applied for many years by the United States District Court for the
District of Columbia. These investment standards are used to prepare an
"Eligible List" of securities designed to conform to the common stock portion
of a prudent investor rule portfolio. Only common stocks and securities
convertible into common stocks meeting these Investment Standards and on the
approved Eligible List may be held by the fund; however, the fund may also
hold, to a limited extent, short-term U.S. Government Securities, cash and cash
equivalents. Any security 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. MORE INFORMATION
ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN ITS STATEMENT OF ADDITIONAL
INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 5
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks and securities with equity conversion or
purchase rights. The prices of equity securities fluctuate based on changes in
the financial condition of their issuers and on market and economic conditions.
The fund's results will be related to the overall market for these securities.
CONVERTIBLE SECURITIES
The fund may invest in bonds and preferred stocks that are convertible into
shares of common stock at a stated exchange ratio. These securities prior to
conversion pay a fixed rate of interest or a dividend. Because convertible
securities have both debt and equity characteristics their value varies in
response to many factors, including the value of the underlying equity, general
market and economic conditions, convertible market valuations, as well as
changes in interest rates, credit spreads, and the credit quality of the
issuer.
- --------------------------------------------------------------------------------
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments which are managed by individual
counselors. Counselors decide how their respective segments will be invested
(within the limits provided by the fund's objective and policies and by Capital
Research and Management Company's investment committee). In addition, Capital
Research and Management Company's research professionals make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed on the following page.
6
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
.....................................
YEARS OF
EXPERIENCE
AS PORTFOLIO
COUNSELOR
(AND RESEARCH WITH CAPITAL
PROFESSIONAL, IF RESEARCH AND
PORTFOLIO COUNSELORS APPLICABLE) FOR MANAGEMENT
FOR WASHINGTON COMPANY OR
WASHINGTON MUTUAL MUTUAL INVESTORS ITS TOTAL
INVESTORS FUND PRIMARY TITLE(S) FUND AFFILIATES YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TIMOTHY D. Senior Vice 7 years (plus 4 14 14 years
ARMOUR President and years as a years
Director, research
Capital professional
Research prior to
Company* becoming a
portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
STEPHEN E. Senior Vice 16 years (plus 25 31 years
BEPLER President, 8 years as a years
Capital research
Research professional
Company* prior to
becoming a
portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
JAMES K. Senior Vice 19 years (plus 35 35 years
DUNTON President and 7 years as a years
Director, research
Capital professional
Research and prior to
Management becoming a
Company portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
GREGG E. Vice President, 7 years (plus 7 24 24 years
IRELAND Capital years as a years
Research and research
Management professional
Company prior to
becoming a
portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
JAMES B. Vice President, 7 years (plus 2 15 15 years
LOVELACE Capital years as a years
Research and research
Management professional
Company prior to
becoming a
portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
ROBERT G. Senior Vice 4 years (plus 22 25 years
O'DONNELL President and 17 years as a years
Director, research
Capital professional
Research and prior to
Management becoming a
Company portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
JAMES F. President and 3 years (plus 9 27 27 years
ROTHENBERG Director, years as a years
Capital research
Research and professional--
Management 1971-1979--
Company prior to
becoming a
portfolio
counselor for
the fund)
- -------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 7
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
X TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED MARCH 31, 1997)
<TABLE>
<CAPTION>
AVERAGE
ANNUAL THE FUND AVERAGE
TOTAL AT NET THE FUND AT MAXIMUM S&P SAVINGS
RETURNS: ASSET VALUE1 SALES CHARGE/1/,/2/ 5003 INSTITUTION/4/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year 19.10% 12.23% 19.79% 4.17%
................................................................................
Five years 17.04% 15.66% 16.39% 3.77%
................................................................................
Ten years 13.21% 12.55% 13.35% 5.19%
................................................................................
Lifetime5 13.49% 13.34% 12.06% 5.30%
</TABLE>
- --------------------------------------------------------------------------------
Yield/1/,/2/: 2.39%
Distribution Rate/2/: 2.22%
/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ Includes the maximum sales charge.
/3/ The Standard & Poor's 500 Index represents stocks. This index is unmanaged
and does not reflect sales charges, commissions or expenses.
/4/ Based on figures, supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board, that reflect all kinds of savings deposits,
including longer term certificates. Unlike investments in the fund, such
deposits are insured and, if held to maturity, offer a guaranteed return of
principal and a fixed rate of interest, but no opportunity for capital
growth. Maximum allowable interest rates were imposed by law until 1983.
/5/ The fund began investment operations July 31, 1952.
8
<PAGE>
[GRAPH OF TOTAL RETURNS GOES HERE]
Here are the fund's annual total returns calculated without a sales charge. This
information is being supplies on a calendar year basis.
<TABLE>
<CAPTION>
Year Percent Return
---- --------------
<S> <C>
1987 1.40
1988 17.66
1989 23.96
1990 -3.86
1991 23.49
1992 9.10
1993 13.05
1994 0.49
1995 41.22
1996 20.18
</TABLE>
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends are usually paid in March, June, September and December. Capital
gains, if any, are usually distributed in December. When a dividend or capital
gain is distributed, the net asset value per share is reduced by the amount of
the payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all distributions paid during the prior year.
Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 9
- --------------------------------------------------------------------------------
<PAGE>
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1952 and reincorporated as a Maryland corporation
in 1990. All fund operations are supervised by the fund's board of directors
who meet periodically and perform duties required by applicable state and
federal laws. Members of the board and advisory board who are not affiliated
with the fund's management are paid certain fees for services rendered to the
fund as described in the statement of additional information. They may elect to
defer all or a portion of these fees through a deferred compensation plan in
effect for the fund. The fund does not hold annual meetings of shareholders.
However, significant corporate matters which require shareholder approval, such
as certain elections of board members or a change in a fundamental investment
policy, will be presented to shareholders at a meeting called for such purpose.
Shareholders have one vote per share owned. At the request of the holders of at
least 10% of the shares, the fund will hold a meeting at which any member of
the board could be removed by a majority vote.
THE BUSINESS MANAGER
Washington Management Corporation, 1101 Vermont Avenue, N.W., Washington, D.C.
20005, is the business manager and provides all services required to carry on
the fund's general administrative and corporate affairs. Washington Management
Corporation provides similar services to other mutual funds. The management fee
paid to Washington Management Corporation may not exceed 0.175% of the fund's
average net assets annually and declines at certain asset levels. The total
management fee paid by the fund, to the business manager and investment adviser
combined, as a percentage of average net assets, for the previous fiscal year
is listed earlier under "Expenses."
- --------------------------------------------------------------------------------
10 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
of the fund.
The management fee paid by the fund to Capital Research and Management Company
may not exceed 0.225% of the fund's average net assets annually and declines at
certain asset levels. The total management fee paid by the fund to the business
manager and investment adviser combined, as a percentage of average net assets,
for the previous fiscal year is listed earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing.
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
Plan were incurred within the preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid.
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 11
- --------------------------------------------------------------------------------
<PAGE>
Subject to the above policy, when two or more brokers are (either directly or
through their correspondent clearing agents) in a position to offer comparable
prices and executions, preference may be given to brokers who have sold shares
of the fund or have provided investment research, statistical, and other
related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP OF SERVICE AREAS GOES HERE]
- --------------------------------------------------------------------------------
12 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order for
any reason. This includes exchange purchase orders that may place an unfair
burden on other fund shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 13
- --------------------------------------------------------------------------------
<PAGE>
X Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
X Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone including American
FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES
AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
<TABLE>
- --------------------------------------------------------------
<S> <C>
To establish an account $250
For a retirement plan account $250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
- --------------------------------------------------------------------------------
14 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
....................... DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
.......................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
.......................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
.......................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
.......................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
.......................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans,
foundations or endowments with $50 million or more in assets may be made with
no sales charge and are not subject to a contingent deferred sales charge.
A dealer concession of up to 1% may be paid by American Funds Distributors on
these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund, Washington Management Corporation and Capital Research and Management
Company and its affiliated companies are not subject to a sales charge.
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services (including
services to retirement plans) pursuant to the fund's Plan of Distribution.
During 1997, American Funds Distributors will also provide additional
compensation to the top one hundred dealers who have sold shares of funds in
The American Funds Group based on the pro rata share of a qualifying dealer's
sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
X Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
X Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or cross-
reinvestment from a fund having a sales charge do qualify.
X Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
16
<PAGE>
X Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous 90
days) in non-money market fund shares over a 13-month period. A portion of
your account may be held in escrow to cover additional sales charges which
may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $50,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 17
- --------------------------------------------------------------------------------
<PAGE>
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R). To use this
service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, the fund's business manager and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges provided American Funds
Service Company employs reasonable procedures to confirm that the instructions
received from any person with appropriate account information are genuine. If
reasonable procedures are not employed, it and/or the fund may be liable for
losses due to unauthorized or fraudulent instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
- --------------------------------------------------------------------------------
18 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
NOTES
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 19
- --------------------------------------------------------------------------------
<PAGE>
NOTES
- --------------------------------------------------------------------------------
20 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
NOTES
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 21
- --------------------------------------------------------------------------------
<PAGE>
NOTES
- --------------------------------------------------------------------------------
22 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
NOTES
- --------------------------------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 23
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the
independent accountant's
report.
A current SAI has been filed
with the Securities and
CODE OF ETHICS Exchange Commission ("SEC").
It is incorporated by
Includes a description of reference into this
the fund's personal prospectus and is available
investing policy. along with other related
materials on the SEC's
Internet Web site at
http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company the fund 1101 Vermont
800/421-0180 ext. 1 Avenue, N.W. Washington,
D.C. 20005
This prospectus has been printed on recycled paper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
24 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
- --------------------------------------------------------------------------------
THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC
OFFERING AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND
ACCURATE ENGLISH TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR
THE FUND. Howard L. Kitzmiller, Senior Vice President and Secretary
Prospectus for Eligible Retirement Plans
Washington Mutual Investors Fund(SM)
An opportunity for current income and capital growth through quality
common stocks
[American Funds Logo]
JUNE 22, 1997
Washington Mutual Investors Fund, Inc.
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
(202) 842-5665
The Fund's investment objective is to produce income and to provide an
opportunity for growth of principal consistent with sound common stock
investing.
This prospectus relates only to shares of the Fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of
the Fund to be acquired otherwise, contact the Secretary of the Fund at the
address indicated above.
This prospectus presents information you should know before investing in
the Fund. It should be retained for future reference.
More detailed information about the Fund, including the Fund's financial
statements, is contained in the statement of additional information dated
June 22, 1997, which has been filed with the Securities and Exchange
Commission and is available to you without charge, by writing the Secretary
of the Fund at the above address or calling American Funds Service Company.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR
GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION
HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
RP 01-010-0796
TABLE OF CONTENTS
Summary of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . 4
Investment Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . . 7
Fund Organization and Management . . . . . . . . . . . . . . . . . . . . . 7
Purchasing Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Redeeming Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SUMMARY
OF EXPENSES
AVERAGE ANNUAL
EXPENSES PAID OVER A
10-YEAR PERIOD WOULD
BE APPROXIMATELY
$8 PER YEAR,
ASSUMING A $1,000
INVESTMENT AND A 5%
ANNUAL RETURN WITH NO SALES CHARGE.
