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Washington Mutual Investors Fund – ‘N-30D’ for 4/30/01

On:  Friday, 6/29/01, at 1:21pm ET   ·   For:  4/30/01   ·   Accession #:  104865-1-500017   ·   File #:  811-00604

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  As Of                Filer                Filing    For·On·As Docs:Size

 6/29/01  Washington Mutual Investors Fund  N-30D       4/30/01    1:81K

Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
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Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                39±   150K 

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11st Page   -   Filing Submission
"Financial Statements

(full page graphic: Mt.Vernon) (Graphic, logo: The American Funds Group(R)) Washington Mutual Investors Fund 2001 Annual Report for the year ended April 30 Washington Mutual Investors Fund(SM) is one of the 29 American Funds, the nation's third-largest mutual fund family. For seven decades, Capital Research and Management Company, the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk. Washington Mutual Investors Fund seeks to provide income and growth of principal through investments in quality common stocks. Fund results in this report were calculated for Class A shares at net asset value (without a sales charge) unless otherwise indicated. Here are the average annual compound returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2001 (the most recent calendar quarter): Class A Shares 1 year 5 years 10 years Reflecting 5.75% maximum sales charge +2.05% +13.48% +14.33% Results for other share classes can be found on page 31. 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 of $25,000 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% 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 are subject to annual expenses about 0.82% 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, have higher expenses (about 0.06% a year) than do Class A shares, and an annual asset-based fee charged by the sponsoring firm. Because expenses are first deducted from income, dividends for each class will vary. Figures shown are past results and are not predictive of future results. Share price and return will vary, so you may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. (graphic: thumbnail image of cover) About Our Cover: The artwork on our cover is a view of Mount Vernon from the northeast, attributed to Edward Savage, oil on canvas, c. 1792. It is one of the earliest depictions of the mansion. About Other Art in This Report: Photos throughout this report are of items and rooms in a miniature model of Mount Vernon. For more details on the model, see the inside back cover. (photo) Fellow Shareholders: We are pleased to report that for the 12 months ended April 30 _ Washington Mutual Investors Fund's 2001 fiscal year _ the value of the Fund's shares rose 13.5%, assuming reinvestment of income dividends totaling 58 cents a share and a capital gain distribution of $2.495 a share. These results contrasted with a decline of 12.9% for the unmanaged Standard & Poor's 500 Composite Index, with dividends reinvested. (The Index tracks 500 relatively large companies listed on U.S. exchanges.) As the Fund's fiscal year progressed, many investors moved away from high-technology shares to stocks of companies demonstrating sustained growth of earnings and dividends. During this period, technology stocks took an extremely hard tumble. On page 2, you will find a discussion of this and other developments from the perspective of our investment adviser, Capital Research and Management Company. Following six increases in short-term interest rates between June 1999 and May 2000, a decline in business activity became evident and public confidence in the economy slipped. On January 3, 2001, the Federal Reserve reversed course and reduced the federal funds rate by 50 basis points, or half of one percentage point. This was followed by identical cuts on January 31, March 20, April 18, and May 15. Although it may take some time, we believe these actions, together with the recently enacted tax reduction bill, should stimulate business activity and help strengthen the economy. Since our last report to you six months ago, 17 new names have appeared in your Fund's portfolio: ALLTEL, Dell Computer, Dow Jones & Co., Gap, General Electric, Halliburton, Intel, Mead, MGIC Investment, Oracle, PNC Financial Services Group, Rockwell International, Sun Microsystems, Target, TJX Companies, TXU, and Xilinx. Four companies were eliminated: Associates First Capital (acquired by Citigroup), First Data, International Flavors & Fragrances, and Thomas & Betts. While in recent years the percentage of S&P 500 companies paying dividends has decreased, the average yield of all stocks in the Fund's portfolio is currently 2.2% _ well above the 1.3% average yield of the stocks in the S&P 500. It is anticipated that the trend of decreasing dividend payouts will require Washington Mutual to reduce the amount of its quarterly dividend. However, the Fund will strive to provide increasing annual dividend income to shareholders who reinvest their capital gains _ an accomplishment that has been achieved every year since the Fund's inception, including this past year. On March 16, the Fund's Board of Directors elected four new Advisory Board members: Louise M. Cromwell, C. Richard Pogue, Linda D. Rabbitt, and William J. Shaw. All are outstanding leaders in their respective fields of endeavor and your Fund will benefit from their advice. Questions and comments from shareholders are always welcome. Information about the Fund is available from your financial adviser and from the American Funds Web site, Washington Mutual's next shareholder report will cover the six months ending October 31 _ the first half of our 2002 fiscal year. Cordially, (signatures) Stephen Hartwell James H. Lemon, Jr Harry J. Lister Chairman of the Board Vice Chairman of the Board President of the Fund 1 Investment Adviser's Report Washington Mutual's results for fiscal 2001 matched almost exactly the 13.6% average annual total return recorded by the Fund over its 49-year lifetime. At the same time, the results surpassed, by a wide margin, not only the S&P 500, which was down 12.9%, but other stock market measures as well. For the 12 months, the New York Stock Exchange Composite Index, a market-value weighted index of all NYSE stocks, had a negative total return of 1.4%. The Dow Jones Industrial Average, a price-weighted average of 30 blue-chip stocks, was up just 1.7%. The most dramatic contrast was with the Nasdaq Composite Index, which is dominated by technology stocks. That index was down 45.2% for the fiscal year and nearly 70% between March 2000 and April 2001. Some Internet stocks were off even more _ as much as 80% to 90% from their highs during the speculative boom. As those figures suggest, the Fund's results were achieved in a drastically altered investment climate. Throughout much of the period, technology stocks that had soared to absurd levels retreated sharply before recovering some lost ground during the spring. Meanwhile, attractively priced stocks of well-established companies _ many of which operate in comparatively unglamorous industries _ came back into favor. This shift in sentiment began in March 2000 _ just before the start of the Fund's fiscal year _ and has worked to our advantage. When the dot-com bubble burst, the portfolio contained very few technology stocks and was concentrated in reasonably valued companies with a solid record of earnings and dividends that can provide income as well as growth. As often happens when a large group of securities decline severely, the good are hammered along with the bad. We took advantage of this and, in recent months, added to the portfolio about a half-dozen sound, well-managed technology-oriented firms that meet the Fund's high standards. These are listed along with other additions to the portfolio in the Shareholder Letter. The Economic Picture The investment climate changed during fiscal 2001 in another important respect. Early in the period, the economic news was generally positive. Starting in the fall, however, evidence that business conditions were deteriorating caused uneasiness among many investors. There was a sharp drop in the market averages in November, followed by further weakness later in the winter. When the fiscal year ended, the overall pace of business activity was still slowing, although the signals were somewhat mixed. There were reports of substantial layoffs and cutbacks in capital spending. Orders for computer equipment were down and inventories were abnormally large. Consumer spending appeared to be holding its own, however, and fears that the economy might be about to collapse were subsiding. Since then, there has been growing confidence that the nation's monetary authorities will succeed in preventing the slowdown from turning into a recession. The actions taken by the Federal Reserve in fiscal 2001 deserve a closer look. When our fiscal year began in May 2000, the Fed was concerned primarily with the threat of higher inflation and was still in the process of raising interest rates. Eight months later, when it began pursuing an easier monetary policy, it did so in emphatic fashion. The five reductions in short-term rates that were announced between early January and mid-May of this year represented the strongest stimulative action taken by the central bank to