AMERICAN MUTUAL FUND
Quarterly Report
for the three months
ended January 31, 1996
[The American Funds Group(R)]
Fellow Shareholders:
During the three months ended January 31, 1996, the value of your investment in
American Mutual Fund increased 8.6% if, like most shareholders, you reinvested
the dividend of 21 cents per share and capital gain distribution of $1.15 per
share, both paid in December 1995. Over this same period, the unmanaged
Standard & Poor's 500 Composite Index rose 10.0%.
AMF's sharp first quarter advance comes on the heels of a 21.3% total
return in fiscal 1995, which ended on October 31. Helping to sustain the rise
in stock prices were record flows of new investments into mutual funds and two
cuts in short-term interest rates by the Federal Reserve Board, one in December
and another in January. In a recent report to a House Banking subcommittee,
Federal Reserve Chairman Alan Greenspan stated that he believes the economy is
"on track for sustained growth." However, given the favorable outlook for
inflation, we would not be surprised to see interest rates continue to decline.
It is now more than 64 months since the S&P 500 has experienced a market
decline of 10% or more. At some point, we will no doubt see a less favorable
environment for equities. In that regard, we believe that your fund is
appropriately positioned for the balanced accomplishment of its three
objectives - conservation of principal as well as current income and capital
growth.
We look forward to reporting to you in more depth in our semi-annual
report to shareholders in three months.
Cordially,
James K. Dunton
President
March 7, 1996
Portfolio Summary - January 31, 1996
INVESTMENT MIX
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
Type of Security
Equity-Type Securities $5,189.969 72.98%
Bonds and Notes 411.882 5.79
Cash Equivalents 1,510.557 21.23
Total Net Assets $7,112.408 100.00%
</TABLE>
LARGEST INVESTMENT CATEGORIES
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
Services $1,336.780 18.80%
Finance 1,081.195 15.20
Energy 775.491 10.90
</TABLE>
LARGEST INDUSTRY HOLDINGS
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
Banking $815.724 11.47%
Telecommunications 734.803 10.33
Energy Sources 488.503 6.87
Health & Personal Care 448.460 6.31
Utilities: Electric & Gas 286.988 4.03
</TABLE>
LARGEST INDIVIDUAL HOLDINGS
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
AT&T $210.322 2.96%
DuPont 147.023 2.07
Ameritech 129.269 1.82
Minnesota Mining & Mfg. 117.713 1.66
Merck 115.913 1.63
Amoco 112.600 1.58
Pacific Telesis 109.150 1.53
Royal Dutch Petroleum 104.250 1.47
Wachovia 98.450 1.38
Sprint 88.406 1.24
</TABLE>
American Mutual Fund(R) 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.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended December 31, 1995
(the most recent calendar quarter), assuming payment of the 5.75% maximum sales
charge at the beginning of the stated periods - 10 years: +220.83%, or +12.36%
a year; 5 years: +86.37%, or +13.26% a year; 12 months: +23.81%. Sales charges
are lower for accounts of $50,000 or more. The fund's 30-day yield as of
February 29, 1996, calculated in accordance with the Securities and Exchange
Commission formula, was 2.93%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
For information about your account or any of the fund's services, please
contact your securities dealer or financial planner, or call the fund's
transfer agent, toll-free, at 800/421-0180.
This report is for the information of shareholders of American Mutual Fund, but
it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
March 31, 1996, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Litho in USA BDA/GRS/2908
(C)1996 American Funds Distributors, Inc.
Lit. No. AMF-012-0396