This table is designed to help you understand costs of investing in the Fund.
These are historical expenses; your actual expenses may vary.
Shareholder Transaction Expenses
Certain retirement plans may purchase shares of the Fund with no sales charge
The Fund also has no sales charge on reinvested dividends, deferred sales
charge 1, redemption fees or exchange fees.
Annual Fund Operating Expenses (for the fiscal year ended April 30,
1997, as a percentage of average net assets)
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.32%
12b-1 expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.22%2
Other expenses (audit, legal, shareholder services, transfer agent and
custodian) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%
Total Fund operating expenses . . . . . . . . . . . . . . . . . . . . . 0.64%
1 3 5 10
EXAMPLE YEAR YEARS YEARS YEARS
You would pay the following
cumulative expenses on a
$1,000 investment, $7 $20 $36 $80
assuming a 5% annual return 3.
1 Retirement plans of organizations with $50 million or more in collective
retirement plan assets may purchase shares of the Fund with no sales
charge. In addition, any employer-sponsored, 403(b) plan or defined
contribution plan qualified under Section 401(a) of the Internal Revenue
Code including a "401(k)" plan with 200 or more eligible employees or any
other plan that invests at least $1 million in shares of the Fund (or in
combination with shares of other funds in The American Funds Group other
than the money market funds) may purchase shares at net asset value;
however, a contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following such purchases. (See "Redeeming
Shares--Contingent Deferred Sales Charge.")
2 These expenses may not exceed 0.25% of the Fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers.
3 Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
FINANCIAL
HIGHLIGHTS
(FOR A SHARE OUTSTANDING
THROUGHOUT THE
FISCAL YEAR)
The following information has been audited by Price Waterhouse LLP, independent
accountants, whose unqualified report covering each of the most recent five
years is included in the statement of additional information. This information
should be read in conjunction with the financial statements and accompanying
notes which appear in the statement of additional information.
<TABLE>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED APRIL 30
Net Asset Value,
Beginning of
Year . . . . $22.77 $18.87 $17.11 $17.59 $16.22 $15.02 $13.75 $14.10 $11.89 $13.31
Income From
Investment
Operations:
Net investment
income . . . .62 .63 .63 .59 .56 .56 .58 .59 .58 .55
Net realized and
unrealized
gain
(loss) on
investments . . 4.36 4.98 2.16 (.12) 1.55 1.50 1.37 .36 2.07 (1.06)
Total Income
from
Investment
Operations . 4.98 5.61 2.79 .47 2.11 2.06 1.95 .95 2.65 (.51)
Less
Distributions:
Dividends from
net investment
income . . . . (.62) (.62) (.62) (.56) (.56) (.56) (.62) (.62) (.44) (.52)
Distributions
from net
realized gains (1.20) (1.09) (.41) (.39) (.18) (.30) (.06) (.68) -- (.39)
Total
Distributions (1.82) (1.71) (1.03) (.95) (.74) (.86) (.68) (1.30) (.44) (.91)
Net Asset Value,
End of Year . $25.93 22.77 $18.87 $17.11 $17.59 $16.22 $15.02 $13.75 $14.10 $11.89
Total Return 1 22.43% 30.40% 17.01% 2.55% 13.36% 14.24% 14.69% 6.52% 22.72% (3.77)%
Ratios/Supplemen
tal Data:
Net assets, end
of year
(in millions) $28,165 $20,689 $14,426 $12,405 $11,306 $8,896 $6,596 $4,778 $3,250 $2,623
Ratio of
expenses to
average net
assets . . . . .64% .66% .69% .69% .70% .74% .77% .69% .67% .58%
Ratio of net
income to
average net
assets . . . . 2.56% 2.98% 3.57% 3.29% 3.33% 3.58% 4.24% 4.01% 4.54% 4.25%
Portfolio
turnover rate 20.41% 23.41% 25.45% 23.86% 18.60% 10.36% 10.86% 7.38% 21.27%
11.83%
Average commisions
paid per share 5.29c 6.24c 6.87c 6.85c 7.49c 7.51c 7.73c 7.53c 7.72c 6.99c
</TABLE>
1 Excludes maximum sales charge of 5.75% of the Fund's offering price.
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.
2 Brokerage commissions paid on portfolio transactions increase the cost
of securities purchased or reduce the proceeds of securities sold, and are
not separately reflected in the Fund's statement of operations. Shares
traded on a principal basis (without commissions), such as most
fixed-income transactions, are excluded.
INVESTMENT OBJECTIVE
AND POLICIES
THE FUND'S GOAL IS
TO PROVIDE YOU WITH
INCOME AND AN OPPORTUNITY FOR
GROWTH OF PRINCIPAL.
The Fund's investment objective is to produce income and to provide an
opportunity for growth of principal consistent with sound common stock
investing. From time to time capital gains or losses may be realized upon the
sales of securities owned by the Fund but active trading with a view to
realization of capital gains is not a policy of the Fund.
The Fund was founded to provide fiduciaries, organizations, institutions and
individuals with a convenient and prudent medium of investment in high quality
common stocks and securities convertible into such common stocks. It is designed
to serve those individuals who are charged with the responsibility of investing
pension and profit-sharing trusts, other fiduciary-type reserves, or family
funds, but who are reluctant to undertake the selection and supervision of
stocks, although recognizing the importance of affording an opportunity for
growth in income and value over the years.
Prudent Investor Rule and the Fund's Eligible List The Fund's policy is at all
times to maintain for its shareholders a fully invested, widely diversified
portfolio of such securities which an experienced investor charged with
fiduciary responsibility and seeking investment objectives similar to those of
the Fund might select for the common stock portion of a portfolio under the
Prudent Investor Rule patterned after the historic Prudent Man Rule.
The Fund's board of directors has adopted "Investment Standards", based on
criteria applied for many years by the United States District Court for the
District of Columbia. These investment standards are used to prepare an
"Eligible List" of securities designed to conform to the common stock portion of
a prudent investor rule portfolio. Only common stocks and securities convertible
into common stocks meeting these Investment Standards and on the approved
Eligible List may be held by the Fund. Any security 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.
The Fund's investment restrictions (which are described in the statement of
additional information) and objective cannot be changed without shareholder
approval. All other investment practices may be changed by the board of
directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED DUE
TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT
IN SECURITIES.
INVESTMENT TECHNIQUES
INVESTING IN STOCKS INVOLVES CERTAIN RISKS.
Risks of Investing Because the Fund invests in equity-type securities such as
common stocks and convertible preferred stocks, the Fund's portfolio is subject
to market risks, including, for example, the possibility that stock prices in
general may decline over short or even extended periods.
Multiple Portfolio Counselor System The basic investment philosophy of Capital
Research and Management Company is to seek fundamental values at reasonable
prices, using a system of multiple portfolio counselors in managing mutual fund
assets. Under this system the portfolio of the Fund is divided into segments
which are managed by individual counselors. Counselors decide how their
respective segments will be invested (within the limits provided by the Fund's
objective and policies and by Capital Research and Management Company's
investment committee). In addition, Capital Research and Management Company's
research professionals make investment decisions with respect to a portion of
the Fund's portfolio. The primary individual portfolio counselors for the Fund
are listed on the next page.
<TABLE>
PORTFOLIO COUNSELORS PRIMARY TITLE(S) YEARS OF EXPERIENCE AS WITH CAPITAL
TOTAL YEARS
FOR WASHINGTON MUTUAL PORTFOLIO COUNSELOR RESEARCH AND
INVESTORS (AND RESEARCH MANAGEMENT COMPANY
FUND PROFESSIONAL, IF OR ITS AFFILIATES
APPLICABLE) FOR
WASHINGTON MUTUAL
INVESTORS FUND
YEARS OF
EXPERIENCE AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
<S> <C> <C> <C>
<C>
Timothy D. Armour Senior Vice President 7 years (plus 4 years as a research 14 years
14 years
and Director, Capital professional prior to becoming a portfolio
Research Company* counselor for the Fund)
Stephen E. Bepler Senior Vice President, 16 years (plus 8 years as a research 25 years
31 years
Capital Research Company* professional prior to becoming a portfolio
counselor for the Fund)
James K. Dunton Senior Vice President and 19 years (plus 7 years as a research 35 years
35 years
Director, Capital Research professional prior to becoming a portfolio
and Management Company counselor for the Fund)
Gregg E. Ireland Vice President, Capital 7 years (plus 7 years as a research 24 years
24 years
Research and Management professional prior to becoming a portfolio
Company counselor for the Fund)
James B. Lovelace Vice President, Capital 7 years (plus 2 years as a research 15 years
15 years
Research and Management professional prior to becoming a portfolio
Company counselor for the Fund)
Robert G. O'Donnell Senior Vice President and 4 years (plus 17 years as a research 22 years
25 years
Director, Capital Research professional prior to becoming a portfolio
and Management Company counselor for the Fund)
James F. Rothenberg President and Director, 3 years (plus 9 years as a research 27 years
27 years
Capital Research and professional-1971-1979-prior to becoming a
Management Company portfolio counselor for the Fund)
* Company affiliated with Capital Research and Management Company.
</TABLE>
INVESTMENT RESULTS
THE FUND HAS AVERAGED
A TOTAL RETURN
(AT NO SALES CHARGE)
OF 13.49% A YEAR
OVER ITS LIFETIME
(JULY 31, 1952 THROUGH
MARCH 31, 1997).
The Fund may from time to time compare its investment results to various
unmanaged indices or other mutual funds in reports to shareholders, sales
literature and advertisements. The results may be calculated on a total return,
yield and/or distribution rate basis for various periods, with or without sales
charges. Results calculated without a sales charge will be higher. Total returns
assume the reinvestment of all dividends and capital gain distributions.
The Fund's distribution rate is calculated by dividing the dividends paid by the
Fund over the last 12 months by the sum of the month-end price and the capital
gains paid over the last 12 months. The SEC yield reflects income the Fund
expects to earn based on its current portfolio of securities, while the
distribution rate is based solely on the Fund's past dividends. Accordingly, the
Fund's SEC yield and distribution rate may differ. For the 30-day period ended
March 31, 1997, the Fund's SEC yield was 2.54% and the distribution rate was
2.35% with no sales charge.
The Fund's total return over the past 12 months and average annual total returns
over the past five-year and ten-year periods as of March 31, 1997, were 19.10%,
17.04% and 13.21%, respectively. These results were calculated with no sales
charge in accordance with Securities and Exchange Commission requirements. Of
course, past results are not an indication of future results. Further
information regarding the Fund's investment results is contained in the Fund's
annual report which may be obtained without charge by writing to the Secretary
of the Fund at the address indicated on the cover of this prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
INCOME DISTRIBUTIONS ARE USUALLY MADE QUARTERLY.