combat signs of weakness in more than 15 years. The Fund's Investments The portfolio in this report shows how Washington Mutual's assets were diversified at fiscal year-end. The five largest industry positions as a percentage of net assets were Banks (11.5%), Oil & Gas (8.9%), Electric Utilities (6.9%), Pharmaceuticals (6.7%), and Diversified Telecommunication Services (6.5%). Of the 149 stocks held throughout the fiscal year, more than two-thirds posted gains for the period. Some of the largest increases were recorded by oil and gas companies that benefited from rising prices for their products. Six of the Fund's 20 most profitable investments were energy-related and recorded double-digit increases. They are Duke Energy (+62.6%), Dominion Resources (+52.2%), TECO Energy (+46.2%), Texaco (+46.0%), Constellation Energy Group (+44.4%), and Kerr-McGee (+38.5%). We plan to keep our research efforts focused on identifying sound long-term investment opportunities among companies that can meet Washington Mutual's eligibility standards. Those standards were established nearly a half-century ago to ensure a combination of quality, value and fundamental strength. They promote a disciplined approach that has helped us weather all kinds of market conditions in the past, and we believe they should continue to do so in the future. _ Capital Research and Management Company The Value of a Long-Term Perspective (Chart) This chart shows how a $10,000<F1> investment grew between July 31, 1952, when the Fund began operations, and April 30, 2001. As you can see, that $10,000 investment in Washington Mutual, with all distributions reinvested, would have grown to $4,709,570<F1><F2>. Over the same period, that $10,000 would have grown to $2,794,204 in the unmanaged Standard & Poor's 500 Composite Index of U.S. common stocks. According to the Consumer Price Index, it now requires $66,255<F5> to purchase what $10,000 would have bought on July 31, 1952. In the average savings institution, $10,000 with interest compounded would have grown to $116,120<F4>. (EDGAR Note: The chart also shows that the $10,000 investment would grow to $719,686<F1><F3> with dividends taken in cash.) Results of a $10,000 Investment in WMIF, the S&P500, and the CPI. July 31, 1952 through April 30, 2001 [Enlarge/Download Table] Year ended Dividends in Dividends TOTAL April 30 Cash (2) WMIF Reinvested (1) WMIF RETURN S&P500 CPI 07/31/52 $9,425 $9,425 $10,000 $10,000 1953 $169 9,161 $170 9,330 -6.7% 10,073 9,963 1954 434 10,773 450 11,494 23.2 12,267 10,037 1955 501 14,665 542 16,288 41.7 17,264 10,000 1956 580 17,851 654 20,565 26.3 22,870 10,075 1957 648 18,304 756 21,877 6.4 22,450 10,449 1958 680 16,928 825 21,055 -3.8 22,214 10,824 1959 700 24,125 885 31,071 47.6 30,484 10,861 1960 728 21,871 947 29,041 -6.5 29,761 11,049 1961 815 26,300 1,097 36,167 24.5 36,957 11,161 1962 823 26,592 1,145 37,654 4.1 38,035 11,311 1963 890 28,838 1,279 42,278 12.3 42,171 11,423 1964 923 31,149 1,368 47,109 11.4 49,542 11,573 1965 957 36,940 1,463 57,490 22.0 57,260 11,760 1966 1,049 38,487 1,648 61,603 7.2 60,362 12,097 1967 1,177 39,424 1,906 65,270 6.0 64,534 12,397 1968 1,332 42,481 2,231 72,692 11.4 69,131 12,884 1969 1,516 48,408 2,626 85,576 17.7 75,712 13,596 1970 1,604 39,049 2,874 71,603 -16.3 61,578 14,419 1971 1,710 48,769 3,193 93,387 30.4 81,401 15,019 1972 1,779 47,991 3,456 95,521 2.3 86,888 15,543 1973 1,818 43,290 3,671 89,522 -6.3 88,797 16,330 1974 1,857 40,682 3,907 87,956 -1.7 77,563 17,978 1975 2,185 42,855 4,829 98,315 11.8 78,768 19,813 1976 2,349 53,771 5,498 129,949 32.2 95,421 21,011 1977 2,509 55,449 6,171 140,348 8.0 96,205 22,472 1978 2,658 54,228 6,849 144,339 2.8 99,497 23,933 1979 2,870 58,180 7,785 163,075 13.0 110,175 26,442 1980 3,203 56,032 9,167 165,847 1.7 121,539 30,337 1981 4,785 72,410 14,603 230,423 38.9 159,497 33,371 1982 4,098 69,851 13,326 235,768 2.3 147,832 35,543 1983 4,496 101,855 15,516 362,292 53.7 220,196 36,929 1984 4,839 100,116 17,526 373,508 3.1 223,854 38,614 1985 5,464 115,473 20,783 452,497 21.1 263,309 40,037 1986 6,109 152,209 24,381 623,767 37.8 358,598 40,674 1987 6,780 180,960 28,229 771,947 23.8 453,750 42,210 1988 7,116 167,083 30,815 742,854 -3.8 424,517 43,858 1989 6,183 198,139 27,837 911,607 22.7 521,251 46,105 1990 8,920 202,429 41,689 971,049 6.5 575,672 48,277 1991 9,135 222,015 44,572 1,113,744 14.7 676,800 50,637 1992 8,318 244,606 42,318 1,272,370 14.2 771,895 52,247 1993 8,467 268,131 44,627 1,442,386 13.4 843,033 53,933 1994 8,583 266,513 46,718 1,479,109 2.5 887,928 55,206 1995 9,790 301,054 55,058 1,730,691 17.0 1,042,583 56,891 1996 10,007 381,514 58,187 2,256,889 30.4 1,356,760 58,539 1997 10,505 455,550 62,763 2,763,026 22.4 1,697,450 60,000 1998 11,032 628,863 67,444 3,890,245 40.8 2,393,223 60,861 1999 11,526 707,653 71,812 4,458,474 14.6 2,915,358 62,247 2000 11,935 646,506 75,684 4,148,122 -7.0 3,209,578 64,157 2001 13,153 719,686 85,029 4,709,570 13.5 2,794,204 66,255 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, 1991. At that time, according to the table, the value of the investment illustrated here was $1,113,744. Since then it has gone up more than fourfold to $4,709,570. Thus, in the same 10-year period, the value of your 1991 investment _ regardless of its size _ has increased more than fourfold. During the period illustrated, stock prices fluctuated and were higher at the end than at the beginning. These results should not be considered as a representation of the results that may be realized from an investment made in the Fund today. Past performance is not predictive of future performance. The indexes are unmanaged and do not reflect sales charges, commissions or expenses. [Enlarge/Download Table] SECTION I (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 6 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 6 sections for clarity) Fiscal Year Ended April 30 1953/6/ 1954 1955 1956 1957 1958 1959 1960 1961 CAPITAL VALUE/3/ Dividends in Cash $ 169 434 501 580 648 680 700 728 815 Value at Year-End/1/ $9,161 10,773 14,665 17,851 18,304 16,928 24,125 21,871 26,300 TOTAL VALUE/2/ Dividends Reinvested $_ 170 450 542 654 756 825 885 947 1,097 Value at Year-End/1/ $9,330 11,494 16,288 20,565 21,877 21,055 31,071 29,041 36,167 WMIF Total Return (6.7)% 23.2 41.7 26.3 6.4 (3.8) 47.6 (6.5) 24.5 [Enlarge/Download Table] SECTION II (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 5 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 5 sections for clarity) Fiscal Year Ended April 30 1962 1963 1964 1965 1966 1967 1968 1969 1970 CAPITAL VALUE/3/ Dividends in Cash 823 890 923 957 1,049 1,177 1,332 1,516 1,604 Value at Year-End/1/ 26,592 28,838 31,149 36,940 38,487 39,424 42,481 48,408 39,049 TOTAL VALUE/2/ Dividends Reinvested 1,145 1,279 1,368 1,463 1,648 1,906 2,231 2,626 2,874 Value at Year-End/1/ 37,654 42,278 47,109 57,490 61,603 65,270 72,692 85,576 71,603 WMIF Total Return 4.1 12.3 11.4 22.0 7.2 6.0 11.4 17.7 (16.3) [Enlarge/Download Table] SECTION III (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 5 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 5 sections for clarity) Fiscal Year Ended April 30 1971 1972 1973 1974 1975 1976 1977 1978 1979 CAPITAL VALUE/3/ Dividends in Cash 1,710 1,779 1,818 1,857 2,185 2,349 2,509 2,658 2,870 Value at Year-End/1/ 48,769 47,991 43,290 40,682 42,855 53,771 55,449 54,228 58,180 TOTAL VALUE/2/ Dividends Reinvested 3,193 3,456 3,671 3,907 4,829 5,498 6,171 6,849 7,785 Value at Year-End/1/ 93,387 95,521 89,522 87,956 98,315 129,949 140,348 144,339 163,075 WMIF Total Return 30.4 2.3 (6.3) (1.7) 11.8 32.2 8.0 2.8 13.0 [Enlarge/Download Table] SECTION IV (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 5 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 5 sections for clarity) Fiscal Year Ended April 30 1980 1981 1982 1983 1984 1985 1986 1987 1988 CAPITAL VALUE/3/ Dividends in Cash 3,203 4,785 4,098 4,496 4,839 5,464 6,109 6,780 7,116 Value at Year-End/1/ 56,032 72,410 69,851 101,855 1116 115,473 152,209 180,960 167,083 TOTAL VALUE/1/ Dividends Reinvested 9,167 14,603 13,326 15,516 17,526 20,783 24,381 28,229 30,815 Value at Year-End/1/ 165,847 230,423 235,768 362,292 373,508 452,497 623,767 771,947 742,854 WMIF Total Return 1.7 38.9 2.3 53.7 3.1 21.1 37.8 23.8 (3.8) [Enlarge/Download Table] SECTION V (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 5 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 5 sections for clarity) Fiscal Year Ended April 30 1989 1990 1991 1992 1993 1994 1995 1996 1997 CAPITAL VALUE/3/ Dividends in Cash 6,183 8,920 9,135 8,318 8,467 8,583 9,790 10,007 10,505 Value at Year-End/1/ 198,139 202,429 222,015 244,606 268,131 266,513 301,054 381,514 455,550 TOTAL VALUE/1/ Dividends Reinvested 27,837 41,689 44,572 42,318 44,627 46,718 55,058 58,187 62,763 Value at Year-End/1/ 911,607 971,049 1,113,744 1,272,370 1,442,386 1,479,109 1,730,691 2,256,889 2,763,026 WMIF Total Return 22.7 6.5 14.7 14.2 13.4 2.5 17.0 30.4 22.4 [Download Table] SECTION VI (EDGAR Note: This table spans three pages in the printed Annual Report. It has been divided into 5 sections so that it fits within the EDGAR format. The left-most column of descriptions has been repeated in each of the 5 sections for clarity) Fiscal Year Ended April 30 1998 1999 2000 2001 CAPITAL VALUE/3/ Dividends in Cash 11,032 11,526 11,935 13,153 Value at Year-End/1/ 628,863 707,653 646,506 719,686 TOTAL VALUE/2/ Dividends Reinvested 67,444 71,812 75,684 85,029 Value at Year-End/1/ 3,890,245 4,458,474 4,148,122 4,709,570 WMIF Total Return 40.8 14.6 (7.0) 13.5 Fund's lifetime average annual compound return: 13.5%/1/ /1/ These figures, unlike those shown earlier in this report, reflect payment of the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net amount invested was $9,425. As outlined in the prospectus, the sales charge is reduced for larger investments of $25,000 or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares. The maximum initial sales charge was 8.5% prior to July 1, 1988. Results shown do not take into account income or capital gain taxes. /2/ Total Value includes reinvested dividends of $966,309 and reinvested capital gain distributions of $1,853,951. /3/ Capital Value includes reinvested capital gain distributions of $341,167, but does not reflect income dividends of $209,705 taken in cash. /4/ With all interest compounded. Based on figures, supplied by the U.S. League of Savings Institutions and the Federal Reserve Board, that reflect all kinds of savings deposits, including longer term certificates. Unlike investments in the Fund, such deposits are insured and, if held to maturity, offer a guaranteed return of principal and a fixed rate of interest, but no opportunity for capital growth. Maximum allowable interest rates were imposed by law until 1983. 