[The American Funds Group(r)]
ANNUAL REPORT FOR THE YEAR ENDED OCTOBER 31, 1999
AMERICAN MUTUAL FUND
50 YEARS
[cover: photo of Mt. Rainier]
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.
American Mutual Fund is one of the 29 mutual funds in The American Funds
Group,(r) the nation's third-largest mutual fund family. For more than six
decades, Capital Research and Management Company, the American Funds adviser,
has invested with a long-term focus based on thorough research and attention to
risk.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTION PAID IN CALENDAR 1999
For tax purposes, here are the income dividends and the capital gain
distribution you received in calendar 1999.
INCOME DIVIDENDS PER SHARE:
$0.185 paid 3/29/99
$0.185 paid 6/28/99
$0.185 paid 9/27/99
$0.185 paid 12/10/99
CAPITAL GAIN DISTRIBUTION PER SHARE:
$5.045 paid 12/10/99
A Form 1099-DIV, which provides the information you will need to prepare your
federal income tax return for 1999, will be mailed to you with Your American
Funds Tax Guide in late January.
FUND RESULTS IN THIS REPORT WERE COMPUTED WITHOUT A SALES CHARGE UNLESS
OTHERWISE INDICATED. FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY.
INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT
FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER
ENTITY.
[Begin Caption]
About our cover: Washington's Mount Rainier rises above a picturesque lake and
forest.
[End Caption]
FELLOW INVESTORS:
As we write to you this year, American Mutual Fund is about to pass a historic
milestone. In a few weeks from the time you receive this report, your fund will
celebrate its 50th anniversary, a mark of longevity few funds can claim. From
its first day - February 21, 1950 - American Mutual Fund has sought the
balanced achievement of three goals: current income, growth and capital
preservation.
Today we can look at the fund's five decades with pride because American Mutual
Fund continues to accomplish those goals. As of the end of its 1999 fiscal year
on October 31, the fund's lifetime average annual compound return was 13.3%,
only slightly behind the 13.4% average return of the unmanaged Standard &
Poor's 500 Stock Composite Index. The fund's return, however, was generated
with much less volatility and risk than one is exposed to in the S&P 500 Index.
In addition, your fund has provided a steady, above-average stream of income
and fared well in down markets. Twenty times in the fund's history the S&P 500
has lost more than 13.5%, but during 19 of the downturns American Mutual Fund
declined less than the index.
CONTINUED GROWTH
In the fiscal year ended October 31, the stock market's strong growth
continued. The S&P 500 rose 25.7%, the fifth consecutive fiscal year it has
risen more than 20%, which is unprecedented in the fund's history. During the
year, shareholders saw the value of an investment in American Mutual Fund rise
9.0%, assuming reinvestment of 75.5 cents a share in quarterly dividends and a
$2.93 a share capital gain distribution paid in December 1998.
Investors who reinvested their distributions had an income return of 2.6%, well
above the 1.5% income return of the S&P 500. Those who took their distributions
in cash saw the value of their holdings rise 6.3% and also received an income
return of 2.6%.
Primarily as a result of a number of mergers and acquisitions that led to the
sale of large holdings, your fund paid a $5.045 a share capital gain in
December 1999 - an amount substantially larger than the one paid a year ago.
A DEMANDING PERIOD
Managing the fund to achieve its balanced objective of income, growth and
capital preservation is always a challenge. The current period of high growth
and global consolidation has proved especially demanding.
Global consolidation continues among many of the industries represented in the
portfolio, notably in energy, telecommunications and banking. In fact, two of
the three largest holdings at the beginning of the fiscal year, Ameritech and
Amoco, as well as several of the portfolio's best-known companies, including
Chrysler and Bankers Trust, were acquired or merged during the fiscal year.
While the consolidation surge has benefited American Mutual Fund shareholders
by increasing the price of many holdings - more than a dozen companies in the
portfolio a year ago have been purchased or are in the process of being
acquired - it has also contributed to the fund's substantial realized capital
gains. Some holdings, including Bankers Trust and Browning-Ferris Industries,
were purchased for cash and some for a combination of cash and stock. Others,
notably Chrysler and Amoco, were purchased by non-U.S. companies, which were
not eligible for retention in the fund.
CONCENTRATED STRENGTH
During the past year, much of the market's strength came from a small number of
growth stocks. The 30 stocks in the S&P 500 that contributed the most to the
return - 6% of the stocks in the index - accounted for more than 75% of the
return in the 12 months ended October 31. Many of today's most rapidly growing
companies - firms such as Microsoft, MCI WorldCom, Cisco Systems and Dell
Computer - don't pay dividends and thus are not eligible for inclusion in the
fund's portfolio. In fact, more than 15% of the stocks in the S&P 500 do not
pay dividends, making them inappropriate for American Mutual Fund.
In this environment of high growth propelled by consolidation and the rapid
rise of a small number of very large companies, the fund's portfolio counselors
and analysts believe many stocks are very highly valued and have placed greater
emphasis on capital preservation. As a result, we have increased the fund's
cash and bond position to 28.6%.
The fund's emphasis on current income, growth and capital preservation, which
guides our investment decisions today, has served shareholders well over 50
years of market cycles. This philosophy should continue to be as effective a
model in the new millennium as it has been for the past half-century. We
believe the fund's shareholders invest in the fund because of its three-fold
objective. Accordingly, we attempt to reduce risk and emphasize capital
preservation as the market rises higher.
We look forward to reporting to you again in six months.
Cordially,
/s/James K. Dunton
James K. Dunton
Chairman of the Board
/s/Robert G. O'Donnell
Robert G. O'Donnell
President
December 15, 1999
THE VALUE OF A LONG-TERM PERSPECTIVE
RESULTS OF A $10,000 INVESTMENT IN AMERICAN MUTUAL FUND
For more than 49 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. This chart
illustrates an assumed $10,000 investment in American Mutual Fund from February
21, 1950 - when the fund began operations - through October 31, 1999. The table
beneath the chart shows the fund's total return in each of the 49 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 $4,584,179. Incidentally, over the
same period, $10,000 in a savings account, with all the interest compounded,
would have grown to $119,096./4/
You can use this table to estimate how the value of your own holding 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 1989.
At the time, the table indicates the value of the investment illustrated here
was $1,299,783. Since then, it has more than tripled to $4,584,179. Thus, in
the same period, the value of your 1989 investment - regardless of its size -
also has more than tripled.
[Begin Sidebar]
AVERAGE ANNUAL COMPOUND RETURNS
BASED ON THE MAXIMUM OFFERING PRICE*
<TABLE>
<CAPTION>
<S> <C> <C>
For periods ended
9/30/99 10/31/99
Ten Years 12.29% 12.76%
Five Years 15.80% 16.19%
One Year 6.65% 2.74%
</TABLE>
*Assumes reinvestment of all distributions and payment of 5.75% sales charge at
the beginning of the stated periods. Sales charges are lower for accounts of
$50,000 or more.
[End Sidebar]
[Begin Sidebar]
The fund's 30-day yield as of November 30, 1999, calculated in accordance with
the Securities and Exchange Commission formula, was 2.78%.
