UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-604
Washington Mutual Investors Fund, Inc.
(Exact Name of Registrant as specified in charter)
1101 Vermont Avenue, NW
Washington, DC 20005
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 842-5665
Date of fiscal year end: April 30, 2005
Date of reporting period: April 30, 2005
Burton L. Raimi
Secretary
Washington Mutual Investors Fund, Inc.
1101 Vermont Avenue, NW
Washington, DC 20005
(name and address of agent for service)
ITEM 1 - Reports to Stockholders
(Graphic: American Funds logo)American Funds(R)
The right choice for the long term(R)
Washington Mutual Investors Fund
Annual report for the year ended April 30, 2005
(Full-Page Photograph of Statue, George Washington, in Boston's Public Garden)
Washington Mutual Investors Fund(SM) seeks to provide income and growth
of principal through investments in quality common stocks.
This Fund is one of the 29 American Funds. The organization ranks among the
nation's three largest mutual fund families. For more than seven decades,
Capital Research and Management Company,SM the American Funds adviser, has
invested with a long-term focus based on thorough research and attention to
risk.
Contents
Letter to shareholders 1
Investment adviser's report 2
The value of a long-term perspective 3
Feature story: Seeking the bluest of the blue chips 6
Investment portfolio 12
Financial statements 18
Fund Directors, Advisory Board and officers 32
About the cover: A profile view of the statue of General George Washington in
Boston's Public Garden.
Figures shown in this report are past results for Class A shares (unless
otherwise indicated) and are not predictive of results in future periods.
Current and future results may be lower or higher than those shown. Share prices
and returns will vary, so investors may lose money. Investing for short periods
makes losses more likely. Investments are not FDIC-insured, nor are they
deposits of or guaranteed by a bank or any other entity. For the most current
information and month-end results, visit americanfunds.com. Fund results shown,
unless otherwise indicated, are at net asset value. If a sales charge (maximum
5.75%) had been deducted, the results would have been lower.
Here are returns on a $1,000 investment with all distributions reinvested for
periods ended March 31, 2005 (the most recent calendar quarter):
1 year 5 years 10 years
Class A shares
Reflecting 5.75% maximum sales charge
Average annual total return -- +4.08% +11.68%
Cumulative total return +0.47% +22.13% +201.83%
The Fund's investment adviser and business manager are waiving a portion of
their management fees. Results shown reflect the waivers, without which they
would have been lower. Please see the Financial Highlights table on page 26 for
details.
Other share class results and important information can be found on page 29.
Fellow shareholders:
(Photograph of Statue, same as cover, cropped)
While inflationary pressures have been moderate, they have prompted the Federal
Reserve Board to increase the federal funds rate eight times in the past 12
months. In a recent comment, the Federal Reserve Board noted an increase in
pricing power by vendors. Thus far, the rising interest rates have not had a
significantly adverse effect on the economy or the stock market. The record of
the Federal Reserve Board in managing interest rates in the recent past has been
excellent and augurs well for the future.
The continued high demand for energy, particularly in Asia, with only modest
increases in supply, has resulted in historically high price levels for crude
oil, coal and natural gas. Higher energy prices have probably diverted funds
that would have otherwise flowed into consumer goods.
As a result of higher product prices, energy stocks have constituted the stock
market's best-performing sector. Your Fund is well represented in this sector,
with 9.6% of the portfolio in energy shares at the fiscal year-end.
The ongoing guerilla war in Iraq, with its continuing financial drain on the
U.S. economy, has continued to dampen investor sentiment. Nevertheless, the
stock market and the economy have performed reasonably well in the 12 months
ended April 30, 2005. During the fiscal year, the value of an investment in
Washington Mutual Investors Fund increased by 6.5%, assuming reinvestment of
income dividends of 59.5 cents a share and the long-term capital gain
distribution of 23 cents a share. These results compared with a total return of
6.3% by the unmanaged Standard & Poor's 500 Composite Index measured on the same
basis. Over longer periods, your Fund's results have been as follows:
Average annual total returns for periods ended April 30, 2005
1 year 5 years 10 years Lifetime*
Washington Mutual +6.5% +5.1% +11.9% +12.8%
S&P 500 +6.3% -2.9% +10.3% +11.3%
*Since the Fund's inception on July 31, 1952.
Since your Fund's October 31, 2004, semi-annual report, seven new companies have
appeared in the portfolio: Amgen, Gillette, Guidant, Home Depot, Medtronic,
Mylan Laboratories and Walt Disney. Five companies have been eliminated:
Constellation Energy Group, Crompton, Gap, PNC Financial Services Group and
Stanley Works. Gillette is now in the process of being acquired by Procter &
Gamble.
Washington Mutual Investors Fund has always stressed the importance of dividends
(see "Seeking the Bluest of the Blue Chips" on page 6), and it is gratifying to
report that 104, or 64%, of your Fund's portfolio companies increased their
dividends during the past 12 months.
We are always very pleased to receive questions and comments from your Fund's
growing number of shareholders, now totaling over 3.7 million accounts.
Cordially,
James H. Lemon, Jr.,
Chairman of the Board
Harry J. Lister,
Vice Chairman of the Board
<
Jeffrey L. Steele,
President of the Fund
June 9, 2005
For current information about the Fund, visit americanfunds.com.
Investment adviser's report
The U.S. economy began to slow down a bit in the latter part of fiscal 2005 from
its very strong pace in fiscal 2004. Commodity prices -- most particularly
energy prices -- have increased substantially, with oil prices one-third higher
over the past 12 months. Short-term interest rates increased from 1.0% to 3.0%
since June 30, 2004. The braking effect of these two factors on the economy has
become increasingly evident in 2005, mollifying concerns about inflation and
holding long-term interest rates in check.
In this mixed environment, the value of an investment in Washington Mutual
Investors Fund, with distributions reinvested, rose 6.5% for the one-year period
ended April 30, 2005. The Fund slightly surpassed the unmanaged Standard &
Poor's 500 Composite Index, which rose 6.3% on a total return basis. As shown in
the table on page 1, the Fund also outdistanced the S&P 500 by wider margins for
the five- and 10-year periods and over its lifetime.
The economic picture and outlook
Gross domestic product grew at an annual rate of 3.5% during the first quarter
of 2005, down from an annual rate of 3.8% in the fourth quarter of 2004. It was
also below the rate of growth for all of 2004.
Despite record oil prices, rising interest rates and a slowing economy, earnings
of S&P 500 companies remained relatively robust, with an estimated average
annual profit increase of more than 13% for the first quarter of the 2005
calendar year. That increase was indeed below the 20-percent-plus annual growth
in five of the previous six quarters, but many companies showed they were able
to cope with the economy's loss of momentum. The slowing of the economy after
three-and-a-half years of growth should not come as a surprise. The overall
pattern of the economy is typical for this stage in the business cycle, with the
accelerated part of the recovery behind us. From this juncture on, it is
possible that corporate earnings growth will be more modest. If that is the
case, the Fund's large, globally integrated research staff should prove
invaluable in finding stocks that have an opportunity to thrive in this kind of
environment.
The Fund's investments
The Fund's five largest sectors of investment at fiscal year-end as a percentage
of net assets were Financials (21.5%), Industrials (12.2%), Health care (11.2%),
Energy (9.6%) and Consumer staples (9.0%). Fueled by the demand for energy and
rising oil and gas prices, energy stocks helped the Fund the most during the
fiscal year. Leading contributors included Exxon Mobil, the Fund's third-largest
holding (+34.0%), and smaller holdings such as EOG Resources (+93.1%), Sunoco
(+57.8%), Unocal (+51.4%) and ConocoPhillips (+47.1%). Aerospace and defense
companies and utilities also helped.
Many industry groups had mixed results. A number of our investments in financial
services stocks were impacted negatively by company-specific problems. High
gasoline prices also muted the results of some retailers. Wal-Mart Stores, the
nation's largest retailer, said gasoline prices were crimping its customers'
spending.
The increasing interest in dividends by corporations and shareholders alike was
a constructive development during the past year. In the first four months of
2005, 142 companies in the S&P 500 increased their dividends, up from 110 in the
same period a year ago. Six companies initiated dividend payments between the
start of the calendar year and April 30. More dividend-paying companies
potentially mean more investment opportunities for Washington Mutual, as nearly
all companies the Fund's managers can select must pay dividends. The most
newsworthy dividend announcement of the past fiscal year was Microsoft's payment
of a $3 per share special dividend to shareholders, for a total payout of $32
billion in December 2004. As a result of the large Microsoft dividend, the Fund
paid a special four-cent dividend in December. Microsoft first began paying
regular dividends in 2003.
We will continue to focus our research efforts on identifying long-term
investment opportunities that meet Washington Mutual's strict standards. These
standards have helped us cope with a wide variety of investment markets over the
long-term, and we believe they will continue to do so in the years ahead.
- -- Capital Research and Management Company
For current information about the Fund, visit americanfunds.com.
The value of a long-term perspective
How a $10,000 investment in Washington Mutual Investors Fund grew
Figures shown are past results for Class A shares and are not predictive of
results in future periods. Current and future results may be lower or higher
than those shown. Share prices and returns will vary, so investors may lose
money. For the most current information and month-end results, visit
americanfunds.com. Fund figures reflect deduction of the maximum sales charge of
5.75% on a $10,000 investment./1/ Thus, the net amount invested was $9,425./2/
This chart and accompanying table show how a $10,000 investment grew between
July 31, 1952, when the Fund began operations, and April 30, 2005.
As you can see, that $10,000 investment in Washington Mutual, with all
distributions reinvested, would have grown to $5,316,457. Over the same period,
that $10,000 would have grown to $2,793,876 in the unmanaged Standard & Poor's
500 Composite Index of U.S. common stocks. According to the Consumer Price
Index, it now requires $72,884 to purchase what $10,000 would have bought on
July 31, 1952.
The year-by-year progress of the $10,000 investment is summarized in the table
below the chart. You can use those figures to estimate how the value of your own
holdings has grown. Let's say, for example, that you have been reinvesting all
your distributions and want to know how your investment has done since April 30,
1995. At that time, according to the table, the value of the investment
illustrated here was $1,730,694. Since then it has gone up threefold to
$5,316,457. Thus, in the same 10-year period, the value of your 1995 investment
- -- regardless of its size -- has increased threefold.
/1/ As outlined in the prospectus, the sales charge is reduced for accounts
(and aggregated investments) of $25,000 or more and is eliminated for purchases
of $1 million or more. There is no sales charge for dividends or capital gain
distributions that are reinvested in additional shares.
/2/ The maximum initial sales charge was 8.5% prior to July 1, 1988.
(Chart showing growth of a $10,000 investment at the inception of the plan to
the following current values:)
$5,316,457/1/ Washington Mutual with dividends reinveested
$2,793,876 S&P 500 with dividends reinvested
$749,077/2/ Washington Mutual with dividends taken in cash
$72,884/3/ Consumer Price Index (inflation)
Results of a $10,000 investment in WMIF, the S&P500, and the CPI.
