American Mutual Fund ANNUAL REPORT 1995 for the year ended October 31
[The American Funds Group(R)]
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.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTION PAID IN CALENDAR 1995
For tax purposes, here are the income dividends and the capital gain
distribution you received in calendar 1995.
INCOME DIVIDENDS PER SHARE:
$0.21 paid 4/10/95
$0.21 paid 7/5/95
$0.21 paid 10/9/95
$0.21 paid 12/11/95
CAPITAL GAIN DISTRIBUTION PER SHARE:
$1.15 paid 12/11/95
A Form 1099-DIV, which provides the information you will need to prepare your
federal income tax return for 1995, will be mailed to you in late January.
ABOUT OUR COVER
Following the fall harvest, autumn leaves dapple the hillsides surrounding a
farm in Vermont. This report marks American Mutual Fund's 46th year of
successful investing in America.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the average annual compound returns with all
dividends reinvested for the period ended September 30, 1995 (the most recent
calendar quarter), assuming payment of the 5.75% maximum sales charge at the
beginning of the stated periods -- 10 years: +13.29%; 5 years: +13.40%; 1 year:
+15.50%. The fund's 30-day yield as of November 30, 1995, calculated in
accordance with the Securities and Exchange Commission formula, was 3.16%.
Sales charges are lower for accounts of $50,000 or more.
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.
American Mutual Fund
Fellow Investors:
Declining interest rates and expanding corporate profits created a very
favorable investment climate for financial assets in fiscal 1995.
Over the 12 months ended October 31, the value of your investment in American
Mutual Fund increased substantially. Your total return was 21.3% if you
reinvested the four quarterly dividends which totaled 84 cents a share, as well
as the capital gain distribution in December 1994 of 87 cents a share. If you
took your dividends in cash and accepted the capital gain distribution in
additional shares, the value of your investment rose 16.8% and you received an
income return of 3.9% based on AMF's net asset value of $21.60 at the start of
the fiscal year.
By comparison, the unmanaged Standard & Poor's 500 Composite Index recorded a
total return of 26.4% while the average total return of the 408 growth and
income funds tracked by Lipper Analytical Services was 20.2%. Both results are
with dividends reinvested and do not reflect the effect of sales charges.
American Mutual Fund strives for the balanced accomplishment of three
objectives -- current income, capital growth and conservation of principal.
Let's look at AMF's results in the context of each objective:
CURRENT INCOME
With dividends of 84 cents per share, American Mutual Fund's income return of
3.9% in fiscal 1995 was one percentage point above that of a broad
cross-section of stocks as measured by the S&P 500 which, calculated on a
comparable basis, produced 2.9% yield for the period. AMF's above-average
income return is due in part to the attractive dividend yields on many of the
stocks in the portfolio, particularly in such industries as banking,
telecommunications, electric & gas utilities, energy and health care. The
fund's income return was also augmented by longer term fixed-income securities
and cash-equivalents.
If you reinvest capital gain distributions, as 97% of shareholder accounts do
to keep capital intact, the stream of income produced by an investment in
American Mutual Fund continued to increase in fiscal 1995.
GROWTH OF DIVIDENDS* Years ended October 31
with dividends in cash and capital gain distributions reinvested
$429 $432 $450 $471
1992 1993 1994 1995
*Assumes $10,000 in the fund on 11/1/91
If you have added to your investment by reinvesting dividends as well, as is
done by 95% of shareholder accounts, the total dollar amount of income you have
received is higher still.
GROWTH OF DIVIDENDS* Years ended October 31
with dividends and capital gain distributions reinvested
$438 $458 $495 $538
1992 1993 1994 1995
*Assumes $10,000 in the fund on 11/1/91
Over the long term, AMF's dividends have been an integral part of the fund's
return. We invite you to read more about the role that income dividends play in
your investment in the feature that begins on page 6.
GROWTH OF CAPITAL
A number of factors made fiscal 1995 an excellent period for capital growth.
The economic expansion, now in its 57th month, proceeded at a moderate pace.
Inflation remained low. Lower interest rates reduced borrowing costs for
businesses and consumers. Ongoing efforts to cut costs generated increased
profits for many companies. And a weaker dollar boosted the competitive
position of numerous U.S. corporations in major world markets.
Investors were also encouraged by a renewed focus in Washington on slowing the
rate of government spending, cutting the federal budget deficit and providing
additional incentives to save and invest -- all of which could have positive
long-term implications for financial assets. Stock prices were further buoyed
by record inflows from investors in search of investment opportunities.
As you might expect in a year of this kind, there was broad strength throughout
the portfolio. Of the 95 stocks held over the course of the year, 81 rose in
price, 13 declined and one was unchanged. The stocks of many banks and
insurance companies recorded significant price gains. In fact, three of the
fund's ten largest gainers in 1995 were financial services firms. AMF's bank
holdings, at 11.6% of net assets, made up the largest industry position. Many
of the fund's investments in the health and personal care industry, at 5.9% of
net assets, also contributed strongly to capital results.
During fiscal 1995, AMF shows additions of 25 new names to the portfolio and
ten deletions. Many of the holdings that were sold had appreciated in price to
the point where we felt there were better opportunities elsewhere. Because
quite a few of these investments did exceptionally well, a sizable capital gain
distribution of $1.15 was paid to shareholders in December after the close of
the fiscal year.
The rise in the value of our shares in fiscal 1995 brought AMF's increase in
capital value during the ten years ended October 31 to 127.5%. In other words,
$10,000 in AMF grew to $22,746 from November 1, 1985 to October 31, 1995,
excluding dividends. If you reinvested dividends as well as capital gain
distributions, the value of that $10,000 increased to $35,243, a rise of
252.4%. That amounts to an average annual compound return of 13.4%.
CONSERVATION OF PRINCIPAL
In addition to current income and capital growth, American Mutual Fund seeks
preservation of principal.