[End Sidebar]
[begin mountain chart]
<TABLE>
<CAPTION>
<S> <C> <C>
Date American Mutual Fund American Mutual Fund
with dividends reinvested (000's) with dividends excluded
(000's)
2/21/50 $9.4 $9.4
7/13/50 9.0 8.9
10/7/50 10.3 10.1
10/31/50 10.0 9.7
10/31/51 12.2 11.3
7/16/52 13.4 12.2
10/31/52 13.2 11.7
3/19/53 14.6 12.9
9/14/53 13.0 11.3
10/31/53 14.1 12.0
10/31/54 19.3 15.9
9/23/55 26.7 21.6
10/31/55 25.1 20.1
8/2/55 31.9 25.0
10/31/56 29.7 23.1
12/31/56 30.8 24.1
10/22/57 26.8 20.3
10/31/57 28.1 21.2
1/2/58 27.9 20.9
9/30/58 34.8 25.7
10/31/58 36.1 26.5
8/3/59 43.5 31.3
10/31/59 41.5 29.7
12/31/59 43.3 31.0
9/28/60 40.3 28.0
10/31/60 40.9 28.4
10/31/61 54.3 36.8
12/12/61 57.1 38.7
6/25/62 42.7 28.5
10/31/62 46.6 30.7
10/31/63 61.3 39.3
10/31/64 71.4 44.6
6/28/65 70.4 43.5
10/31/65 79.9 48.8
12/17/65 82.3 50.2
10/7/66 71.7 42.5
10/31/66 77.6 46.1
1/4/67 79.9 47.1
9/25/67 98.6 57.3
10/31/67 92.8 53.6
3/25/68 89.2 51.1
10/31/68 109.6 61.3
11/29/68 115.0 64.3
10/9/69 98.4 53.0
10/31/69 103.2 55.7
5/26/70 78.4 41.4
10/31/70 93.3 48.1
4/29/71 121.0 61.1
10/31/71 113.0 56.0
11/23/71 106.4 52.8
8/23/72 128.1 61.7
10/31/72 125.2 59.7
12/11/72 136.0 64.9
8/22/73 112.2 51.9
10/31/73 124.8 57.1
3/14/74 126.3 57.1
10/3/74 91.0 38.8
10/31/74 105.1 45.0
12/6/74 96.9 41.5
7/15/75 138.2 56.9
10/31/75 132.2 53.3
12/5/75 130.3 52.6
9/21/76 174.0 68.0
10/31/76 167.4 64.3
12/31/76 182.7 70.1
10/31/77 176.4 64.6
1/26/78 175.8 63.5
9/12/78 229.3 80.8
10/31/78 198.8 69.1
10/5/79 257.9 86.4
10/31/79 232.8 77.0
10/15/80 315.9 100.7
10/31/80 303.6 95.4
6/23/81 350.4 107.6
9/25/81 317.8 96.4
10/31/81 334.1 99.9
8/10/82 334.4 93.8
10/22/82 434.7 120.5
10/31/82 426.4 118.2
1/3/83 444.3 120.5
10/10/83 562.8 149.6
10/31/83 544.9 143.3
11/29/83 564.8 148.5
7/24/84 507.7 128.7
10/31/84 577.2 144.4
1/4/85 583.5 144.2
7/17/85 705.0 170.3
10/31/85 701.8 167.6
9/4/86 936.5 217.0
10/31/86 913.1 209.4
8/25/87 1,136.9 253.2
10/19/87 886.3 195.6
10/31/87 960.9 212.1
12/4/87 893.6 197.3
6/22/88 1,071.4 229.9
10/31/88 1,081.2 227.1
1/3/89 1,071.7 220.6
10/31/89 1,299.8 259.4
12/13/89 1,346.6 268.7
10/31/90 1,239.3 235.2
1/9/91 1,280.5 238.5
8/28/91 1,533.1 279.4
10/31/91 1,544.4 278.5
12/10/91 1,500.8 267.7
8/3/92 1,715.8 299.7
10/31/92 1,690.0 292.2
12/4/92 1,721.0 294.5
10/15/93 2,018.7 335.9
10/31/93 2,004.9 333.6
11/1/93 2,003.1 333.3
4/4/94 1,902.0 313.6
10/31/94 2,039.9 326.4
12/8/94 1,968.4 311.8
10/19/95 2,505.2 386.1
10/31/95 2,473.4 381.2
1/10/96 2,579.7 394.3
10/21/96 2,965.1 442.2
10/31/96 2,940.7 438.6
12/16/96 2,977.6 440.7
10/7/97 3,809.7 552.3
10/31/97 3,652.2 529.4
1/9/98 3,718.5 535.7
4/17/98 4,289.1 614.0
10/31/98 4,205.5 594.2
11/23/98 4,395.6 621.0
12/14/99 4,240.0 595.3
10/31/99 4,584.2 631.8
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Date S&P with Dividends
reinvested
2/21/50 $10,000
10/24/50 9,942
10/31/50 11,945
12/4/50 12,654
10/15/51 15,658
10/31/51 15,060
11/24/51 14,640
8/8/52 17,572
10/31/52 17,076
1/5/53 18,860
9/14/53 16,520
10/31/53 18,088
11/17/53 17,875
10/6/54 25,447
10/31/54 24,608
11/1/54 24,693
9/23/55 36,622
10/31/55 34,277
11/1/55 34,228
8/2/56 41,502
10/31/56 38,383
7/15/57 42,558
10/22/57 34,124
10/31/57 35,945
12/18/57 34,474
10/13/58 46,989
10/31/58 46,725
11/25/58 46,443
8/3/59 56,587
10/31/59 54,057
1/5/60 54,238
10/25/60 50,873
10/31/60 51,934
11/1/60 52,469
10/31/61 68,836
12/12/61 72,869
6/26/62 53,283
10/3162 58,613
11/1/62 59,235
10/28/63 79,804
10/31/63 79,300
11/22/63 74,586
10/12/64 94,164
10/31/64 93,745
6/28/65 91,596
10/27/65 105,390
10/31/65 105,287
2/9/66 108,094
10/7/66 86,244
10/31/66 94,491
11/22/66 93,866
9/25/67 117,941
10/31/67 114,315
3/5/68 107,666
10/21/68 131,854
10/31/68 129,870
11/29/68 136,099
7/29/69 136,099
10/31/69 126,055
11/10/69 127,468
5/26/70 91,431
10/31/70 112,074
11/18/70 111,454
4/28/71 143,317
10/31/71 130,925
11/23/71 125,270
8/14/72 159,816
10/31/72 159,556
1/11/73 173,164
8/22/73 146,938
10/31/73 159,492
11/1/73 158,609
10/3/74 95,773
10/31/74 113,642
12/6/74 99,971
7/15/75 152,167
10/31/75 143,265
12/5/75 139,693
9/21/76 178,535
10/31/76 172,008
12/31/76 181,519
10/25/77 159,037
10/31/77 161,378
3/6/78 153,947
9/12/78 194,618
10/31/78 171,525
11/14/78 170,309
10/5/79 216,142
10/31/79 197,786
3/27/80 193,426
10/15/80 274,076
10/31/80 261,305
11/28/80 288,057
9/25/81 239,589
10/31/81 262,733
8/12/82 230,795
10/20/82 318,251
10/31/82 305,634
11/23/82 303,851
10/10/83 412,607
10/31/83 390,859
7/24/84 365,687
9/17/84 417,762
10/31/84 415,486
12/13/84 404,779
7/17/85 505,646
10/31/85 495,859
11/4/85 499,595
9/4/86 680,720
10/31/86 660,216
11/18/86 640,733
8/25/87 932,590
10/31/87 702,093
12/4/87 624,380
10/21/88 819,796
10/31/88 806,242
11/16/88 762,457
10/9/89 1,076,196
10/31/89 1,018,049
7/16/90 1,131,616
10/11/90 915,096
10/31/90 941,546
11/7/90 947,771
8/28/91 1,260,203
10/31/91 1,256,985
11/29/91 1,201,768
9/14/92 1,392,857
10/31/92 1,381,777
11/4/92 137,659
10/15/93 1,593,139
10/31/93 1,587,473
2/2/94 1,646,390
4/4/94 1,509,801
10/31/94 1,648,906
12/8/94 1,555,002
10/19/95 2,116,233
10/31/95 2,083,520
11/1/95 2,093,266
10/18/96 2,604,378
10/31/96 2,584,044
11/1/96 2,578,548
10/7/97 3,669,316
10/31/97 3,413,653
11/12/97 3,381,331
7/17/98 4,478,987
10/31/98 4,163,927
11/3/98 4,210,051
7/16/99 5,427,927
10/31/99 5,232,347
</TABLE>
[end chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year-by-year summary of results
1950# 1951 1952 1953 1954
Dividends reinvested/5/ $310 533 524 579 613
Value at year-end/1/ $10,018 12,234 13,163 14,076 19,261
Dividends excluded/6/ $307 507 480 508 515
Value at year-end/1/ $9,708 11,334 11,710 12,009 15,876
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 3.1% 5.3 4.3 4.4 4.4
Capital results/1/ (2.9)% 16.8 3.3 2.7 32.4
AMF Total Return 0.2% 22.1 7.6 6.9 36.8
Year-by-year summary of results
1955 1956 1957 1958 1959
Dividends reinvested/5/ 667 789 911 1,010 1,050
Value at year-end/1/ 25,050 29,651 28,050 36,140 41,488
Dividends excluded/6/ 545 627 702 754 764
Value at year-end/1/ 20,087 23,142 21,241 26,511 29,668
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 3.5 3.1 3.1 3.6 2.9
Capital results/1/ 26.6 15.3 (8.5) 25.2 11.9
AMF Total Return 30.1 18.4 (5.4) 28.8 14.8
Year-by-year summary of results
1960 1961 1962 1963 1964
Dividends reinvested/5/ 1,210 1,257 1,372 1,523 1,697
Value at year-end/1/ 40,864 54,348 46,572 61,289 71,355
Dividends excluded/6/ 854 867 921 993 1,079
Value at year-end/1/ 28,371 36,806 30,677 39,309 44,625
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 2.9 3.1 2.5 3.3 2.8
Capital results/1/ (4.4) 29.9 (16.8) 28.3 13.6
AMF Total Return (1.5) 33.0 (14.3) 31.6 16.4
Year-by-year summary of results
1965 1966 1967 1968 1969
Dividends reinvested/5/ 1,844 2,271 2,568 3,154 3,762
Value at year-end/1/ 79,919 77,646 92,836 109,586 103,215
Dividends excluded/6/ 1,143 1,372 1,507 1,796 2,076
Value at year-end/1/ 48,769 46,067 53,558 61,257 55,651
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 2.6 2.8 3.3 3.4 3.4
Capital results/1/ 9.4 (5.6) 16.3 14.6 (9.2)
AMF Total Return 12.0 (2.8) 19.6 18.0 (5.8)
Year-by-year summary of results
1970 1971 1972 1973 1974