5 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. 6 Since the Fund's inception on July 31, 1952. /5/ Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. 6 Since the Fund's inception on July 31, 1952. Average Annual Compound Returns/1/ for periods ended April 30, 2001 1 Year 5 Years 10 Years +7.00% +14.49% +14.83% /1/ Based on the maximum sales charge of 5.75%. Sales charges are lower for investments of $25,000 or more. (photo Steve Hartwel) Steve Hartwell A Conversation... With Washington Mutual's Chairman In December, Stephen (Steve) Hartwell will retire as Chairman of Washington Mutual Investors Fund's Board of Directors, a position he has held for 16 years _ a period of significant growth for the Fund. Upon his retirement, the Fund's Board of Directors plans to elect Mr. Hartwell Chairman Emeritus. Recently, he met with Chairman-elect James H. Lemon, Jr., President Harry J. Lister, and Executive Vice President Jeffrey L. Steele to discuss some of his thoughts and the events that have marked his successful leadership. We felt that the highlights from that meeting might be of interest to our shareholders. (group photo) From left to right: Jeffrey L. Steele, James H. Lemon, Jr., Harry J. Lister, and Stephen Hartwell. Washington Mutual Investors Fund Jim Lemon: Over the past decade, Washington Mutual has become one of the country's five largest mutual funds. To what do you attribute this success? Steve Hartwell: First and foremost, I would have to point to the Fund's record of consistent and excellent long-term results. However, there are other important reasons. One is the high level of quality of our shareholder services and the fast, accurate response to inquiries from shareholders and dealers. Another has been the Fund's ability to provide those who reinvest capital gain distributions with an increasing amount of regular dividend income each year over the Fund's lifetime. And finally, I would include low operating expenses, which have also helped provide shareholders with higher dividend income. Harry Lister: What, in your view, have been the major changes to the Fund over the past 10 years? Steve Hartwell: Let me say first that I believe that the major strength of Washington Mutual has been consistency in its approach to investing. The Fund has adhered to its basic investment criteria. Over the years, to adapt to changing economic conditions, it has made only a few small adjustments to those criteria. For example, in recognition of the increasing foreign ownership of U.S. companies in industries such as oil and insurance, we can now purchase and own, within certain limits, foreign companies that acquire companies on the eligible list. The Fund also is allowed to make a limited investment in companies that may not presently pay dividends but which meet other exceptionally high standards; this action has permitted Washington Mutual to have access to growth areas where, in the past, it was unable to participate. Another change that I feel is important has been the Fund's ability to offer different classes of shares tailored to meet investors' specific requirements. (photo Harry Lister) Harry Lister (photo Jeff Steele) Jeff Steele Jeff Steele: Steve, what have you found to be the Fund's most important advantages from the standpoint of shareholders? Steve Hartwell: Two in particular. I would have to say adherence to our investment criteria and the fully invested policy. The criteria have enabled us to focus on quality and value, which has allowed the Fund to provide an attractive investment for 401(k) plans, IRAs and other forms of company-sponsored retirement programs as well as to offer a high-quality, conservative investment to individual investors. The fully invested policy prohibits building a substantial buying reserve even when market values are high. This has led to a more conservative investment portfolio in the latter stages of extended bull markets; but it also ensures that the Fund is fully invested in equities the day the market bottoms. The benefits of that are fairly obvious. Jeff Steele: What comments do you receive most often from shareholders? Steve Hartwell: Our share-holders have almost uniformly praised the Fund's long-term results and its record of increasing dividend income. An exception occurred in 1999 and early 2000, when some of our investors wrote questioning the cautious approach employed by our adviser, Capital Research and Management Company. After this past year's performance by the market _ and the collapse of many speculative, high-tech growth stocks _ those letters stopped coming. (photo Steve Hartwell and Jim Lemon) Steve Hartwell and Jim Lemon Jim Lemon: Income has always been an important objective of the Fund. However, the number of dividend-paying stocks in the S&P 500 Index has continued to decrease over the past 10 to 15 years. How do you think this will affect the Fund? Steve Hartwell: We have a value-oriented growth and income fund. Our adviser's portfolio counselors have been able to maintain income by finding securities that can provide both growth of principal and income. Management of the Fund's cash also has been an important source of income. Through a combination of these methods, I believe we ought to be able to maintain our above-average income return relative to the S&P 500. More importantly, even though it may be necessary to occasionally reduce the dividend rate, over the long term, the Fund will keep striving to provide rising annual dividend income to shareholders who reinvest their capital gains distributions. Harry Lister: How has the Fund been able to maintain its investment objective over its nearly 50 years of operation? Steve Hartwell: Washington Mutual is truly a unique mutual fund. It was created with a carefully designed concept of combining a fully invested position and rigorous investment standards. Capital Research has skillfully applied this structure to carry out the objective of growth of principal and income. It has developed a large, enormously successful global research organization. The Fund's officers and Directors regularly evaluate changing conditions and work closely with Capital to make only those revisions in our standards that are needed to adapt to changing economic and global trends. The manner in which our standards have been utilized and the substantial resources and talent available to the Fund have combined to enable us to maintain our investment objective through the years. (photo Jim Lemon) Jim Lemon (photo Harry Lister) Harry Lister Harry Lister: Steve, would you share with us some of your thoughts about investing in the future? Steve Hartwell: One of my favorite thoughts about investing is found in The Washington Mutual Story brochure. The brochure shows the results of a fixed annual investment made in the Fund each year over the past 20 years, a period of ever-changing market conditions. It points out that if an investor had been able to select the lowest Fund share price each year, the result would have been an average rate of return of 16.8% a year. However, if that same person had been unfortunate and invested at the highest per share price each year, the annual average return would have been 15.4%. That's not a huge difference. It supports my conviction that trying to pick the perfect time to invest isn't worth the worry. I don't know if we will see double-digit growth annually in the years ahead, but I do know that regular investing in quality common stocks _ like those in the Fund's portfolio _ will continue to make sense.