While AMF has often lagged the market when stock prices are rising sharply, it
has also tended to give up less ground when stock prices are retreating. As you
can see from the table below, the fund has held up better than the S&P 500 in
all of the major extended market declines over its 46-year lifetime.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HOW AMF FARED DURING MARKET DECLINES
Period of Duration of Total Return AMF Advantage
Market Decline Decline S&P AMF During Decline
(Months) 500
1/5/53 - 9/14/53 8.3 -14.8% -12.2% +2.6
8/2/56 - 14.7 -21.6 -19.0 +2.6
10/22/57
12/12/61 - 6.4 -28.0 -25.3 +2.7
6/26/62
2/9/66 - 10/7/66 7.9 -22.2 -16.9 +5.3
11/29/68 - 17.9 -36.1 -33.1 +3.0
5/26/70
1/11/73 - 20.7 -48.2 -38.8 +9.4
10/3/74
9/21/76 - 3/6/78 17.5 -19.4 -4.6 +14.8
11/28/80 - 20.4 -27.1 -7.6 +19.5
8/12/82
8/25/87 - 3.3 -33.5 -22.1 +11.4
12/4/87
7/16/90 - 2.9 -19.9 -13.2 +6.7
0/11/90
</TABLE>
It has now been more than 60 months since the S&P 500 has experienced a
correction of 10% or more. Over the last 60 years, the longest previous
interval between such corrections was 45 months and the average was 21 months.
In fact, on only three prior occasions has such an unbroken rally extended
beyond 36 months.
American Mutual Fund entered fiscal 1995 with 86% of its net assets invested in
stocks and longer term fixed-income securities (the breakdown between the two
as of November 1, 1994 was 71.4% in equity-type securities and 14.7% in bonds
and notes). Over the previous 3 1/2 years, the fund's invested position in
stocks and longer term fixed-income securities ranged from 85% to 100% of net
assets, with the remainder held in cash equivalents.
Earlier in fiscal 1995, following a series of short-term interest rate
increases by the Federal Reserve, we sold some of our bonds and notes and
invested the proceeds in cash equivalents. At fiscal year-end, the fund's bond
position was down to 6.6% of net assets, while short-term securities stood at
20.7% and equity-type securities at 72.7% of net assets. The cash position is
designed to cushion the effects of any market decline and put the fund in a
position to take advantage of attractive longer term opportunities as they
emerge.
To some shareholders, the fund's concern with preservation of principal in
fiscal 1995 no doubt seemed out of place. In retrospect, it caused us to miss
some profitable opportunities, and it caused us to lag the S&P 500 Index.
However, this concern with protecting as well as enhancing capital has
contributed importantly to the long-term record you can find chronicled in the
chart on pages 4 and 5. We hope that it has also provided our shareholders with
peace of mind.
Looking forward, we would be surprised if the market did not occasionally pause
and, from time to time, retrace part of its earlier gains. We would encourage
our shareholders to maintain a long-term perspective and to endeavor to take
any setbacks in stride. Over the long term, we continue to believe that the
outlook for many well-run American corporations and their owners -- their
shareholders -- remains bright.
Cordially,
Jon B. Lovelace, Jr.
Chairman of the Board
James K. Dunton
President
December 14, 1995
A LOOK AT THE FUND'S RECORD
Results of a $10,000 Investment in American Mutual Fund
For more than 45 years, American Mutual Fund has been providing investors with
an opportunity to achieve their financial goals. A meaningful way to compare
the fund's results with the return on other investments is through its "total
return."
Total return is a combination of income return and capital results. "Income
return" represents the fund's income dividends, which are paid quarterly.
"Capital results" is the change in the net asset value of the fund's shares,
adjusted for capital gain distributions. Together, they represent the
percentage change in the value of an investment when income dividends and
capital gain distributions have been reinvested in additional shares.
This chart illustrates an assumed $10,000 investment in American Mutual Fund
from February 21, 1950 -- when the fund began operations -- through October 31,
1995. The table beneath the chart shows the fund's total return in each of the
45 fiscal years, broken down into its income and capital components.
As you can see, during this period a $10,000 investment in the fund, with all
dividends reinvested, would have grown to $2,473,442 compared with $2,102,453
in the S&P 500 Index. Incidentally, over the same period, $10,000 in a savings
account, with all interest compounded, would have grown to $98,209,* according
to figures supplied by the U.S. League of Savings Institutions and the Federal
Reserve Board.
You can use this table to estimate how the value of your own holdings has grown
over the years. Let's say, for example, that you have been reinvesting all your
dividends and want to know how your investment has done since the end of 1985.
At the time, the table indicates the value of the investment illustrated here
was $701,835.
Since then, it has more than tripled to $2,473,442. Thus, in the same period,
the value of your 1985 investment -- regardless of its size -- also has more
than tripled.
*Reflects all kinds of savings deposits, including longer term certificates.
Unlike investments in the fund, such deposits are insured and, if held to
maturity, offer a guaranteed return of principal and a fixed rate of interest,
but no opportunity for capital growth. Maximum allowable interest rates were
imposed by law until 1983.
$2,473,442/1,2/ American Mutual Fund with dividends reinvested
$2,102,453 S&P 500 with dividends reinvested
$386,119/1,3/ American Mutual Fund with dividends taken in cash
$10,000/1/ original investment
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS BASED ON THE MAXIMUM OFFERING
PRICE*
for periods for periods
ended 9/30/95 ended 10/31/95
Ten Years + 13.29% + 12.76%
Five Years + 13.40% + 13.47%
One Year + 15.50% + 14.27%
</TABLE>
*Assumes reinvestment of all distributions and payment of 5.75% sales charge at
the beginning of the stated periods.
Past results are not predictive of future results.
The S&P 500 Index is unmanaged and does not reflect sales charges, commissions
or expenses.
# Fund commenced operations February 21, 1950.
/1/ Results reflect payment of 5.75% sales charge on the $10,000 investment.
Thus, the net amount invested was $9,425. There is no sales charge on dividends
reinvested or capital gain distributions taken in shares. Results shown do not
take into account income or capital gain taxes.
