=====================================================
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. 103
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 31
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 2000 ON OR ABOUT JULY 24,
2000.
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
/x/ IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON JUNE 22, 2000,
PURSUANT TO PARAGRAPH (B) OF RULE 485.
===============================================
<PAGE>
Washington Mutual Investors Fund/SM/
Prospectus
JUNE 22, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
WASHINGTON MUTUAL INVESTORS FUND, INC.
1101 Vermont Avenue, N.W.
Washington, D.C. 20005
<TABLE>
<CAPTION>
TICKER NEWSPAPER FUND
SYMBOL ABBREVIATION NUMBER
------------------------------------------------------------
<S> <C> <C> <C>
Class A AWSHX WshA 01
Class B WSHBX WshB 201
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objective, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 11
-------------------------------------------------------
Choosing a Share Class 12
-------------------------------------------------------
Purchase and Exchange of Shares 13
-------------------------------------------------------
Sales Charges 14
-------------------------------------------------------
Sales Charge Reductions and Waivers 16
-------------------------------------------------------
Plans of Distribution 18
-------------------------------------------------------
How to Sell Shares 19
-------------------------------------------------------
Distributions and Taxes 21
-------------------------------------------------------
Financial Highlights 22
-------------------------------------------------------
</TABLE>
1
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
WMIF-010-0600/MC
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to produce current income and to provide an opportunity for
growth of principal consistent with sound common stock investing. The fund
invests primarily in common stocks of larger, more established companies that
meet the listing requirements of the New York Stock Exchange and have a strong
record of earnings and dividends.
The fund is designed to provide fiduciaries, organizations, institutions and
individuals with a convenient and prudent medium of investment in high quality
common stocks and securities convertible into common stocks. It is especially
designed to serve those individuals who are charged with the responsibility of
investing retirement plan trusts, other fiduciary type reserves, or family
funds, but who are reluctant to undertake the selection and supervision of
individual stocks.
The fund strives to maintain a fully invested, diversified portfolio, primarily
of high-quality stocks and securities convertible into common stocks. The fund
has stringent Investment Standards based upon criteria originally adopted 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. Applying these Investment Standards, the fund's Investment Adviser
compiles an "Eligible List" of investments considered appropriate for a prudent
investor seeking opportunities for income and growth of principal consistent
with common stock investing. 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 additions to, or deletions from, the List to comply with the fund's
Investment Standards.
An investment in the fund is subject to risks, including the possibility that
the fund may decline in value in response to economic, political or social
events in the U.S. or abroad. The prices of equity securities owned by the fund
may be affected by events specifically involving the companies issuing those
securities.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)
[begin bar chart]
1990 -3.86%
1991 23.49
1992 9.10
1993 13.05
1994 0.49
1995 41.22
1996 20.18
1997 33.29
1998 19.37
1999 1.16
[end bar chart]
The fund's year-to-date return for the three months ending March 31, 2000 was
-0.82%.
------------------------------------------------------------------------------
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 14.44% (quarter ended June 30, 1997)
LOWEST -13.13% (quarter ended September 30, 1990)
</TABLE>
3
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge -4.67% 20.82% 14.25% 13.58%
imposed)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
S&P 500/3/ 21.01% 28.49% 18.17% 12.96%
------------------------------------------------------------------------------
Lipper Growth and Income 11.86% 20.60% 14.38% N/A
Index/4/
------------------------------------------------------------------------------
</TABLE>
Class A yield: 1.98%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)
1 The fund began investment operations for Class A shares on July 31, 1952.
2 The fund began investment operations for Class B shares on March 15, 2000.
3 The Standard & Poor's 500 Composite Index is an asset-weighted, broad-based
measurement of changes in stock market conditions based on the average
performance of 500 widely held common stocks. This index is unmanaged and does
not reflect sales charges, commissions or expenses. The lifetime figure is
from the date the fund's Class A shares began investment operations.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund's Class A shares began
investment operations, therefore, lifetime results are not available.
Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge imposed,
as required by Securities and Exchange Commission rules. Class A share results
reflect the maximum initial sales charge of 5.75%. Sales charges are reduced
for purchases of $25,000 or more. Results would be higher if they were
calculated at net asset value. All fund results reflect the reinvestment of
dividend and capital gain distributions.
Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the fund's Class B
shares began investment operations on March 15, 2000, no results are available
as of the most recent calendar year-end.
4
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $25,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.29% 0.29%
Distribution and/or Service (12b-1) Fees 0.24%/2/ 1.00%/3/
Other Expenses 0.10% 0.09%
Total Annual Fund Operating Expenses 0.63% 1.38%
</TABLE>
1 Based on estimated amounts for the current fiscal year.
2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $636 $765 $906 $1,316
----------------------------------------------------------------------------
Class B - assuming redemption $640 $837 $955 $1,452
Class B - assuming no redemption $140 $437 $755 $1,452
</TABLE>
5
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES 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 strives to accomplish this objective through fundamental
research, careful selection, and broad diversification. In the selection of
securities for investment, current and potential yield as well as the potential
for long-term capital appreciation are considered. The fund strives in its
overall portfolio to achieve an above average yield and a below average
price-to-earnings ratio in relation to the Standard & Poor's 500 Composite
Index (a broad, unmanaged index). The fund's portfolio is limited to securities
included on its Eligible List, which is compiled to conform to the fund's
Investment Standards based on criteria that were adopted by the United States
District Court for the District of Columbia. 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.
The values of equity securities held by the fund may decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency and interest rate fluctuations.
The fund's policy is to maintain at all times for its shareholders a fully
invested and widely diversified portfolio of securities; however, the fund may
hold to a limited extent, short-term U.S. government securities, cash and cash
equivalents.
In addition to the principal investment strategies described above, the fund
has other investment practices that are described in the statement of
additional information.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
investments. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
6
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 1.16% 22.26% 14.93% 13.72%
(with no sales charge imposed)
---------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
---------------------------------------------------------------------------
Lipper Growth and Income 11.86% 20.60% 14.38% N/A
Index/4/
---------------------------------------------------------------------------
</TABLE>
These results do not reflect sales charges. Sales charges are reduced or
eliminated for larger purchases and purchases by certain retirement plans.
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The fund began investment operations for Class A shares on July 31, 1952.
3 The fund began investment operations for Class B shares on March 15, 2000.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund's Class A shares began
investment operations, therefore, lifetime results are not available.
7
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
The following information relating to the fund's investment portfolio is as of
the end of the fund's fiscal year, April 30, 2000.
<TABLE>
<CAPTION>
PERCENT OF
LARGEST INVESTMENT CATEGORIES NET ASSETS
---------------------------------------------------------------
<S> <C>
Finance 20.54%
---------------------------------------------------------------
Consumer Goods 19.20
---------------------------------------------------------------
Services 18.42
---------------------------------------------------------------
LARGEST INDUSTRY HOLDINGS
---------------------------------------------------------------
Banking 12.41%
---------------------------------------------------------------
Health & Personal Care 11.60
---------------------------------------------------------------
Diversified Telecommunications Services 9.83
---------------------------------------------------------------
Utilities: Electric & Gas 9.18
---------------------------------------------------------------
Energy Sources 7.84
---------------------------------------------------------------
LARGEST INDIVIDUAL HOLDINGS
---------------------------------------------------------------
Bank of America 3.01%
---------------------------------------------------------------
Pharmacia 2.53
---------------------------------------------------------------
Sprint 2.49
---------------------------------------------------------------
AT&T 2.44
---------------------------------------------------------------
Household International 2.12
---------------------------------------------------------------
Texaco 1.90
---------------------------------------------------------------
Kimberly-Clark 1.74
---------------------------------------------------------------
GTE 1.74
---------------------------------------------------------------
Wells Fargo 1.68
---------------------------------------------------------------
US WEST 1.65
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
BUSINESS MANAGER
Washington Management Corporation or its predecessors, since the fund's
inception, have provided the services necessary to carry on the fund's general
administrative and corporate affairs. These services encompass general
corporate governance, regulatory compliance and oversight of each of the fund's
contractual service providers including custodian operations, shareholder
services and fund share distribution functions. Washington Management
Corporation, a wholly owned subsidiary of The Johnston-Lemon Group,
Incorporated, maintains its principal business address at 1101 Vermont Avenue.,
NW, Washington, DC 20005.
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as 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 total management fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is discussed earlier under "Fees and
Expenses of the Fund."
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 and with the Securities and
Exchange Commission rules adopted in 1999 governing Codes of Ethics. This
policy has also been incorporated into the fund's Code of Ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a 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 a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for Washington Mutual Investors Fund are listed on the
following page.
9
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF
EXPERIENCE AS AN INVESTMENT
PROFESSIONAL (INCLUDING THE
YEARS OF EXPERIENCE LAST FIVE YEARS)
PORTFOLIO AS PORTFOLIO COUNSELOR -------------------------------
COUNSELORS FOR (AND RESEARCH PROFESSIONAL, WITH CAPITAL
WASHINGTON IF APPLICABLE) FOR RESEARCH AND
MUTUAL WASHINGTON MUTUAL INVESTORS MANAGEMENT
INVESTORS FUND PRIMARY TITLE(S) FUND (APPROXIMATE) COMPANY
------------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-------------------------------
<S> <C> <C> <C> <C>
TIMOTHY D. Chairman and Chief 10 years (plus 4 years as a 17 years 17 years
ARMOUR Executive Officer, Capital research professional prior to
Research Company*; becoming a portfolio counselor
Director, Capital Research for the fund)
and Management Company
----------------------------------------------------------------
----------------------------------------------
STEPHEN E. Senior Vice President, 19 years (plus 8 years as a 28 years 34 years
BEPLER Capital Research Company* research professional prior to
becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
ALAN N. Senior Vice President, 2 years (plus 6 years as a 9 years 14 years
BERRO Capital Research Company* research professional prior to
becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
JAMES K. Senior Vice President and 22 years (plus 7 years as a 38 years 38 years
DUNTON Director, Capital Research research professional prior to
and Management Company becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
J. DALE Vice President and 3 years (plus 4 years as a 9 years 11 years
HARVEY Director, Capital Research research professional prior to
Company* becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
GREGG E. Senior Vice President, 10 years (plus 7 years as a 27 years 27 years
IRELAND Capital Research and research professional prior to
Management Company becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
JAMES B. Senior Vice President, 10 years (plus 2 years as a 18 years 18 years
LOVELACE Capital Research and research professional prior to
Management Company becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
ROBERT G. Senior Vice President and 7 years (plus 17 years as a 25 years 28 years
O'DONNELL Director, Capital Research research professional prior to
and Management Company becoming a portfolio counselor
for the fund)
--------------------------------------------------------------------------------------------------------------
JAMES F. President and Director, 6 years (plus 9 years as a 30 years 30 years
ROTHENBERG Capital Research and research professional-
Management Company 1971-1979-prior to becoming a
portfolio counselor for the
fund)
* Company affiliated with Capital Research and Management Company
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.