Dividends and Distributions Dividends are usually paid in March, June,
September and December. Capital gains, if any, are usually distributed in
December. When a dividend or capital gain is distributed, the net asset value
per share is reduced by the amount of the payment.
The terms of your plan will govern how your plan may receive distributions from
the Fund. Generally, periodic distributions from the Fund to your plan are
reinvested in additional Fund shares, although your plan may permit Fund
distributions from net investment income to be received by you in cash while
reinvesting capital gains distributions in additional shares or all Fund
distributions to be received in cash. Unless you select another option, all
distributions will be reinvested in additional Fund shares.
Federal Taxes The Fund intends to operate as a "regulated investment company"
under the Internal Revenue Code. In any fiscal year in which the Fund so
qualifies and distributes to shareholders all of its net investment income and
capital gain net income, the Fund itself is relieved of federal income tax. The
tax treatment of redemptions from a retirement plan may differ from redemptions
from an ordinary shareholder account.
Please see the statement of additional information and your tax adviser for
further information.
FUND
ORGANIZATION AND MANAGEMENT
THE FUND IS A MEMBER OF THE AMERICAN FUNDS GROUP, WHICH IS MANAGED BY ONE OF
THE LARGEST AND
MOST EXPERIENCED
INVESTMENT ADVISERS.
Fund Organization and Voting Rights The Fund, an open-
end, diversified management investment company, was organized as a Delaware
corporation in 1952 and was reincorporated in the State of Maryland in 1990. The
Fund's board supervises Fund operations and performs duties required by
applicable state and federal law. Members of the board and advisory board who
are not affiliated with the Fund's management are paid certain fees for services
rendered to the Fund as described in the statement of additional information.
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the Fund. Shareholders have one vote per share
owned and, at the request of the holders of at least 10% of the shares, the Fund
will hold a meeting at which any member of the board could be removed by a
majority vote. There will not usually be a shareholder meeting in any year
except, for example, when the election of the board is required to be acted upon
by shareholders under the Investment Company Act of 1940.
The Business Manager Washington Management Corporation, 1101 Vermont Avenue
N.W., Washington, D.C. 20005, is the business manager and 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
recordkeeping facilities. Washington Management Corporation provides similar
services to other mutual funds. The Business Manager receives a monthly fee,
accrued daily, at the annual rate of 0.175% of the first $3 billion of the
Fund's net assets, 0.15% of net assets in excess of $3 billion but not exceeding
$5 billion, 0.135% of net assets in excess of $5 billion but not exceeding $8
billion, 0.12% of net assets in excess of $8 billion but not exceeding $12
billion, 0.095% of net assets in excess of $12 billion but not exceeding $21
billion and 0.075% of net assets in excess of $21 billion.
The Investment Adviser Capital Research and Management Company, a large and
experienced investment management organization founded in 1931, is the
investment adviser to the Fund and other funds, including those in The American
Funds Group. Capital Research and Management Company is located at 333 South
Hope Street, Los Angeles, CA 90071 and at 135 South State College Boulevard,
Brea, CA 92821. Capital Research and Management Company manages the investment
portfolio of the Fund and receives a monthly fee, accrued daily, at the annual
rate of 0.225% of the first $3 billion of the Fund's net assets, 0.21% of net
assets in excess of $3 billion but not exceeding $8 billion, 0.20% of net assets
in excess of $8 billion but not exceeding $21 billion and 0.195% of net assets
in excess of $21 billion.
Capital Research and Management Company is a wholly owned subsidiary of The
Capital Group Companies, Inc. (formerly "The Capital Group, Inc.") which is
located at 333 South Hope Street, Los Angeles, CA 90071. The research activities
of Capital Research and Management Company are conducted by affiliated companies
which have offices in Los Angeles, San Francisco, New York, Washington, D.C.,
London, Geneva, Singapore, Hong Kong and Tokyo.
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the Investment Company
Institute's Advisory Group on Personal Investing. (See the statement of
additional information.)
Portfolio Transactions Orders for the Fund's portfolio securities transactions
are placed by Capital Research and Management Company, which strives to obtain
the best available prices, taking into account the costs and quality of
executions.
Subject to the above policy, when two or more brokers are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the Fund or have provided investment research, statistical, and
other related services for the benefit of the Fund and/or of other funds served
by Capital Research and Management Company.
Principal Underwriter American Funds Distributors, Inc., a wholly owned
subsidiary of Capital Research and Management Company, is the principal
underwriter of the Fund's shares. American Funds Distributors, Inc. is located
at 333 South Hope Street, Los Angeles, CA 90071, 135 South State College
Boulevard, Brea, CA 92821, 8000 1H-10 West, San Antonio, TX 78230, 5300 Robin
Hood Road, Norfolk, VA 23513 and 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240. Telephone conversations with American Funds Distributors
may be recorded or monitored for verification, recordkeeping and quality
assurance purposes. The Principal Underwriter makes shares available at net
asset value to Washington Investors Plans, Inc.
Plan of Distribution The Fund has a plan of distribution or "12b-1 Plan" under
which it may finance activities primarily intended to sell shares, provided the
categories of expenses are approved in advance by the Board and the expenses
paid under the plan were incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the Fund under the plan may not exceed
0.25% of its average net assets annually (all of which may be for service fees).
Transfer Agent American Funds Service Company, 800/421-0180, a wholly owned
subsidiary of Capital Research and Management Company, is the transfer agent and
performs shareholder service functions. American Funds Service Company is
located at 333 South Hope Street, Los Angeles CA 90071, 135 South State College
Boulevard, Brea, CA 9281, 8000 IH-10 West, San Antonio, TX 78230, 5300 Robin
Hood Road, Norfolk, VA 23513 and 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240. It was paid a fee of $16,906,000 for the fiscal year
ended April 30, 1997. Telephone conversations with American Funds Service
Company may be recorded or monitored for verification, recordkeeping and quality
assurance purposes.
PURCHASING SHARES
ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR RETIREMENT PLAN. FOR
MORE INFORMATION ABOUT HOW TO PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE CONSULT WITH YOUR
EMPLOYER. Shares are sold to eligible retirement plans at the net asset value
per share next determined after receipt of an order by the Fund or American
Funds Service Company. Orders must be received before the close of regular
trading on the New York Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective retirement plan assets of $50
million or more may purchase shares at net asset value. In addition, any
employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other plan that invests at least $1 million in
shares of the Fund (or in combination with shares of other funds in The American
Funds Group other than the money market funds) may purchase shares at net asset
value; however, a contingent deferred sales charge of 1% is imposed on certain
redemptions made within twelve months of such purchase. (See "Redeeming Shares--
Contingent Deferred Sales Charge.") Plans may also qualify to purchase shares at
net asset value by completing a statement of intention to purchase $1 million in
Fund shares subject to a commission over a maximum of 13 consecutive months.
Certain redemptions of such shares may also be subject to a contingent deferred
sales charge as described above. (See the statement of additional information.)
The minimum initial investment is $250, except that the money market funds have
a minimum of $1,000 for individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic Investment Plans" (except for
the money market funds) or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for shareholders of other funds
in The American Funds Group.
Commissions of up to 1% will be paid to dealers who initiate and are responsible
for purchases of $1 million or more, for purchases by any employer-sponsored
403(b) plan or defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 200 or more eligible
employees (paid pursuant to the Fund's plan of distribution), and for purchases
made at net asset value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or more as set forth in the
statement of additional information (paid by American Funds Distributors).
During 1997, American Funds Distributors will provide additional compensation to
the top 100 dealers who have sold shares of the Fund or other funds in
The American Funds Group based on a pro rata share of a qualifying dealer's
sales.
American Funds Distributors will, on an annual basis, determine the advisability
of continuing these payments.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets annually in order to promote selling efforts and to
compensate them for providing certain services. (See "Fund Organization and
Management--Plan of Distribution.") These services include processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the Fund.
Shares of the Fund are offered to other shareholders pursuant to another
prospectus at public offering prices that may include an initial sales charge.
Share Price Shares are offered to eligible retirement plans at the net asset
value next determined after the order is received by the Fund or American Funds
Service Company. In the case of orders sent directly to the Fund or American
Funds Service Company, an investment dealer must be indicated. Dealers are
responsible for promptly transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of Shares.")
The Fund's net asset value per share is determined as of the close of trading
(currently 4:00 p.m., New York time) on each day the New York Stock Exchange is
open. The current value of the Fund's total assets, less all liabilities, is
divided by the total number of shares outstanding and the result, rounded to the
nearer cent, is the net asset value per share.
SHAREHOLDER
SERVICES
Subject to any restrictions contained in your plan, you can exchange your shares
for shares of other funds in The American Funds Group at net asset value. In
addition, again depending on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of other funds. Contact your
plan administrator/trustee regarding how to use these services. Also, see the
Fund's statement of additional information for a description of these and other
services that may be available through your plan. These services are available
only in states where the Fund to be purchased may be legally offered and may be
terminated or modified at any time upon 60 days' written notice.
REDEEMING
SHARES
Subject to any restrictions imposed by your employer's plan, you can sell your
shares through the plan to the Fund any day the New York Stock Exchange is open.
For more information about how to sell shares of the Fund through your
retirement plan, including any charges that may be imposed by the plan, please
consult with your employer.
By contacting your plan Your plan administrator/trustee must send a letter of
administrator/trustee instruction specifying the name of the fund, the
number of shares or dollar amount to be sold, and, if
applicable, your name and account number. You should
also enclose any certificate you wish to redeem. For
your protection, if you redeem more than $50,000, the
signatures of the registered owners (i.e., trustees
or their legal representatives) must be guaranteed by
a bank, savings association, credit union, or member
firm of a domestic stock exchange or the National
Association of Securities Dealers, Inc., that is an
eligible guarantor institution. Your plan
administrator/trustee should verify with the
institution that it is an eligible guarantor prior to
signing. Additional documentation may be required to
redeem shares from certain accounts. Notarization by
a Notary Public is not an acceptable signature
guarantee.
By contacting an Shares may also be redeemed through an investment
investment dealer dealer; however you or your plan may be charged for
this service. Shares held for you in an investment
dealer's street name must be redeemed through the
dealer.
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE NET ASSET VALUE NEXT
DETERMINED AFTER YOUR ORDER AND ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE
FUND OR AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING SHARES--SHARE PRICE.")
Contingent Deferred Sales Charge A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a "401(k)"
plan with 200 or more eligible employees. The charge is 1% of the lesser of the
value of the shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the total cost of such shares. Shares held for the longest
period are assumed to be redeemed first for purposes of calculating this charge.
The charge is waived for exchanges (except if shares acquired by exchange were
then redeemed within 12 months of the initial purchase); for distributions from
qualified retirement plans and other employee benefit plans; for redemptions
resulting from participant-directed switches among investment options within a
participant-directed employer-sponsored retirement plan; and for redemptions in
connection with loans made by qualified retirement plans.