July 31, 1952 through April 30, 2005
Year CAPITAL VALUE/2/ TOTAL VALUE/1/
ended Dividends in Dividends TOTAL
April 30 Cash WMIF Reinvested WMIF RETURN S&P500 CPI
07/31/52 $9,425 $9,425 $10,000 $10,000
1953# $170 9,161 $170 9,330 -6.7% 10,094 9,963
1954 434 10,773 449 11,494 23.2 12,282 10,037
1955 500 14,665 542 16,288 41.7 17,295 10,000
1956 580 17,851 654 20,565 26.3 22,938 10,075
1957 647 18,304 756 21,877 6.4 22,520 10,449
1958 680 16,928 825 21,055 -3.8 22,269 10,824
1959 701 24,125 885 31,071 47.6 30,569 10,861
1960 728 21,871 948 29,041 -6.5 29,850 11,049
1961 815 26,300 1,097 36,167 24.5 37,071 11,161
1962 824 26,592 1,146 37,654 4.1 38,158 11,311
1963 891 28,838 1,279 42,278 12.3 42,296 11,423
1964 923 31,149 1,369 47,109 11.4 49,698 11,573
1965 956 36,940 1,462 57,490 22.0 57,450 11,760
1966 1,048 38,487 1,648 61,603 7.2 60,563 12,097
1967 1,176 39,424 1,906 65,270 6.0 64,731 12,397
1968 1,331 42,481 2,231 72,692 11.4 69,365 12,884
1969 1,516 48,408 2,627 85,576 17.7 75,988 13,596
1970 1,605 39,049 2,874 71,603 -16.3 61,834 14,419
1971 1,711 48,769 3,193 93,387 30.4 81,718 15,019
1972 1,779 47,991 3,455 95,521 2.3 87,267 15,543
1973 1,818 43,290 3,671 89,522 -6.3 89,214 16,330
1974 1,858 40,682 3,907 87,956 -1.7 77,959 17,978
1975 2,185 42,855 4,828 98,315 11.8 79,061 19,813
1976 2,350 53,771 5,498 129,949 32.2 95,785 21,011
1977 2,510 55,449 6,171 140,348 8.0 96,702 22,472
1978 2,658 54,228 6,849 144,340 2.8 100,121 23,933
1979 2,870 58,180 7,785 163,075 13.0 110,959 26,442
1980 3,203 56,032 9,167 165,848 1.7 122,446 30,337
1981 4,784 72,410 14,603 230,424 38.9 160,796 33,371
1982 4,097 69,851 13,327 235,768 2.3 148,977 35,543
1983 4,497 101,855 15,517 362,293 53.7 221,825 36,929
1984 4,840 100,116 17,527 373,509 3.1 225,698 38,614
1985 5,465 115,473 20,783 452,498 21.1 265,541 40,037
1986 6,110 152,209 24,380 623,768 37.9 361,778 40,674
1987 6,781 180,960 28,228 771,949 23.8 457,672 42,210
1988 7,116 167,083 30,815 742,856 -3.8 427,911 43,858
1989 6,183 198,139 27,838 911,609 22.7 525,847 46,105
1990 8,920 202,429 41,689 971,051 6.5 581,168 48,277
1991 9,136 222,016 44,574 1,113,747 14.7 683,361 50,637
1992 8,319 244,607 42,315 1,272,372 14.2 779,015 52,247
1993 8,468 268,131 44,625 1,442,389 13.4 850,855 53,933
1994 8,583 266,513 46,719 1,479,112 2.5 896,027 55,206
1995 9,790 301,054 55,060 1,730,694 17.0 1,052,264 56,891
1996 10,008 381,514 58,187 2,256,894 30.4 1,369,880 58,539
1997 10,506 455,551 62,763 2,763,032 22.4 1,714,024 60,000
1998 11,033 628,864 67,443 3,890,253 40.8 2,417,442 60,861
1999 11,527 707,654 71,812 4,458,483 14.6 2,945,129 62,247
2000 11,935 646,507 75,684 4,148,130 -7.0 3,243,332 64,157
2001 13,153 719,687 85,030 4,709,580 13.5 2,822,817 66,255
2002 13,116 700,823 86,458 4,674,962 -0.7 2,466,687 67,341
2003 13,345 593,597 89,753 4,050,310 -13.4 2,138,513 68,839
2004 13,383 717,050 92,016 4,989,599 23.2 2,627,509 70,412
2005 14,846 749,077/2/ 104,079 5,316,457/1/ 6.5 2,793,876 72,884/3/
Fiscal year Capital Value /2/ Total Value/1/
ended Dividends Value at Dividends Value at WMIF total
April 30 in cash year-end reinvested year-end return
1953/4/ $170 $9,161 $170 $9,330 (6.7)%
1954 434 10,773 449 11,494 23.2
1955 500 14,665 542 16,288 41.7
1956 580 17,851 654 20,565 26.3
1957 647 18,304 756 21,877 6.4
1958 680 16,928 825 21,055 (3.8)
1959 701 24,125 885 31,071 47.6
1960 728 21,871 948 29,041 (6.5)
1961 815 26,300 1,097 36,167 24.5
1962 824 26,592 1,146 37,654 4.1
1963 891 28,838 1,279 42,278 12.3
1964 923 31,149 1,369 47,109 11.4
1965 956 36,940 1,462 57,490 22.0
1966 1,048 38,487 1,648 61,603 7.2
1967 1,176 39,424 1,906 65,270 6.0
1968 1,331 42,481 2,231 72,692 11.4
1969 1,516 48,408 2,627 85,576 17.7
1970 1,605 39,049 2,874 71,603 (16.3)
1971 1,711 48,769 3,193 93,387 30.4
1972 1,779 47,991 3,455 95,521 2.3
1973 1,818 43,290 3,671 89,522 (6.3)
1974 1,858 40,682 3,907 87,956 (1.7)
1975 2,185 42,855 4,828 98,315 11.8
1976 2,350 53,771 5,498 129,949 32.2
1977 2,510 55,449 6,171 140,348 8.0
1978 2,658 54,228 6,849 144,340 2.8
1979 2,870 58,180 7,785 163,075 13.0
1980 3,203 56,032 9,167 165,848 1.7
1981 4,784 72,410 14,603 230,424 38.9
1982 4,097 69,851 13,327 235,768 2.3
1983 4,497 101,855 15,517 362,293 53.7
1984 4,840 100,116 17,527 373,509 3.1
1985 5,465 115,473 20,783 452,498 21.1
1986 6,110 152,209 24,380 623,768 37.9
1987 6,781 180,960 28,228 771,949 23.8
1988 7,116 167,083 30,815 742,856 (3.8)
1989 6183 198,139 27,838 911,609 22.7
1990 8,920 202,429 41,689 971,051 6.5
1991 9,136 222,016 44,574 1,113,747 14.7
1992 8,319 244,607 42,315 1,272,372 14.2
1993 8,468 268,131 44,625 1,442,389 13.4
1994 8,583 266,513 46,719 1,479,112 2.5
1995 9,790 301,054 55,060 1,730,694 17.0
1996 10,008 381,514 58,187 2,256,894 30.4
1997 10,506 455,551 62,763 2,763,032 22.4
1998 11,033 628,864 67,443 3,890,253 40.8
1999 11,527 707,654 71,812 4,458,483 14.6
2000 11,935 646,507 75,684 4,148,130 (7.0)
2001 13,153 719,687 85,030 4,709,580 13.5
2002 13,116 700,823 86,458 4,674,962 (0.7)
2003 13,345 593,597 89,753 4,050,310 (13.4)
2004 13,383 717,050 92,016 4,989,599 23.2
2005 14,846 749,077 104,079 5,316,457 6.5
Fund's lifetime average annual total return: 12.6%
Past results are not predictive of future results. The results shown are before
taxes on Fund distributions and sale of Fund shares.
During the period illustrated, stock prices fluctuated and were higher at the
end than at the beginning. These results should not be considered as a
representation of the results that may be realized from an investment made in
the Fund today. The indexes are unmanaged and do not reflect
sales charges, commissions or expenses.
/1/ Total value includes reinvested dividends of $1,338,617 and reinvested
capital gain distributions of $2,034,383.
/2/ Capital value includes reinvested capital gain distributions of $367,892
but does not reflect income dividends of $264,407 taken in cash.
/3/ Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
/4/ Since the Fund's inception on July 31, 1952.
Average annual total returns based on a $1,000 investment
(for periods ended April 30, 2005*)
1 year 5 years 10 years
Class A shares +0.42% +3.85% +11.22%
*Assumes reinvestment of all distributions and payment of the maximum 5.75%
sales charge.
The Fund's investment adviser and business manager are waiving a portion of
their management fees. Results shown reflect the waivers, without which they
would have been lower. Please see the Financial Highlights table on page 26 for
details.
Seeking the bluest of the blue chips
(Photograph: woman at computer screen)
Here's why 97% of stocks don't meet Washington Mutual Investors Fund's quality
standards -- and how the Fund's investment professionals select from the 3% that
do.
In 1830, a Massachusetts court established that people with responsibility for
investing trust fund assets should do so prudently. Nearly 40 years later, the
New York Court of Appeals ruled that only certain securities could be considered
reasonable choices for use by fiduciaries. Over the years that followed, other
states picked up on the idea and began issuing their own "Legal Lists" of
approved securities.
Initially, stocks seldom figured in these lists, which focused on long-term
government or corporate bonds. Nearly all types of investments were crushed in
the Great Depression of the 1930s, but as the dust cleared it became apparent
that some stocks could be suitable for prudent investors. By the early 1940s,
standards for trust fund investments had begun changing to include stocks issued
by well-established, high-quality companies.
"That set the stage for Washington Mutual Investors Fund," says James Lemon,
chairman of the Fund's board of directors.
Bernie Nees, the Fund's founder, realized that an exacting prescreening process
could be useful to investors of all kinds -- not just fiduciaries. In 1952, the
Fund commenced operations, adopting the Legal List criteria set up by the U.S.
District Court for the District of Columbia. In the 1970s, those court-mandated
rules were replaced by the more general "prudent man" rule. The Fund, however,
decided to continue to embrace the conceptual investment screening process of
the Legal List. Indeed, the Fund's current Investment Standards reflect only
modest updates to the original screeing guidelines.
The screens filter out companies whose histories have been excessively erratic,
as well as new and unseasoned companies. Sometimes those situations can provide
big rewards, but there's often greater risk involved. Only companies that have
demonstrated their ability to produce relatively steady results over long
periods of time survive the initial cut.
(caption:)
"...[we] focus on selecting stocks rather than timing the market."
- -- Dale Harvey, portfolio counselor
(Photograph of Dale Harvey)
Jim Dunton, who has managed money for the Fund for 34 years, says, "The process
boils things down to a manageable number of large, high-quality companies in
dozens of industries. It makes it possible for us to watch the valuations and
price trends every day for those that qualify, and we do."
Will Robbins, the Fund's banking industry analyst, says the rigorous
requirements have "led us to fish in a very attractive pond and have helped keep
us out of trouble. For example, when the technology bubble burst in 2000, we
felt barely a ripple, partly because most of those companies hadn't been around
long enough to qualify for the Fund."
The Fund seeks to be fully invested in equity securities at all times.
Because shareholders are constantly putting money in the Fund and taking money
out, a small portion of assets will always be in cash. However, Washington
Mutual Investors Fund can't build a cash position as an investment strategy. The
Fund must always be fully invested, so the investment decision makers must be
constantly alert to opportunities among eligible stocks.
Portfolio counselor Dale Harvey observes, "This forces us to focus on selecting
stocks rather than timing the market. It also helps us keep the portfolio fresh
because we must constantly reassess the stocks we feel most strongly about. The
best place to put the next dollar might not be the place where we put the last
dollar."
Diversification is assured because, as a fundamental policy, the Fund will not
invest more than 5% of assets in any one company or more than 25% in any one
industry.
(Inset)
Stringent stock selection (as of 12/31/2004)
There are about 14,000 stocks listed on U.S. exchanges.
Only 344 meet Washington Mutual Investors Fund's Investment Standards.
Fewer than half of those appear in the Fund's portfolio.
(end of inset)
(Photograph: entrance to New York Stock Exchange)
Stocks must be listed on the New York Stock Exchange or meet the Exchange's
financial requirements for listing.
In short, the Fund focuses on stocks issued by large, highly liquid, U.S.-based
companies -- which often do business all over the world.
Most of their names are familiar. You see them in newspapers and magazines all
the time, and you use their products every day. Given how well known they are,
is it even possible their values haven't already been fully recognized in the
stock market?
Yes. Look at anything through a more powerful microscope and you'll always
discover new details. The Fund's investment adviser, Capital Research and
Management Company, is among the world's most experienced research
organizations, with 140 investment professionals operating from 11 research
offices around the globe.
When studying big companies engaged in multiple businesses, the breadth of
Capital Research's analysts means experts in several industries often compare
notes about the same stock. Oil and gas industry analyst Cathy Kehr says, "I
often speak with our utility analysts about the demand for electricity because
this demand can influence the price of natural gas."
Ray Joseph, Jr., an investment analyst who follows the insurance industry, says
that one company he studies owns three TV stations and 17 radio stations.
"Broadcasting accounts for about 10% of the company's earnings. So when I want
to sharpen my pencil on that company, I talk with our media analyst to see how
much advertising revenues might be affected by various events. Sometimes we'll
even visit the company together, then share our thoughts."
As two of Capital Research's investment analysts, Cathy and Ray feed information
to the Fund's eight portfolio counselors, each of whom makes independent
investment decisions. The investment analysts as a group also manage a portion
of the Fund's assets. Portfolio counselor Jim Lovelace observes that this
practice, unusual among mutual funds but widely used in the American Funds
group, "gets all the analysts to work with each other collaboratively, so that
they are always exchanging information and constructively critiquing each
other's work."
Nearly all companies must have paid dividends in at least nine of the past 10
years (four of the past five for banks and savings and loans), and earnings must
have been equal to or greater than the amount paid in dividends in at least four
of the past five years.
When fast-growing companies are in fashion, as they were in the latter half of
the 1990s, the market tends to discount the importance of dividends. Yet
dividends are the closest thing to a sure return for investors. Once a dividend
pattern is established, companies are reluctant to reduce it. A lower payment
could send a pessimistic signal about future prospects and upset investors who
were counting on the income. During periods when a company's share price is
stagnant or slipping, dividends reward investors for patience.
