Washington Mutual Investors Fund
The American Funds Group (R) (logo)
(cover picture)
1999 Annual Report
(picture)
About Our Cover:
The New York Stock Exchange from the statue of George Washington in front of
the Federal Hall National Memorial. The Memorial replaced the original Federal
Hall, where George Washington was sworn in as the country's first president in
1789.
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 _ have updated
all significant computer systems to process date-related information properly
following the turn of the century. Testing of these and other systems with
business partners, vendors and other service providers will continue through
much of 1999. 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.
Washington Mutual Investors Fund (SM) seeks to provide income and growth of
principal through investments in quality common stocks. Washington Mutual
Investors Fund is one of the 29 funds in The American Funds Group(R), the
nation's third-largest mutual fund family. For more than six decades, Capital
Research and Management Company, the American Funds adviser, 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 Fund's total returns and average annual
compound returns with all distributions reinvested for periods ended March 31,
1999 (the most recent calendar quarter), assuming payment of the 5.75% maximum
sales charge at the beginning of the stated periods _ 10 years: +351.37%, or
+16.27% a year; 5 years: +169.93%, or +21.97% a year; 12 months: +0.46%.
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:
During the fiscal year ended April 30, Washington Mutual Investors Fund
generated a total return of 14.6%.<FN1> This followed several unusually big
gains: +40.8% in 1998, +22.4% in 1997 and +30.4% in 1996. Our fiscal 1999
results were achieved in a volatile investment climate. When the year began
last May, the U.S. stock market was rising. Starting in mid-July it suffered a
severe decline, brought on mainly by further economic deterioration in
Asia and
weaker earnings reports for U.S. companies doing business in that part of the
world. Another contributing factor was the collapse in September of a major
Wall Street hedge fund.
Three timely reductions in short-term interest rates by the Federal Reserve _
in September, October and November _ helped prevent matters from getting
worse. Stock prices in the United States responded favorably to the Fed's
actions, turning upward again in October. They kept rising, with minor
interruptions, during the remainder of our fiscal year. Throughout this time,
the nation's economy has continued to grow, and inflation has remained under
control even though unemployment is very low.
In fiscal 1999, the unmanaged Standard & Poor's 500 Composite Index recorded a
total return of 21.8%. The large disparity between that figure and your Fund's
results reflects some unusual developments that have been taking place within
the market and the index; this is discussed further in the Investment
Adviser's
Report, which begins on page 2.
This past fiscal year saw takeover or merger activity involving a number of
companies in the Fund's portfolio of securities. These, in part, include
American Stores, Ameritech, Bankers Trust, Bank of America, Beneficial
Finance,
Chrysler, Mobil Oil and Transamerica. We believe the presence of such an
unusually large number of acquisitions attests to the ability of our
investment
adviser, Capital Research and Management Company, to identify attractive
underlying value through intensive research.
During the year, 44% of the companies represented in the portfolio raised
their
dividend payments. This has enabled your Fund to maintain its dividend in a
period of unprecedented shareholder growth, where an increasing number
reinvest
their dividends and capital gains.
Since our last report to you at the end of October, 11 new securities have
appeared in the portfolio: Alcoa, Ashland, Citigroup, Diebold, Dominion
Resources, Fluor, Hercules, Interpublic Group of Companies, Knight-Ridder,
Sundstrand and Tribune. Eleven holdings were eliminated: Bell Atlantic, Cigna,
Comerica, Goodyear, Louisiana-Pacific, R.H. Donnelley, Raytheon, Rite Aid,
Rockwell International, Sonat and Waste Management.
The phenomenal rise in the prices of Internet stocks _ some of which have no
earnings _ has created apprehension that a realistic
appraisal of future prospects for these firms might cause a major collapse in
that segment of the market and hurt other, less volatile securities as well.
Your management shares this concern. If and when a fairly broad-based decline
takes place, we believe that Washington Mutual's time-tested criteria _
emphasizing earnings and dividends _ can provide relative stability for the
portfolio, just as it has during downturns in the past. On page 6, you will
find an article featuring the Fund's investment approach and our criteria.
We are always pleased to receive questions and comments from our investors.
Because a wide range of information is now available from your financial
adviser and the American Funds Web site, www.americanfunds.com, we have joined
other funds in The American Funds Group in eliminating quarterly reports. Our
next formal report to shareholders will cover the six months ending
October 31.
Cordially,
(signatures)
Stephen Hartwell James H. Lemon, Jr. Harry J. Lister
Chairman of the Board Vice Chairman of the Board President of the Fund
June 11, 1999
[FN]
<F1>All figures in this report include reinvestment of distributions unless
otherwise indicated.
</FN>
Investment Adviser's Report
Over the past year or so, we have seen huge discrepancies in the results
turned
in by various segments of the U.S. stock market. Equities with large
capitalizations generally continued accelerating in price while many smaller
capitalization issues fared poorly. In particular, Internet-related stocks
soared to extraordinary levels before their recent correction. Meanwhile, the
securities of many well-run companies with solid prospects in less exotic
industries languished for lack of investor interest during most of this period
even though they carried more reasonable valuations.
To give you some idea of how wide the discrepancies have been, consider this:
during the fiscal year ended April 30, the 55 stocks in the unmanaged Standard
& Poor's 500 Composite Index with market capitalizations of $50 billion or
more
rose in price an average of 27%, while those with capitalizations of less than
$2 billion declined an average of 23%.
Washington Mutual's 14.6% total return in fiscal 1999 trailed the S&P 500 by a
wide margin primarily for two reasons: 1) because our portfolio aims to
provide
an income return above that of the index, it includes numerous income-oriented
stocks which often lag when the market soars; and 2) a number of the stocks
that propelled the S&P 500 upward are non-dividend-paying, over-the-counter
securities that did not meet our strict criteria and were not eligible for
investment.
As those of you who have followed the Fund for some time are aware, Washington
Mutual invests only in dividend-paying securities listed on the New York Stock
Exchange. At a time when the market and key components of the S&P 500 have
been behaving in such an unusual, widely divergent manner, it is useful to
also
compare the Fund's results with those recorded by the NYSE Composite Index,
which covers all stocks listed on the Big Board. For the 12 months ended
April
30, that index rose 11.3% _ about three percentage points less than your Fund
_ if we assume a dividend yield equal to the S&P 500. (The NYSE Composite is
not computed on a total return basis.) Measured this same way, over the past
five years Washington Mutual has outpaced this index by an average margin of
almost two percentage points a year. It is interesting to note as well that
the NYSE Composite and the S&P 500 normally track each other fairly closely;
the 10-point spread between the two in fiscal 1999 was eight times wider than
the average of all other fiscal-year comparisons since the NYSE Composite was
created more than 30 years ago.
