SEC File Nos. 2-10607
811-572
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 102
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 22
AMERICAN MUTUAL FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
JOHN B. POWER, ESQ.
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On December 19, 1996, it filed its 24f-2 notice for fiscal 1996.
Approximate date of proposed public offering:
It is proposed that this filing become effective on January 1, 1997, pursuant
to paragraph (a) of rule 485.
AMERICAN MUTUAL FUND, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER OF
PART "A"OF FORM N-1A CAPTIONS IN PROSPECTUS (PART "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Fund Organization and Management; Investment Policies and
Risks; Securities and Investment Techniques; Multiple
Portfolio Counselor System
5. Management of the Fund Financial Highlights; Fund Organization and Management;
Securities and Investment Techniques; Multiple Portfolio
Counselor System
6. Capital Stock and Other Securities Investment Policies and Risks; Securities and Investment
Techniques;Fund Organization and Management; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Fund Organization and Management;
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
ITEM NUMBER OF CAPTIONS IN STATEMENT OF
PART "B" OF FORM N-1A ADDITIONAL INFORMATION (PART "B")
<S> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History Fund Organization and Management (Part "A")
13. Investment Objectives and Policies Investment Policies; Description of Certain Securities;
Investment Restrictions
14. Management of the Registrant Fund Directors and Officers; Management
15. Control Persons and Principal Holders Fund Directors and Officers
of Securities
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Shareholder Account
Securities Being Offered Services and Privileges; Redeeming Shares
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
ITEM IN PART "C"
24. Financial Statements and Exhibits
25. Persons Controlled by or under
Common Control with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of
Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
Signature Page
<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
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American Mutual
Fund, Inc.(R)
Prospectus
JANUARY 1, 1997
<PAGE>
AMERICAN MUTUAL FUND, INC.
333 South Hope Street
Los Angeles, CA 90071
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TABLE OF CONTENTS
Expenses 3
Financial Highlights 4
Investment Policies and Risks 5
Securities and Investment Techniques 6
Multiple Portfolio Counselor System 6
Investment Results 8
Dividends,.Distributions.and.Taxes 9
Fund.Organization.and.Management 10
Shareholder Services 13
- --------------------------------------------------------------------------------
The fund strives for the balanced accomplishment of three objectives -- current
income, capital growth and conservation of principal. It seeks to fulfill these
objectives through the constant supervision, careful selection and
diversification of a portfolio which ordinarily consists principally of equity-
type securities of companies that are likely to participate in the growth of
the American economy.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE
FUND IS NOT A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY
OR PERSON INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE
CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
03-010-0197
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Annual fund operating expenses are paid out of the fund's
earned income.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets for the fiscal period ended October 31,
1996)
- --------------------------------------------------------------------------------
Management fees 0.29%
12b-1 expenses 0.20%/1/
Other expenses 0.10%
Total fund operating expenses 0.59%
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
One year $ 63
Three years $ 75
Five years $ 89
Ten years $127
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Deloitte and Touche LLP,
independent auditors. This table should be read together with the financial
statements which are included in the statement of additional information and
annual report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
-------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $24.17 $21.60 $23.21 $21.29 $20.98 $17.91 $20.53 $18.66 $18.16 $19.12
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .84 .87 .88 .85 .87 .89 .96 1.00 .85 .78
Net realized and
unrealized gain (loss)
on investments 3.52 3.41 (.54) 2.89 .98 3.39 (1.79) 2.53 1.25 .24
Total income from
investment operations 4.36 4.28 .34 3.74 1.85 4.28 (.83) 3.53 2.10 1.02
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.84) (.84) (.84) (.85) (.88) (1.01) (1.00) (.99) (.89) (.76)
Distributions from net
realized gains (1.15) (.87) (1.11) (.97) (.66) (.20) (.79) (.67) (.71) (1.22)
Total distributions (1.99) (1.71) (1.95) (1.82) (1.54) (1.21) (1.79) (1.66) (1.60) (1.98)
Net asset value,
end of year $26.54 $24.17 $21.60 $23.21 $21.29 $20.98 $17.91 $20.53 $18.66 $18.16
Total return /1/ 18.89% 21.25% 1.75% 18.63% 9.43% 24.62% (4.65)% 20.22% 12.52% 5.24%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $7,759 $6,552 $5,397 $5,283 $4,565 $4,134 $3,196 $3,169 $2,610 $2,388
Ratios of expenses to
average net assets .59% .59% .60% .59% .60% .63% .60% .59% .54% .47%
Ratio of net income to
average net assets 3.36% 3.92% 4.07% 3.83% 4.15% 4.47% 5.00% 5.20% 4.77% 4.26%
Average commissions paid
per share /2/ 5.88c 6.27c 6.54c 7.31c 7.56c 7.68c 7.75c 7.95c 7.43c 6.81c
Portfolio
turnover rate 24.21% 23.31% 18.46% 22.48% 37.35% 23.77% 12.17% 22.80% 16.92% 13.42%
</TABLE>
/1/ Excludes maximum sales charge of 5.75%.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
reflected in the fund's statement of operations. Shares traded on a
principal basis, such as most over-the-counter and fixed-income transactions,
are excluded.
4
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RISKS
The fund strives for the balanced accomplishment of three objectives -- current
income, capital growth and conservation of principal. The fund seeks to fulfill
each of its objectives as follows:
CURRENT INCOME--primarily by the selection of investments whose dividends
appear well protected.
CAPITAL GROWTH--primarily by the purchase of equity-type securities of
companies which Capital Research and Management Company, the fund's investment
adviser, expects are likely to participate in the growth of the American
economy.
CONSERVATION OF PRINCIPAL--by careful selection, broad diversification and
constant supervision of investments which should serve to reduce risk and
thereby preserve principal.
The fund's portfolio is managed as a whole in that the fund does not seek to
fulfill all of its objectives in each of its investments. The fund will
ordinarily invest principally in equity-type securities such as common stocks
and nonconvertible preferred stocks of companies that are likely to participate
in the growth of the American economy. The fund's investments include the
stocks of companies domiciled in the U.S. and/or that are part of the Standard
& Poor's 500 Stock Composite Index which is considered a broad measure of the
U.S. market. However, assets may also be held in securities convertible into
common stocks, straight debt securities (rated in the top three quality
categories by Standard & Poor's Corporation or Moody's Investors Service, Inc.
or unrated but determined to be of equivalent quality by Capital Research and
Management Company), cash or cash equivalents, and U.S. Government securities.
The fund's investments are limited to securities included on its eligible list,
which consists of securities deemed suitable investment media in light of the
fund's investment objectives and policies. Securities are added to, or deleted
from, the eligible list by the board of directors, reviewing and acting upon
the recommendations of Capital Research and Management Company. MORE
INFORMATION ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN ITS STATEMENT OF
ADDITIONAL INFORMATION.
The fund's investment restrictions (which are described in the statement of
additional information as fundamental) and objectives may not be changed
without shareholder approval. All other investment practices may be changed by
the fund's board of directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
5
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks, preferred stocks, and securities with
equity conversion or purchase rights. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on overall
market and economic conditions. The fund's results will be related to the
overall market for these securities.
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest, and must repay the amount borrowed at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but
are purchased at a discount from their face values. The prices of debt
securities fluctuate depending on such factors as interest rates, credit
quality and maturity. In general their prices decline when interest rates rise
and vice versa.
- --------------------------------------------------------------------------------
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments which are managed by individual
counselors. Counselors decide how their respective segments will be invested
(within the limits provided by the fund's objectives and policies and by
Capital Research and Management Company's investment committee). In addition,
Capital Research and Management Company's research professionals make
investment decisions with respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund are listed on the
following page.
6
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE AS
INVESTMENT PROFESSIONAL
(APPROXIMATE)
--------------------------
YEARS OF EXPERIENCE
AS PORTFOLIO COUNSELOR WITH CAPITAL
(AND RESEARCH PROFESSIONAL, RESEARCH AND
PORTFOLIO COUNSELORS IF APPLICABLE) FOR MANAGEMENT
FOR AMERICAN MUTUAL AMERICAN MUTUAL FUND COMPANY OR
FUND PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES TOTAL YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JON B. Chairman of the 37 years 45 years 45 years
LOVELACE, Board of the
JR. fund. Vice
Chairman of the
Board and
Chairman of the
Executive
Committee,
Capital
Research and
Management
Company
- ----------------------------------------------------------------------------------------------
JAMES K. President and 27 years 34 years 34 years
DUNTON Director of the
fund. Senior
Vice President
and Director,
Capital
Research and
Management
Company
- ----------------------------------------------------------------------------------------------
ROBERT G. Executive Vice 9 years (plus 21 years 25 years
O'DONNELL President of 11 years as
the fund. research
Senior Vice professional
President and prior to
Director, becoming a
Capital portfolio
Research and counselor for
Management the fund)
Company
- ----------------------------------------------------------------------------------------------
TIMOTHY Vice President 5 years (plus 6 14 years 14 years
D. of the fund. years as
ARMOUR Director, research
Capital professional
Research and prior to
Management becoming a
Company. Senior portfolio
Vice President, counselor for
Capital the fund)
Research
Company*
- ----------------------------------------------------------------------------------------------
R. Portfolio 11 years (plus 32 years 32 years
MICHAEL counselor for 7 years as
SHANAHAN the fund. research
Chairman of the professional
Board and prior to
Principal becoming a
Executive portfolio
Officer, counselor for
Capital the fund)
Research and
Management
Company
- ----------------------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
7
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield,
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
- - TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gain
distributions.
- - YIELD refers to the income the fund expects to earn based on its current
portfolio over a given period of time, expressed as an annual percentage
rate. Because yield is calculated using a formula mandated by the Securities
and Exchange Commission, this quoted yield may be different than the income
actually paid to shareholders.
- - DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED SEPTEMBER 30, 1996)
<TABLE>
<CAPTION>
THE FUND AT
THE FUND AT MAXIMUM
NET ASSET VALUE SALES CHARGE/1/ S&P 500/2/
- ----------------------------------------------------------
<S> <C> <C> <C>
AVERAGE ANNUAL
TOTAL RETURNS:
..........................................................
One year 16.13% 9.44% 20.32%
..........................................................
Five years 13.55% 12.21% 15.21%
..........................................................
Ten years 12.58% 11.91% 14.96%
..........................................................
Lifetime/3/ 13.06% 12.91% 12.62%
- ----------------------------------------------------------
</TABLE>
Yield/1/: 3.15%
Distribution Rate/1/: 3.08%
/1/ These fund results were calculated according to a standard formula that is
required for all stock and bond funds. The maximum sales charge has been
deducted.
/2/ The Standard & Poor's 500 Index represents stocks. This index is unmanaged
and does not reflect sales charges, commissions or expenses.
/3/ The fund began investment operations on February 21, 1950.
8
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
1986 18.55
1987 4.42
1988 12.85
1989 25.25
1990 -1.62
1991 21.72
1992 7.83
1993 14.28
1994 0.33
1995 31.38
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends are usually paid in April, July, October and December. Capital gains,
if any, are usually distributed in December. When a dividend or capital gain is
distributed, the net asset value per share is reduced by the amount of the
payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement account may differ from redemptions
from an ordinary shareholder account.
9
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1949 and reorganized as a Maryland corporation in
1984. All fund operations are supervised by the fund's board of directors who
meet periodically and perform duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in the statement of additional information.