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 of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service 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, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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.
You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
11
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
. How long you expect to own the shares
. How much you intend to invest
. The expenses associated with owning shares of each class
. Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced or
eliminated for purchases of $25,000
or more (see "Sales Charges - Class
A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
12
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU 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 INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 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
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
13
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 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. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than 5.00% 5.26% 4.25%
$50,000
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution--
14
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
type plans investing $1 million or more, or with 100 or more eligible
employees, and Individual Retirement Account rollovers involving retirement
plan assets invested in the American Funds, may invest with no sales charge and
are not subject to a contingent deferred sales charge. Investments made
through retirement plans, endowments or foundations with $50 million or more in
assets, or through certain qualified fee-based programs may also be made with
no sales charge and are not subject to a contingent deferred sales charge. The
fund may pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
American Funds Distributors pays compensation equal to 4% of the amount
invested to dealers who sell Class B shares.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may
15
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
face certain tax consequences. Please see the statement of additional
information for more information.
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGES
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
. trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
. solely controlled business accounts.
. single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.
16
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
. when receiving payments through systematic withdrawal plans (up to 12% of
the value of your account);
. when receiving required minimum distributions from retirement accounts upon
reaching age 70 1/2; or
. for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
17
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
18
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
. Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
. Requests must be signed by the registered shareholder(s).
. A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
. American Funds Service Company reserves the right to require signature
guarantee(s) on all redemptions.
. Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
. Redemptions by telephone, fax, or computer (including American FundsLine
and American FundsLine OnLine) are limited to $50,000 per shareholder each
day.
. Checks must be made payable to the registered shareholder.
. Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
19
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), 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 liabilities (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.
20
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually 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.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
21
WASHINGTON MUTUAL INVESTORS FUND / PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years (the fund began investment operations for Class
B shares on March 15, 2000). Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, is included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
Net gains on
Net asset securities Dividends
value, Net (both realized Total from (from net Distributions Net asset
Year ended beginning of investment and investment investment (from capital Total value, end of
April 30 year income unrealized) operations income) gains) distributions year
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
2000 $35.31 $.61/2/ $(3.09 )/2/ $(2.48 )/2/ $(.58) $(3.11) $(3.69) $29.14
1999 33.92 .60 3.99 4.59 (.61) (2.59) (3.20) 35.31
1998 25.93 .62 9.65 10.27 (.62) (1.66) (2.28) 33.92
1997 22.77 .62 4.36 4.98 (.62) (1.20) (1.82) 25.93
1996 18.87 .63 4.98 5.61 (.62) (1.09) (1.71) 22.77
CLASS B:
2000 26.93 .02/2/ 2.16/2/ 2.18/2/ - - - 29.11
<CAPTION>
Ratio of Raio of
Net assets, expenses to income to
Year ended end of year average net average net Portfolio
April 30 Total return/1/ (in millions) assets assets turnover rate
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A:
2000 (6.96)% $47,319 .63 % 1.91 % 26.24 %
1999 14.61 57,018 .61 1.84 27.93
1998 40.80 45,764 .62 2.08 17.61
1997 22.43 28,165 .64 2.56 20.41
1996 30.40 20,689 .66 2.98 23.41
CLASS B:
2000 8.10 34 1.38/3/ .67/3/ 26.24/4/
</TABLE>
1 Excludes sales charges.
2 Based on average shares outstanding.
3 Represents annualized ratio for year ended April 30, 2000.
4 Represents portfolio turnover rate for the year ended April 30, 2000.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
* * * * *
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The Codes of Ethics describe the personal investing policies adopted by the
fund, the business manager and the fund's investment adviser and its
affiliated companies.
The Codes of Ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 1101 Vermont Avenue,
N.W., Washington, D.C. 20005.
Investment Company File No. 811-604
Printed on recycled paper
WASHINGTON MUTUAL INVESTORS FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
June 22, 2000
This document is not a prospectus but should be read in conjunction with the
current prospectus dated
June 22, 2000 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.
Description of Certain Securities and Investment Techniques 1
<S> <C>
The Fund and Its Investment Objective and Policies 2
Investment Restrictions 3
Fund Organization and Voting Rights 4
Fund Directors, Advisory Board Members and Officers 5
Management 10
Dividends, Distributions and Federal Taxes 12
Purchase of Shares 15
Sales Charges 18
Sales Charge Reductions and Waivers 20
Individual Retirement Account (IRA) Rollovers 22
Price of Shares 22
Selling Shares 23
Shareholder Account Services and Privileges 24
Execution of Portfolio Transactions 26
General Information 27
Class A Share Investment Results and Related Statistics 28
Financial Statements Attached
</TABLE>
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Objective, Strategies and Risks".
As set forth in its Prospectus, only common stocks and securities convertible
into common stocks meeting the fund's Investment Standards and on the fund's
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.
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 purchase securities convertible into
common stocks where the issuing corporation meets the fund's Investment
Standards and appears on the fund's Eligible List. The value of convertible
securities which have both debt and equity characteristics 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.
NON-U.S. SECURITIES - - The fund may invest up to 5% of its total assets in
securities of companies domiciled outside of the United States as a result of a
merger with a US company which oterwise meet the fund's Investment Standards.
These investments are limited to securities, including American Depository
Receipts ("ADRs") traded on U.S. securities exchanges or on NASDAQ. Foreign
securities may be subject to certain risks, different from those of investing
in U.S. based companies. These include less publicly available information
about issues, different accounting, auditing and financial reporting
regulations and practices, changing economic, political and social conditions,
and risks associated with foreign currency exchange rates and foreign trading
markets. American Depository Receipts are typically issued by a U.S. bank or
trust company evidencing ownership of an underlying foreign security.
Investing in foreign securities that are traded in the U.S. or through ADRs
avoids certain foreign currency risks. Investing through ADRs may, however,
make it more difficult to exercise all of the rights that customarily attach to
share ownership.
U.S. GOVERNMENT SECURITIES, CASH AND CASH EQUIVALENTS -- These securities may
include direct obligations of the U.S. Treasury (such as Treasury bills, notes
and bonds), federal agency obligations guaranteed as to principal and interest
by the U.S. Treasury, and certain securities issued by U.S. Government
instrumentalities and certain federal agencies which securities are neither
direct obligations of, nor guaranteed by, the Treasury. These latter
securities, however, generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported
by the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality.
THE FUND AND ITS INVESTMENT OBJECTIVE AND POLICIES
The fund has Investment Standards based upon criteria originally established by
the United States District Court for the District of Columbia for determining
the eligibility of securities under the Court's Legal List procedure which was
in effect for many years. The fund has an Eligible List of investments based
upon its Investment Standards. The fund's Investment Standards encompass
numerous criteria which govern which securities may be included on the fund's
Eligible List. Currently, those criteria include, for example: (i) a security
must be eligible for listing on the New York Stock Exchange; (ii) except for
banks and a few other companies, the issuing company must have fully earned its
dividends in at least four of the past five years and paid a dividend in at
least nine of the past ten years; (iii) banks and savings and loan associations
must have paid a dividend in at least four of the past five years; (iv)
companies which do not meet the fund's dividend payment requirements must meet
other additional requirements which are generally more stringent than the
fund's other standards applicable to dividend paying companies (these companies
are limited to 5% of the fund's total assets at the time of the investment);
(v) the ratio of current assets to liabilities for most individual companies
must be at least 1.5 to 1, or their bonds must be rated at least investment
grade by Standard and Poor's Corp; (vi) banks, insurance companies and other
financial institutions must have capital funds of at least $100 million; and
(vii) companies must not derive the majority of their revenues from alcohol or
tobacco products. The Investment Standards are periodically reviewed by the
fund's Board of Directors, Investment Adviser and Business Manager. Although
the Standards are not changed frequently, modifications may be made, with the
approval of the fund's Board of Directors, as a result of economic, market or
corporate developments. 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 additions to, or deletions from, the List for continued compliance with the
fund's Investment Standards.
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. The
Investment Standards are not part of the fund's Investment Restrictions
discussed below.
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 net assets 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 as
permitted 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 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
below. They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund.
The fund has two classes of shares - Class A and Class B. The shares of each
class represent an interest in the same investment portfolio. Each class has
equal rights as to voting, redemption, dividends and liquidation, except that
each class bears different distribution expenses and may bear different
transfer agent fees and other expenses properly attributable to the particular
class as approved by the Board of Directors. Class A and Class B shareholders
have exclusive voting rights with respect to the rule 12b-1 Plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests of another class. Shares
of all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone.
The fund does not hold annual meetings of its shareholders. However,
significant corporate matters which require shareholder approval, such as
certain elections of Board members or a change in a fundamental investment
policy, will be presented to shareholders at a meeting called for such purpose.
Shareholders have one vote per share owned. At the request of the holders of
at least 10% of the shares, the fund will hold a meeting at which any member of
the Board could be removed by a majority vote.