Washington Mutual has continued to do well relative to the majority of similar
funds. According to Lipper, Inc., a leading mutual fund tracking service,
despite the relatively lackluster results in fiscal 1999 your Fund placed in
the top 34% (276th of 815) among all growth-and-income funds for the year.
Over longer, more meaningful periods, it has done even better. For the five
years ended April 30, it ranked in the top 11% (32nd of 319); for the 10
years,
in the top 17% (25th of 148); and for the past 30 years, in the top 8% (fourth
of 56) among similar funds in existence throughout that time. (Lipper results
do not reflect the effects of sales charges.)
The portfolio, which begins on page 14, reflects the broadly diversified
nature
of the Fund and shows how its assets were diversified at fiscal year-end. The
largest industry positions as a percentage of net assets were Banking (14.1%),
Telecommunications (10.7%), Utilities: Electric & Gas (8.5%), Health &
Personal
Care (8.2%), Energy Sources (7.5%), Chemicals (5.6%) and Insurance (4.9%).
In the months ahead, we will continue relying on our organization's strong
research capabilities to uncover good values and do our best to provide you
with a rewarding investment experience.
- - Capital Research and Management Company
Charting an Investment
(graph)
This chart shows how a $10,000<F1> investment grew between July 31, 1952, when
the Fund began operations, and April 30, 1999.
As you can see, that $10,000 investment in Washington Mutual, with all
distributions reinvested, would have grown to $4,458,474<F1><F2>. Over the
same
period, that $10,000 would have grown to $2,915,275 in the unmanaged
Standard &
Poor's 500 Composite Index of U.S. common stocks. According to the Consumer
Price Index, it now requires $62,247 to purchase what $10,000 would have
bought
on July 31, 1952. In the average savings institution, $10,000 with interest
compounded, would have grown to $108,513.<F4>
The year-by-year progress of the $10,000 investment is summarized in the table
below the chart. You can use those figures to estimate how the value of your
own holdings has grown. Let's say, for example, that you have been reinvesting
all your distributions and want to know how your investment has done since
April 30, 1989. At that time, according to the table, the value of the
investment illustrated here was $911,607. Since then it has gone up nearly
fivefold to $4,458,474. Thus, in the same 10-year period, the value of your
1989 investment _ regardless of its size _ has also increased nearly
fivefold.
(Mountain Chart; plot points below)
Results of a $10,000 Investment in WMIF, the S&P500, and the CPI. July 31,
1952
through April 30, 1999
Fiscal
Year
ended Dividends Dividends TOTAL
April 30 in Cash WMIF<F1><F3> Reinvested WMIF <F2> RETURN S&P500 CPI
07/31/52 $9,425 $9,425 $10,000 $10,000
1953 $169 9,161 $170 9,330 -6.7% 10,073 9,963
1954 434 10,773 450 11,494 23.2 12,267 10,037
1955 501 14,665 542 16,288 41.7 17,264 10,000
1956 580 17,851 654 20,565 26.3 22,870 10,075
1957 648 18,304 756 21,877 6.4 22,450 10,449
1958 680 16,928 825 21,055 -3.8 22,214 10,824
1959 700 24,125 885 31,071 47.6 30,484 10,861
1960 728 21,871 947 29,041 -6.5 29,761 11,049
1961 815 26,300 1,097 36,167 24.5 36,957 11,161
1962 823 26,592 1,145 37,654 4.1 38,035 11,311
1963 890 28,838 1,279 42,278 12.3 42,171 11,423
1964 923 31,149 1,368 47,109 11.4 49,542 11,573
1965 957 36,940 1,463 57,490 22.0 57,260 11,760
1966 1,049 38,487 1,648 61,603 7.2 60,362 12,097
1967 1,177 39,424 1,906 65,270 6.0 64,534 12,397
1968 1,332 42,481 2,231 72,692 11.4 69,131 12,884
1969 1,516 48,408 2,626 85,576 17.7 75,712 13,596
1970 1,604 39,049 2,874 71,603 -16.3 61,578 14,419
1971 1,710 48,769 3,193 93,387 30.4 81,401 15,019
1972 1,779 47,991 3,456 95,521 2.3 86,888 15,543
1973 1,818 43,290 3,671 89,522 -6.3 88,797 16,330
1974 1,857 40,682 3,907 87,956 -1.7 77,563 17,978
1975 2,185 42,855 4,829 98,315 11.8 78,768 19,813
1976 2,349 53,771 5,498 129,949 32.2 95,421 21,011
1977 2,509 55,449 6,171 140,348 8.0 96,205 22,472
1978 2,658 54,228 6,849 144,339 2.8 99,497 23,933
1979 2,870 58,180 7,785 163,075 13.0 110,175 26,442
1980 3,203 56,032 9,167 165,847 1.7 121,539 30,337
1981 4,785 72,410 14,603 230,423 38.9 159,497 33,371
1982 4,098 69,851 13,326 235,768 2.3 147,832 35,543
1983 4,496 101,855 15,516 362,292 53.7 220,196 36,929
1984 4,839 100,116 17,526 373,508 3.1 223,854 38,614
1985 5,464 115,473 20,783 452,497 21.1 263,309 40,037
1986 6,109 152,209 24,381 623,767 37.8 358,598 40,674
1987 6,780 180,960 28,229 771,947 23.8 453,750 42,210
1988 7,116 167,083 30,815 742,854 -3.8 424,533 43,858
1989 6,183 198,139 27,837 911,607 22.7 521,235 46,105
1990 8,920 202,429 41,689 971,049 6.5 575,654 48,277
1991 9,135 222,015 44,572 1,113,744 14.7 676,779 50,637
1992 8,318 244,606 42,318 1,272,370 14.2 771,871 52,247
1993 8,467 268,131 44,627 1,442,386 13.4 843,007 53,933
1994 8,583 266,513 46,718 1,479,109 2.5 887,902 55,206
1995 9,790 301,054 55,058 1,730,691 17.0 1,042,552 56,891
1996 10,007 381,514 58,187 2,256,889 30.4 1,356,721 58,539
1997 10,505 455,550 62,763 2,763,026 22.4 1,697,402 60,000
1998 11,032 628,863 67,444 3,890,245 40.8 2,393,154 60,861
1999 11,526 707,653 71,812 4,458,474 14.6 2,915,275 62,247
Fund's lifetime average annual compound return: 13.9%1
Average Annual Compound Returns<F7> for periods ended April 30, 1999
10 Years 5 Years 1 Year
+16.51% +23.23% +8.01%
During the period illustrated, stock prices fluctuated and were higher
at the end than at the beginning. These results should not be considered as a
representation of the results that may be realized from an investment made in
the Fund today. Past performance is not predictive of future performance.