* I'm reminded of a question that was put many years ago to Bernie Nees, the Fund's founder. Bernie was asked how to make money in the stock market and he replied, "You must be invested at the bottom." When asked how one can be guaranteed that they're at the bottom, he replied, "Always be invested." (photo Steve Hartwell) Steve Hartwell *Regular investing does not ensure a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining. Jeff Steele: In an ever-changing and volatile investment climate, do you believe our investment standards can continue to provide meaningful value to the Fund and its shareholders? Steve Hartwell: I think our long-term record constitutes clear evidence that those standards have provided good value. During Washington Mutual's nearly 50 years, very few modifications to our standards have been necessary. In times of market volatility and in bear markets, our emphasis on income and our adviser's value approach to investing have also helped us. Certainly the growth of the Fund and its utilization by retirement programs and other long-term investors bears testimony to the success of our approach. I firmly believe that the relevance and value of our standards will endure over time. Jim Lemon: Based on your many years of experience, Steve, what have you found to be the most important considerations that a serious investor should take into account when building an investment program? Steve Hartwell: As you all are well aware, there are a number of important considerations. In my mind, two stand out. First, one must establish a long-term investment goal. Second, one must develop a sound and workable plan to achieve the goal. Many individuals wait too long before setting a goal and implementing it. There is a great advantage to beginning an investment program as early as possible. History has shown us that, in the long run, quality common stocks have produced very good returns. For that very reason, a quality, value-oriented mutual fund like Washington Mutual has proven to be the right vehicle for many investors. (photo Jim Lemon and Jeff Steele) Jim Lemon and Jeff Steele (photo Fireplace) What Makes the American Funds Different? Washington Mutual Investors Fund is a member of the American Funds, the nation's third-largest mutual fund family. You won't find us advertised, yet thousands of financial advisers recommend American Funds for their clients' serious money _ money set aside for education, a home, retirement, and other important dreams. What the 29 funds have in common is a commitment to your best interests and the proven approach of our investment adviser, Capital Research and Management Company. In business since 1931, Capital Research's calling cards include: A long-term, value-oriented approach: Rather than follow short-term fads, we rely on our own intensive research to find well-managed companies with reasonably priced securities and solid, long-term potential. Despite our size, we offer relatively few funds compared with many large fund families, allowing us to maintain a careful focus on our objectives and enabling you to benefit from economies of scale. An unparalleled global research effort: We opened our first overseas office in 1962, well before most mutual funds began investing internationally. Today, the American Funds draw on one of the industry's most globally integrated research networks. Capital Research spends substantial resources getting to know companies and industries around the world. A multiple portfolio counselor system: More than 40 years ago, we developed a unique strategy for managing investments that blends teamwork with individual accountability. Every American Fund is divided among a number of portfolio counselors, each of whom manages his or her portion independently, within each fund's objectives; in most cases, research analysts manage a portion as well. Over time, this method has contributed to consistency of results and continuity of management. Experienced investment professionals: More than 75% of the portfolio counselors who serve American Funds were in the investment business before the sharp stock market decline in October 1987. Long tenure and experience through a variety of market conditions mean we aren't "practicing" with your money. A commitment to low operating expenses: You can't control market returns, but you can control what you invest in and how much you pay to own it. The American Funds provide exceptional value for shareholders, with operating expenses that are among the lowest in the mutual fund industry. Our portfolio turnover rates are low as well, keeping transaction costs and tax consequences contained. A Portfolio for Every Investor Most financial advisers suggest that investors balance their portfolios by investing across several types of funds. Which mix is right for you? That depends on a number of things _ including your risk tolerance, investment time horizon and financial goals. The 29 American Funds offer an array of investment objectives to help you and your financial adviser build a portfolio specifically tailored to your needs. Growth Funds Emphasis on long-term growth through stocks AMCAP Fund(R) EuroPacific Growth Fund(R) The Growth Fund of America(R) The New Economy Fund(R) New Perspective Fund(R) New World Fund(SM) SMALLCAP World Fund(R) Growth-and-Income Funds Emphasis on long-term growth and dividends through stocks American Mutual Fund(R) Capital World Growth and Income Fund(SM) Fundamental Investors(SM) The Investment Company of America(R) Washington Mutual Investors Fund(SM) Equity-Income Funds Emphasis on above-average income and growth through stocks and/or bonds Capital Income Builder(R) The Income Fund of America(R) Balanced Fund Emphasis on long-term growth and current income through stocks and bonds American Balanced Fund(R) Income Funds Emphasis on current income through bonds American High-Income Trust(SM) The Bond Fund of America(SM) Capital World Bond Fund(R) Intermediate Bond Fund of America(R) U.S. Government Securities Fund(SM) Tax-Exempt Income Funds Emphasis on tax-free current income through municipal bonds American High-Income Municipal Bond Fund(R) Limited Term Tax-Exempt Bond Fund of America(SM) The Tax-Exempt Bond Fund of America(R) State-specific tax-exempt funds The Tax-Exempt Fund of California(R) The Tax-Exempt Fund of Maryland(R) The Tax-Exempt Fund of Virginia(R) Money Market Funds Seek stable monthly income through money market instruments The Cash Management Trust of America(R) The Tax-Exempt Money Fund of America(SM) The U.S. Treasury Money Fund of America(SM) We also offer a full line of retirement plans and variable annuities. For more complete information about any of the funds, including charges and expenses, please obtain a prospectus from your financial adviser, download one from our Web site at, or phone the funds' transfer agent, American Funds Service Company, at 800/421-0180. Please read the prospectus carefully before you invest or send money. For more information, ask your financial adviser for a copy of our brochure A Portfolio for Every Investor. (photo of Chair and tea cup) Investment Portfolio April 30, 2001 Five Largest Industries Ten Largest Individual Holdings Percent of Percent of Net Assets Net Assets Banks 11.53% Bank of America 3.64% Oil & Gas 8.87 Texaco 2.97 Electric Utilities 6.88 AT&T 2.28 Pharmaceuticals 6.65 BANK ONE 2.02 Diversified Telecommunication Services 6.54 Household International 2.00 Chevron 1.95 Wells Fargo 1.85 Verizon Communications 1.80 Allstate 1.70 Exxon Mobil 1.69 Energy Equipment & Services .09% Oil & Gas 8.87% Market Percent of Equity Securities (common stocks) Shares Value (000) Net Assets Energy 8.96% Energy Equip0ment and Services .09% Halliburton Co. 1,000,000 $ 43,210 .09% Oil and Gas 8.87% Ashland Inc. 3,680,000 158,461 .32 BP Amoco PLC (American Depositary Receipts) 2,000,000 108,160 .22 Chevron Corp. 9,912,000 957,103 1.95 Conoco Inc., Class A 2,000,000 60,580 .37 Conoco Inc., Class B 3,913,692 119,055 Exxon Mobil Corp. 9,321,514 825,886 1.69 Kerr-McGee Corp. 1,450,000 103,892 .21 Phillips Petroleum Co. 5,352,400 319,003 .65 Texaco Inc. 20,150,000 1,456,442 2.97 Unocal Corp. 6,296,500 240,274 .49 4,348,856 8.87 4,392,066 8.96 Materials 5.49% Chemicals 1.35% Air Products and Chemicals, Inc. 2,690,000 115,643 .23 Crompton Corp. 5,800,001 58,754 .12 Dow Chemical Co. 8,050,000 269,272 .55 PPG Industries, Inc. 4,125,700 219,281 .45 662,950 1.35 Metals & Mining 1.15% Alcoa Inc. 10,100,000 418,140 .85 Phelps Dodge Corp. 3,220,000 144,063 .30 562,203 1.15 Paper & Forest Products 2.99% International Paper Co. 17,672,000 $ 692,389 1.41% Mead Corp. 2,568,900 72,443 .15 Westvaco Corp. 4,999,800 131,895 .27 Weyerhaeuser Co. 8,900,000 503,117 1.02 Willamette Industries, Inc. 1,400,000 68,110 .14 1,467,954 2.99 2,693,107 5.49 Capital Goods 6.85% Aerospace & Defense 3.64% Boeing Co. 2,400,000 148,320 .30 Honeywell International Inc. 8,200,000 400,816 .82 Lockheed Martin Corp. 12,089,000 425,049 .87 Raytheon Co., Class A 3,041,100 89,561 Raytheon Co., Class B 3,235,600 95,547 .38 United Technologies Corp. 8,010,000 625,421 1.27 1,784,714 3.64 Construction & Engineering .16% Fluor Corp. 1,500,000 79,065 .16 Electrical Equipment .32% Emerson Electric Co. 1,750,000 116,637 .24 Rockwell International Corp. 821,000 36,970 .08 153,607 .32 Industrial Conglomerates .27% General Electric Co. 2,000,000 97,060 .20 Minnesota Mining and Manufacturing Co. 300,000 35,703 .07 132,763 .27 Machinery 1.98% Caterpillar Inc. 1,700,000 85,340 .17 Deere & Co. 6,240,000 256,277 .52 Dover Corp. 4,000,000 156,280 .32 Eaton Corp. 1,712,900 126,086 .26 Illinois Tool Works Inc. 1,200,000 76,056 .15 Ingersoll-Rand Co. 2,790,500 131,153 .27 Pall Corp. 5,958,700 139,851 .29 971,043 1.98 Trading Companies & Distributors .48% Genuine Parts Co. 8,765,800 236,677 .48 3,357,869 6.85 Commercial Services & Supplies 1.33% Commercial Services & Supplies 1.33% Deluxe Corp. 2,200,000 $ 57,178 .12% Equifax Inc. 1,927,700 63,749 .13 Pitney Bowes Inc. 12,500,000 475,875 .97 ServiceMaster Co. 4,926,100 53,842 .11 650,644 1.33 Transportation 1.94% Airlines .28% Southwest Airlines Co. 7,500,000 136,575 .28 Road & Rail 1.66% Burlington Northern