(caption:)
"...we're long-term investors in quality companies, and our time horizon makes
the most of our research network."
- -- Ray Joseph, Jr., investment analyst
(Photograph of Ray Joseph, Jr.)
What's more, a dividend that's high relative to the stock price can be a sign
that a company is underappreciated by the stock market. "History shows that it
can be a good strategy to buy shares in out-of-favor companies paying generous
dividends," says portfolio counselor Greg Johnson. "That's especially true if
the companies have solid balance sheets and a long record of earning more than
enough to cover the dividend payments -- exactly the sorts of companies the
Fund's screening process helps to identify."
Washington Mutual Investors Fund's emphasis on dividends is underscored in the
Fund's investment objective: "To produce income and to provide an opportunity
for growth of principal consistent with sound common stock investing." More
specifically, the Fund aims to provide you with more income than you'd receive
from a portfolio replicating the unmanaged Standard & Poor's 500 Composite
Index.
(inset)
A focus on dividend-paying companies
Of the approximately 160 companies reflected in the Fund's portfolio on April
30, 2005:
127 have paid uninterrupted dividends for at least 25 years
98 have paid uninterrupted dividends for at least 50 years
57 have paid uninterrupted dividends for at least 75 years
28 have paid uninterrupted dividends for at least 100 years
(end of inset)
The Fund's dividend standard and other quality screens, of course, limit the
number of companies that may be purchased. "If we were trading-oriented, we
might feel constrained by the relatively small number of stocks we can choose
from for this Fund," says Ray. "But we're long-term investors in quality
companies, and our time horizon makes the most of our research network. Everyone
may know about Wal-Mart's next quarter. Our research effort focuses on giving us
an in-depth look at prospects over the next five years."
(Photograph: calculator, print out, and newspaper)
Greg adds that the long experience of the Fund's investment professionals (an
average of 23 years at Capital Research for the portfolio counselors, for
example) is a big help. "We get to know corporate management people better than
many investment firms do. We meet the next generation on their way up. You can't
analyze someone in terms of integrity, people skills and ability of execution
based on one visit."
Experience can also give the Fund's investment decision makers an edge in
discerning what's important. As Jim Dunton puts it, "When you've been watching a
company for years, you have a much better idea what you're looking at -- and
what it's worth."
No more than 5% of the Fund's assets can be invested in companies not meeting
the dividend standard, and these exceptions must meet even higher financial
standards.
Over the years, market trends have changed in some ways that couldn't have been
anticipated when the Fund was founded.
"In the late '90s, the number of companies paying dividends had shrunk and some
had chosen not to pay dividends for reasons other than ability," says Dale. "So
we thought about the spirit of the Fund's guidelines. Microsoft had no debt and
was clearly a fabulous company. If Microsoft and companies like it weren't
making the list, that suggested it was time for a small change."
The Fund's board of directors agreed. Cy Ansary, a director for 22 years, says,
"We're always looking at the guidelines to see if they still make sense. Usually
they do. It's a testament to the original vision for the Fund. But as directors,
our job is to make changes when appropriate, as we did in this case."
The board updated the guidelines to allow for up to 5% of assets to be invested
in extraordinary companies that clearly had the means to pay dividends. Of
course, when companies like these mature, they often do begin giving a portion
of earnings back to shareholders. Microsoft, added to the Fund under the rule
permitting exceptions, has since begun paying dividends -- including, during the
past year, the largest special cash dividend in history.
The Fund cannot invest in companies that derive the majority of their revenues
from alcohol or tobacco products.
This prohibition wasn't part of the original standards established by the
District Court. It was added in the Fund's early years. The restriction has
proved popular with many investors. In fact, Washington Mutual Investors Fund is
the nation's largest mutual fund with such a policy.
(Caption:)
"These time-tested guidelines have proved their worth."
- -- Jim Dunton, portfolio counselor
(Photograph of Jim Dunton)
(inset)
Figures shown are past results for Class A shares and are not predictive of
results in future periods. Current and future results may be lower or higher
than those shown. Share prices and returns will vary, so investors may lose
money. For the most current information and month-end results, visit
americanfunds.com. Fund results shown, unless otherwise indicated, are at net
asset value. If a sales charge (maximum 5.75%) had been deducted, the results
would have been lower.
(end of inset)
Of course, some companies meet the Fund's Investment Standards but don't end up
in the portfolio.
Concerns about management issues or major economic changes, for instance, can
keep companies or entire industries out of the Fund's portfolio for a while.
Dale points out that some stocks meet the standards but aren't as attractive as
others. "We avoid stocks where we can't see value. Some were good investments
for us years ago and some will be in the future. But at the moment, we think
their prospects for the next five or 10 years are nothing special.
"Washington Mutual Investors Fund is not an index fund," he continues. "It's an
actively managed fund that applies a number of quality screens, resulting in a
distinct group of carefully selected stocks. The difference is important, and
it's been borne out in the long-term results."
Since the Fund began operations in July 1952 through April 30, 2005, it has
produced an average annual total return of 12.8%, versus an 11.3% gain by the
unmanaged Standard & Poor's 500 Composite Index. Consider that 1.5% difference
in dollar terms. A hypothetical $10,000 investment in the Fund, with dividends
and capital gains reinvested, would have grown to $5,640,754. Meanwhile, the
same amount invested in the S&P 500 would be worth $2,793,876.
As Jim Dunton says, "These time-tested guidelines have proved their worth."
(caption:)
"Dividends are the ultimate proof that stocks are not just pieces of paper but
represent ownership in real businesses."
- -- Bernie Nees (1908-2001), the Fund's founder
(Photograph of Bernie Nees)
Investment portfolio April 30, 2005
Percent of
Industry sector holdings net assets
Financials 21.45%
Industrials 12.16
Health care 11.21
Energy 9.58
Consumer staples 8.96
Other industries 33.73
Convertible securities .22
Cash & equivalents 2.69
Percent of
Ten largest holdings net assets
JPMorgan Chase 2.81%
General Electric 2.80
Exxon Mobil 2.75
ChevronTexaco 2.66
Bristol-Myers Squibb 2.27
Citigroup 2.26
SBC Communications 1.87
Bank of America 1.85
BellSouth 1.76
Fannie Mae 1.69
Market
value Percent of
Common stocks -- 97.09% Shares (000) net assets
Energy -- 9.58%
Apache Corp. 4,000,000 $ 225,160 .30%
Ashland Inc. 1,830,000 123,049 .17
ChevronTexaco Corp. 38,028,000 1,977,456 2.66
ConocoPhillips 7,307,750 766,218 1.03
EOG Resources, Inc. 5,978,000 284,254 .38
Exxon Mobil Corp. 35,876,600 2,046,042 2.75
Halliburton Co. 4,300,000 178,837 .24
Marathon Oil Corp. 13,450,000 626,367 .84
Schlumberger Ltd. 3,625,000 247,986 .33
Sunoco, Inc. 2,750,000 272,965 .37
Unocal Corp. 6,996,500 381,659 .51
7,129,993 9.58
Materials -- 4.14%
Air Products and Chemicals, Inc. 4,500,000 264,285 .36
Alcoa Inc. 17,250,000 500,595 .67
E.I. du Pont de Nemours and Co. 9,950,000 468,745 .63
International Paper Co. 20,700,000 709,803 .95
MeadWestvaco Corp. 4,391,200 129,321 .18
PPG Industries, Inc. 4,100,000 276,955 .37
Temple-Inland Inc. 1,400,000 47,250 .06
Weyerhaeuser Co. 9,950,000 682,669 .92
3,079,623 4.14
Industrials -- 12.16%
3M Co. 5,625,000 430,144 .58
Avery Dennison Corp. 2,500,000 130,875 .17
Boeing Co. 10,700,000 636,864 .85
Burlington Northern Santa Fe Corp. 1,950,000 94,087 .13
Caterpillar Inc. 1,225,000 107,861 .14
Deere & Co. 4,638,100 290,067 .39
Deluxe Corp. 2,200,000 87,846 .12
Dover Corp. 2,000,000 72,720 .10
Eaton Corp. 1,200,000 70,380 .09
Emerson Electric Co. 5,900,000 369,753 .50
Fluor Corp. 3,036,500 156,562 .21
General Dynamics Corp. 1,475,000 154,949 .21
General Electric Co. 57,553,100 2,083,422 2.80
Honeywell International Inc. 2,500,000 89,400 .12
IKON Office Solutions, Inc. 2,000,000 17,300 .02
Ilinois Tool Works Inc. 2,250,000 188,595 .25
Ingersoll-Rand Co. Ltd., Class A 1,700,000 130,679 .17
Lockheed Martin Corp. 6,550,000 399,223 .54
Northrop Grumman Corp. 11,250,000 616,950 .83
Pitney Bowes Inc. 8,514,900 380,786 .51
Raytheon Co. 4,543,200 170,870 .23
ServiceMaster Co. 8,750,000 112,262 .15
Southwest Airlines Co. 7,500,000 111,600 .15
Tyco International Ltd. 18,975,000 594,107 .80
Union Pacific Corp. 1,400,000 89,502 .12
United Parcel Service, Inc., Class B 8,205,000 585,099 .79
United Technologies Corp. 8,700,000 884,964 1.19
9,056,867 12.16
Consumer discretionary -- 7.57%
Best Buy Co., Inc. 6,950,000 349,863 .47
Carnival Corp., units 6,650,000 325,052 .44
Dana Corp. 6,130,000 70,005 .09
Dow Jones & Co., Inc. 1,287,600 43,057 .0
Gannett Co., Inc. 1,300,000 100,100 .13
General Motors Corp. 26,988,400 720,051 .97
Genuine Parts Co. 8,375,000 359,288 .48
Home Depot, Inc. 3,500,000 123,795 .17
Knight-Ridder, Inc. 1,100,000 71,170 .10
Limited Brands, Inc. 19,273,400 418,040 .56
Lowe's Companies, Inc. 20,000,000 1,042,200 1.40
May Department Stores Co. 4,500,000 157,860 .21
McDonald's Corp. 7,000,000 205,170 .27
Newell Rubbermaid Inc. 8,000,000 173,840 .23
NIKE, Inc., Class B 1,150,000 88,331 .12
Target Corp. 13,000,000 603,330 .81
TJX Companies, Inc. 21,750,000 492,637 .66
VF Corp. 3,800,000 215,042 .2
Walt Disney Co. 3,000,000 79,200 .11
5,638,031 7.57
Consumer staples -- 8.96%
Albertson's, Inc. 16,956,750 335,574 .45
Avon Products, Inc. 12,700,000 509,016 .68
Coca-Cola Co. 17,500,000 760,200 1.02
ConAgra Foods, Inc. 9,100,000 243,425 .33
General Mills, Inc. 8,040,000 397,176 .53
Gillette Co. 613,700 31,691 .04
H.J. Heinz Co. 17,450,000 643,033 .86
Kellogg Co. 7,200,000 323,640 .44
Kimberly-Clark Corp. 11,613,100 725,238 .98
PepsiCo, Inc. 8,400,000 467,376 .63
Procter & Gamble Co. 6,590,000 356,848 .48
Sara Lee Corp. 24,300,000 519,777 .70
Unilever NV (New York registered) 2,800,000 180,404 .24
Walgreen Co. 16,877,700 726,754 .98
Wal-Mart Stores, Inc. 9,500,000 447,830 .60
6,667,982 8.96
Health care -- 11.21%
Abbott Laboratories 21,700,000 1,066,772 1.43
Aetna Inc. 1,150,000 84,376 .11
Amgen Inc.<F1> 2,750,000 160,077 .22
Applera Corp. - Applied Biosystems Group 8,733,000 185,140 .25
Becton, Dickinson and Co. 1,650,000 96,558 .13
Bristol-Myers Squibb Co. 64,935,000 1,688,310 2.27
Cardinal Health, Inc. 11,325,000 629,330 .85
CIGNA Corp. 1,000,000 91,980 .12
Eli Lilly and Co. 20,895,000 1,221,731 1.64
Guidant Corp. 1,646,900 122,002 .16
Johnson & Johnson 4,900,000 336,287 .45
Medtronic, Inc. 5,500,000 289,850 .39
Merck & Co., Inc. 20,500,000 694,950 .93
Mylan Laboratories Inc. 8,500,000 140,250 .19
Pfizer Inc 29,865,000 811,432 1.09
Schering-Plough Corp. 6,810,800 142,141 .19
Wyeth 13,000,000 584,220 .79
8,345,406 11.21