[FN]
<F1> Results reflect payment of the maximum sales charge of 5.75% on the
$10,000 investment. Thus, the net amount invested was $9,425. As outlined in
the prospectus, the sales charge is reduced for larger investments of $50,000
or more. There is no sales charge on dividends or capital gain distributions
that are reinvested in additional shares. The maximum initial sales charge was
8.5% prior to July 1, 1988. Results shown do not take into account income or
capital gain taxes.
<F2> Total Value includes reinvested dividends of $805,596 and reinvested
capital gain distributions of $1,099,907.
<F3> Capital Value includes capital gain distributions of $223,583, but does
not reflect income dividends of $184,617 taken in cash.
<F4> Based on figures, supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board, that reflect all kinds of savings deposits,
including longer term certificates. Unlike investments in the Fund, such
deposits are insured and, if held to maturity, offer a guaranteed return of
principal and a fixed rate of interest, but no opportunity for capital growth.
Maximum allowable interest rates were imposed by
law until 1983.
<F5> Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
<F6> Since the Fund's inception on July 31, 1952.
<F7> Based on the maximum sales charge of 5.75%. Sales charges are lower for
investments of $50,000 or more.
</FN>
The Art of Investing
(photo)
The New York Stock Exchange and beyond_All works of art, whether symphonies,
paintings or novels, have one thing in common. They flow so smoothly and
effortlessly that they give no hint of the extraordinary labor that went into
their creation. This circumstance is often called _ the art that conceals the
art.
(photo)
Successful investing, while not purely an art form, has some of its elements.
When a mutual fund consistently turns in solid results over the decades, the
very achievement tends to overshadow the skill and principles that made it
possible.
This certainly has been the case with Washington Mutual Investors Fund,
where a
$10,000 investment in 1952 grew to $4.7 million by 1999 with all distributions
reinvested. This represents a 14.1% average annual compound return over its
47-year history.
Washington Mutual's record might reasonably prompt shareholders to ask, "How
did our Fund achieve that kind of growth?" It's a fair question _ and it has
an interesting answer. Basically, two key strategies have propelled
Washington
Mutual to its record of growth.
First, the Fund employs a disciplined approach to stock selection. The
goal is
to identify and invest in stocks that offer the best value _ and do so year
after year. At the same time, the Fund seeks to have at least 95% of its
assets invested in stocks at all times _ thus keeping shareholder money at
work.
Second, stocks that pass through Washington Mutual's many financial
screens are
analyzed and studied before they are purchased. They are then monitored
carefully after becoming part of the Fund's holdings. The research is carried
out by an experienced team of investment experts at Capital Research and
Management Company, the Fund's investment adviser.
Pinpointing the best of the best, however, is no easy task _ especially in a
stock market overflowing with 13,000 public companies. Likewise, choosing
what
is fundamental above what is fashionable _ decade after decade _ is equally
difficult.
Washington Mutual was founded in 1952 to provide a prudent approach to common
stock investing for fiduciaries _ those entrusted with caring for other
people's money _ and for conservative individual investors.
That heritage is very much alive today, and Washington Mutual is widely used
for such purposes. Of the 2.0 million shareholder accounts at Washington
Mutual, more than half represent the savings of individual and corporate
pension and retirement funds, investments made by trustees, guardians and
custodians, and monies invested by religious, educational and charitable
organizations.
(pie chart)
Washington Mutual Investors Fund
Retirement plans 52%
Individual Retirement Accounts 43%
403(b), 401(k) and other plans 9%
Individual Accounts 21%
(purpose not specified)
Investments for college expenses 9%
(Uniform Gift/Transfer to Minors Act accounts\
Corporate/Institutional/Nonprofit and Other 18%
Statistics are based on account registrations using a single Taxpayer
Identification Number. Corporate retirement plans are often registered as a
single account; however, they may include many participants.
(end of pie chart)
To meet its responsibilities to its shareholders, Washington Mutual looks for
companies that offer true financial strength and solid records of growth and
profitability. The Fund also looks for companies that pay regular and
preferably increasing annual dividends and for companies whose stocks are
highly liquid _ that is, easy to trade in both good and bad markets.
Where does one find such companies? A good place to start looking is the New
York Stock Exchange. One of Washington Mutual's basic requirements is that a
company must be listed on the New York Stock Exchange (NYSE) to be
eligible for
the Fund's portfolio. This has proved wise and profitable.
The NYSE, whose history dates back 200 years, is a highly electronic global
marketplace with more than 3,000 listed companies. It is synonymous with Wall
Street.
(graph showing NYSE Market value from 1952 through 1998)
(graph showing NYSE Average Daily Volume from 1952 through 1998)
The market value of the companies trading on the NYSE is about $11
trillion and
growing rapidly. In 1997, trading averaged 527 million shares a day, and the
number of shares traded on a single day broke through the one billion share
mark for the first time in history. In 1998, trading averaged 673 million
shares a day.
The NYSE is home to most of the nation's major corporations. All of the 30
blue chip companies that are part of the closely watched Dow Jones Industrial
Average are traded on the NYSE. Of the 500 companies that make up Standard &
Poor's 500 Composite Index, 458 trade on the NYSE.
What does it mean to shareholders when Washington Mutual says it will invest
only in NYSE-listed companies? Actually, it means quite a lot. Specifically,
when Washington Mutual invests in a NYSE-listed company, the Fund gets a set
of benefits that helps protect and enhance the value of the Fund's investment.
