[The American Funds Group(r)]
Semi-Annual Report for the six months ended April 30, 2000
[cover: photo of Mt. Rainier]
American Mutual Fund
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 nearly seven
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.
Here are the fund's average annual compound returns on a $1,000 investment with
all distributions reinvested for periods ended March 31, 2000 (the most recent
calendar quarter):
10 Years 5 Years 1 Year
Class A shares reflecting
5.75% maximum sales charge +11.88% +13.72% -7.47%
The fund's 30-day yield as of May 31, 2000, calculated in accordance with the
Securities and Exchange Commission formula, was 3.00%.
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the fund's fiscal period. Fund
results in this report were calculated for Class A shares at net asset value
(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.
Please see the back cover for important information about Class A and Class B
shares.
Fellow Investors:
The first half of our 2000 fiscal year was a challenging period for American
Mutual Fund as it sought to meet its three objectives of current income,
capital growth and conservation of principal.
While the stock market continued to move upward for most of the period, much of
its strength came from a narrow base of stocks, primarily Internet and
technology companies. Although the unmanaged Standard & Poor's 500 Stock
Composite Index gained 7.2% during the six months ended April 30, the majority
of stocks in the index actually declined in value. The fund lagged the S&P 500
Index because of our focus on stocks that pay above-average income and because
several of the fund's largest industry holdings, including the banking, energy
sources and health and personal care industries, were down during the period.
In this environment, shareholders who reinvested quarterly dividends totaling
37 cents a share and a $5.045 a share capital gain distribution paid in
December saw the value of their holdings decline 4.6%. Shareholders who took
distributions in cash earned an income return of 1.4%, partially offsetting a
6.0% decline in the fund's value.
The Value of a Disciplined Approach
Restraint is one of the hardest investment disciplines to master, especially in
a rapidly rising market when the temptation to chase high-flying stocks can be
strong. But when one is simultaneously seeking income, growth and preservation
of capital, as American Mutual Fund does, a disciplined approach is essential.
With the stock market in the grip of a speculative frenzy for most of the
fiscal period, the fund's investment professionals maintained the steady,
disciplined approach that has been successful for the past 50 years. Our
requirement to focus on large dividend-paying companies held the fund back
during much of the period because many of the stocks that powered the S&P 500's
rise do not pay dividends and are not appropriate for the fund. But this focus
served American Mutual Fund well during the recent downturn in technology
stocks.
While we rarely focus on short-term results, the fund's performance during the
most recent downturn demonstrates why we have been cautious. The Nasdaq
Composite Index, which is heavily weighted with the type of technology stocks
that were at the heart of the speculative frenzy, fell 37.3% from its peak on
March 10 through the low point on May 23.
During the same period, American Mutual Fund gained 11.5% excluding dividends.
The S&P 500 lost 11.2% from a peak on March 24 to its low point on April 14,
while American Mutual Fund gained 0.4% excluding dividends.
A High Level of Reserves
During the fiscal half-year, the fund maintained large cash reserves to take
advantage of buying opportunities. So far, we have moved cautiously, increasing
the fund's equity holdings to 74%, while lowering its cash and bond position
from 29% to 26% of assets. Banking remains the fund's largest industry at 8.8%
of the portfolio, down from 10.3% six months ago. This has been a difficult
period for the banking industry as the Federal Reserve Board has been pushing
up interest rates in an effort to forestall an increase in inflation. Shortly
after the end of the fiscal half-year, the Fed raised the federal funds rate -
the rate banks charge each other on overnight loans - for the sixth time in 12
months. When the cost of borrowing rises, bank profits suffer.
A Time-Tested Approach
No one knows, of course, if the recent market decline and rebound marks the
beginning of a rally, is the first phase of a prolonged market slump or is
simply short-term volatility. Likewise, we cannot make predictions about the
short-term future of the dividend-paying stocks you find in American Mutual
Fund's portfolio. But whatever happens in the coming months and years, we will
continue to invest in quality companies that can help the fund seek its three
objectives simultaneously.
We look forward to reporting to you again in six months.
Cordially,
/s/ James K. Dunton /s/ Robert G. O'Donnell
James K. Dunton Robert G. O'Donnell
Chairman of the Board President
June 9, 2000
<TABLE>
American Mutual Fund, Inc.
