=====================================================
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. 99
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 27
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 WILL FILE ITS 24F-2 NOTICE FOR FISCAL 1998 ON OR ABOUT JULY
24, 1998.
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
/x/ IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON JUNE 22, 1998,
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
<PAGE>
[LOGO]
- -------------------------------------------------------------------
Washington Mutual
Investors Fund-SM-
PROSPECTUS
JUNE 22, 1998
<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 14
</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.
01-010-0698
<PAGE>
- --------------------------------------------------------------------------------
EXPENSES
THE EFFECT OF THE EXPENSES DESCRIBED BELOW IS REFLECTED IN THE FUND'S SHARE
PRICE AND RETURN.
You may pay certain shareholder transaction expenses when you buy or sell shares
of the fund. Operating expenses are paid by the fund.
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 0.30%
................................................
12b-1 expenses 0.24%(1)
................................................
Other expenses 0.08%
................................................
Total fund operating expenses 0.62%
</TABLE>
(1) 12b-1 EXPENSES MAY NOT EXCEED 0.25% OF THE FUND'S AVERAGE NET ASSETS
ANNUALLY.
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 $ 63
.............................................
Three years $ 76
.............................................
Five years $ 90
.............................................
Ten years $130
</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.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 3
<PAGE>
- --------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 25.93 $ 22.77 $ 18.87 $ 17.11 $ 17.59 $ 16.22 $15.02 $13.75 $14.10 $11.89
- -----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .62 .62 .63 .63 .59 .56 .56 .58 .59 .58
............................................................................................................................
Net realized and unrealized gain (loss)
on investments 9.65 4.36 4.98 2.16 (.12) 1.55 1.50 1.37 .36 2.07
............................................................................................................................
Total income from investment operations 10.27 4.98 5.61 2.79 .47 2.11 2.06 1.95 .95 2.65
- -----------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.62) (.62) (.62) (.62) (.56) (.56) (.56) (.62) (.62) (.44)
............................................................................................................................
Distributions from net realized gains (1.66) (1.20) (1.09) (.41) (.39) (.18) (.30) (.06) (.68) --
............................................................................................................................
Total distributions (2.28) (1.82) (1.71) (1.03) (.95) (.74) (.86) (.68) (1.30) (.44)
............................................................................................................................
Net asset value, end of year $ 33.92 $ 25.93 $ 22.77 $ 18.87 $ 17.11 $ 17.59 $16.22 $15.02 $13.75 $14.10
- -----------------------------------------------------------------------------------------------------------------------------
Total return(1) 40.80% 22.43% 30.40% 17.01% 2.55% 13.36% 14.24% 14.69% 6.52% 22.72%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in millions) $45,764 $28,165 $20,689 $14,426 $12,405 $11,306 $8,896 $6,596 $4,778 $3,250
............................................................................................................................
Ratio of expenses to average net assets .62% .64% .66% .69% .69% .70% .74% .77% .69% .67%
............................................................................................................................
Ratio of net income to average net
assets 2.08% 2.56% 2.98% 3.57% 3.29% 3.33% 3.58% 4.24% 4.01% 4.54%
............................................................................................................................
4.94 5.29 6.24 6.87 6.85 7.49 7.51 7.73 7.53 7.72
Average commissions paid per share(2) CENTS CENTS CENTS CENTS CENTS CENTS CENTS CENTS CENTS CENTS
............................................................................................................................
Portfolio turnover rate 17.61% 20.41% 23.41% 25.45% 23.86% 18.60% 10.36% 10.86% 7.38% 21.27%
- -----------------------------------------------------------------------------------------------------------------------------
</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 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<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.
Investment limitations are considered at the time securities are purchased.
These limits are based on the fund's net assets unless otherwise indicated. The
fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval.
THE FUND MAY NOT ACHIEVE ITS INVESTMENT OBJECTIVE DUE TO MARKET CONDITIONS AND
OTHER FACTORS. IN ADDITION, THE FUND MAY EXPERIENCE DIFFICULTY LIQUIDATING
CERTAIN PORTFOLIO SECURITIES DURING SIGNIFICANT MARKET DECLINES OR PERIODS OF
HEAVY REDEMPTIONS.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 5
<PAGE>
- -------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. 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, preferred stocks and other securities 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 investment philosophy of Capital Research and Management Company is to seek
fundamental values at reasonable prices. Capital Research and Management Company
utilizes 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 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
PORTFOLIO YEARS OF EXPERIENCE WITH CAPITAL
COUNSELORS AS PORTFOLIO COUNSELOR RESEARCH AND
FOR (AND RESEARCH PROFESSIONAL, MANAGEMENT
WASHINGTON MUTUAL IF APPLICABLE) FOR COMPANY OR
INVESTORS FUND PRIMARY TITLE(S) WASHINGTON MUTUAL INVESTORS FUND ITS AFFILIATES TOTAL YEARS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
TIMOTHY D. ARMOUR Chairman and Chief Executive 8 years (plus 4 years as a research 15 years 15 years
Officer, Capital Research Company* professional prior to becoming a
portfolio counselor for the fund)
- --------------------------------------------------------------------------------------------------------------------------
STEPHEN E. Senior Vice President, Capital 17 years (plus 8 years as a 26 years 32 years
BEPLER Research Company* research professional prior to
becoming a portfolio counselor for
the fund)
- --------------------------------------------------------------------------------------------------------------------------
JAMES K. Senior Vice President and Director, 20 years (plus 7 years as a 36 years 36 years
DUNTON Capital Research and Management research professional prior to
Company becoming a portfolio counselor for
the fund)
- --------------------------------------------------------------------------------------------------------------------------
GREGG E. Senior Vice President, Capital 8 years (plus 7 years as a research 25 years 25 years
IRELAND Research and Management Company professional prior to becoming a
portfolio counselor for the fund)
- --------------------------------------------------------------------------------------------------------------------------
JAMES B. Senior Vice President, Capital 8 years (plus 2 years as a research 16 years 16 years
LOVELACE Research and Management Company professional prior to becoming a
portfolio counselor for the fund)
- --------------------------------------------------------------------------------------------------------------------------
ROBERT G. O'DONNELL Senior Vice President and Director, 5 years (plus 17 years as a 23 years 26 years
Capital Research and Management research professional prior to
Company becoming a portfolio counselor for
the fund)
- --------------------------------------------------------------------------------------------------------------------------
DONALD D. Vice President, Capital Research 4 years (plus 6 years as a research 13 years 13 years
O'NEAL and Management Company professional prior to becoming a
portfolio counselor for the fund)
- --------------------------------------------------------------------------------------------------------------------------
JAMES F. ROTHENBERG President and Director, Capital 4 years (plus 9 years as a research 28 years 28 years
Research and Management Company professional-- 1971-1979--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>
- --------------------------------------------------------------------------------
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, 1998)
<TABLE>
<CAPTION>
THE FUND THE FUND AT
AT NET MAXIMUM
AVERAGE ANNUAL ASSET SALES
TOTAL RETURNS: VALUE(1) CHARGE(1,2) S&P 500(3)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
One year 45.11% 36.79% 47.88%
...................................................................................