Those benefits come on several levels:
Financial Soundness
In order to be listed on the NYSE, a company must pass a series of financial
and business-related tests. The tests focus on the company's record of
profitability, the number of shares it has available in the open market
and the
market value of those shares.
The NYSE also looks at the degree of public interest in a company, the
industry
in which it operates and its future business prospects. A company must
agree to
keep the exchange and the public informed about the progress of its affairs
through annual reports and other communications. NYSE companies also are
required to submit to regular inspections of their books and records by
exchange officials.
Market Integrity
The NYSE operates a computerized system called Stock Watch that helps the
exchange guard against manipulation of stocks and insider trading.
When NYSE computers register unusual price or volume activity in a listed
stock, alarms sound _ at least figuratively. Often, unusual volume or sudden
price changes can be explained by company news, industry trends or economic
developments.
(photo of trading floor)
When there is no easy explanation however, the NYSE launches an investigation,
which includes calls to company officials, brokerage firms and traders. These
inquiries are coupled with an electronic review of who made the unusual
trades and a wide-ranging study of whether inside information was involved.
If the investigation uncovers wrongdoing by NYSE members or their employees,
the NYSE can take disciplinary action itself or refer the matter to the
Securities and Exchange Commission (SEC) as it does when the incident involves
persons outside of NYSE jurisdiction.
Market Volatility
The price of a NYSE-listed stock can be affected by business, economic and
market factors. Price changes generally are regarded as a normal part of
market activity. But when new trading strategies emerge that cause huge price
swings _ including panic selling _ the NYSE acts to dampen that volatility
and encourage a return to an orderly market.
That is what the NYSE did in 1990 in response to the development of program
trading, a strategy in which computers are used to organize the rapid sale or
purchase of huge baskets of stocks, causing market prices to soar or plummet.
The NYSE established "circuit breakers," (limits set when price fluctuations
exceed a certain percentage of trading) also known as "trading collars," to
interrupt the pressure on the market generated by the computerized
programs and
to give investors time to reassess the activity. The trading collars, which
were triggered 366 times on 227 days in 1998, helped dampen market volatility.
Although a listing on the NYSE is an initial criteria of Washington Mutual's
investment standards, it is not the only priority. The Fund has numerous
other
screens, some of which are mentioned below, to help its portfolio counselors
choose sound companies.
Indeed, the Fund's requirements go beyond those set forth by the NYSE.
Washington Mutual, for instance, puts a major emphasis on dividends. Income
can contribute significantly to a stock's total return and can decrease the
overall volatility of return. Dividends have accounted for 47% of Washington
Mutual's lifetime total return.
Significantly, of the 165 companies in the Fund's portfolio, 142 have paid
uninterrupted dividends for at least 25 years. At least 122 have paid
dividends for 50 years, while 21 companies, or their predecessors, have paid
dividends for at least 100 years!
Current portfolio companies that have paid dividends for 110 years or more as
of April 30, 1999
(timeline graphic with companies listed)
The Fund requires its portfolio companies (except for banks) to have paid
dividends in at least nine of the last ten years. The Fund also requires a
company to have fully earned its dividend in at least four of the last five
years. Banks and savings and loans must have paid a dividend in at least four
of the past five years and meet specific tests for capital adequacy.
Industrial
companies must also meet specific criteria for return on their invested
capital.
Washington Mutual has a prohibition against investing in companies that derive
the majority of their revenues from tobacco or alcohol products. This
requirement has drawn widespread support from Fund shareholders. In addition,
to be eligible for the Washington Mutual portfolio, a company must be a U.S.
corporation.
The impact of all these screens on stock selection is quite dramatic.
Of the more than 3,000 companies listed on the New York Stock Exchange, only
325 meet all the requirements established by Washington Mutual. And of those
325, only about half _ 165 companies as of April 30 _ have been selected by
Washington Mutual's portfolio counselors to be included in the Fund's
portfolio.
Because not every stock that is eligible for Washington Mutual is purchased by
the Fund, a shareholder might also wonder: "Who decides which stocks to
purchase? How are those choices made?"
The answer is that these decisions are made by Washington Mutual's team
of portfolio counselors _ eight investment experts who have an average of 24
years of investment experience at Capital Research and Management Company.
Washington Mutual's Portfolio Counselors
(pie chart with counselors' photographs)
James F. Rothenberg
5 years with WMIF
29 years with CRMC
Research
Analyst
Group
Timothy D. Armour
9 years with WMIF
16 years with CRMC
Donald D. O'Neal
5 years with WMIF
14 years with CRMC
Stephen E. Bepler
18 years with WMIF
27 years with CRMC
Robert G. O'Donnell
6 years with WMIF
24 years with CRMC
James K. Dunton
21 years with WMIF
37 years with CRMC
James B. Lovelace
9 years with WMIF
17 years with CRMC
Gregg E. Ireland
9 years with WMIF
26 years with CRMC
Capital Research manages its mutual funds by using the multiple portfolio
counselor system. Each counselor is given a portion of a fund's assets to
manage as though it was an entire fund _ subject to fund objectives and
overall guidelines. A small group of analysts also helps manage a portion of
Washington Mutual's assets.
The counselors work closely with all of Capital's research analysts; currently
there are more than 100 analysts who cover every significant industry.
Washington Mutual Investors Fund
In the investment business, knowledge is power. Capital analysts travel
thousands of miles each year visiting companies, talking to their officials,
and studying their business operations. Often, the analysts meet with a
company's suppliers, bankers, customers and competitors _ all in an effort to
develop a complete understanding of what a company is doing today and what it
is likely to do in the future.
That information plays a vital role when counselors and analysts decide
whether
to invest in a specific company. Although some companies remain in the
Washington Mutual portfolio for many years, the counselors also monitor what
happens to these firms on a day-by-day basis.
Capital believes that its multiple portfolio counselor system blends
individual
effort with teamwork and offers the following benefits:
Consistency
Having more than one person manage a fund's investments over the long term
tends to smooth out the peaks and valleys of investing.
Diversity
Each segment of the fund tends to reflect the convictions of the individual
managing it _ thereby increasing the fund's diversification.
Flexibility
Counselors can act quickly on their best ideas, without the need for
consensus.
Continuity
When a counselor retires or leaves a fund, only a portion of the portfolio
changes hands. That allows for smooth transitions, including a way to phase
in new counselors.