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 THE FUND AFFILIATED WITH THE BOARDS
ON
DURING FISCAL YEAR ENDED AMERICAN FUNDS WHICH
4/30/00 GROUP INDIVIDUAL
SERVES/2/
<S> <C> <C> <C> <C> <C>
Charles T. Akre Director Emeritus Miller & Chevalier, $21,000 $21,000 1
700 John Ringling Blvd. Chartered,
Apt. 1108 Of Counsel
Sarasota, FL 34236
Age: 90
Cyrus A. Ansary Director Investment Services $59,500 $62,000 3
1725 K Street, N.W., Suite 410 International Co. LLC,
Washington, D.C. 20006 President
Age: 66
Nathan A. Baily Director Emeritus Management, Marketing, $20,000 $20,000 1
5516 Greystone Street Education Consultant
Chevy Chase, MD 20815
Age: 79
John A. Beck{ Director Emeritus Washington Management none/4/ none/4/ 1
Age: 74 Corporation, Counsel
Fred J. Brinkman*{ Director Washington Management none/4/ none/4/ 1
Age: 71 Corporation, Senior
Financial Consultant
Charles A. Bowsher Advisory Board Retired Comptroller $7,000 $7,000 1
4503 Boxwood Road Member General of
Bethesda, MD 20816 The United States
Age: 69
Mary K. Bush Advisory Board Bush & Company, $7,000 $7,000 1
4201 Cathedral Ave., N.W. Member President
Number 1016 East
Washington, D.C. 20016
Age: 52
Daniel J. Callahan III Director The Morris & Gwendolyn $59,000 $59,000 1
1825 K Street, N.W. Cafritz Foundation,
Washington, D.C. 20006 Vice Chairman &
Age: 68 Treasurer
Stephen Hartwell*{ Chairman of the Board Washington Management none/4/ none/4/ 3
Age: 85 Corporation, Chairman of
the Board
James H. Lemon, Jr.*{ Vice Chairman of the The Johnston-Lemon none/4/ none/4/ 3
Age: 64 Board Group, Incorporated,
Chairman of the Board
and
Chief Executive Officer
Harry J. Lister*{ President Washington Management none/4/ none/4/ 3
Age: 64 Corporation, President
and Director
James C. Miller III Director Citizens for a Sound $60,500 $60,500 3
1250 H Street, N.W., Suite 700 Economy, Counselor
Washington, D.C. 20005
Age: 57
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: 92
Katherine D. Ortega Advisory Board Former Treasurer of the $7,000/3/ $7,000 1
800 25th Street, NW Member United States
Suite 1003
Washington, D.C. 20038
Age: 66
Mr. John Knox Singleton Advisory Board President, INOVA $7,000/3/ $7,000 1
8110 Gatehouse Road Member Health System
Falls Church, VA 22042
Age: 51
T. Eugene Smith Director T. Eugene Smith, Inc., $60,000 $63,700 3
666 Tintagel Lane President
McLean, VA 22101
Age: 69
William B. Snyder Advisory Board Merastar Partners $6,000 $6,000 1
6900 Wisconsin Avenue, Suite 304 Member Limited Partnership,
Bethesda, MD 20815 General Partner
Age: 70
Leonard P. Steuart II Director Steuart Investment $57,000/3/ $57,000 1
5454 Wisconsin Avenue Company, Vice President
Suite 1600
Chevy Chase, MD 20815
Age: 65
Robert F. Tardio Advisory Board Senior Managing Director, $7,000 $7,000 1
1530 Wilson Blvd., Suite 400 Member GKMG Consulting
Arlington, VA 222097 Services, Inc.
Age:71
Margita E. White Director Association for Maximum $60,000 $60,000 3
1776 Massachusetts Avenue, N.W. Service Television Inc.,
Suite 310 President
Washington, D.C. 20036
Age: 62
Stephen G. Yeonas Director Emeritus Stephen G. Yeonas $23000/3/ $26,500 3
6867 Elm Street, Suite 210 Company, Chairman of
McLean, VA 22101 the Board and Chief
Age: 75 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 1994.
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 (8/1/98 -- 7/31/99).
/3/Since the plan's adoption, the total amount of deferred compensation accrued
by the fund (plus earnings thereon) through 3/31/00 for participants is as
follows: Director Leonard P. Steuart II ($175,410), Director Emeritus Stephen
G. Yeonas ($328,718), and Advisory Board members Katherine Ortega ($21,684),
and J. Knox Singleton ($19,268). 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Age Position(s) Principal Occupation(s) During
with Registrant Past 5 Years
Jeffrey L. Steele 54 Executive Vice President Executive Vice President and Director ,
Washington Management Corporation;
former Partner, Dechert Price and Rhoads
Howard L. Kitzmiller 70 Senior Vice President, Secretary and Senior Vice President, Secretary,
Assistant Treasurer Assistant Treasurer and Director,
Washington Management Corporation
Ralph S. Richard 81 Vice President and Treasurer Vice President, Treasurer and Director,
Washington Management Corporation
Lois A. Erhard 48 Vice President Vice President, Washington
Management Corporation
Michael W. Stockton 33 Assistant Vice President, Assistant Assistant Vice President, Assistant Secretary
Secretary and Assistant Treasurer and Assistant Treasurer, Washington
Management Corporation
J. Lanier Frank 39 Assistant Vice President Assistant Vice President,
Washington Management Corporation
Ashley L. Shaw 31 Assistant Secretary Assistant Secretary, Washington
Management Corporation; former Part-time
Associate, Reed Smith Shaw and McClay;
former Law Clerk, The Honorable
William E. Anderson
</TABLE>
# 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/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 a fee of
$40,000 per annum 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 a fee of
$20,000 per annum 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 a fee of
$5,000 per annum 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 8. As of
June 1, 2000 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. Washington Management Corporation maintains its principal
business address at 1101 Vermont Avenue, N.W., Washington, D.C. 20005.
The primary function of the Business Manager is to oversee the various services
and operations of the fund. The Business Manager provides services necessary
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 exceed an amount equal to 1% of the average net assets
of the fund for the year. No such reimbursement was necessary in fiscal 1999.
The expense limitation described above shall apply only to Class A shares
issued by the Fund and shall not apply to any other class(es) of shares the
Fund may issue in the future. However, notwithstanding the foregoing, to the
extent the Business Manager is required to reduce its management fee due to the
expenses of the Class A shares exceeding the stated limit, the reduction in the
management fee will reduce the Fund's management fee expense similarly for all
other classes of shares of the Fund. 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, 0.075% of net assets in excess of $21 billion but not
exceeding $34 billion, 0.06% of net assets in excess of $34 billion but not
exceeding $44 billion, 0.05% of net assets in excess of $44 billion but not
exceeding $55 billion and 0.04% of net assets in excess of $55 billion. During
the fiscal years ended April 30, 2000, 1999 and 1998, the Business Manager's
fees amounted to $47,107,000, $44,286,000 and $36,895,000, respectively.
The current Business Management Agreement, unless sooner terminated, will
continue in effect until August 31, 2001 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 Agreement
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
Agreement provides that the Business Manager has no liability to the fund for
its acts or omissions in the performance of its obligations to the fund not
involving willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations under the Agreement. The Agreement also provides
that either party has the right to terminate it, without penalty, upon sixty
(60) days' written notice to the other party and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Business Manager has established a charitable foundation, The Washington
Management Corporation Foundation, which makes contributions to charities
organized under Section 501(c)(3) or 509(a)(2) of the Internal Revenue Code.
Directors, Directors Emeriti, Advisory Board members and officers of the fund,
as well as all employees of the Business Manager and its affiliates, may
participate in a gift matching program sponsored by the Foundation.
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 research 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.
The Investment Adviser is responsible for more than $300 billion of stocks,
bonds and money market instruments and serves over 11 million shareholder
accounts 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, 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, 2000, 1999 and 1998, the Investment Adviser's fees
amounted to $105,889,000, $96,791,000 and $73,646,000, respectively.
The Investment Advisory Agreement, unless sooner terminated, will continue in
effect until August 31, 2001 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 Agreement 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 Agreement
provides that the Investment Adviser has no liability to the fund for its acts
or omissions in the performance of its obligations to the fund not involving
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations under the Agreement. The Agreement also provides that either party
has the right to terminate it, without penalty, upon sixty (60) days' written
notice to the other party and that the Agreement automatically terminates in
the event of its 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, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted Plans of
Distribution (the Plans), pursuant to rule 12b-1 under the 1940 Act (see
"Principal Underwriter" in the prospectus). The Principal Underwriter receives
amounts payable pursuant to the Plans (see below) and commissions consisting of
that portion of the sales charge remaining after the discounts which it allows
to investment dealers. Commissions retained by the Principal Underwriter on
sales of Class A fund shares during the fiscal year ended April 30, 2000
amounted to $26,981,000 after allowance of $133,675,000 to dealers including
$942,000 earned by Johnston, Lemon & Co. Incorporated on its retail sales of
shares and the Distribution Plans of the fund. During the fiscal years ended
April 30, 1999 and 1998, the Principal Underwriter retained $42,516,000 and
$38,821,000, respectively.
As required by rule 12b-1, the Plans (together with the Principal Underwriting
Agreement) have 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 Plans
or the Principal Underwriting Agreement, and the Plans have 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 Plans. Potential benefits of the Plans 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 Plans.
Expenses under the Plans are reviewed quarterly and the Plans must be
considered for renewal annually by the Board of Directors.
Under the Plans the fund may expend up to 0.25% of its net assets annually for
Class A shares and up to 1.00% of its net assets annually for Class B shares
to finance any activity which is primarily intended to result in the sale of
fund shares, provided the fund's Board of Directors has approved the category
of expenses for which payment is being made. For Class A shares these include
up to 0.25% in service fees for qualified dealers and dealer commissions and
wholesaler compensation on sales of shares exceeding $1 million purchased
without a sales charge (including purchases by employer-sponsored defined
contribution-type retirement plans investing $1 million or more or with 100 or
more eligible employees, rollover IRA accounts as described in "Individual
Retirement Account (IRA) Rollovers" below, and retirement plans, endowments or
foundations with $50 million or more in assets). For Class B shares these
include 0.25% in service fees for qualified dealers and 0.75% in payments to
the Principal Underwriter for financing commissions paid to qualified dealers
selling Class B shares.