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund does not hold annual
meetings of shareholders. However, significant corporate matters which require
shareholder approval, such as certain elections of board members or a change in
a fundamental investment policy, will be presented to shareholders at a meeting
called for such purpose. Shareholders have one vote per share owned. At the
request of the holders of at least 10% of the shares, the fund will hold a
meeting at which any member of the board could be removed by a majority vote.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
and business affairs of the fund. The management fee paid by the fund to
Capital Research and Management Company is composed of a management fee, which
may not exceed
10
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
0.384% of the fund's average net assets annually and declines at certain asset
levels. The total management fee paid by the fund for the previous fiscal year
is listed above under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
plan were incurred within the preceding 12 months and accrued while the plan is
in effect. The 12b-1 fee paid by the fund for the last fiscal year is listed
above under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers are in a position to
offer comparable prices and executions, preference may be given to brokers who
have sold shares of the fund or have provided investment research, statistical,
and other related services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
11
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREA
Call toll-free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[MAP]
WESTERN SERVICE CENTER
American Funds
Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds
Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds
Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds
Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
12
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS. IF
YOU ARE INVESTING THROUGH A RETIREMENT PLAN, YOU SHOULD CONTACT YOUR PLAN
ADMINISTRATOR/TRUSTEE ABOUT WHAT SERVICES ARE AVAILABLE AND WITH QUESTIONS
ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
- - Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
- - Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the
fund (with no sales charge). This will be done automatically unless you
elect to have the dividends and/or capital gain distributions paid to you
in cash.
- - Cross-Reinvestment
You may invest your dividend and capital gain distributions into any other
fund in The American Funds Group.
13
<PAGE>
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AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
- - Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to
automatically exchange shares among any of the funds in The American Funds
Group. Exchange requests may be made in writing, by telephone including
American FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
- - Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
14
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS
<TABLE>
- ----------------------------------------------------------------
<S> <C>
To establish an account $ 250
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
-----------------
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans with $100
million or more in assets may be made with no sales charge and are not subject
to a contingent deferred sales charge. A dealer concession of up to 1% may be
paid by American Funds Distributors on these investments. Investments by
certain individuals and entities including employees and other associated
persons of dealers authorized to sell shares of the fund and Capital
15
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
Research and Management Company and its affiliated companies are not subject to
a sales charge.
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
- - Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
- - Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
16
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
- - Right of Accumulation
You may take into account the current value of your existing holdings in
The American Funds Group to determine your sales charge. Direct purchases
of the money market funds are excluded.
- - Statement of Intention
You may enter into a non-binding commitment to invest a certain amount in
non-money market fund shares over a 13-month period. A portion of your
account may be held in escrow to cover additional sales charges which may
be due if your total investments over the statement period are insufficient
to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received and accepted by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below) or
by fax. Sales by telephone or fax are limited to $10,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 15 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
17
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made payable to the registered shareholder(s) and is
mailed to the address of record on the account, provided the address has been
used with the account for at least 15 days. Additional documentation may be
required for sale of shares held in corporate, partnership or fiduciary
accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $10,000 per fund, per account each
day), or exchange shares around the clock with American FundsLine(R). To use
this service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
18
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
19
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
20
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
21
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
22
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN MUTUAL FUND, INC. / PROSPECTUS
- --------------------------------------------------------------------------------
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
American Funds American Funds American
Service Company Distributors FundsLine(R)
800/421-0180 ext. 1 800/421-9900 ext. 11 800/325-3590
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
--------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects of
performance information, the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the auditor's
report.
CODE OF ETHICS A current SAI has been filed
with the Securities and
Includes a description of the Exchange Commission and is
fund's personal investing incorporated by reference (is
policy. legally part of the
prospectus).
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the
Service Company Fund 333 South Hope Street
800/421-0180 ext. 1 Los Angeles, CA 90071
This prospectus has been printed on recycled paper.
[RECYCLE LOGO]
24
<PAGE>
AMERICAN MUTUAL FUND, INC.
PART B
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
This document is not a prospectus but should be read in conjunction
with the current Prospectus of American Mutual Fund, Inc. (the fund or AMF)
dated January 1, 1997. The Prospectus may be obtained from your investment
dealer or financial planner or by writing to the fund at the following
address:
AMERICAN MUTUAL FUND, INC.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible
retirement plans should note that not all of the services or features described
below may be available to them, and they should contact their employer for
details.
TABLE OF CONTENTS
ITEM PAGE NO.
INVESTMENT POLICIES 1
DESCRIPTION OF CERTAIN SECURITIES 2
INVESTMENT RESTRICTIONS 3
FUND DIRECTORS AND OFFICERS 6
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 14
REDEEMING SHARES 21
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 22
EXECUTION OF PORTFOLIO TRANSACTIONS 24
GENERAL INFORMATION 25
INVESTMENT RESULTS 26
FINANCIAL STATEMENTS ATTACHED
INVESTMENT POLICIES
The fund will invest primarily in equity-type securities of companies that
are likely to participate in the growth of the American economy; however, the
fund is not restricted with regard to the percentage of its portfolio which may
be placed in any particular type of investment. The economic outlook of
Capital Research and Management Company (the Investment Adviser) and the
fundamental and relative attractiveness of individual securities will determine
the fund's relative investment in cash and cash equivalents, bonds, preferred
stocks, common stocks and obligations of the U.S. Government, or its agencies
or instrumentalities.
FIXED-INCOME SECURITIES -- The fund may invest in intermediate- and long-term
debt securities. If market interest rates increase, such fixed-income
securities generally decline in value and vice versa. If the currency in which
the security is denominated declines against the U.S. dollar, the dollar value
of the security will decline and vice versa.
DESCRIPTION OF CERTAIN SECURITIES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Policies and Risks."
BOND RATINGS - The fund may invest in debt securities which are rated in the
top three quality categories by Standard & Poor's Corporation or Moody's
Investors Service, Inc. or determined to be of equivalent quality by the
Investment Adviser. The top three rating categories for Standard & Poor's and
Moody's are described below:
STANDARD & POOR'S CORPORATION:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions, than debt in higher categories."
MOODY'S INVESTORS SERVICE, INC.:
"Bonds rated Aaa are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."
"Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities, or fluctuation of protective elements may be
of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities."
"Bonds rated A are judged to be of upper medium grade obligations. These bonds
possess many favorable investment attributes. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury. In these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government,
and thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to, Federal Land Banks, Farmers Home Administration, Central
Bank Cooperatives, and Federal Intermediate Credit Banks.
CASH AND CASH EQUIVALENTS - The fund may maintain assets in cash or cash
equivalents. These securities include: (1) commercial paper (short-term notes
up to 9 months in maturity issued by corporations or governmental bodies); (2)
commercial bank obligations such as certificates of deposit (interest-bearing
time deposits), bankers' acceptances (time drafts on a commercial bank where
the bank accepts an irrevocable obligation to pay at maturity), and documented
discount notes (corporate promissory discount notes accompanied by a commercial
bank guarantee to pay at maturity); (3) savings association obligations
(certificates of deposit issued by mutual savings banks or savings and loan
associations); (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less; and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
INVESTMENT RESTRICTIONS
The fund has adopted certain investment restrictions, which cannot be
changed without approval by a majority of its outstanding shares. Such
majority is defined within the Investment Company Act of 1940 (the 1940 Act) as
the vote of the lesser of (i) 67% or more of the outstanding voting securities
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present in person or by proxy, or (ii) more than 50% of the
outstanding voting securities.
These restrictions provide that the fund shall make no investment:
1. Which involves promotion or business management by the fund;
2. In any security about which information is not available with respect to
the history, management, assets, earnings, and income of the issuer;
3. If the investment would cause more than 5% of the value of the assets of
the fund, as they exist at the time of investment, to be invested in the
securities of any one issuer;
4. If the investment would cause more than 20% of the value of the assets of
the fund to be invested in securities of companies in any one industry;
5. If the investment would cause the fund to own more than 10% of any class of
securities of any one issuer or more than 10% of the outstanding voting
securities of any one issuer;
6. In any security which has not been placed on the fund's "Eligible List"
(See Prospectus).
The foregoing restrictions do not apply to the purchase of securities
issued or fully guaranteed by the U.S. government. Such restrictions also do
not apply to the acquisition of securities or property in satisfaction of
claims or as distributions on securities owned, or to the exercise of rights
distributed on securities owned; but if any securities or property so acquired
would not be permitted as an investment under the foregoing restrictions, they
must be converted into a permissible investment as soon as reasonably
practicable.
The fund is not permitted to:
7. Invest in real estate;
8. Make any investment which would subject it to unlimited liability;
9. Buy securities on margin;
10. Sell securities short; nor
11. Borrow money.
The fund does not concentrate investments in one industry or group of
industries, invest in commodities, or make loans except in the very occasional
instance where interest returns on a loan are particularly favorable, the loan
is secured by at least 150% of marketable securities, the total loans
outstanding would not exceed 20% of the current market value of the assets of
the fund, and total loans to any one borrower would not exceed 5% of the value
of such assets. No loans have ever been made to any person under the foregoing
authority. Loans may not be made to persons affiliated with the fund. The
fund does not invest to control other companies. While the fundamental
policies of the fund permit it to act as underwriter of securities issued by
others, it is not the practice of the fund to do so. The fundamental policies
set forth in this paragraph also may not be changed without shareholder
approval.
Further investment policies of the fund, which may be changed by action of
the Board of Directors, without shareholder approval, include the following:
the fund will not purchase or retain the securities of any issuer if those
officers and directors of the fund or the Investment Adviser who own
beneficially more than 1/2 of 1% of such issuer together own more than 5% of
the securities of such issuer; the fund will not invest in the securities of
other investment companies (except in connection with the administration of a
deferred compensation plan adopted by Directors and to the extent such
investments are allowed by an exemptive order granted by the Securities and
Exchange Commission); the fund will not invest in securities of companies
which, with their predecessors, have a record of less than three years'
continuous operations; the fund will not ordinarily purchase securities which
are non-income-producing at the time of purchase; the fund will not invest in
puts, calls, straddles, spreads or any combination thereof; the fund will not
purchase partnership interests in oil, gas, or mineral exploration, drilling or
mining ventures; nor will the fund invest more than 5% of the value of the
fund's net assets in warrants, valued at the lower of cost or market, with no
more than 2% being unlisted on the New York or American Stock Exchanges
(warrants acquired by the fund in units or attached to securities may be deemed
to be without value); nor invest more than 15% of the value of its total assets
in securities which are not readily marketable (including repurchase agreements
maturing in more than seven days or securities for which there is no active and
substantial market).
FUND DIRECTORS AND OFFICERS
DIRECTORS AND DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION PRINCIPAL AGGREGATE TOTAL COMPENSATION TOTAL
WITH OCCUPATION(S) DURING COMPENSATION FROM ALL NUMBER
REGISTRANT PAST 5 YEARS (INCLUDING FUNDS MANAGED OF FUND
(POSITIONS WITHIN THE VOLUNTARILY BY CAPITAL BOARDS
ORGANIZATIONS LISTED MAY DEFERRED COMPEN- RESEARCH AND ON WHICH
HAVE CHANGED DURING THIS SATION/1/) FROM MANAGEMENT DIRECTOR
PERIOD) THE FUND DURING COMPANY FOR THE SERVES/2/
FISCAL YEAR
<S> <C> <C> <C> <C> <C>
+H. Frederick Director Private Investor; $24,500/3/ $145,850/3/ 18
Christie former President and
P.O. Box 144 Chief Executive
Palos Verdes Estates, Officer, The Mission
CA 90274 Group (non-utility
Age: 63 holding company,
subsidiary of
Southern California
Edison Company)
E. H. Clark, Jr. Director Chairman of the Board $24,500 $24,500 1
West Tower and Chief Executive
5000 Birch Street, Officer, The
Suite 3000 Friendship Group (an
Newport Beach, CA investment
92660 partnership); former
Age: 70 Chairman of the
Board, Baker Hughes
Inc.; former
Chairman of the
Board, Baker
International
Corporation
Mary Anne Dolan Director Founder and $23,900 $23,900 1
1033 Gayley Avenue, President, M.A.D.,
Suite 205 Inc.