Five years 21.94% 20.50% 22.35%
...................................................................................
Ten years 18.09% 17.39% 18.90%
...................................................................................
Lifetime(4) 14.10% 13.95% 12.74%
- ------------------------------------------------------------------------------------
Yield(1,2): 1.74%
Distribution Rate(2): 1.65%
</TABLE>
(1) THESE FUND RESULTS WERE CALCULATED ACCORDING TO A STANDARD FORMULA 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) THE FUND BEGAN INVESTMENT OPERATIONS ON JULY 31, 1952.
8 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HERE ARE THE FUND'S ANNUAL TOTAL RETURNS CALCULATED WITHOUT A SALES
CHARGE. THIS
INFORMATION IS BEING SUPPLIED ON A CALENDAR YEAR BASIS.
<S> <C>
88 17.66%
89 28.96%
90 -3.86%
91 23.49%
92 9.10%
93 13.05%
94 0.49%
95 41.22%
96 20.18%
97 33.29%
</TABLE>
Past results are not an indication of future results.
- -------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends, which may fluctuate, 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.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, or the shareholder does
not respond to mailings from American Funds Service Company with regard to
uncashed distribution checks, the shareholder's distribution option will
automatically be converted to having all dividends and other distributions
reinvested in additional shares.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 9
<PAGE>
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.
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
which meets periodically and performs 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
10 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
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."
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.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 11
<PAGE>
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. The 12b-1 fee paid by the fund,
as a percentage of average net assets, for the previous fiscal year is listed
earlier under "Expenses." Since these fees are paid out of the fund's assets on
an ongoing basis, over time they will increase the cost of an investment and may
cost you more than paying higher sales charges in lieu of these fees.
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.
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.
12 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
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
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
[MAP]
<TABLE>
<S> <C> <C> <C>
WESTERN SERVICE WESTERN CENTRAL EASTERN CENTRAL EASTERN SERVICE
CENTER SERVICE CENTER SERVICE CENTER CENTER
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Norfolk, Virginia
92822-2205 78265-9522 Indiana 23501-2280
Fax: 714/671-7080 Fax: 210/530-4050 46206-6007 Fax: 757/670-4773
Fax: 317/735-6620
</TABLE>
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 13
<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, computer,
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 undue
burden on 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
14 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
elect to have the dividends and/or capital gain distributions paid to you in
cash.
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-Registered Trademark-, by computer using American FundsLine
OnLine-SM- (see below) or by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
ALTHOUGH THERE IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES A
SHAREHOLDER CAN MAKE IN A PERIOD OF TIME, THE FUND AND AMERICAN FUNDS
DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER AND MAY TERMINATE
THE EXCHANGE PRIVILEGE OF ANY INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY
THEY HAVE DETERMINED IN THEIR DISCRETION INVOLVES ACTUAL OR POTENTIAL HARM TO
THE FUND.
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 4:00
p.m. New York time which is the normal close of trading on the New York Stock
Exchange, every day the 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.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 15
<PAGE>
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 through payroll
deduction..................................... $ 25
</TABLE>
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 100 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS BY THESE ACCOUNTS MADE WITHIN ONE YEAR OF
PURCHASE. 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
16 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
the fund under its Plan of Distribution and/or by American Funds Distributors on
investments made with no initial sales charge. 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.
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 pursuant to the
fund's Plan of Distribution. American Funds Distributors currently provides
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,
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 17
<PAGE>
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, as well as your holdings in Endowments and Bond
Portfolio for Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or charity.
Direct purchases of the money market funds are excluded.
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 (excludes appreciation and
reinvested distributions). 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-Registered Trademark- or American FundsLine OnLine-SM- (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-Registered
Trademark-) by computer using American FundsLine OnLine-SM-, 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.
18 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
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. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
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 member firm of a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association, or credit
union 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
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 (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Fund Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Reinvestment will be at the next calculated net asset value after receipt and
acceptance by American Funds Service Company.
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS 19
<PAGE>
- -------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE-REGISTERED TRADEMARK- AND AMERICAN FUNDSLINE ONLINE-SM-
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-Registered Trademark-
or American FundsLine OnLine-SM-. To use these services, call 800/325-3590 from
a TouchTone-TM- telephone or access The American Funds Web site on the Internet
at www.americanfunds.com.
TELEPHONE AND COMPUTER PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone, computer (including American
FundsLine-Registered Trademark- or American FundsLine OnLine-SM-), 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.)
20 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in your
account. Dividends and capital gain reinvestments and purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service providers --
including the investment adviser and its affiliates -- are taking steps to
address the issue. In addition, the Year 2000 problem may adversely affect the
companies in which the fund invests. For example, companies may incur
substantial costs to address the problem. They may also suffer losses caused by
corporate and governmental data processing errors. The fund and its investment
adviser will continue to monitor developments relating to this issue.
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 RETIREMENT PLAN FOR DEALER SERVICES
SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine-Registered Trademark- Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
------------------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. In the event of any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, the English text will prevail.
------------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Includes financial statements, detailed performance information, portfolio
holdings, a statement from portfolio management and the independent
accountant's report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the fund, including the
fund's financial statements.
A current SAI has been filed with the Securities and Exchange Commission
("SEC"). It is incorporated by reference into this prospectus and is
available along with other related materials on the SEC's Internet Web site
at
http://www.sec.gov.
CODE OF ETHICS
Includes a description of the investment adviser's personal investing
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary
Service Company of the fund
800/421-0180 ext. 1 1101 Vermont Avenue, N.W.
Washington, D.C. 20005
This prospectus has been printed on recycled paper. [LOGO]
24 WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
WASHINGTON MUTUAL INVESTORS FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June 22, 1998
This document is not a prospectus but should be read in conjunction with the
current prospectus dated June 22, 1998 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 9
Dividends, Distributions and Federal Taxes 11
Purchase of Shares 13
Redeeming Shares 18
Shareholder Account Services and Privileges 19
Execution of Portfolio Transactions 20
General Information 21
Investment Results 22
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. Investment limitations
expressed in the following restrictions are considered at the time securities
are purchased and are based on the fund's net assets unless otherwise
indicated.