Commissions on sales of Class A shares exceeding $1 million (including
purchases by any employer-sponsored 403(b) plan or purchases by any defined
contribution plan qualified under Section 401(a) of the Internal Revenue Code,
including any "401(k)" plan with 100 or more eligible employees) in excess of
the Class A Plan limitation not reimbursed during the most recent fiscal
quarter are recoverable for five quarters, provided that such commissions do
not exceed the annual expense limit. After five quarters, commissions are not
recoverable. During the fiscal year ended April 30, 2000 the fund paid or
accrued $125,719,000 under the Class A Plan and $24,000 under the Class B Plan
for compensation to dealers. As of April 30, 2000, distribution expenses
accrued and unpaid amounted to $18,392,000 and $20,000 under the Class A and
Class B Plans, respectively.
OTHER COMPENSATION TO DEALERS -- 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 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally 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.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
DIVIDENDS <UNDEF> The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. The fund may follow the practice of distributing the entire excess of
net realized long-term capital gains over net realized short-term capital
losses. However, the fund may retain all or part of such gain for
reinvestment, after paying the related federal taxes for which shareholders may
then be able to claim a credit against their federal tax liability. If the
fund does not distribute the amount of capital gain and/or net investment
income required to be distributed by an excise tax provision of the Code, the
fund may be subject to that excise tax. In certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
the required amount. In this case, the fund will pay any income or excise
taxes due.
The fund intends to distribute each year its investment company taxable income,
including any net short-term capital gains in excess of net long-term capital
losses, and any net capital gains realized during each fiscal year. Additional
distributions may be made, if necessary.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other
American Funds, as provided in the prospectus.
TAXES --The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses)
and generally is not subject to federal income tax to the extent that it
distributes annually its investment company taxable income and net realized
capital gains in the manner required under the Code. The fund intends to
distribute annually all of its investment company taxable income and net
realized capital gains and therefore does not expect to pay federal income tax,
although in certain circumstances the fund may determine that it is in the
interest of shareholders to distribute less than that amount.
The fund will be subject to a 4% nondeductible excise tax on amounts required
to be but not distributed under a prescribed formula. The formula requires the
fund to distribute to shareholders for a calendar year an amount equal to at
least 98% of the fund's ordinary income for that calendar year, at least 98% of
the excess of its capital gains over capital losses realized during the
one-year period ending October 31 during such year, and all ordinary income and
capital gains for prior years that were not previously distributed.
Investment company taxable income generally includes dividends, interest and
net short-term capital gains in excess of net long-term capital losses. Net
capital gains for a fiscal year are computed by taking into account any capital
loss carryforward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by a fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to
increase the adjusted tax basis on fund shares by the difference between a pro
rata share of the retained gains less the related tax paid by the fund.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain
distributions" generally will be taxable to individual shareholders at a
maximum 20% capital gains rate, regardless of the length of time the shares of
the fund have been held by such shareholders. Such distributions are not
eligible for the dividends-received deduction. Any loss realized upon the
redemption of shares held at the time of redemption for six months or less from
the date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gain during
such six-month period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions
in the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another
American Fund, may result in tax consequences (gain or loss) to the shareholder
and must also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of
the fund's gross income, a portion of the income distributions of the fund will
be eligible for the deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify.
The dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days during the
90 day holding period beginning 45 days before the ex-dividend date.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to
the shareholder as ordinary income or capital gain as described above, even
though, from an investment standpoint, it may constitute a partial return of
investment capital. For this reason, investors should consider the tax
implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive
a partial return of investment capital upon the distribution, which will
nevertheless be taxable to them.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt U.S. shareholders who fail to furnish the
investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, I.E., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or at a
lower rate under an applicable income tax treaty) on dividend income received
by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Purchase Minimums" for $50 minimum (except where a lower
initial investment minimums. minimum is noted under "Purchase
Minimums").
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 Purchases, 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>
PURCHASE MINIMUMS - The minimum initial investment for all funds in The
American Funds Group, except the money market funds and the state tax-exempt
funds, is $250. The minimum initial investment for the money market funds (The
Cash Management Trust of America, The Tax- Exempt Money Fund of America, and
The U.S. Treasury Money Fund of America) and the state tax-exempt funds (The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, and The
Tax-Exempt Fund of Virginia) is $1,000. Purchase 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).
PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. For investments above $100,000 Class
A shares are generally a less expensive option over time due to sales charge
reductions or waivers.
FUND NUMBERS - Here are the fund numbers for use with our automated phone line,
American FundsLineR (see description below):
<TABLE>
<CAPTION>
<S> <C> <C>
FUND FUND FUND
NUMBER NUMBER
CLASS A CLASS B
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/R/ 202
02
American Balanced Fund/R/ 211
11
American Mutual Fund/R/ 203
03
Capital Income Builder/R/ 212
12
Capital World Growth and Income Fund/SM/ 233
33
EuroPacific Growth Fund/R/ 216
16
Fundamental Investors/SM/ 210
10
The Growth Fund of America/R/ 205
05
The Income Fund of America/R/ 206
06
The Investment Company of America/R/ 204
04
The New Economy Fund/R/ 214
14
New Perspective Fund/R/ 207
07
New World Fund/SM/ 236
36
SMALLCAP World Fund/R/ 235
35
Washington Mutual Investors Fund/SM/ 201
01
BOND FUNDS
American High-Income Municipal Bond Fund/R/ 240
40
American High-Income Trust/SM/ 221
21
The Bond Fund of America/SM/ 208
08
Capital World Bond Fund/R/ 231
31
Intermediate Bond Fund of America/SM/ 223
23
Limited Term Tax-Exempt Bond Fund of America/SM/ 243
43
The Tax-Exempt Bond Fund of America/SM/ 219
19
The Tax-Exempt Fund of California/R/* 220
20
The Tax-Exempt Fund of Maryland/R/* 224
24
The Tax-Exempt Fund of Virginia/R/* 225
25
U.S. Government Securities Fund/SM/ 222
22
MONEY MARKET FUNDS
The Cash Management Trust of America/R/ 209
09
The Tax-Exempt Money Fund of America/SM/ N/A
39
The U.S. Treasury Money Fund of America/SM/ N/A
49
* Available only in certain states.
</TABLE>
SALES CHARGES
CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A
shares of 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 "Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $25,000
6.10% 5.75% 5.00%
$25,000 but less than $50,000. . . . . . . . . . . 5.26 5.00 4.25
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $100,000
3.90 3.75 3.00
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 $750,000. . . . . . . . 2.04 2.00 1.60
$750,000 but less than $1,000,000
1.52 1.50 1.20
$1,000,000 or more (see below)
none none CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES -- Investments of
$1 million or more are sold with no
initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE (CDSC) MAY BE IMPOSED IF
REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans
investing $1 million or more, or with 100 or more eligible
employees, and Individual Retirement Account
rollovers from retirement plan assets invested in the American
Funds (see "Individual Retirement Account
(IRA) Rollovers" below) may invest with no sales charge and are
not subject to a contingent deferred sales
charge. Investments made by investors in certain qualified
fee-based programs, and retirement plans,
endowments or foundations with $50 million or more in assets may
also be made with no sales charge and are
not subject to a CDSC. A dealer concession of up to 1% may be
paid by the fund under its Plan of Distribution
on investments made with no initial sales charge.
</TABLE>
In addition, Class A shares of the stock, stock/bond and bond funds may sell
shares at net asset value to:
(1) current or retired directors, trustees, officers and advisory board members
of, and certain lawyers who provide services to the funds managed by Capital
Research and Management Company, employees of Washington Management
Corporation, employees and partners of The Capital Group Companies, Inc. and
its affiliated companies, certain family members of the above persons, and
trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with
American Funds Distributors (or who clear transactions through such dealers)
and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation.
Shares are offered at net asset value to these persons and organizations due to
anticipated economies in sales effort and expense.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES - A contingent deferred
sales charge of 1% applies to redemptions made from funds, other than the money
market funds, within 12 months following Class A share purchases of $1 million
or more made without an initial sales charge. 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 the
longest are assumed to be redeemed first for purposes of calculating this CDSC.
The CDSC may be waived in certain circumstances. See "CDSC Waivers for Class A
Shares" below.
DEALER COMMISSIONS ON CLASS A SHARES -- The following commissions (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 defined contribution
plan investing $1,000,000 or more, or with 100 or more eligible employees, IRA
rollover accounts (as decribed in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with collective assets of $50
million or more: 1.00% on amounts of $1 million to $4 million, 0.50% on amounts
over $4 million to $10 million, and 0.25% on amounts over $10 million. 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).
CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge. However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:
C ONTINGENT DEFERRED SALES CHARGE ON
SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
1 5.00%
2
4.00%
3
4.00%
4
3.00%
5
2.00%
6
1.00%
There is no CDSC on appreciation in share value above the initial purchase
price or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances.
See "CDSC Waivers for Class B shares" below. The CDSC is based on the original
purchase cost or the current market value of the shares being sold, whichever
is less. In processing redemptions of Class B shares, shares that are not
subject to any CDSC will be redeemed first and then shares that you have owned
the longest during the six-year period. CLASS B SHARES ARE NOT AVAILABLE TO
CERTAIN RETIREMENT PLANS, INCLUDING GROUP RETIREMENT PLANS SUCH AS 401(K)
PLANS, EMPLOYER-SPONSORED 403(B) PLANS, AND MONEY PURCHASE PENSION AND PROFIT
SHARING PLANS.