/2/ Includes reinvested dividends of $857,373 and reinvested capital gain
distributions totaling $752,407 in the years 1950-1995.
/3/ Includes reinvested capital gain distributions taken in shares totaling
$190,626 but does not reflect income dividends taken in cash.
HARVESTING INCOME FROM AN INVESTMENT IN AMERICAN MUTUAL FUND
Robert and Charlotte Hinson of Bayside, Wisconsin, wanted an investment that
offered the potential for income, capital growth and conservation of principal.
[Photo Caption] Robert and Charlotte Hinson look forward to their retirement
years together. They plan to spend more time traveling and relaxing at their
vacation home, a lakeside log cabin in north central Minnesota, when Robert, a
radiologist, stops practicing medicine.[End Photo Caption]
With one eye on retirement, they also wanted an investment that could give them
rising income over time. That way, they'd have help in meeting increases in the
cost of living. So, four years ago, they took some of the money they had in
Treasury bonds and notes and invested in American Mutual Fund.
AMF's three objectives -- current income, capital growth and conservation of
principal -- have, in fact, worked in concert to produce rising income over the
lifetime of the fund.
Rising dividends from investments in common stocks are what fuel the fund's
growing income stream. Many of the companies you've invested in through the
fund have grown and prospered over the years. As their profits have increased,
so have their dividends.
Take Merck, for example, the world's largest pharmaceutical company and one of
the fund's largest holdings. It is a company whose products and services Robert
Hinson, a physician, is well-acquainted with. Over the past ten years, Merck
has seen its sales increase from $3.5 billion to $15 billion and its profits
grow from $540 million to $3 billion. Merck's owners -- its shareholders --
have received a share of those higher profits in the form of higher dividends.
The company's dividends have increased steadily each year, from 18 cents a
share in 1985 to $1.14 a share in 1994.
This pattern of rising profits and rising dividends has been repeated over the
years throughout the fund's portfolio as companies have participated in the
growth of the American economy.
The table to the right shows American Mutual Fund's ten largest stock holdings
at fiscal year-end and the per-share dividends they paid in calendar 1984 and
calendar 1994, adjusted for any stock splits. Some companies held by the fund
paid out above-average dividends and increased them slowly. Others began with
smaller dividends but increased them more rapidly. In addition to stocks, AMF
holds high-quality bonds (those rated A or better) and cash equivalents that
its investment adviser feels can make a contribution to one or more of the
fund's three investment objectives.
PER-SHARE DIVIDENDS OF
AMF'S TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Dividend
Company 1984 1994
1. AT&T (Sept. 1991) $1.20 $1.32
2. Pacific Telesis (Jan. 1984) 1.35 2.18
3. Ameritech (Jan. 1984) 1.00 1.92
4. Minnesota Mining
and Manufacturing (Feb. 1980) .85 1.76
5. Amoco (Mar. 1987) 1.50 2.20
6. Merck (Jan. 1986) .17 1.14
7. Wachovia (Aug. 1988) .37 1.23
8. Royal Dutch Petroleum (Jan. 1993) 1.44* 4.85*
9. DuPont (Sept. 1987) .97 1.82
10. Sprint (Dec. 1988) .94 1.00
</TABLE>
The fund has continuously held equities in these companies since the dates
indicated in parentheses.
*Gross dividend before 15% Netherlands tax to U.S. residents.
American Mutual Fund's own noteworthy record of generous and growing dividends
reflects the rising dividends paid by the companies it has invested in.
The chart below shows the growth in dividends produced by a $10,000 investment
in the fund at its inception in 1950. It assumes you took your income dividends
in cash and reinvested your capital gain distributions, thus keeping capital
intact. As you can see, dividends have increased dramatically over the years --
to the point where the yearly income generated by the fund now actually exceeds
the amount that was originally invested.
On eight occasions over AMF's lifetime, the fund paid special dividends out of
income generated by unusually large holdings of high-yielding cash equivalents.
Because these dividends are somewhat out of the ordinary, they are indicated in
the chart by their lighter color.
Shareholders who have kept their principal intact by reinvesting their capital
gain distributions have seen their regular dividend income increase in every
year except 1952. Since 1952, regular dividends have grown at a compound annual
rate of 8.1% if taken in cash. That is well in excess of the 5.3% compound
annual growth rate in dividends for the Standard & Poor's 500 Index.
While over time many of the companies in the fund's portfolio have paid higher
dividends as they have become more profitable, those increases have, more often
than not, been accompanied by gains in the share prices themselves. Stock
prices, of course, can be highly volatile. Robert Hinson, for his part, says
he's prepared to take that volatility in stride. "I understand the market may
have a few bad years. But historically, there's been more good years than bad,"
he says. Over meaningful time periods, the price of a company's stock generally
tends to go in the same direction as its profits and dividends.
The Hinsons describe themselves as conservative investors, so they like the
fact that AMF's emphasis on companies with long histories of rising earnings
and dividends has added to its stability. Dividends have helped reward
investors' patience when markets are flat or retreating. And because most of
these companies are financially strong, they have tended to fare better than
their weaker competitors during difficult periods. Finally, because AMF has
limited its losses during market declines, shareholders have had more money
working for them -- and producing income for them -- when prices again moved to
higher ground.
Here is an example of what AMF's dividend growth has meant in dollar terms: 20
years ago, $10,000 in AMF would have produced dividend income of $585. Since
then, those dividends would have increased steadily to a point where in the
latest fiscal year -- the 12 months ended October 31, 1995 -- they would have
amounted to $2,458.
[Sidebar] The Hinsons describe themselves as conservative investors, so they
like the fact that AMF's emphasis on companies with long histories of rising
earnings and dividends has added to its stability.[End Sidebar]
Over this 20-year period, AMF's dividends have grown at a compound annual rate
of 7.8% compared with the 5.3% compound annual rate of inflation over the
period, as measured by the Consumer Price Index. That has meant that
shareholders who take their dividends in cash have had a rising income stream
to help them with increases in the cost of living.