Los Angeles, CA (a communications
90024 company)
Age: 49
++James K. Dunton President Senior Vice President none/4/ none/4/ 1
333 South Hope Street and and Director, Capital
Los Angeles, CA Director Research and
90071 Management Company
Age: 58
Martin Fenton, Director Chairman, Senior $24,500 $116,500 16
Jr.8070 La Jolla Resource Group
Shores (management of senior
P.O. Box 446 living centers)
La Jolla, CA 92037
Age: 61
E. Eric Johnson Director Chairman, TBG $23,900/3/ $23,900/3/ 1
2029 Century Park Financial; former
East #3720 Chairman, Johnson &
Los Angeles, CA Higgins of California
90067
Age: 69
Mary Myers Kauppila Director Founder and $24,500/3/ $74,350/3/ 4
One Winthrop Square President, Energy
Boston, MA 02210 Investment, Inc.
Age: 42
++Jon B. Lovelace, Chairman Vice Chairman of the none/4/ none/4/ 4
Jr. of the Board and Chairman of
333 South Hope Street Board the Executive
Los Angeles, CA Committee, Capital
90071 Research and
Age: 69 Management Company
++James W. Ratzlaff Vice Senior Partner, The none/4/ none/4/ 6
P.O. Box 7650 Chairman Capital Group
San Francisco, CA of the Partners, L.P.
94120 Board
Age: 60
Olin C. Robison Director President of the $23,300 $75,500 2
The Marble Works Salzburg Seminar;
Middlebury, VT 05753 Professor and former
Age: 60 President, Middlebury
College
</TABLE>
+ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
++ "Interested persons" within the meaning of the Investment Company Act of
1940 (the 1940 Act) on the basis of their affiliation with the fund's
Investment Adviser, Capital Research and Management Company or the parent
company of the Investment Adviser, The Capital Group Companies, Inc.
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more
funds in The American Funds Group as designated by the director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating directors are as
follows: H. Frederick Christie ($45,712), E. Eric Johnson ($80,122) and Mary
Myers Kauppila ($83,932). Amounts deferred and accumulated earnings thereon
are not funded and are general unsecured liabilities of the fund until paid to
the director.
/4/ James K. Dunton, Jon B. Lovelace, Jr. and James W. Ratzlaff are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
OFFICERS
JON B. LOVELACE, JR., Chairman of the Board (see above).
JAMES W. RATZLAFF, Vice Chairman of the Board (see above).
JAMES K. DUNTON, President (see above)
ROBERT G. O'DONNELL, Executive Vice President. One Market, Steuart Tower,
Suite 1800, San Francisco, CA 94105. Senior Vice President and Director,
Capital Research and Management Company.
* TIMOTHY D. ARMOUR, Vice President. Director, Capital Research and
Management Company. Senior Vice President, Capital Research
Company.
* JOYCE E. GORDON, Vice President.
Senior Vice President, Capital Research Company.
* VINCENT P. CORTI, Secretary.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
** STEVEN N. KEARSLEY, Treasurer.
Vice President and Treasurer, Capital Research and Management Company;
Director, American Funds Service Company.
** R. MARCIA GOULD, Assistant Treasurer.
Vice President - Fund Business Management Group, Capital Research and
Management Company.
** MARY C. HALL, Assistant Treasurer.
Senior Vice President - Fund Business Management Group, Capital Research
and Management Company.
________________________
# Positions within the organizations listed may have changed during this
period.
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92821.
All of the officers listed are officers or employees of the Investment
Adviser or affiliated companies. No compensation is paid by the fund to any
officer or director who is a director, officer or employee of the Investment
Adviser or affiliated companies. The fund pays fees of $16,000 per annum to
directors who are not affiliated with the Investment Adviser, plus $1,500 for
each Board of Directors meeting attended, plus $600 for each meeting attended
as a member of a committee of the Board of Directors. The directors may elect,
on a voluntary basis, to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund. The fund also reimburses
certain expenses of the directors who are not affiliated with the Investment
Adviser. As of December 1, 1996 the officers, directors and their families, as
a group, owned beneficially or of record less than 1% of the outstanding
shares.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world. The Investment Adviser believes that it is able to attract and retain
quality personnel. The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for managing more than $100
billion of stocks, bonds and money market instruments and serves over five
million investors of all types. These investors include privately owned
businesses and large corporations as well as schools, colleges, foundations and
other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the Agreement) between the fund and the Investment Adviser may be
renewed annually, provided that any such renewal has been specifically approved
by (i) the Board of Directors, or by the vote of a majority (as defined in the
1940 Act) of the outstanding voting securities, and (ii) the vote of a majority
of Directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person, at a meeting called
for the purpose of voting on such approval. The Agreement provides that the
Investment Adviser has no liability to the fund for its acts or omissions in
performance of its obligations to the fund not involving willful misconduct,
bad faith, gross negligence or reckless disregard of its obligations under the
Agreement. The Agreement also provides that either party has the right to
terminate it without penalty, upon 60 days' written notice to the other party
and that the Agreement automatically terminates in the event of its assignment
(as defined in the 1940 Act).
The Investment Adviser, in addition to providing investment advisory
services, furnishes the services and pays the compensation and travel expenses
of persons to perform the executive, administrative, clerical, and bookkeeping
functions of the fund, provides suitable office space and utilities, necessary
office equipment and general purpose accounting forms, supplies and postage
used at the office of the fund. The fund pays all expenses not expressly
assumed by the Investment Adviser, including, but not limited to, fees and
expenses of the transfer agent, dividend disbursing agent, legal counsel,
independent accountant and custodian, including charges of such custodian for
the preparation and maintenance of the books of account and records of the
fund, cost of designing, printing and mailing reports, prospectuses, proxy
statements and notices to shareholders; fees and expenses of registration,
qualification and issuance of fund shares; expenses pursuant to the fund's Plan
of Distribution (described below); association dues; interest; taxes; and
compensation of Directors who are not affiliated persons of the Investment
Adviser.
As compensation for its services, the Investment Adviser receives a
monthly fee which is accrued daily, calculated at the annual rate of 0.384% on
the first $1 billion of net assets, plus 0.33% on net assets from $1 billion to
$2 billion, plus 0.294% on net assets from $2 billion to $3 billion, plus 0.27%
on net assets from $3 billion to $5 billion, plus 0.252% on net assets from $5
billion to $8 billion, plus 0.24% on net assets over $8 billion. In connection
with the approval of the Agreement by the fund's Board of Directors, the
Investment Adviser has agreed to waive any fees to the extent they would exceed
those payable under the rate structure contained in the previous agreement.
The fee structure referenced above is lower than that in the previous agreement
except in the event that the fund's net assets were to fall below $3 billion.
The Agreement provides that the Investment Adviser shall pay the fund the
amount by which expenses, with the exception of taxes and expenses, if any, as
may be incurred in connection with any merger, reorganization, or
recapitalization, exceed the sum of 1% of the first $25 million of the monthly
average of total assets of the fund for the year and 3/4 of 1% of such average
in excess of $25 million. Only one state (California) continues to impose
expense limitations on funds registered for sale therein. The California
provision currently limits annual expenses to the sum of 2-1/2% of the first
$30 million of average net assets, 2% of the next $70 million and 1-1/2% of the
remaining average net assets. Rule 12b-1 distribution plan expenses would be
excluded from this limit. Expenses which are not subject to this limitation
are interest, taxes, and extraordinary items such as litigation. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses.
During the fiscal years ended October 31, 1996, 1995, and 1994, the
Investment Adviser's total fees amounted to $21,154,000, $17,788,000 and
$16,241,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares for the fiscal year ended
October 31, 1996 amounted to $3,378,000, after allowance of $16,767,000 to
dealers. During the fiscal years ended October 31, 1995 and 1994 the Principal
Underwriter retained $2,831,000 and $2,877,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal
Underwriting Agreement) has been approved by the full Board of Directors, and
separately by a majority of the Directors who are not interested persons of the
fund and who have no direct or indirect financial interest in the operation of
the Plan or the Principal Underwriting Agreement, and the Plan has been
approved by the vote of a majority of the outstanding voting securities of the
fund. The Officers and Directors who are "interested persons" of the fund may
be considered to have a direct or indirect financial interest in the operation
of the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Directors who
are not "interested persons" of the fund are committed to the discretion of the
Directors who are not "interested persons" during the existence of the Plan.
The Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Directors has approved the
category of expenses for which payment is being made. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a 401(k)
plan with 200 or more eligible employees). Only expenses incurred during the
preceding 12 months and accrued while the Plan is in effect may be paid by the
fund. During the fiscal year ended October 31, 1996, the fund paid or accrued
$14,098,000 under the Plan as compensation to dealers.
The Glass-Steagall and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements, and has elected the tax
status of, a "regulated investment company" under the provisions of Subchapter
M of the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the
fund distributes within specified times at least 90% of the sum of its
investment company taxable income (net investment income and the excess of net
short-term capital gains over net long-term capital losses) and its tax-exempt
interest, if any, it will be taxed only on that portion of such investment
company taxable income which it retains.
To qualify, the fund must (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans and gains
from the sale or other disposition of stock, securities, currencies or other
income derived with respect to its business of investing in such stock,
securities or currencies or other income derived with respect to its business
of investing in such stock, securities or currencies; (b) derive less than 30%
of its gross income from the gains on sale or other disposition of stock or
securities held less than three months; and (c) diversify its holdings so that,
at the end of each fiscal quarter, (i) at least 50% of the market value of the
fund's assets is represented by cash, cash items, U.S. Government securities,
securities of other regulated investment companies and other securities (but
such other securities must be limited, in respect of any one issuer, to an
amount not greater than 5% of the fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of
its assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the
excess of a regulated investment company's "required distribution" for the
calendar year ending within the regulated investment company's taxable year
over the "distributed amount" for such calendar year. The term "required
distribution" means the sum of (i) 98% of ordinary income (generally net
investment income) for the calendar year, (ii) 98% of capital gains (both
long-term and short-term) for the one-year period ending on October 31 (as
though the one-year period ending on October 31 were the regulated investment
company's taxable year), and (iii) the sum of any untaxed, undistributed net
investment income and net capital gains of the regulated investment company for
prior periods. The term "distributed amount" generally means the sum of (i)
amounts actually distributed by the fund from its current year's ordinary
income and capital gain net income and (ii) any amount on which the fund pays
income tax for the periods described above. The fund intends, to the extent
practicable, to meet these distribution requirements to minimize or avoid the
excise tax liability.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of the fund should, by reason
of a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are
paid. However, dividends declared in October, November and December and made
payable to shareholders of record in such a month are treated as paid and are
thereby taxable as of December 31, provided that the fund pays the dividend no
later than the end of January of the following year.
Corporate shareholders of the fund may be eligible for the
dividends-received deduction on the dividends (excluding the net capital gain
distributions) paid by the fund to the extent the fund's income is derived from
dividends (which if received directly would qualify for such deduction)
received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the fund shares
paying the dividends upon which the deduction is based for at least 46 days.