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; and
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 cash equivalents not to exceed 5% of total capital assets, which shall be
invested in short-term U.S. Treasury or other U.S. Government guaranteed
short-term obligations, at the discretion of the fund's Treasurer or 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
4/30/98 GROUP INDIVIDUAL
SERVES/2/
<S> <C> <C> <C> <C> <C>
Charles T. Akre Director Emeritus Miller & Chevalier, $15,000 $15,000 1
700 John Ringling Blvd. Chartered,
Apt. 1108 Of Counsel
Sarasota, FL 34236
Age: 88
Cyrus A. Ansary Director Investment Services $50,800 $53,500 3
1725 K Street, N.W., Suite 410 International Co.,
Washington, D.C. 20006 President
Age: 64
Nathan A. Baily Director Emeritus Management, Marketing, $16,500 $16,500 1
5516 Greystone Street Education Consultant
Chevy Chase, MD 20815
Age: 77
John A. Beck*{ Director Emeritus Washington Management none/4/ none/4/ 1
Age: 72 Corporation, Counsel
Fred J. Brinkman*{ Director Washington Management none/4/ none/4/ 1
Age: 69 Corporation, Senior
Financial Consultant
Charles A. Bowsher Advisory Board Retired Comptroller $6,000 $6000 1
4503 Boxwood Road Member General of
Bethesda, MD 20816 The United States
Age: 67
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: 50
Daniel J. Callahan III Director The Morris & Gwendolyn $46,800 $46,800 1
1825 K Street, N.W. Cafritz Foundation,
Washington, D.C. 20006 Vice Chairman &
Age: 66 Treasurer
Stephen Hartwell*{ Chairman of the Board Washington Management none/4/ none/4/ 3
Age: 83 Corporation, Chairman of
the Board
Vernon W. Holleman, Jr. Advisory Board Vernon W. Holleman, Jr. $6,000/3/ $6,000 1
5550 Friendship Drive Member Company, President
Suite 502
Chevy Chase, MD 20815
Age: 62
James H. Lemon, Jr.*{ Vice Chairman of the The Johnston-Lemon none/4/ none/4/ 3
Age: 62 Board Group, Incorporated,
Chairman of the Board
and
Chief Executive Officer
Harry J. Lister*{ President Washington Management none/4/ none/4/ 3
Age: 62 Corporation, President
and Director
James C. Miller III Director Citizens for a Sound $50,200 $50,200 1
1250 H Street, N.W., Suite 700 Economy, Counselor
Washington, D.C. 20005
Age: 55
Bernard J. Nees Chairman Emeritus of Washington Management none/4/ none/4/ 1
1101 Vermont Avenue, N.W. the Board Corporation,
Washington, D.C. 20005 Former Chairman
Age: 90
Katherine D. Ortega Advisory Board Former Treasurer of the $5,000/3/ $5,000 1
800 25th Street, NW Member United States
Suite 1003
Washington, D.C. 20038
Age: 64
Mr. John Knox Singleton Advisory Board President, INOVA $6,000/3/ $6,000 1
8001 Braddock Road Member Health System
Springfield, VA 22151
Age: 49
Jean Head Sisco Director Emeritus Sisco Associates, $38,500 $42,000 3
2517 Massachusetts Avenue, N.W. Management Consulting
Washington, D.C. 20008 Firm, Partner
Age: 72
T. Eugene Smith Director T. Eugene Smith, Inc., $50,900 $54,600 3
666 Tintagel Lane President
McLean, VA 22101
Age: 67
William B. Snyder Advisory Board Southern Heritage $5,000 $5,000 1
P. O. Box 30690 Member Insuarance Company,
Bethesda, MD 20824 Chairman
Age: 68
Leonard P. Steuart II Director Steuart Investment $48,800/3/ $48,800 1
5454 Wisconsin Avenue Company, Vice President
Suite 504
Chevy Chase, MD 20815
Age: 63
Robert F. Tardio Advisory Board Independent Consultant $5,000 $5,000 1
11204 River View Drive Member
Potomac, MD 20854
Age: 69
Margita E. White Director Association for Maximum $50,200 $50,200 1
1776 Massachusetts Avenue, N.W. Service Television Inc.,
Suite 310 President
Washington, D.C. 20036
Age: 60
Stephen G. Yeonas Director Emeritus Stephen G. Yeonas $38,800/3/ $42,300 3
1355 Beverly Road, Suite 102 Company, Chairman of
McLean, VA 22101 the Board and Chief
Age: 73 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 (8/1/96 -- 7/31/97).
/3/Since the plan's adoption, the total amount of deferred compensation accrued
by the fund (plus earnings thereon) through 3/31/98, the latest calendar
quarter, for participants is as follows: Director Leonard P. Steuart II
($57,208), Director Emeritus Stephen G. Yeonas ($308,071), and Advisory Board
members Katherine Ortega ($8,839), Vernon W. Holleman, Jr. ($31,463) and J.
Knox Singleton ($6,912) 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., Harry
J. Lister and Bernard J. Nees are affiliated with the Business Manager and,
accordingly, receive no remuneration from the fund.//
OTHER OFFICERS
(WITH THEIR PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS)#
1101 VERMONT AVENUE, N.W., WASHINGTON, D.C. 20005
HOWARD L. KITZMILLER (Age: 68)
Senior Vice President, Secretary
and Assistant Treasurer
Washington Management Corporation,
Senior Vice President, Secretary,
Assistant Treasurer and Director
RALPH S. RICHARD (Age: 79)
Vice President and Treasurer
Washington Management Corporation,
Vice President, Treasurer and Director
LOIS A. ERHARD (Age: 46)
Vice President
Washington Management Corporation,
Vice President
MICHAEL W. STOCKTON (Age: 31)
Assistant Vice President, Assistant Secretary and Assistant Treasurer
Washington Management Corporation,
Assistant Vice President, Assistant Secretary and Assistant Treasurer
J. LANIER FRANK (Age: 37)
Assistant Vice President
Washington Management Corporation,
Assistant Vice President
# Positions within the organizations listed may have changed during this
period.
All of the officers listed are officers of the Business Manager. Most of the
Directors and officers are also officers and/or directors and/or trustees of
one or more of the other funds for which Washington Management Corporation
serves as Business Manager. All unaffiliated Directors receive from the fund
$20,000 semi-annually and an attendance fee of $2,000 for each board meeting
attended. The chairman of a committee receives an attendance fee of $1,500 and
committee members receive $1,000 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 $10,000
semi-annually 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 $2,500
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, 1998 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 1998. 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 but not exceeding $34
billion, and 0.06% of net assets in excess of $34 billion but not exceeding $55
billion and 0.05% of net assets in excess of $55 billion. During the fiscal
years ended April 30, 1998, 1997 and 1996, the Business Manager's fees amounted
to $36,895,000, $28,014,000 and $22,468,000, 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 $175 billion of stocks,
bonds and money market instruments and serves over eight 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, 0.195% of net assets in excess of $21 billion but
not exceeding $34 billion, and 0.19% of net assets in excess of $34 billion but
not exceeding $55 billion and 0.185% in excess of $55 billion. During the
fiscal years ended April 30, 1998, 1997 and 1996, the Investment Adviser's fees
amounted to $73,646,000, $49,383,000 and $36,371,000, 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, 1998 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, 1998 amounted to
$38,821,000 after allowance of $200,960,000 to dealers including $1,052,000
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,
1997 and 1996, the Principal Underwriter retained $22,625,000 and $16,734,000,
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 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 no-load sales of shares (including
sales exceeding $1 million, 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 100 or more eligible
employees, and investments by retirement plans, foundations and endowments with
$50 million or more in assets). During the fiscal year ended April 30, 1998,
the fund paid or accrued $86,819,000 under the Plan, for compensation to
dealers. As of April 30, 1998, distribution expenses accrued and unpaid
amounted to $14,662,000.
