(Logo) The American Funds Group
Washington Mutual Investors Fund
Semi-Annual Report
October 31, 1998
Washington Mutual Investors Fund seeks to provide income and growth of
principal through investments in quality common stocks.
Washington Mutual Investors Fund is one of the 28 mutual funds in The American
Funds Group , for which Capital Research and Management Company is the
investment adviser. Since 1931, Capital has invested with a long-term focus
based on thorough research and attention to risk.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended September 30, 1998
(the most recent calendar quarter), assuming payment of the 5.75% maximum sales
charge at the beginning of the stated periods _ 10 years: +333.95%, or +15.81%
a year; 5 years: +124.08%, or +17.51% a year; 12 months: +3.62%. Sales charges
are lower for accounts of $50,000 or more.-
FIGURES SHOWN ARE PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY
LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS
ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY
OTHER ENTITY.
Fellow Shareholders:
The first half of our fiscal year _ the six months ended October 31 _ saw
considerable turbulence in world equity markets. We are pleased to report that
Washington Mutual Investors Fund came through this difficult period relatively
unscathed as a result of its policy of holding only quality income-producing
companies listed on the New York Stock Exchange.
For the six months, the Fund's net asset value dipped slightly, to $33.35 from
$33.92 on April 30. Assuming reinvestment of dividends totaling 29 cents a
share paid during the period, the decline amounted to 0.8%. Meanwhile, the
unmanaged Standard & Poor's 500 Composite Index recorded a similarly minuscule
drop of 0.4% on a total return basis.
Two categories of securities in which Washington Mutual does not invest were
battered especially hard during the half year. One was small-company issues
traded over-the-counter, many of which posted sizable declines. The other
category was emerging markets stocks, where the damage was extremely severe.
Russia's equity market plunged more than 80% and Brazil's nearly 40% for the
six months, both in U.S. dollars. The Morgan Stanley Capital International EMF
(Emerging Markets Free) Asia Index, which tracks stock prices in 10 developing
countries in the Asia-Pacific region, fell almost 30%, reflecting continued
economic deterioration in that part of the world.
While the U.S. economy held up very well in the May-October period, many
American companies doing extensive business in Asia began reporting lower
earnings. The stocks of many of these firms were treated harshly by investors,
as were the shares of banks that either reported Asian loan losses or were
viewed as being exposed to such losses. Washington Mutual has several holdings
in each of these categories, and their weak performance held back the six-month
results. At the same time, the Fund benefited from strong showings by a number
of its investments in retailing and other industries that have been less
directly affected by events in Asia.
Although the U.S. market as measured by the S&P 500 finished the half year
approximately where it began, there were major price swings during the period.
In the early part of the summer, stocks rose, continuing the impressive advance
of the past few years. They then sold off quite dramatically for several weeks
before rebounding in the autumn. The selloff drove the S&P 500 to a level
about 20% below its summer high. The recovery that began in early October was
chiefly a response to actions taken by the Federal Reserve. Recognizing that
Asia's slowdown was beginning to threaten economic growth in the United States,
the Fed cut the Federal funds rate by 25 basis points on September 29, October
15, and again on November 17. The last two reductions were accompanied by
cuts in the discount rate _ the rate at which the Fed makes loans to member
banks.
While the U.S. economy appears capable of sustaining at least moderate growth,
the Fund's investment adviser believes that the combination of a less buoyant
profit outlook and high equity valuations is likely to temper the stock
market's near-term upside potential.
On October 31, the Fund's portfolio showed ownership of 166 companies in 31
industries. The largest industry positions as a percentage of net assets were
Banking (12.8%), Telecommunications (9.9%), Energy Sources (9.7%), Health &
Personal Care (8.4%), Electric & Gas Utilities (8.4%), and Insurance (5.6%).
Washington Mutual's portfolio counselors took advantage of lower share prices,
mainly in August and September, to expand the Fund's holdings. As a result, an
unusually large number of new names have been added to the portfolio since
April 30. They are: Air Products and Chemicals, Allegheny Teledyne, Deere,
Dover, First Data, GTE, IBM, Illinois Tool Works, Pall, Perkin-Elmer, R.H.