Dividends reinvested/5/ 4,168 4,424 4,711 5,069 7,273
Value at year-end/1/ 93,358 112,999 125,226 124,799 105,121
Dividends excluded/6/ 2,209 2,244 2,304 2,380 3,258
Value at year-end/1/ 48,100 56,017 56,737 57,130 44,985
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 4.0 4.7 4.2 4.0 5.8
Capital results/1/ (13.6) 16.3 6.6 (4.3) (21.6)
AMF Total Return (9.6) 21.0 10.8 (0.3) (15.8)
Year-by-year summary of results
1975 1976 1977 1978 1979
Dividends reinvested/5/ 7,300 7,881 8,604 9,989 11,322
Value at year-end/1/ 132,196 167,378 176,433 198,946 232,804
Dividends excluded/6/ 3,055 3,123 3,244 3,583 3,860
Value at year-end/1/ 53,330 64,276 64,555 69,119 76,959
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 6.9 6.0 5.1 5.7 5.7
Capital results/1/ 18.9 20.6 0.3 7.1 11.3
AMF Total Return 25.8 26.6 5.4 12.8 17.0
Year-by-year summary of results
1980 1981 1982 1983 1984
Dividends reinvested/5/ 13,854 16,351 26,841 26,227 26,606
Value at year-end/1/ 303,583 334,115 426,436 544,914 577,158
Dividends excluded/6/ 4,491 5,044 7,807 7,122 6,867
Value at year-end/1/ 95,432 99,944 118,168 143,286 144,418
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 6.0 5.4 8.0 6.2 4.9
Capital results/1/ 24.4 4.7 19.6 21.6 1.0
AMF Total Return 30.4 10.1 27.6 27.8 5.9
Year-by-year summary of results
1985 1986 1987 1988 1989
Dividends reinvested/5/ 30,124 34,058 39,285 50,009 59,908
Value at year-end/1/ 701,833 913,068 960,885 1,081,197 1,299,783
Dividends excluded/6/ 7,403 8,006 8,876 10,831 12,336
Value at year-end/1/ 167,598 209,414 212,116 227,086 259,386
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 5.2 4.9 4.3 5.2 5.5
Capital results/1/ 16.4 25.2 0.9 7.3 14.7
AMF Total Return 21.6 30.1 5.2 12.5 20.2
Year-by-year summary of results
1990 1991 1992 1993 1994
Dividends reinvested/5/ 66,101 71,766 67,509 70,887 76,471
Value at year-end/1/ 1,239,341 1,544,407 1,690,010 2,004,855 2,039,865
Dividends excluded/6/ 12,953 13,356 11,977 12,073 12,540
Value at year-end/1/ 235,204 278,500 292,156 333,582 326,418
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 5.1 5.8 4.4 4.2 3.8
Capital results/1/ (9.8) 18.8 5.0 14.4 (2.1)
AMF Total Return (4.7) 24.6 9.4 18.6 1.7
Year-by-year summary of results
1995 1996 1997 1998 1999
Dividends reinvested/5/ 83,156 90,173 95,004 104,111 110,493
Value at year-end/1/ 2,473,435 2,940,729 3,652,188 4,205,452 4,584,179
Dividends excluded/6/ 13,110 13,725 14,010 14,946 15,466
Value at year-end/1/ 381,224 438,613 529,422 594,159 631,824
Annual percentage returns assuming reinvestment of dividends
Income return/1/ 4.1 3.6 3.2 2.9 2.6
Capital results/1/ 17.2 15.3 21.0 12.2 6.4
AMF Total Return 21.3 18.9 24.2 15.1
</TABLE>
$5,232,347
S&P 500 with
dividends reinvested
$4,584,179/1,2/
American Mutual Fund
with dividends reinvested
$631,824/1,3/
American Mutual Fund
with dividends excluded
$119,096/4/
Average savings
Institution with
Interest compounded
$10,000/1/
original investment
AVERAGE
ANNUAL
COMPOUND
RETURN FOR
AMF'S
LIFETIME
4.18%
8.94
13.12%/1/
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/These figures, unlike those shown earlier in this report, reflect payment of
5.75% sales charge on the $10,000 investment. Thus, the net amount invested was
$9,425. The maximum sales charge was 8.5% prior to July 1, 1988. Results shown
do not take into account income or capital gain taxes.
/2/Includes reinvested capital gain distributions totaling $1,744,018 in the
years 1950-1999 and reinvested dividends. The total "cost" of this investment
($10,000 plus $1,257,319 in reinvested dividends) was $1,267,319.
/3/Includes reinvested capital gain distributions taken in shares totaling
$332,214 but does not reflect income dividends taken in cash.
/4/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. Results based on figures supplied by the U.S. League
of Savings Institutions and the Federal Reserve Board.
/5/Includes special dividends of $1,691 in 1974, $989 in 1975, $7,524 in 1982,
$3,967 in 1983, $6,064 in 1988, $9,850 in 1989, $9,497 in 1990 and $8,996 in
1991.
/6/Includes special dividends of $746 in 1974, $407 in 1975, $2,251 in 1982,
$1,099 in 1983, $1,339 in 1988, $2,069 in 1989, $1,895 in 1990 and $1,707 in
1991.
[Begin Caption]
EISENHOWER, COLD WAR AND KOREA
1950S
[End Caption]
[Begin Caption]
KENNEDY, CONGLOMERATES AND VIETNAM
1960S
[End Caption]
[Begin Caption]
1970S
OPEC, E-MAIL AND TRANSITION
[End Caption]
[Begin Caption]
FALLING OIL PRICES, REBOUNDING MARKETS AND CRUMBLING WALLS
1980S
[End Caption]
[Begin Caption]
1990S
GULF WAR, BULL MARKET AND INTERNET COMMERCE
[End Caption]
AMERICAN MUTUAL FUND:
FIFTY YEARS OF INCOME, GROWTH AND CAPITAL PRESERVATION
In February, American Mutual Fund will celebrate its golden anniversary. It has
been around longer than the vast majority of mutual funds and is even older
than many of its shareholders. Indeed, for most people, 50 years is half a
lifetime or more - time enough to raise a family, send children to college and
begin thinking about retirement: goals American Mutual Fund may have helped
investors achieve more easily.
During the fund's first five decades, fads and fancies have swept through
American life as well as through the investing world. But the fund's basic
charter - to provide investors with current income, growth and preservation of
capital - is as relevant today as it was on February 21, 1950, the day the fund
began operations. Through the decades, American Mutual Fund has met those
goals. The fund has generated a 13.3% lifetime average annual compound return
and, while its income return has fluctuated, it has averaged just over 4% a
year. In addition, the fund has been unusually resilient in down markets.
A key ingredient in American Mutual Fund's success is the depth of experience
of the fund's managers. The five portfolio counselors have a total of 159 years
of investment experience among them - an average of nearly 32 years.
This depth of experience may be unmatched in the mutual fund industry. One
portfolio counselor, Jon Lovelace, has been a director and portfolio counselor
with American Mutual Fund for more than 40 years - one of the longest tenures
in the mutual fund industry.
The fund's investment counselors have managed investments during wars,
recessions and exuberant bull markets. They've also seen their share of market
downturns. Seven times in the fund's lifetime, Standard & Poor's 500 Composite
Stock Index has taken a bearish turn and lost more than 20%. It came within a
whisker of that three more times.
"With its focus on the balanced accomplishment of three objectives, American
Mutual Fund promised from the beginning to be somewhat less aggressive and do
better in down markets," says Jon Lovelace. "We've done a remarkable job of
that over these 50 years," he says.
[Begin Sidebar]
[photo: Jonathan B. Lovelace]
Jonathan B. Lovelace
Jon has been involved with American Mutual Fund since its earliest days. In
1953, he was an assistant secretary and assistant treasurer of the fund. In
1968, he became the fund's president and in 1971, its chairman. He became
chairman emeritus in 1999.