If a shareholder exchanges or otherwise disposes of shares of the fund
within 90 days of having acquired such shares, and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
for shares of the fund, or of a different fund, the sales charge previously
incurred acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
Under the Code, distributions of net investment income by the fund to
a shareholder who, as to the U.S., is a nonresident alien individual,
nonresident alien fiduciary of a trust or estate, non-U.S. corporation or
non-U.S. partnership (a non-U.S. shareholder) will be subject to U.S.
withholding tax (at a rate of 30% or lower treaty rate). Withholding will not
apply if a dividend paid by the fund to a non-U.S. shareholder is "effectively
connected" with a U.S. trade or business, in which case the reporting and
withholding requirements applicable to U.S. citizens, U.S. residents, or
domestic corporations will apply. Distributions of net long-term capital gains
not effectively connected with a U.S. trade or business are not subject to tax
withholding, but in the case of a non-U.S. shareholder who is a nonresident
alien individual, such distributions ordinarily will be subject to U.S. income
tax at a rate of 30% if the individual is physically present in the U.S. for
more than 182 days during the taxable year.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gain is 28%; and the maximum corporate tax applicable
to ordinary income and net capital gain is 35%. However, to eliminate the
benefit of lower marginal corporate income tax rates, corporations which have
income in excess of $100,000 for a taxable year will be required to pay an
additional income tax liability up to $11,750 and corporations which have
taxable income in excess of $15,000,000 for a taxable year will be required to
pay an additional amount of tax of up to $100,000. Naturally, the amount of
tax payable by a taxpayer will be affected by a combination of tax law rules
covering, e.g., deductions, credits, deferrals, exemptions, sources of income
and other matters. Under the Code, an individual is entitled to establish an
IRA each year (prior to the tax return filing deadline for that year) whereby
earnings on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not
be viewed as a comprehensive discussion of all provisions of the Code relevant
to investors. Dividends and capital gains distributions may also be subject to
state or local taxes. Shareholders should consult their own tax advisers for
additional details as to their particular tax status.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums $50 minimum (except where a lower
and Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer Mail directly to your investment dealer's
your investment who is registered in the state address printed on your account
dealer where the purchase is made statement.
and who has a sales
agreement with American
Funds Distributors.
By mail Make your check payable to Fill out the account additions form at the
the fund and mail to the bottom of a recent account statement,
address indicated on the make your check payable to the fund,
account application. Please write your account number on your
indicate an investment dealer check, and mail the check and form in
on the account application. the envelope provided with your account
statement.
By telephone Please contact your Complete the "Investments by Phone"
investment dealer to open section on the account application or
account, then follow the American FundsLink Authorization
procedures for additional Form.
investments. Once you establish the privilege, you,
your financial advisor or any person with
your account information can call
American FundsLineR and make
investments by telephone (subject to
conditions noted in "Telephone
Purchases, Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "Initial Investment."
investment dealer on the
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE
ORDER.
</TABLE>
Investment Minimums and Fund Numbers - Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLineR (see
description below):
<TABLE>
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<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP FundR 02
$1,000
American Balanced FundR 11
500
American Mutual FundR 03
250
Capital Income BuilderR 12
1,000
Capital World Growth and Income Fund$ 33
1,000
EuroPacific Growth FundR 16
250
Fundamental Investors$ 10
250
The Growth Fund of AmericaR 05
1,000
The Income Fund of AmericaR 06
1,000
The Investment Company of AmericaR 04
250
The New Economy FundR 14
1,000
New Perspective FundR 07
250
SMALLCAP World FundR 35
1,000
Washington Mutual Investors Fund$ 01
250
BOND FUNDS
American High-Income Municipal Bond FundR 40
1,000
American High-Income Trust$ 21
1,000
The Bond Fund of America$ 08
1,000
Capital World Bond FundR 31
1,000
Intermediate Bond Fund of America$ 23
1,000
Limited Term Tax-Exempt Bond Fund of America$ 43
1,000
The Tax-Exempt Bond Fund of AmericaR 19
1,000
The Tax-Exempt Fund of CaliforniaR* 20
1,000
The Tax-Exempt Fund of MarylandR* 24
1,000
The Tax-Exempt Fund of VirginiaR* 25
1,000
U.S. Government Securities Fund$ 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of AmericaR 09
2,500
The Tax-Exempt Money Fund of America$ 39
2,500
The U.S. Treasury Money Fund of America$ 49
2,500
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the
money market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below)
none none
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated
percentage of its income), will, during calendar year 1997, provide additional
compensation to dealers. Currently these payments are limited to the top one
hundred dealers who have sold shares of the fund or other funds in The American
Funds Group. These payments will be based on a pro rata share of a qualifying
dealer's sales. American Funds Distributors will, on an annual basis, determine
the advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other purchaser
investing at least $1 million in shares of the fund (or in combination with
shares of other funds in The American Funds Group other than the money market
funds) may purchase shares at net asset value; however, a contingent deferred
sales charge of 1% is imposed on certain redemptions made within twelve months
of the purchase. (See "Redeeming Shares--Contingent Deferred Sales
Charge.")
Qualified dealers currently are paid a continuing service fee not to
exceed 0.25% of average net assets (0.15% in the case of the money market
funds) annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $100
million or more; (5) insurance company separate accounts; (6) accounts managed
by subsidiaries of The Capital Group Companies, Inc.; and (7) The Capital Group
Companies, Inc., its affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to these persons and
organizations due to anticipated economies in sales effort and expense.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to the following statement of intention (the
"Statement") terms. The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder elects to utilize a Statement in order to
qualify for a reduced sales charge, shares equal to 5% of the dollar amount
specified in the Statement will be held in escrow in the shareholder's account
out of the initial purchase (or subsequent purchases, if necessary) by the
Transfer Agent. All dividends and any capital gain distributions on shares
held in escrow will be credited to the shareholder's account in shares (or paid
in cash, if requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the sales
charge which would have been paid if the total of such purchases had been made
at a single time. If the difference is not paid within 45 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares held in escrow will be redeemed to pay such difference. If
the proceeds from this redemption are inadequate, the purchaser will be liable
to the Principal Underwriter for the balance still outstanding. The Statement
may be revised upward at any time during the 13-month period, and such a
revision will be treated as a new Statement, except that the 13-month period
during which the purchase must be made will remain unchanged and there will be
no retroactive reduction of the sales charges paid on prior purchases.
Existing holdings eligible for rights of accumulation (see the prospectus and
account application) may be credited toward satisfying the Statement. During
the Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service; this offering price is effective for orders received prior to the time
of determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In the case of orders sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. The dealer is responsible for
promptly transmitting purchase orders to the Principal Underwriter. Orders
received by the investment dealer, the Transfer Agent, or the fund after the
time of the determination of the net asset value will be entered at the next
calculated offering price. The prices which appear in the newspaper are not
always indicative of prices at which you will be purchasing and redeeming
shares of the fund, since such prices generally reflect the previous day's
closing price whereas purchases and redemptions are made at the next calculated
price.
The price you pay for shares, the offering price, is based on the net
asset value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open as set forth below. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas
Day. The net asset value per share is determined as follows:
1. Securities traded on a national securities exchange (or reported on the
NASDAQ national market) and securities traded in the over-the-counter market
are stated at the last reported sales price on the day of valuation; other
securities, and securities for which no sale was reported on that date, are
stated on the last quoted bid price. Nonconvertible bonds and debentures, and
other long-term debt securities normally are valued at prices obtained for the
day of valuation from a bond pricing service, when such prices are available;
however, in circumstances where the Investment Adviser deems it appropriate to
do so, an over-the-counter or exchange quotation may be used. U.S. Treasury
bills, and other short-term obligations issued or guaranteed by the U,S.
Government, its agencies or instrumentalities, certificates of deposit issued
by banks, corporate short-term notes and other short-term investments with
original or remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, for securities of comparable maturity, quality and
type. Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the fund if acquired within 60 days of maturity
or, if already held on the 60th day, based on the value determined on the 61st
day. Other securities are valued on the basis of last sale or bid prices in
what is, in the opinion of the Investment Adviser, the broadest and most
representative market, which may be either a securities exchange or the
over-the-counter market. Where quotations are not readily available,
securities are valued at fair value as determined in good faith by the Board of
Directors. The fair value of all other assets is added to the value of
securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the
liabilities, including proper accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or the
fund. The Principal Underwriter will not knowingly sell fund shares directly,
indirectly, or through a unit investment trust to any other investment company,
or to any person or entity, where, after the sale, such investment company,
person or entity would own beneficially, directly, indirectly, or through a
unit investment trust, more than 3% of the outstanding shares of the fund
without the consent of a majority of the fund's Directors.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to Send a letter of instruction specifying
American the name of the fund,
Funds Service the number of shares or dollar amount to
Company (at be sold, your name
the appropriate and account number. You should also
address enclose any share
indicated under certificates you wish to redeem. For
"Principal redemptions over
Underwriter and $50,000 and for certain redemptions of
Transfer $50,000 or less (see
Agent" in the below), your signature must be guaranteed
prospectus) by a bank,
savings association, credit union, or
member firm of a
domestic stock exchange or the National
Association of
Securities Dealers, Inc. that is an
eligible guarantor institution.
You should verify with the institution
that it is an eligible
guarantor prior to signing. Additional
documentation may be
required for redemption of shares held in
corporate,
partnership or fiduciary accounts.
Notarization by a Notary
Public is not an
acceptable signature guarantee.
By contacting your If you redeem shares through your
investment dealer investment dealer, you
may be charged for this service. SHARES
HELD FOR YOU IN
YOUR INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED
THROUGH THE DEALER.
You may have a You may use this option, provided the
redemption account is registered in
check sent to you the name of an individual(s), a UGMA/UTMA
by using custodian, or a
American FundsLineR non-retirement plan trust. These
or by redemptions may not
telephoning, exceed $10,000 per day, per fund account
faxing, or and the check
telegraphing must be made payable to the shareholder(s)
American of record and be
Funds Service sent to the address of record provided the
Company address has been
(subject to the used with the account for at least 10
conditions days. See "Principal
noted in this Underwriter and Transfer Agent" in the
section and in prospectus and
"Telephone "Exchange Privilege" below for the
Purchases, appropriate telephone or
Redemptions and fax number.
Exchanges" below)
In the case of the Upon request (use the account application
money for the money
market funds, you market funds) you may establish telephone
may have redemption
redemptions wired privileges (which will enable you to have
to your a redemption sent to
bank by telephoning your bank account) and/or check writing
American Funds privileges. If you
Service request check writing privileges, you will
Company ($1,000 or be provided with
more) checks that you may use to draw against
or by writing a your account.
check ($250 These checks may be made payable to anyone
or more) you
designate and must be signed by the
authorized number of
registered shareholders exactly as
indicated on your checking
account signature card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF
$50,000 OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permit the fund
to direct the Transfer Agent to redeem the shares of any shareholder if (a) the
shares owned by such shareholder have a value (determined, for the purpose of
this sentence only, as the greater of the shareholder's cost or the then net
asset value of the shares, including the reinvestment of income dividends and
capital gain distributions, if any) of less than $250, or (b) such shareholder
owns less than ten (10) shares of Capital Stock of the Corporation. Prior
notice of at least 60 days will be given to a shareholder before the
involuntary redemption provision is made effective with respect to the
shareholder's account. The shareholder will have not less than 30 days from
the date of such notice within which to bring the account up to the minimum
determined as set forth above.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables
shareholders to make regular monthly or quarterly investments in shares through
automatic charges to their bank accounts. With shareholder authorization and
bank approval, the Transfer Agent will automatically charge the bank account
for the amount specified ($50 minimum), which will be automatically invested in
shares at the offering price on or about the dates you select. Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement at least quarterly. Participation in the plan will
begin within 30 days after receipt of the account application. If the
shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or closing of the account, the plan may be terminated and
the related investment reversed. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(i) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, automatically to redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The
American Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLineR (see "American FundsLineR" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone Redemptions and Exchanges" below.) Shares held
in corporate-type retirement plans for which Capital Guardian Trust Company
serves as trustee may not be exchanged by telephone, fax or telegraph. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of
$50 or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINER - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $10,000
per fund, per account each day), or exchange shares around the clock with
American FundsLineR. To use this service, call 800/325-3590 from a TouchTonet
telephone. Redemptions and exchanges through American FundsLineR are subject
to the conditions noted above and in "Redeeming Shares--Telephone Redemptions
and Exchanges" below. You will need your fund number (see the list of funds in
The American Funds Group under "Purchase of Shares--Investment Minimums and
Fund Numbers"), personal identification number (the last four digits of your
Social Security number or other tax identification number associated with your
account) and account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLineR), fax or telegraph redemption and/or exchange options, you
agree to hold the fund, American Funds Service Company, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing American Funds Service Company (you may also
reinstate them at any time by writing American Funds Service Company). If
American Funds Service Company does not employ reasonable procedures to confirm
that the instructions received from any person with appropriate account
information are genuine, the fund may be liable for losses due to unauthorized
or fraudulent instructions. In the event that shareholders are unable to reach
the fund by telephone because of technical difficulties, market conditions, or
a natural disaster, redemption and exchange requests may be made in writing
only.