Donnelley, Sonat, Stanley Works, TECO Energy, Transamerica, and Williams
Companies. Six holdings have been eliminated: Cognizant, Dominion Resources,
KeySpan, Procter & Gamble, Walgreen, and Whirlpool.
The portfolio changes during the half year resulted in a substantial realized
capital gain, which will be distributed, along with an extra income dividend,
prior to December 31. The entire capital gain distribution will qualify for
the recently enacted 20% maximum capital gain tax rate. In January, we will
mail a Tax Guide and a Form 1099-DIV to shareholders who received taxable
dividends or capital gain distributions.
Your management is appreciative of the loyalty shown by our many shareholders
who have helped Washington Mutual continue to grow. Your questions and
comments are always welcome.
Cordially,
(Signatures)
Stephen Hartwell James H. Lemon, Jr. Harry J. Lister
Chairman of the Board Vice Chairman of the Board President of the Fund
December 10, 1998
Preparing for the Year 2000 _ The Fund's key service providers _ Capital
Research and Management Company, the investment adviser, Washington Management
Corporation, the business manager, and American Funds Service Company, the
transfer agent _ are updating their computer systems to process date-related
information properly following the turn of the century. All are on track to
complete modifications of significant internal systems by the end of 1998.
Testing with business partners, vendors and other service providers is already
under way. We will continue to keep you up-to-date in our regular
publications. If you'd like more detailed information, please call
Shareholder Services at 800/421-0180, ext. 21, or visit our Web site at
www.americanfunds.com.
Investment Portfolio
October 31, 1998
Unaudited
Five Largest
Investment Categories
Percent of
Net Assets
Finance 22.10%
Services 19.80
Energy 18.10
Consumer Goods 15.11
Capital Equipment 11.43
Ten Largest
Individual Holdings
Percent of
Net Assets
AT&T 3.09%
First Union 2.86
Ameritech 2.66
BankAmerica 2.23
Warner-Lambert 2.19
Amoco 2.19
Texaco 2.16
Atlantic Richfield 2.13
Household International 1.84
U S WEST 1.70
Market Percent
Value of Net
Common Stocks Shares (000) Assets
Energy
Energy Sources (9.68%)
Amoco Corp. 18,675,000 $ 1,048,134 2.19%
Atlantic Richfield Co. 14,775,000 1,017,628 2.13
Chevron Corp. 4,500,000 366,750 .77
Exxon Corp. 2,500,000 178,125 .37
Kerr-McGee Corp. 2,350,000 93,706 .20
Mobil Corp. 8,696,700 658,232 1.38
Texaco Inc. 17,381,600 1,030,946 2.16
Unocal Corp. 6,800,000 230,775 .48
4,624,296 9.68
Utilities: Electric & Gas (8.42%)
Ameren Corp. 6,800,000 271,575 .57
American Electric Power Co., Inc. 3,350,000 163,941 .34
Baltimore Gas and Electric Co. 5,300,000 166,287 .35
Carolina Power & Light Co. 4,250,000 194,969 .41
Central and South West Corp. 9,650,800 268,413 .56
CINergy Corp. 1,700,000 58,650 .12
Conectiv, Inc. (percent of Net Assets
combined with ClassA below) 2,723,100 62,291
Conectiv, Inc., Class A 325,000 12,005 .16
Consolidated Edison, Inc. 5,550,000 278,194 .58
Consolidated Natural Gas Co. 2,100,000 110,906 .23
DTE Energy Co. 3,465,000 147,696 .31