Other Important Things to Remember The net asset value for
redemptions is determined as indicated under "Purchasing Shares--Share
Price." Because the Fund's net asset value fluctuates, reflecting the market
value of the portfolio, the amount you receive for shares redeemed may be more
or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), redemption proceeds will
be paid on or before the seventh day following receipt of a proper redemption
request.
THIS PROSPECTUS HAS BEEN PRINTED ON RECYCLED
PAPER THAT MEETS THE GUIDELINES OF THE
Y UNITED STATES ENVIRONMENTAL PROTECTION AGENCY.
This prospectus relates only to shares of the Fund offered
without a sales charge to eligible retirement plans. For a
prospectus regarding shares of the Fund to be acquired
otherwise, contact the Secretary of the Fund at the address
indicated on the front.
WASHINGTON MUTUAL INVESTORS FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June 22, 1997
This document is not a prospectus but should be read in conjunction with the
current prospectus dated June 22, 1997 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
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
<TABLE>
<CAPTION>
ITEM PAGE NO.
<S> <C>
The fund and Its Investment Objective and Policies 1
Investment Restrictions 2
Fund Directors, Advisory Board Members and Officers 3
Director and Advisory Board Compensation 3
Management 8
Dividends, Distributions and Federal Taxes 10
Purchase of Shares 12
Redeeming Shares 17
Shareholder Account Services and Privileges 19
Execution of Portfolio Transactions 20
General Information 20
Investment Results 21
Financial Statements Attached
</TABLE>
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 Prudent Investor Rule in some jurisdictions
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 fundamental policies and investment restrictions
for the protection of shareholders that may not be changed without shareholder
approval. Approval requires the affirmative vote of 67% or more of the
voting securities present at a meeting of shareholders, provided more than 50%
of such securities are represented at the meeting or the vote of more than
50% of the outstanding voting securities, whichever is less.
The fund may not:
Purchase any security which is not legal for the investment of trust funds in
the District of Columbia;
Purchase or sell real estate or commodities;
Make a purchase 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;
Make a purchase which would cause more than 10% of the outstanding securities
of any issuer to be held in the portfolio of the fund;
Invest in companies for the purpose of exercising control or management and
may not invest in securities of other investment companies;
Purchase securities on margin or sell securities short;
Lend money;
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;
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.
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.
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 MEMBERS AND OFFICERS
(WITH THEIR PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS)#
DIRECTOR AND ADVISORY BOARD COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE 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
4/30/97 GROUP INDIVIDUAL
SERVES/2/
<S> <C> <C> <C> <C> <C>
Charles T. Akre Director Emeritus Miller & Chevalier, $17,000 $17,000 1
700 John Ringling Blvd. Chartered,
Apt. 1108 Of Counsel
Sarasota, FL 34236
Age: 87
Cyrus A. Ansary Director Investment Services $50,400 $54,100 3
1725 K Street, N.W., Suite 410 International Co.,
Washington, D.C. 20006 President
Age: 63
Nathan A. Baily Director Emeritus Management, Marketing, $16,000 $16,000 1
5516 Greystone Street Education Consultant
Chevy Chase, MD 20815
Age: 76
John A. Beck*{ Director The Johnston-Lemon none/4/ none/4/ 1
Age: 71 Group, Incorporated,
Vice Chairman
Fred J. Brinkman*{ Director Washington Management none/4/ none/4/ 1
Age: 68 Corporation, Senior
Financial Consultant
Charles A. Bowsher Advisory Board Retired Comptroller $3,000/6/ $3,000 1
4503 Boxwood Road Member General of
Bethesda, MD 20816 The United States
Age: 00
Mary K. Bush Advisory Board Bush & Company, $6,000 $6,000 1
4201 Cathedral Ave., N.W. Member President
Number 1016 East
Washington, D.C. 20016
Age: 49
Daniel J. Callahan III Director The Morris & Gwendolyn $24,700/5/ $24,700 1
1825 K Street, N.W. Cafritz Foundation,
Washington, D.C. 20006 Vice Chairman &
Age: 65 Treasurer
Frank M. Ewing Director Emeritus Frank M. Ewing Co., Inc. $17,500 $19,600 3
P. O. Box 2248 President and Chairman of
Gaithersburg, MD 20886 the Board
Age: 82
Stephen Hartwell*{ Chairman of the Board Washington Management none/4/ none/4/ 3
Age: 82 Corporation, Chairman of
the Board
Vernon W. Holleman, Jr. Advisory Board Vernon W. Holleman, Jr. $5,000/3/ $5,000 1
5550 Friendship Drive Member Company, President
Suite 502
Chevy Chase, MD 20815
Age: 61
James H. Lemon, Jr.*{ Vice Chairman of the The Johnston-Lemon none/4/ none/4/ 3
Age: 61 Board Group, Incorporated,
Chairman of the Board
and
Chief Executive Officer
Harry J. Lister*{ President Washington Management none/4/ none/4/ 3
Age: 61 Corporation, President
and Director
James C. Miller III Director Citizens for a Sound $49,500 $49,500 1
1250 H Street, N.W., Suite 700 Economy, Counselor
Washington, D.C. 20005
Age: 54
Bernard J. Nees Chairman Emeritus of Johnston, Lemon & Co. none/4/ none/4/ 1
1101 Vermont Avenue, N.W. the Board Incorporated,
Washington, D.C. 20005 Executive Vice President
Age: 89 and
Director Emeritus
Katherine D. Ortega Advisory Board Former Treasurer of the $2,000/6/ $2,000 1
800 25th Street, NW Member United States
Suite 1003
Washington, D.C. 20038
Age: 63
Thomas J. Owen Director The CAFRITZ Company, $47,800 $47,800 1
6006 Onondaga Road President and Chief
Bethesda, MD 20816 Executive Officer
Age: 62
Mr. John Knox Singleton Advisory Board President, INOVA $3,000/6/ $3,000 1
8001 Braddock Road Member Health System
Springfield, VA 22151
Age:
Jean Head Sisco Director Sisco Associates, $51,500 $55,200 3
2517 Massachusetts Avenue, N.W. Management Consulting
Washington, D.C. 20008 Firm, Partner
Age: 71
T. Eugene Smith Director T. Eugene Smith, Inc., $50,200 $53,900 3
666 Tintagel Lane President
McLean, VA 22101
Age: 66
William B. Snyder Advisory Board Southern Heritage $6,000 $6,000 1
P. O. Box 30690 Member Holdings, Inc.
Bethesda, MD 20824 and Merastar Corporation
Age: 67 Chairman, President and
CEO
Leonard P. Steuart II Director Steuart Investment $22,700/5/ $22,700 1
5454 Wisconsin Avenue Company, Vice President
Suite 504
Chevy Chase, MD 20815
Age: 62
Robert F. Tardio Advisory Board Independent Consultant $5,000 $5,000 1
11517 Highland Farm Road Member
Potomac, MD 20854
Age: 68
Margita E. White Director Association for Maximum $46,100 $46,100 1
1776 Massachusetts Avenue, N.W. Service Television Inc.,
Suite 310 President
Washington, D.C. 20036
Age: 59
Stephen G. Yeonas Director Stephen G. Yeonas $51,500/3/ $55,200 3
1355 Beverly Road, Suite 102 Company, Chairman of
McLean, VA 22101 the Board and Chief
Age: 72 Executive Officer
</TABLE>
# 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 and Advisory Board members
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
or Advisory Board member.
/2/In each instance where a Director of the fund serves on other funds
affiliated 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 (8/1/95 -- 7/31/96).
/3/Since the plan's adoption, the total amount of deferred compensation accrued
by the fund (plus earnings thereon) through 3/31/97, the latest calendar
quarter, for participants is as follows: Director Stephen G. Yeonas ($192,882),
and Advisory Board member Vernon W. Holleman, Jr. ($18,046). Amounts deferred
and accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the participant.
/4/John A. Beck, Fred J. Brinkman, Stephen Hartwell, James H. Lemon, Jr. and
Harry J. Lister are affiliated with the Business Manager and, accordingly,
receive no remuneration from the fund.
/5/Messrs. Callahan and Steuart each received $8,250 as members of the fund's
Advisory Board. Both were elected Directors of the fund effective January 1,
1997. The remaining compensation shown reflects Director's fees.
/6/Mr. Bowsher, Mrs. Ortega and Mr. Singleton were elected to the Advisory
Board on March 21, 1997 and, therefore, did not receive a full year of
compensation.
OTHER OFFICERS
(WITH THEIR PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS)#
1101 VERMONT AVENUE, N.W., WASHINGTON, D.C. 20005.
HOWARD L. KITZMILLER (Age: 67)
Senior Vice President, Secretary
and Assistant Treasurer
Washington Management Corporation,
Senior Vice President, Secretary,
Assistant Treasurer and Director
RALPH S. RICHARD (Age: 78)
Vice President and Treasurer
Johnston, Lemon & Co. Incorporated,
Executive Vice President and Director
LOIS A. ERHARD (Age: 45)
Vice President
Washington Management Corporation,
Vice President
MICHAEL W. STOCKTON (Age: 30)
Assistant Vice President, Assistant Secretary and Assistant Treasurer
Washington Management Corporation,
Assistant Vice President and Assistant Treasurer
# 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
$7,500 quarterly and an attendance fee of $2,000 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. 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 $3,750
quarterly plus $500 per Board meeting attended.
The Board of Directors has established an Advisory Board whose members
are, in the judgment of the Directors, highly knowledgeable about political and
economic matters. In addition to holding meetings with the Board of Directors,
members of the Advisory Board, while not participating in specific investment
decisions, consult from time to time with the Investment Adviser, primarily
with respect to trade and business conditions. Members of the Advisory Board,
however, possess no authority or responsibility with respect to the fund's
investments or management. Members of the Advisory Board receive $2,000
semi-annually plus $1,000 per 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. For deferred compensation, see footnote 3 at page 7.
As of May 31, 1997 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, 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 1997. The Business Manager receives a monthly fee, accrued
daily, at the annual rate of 0.175% of the first $3 billion of the fund's net
assets, 0.15% of net assets in excess of $3 billion but not exceeding $5
billion, 0.135% of net assets in excess of $5 billion but not exceeding $8
billion, 0.12% of net assets in excess of $8 billion but not exceeding $12
billion, 0.095% of nets assets in excess of $12 billion but not exceeding $21
billion and 0.075% of net assets in excess of $21 billion. During the fiscal
years ended April 30, 1997, 1996 and 1995, the Business Manager's fees amounted
to $28,014,000, $22,468,000 and $18,180,000, respectively.
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
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. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
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 more than $100 billion of stocks,
bonds and money market instruments and serves over five million investors of
all types throughout the world. 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. The Investment Adviser receives a
monthly fee, accrued daily, at the annual rate of 0.225% of the first $3
billion of the fund's net assets, 0.21% of net assets in excess of $3 billion
but not exceeding $8 billion, 0.20% of net assets in excess of $8 billion but
not exceeding $21 billion and 0.195% of net assets in excess of $21 billion.