Compensation equal to 4% of the amount invested is paid by the Principal
Underwriter to dealers who sell Class B shares.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES - Class B shares automatically
convert to Class A shares in the month of the eight-year anniversary of the
purchase date. The conversion of Class B shares to Class A shares after eight
years is subject to the Internal Revenue Service's continued position that the
conversion of Class B shares is not subject to federal income tax. In the
event the Internal Revenue Service no longer takes this position, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. At your
option, Class B shares may still be exchanged for Class A shares on the basis
of relative net asset value of the two classes, without the imposition of a
sales charge or fee; HOWEVER, SUCH AN EXCHANGE COULD CONSTITUTE A TAXABLE EVENT
FOR YOU AND, ABSENT SUCH AN EXCHANGE, CLASS B SHARES WOULD CONTINUE TO BE
SUBJECT TO HIGHER EXPENSES FOR LONGER THAN EIGHT YEARS.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE - You and your "immediate family" (your
spouse and your children under age 21) may combine investments to reduce your
costs. You must let your investment dealer or American Funds Service Company
(the "Transfer Agent") know if you qualify for a reduction in your sales charge
using one or any combination of the methods described below.
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a 13-month period and receive the same sales
charge as if all shares had been purchased at once. This includes purchases
made during the previous 90 days, but does not include appreciation of your
investment or reinvested distributions. The reduced sales charges and offering
prices set forth in the Prospectus apply to purchases of $25,000 or more made
within a 13-month period subject to a statement of intention (the "Statement").
The Statement is not a binding obligation to purchase the indicated amount.
When a shareholder elects to utilize a Statement in order to qualify for a
reduced sales charge, shares equal to 5% of the dollar amount specified in the
Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid by the close of the period 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 account
application) and any individual investments in American Legacy products
(American Legacy, American Legacy II and American Legacy III variable
annuities, American Legacy Life, American Legacy Variable Life, and American
Legacy Estate Builder) 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.
When the trustees of certain retirement plans purchase shares 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, and any individual
investments in American Legacy products 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.
CONCURRENT PURCHASES - You may combine purchases of Class A and/or Class B
shares of two or more funds in The American Funds Group, as well as individual
holdings in American Legacy variable annuities and variable life insurance
products. Direct purchases of the money market funds are excluded. Shares of
money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHT OF ACCUMULATION - You may take into account the current value of your
existing Class A and B holdings in The American Funds Group, as well as your
holdings in 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.
When determining your sales charge, you may also take into account the value of
your individual holdings, as of the end of the week prior to your investment,
in various American Legacy products (American Legacy, American Legacy II and
American Legacy III variable annuities, American Legacy Life, American Legacy
Variable Life, and American Legacy Estate Builder). Direct purchases of the
money market funds are excluded.
CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in
the following cases:
(1) Exchanges (except if shares acquired by exchange are then redeemed within
12 months of the initial purchase).
(2) Distributions from 403(b) plans or IRAs due to death, post-purchase
disability or attainment of age 59-1/2.
(3) Tax-free returns of excess contributions to IRAs.
(4) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% of the net asset value of the account
each year.
CDSC WAIVERS FOR CLASS B SHARES - Any CDSC on Class B shares may be waived in
the following cases:
(1) Systematic withdrawal plans (SWPs) - investors who set up a SWP (see
"Automatic Withdrawals" below) may withdraw up to 12% of the net asset value
of their account each year without incurring any CDSC. Shares not subject to
a CDSC (such as shares representing reinvestment of distributions) will be
redeemed first and will count toward the 12% limitation. If there are
insufficient shares not subject to a CDSC, shares subject to the lowest CDSC
will be redeemed next until the 12% limit is reached.
The 12% fee from CDSC limit is calculated on a pro rata basis at the time the
first payment is made and is recalculated thereafter on a pro rata basis at
the time of each SWP payment. Shareholders who establish a SWP should be
aware that the amount of that payment not subject to a CDSC may vary over time
depending on fluctuations in net asset value of their account. This privilege
may be revised or terminated at any time.
(2) Required minimum distributions taken from retirement accounts upon the
attainment of age 70-1/2.
(3) Distributions due to death or post-purchase disability of a shareholder. In
the case of joint tenant accounts, if one joint tenant dies, the surviving
joint tenant(s), at the time they notify the Transfer Agent of the decedent's
death and remove his/her name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions subsequent to the notification
to the Transfer Agent of the death of one of the joint owners will be subject
to a CDSC.
INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS
Assets from an employer-sponsored retirement plan (plan assets) may be invested
in any class of shares of the American Funds (except as described below)
through an IRA rollover plan. All such rollover investments will be subject to
the terms and conditions for Class A and B shares contained in the fund's
current prospectus and statement of additional information. In the case of an
IRA rollover involving plan assets from a plan that offered the American Funds,
the assets may only be invested in Class A shares of the American Funds. Such
investments will be at net asset value and will not be subject to a contingent
deferred sales charge. Dealers who initiate and are responsible for such
investments will be compensated pursuant to the schedule applicable to
investments of $1 million or more (see "Dealer Commissions on Class A Shares"
above).
PRICE OF SHARES
Shares are purchased at the offering price next determined after the purchase
order is received and accepted by the fund or American Funds Service Company;
this offering price is effective for orders received prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In case of orders sent directly to the fund or 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 as of approximately 4:00 p.m.,
New York Time which is the normal close of trading on the New York Stock
Exchange each day the Exchange is open. If, for example, the Exchange closes
at 1:00 p.m. the fund's share price would still be determined as of 4:00 p.m.
New York time. 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.
All portfolio securities of funds advised by Capital Research and Management
Company (other than money market funds) are valued, and 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 fund's Board of Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. Sales of certain Class A and B
shares may be subject to deferred sales charges. You may sell (redeem) shares
in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold through the
dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of record
which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution. The Transfer Agent reserves
the right to require a signature guarantee on all redemptions.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in certificate form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE OR AMERICAN FUNDSLINE ONLINE
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder(s).
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application)
-- 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 anyone you designate and must be signed by the authorized number or
registered shareholders exactly as indicated on your checking account signature
card.
- Check writing is not available for Class B shares of The Cash Management
Trust.
If you sell Class B shares and request a specific dollar amount to be sold, we
will sell sufficient shares so that the sale proceeds, after deducting any
contingent deferred sales charge, equals the dollar amount requested.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), 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.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), 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.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution of Class A or Class B shares without a sales charge in the Class A
shares of any fund in The American Funds Group within 90 days after the date of
the redemption or distribution (any contingent deferred sales charge on Class A
shares will be credited to your account). Redemption proceeds of shares
representing direct purchases in the money market funds are excluded. Proceeds
will be reinvested at the next calculated net asset value after your request is
received and accepted by the Transfer Agent.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables you to make
monthly or quarterly investments into The American Funds Group through
automatic debits from your bank account. To set up a plan you must fill out
an account application and specify the amount you would like to invest ($50
minimum) and the date on which you would like your investments to occur. The
plan will begin within 30 days after your account application is received. Your
bank account will be debited on the day or a few days before your investment is
made, depending on the bank's capabilities. The Transfer Agent will then
invest your money into the fund you specified on or around the date you
specified. For example, if the date you specified falls on a weekend or
holiday, your money will be invested on the next business day. If your 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. You may change the amount of the investment or discontinue the plan
at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the
fund receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distribution must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group within the same class. However, exchanges from Class A shares of
The Cash Management Trust of America may be made to Class B shares of any other
American Fund for dollar cost averaging purposes. 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
"Selling Shares"), by contacting your investment dealer, by using American
FundsLine and American FundsLine OnLine (see "American FundsLine and American
FundsLine OnLine" 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 Purchases, 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.
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 AND AMERICAN FUNDSLINE ONLINE- You may check your share
balance, the price of your shares, or your most recent account transaction,
sell shares (up to $50,000 per shareholder, per day), or exchange shares around
the clock with American FundsLine and American FundsLine OnLine. 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 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-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 FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, 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 the Transfer Agent (you may also
reinstate them at any time by writing the Transfer Agent). If the Transfer
Agent 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.
REDEMPTION OF SHARES - The Fund's Articles of Incorporation permit the Fund to
direct the Transfer Agent to redeem the shares of any shareholder if the value
of shares in the account is less than the minimum initial investment amount set
forth in the Fund's current registration statement under the 1940 Act, subject
to such further terms and conditions as the Board of Directors may adopt.
Prior notice of at least 60 days will be given to a shareholder before the
involuntary redemption provision is made effective with respect to the
shareholder's account to provide the shareholder with an opportunity to bring
the account up to the minimum.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
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 quality of executions. When, in the opinion of the Investment Adviser, two
or more brokers (either directly or through their correspondent clearing
agents) are in a position to obtain the best price and execution, preference
may be given to brokers who have sold shares of the fund or who have provided
investment research, statistical, or other related services to 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.
The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parents of broker-dealers that derive more
than 15% of their revenue from broker-dealer activities) which have certain
relationships with the fund. During the last fiscal year, The Chase Manhattan
Bank and J. P. Morgan were among the top 10 dealers that received the largest
amount of brokerage commissions and that acted as principals in portfolio
transactions. The fund held equity securities of The Chase Manhattan Bank and
J.P. Morgan in the amounts of $475,613,000 and $226,454,000, respectively, at
the year ended April 30, 2000.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended April 30, 2000, 1999
and 1998 amounted to $31,948,000, $28,860,000 and $18,302,000, respectively.
During fiscal years 2000, 1999 and 1998 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 $43,063,000 for the fiscal year ended April 30, 2000.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers 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 PricewaterhouseCoopers 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.
PROSPECTUSES AND REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on April
30. Shareholders are provided updated prospectuses annually. In addition,
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, PricewaterhouseCoopers LLP. In an effort to reduce the volume of
mail shareholders receive from the fund when a household owns more than one
account, the Transfer Agent has taken steps to eliminate duplicate mailings of
shareholder reports. To receive additional copies of a prospectus or report,
shareholders should contact the Transfer Agent.