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may
be executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactioins.
The fund is required to disclose information regarding investments in
the securities of broker-dealers which have certain relationships with the
fund. During the last fiscal year, the fund held certain equity and debt
securities of some of its regular brokers and dealers or their parents that
derive more than 15% of gross revenues from securities-related activities which
included securities of: General Electric Company (equity) $19,350,000; General
Electric Capital Corporation (debt) $42,965,000; and, J.P. Morgan & Co.
(equity) $38,869,000.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended October 31, 1996, 1995
and 1994 amounted to $2,889,000, $2,980,000 and $2,662,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary
of the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $4,473,000 for the fiscal year ended October 31, 1996.
INDEPENDENT ACCOUNTANT - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, has served as the fund's independent accountant
since its inception, providing audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements included in this Statement of Additional
Information have been so included in reliance on the report of Deloitte &
Touche LLP given on the authority of said firm as experts in auditing and
accounting.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on October 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountant,
Deloitte & Touche LLP, whose selection is determined annually by the Board of
Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions. You may obtain a summary of
the personal investing policy by contacting the Secretary of the fund.
The financial statements including the investment portfolio and the report of
Independent Accountant contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- OCTOBER 31, 1996
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $26.54
Maximum offering price per share (100/94.25 of
net asset value per share, which takes into
account the fund's current maximum sales charge) $28.16
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
INVESTMENT RESULTS
The fund's yield is 2.90% based on a 30-day (or one month) period
ended October 31, 1996, computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[((a-b)/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's average annual total return for the one-, five- and
ten-year periods ending on October 31, 1996 was 12.08%, 12.41%, and 11.74%,
respectively. The average annual total return (T) is computed by equating the
value at the end of the period (ending redeemable value or ERV) with a
hypothetical initial investment of $1,000 (P) over a period of years (n)
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in
accordance with the formula stated above: (1) deduction of the maximum sales
load of 5.75% from the $1,000 initial investment; (2) reinvestment of dividends
and distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
The fund may also, at times, calculate total return based on net asset
value per share (rather than the offering price), in which case the figure
would not reflect the effect of any sales charges which would have been paid if
shares were purchased during the period reflected in the computation.
Consequently, total return calculated in this manner will be higher. These
total returns may be calculated over periods in addition to those described
above. Total return for the unmanaged indices will be calculated assuming
reinvestment of dividends and interest, but will not reflect any deductions for
advisory fees, brokerage costs or administrative expenses.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by dividing the dividends
paid by the fund over the last 12 months by the sum of the month-end net asset
value or maximum offering price and the capital gains paid over the last 12
months. The distribution rate may differ from the yield.
The fund may include information on its investment results and/or
comparisons of its investment results to various unmanaged indices (such as The
Dow Jones Average of 30 Industrial Stocks and The Standard and Poor's 500 Stock
Composite Index) or results of other mutual funds or investment or savings
vehicles in advertisements or in reports furnished to present or prospective
shareholders.
The fund may refer to results compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services,
Morningstar, Inc., Wiesenberger Investment Companies Services and by the U.S.
Department of Commerce. Additionally, the fund may, from time to time, refer
to results published in various newspapers or periodicals, including BARRONS,
FORBES, FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE,
MONEY, U.S. NEWS AND WORLD REPORT and The Wall Street Journal.
The fund may, from time to time, compare its investment results with the
following:
(1) Average of Savings Institutions deposits, which is a measure of all kinds
of savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions and the Federal Reserve
Board). Savings deposits offer a guaranteed rate of return on principal, but
no opportunity for capital growth. The period shown may include periods during
which the maximum rates paid on some savings deposits were fixed by law.
(2) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
The fund may, from time to time, illustrate the benefits of tax-deferral
by comparing taxable investments to investments made through tax-deferred
retirement plans.
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the rolling
10-year periods since January 1, 1966 (121 in all), those funds have had better
total returns than the Standard & Poor's 500 Stock Composite Index in 94 of the
121 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than some of the funds
mentioned above. These results are included solely for the purpose of
informing investors about the experience and history of Capital Research and
Management Company.
The investment results set forth below were calculated as described in the
fund's prospectus. The fund's results will vary from time to time depending
upon market conditions, the composition of the fund's portfolio and operating
expenses of the fund, so that any investment results reported by the fund
should not be considered representative of what an investment in the fund may
earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
The investment results set forth below were calculated as described in the
fund's Prospectus.
AMF VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
10-Year Average
Periods Savings
<S> <C> <C> <C> <C>
11/1 - 10/31 AMF DJIA(1) S&P 500 (2) Account (3)
1986 - 1996 +204% +342% +292% +68%
1985 - 1995 +232 +384 +321 +73
1984 - 1994 +233 +362 +297 +80
1983 - 1993 +247 +338 +307 +91
1982 - 1992 +273 +384 +353 +103
1981 - 1991 +336 +453 +379 +115
1980 - 1990 +285 +316 +261 +123
1979 - 1989 +426 +423 +415 +126
1978 - 1988 +412 +347 +371 +125
1977 - 1987 +413 +309 +335 +125
1976 - 1986 +414 +233 +284 +124
1975 - 1985 +400 +182 +247 +122
1974 - 1984 +418 +212 +266 +117
1973 - 1983 +312 +120 +145 +111
1972 - 1982 +221 +76 +91 +103
1971 - 1981 +179 +67 +101 +93
1970 - 1980 +207 +97 +134 +83
1969 - 1979 +113 +50 +57 +78
1968 - 1978 +71 +28 +32 +74
1967 - 1977 +79 +40 +41 +71
1966 - 1976 +103 +78 +82 +69
1965 - 1975 +56 +28 +36 +66
1964 - 1974 +39 +10 +21 +62
1963 - 1973 +92 +81 +102 +59
1962 - 1972 +154 +131 +173 +56
1961 - 1971 +96 +70 +90 +54
1960 - 1970 +115 +86 +116 +52
1959 - 1969 +134 +87 +133 +49
1958 - 1968 +186 +147 +178 +46
1957 - 1967 +212 +184 +218 +44
</TABLE>
/(1)/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30
industrial companies such as General Motors and General Electric.
/(2)/ The Standard & Poor's 500 Stock Composite Index is comprised of
industrial, transportation, public utilities and financial stocks and
represents a large portion of the value of issues traded on the New York Stock
Exchange. Selected issues traded on the American Stock Exchange are also
included.
/(3)/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings accounts offer a guaranteed return
of principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.
IF YOU ARE CONSIDERING AMF FOR AN INDIVIDUAL RETIREMENT ACCOUNT. . .
<TABLE>
<CAPTION>
Here's how much you would have if you had invested $2,000 a year on
November 1 of each year in AMF over the past 5, 10, 20 and 30 years:
<S> <C> <C> <C>
5 years 10 years 20 years 30 years
(11/1/91 - 10/31/96) (11/1/86 - 10/31/96) (11/1/76 - 10/31/96) (11/1/66 - 10/31/96)
$14,592 $40,296 $232,705 $762,301
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM...
<TABLE>
<CAPTION>
...and taken all distributions
if you had invested in shares, your investment
$10,000 in AMF would have been worth this
this many years ago... much at October 31, 1996
Number Periods
of Years 11/1 - 10/31 Value
<S> <C> <C>
1 1995 - 1996 $11,208
2 1994 - 1996 13,586
3 1993 - 1996 13,822
4 1992 - 1996 16,399
5 1991 - 1996 17,946
6 1990 - 1996 22,367
7 1989 - 1996 21,326
8 1988 - 1996 25,633
9 1987 - 1996 28,841
10 1986 - 1996 30,350
11 1985 - 1996 39,498
12 1984 - 1996 48,019
13 1983 - 1996 50,866
14 1982 - 1996 64,981
15 1981 - 1996 82,964
16 1980 - 1996 91,319
17 1979 - 1996 119,014
18 1978 - 1996 139,288
19 1977 - 1996 157,088
20 1976 - 1996 165,557
21 1975 - 1996 209,649
22 1974 - 1996 263,830
23 1973 - 1996 222,180
24 1972 - 1996 221,351
25 1971 - 1996 245,396
26 1970 - 1996 296,897
27 1969 - 1996 268,567
28 1968 - 1996 252,872
29 1967 - 1996 298,423
30 1966 - 1996 356,995
</TABLE>
Illustration of a $10,000 investment in AMF with
dividends reinvested and capital gain distributions taken in shares
(For the lifetime of the Fund, February 21, 1950 through October 31, 1996)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Fiscal Total From From
Year End Annual Dividends Investment From Initial Capital Gains Dividends Total
10/31 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
<S> <C> <C> <C> <C> <C> <C> <C>
1950 $ 247 $ 247 $ 10,247 $ 9,548 $ 225 $ 245 $ 10,018
1951 523 770 10,770 10,706 740 788 12,234
1952 513 1,283 11,283 10,536 1,357 1,271 13,164
1953 550 1,833 11,833 10,452 1,829 1,795 14,076
1954 579 2,412 12,412 13,048 3,378 2,835 19,261
1955 647 3,059 13,059 15,240 5,871 3,939 25,050
1956 789 3,848 13,848 16,087 8,658 4,906 29,651
1957 911 4,759 14,759 13,452 9,685 4,913 28,050
1958 1,010 5,769 15,769 15,936 13,280 6,924 36,140
1959 1,050 6,819 16,819 16,632 16,623 8,234 41,489
1960 1,210 8,029 18,029 15,052 17,197 8,616 40,865
1961 1,257 9,286 19,286 18,495 23,965 11,888 54,348
1962 1,372 10,658 20,658 14,638 21,270 10,664 46,572
1963 1,523 12,181 22,181 17,987 28,625 14,677 61,289
1964 1,697 13,878 23,878 19,360 34,472 17,523 71,355
1965 1,845 15,723 25,723 19,925 40,082 19,912 79,919
1966 2,271 17,994 27,994 17,611 40,329 19,706 77,646
1967 2,568 20,562 30,562 19,285 49,467 24,084 92,836
1968 3,154 23,716 33,716 20,903 59,174 29,509 109,586
1969 3,762 27,478 37,478 17,930 56,314 28,972 103,216
1970 4,168 31,646 41,646 14,506 51,267 27,585 93,358
1971 4,424 36,070 46,070 16,482 61,005 35,512 112,999
1972 4,711 40,781 50,781 16,990 67,024 41,212 125,226
1973 5,069 45,850 55,850 15,842 65,585 43,372 124,799
1974 7,273 53,123 63,123 12,474 51,642 41,006 105,122
1975 7,300 60,423 70,423 14,788 61,223 56,185 132,196
1976 7,881 68,304 78,304 17,516 75,351 74,512 167,379
1977 8,604 76,908 86,908 16,952 79,251 80,231 176,434
</TABLE>
Illustration of a $10,000 investment in AMF with
dividends reinvested and capital gain distributions taken in shares (cont.)