The Hinsons, like many Americans, owned short-term savings vehicles off and on
over the past two decades. Compared with an investment in U.S.
government-guaranteed 3-month Treasury bills over this period, AMF has offered
steadier income. In Treasury bills, an investor's income was linked to
short-term interest rates, which fluctuated dramatically. All told, $10,000 in
AMF would have paid out $31,615 in income versus $14,549 from Treasury bills.
If, instead, an investor had opted for a 10-year Treasury bond, he or she would
have received an income return of 8.1% a year during the first ten years, and,
when that bond matured and the proceeds were reinvested, roughly 10.2% a year
for the next ten years, for a total of $18,380 in interest payments. The income
return from the 10-year Treasury bond was higher than AMF's income return in
the early years. In effect, investors in the fund sacrificed some initial
income for the opportunity for growing income. By the fifth year, AMF's rising
dividends overtook the bond's fixed-interest payments.
Unlike the fund, where investors can lose money, the Hinsons knew Treasury
bonds and bills guaranteed the return of principal if held to maturity. Yet
after inflation had taken its toll, the dollars returned were worth less.
Meanwhile, AMF increased in value from $10,000 to $71,483, in addition to
paying out $31,615 in income.
The examples we have focused on thus far concern a shareholder who took his or
her dividends in cash. Yet the Hinsons realized that the best way to harvest
income from an investment in American Mutual Fund is actually to reinvest that
income.
Although like most shareholders they currently reinvest, the Hinsons plan on
taking income from the fund in several years when they retire. As a result,
they have seen both their income and the value of their investment rise more
rapidly. When reinvested, dividends purchase more shares, which become
additional capital. That capital can grow and produce additional income. The
effect of compounding income can be likened to a plant that grows and gives off
seeds, which in turn grow and give off seeds of their own in a process that
gradually picks up speed.
Since the end of fiscal 1975, a shareholder who reinvested all distributions
from $10,000 in AMF has seen his or her dividends increase not 320%, as did
those who took dividends in cash, but 956%. And he or she has seen the value of
an investment in the fund increase not to $71,483 but to $187,105.
Given AMF's history of generous dividends and the power of compounding, over
the long haul, income is likely to play a larger and larger role in your total
return. Indeed, American Mutual Fund can be viewed as an investment whose share
price has fluctuated as it produced a steady -- and growing -- stream of
income.
Percentage of total return from reinvested dividends
5 years
34.4% from reinvested dividends
20 years
46.9% from reinvested dividends
40 years
51.5% from reinvested dividends
AMERICAN MUTUAL FUND
October 31, 1995
Percent of
Largest Industry Holdings* Net Assets
Banking 11.60%
Telecommunications 11.18%
Energy Sources 6.52%
Health & Personal Care 5.94%
Utilities: Electric & Gas 4.09%
Other Industries 33.35%
Bonds, Notes, and Cash Equivalents 27.32%
*Percentages above do not include certain stocks in initial period of
acquisition.
Percent of
Largest Individual Holdings Net Assets
AT&T 3.07%
Pacific Telesis 1.92
Ameritech 1.77
Minnesota Mining and Manufacturing 1.76
Amoco 1.56
Merck 1.54
Wachovia 1.48
Royal Dutch Petroleum 1.41
DuPont 1.31
Sprint 1.29
<TABLE>
<CAPTION>
Market Percent
EQUITY-TYPE SECURITIES Value of Net
(common and preferred stocks) Shares (Millions) Assets
<S> <C> <C> <C>
ENERGY
ENERGY SOURCES- 6.52%
Amoco Corp. 1,600,000 $102.200 1.56
Ashland Inc. 519,100 16.417 .25
Atlantic Richfield Co. 70,000 7.473 .11
Chevron Corp. 350,000 16.363 .25
Exxon Corp. 925,000 70.647 1.08
Phillips Petroleum Co. 2,400,000 77.400 1.18
Royal Dutch Petroleum Co.
(New York Registered Shares) 750,000 92.156 1.41
Texaco Inc. 400,000 27.250 .42
Unocal Corp. $3.50 convertible preferred 330,000 16.995 .26
UTILITIES: ELECTRIC & GAS- 4.09%
Carolina Power & Light Co. 650,000 21.288 .32
Central and South West Corp. 1,800,000 48.150 .73
Consolidated Edison Co. of New York, Inc. 1,900,000 57.713 .88
Dominion Resources, Inc. 150,000 5.963 .09
Duke Power Co. 500,000 22.375 .34
Entergy Corp. 1,600,000 45.600 .70
Houston Industries Inc. 375,000 17.391 .27
Pacific Gas and Electric Co. 1,300,000 38.188 .58
Unicom Corp. 350,000 11.463 .18
----------- ------
695.032 10.61
----------- ------
MATERIALS
CHEMICALS- 2.99%
Dow Chemical Co. 400,000 27.450 .42
E.I. du Pont de Nemours and Co. 1,372,000 85.579 1.31
Monsanto Co. 788,200 82.564 1.26
FOREST PRODUCTS & PAPER- 1.38%
Georgia-Pacific Corp. 125,000 10.313 .16
Rayonier Inc. (formerly ITT Rayonier Inc.) 50,000 1.875 .03
Union Camp Corp. 750,000 38.156 .58
Westvaco Corp. 820,000 22.755 .35
Weyerhaeuser Co. 400,000 17.650 .26
METALS: STEEL- 0.27%
Worthington Industries, Inc. 1,050,000 17.456 .27
MISCELLANEOUS MATERIALS & COMMODITIES- 0.80%
Olin Corp. 649,600 41.574 .63
TRINOVA Corp. 400,000 11.250 .17
----------- ------
356.622 5.44
----------- ------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY- 1.96%
Boeing Co. 570,000 37.406 .57