PERSONAL INVESTING POLICY - The fund, Washington Management Corporation,
Capital Research and Management Company and its affiliated companies, including
the fund's principal underwriter, have adopted codes of ethics which allow for
personal investment. The personal investing policy is 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; limitations on service as
a director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - 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 FOR CLASS A SHARES -- APRIL 30, 2000
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . . . $29.14
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). . . . . $30.92
CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield is 2.03% based on a 30-day (or one month) period ended April
30, 2000, 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, 2000 was -12.30%, +17.70% and
+14.94%, 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. For educational purposes,
fund literature may contain discussions and/or illustrations of volatility,
risk tolerance, asset allocation and investment strategies.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results compiled by organizations such as CDA Investment
Technologies, Ibbottson Associates, Lipper Analytical Services, Morningstar,
Inc. 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.
The fund may also show investment results for its Class B shares which began
investment operations on March 15, 2000.
<TABLE>
<S> <C> <C> <C>
Washington Mutual Investors Fund, Inc.
Investment Portfolio, April 30, 2000
Market Percent
Value of Net
Equity Securities Shares (000) Assets
-------------------------------------------- ---------------- ---------------- --------
ENERGY
ENERGY SOURCES - 7.84%
Ashland Inc. 3,680,000 $ 125,580 .26
Chevron Corp. 9,052,000 770,552 1.63
Conoco Inc., Class A 8,450,000 201,216 .74
Conoco Inc., Class B 5,913,692 147,103
Exxon Mobil Corp. (merger of Exxon Corp. and Mobil Corp.) 9,421,514 731,934 1.55
Kerr-McGee Corp. 2,750,000 142,312 .30
Phillips Petroleum Co. 10,310,600 489,109 1.03
Texaco Inc. 18,200,000 900,900 1.90
Unocal Corp. 6,296,500 203,456 .43
----------- -------
3,712,162 7.84
----------- -------
UTILITIES: ELECTRIC & GAS - 9.18%
Ameren Corp. 6,727,400 246,811 .52
American Electric Power Co., Inc. 6,870,000 251,614 .53
Carolina Power & Light Co. 7,800,000 285,188 .60
Central and South West Corp. 8,650,800 187,614 .40
Cinergy Corp. (formerly CINergy Corp.) 2,250,000 60,188 .13
Conectiv 3,400,000 60,350 .13
Consolidated Edison, Inc. 5,671,700 199,573 .42
Constellation Energy Group, Inc. 6,450,000 213,253 .45
Dominion Resources, Inc. 4,966,061 223,473 .47
DTE Energy Co. 3,869,400 126,239 .27
Duke Energy Corp. 5,050,000 290,375 .61
Edison International 3,135,000 59,761 .13
Entergy Corp. 2,400,000 61,050 .13
Florida Progress Corp. 4,725,000 231,525 .49
FPL Group, Inc. 2,746,100 124,089 .26
GPU, Inc. 4,125,000 115,758 .24
New Century Energies, Inc. 3,050,000 99,506 .21
PECO Energy Co. 2,724,400 113,573 .24
PPL Corporation (formerly PP&L Resources, Inc.) 3,035,319 72,468 .15
Public Service Enterprise Group Inc. 2,020,000 72,468 .15
Puget Sound Energy, Inc. 3,800,000 90,250 .19
Reliant Energy, Inc. 1,800,000 47,925 .10
Southern Co. 24,400,000 608,475 1.28
TECO Energy, Inc. 1,000,000 21,875 .05
Williams Companies, Inc. 12,500,000 466,406 .99
Wisconsin Energy Corp. 800,000 17,100 .04
----------- -------
4,346,907 9.18
----------- --------
Total Energy 8,059,069 17.02
----------- --------
MATERIALS
CHEMICALS - 1.87%
Air Products and Chemicals, Inc. 2,690,000 83,558 .18
CK Witco Corp. 5,800,000 68,150 .14
Dow Chemical Co. 1,050,000 118,650 .25
Hercules Inc. 5,220,000 81,236 .17
International Flavors & Fragrances Inc. 2,000,000 68,875 .15
PPG Industries, Inc. 7,925,000 430,922 .91
Union Carbide Corp. 604,500 35,666 .07
----------- --------
887,057 1.87
----------- --------
FOREST PRODUCTS & PAPER - 2.55%
International Paper Co. 13,172,000 484,071 1.02
Westvaco Corp. 4,999,800 154,369 .33
Weyerhaeuser Co. 8,900,000 475,594 1.00
Willamette Industries, Inc. 2,475,000 94,514 .20
----------- --------
1,208,548 2.55
----------- --------
METALS: NONFERROUS - .88%
Alcoa Inc. 4,300,000 278,962 .59
Phelps Dodge Corp. 2,920,000 135,050 .29
----------- --------
414,012 .88
----------- --------
Total Materials 2,509,617 5.30
----------- --------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY - 1.91%
Boeing Co. 3,550,000 140,891 .30
Raytheon Co., Class A 1,000,000 22,937 .12
Raytheon Co., Class B 1,500,000 33,281
United Technologies Corp. 11,383,300 707,899 1.49
----------- --------
905,008 1.91
----------- --------
DATA PROCESSING & REPRODUCTION - 3.36%
Computer Associates International, Inc. 4,250,000 237,203 .50
Hewlett-Packard Co. 3,000,000 405,000 .86
International Business Machines Corp. 1,800,000 200,925 .42
Xerox Corp. 28,289,400 747,901 1.58
----------- --------
1,591,029 3.36
----------- --------
ELECTRICAL & ELECTRONICS - .59%
Emerson Electric Co. 4,172,400 228,961 .48
Harris Corp. 1,550,000 50,084 .11
----------- --------
279,045 .59
----------- --------
ELECTRONIC COMPONENTS - 1.27%
Motorola, Inc. 1,000,000 119,062 .25
Texas Instruments Inc. 2,450,000 399,044 .84
Thomas & Betts Corp. 2,720,000 83,810 .18
----------- --------
601,916 1.27
----------- --------
ELECTRONIC INSTRUMENTS - .68%
PE Biosystems Group 5,363,800 321,828 .68
----------- --------
ENERGY EQUIPMENT - .11%
Halliburton Co. 1,200,000 53,025 .11
----------- --------
INDUSTRIAL COMPONENTS - 2.84%
Dana Corp. 6,926,600 210,395 .44
Eaton Corp. 2,362,900 198,484 .42
Genuine Parts Co. 8,765,800 230,102 .49
Goodyear Tire & Rubber Co. 3,250,000 89,781 .19
Illinois Tool Works Inc. 1,200,000 76,875 .16
Johnson Controls, Inc. 4,052,400 256,568 .54
TRW Inc. 4,840,800 283,187 .60
----------- --------
1,345,392 2.84
----------- --------
MACHINERY & ENGINEERING - 1.29%
Caterpillar Inc. 1,200,000 47,325 .10
Deere & Co. 6,240,000 251,940 .53
Fluor Corp. 3,700,000 124,182 .26
Ingersoll-Rand Co. 1,068,100 50,134 .11
Pall Corp. 6,100,000 136,106 .29
----------- --------
609,687 1.29
----------- --------
Total Capital Equipment 5,706,930 12.05
----------- --------
CONSUMER GOODS
APPLIANCES & HOUSEHOLD DURABLES - .72%
Newell Rubbermaid Inc. 13,605,500 342,689 .72
----------- --------
AUTOMOBILES - .48%
Ford Motor Co. 4,160,500 227,527 .48
----------- --------
BEVERAGES - 1.17%
Coca-Cola Co. 425,000 20,001 .04
PepsiCo, Inc. 14,500,000 531,969 1.13
----------- --------
551,970 1.17
----------- --------
FOOD & HOUSEHOLD PRODUCTS - 3.34%
Bestfoods 2,000,000 100,500 .21
Campbell Soup Co. 2,250,000 58,500 .12
Colgate-Palmolive Co. 400,000 22,850 .05
ConAgra, Inc. 8,200,000 154,775 .33
General Mills, Inc. 9,920,000 360,840 .76
H.J. Heinz Co. 3,600,000 122,400 .26
Kellogg Co. 4,177,600 102,090 .22
Sara Lee Corp. 44,050,000 660,750 1.39
----------- --------
1,582,705 3.34
----------- --------
HEALTH & PERSONAL CARE - 11.60%
Abbott Laboratories 5,000,000 192,187 .41
American Home Products Corp. 2,000,000 112,375 .24
Avon Products, Inc. 5,430,000 225,345 .48
Baxter International Inc. 1,150,000 74,894 .16
Becton, Dickinson and Co. 4,700,000 120,437 .25
Bristol-Myers Squibb Co. 12,488,600 654,871 1.38
Cardinal Health, Inc. 7,485,000 412,143 .87
Eli Lilly and Co. 4,250,000 328,578 .69
Kimberly-Clark Corp. 14,200,000 824,488 1.74
Mallinckrodt Inc. 3,585,000 96,347 .20
McKesson HBOC, Inc. (formerly McKesson Corp.) 1,000,000 16,875 .04
Merck & Co., Inc. 1,600,000 111,200 .24
Pfizer Inc 6,990,000 294,454 .62
Pharmacia Corp. (merger of Pharmacia & Upjohn, Inc. and
Monsanto Co.) 24,034,000 1,200,198 2.53
Schering-Plough Corp. 2,500,000 100,781 .21
Warner-Lambert Co. 6,400,000 728,400 1.54
----------- --------
5,493,573 11.60
----------- --------
RECREATION & OTHER CONSUMER PRODUCTS - .87%
American Greetings Corp., Class A 1,550,000 28,094 .06
Eastman Kodak Co. 4,569,700 255,617 .54
Stanley Works 4,350,000 128,325 .27
----------- --------
412,036 .87
----------- --------
TEXTILES & APPAREL - 1.02%
NIKE, Inc., Class B 8,810,425 382,703 .81
VF Corp. 3,500,000 98,875 .21
----------- --------
481,578 1.02
----------- --------
Total Consumer Goods 9,092,078 19.20
----------- --------
SERVICES
BROADCASTING & PUBLISHING - .25%
Gannett Co., Inc. 1,000,000 63,875 .13
Knight-Ridder, Inc. 1,148,000 56,324 .12
----------- --------
120,199 .25
----------- --------
BUSINESS SERVICES - 1.79%
Deluxe Corp. 2,200,000 55,413 .12
Dun & Bradstreet Corp. 2,800,000 84,350 .18
Equifax Inc. 4,000,000 97,750 .21
First Data Corp. 3,143,400 153,044 .32
IKON Office Solutions, Inc. 7,285,000 42,799 .09
Interpublic Group of Companies, Inc. 2,772,900 113,689 .24
Pitney Bowes Inc. 6,800,000 277,950 .59
ServiceMaster Co. 1,500,000 20,438 .04
----------- --------
845,433 1.79
----------- --------
LEISURE & TOURISM - .40%
McDonald's Corp. 5,000,000 190,625 .40
----------- --------
MERCHANDISING - 4.28%
Albertson's, Inc. 20,694,440 673,863 1.42
Dillard's Inc., Class A 3,950,500 55,060 .12
Dollar General Corp. 1,000,000 22,875 .05
J.C. Penney Co., Inc. 12,750,000 176,109 .37