(For the lifetime of the Fund, February 21, 1950 through October 31, 1996)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
Fiscal Total From From
Year End Annual Dividends Investment From Initial Capital Gains Dividends Total
10/31 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
<S> <C> <C> <C> <C> <C> <C> <C>
1978 9,989 86,897 96,897 17,516 88,743 92,688 198,947
1979 11,322 98,219 108,219 18,702 104,186 109,917 232,805
1980 13,854 112,073 122,073 22,295 135,771 145,518 303,584
1981 16,351 128,424 138,424 22,559 148,139 163,418 334,116
1982 26,841 155,265 165,265 24,271 194,950 207,217 426,438
1983 26,227 181,492 191,492 28,391 246,296 270,229 544,916
1984 26,606 208,098 218,098 27,413 260,888 288,859 577,160
1985 30,124 238,222 248,222 30,310 320,100 351,425 701,835
1986 34,058 272,280 282,280 35,974 423,882 453,214 913,070
1987 39,285 311,565 321,565 34,167 460,226 466,495 960,888
1988 50,009 361,574 371,574 35,108 514,255 531,837 1,081,200
1989 59,908 421,482 431,482 38,627 611,229 649,930 1,299,786
1990 66,101 487,583 497,583 33,697 577,926 627,722 1,239,345
1991 71,767 559,350 569,350 39,473 692,684 812,254 1,544,411
1992 67,509 626,859 636,859 40,056 755,828 894,131 1,690,015
1993 70,887 697,746 707,746 43,669 911,212 1,049,980 2,004,861
1994 76,471 774,217 784,217 40,640 944,019 1,055,212 2,039,871
1995 83,156 857,373 867,373 45,475 1,156,130 1,271,837 2,473,442
1996 90,173 947,546 957,546 49,934 1,399,311 1,491,493
2,940,738
</TABLE>
The dollar amount of capital gain distributions during the period was $870,092.
<PAGE>
<TABLE>
AMERICAN MUTUAL FUND
October 31, 1996
- ---------------------------- ---------------
Percent of
Largest Industry Holdings* Net Assets
- ---------------------------- ---------------
<S> <C>
Banking 13.30%
Energy Sources 8.61
Telecommunications 7.65
Health & Personal Care 6.69
Utilities: Electric & Gas 3.61
Other Industries 37.33
Bonds, Notes, Cash and Equivalents 22.81
*Percentages above do not include certain
stocks in initial period of acquisition.
- ---------------------------- ---------------
Percent of
Largest Individual Holdings Net Assets
- ---------------------------- ---------------
DuPont 2.53%
Amoco 2.44
Ameritech 2.15
AT&T 2.06
Royal Dutch Petroleum 1.44
Merck 1.43
American Home Products 1.26
Phillips Petroleum 1.22
Comerica 1.16
Banc One 1.15
</TABLE>
<TABLE>
AMERICAN MUTUAL FUND Investment Portfolio
October 31, 1996
Market Percent
EQUITY-TYPE SECURITIES Value of Net
(common and preferred stocks) Shares (Millions) Assets
----------- ----------- -----------
<S> <C> <C> <C>
Energy
Energy Sources- 6.17%
Amoco Corp. 2,500,000 $189.375 2.44%
Ashland Inc. 519,100 22.062 .28
Atlantic Richfield Co. 600,000 79.500 1.02
Chevron Corp. 235,000 15.451 .20
Exxon Corp. 825,000 73.116 .94
Pennzoil Co. 609,700 31.095 .40
Phillips Petroleum Co. 2,300,000 94.300 1.22
Royal Dutch Petroleum Co.
(New York Registered Shares) 675,000 111.628 1.44
Texaco Inc. 100,000 10.163 .13
Union Pacific Resources Group, Inc. 804,598 22.126 .29
Unocal Capital Trust. $3.125 convertible preferred 368,280 19.703 .25
Utilities: Electric & Gas- 3.61%
American Electric Power Co., Inc. 200,000 8.300 .11
Carolina Power & Light Co. 200,000 7.225 .09
Central and South West Corp. 2,300,000 60.950 .79
Consolidated Edison Co. of New York, Inc. 1,900,000 55.575 .72
Dominion Resources, Inc. 150,000 5.662 .07
Duke Power Co. 500,000 24.438 .31
Entergy Corp. 1,350,000 37.800 .49
Houston Industries Inc. 1,100,000 25.162 .32
Pacific Gas and Electric Co. 1,600,000 37.600 .49
Unicom Corp. 200,000 5.200 .07
Union Electric Co. 300,000 11.587 .15
----------- ------
948.018 9.78
----------- ------
Materials
Chemicals- 3.34%
Dow Chemical Co. 350,000 27.212 .35
E.I. du Pont de Nemours and Co. 2,112,500 195.934 2.53
Monsanto Co. 900,000 35.663 .46
Forest Products & Paper- 2.21%
Georgia-Pacific Corp. 450,000 33.750 .43
International Paper Co. 1,000,000 42.750 .55
Rayonier Inc. 50,000 1.981 .03
Union Camp Corp. 850,000 41.437 .53
Westvaco Corp. 850,000 24.225 .32
Weyerhaeuser Co. 600,000 27.525 .35
Metals: Nonferrous- 0.38%
Aluminum Co. of America 500,000 29.313 .38
Metals: Steel- 0.28%
Worthington Industries, Inc. 1,050,000 21.788 .28
Miscellaneous Materials & Commodities- 0.17%
TRINOVA Corp. 400,000 13.150 .17
----------- ------
494.728 6.38
----------- ------
Capital Equipment
Aerospace & Military Technology- 1.29%
Boeing Co. 350,000 33.381 .43
General Motors Corp., Class H 250,000 13.344 .17
Raytheon Co. 225,000 11.081 .14
Sundstrand Corp. 750,000 30.188 .39
United Technologies Corp. 100,000 12.875 .16
Construction & Housing- 0.14%
Stone & Webster, Inc. 325,000 10.725 .14
Data Processing & Reproduction- 1.28%
International Business Machines Corp. 500,000 64.500 .83
Xerox Corp. 750,000 34.781 .45
Electrical & Electronic- 1.69%
Emerson Electric Co. 250,000 22.250 .29
General Electric Co. 200,000 19.350 .25
Hubbell Inc., Class B 720,000 29.430 .38
Lucent Technologies Inc. 1,278,511 60.090 .77
Electronic Components- 0.36%
Motorola, Inc. 600,000 27.600 .36
Industrial Components- 1.69%
Dana Corp. 700,000 20.738 .27
Goodyear Tire & Rubber Co. 700,000 32.112 .41
Johnson Controls, Inc. 200,000 14.600 .19
TRW Inc. 700,000 63.350 .82
Machinery & Engineering- 2.13%
Briggs & Stratton Corp. 629,100 25.164 .32
Caterpillar Inc. 1,094,000 75.076 .97
Deere & Co. 1,564,200 65.305 .84
----------- ------
665.940 8.58
----------- ------
Consumer Goods
Automobiles- 1.12%
Ford Motor Co., Class A 2,779,620 86.863 1.12
Beverages- 0.70%
PepsiCo, Inc. 1,832,000 54.273 .70
Food & Household Products- 2.04%
Colgate-Palmolive Co. 325,000 29.900 .39
ConAgra, Inc. 600,000 29.925 .39
CPC International Inc. 185,000 14.592 .19
General Mills, Inc. 750,000 42.844 .55
Procter & Gamble Co. 300,000 29.700 .38
Unilever NV 70,000 10.701 .14
Health & Personal Care- 6.69%
Abbott Laboratories 550,000 27.844 .36
American Home Products Corp. 1,600,000 98.000 1.26
Bristol-Myers Squibb Co. 275,000 29.081 .37
Johnson & Johnson 700,000 34.475 .44
Kimberly-Clark Corp. 330,000 30.772 .40
Eli Lilly and Co. 400,000 28.200 .36
Merck & Co., Inc. 1,500,000 111.188 1.43
Pharmacia & Upjohn, Inc. 747,500 26.910 .35
Schering-Plough Corp. 1,285,000 82.240 1.06
Warner-Lambert Co. 800,000 50.900 .66
Textiles & Apparel- 0.42%
VF Corp. 500,000 32.688 .42
----------- ------
851.096 10.97
----------- ------
Services
Broadcasting & Publishing- 1.07%
Gannett Co., Inc. 550,000 41.731 .54
Tribune Co. 500,000 40.875 .53
Business & Public Services- 3.58%
Browning-Ferris Industries, Inc. 2,100,000 55.125 .71
Dun & Bradstreet Corp. 1,100,000 63.663 .82
Electronic Data Systems Corp. 410,000 18.450 .24
Moore Corp. Ltd. 3,325,000 67.331 .87
Pitney Bowes Inc. 1,000,000 55.875 .72
WMX Technologies, Inc. 500,000 17.187 .22
Leisure & Tourism- 0.59%
Marriott International, Inc. 800,000 45.500 .59
Merchandising- 2.14%
J. C. Penney Co., Inc. 950,000 49.875 .64
Wal-Mart Stores, Inc. 3,250,000 86.531 1.11
Walgreen Co. 800,000 30.200 .39
Telecommunications- 7.65%
Ameritech Corp. 3,050,000 166.988 2.15
AT&T Corp. 4,595,000 160.251 2.06
Bell Atlantic Corp. 200,000 12.050 .16
GTE Corp. 1,500,000 63.187 .81
Pacific Telesis Group 2,250,000 76.500 .99
SBC Communications Inc. 700,000 34.038 .44
Sprint Corp. 700,000 27.475 .35
U S WEST Communications Group 1,750,000 53.156 .69
Transportation: Rail & Road- 2.70%
Conrail, Inc. 750,000 71.344 .92
Norfolk Southern Corp. 955,000 85.114 1.10
Union Pacific Corp. 950,000 53.319 .68
----------- ------
1,375.765 17.73
----------- ------
Finance
Banking- 13.30%
AmSouth Bancorporation 1,000,000 46.375 .60
Banc One Corp. 2,100,000 88.988 1.15
BankAmerica Corp. 250,000 22.875 .29
Bankers Trust New York Corp. 400,000 33.800 .43
Boatmen's Bancshares, Inc. 365,000 22.174 .29
The Chase Manhattan Corp. 700,000 60.025 .77
Comerica Inc. 1,700,000 90.312 1.16
CoreStates Financial Corp. 1,200,000 58.350 .75
First Chicago NBD Corp. 1,200,000 61.200 .79
First Security Corp. 1,425,000 41.859 .54
First Union Corp. 550,000 40.013 .51
Firstar Corp. 800,000 39.200 .51
Fleet Financial Group, Inc. 1,693,000 84.438 1.09
Huntington Bancshares Inc. 1,155,000 27.720 .36
KeyCorp 400,000 18.650 .24
J.P. Morgan & Co. Inc. 450,000 38.869 .50
PNC Bank Corp. 2,300,000 83.375 1.07
U. S. Bancorp 650,000 26.000 .34
Wachovia Corp. 1,600,000 86.000 1.11
Wells Fargo & Co. 233,333 62.329 .80
Financial Services- 1.46%
Beneficial Corp. 350,000 20.475 .26
Federal National Mortgage Assn. 1,580,000 61.818 .80
Household International, Inc. 350,000 30.975 .40
Insurance- 2.91%
Allstate Corp. 800,000 44.900 .58
American General Corp. 1,610,000 59.972 .77
Lincoln National Corp. 600,000 29.100 .38
Marsh & McLennan Companies, Inc. 250,000 26.031 .34
SAFECO Corp. 1,000,000 37.750 .49
St. Paul Companies, Inc. 500,000 27.188 .35
----------- ------
1,370.761 17.67
----------- ------
Multi-Industry & Miscellaneous
Multi-Industry- 2.35%
AlliedSignal Inc. 400,000 26.200 .34
Harsco Corp. 50,000 3.194 .04
Minnesota Mining and Manufacturing Co. 825,000 63.215 .81
Tenneco Inc. 1,100,000 54.450 .70
Textron Inc. 400,000 35.500 .46
----------- ------
182.559 2.35
----------- ------
Miscellaneous- 1.29%
Stocks in initial period of acquisition 100.049 1.29
----------- ------
TOTAL EQUITY-TYPE SECURITIES (cost:
$3,871.499 million) 5,988.916 74.75
----------- ------
BONDS AND NOTES Principal
Amount
Corporate- 0.17% -----------
J.C. Penney Co., Inc. 9.05% 2001 $12,000,000 13.122 .17
----------- ------
U.S. Treasury Obligations- 4.80%
12.375% May 2004 50,000,000 68.031 .88
11.75% February 2001 50,000,000 60.554 .78
8.25% July 1998 60,000,000 62.437 .80
5.125% April 1998 60,000,000 59.550 .77
8.125% February 1998 60,000,000 61.810 .79
6.00% November 1997 60,000,000 60.262 .78
----------- ------
372.644 4.80
----------- ------
TOTAL BONDS AND NOTES (cost: $403.898 million) 385.766 4.97
----------- ------
TOTAL INVESTMENT SECURITIES (cost: $4,275.397
million) 6,374.682 79.72
----------- ------
SHORT-TERM SECURITIES
Corporate Short-Term Notes- 13.91%
Ameritech Corp. 5.24%-5.33% due 11/22/96-1/30/97 97,000,000 96.329 1.24
AT&T Corp. 5.27% due 11/5/96 30,000,000 29.978 .39
Baltimore Gas & Electric Co. 5.24%-5.28% due 11/14-12/6/96 35,085,000 34.930 .45
BellSouth Telecommunications, Inc. 5.22%-5.27%
due 11/4-12/4/96 39,700,000 39.579 .51
Beneficial Corp. 5.24%-5.26% due 12/10/96 64,900,000 64.518 .83
E.I. du Pont de Nemours and Co. 5.26%-5.35%
due 11/19/96-1/8/97* 57,867,000 57.581 .74
Ford Motor Credit Co. 5.25%-5.36%
due 11/8/96-1/9/97 100,900,000 100.448 1.29
General Electric Capital Corp. 5.31%-5.34%
due 11/14/96-1/14/97 43,200,000 42.965 .55
H.J.Heinz Co. 5.23%-5.41%
due 11/6-12/11/96 69,500,000 69.260 .89
Hewlett-Packard Co. 5.20%-5.26%