A life member of the Sierra Club, he's also a member of the Council on Foreign
Relations, a former board member of American Public Radio (now Public Radio
International) and has held the position of chairman of the board of both the
J. Paul Getty Trust and Claremont McKenna College.
"If you're managing this fund appropriately, you're going to look kind of dull
in up markets. In the 1960s there was the thought, an arrogance really, that
you could fine tune the economy and control it. That was the first time we saw
the approach that emphasized total return over income, an approach which is
very much in vogue again now." Jonathan Lovelace
[End Sidebar]
[Begin Sidebar]
1950S
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959
EISENHOWER, COLD WAR AND KOREA
<TABLE>
<CAPTION>
<S> <C>
1950: KOREAN WAR BEGINS
1952: EISENHOWER ELECTED PRESIDENT
1957: FROM JULY 15 TO OCTOBER 22,
THE S&P 500 LOSES 20.7%;
AMF DOWN 19.0%
1957: SPUTNIK LAUNCHED
</TABLE>
A few holdings in American Mutual Fund during the decade: General Electric,
General Motors, Ford and Standard Oil of California.
[End Sidebar]
[photo: Presidential convention]
1950S: EISENHOWER, COLD WAR AND KOREA
The tone for the fund's long-term success was set from the very beginning, says
Marge Fisher, a former portfolio counselor and president of the fund, who
retired in 1986. Jonathan Bell Lovelace, Sr., who founded Capital Research and
Management Company, the investment adviser to the fund, drew on his personal
experience when he started American Mutual Fund, Fisher says.
"He had been through the crash of 1929 and knew how to handle it. He always
looked ahead several years, not just at the current market."
We can look back on the 1950s as the decade that laid the foundation for the
fund and the country. President Eisenhower won funding for the interstate
highway system, and Americans took to the road as never before. The first
credit card was issued, and the Soviets launched Sputnik, touching off the
space race.
The decade also marked an important change in the way Capital Research managed
its funds. In the beginning, Capital Research used an investment committee led
by Jonathan Lovelace, Sr., but in 1953 moved to a single-manager system.
It stayed that way until 1958, when Jon Lovelace suggested a new approach to
investment management, which became known as the multiple portfolio counselor
system. The fund's portfolio counselors share research, opinions and insights,
but rather than acting as a committee, each invests a portion of the assets
according to his or her strongest convictions within the limits set by the
fund's objectives.
[Begin Sidebar]
[photo: James K. Dunton]
James K. Dunton
Jim joined Capital Research as an analyst in 1962 and four years later began
managing assets in American Mutual Fund. He became vice president of the fund
in 1984 and president in 1993. In 1997 he was elected chairman of the fund.
A former chairman of both the Association for Investment Management and
Research and the Financial Analysts Federation, Jim has also served as a
trustee of the Darden School of Business Administration at the University of
Virginia.
"The people who invest in this fund are those who are especially sensitive to
the periodic but unpredictable downside risk in the stock market. They want a
good return and solid dividends without the level of risk that's inherent in a
lot of other investments." James K. Dunton
[End Sidebar]
[Begin Sidebar]
1960S
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969
KENNEDY, CONGLOMERATES AND VIETNAM
<TABLE>
<CAPTION>
<S> <C>
1961: BERLIN WALL ERECTED
1965: PRESIDENT JOHNSON ORDERS
BOMBING OF NORTH VIETNAM
1968 - 1970: S&P 500 DECLINES 36.1%
FROM NOVEMBER 29, 1968 TO
MAY 26, 1970; AMF DOWN 35.7%
1969: MAN WALKS ON THE MOON
</TABLE>
A few holdings in American Mutual Fund
during the decade: Eastman Kodak,
General Dynamics, Columbia Broadcasting
and Xerox.
[End Sidebar]
[Begin Sidebar]
All results in the timeline were calculated with dividends taken in cash and
capital gains reinvested.
[End Sidebar]
"I proposed it as an interim measure because we didn't know how it would work,"
says Jon Lovelace. "There was a lot of skepticism, but I thought it was a good
way to phase in other people. It turned out that it worked so well we expanded
it."
Today every fund in The American Funds Group, with the exception of money
market funds, uses the multiple portfolio counselor system. An important
element of this approach is how it helps ease in new portfolio counselors and
analysts.
"The system gives you the chance to work closely with experienced people," says
Tim Armour, whose 16 years of investment experience make him the "newest"
American Mutual Fund portfolio counselor. "I remember in October 1987 when the
market fell so quickly. For a person new to the business like me, it was hard
not to wonder where we were headed. Were we going into another recession? But
Jon [Lovelace] was buying stocks at good valuations, and when you see someone
with his experience, background and knowledge of the market view the downturn
as an opportunity, it has a huge impact on you."
As the 1950s ended and American Mutual Fund headed into its second decade, the
experience of the fund's managers would prove its value to shareholders.
[photo: Kennedy, speaking to a crowd]
1960S: KENNEDY, CONGLOMERATES AND VIETNAM
In January 1961, John F. Kennedy was sworn in as president of the United
States. Soon the U.S. economy was in an era of low inflation and low interest
rates. But by the end of the decade, the S&P 500 would suffer three severe down
markets and the seeds of future economic problems would be planted.
[Begin Sidebar]
[photo: R. Michael Shanahan]
R. Michael Shanahan
Mike started at Capital Research as an analyst in 1965 and became a portfolio
counselor in American Mutual Fund in 1986. He is chairman of the board of
trustees of Harvey Mudd College and chairman of the board of Capital Research
and Management Company.
"American Mutual Fund doesn't have great appeal in periods when everything is
exuberant. The objectives of income and preservation of capital get in the way
of growth. But for the long term, the fund's philosophy really makes sense."
Michael Shanahan
[End Sidebar]
[Begin Sidebar]
1970S
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979
OPEC, E-MAIL AND TRANSITION
<TABLE>
<CAPTION>
<S> <C>
1972: PRESIDENT NIXON VISITS CHINA
1973: OPEC OIL EMBARGO
1973 - 1974: S&P 500 LOSES 48.2%
FROM JANUARY 11, 1973 TO
OCTOBER 3, 1974; AMF
DECLINES 36.7%
1975: BILL GATES DROPS OUT OF
HARVARD TO FOUND MICROSOFT
</TABLE>
A few holdings in American Mutual Fund during the decade: Sperry Rand, Digital
Equipment, IBM and Boeing.
[End Sidebar]
"Early in the decade, it was an extremely predictable world," says James
Dunton, the fund's current chairman, who began managing money in American
Mutual Fund more than 30 years ago. "Interest rates were stable. Inflation was
stable. Profit growth was steady."
By mid-decade, though, signs of change emerged. The government was printing
money to pay for the Vietnam War; in 1966, interest rates began to rise and the
market turned down sharply. In eight months, between February 9, 1966 and
October 7, 1966, the S&P 500 lost 22.2%.
"It was a warning bell that something was changing. It was really the beginning
of the inflationary spiral," Dunton says. "But the market came roaring back,
and by the late 1960s the conglomerate craze was going strong. The big
conglomerates were gobbling up hundreds of companies a year."
At the same time, investors seemed to lose interest in income as an objective.
"There was a feeling then that you didn't have to worry about income - that you
could just take the return you needed out of your capital gains," says Jon
Lovelace. "At that time, you could have easily asked if American Mutual was
still relevant."
But if anything, the rising market of the late 1960s reinforced the value of
the fund's approach, says Jon Lovelace. "It was important that we stuck by our
guns in that period."
In 1968, the year Jon Lovelace was elected president of the fund, a long, harsh
bear market began. From November 29, 1968 to May 26, 1970, the S&P 500 lost
36.1% while American Mutual declined 35.7%.
As bad as that bear market was, a worse downturn - and a stronger rebound -
awaited investors in the next decade.
[photo: Sign that reads, "GAS SHORTAGE! Sales limited to 10 GALS. of GAS PER
CUSTOMER."]
1970S: OPEC, E-MAIL AND TRANSITION
The 1970s was a time of transition. The nation struggled through an oil
embargo, rising interest rates, a severe recession and President Richard
Nixon's resignation. For equity investors, it was a decade of market swings and
a time to reassess the 1960s' emphasis on growth. The S&P 500 lost more than
13.5% seven times, and investors were reminded that markets can turn down for
long periods. In the 1973-1974 bear market, which lasted 21 months, the S&P 500
lost 48.2% - almost half its value. During that downturn, American Mutual Fund
declined 36.7%.
To put the severity of the downturn in proper perspective, Jon Lovelace notes
that "In January 1973, the market reached a level that it did not get back to
and stay ahead of until September 1982."
Hints of future changes could be seen in the first years of the decade. In 1972
e-mail was born, and by 1976 Steve Jobs and Steve Wozniak had created the first
Apple computer.