General Motors Corp., Class H 250,000 10.500 .16
Sundstrand Corp 517,600 31.703 .48
United Technologies Corp. 550,000 48.813 .75
CONSTRUCTION & HOUSING- 0.17%
Stone & Webster, Inc. 325,000 10.928 .17
DATA PROCESSING & REPRODUCTION- 1.88%
International Business Machines Corp. 735,000 71.479 1.09
Xerox Corp. 400,000 51.900 .79
ELECTRICAL & ELECTRONIC- 1.62%
General Electric Co. 1,335,000 84.439 1.29
Hubbell Inc., Class B 360,000 21.690 .33
ELECTRONIC COMPONENTS- 0.60%
Motorola, Inc. 600,000 39.375 .60
INDUSTRIAL COMPONENTS- 1.16%
Dana Corp. 700,000 17.938 .27
Johnson Controls, Inc. 200,000 11.650 .18
TRW Inc. 700,000 46.025 .71
MACHINERY & ENGINEERING- 1.25%
Caterpillar Inc. 400,000 22.450 .34
Deere & Co. 671,400 60.006 .91
----------- ------
566.302 8.64
----------- ------
CONSUMER GOODS
AUTOMOBILES- 1.18%
Ford Motor Co., Class A 2,679,620 77.039 1.18
BEVERAGES- 0.40%
PepsiCo, Inc. 500,000 26.375 .40
FOOD & HOUSEHOLD PRODUCTS- 1.84%
Colgate-Palmolive Co. 325,000 22.506 .34
ConAgra, Inc. 1,279,917 49.437 .75
CPC International Inc. 185,000 12.279 .19
General Mills, Inc. 400,000 22.950 .35
Ralston Purina Co. 226,300 13.437 .21
HEALTH & PERSONAL CARE- 5.94%
Abbott Laboratories 400,000 15.900 .24
American Home Products Corp. 765,000 67.798 1.03
Bausch & Lomb Inc. 501,000 17.347 .26
Bristol-Myers Squibb Co. 325,000 24.781 .38
Johnson & Johnson 400,000 32.600 .50
Eli Lilly and Co. 325,000 31.403 .48
Merck & Co., Inc. 1,760,000 101.200 1.54
Schering-Plough Corp. 600,000 32.175 .49
Upjohn Co. 630,000 31.973 .49
Warner-Lambert Co. 400,000 34.050 .53
TEXTILES & APPAREL- 0.37%
VF Corp. 500,000 23.937 .37
----------- ------
637.187 9.73
----------- ------
SERVICES
BROADCASTING & PUBLISHING- 1.27%
Gannett Co., Inc. 850,000 46.219 .71
Times Mirror Co., $1.374 preferred equity
redemption cumulative stock, Series B 224,483 5.416 .08
Tribune Co. 500,000 31.562 .48
BUSINESS & PUBLIC SERVICES- 2.04%
Dun & Bradstreet Corp. 1,000,000 59.750 .91
Moore Corp. Ltd. 700,000 13.387 .20
Pitney Bowes Inc. 1,000,000 43.625 .67
WMX Technologies, Inc. 600,000 16.875 .26
LEISURE & TOURISM- 0.45%
Marriott International, Inc. 800,000 29.500 .45
MERCHANDISING- 0.87%
J. C. Penney Co., Inc. 300,000 12.637 .19
Wal-Mart Stores, Inc. 1,000,000 21.625 .33
Walgreen Co. 800,000 22.800 .35
TELECOMMUNICATIONS- 11.18%
Ameritech Corp. 2,150,000 116.100 1.77
AT&T Corp. 3,145,000 201.280 3.07
Bell Atlantic Corp. 500,000 31.812 .49
GTE Corp. 1,500,000 61.875 .94
Pacific Telesis Group 4,150,000 126.056 1.92
SBC Communications Inc. 700,000 39.112 .60
Sprint Corp. 2,200,000 84.700 1.29
U S WEST, Inc. 1,500,000 71.437 1.10
TRANSPORTATION: AIRLINES- 0.26%
Delta Air Lines, Inc. $3.50 convertible preferred,
Class C 310,000 17.166 .26
TRANSPORTATION: RAIL & ROAD- 2.56%
Conrail, Inc. 750,000 51.562 .79
Norfolk Southern Corp. 955,000 73.774 1.13
Union Pacific Corp. 650,000 42.494 .64
----------- ------
1,220.764 18.63
----------- ------
FINANCE
BANKING- 11.60%
AmSouth Bancorporation 1,000,000 39.875 .61
Banc One Corp. 2,100,000 70.875 1.08
BankAmerica Corp. 250,000 14.375 .22
Chemical Banking Corp. 1,050,000 59.719 .91
Citicorp $5.375 convertible preferred,
Series 13 150,000 26.850 .41
Comerica Inc. 1,700,000 57.162 .87
First Chicago Corp. 440,000 29.865 .46
First Interstate Bancorp 350,000 45.150 .69
First Security Corp. 950,000 31.112 .47
First Union Corp. 250,000 12.406 .19
Fleet Financial Group, Inc. 1,200,000 46.500 .71
Huntington Bancshares Inc. 2,600,000 62.075 .95
J.P. Morgan & Co. Inc. 450,000 34.706 .53
NBD Bancorp, Inc. 300,000 11.400 .17
PNC Bank Corp. 2,440,000 64.050 .98
Wachovia Corp. 2,200,000 97.075 1.48
Wells Fargo & Co. 270,000 56.734 .87
FINANCIAL SERVICES- 0.80%
Beneficial Corp. 225,000 11.025 .17
Federal National Mortgage Assn. 395,000 41.426 .63
INSURANCE- 3.04%
Aetna Life and Casualty Co. 400,000 28.150 .43
Allstate Corp. 1,400,000 51.450 .79
American General Corp. 970,000 31.889 .49
Lincoln National Corp. 600,000 26.775 .41
SAFECO Corp. 550,000 35.303 .54
St. Paul Companies, Inc. 500,000 25.375 .38
----------- ------
1,011.322 15.44
----------- ------
MULTI-INDUSTRY & MISCELLANEOUS
MULTI-INDUSTRY- 2.73%
Minnesota Mining and Manufacturing Co. 2,025,000 115.172 1.76
Tenneco Inc. 700,000 30.712 .47
Textron Inc. 480,000 33.000 .50
----------- ------
178.884 2.73
----------- ------
MISCELLANEOUS- 1.46%
Stocks in initial period of acquisition 95.974 1.46
----------- ------
TOTAL EQUITY-TYPE SECURITIES (cost:
$3,172.345 million) 4,762.087 72.68
----------- ------
BONDS AND NOTES Principal
Amount
CORPORATE- 0.21%
J.C. Penney Co., Inc. 9.05% 2001 $12,000,000 13.477 .21
----------- ------
U.S. TREASURY OBLIGATIONS- 6.37%
10.75% August 2005 8,000,000 10.720 .16
12.375% May 2004 50,000,000 70.906 1.08
11.75% February 2001 50,000,000 63.297 .97
8.25% July 1998 60,000,000 63.778 .97
5.125% April 1998 60,000,000 59.240 .90
8.125% February 1998 60,000,000 63.103 .96
6.00% November 1997 60,000,000 60.441 .92
6.375% June 1997 12,000,000 12.148 .19
7.25% November 1996 14,000,000 14.228 .22
----------- ------
417.861 6.37
----------- ------
TOTAL BONDS AND NOTES (cost: $439.766 million) 431.338 6.58
----------- ------
TOTAL INVESTMENT SECURITIES (cost: $3,612.111
million) 5,193.425 79.26
----------- ------
SHORT-TERM SECURITIES