"The multiple portfolio counselor system gives shareholders the luxury of more
than one investment style," said Jim Rothenberg, president of Capital Research
and one of Washington Mutual's portfolio counselors. "That's particularly
important for long-term investors, who will probably experience a variety of
market conditions over their financial lifetimes."
Variety, indeed. For more than four decades, the men and women of Washington
Mutual have maintained the Fund's investment discipline and its steady growth
in times of war and peace, economic boom and bust, and bull and bear markets.
Like a genuine work of art, such an approach never goes out of style.
Investment Portfolio
April 30, 1999
Five Largest Investment Categories Ten Largest Individual Holdings
Percent of
Net Assets
Percent of
Net Assets
(bar Chart)
Bank of America 3.14%
Sprint Fon Group 2.52
Ameritech 2.28
First Union 2.24
Household International 2.12
AT&T 1.94
Wells Fargo 1.80
U S West 1.77
GTE 1.74
Monsanto 1.71
Equity Securities
Percent of
(Common and Preferred Stocks) Shares Market Value (000) Net
Assets
Energy (photograph)
Energy Sources _ 7.48%
Ashland Inc. 3,680,000 $ 155,480
.27%
Atlantic Richfield Co. 8,108,000 680,565
1.19
BP Amoco 1,625,999 184,043
.32
Chevron Corp. 7,892,000 787,227
1.38
Exxon Corp. 3,700,000 307,331
.54
Kerr-McGee Corp. 3,150,000 133,481
.24
Mobil Corp. 8,175,000 856,331
1.50
Texaco Inc. 14,000,000 878,500
1.54
Unocal Corp. 6,800,000 282,625
.50
4,265,583
7.48
Utilities: Electric & Gas _ 8.45%
Ameren Corp. 6,800,000 263,075
.46
American Electric Power Co., Inc. 4,400,000 182,325
.32
Baltimore Gas and Electric Co. 7,300,000 205,313
.36
Carolina Power & Light Co. 6,450,000 260,016
.46
Central and South West Corp. 9,575,800 237,600
.42
CINergy Corp. 2,250,000 67,078
.12
Conectiv 3,400,000 81,388
Conectiv, Class A 325,000 11,395
.16
Consolidated Edison, Inc. 5,550,000 252,178
.44
Consolidated Natural Gas Co. 3,425,000 203,787
.36
Dominion Resources, Inc. 2,000,000 82,250
.14
DTE Energy Co. 3,465,000 141,415
.25
Duke Energy Corp. 4,950,000 277,200
.49
Edison International 3,135,000 76,807
.13
Entergy Corp. 2,400,000 75,000
.13
Florida Progress Corp. 4,725,000 181,912
.32
FPL Group, Inc. 1,800,000 101,475
.18
GPU, Inc. 6,325,000 $ 241,141
.42%
New Century Energies, Inc. 3,050,000 106,750
.19
OGE Energy Corp. 800,000 18,950
.03
PECO Energy Co. 2,500,000 118,594
.21
PP & L Resources, Inc. 3,490,319 97,511
.17
Public Service Enterprise Group Inc. 2,020,000 80,800
.14
Puget Sound Energy, Inc. 3,800,000 93,812
.16
Reliant Energy, Inc.
(formerly Houston Industries Inc.) 1,800,000 50,963
.09
Sempra Energy 2,026,300 42,046
.07
Southern Co. 25,259,400 683,583
1.20
TECO Energy, Inc. 1,000,000 21,313
.04
Williams Companies, Inc. 11,500,000 543,375
.95
Wisconsin Energy Corp. 800,000 21,500
.04
4,820,552
8.45
Total Energy 9,086,135
15.93
Materials (photograph)
Chemicals _ 5.61%
Air Products and Chemicals, Inc. 4,290,000 201,630
.35
E.I. du Pont de Nemours and Co. 12,520,500 884,260
1.55
Hercules Inc. 4,900,000 185,281
.33
International Flavors &
Fragrances Inc. 2,940,000 116,130
.20
Mallinckrodt Inc. 3,585,000 125,699
.22
Monsanto Co. 21,532,000 974,323 1.71
PPG Industries, Inc. 8,716,500 566,028 .
99
Sherwin-Williams Co. 3,000,000 93,375
.16
Witco Corp. 2,825,000 53,851
.10
3,200,577
5.61
Forest Products & Paper _ 2.81%
International Paper Co. 13,500,000 719,719
1.26
Westvaco Corp. 5,500,000 164,312
.29
Weyerhaeuser Co. 8,975,000 602,447
1.06
Willamette Industries, Inc. 2,475,000 115,706
.20
1,602,184
2.81
Metals: Nonferrous _ .54%
Alcoa Inc. 2,117,600 131,821
.23
Phelps Dodge Corp. 2,807,300 177,562
.31
309,383 .54
Metals: Steel _ .09%
Allegheny Teledyne Inc. 2,250,000 50,344
.09
Total Materials 5,162,488
9.05
Capital Equipment (photograph)
Aerospace & Military Technology _ 2.16%
Boeing Co. 10,767,900 $ 437,446
.77%
Sundstrand Corp. 1,300,000 93,275
.16
United Technologies Corp. 4,825,300 699,065
1.23
1,229,786
2.16
Data Processing & Reproduction _ 2.50%
Hewlett-Packard Co. 7,250,000 571,844
1.01
International Business Machines Corp. 600,000 125,512
.22
Xerox Corp. 12,347,500 725,416
1.27
1,422,772
2.50
Electrical & Electronics _ .41%
Emerson Electric Co. 2,800,000 180,600
.32
General Electric Co. 500,000 52,750
.09
233,350
.41
Electronic Components _ .87%
Motorola, Inc. 2,610,900 209,198
.37
Texas Instruments Inc. 1,700,000 173,613
.30
Thomas & Betts Corp. 2,720,000 114,240
.20
497,051
.87
Electronic Instruments _ .46%
Perkin-Elmer Corp. 2,408,900 260,462
.46
Energy Equipment _ .37%
Halliburton Co. 4,900,000 208,863
.37
Industrial Components _ 2.46%
Dana Corp. 4,943,100 232,944
.41
Eaton Corp. 3,300,000 302,569
.53
Genuine Parts Co. 8,775,000 263,250
.46
Illinois Tool Works, Inc. 866,700 66,736
.12
Johnson Controls Inc. 4,152,400 302,866
.53
TRW Inc. 5,550,000 232,753
.41
1,401,118
2.46
Machinery & Engineering _ 1.31%
Caterpillar Inc. 1,350,000 $ 86,906
.15%
Deere & Co. 7,240,000 311,320
.54
Fluor Corp. 3,700,000 123,487
.22
Ingersoll-Rand Co. 1,012,500 70,052
.12
Pall Corp. 6,100,000 112,469
.20
Parker Hannifin Corp. 950,000 44,591
.08
748,825
1.31
Total Capital Equipment 6,002,227
10.54
Consumer Goods (photograph)
Appliances & Household Durables _ .33%
Newell Rubbermaid Inc.