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 investment company
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; and (b) 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 long-term 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 gains on assets held more than 18 months is 20% and on assets held more
than one year and not more than 18 months 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 $11,750 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 Individual Retirement Account ("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
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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 and
Computer Redemptions and Exchanges" below).
By Computer Please contact your investment Complete the American FundsLink
dealer to open account, then follow Authorization Form. Once you've established
the procedures for additional the privilege, you, your financial adviser
investments. or any person with your account information
may access American FundsLine OnLine/SM/ on
the Internet and make investments by computer
(subject to conditions noted in "Telephone and
Computer Purchases, 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):
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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 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).
DEALER COMMISSIONS - 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.)
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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
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 Code including a "401(k)"
plan with 100 or more eligible employees,
and for purchases made at net asset value by certain retirement
plans, foundations and endowments with
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), currently provides 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 Code including a "401(k)" plan with 100 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, foundations and
endowments with 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 American Funds
Service Company (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 the Transfer
Agent; 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 the Transfer Agent, 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 4:00 p.m., New York Time each
day the New York Stock Exchange is open. For example, if the Exchange closes
at 1:00 p.m. on one day and 4:00 p.m. on the next day, the fund's share price
would be determined as of 4:00 p.m. New York time on both days. The New York
Stock Exchange is currently closed on weekends and on the following holidays:
New Year's Day, Martin Luther King, Jr. 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. Equity securities, including depositary receipts, are valued at the
last reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or
less to maturity are amortized to maturity based on their cost if acquired
within 60 days of maturity or, if already held on the 60th day, based on the
value determined on the 61st day. Forward currency contracts are valued at the
mean of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies
are translated prior to the next determination of the net asset value of the
fund's shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's Board; The fair value of all other assets is
added to the value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or by
the fund. The 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
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<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
American FundLine Online/SM/
or by telephoning, faxing, or
telegraphing American Funds Service Company (subject to the conditions noted in this section and in "Telephone and Computer
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 Code including a "401(k)" plan with 100
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 1/2; 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, the
Transfer Agent 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 and American FundsLine OnLine/SM/ (see "American FundsLineR and
American FundsLine OnLine/SM/" 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 and Computer 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,
computer, 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 FUNDSLINE/R/ AND AMERICAN FUNDSLINE ONLINE/SM/- 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 and American
FundsLine OnLine/SM/. To use this service, call 800/325-3590 from a TouchTonet
telephone or access the American Funds Web site on the Internet at
www.americanfunds.com. Redemptions and exchanges through American FundsLineR
and American FundsLine OnLine/SM/ are subject to the conditions noted above and
in "Telephone and Computer 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 AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLineR and American FundsLine OnLine/SM/),
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 $884,029,000 and $574,219,000, respectively, at the year ended April 30,
1998.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended April 30, 1998, 1997
and 1996 amounted to $18,302,000, $14,511,000 and $13,383,000, respectively.
During fiscal years 1998, 1997 and 1996 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 $21,078,000 for the fiscal year ended April 30, 1998.
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. In an effort to reduce the volume of mail
shareholders receive from the fund when a househousehold owns more than one
account, the Transfer Agent has taken steps to eliminate duplicate mailings of
shareholder reports. To receive additional copies of a report shareholders
should contact the Trasnfer Agent.
YEAR 2000 - The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The fund understands that
these service providers are taking steps to address the "Year 2000 problem".
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the fund. In addition, the fund's investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and government data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings
of individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
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; 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, 1998
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . . . $33.92
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). . . . . $35.99