Limited Inc. 8,250,000 372,797 .79
Lowe's Companies, Inc. 3,258,800 161,311 .34
May Department Stores Co. 15,800,000 434,500 .92
Walgreen Co. 4,625,000 130,078 .27
----------- --------
2,026,593 4.28
----------- --------
DIVERSIFIED TELECOMMUNICATION SERVICES - 9.83%
AT&T Corp. 24,737,500 1,154,932 2.44
Bell Atlantic Corp. 200,000 11,850 .03
CenturyTel, Inc. 670,000 16,415 .03
GTE Corp. 12,142,300 822,641 1.74
SBC Communications Inc. 15,704,682 688,061 1.45
Sprint FON Group 19,195,000 1,180,493 2.49
U S WEST, Inc. 10,950,000 779,503 1.65
----------- --------
4,653,895 9.83
----------- --------
TRANSPORTATION: AIRLINES - .23%
Southwest Airlines Co. 5,000,000 108,437 .23
----------- --------
TRANSPORTATION: RAIL - 1.64%
Burlington Northern Santa Fe Corp. 4,750,000 114,594 .24
CSX Corp. 10,800,000 226,125 .48
Norfolk Southern Corp. 18,850,000 332,231 .70
Union Pacific Corp. 2,500,000 105,312 .22
----------- --------
778,262 1.64
----------- --------
Total Services 8,723,444 18.42
----------- --------
FINANCE
BANKING - 12.41%
Bank of America Corp. 29,050,000 1,423,450 3.01
Bank of New York Co., Inc. 11,250,000 461,953 .98
BANK ONE CORP. 21,638,400 659,971 1.39
Chase Manhattan Corp. 6,600,000 475,613 1.00
Citigroup Inc. 5,859,500 348,274 .74
First Union Corp. 20,787,000 662,586 1.40
FleetBoston Financial Corp. (formerly Fleet Boston Corp.) 9,149,473 324,234 .68
J.P. Morgan & Co. Inc. 1,764,000 226,454 .48
KeyCorp 3,700,000 68,450 .14
National City Corp. 3,100,000 52,700 .11
SunTrust Banks, Inc. 2,500,000 126,875 .27
Wachovia Corp. 850,000 53,284 .11
Washington Mutual, Inc. 7,781,300 198,910 .42
Wells Fargo & Co. 19,341,500 794,210 1.68
----------- --------
5,876,964 12.41
----------- --------
FINANCIAL SERVICES - 3.31%
Fannie Mae 4,925,000 297,039 .63
Household International, Inc. 24,047,482 1,003,982 2.12
MBNA Corp. 751,200 19,954 .04
Providian Financial Corp. 1,947,400 171,493 .36
SLM Holding Corp. 2,370,000 74,211 .16
----------- --------
1,566,679 3.31
----------- --------
INSURANCE - 4.82%
Aetna Inc. 5,250,005 303,844 .64
Allstate Corp. 27,425,000 647,916 1.37
American General Corp. 8,405,000 470,680 .99
Aon Corp. 9,181,000 248,461 .52
Jefferson-Pilot Corp. 3,700,000 246,281 .52
Lincoln National Corp. 6,050,000 210,615 .45
Marsh & McLennan Companies, Inc. 1,200,000 118,275 .25
St. Paul Companies, Inc. 1,000,000 35,625 .08
----------- --------
2,281,697 4.82
----------- --------
Total Finance 9,725,340 20.54
----------- --------
MULTI-INDUSTRY
MULTI-INDUSTRY - 1.58%
Dover Corp. 4,000,000 203,250 .43
Honeywell International Inc. 9,300,000 520,800 1.10
Minnesota Mining and Manufacturing Co. 300,000 25,950 .05
----------- --------
Total Multi-Industry 750,000 1.58
----------- --------
MISCELLANEOUS
MISCELLANEOUS - .99%
Equity securities in intial period of acquisition 19,197 467,443 .99
----------- --------
TOTAL EQUITY SECURITIES
(cost:$37,338,455,000) 45,033,921 95.10
----------- --------
Principal
Amount
Short-Term Securities (000)
----------------------------- ------------------ ----------------------- -------------------
U.S.Treasuries and Other Federal Agencies - 4.85%
Federal Farm Credit Banks
5.85% due 5/4/00 $ 18,000 17,988 .04
Federal Home Loan Bank
5.64%-6.10% due 5/5/00-7/21/00 1,133,739 1,124,592 2.38
United States Treasury bills
5.47%-5.73% due 5/11/000-7/27/00 1,162,645 1,151,963 2.43
----------- --------
TOTAL SHORT-TERM SECURITIES
(cost: $2,294,829,000) 2,294,543 4.85
----------- --------
TOTAL INVESTMENT SECURITIES
(cost: $39,633,284,000) 47,328,464 99.95
Excess of cash and receivables over payables 24,605 .05
----------- --------
NET ASSETS $ 47,353,069 100.00
----------- --------
----------- --------
See Notes to Financial Statements
</TABLE>
<TABLE>
<S> <C> <C>
Financial Statements
Statement of Assets and Liabilities
April 30, 2000 (dollars in thousands)
Assets:
Investment securities at market
(cost: $39,633,284) $47,328,464
Cash 284
Receivables for--
Sales of investments $98,871
Sales of Fund's shares 38,245
Dividends 79,821 216,937
------------ ------------
47,545,685
Liabilities:
Payables for--
Purchases of investments 74,452
Repurchases of Fund's shares 75,444
Management services 11,422
Other expenses 31,298 192,616
------------ ------------
Net Assets at April 30, 2000 $47,353,069
============
Class A shares, $1.00 par value
(authorized capital stock -
3,000,000,000 shares)
Net assets $47,318,790
Shares outstanding 1,623,868,453
Net asset value per share $29.14
Class B shares, $1.00 par value
(authorized capital stock -
1,000,000,000 shares)
Net assets $34,279
Shares outstanding 1,177,415
Net asset value per share $29.11
Statement of Operations
for the year ended April 30, 2000 (dollars in thousands)
Investment Income:
Income:
Dividends $ 1,257,914
Interest 91,368 $ 1,349,282
------------
Expenses:
Investment adviser fee 105,889
Business management fee 47,107
Distribution expense- Class A 125,719
Distribution expense- Class B 24
Transfer agent fee- Class A 43,061
Transfer agent fee- Class B 2
Reports to shareholders 1,278
Registration statement and prospectus 3,629
Postage, stationery and supplies 6,732
Directors' and Advisory Board fees 485
Auditing and legal fees 158
Custodian fee 415
Other expenses 170 334,669
------------ ------------
Net investment income 1,014,613
------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 5,370,939
Net unrealized appreciation:
Beginning of year 18,414,413
End of year 7,695,180
------------
Net change in unrealized
appreciation (10,719,233)
------------
Net realized gain and change in
unrealized appreciation (5,348,294)
------------
Net Decrease in Net Assets
Resulting from Operations $ (4,33
============
Statement of Changes in Net Assets
(dollars in thousands)
Year Ended April 30
2000 1999
------------ ------------
Operations:
Net investment income $ 1,014,613 $ 897,215
Net realized gain on investments 5,370,939 5,230,170
Net change in unrealized
appreciation on investments (10,719,233) 1,076,341
------------ ------------
Net (Decrease) Increase in Net Assets
Resulting from Operations (4,333,681) 7,203,726
------------ ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income
Class A (952,846) (890,284)
Class B - -
Distributions from net realized gain
on investments
Class A (5,085,575) (3,760,550)
Class B - -
------------ ------------
Total Dividends and Distributions (6,038,421) (4,650,834)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold 8,330,952 11,104,242
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments 5,726,003 4,421,141
Cost of shares repurchased (13,350,009) (6,823,584)
------------ ------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 706,946 8,701,799
------------ ------------
Total (Decrease) Increase in Net Assets (9,665,156) 11,254,691
Net Assets:
Beginning of year 57,018,225 45,763,534
------------ ------------
End of year (including undistributed
net investment income: $174,408 and
$112,641, respectively) $ 47,353,069 $57,018,225
============ ============
See Notes to Financial Statements
</TABLE>
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.
The Fund offers Class A and Class B shares. Class A shares are sold with an
initial sales charge of up to 5.75%. Class B shares are sold without an
initial sales charge but subject to a contingent deferred sales charge paid
upon redemption. This charge declines from 5% to zero over a period of six
years. Class B shares have higher distribution expenses and transfer agent
fees than Class A shares. Class B shares are automatically converted to Class
A shares eight years after the date of purchase. Holders of both classes of
shares have pro rata rights to assets and dividends, and identical voting,
liquidation and other rights, except that each class bears different
distribution and transfer agent expenses, and each class shall have exclusive
rights to vote on matters affecting only their class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements:
SECURITY VALUATION - Equity securities are valued at the last reported sales
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. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. 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
Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for as of the trade date. Realized gains and losses from
securities transactions are determined based on specific identified cost.
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on an accrual basis.
COMMON EXPENSES - Income, expenses other than class-specific expenses and
realized and unrealized gains and losses are allocated daily between the
classes based on their relative net asset values. Distribution expenses and
transfer agent fees and other class-specific expenses, if any, are accrued
daily and charged to the applicable share class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION
The Fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net realized gains for the fiscal year. As a
regulated investment company, the Fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the Fund.