Financials -- 21.45%
AFLAC Inc. 2,000,000 81,300 .11
Allstate Corp. 8,068,300 453,116 .61
American Express Co. 3,450,000 181,815 .24
American International Group, Inc. 14,800,000 752,580 1.01
Aon Corp. 6,900,000 143,865 .19
Bank of America Corp. 30,640,000 1,380,026 1.85
Bank of New York Co., Inc. 28,300,000 790,702 1.06
Citigroup Inc. 35,766,800 1,679,609 2.26
Comerica Inc. 1,250,000 71,575 .10
Fannie Mae 23,325,000 1,258,384 1.69
Freddie Mac 11,440,000 703,789 .94
Hartford Financial Services Group, Inc. 3,275,000 237,012 .32
HSBC Holdings PLC (ADR) 10,272,000 822,274 1.10
J.P. Morgan Chase & Co. 58,986,560 2,093,433 2.81
Jefferson-Pilot Corp. 5,420,000 272,138 .37
Lincoln National Corp. 6,950,000 312,541 .42
Marsh & McLennan Companies, Inc. 20,145,000 564,664 .76
National City Corp. 3,000,000 101,880 .14
SLM Corp. 2,100,000 100,044 .13
St. Paul Travelers Companies, Inc. 15,220,000 544,876 .73
SunTrust Banks, Inc. 3,200,000 233,056 .31
U.S. Bancorp 13,125,000 366,187 .49
Wachovia Corp. 8,670,000 443,730 .60
Washington Mutual, Inc. 27,350,000 1,130,102 1.52
Wells Fargo & Co. 20,340,000 1,219,180 1.64
XL Capital Ltd., Class A 520,000 36,556 .05
15,974,434 21.45
Information technology -- 6.35%
Applied Materials, Inc.<F1> 6,500,000 96,655 .13
Automatic Data Processing, Inc. 7,450,000 323,628 .43
Dell Inc.<F1> 1,600,000 55,728 .08
Electronic Data Systems Corp. 11,555,400 223,597 .30
First Data Corp. 4,350,000 165,430 .22
Hewlett-Packard Co. 52,100,000 1,066,487 1.43
Intel Corp. 11,250,000 264,600 .36
International Business Machines Corp. 9,720,000 742,414 1.00
Linear Technology Corp. 5,400,000 192,996 .26
Microsoft Corp. 40,950,000 1,036,035 1.39
Oracle Corp.<F1> 4,000,000 46,240 .06
Texas Instruments Inc. 15,085,300 376,529 .51
Xilinx, Inc. 5,000,000 134,700 .18
4,725,039 6.35
Telecommunication services -- 7.16%
ALLTEL Corp. 4,160,200 236,965 .32
AT&T Corp. 29,325,999 561,006 .75
BellSouth Corp. 49,350,000 1,307,282 1.76
SBC Communications Inc. 58,550,000 1,393,490 1.87
Sprint Corp. 31,750,000 706,755 .95
Verizon Communications Inc. 31,470,000 1,126,626 1.51
5,332,124 7.16
Utilities -- 7.37%
Ameren Corp. 2,300,000 118,910 .16
American Electric Power Co., Inc. 14,760,200 519,854 .70
Cinergy Corp. 1,948,500 77,161 .10
Consolidated Edison, Inc. 3,600,000 155,808 .21
Dominion Resources, Inc. 9,785,000 737,789 .99
DTE Energy Co. 4,150,000 190,692 .26
Duke Energy Corp. 16,940,000 494,479 .67
Exelon Corp. 12,369,000 612,265 .82
FirstEnergy Corp. 9,133,635 397,496 .53
FPL Group, Inc. 12,258,000 500,372 .67
NiSource Inc. 4,900,000 113,876 .15
Pinnacle West Capital Corp. 3,555,000 148,955 .20
PPL Corp. 2,300,000 124,798 .17
Progress Energy, Inc. 7,125,418 299,196 .40
Public Service Enterprise Group Inc. 7,600,000 441,560 .59
Puget Sound Energy, Inc. 2,800,000 60,032 .08
Southern Co. 13,000,000 428,350 .58
Xcel Energy Inc. 4,000,000 68,720 .09
5,490,313 7.37
Miscellaneous -- 1.14%
Other common stocks in initial
period of acquisition $ 848,015 1.14%
Total common stocks (cost: $59,511,428,000) 72,287,827 97.09
Units or
principal
Convertible securities -- 0.22% amount
Consumer discretionary -- 0.05%
General Motors Corp., Series B,
5.25% convertible senior
debentures 2032 $61,050,000 40,464 .05
Health care -- 0.02%
Baxter International Inc. 7.00%
convertible preferred 2006 300,000 16,710 .02
Telecommunication services -- 0.12%
ALLTEL Corp. 7.75% convertible
preferred 2005 1,500,000 74,940 .10
CenturyTel, Inc. 6.875% ACES 2005 575,000 14,318 .02
89,258 .12
Utilities -- 0.03%
Ameren Corp. 9.75% ACES convertible
preferred 2005 760,000 21,348 .03
Total convertible securities
(cost: $189,239,000) 167,780 .22
Units or
Principal
amount
Short-term securities -- 2.39% (000)
3M Co. 2.78% due 5/19/2005 $ 4,600 4,593 .01
Abbott Laboratories Inc.
2.86% due 5/19/2005<F2> 27,600 27,558 .04
Bank of America Corp.
2.94%-2.95% due 6/10/2005 100,000 99,670 \
Ranger Funding Co. LLC -- .15
2.91% due 5/16/2005<F2> 9,300 9,288 /
BellSouth Corp.
2.76%-2.78% due 5/3/2005<F2> 32,685 32,678 .04
CAFCO, LLC 2.96% due 6/14/2005<F2> 25,000 24,907 \
-- .11
Ciesco LLC 2.71% due 5/4/2005 56,500 56,484 /
Clipper Receivables Co., LLC
2.91% due 5/27/2005<F2> 15,300 15,267 .02
Coca-Cola Co. 2.68%-2.95% due 5/6-6/27/2005 70,000 69,860 .09
DuPont (E.I.) de Nemours & Co.
2.90%-2.92% due 6/6-6/17/2005 146,500 145,992 .20
Edison Asset Securitization LLC
2.74% due 5/13/2005<F2> 20,600 20,580 \
General Electric Capital Services, Inc. -- .09
2.96% due 6/20/2005 50,000 49,794 /
Exxon Project Investment Corp.
2.92% due 6/3/2005<F2> 24,000 23,934 .03
Fannie Mae 2.86% due 6/1/2005 26,200 26,135 .03
FCAR Owner Trust I 2.93% due 6/8/2005 50,000 49,845 .07
Federal Farm Credit Banks
2.91% due 6/23/2005 18,500 18,418 .02
Federal Home Loan Bank
2.64%-2.84% due 5/6-6/17/2005 94,016 93,746 .13
Freddie Mac
2.63%-2.89% due 5/10-6/30/2005 159,468 159,135 .21
Gannett Co
2.78%-2.89% due 5/18-6/22/2005<F2> 50,000 49,866 .07
HSBC Finance Corp.
2.76%-2.90% due 5/2-6/10/2005 80,750 80,595 .11
IBM Capital Inc. 2.88% due 5/26/2005<F2> 7,800 7,784 \
International Business Machines Corp. -- .06
2.805% due 5/26/2005 34,200 34,131 /
New Center Asset Trust Plus
2.94% due 6/6/2005 25,000 24,924 .03
Park Avenue Receivables Co., LLC
2.92% due 5/20/2005<F2> 25,200 25,159 \
Preferred Receivables Funding Corp. -- .11
2.84%-2.86% due 5/12-5/13/2005<F2> 55,914 55,858 /
PepsiCo Inc. 2.80% due 5/16/2005<F2> 9,800 9,788 .01
Procter & Gamble Co.
2.78%-2.93% due 5/25-6/21/2005<F2> 125,000 124,564 .17%
Tennessee Valley Authority
2.71%-2.84% due 5/5-6/16/2005 82,500 82,279 .11
Three Pillars Funding, LLC
2.85%-2.99% due 5/2-5/16/2005<F2> 72,651 72,582 .10
United Parcel Service Inc.
2.72% due 5/2/2005 25,000 24,996 .03
Variable Funding Capital Corp.
2.87%-2.94% due 5/20-6/7/2005<F2> 97,000 96,768 .13
Wal-Mart Stores, Inc.
2.75%-2.87% due 5/10-6/1/2005<F2> 111,000 110,814 .15
Wells Fargo & Co. 2.68% due 5/3/2005 50,000 50,000 .07
Total short-term securities
(cost: $1,777,965,000) 1,777,992 2.39
Total investment securities
(cost: $61,478,632,000) 74,233,599 99.70
Other assets less liabilities 222,192 .30
Net assets $ 74,455,791 100.00%
"Miscellaneous" securities include holdings in their initial period of
acquisition that have not previously been publicly disclosed.
<FN>
<F1> Security did not produce income during the last 12 months.
<F2> Restricted securities that can be resold only to institutional investors.
In practice, these securities are typically as liquid as unrestricted securities
in the portfolio. The total value of all restricted securities was $707,395,000,
which represented 0.95% of the net assets of the Fund.
</FN>
ADR = American Depositary Receipts
See Notes to Financial Statements
Investments in affiliates
A company is considered to be an affiliate of the Fund under the Investment
Company Act of 1940 if the Fund's holdings in that company represent 5% or more
of the outstanding voting shares of that company. Further details on these
holdings and related transactions during the year ended April 30, 2005, appear
below.
Dividend
Beginning Ending income
Company shares Purchases Sales shares (000)
Albertson's, Inc.* 19,906,750 -- 2,950,000 16,956,750 $13,448
Ashland Inc.* 3,680,000 -- 1,850,000 1,830,000 3,704
Crompton Corp.* 5,800,001 -- 5,800,001 -- 630
Stanley Works* 4,200,000 -- 4,200,000 -- 2,492
$20,274
*Unaffiliated issuer at 4/30/2005.
Financial statements
Statement of assets and liabilities (dollars and shares in thousands,
at April 30, 2005 except per-share amounts)
Assets:
Investment securities at market
(cost: $61,478,632) $74,233,599
Cash 498
Receivables for:
Sales of investments $131,718
Sales of Fund's shares 125,816
Dividends and interest 194,689 452,223
74,686,320
Liabilities:
Payables for:
Purchases of investments 103,048
Repurchases of Fund's shares 64,981
Management services 14,689
Services provided by affiliates 46,503
Deferred Directors' and Advisory Board compensation 1,146
Other fees and expenses 162 230,529
Net assets at April 30, 2005 $74,455,791
Net assets consist of:
Capital paid in on shares of capital stock $60,977,618
Undistributed net investment income 370,847
Undistributed net realized gain 352,359
Net unrealized appreciation 12,754,967
Net assets at April 30, 2005 $74,455,791
Total authorized capital stock -- 4,000,000 shares, $.001 par value (2,496,045
total shares outstanding)
Net asset
Shares value per
Net assets outstanding share/1/
Class A $61,184,602 2,049,510 $29.85
Class B 2,902,273 97,760 29.69
Class C 2,991,135 100,932 29.64
Class F 2,504,624 84,055 29.80
Class 529-A 632,661 21,211 29.83
Class 529-B 148,054 4,982 29.72
Class 529-C 225,782 7,599 29.71
Class 529-E 35,277 1,186 29.74
Class 529-F 21,019 706 29.79
Class R-1 34,253 1,153 29.71
Class R-2 622,295 20,998 29.64
Class R-3 1,705,217 57,360 29.73
Class R-4 829,436 27,850 29.78
Class R-5 619,163 20,743 29.85
/1/ Maximum offering price and redemption price per share were equal to the net
asset value per share for all share classes, except for classes A and 529-A, for
which the maximum offering prices per share were $31.67 and $31.65,
respectively.
See Notes to Financial Statements
Statement of operations for the year ended April 30, 2005 (dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S.
withholding tax of $1,048;
also includes $20,274 from affiliates) $1,984,595
Interest 50,883 $2,035,478
Fees and expenses:
Investment advisory services 139,427
Business management services 53,358
Distribution services 219,690
Transfer agent services 53,374
Administrative services 17,381
Reports to shareholders 1,921
Registration statement and prospectus 2,481
Postage, stationery and supplies 6,469
Directors' and Advisory Board compensation 803
Auditing and legal 241
Custodian 434
State and local taxes 1
Other 269
Total expenses before reimbursements/waivers 495,849
Reimbursement/waiver of expenses 7,985 487,864
Net investment income 1,547,614
Net realized gain and unrealized
appreciation on investments:
Net realized gain on investments
(including $43,701 net loss from affiliates) 547,062
Net unrealized appreciation on investments 2,329,367
Net realized gain and unrealized
appreciation on investments 2,876,429
Net increase in net assets resulting from operations $4,424,043
See Notes to Financial Statements
Financial statements
Statement of changes in net assets (dollars in thousands)
Year ended April 30
2005 2004
Operations:
Net investment income $ 1,547,614 $ 1,221,227
Net realized gain on investments 547,062 1,391,805
Net unrealized appreciation on investments 2,329,367 9,001,008
Net increase in net assets
resulting from operations 4,424,043 11,614,040
Dividends and distributions paid to shareholders:
Dividends from net investment income (1,378,347) (1,130,674 )
Distributions from net realized gain
on investments (559,57) (405,371)
Total dividends and distributions
paid to shareholders (1,937,925) (1,536,045)
Capital share transactions 5,169,240 8,507,821
Total increase in net assets 7,655,358 18,585,816
Net assets:
Beginning of year 66,800,433 48,214,617
End of year (including undistributed
net investment income:
$370,847 and $201,665, respectively) $74,455,791 $66,800,433
See Notes to Financial Statements
Notes to financial statements
1. Organization and significant accounting policies
Organization -- Washington Mutual Investors Fund (the "Fund") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company. The Fund's investment objective is to produce current income
and to provide an opportunity for growth of principal consistent with sound
common stock investing.
The Fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica(R) savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The Fund's share classes are described below:
Initial Contingent deferred
Share class sales charge sales charge upon redemption Conversion feature
Classes A and 529-A Up to 5.75% None (except 1% for certain redemptions None
within one year of purchase without an
initial sales charge)
Classes B and 529-B None Declines from 5% to zero for redemptions Classes B and 529-B convert to classes A
within six years of purchase and 529-A, respectively, after eight years
Class C None 1% for redemptions within one year of purchase Class C converts to Class F after 10 years
Class 529-C None 1% for redemptions within one year of purchase None
Class 529-E None None None
Classes F and 529-F None None None
Classes R-1, R-2,
R-3, R-4 and R-5 None None None
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation proceeds. Each share class has identical voting rights, except for
the exclusive right to vote on matters affecting only its class. Share classes
have different fees and expenses ("class-specific fees and expenses"), primarily
due to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
Significant accounting policies -- The financial statements have been
prepared to comply with accounting principles generally accepted in the
United States of America. These principles require management to make
estimates and assumptions that affect reported amounts and disclosures.
Actual results could differ from those estimates. The following is a
summary of the significant accounting policies followed by the Fund:
Security valuation -- Equity securities are valued at the official closing
price of, or 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. Prices for each security are taken from the principal
exchange or market in which the security trades. Fixed-income securities
are valued at prices obtained from an independent pricing service, when
such prices are available. However, where the investment adviser deems it
appropriate, such securities will be valued at the mean quoted bid and
asked prices (or bid prices, if asked prices are not available) or at
prices for securities of comparable maturity, quality and type. Securities
with both fixed-income and equity characteristics, or equity securities
traded principally among fixed-income dealers, are valued in the manner
described above for either equity or fixed-income securities, depending on
which method is deemed most appropriate by the investment adviser.
Short-term securities purchased within 60 days to maturity are valued at
amortized cost, which approximates market value. The value of short-term
securities purchased with greater than 60 days to maturity with 60 days or
less remaining to maturity is determined based on the market value on the
61st day. The ability of the issuers of the debt securities held by the
Fund to meet their obligations may be affected by economic developments in
a specific industry, state or region. Securities and other assets for which
representative market quotations are not readily available are fair valued
as determined in good faith under procedures adopted by authority of the
Fund's Board of Directors. Various factors may be reviewed in order to make
a good faith determination of a security's fair value. These factors
include, but are not limited to, the type and cost of the security;
contractual or legal restrictions on resale of the security; relevant
financial or business developments of the issuer; actively traded similar
or related securities; conversion or exchange rights on the security;
related corporate actions; significant events occurring after the close of
trading in the security; and changes in overall market conditions.
Security transactions and related investment income -- Security
transactions are recorded by the Fund as of the date the trades are
executed with brokers. Realized gains and losses from security transactions
are determined based on the specific identified cost of the securities.
Dividend income is recognized on the ex-dividend date and interest income
is recognized on an accrual basis. Market discounts, premiums and original
issue discounts on fixed-income securities are amortized daily over the
expected life of the security.
Class allocations -- Income, fees and expenses (other than class-specific
fees and expenses) and realized and unrealized gains and losses are
allocated daily among the various share classes based on their relative net
assets. Class-specific fees and expenses, such as distribution,
administrative and shareholder services, are charged directly to the
respective share class.
Dividends and distributions to shareholders -- Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
CollegeAmerica is a registered trademark of the Virginia College Savings
Plan.SM
2. Federal income taxation and distributions
The Fund complies with the requirements under Subchapter M of the Internal
Revenue Code applicable to mutual funds and intends to distribute substantially
all of its net taxable income and net capital gains each year. The Fund is not
subject to income taxes to the extent such distributions are made.
Distributions -- Distributions paid to shareholders are based on net investment
income and net realized gains determined on a tax basis, which may differ from
net investment income and net realized gains for financial reporting purposes.
These differences are due primarily to differing treatment for items such as
short-term capital gains and losses; capital losses related to sales of certain
securities within 30 days of purchase; deferred expenses; cost of investments
sold; and amortization of premiums. 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, 2005, the cost of
investment securities for Federal income tax purposes was $61,505,043,000.
During the year ended April 30, 2005, the Fund reclassified $85,000 from
undistributed net investment income to additional paid-in capital to align
financial reporting with tax reporting.
As of April 30, 2005, the components of distributable earnings on a tax basis
were as follows (dollars in thousands):
Undistributed net investment income $ 372,644
Undistributed long-term capital gains 378,119
Gross unrealized appreciation on investment securities 14,939,710
Gross unrealized depreciation on investment securities (2,211,154
)
Net unrealized appreciation on investment securities 12,728,556
During the year ended April 30, 2005, the Fund realized, on a tax basis, a net
capital gain of $560,564,000.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
Year ended April 30, 2005 Year ended April 30, 2004
Distributions Distributions Distributions Distributions
from from Total from from Total
ordinary long-term distributions ordineary long-term distributions
income capital gains paid income capital gains paid
Class A $1,200,617 $465,497 $1,666,114 $1,023,435 $353,523 $1,376,958
Class B 34,980 21,983 56,963 26,631 14,964 41,595
Class C 33,095 22,268 55,363 22,527 13,551 36,078
Class F 44,042 18,476 62,518 27,287 10,227 37,514
Class 529-A 10,025 4,223 14,248 6,006 2,219 8,225
Class 529-B 1,410 1,056 2,466 904 592 1,496
Class 529-C 2,093 1,539 3,632 1,240 804 2,044
Class 529-E 470 238 708 262 117 379
Class 529-F 306 137 443 127 54 181
Class R-1 295 197 492 152 94 246
Class R-2 6,084 4,018 10,102 2,866 1,661 4,527
Class R-3 23,111 11,401 34,512 8,967 4,233 13,200
Class R-4 10,400 4,362 14,762 3,296 1,130 4,426
Class R-5 11,419 4,183 15,602 6,974 2,202 9,176
Total $1,378,347 $559,578 $1,937,925 $1,130,674 $405,371 $1,536,045
3. Fees and transactions with related parties
Business management services -- The Fund has a business management agreement
with Washington Management Corporation (WMC). Under this agreement, WMC provides
services necessary to carry on the Fund's general administrative and corporate
affairs. These services encompass matters relating to general corporate
governance, regulatory compliance and monitoring of the Fund's contractual
service providers, including custodian operations, shareholder services and Fund
share distribution functions. Under the agreement, all expenses chargeable to
the Class A shares of the Fund, including compensation to the business manager,
shall not exceed 1% of the average net assets of the Fund on an annual basis. At
the beginning of the year, the agreement provided for monthly fees, accrued
daily, based on a declining series of annual rates beginning with 0.175% on the
first $3 billion of daily net assets and decreasing to 0.035% on such assets in
excess of $67 billion. The Board of Directors approved an amended agreement eff-
ective January 15, 2005, continuing the series of rates to include an additional
annual rate of 0.030% on daily net assets in excess of $77 billion. During the
year ended April 30, 2005, WMC reduced business management services fees by
$2,016,000. As a result, the fee shown in the accompanying financial statements
of $53,358,000, which was equivalent to an annualized rate of 0.074%, was
reduced to $51,342,000, or 0.072% of average daily net assets. During the fiscal
year, WMC paid the Fund's investment adviser $2,147,000 for performing various
fund accounting services for the Fund and for The American Funds Tax-Exempt
Series I, another registered investment company for which WMC serves as business
manager. Johnston, Lemon & Co. Incorporated (JLC), a wholly owned subsidiary of
The Johnston-Lemon Group, Incorporated (JLG) (parent company of WMC), earned
$661,000 on its retail sales of shares and distribution plans of the Fund. JLC
received no brokerage commissions resulting from the purchases and sales of
securities for the investment account of the Fund.
Investment advisory services -- Capital Research and Management Company (CRMC),
the Fund's investment adviser, is the parent company of American Funds Service
Company (AFS), the Fund's transfer agent, and American Funds Distributors, Inc.
(AFD), the principal underwriter of the Fund's shares. The Investment Advisory
Agreement with CRMC provides for monthly fees accrued daily. At the beginning of
the year, these fees were based on a declining series of annual rates beginning
with 0.225% on the first $3 billion of daily net assets and decreasing to 0.185%
on such assets in excess of $55 billion. The Board of Directors approved an
amended agreement effective June 17, 2004, continuing the series of rates to
include an additional annual rate of 0.180% on daily net assets in excess of $71
billion. During the year ended April 30, 2005, CRMC reduced investment advisory
services fees by $5,335,000. As a result, the fee shown on the accompanying
financial statements of $139,427,000, which was equivalent to an annualized rate
of 0.194%, was reduced to $134,092,000, or 0.187% of average daily net assets.
Class-specific fees and expenses -- Expenses that are specific to individual
share classes are accrued directly to the respective share class. The principal
class-specific fees and expenses are described below:
Distribution services -- The Fund has adopted plans of distribution for all
share classes, except Class R-5. Under the plans, the Board of Directors
approves certain categories of expenses that are used to finance activities
primarily intended to sell Fund shares. The plans provide for annual
expenses, based on a percentage of average daily net assets, ranging from
0.25% to 1.00% as noted below. In some cases, the Board of Directors has
approved expense amounts lower than plan limits. All share classes may use
up to 0.25% of average daily net assets to pay service fees, or to
compensate AFD for paying service fees, to firms that have entered into
agreements with AFD for providing certain shareholder services. Expenses in
excess of these amounts, up to approved limits, may be used to compensate
dealers and wholesalers for shares sold.
For classes A and 529-A, the Board of Directors has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for certain
shares sold without a sales charge. Each class reimburses AFD for amounts
billed within the prior 15 months but only to the extent that the overall
annual expense limit of 0.25% is not exceeded. As of April 30, 2005, there
were no unreimbursed expenses subject to reimbursement for classes A or
529-A.
Share class Currently approved limits Plan limits
Class A 0.25% 0.25%
Class 529-A 0.25 0.50
Classes B and 529-B 1.00 1.00
Classes C, 529-C and R-1 1.00 1.00
Class R-2 0.75 1.00
Classes 529-E and R-3 0.50 0.75
Classes F, 529-F and R-4 0.25 0.50
Transfer agent services -- The Fund has a transfer agent agreement with AFS
for classes A and B. Under this agreement, these share classes compensate
AFS for transfer agent services including shareholder recordkeeping,
communications and transaction processing. AFS is also compensated for
certain transfer agent services provided to all other share classes from
the administrative services fees paid to CRMC described below.