Duke Energy Corp. 3,850,000 249,047 .52
Edison International 2,885,000 76,092 .16
Entergy Corp. 2,400,000 69,000 .14
Florida Progress Corp. 4,485,800 188,123 .39
FPL Group, Inc. 1,300,000 81,331 .17
GPU, Inc. 4,500,000 194,062 .41
Houston Industries Inc. 1,800,000 55,913 .12
New Century Energies, Inc. 2,500,000 120,781 .25
OGE Energy Corp. 800,000 21,250 .04
PECO Energy Co. 2,500,000 96,719 .20
PP & L Resources, Inc. 3,490,319 94,675 .20
Public Service Enterprise Group Inc. 2,020,000 76,760 .16
Puget Sound Energy, Inc. 3,800,000 102,600 .22
Sempra Energy (formerly Enova Corp.) 2,000,000 52,000 .11
Sonat Inc. 1,600,000 48,500 .10
Southern Co. 14,850,000 418,584 .88
TECO Energy, Inc. 700,000 19,338 .04
Williams Companies, Inc. 11,000,000 301,812 .63
Wisconsin Energy Corp. 700,000 21,437 .05
4,022,951 8.42
Total Energy 8,647,247 18.10
Materials
Chemicals (4.27%)
Air Products and Chemicals, Inc. 3,900,000 147,225 .31
E.I. du Pont de Nemours and Co. 11,325,000 651,187 1.36
International Flavors & Fragrances Inc. 2,815,100 105,390 .22
Mallinckrodt Inc. 3,585,000 102,173 .22
Monsanto Co. 12,859,000 522,397 1.09
PPG Industries, Inc. 7,066,500 404,115 .85
Sherwin-Williams Co. 3,000,000 75,563 .16
Witco Corp. 1,556,800 29,287 .06
2,037,337 4.27
Forest Products & Paper (2.50%)
International Paper Co. 12,650,000 587,434 1.23
Louisiana-Pacific Corp. 3,525,000 62,569 .13
Westvaco Corp. 5,500,000 135,438 .28
Weyerhaeuser Co. 7,125,000 333,539 .70
Willamette Industries, Inc. 2,475,000 76,725 .16
1,195,705 2.50
Metals: Nonferrous (.33%)
Phelps Dodge Corp. 2,720,000 $ 156,740 .33%
Metals: Steel (.08%)
Allegheny Teledyne Inc. 1,940,000 39,891 .08
Total Materials 3,429,673 7.18
Capital Equipment
Aerospace & Military Technology (2.54%)
Boeing Co. 7,267,900 272,546 .57
Raytheon Co., Class B 6,150,000 357,084 .75
United Technologies Corp. 6,119,100 582,844 1.22
1,212,474 2.54
Data Processing & Reproduction (2.36%)
Hewlett-Packard Co. 7,675,000 461,939 .97
International Business Machines Corp. 600,000 89,063 .19
Xerox Corp. 5,944,100 575,835 1.20
1,126,837 2.36
Electrical & Electronics (.42%)
Emerson Electric Co. 2,130,300 140,600 .29
General Electric Co. 700,000 61,250 .13
201,850 .42
Electronic Components (1.44%)
AMP Inc. 6,143,209 252,256 .53
Motorola, Inc. 2,594,600 134,919 .28
Texas Instruments Inc. 2,800,000 179,025 .38
Thomas & Betts Corp. 2,720,000 121,550 .25
687,750 1.44
Electronic Instruments (.42%)
Perkin-Elmer Corp. 2,408,900 203,100 .42
Energy Equipment (.13%)
Halliburton Co.
(formerly Dresser Industries, Inc.) 1,700,000 61,094 .13
Industrial Components (3.13%)
Dana Corp. 4,104,000 $ 171,599 .36%
Eaton Corp. 3,500,000 236,906 .49
Genuine Parts Co. 8,775,000 276,413 .58
Goodyear Tire & Rubber Co. 2,200,000 118,525 .25
Illinois Tool Works Inc. 866,700 55,577 .12
Johnson Controls, Inc. 4,197,600 236,115 .49
Rockwell International Corp. 1,500,000 61,594 .13
TRW Inc. 6,000,000 341,625 .71
1,498,354 3.13
Machinery & Engineering (.99%)
Caterpillar Inc. 1,350,000 60,750 .13
Deere & Co. 6,390,000 226,046 .47
Ingersoll-Rand Co. 1,012,500 51,131 .11
Pall Corp. 4,000,000 101,000 .21