"The 1970s was a real transition. It marked the end of the attitude of
emphasizing only growth and it was the start of the interest-rate spiral," says
Mike Shanahan, a portfolio counselor with the fund who has more than 30 years
of investment experience. After the speculation of the late 1960s, the 1970s
proved the value of American Mutual Fund's approach, he says.
"American Mutual Fund doesn't have great appeal in periods when everything is
exuberant. The objectives of income and preservation of capital get in the way
of growth. But for the long term, the fund's philosophy really makes sense,"
Shanahan says. "Jon has always said: $Dividends matter. They're the most
predictable part of the total return.' "
[Begin Sidebar]
[photo: Robert G. O'Donnell]
Robert G. O'Donnell
Bob began his career in the investment business in 1972 and joined Capital
Research Company in 1975. He was elected vice president of American Mutual Fund
in 1987 and president in 1997. He is a trustee of the University of California,
Berkeley Foundation, and a member of the advisory board of the Library of the
University of California, Berkeley.
"A big difference between managing this fund today and 10 years ago is how many
of the stocks in the S&P 500 aren't eligible to be in the fund because they
don't pay a dividend." Robert G. O'Donnell
[End Sidebar]
[Begin Sidebar]
1980S
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
FALLING OIL PRICES, REBOUNDING MARKETS AND CRUMBLING WALLS
<TABLE>
<CAPTION>
<S> <C>
1980: REAGAN ELECTED PRESIDENT
1982: U.S. SUFFERS WORST RECESSION
IN 40 YEARS
1987: FROM AUGUST 25, 1987 TO
DECEMBER 4, 1987
THE S&P 500 LOSES 33.5%;
AMF DECLINES 22.1%
1989: BERLIN WALL TORN DOWN
</TABLE>
A few holdings in American Mutual Fund during the decade: Procter & Gamble,
Polaroid, Monsanto and DuPont.
[End Sidebar]
[photo: Person chipping away at Berlin Wall]
1980S: FALLING OIL PRICES, REBOUNDING MARKETS AND CRUMBLING WALLS
The fallout of the oil embargo and high interest rates of the 1970s lingered
into the 1980s. But as the decade progressed, oil prices fell, interest rates
declined and the stock market gained momentum. There were still downturns, but
they were less frequent and shorter. The S&P 500 lost 14.4% from October 10,
1983, to July 24, 1984, but the index dropped more than 13.5% only one
subsequent time in the 1980s: In 1987, the S&P 500 lost 33.5% in a brief but
frightening plunge.
Despite the setbacks, the 1980s was a period of strong stock market growth. The
S&P 500 ended the decade three times higher than it began. Some of the fastest
growing stocks in the 1980s, though, didn't pay dividends and weren't included
in the fund's holdings.
"The nature of the eligibility list, the quality test, and the dividend
requirement force the fund to be less diversified than an index such as the S&P
500," says Bob O'Donnell, a fund portfolio counselor with more than 27 years'
experience. "We can't invest in everything in that index."
Balancing the fund's three goals often means not investing in the hottest stock
of the day. But, O'Donnell notes, American Mutual Fund isn't designed for
investors who want only growth. "This fund works well for the person who's
concerned about absolute return, who wants growth but also cares about
minimizing the damage to their capital in a difficult period."
[Begin Sidebar]
[photo: Timothy D. Armour]
Timothy D. Armour
Tim joined Capital Research in 1983 as a research analyst specializing in
service and global telecommunications companies. In 1994 he was elected vice
president of American Mutual Fund and senior vice president in 1997. He is
chairman of the board of Capital Research Company.
"We're looking for financially sound companies that have good prospects for
future growth and that provide respectable dividends as well." Timothy D.
Armour
[End Sidebar]
[Begin Sidebar]
1990S
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
GULF WAR, BULL MARKET AND INTERNET COMMERCE
<TABLE>
<CAPTION>
<S> <C>
1990: WAR IN THE PERSIAN GULF
1990: FROM JULY 16, 1990 TO
OCTOBER 11, 1990, THE
S&P 500 GOES DOWN 19.9%;
AMF DECLINES 13.2%
1997: HONG KONG RETURNS TO
CHINESE SOVEREIGNTY
1999: 200 MILLION PEOPLE
CONNECTED BY THE INTERNET
</TABLE>
A few holdings in American Mutual Fund during the decade: Chrysler, Xerox,
General Motors and General Electric.
[End Sidebar]
[photo: Soldier, with smoke in foreground]
1990S: GULF WAR, BULL MARKET AND INTERNET COMMERCE
The 1980s ended with the fall of the Berlin Wall, prompting politicians and
economists to speak of a "peace dividend." But the new decade began with war in
the Persian Gulf and a bear market.
After dropping 19.9% in three months in 1990, the S&P 500 quickly resumed its
climb. "We've basically had a bull market for 16 years with some small
downdrafts along the way," says Armour. "Now the market has appreciated so much
that the dividend yield has dropped to nearly 1%."
Today's environment is reminiscent of earlier periods when investors favored
growth over dividends. American Mutual Fund, though, is still investing
essentially the way it has for almost 50 years. "We tend to buy out-of-favor
companies that have had pretty good track records over a long period of time
and have financially sound balance sheets," Armour says.
The world has changed dramatically in the past 50 years, but, O'Donnell notes,
the portfolio counselors and analysts' motivation is the same today as it was
on February 21, 1950. "We're not managing this fund for our personal egos or to
try to get on the cover of a magazine. We're very conscious that we've got
people's college money and retirement money. That's what drives us every day."
This motivation, combined with leadership and a view to the long term, is a
formula that has worked for 50 years and should be a good foundation for the
next five decades as well.
[photos: globe, map, American flag]
WHAT MAKES THE AMERICAN FUNDS DIFFERENT?
As a shareholder in American Mutual Fund, you are also a member of The American
Funds Group, the nation's third-largest mutual fund family. You won't find us
advertised, yet thousands of financial advisers recommend the American Funds
for their clients' serious money - money set aside for education, a home,
retirement and other important dreams.
What the 29 funds in our group have in common is a commitment to your best
interests and the proven approach of our investment adviser, Capital Research
and Management Company. In business since 1931, Capital's calling cards
include:
A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow short-term fads, we rely on our own intensive research to
find well-managed companies with reasonably priced securities and solid,
long-term potential. Despite our size, we offer relatively few funds compared
with many large fund families, allowing us to maintain a careful focus on our
objectives and to benefit from economies of scale.
A GLOBAL PERSPECTIVE
We opened our first overseas office in 1962, well before most mutual funds
began investing internationally. Today, the American Funds draw on one of the
industry's most globally integrated research networks. Capital Research spends
substantial resources getting to know companies and industries around the
world.
A MULTIPLE PORTFOLIO COUNSELOR SYSTEM
More than 40 years ago, we developed a unique strategy for managing investments
that blends teamwork with individual accountability. Every American Fund is
divided among a number of portfolio counselors, each of whom manages his or her
portion independently, within each fund's objectives; in most cases, research
analysts manage a portion as well. Over time, this method has contributed to
consistency of results and continuity of management.
EXPERIENCED INVESTMENT PROFESSIONALS
Nearly 90% of the portfolio counselors who serve the American Funds were in the
investment business before the stock market decline of October 1987. Long
tenure and experience through a variety of market conditions mean we aren't
"practicing" with your money.
A COMMITMENT TO LOW OPERATING EXPENSES
You can't control market returns, but you can control what you invest in and
how much you pay to own it. American Funds provide exceptional value for
shareholders, with operating expenses that are among the lowest in the mutual
fund industry. Our portfolio turnover rates are low as well, keeping
transaction costs and tax consequences contained.
A PORTFOLIO FOR EVERY INVESTOR
Most financial advisers suggest that investors balance their portfolios by
investing across several types of investments. Which mix is right for you? That
depends on a number of things - including your risk tolerance, investment time
horizon and financial goals. The American Funds Group offers 29 funds with an
array of investment objectives to help you and your financial adviser build a
portfolio specifically tailored to your needs.
GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(r)
EuroPacific Growth Fund(r)
The Growth Fund of America(r)
The New Economy Fund(r)
New Perspective Fund(r)
New World Fund(SM)
SMALLCAP World Fund(r)
GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(r)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(r)
Washington Mutual Investors Fund(SM)
EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(r)
The Income Fund of America(r)
BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(r)
INCOME FUNDS
Emphasis on current income through bonds
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(r)
Intermediate Bond Fund of America(r)
U.S. Government Securities Fund(SM)
TAX-EXEMPT INCOME FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(r)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(r)
State-specific tax-exempt funds:
The Tax-Exempt Fund of California(r)
The Tax-Exempt Fund of Maryland(r)
The Tax-Exempt Fund of Virginia(r)
MONEY MARKET FUNDS
Seek stable monthly income through money market instruments
The Cash Management Trust of America(r)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
We also offer a full line of retirement plans
and variable annuities.