During the fiscal years ended April 30, 1997, 1996 and 1995, the Investment
Adviser's fees amounted to $49,383,000, $36,371,000, and $27,370,000,
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, 1997 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 Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240 and 5300 Robin
Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of Distribution (the
Plan), pursuant to rule 12b-1 under the 1940 Act (see "Principal Underwriter"
in the prospectus). The Principal Underwriter receives amounts payable
pursuant to the Plan (described 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, 1997 amounted to
$22,625,000 after allowance of $117,572,000 to dealers including $815,000
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,
1996 and 1995, the Principal Underwriter retained $16,734,000 and $7,073,000,
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 employer-sponsored 403(b) plan or 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 preceding 12 months and accrued while the Plan is in effect are paid
by the fund. During the fiscal year ended April 30, 1997, the fund paid or
accrued $52,997,000 under the Plan, for compensation to dealers. As of April
30, 1997, distribution expenses accrued but unbilled amounted to $9,282,000.
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 as a regulated investment company, 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. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
Corporate shareholders of the fund may be eligible for the dividends-received
deduction on the dividends (excluding the net capital gains dividends) paid by
the fund to the extent that the fund's income is derived from dividends (which,
if received directly, would qualify for such deduction) received from domestic
corporations. In order to quality for the dividends-received deduction, a
corporate shareholder must hold the fund shares paying the dividends upon which
the deduction is based for at least 46 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.
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.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of capital gains not effectively connected with a U.S. trade or business are
not subject to the withholding, but if the non-U.S. shareholder was an
individual who was physically present in the U.S. during the tax year for more
than 182 days and such shareholder is nonetheless treated as a nonresident
alien, the distributions would be subject to a 30% tax.
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%. However, to eliminate the benefit of lower
marginal corporate income tax rates, corporations which have income in excess
of $100,000 for a taxable year will be required to pay an additional income tax
liability of up to $11,700 and corporations which have taxable income in excess
of $15,000,000 for a taxable year will be required to pay an additional amount
of tax of up to $100,000. 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 situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower
Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer who is Mail directly to your investment dealer's address
your investment registered in the state where the printed on your account statement.
dealer purchase is made and who has a
sales agreement with American
Funds Distributors.
By mail Make your check payable to the fund and mail to the address indicated on the account application. Please indicate
an investment dealer on the account application. Fill out the account additions form at the
bottom of a recent account statement, make your check payable to the fund, write your
account number on your check, and mail the check and form in the envelope provided with your account statement.
By telephone Please contact your investment dealer to open account, then follow the procedures for additional investments.
Complete the "Investments by Phone"
section on the account application or
American FundsLink Authorization Form.
Once you establish the privilege, you, your financial advisor or any person with your
account information can call American FundsLineR and make investments by telephone (subject to conditions noted in "Shareholder
Account Services and Privileges -
Telephone Redemptions and Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "Initial Investment."
investment dealer on the
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLineR (see description below):
<TABLE>
<CAPTION>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP FundR 02
$1,000
American Balanced FundR 11
500
American Mutual FundR 03
250
Capital Income BuilderR 12
1,000
Capital World Growth and Income Fund$ 33
1,000
EuroPacific Growth FundR 16
250
Fundamental Investors$ 10
250
The Growth Fund of AmericaR 05
1,000
The Income Fund of AmericaR 06
1,000
The Investment Company of AmericaR 04
250
The New Economy FundR 14
1,000
New Perspective FundR 07
250
SMALLCAP World FundR 35
1,000
Washington Mutual Investors Fund$ 01
250
BOND FUNDS
American High-Income Municipal Bond FundR 40
1,000
American High-Income Trust$ 21
1,000
The Bond Fund of America$ 08
1,000
Capital World Bond FundR 31
1,000
Intermediate Bond Fund of America$ 23
1,000
Limited Term Tax-Exempt Bond Fund of America$ 43
1,000
The Tax-Exempt Bond Fund of AmericaR 19
1,000
The Tax-Exempt Fund of CaliforniaR* 20
1,000
The Tax-Exempt Fund of MarylandR* 24
1,000
The Tax-Exempt Fund of VirginiaR* 25
1,000
U.S. Government Securities Fund$ 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of AmericaR 09
2,500
The Tax-Exempt Money Fund of America$ 39
2,500
The U.S. Treasury Money Fund of America$ 49
2,500
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
SALES CHARGES- The sales charges you pay when purchasing the stock, stock/bond,
and bond funds of The American Funds Group are set forth below. The money
market funds of The American Funds Group are offered at net asset value. (See
"Investment Minimums and Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below) none none
DEALER COMMISSIONS - Commissions of up to 1% will be paid to
dealers who initiate and are responsible for
purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or 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, and for purchases made
at net asset value by certain retirement
plans of organizations with collective retirement plan assets of
$50 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. For certain
tax-exempt accounts open 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 2.0% ($50,000 but less than $100,000);
2.0% and 1.5% ($100,000 but less than
$250,000) and 1.5% and 1.25% ($250,000 but less than $1 million).
</TABLE>
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These payments will be based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other purchaser investing at least $1 million
in shares of the fund (or in combination with shares of other funds in The
American Funds Group other than the money market funds) may purchase shares at
net asset value; however, a contingent deferred sales charge of 1% is imposed
on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.") Investments by
retirement plans, foundations or endowments with $50 million or more in assets
may be made with no sales charge and are not subject to a contingent deferred
sales charge.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value with no contingent deferred sales charge to: (1)
current or retired directors, trustees, officers and advisory board members of
the funds managed by Capital Research and Management Company, employees of
Washington Management Corporation, employees and partners of The Capital Group
Companies, Inc. and its affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such persons; (2) current
registered representatives, retired registered representatives with respect to
accounts established while active, or full-time employees (and their spouses,
parents, and children) of dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such dealers) and plans for
such persons or the dealers; (3) companies exchanging securities with the fund
through a merger, acquisition or exchange offer; (4) trustees or other
fiduciaries purchasing shares for certain retirement plans of organizations
with retirement plan assets of $50 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries of The Capital Group
Companies, Inc.; and (7) The Capital Group Companies, Inc., its affiliated
companies and Washington Management Corporation. Shares are offered at net
asset value to these persons and organizations due to anticipated economies in
sales effort and expense.
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 subject to a statement of intention (the "Statement"). The
Statement is not a binding obligation to purchase the indicated amount. When a
shareholder elects to utilize a Statement in order to qualify for a reduced
sales charge, shares equal 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 any capital gain distributions on shares held in escrow 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 45 days after written request by
the Principal Underwriter or the securities dealer, the appropriate number of
shares held in escrow 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. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
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 handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, 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.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above, or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received 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. In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. 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 (excluding treasury shares), 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 Principal Underwriter 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.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Service Company (at the appropriate address indicated under "Fund Organization and Management -
Principal Underwriter and Transfer Agent" in the Send a letter of instruction specifying the name of the fund, the number of
shares or dollar amount to be sold, your name and account number. You should also enclose any share certificates you wish to
redeem. For redemptions over $50,000 and for certain redemptions of $50,000 or less (see below), your signature must be guaranteed
by a bank, savings association, credit union, or
prospectus) member firm of a domestic stock exchange or the National Association of Securities Dealers, Inc. that is
an eligible guarantor institution. You should verify with the institution that it is an eligible guarantor prior to signing.
Additional documentation may be required for redemption of shares held in corporate, partnership or fiduciary accounts.
Notarization by a Notary Public is not an
acceptable signature guarantee.
By contacting your investment dealer If you redeem shares through your investment dealer, you may be charged for this service.
SHARES HELD FOR YOU IN YOUR INVESTMENT DEALER'S STREET NAME MUST BE REDEEMED THROUGH THE DEALER.
You may have a redemption You may use this option, provided the account is registered in the name of an individual(s), a UGMA/UTMA
custodian, or a non-retirement plan trust. These redemptions may not exceed $50,000 per shareholder, per day account and the check
must be made payable to the shareholder(s) of record and be sent to the address of record provided the address has been used with
the account
check sent to you by using for at least 10 days. See "Fund Organization and Management - Principal Underwriter and Transfer
Agent" in the prospectus and "Exchange Privilege" below for the appropriate telephone or fax number.
American FundsLineR or by
telephoning, faxing, or
telegraphing American Funds Service Company (subject to the conditions noted in this section and in "Telephone Purchases, Sales and
Exchanges" in the prospectus)
In the case of the money Upon request (use the account application for the money market funds) you may establish telephone
redemption privileges (which will enable you to have a redemption sent to your bank account) and/or check writing privileges. If
you request check writing privileges, you will be provided with checks that you may use to draw against your account. These checks
may be made payable to
market funds, you may have anyone you designate and must be signed by the authorized number of registered shareholders exactly as
indicated on your checking account signature card.
redemptions wired to your
bank by telephoning American Funds Service Company ($1,000 or more) or by writing a check ($250 or more)
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 59$; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
REDEMPTION OF SHARES - The Transfer Agent may redeem the shares of any
shareholder if the shares owned by such shareholder through redemptions, market
decline or otherwise, have a value of less than the minimum initial investment
amount required of new shareholders, (determined, for this purpose only as the
greater of the shareholder's cost or current net asset value of the shares,
including any shares acquired through reinvestment of income dividends and
capital gains distributions). 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.
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 to provide the shareholder with an opportunity to bring the account up
to the minimum.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular investments monthly or quarterly 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 dates you select. 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
at least quarterly. 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 the
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 to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
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 90 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).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLineR (see "American FundsLineR" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone Redemptions and Exchanges" below.) Shares held
in corporate-type retirement plans for which Capital Guardian Trust Company
serves as trustee may not be exchanged by telephone, fax or telegraph. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
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.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINER - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $50,000
per shareholder, per day), or exchange shares around the clock with American
FundsLineR. To use this service, call 800/325-3590 from a TouchTonet telephone.
Redemptions and exchanges through American FundsLineR are subject to the
conditions noted above and in "Telephone Redemptions and Exchanges" below. You
will need your fund number (see the list of funds in The American Funds Group
under "Purchase of Shares--Investment Minimums and Fund Numbers"), personal
identification number (the last four digits of your Social Security number or
other tax identification number associated with your account) and account
number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLineR), fax or telegraph redemption and/or exchange options, you
agree to hold the fund, American Funds Service Company, any of its affiliates
or mutual funds managed by such affiliates, the Fund's Business Manager and
each of their respective directors, trustees, officers, employees and agents
harmless from any losses, expenses, costs or liability (including attorney
fees) which may be incurred in connection with the exercise of these
privileges. Generally, all shareholders are automatically eligible to use these
options. However, you may elect to opt out of these options by writing American
Funds Service Company (you may also reinstate them at any time by writing
American Funds Service Company). If American Funds Service Company does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, it and/or the fund may
be liable for losses due to unauthorized or fraudulent instructions. In the
event that shareholders are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural disaster, redemption
and exchange requests may be made in writing only.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through its
correspondent clearing agent) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research, statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser. The fund does not consider that it has
an obligation to obtain the lowest available commission rate to the exclusion
of price, service and qualitative considerations.