Parker Hannifin Corp. 950,000 33,962 .07
472,889 .99
Total Capital Equipment 5,464,348 11.43
Consumer Goods
Appliances & Household Durables (.24%)
Rubbermaid Inc. 3,495,200 115,997 .24
Automobiles (1.27%)
Chrysler Corp. 12,626,400 607,646 1.27
Beverages (.79%)
PepsiCo, Inc. 11,200,000 378,000 .79
Food & Household Products (2.55%)
Bestfoods 4,130,400 225,107 .47
Colgate-Palmolive Co. 600,000 53,025 .11
General Mills, Inc. 5,930,500 435,891 .91
Kellogg Co. 5,700,000 188,100 .40
Sara Lee Corp. 5,300,000 316,344 .66
1,218,467 2.55
Health & Personal Care (8.42%)
American Home Products Corp. 2,150,000 104,812 .22
Avon Products, Inc. 4,479,600 177,784 .37
Baxter International Inc. 3,200,000 191,800 .40
Bristol-Myers Squibb Co. 3,950,000 436,722 .91
Johnson & Johnson 800,000 65,200 .14
Kimberly-Clark Corp. 2,778,400 134,058 .28
Eli Lilly and Co. 7,989,800 646,674 1.35
McKesson Corp. 200,000 15,400 .03
Merck & Co., Inc. 1,500,000 202,875 .43
Pfizer Inc 3,450,000 370,228 .77
Pharmacia & Upjohn, Inc. 4,900,000 259,394 .55
Schering-Plough Corp. 3,600,000 370,350 .78
Warner-Lambert Co. 13,375,000 1,048,266 2.19
4,023,563 8.42
Recreation & Other Consumer Products (1.08%)
Eastman Kodak Co. 5,631,500 436,441 .91
Stanley Works 2,625,000 78,750 .17
515,191 1.08
Textiles & Apparel (.76%)
NIKE, Inc., Class B 6,335,425 276,779 .58
VF Corp. 2,000,000 83,625 .18
360,404 .76
Total Consumer Goods 7,219,268 15.11
Services
Broadcasting & Publishing (.46%)
Dow Jones & Co., Inc. 3,057,600 140,076 .29
Gannett Co., Inc. 1,275,800 78,940 .17
219,016 .46
Business & Public Services (2.79%)
Browning-Ferris Industries, Inc. 9,258,700 328,105 .69
Deluxe Corp. 2,675,000 86,603 .18
Dun & Bradstreet Corp. 1,550,000 43,981 .09
Electronic Data Systems Corp. 6,014,700 244,723 .51
First Data Corp. 7,675,000 203,388 .42
IKON Office Solutions, Inc. 7,085,000 66,865 .14
Pitney Bowes Inc. 1,800,000 99,113 .21
R.H. Donnelley Corp. 203,460 2,848 .01
Waste Management, Inc. 5,735,040 258,794 .54
1,334,420 2.79
Leisure & Tourism (.42%)
McDonald's Corp. 3,000,000 200,625 .42
Merchandising (5.17%)
Albertson's, Inc. 12,033,200 668,595 1.40
American Stores Co. 9,764,700 317,963 .67
May Department Stores Co. 4,073,400 248,477 .52
J.C. Penney Co., Inc. 12,650,500 600,899 1.26
Rite Aid Corp. 3,000,000 119,063 .24
Sears, Roebuck and Co. 1,600,000 71,900 .15
Wal-Mart Stores, Inc. 6,450,000 445,050 .93
2,471,947 5.17
Telecommunications (9.92%)
Ameritech Corp. 23,560,000 1,270,767 2.66
AT&T Corp. 23,725,000 1,476,881 3.09
Bell Atlantic Corp. 700,000 37,188 .08
GTE Corp. 4,257,400 249,856 .52
SBC Communications Inc. 4,194,350 194,251 .41
Sprint Corp. 9,080,000 696,890 1.46
U S WEST, Inc. (formerly U S WEST
Communications Group) 14,200,000 814,725 1.70
4,740,558 9.92
Transportation: Rail (1.04%)
CSX Corp. 1,000,000 39,250 .08
Norfolk Southern Corp. 7,755,000 255,430 .53
Union Pacific Corp. 4,195,200 199,796 .43
494,476 1.04
Total Services 9,461,042 19.80
Finance
Banking (12.84%)
Banc One Corp.
(merged with First Chicago NBD Corp.) 7,484,500 $ 365,805 .76%
Bank of New York Co., Inc. 15,400,000 486,062 1.02
BankAmerica Corp.