CORPORATE SHORT-TERM NOTES- 17.84%
American Express Credit Corp. 5.67%-5.70%
due 12/7/95-1/17/96 73,300,000 72.729 1.11
AT&T Corp. 5.64%-5.65%
due 12/19-12/21/95 63,500,000 62.996 .96
Central and South West Corp. 5.67%-5.72%
due 11/6-12/14/95 69,845,000 69.618 1.06
Coca-Cola Co. 5.65%-5.66%
due 12/19-12/21/95 48,100,000 47.720 .73
John Deere Capital Corp. 5.71%-5.72%
due 11/15-11/16/95 40,000,000 39.902 .61
Ford Motor Credit Co. 5.64%-5.74%
due 11/1-12/1/95 75,000,000 74.748 1.14
General Electric Capital Corp. 5.68%-5.75%
due 11/13-12/15/95 87,400,000 87.048 1.33
H.J.Heinz Co. 5.71%-5.72%
due 11/1-12/28/95 41,600,000 41.530 .63
Hewlett-Packard Co. 5.58%-5.68%
due 12/13/95-1/25/96 93,050,000 92.159 1.41
J.C. Penney Funding Corp. 5.70%-5.71%
due 11/7-12/4/95 76,600,000 76.444 1.17
PepsiCo, Inc. 5.68%-5.72% due 11/7/95-1/19/96 62,300,000 61.815 .94
Pfizer Inc. 5.69%-5.70% due 11/2-12/4/95 60,000,000 59.833 .91
Procter & Gamble Co. 5.62%-5.65% due 11/29/95-1/25/96 96,700,000 96.004 1.47
Sara Lee Corp. 5.68% due 12/27/95 50,000,000 49.549 .76
Southwestern Bell Telephone Co. 5.72%-5.75%
due 11/7-11/15/95 19,300,000 19.267 .29
U S WEST Communications, Inc. 5.71%-5.72% due 44,175,000 44.113 .67
11/8-11/9/95
Wal-Mart Stores, Inc. 5.67%-5.70% due 11/13-12/20/95 82,064,000 81.603 1.25
Xerox Corp. 5.68%-5.71% due 11/2-12/15/95 92,400,000 92.130 1.40
FEDERAL AGENCY SHORT-TERM OBLIGATIONS- 0.46%
Federal National Mortgage Assn. 5.61%
due 12/8/95 30,000,000 29.822 .46
U.S. TREASURY SHORT-TERM SECURITIES - 2.66%
7.375%-7.50% due 1/31-5/15/96 172,700,000 173.812 2.66
----------- ------
TOTAL SHORT-TERM SECURITIES (cost: $1,370.635
million) 1,372.842 20.96
Excess of payables over cash and receivables 14.183 .22
----------- ------
TOTAL SHORT-TERM SECURITIES,
CASH AND RECEIVABLES, NET OF PAYABLES 1,358.659 20.74
----------- ------
NET ASSETS $6,552.084 100.00%
=========== ======
</TABLE>
See Notes to Financial Statements
<TABLE>
<CAPTION>
Equity-type securities Equity-type securities
appearing in the portfolio eliminated from the portfolio
since April 30, 1995 since April 30, 1995
- ---------------------------- ------------------------------
<S> <C>
Abbott Laboratories General Re
Aetna Life and Casualty Melville
Ashland Mobil
Colgate-Palmolive Phelps Dodge
Duke Power Texas Instruments
Fleet Financial Group Texas Utilities
General Motors
Georgia-Pacific
Johnson Controls
Moore
J.C. Penney
Ralston Purina
Wal-Mart
Walgreen
Weyerhaeuser
</TABLE>
- -----------
AMERICAN MUTUAL FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------------------- --------- --------------
STATEMENT OF ASSETS AND LIABILITIES (dollars in
October 31, 1995 millions)
- ---------------------------------------- --------- --------------
<S> <C> <C>
ASSETS:
Investment securities at market
(cost: $3,612.111) $5,193.425
Short-term securities
(cost: $1,370.635) 1,372.842
Cash 1.558
Receivables for-
Sales of fund's shares $ 5.487
Dividends and accrued interest 23.088 28.575
--------- --------------
6,596.400
LIABILITIES:
Payables for-
Purchases of investments 37.421
Repurchases of fund's shares 3.219
Management services 1.616
Accrued expenses 2.060 44.316
--------- --------------
NET ASSETS AT OCTOBER 31, 1995-
Equivalent to $24.17 per share on
271,030,873 shares of $1 par value
capital stock outstanding (authorized
capital stock--500,000,000 shares) $6,552.084
==============
- ----------------------------------------- --------- --------------
STATEMENT OF OPERATIONS (dollars in
for the year ended October 31, 1995 millions)
- ----------------------------------------- --------- --------------
INVESTMENT INCOME:
Income:
Dividends $156.273
Interest 108.834 $265.107
---------
Expenses:
Management services fee 17.788
Distribution expenses 11.107
Transfer agent fee 3.849
Reports to shareholders .398
Registration statement and
prospectus .148
Postage, stationery and supplies .934
Directors' fees .186
Auditing and legal fees .063
Custodian fee .143
Taxes other than federal income tax .068
Other expenses .100 34.784
--------- --------------
Net investment income 230.323
--------------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Net realized gain 305.112
Net increase in unrealized appreciation on
investments:
Beginning of year 970.648
End of year 1,583.521 612.873
--------- --------------
Net realized gain and increase in unrealized
appreciation on investments 917.985
--------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,148.308
==============
- ---------------------------------------- --------------
STATEMENT OF CHANGES IN NET ASSETS (dollars in
millions)
- ----------------------------------------- --------------
Year ended
October 31
1995 1994
--------- --------------
OPERATIONS:
Net investment income $ 230.323 $ 213.211
Net realized gain on investments 305.112 205.193
Net change in unrealized appreciation
on investments 612.873 (327.297)
--------- --------------
Net increase in net assets
resulting from operations 1,148.308 91.107
--------- --------------
DIVIDENDS AND DISTRIBUTIONS
PAID TO SHAREHOLDERS:
Dividends from net investment income (220.251) (200.381)
Distributions from net realized
gain on investments (217.473) (251.156)
--------- --------------
Total dividends and distributions (437.724) (451.537)
--------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