Santa Fe Corp. 4,925,300 144,804 .29 CSX Corp. 8,300,000 291,081 .59 Norfolk Southern Corp. 12,100,000 238,854 .49 Union Pacific Corp. 2,500,000 142,225 .29 816,964 1.66 953,539 1.94 Automobiles & Components 1.52% Auto Components 1.26% Dana Corp. 6,326,600 124,191 .25 Goodyear Tire & Rubber Co. 3,000,000 74,190 .15 Johnson Controls, Inc. 2,550,700 184,671 .38 TRW Inc. 6,050,000 232,683 .48 615,735 1.26 Automobiles .26% Ford Motor Co. 4,370,438 128,840 .26 744,575 1.52 Consumer Durables & Apparel 2.34% Household Durables .98% Newell Rubbermaid Inc. 12,100,000 326,216 .66 Stanley Works 4,350,000 157,688 .32 483,904 .98 Leisure Equipment & Products .38% Eastman Kodak Co. 4,275,000 185,962 .38 Textiles & Apparel .98% NIKE, Inc., Class B 8,071,925 $ 337,487 .69% VF Corp. 3,500,000 142,065 .29 479,552 .98 1,149,418 2.34 Hotels, Restaurants & Leisure 1.11% Hotels, Restaurants & Leisure 1.11% McDonald's Corp. 19,864,000 546,260 1.11 Media 1.62% Dow Jones & Co., Inc. 1,900,000 103,113 .21 Gannett Co., Inc. 1,739,700 112,298 .23 Interpublic Group of Companies, Inc. 10,275,000 348,836 .71 Knight-Ridder, Inc. 1,100,000 59,565 .12 Walt Disney Co. 5,600,000 169,400 .35 793,212 1.62 Retailing 4.76% Multiline Retail 1.55% Dillard's Inc., Class A 3,000,000 50,820 .10 Dollar General Corp. 5,250,000 86,625 .18 J.C. Penney Co., Inc. 11,215,800 227,232 .46 May Department Stores Co. 9,300,000 346,425 .71 Target Corp. 1,250,000 48,063 .10 759,165 1.55 Specialty Retail 3.21% Circuit City Stores,Inc.-Circuit City Group 10,000,000 150,500 .31 Gap, Inc. 7,500,000 207,825 .42 Limited Inc. 17,250,000 291,870 .59 Lowe's Companies, Inc. 11,600,000 730,800 1.49 TJX Companies, Inc. 6,250,000 195,813 .40 1,576,808 3.21 2,335,973 4.76 Food & Drug Retailing 1.63% Food & Drug Retailing 1.63% Albertson's, Inc. 17,398,940 581,125 1.18 Walgreen Co. 5,125,000 219,247 .45 800,372 1.63 Food & Beverage 4.20% Beverages .81% PepsiCo, Inc. 9,100,000 $ 398,671 .81% Food Products 3.39% Campbell Soup Co. 2,605,000 79,296 .16 ConAgra Foods, Inc. 14,700,000 305,907 .63 General Mills, Inc. 9,610,400 378,746 .77 H.J. Heinz Co. 4,600,000 180,090 .37 Kellogg Co. 3,100,000 79,050 .16 Sara Lee Corp. 32,097,000 639,051 1.30 1,662,140 3.39 2,060,811 4.20 Household & Personal Products 1.96% Household Products 1.31% Kimberly-Clark Corp. 10,856,600 644,882 1.31 Personal Products .65% Avon Products, Inc. 7,482,500 316,659 .65 961,541 1.96 Health Care Equipment & Services 1.61% Health Care Equipment & Supplies .37% Becton, Dickinson and Co. 5,700,000 184,395 .37 Aetna Inc.* 6,900,000 194,511 .40 Cardinal Health, Inc. 6,127,500 412,994 .84 607,505 1.24 791,900 1.61 Pharmaceuticals & Biotechnology 6.65% Pharmaceuticals 6.65% Abbott Laboratories 3,500,000 162,330 .33 American Home Products Corp. 2,000,000 115,500 .24 Bristol-Myers Squibb Co. 13,488,600 755,362 1.54 Eli Lilly and Co. 4,000,000 340,000 .69 Merck & Co., Inc. 2,096,200 159,248 .33 Pfizer Inc 16,575,450 717,717 1.46 Pharmacia Corp. 14,534,000 759,547 1.55 Schering-Plough Corp. 6,500,000 250,510 .51 3,260,214 6.65 Banks 11.53% Banks 11.53% Bank of America Corp. 31,832,200 $1,782,603 3.64% Bank of New York Co., Inc. 5,000,000 251,000 .51 BANK ONE CORP. 26,238,400 991,024 2.02 First Union Corp. 23,885,900 715,861 1.46 FleetBoston Financial Corp. 2,631,203 100,959 .21 KeyCorp 2,600,000 60,268 .12 National City Corp. 3,400,000 92,514 .19 PNC Financial Services Group, Inc. 2,000,000 130,140 .27 SunTrust Banks, Inc. 2,500,000 158,750 .32 Wachovia Corp. 2,850,000 173,280 .35 Washington Mutual, Inc. 5,775,000 288,346 .59 Wells Fargo & Co. 19,341,500 908,470 1.85 5,653,215 11.53 Diversified Financials 5.72% Diversified Financials 5.72% Citigroup Inc. 4,231,818 207,994 .42 Fannie Mae 4,650,000 373,209 .76 Freddie Mac 3,100,000 203,980 .42 Household International, Inc. 15,300,000 979,506 2.00 J.P. Morgan Chase & Co. (formed by the merger of Chase Manhattan Corp. and J.P. Morgan & Co. Inc.) 12,050,000 578,159 1.18 Moody's Corp. 2,800,000 87,920 .18 Providian Financial Corp. 4,400,000 234,520 .48 USA Education Inc. 1,970,000 140,067 .28 2,805,355 5.72 Insurance 4.99% Insurance 4.99% Allstate Corp. 20,037,500 836,566 1.70 American General Corp. 12,626,000 550,620 1.12 Aon Corp. 8,681,000 288,556 .59 Jefferson-Pilot Corp. 5,550,000 258,963 .53 Lincoln National Corp. 5,554,800 256,409 .52 Marsh & McLennan Companies, Inc. 1,200,000 115,728 .24 GIC Investment Corp. 500,000 32,495 .07 St. Paul Companies, Inc. 2,400,000 108,240 .22 2,447,577 4.99 Software & Services .90% Software .90% Computer Associates International, Inc. 1,000,000 32,190 .07 Microsoft Corp.* 5,050,000 342,138 .70 Oracle Corp.* 4,000,000 64,640 .13 438,968 .90 Technology Hardware & Equipment 4.51% Communications Equipment .73% Harris Corp. 1,550,000$ 44,562 .09% Motorola, Inc. 20,250,000 314,888 .64 359,450 .73 Computers & Peripherals 2.02% Dell Computer Corp.* 2,000,000 52,480 .11 Hewlett-Packard Co. 19,500,000 554,385 1.13 International Business Machines Corp. 2,500,000 287,850 .59 Sun Microsystems, Inc.* 5,500,000 94,160 .19 988,875 2.02 Office Electronics .44% IKON Office Solutions, Inc. 7,285,000 45,167 .09 Xerox Corp. 18,900,000 170,856 .35 216,023 .44 Semiconductor Equipment & Products 1.32% Intel Corp. 1,500,000 46,365 .09 Texas Instruments Inc. 14,300,000 553,410 1.13 Xilinx, Inc.* 1,000,000 47,470 .10 647,245 1.32 2,211,593 4.51 Telecommunication Services 6.54% Diversified Telecommunication Services 6.54% ALLTEL Corp. 4,130,000 225,539 .46 AT&T Corp. 50,300,000 1,120,684 2.28 Qwest Communications International Inc. 5,256,900 215,007 .44 SBC Communications Inc. 13,278,083 547,721 1.12 Sprint FON Group 10,000,000 213,800 .44 Verizon Communications 16,021,926 882,328 1.80 3,205,079 6.54 Utilities 7.89% Electric Utilities 6.88% Ameren Corp. 3,077,400 129,158 .26 American Electric Power Co., Inc. 10,345,580 510,451 1.04 Conectiv 2,500,000 55,750 .11 Consolidated Edison, Inc. 7,146,700 267,358 .55 Constellation Energy Group, Inc. 6,400,000 305,536 .62 Dominion Resources, Inc. 4,237,020 290,194 .59 DTE Energy Co. 3,550,000 148,816 .30 Duke Energy Corp. 3,200,000 149,632 .31 Edison International 3,135,000 $ 30,880 .06 FPL Group, Inc. 500,000 29,950 .06 GPU, Inc. 4,875,000 162,386 .33 PPL Corp. 2,000,000 110,000 .22 Progress Energy, Inc. (formerly CP&L Energy, Inc.) 8,375,418 370,528 .76 Public Service Enterprise Group Inc. 2,020,000 93,809 .19 Puget Sound Energy, Inc. 3,800,000 90,212 .18 Southern Co. 13,535,000 316,584 .65 TECO Energy, Inc. 1,000,000 31,990 .07 TXU Corp. 3,000,000 131,880 .27 Xcel Energy Inc. 4,795,700 149,626 .31 3,374,740 6.88 Multi-Utilities 1.01% Williams Companies, Inc. 11,686,400 492,815 1.01 3,867,555 7.89 Miscellaneous 1.38% Miscellaneous 1.38% Equity securities in initial period of acquisition 676,661 1.38 TOTAL EQUITY SECURITIES (cost: $36,387,953,000) 46,797,504 95.43 Principal Market Percent of Short-Term Securities Amount (000) Value (000) Net Assets U.S. Treasuries and Other Federal Agencies 4.42% U.S. Treasuries and Other Federal Agencies 4.42% Federal Farm Credit Bank 4.13% - 4.66% due 6/6 - 7/30/01 $ 82,500 81,885 .17 Federal Home Loan Bank 4.10% - 5.17% due 5/2 - 7/25/01 1,006,535 1,001,134 2.04 United States Treasury bills 3.62% - 4.97% due 5/3 - 7/26/01 1,091,711 1,085,838 2.21 TOTAL SHORT-TERM SECURITIES (cost: $2,168,247,000) 2,168,857 4.42 TOTAL INVESTMENT SECURITIES (cost: $38,556,200,000) 48,966,361 99.85 Excess of cash and receivables over payables 74,921 .15 NET ASSETS $49,041,282 100.00% *Non-income-producing security. See Notes to Financial Statements (photo window) Financial Statements Statement of Assets and Liabilities April 30, 2001 (dollars in thousands) Assets: Investment securities at market (cost: $38,556,200) $48,966,361 Cash 301 Receivables for _ Sales of investments $190,276 Sales of Fund's shares 63,783 Dividends 49,837 303,896 49,270,558 Liabilities: Payables for _ Purchases of investments 144,379 Repurchases of Fund's shares 47,180 Management services 11,254 Other expenses 26,463 229,276 Net Assets at April 30, 2001 $49,041,282 Total authorized capital stock _ 4,000,000,000 shares: Class A shares, $1.00 par value Net assets $48,700,632 Shares outstanding 1,634,385,000 Net asset value per share $29.80 Class B shares, $1.00 par value Net assets $288,713 Shares outstanding 9,718,076 Net asset value per share $29.71 Class C shares, $1.00 par value Net assets $36,034 Shares outstanding 1,213,305 Net asset value per share $29.70 Class F shares, $1.00 par value Net assets $15,903 Shares outstanding 533,817 Net asset value per share $29.79 See Notes to Financial Statements Statement of Operations for the year ended April 30, 2001 (dollars in thousands) Investment Income: Income: Dividends $1,091,948 Interest 118,352 $1,210,300 Expenses: Investment adviser fee 92,578 Business management fee 42,756 Distribution expenses _ Class A 111,799 Distribution expenses _ Class B 1,340 Distribution expenses _ Class C 22 Distribution expenses _ Class F 2 Transfer agent fee _ Class A 43,982 Transfer agent fee _ Class B 142 Administrative services fees _ Class C 13 Administrative services fees _ Class F 4 Reports to shareholders 650 Registration statement and prospectus 1,443 Postage, stationery and supplies 6,410 Directors' and Advisory Board fees 505 Auditing and legal fees 153 Custodian fee 373 Other expenses 234 302,406 Net investment income 907,894 Realized Gain and Unrealized Appreciation on Investments: Net realized gain 2,303,878 Net unrealized appreciation on investments 2,714,981 Net