(merged with NationsBank Corp.) 18,585,820 1,067,523 2.23
Bankers Trust Corp. 3,040,000 190,950 .40
Chase Manhattan Corp. 11,508,300 653,815 1.37
Comerica Inc. 200,000 12,900 .03
First Union Corp. 23,597,528 1,368,657 2.86
Fleet Financial Group, Inc. 5,900,000 235,631 .49
KeyCorp 8,800,000 266,750 .56
J.P. Morgan & Co. Inc. 3,175,000 299,244 .63
Norwest Corp. 6,500,000 241,719 .51
SunTrust Banks, Inc. 2,000,000 139,375 .29
Wachovia Corp. 850,000 77,244 .16
Wells Fargo & Co. 1,972,700 729,899 1.53
6,135,574 12.84
Financial Services (3.62%)
American Express Co. 1,621,700 143,318 .30
Fannie Mae 6,550,000 463,822 .97
Household International, Inc.
(merged with Beneficial Corp.) 24,047,482 879,236 1.84
SLM Holding Corp. 1,450,000 58,090 .12
Transamerica Corp. 1,800,000 187,200 .39
1,731,666 3.62
Insurance (5.64%)
Aetna Inc. 2,400,000 179,100 .38
Allstate Corp. 8,140,000 350,529 .73
American General Corp. 6,405,000 438,743 .92
Aon Corp. 5,504,000 341,248 .71
CIGNA Corp. 1,900,000 138,581 .29
General Re Corp. 1,200,000 263,625 .55
Jefferson-Pilot Corp. 3,350,000 203,513 .43
Lincoln National Corp. 3,225,000 244,697 .51
Marsh & McLennan Companies, Inc. 3,100,000 172,050 .36
St. Paul Companies, Inc. 10,888,520 360,682 .76
2,692,768 5.64
Total Finance 10,560,008 22.10
Multi-Industry
Multi-Industry (1.11%)
AlliedSignal Inc. 7,800,000 303,713 .64
Dover Corp. 5,200,000 165,100 .34
Minnesota Mining and Manufacturing Co. 500,000 40,000 .08
Whitman Corp. 1,050,000 22,509 .05
Total Multi-Industry 531,322 1.11
Miscellaneous
Common stocks in initial period
of acquisition 9,833,100 382,095 .80
TOTAL common stocks
(cost: $31,242,638,000) 45,695,003 95.63
Principal
Amount
Short-Term Securities (000)
U.S. Treasuries and
Other Federal Agencies
Federal Farm Credit Banks
5.36% due 11/5-11/6/98 $ 50,000 49,959 .11
Federal Home Loan Bank
4.70%-5.39% due
11/13/98-1/27/99 777,913 771,287 1.61
United States Treasury bills
3.74%-4.93% due
11/12/98-1/21/99 1,278,631 1,272,537 2.66
TOTAL SHORT-TERM SECURITIES
(cost: $2,092,984,000) 2,093,783 4.38
TOTAL INVESTMENT SECURITIES
(cost: $33,335,622,000) 47,788,786 100.01
Excess of payables over cash and
receivables 6,465 .01
NET ASSETS $47,782,321 100.00%
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
October 31, 1998
Unaudited
(dollars in thousands)
Assets:
Investment securities at market
(cost: $33,335,622) $47,788,786
Cash 3,604
Receivables for_
Sales of investments $031,328
Sales of Fund's shares 80,180
Dividends 80,870 192,378
47,984,768
Liabilities:
Payables for_
Purchases of investments 127,155
Repurchases of Fund's shares 44,573
Management services 11,283
Accrued expenses 19,436 202,447
Net Assets at October 31, 1998_
Equivalent to $33.35 per share on
1,432,642,992 shares of $1 par value
capital stock outstanding (authorized
capital stock _ 2,000,000,000 shares) $47,782,321
Statement of Operations
for the six months ended October 31, 1998
Unaudited
(dollars in thousands)
Investment Income:
Income:
Dividends $ 527,029
Interest 48,028 $ 575,057
Expenses:
Investment management fee 45,978
Business management fee 21,438
Distribution expenses 49,249
Transfer agent fee 14,897
Reports to shareholders 723
Registration statement and prospectus 3,112
Postage, stationery and supplies 2,734
Directors' and Advisory Board fees 190
Auditing and legal fees 106
Custodian fee 195 138,622
Net investment income 436,435
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 2,085,564
Net unrealized appreciation:
Beginning of period 17,338,072
End of period 14,453,164
Net change in unrealized
appreciation (2,884,908)
Net realized gain and change in
unrealized appreciation (799,344)
Net Decrease in Net Assets
Resulting from Operations $ (362,909)
See Notes to Financial Statements
Statement of Changes in Net Assets
Six Months Ended Year Ended
(dollars in thousands) October 31, 1998<F1> April 30,
1998
Operations:
Net investment income $ 436,435 $ 759,844
Net realized gain on investments 2,085,564 2,816,947
Net change in unrealized appreciation
on investments (2,884,908) 8,654,558
Net (Decrease) Increase in Net Assets
Resulting from Operations (362,909) 12,231,349
Dividends and Distributions Paid
to Shareholders:
Dividends from net investment income (404,622) (736,632)
Distributions from net realized gain