31,087,225 and 30,117,655
shares, respectively 689.376 652.107
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
18,568,126 and 18,500,247
shares, respectively 388.017 395.698
Cost of shares repurchased:
28,510,164 and 26,355,477
shares, respectively (633.334) (572.989)
--------- --------------
Net increase in net assets
resulting from capital share
transactions 444.059 474.816
--------- --------------
TOTAL INCREASE IN NET ASSETS 1,154.643 114.386
NET ASSETS:
Beginning of year 5,397.441 5,283.055
--------- --------------
End of year (including undistributed
net investment income: $41.899
and $31.827, respectively) $6,552.084 $5,397.441
=========== ==============
</TABLE>
See Notes to Financial Statements
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 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. Short-term
securities with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
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 $143,000 includes $51,000 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, 1995, net unrealized appreciation on investments for federal
income tax purposes aggregated $1,584,877,000, of which $1,609,769,000 related
to appreciated securities and $24,892,000 related to depreciated securities.
During the year ended October 31, 1995, the fund realized, on a tax basis, a
net capital gain of $305,481,000 on securities transactions. The cost of
portfolio securities for federal income tax purposes was $4,981,390,000 at
October 31, 1995.
3. The fee of $17,788,000 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, 1995,
distribution expenses under the Plan were $11,107,000. As of October 31, 1995,
accrued and unpaid distribution expenses were $1,944,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $3,849,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $2,831,000 (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 of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as memebers of the Board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of October 31, 1995, aggregate amounts deferred were $91,000.
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, 1995, accumulated undistributed net realized gain on
investments was $290,187,000 and paid-in capital was $4,365,446,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,134,732,000 and $1,268,264,000, respectively,
during the year ended October 31, 1995.
Per-Share Data and Ratios
<TABLE>
<CAPTION>
Year
ended
October 31
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year $21.60 $23.21 $21.29 $20.98 $17.91
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .87 .88 .85 .87 .89
Net realized and unrealized
gain (loss) on investments 3.41 (.54) 2.89 .98 3.39
------- ------- ------- ------- -------
Total income from
investment operations 4.28 .34 3.74 1.85 4.28
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income (.84) (.84) (.85) (.88) (1.01)
Distributions from net
realized gains (.87) (1.11) (.97) (.66) (.20)
------- ------- ------- ------- -------
Total distributions (1.71) (1.95) (1.82) (1.54) (1.21)
------- ------- ------- ------- -------
Net Asset Value, End of Year $24.17 $21.60 $23.21 $21.29 $20.98
======= ======= ======= ======= =======
Total Return* 21.25% 1.75% 18.63% 9.43% 24.62%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $6,552 $5,397 $5,283 $4,565 $4,134
Ratio of expenses to average
net assets .59% .60% .59% .60% .63%
Ratio of net income to average
net assets 3.92% 4.07% 3.83% 4.15% 4.47%
Portfolio turnover rate 23.31% 18.46% 22.48% 37.35% 23.77%
</TABLE>
*This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
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., including the schedule of portfolio investments, as
of October 31, 1995, and the related statement 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 the 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 at October
31, 1995 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. at October 31, 1995, 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, 1995
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 of Payment Date Dividends From Net From Net
Record from Net Realized Realized
Investment Short-Term Long-term
Income Gains Gains
<S> <C> <C> <C> <C>
December 2, 1994 December 5, 1994 $0.21 - $0.87
April 7, 1995 April 10, 1995 0.21 - -
July 3, 1995 July 5, 1995 0.21 - -
October 6, 1995 October 9, 1995 0.21 - -
</TABLE>
Corporate shareholders may deduct 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, 21% of the dividends
paid by the fund from net investment income was derived from interest on direct
U.S. Treasury obligations.
Dividends and distibutions 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 WHICH WILL BE
MAILED IN JANUARY 1996 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON
THEIR RESPECTIVE 1995 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX
ADVISERS.
FUND SERVICES
These handy services can add convenience and flexibility to your American Funds
investments.
ADDING TO YOUR INVESTMENT
There are three ways you can group your American Funds purchases to qualify for
a quantity discount:
RIGHT OF ACCUMULATION: You can combine the value of your existing shares with
those you are purchasing to qualify for a discount.