realized gain and unrealized appreciation on investments 5,018,859 Net Increase in Net Assets Resulting from Operations $5,926,753 See Notes to Financial Statements (photo of chair) Statement of Changes in Net Assets Year ended April 30, (dollars in thousands) 2001 2000 Operations: Net investment income $ 907,894 $ 1,014,613 Net realized gain on investments 2,303,878 5,370,939 Net unrealized appreciation (depreciation) on investments 2,714,981 (10,719,233) Net Increase (Decrease) in Net Assets Resulting from Operations 5,926,753 (4,333,681) Dividends and Distributions Paid to Shareholders: Dividends from net investment income: Class A (909,313) (952,846) Class B (1,882) _ Distributions from net realized gains on investments: Class A (3,750,270) (5,085,575) Class B (12,049) _ Total Dividends and Distributions (4,673,514) (6,038,421) Capital Share Transactions: Proceeds from shares sold 4,970,885 8,330,952 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments 4,406,084 5,726,003 Cost of shares repurchased (8,941,995) (13,350,009) Net Increase in Net Assets Resulting from Capital Share Transactions 434,974 706,946 Total Increase (Decrease) in Net Assets 1,688,213 (9,665,156) Net Assets: Beginning of year 47,353,069 57,018,225 End of year (including undistributed net investment income: $168,205 and $174,408, respectively) $49,041,282 $47,353,069 See Notes to Financial Statements (photo) (photo) Notes to Financial Statements 1. Organization and Significant Accounting Policies Organization _ Washington Mutual Investors Fund (the "Fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The Fund's investment objective is to produce income and to provide an opportunity for growth of principal consistent with sound common stock investing. The Fund offers four classes of shares as described below: Class A shares are sold with an initial sales charge of up to 5.75%; Class B shares are sold without an initial sales charge but are subject to a contingent deferred sales charge (CDSC) paid upon redemption. This charge declines from 5% to zero over a period of six years. Class B shares automatically convert to Class A shares after eight years; Class C shares are sold without an initial sales charge but are subject to a CDSC of 1% for redemptions within one year of purchase. Class C shares automatically convert to Class F shares after ten years; and Class F shares, which are sold exclusively through fee-based programs, are sold without an initial sales charge or CDSC. Holders of all classes of shares have equal pro rata rights to assets, dividends, liquidation and other rights. Each class has identical voting rights except for exclusive rights to vote on matters affecting only its class. Each class of shares may have different distribution, administrative services and transfer agent fees and expenses. Differences in class-specific expenses will result in the payment of different per share dividends by each class. Significant Accounting Policies _ The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by the Fund in the preparation of its financial statements: Security Valuation _ Equity securities, including depositary receipts, are valued at the last reported sale price on the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. In cases where equity securities are traded on more than one exchange, the securities are valued on the exchange or market determined by the investment adviser to be the broadest and most representative market, which may be either a securities exchange or the over-the-counter market. Short-term securities maturing within 60 days are valued at amortized cost, which approximates market value. Securities and assets for which representative market quotations are not readily available are valued at fair value as determined in good faith under policies approved by the Board of Directors. Security Transactions and Related Investment Income _ Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Dividends and Distributions to Shareholders _ Dividends and distributions paid to shareholders are recorded on the ex-dividend date. Class Allocations _ Income, expenses (other than class-specific expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net asset values. Distribution expenses, administrative services fees, certain transfer agent fees and other applicable class-specific expenses are accrued daily and charged to the respective share class. 2. Federal Income Taxation The Fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and intends to distribute all of its net taxable income and net capital gains for the fiscal year. As a regulated investment company, the Fund is not subject to income taxes if such distributions are made. Required distributions are determined on a tax basis and may differ from net investment income and net realized gains for financial reporting purposes. In addition, the fiscal year in which amounts are distributed may differ from the year in which the net investment income is earned and the net gains are realized by the Fund. As of April 30, 2001, the cost of investment securities for book and federal income tax reporting purposes was $38,556,200,000. Net unrealized appreciation on investments aggregated $10,410,161,000; $12,418,811,000 related to appreciated securities and $2,008,650,000 related to depreciated securities. For the year ended April 30, 2001, the Fund realized, on a tax basis, a net capital gain of $2,306,780,000 on securities transactions. 3. Fees and Transactions with Related Parties Business Management and Investment Advisory Fees _ A fee of $42,756,000 was incurred during the fiscal year ended April 30, 2001 for business management services pursuant to the business management agreement with Washington Management Corporation (WMC). The agreement provides for monthly fees, accrued daily, based on a series of rates beginning with 0.175% per annum of the first $3 billion of net assets decreasing to 0.04% of such assets in excess of $55 billion. For the year ended April 30, 2001, the management services fee was equivalent to an annualized rate of 0.09% of average net assets. Johnston, Lemon & Co. Incorporated (JLC), earned $735,000 on its retail sales of all share classes and distribution plans of the Fund and received no brokerage commissions resulting from purchases and sales of securities for the investment account of the Fund. A fee of $92,578,000 was incurred during the fiscal year ended April 30, 2001 for investment advisory services pursuant to an agreement with Capital Research and Management Company (CRMC). The agreement provides for monthly fees, accrued daily, based on a series of rates beginning with 0.225% per annum of the first $3 billion of net assets decreasing to 0.185% of such assets in excess of $55 billion. For the year ended April 30, 2001, the investment advisory services fee was equivalent to an annualized rate of 0.20% of average net assets. Distribution Expenses _ American Funds Distributors, Inc. (AFD) is the principal underwriter of the Fund's shares. The Fund has adopted Plans of Distribution under which it may finance activities primarily intended to sell Fund shares, provided the categories of expenses are approved in advance by the Fund's Board of Directors. The Plans provide for annual expenses, based on average daily net assets, of up to 0.25% for Class A shares, 1.00% for Class B and Class C shares and up to 0.50% for Class F shares. All share classes may use up to 0.25% of these expenses 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. The balance may be used for approved distribution expenses as follows: Class A Shares _ Approved categories of expense include reimbursements to AFD for commissions paid to dealers and wholesalers in respect of certain shares sold without a sales charge. Those reimbursements are permitted for amounts billed to the Fund within the prior 15 months but only to the extent that the overall 0.25% annual expense limit for Class A shares is not exceeded. For the year ended April 30, 2001, aggregate distribution expenses were $111,799,000, or 0.24% of average daily net assets attributable to Class A shares. Class B Shares _ In addition to service fees of 0.25%, approved categories of expense include fees of 0.75% per annum of average daily net assets attributable to Class B shares payable to AFD. AFD sells the rights to receive such payments (as well as any contingent deferred sales charges payable in respect of shares sold during the period) in order to finance the payment of dealer commissions. For the year ended April 30, 2001, aggregate distribution expenses were $1,340,000, or 1.00% of average daily net assets attributable to Class B shares. Class C Shares _ In addition to service fees of 0.25%, the Board of Directors has approved the payment of 0.75% per annum of average daily net assets attributable to Class C shares to AFD to compensate firms selling Class C shares of the Fund. For the year ended April 30, 2001, aggregate distribution expenses were $22,000, or 1.00% of average daily net assets attributable to Class C shares. Class F Shares _ The plan has an expense limit of 0.50%. However, the Board of Directors has presently approved expenses under the plan of 0.25% per annum of average daily net assets attributable to Class F shares. For the year ended April 30, 2001, aggregate distribution expenses were $2,000, or 0.25% of average daily net assets attributable to Class F shares. As of April 30, 2001, aggregate distribution expenses payable to AFD for all share