Administrative services -- The Fund has an administrative services
agreement with CRMC to provide transfer agent and other related shareholder
services for all classes of shares other than classes A and B. Each
relevant class pays CRMC annual fees of 0.15% (0.10% for Class R-5) based
on its respective average daily net assets. Each relevant class also pays
AFS additional amounts for certain transfer agent services. CRMC and AFS
may use these fees to compensate third parties for performing these
services. During the year ended April 30, 2005, CRMC agreed to pay a
portion of these fees for classes R-1 and R-2. For the year ended April 30,
2005, the total fees paid by CRMC were $4,000 and $630,000 for classes R-1
and R-2, respectively. Administrative services fees are presented gross of
any payments made by CRMC. Each 529 share class is subject to an additional
annual administrative services fee of 0.10% of its respective average daily
net assets; this fee is payable to the Commonwealth of Virginia for the
maintenance of the CollegeAmerica plan. Although these amounts are included
with administrative services fees in the accompanying financial statements,
the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described above for the year ended April 30,
2005, were as follows (dollars in thousands):
--------------Administraive services--------------
Commonwealth
CRMC of Virginia
Distribution Transfer agent administrative Transfer agent administrative
Share class services services services services services
Class A $141,591 $50,900 Not applicable Not applicable Not applicable
Class B 27,871 2,474 Not applicable Not applicable Not applicable
Class C 27,947 | $4,192 $593 Not applicable
Class F 5,724 | 3,434 274 Not applicable
Class 529-A 879 | 796 75 $530
Class 529-B 1,316 Included in 197 55 132
Class 529-C 1,922 administrative 288 65 192
Class 529-E 147 services 44 4 30
Class 529-F 41 | 25 2 16
Class R-1 247 | 37 17 Not applicable
Class R-2 3,733 | 747 1,960 Not applicable
Class R-3 6,937 | 2,081 251 Not applicable
Class R-4 1,335 | 801 16 Not applicable
Class R-5 Not applicable | 517 10 Not applicable
Total $219,690 $53,374 $13,159 $3,322 $900
Deferred Directors' and Advisory Board compensation -- Since the adoption of the
deferred compensation plan in 1994, Independent Directors and Advisory Board
members may elect to defer the cash payment of part or all of their
compensation. These deferred amounts, which remain as liabilities of the Fund,
are treated as if invested in shares of the Fund or other American Funds. These
amounts represent general, unsecured liabilities of the Fund and vary according
to the total returns of the selected Funds. Directors' and Advisory Board
compensation of $803,000, shown on the accompanying financial statements,
includes $730,000 in current fees (either paid in cash or deferred) and a net
increase of $73,000 in the value of the deferred amounts.
Affiliated officers and Directors -- All officers of the Fund and all of its
Directors who are affiliated with WMC receive no compensation directly from the
Fund in such capacities.
4. Capital share transactions
Capital share transactions in the Fund were as follows (dollars and shares in
thousands):
Reinvestments of
dividends and
Sales<F1> distributions Repurchases<F1> Net increase
Share class Amount Shares Amount Shares Amount Shares Amount Shares
Year ended April 30, 2005
Class A $ 7,395,134 249,062 $1,569,990 52,168 $(6,916,372) (232,386) $2,048,752 68,844
Class B 451,234 15,339 54,564 1,818 (248,702) (8,408) 257,096 8,749
Class C 753,447 25,600 52,449 1,750 (367,965) (12,434) 437,931 14,916
Class F 915,300 30,894 55,610 1,850 (459,462) (15,406) 511,448 17,338
Class 529-A 202,543 6,808 14,247 473 (26,138) (877) 190,652 6,404
Class 529-B 35,804 1,212 2,466 82 (4,797) (161) 33,473 1,133
Class 529-C 71,331 2,409 3,631 120 (11,208) (378) 63,754 2,151
Class 529-E 11,939 402 708 24 (1,592) (54) 11,055 372
Class 529-F 9,916 334 442 15 (1,268) (42) 9,090 307
Class R-1 23,143 783 488 16 (6,379) (217) 17,252 582
Class R-2 325,408 11,018 10,099 337 (98,064) (3,317) 237,443 8,038
Class R-3 862,578 29,133 34,456 1,146 (241,511) (8,100) 655,523 22,179
Class R-4 564,507 18,978 14,724 489 (92,164) (3,088) 487,067 16,379
Class R-5 279,665 9,418 15,114 502 (86,075) (2,890) 208,704 7,030
Total net increase (decrease) $11,901,949 401,390 $1,828,988 60,790 $(8,561,697) (287,758) $5,169,240 174,422
Year ended April 30, 2005
Class A $ 8,658,906 316,038 $1,297,927 46,995 $(5,596,587) (204,091) $4,360,246 158,942
Class B 784,093 28,982 39,955 1,448 (160,096) (5,858) 663,952 24,57
Class C 1,132,018 41,659 34,320 1,244 (212,342) (7,789) 953,996 35,114
Class F 1,021,066 37,267 33,743 1,219 (256,599) (9,291) 798,210 29,195
Class 529-A 183,817 6,679 8,223 297 (12,711) (458) 179,329 6,518
Class 529-B 45,906 1,683 1,496 54 (2,506) (91) 44,896 1,646
Class 529-C 73,740 2,685 2,044 74 (5,645) (204) 70,139 2,555
Class 529-E 11,711 426 379 14 (728) (26) 11,362 414
Class 529-F 7,909 288 181 6 (387) (13) 7,703 281
Class R-1 11,914 436 246 9 (5,604) (203) 6,556 242
Class R-2 293,230 10,725 4,527 163 (53,205) (1,943) 244,552 8,945
Class R-3 911,148 33,444 13,186 474 (108,485) (3,956) 815,849 29,962
Class R-4 275,613 9,872 4,426 159 (42,240) (1,520) 237,799 8,511
Class R-5 139,624 5,078 8,914 322 (35,306) (1,292) 113,232 4,108
Total net increase (decrease) $13,550,695 495,262 $1,449,567 52,478 $(6,492,441) (236,735) $8,507,821 311,005
<FN>
<F1>Includes exchanges between share classes of the Fund.
</FN>
5. Investment transactions and other disclosures
The Fund made purchases and sales of investment securities, excluding short-term
securities, of $15,183,746,000 and $11,071,075,000, respectively, during the
year ended April 30, 2005.
The Fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
year ended April 30, 2005, the custodian fee of $434,000, shown on the
accompanying financial statements, includes $37,000 that was offset by this
reduction, rather than paid in cash.
Financial highlights<F1>
Income (loss) from Dividends and
investment operations<F2> distributions
Ratio
Ratio of ex-
of ex- penses
Net penses to aver- Ratio
gains to aver- age net of net
(losses) Divi- age net assets income
Net on secur Total dends Total Net assets after (loss)
Asset Net ities from (from Distri- divi- Net assets before reim- to
value invest- (both invest- net butions dends asset end of reim- burse- aver-
begin- ment realized ment invest- (from and value, Total period burse- ments/ age
ning of income and un- oper- ment capital distri- end of return (in ments/ waivers net
period (loss) realized) ations income) gains) butions period <F3> millions) waivers <F4> assets
Class A:
Year ended
4/30/2005 $28.79 $ .67 $1.22 $1.89 $(.60) $ (.23) $ (.83) $29.85 6.55% $61,185 .61% .60% 2.24%
Year ended
4/30/2004 23.99 .59 4.94 5.53 (.54) (.19) (.7) 28.79 23.19 57,027 .64 .64 2.14
Year ended
4/30/2003 28.37 .55 (4.35) (3.80) (.54) (.04) (.58) 23.99 (13.36) 43,701 .67 .67 2.28
Year ended
4/30/2002 29.80 .50 (.75) (.25) (.54) (.64) (1.18) 28.37 (.73) 50,669 .65 .65 1.72
Year ended
4/30/2001 29.14 .57 3.17 3.74 (.58) (2.50) (3.08) 29.80 13.54 48,700 .65 .65 1.95
Class B:
Year ended
4/30/2005 28.64 .43 1.22 1.65 (.3) (.23) (.60) 29.69 5.75 2,902 1.38 1.37 1.47
Year ended
4/30/2004 23.88 .37 4.92 5.29 (.3) (.19) (.53) 28.64 22.2 2,549 1.40 1.40 1.36
Year ended
4/30/2003 28.25 .36 (4.32) (3.96) (.37) (.04) (.41) 23.88 (14.01) 1,538 1.45 1.45 1.52
Year ended
4/30/2002 29.71 .25 (.72) (.47) (.35) (.6) (.9) 28.25 (1.5) 1,097 1.41 1.41 .88
Year ended
4/30/2001 29.11 .29 3.22 3.51 (.41) (2.50) (2.91) 29.71 12.67 289 1.42 1.42 .99
Class C:
Year ended
4/30/2005 28.59 .41 1.22 1.63 (.35) (.23) (.58) 29.64 5.69 2,991 1.46 1.45 1.39
Year ended
4/30/2004 23.84 .35 4.92 5.27 (.3) (.19) (.52) 28.59 22.19 2,460 1.48 1.48 1.27
Year ended
4/30/2003 28.22 .35 (4.33) (3.98) (.36) (.04) (.40) 23.84 (14.10) 1,214 1.51 1.51 1.46
Year ended
4/30/2002 29.70 .21 (.73) (.5) (.32) (.64) (.96) 28.22 (1.68) 678 1.51 1.51 .72
Period from
3/15/2001
to 4/30/2001 28.32 (.02) 1.40 1.38 -- -- -- 29.70 4.87 36 .23 .23 (.07)
Class F:
Year ended
4/30/2005 28.74 .64 1.22 1.86 (.57) (.23) (.80) 29.80 6.47 2,505 .69 .68 2.15
Year ended
4/30/2004 23.95 .56 4.94 5.50 (.52) (.19) (.71) 28.74 23.13 1,917 .71 .71 2.04
Year ended
4/30/2003 28.33 .53 (4.34) (3.81) (.53) (.04) (.57) 23.95 (13.42) 899 .74 .74 2.24
Year ended
4/30/2002 29.79 .42 (.72) (.30) (.52) (.64) (1.16) 28.33 (.89) 444 .78 .78 1.46
Period from
3/15/2001
to 4/30/2001 28.37 .01 1.41 1.42 -- -- -- 29.79 5.01 16 .12 .12 .04
Class 529-A:
Year ended
4/30/2005 28.76 .63 1.23 1.86 (.56) (.23) (.79) 29.83 6.47 633 .71 .70 2.12
Year ended
4/30/2004 23.97 .56 4.95 5.51 (.53) (.19) (.72) 28.76 23.07 426 .71 .71 2.03
Year ended
4/30/2003 28.36 .54 (4.35) (3.81) (.54) (.04) (.58) 23.97 (13.38) 199 .70 .70 2.29
Period from
2/15/2002
to 4/30/2002 27.71 .04 .75 .79 (.1) -- (.14) 28.36 2.82 49 .16 .16 .14
Class 529-B:
Year ended
4/30/2005 28.68 .38 1.21 1.59 (.32) (.23) (.55) 29.72 5.52 148 1.58 1.57 1.26
Year ended
4/30/2004 23.91 .32 4.96 5.28 (.32) (.19) (.51) 28.68 22.08 110 1.59 1.59 1.15
Year ended
4/30/2003 28.34 .32 (4.35) (4.03) (.36) (.04) (.40) 23.91 (14.18) 53 1.62 1.62 1.36
Period from
2/19/2002
to 4/30/2002 27.25 (.01) 1.22 1.21 (.12) -- (.12) 28.34 4.38 11 .30 .30 (.02)
Class 529-C:
Year ended
4/30/2005 28.67 .37 1.22 1.59 (.32) (.23) (.55) 29.71 5.54 226 1.57 1.56 1.27
Year ended
4/30/2004 23.91 .32 4.93 5.25 (.30) (.19) (.49) 28.67 22.06 156 1.58 1.58 1.15
Year ended
4/30/2003 28.33 .32 (4.34) (4.02) (.36) (.04) (.40) 23.91 (14.18) 69 1.61 1.61 1.38
Period from
2/15/2002
to 4/30/2002 27.71 (.01) .75 .74 (.12) -- (.12) 28.33 2.65 15 .32 .32 (.03)
Class 529-E:
Year ended
4/30/2005 28.69 .53 1.22 1.75 (.47) (.23) (.70) 29.74 6.09 35 1.05 1.04 1.79
Year ended
4/30/2004 23.92 .46 4.94 5.40 (.44) (.19) (.6) 28.69 22.68 23 1.06 1.06 1.68
Year ended
4/30/2003 28.34 .45 (4.35) (3.9) (.48) (.04) (.52) 23.92 (13.73) 9 1.08 1.08 1.92
Period from
3/1/2002
to 4/30/2002 28.59 .01 (.13) (.12) (.13) -- (.13) 28.34 (.44) 1 .17 .17 .04
Class 529-F:
Year ended
4/30/2005 28.74 .60 1.22 1.82 (.54) (.23) (.77) 29.79 6.35 21 .80 .79 2.03
Year ended
4/30/2004 23.96 .53 4.95 5.48 (.51) (.19) (.70) 28.74 23.00 11 .81 .81 1.90
Period from
9/16/2002
to 4/30/2003 23.98 .32 .10 .42 (.40) (.04) (.44) 23.96 1.85 3 .82<F5> .82<F5> 2.25<F5>
Financial highlights<F1>
Income (loss) from Dividends and
investment operations<F2> distributions
Ratio
Ratio of ex-
of ex- penses
Net penses to aver-
gains to aver- age net Ratio
(losses) Divi- age net assets of net
Net on secur Total dends Total Net assets after income
Asset ities from (from Distri- divi- Net assets before reim- to
value Net (both invest- net butions dends asset end of reim- burse- aver-
begin- invest- realized ment invest- (from and value, period burse- ments/ age
ning of ment and un- oper- ment capital distri- end of Total (in ments/ waivers net
period income realized) ations income) gains) butions period return millions) waivers <F4> assets
Class R-1:
Year ended
4/30/2005 $28.68 $.40 $1.21 $1.61 $(.3) $(.23) $(.58) $29.71 5.62% $ 34 1.50% 1.47% 1.35%
Year ended
4/30/2004 23.92 .35 4.93 5.28 (.33) (.19) (.52) 28.68 22.16 16 1.52 1.49 1.25
Period from
5/29/2002
to 4/30/2003 28.52 .32 (4.46) (4.14) (.42) (.04) (.46) 23.92(14.50) 8 1.71<F5> 1.51<F5> 1.50<F5>
Class R-2:
Year ended
4/30/2005 28.60 .41 1.22 1.63 (.36) (.23) (.59) 29.64 5.68 622 1.57 1.44 1.38
Year ended
4/30/2004 23.88 .35 4.91 5.26 (.35) (.19) (.54) 28.60 22.12 371 1.69 1.45 1.26
Period from
5/31/2002
to 4/30/2003 28.46 .33 (4.40) (4.07) (.47) (.04) (.51) 23.88 (14.29) 96 1.78<F5> 1.47<F5> 1.58<F5>
Class R-3:
Year ended
4/30/2005 28.68 .56 1.21 1.77 (.49) (.23) (.72) 29.73 6.17 1,705 .95 .94 1.89
Year ended
4/30/2004 23.93 .46 4.94 5.40 (.46) (.19) (.65) 28.68 22.68 1,009 1.07 1.07 1.63
Period from
6/4/2002
to 4/30/2003 27.81 .41 (3.74) (3.33) (.51) (.04) (.55) 23.93 (11.94) 125 1.11<F5> 1.09<F5> 1.95<F5>
Class R-4:
Year ended
4/30/2005 28.73 .64 1.22 1.86 (.58) (.23) (.81) 29.78 6.46 830 .68 .67 2.14
Year ended
4/30/2004 23.95 .56 4.94 5.50 (.53) (.19) (.72) 28.73 23.11 330 .70 .70 2.01
Period from
5/20/2002
to 4/30/2003 28.78 .51 (4.74) (4.23) (.56) (.04) (.60) 23.95 (14.66) 71 .74<F5> .73<F5> 2.32<F5>
Class R-5:
Year ended
4/30/2005 28.79 .73 1.22 1.95 (.66) (.23) (.89) 29.85 6.78 619 .38 .37 2.45
Year ended
4/30/2004 23.99 .65 4.94 5.59 (.60) (.19) (.79) 28.79 23.49 395 .39 .39 2.36
Period from
5/15/2002
to 4/30/2003 28.84 .57 (4.78) (4.21) (.60) (.04) (.64) 23.99 (14.57) 230 .41<F5> .41<F5> 2.51<F5>
Year ended April 30
2005 2004 2003 2002 2001
Portfolio turnover rate for
all classes of shares 16% 12% 21% 22% 25%
<FN>
<F1> Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
<F2> Based on average shares outstanding.