STATEMENT OF INTENTION: You can, without obligation, use a Statement of
Intention that allows you to combine the value of your existing shares and the
purchases you intend to make over a 13-month period so you can take immediate
advantage of the maximum quantity discount available.
CONCURRENT PURCHASES: By purchasing shares in more than one of the American
Funds simultaneously, you may qualify for a quantity discount.
(Shares of money market funds purchased directly do not apply to quantity
discounts. Additionally, certain accounts may not be eligible to be grouped.
See the fund's prospectus or your investment professional for more details.)
Subsequent investments by mail: Once your account has been established and
you've selected a broker/dealer, simply send a check for $50 or more, along
with the bottom portion of your account statement, to American Funds Service
Company.
PUTTING YOUR INVESTMENTS ON AUTOPILOT
AUTOMATIC INVESTMENT PLAN: You can make automatic investments regularly by
authorizing American Funds Service Company to deduct a specified sum from your
bank account.
AUTOMATIC EXCHANGE PLAN: You can automatically exchange $50 or more between
funds on a regular basis.
AUTOMATIC WITHDRAWAL PLAN: You can arrange to have regular checks for specified
amounts sent to you or to anyone you designate in any month(s) you choose.
CHOOSING THE PAYOUT SYSTEM THAT'S RIGHT FOR YOU
AUTOMATIC REINVESTMENT: All dividends and capital gain distributions can be
automatically reinvested in additional fund shares without a sales charge.
CROSS-REINVESTMENT: You can reinvest dividends and/or capital gains from one
fund to another fund at no charge if you have a balance of at least $5,000 in
the originating fund or meet the minimum initial investment for the receiving
fund.
DIVIDENDS IN CASH: You can elect to take dividends in cash.
REPORTS YOU'LL RECEIVE FROM US
CONFIRMATIONS OF TRANSACTIONS: You receive account statements reflecting the
transactions in your account.
CONSOLIDATED QUARTERLY STATEMENTS: If you have more than one account with the
American Funds, you can request a quarterly statement combining certain
accounts registered to the same individual.
YEAR-END TAX REPORTS: At the end of each year, you will receive an individual
report which shows the tax status of the distributions paid to you during the
year. In many instances, these reports can help you calculate taxes due on
shares sold by reporting average cost.
SPECIAL SERVICES
EXCHANGE PRIVILEGES: You can transfer some or all of
your holdings into other American Funds by mail or by phone. Certain
restrictions apply (a sales charge may apply if one has not already been paid),
and it's important to remember that an exchange constitutes a sale and purchase
for tax purposes.
TELEPHONE INFORMATION SERVICE: American FundsLine(R) is a toll-free service
which gives you account information as well as current prices for all American
Funds. Just call 800/325-3590.
SAFEKEEPING OF CERTIFICATES: Your shares are credited to your account and
certificates are not issued unless specifically requested. (Certificates are
not available for money market funds.)
FREE CHECK-WRITING WITHDRAWAL SERVICE: If you have a money market fund account,
this service enables you to write checks for $250 or more against the account.
The account continues to earn daily interest until checks clear the fund's
bank.
RETIREMENT PLANS: A wide variety of plans is available.
FOR MORE COMPLETE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN
FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR
SECURITIES DEALER OR FINANCIAL PLANNER, OR PHONE THE FUND'S TRANSFER AGENT,
AMERICAN FUNDS SERVICE COMPANY, AT 800/421-0180. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE YOU INVEST OR SEND MONEY. THESE SERVICES ARE SUBJECT TO CHANGE
OR TERMINATION.
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Palos Verdes Estates, California
Private investor; former President and Chief Executive Officer,
The Mission Group; former President, Southern California
Edison Company
E. H. CLARK, JR.
Newport Beach, California
Chairman of the Board and Chief Executive Officer, The Friendship Group (an
investment partnership); former Chairman of the Board, Baker Hughes Inc.
MARY ANNE DOLAN
Los Angeles, California
Founder and President, M.A.D., Inc. (TV and film productions);
former editor, The Los Angeles Herald Examiner
JAMES K. DUNTON
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
E. ERIC JOHNSON
Los Angeles, California
Chairman of the Board, TBG Financial Services
MARY MYERS KAUPPILA
Boston, Massachusetts
Founder and President, Energy Investment, Inc.
JON B. LOVELACE, JR.
Los Angeles, California
Chairman of the Board of the fund
Vice Chairman of the Board and Chairman of the Executive Committee, Capital
Research and Management Company
JAMES W. RATZLAFF
San Francisco, California
Senior Partner, The Capital Group Partners L.P.
OLIN C. ROBISON, PH.D.
Middlebury, Vermont
President of the Salzburg Seminar;
Professor and former President, Middlebury College
OTHER OFFICERS
ROBERT G. O'DONNELL
San Francisco, California
Executive Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
TIMOTHY D. ARMOUR
Los Angeles, California
Vice President of the fund
Executive Vice President,
Capital Research Company
VINCENT P. CORTI
Los Angeles, California
Secretary of the fund
Vice President -- Fund Business Management Group,
Capital Research and Management Company
STEVEN N. KEARSLEY
Brea, California
Treasurer of the fund
Vice President and Treasurer,
Capital Research and Management Company
MARY C. CREMIN
Brea, California
Assistant Treasurer of the fund
Senior Vice President -- Fund Business Management Group,
Capital Research and Management Company
R. MARCIA GOULD
Brea, California
Assistant Treasurer of the fund
Vice President -- Fund Business Management Group,
Capital Research and Management Company
Marjorie Fisher, a Director of the fund since 1975, retired
from the Board at the end of the fiscal year. Throughout her many years of
involvement with AMF, which began in 1951, Miss Fisher's
service included several officer positions including President
and Chief Executive Officer. The Directors express their
admiration and gratitude for her numerous significant
contributions to the fund.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
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 December 31, 1995, this report must be accompanied
by an American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA BDA/AL/2769
Lit. No. AMF-011-1295
The American Funds Group (R)