due 11/6-12/20/96 60,000,000 59.895 .77
Lucent Technologies Inc. 5.23%-5.30%
due 11/7/96-1/9/97 82,500,000 82.007 1.06
J.C. Penney Funding Corp. 5.25%-5.31%
due 12/4/96-1/23/97 75,500,000 74.917 .97
Procter & Gamble Co. 5.27%-5.40%
due 11/6/96-1/13/97 68,800,000 68.341 .88
Southwestern Bell Telephone Co.5.22%-5.27%
due 11/4-12/20/96 65,000,000 64.721 .83
U S WEST Communications, Inc.5.27%-5.30%
due 11/12-12/13/96 62,500,000 62.275 .80
Warner-Lambert Co.5.27%-5.30%
due 11/1/96-1/6/97 58,600,000 58.265 .75
Weyerhaeuser Co.5.24%-5.34%
due 11/8-12/19/96 75,000,000 74.667 .96
Federal Agency Short-Term Obligations- 3.52%
Federal Home Loan Bank 5.24%-5.36% due 11/20-12/19/96 81,200,000 80.756 1.04
Federal Home Loan Mortgage Corp. 5.20%-5.40%
due 11/13-12/31/96 99,490,000 98.924 1.28
Federal National Mortgage Assn. 5.33%-5.44%
due 12/6-12/19/96 93,600,000 93.067 1.20
U.S. Treasury Short-Term Securities - 0.35%
6.375%-7.25% due 11/15/96-6/30/97 26,000,000 26.080 .35
----------- ------
TOTAL SHORT-TERM SECURITIES (cost: $1,379.533
million) 1,379.503 17.78
Excess of cash and receivables over payables 4.891 .06
----------- ------
TOTAL SHORT-TERM SECURITIES,
CASH AND RECEIVABLES, NET OF PAYABLES 1,384.394 17.84
----------- ------
NET ASSETS $7,759.076 97.56%
=========== ======
*Purchased in a private placement transaction, resale to
the public may require registration or sale only to
qualified institutional buyers.
See Notes to Financial Statements
</TABLE>
- ---------------------------- ---------------
Equity-type securities Equity-type securities
appearing in the portfolio eliminated from the portfolio
since April 30, 1996 since April 30, 1996
- ---------------------------- ---------------
AlliedSignal Aetna Life and Casualty
Aluminum Co. of America Bausch & Lomb
American Electric Power
Bankers Trust New York
Briggs & Stratton
Browning-Ferries
CoreStates Financial
Electronic Data Systems
Emerson Electric
KeyCorp
Marsh & McLennan
Pennzoil
Procter & Gamble
Raytheon
U. S. Bancorp
Unilever
Union Electric
Unocal Capital Trust
<TABLE>
American Mutual Fund Financial Statements
- ----------------------------------------- ----------- -----------
Statement of Assets and Liabilities (dollars in
October 31, 1996 millions)
- ------------------------------------------------ ----------- ----------
<S> <C> <C>
Investment securities at market
(cost: $4,275.397) $6,374.682
Short-term securities
(cost: $1,379.533) 1,379.503
Cash .139
Receivables for-
Sales of investments $.000
Sales of fund's shares $ 9.202
Dividends and accrued interest 22.540 31.742
----------- ----------
7,786.066
Liabilities:
Payables for-
Purchases of investments 18.058
Repurchases of fund's shares 4.513
Management services 1.869
Accrued expenses 2.550 26.990
----------- ----------
Net Assets at October 31, 1996-
Equivalent to $26.54 per share on
292,312,818 shares of $1 par value
capital stock outstanding (authorized
capital stock--500,000,000 shares) $7,759.076
=========
- -----------------------------------------------------------------------------------
Statement of Operations (dollars in
for the year ended October 31, 1996 millions)
- -------------------------------------------------- ---------- -----------
Investment Income:
Income:
Dividends $ 171.438
Interest 112.277 $283.715
----------
Expenses:
Management services fee 21.154
Distribution expenses 14.098
Transfer agent fee 4.473
Reports to shareholders .517
Registration statement and
prospectus .429
Postage, stationery and supplies .957
Directors' fees .169
Auditing and legal fees .072
Custodian fee .164
Taxes other than federal income tax .074
Other expenses .107 42.214
----------- ----------
Net investment income 241.501
----------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 477.701
Net increase in unrealized appreciation on
investments:
Beginning of year 1,583.521
End of year 2,099.255 515.734
----------- ----------
Net realized gain and increase in unrealized
appreciation on investments 993.435
----------
Net Increase in Net Assets Resulting
from Operations $1,234.936
==========
- -------------------------------------------------- ----------- ----------
Statement of Changes in Net Assets (dollars in
millions)
- ------------------------------------------------- ----------- ----------
Year ended October 31
1996 1995
----------- ----------
Operations:
Net investment income $ 241.501 $ 230.323
Net realized gain on investments 477.701 305.112
Net increase in unrealized appreciation
on investments 515.734 612.873
----------- ----------
Net increase in net assets
resulting from operations 1,234.936 1,148.308
----------- ----------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (238.662) (220.251)
Distributions from net realized
gain on investments (311.944) (217.473)
----------- ----------
Total dividends and distributions (550.606) (437.724)
----------- ----------
Capital Share Transactions:
Proceeds from shares sold:
34,457,011 and 31,087,225
shares, respectively 865.021 689.376
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
20,031,287 and 18,568,126
shares, respectively 491.254 388.017
Cost of shares repurchased:
33,206,353 and 28,510,164
shares, respectively (833.613) (633.334)
----------- ----------
Net increase in net assets
resulting from capital share
transactions 522.662 444.059
----------- ----------
Total Increase in Net Assets 1,206.992 1,154.643
Net Assets:
Beginning of year 6,552.084 5,397.441
----------- ----------
End of year (including undistributed
net investment income: $44.738
and $41.899, respectively) $7,759.076 $6,552.084
=========== ==========
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. American Mutual Fund, Inc. (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The fund strives for the balanced accomplishment of three objectives-current
income, capital growth and conservation of principal-through investments in
companies that participate in the growth of the American economy. The following
paragraphs summarize the significant accounting policies consistently followed
by the fund in the preparation of its financial statements:
Equity-type securities traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities, and securities for which no sale was reported
on that date, are stated at the last quoted bid price. Bonds and notes are
valued at prices obtained from a bond-pricing service provided by a major
dealer in bonds, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean of their representative quoted bid and asked prices
or, if such prices are not available, at prices for securities of comparable
maturity, quality and type. Short-term securities with original or remaining
maturities in excess of 60 days are valued at the mean of their quoted bid and
asked prices. Where pricing service or market quotations are not readily
available, securities will be valued at fair value by the Board of Directors or
a committee thereof. Short-term securities with 60 days or less to maturity are
valued at amortized cost, which approximates market value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. Discounts
on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Pursuant to the custodian agreement, the fund receives credits against
its custodian fee for imputed interest on certain balances with the custodian
bank. The custodian fee of $164,000 includes $29,000 that was paid by these
credits rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of October 31, 1996, net unrealized appreciation on investments for
federal income tax purposes aggregated $2,100,611,000, of which $2,146,898,000
related to appreciated securities and $46,287,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended October 31, 1996. The cost of
portfolio securities for federal income tax purposes was $5,653,574,000 at
October 31,1996.
3. The fee of $21,154,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC) with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.384% of the first $1 billion of average net assets;
0.33% of such assets in excess of $1 billion but not exceeding $2 billion;
0.294% of such assets in excess of $2 billion but not exceeding $3 billion;
0.27% of such assets in excess of $3 billion but not exceeding $5 billion;
0.252% of such assets in excess of $5 billion but not exceeding $8 billion; and
0.24% of such assets in excess of $8 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended October 31, 1996,
distribution expenses under the Plan were $14,098,000. As of October 31, 1996,
accrued and unpaid distribution expenses were $2,317,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $4,473,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $3,378,000
(after allowances to dealers) as its portion of the sales charges paid by
purchasers of the fund's shares. Such sales charges are not an expense of the
fund and, hence, are not reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of
the fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of October 31,
1996, aggregate amounts deferred and earnings thereon were $210,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of October 31, 1996, accumulated undistributed net realized gain on
investments was $456,481,000 and paid-in capital was $4,866,289,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,444,661,000 and $1,404,889,000, respectively,
during the year ended October 31, 1996.
<TABLE>
Per-Share Data and Ratios Year ended October 31
------- ------- ------- ------- -------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $24.17 $21.60 $23.21 $21.29 $20.98
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .84 .87 .88 .85 .87
Net realized and unrealized
gain (loss) on investments 3.52 3.41 (.54) 2.89 .98
------- ------- ------- ------- -------
Total income from
investment operations 4.36 4.28 .34 3.74 1.85
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income (.84) (.84) (.84) (.85) (.88)
Distributions from net
realized gains (1.15) (.87) (1.11) (.97) (.66)
------- ------- ------- ------- -------
Total distributions (1.99) (1.71) (1.95) (1.82) (1.54)
------- ------- ------- ------- -------
Net Asset Value, End of Year $26.54 $24.17 $21.60 $23.21 $21.29
======= ======= ======= ======= =======
Total Return /1/ 18.89% 21.25% 1.75% 18.63% 9.43%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $7,759 $6,552 $5,397 $5,283 $4,565
Ratio of expenses to average
net assets .59% .59% .60% .59% .60%
Ratio of net income to average
net assets 3.36% 3.92% 4.07% 3.83% 4.15%
Average commissions paid
per share /2/ 5.88 cents 6.27 cents 6.54 cents 7.31 cents 7.56 cents
Portfolio turnover rate 24.21% 23.31% 18.46% 22.48% 37.35%
/1/This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the funds's offering price.