For more complete information about any of the funds, including charges and
expenses, please obtain a prospectus from your financial adviser, download one
from our Web site at www.americanfunds.com, 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. For more information, ask your
financial adviser for a copy of A Portfolio for Every Investor.
<TABLE>
American Mutual Fund, Inc.
Investment Portfolio, October 31, 1999
<S> <C> <C> <C>
Percent of
Largest Industry Holdings Net Assets
Banking 10.34%
Diversified Telecommunication Services 9.54
Energy Sources 6.28
Utilities: Electric & Gas 6.01
Health & Personal Care 4.88
Percent of
Largest Individual Holdings Net Assets
Sprint FON Group 3.00%
Bank of America 2.04
SBC Communications 1.81
U S WEST 1.54
Bristol-Myers Squibb 1.47
Household International 1.41
AT&T 1.19
IBM 1.09
Monsanto 1.09
Southern Co. 1.07
Market ValuPercent Of Net
Equity Securities (Common and Preferred Stocks) Shares (Millions) Assets
- -------------------------------------------------------------------------------------------
Energy
Energy Sources - 6.28%
Ashland Inc. 1,850,000 61.050 .58
Atlantic Richfield Co. 645,000 60.106 .58
Chevron Corp. 493,500 45.063 .43
Conoco Inc., Class B 2,305,580 62.539 .60
Exxon Corp. 170,000 12.591 .12
Kerr-McGee Corp. 600,000 32.250 .31
Mobil Corp. 140,000 13.510 .13
Phillips Petroleum Co. 2,300,000 106.950 1.03
Royal Dutch Petroleum Co. (New York Registered) 1,750,000 104.891 1.01
Sunoco, Inc. 1,100,000 26.537 .25
Texaco Inc. 1,510,000 92.676 .89
Ultramar Diamond Shamrock Corp. 1,500,000 36.750 .35
UTILITIES: ELECTRIC & GAS - 6.01%
Ameren Corp. 300,000 11.344 .11
American Electric Power Co., Inc. 575,000 19.837 .19
Carolina Power & Light Co. 900,000 31.050 .30
Central and South West Corp. 4,275,000 94.852 .91
Consolidated Edison, Inc. 1,085,700 41.460 .40
Duke Energy Corp. 1,925,000 108.762 1.04
FPL Group, Inc. 700,000 35.219 .34
GPU, Inc. 800,000 27.150 .26
New Century Energies, Inc. 3,100,000 100.944 .97
Southern Co. 4,200,000 111.562 1.07
TECO Energy, Inc. 2,000,000 44.125 .42
-----------------------
1,281.218 12.29
-----------------------
Materials
Chemicals - 3.60%
Air Products and Chemicals, Inc. 400,000 11.000 .11
Hercules Inc. 1,800,000 43.313 .42
International Flavors & Fragrances Inc. 900,000 34.425 .33
Mallinckrodt Inc. 2,000,000 67.875 .65
Monsanto Co. 2,942,700 113.294 1.09
PPG Industries, Inc. 570,900 34.611 .33
Praxair, Inc. 1,500,000 70.125 .67
Forest Products & Paper - 2.55%
Fort James Corp. 2,658,800 69.960 .67
Georgia-Pacific Corp., Georgia-Pacific Group 500,000 19.844
Georgia-Pacific Corp., Timber Group 725,000 17.309 .36
International Paper Co. 700,000 36.837 .35
Westvaco Corp. 3,400,000 100.938 .97
Weyerhaeuser Co. 350,000 20.891 .20
-----------------------
640.422 6.15
-----------------------
Capital Equipment
Aerospace & Military Technology - 1.17%
Boeing Co. 957,100 44.086 .42
Northrop Grumman Corp. 600,000 32.925 .32
Raytheon Co., Class A 140,600 3.858
Raytheon Co., Class B 575,000 16.747 .20
United Technologies Corp. 400,000 24.200 .23
Data Processing & Reproduction - 2.21%
Hewlett-Packard Co. 250,000 18.516 .18
International Business Machines Corp. 1,160,000 114.115 1.09
Xerox Corp. 3,500,000 98.000 .94
Electrical & Electronic - 0.89%
Emerson Electric Co. 600,000 36.037 .35
Harris Corp. 1,650,000 37.022 .35
Hubbell Inc., Class B 720,000 19.935 .19
Electronic Components - 0.67%
Thomas & Betts Corp. 1,550,000 69.556 .67
Industrial Components - 1.68%
Dana Corp. 700,000 20.694 .20
Delphi Automotive Systems Corp. 698,465 11.481 .11
Eaton Corp. 400,000 30.100 .29
Federal-Mogul Corp. 350,000 8.794
Federal-Mogul Corp. 7.00% convertible preferred 500,000 19.187 .26
Genuine Parts Co. 1,625,000 42.352 .41
Johnson Controls, Inc. 280,000 17.010 .16
TRW Inc. 600,000 25.725 .25
Machinery & Engineering - 1.02%
Briggs & Stratton Corp. 629,100 36.763 .36
Caterpillar Inc. 400,000 22.100 .21
Deere & Co. 1,300,000 47.125 .45
-----------------------
796.328 7.64
-----------------------
Consumer Goods
Automobiles - 0.07%
General Motors Corp. 109,200 7.671 .07
Beverages - 0.73%
PepsiCo, Inc. 2,200,000 76.312 .73
Food & Household Products - 1.86%
Bestfoods 270,000 15.863 .15
Colgate-Palmolive Co. 500,000 30.250 .29
ConAgra, Inc. 800,000 20.850 .20
General Mills, Inc. 900,000 78.469 .75
Sara Lee Corp. 1,800,000 48.712 .47
Health & Personal Care - 4.88%
Abbott Laboratories 1,500,000 60.563 .58
Bristol-Myers Squibb Co. 2,000,000 153.625 1.47
Eli Lilly and Co. 800,000 55.100 .53
Johnson & Johnson 400,000 41.900 .40
Kimberly-Clark Corp. 400,000 25.250 .24
Merck & Co., Inc. 400,000 31.825 .31
Pfizer Inc 600,000 23.700 .23
Pharmacia & Upjohn, Inc. 647,500 34.925 .34
Schering-Plough Corp. 500,000 24.750 .24
Warner-Lambert Co. 700,000 55.868 .54
Recreation, Other Consumer Products - 0.90%
Pennzoil-Quaker State Co. 1,250,000 14.765 .14
Stanley Works 2,850,000 79.088 .76
Textiles & Apparel - 0.79%
NIKE, Inc., Class B 850,000 47.972 .46
VF Corp. 1,150,000 34.572 .33
-----------------------
962.030 9.23
-----------------------
Services
Broadcasting & Publishing - 1.09%
Gannett Co., Inc. 650,000 50.131 .48
Knight-Ridder, Inc. 1,000,000 63.500 .61
Business & Public Services - 0.40%
Electronic Data Systems Corp. 250,000 14.625 .14
Waste Management, Inc. 1,500,000 27.563 .26
Merchandising - 2.31%
Albertson's, Inc. 1,477,200 53.641 .52
J.C. Penney Co., Inc. 3,579,100 90.820 .87
May Department Stores Co. 1,960,300 67.998 .65
Wal-Mart Stores, Inc. 500,000 28.344 .27
Diversified Telecommunication Services - 9.54%
AT&T Corp. 2,650,000 123.887 1.19
CenturyTel, Inc. 2,500,000 101.094 .97
GTE Corp. 1,438,200 107.865 1.03
SBC Communications Inc. 3,702,892 188.616 1.81
Sprint FON Group 4,207,000 312.632 3.00
U S WEST, Inc. 2,620,000 159.984 1.54
Transportation: Rail & Road - 1.38%
Burlington Northern Santa Fe Corp. 250,000 7.969 .08
Norfolk Southern Corp. 4,415,000 107.891 1.03
Union Pacific Corp. 500,000 27.875 .27
-----------------------
1,534.435 14.72
-----------------------
Finance
Banking - 10.34%
AmSouth Bancorporation 2,700,000 69.525 .67
Bank of America Corp. 3,300,000 212.437 2.04
Bank of New York Co., Inc. 750,000 31.406 .30
BANK ONE CORP. 1,970,000 73.998 .71
Chase Manhattan Corp. 1,000,000 87.375 .84
Comerica Inc. 450,000 26.747 .26
First Security Corp. 2,500,000 64.062 .61
First Union Corp. 2,300,000 98.181 .94
Fleet Boston Corp. (formerly Fleet Financial 700,000 30.538 .29
Group, Inc.)