INVESTMENT RESULTS
The fund's yield is 1.66% based on a 30-day (or one month) period ended April
30, 1998, 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, 1998 was +32.71%, +20.52% and
+17.31%, 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 growth and growth- income funds that are at least 10 years old.
In the rolling 10-year periods since January 1, 1968 (133 in all), those funds
have had better total returns than their comparable Lipper indices in 124 of
the 133 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
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10-Year Periods WMIF DJIA/1/ S&P 500/2/ Average Savings
5/01 - 4/30 Deposit/3/
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1988-1998 +393% +500% +464% +54%
1987-1997 +237% +319% +275% +57
1986-1996 +241 +333 +279 +61
1985-1995 +261 +385 +296 +67
1984-1994 +273 +355 +297 +78
1983-1993 +275 +312 +284 +89
1982-1992 +409 +498 +424 +102
1981-1991 +356 +351 +325 +113
1980-1990 +453 +418 +375 +120
1979-1989 +426 +360 +374 +122
1978-1988 +386 +302 +327 +123
1977-1987 +419 +319 +372 +125
1976-1986 +353 +207 +277 +124
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, 1998
Number of Years 5/1-4/30 Value
<S> <C> <C>
1 1997 - 1998 13,271
2 1996 - 1998 16,245
3 1995 - 1998 21,187
4 1994 - 1998 24,794
5 1993 - 1998 25,424
6 1992 - 1998 28,816
7 1991 - 1998 32,913
8 1990 - 1998 37,755
9 1989 - 1998 40,221
10 1988 - 1998 49,340
11 1987 - 1998 47,504
12 1986 - 1998 58,772
13 1985 - 1998 81,070
14 1984 - 1998 98,115
15 1983 - 1998 101,210
16 1982 - 1998 155,441
17 1981 - 1998 159,195
18 1980 - 1998 221,510
19 1979 - 1998 224,608
20 1978 - 1998 254,356
21 1977 - 1998 261,416
22 1976 - 1998 282,323
23 1975 - 1998 373,228
24 1974 - 1998 416,490
25 1973 - 1998 409,541
26 1972 - 1998 384,031
27 1971 - 1998 392,305
28 1970 - 1998 509,155
29 1969 - 1998 428,882
30 1968 - 1998 504,759
</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 30,1998)
<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
1998 67,444 733,784 743,784 127,879 1,831,030 1,931,336 3,890,245
</TABLE>
The dollar amount of capital gain distributions from inception was $799,621
/*/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
(5/1/88-4/30/98) (5/1/78-4/30/98) (5/1/68-4/30/98) (5/1/58-4/30/98)
$4,934 $25,436 $50,476 $174,474
</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
(5/1/88-4/30/98) (5/1/78-4/30/98) (5/1/68-4/30/98) (5/1/58-4/30/98)
$16,956 $97,315 $308,200 $851,436
</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
(5/1/88-4/30/98) (5/1/78-4/30/98) (5/1/68-4/30/98) (5/1/58-4/30/98)
$57,954 $339,481 $1,134,909 $3,069,520
</TABLE>
<TABLE>
Washington Mutual Investors Fund
Investment Portfolio
April 30, 1998
<S> <C> <C> <C> <C<C>
Market Percent
Value of Net Market
Equity Securities Shares (000) Assets Value
(Common and Preferred Stocks)
Energy
Energy Sources (10.15%)
Amoco Corp. 16,910,000 $ 748,267 1.63 % 748,267,500
Atlantic Richfield Co. 14,312,500 1,116,375 2.44 1,116,375,000
Chevron Corp. 5,600,000 463,050 1.01 463,050,000
Exxon Corp. 2,200,000 160,463 .35 160,462,500
Kerr-McGee Corp. 2,350,000 155,100 .34 155,100,000
Mobil Corp. 6,525,000 515,475 1.13 515,475,000
Texaco Inc. 20,450,000 1,257,675 2.75 1,257,675,000
Unocal Corp. 5,600,000 229,250 .50 229,250,000
----------- ------- ---------------
4,645,655 10.15 4,645,655,000
----------- ------- ---------------
Utilities: Electric & Gas (8.32%)
Ameren Corp. 6,800,000 269,450 .59 269,450,000
American Electric Power Co., Inc. 3,350,000 159,962 .35 159,962,500
Baltimore Gas and Electric Co. 4,216,600 132,823 .29 132,822,900
Carolina Power & Light Co. 4,000,000 172,250 .38 172,250,000
Central and South West Corp. 6,225,800 162,260 .35 162,259,913
CINergy Corp. 700,000 24,413 .05 24,412,500
Conectiv, Inc. (formerly Atlantic Energy, Inc.) 1,909,800 39,986 .09 39,986,438
Conectiv, Inc., Class A 325,000 10,664 .02 10,664,063
Consolidated Edison, Inc. 6,000,000 271,500 .59 271,500,000
Consolidated Natural Gas Co. 2,100,000 120,750 .26 120,750,000
Dominion Resources, Inc. 595,000 23,540 .05 23,539,688
DTE Energy Co. 3,865,000 151,460 .33 151,459,688
Duke Energy Corp. 8,623,552 499,088 1.09 499,088,072
Edison International 3,985,000 118,803 .26 118,802,813
Enova Corp. 2,000,000 53,500 .12 53,500,000
Entergy Corp. 2,400,000 59,700 .13 59,700,000
Florida Progress Corp. 4,485,800 182,236 .40 182,235,625
FPL Group, Inc. 1,600,000 99,300 .22 99,300,000
GPU, Inc. 2,400,000 95,100 .21 95,100,000
Houston Industries Inc. 2,800,000 81,375 .18 81,375,000
KeySpan Energy Corp. 900,000 30,713 .07 30,712,500
New Century Energies, Inc. 2,500,000 118,750 .26 118,750,000
OGE Energy Corp. 400,000 21,975 .05 21,975,000
PECO Energy Co. 2,500,000 59,531 .13 59,531,250
PP & L Resources, Inc. 7,700,000 177,581 .39 177,581,250
Public Service Enterprise Group Inc. 3,420,000 114,784 .25 114,783,750
Puget Sound Energy, Inc. 3,800,000 99,987 .22 99,987,500
Southern Co. 16,275,000 431,287 .94 431,287,500
Wisconsin Energy Corp. 700,000 21,350 .05 21,349,997
----------- ------- ---------------
3,804,118 8.32 3,804,117,947
----------- ------- ---------------
Total Energy 8,449,773 18.47 8,449,772,947
----------- ------- ---------------
Materials
Chemicals (3.88%)
E.I. du Pont de Nemours and Co. 12,488,000 909,283 1.99 909,282,500
International Flavors & Fragrances Inc. 860,700 42,120 .09 42,120,506
Mallinckrodt Inc. 1,006,800 32,469 .07 32,469,300
Monsanto Co. 3,850,000 203,569 .44 203,568,750
PPG Industries, Inc. 6,089,500 430,452 .94 430,451,531
Sherwin-Williams Co. 3,000,000 106,875 .23 106,875,000
Witco Corp. 1,400,000 55,475 .12 55,475,001
----------- ------- ---------------
1,780,243 3.88 1,780,242,588
----------- ------- ---------------
Forest Products & Paper (2.81%)
International Paper Co. 12,650,000 660,172 1.44 660,171,875
Louisiana-Pacific Corp. 5,425,000 118,672 .26 118,671,875
Westvaco Corp. 5,501,350 166,760 .37 166,759,672
Weyerhaeuser Co. 4,225,000 243,465 .53 243,465,625
Willamette Industries, Inc. 2,475,000 96,061 .21 96,060,937
----------- ------- ---------------
1,285,130 2.81 1,285,129,984
----------- ------- ---------------
Metals: Nonferrous (.40%)
Phelps Dodge Corp. 2,720,000 182,580 .40 182,580,000
----------- ------- ---------------
Total Materials 3,247,953 7.09 3,247,952,572
----------- ------- ---------------
Capital Equipment
Aerospace & Military Technology (1.95%)
Boeing Co. 3,825,000 191,489 .42 191,489,063