(formerly Rubbermaid Inc.) 3,937,716 186,795
.33
Automobiles _ .19%
DaimlerChrysler AG
(formerly Chrysler Corp.) 1,075,538 105,604
.19
Beverages _ 1.06%
PepsiCo, Inc. 16,350,000 603,928
1.06
Food & Household Products _ 3.08%
Bestfoods 3,915,400 196,504
.35
Colgate-Palmolive Co. 2,000,000 204,875
.36
General Mills, Inc. 6,650,000 486,282
.85
Kellogg Co. 6,839,600 253,065
.44
Sara Lee Corp. 27,691,500 616,136
1.08
1,756,862
3.08
Health & Personal Care _ 8.16%
American Home Products Corp. 2,200,000 134,200
.23
Avon Products, Inc. 4,679,600 254,161
.45
Baxter International Inc. 3,200,000 201,600
.35
Bristol-Myers Squibb Co. 14,700,000 934,369
1.64
Eli Lilly and Co. 7,990,000 588,264
1.03
Johnson & Johnson 800,000 78,000
.14
Kimberly-Clark Corp. 12,415,600 761,231
1.34
McKesson Corp. 3,000,000 105,000
.18
Merck & Co., Inc. 2,000,000 140,500
.25
Pfizer Inc 3,600,000 414,225
.73
Pharmacia & Upjohn, Inc. 4,500,000 252,000
.44
Schering-Plough Corp. 7,200,000 347,850
.61
Warner-Lambert Co. 6,500,000 441,594
.77
4,652,994
8.16
Recreation & Other Consumer Products _ .94%
Eastman Kodak Co. 5,656,500 $ 422,116
.74%
Stanley Works 3,675,000 111,858
.20
533,974
.94
Textiles & Apparel _ 1.05%
NIKE, Inc., Class B 7,685,425 477,937
.84
VF Corp. 2,400,000 123,600
.21
601,537
1.05
Total Consumer Goods 8,441,694
14.81
Services (photograph)
Broadcasting & Publishing _ .71%
Dow Jones & Co., Inc. 3,292,400 179,436
.31
Gannett Co., Inc. 1,675,800 118,667
.21
Knight-Ridder, Inc. 1,600,000 86,100
.15
Tribune Co. 253,300 21,135
.04
405,338
.71
Business & Public Services _ 2.72%
Browning-Ferris Industries, Inc. 9,158,700 365,203
.64
Deluxe Corp. 2,489,800 86,209
.15
Diebold, Inc. 700,000 16,844
.03
Dun & Bradstreet Corp. 2,803,500 103,029
.18
Electronic Data Systems Corp. 5,214,700 280,290
.49
First Data Corp. 7,575,000 321,464
.57
IKON Office Solutions, Inc. 7,285,000 87,875
.15
Interpublic Group of Companies, Inc. 1,362,200 105,656
.19
Pitney Bowes Inc. 2,634,500 184,250
.32
1,550,820
2.72
Leisure & Tourism _ .37%
McDonald's Corp. 5,000,000 211,875
.37
Merchandising _ 4.06%
Albertson's, Inc. 12,033,200 619,710
1.09
American Stores Co. 13,423,000 423,663
.74
J.C. Penney Co., Inc. 13,120,500 598,623
1.05
May Department Stores Co. 11,100,000 441,919
.77
Sears, Roebuck and Co. 1,600,000 73,600
.13
Wal-Mart Stores, Inc. 3,430,000 157,780
.28
2,315,295
4.06
Telecommunications _ 10.66%
Ameritech Corp. 19,017,000 $ 1,301,476
2.28%
AT&T Corp. 21,899,050 1,105,902
1.94
GTE Corp. 14,763,300 988,218
1.74
SBC Communications Inc. 4,194,350 234,884
.41
Sprint FON Group (formerly Sprint Corp.)
13,993,800 1,435,239
2.52
U S WEST, Inc. 19,319,700 1,010,662
1.77
6,076,381
10.66
Transportation: Rail _ 1.05%
CSX Corp. 2,831,000 139,427
.24
Norfolk Southern Corp. 10,450,000 341,584
.60
Union Pacific Corp. 2,000,000 120,000
.21
601,011
1.05
Total Services 11,160,720
19.57
Finance (photograph)
Banking _ 14.12%
Bankers Trust Corp. 3,040,000 273,790
.48
Bank of America Corp.
(formerly BankAmerica Corp.) 24,825,000 1,787,400
3.14
Bank of New York Co., Inc. 15,100,000 604,000
1.06
BANK ONE CORP.