As of April 30, 2000, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $7,695,180,000, of which
$10,334,155,000 related to appreciated securities and $2,638,975,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended April 30, 2000. The cost
of portfolio securities for book and federal income tax purposes was
$39,633,284,000 at April 30, 2000.
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 fee of $47,107,000 was
incurred for business management services pursuant to the business management
agreement with WMC. The agreement provides for monthly fees, accrued daily,
computed at 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. Johnston, Lemon & Co.
Incorporated, (JLC), earned $942,000 on its retail sales of shares and
distribution plan of the Fund and received no brokerage commissions resulting
from purchases and sales of securities for the investment account of the Fund.
A fee of $105,889,000 for investment advisory services was incurred pursuant to
an agreement with Capital Research and Management Company (CRMC). The
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 - American Funds Distributors, Inc. (AFD), the principal
underwriter of the Fund's shares, received $26,981,000 (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.
Pursuant to a Plan of Distribution for Class A shares, the Fund may expend up
to 0.25% of Class A 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. Pursuant to a Plan of Distribution for
Class B shares, the Fund may expend up to 1.00% of Class B average net assets
annually to compensate dealers for their selling and servicing efforts. During
the year ended April 30, 2000, distribution expenses under the Plans of
Distribution for Class A and Class B were $125,719,000 and 24,000,
respectively. As of April 30, 2000, accrued and unpaid distribution expenses
for Class A and Class B were $18,392,000 and 20,000, respectively.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the Fund, was paid a fee of $43,063,000.
DEFERRED DIRECTORS' FEES - Independent Directors and Advisory Board members
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, 2000, aggregate deferred amounts and earnings thereon since the
deferred compensation plan's adoption (1994), net of any payments to Directors
and Advisory Board Members, were $550,000.
AFFILIATED DIRECTORS' AND OFFICERS <UNDEF> WMC and JLC are both wholly owned
subsidiaries of The Johnston-Lemon Group, Incorporated (JLG). All the officers
of the Fund and four of its directors are affiliated with JLG.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The Fund made purchases and sales of investment securities, excluding
short-term securities, of $13,500,838,000 and $18,510,861,000, respectively,
during the year ended April 30, 2000.
As of April 30, 2000, net assets consist of the following (000):
Capital paid in on shares of capital stock $36,724,104
Undistributed net investment income 174,408
Accumulated net realized gain 2,759,377
Net unrealized appreciation 7,695,180
Net Assets $47,353,069
The Fund reclassified $733,990,000 from undistributed net realized gains to
additional paid-in capital for the year ended April 30, 2000.
CAPITAL SHARE TRANSACTIONS IN THE FUND WERE AS FOLLOWS:
AMOUNT ('000) SHARES AMOUNT ('000) SHARES
CLASS A SHARES:
SOLD 8,296,876 258,447,597 11,104,242 334,983,835
REINVESTMENT OF
DIVIDENDS AND
DISTRIBUTIONS 5,726,003 195,503,827 4,421,141 137,585,488
REPURCHASED (13,349,916) (444,808,302) (6,823,584) (206,861,783)
NET INCREASE
IN CLASS A 672,963 9,143,122 8,701,799 265,707,540
CLASS B SHARES:
SOLD 34,076 1,180,562 - -
REINVESTMENT OF
DIVIDENDS AND
DISTRIBUTIONS - - -
REPURCHASED (93) (3,147) - -
NET INCREASE IN
CLASS B 33,983 1,177,415 - -
TOTAL NET INCREASE
IN SHARE
TRANSACTIONS 706,946 8,701,799 265,707,540 10,320,537
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 $415,000 INCLUDES $203,000 THAT WAS PAID BY THESE CREDITS
RATHER THAN IN CASH.
THE FUND OWNS 5.2% AND 5.1% OF THE OUTSTANDING VOTING SECURITIES OF ASHLAND
AND HOUSEHOLD INTERNATIONAL, RESPECTIVELY, WHICH REPRESENT INVESTMENTS IN
AFFILIATES AS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940.
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
gains of net
(losses) Divi- Dist- Net Ratio income
Net on sec- Total dends ribut- asset Net of to Port-
asset urities from (from ions Total value assets, expe- aver- folio
Year value, Net (both inves- net in-(from Dist- end end nses age turn-
ended begin. Inves- realized ment vest- capi- ribu- of of to av- net over
April of ment and un- opera- ment tal tions year Total year erage ass- rate
30 year Income realized tions Income gains) Return(millions)assets ets
Class A :
2000 $35.31 $.61/2/ ($3.09)/2/ ($2.48)/2/ ($.58) (3.11) (3.69) $29.14 -6.96% $47,319 .63% 1.91% 26.24%
1999 33.92 .60 3.99 4.59 (.61) (2.59) (3.20) 35.31 14.61 57,018 .61 1.84 27.93
1998 25.93 .62 9.65 10.27 (.62) (1.66) (2.28) 33.92 40.80 45,764 .62 2.08 17.61
1997 22.77 .62 4.36 4.98 (.62) (1.20) (1.82) 25.93 22.43 28,165 .64 2.56 10.41
1996 18.87 .63 4.98 5.61 (.62) (1.09) (1.71) 22.77 30.40 20,689 .66 .98 23.41
Class B /3/:
2000 26.93 02/2/ 2.16/2/ 2.18/2/ - - - 29.11 8.10 34 1.38/4/ .67/4/26.24/5/
/1/ Excludes sales charge on Class A shares or contingent deferred sales charge on Class B shares.
/2/ Based on average shares outstanding.
/3/ Class B shares offered for sale commencing March 15, 2000.
/4/ Annualized.
/5/ Represents portfolio turnover rate for the year ended April 30, 2000.
</TABLE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Washington Mutual Investors Fund,
Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Washington Mutual Investors Fund,
Inc. (the "Fund") at April 30, 2000, 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 in the United States.
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 auditing standards generally accepted in the United States
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, 2000 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
/S/ PricewaterhouseCoopers LLP
Los Angeles, California
May 31, 2000
PART C
OTHER INFORMATION
ITEM 23 EXHIBITS:
(a). On file (see SEC files nos. 811-604 and 2-11051)
(b). On file (see SEC files nos. 811-604 and 2-11051)
(c). On file (see SEC files nos. 811-604 and 2-11051)
(d). On file (see SEC files nos. 811-604 and 2-11051)
(e). On file (see SEC files nos. 811-604 and 2-11051)
(f). None
(g). On file (see SEC files nos. 811-604 and 2-11051)
(h). On file (see SEC files nos. 811-604 and 2-11051)
(i). On file (see SEC files nos. 811-604 and 2-11051)
(j). Consent of Independent Accountants
(k). None
(l). Not applicable to this filing.
(m). On file (see SEC files nos. 811-604 and 2-11051)
(n). On file (see SEC files nos. 811-604 and 2-11051)
(p) On file (see SEC files nos. 811-604 and 2-11051)
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 25. 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
ITEM 25. INDEMNIFICATION (CONT.)
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
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 27. 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, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., The Investment Company of America, Intermediate Bond Fund of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America,
U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
1501 N. University, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
5400 Mount Meeker Road
Suite 1
Boulder, CO 80301-3508
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
John A. Blanchard 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 Senior Vice President None
2320 North Austin Avenue
Georgetown, TX 78626
Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Greenwood Village, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
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, President and Co-Chief None
Executive Officer
Ruth M. Collier Senior Vice President None
29 Landsdowne Drive
Larchmont, NY 10538
S David Coolbaugh Assistant Vice President None
H Carlo O. Cordasco Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
L Carl D. Cutting Vice President None
William F. Daugherty Regional Vice President None
1216 Highlander Way
Mechanicsburg, PA 17055
Daniel 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 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
633 Menlo Avenue, Suite 210
Menlo Park, CA 94025
Peter J. Doran Director, Executive Vice President None
100 Merrick Road, Suite 216W
Rockville Centre, NY 11570
L Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
Timothy L. Ellis Regional Vice President None
1441 Canton Mart Road, Suite 9
Jackson, MS 39211
L Paul H. Fieberg Senior Vice President None
John Fodor Senior Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner 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
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Assistant Vice President None
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
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
Arthur J. Levine Senior 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
Mark J. Lien Regional Vice President None
5570 Beechwood Terrace
West Des Moines, IA 50266
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional None
Investment Services
LW Robert W. Lovelace Director None
Stephen A. Malbasa Senior Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services
David R. Murray Vice President None
60 Briant Drive
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 Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Gary A. Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
6133 Calle del Paisano
Scottsdale, AZ 85251
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
L John O. Post Senior Vice President None
S Richard P. Prior Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
244 Lambeau Lane
Glenville, NC 28736
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 Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director None
L Sherrie L. Shaw Assistant Vice President None
Brad W. Short Regional Vice President None
1601 Seal Way
Seal Beach, CA 90740
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
L John C. Smith Assistant Vice President - None
Institutional Investment Services
Rodney G. Smith Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
S Sherrie L. Snyder-Senft Assistant Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
Therese L. Souiller Assistant Vice President None
2652 Excaliber Court
Virginia Beach, VA 23454
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
181 Second Avenue
Suite 228
San Mateo, CA 94401
LW Eric H. Stern Director None
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. 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 Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
7 Gladstone Lane
Laguna Niguel, CA 92677
Thomas E. Warren Regional Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George J. Wenzel Regional Vice President None
3406 Shakespeare Drive
Troy, MI 48084
J. D. Wiedmaier Assistant Vice President None
3513 Riverstone Way
Chesapeake, VA 23325
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior Vice President None
William R. Yost Senior Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
2887 Player Lane
Tustin Ranch, CA 92782
</TABLE>
__________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. 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, 3500 Wiseman Boulevard, San Antonio, TX 78251, 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 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
N/A
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 20th day of
June, 2000.
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 20, 2000, 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. Callahan 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
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
Howard L. Kitzmiller