<F3> Total returns exclude all sales charges, including contingent deferred
sales charges.
<F4> The ratios in this column reflect the impact, if any, of certain
reimbursements/waivers from CRMC and WMC. During the year ended 4/30/2005, CRMC
and WMC reduced management fees for all share classes. In addition, during the
start-up period for the retirement plan share classes (except Class R-5), CRMC
agreed to pay a portion of the fees related to transfer agent services.
<F5> Annualized.
</FN>
See Notes to Financial Statements
Report of independent registered public accounting firm
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 financial highlights present fairly, in all
material respects, the financial position of Washington Mutual Investors Fund,
Inc. (the "Fund") at April 30, 2005, and the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards 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, 2005 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Los Angeles, California
June 3, 2005
Tax information (unaudited)
We are required to advise you within 60 days of the Fund's fiscal year-end
regarding the Federal tax status of certain distributions received by
shareholders during such fiscal year. The information below is provided for the
Fund's fiscal year ending April 30, 2005.
During the fiscal year ended, the Fund paid a long-term capital gain
distribution of $559,578,000.
Individual shareholders are eligible for reduced tax rates on qualified dividend
income. The Fund designates 100% of the dividends received as qualified dividend
income.
Corporate shareholders may exclude up to 70% of qualifying dividends. The Fund
designates 100% of dividends received as qualified dividend income.
For state tax purposes, certain states may exempt from income taxation that
portion of the income dividends paid by the Fund that were derived from direct
U.S. government obligations. The Fund designates $8,339,000 as interest derived
on direct U.S. government obligations.
Individual shareholders should refer to their Form 1099-DIV or other tax
information, which will be mailed in January 2006 to determine the calendar year
amounts to be included on their 2005 tax returns. Shareholders should consult
their tax advisers.
Other share class results (unaudited)
Class B, Class C, Class F and Class 529
Figures shown are past results and are not predictive of results in future
periods. Current and future results may be lower or higher than those shown.
Share prices and returns will vary, so investors may lose money. For the most
current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended March 31, 2005 (the most recent
calendar quarter):
Life
1 year 5 years of class
Class B shares
Reflecting applicable contingent deferred
sales charge (CDSC), maximum
of 5%, payable only if shares are sold
within six years of purchase +0.82% +4.18% +5.97%<F1>
Not reflecting CDSC +5.82% +4.52% +6.13%<F1>
Class C shares
Reflecting CDSC, maximum of 1%,
payable only if shares are sold
within one year of purchase +4.71% -- +3.69%<F2>
Not reflecting CDSC +5.71% -- +3.69%<F2>
Class F shares<F3>
Not reflecting annual asset-based fee
charged by sponsoring firm +6.54% -- +4.50%<F2>
Class 529-A shares
Reflecting 5.75% maximum sales charge +0.42% -- +3.49%<F4>
Not reflecting maximum sales charge +6.54% -- +5.47%<F4>
Class 529-B shares
Reflecting applicable CDSC, maximum
of 5%, payable only if shares
are sold within six years of purchase +0.62% -- +4.25%<F5>
Not reflecting CDSC +5.62% -- +5.13%<F5>
Class 529-C shares
Reflecting CDSC, maximum of 1%,
payable only if shares are sold
within one year of purchase +4.60% -- +4.55%<F4>
Not reflecting CDSC +5.60% -- +4.55%<F4>
Class 529-E shares<F3> +6.12% -- +4.08%<F6>
Class 529-F shares<F3>
Not reflecting annual asset-based
fee charged by sponsoring firm +6.41% -- +12.49%<F7>
The Fund's investment adviser and business manager are waiving a portion of
their management fees. Results shown reflect the waivers, without which they
would have been lower. Please see the Financial Highlights table on page 26 for
details.
<FN>
<F1> From March 15, 2000, when Class B shares were first sold.
<F2> From March 15, 2001, when Class C and Class F shares were first sold.
<F3> These shares are sold without any initial or contingent deferred sales
charge.
<F4> From February 15, 2002, when Class 529-A and Class 529-C shares were first
sold.
<F5> From February 19, 2002, when Class 529-B shares were first sold.
<F6> From March 1, 2002, when Class 529-E shares were first sold.
<F7> From September 16, 2002, when Class 529-F shares were first sold.
</FN>
There are several ways to invest in Washington Mutual Investors Fund. Class A
shares are subject to a 5.75% maximum up-front sales charge that declines for
accounts (and aggregated investments) of $25,000 or more and is eliminated for
purchases of $1 million or more. Other share classes, which are generally not
available for certain employer-sponsored retirement plans, have no up-front
sales charges but are subject to additional annual expenses and fees. Annual
expenses for Class B shares were 0.77 percentage points higher than for Class A
shares; Class B shares convert to Class A shares after eight years of ownership.
If redeemed within six years, Class B shares may also be subject to a contingent
deferred sales charge ("CDSC") of up to 5% that declines over time. Class C
shares were subject to annual expenses 0.85 percentage points higher than those
for Class A shares and a 1% CDSC if redeemed within the first year after
purchase. Class C shares convert to Class F shares after 10 years. Class F
shares, which are available only through certain fee-based programs offered by
broker-dealer firms and registered investment advisers, had higher annual
expenses (by 0.08 percentage points) than did Class A shares, and an annual
asset-based fee charged by the sponsoring firm. Expenses are deducted from
income earned by the Fund. As a result, dividends and investment results will
differ for each share class.
Expense example (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs such as initial sales charges on purchase payments and contingent deferred
sales charges on redemptions (loads); and (2) ongoing costs, including
management fees; distribution and service (12b-1) fees; and other expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund so you can compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
invested at the beginning of the period and held for the entire period (November
1, 2004 through April 30, 2005).
Actual expenses:
The first line of each share class in the table on the next page provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses paid during period" to estimate the expenses you paid on your account
during this period. There are some account fees that are charged to certain
types of accounts, such as Individual Retirement Accounts and CollegeAmerica
accounts (generally, a $10 fee is charged to set up the account and an
additional $10 fee is charged to the account annually) that would increase the
amount of expenses paid on your account. In addition, retirement plan
participants may be subject to certain fees charged by the plan sponsor, and
Class F and Class 529-F shareholders may be subject to fees charged by financial
intermediaries, typically ranging from 0.75% to 1.50% of assets annually
depending on services offered. You can estimate the impact of these fees by
adding the amount of the fees to the total estimated expenses you paid on your
account during the period as calculated above. In addition, your ending account
value would also be lower by the amount of these fees.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides
information about hypothetical account values and hypothetical expenses based on
the actual expense ratio for the share class and an assumed rate of return of
5.00% per year before expenses, which is not the actual return of the share
class. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5.00% hypothetical example with the 5.00%
hypothetical examples that appear in the shareholder reports of the other funds.
There are some account fees that are charged to certain shareholders, such as
Individual Retirement Accounts and CollegeAmerica accounts (generally, a $10 fee
is charged to set up the account and an additional $10 fee is charged to the
account annually) that would increase the amount of expenses paid on your
account. In addition, retirement plan participants may be subject to certain
fees charged by the plan sponsor, and Class F and Class 529-F shareholders may
be subject to fees charged by financial intermediaries, typically ranging from
0.75% to 1.50% of assets annually depending on services offered. You can
estimate the impact of these fees by adding the amount of the fees to the total
estimated expenses you paid on your account during the period as calculated
above. In addition, your ending account value would also be lower by the amount
of these fees.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of each share class in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning Ending Expenses
account account paid Annualized
value value during expense
11/1/2004 4/30/2005 period/1/ ratio
Class A -- actual return $1,000.00 $1,034.48 $2.98 .59%
Class A -- assumed 5% return 1,000.00 1,021.87 2.96 .59
Class B -- actual return 1,000.00 1,030.72 6.80 1.35
Class B -- assumed 5% return 1,000.00 1,018.10 6.76 1.35
Class C -- actual return 1,000.00 1,030.40 7.25 1.44
Class C -- assumed 5% return 1,000.00 1,017.65 7.20 1.44
Class F -- actual return 1,000.00 1,034.45 3.38 .67
Class F -- assumed 5% return 1,000.00 1,021.47 3.36 .67
Class 529-A -- actual return 1,000.00 1,033.94 3.58 .71
Class 529-A -- assumed 5% return 1,000.00 1,021.27 3.56 .71
Class 529-B -- actual return 1,000.00 1,029.71 7.85 1.56
Class 529-B -- assumed 5% return 1,000.00 1,017.06 7.80 1.56
Class 529-C -- actual return 1,000.00 1,029.51 7.80 1.55
Class 529-C -- assumed 5% return 1,000.00 1,017.11 7.75 1.55
Class 529-E -- actual return 1,000.00 1,032.42 5.19 1.03
Class 529-E -- assumed 5% return 1,000.00 1,019.69 5.16 1.03
Class 529-F -- actual return 1,000.00 1,033.59 3.93 .78
Class 529-F -- assumed 5% return 1,000.00 1,020.93 3.91 .78
Class R-1 -- actual return 1,000.00 1,029.99 7.35 1.46
Class R-1 -- assumed 5% return 1,000.00 1,017.55 7.30 1.46
Class R-2 -- actual return 1,000.00 1,030.23 7.20 1.43
Class R-2 -- assumed 5% return 1,000.00 1,017.70 7.15 1.43
Class R-3 -- actual return 1,000.00 1,033.09 4.34 .86
Class R-3 -- assumed 5% return 1,000.00 1,020.53 4.31 .86
Class R-4 -- actual return 1,000.00 1,033.87 3.33 .66
Class R-4 -- assumed 5% return 1,000.00 1,021.52 3.31 .66
Class R-5 -- actual return 1,000.00 1,035.62 1.82 .36
Class R-5 -- assumed 5% return 1,000.00 1,023.01 1.81 .36
/1/ Expenses are equal to the annualized expense ratio, multiplied by the
average account value over the period, multiplied by the number of days in the
period (181), and divided by 365 (to reflect the one-half year period).
