American Mutual Fund
QUARTERLY REPORT
for the three months ended January 31, 1997
[The American Funds Group (R)]
[cover: Field of golden poppies]
FELLOW INVESTORS:
For the three months ended January 31, 1997, the value of your investment in
American Mutual Fund rose 7.5% if, like most shareholders, you reinvested the
per-share dividend of 21 cents and capital gain distribution of $1.61. The
unmanaged Standard & Poor's 500 Composite Index, which rose 12.0% over the same
period, outpaced the fund by a considerable margin. This was largely a result
of the portfolio's current 24% commitment to cash and other fixed-income
securities. It was also a reflection of the fundamental differences between the
stocks that are included in the index and those in which your fund invests.
American Mutual Fund's investment objectives are to provide current income,
capital growth and conservation of principal. In order to help the fund meet
these objectives, every stock purchased for the fund's portfolio must pay a
dividend. This has kept American Mutual Fund from owning many of the technology
stocks that have been fueling the stock market's momentum, especially over the
last six months. On the other hand, the fund's investments in dividend-paying
stocks have historically helped it hold up much better than the S&P 500 during
market declines and have helped it outpace the index over the fund's lifetime.
Almost 77 months have passed without so much as a 10% correction in the S&P
500 - the longest such run in history by more than two years. Although
corporate profits remain strong and inflation remains subdued, this kind of
sustained market exuberance gives us pause. As a result, we continue to
position the fund's portfolio conservatively.
In closing, we'd like to mention that at the fund's Board meeting on February
19, Jon Lovelace stepped down as Chairman of the Board, a position he has held
since 1971. We'd like to take this opportunity to thank him for his years of
service and outstanding leadership. He will continue to serve as a portfolio
counselor and Director of the fund. James Dunton, who has been a portfolio
counselor for the fund for 27 years and President of the fund since 1993, was
elected Chairman. Robert O'Donnell, who has served nine years as a portfolio
counselor for the fund, was elected President of the fund.
We look forward to reporting to you again in three months.
Sincerely,
/s/ James K. Dunton
James K. Dunton
Chairman of the Board
/s/ Robert G. O'Donnell
Robert G. O'Donnell
President
March 7, 1997
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PORTFOLIO SUMMARY Market Value Percent of
January 31, 1997 (Millions) Net Assets
INVESTMENT MIX
Equity-Type Securities $6,294.222 76.42%
Bonds and Notes 322.708 3.92
Cash and Equivalents 1,619.808 19.66
Net Assets $8,236.738 100.00%
Market Value Percent of
(Millions) Net Assets
FIVE LARGEST INDUSTRY HOLDINGS
Banking $1,178.082 14.30%
Energy Sources 699.263 8.49
Telecommunications 677.234 8.22
Health & Personal Care 518.673 6.30
Utilities: Electric & Gas 323.589 3.93
Market Value Percent of
(Millions) Net Assets
TEN LARGEST INDIVIDUAL HOLDINGS
DuPont $231.583 2.81%
Amoco 217.500 2.64
AT&T 203.766 2.47
Ameritech 196.362 2.38
Royal Dutch Petroleum 117.113 1.42
Fleet Financial Group 116.100 1.41
Merck 113.438 1.38
American Home Products 101.400 1.23
Schering-Plough 97.178 1.18
Comerica 97.113 1.18
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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 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 shareholder 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 SG/GAC/3308
(c) 1997 American Funds Distributors, Inc.
Lit. No. AMF-012-0397
Printed on recycled paper
