AMERICAN MUTUAL FUND
QUARTERLY REPORT
for the nine months ended July 31, 1996
[The American Funds Group(R)]
FELLOW SHAREHOLDERS:
For the three-month period ended July 31, the value of your investment in
American Mutual Fund declined 1.1% if, like most shareholders, you reinvested
the income dividend of 21 cents a share paid in July. By comparison, the
unmanaged Standard & Poor's 500 Composite Index declined 1.6%.
The U.S. equity market actually experienced a much more significant decline
than shown by these figures. From its closing high on May 24 to its low on July
24, the S&P 500, which measures the stocks of larger companies, declined 7.6%.
Meanwhile, the NASDAQ Composite Index, which measures the stocks of smaller,
less well-known companies listed over the counter, declined 16.5% over the same
period. While the decline in the broad market no doubt reflected a delayed
reaction to a sharp rise in long-term interest rates since mid-February, the
more severe decline in the over-the-counter market also reflected a growing
concern about the level of speculation in less-seasoned issues and especially
in the new-issue market.
As the ongoing economic expansion, now in its sixth year, moves us closer to
full utilization of our country's available resources of labor and
manufacturing capacity, we may see slower growth in corporate profits and an
increased risk of higher inflation and rising interest rates. Such trends could
have even more of a negative impact on the market. That seems all the more
possible given that we have not registered even a 10% decline in the S&P 500
since 1990 - a decline normally experienced about every two years.
We believe AMF's portfolio is well positioned to take advantage of market
weaknesses that might develop. As many of you know, one of the characteristics
that has set American Mutual Fund apart over the years has been its superior
resistance to market declines. The fund has held up better - often much better
- - than the S&P 500 in all of the major extended market declines in the fund's
46-year lifetime.
Looking to the longer term, we believe that the outlook for the companies in
American Mutual Fund's portfolio remains positive. We believe that in coming
years the vast majority of them will continue to enjoy rising earnings and
dividends that will ultimately be reflected in their stock prices - and in the
value of your holdings.
We look forward to reporting to you in more detail in three months.
Cordially,
James K. Dunton
President
September 6, 1996
PORTFOLIO SUMMARY - JULY 31, 1996
INVESTMENT MIX
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
Equity-Type Securities $5,382.742 75.27%
Bonds & Notes 382.865 5.35
Cash & Equivalents 1,385.220 19.38
Total Net Assets $7,150.827 100.00%
</TABLE>
LARGEST INDUSTRY HOLDINGS
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
Banking $874.717 12.23%
Telecommunications 641.808 8.98
Energy Sources 563.602 7.88
Health & Personal Care 462.886 6.47
Utilities: Electric & Gas 271.181 3.79
</TABLE>
LARGEST INDIVIDUAL HOLDINGS
<TABLE>
<CAPTION>
Market Value Percent of
(Millions) Net Assets
<S> <C> <C>
AT&T $205.633 2.88%
DuPont 170.584 2.39
Ameritech 163.725 2.29
Amoco 127.063 1.78
Merck 102.800 1.44
Royal Dutch Petroleum 101.841 1.42
Wachovia 97.350 1.36
Minnesota Mining and Manufacturing 95.115 1.33
Phillips Petroleum 90.850 1.27
American Home Products 90.800 1.27
</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.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND WERE COMPUTED WITHOUT A
SALES CHARGE. 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 financial adviser or call American Funds Service Company,
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.
Litho in USA BDA/GAC/3044
(C)1996 American Funds Distributors, Inc.
Lit. No. AMF-012-0996
Printed on recycled paper