Board of Directors and Directors Emeritus
Independent Directors
Number of
portfolios
within
Year first the Fund
elected a complex/2/
Director on which
of the Director
Name and age Fund/1/ Principal occupation(s) during past five years serves Other directorships /3/ held
Cyrus A. Ansary, 71 1983 President, Investment Services International Co. LLC 3 JPMorgan Value Opportunities
Fund
(private investment company for various
operating entities)
Charles A. Bowsher, 73 2001 Retired Comptroller General of the United States 1 DeVry Inc.;
SI International, Inc.
Daniel J. Callahan III, 72 1997 Vice Chairman and Treasurer, The Morris & Gwendolyn 3 JPMorgan Value Opportunities
Cafritz Foundation Fund
R. Clark Hooper, 58 2003 President, Dumbarton Group LLC (securities industry 1 None
consulting); Former Executive Vice President, NASD
Edward W. Kelley, Jr., 73 2002 Retired Governor, Federal Reserve Board 1 Security Capital Corp.
James C. Miller III, 62 1992 Chairman, The CapAnalysis Group, LLC (economic, 3 FLYi, Inc.;
financial and regulatory consulting); Former Counselor, JPMorgan Value Opportunities
Citizens for a Sound Economy Fund
Katherine D. Ortega, 70 2002 Former Treasurer of the United States 3 JPMorgan Value
Opportunities Fund;
The Kroger Co.;
Rayonier Inc.
J. Knox Singleton, 56 2001 President and Chief Executive Officer, 3 Healthcare Realty Trust,
INOVA Health System Inc.; JPMorgan Value
Opportunities Fund
T. Eugene Smith, 74 1987 President, T. Eugene Smith, Inc. (real estate consulting, 3 JPMorgan Value Opportunities
planning, and development) Fund
Interested Directors/3/
Number of
Year first portfolios
elected within
Director the Fund
or complex/2/
officer on which
Name, age, and of the Director
position with Fund Fund /1/ Principal occupation(s) during past five years serves Other directorships /3/ held
James H. Lemon, Jr., 69 1971 Chairman of the Board and Chief Executive Officer, 3 JPMorgan Value Opportunities
Chairman of the Board The Johnston-Lemon Group, Incorporated (financial Fund
services holding company)
Harry J. Lister, 69 1972 Director, Washington Management Corporation 3 JPMorgan Value Opportunities
Vice Chairman of the Board Fund
Jeffrey L. Steele, 59 2000 President and Director, Washington Management 3 JPMorgan Value Opportunities
President Corporation Fund
Directors Emeritus
Stephen Hartwell, Chairman Emeritus
John A. Beck
Fred J. Brinkman
Stephen G. Yeonas
Advisory Board and officers
Advisory Board members
Number of
portfolios
within
the Fund
complex
Year first on which
elected to Advisory
Advisory Board
Board Member
/1/ Principal occupation(s) during past five years serves Other directorships/3/ held
Mary K. Bush, 57 1995 President, Bush International Inc. (international 1 Brady Corporation;
financial advisory services) Briggs & Stratton;
Mortgage Guaranty Insurance
Corporation;
Pioneer Funds
Louise M. Cromwell, 60 2001 Retired Partner, Shaw Pittman 1 None
C. Richard Pogue, 68 2001 Retired Executive Vice President, Investment 1 FAM Equity-Income Fund;
Company Institute FAM Value Fund
Linda D. Rabbitt, 56 2001 President, Rand Construction Corporation 1 Watson Wyatt & Company
Holdings
William J. Shaw, 59 2001 President and Chief Operating Officer, Marriott 1 Marriott International, Inc.
International, Inc.
Other officers
Year first
elected an
officer of
Name, age and the Fund Principal occupation(s) during
position with Fund /1/ past five years
Howard L. Kitzmiller, 74 1983 Senior Vice President, Secretary, Assistant
Senior Vice President Treasurer, and Director, Washington
and Secretary Management Corporation
Michael W. Stockton, 38 1995 Vice President, Assistant Secretary,
Vice President, Assistant Treasurer, and Director,
Treasurer and Washington Management Corporation
Assistant Secretary
Ralph S. Richard, 86 1953 Vice President, Treasurer, and Director,
Vice President Washington Management Corporation
Lois A. Erhard, 52 1983 Vice President, Washington Management
Vice President Corporation
J. Lanier Frank, 44 1997 Assistant Vice President, Washington
Assistant Vice President Management Corporation
Jennifer L. Butler, 39 2005 Assistant Vice President, Washington
Assistant Secretary Management Corporation;
Former Specialist, Fund Administration,
Pacific Investment Management Company
Ashley L. Shaw,/5/ 36 2000 Assistant Secretary, Washington Management
Assistant Secretary Corporation
The Statement of Additional Information includes additional information about
the Fund's Directors and is available without charge upon request by calling
American Funds Service Company at 800/421-0180. The address for all Directors,
Advisory Board members, and officers of the Fund is 1101 Vermont Avenue, NW,
Washington, DC 20005, Attention: Fund Secretary.
/1/ Directors, Advisory Board members and officers of the Fund serve until
their resignation, removal, or retirement.
/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 are
portfolios of The American Funds Tax-Exempt Series I.
/3/ This includes all directorships other than those in The American Funds
Group that are held by each Director or Advisory Board member as a director of a
public company or a registered investment company.
/4/ "Interested persons" within the meaning of the 1940 Act on the basis of
their affiliation with the Fund's Business Manager, Washington Management
Corporation.
/5/ Ashley L. Shaw is the daughter of James H. Lemon, Jr.
Offices
Offices of the Fund and of the business manager
Washington Management Corporation
1101 Vermont Avenue, NW
Washington, DC 20005-3521
202/842-5665
Investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
Transfer agent
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065
Santa Ana, CA 92799-5065
P.O. Box 659522
San Antonio, TX 78265-9522
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Dechert LLP
1775 I Street, NW
Washington, DC 20006-2401
Independent registered public accounting firm
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071-2889
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Washington Mutual Investors Fund files a complete list of its portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q.
This form is available free of charge on the SEC website or upon request by
calling AFS. You may also review or, for a fee, copy the form at the SEC's
Public Reference Room in Washington, DC (800/SEC-0330).
This report is for the information of shareholders of Washington Mutual
Investors Fund, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the Fund. If used as
sales material after June 30, 2005, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
What makes American Funds different?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 30 million shareholder accounts.
Our unique combination of strengths includes these five factors:
- - A long-term, value-oriented approach
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
- - An unparalleled global research effort
American Funds draws on one of the industry's most globally integrated
research networks.
- - The multiple portfolio counselor system
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well.
Over time this method has contributed to a consistency of results and
continuity of management.
- - Experienced investment professionals
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. More than half of them were in
the investment business before the sharp market decline of 1987.
- - A commitment to low operating expenses
American Funds' operating expenses are among the lowest in the mutual
fund industry. Our portfolio turnover rates are low as well, keeping
transaction costs and tax consequences contained.
Investors should carefully consider the investment objectives, risks, charges
and expenses of the American Funds and CollegeAmerica. This and other important
information is contained in the Fund's prospectus and the CollegeAmerica program
description, which can be obtained from your financial adviser and should be
read carefully before investing. You may also call American Funds Service
Company (AFS) at 800/421-0180 or visit the American Funds website at
americanfunds.com.
"American Funds Proxy Voting Guidelines" -- which describes how we vote proxies
relating to portfolio securities -- is available free of charge on the U.S.
Securities and Exchange Commission (SEC) website at www.sec.gov, on the American
Funds website or upon request by calling AFS. The Fund's proxy voting record for
the 12 months ended June 30, 2004, is also available on the SEC and American
Funds websites.
(Logo)
American Funds(R)
The right choice for the long term(R)
(Logo)
Washington Mutual Investors Fund
Washington Mutual Investors Fund, Inc.
1101 Vermont Avenue, NW
Washington, DC 20005
202/842-5665
The Capital Group Companies
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGEAR-901-0605P
(Recycled Logo)
Printed on recycled paper
ITEM 2 - Code of Ethics
The Registrant has adopted a code of ethics that applies to its Principal
Executive Officer and Principal Financial Officer. The Registrant undertakes to
provide to any person without charge, upon request, a copy of the Code of
Ethics. Such request can be made to American Funds Service Company at
800/421-0180 or to the Secretary of the Registrant, 1101 Vermont Avenue, NW,
Suite 600, Washington, DC 20005.
ITEM 3 - Audit Committee Financial Expert
The Registrant's Board has determined that Charles A. Bowsher, a member of the
Registrant's Audit Committee, is an "audit committee financial expert" and
"independent," as such terms are defined in this Item. This designation will not
increase the designee's duties, obligations or liability as compared to his
duties, obligations and liability as a member of the Audit Committee and of the
Board; nor will it reduce the responsibility of the other Audit Committee
members. There may be other individuals who, through education or experience,
would qualify as "audit committee financial experts" if the Board had designated
them as such. Most importantly, the Board believes each member of the Audit
Committee contributes significantly to the effective oversight of the
Registrant's financial statements and condition.
ITEM 4 - Principal Accountant Fees and Services
Registrant:
a) Audit Fees:
2004 $98,000
2005 $85,000
b) Audit- Related Fees:
2004 none
2005 none
c) Tax Fees:
2004 $6,000
2005 $7,000
The tax fees consist of professional
services relating to the preparation of the
registrant's tax returns.
d) All Other Fees:
2004 none
2005 none
ITEM 4 - Principal Accountant Fees and Services (continued)
Adviser and affiliates (includes only fees for non-audit
services billed to the adviser and affiliates for engagements
that relate directly to the operations and financial reporting
of the registrant and were subject to the pre-approval
policies described below):
a) Audit- Related Fees:
2004 none
2005 none
b) Tax Fees:
2004 none
2005 none
c) All Other Fees:
2004 none
2005 none
The registrant's Audit Committee will pre-approve all audit and permissible
non-audit services that the Committee considers compatible with maintaining the
auditors' independence. The pre-approval requirement will extend to all
non-audit services provided to the registrant, the business manager, the
investment adviser, and any entity controlling, controlled by, or under common
control with the investment adviser or business manager that provides ongoing
services to the registrant, if the engagement relates directly to the operations
and financial reporting of the registrant. The Committee will not delegate its
responsibility to pre-approve these services to the business manager or
investment adviser. The Committee may delegate to one or more Committee members
the authority to review and pre-approve audit and permissible non-audit
services. Actions taken under any such delegation will be reported to the full
Committee at its next meeting. The pre-approval requirement is waived with
respect to non-audit services if certain conditions are met. The pre-approval
requirement was not waived for any of the services listed above under paragraphs
b, c and d.
Aggregate non-audit fees paid to the registrant's auditors, including fees for
all services billed to the adviser and affiliates were $6,000 for fiscal year
2004 and $0 for fiscal year 2005. The non-audit services represented by these
amounts were brought to the attention of the Committee and considered to be
compatible with maintaining the auditors' independence.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Schedule of Investments
The full schedule of investments for the Fund is included as part of the report
to shareholders filed under Item 1 of this Form.
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 8 - Portfolio Managers of Equity Securities by Closed End Management
Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 10 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors since the registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The registrant has a Governance Committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. The committee periodically reviews such
issues as the Board's composition, responsibilities, committees, compensation
and other relevant issues, and recommends any appropriate changes to the full
Board of Directors. While the committee normally is able to identify from its
own resources an ample number of qualified candidates, it will consider
shareholder suggestions of persons to be considered as nominees to fill future
vacancies on the Board. Such suggestions must be sent in writing to the
Governance Committee of the registrant, c/o the registrant's Secretary, and
should be accompanied by complete biographical and occupational data on the
prospective nominee, along with a written consent of the prospective nominee for
consideration of his or her name by the Governance Committee.
ITEM 11 - Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal Financial
Officer have concluded, based on their evaluation of the Registrant's
disclosure controls and procedures (as such term is defined in Rule 30a-3
under the Investment Company Act of 1940), that such controls and
procedures are adequate and reasonably designed to achieve the purposes
described in paragraph (c) of such rule.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12 - Exhibits
(a) The Code of Ethics that is the subject of the disclosure required by Item 2
is attached as an exhibit hereto.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto. (a)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Washington Mutual Investors Fund, Inc.
By /s/ Jeffrey L. Steele, President and PEO
Date: June 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Jeffrey L. Steele, President and PEO
Date: June 28, 2005
By /s/ Michael W. Stockton, Vice President and Treasurer
Date: June 28, 2005