Raytheon Co., Class B 6,150,000 348,628 .76 348,628,125
United Technologies Corp. 3,585,400 352,938 .77 352,937,812
----------- ------- ---------------
893,055 1.95 893,055,000
----------- ------- ---------------
Data Processing & Reproduction (1.88%)
Hewlett-Packard Co. 4,675,000 352,086 .77 352,085,938
Xerox Corp. 4,492,000 509,842 1.11 509,842,000
----------- ------- ---------------
861,928 1.88 861,927,938
----------- ------- ---------------
Electrical & Electronics (.47%)
Emerson Electric Co. 2,130,300 135,540 .30 135,540,338
General Electric Co. 900,000 76,613 .17 76,612,500
----------- ------- ---------------
212,153 .47 212,152,838
----------- ------- ---------------
Electronic Components (.93%)
AMP Inc. 3,650,000 143,491 .31 143,490,625
Motorola, Inc. 2,000,000 111,250 .24 111,250,000
Texas Instruments Inc. 1,800,000 115,312 .25 115,312,500
Thomas & Betts Corp. 1,020,000 59,542 .13 59,542,500
----------- ------- ---------------
429,595 .93 429,595,625
----------- ------- ---------------
Energy Equipment (.20%)
Dresser Industries, Inc. 1,700,000 89,887 .20 89,887,500
----------- ------- ---------------
Industrial Components (3.17%)
Dana Corp. 3,222,800 190,548 .42 190,548,050
Eaton Corp. 2,300,000 212,463 .46 212,462,500
Genuine Parts Co. 8,775,000 315,900 .69 315,900,000
Goodyear Tire & Rubber Co. 2,200,000 154,000 .34 154,000,000
Johnson Controls, Inc. 4,197,600 249,232 .54 249,232,500
Rockwell International Corp. 1,200,000 67,125 .15 67,125,000
TRW Inc. 4,950,000 261,422 .57 261,421,875
----------- ------- ---------------
1,450,690 3.17 1,450,689,925
----------- ------- ---------------
Machinery & Engineering (.59%)
Caterpillar Inc. 3,182,200 181,187 .40 181,186,513
Ingersoll-Rand Co. 1,012,500 46,638 .10 46,638,281
Parker Hannifin Corp. 950,000 42,394 .09 42,393,748
----------- ------- ---------------
270,219 .59 270,218,542
----------- ------- ---------------
Total Capital Equipment 4,207,527 9.19 4,207,527,368
----------- ------- ---------------
Consumer Goods
Appliances & Household Durables (.27%)
Rubbermaid Inc. 3,495,200 100,050 .22 100,050,100
Whirlpool Corp. 300,000 21,600 .05 21,600,000
----------- ------- ---------------
121,650 .27 121,650,100
----------- ------- ---------------
Automobiles (1.53%)
Chrysler Corp. 17,450,000 701,272 1.53 701,271,875
----------- ------- ---------------
Beverages (.37%)
PepsiCo, Inc. 4,300,000 170,656 .37 170,656,250
----------- ------- ---------------
Food & Household Products (2.48%)
Bestfoods 4,440,400 243,667 .53 243,666,950
Colgate-Palmolive Co. 366,300 32,853 .07 32,852,531
General Mills, Inc. 4,900,000 331,056 .72 331,056,250
Kellogg Co. 4,200,000 173,250 .38 173,250,000
Procter & Gamble Co. 1,300,000 106,844 .24 106,843,750
Sara Lee Corp. 4,150,000 247,184 .54 247,184,375
----------- ------- ---------------
1,134,854 2.48 1,134,853,856
----------- ------- ---------------
Health & Personal Care (9.34%)
American Home Products Corp. 1,000,000 93,125 .20 93,125,000
Avon Products, Inc. 2,286,800 187,946 .41 187,946,375
Baxter International Inc. 4,400,000 243,925 .53 243,925,000
Bristol-Myers Squibb Co. 3,950,000 418,206 .91 418,206,250
Johnson & Johnson 800,000 57,100 .12 57,100,000
Kimberly-Clark Corp. 1,400,000 71,050 .16 71,050,000
Eli Lilly and Co. 9,968,800 693,455 1.52 693,454,650
McKesson Corp. 750,000 53,016 .12 53,015,625
Merck & Co., Inc. 1,500,000 180,750 .40 180,750,000
Pfizer Inc 4,596,200 523,105 1.14 523,105,013
Pharmacia & Upjohn, Inc. 6,675,000 280,767 .61 280,767,188
Schering-Plough Corp. 5,100,000 408,638 .89 408,637,500
Warner-Lambert Co. 5,634,200 1,065,920 2.33 1,065,920,212
----------- ------- ---------------
4,277,003 9.34 4,277,002,813
----------- ------- ---------------
Recreation & Other Consumer Products (.76%)
Eastman Kodak Co. 4,806,500 346,969 .76 346,969,219
----------- ------- ---------------
Textiles & Apparel (.31%)
NIKE, Inc., Class B 1,220,425 58,275 .13 58,275,294
VF Corp. 1,618,800 84,178 .18 84,177,600
----------- ------- ---------------
142,453 .31 142,452,894
----------- ------- ---------------
Total Consumer Goods 6,894,857 15.06 6,894,857,007
----------- ------- ---------------
Services
Broadcasting & Publishing (.43%)
Dow Jones & Co., Inc. 2,407,600 117,220 .25 117,220,025
Gannett Co., Inc. 1,200,000 81,525 .18 81,525,000
----------- ------- ---------------
198,745 .43 198,745,025
----------- ------- ---------------
Business & Public Services (2.59%)
Browning-Ferris Industries, Inc. 9,608,700 327,897 .72 327,896,888
Cognizant Corp. 169,200 8,703 .02 8,703,225
Deluxe Corp. 2,500,000 83,750 .18 83,750,000
Dun & Bradstreet Corp. 1,600,000 56,800 .12 56,800,000
Electronic Data Systems Corp. 4,614,700 198,432 .43 198,432,100
IKON Office Solutions, Inc. 5,830,000 141,013 .31 141,013,125
IKON Office Solutions, Inc., convertible
preferred, Series BB 380,000 22,871 .05 22,871,250
Pitney Bowes Inc. 1,800,000 86,400 .19 86,400,000
Waste Management, Inc. 7,725,000 258,788 .57 258,787,500
----------- ------- ---------------
1,184,654 2.59 1,184,654,088
----------- ------- ---------------
Leisure & Tourism (.60%)
McDonald's Corp. 4,425,000 273,797 .60 273,796,875
----------- ------- ---------------
Merchandising (5.50%)
Albertson's, Inc. 11,653,200 582,660 1.27 582,660,000
American Stores Co. 6,475,700 155,417 .34 155,416,800
May Department Stores Co. 4,200,000 259,087 .57 259,087,500
J.C. Penney Co., Inc. 11,078,500 787,266 1.72 787,265,906
Rite Aid Corp. 3,000,000 96,375 .21 96,375,000
Sears, Roebuck and Co. 1,600,000 94,900 .21 94,900,000
Walgreen Co. 1,000,000 34,500 .08 34,500,001
Wal-Mart Stores, Inc. 10,000,000 505,625 1.10 505,625,000
----------- ------- ---------------
2,515,830 5.50 2,515,830,207
----------- ------- ---------------
Telecommunications (8.77%)
Ameritech Corp. 24,200,000 1,030,012 2.25 1,030,012,500
AT&T Corp. 21,280,700 1,278,172 2.79 1,278,172,044
Bell Atlantic Corp. 1,337,900 125,177 .28 125,177,269
SBC Communications Inc. 6,614,350 274,082 .60 274,082,128
Sprint Corp. 6,250,000 426,953 .93 426,953,125
U S WEST Communications Group 16,670,000 879,343 1.92 879,342,500
----------- ------- ---------------
4,013,739 8.77 4,013,739,566
----------- ------- ---------------
Transportation: Rail (1.25%)
CSX Corp. 750,000 39,375 .09 39,375,000
Norfolk Southern Corp. 7,259,500 242,740 .53 242,739,531
Union Pacific Corp. 5,295,200 289,912 .63 289,912,199
----------- ------- ---------------
572,027 1.25 572,026,730
----------- ------- ---------------
Total Services 8,758,792 19.14 8,758,792,491