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. The fund will not pay a mark-up for research
in principal transactions.
As of the end of the fund's most recent fiscal year, it held certain equity
securities of some of its regular brokers and dealers or their parents that
derive more than 15% of gross revenues from securities-related activities which
included securities of The Chase Manhattan Bank and J.P. Morgan in the amounts
of $361,238,000 and $257,744,000, respectively, at the year ended April 30,
1997.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended April 30, 1997, 1996
and 1995 amounted to $14,511,000, $13,383,000 and $11,529,000, respectively.
During fiscal years 1997, 1996 and 1995 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, 3 Metrotech Center, Brooklyn, NY 11245,
as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $16,906,000 for the fiscal year ended April 30, 1997.
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 LLP given on the
authority of said firm as experts in accounting and auditing. The selection of
the fund's independent accountant is reviewed and determined annually by the
Board of Directors.
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 LLP.
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 Accountants 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, 1997
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . . . $25.93
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). . . . . $27.51
INVESTMENT RESULTS
The fund's yield is 2.35% based on a 30-day (or one month) period ended April
30, 1997, 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 total return over the past year and average total returns for the
five- and ten-year periods ending on April 30, 1997 was +15.39%, +15.40% and
+12.93%, 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 year, five
year, 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 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. These total returns may
be calculated over periods in addition to those described 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 may provide lifetime average total return figures.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
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 Stock Composite
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
Total return for the unmanaged indices will be calculated assuming reinvestment
if dividends and interest, but will not reflect any deductions for advisory
fees, brokerage costs or administrative expenses.
The fund may 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 January 1, 1967 (127 in all), those funds have had better
total returns than the Standard & Poor's 500 Composite Stock Index in 91 of the
127 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>
1987-1997 +237% +319% +275% +66%
1986-1996 +241 +333 +279 +70
1985-1995 +261 +385 +296 +76
1984-1994 +273 +355 +297 +86
1983-1993 +275 +312 +284 +97
1982-1992 +409 +498 +424 +109
1981-1991 +356 +351 +325 +120
1980-1990 +453 +418 +375 +125
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
</TABLE>
/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 Stock 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, 1997
Number of Years 5/1-4/30 Value
<S> <C> <C>
1 1996 - 1997 11,538
2 1995 - 1997 15,048
3 1994 - 1997 17,610
4 1993 - 1997 18,058
5 1992 - 1997 20,467
6 1991 - 1997 23,377
7 1990 - 1997 26,816
8 1989 - 1997 28,567
9 1988 - 1997 35,043
10 1987 - 1997 33,739
11 1986 - 1997 41,742
12 1985 - 1997 57,579
13 1984 - 1997 69,686
14 1983 - 1997 71,884
15 1982 - 1997 110,401
16 1981 - 1997 113,067
17 1980 - 1997 157,326
18 1979 - 1997 159,527
19 1978 - 1997 180,655
20 1977 - 1997 185,669
21 1976 - 1997 200,518
22 1975 - 1997 265,083
23 1974 - 1997 295,810
24 1973 - 1997 290,874
25 1972 - 1997 272,756
26 1971 - 1997 278,633
27 1970 - 1997 361,624
28 1969 - 1997 304,611
29 1968 - 1997 358,502
30 1967 - 1997 399,209
</TABLE>
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 30,1997)
<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 23,202 71,603
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
1996 58,187 603,577 613,577 85,844 982,808 1,188,237 2,256,889
1997 62,763 666,340 676,340 97,757 1,245,507 1,419,762 2,763,026
</TABLE>
The dollar amount of capital gain distributions from inception was $621,556
/*/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
(5/1/87-4/30/97) (5/1/77 - 4/30/97) (5/1/67 - 4/30/97) (5/1/57-4/30/97)
$3,374 $18,567 $39,921 $119,307
</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
(5/1/87 - 4/30/97) (5/1/77 - 4/30/97) (5/1/67 - 4/30/97) (5/1/57-4/30/97)
$13,193 $78,174 $240,451 $661,774
</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
(5/1/87-4/30/97) (5/1/77 - 4/30/97) (5/1/67 - 4/30/97) (5/1/57-4/30/97)
$46,024 $276,485 $884,263 $2,418,390
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Washington Mutual Investors Fund
Investment Portfolio
April 30, 1997 Market Percent
Value of Net
Common Stocks Shares (000) Assets
Energy
Energy Sources (11.11%)
Amoco Corp. 7,450,000 $623,006 2.21 %
Atlantic Richfield Co. 6,510,000 886,174 3.15
Chevron Corp. 5,700,000 390,450 1.39
Exxon Corp. 4,800,000 271,800 .97
Kerr-McGee Corp. 2,300,000 138,862 .49
Mobil Corp. 475,000 61,750 .22
Texaco Inc. 6,175,000 651,463 2.31
Unocal Corp. 2,740,100 104,466 .37
----------- -------
3,127,971 11.11
----------- -------
Utilities: Electric & Gas (8.31%)
American Electric Power Company, Inc. 3,750,000 151,875 .54
Atlantic Energy, Inc. 1,650,000 26,606 .09
Baltimore Gas and Electric Co. 2,000,000 51,000 .18
Brooklyn Union Gas Co. 900,000 24,638 .09
Carolina Power & Light Co. 3,500,000 119,000 .42
Central and South West Corp. 2,650,000 53,331 .19
CINergy Corp. 700,000 23,275 .08
Consolidated Edison Co. of
New York, Inc. 6,000,000 166,500 .59
Consolidated Natural Gas Co. 2,100,000 105,787 .37
Dominion Resources, Inc. 595,000 20,453 .07
DTE Energy Co. 3,465,000 92,689 .33
Duke Power Co. 4,150,000 182,081 .65
Edison International 6,347,000 133,287 .47
Florida Progress Corp. 4,835,800 148,701 .53
FPL Group, Inc. 1,300,000 58,012 .21
Houston Industries Inc. 5,480,000 109,600 .39
Northeast Utilities 4,555,000 37,579 .13
OGE Energy Corp. 400,000 16,600 .06
PanEnergy Corp. 2,769,400 122,546 .43
PECO Energy Co. 4,000,000 79,000 .28
PG&E Corp. 3,950,000 94,800 .34
PP & L Resources, Inc. 4,700,000 92,237 .33
Public Service Enterprise Group Inc. 3,820,000 92,158 .33
Puget Sound Power & Light Co. 1,000,000 24,500 .09
Southern Co. 8,000,000 163,000 .58
Union Electric Co. 3,900,000 138,938 .49
Wisconsin Energy Corp. 550,000 13,750 .05
----------- -------
2,341,943 8.31
----------- -------
Total Energy 5,469,914 19.42
----------- -------
Materials
Building Materials & Components (.02%)
Masco Corp. 150,000 5,662 .02
----------- -------
Chemicals (3.93%)
E.I. du Pont de Nemours and Co. 7,142,500 757,998 2.69
Monsanto Co. 3,050,000 130,388 .46
PPG Industries, Inc. 2,350,000 127,781 .46
Sherwin-Williams Co. 3,000,000 90,750 .32
----------- -------
1,106,917 3.93
----------- -------
Forest Products & Paper (2.47%)
International Paper Co. 10,450,000 441,513 1.57
Louisiana-Pacific Corp. 5,380,000 100,202 .35
Westvaco Corp. 5,501,350 154,038 .55
----------- -------
695,753 2.47
----------- -------
Metals: Nonferrous (.23%)
Phelps Dodge Corp. 850,000 65,237 .23
----------- -------
Total Materials 1,873,569 6.65
----------- -------
Capital Equipment
Aerospace & Military Technology (1.24%)
Boeing Co. 585,820 57,776 .20
Raytheon Co. 4,750,000 207,219 .74
United Technologies Corp. 1,100,000 83,188 .30
----------- -------
348,183 1.24
----------- -------
Data Processing & Reproduction (.93%)
Xerox Corp. 4,240,000 260,760 .93
----------- -------
Electrical & Electronics (.70%)
Emerson Electric Co. 1,700,000 86,275 .31
General Electric Co. 1,000,000 110,875 .39
----------- -------
197,150 .70
----------- -------
Electronic Components (.16%)
Thomas & Betts Corp. 1,020,000 46,282 .16
----------- -------
Energy Equipment (.18%)
Dresser Industries, Inc. 1,700,000 50,788 .18
----------- -------
Industrial Components (3.12%)
Dana Corp. 3,150,000 100,406 .35
Eaton Corp. 2,100,000 157,238 .56
Echlin Inc. 3,000,000 97,875 .35
Genuine Parts Co. 5,587,500 180,895 .64
Goodyear Tire & Rubber Co. 2,200,000 115,775 .41
Rockwell International Corp. 1,235,000 82,128 .29
TRW Inc. 2,800,000 145,950 .52
----------- -------
880,267 3.12
----------- -------
Machinery & Engineering (.87%)
Caterpillar Inc. 1,816,100 161,633 .57
Ingersoll-Rand Co. 675,000 33,159 .12
Parker Hannifin Corp. 1,000,000 49,750 .18
----------- -------
244,542 .87
----------- -------
Total Capital Equipment 2,027,972 7.20
----------- -------
Consumer Goods
Appliances & Household Durables (.08%)
Maytag Corp. 1,000,000 22,875 .08
----------- -------
Beverages (.90%)
PepsiCo, Inc. 7,257,100 253,092 .90
----------- -------
Food & Household Products (3.21%)
Colgate-Palmolive Co. 800,000 88,800 .32
CPC International Inc. 2,120,200 175,181 .62
General Mills, Inc. 5,115,600 317,167 1.13
Kellogg Co. 2,207,700 153,987 .55
Procter & Gamble Co. 750,000 94,313 .33
Sara Lee Corp. 1,750,000 73,500 .26
----------- -------
902,948 3.21
----------- -------
Health & Personal Care (11.87%)
American Home Products Corp. 7,600,000 503,500 1.79
Bristol-Myers Squibb Co. 4,450,000 291,475 1.03
Johnson & Johnson 1,000,000 61,250 .22
Kimberly-Clark Corp. 4,440,000 227,550 .81
Eli Lilly and Co. 6,002,300 527,452 1.87
McKesson Corp. 375,000 27,141 .10
Merck & Co., Inc. 4,700,000 425,350 1.51
Pfizer Inc 2,001,600 192,154 .68
Pharmacia & Upjohn, Inc. 6,339,500 187,808 .67
Schering-Plough Corp. 2,750,000 220,000 .78
Tambrands Inc. 1,067,800 50,186 .18
Warner-Lambert Co. 6,414,200 628,591 2.23
----------- -------
3,342,457 11.87
----------- -------
Recreation & Other Consumer
Products (.15%)
Eastman Kodak Co. 500,000 41,750 .15
----------- -------
Textiles & Apparel (.15%)
VF Corp. 600,000 43,275 .15
----------- -------
Total Consumer Goods 4,606,397 16.36
----------- -------
Services
Broadcasting & Publishing (.37%)
Dow Jones & Co., Inc. 602,500 24,401 .09
Gannett Co., Inc. 900,000 78,525 .28
----------- -------
102,926 .37
----------- -------
Business & Public Services (3.65%)
Browning-Ferris Industries, Inc. 8,880,000 251,970 .89
Cognizant Corp. 5,356,100 174,743 .62
Deluxe Corp. 600,000 18,375 .07
Dun & Bradstreet Corp. 6,938,300 170,856 .61
Pitney Bowes Inc. 2,600,000 166,400 .59
WMX Technologies, Inc. 8,306,200 243,994 .87
----------- -------
1,026,338 3.65
----------- -------