(formerly BANC ONE CORP.) 8,174,500 482,296
.85
Chase Manhattan Corp. 10,194,800 843,620
1.48
Citigroup Inc. 3,500,000 263,375
.46
First Union Corp. 23,086,700 1,278,426
2.24
Fleet Financial Group, Inc. 6,100,000 262,681
.46
J.P. Morgan & Co. Inc. 3,175,000 427,831
.75
KeyCorp 9,550,000 295,453
.52
SunTrust Banks, Inc. 5,975,000 427,213
.75
Wachovia Corp. 850,000 74,694
.13
Wells Fargo & Co. 23,727,000 1,024,710
1.80
8,045,489
14.12
Financial Services _ 3.34%
American Express Co. 600,000 78,413
.14
Fannie Mae 3,900,000 276,656
.48
Household International, Inc. 24,047,482 1,209,889
2.12
SLM Holding Corp. 2,000,000 85,375
.15
Transamerica Corp. 3,600,000 256,500
.45
1,906,833
3.34
Insurance _ 4.91%
Aetna Inc. 2,650,000 232,372
Aetna Inc., Class C,
6.25% convertible preferred 315,000 24,353
.45
Allstate Corp. 14,950,000 543,806
.95
American General Corp. 6,555,000 485,070
.85
Aon Corp. 7,829,400 536,314
.94
Jefferson-Pilot Corp. 3,350,000 $ 225,706
.40%
Lincoln National Corp. 3,025,000 290,589
.51
Marsh & McLennan Companies, Inc. 2,512,500 192,363
.34
St. Paul Companies, Inc. 9,402,400 269,731
.47
2,800,304
4.91
Total Finance 12,752,626
22.37
Multi-Industry (photograph)
Multi-Industry _ 2.02%
AlliedSignal Inc. 9,300,000 546,375
.96
Berkshire Hathaway, Class A
(formerly General Re Corp.) 600 45,840
.08
Dover Corp. 6,150,500 227,184
.40
Minnesota Mining and
Manufacturing Co. 2,500,000 222,500
.39
Tyco International Ltd.
(formerly AMP Inc.) 1,175,501 95,509
.16
Whitman Corp. 1,050,000 17,194
.03
Total Multi-Industry 1,154,602
2.02
Miscellaneous
Miscellaneous _ 2.27%
Equity securities in
initial period of acquisition 27,452,700 1,297,165
2.27
TOTAL EQUITY SECURITIES
(cost: $36,643,354,000) 55,057,657
96.56
U.S. Treasuries and Other Federal Agencies
Principal
Amount
Short-Term Securities (000)
U.S. Treasuries and Other Federal Agencies _ 3.25%
Federal Home Loan Bank
4.67%-4.74% due 5/5-7/23/99 $ 735,054 735,029
1.29
United States Treasury bills
4.16%-4.52% due 5/6-7/29/99 1,116,677 1,116,812
1.96
TOTAL SHORT-TERM SECURITIES 1,851,841
3.25
(cost: $1,851,731,000)
TOTAL INVESTMENT SECURITIES
(cost: $38,495,085,000) 56,909,498
99.81
Excess of cash and receivables over payables 108,727
.19
NET ASSETS $57,018,225
100.00%
See Notes to Financial Statements
Financial Statements
Statement of Assets and Liabilities
April 30, 1999
(dollars in thousands)
Assets:
Investment securities at market
(cost: $38,495,085) $56,909,498
Cash 251
Receivables for _
Sales of investments $202,921
Sales of Fund's shares 109,035
Dividends 79,866 391,822
57,301,571
Liabilities:
Payables for _
Purchases of investments 192,301
Repurchases of Fund's shares 53,149
Management services 12,906
Other expenses 24,990 283,346
Net Assets at April 30, 1999 _
Equivalent to $35.31 per share on
1,614,725,331 shares of $1 par value
capital stock outstanding (authorized
capital stock _ 2,000,000,000 shares) $57,018,225
Statement of Operations
for the year ended April 30, 1999
(dollars in thousands)
Investment Income:
Income:
Dividends $ 1,097,923
Interest 95,445 $1,193,368
Expenses:
Investment adviser fee 96,791
Business management fee 44,286
Distribution expenses 110,672
Transfer agent fee 32,657
Reports to shareholders 1,545
Registration statement and prospectus 3,634
Postage, stationery and supplies 5,326
Directors' and Advisory Board fees 413
Auditing and legal fees 135
Custodian fee 403
Other expenses 291 296,153
Net investment income 897,215
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 5,230,170
Net unrealized appreciation:
Beginning of year 17,338,072
End of year 18,414,413
Net change in unrealized
appreciation 1,076,341
Net realized gain and change in
unrealized appreciation 6,306,511
Net Increase in Net Assets
Resulting from Operations $7,203,726
Statement of Changes in Net Assets
Year ended April 30
(dollars in thousands) 1999 1998
Operations:
Net investment income $ 897,215 $
759,844
Net realized gain on investments 5,230,170
2,816,947
Net change in unrealized
appreciation on investments 1,076,341
8,654,558
Net Increase in Net Assets
Resulting from Operations 7,203,726
12,231,349
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (890,284)
(736,632)
Distributions from net realized gain
on investments (3,760,550)
(1,958,463)
Total Dividends and Distributions (4,650,834)
(2,695,095)
Capital Share Transactions:
Proceeds from shares sold:
334,983,835 and 298,975,826
shares, respectively 11,104,242
9,237,792
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
137,585,488 and 84,081,074 shares,
respectively 4,421,141
2,539,311
Cost of shares repurchased:
206,861,783 and 120,245,204
shares, respectively (6,823,584)
(3,714,819)
Net Increase in Net Assets Resulting
from Capital Share Transactions 8,701,799
8,062,284
Total Increase in Net Assets 11,254,691
17,598,538
Net Assets:
Beginning of year 45,763,534
28,164,996
End of year (including undistributed
net investment income: $112,641
and $105,710, respectively) $57,018,225
$45,763,534
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 current
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 custo
mary 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 April 30, 1999, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $18,414,413,000, of which
$19,030,435,000 related to appreciated securities and $616,022,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended April 30, 1999. The cost
of portfolio securities for book and federal income tax purposes was
$38,495,085,000 at April 30, 1999.
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,
was paid a fee of $44,286,000 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 $1,046,000 on its retail sales of shares 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
adviser of the Fund, was paid a fee of $96,791,000 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 year
ended
April 30, 1999, distribution expenses under the Plan were $110,672,000,
including accrued and unpaid expenses of $20,594,000.
American Funds Distributors, Inc., the principal underwriter of the Fund's
shares, has informed the Fund that it has received $42,516,000 (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.
Transfer Agent Fee _ American Funds Service Company, the transfer agent for
the Fund, was paid a fee of $32,657,000.
Deferred Directors' Fees _ Independent Directors and Advisory Board members of
the Fund 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, 1999, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1994), net of any payments to
directors, were $521,000.
4. Investment Transactions and Other Disclosures
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $17,664,899,000 and $13,097,547,000, respectively,
during the year ended April 30, 1999.
As of April 30, 1999, accumulated undistributed net realized gain on
investments was $3,208,003,000 and additional paid-in capital was
$33,668,443,000. The Fund reclassified $67,224,000 from undistributed net
realized gains to additional paid-in capital for the year ended April 30,
1999.