----------- ------- ---------------
Finance
Banking (14.52%)
Banc One Corp. 3,679,500 216,401 .47 216,400,594
Bank of New York Co., Inc. 10,450,000 617,203 1.35 617,203,125
BankAmerica Corp. 4,000,000 340,000 .74 340,000,000
Bankers Trust New York Corp. 1,940,000 250,502 .55 250,502,500
Chase Manhattan Corp. 6,380,000 884,029 1.93 884,028,750
Comerica Inc. 375,000 25,102 .06 25,101,563
First Chicago NBD Corp. 2,300,000 213,612 .47 213,612,500
First Union Corp. 19,859,146 1,198,996 2.62 1,198,995,940
Fleet Financial Group, Inc. 3,740,000 323,042 .71 323,042,500
KeyCorp 8,350,000 331,391 .72 331,390,625
J.P. Morgan & Co. Inc. 4,375,000 574,219 1.25 574,218,750
NationsBank Corp. 7,471,875 565,994 1.24 565,994,531
Norwest Corp. 6,500,000 257,969 .56 257,968,750
SunTrust Banks, Inc. 2,000,000 162,875 .36 162,875,000
Wachovia Corp. 2,050,000 174,122 .38 174,121,875
Wells Fargo & Co. 1,383,900 509,967 1.11 509,967,149
----------- ------- ---------------
6,645,424 14.52 6,645,424,152
----------- ------- ---------------
Financial Services (3.74%)
American Express Co. 2,650,000 270,300 .59 270,300,000
Beneficial Corp. 2,324,100 303,004 .66 303,004,538
Fannie Mae 6,650,000 398,169 .87 398,168,750
Household International, Inc. 5,273,000 693,070 1.52 693,069,938
SLM Holding Corp. 1,050,000 44,822 .10 44,821,875
----------- ------- ---------------
1,709,365 3.74 1,709,365,101
----------- ------- ---------------
Insurance (6.80%)
Aetna Inc. 3,325,000 268,702 .59 268,701,563
Allstate Corp. 4,370,000 420,612 .92 420,612,500
American General Corp. 6,050,000 403,081 .88 403,081,250
Aon Corp. 4,200,000 270,900 .59 270,900,000
CIGNA Corp. 1,200,000 248,325 .54 248,325,000
General Re Corp. 1,955,000 437,065 .95 437,064,688
Jefferson-Pilot Corp. 2,660,700 156,150 .34 156,149,831
Lincoln National Corp. 3,225,000 286,420 .63 286,420,313
Marsh & McLennan Companies, Inc. 2,200,000 200,475 .44 200,475,000
St. Paul Companies, Inc. 4,943,090 418,927 .92 418,926,877
----------- ------- ---------------
3,110,657 6.80 3,110,657,022
----------- ------- ---------------
Total Finance 11,465,446 25.06 11,465,446,275
----------- ------- ---------------
Multi-Industry
Multi-Industry (.59%)
AlliedSignal Inc. 4,600,000 201,538 .44 201,537,500
Minnesota Mining and Manufacturing Co. 500,000 47,187 .10 47,187,500
Whitman Corp. 1,050,000 20,541 .05 20,540,624
----------- ------- ---------------
Total Multi-Industry 269,266 .59 269,265,624
----------- ------- ---------------
Principal
Amount
Convertible Debentures (000)
Business & Public Services (.00%)
Browning-Ferris Industries,
Inc. 6.25% 2012 $0 0 .00 1
----------- ------- ---------------
Total Convertible Debentures .00 1
----------- ------- ---------------
Miscellaneous
Equity securities in initial period of acquisition 21,357,500 891,130 1.95 891,129,880
----------- ------- ---------------
TOTAL INVESTMENT SECURITIES
(cost: $26,847,084,000) 44,184,744 96.55 44,184,744,164
Excess of United States Treasury bills,
cash, and receivables over payables 1,578,790 3.45 1,578,790,189
----------- ------- -----------------------
NET ASSETS $45,763,534 100.00 % 45,763,534,353
=========== ======= ===============
See Notes to Financial Statements
</TABLE>
<TABLE>
Washington Mutual Investors Fund
Financial Statements
Statement of Assets and Liabilities
April 30, 1998
(dollars in thousands)
<C> <S> <S>
Assets:
Investment securities at market
(cost: $26,847,084) $44,184,744
United States Treasury bills
(cost: $1,505,764) 1,506,176
Cash 6,286
Receivables for--
Sales of investments $53,926
Sales of Fund's shares 117,744
Dividends 71,753 243,423
------------ ------------
45,940,629
Liabilities:
Payables for--
Purchases of investments 118,292
Repurchases of Fund's shares 28,344
Management services 10,974
Accrued expenses 19,485 177,095
------------ ------------
Net Assets at April 30, 1998
Equivalent to $33.92 per share on
1,349,017,791 shares of $1 par value
capital stock outstanding (authorized
capital stock -- 2,000,000,000 shares) $45,763,534
============
Statement of Operations
for the year ended April 30, 1998
(dollars in thousands)
Investment Income:
Income:
Dividends $ 906,675
Interest 81,548 $ 988,223
------------
Expenses:
Investment management fee 73,646
Business management fee 36,895
Distribution expenses 86,819
Transfer agent fee 21,078
Reports to shareholders 1,643
Registration statement and prospectus 2,359
Postage, stationery and supplies 4,680
Directors' and Advisory Board fees 474
Auditing and legal fees 131
Custodian fee 370
Other expenses 284 228,379
------------ ------------
Net investment income 759,844
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 2,816,947
Net unrealized appreciation:
Beginning of year 8,683,514
End of year 17,338,072
------------
Net change in unrealized
appreciation 8,654,558
------------
Net realized gain and change in
unrealized appreciation 11,471,505
------------
Net Increase in Net Assets
Resulting from Operations $12,231,349
============
Statement of Changes in Net Assets
(dollars in thousands)
Year Ended April 30
1998 1997
------------ ------------
Operations:
Net investment income $ 759,844 $ 617,890
Net realized gain on investments 2,816,947 1,465,728
Net change in unrealized
appreciation on investments 8,654,558 2,795,800
------------ ------------
Net Increase in Net Assets
Resulting from Operations 12,231,349 4,879,418
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (736,632) (607,336)
Distributions from net realized gain
on investments (1,958,463) (1,174,688)
------------ ------------
Total Dividends and Distributions (2,695,095) (1,782,024)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
298,975,826 and 215,746,819
shares, respectively 9,237,792 5,311,956
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
84,081,074 and 67,871,052 shares,
respectively 2,539,311 1,671,650
Cost of shares repurchased:
120,245,204 and 105,990,667
shares, respectively (3,714,819) (2,605,406)
------------ ------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 8,062,284 4,378,200
------------ ------------
Total Increase in Net Assets 17,598,538 7,475,594
Net Assets:
Beginning of year 28,164,996 20,689,402
------------ ------------
End of year (including undistributed
net investment income: $105,710 and
$82,498, respectively) $45,763,534 $28,164,996
============ ============
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:
Equity 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.