Merchandising (3.81%)
Albertson's, Inc. 5,465,000 180,345 .64
J.C. Penney Co., Inc. 10,242,900 489,098 1.74
Walgreen Co. 880,100 40,485 .14
Wal-Mart Stores, Inc. 12,900,000 364,425 1.29
----------- -------
1,074,353 3.81
----------- -------
Telecommunications (8.59%)
Ameritech Corp. 11,212,300 685,352 2.43
AT&T Corp. 20,250,000 678,375 2.41
Bell Atlantic Corp. 1,472,100 99,735 .35
GTE Corp. 2,000,000 91,750 .33
SBC Communications Inc. 3,707,175 205,748 .73
Sprint Corp. 1,200,000 52,650 .19
U S WEST Communications Group 17,270,000 606,609 2.15
----------- -------
2,420,219 8.59
----------- -------
Transportation: Rail (2.00%)
CSX Corp. 1,100,000 51,288 .18
Norfolk Southern Corp. 2,520,000 226,485 .81
Union Pacific Corp. 4,470,200 284,975 1.01
----------- -------
562,748 2.00
----------- -------
Total Services 5,186,584 18.42
----------- -------
Finance
Banking (15.23%)
Banc One Corp. 3,330,100 141,113 .50
Bank of New York Co., Inc. 13,800,000 545,100 1.94
BankAmerica Corp. 2,275,000 265,891 .94
Bankers Trust New York Corp. 1,940,000 157,868 .56
Barnett Banks, Inc. 1,850,000 90,419 .32
Chase Manhattan Corp. 3,900,000 361,238 1.28
Comerica Inc. 546,200 31,953 .11
CoreStates Financial Corp 6,050,000 306,281 1.09
First Chicago NBD Corp. 5,300,000 298,125 1.06
First Union Corp. 2,575,000 216,300 .77
Fleet Financial Group, Inc. 6,717,400 409,761 1.45
KeyCorp 2,000,000 104,250 .37
J.P. Morgan & Co. Inc. 2,530,000 257,744 .92
National City Corp. 2,350,000 114,562 .41
NationsBank Corp. 5,700,000 344,137 1.22
Norwest Corp. 4,000,000 199,500 .71
PNC Bank Corp. 4,400,000 180,950 .64
Signet Banking Corp. 1,400,000 43,225 .15
SunTrust Banks, Inc. 2,000,000 101,500 .36
Wachovia Corp. 2,053,700 120,141 .43
----------- -------
4,290,058 15.23
----------- -------
Financial Services (3.70%)
American Express Co. 3,300,000 217,388 .77
Beneficial Corp. 2,548,180 163,084 .58
Federal National Mortgage Assn. 7,300,000 300,212 1.07
Household International, Inc. 4,103,300 361,090 1.28
----------- -------
1,041,774 3.70
----------- -------
Insurance (6.20%)
Aetna Inc. 2,400,000 218,700 .78
Allstate Corp. 5,400,000 353,700 1.25
American General Corp. 5,400,000 235,575 .84
CIGNA Corp. 1,050,000 157,894 .56
General Re Corp. 1,905,000 318,611 1.13
Lincoln National Corp. 2,600,000 145,600 .52
Marsh & McLennan Companies, Inc. 1,100,000 132,550 .47
St. Paul Companies, Inc. 2,725,000 182,575 .65
----------- -------
1,745,205 6.20
----------- -------
Total Finance 7,077,037 25.13
----------- -------
Multi-Industry
Multi-Industry (.56%)
AlliedSignal Inc. 1,075,000 77,669 .28
Minnesota Mining and Manufacturing Co. 500,000 43,500 .15
Whitman Corp. 1,625,000 37,578 .13
----------- -------
Total Multi-Industry 158,747 .56
----------- -------
Miscellaneous
Common stocks in initial period of
acquisition 738,790 2.62
----------- -------
TOTAL INVESTMENT SECURITIES
(cost: $18,455,562,000) 27,139,010 96.36
Excess of United States Treasury bills,
cash, and receivables over payables 1,025,986 3.64
----------- -------
NET ASSETS $28,164,996 100.00 %
=========== =======
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C>
Washington Mutual Investors Fund
Financial Statements
Statement of Assets and Liabilities
April 30, 1997
(dollars in thousands)
Assets:
Investment securities at market
(cost: $18,455,562) $27,139,010
United States Treasury bills
(cost: $1,000,298) 1,000,364
Cash 106
Receivables for--
Sales of investments $281,244
Sales of Fund's shares 48,675
Dividends and interest 58,279 388,198
------------ ------------
28,527,678
Liabilities:
Payables for--
Purchases of investments 327,084
Repurchases of Fund's shares 17,288
Management services 6,980
Accrued expenses 11,330 362,682
------------ ------------
Net Assets at April 30, 1997
Equivalent to $25.93 per share on
1,086,206,095 shares of $1 par value
capital stock outstanding (authorized
capital stock -- 2,000,000,000 shares) $28,164,996
============
Statement of Operations
for the year ended April 30, 1997
(dollars in thousands)
Investment Income:
Income:
Dividends $ 721,101
Interest 51,652 $ 772,753
------------
Expenses:
Investment management fee 49,383
Business management fee 28,014
Distribution expenses 52,997
Transfer agent fee 16,906
Reports to shareholders 790
Registration statement and prospectus 1,857
Postage, stationery and supplies 3,837
Directors' and Advisory Board fees 478
Auditing and legal fees 124
Custodian fee 297
Other expenses 180 154,863
------------ ------------
Net investment income 617,890
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 1,465,728
Net unrealized appreciation:
Beginning of year 5,887,714
End of year 8,683,514
------------
Net change in unrealized
appreciation 2,795,800
------------
Net realized gain and change in
unrealized appreciation 4,261,528
------------
Net Increase in Net Assets
Resulting from Operations $4,879,418
============
Statement of Changes in Net Assets
(dollars in thousands)
Year Ended April 30
1997 1996
------------ ------------
Operations:
Net investment income $ 617,890 $ 522,254
Net realized gain on investments 1,465,728 1,227,501
Net change in unrealized
appreciation on investments 2,795,800 2,757,898
------------ ------------
Net Increase in Net Assets
Resulting from Operations 4,879,418 4,507,653
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (607,336) (503,739)
Distributions from net realized gain
on investments (1,174,688) (879,840)
------------ ------------
Total Dividends and Distributions (1,782,024) (1,383,579)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
215,746,819 and 172,566,749
shares, respectively 5,311,956 3,741,201
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
67,871,052 and 61,317,672 shares,
respectively 1,671,650 1,323,273
Cost of shares repurchased:
105,990,667 and 89,667,381
shares, respectively (2,605,406) (1,924,927)
------------ ------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 4,378,200 3,139,547
------------ ------------
Total Increase in Net Assets 7,475,594 6,263,621
Net Assets:
Beginning of year 20,689,402 14,425,781
------------ ------------
End of year (including undistributed
net investment income: $82,498 and
$71,944, respectively) $28,164,996 $20,689,402
============ ============
See Notes to Financial Statements
</TABLE>
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 Fund's investment objective is to produce income and
to provide an opportunity for growth of principal consistent with sound common
stock investing. 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 a national securities exchange on the day of valuation 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 $297,000 included $22,000 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, 1997, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $8,683,514,000, of which $9,009,917,000
related to appreciated securities and $326,403,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended April 30, 1997. The cost of
portfolio securities for book and federal income tax purposes was
$19,455,860,000 at April 30, 1997.
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.
WMC, business manager of the Fund, was paid a fee of $28,014,000 for business
management services. The business management agreement provides for monthly
fees, accrued daily, based on an annual rate of 0.175% of the first $3 billion
of net assets; 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; 0.095% of such assets in excess of $12 billion but not exceeding $21
billion, and 0.075% of such assets in excess of $21 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 $815,366 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 officers
of the Fund and five 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 $49,383,000 for investment management
services. The investment advisory agreement provides for monthly fees, accrued
daily, based on an annual rate of 0.225% of the first $3 billion of net assets;
0.21% of such assets in excess of $3 billion but not exceeding $8 billion;
0.20% of such assets in excess of $8 billion but not exceeding $21 billion; and
0.195% of such assets in excess of $21 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, 1997, distribution
expenses under the Plan were $52,997,000 including accrued expenses of
$9,282,000.
American Funds Service Company, the transfer agent for the Fund, was paid a
fee of $16,906,000. AFD has informed the Fund that it has received $22,625,000
(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 and Advisory Board members of the Fund who are unaffiliated with
WMC may elect to defer part or all of the fees earned for such services.
Amounts deferred are not funded and are general unsecured liabilities of the
Fund. As of April 30, 1997, aggregate amounts deferred and earnings thereon
were $215,000.
4. As of April 30, 1997, accumulated undistributed net realized gain on
investments was $947,123,000 and additional paid-in capital was
$17,365,655,000.
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $7,778,144,000 and $4,733,698,000, respectively,
during the year ended April 30, 1997.
The fund owns 5.4% of the outstanding voting securities of Westvaco Corp. and
thus is considered an affiliate as defined in the Investment Company Act of
1940.
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share
Data and Ratios
Year en ded Apr il 30
1997 1996 1995 1994 1993
Net Asset Value,
Beginning of Year $ 22. $18.87 $17.11 $17.59 $16.22
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .62 .63 .63 .59 .56
Net realized and
unrealized gain (loss)
on investments 4.36 4.98 2.16 (.12) 1.55
------- ------- ------- ------- -------
Total income from
investment operations 4.98 5.61 2.79 .47 2.11
------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income (.62) (.62) (.62) (.56) (.56)
Distributions from net
realized gains (1.20) (1.09) (.41) (.39) (.18)
------- ------- ------- ------- -------
Total distributions (1.82) (1.71) (1.03) (.95) (.74)
------- ------- ------- ------- -------
Net Asset Value,
End of Year $25.93 $22.77 $18.87 $17.11 $17.59
======= ======= ======= ======= =======
Total Return/1/ 22.43% 30.40% 17.01% 2.55% 13.36%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $28,165 $20,689 $14,426 $12,405 $11,306
Ratio of expenses to
average net assets .64% .66% .69% .69% .70%
Ratio of net income to
average net assets 2.56% 2.98% 3.57% 3.29% 3.33%
Average commissions paid/2/ 5.29c 6.24c 6.87c 6.85c 7.49c
Portfolio turnover rate 20.41% 23.4 25.4 23.8 18.6
/1/Excludes maximum
sales charge of 5.75%
of the Fund's offering price.