classes were $17,929,000. AFD received $12,400,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the Fund's Class A shares for the year ended April 30, 2001. Such sales charges are not an expense of the Fund and, hence, are not reflected in the accompanying Statement of Operations. Transfer Agent Fee _ A fee of $44,124,000 was incurred during the year ended April 30, 2001, pursuant to an agreement with American Funds Service Company (AFS), the transfer agent for the Fund. As of April 30, 2001, aggregate transfer agent fees payable to AFS for Class A and Class B shares were $7,785,000. Administrative Services Fees _ The Fund has an administrative services agreement with CRMC for Class C and Class F shares. Pursuant to this agreement, CRMC provides transfer agency and other related shareholder services. CRMC may contract with third parties to perform these services. Under the agreement, the Fund pays CRMC a fee equal to 0.15% per annum of average daily net assets of Class C and Class F shares, plus amounts payable for certain transfer agency services according to a specified schedule. For the year ended April 30, 2001, total fees incurred under the agreement were $17,000. As of April 30, 2001, aggregate administrative services fees payable to CRMC for Class C and Class F shares were $15,000. Deferred Directors' and Advisory Board Fees _ Independent Directors and Advisory Board Members may elect to defer the receipt of part or all of the fees earned. Deferred compensation amounts, which remain in 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. As of April 30, 2001, the cumulative amount of these liabilities was $702,000. Directors' and Advisory Board fees during the year ended April 30, 2001, were $505,000, comprised of $457,000 in current fees (either paid in cash or deferred), and $48,000 representing the net increase in the value of deferred compensation. Affiliated Directors and Officers _ WMC and JLC are both wholly owned subsidiaries of The Johnston-Lemon Group, Incorporated (JLG). All the officers of the Fund and four of its directors are affiliated with JLG and receive no remuneration directly from the Fund in such capacities. 4. Investment Transactions and Other Disclosures The Fund made purchases and sales of investment securities, excluding short-term securities, of $11,365,833,000 and $14,619,364,000, respectively, during the year ended April 30, 2001. Pursuant to the custodian agreement, the Fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. For the year ended April 30, 2001, the custodian fee of $373,000 includes $32,000 that was paid by these credits rather than in cash. For the year ended April 30, 2001, the Fund reclassified $2,902,000 from undistributed net investment income to undistributed net realized gains; and reclassified $202,220,000 from undistributed net realized gains to additional paid-in capital to reflect permanent differences between book and tax reporting. As of April 30, 2001, net assets consisted of the following: Capital paid in on shares of capital stock $37,361,298,000 Undistributed net investment income 168,205,000 Accumulated net realized gain 1,101,618,000 Net unrealized appreciation 10,410,161,000 Net assets $49,041,282,000 [Enlarge/Download Table] Capital share transactions in the Fund were as follows: Year ended April 30, 2001 Year ended April 30, 2000 Amount Amount (000) Shares (000) Shares Class A Shares: Sold $ 4,676,526 159,865,422 $ 8,296,876 258,447,597 Reinvestment of dividends and distributions 4,392,650 155,285,340 5,726,003 195,503,827 Repurchased (8,932,465) (304,634,215) (13,349,916) (444,808,302) Net increase in Class A 136,711 10,516,547 672,963 9,143,122 Class B Shares:<F1> Sold 244,344 8,386,387 34,076 1,180,562 Reinvestment of dividends and distributions 13,434 476,476 _ _ Repurchased (9,335) (322,202) (93) (3,147) Net increase in Class B 248,443 8,540,661 33,983 1,177,415 Class C Shares:<F2> Sold 34,630 1,215,379 _ _ Reinvestment of dividends and distributions _ _ _ _ Repurchased (60) (2,074) _ _ Net increase in Class C 34,570 1,213,305 _ _ Class F Shares:<F2> Sold 15,385 538,541 _ _ Reinvestment of dividends and distributions _ _ _ _ Repurchased (135) (4,724) _ _ Net increase in Class F 15,250 533,817 _ _ Total net increase in Fund $ 434,974 20,804,330 $ 706,946 10,320,537 <FN> <F1>Class B shares were offered beginning March 15, 2000. <F2>Class C and Class F shares were offered beginning March 15, 2001. </FN> 5. Investments in Affiliates The Fund owns 5.28%, 5.15%, 5.15%, 5.10%, 5.08%, and 5.03% of the outstanding voting securities of Ashland, Crompton, IKON Office Solutions, Genuine Parts, Stanley Works, and Pitney Bowes, respectively, and therefore, each is considered an "affiliated company" of the Fund under the Investment Company Act of 1940. (photo ) [Enlarge/Download Table] Per-Share Data and Ratios Class A Year ended April 30, 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Year $29.14 $35.31 $33.92 $25.93 $22.77 Income from Investment Operations: Net investment income .57<F1> .61<F1> .60 .62 .62 Net gains (losses) on securities (both realized and unrealized) 3.17<F1> (3.09)<F1> 3.99 9.65 4.36 Total from investment operations 3.74 (2.48) 4.59 10.27 4.98 Less Distributions: Dividends (from net investment income) (.58) (.58) (.61) (.62) (.62) Distributions (from capital gains) (2.50) (3.11) (2.59) (1.66) (1.20) Total distributions (3.08) (3.69) (3.20) (2.28) (1.82) Net Asset Value, End of Year $29.80 $29.14 $35.31 $33.92 $25.93 Total Return<F3> 13.54% (6.96)% 14.61% 40.80% 22.43% Ratios/Supplemental Data: Net assets, end of year (in millions) $48,700 $47,319 $57,018 $45,764 $28,165 Ratio of expenses to average net assets .65% .63% .61% .62% .64% Ratio of net income to average net assets 1.95% 1.91% 1.84% 2.08% 2.56% [Enlarge/Download Table] Class B Class C Class F Year ended Mar 15 Mar 15 Mar 15 April 30, to Apr 30, to Apr 30, to Apr 30, 2001 2000/2/ 2001/2/ 2001/2/ Net Asset Value, Beginning of Period $29.11 $26.93 $28.32 $28.37 Income from Investment Operations: Net investment income1 .29 .02 (.02) .01 Net gains on securities (both realized and unrealized)1 3.22 2.16 1.40 1.41 Total from investment operations 3.51 2.18 1.38 1.42 Less Distributions: Dividends (from net investment income) (.41) _ _ _ Distributions (from capital gains) (2.50) _ _ _ Total distributions (2.91) _ _ _ Net Asset Value, End of Period $29.71 $29.11 $29.70 $29.79 Total Return/3/ 12.68% 8.10% 4.87% 5.01% Ratios/Supplemental Data: Net assets, end of period (in millions) $289 $34 $36 $16 Ratio of expenses to average net assets 1.42% .17% .23% .12% Ratio of net income to average net assets .99% .08% _ .04% [Enlarge/Download Table] Supplemental Data - All Classes Year ended April 30, 2001 2000 1999 1998 1997 Portfolio Turnover Rate 25.29% 26.24% 27.93% 17.61% 20.41% /1/ Based on average shares outstanding. /2/ Based on operations for the period shown and, accordingly, not representative of a full year. /3/Total returns exclude all sales charges, including contingent deferred sales charges. (photo of fireplace) Report of Independent Accountants To the Board of Directors and Shareholders of Washington Mutual Investors Fund, Inc. In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the per-share data and ratios present fairly, in all material respects, the financial position of Washington Mutual Investors Fund, Inc. (the "Fund") at April 30, 2001, the results of its operations, the changes in its net assets and the per-share data and ratios for the years indicated, in conformity with generally accepted accounting principles in the United States of America. These financial statements and per-share data and ratios (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2001, by correspondence with the custodian, provide a reasonable basis for our opinion expressed above. (signature Price Wtaerhouse) Los Angeles, California May 31, 2001 Tax Information for the Year Ended April 30, 2001 (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 distributions made during the fiscal year by the Fund were earned from the following sources: [Enlarge/Download Table] Dividends and distributions Dividends and distributions per Class A share per Class B share From net From net From net From net investment realized investment realized To shareholders of record Payment date income long-term gains income long-term gains June 16, 2000 June 19, 2000 $.145 _ $.1062 _ September 22, 2000 September 25, 2000 .145 _ .1060 _ December 22, 2000 December 26, 2000 .145 $2.495 .0866 $2.495 March 15, 2001 March 16, 2001 .145 _ .1110 _ Corporate shareholders may exclude up to 70% of qualifying dividends received during the year. For purposes of computing this exclusion, all of the dividends paid by the Fund from net investment income represent qualifying dividends. Certain states may exempt from income taxation that portion of the dividends paid from net investment income that was derived from direct U.S. Treasury obligations. For purposes of computing this exclusion, 5% of the dividends paid by the Fund from net investment income were derived from interest on direct U.S. Treasury obligations. Dividends and distributions received by retirement plans such as IRAs, Keogh-type plans, and 403(b) plans need not be reported as taxable income. However, many retirement plan trusts may need this information for their annual information reporting. The Fund also designates as a capital gain distribution a portion of earnings and profits paid to shareholders in redemption of