on investments_ (1,958,463)
Total Dividends and Distributions (404,622) (2,695,095)
Capital Share Transactions:
Proceeds from shares sold:
160,734,265 and 298,975,826 shares,
respectively 5,294,310 9,237,792
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 11,615,841 and 84,081,074
shares, respectively 376,372 2,539,311
Cost of shares repurchased:
88,724,905 and 120,245,204 shares,
respectively (2,884,364) (3,714,819)
Net Increase in Net Assets Resulting
from Capital Share Transactions 2,786,318 8,062,284
Total Increase in Net Assets 2,018,787 17,598,538
Net Assets:
Beginning of period 45,763,534 28,164,996
End of period (including undistributed
net investment income: $137,523 and
$105,710, respectively) $47,782,321 $45,763,534
[FN]
<F1>Unaudited
</FN>
See Notes to Financial Statements
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Organization _ 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.
Significant Accounting Policies _ The following paragraphs summarize the
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements:
Security Valuation _ Equity securities, including convertible debentures, 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
and other cash-equivalent securities 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 and
other cash-equivalent securities 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.
Security Transactions and Related Investment Income _ 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 to Shareholders _ Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
2. Federal Income Taxation _ 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 October 31, 1998, net unrealized appreciation on investments for book
and Federal income tax purposes aggregated $14,453,164,000, of which
$14,932,052,000 related to appreciated securities and $478,888,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the six months ended October 31, 1998.
The cost of portfolio securities for book and federal income tax purposes was
$33,335,622,000 at October 31, 1998.
3. Fees and Transactions with Related Parties
Business Management and Investment Advisory Fees _ 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,
incurred a fee of $21,438,000 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; 0.06% of such
assets in excess of $34 billion but not exceeding $55 billion; and 0.05% of
net assets in excess of $55 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
$540,000 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 four of its directors are affiliated with The Johnston-Lemon
Group, Incorporated. Capital Research and Management Company, investment
manager of the Fund, incurred a fee of $45,978,000 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; 0.19% of such assets in excess of $34 billion but not exceeding $55
billion; and 0.185% of net assets in excess of $55 billion.
Distribution Expenses _ 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. During the six
months ended October 31, 1998, distribution expenses under the Plan were
$49,249,000, including accrued and unpaid expenses of $14,775,000.
American Funds Distributors, Inc. (AFD) has informed the Fund that it has
received $21,072,904 (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.
Transfer Agent Fee _ American Funds Service Company, the transfer agent for
the Fund, was paid a fee of $14,897,000.
Deferred Directors' Fees _ 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 October 31, 1998, aggregate amounts
deferred and earnings thereon were $453,000.
4. Investment Transactions and Other Disclosures
As of October 31, 1998, accumulated undistributed net realized gain on
investments was $3,891,171,000 and additional paid-in capital was
$27,867,820,000.
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $7,237,243,000 and $4,926,289,000, respectively,
during the six months ended October 31, 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 $195,000 included $24,000 that was paid by these
credits rather than in cash.
The Fund owns 5.4%, 5.3%, 5.2%, and 5.0% of the outstanding voting securities
of Westvaco, Browning-Ferris Industries, IKON Office Solutions, and TRW,
respectively, which represent investments in affiliates as defined in the
Investment Company Act of 1940.