Total Return figure
for 1993 has been revised.
Previously shown for
that year was 13.38%.
/2/Brokerage commissions
paid on portfolio
transactions increase the
cost of securities
purchased or reduce the
proceeds of securities sold,
and are not separately reflected in the
Fund's statement of
operations. Shares traded
on a principal basis are
excluded.
</TABLE>
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, 1997, 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, 1997 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.
Los Angeles, California
May 30, 1997
Tax Information
(Unaudited)
During the fiscal year ended April 30, 1997, 100% of the dividends paid by the
Fund from net investment income earned qualified for the corporate
dividends-received deduction. Six 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.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Per-Share Data and Ratios
Report of Independent Auditors
(B) EXHIBITS:
1. On file (see SEC files nos. 811-604 and 2-11051)
2. On file (see SEC files nos. 811-604 and 2-11051)
3. None
4. On file (see SEC files nos. 811-604 and 2-11051)
5. On file (see SEC files nos. 811-604 and 2-11051)
6. On file (see SEC files nos. 811-604 and 2-11051)
7. None
8. On file (see SEC files nos. 811-604 and 2-11051)
9. On file (see SEC files nos. 811-604 and 2-11051)
10. Not applicable to this filing.
11. Consent of Independent Accountants
12. None
13. None
14. On file (see SEC files nos. 811-604 and 2-11051)
15. On file (see SEC files nos. 811-604 and 2-11051)
16. On file (see SEC files nos. 811-604 and 2-11051)
17. Financial Data Schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of April 30, 1997
<TABLE>
<CAPTION>
Number of
Title of Class Record-Holders
<S> <C>
Common Stock 1,251,721
($1.00 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual Fund Errors
and Omissions Policy written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company and ICI Mutual Insurance Company which
insures its officers and directors against certain liabilities.
ARTICLE VIII (H) AND (I) OF THE ARTICLES OF INCORPORATION OF THE FUND PROVIDE
THAT:
(h) "The Corporation shall indemnify (1) its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law, and (2) its other employees and agents to
such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such By-Laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of these
Articles of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal. Nothing contained herein shall be construed
to authorize the Corporation to indemnify any director or officer of the
Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the [Investment
Company] Act [of 1940].
(i) To the fullest extent permitted by Maryland statutory and decisional law
and the [Investment Company] Act [of 1940], no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for money damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any liability to
which such director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment, modification or repeal of
this Article VIII shall adversely affect any right or protection of a director
or officer that exists at the time of such amendment, modification or repeal."
Subsection (b) of Section 2-418 of the GENERAL CORPORATION LAW OF MARYLAND
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other
ITEM 27. INDEMNIFICATION (CONT.)
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against reasonable
expenses (including attorneys' fees), judgments, penalties, fines and amounts
paid in settlement actually incurred by him in connection with such action,
suit or proceeding unless it is proved that: (i) the act or omission of the
person was material to the cause of action adjudicated in the proceeding and
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the person actually received an improper personal benefit of
money, property or services; or (iii) with respect to any criminal action or
proceeding, the person had reasonable cause to believe his act or omission was
unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible in the circumstances because
the party to be indemnified has met the standard of conduct set forth in
subsection (b). This determination shall be made (i) by the Board of Directors
by a majority vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such quorum cannot be obtained, then by a
majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors of a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the shareholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, 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., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America and
The U.S. Treasury Money Fund of America.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
<S> <C> <C> <C>
David A. Abzug Regional Vice President None
4433 Leydon Avenue
Woodland Hills, CA 91364
John A. Agar Regional Vice President None
1501 N. University Drive, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard Armstrong Assistant Vice President None
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
3100 West End Ave., Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
L Daniel C. Brown Senior Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine St.
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Dan J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55346
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Mail Street
Jenks, OK 74037
Kirk D. Dodge Vice President None
3034 Parkridge Drive
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01722
L Mark P. Freeman, Jr. President and Director None
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
L Paul G. Haaga, Jr. Director None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
L Robert L. Johansen Vice President and Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Ave., 36th Floor
New York, NY 10111-0121
V. John Kriss Senior Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
1940 Blake St., Suite 303
Denver, CO 80202
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional Investment Services Division None
L Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
L John C. Massar Director, Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
P.O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
L John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
P.O. Box 472245
Charlotte, NC 28247
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe, Ave., No. 4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
L Daniel B. Seivert Assistant Vice President None
L R. Michael Shanahan Director President and Director
David W. Short Director, Senior Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
L Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
L John C. Smith Vice President - None
Institutional Investment Services Division
L Mary E. Smith Assistant Vice President, Institutional Investment Services Division None
Rodney G. Smith Vice President None
100 N. Central Exp., Suite 1214
Richardson, TX 75080
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew Taylor Assistant Vice President None
S James P. Toomey Assistant Vice President None
I Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
L David M. Ward Assistant Vice President -Institutional Investment Services Division None
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34238
L J. Kelly Webb Senior Vice President, Treasurer None
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
N. Dexter Williams Vice President None
25 Whitside Court
Danville, CA 94526
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Assistant Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director and Senior Vice President None
Laurie B. Wood Regional Vice President None
3500 West Camino de Urania
Tucson, AZ 85741
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
320 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica boulevard, 15th Floor, Los Angeles, CA
90025
SF Business Address, Four Embarcadero Center, Suite 1800, San Francisco, CA
94111
B Business Address, 135 South State College Blvd., Brea, CA 92821
S Business Address, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, are maintained and kept in the offices of the
Fund, 1101 Vermont Avenue, N.W., Washington, D.C. 20005, and its investment
adviser, Capital Research and Management Company, 333 South Hope Street, Los
Angeles, CA 90071. Certain accounting records are maintained and kept in the
offices of the Fund's accounting department,
5300 Robin Hood Road, Norfolk, VA 23513 .
Records covering shareholder accounts are maintained and kept by the Transfer
Agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92821, 8000 IH-10, Suite 1400, San Antonio, TX 78230, 5300 Robin Hood Road,
Norfolk, VA 23513 and 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240.
Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, New York, 10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the Prospectus, the Fund undertakes to provide each
person to whom a prospectus is delivered with a copy of the Fund's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to rule
485(b) under the Securites Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington, District of Columbia, on the 12th day of
June, 1997.
WASHINGTON MUTUAL INVESTORS FUND, INC.
By Stephen Hartwell, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below on June 12, 1997, by the
following persons in the capacities indicated.
SIGNATURE TITLE
(1) PRINCIPAL EXECUTIVE OFFICER:
Stephen Hartwell Chairman of the Board
(2) PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:
Ralph S. Richard Vice President and Treasurer
(3) DIRECTORS
Stephen Hartwell Chairman of the Board
James H. Lemon, Jr.* Vice Chairman of the Board
Harry J. Lister* President
Cyrus A. Ansary* Director
John A. Beck* Director
Fred J. Brinkman* Director
Daniel J. Callahn III* Director
James C. Miller III* Director
Thomas A. Owen* Director
Jean Head Sisco* Director
T. Eugene Smith* Director
Leonard P. Steuart II* Director
Margita E. White* Director
Stephen G. Yeonas* Director
*By Howard L. Kitzmiller,
Attorney-in-Fact
POWER OF ATTORNEY
The undersigned directors of Washington Mutual Investors Fund, Inc. a Maryland
Corporation, do each hereby constitute and appoint Stephen Hartwell, Harry J.
Lister and Howard L. Kitzmiller, or any of them to act as attorneys-in-fact for
and in his or her name, place and stead (1) to sign his or her name as a
director of said Corporation to any and all amendments to the Registration
Statement of Washington Mutual Investors Fund, Inc., File No. 2-11051 under the
Securities Act of 1933, as amended, or under the Investment Company Act of
1940, as amended, File No. 811-604, said amendments to be filed with the
Securities and Exchange Commission, and to any and all documents required by
any State in the United States of America in which this Corporation offers its
shares, and (2) to deliver any and all such amendments to such Registration
Statement, so signed, for filing with the Securities and Exchange Commission
under the provisions of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, granting to said attorneys-in-fact,
and each of them, full power and authority to do and perform every act and
thing whatsoever requisite and necessary to be done in and about the premises
as fully to all intents and purposes as the undersigned might or could do if
personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Washington, D.C., this 21st day of March, 1997.
Cyrus A. Ansary James C. Miller III
John A. Beck Thomas J. Owen
Daniel J. Callahan III Jean Head Sisco
Stephen Hartwell T. Eugene Smith
James H. Lemon, Jr. Leonard P. Steuart II
Harry J. Lister Margita E. White
Fred J. Brinkman Stephen G. Yeonas
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting this Post-Effective Amendment No. 98 to the registration statement
on Form N-1A (the "Registration Statement") of our report dated May 30, 1997,
relating to the financial statements and per-share data and ratios of
Washington Mutual Investors Fund, Inc., which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "General
Information-Independent Accountants" and "General Information-Reports to
Shareholders" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
June 12, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 19455860
<INVESTMENTS-AT-VALUE> 28139374
<RECEIVABLES> 388198
<ASSETS-OTHER> 106
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28527678
<PAYABLE-FOR-SECURITIES> 327084
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35598
<TOTAL-LIABILITIES> 362682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17365655
<SHARES-COMMON-STOCK> 1086206
<SHARES-COMMON-PRIOR> 908579
<ACCUMULATED-NII-CURRENT> 82498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 947123
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8683514
<NET-ASSETS> 28164996
<DIVIDEND-INCOME> 721101
<INTEREST-INCOME> 51652
<OTHER-INCOME> 0
<EXPENSES-NET> 154863
<NET-INVESTMENT-INCOME> 617890
<REALIZED-GAINS-CURRENT> 1465728
<APPREC-INCREASE-CURRENT> 2795800
<NET-CHANGE-FROM-OPS> 4879418
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 607336
<DISTRIBUTIONS-OF-GAINS> 1174688
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 215747
<NUMBER-OF-SHARES-REDEEMED> 105991
<SHARES-REINVESTED> 67871
<NET-CHANGE-IN-ASSETS> 7475594
<ACCUMULATED-NII-PRIOR> 71944
<ACCUMULATED-GAINS-PRIOR> 656091
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 77397
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 154863
<AVERAGE-NET-ASSETS> 24169845
<PER-SHARE-NAV-BEGIN> 22.77
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> 4.36
<PER-SHARE-DIVIDEND> .62
<PER-SHARE-DISTRIBUTIONS> 1.20
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.93
<EXPENSE-RATIO> .64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>