Huntington Bancshares Inc. 1,800,000 53.325 .51
J.P. Morgan & Co. Inc. 250,000 32.719 .31
KeyCorp 1,000,000 27.938 .27
National City Corp. 1,000,000 29.500 .28
SunTrust Banks, Inc. 784,000 57.379 .55
U.S. Bancorp 1,000,000 37.063 .36
Wachovia Corp. 800,000 69.000 .66
Wells Fargo & Co. 1,600,000 76.600 .74
Financial Services - 1.59%
Associates First Capital Corp., Class A 393,336 14.357 .14
Fannie Mae 50,000 3.538 .04
Household International, Inc. 3,300,000 147.262 1.41
Insurance - 3.65%
Allstate Corp. 3,850,000 110.688 1.06
American General Corp. 1,010,000 74.929 .72
Aon Corp. 1,240,500 44.038 .42
Jefferson-Pilot Corp. 900,000 67.556 .65
Lincoln National Corp. 800,000 36.900 .36
SAFECO Corp. 900,000 24.750 .24
St. Paul Companies, Inc. 663,300 21.226 .20
Real Estate - 0.40%
Equity Residential Properties Trust 1,000,000 41.812 .40
-----------------------
1,664.849 15.98
-----------------------
Multi-Industry & Miscellaneous
Multi-Industry - 1.71%
AlliedSignal Inc. 1,200,000 68.325 .66
Harsco Corp. 2,025,000 59.611 .57
Textron Inc. 650,000 50.172 .48
Miscellaneous - 3.66%
Other equity securities in initial period of acquisition 381.036 3.66
-----------------------
559.144 5.37
-----------------------
TOTAL EQUITY SECURITIES (cost: $5,604.262 million) 7,438.426 71.38
Principal
Bonds & Notes Amount
- -------------------------------------------------------------------------------------------
CORPORATE - 0.12%
J. C. Penney Co., Inc. 9.05% 2001 12,000,000 12.302 .12
U.S. TREASURY OBLIGATIONS - 6.58%
3.875% January 2009 (1) 100,000,00 100.021 0.96
13.750% August 2004 48,500,000 63.520 0.61
3.739% July 2002 (1) 100,000,00 103.693 1.00
7.75% February 2001 56,000,000 57.374 0.55
5.625% November 2000 90,000,000 89.985 0.86
6.25% August 2000 90,000,000 90.492 0.87
6.375% May 2000 90,000,000 90.450 0.87
5.625% November 1999 90,000,000 90.056 0.86
-----------------------
TOTAL BONDS & NOTES (cost: $698.902 million) 697.893 6.70
-----------------------
TOTAL INVESTMENT SECURITIES (cost $6,303.164 million) 8,136.319 78.08
Market Percent
Principal Value Of Net
Short-Term Securities Amount (Millions) Assets
- -------------------------------------------- ---------------------------------
CORPORATE SHORT-TERM NOTES - 13.08%
A I Credit Corp. 5.60% due 1/31/2000 50,000,000 49.223 .47
American Express Credit Corp. 5.60%-5.85% 51,500,000 50.552 .49
due 2/16-2/17/2000
Associates First Capital Corp. 5.15%-5.68% 74,500,000 73.740 .71
due 11/3/1999-2/7/2000
AT&T Corp. 5.70%-5.72% due 2/25-2/28/2000 47,300,000 46.368 .44
BellSouth Telecommunications, Inc. 5.60%-5.62% 83,500,000 82.244 .79
due 1/19-2/10/2000
CIT Group Holdings, Inc. 5.14% due 11/5/1999 38,000,000 37.972 .36
Coco-Cola Co. 5.29%-5.87% due 1/25-1/28/2000 40,400,000 39.809 .38
Duke Energy Corp. 5.33%-5.85% due 1/14-2/2/2000 60,000,000 59.171 .57
Eastman Kodak Co. 5.73%-5.85% due 1/20-2/14/2000 50,000,000 49.209 .47
E.I. du Pont de Nemours and Co. 5.25%-5.55% 53,200,000 52.643 .51
due 11/29/1999-2/8/2000
Emerson Electric Co. 5.30%-5.60% due 54,500,000 53.623 .51
1/24-2/23/2000
Ford Motor Credit Co. 5.19%-5.68% due 72,000,000 71.148 .68
12/3/1999-1/25/2000
General Electric Capital Corp. 5.43%-5.97% 82,500,000 81.178 .78
due 1/27-2/9/2000
H.J. Heinz Co. 5.33%-5.50% due 1/26-2/3/2000 64,500,000 63.496 .61
Household Finance Corp. 5.67%-5.96% due 58,800,000 57.892 .56
1/11-2/14/2000
IBM Credit Corp. 5.70% due 2/11/2000 50,000,000 49.129 .47
Johnson & Johnson 4.78% due 11/1/1999 (2) 24,900,000 24.896 .24
Lucent Technologies Inc. 5.30% due 12/10/1999 40,000,000 39.764 .38
Merck & Co., Inc. 5.29%-5.30% due 2/2-2/4/2000 40,800,000 40.146 .39
Monsanto Co. 5.30%-5.88% due 11/23/1999-3/3/2000 85,000,000 83.612 .80
National Rural Utilities Cooperative Finance Corp.
5.28%-5.73% due 11/16/1999-2/18/2000 40,600,000 40.075 .38
Pfizer Inc 5.67%-5.85% due 2/14-3/28/2000 59,300,000 58.069 .56
Procter & Gamble Co. 5.29%-5.90% due 80,200,000 79.515 .76
12/8/1999-1/10/2000
SBC Communications Inc. 5.67% due 3/3/2000 (2) 50,000,000 48.980 .47
Walt Disney Co. 5.84%-5.89% due 1/21/2000 31,400,000 30.963 .30
Federal Agency Discount Notes - 8.47%
Fannie Mae 4.75%-5.42% due 11/2/1999-2/9/2000 416,114,00 413.233 3.96
Federal Home Loan Banks 5.20%-5.53% due 171,600,00 168.882 1.62
11/10/1999-3/10/2000
Freddie Mac 4.77%-5.525% due 11/2/1999-3/2/2000 303,948,00 301.002 2.89
-----------------------
TOTAL SHORT-TERM SECURITIES 2,246.534 21.55
(cost: $2,248.093 million)
Excess of cash and receivables over payables 38.374 .37
-----------------------
TOTAL SHORT-TERM SECURITIES, CASH AND RECEIVABLES 2,284.908 21.92
-----------------------
NET ASSETS $10,421.22 100.00%
(1) Index-linked bond whose principal amount moves
with a government retail price index.