/2/Brokerage commissions paid on portfolio transactions increase
the cost of securities purchased or reduce the proceeds of
securities sold, and are not reflected in the fund's
statement of operations. Shares traded on a principal
basis, such as most over-the-counter and fixed-income
transactions, are excluded.
</TABLE>
Independent Auditors' Report
To the Board of Directors and Shareholders of American Mutual Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
American Mutual Fund, Inc., (the "Fund"),including the schedule of portfolio
investments, as of October 31, 1996,and the related statements of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the per-share data and ratios for each
of the five years in the period then ended.These financial statements and
per-share data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards.Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per-share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of American Mutual Fund, Inc. as of October 31, 1996, 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 per-share data and ratios for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
November 22, 1996
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 distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
Dividends and Distributions per Share
<TABLE>
<CAPTION>
To Shareholders Payment Date From Net From Net From Net
of Record Investment Realized Realized
Income Short-Term Gains Long-Term Gains
<S> <C> <C> <C> <C>
December 8, 1995 December 11, 1995 $.21 $.03 $1.12
April 4, 1996 April 8, 1996 .21 - -
July 5, 1996 July 8, 1996 .21 - -
October 4, 1996 October 7, 1996 .21 - -
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends
received during the year. For purposes of computing this exclusion, 64% of the
dividends paid by the fund from net investment income represents 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, 14% of the
dividends paid by the fund from net investment income were derived from
interest on direct U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
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 1997 TO DETERMINE THE CALENDAR
YEAR AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1996 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
As of October 31, 1996:
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Per-Share Data and Ratios
Independent Auditors' Report
(b) Exhibits:
1. On file (see SEC files nos. 811-572 and 2-10607)
2. On file (see SEC files nos. 811-572 and 2-10607)
3. None.
4. On file (see SEC files nos. 811-572 and 2-10607)
5. On file (see SEC files nos. 811-572 and 2-10607)
6. On file (see SEC files nos. 811-572 and 2-10607)
7. None.
8. On file (see SEC files nos. 811-572 and 2-10607)
9. On file (see SEC files nos. 811-572 and 2-10607)
10. Not applicable to this filing.
11. Consent of Independent Auditors.
12. None.
13. None.
14. On file (see SEC files nos. 811-572 and 2-10607)
15. On file (see SEC files nos. 811-572 and 2-10607)
16. On file (see SEC files nos. 811-572 and 2-10607)
17. EX-27 Financial data schedule
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of November 30, 1996
Number of Record-Holders
Title of Class
Capital Stock 319,572
($1.00 par value)
ITEM 27. INDEMNIFICATION
Registrant is a joint-insured under Investment Advisor/Mutual Fund Errors
and Omissions Policy written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company and ICI Mutual Insurance Company, which
insures its officers and Directors against certain liabilities. However, in no
event will Registrant maintain insurance to indemnify any such person for any
act for which Registrant itself is not permitted to indemnify the individual.
Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is established that: (i) the
act or omission of the person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.
Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible under the circumstances
because the party to be indemnified has met the standard of conduct set forth
in subsection (b). This determination shall be made (i) by the Board of
Directors by a majority vote of a quorum consisting of directors not, at the
time, parties to the proceeding, or, if such quorum cannot be obtained, then by
a majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors or a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).
Section 2-418 further provides that indemnification provided for by
Section 2-418 shall not be deemed exclusive of any rights to which the
indemnified party may be entitled; that the scope of indemnification extends to
directors, officers, employees or agents of a constituent corporation absorbed
in a consolidation or merger and persons serving in that capacity at the
request of the constituent corporation for another; and empowers the
corporation to purchase and maintain insurance on behalf of a director,
officer, employee or agent of the corporation against any liability asserted
against or incurred by such person in any such capacity or arising out of such
person's status as such whether or not the corporation would have the power to
indemnify such person against such liabilities under Section 2-418.
Article VII of the Articles of Incorporation of the Fund provides that
"The Corporation shall indemnify (a) its directors to the full extent provided
by the general laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures provided by such laws;
(b) its officers to the same extent it shall indemnify its directors; and (c)
its officers who are not directors to such further extent as shall be
consistent with the law. The foregoing shall not limit the authority of the
Corporation to indemnify other employees and agents consistent with the law."
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
None.
ITEM 29. PRINCIPAL UNDERWRITERS
( a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, The Bond Fund of America, Inc., Capital Income Builder,
Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund,
Inc., The Cash Management Trust of America, EuroPacific Growth Fund,
Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund
of America, Inc., The Intermediate Bond Fund of America, The Investment Company
of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund,
New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund
of America, Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David A. Abzug Assistant Regional Vice None
5657 Lemona Avenue President
Van Nuys, CA 91411
John A. Agar Regional Vice President None
1501 N. University Drive
Suite 227A
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Brynwood Drive
Madison, WI 53711
% Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue So.
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
3100 West End Avenue
Suite 870
Nashville, TN 37215
Mick L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Senior Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
609 W. Littleton Blvd. - Suite 310
Littleton, CO 80121
Christopher J. Cassin Senior Vice President None
111 West Chicago Avenue
Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
* Larry P. Clemmensen Treasurer, Director None
* Kevin G. Clifford Director, Senior Vice None
President
Ruth M. Collier Vice President None
145 W. 67th Street #12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Blvd.
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
* Carl D. Cutting Vice President None
Dan J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 East Main Street
Jenks, OK 74037
Kirk D. Dodge Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
& Lloyd G. Edwards Vice President None
* Paul H. Fieberg Senior Vice President None
John R. Fodor Regional Vice President None
15 Latisquana Road
Southborough, MA 01772
* Mark P. Freeman, Jr. President, Director None
Clyde E. Gardner Senior Vice President None
Rt. 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director None
David E. Harper Senior Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
* Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue, 36th Floor
New York, NY 10111
V. John Kriss, Jr. Senior Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E
East Tennessee Circle
Aurora, CO 80012
* Lorin E. Liesy Assistant Vice President None
* Susan G. Lindgren Vice President - Institutional None
Investment Services Division
% Stella Lopez Vice President None
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 S. Race Street
Littleton, CO 80121
* John C. Massar Director, Senior Vice President None
* E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
3500 West Camino de Urania
Tucson, AZ 85741
% John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Rd.
St. Louis, MO 63131
* R. William Melinat Vice President, Institutional None
Investment Services Division
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Vice President None
32 Ridge Avenue
Newton Centre, MA 02161
# Candance D. Pilgram Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, SE
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
* George L. Romine, Jr. Vice President, Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07960
* Julie D. Roth Vice President None
* James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joe D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
* Daniel B. Seivert Assistant Vice President None
* R. Michael Shanahan Chairman None
David W. Short Director, Senior Vice President None
1000 RIDC Plaza, Ste. 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President, None
Institutional Investment
Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President, None
Institutional Investment
ServicesDivision
* Mary E. Smith Assistant Vice President, None
Institutional Investment
Services Division
Rodney G. Smith Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
4 West 4th Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
* Drew Taylor Assistant Vice President None
% James P. Toomey Assistant Vice President None
& Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
* David M. Ward Assistant Vice President, None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34238
* J. Kelly Webb Senior Vice President None
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
# Laura L. Wimberly Assistant Vice President None
* Marshall D. Wingo Senior Vice President None
* Robert L. Winston Senior Vice President, None
Director
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
209 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, One Market Plaza, Steuart Tower, Suite 1800, San
Francisco, CA 94111
# Business Address, 135 South State College Blvd., Brea, CA 92821
% Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
& Business Address, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, are maintained and held in the offices of
the Fund and its investment adviser, Capital Research and Management Company,
333 South Hope Street, Los Angeles, CA 90071. Certain accounting records are
maintained and kept in the offices of the Fund's accounting department, 135
South State College Blvd., Brea, CA 92821.
Records covering shareholder accounts are maintained and kept by the
Transfer Agent, American Funds Service Company, 135 South State College Blvd.,
Brea, CA 92821, 8000 IH-10, Suite 1400, San Antonio, TX 78230, 8332 Woodfield
Crossing Blvd., Indianapolis, IN 46240, and 5300 Robin Hood Road, Norfolk, VA
23513.
Records covering portfolio transactions are also maintained and kept by
the Custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York,
New York, 10081.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
(c) As reflected in the prospectus, the fund undertakes to provide each
person to whom a prospectus is delivered with a copy of the fund's latest
annual report to shareholders, upon request and without charge.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
20th day of December, 1996.
AMERICAN MUTUAL FUND, INC.
By /s/ JON B. LOVELACE, JR.
(Jon B. Lovelace, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment
to Registration Statement has been signed below on December 20, 1996, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Chief Executive Officer:
/s/ JAMES W. RATZLAFF
(James W. Ratzlaff) Vice Chairman of the Board
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ STEVEN N. KEARSLEY
(Steven N. Kearsley) Treasurer
(3) Directors:
H. Frederick Christie* Director
E. H. Clark, Jr.* Director
Mary Anne Dolan* Director
James K. Dunton President and Director
Martin Fenton, Jr.* Director
E. Eric Johnson* Director
Mary Myers Kaupilla* Director
/s/ JON B. LOVELACE, JR.
(Jon B. Lovelace, Jr.) Chairman of the Board
James W. Ratzlaff* Vice Chairman of the Board
Olin C. Robison* Director
</TABLE>
*By /s/ VINCENT P. CORTI
(Vincent P. Corti, Attorney-in-Fact)
CONSENT OF INDEPENDENT AUDITORS
American Mutual Fund, Inc.:
We consent to (a) the use in this Post-Effective Amendment No. 102 to
Registration Statement No. 2-10607 on Form N-1A of our report dated November
22, 1996 appearing in the Financial Statements, which are included in Part B,
the Statement of Additional Information of such Registration Statement, (b) the
references to us under the heading "General Information" in such Statement of
Additional Information and (c) the reference to us under the heading "Financial
Highlights" in the Prospectus, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
December 23, 1996
Los Angeles, California
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-1-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 5,654,930
<INVESTMENTS-AT-VALUE> 7,754,185
<RECEIVABLES> 31,742
<ASSETS-OTHER> 139
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,786,066
<PAYABLE-FOR-SECURITIES> 18,058
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,932
<TOTAL-LIABILITIES> 26,990
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,866,289
<SHARES-COMMON-STOCK> 292,312,818
<SHARES-COMMON-PRIOR> 271,030,873
<ACCUMULATED-NII-CURRENT> 44,738
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 456,481
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,099,255
<NET-ASSETS> 7,759,076
<DIVIDEND-INCOME> 171,438
<INTEREST-INCOME> 112,277
<OTHER-INCOME> 0
<EXPENSES-NET> 42,214
<NET-INVESTMENT-INCOME> 241,501
<REALIZED-GAINS-CURRENT> 477,701
<APPREC-INCREASE-CURRENT> 515,734
<NET-CHANGE-FROM-OPS> 1,234,936
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 238,662
<DISTRIBUTIONS-OF-GAINS> 311,944
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,457,011
<NUMBER-OF-SHARES-REDEEMED> 33,206,353
<SHARES-REINVESTED> 20,031,287
<NET-CHANGE-IN-ASSETS> 1,206,992
<ACCUMULATED-NII-PRIOR> 41,899
<ACCUMULATED-GAINS-PRIOR> 290,187
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 21,154
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42,214
<AVERAGE-NET-ASSETS> 7,197,832
<PER-SHARE-NAV-BEGIN> 24.17
<PER-SHARE-NII> .84
<PER-SHARE-GAIN-APPREC> 3.52
<PER-SHARE-DIVIDEND> .84
<PER-SHARE-DISTRIBUTIONS> 1.15
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.54
<EXPENSE-RATIO> .006
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