Per-Share Data and Ratios
Six Months
Ended Year ended April 30
10/31/98<F2> 1998 1997 1996 1995 1994
Net Asset Value,
Beginning of Period $33.92 $25.93 $22.77 $18.87 $17.11 $17.59
Income (Loss) from Investment
Operations:
Net investment income .31 .62 .62 .63 .63 .59
Net realized and
unrealized (loss) gain
on investments (.59) 9.65 4.36 4.98 2.16 (.12)
Total (loss) income from
investment operations (.28) 10.27 4.98 5.61 2.79 .47
Less Distributions:
Dividends from net
investment income (.29) (.62) (.62) (.62) (.62) (.56)
Distributions from net
realized gains _ (1.66) (1.20) (1.09) (.41) (.39)
Total distributions (.29) (2.28) (1.82) (1.71) (1.03) (.95)
Net Asset Value,
End of Period $33.35 $33.92 $25.93 $22.77 $18.87 $17.11
Total Return<F3> (.80)%<F4> 40.80% 22.43% 30.40% 17.01% 2.55%
Ratios/Supplemental Data:
Net assets, end of
period (in millions) $47,782<F4> $45,764 $28,165 $20,689 $14,426 $12,405
Ratio of expenses to
average net assets .30%<F4> .62% .64% .66% .69% .69%
Ratio of net income
to average net assets .96%<F4> 2.08% 2.56% 2.98% 3.57% 3.29%
Portfolio turnover rate 11.25%<F4> 17.61% 20.41% 23.41% 25.45% 23.86%
[FN]
<F2> Unaudited
<F3> Excludes maximum sales charge of 5.75%.
<F4> Based on operations for the period shown and, accordingly, not
representative of a full year.
</FN>
Board of Directors
Stephen Hartwell
Chairman of the Board
James H. Lemon, Jr.
Vice Chairman of the Board
Harry J. Lister
President of the Fund
Cyrus A. Ansary
Fred J. Brinkman
Daniel J. Callahan III
James C. Miller III
T. Eugene Smith
Leonard P. Steuart II
Margita E. White
Directors Emeritus
Bernard J. Nees
Chairman Emeritus of the Fund
Charles T. Akre
Nathan A. Baily
John A. Beck
Jean Head Sisco
Stephen G. Yeonas
Advisory Board
Charles A. Bowsher
Mary K. Bush
Vernon W. Holleman, Jr.
Katherine D. Ortega
J. Knox Singleton
William B. Snyder
Robert F. Tardio
Other Officers
Howard L. Kitzmiller
Senior Vice President, Secretary
and Assistant Treasurer of the Fund
Ralph S. Richard
Vice President and Treasurer of the Fund
Lois A. Erhard
Vice President of the Fund
Michael W. Stockton
Assistant Vice President, Assistant Secretary
and Assistant Treasurer of the Fund
J. Lanier Frank
Assistant Vice President of the Fund
In an effort to reduce the number of shareholder reports the Fund mails to a
household when more than one account is held, we have taken steps to eliminate
duplication where possible. If you continue to receive more than one copy or
would like to receive additional copies, please call American Funds Service
Company at 800/421-0180.
Offices of the Fund
and of the Business Manager
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, DC 20005-3585
202/842-5665
Investment Manager
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1443
135 South State College Boulevard
Brea, CA 92821-5823
Transfer Agent
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, CA 92822-2205
P.O. Box 659522
San Antonio, TX 78265-9522
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081-0001
Counsel
Thompson, O'Donnell, Markham, Norton & Hannon
805 Fifteenth Street, NW
Washington, DC 20005-2216
Principal Underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1462
For information about your account or any of the Fund's services, please
contact your financial adviser. You may also call American Funds Service
Company, toll-free, at 800/421-0180 or visit www.americanfunds.com on the
World Wide Web.
This report is for the information of shareholders of Washington Mutual
Investors Fund, Inc., but it may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details about
charges, expenses, investment objectives and operating policies of the Fund.
If used as sales material after December 31, 1998, this report must be
accompanied by an American Funds Group Statistical Update for the most
recently completed calendar quarter.
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