their shares. Since the amounts above are reported for the Fund's fiscal year and not the calendar year, shareholders should refer to their Form 1099-DIV or other tax information which will be mailed in January 2002 to determine the calendar year amounts to be included on their 2001 tax returns. Shareholders should consult their tax advisers. Share Results: Class B, Class C, and Class F (unaudited) Average annual compound returns for periods ended March 31, 2001 (the most recent calendar quarter): Class B Shares 1 year Life of class* Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%, payable only if shares are sold. +2.58% +11.75% Not reflecting CDSC +7.45% +15.56% Class C and Class F Shares Results for these shares are not shown because of the brief time between their introduction on March 15, 2001, and the end of the period. *From March 15, 2000, when B shares first became available. Shareholder Services (graphic: American Funds Logo) American FundsLine(R) (graphic phone) Use our 24-hour automated phone system for fund information and transactions. FundsLine Online(R) (graphic computer) Visit our Web site when you want to access your account, download a prospectus, or find fund information. Reduced sales charge (graphic coins) Larger purchases may qualify for a reduced sales charge. To help reach a breakpoint, you may _ - Add your present purchase to the value of all eligible household accounts and/or - Add your present purchase to purchases you intend to make over 13 months Assets in money market funds generally do not apply when determining sales charges. Retirement plans (graphic signpost) A wide range of fund choices for individual and company-sponsored retirement plans. American FundsLink(SM) (graphic building) Link your fund account to your bank account for direct transfers between the two and to purchase shares using American FundsLine or FundsLine OnLine. Automatic transactions (graphic calendar) Use this service when you want to purchase, sell and exchange shares on a regular basis. Flexible dividend options (graphic magician) Use your dividend and capital gain distributions to meet your changing needs. You may _ - Invest dividends and capital gain distributions back into the fund - Diversify by investing dividends and capital gain distributions into another American Fund - Take dividends in cash - Have dividends paid directly to someone else Because certain transactions have restrictions or tax consequences, please consult your financial adviser before requesting changes. Would you like more information? Your financial adviser will be happy to explain these services in greater detail, or you maycontact American Funds Service Company. To contact American Funds Service Company: Shareholder Services Representative _ 8 a.m. to 8 p.m. Eastern time, Monday - Friday _ 800/421-0180 American FundsLine _ 24-hour automated telephone system _ 800/325-3590 FundsLine OnLine _ Web site _ By mail _ Write to the service center nearest you. (If you live outside the United States, please write to the Western service center.) Western (graphic Westren U.S.) American Funds Service Company P.O. Box 2205 Brea, CA 92822-2205 West Central (graphic West Central U.S.) American Funds Service Company P.O. Box 659522 San Antonio, TX 78265-9522 East Central (graphic East Central U.S.) American Funds Service Company P.O. Box 6007 Indianapolis, IN 46206-6007 Eastern (graphic Eastern U.S.) American Funds Service Company P.O. Box 2280 Norfolk, VA 23501-2280 Please obtain the applicable prospectuses from your financial adviser or our Web site and read them carefully before investing or sending money. American Funds reserves the right to terminate or modify these services. Directors Stephen Hartwell Chairman of the Board Chairman, Washington Management Corporation James H. Lemon, Jr. Vice Chairman of the Board Chairman and Chief Executive Officer, The Johnston-Lemon Group, Incorporated Harry J. Lister President of the Fund Director and President, Washington Management Corporation Cyrus A. Ansary President, Investment Services International Co. LLC Fred J. Brinkman Retired Senior Partner, Arthur Andersen, LLP Daniel J. Callahan III Vice Chairman and Treasurer, The Morris and Gwendolyn Cafritz Foundation James C. Miller III Counselor, Citizens for a Sound Economy T. Eugene Smith President, T. Eugene Smith Inc. Leonard P. Steuart, II Vice President, Steuart Investment Company Margita E. White President, Association for Maximum Service Television Inc. Advisory Board Charles A. Bowsher Retired Comptroller General of the United States Mary K. Bush President, Bush International Inc. Louise M. Cromwell Senior Counsel, Shaw Pittman Katherine D. Ortega Former Treasurer of the United States C. Richard Pogue Retired Executive Vice President, Investment Company Institute Linda D. Rabbitt President, Rand Construction Corporation William J. Shaw President and Chief Operating Officer, Marriott International J. Knox Singleton President and Chief Executive Officer, INOVA Health System William B. Snyder General Partner, Merastar Partners Limited Partnership Robert F. Tardio Senior Managing Director, PA Consulting Group Directors Emeritus Bernard J. Nees Chairman Emeritus of the Fund Charles T. Akre Of Counsel, Miller & Chevalier, Chartered Dr. Nathan A. Baily Management, Marketing and Education Consultant John A. Beck Of Counsel, Reed Smith Shaw & McClay Stephen G. Yeonas Chairman and Chief Executive Officer, Stephen G. Yeonas Company Other Officers Jeffrey L. Steele Executive Vice President of the Fund Director and Executive Vice President, Washington Management Corporation Howard L. Kitzmiller Senior Vice President, Secretary and Assistant Treasurer of the Fund Director, Senior Vice President, Secretary and Assistant Treasurer, Washington Management Corporation Ralph S. Richard Vice President and Treasurer of the Fund Director, Vice President and Treasurer, Washington Management Corporation Lois A. Erhard Vice President of the Fund Vice President, Washington Management Corporation Michael W. Stockton Assistant Vice President, Assistant Secretary and Assistant Treasurer of the Fund Vice President, Assistant Secretary and Assistant Treasurer, Washington Management Corporation J. Lanier Frank Assistant Vice President of the Fund Assistant Vice President, Washington Management Corporation Ashley L. Shaw Assistant Secretary of the Fund Assistant Secretary, Washington Management Corporation Offices of the Fund and of the Business Manager Washington Management Corporation 1101 Vermont Avenue, NW Washington, DC 20005-3585 202/842-5665 Investment Adviser Capital Research and Management Company 333 South Hope Street Los Angeles, CA 90071-1443 135 South State College Boulevard Brea, CA 92821-5823 Custodian of Assets The Chase Manhattan Bank One Chase Manhattan Plaza New York, NY 10081-0001 Counsel Thompson, O'Donnell, Markham, Norton & Hannon 805 Fifteenth Street, NW Washington, DC 20005-2216 Transfer Agent American Funds Service Company (Please write to the address nearest you) P.O. Box 2205 Brea, CA 92822-2205 P.O. Box 659522 San Antonio, TX 78265-9522 P.O. Box 6007 Indianapolis, IN 46206-6007 PO. Box 2280 Norfolk, VA 23501-2280 Independent Accountants PricewaterhouseCoopers LLP 350 South Grand Avenue Los Angeles, CA 90071-3405 Principal Underwriter American Funds Distributors, Inc. 333 South Hope Street Los Angeles, CA 90071-1462 This report is for the information of shareholders of Washington Mutual Investors Fund, Inc., but it may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the Fund. If used as sales material after June 30, 2001, this report must be accompanied by an American Funds Group Statistical Update for the most recently completed calendar quarter. For information about your account or any of the Fund's services, or for a prospectus for any of the American Funds, please contact your financial adviser. You may also call American Funds Service Company, toll-free, at 800/421-0180 or visit us at on the World Wide Web. Please read the prospectus carefully before you invest or send money. (group photo and model of Mt. Vernon) From left to right: Harry J. Lister; James H. Lemon, SR.; Stephen Hartwell; and Jeffrey L. Steele. Mount Vernon in Miniature Photographs throughout this report illustrate the remarkable attention to detail given the fully functional rendition of George Washington's home, Mount Vernon, pictured above. Five years in the making by miniaturists and artisans, the copy mirrors the Mansion in every way, simply in one-twelfth scale. George Washington spent over 40 years at Mount Vernon, enlarging it with additions and enhancing it with decoration to make the estate in which he and his wife continually entertained arguably the most famous house in America at its time. The model truly captures the distinctive personality of the home and, by extension, George Washington himself. The replica is currently touring select presidential libraries throughout the United States; more information on both the exhibit and Mount Vernon itself can be found at We would like to thank the Mount Vernon Ladies' Association for allowing us to use the painting and model of Mount Vernon throughout this report. (recycle symbol) Printed on recycled paper WMIF-011-060 (back outside cover) (full page photo of Mt.Vernon) (American Funds Logo) (logo Washington Mutual Investors funds) Washington Mutual Investors Fund, Inc. 1101 Vermont Avenue, NW Washington, DC 20005 202/842-5665

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