Securities for which representative market quotations are not readily available
are valued at fair value as determined in good faith under policies approved by
the Fund's Board.
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.
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, 1998, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $17,338,072,000, of which
$17,402,183,000 related to appreciated securities and $64,111,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended April 30, 1998. The cost
of portfolio securities for book and federal income tax purposes was
$28,352,848,000 at April 30, 1998.
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 $36,895,000 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; 0.075% of such assets in excess of $21 billion but not exceeding $34
billion; and 0.06% of net assets in excess of $34 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
$1,052,000 on its retail sales of shares and under the distribution plan of the
Fund but received no net brokerage commissions resulting from purchases and
sales of securities for the investment account of the Fund. All 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 $73,646,000 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;
0.195% of such assets in excess of $21 billion but not exceeding $34 billion;
and 0.19% of net assets in excess of $34 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, 1998, distribution
expenses under the Plan were $86,819,000, including accrued and unpaid expenses
of $14,662,000.
AFD has informed the Fund that it has received $38,821,000 (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.
American Funds Service Company, the transfer agent for the Fund, was paid a
fee of $21,078,000.
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, 1998, aggregate amounts deferred and earnings thereon
were $423,000.
4. As of April 30, 1998, accumulated undistributed net realized gain on
investments was $1,805,607,000 and additional paid-in capital was
$25,165,127,000.
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $11,760,171,000 and $6,185,607,000, respectively,
during the period ended April 30, 1998.
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 $370,000 included $56,000 that was paid by these credits
rather than in cash.
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>
Per-Share
Data and Ratios
Year ended April 30
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Year $ 2 $ 2 $18.87 $17.11 $17.59
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .62 .62 .63 .63 .59
Net realized and
unrealized gain (loss)
on investments 9.65 4.36 4.98 2.16 (.12)
------- ------- ------- ------- -------
Total income from
investment operations 10.27 4.98 5.61 2.79 .47
------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income (.62) (.62) (.62) (.62) (.56)
Distributions from net
realized gains (1.66) (1.20) (1.09) (.41) (.39)
------- ------- ------- ------- -------
Total distributions (2.28) (1.82) (1.71) (1.03) (.95)
------- ------- ------- ------- -------
Net Asset Value,
End of Year $33.92 $25.93 $22.77 $18.87 $17.11
======= ======= ======= ======= =======
Total Return/1/ 40.80% 22.43% 30.40% 17.01% 2.55%
Ratios/Supplemental Data:
Net assets, end of
year (in millions) $45,764 $28,165 $20,689 $14,426 $12,405
Ratio of expenses to
average net assets .62% .64% .66% .69% .69%
Ratio of net income to
average net assets 2.08% 2.56% 2.98% 3.57% 3.29%
Average commissions paid/2/ 4.94 cents 5.29 cents 6.24 cents 6.87 cents 6.85 cents
Portfolio turnover rate 17.61% 20.41% 23.41% 25.45% 23.86%
/1/Excludes maximum
sales charge of 5.75%.
/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.
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, 1998, 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, 1998 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.
/S/ Price Waterhouse LLP
Los Angeles, California
May 29, 1998
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, 1998
</TABLE>
<TABLE>
<CAPTION>
Number of
Title of Class Record-Holders
<S> <C>
Common Stock 1,721,993
($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.
(b)
<TABLE>
<CAPTION>
(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
27304 Park Vista Road
Van Nuys, CA 91301
John A. Agar Regional Vice President None
1501 N. University Drive
Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Brynwood 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 So.
Suite 204
Minneapolis, MN 55438
B Carl R. Bauer Assistant Vice President None
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
P.O. Box 1665
Brentwood, TN 37024-1665
Mick L. Brethower Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
C. Alan Brown Regional Vice President None
4129 Laclede 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 Senior Vice President None
609 W. Littleton Blvd. - Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 West Chicago Avenue
Suite G3
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director and President None
Ruth M. Collier Vice President None
145 W. 67th Street #12K
New York, NY 10023
S David Coolbaugh Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Blvd.
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Dan J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 East Main Street
Jenks, OK 74037
Kirk D. Dodge Senior 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 R. Fodor Vice President None
15 Latisquana Road
Southborough, MA 01772
L Mark P. Freeman, Jr. Director None
Clyde E. Gardner Senior Vice President None
Rt. 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director None
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey 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, Controller None
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
V. John Kriss, Jr. 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
5506 East Mineral Lane
Littleton, CO 80122
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional Investment Services Division None
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
Stephen A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 S. Race Street
Littleton, CO 80121
L John C. Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
L Jamie R. McCrary Assistant Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Rd.
St. Louis, MO 63131
L R. William Melinat Vice President, Institutional None
Investment Services Division
David R. Murray Vice President None
60 Briant Avenue
Sudbury, MA 01776
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 02161
B Candance D. Pilgram 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
S Richard P. Prior Assistant Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07960
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30008 Oakland Hills Drive
Georgetown, TX 78628
Christopher S. 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 Avenue, #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 None
David W. Short Chairman of the Board None
1000 RIDC Plaza, Ste. 212
Pittsburgh, PA 15238
William P. Simon, Jr. Senior Vice President None
554 Canterbury Lane
Berwyn, PA 19312
L John C. Smith Assistant Vice President, None
Institutional Investment Services Division
Rodney G. Smith Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
4 West 4th Avenue, Suite 406
San Mateo, CA 94402
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede 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
H Andrew J. Ward Vice President None
L David M. Ward Vice President, None
Institutional Investment Services Division
Thomas E. Warren Regional Vice President None
1701 Starling Drive
Sarasota, FL 34231
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 Senior 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 Vice President None
L Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, 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 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
SF Business Address, One Market Plaza, Steuart Tower, Ste. 1800, San Francisco,
CA 94111
LW Business Address, 11100 Santa Monica Blvd., Los Angeles, CA 90025
B Business Address, 135 South State College Blvd., Brea, CA 92821
S Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Boulevard, 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 15th day of
June, 1998.
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 15, 1998, 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
Fred J. Brinkman* Director
Daniel J. Callahn III* Director
James C. Miller III* Director
T. Eugene Smith* Director
Leonard P. Steuart II* Director
Margita E. White* Director
*By Howard L. Kitzmiller,
Attorney-in-Fact
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting this Post-Effective Amendment No. 99 to the registration statement
on Form N-1A (the "Registration Statement") of our report dated May 29, 1998,
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 11, 1998
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 28352848
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