(2) 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
Equity securities appearing in the portfolio
since April 30, 1999
Abbott Laboratories
Burlington Northern Santa Fe
CenturyTel
Chevron
Conoco
Delphi Automotive Systems
Exxon
Harris
Hercules
Johnson Controls
Knight-Ridder
Mobil
National City
Northrop Grumman
Union Pacific
Equity securities eliminated from the portfolio
since April 30, 1999
Alcoa
American Stores
Ameritech
Bankers Trust
Browning-Ferris Industries
Du Pont
Goodyear Tire & Rubber
Motorola
PennzEnergy
Transamerica
Union Camp
</TABLE>
<TABLE>
American Mutual Fund Financial Statements
<S> <C> <C>
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities (dollars in
at October 31, 1999 millions)
- -------------------------------------------------------------------------------
Assets:
Investment securities at market
(cost: $6,303.164) $8,136.319
Short-term securities
(cost: $2,248.093) 2,246.534
Cash .245
Receivables for-
Sales of investments $24.743
Sales of fund's shares 3.409
Dividends and interest 27.030 55.182
---------------------------------
10,438.280
Liabilities:
Payables for-
Purchases of investments 3.327
Repurchases of fund's shares 7.136
Management services 2.394
Other expenses 4.196 17.053
---------------------------------
Net Assets at October 31, 1999-
Equivalent to $30.09 per share on
346,291,270 shares of $1 par value
capital stock outstanding (authorized
capital stock--500,000,000 shares) $10,421.227
=================
- -------------------------------------------------------------------------------
Statement of Operations (dollars in
for the year ended October 31, 1999 millions)
- -------------------------------------------------------------------------------
Investment Income:
Income:
Dividends $ 190.317
Interest 153.180 $343.497
-----------------
Expenses:
Management services fee 29.352
Distribution expenses 23.197
Transfer agent fee 5.190
Reports to shareholders .081
Registration statement and
prospectus .381
Postage, stationery and supplies 1.123
Directors' fees .222
Auditing and legal fees .059
Custodian fee .170
Taxes other than federal income tax .098
Other expenses .161 60.034
-------------------------------
Net investment income 283.463
-----------------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 1,844.287
Net decrease in unrealized appreciation on
investments:
Beginning of year 3,047.801
End of year 1,831.596 (1,216.205)
-------------------------------
Net realized gain and unrealized
depreciation on investments 628.082
---------------
Net Increase in Net Assets Resulting
from Operations $911.545
================
- -----------------------------------------------------------------------------
Statement of Changes in Net Assets (dollars in
millions)
- -------------------------------------------------------------------------------
Year ended October 31
1999 1998
-------------------------------
Operations:
Net investment income $ 283.463 $ 275.053
Net realized gain on investments 1,844.287 1,003.521
Net unrealized appreciation (depreciation)
on investments (1,216.205) 115.593
--------------------------------
Net increase in net assets
resulting from operations 911.545 1,394.167
-------------------------------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (259.303) (260.046)
Distributions from net realized
gain on investments (957.004) (769.233)
--------------------------------
Total dividends and distributions (1,216.307) (1,029.279)
--------------------------------
Capital Share Transactions:
Proceeds from shares sold:
25,199,667 and 28,085,473
shares, respectively 766.619 855.659
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions of
net realized gain on investments:
38,225,805 and 31,459,296
shares, respectively 1,105.758 928.317
Cost of shares repurchased:
44,745,071 and 42,580,163
shares, respectively (1,361.752) (1,295.650)
-------------------------------
Net increase in net assets
resulting from capital share
transactions 510.625 488.326
---------------------------------
Total Increase in Net Assets 205.863 853.214
Net Assets:
Beginning of year 10,215.364 9,362.150
--------------------------------
End of year (including undistributed
net investment income: $92.283
and $68.123, respectively) $10,421.227 $10,215.364
================================
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - Equity securities, including depositary receipts,
are valued at the last reported sale price on the exchange or market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where equity securities are traded on more than one exchange,
the securities are valued on the exchange or market determined by the
investment adviser to be the broadest and most representative market, which may
be either a securities exchange or the over-the-counter market. Fixed-income
securities are valued at prices obtained from a pricing service, 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
quoted bid and asked prices or at prices for securities of comparable maturity,
quality and type. The ability of the issuers of the debt securities held by the
fund to meet their obligations may be affected by economic developments in a
specific industry, state or region. Short-term securities maturing within 60
days are valued at amortized cost, which approximates market value. Securities
and assets for which representative market quotations are not readily available
are valued at fair value as determined in good faith by a committee appointed
by the Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -
Security transactions are accounted for as of the trade date. Realized gains
and losses from securities transactions are determined based on specific
identified cost. Dividend income is recognized on the ex-dividend date, and
interest income is recognized on an accrual basis. Market discounts and
original issue discounts on securities purchased are amortized daily over the
expected life of the security. The fund does not amortize premiums on
securities purchased
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends
and distributions paid to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As a
regulated investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of October 31, 1999, net unrealized appreciation on investments for
federal income tax purposes aggregated $1,832,353,000, of which $2,216,240,000
related to appreciated securities and $383,887,000 related to depreciated
securities. During the year ended October 31, 1999, the fund realized, on a tax
basis, a net capital gain of $1,844,278,000 on securities transactions. The
cost of portfolio securities for federal income tax purposes was $8,550,500,000
at October 31, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $29,352,000 for management services was
incurred 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.
DISTRIBUTION EXPENSES - 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, 1999, distribution expenses under the Plan were $23,197,000. As of
October 31, 1999, accrued and unpaid distribution expenses were $3,501,OOO.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $2,925,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $5,190,000.
DEFERRED DIRECTORS' FEES - 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, 1999, aggregate deferred amounts and earnings
thereon since the deferred compensation plan's adoption (1993), net of any
payments to Directors, were $679,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,491,242,000 and $4,111,829,OOO, respectively,
during the year ended October 31, 1999.
As of October 31, 1999, accumulated undistributed net realized gain on
investments was $1,683,027,000 and additional paid-in capital was
$6,468,030,000. The fund reclassified $133,258,000 from undistributed net
realized gains to additional paid-in capital for the year ended October 31,
1999 as a result of permanent differences between book and tax.
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 $170,000 includes $23,000 that was paid by these credits
rather than in cash.
<TABLE>
American Mutual Fund
<S> <C> <C> <C> <C> <C>
Per-Share Data and Ratios Year endOctober 31
------- ------- -------------------
1999 1998 1997 1996 1995
------- ------- -------------------
Net Asset Value, Beginning of
Year $31.18 $30.14 $26.54 24.17$21.60
------- ------- -------------------
Income from Investment
Operations:
Net investment income .82 .84 .83 .84 .87
Net gain on securities
(both realized & unrealized) 1.78 3.48 5.19 3.52 3.41
------- ------- -------------------
Total income from
investment operations 2.60 4.32 6.02 4.36 4.28
------- ------- -------------------
Less Distributions:
Dividends (from net investment
income) (.76) (.80) (.81) (.84) (.84)
Distributions (from
capital gains) (2.93) (2.48)(1.61)(1.15) (.87)
------- ------- -------------------
Total distributions (3.69) (3.28)(2.42)(1.99)(1.71)
------- ------- -------------------
Net Asset Value, End of Year $30.09 $31.18 $30.14$26.54$24.17
======= ======= ===================
Total Return/1/ 9.01% 15.15% 24.19%18.89%21.25%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $10,421 $10,215 $9,362$7,759$6,552
Ratio of expenses to average
net assets .57% .56% .58% .59% .59%
Ratio of net income to average
net assets 2.67% 2.75%2.95% 3.36% 3.92%
Portfolio turnover rate 41.53% 28.97% 19.16%24.21%23.31%
/1/Excludes maximum sales charge of
5.75%.
</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 investment portfolio, as
of October 31, 1999, 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 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, 1999 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
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, 1999, 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 30, 1999
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>
<S> <C> <C> <C>
To Shareholders Payment Date From Net From Net
of Record Investment Realized Long-term
Income Gains
December 10,1998 December 11,1998 $.200 $2.930
March 26,1999 March 29,1999 .185 -
June 25,1999 June 28,1999 .185 -
September 24,1999 September 27,1999 .185 -
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 66% 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, 10% 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.
The funds also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
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 2000 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1999 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
[American Funds Group(r)]
AMERICAN MUTUAL FUND
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer, The Mission
Group; former President, Southern
California Edison Company
MARY ANNE DOLAN
Los Angeles, California
Founder and President, M.A.D., Inc.
(communications company); former editor,
The Los Angeles Herald Examiner
JAMES K. DUNTON
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
MARTIN FENTON
San Diego, California
Managing Director, Senior Resource
Group, LLC (development and management
of senior living communities)
MARY MYERS KAUPPILA
Boston, Massachusetts
Private investor; former owner and President,
Energy Investment, Inc.
BAILEY MORRIS-ECK*
Washington, D. C.
Senior Associate, Reuters Foundation;
Senior Fellow, Institute for International
Economics; Consultant,
The Independent of London;
former Vice President, Brookings Institution
ROBERT G. O'DONNELL
San Francisco, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
KIRK P. PENDLETON
Huntingdon, Pennsylvania
Chairman of the Board and Chief
Executive Officer, Cairnwood, Inc.
(venture capital investment)
JAMES W. RATZLAFF
San Francisco, California
Vice Chairman of the Board of the fund
Senior Partner, The Capital Group
Partners L.P.
OLIN C. ROBISON, PH.D.
Middlebury, Vermont
President of the Salzburg Seminar;
President Emeritus, Middlebury College
STEVEN B. SAMPLE, PH.D.*
Los Angeles, California
President, University of Southern California;
Chairman, Association of Pacific Rim
Universities; past Chairman of the
Association of American Universities
CHAIRMAN EMERITUS
JON B. LOVELACE, JR.
Los Angeles, California
Chairman Emeritus of the fund
Chairman Emeritus, Capital Research and Management Company
OTHER OFFICERS
TIMOTHY D. ARMOUR
Los Angeles, California
Senior Vice President of the fund
Director, Capital Research and Management Company
JOYCE E. GORDON
Los Angeles, California
Vice President of the fund
Senior Vice President and Director,
Capital Research Company
JOANNA F. JONSSON
San Francisco, California
Vice President of the fund
Vice President and Director,
Capital Research Company
VINCENT P. CORTI
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
ROBERT P. SIMMER
Norfolk, Virginia
Assistant Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
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 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
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
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
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
prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the fund. If used as sales material after December
31, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180
OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD WIDE WEB.
*Effective November 16, 1999
E.H. Clark, Jr. and E. Eric Johnson retired from the board effective November
16. The Directors thank them for their many contributions.
Printed on recycled paper
Litho in USA CD/L/4453
Lit. No. AMF-011-1299