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 $403,000 included $76,000 that was paid by these credits
rather than
in cash.
The Fund owns 5.8%, 5.5%, and 5.0% of the outstanding voting securities of
Browning-Ferris Industries, Westvaco, and Mallinckrodt, respectively, which
represent investments in affiliates as defined in the Investment Company
Act of
1940.
Per-Share Data and Ratios
Year ended April 30
1999 1998 1997 1996 1995
Net Asset Value, Beginning of Year $33.92 $25.93 $22.77 $18.87 $17.11
Income from Investment Operations:
Net investment income .60 .62 .62 .63 .63
Net gains on securities (both
realized and unrealized) 3.99 9.65 4.36 4.98 2.16
Total from investment
operations 4.59 10.27 4.98 5.61 2.79
Less Distributions:
Dividends (from net
investment income) (.61) (.62) (.62) (.62)
(.62)
Distributions (from capital gains) (2.59) (1.66) (1.20) (1.09)
(.41)
Total distributions (3.20) (2.28) (1.82) (1.71)
(1.03)
Net Asset Value, End of Year $35.31 $33.92 $25.93 $22.77 $18.87
Total Return<F1> 14.61% 40.80% 22.43% 30.40%
17.01%
Ratios/Supplemental Data:
Net assets, end of year (in millions)
$57,018 $45,764 $28,165 $20,689 $14,426
Ratio of expenses to average
net assets .61% .62% .64% .66% .69%
Ratio of net income to average
net assets 1.84% 2.08% 2.56% 2.98% 3.57%
Portfolio turnover rate 27.93% 17.61% 20.41% 23.41% 25.45%
[FN]
<F1>Excludes maximum sales charge of 5.75%.
</FN>
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, 1999, the results of its operations, the
changes
in its net assets and the per-share data and ratios for the years
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, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
(signature)
Pricewaterhouse Coopers LLP
Los Angeles, California
May 28, 1999
Tax Information for the Year Ended April 30, 1999 (Unaudited)
We are required to advise you within 60 days of the Fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
Fund were earned from the following sources:
Dividends and Distributions per Share
To Shareholders From Net From Net
Realized
of Record Payment Date Investment Income Long-Term Gains
June 19, 1998 June 22, 1998 $0.145 _
September 18, 1998 September 21, 1998 0.145 _
December 18, 1998 December 21, 1998 0.175 $2.595
March 19, 1999 March 22, 1999 0.145 _
The Fund also designates as a capital gain distribution a portion of earnings
and profits to shareholders in redemption of their shares.
Corporate shareholders may exclude up to 100% of qualifying dividends received
during the year. Certain states may exempt from income taxation that portion
of the dividends paid from net investment income that was derived from direct
U.S. Treasury obligations. For purposes of computing this exclusion, 8%
of the
dividends paid by the Fund from net investment income were derived from
interest on direct U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their
annual
information reporting.
Shareholders should consult their tax advisers.
Washington Mutual Investors Fund
Directors
Stephen Hartwell
Chairman of the Board
Chairman, Washington
Management Corporation
James H. Lemon, Jr.
Vice Chairman of the Board
Chairman and Chief Executive Officer,
The Johnston-Lemon Group, Incorporated
Harry J. Lister
President of the Fund
Director and President,
Washington Management Corporation
Cyrus A. Ansary
President, Investment Services
International Co. LLC.
Fred J. Brinkman
Retired Senior Partner,
Arthur Andersen, LLP
Daniel J. Callahan III
Vice Chairman and Treasurer,
The Morris and Gwendolyn Cafritz Foundation
James C. Miller III
Counselor, Citizens for a Sound Economy
T. Eugene Smith
President, T. Eugene Smith Inc.
Leonard P. Steuart, II
Vice President, Steuart Investment Company
Margita E. White
President, Association for Maximum
Service Television Inc.
Advisory Board
Charles A. Bowsher
Retired Comptroller General of the
United States
Mary K. Bush
President, Bush & Company
Vernon W. Holleman, Jr.
President, Vernon W. Holleman, Jr., Co.
Katherine D. Ortega
Former Treasurer of the United States
J. Knox Singleton
President and Chief Executive Officer, INOVA Health Systems
William B. Snyder
General Partner, Merastar Partners
Limited Partnership
Robert F. Tardio
Senior Managing Director,
GKMG Consulting Services, Inc.
Directors Emeritus
Bernard J. Nees
Chairman Emeritus of the Fund
Charles T. Akre
Of Counsel, Miller & Chevalier, Chartered
Dr. Nathan A. Baily
Management, Marketing and Education Consultant
John A. Beck
Of Counsel, Reed Smith Shaw & McClay
Jean Head Sisco
Partner, Sisco Associates
Stephen G. Yeonas
Chairman and Chief Executive Officer,
Stephen G. Yeonas Company
Other Officers
Howard L. Kitzmiller
Senior Vice President, Secretary and Assistant Treasurer of the Fund
Director, Senior Vice President, Secretary and Assistant Treasurer, Washington
Management Corporation
Ralph S. Richard
Vice President and Treasurer of the Fund
Director, Vice President and Treasurer, Washington Management Corporation
Lois A. Erhard
Vice President of the Fund
Vice President, Washington Management Corporation
Michael W. Stockton
Assistant Vice President, Assistant Secretary and Assistant Treasurer of the
Fund
Assistant Vice President, Assistant Secretary, and Assistant Treasurer,
Washington Management Corporation
J. Lanier Frank
Assistant Vice President of the Fund
Assistant Vice President, Washington Management Corporation
Offices of the Fund and of the Business Manager
Washington ManagementCorporation
1101 Vermont Avenue, NW
Washington, DC 20005-3585
202/842-5665
Investment Adviser
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 of Assets
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
Independent Accountants
PricewaterhouseCoopers LLP
400 South Hope Street
Los Angeles, CA 90071-2889
Principal Underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1462
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 June 30, 1999, this report must be accompanied
by an American Funds Group Statistical Update for the most recently completed
calendar quarter.
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.
(recycle logo)
Printed on recycled paper
WMIF-011-0699
The American Funds Group(R) (logo)
(logo)
Washington Mutual Investors Fund, Inc.
1101 Vermont Avenue, NW
Washington, DC 20005
202/842-5665