Investment Portfolio, April 30, 2000
(Unaudited)
<S> <C> <C> <C> <C>
Percent of
Largest Industry Holdings Net Assets
Banking 8.75%
Diversified Telecommunication Services 8.65
Energy Sources 7.74
Utilities: Electric & Gas 7.39
Health & Personal Care 6.29
Other Industries 35.29
Bonds, Notes, Cash & Equivalents 25.89
100.00%
Percent of
Largest Individual Holdings Net Assets
Sprint FON Group 2.16%
U S WEST 2.01
Bank of America 1.85
Household International 1.60
IBM 1.50
Duke Energy 1.47
Pharmacia 1.46
SBC Communications 1.44
Royal Dutch Petroleum 1.41
BANK ONE 1.32
Shares Market Percent
Value of Net
Equity Securities (Common and Preferred Stocks) (Millions) Assets
-------------------------------------------- ---------- ---------- ----------
Energy
Energy Sources - 7.74%
Ashland Inc. 1,850,000 $ 63.131 .73 %
Chevron Corp. 493,500 42.009 .49
Conoco Inc., Class B 2,305,580 57.351 .66
Kerr-McGee Corp. 545,000 28.204 .33
Phillips Petroleum Co. 1,761,700 83.571 .97
Royal Dutch Petroleum Co. (New York Registered) 2,115,000 121.348 1.41
Sunoco, Inc. 1,400,000 42.437 .49
Texaco Inc. 2,070,000 102.465 1.19
Ultramar Diamond Shamrock Corp. 1,500,000 37.125 .43
Unocal Corp. 840,000 27.143 .31
USX-Marathon Group 2,700,000 62.944 .73
Utilities: Electric & Gas - 7.39%
Ameren Corp. 300,000 11.006 .13
American Electric Power Co., Inc. 775,000 28.385 .33
Carolina Power & Light Co. 900,000 32.906 .38
Central and South West Corp. 3,715,000 80.569 .93
Consolidated Edison, Inc. 1,335,700 47.000 .55
Duke Energy Corp. 2,200,000 126.500 1.47
FPL Group, Inc. 818,300 36.977 .43
GPU, Inc. 800,000 22.450 .26
New Century Energies, Inc. 3,200,000 104.400 1.21
Southern Co. 4,300,000 107.231 1.24
TECO Energy, Inc. 1,800,000 39.375 .46
---------- ----------
1,304.527 15.13
---------- ----------
Materials
Chemicals - 1.95%
Air Products and Chemicals, Inc. 400,000 12.425 .14
Ferro Corp. 1,047,200 23.955 .28
Hercules Inc. 1,800,000 28.012 .32
International Flavors & Fragrances Inc. 875,000 30.133 .35
PPG Industries, Inc. 570,900 31.043 .36
Praxair, Inc. 950,000 42.215 .50
Forest Products & Paper - 2.71%
Fort James Corp. 2,658,800 63.645 .74
Georgia-Pacific Corp., Georgia-Pacific Group 620,000 22.785 .45
Georgia-Pacific Corp., Timber Group 725,000 16.811
International Paper Co. 700,000 25.725 .30
Westvaco Corp. 3,400,000 104.975 1.22
---------- ----------
401.724 4.66
---------- ----------
Capital Equipment
Aerospace & Military Technology - 1.13%
Boeing Co. 200,000 7.937 .09
Northrop Grumman Corp. 600,000 42.525 .49
Raytheon Co., Class A 405,000 9.290 .26
Raytheon Co., Class B 575,000 12.758
United Technologies Corp. 400,000 24.875 .29
Data Processing & Reproduction - 3.31%
Hewlett-Packard Co. 425,000 57.375 .67
International Business Machines Corp. 1,160,000 129.485 1.50
Xerox Corp. 3,716,900 98.266 1.14
Electronics - 0.95%
Emerson Electric Co. 500,000 27.437 .32
Harris Corp. 1,100,000 35.544 .41
Hubbell Inc., Class B 720,000 18.765 .22
Electronic Components - 1.03%
Thomas & Betts Corp. 2,890,000 89.048 1.03
Industrial Components - 2.15%
Dana Corp. 700,000 21.263 .25
Delphi Automotive Systems Corp. 698,465 13.358 .16
Eaton Corp. 300,000 25.200 .29
Federal-Mogul Corp. 240,600 3.263 .15
Federal-Mogul Corp. 7.00% convertible preferred 340,500 9.704
Genuine Parts Co. 1,000,000 26.250 .30
Goodyear Tire & Rubber Co. 1,200,000 33.150 .38
Johnson Controls, Inc. 280,000 17.728 .21
TRW Inc. 600,000 35.100 .41
Machinery & Engineering - 0.94%
Briggs & Stratton Corp. 629,100 24.142 .28
Caterpillar Inc. 400,000 15.775 .18
Deere & Co. 1,000,000 40.375 .47
Pall Corp. 50,000 1.115 .01
---------- ----------
819.728 9.51
---------- ----------
Consumer Goods
Automobiles - 0.18%
General Motors Corp. 170,000 15.916 .18
Beverages - 0.58%
Coca-Cola Co. 120,000 5.648 .07
PepsiCo, Inc. 1,200,000 44.025 .51
Food & Household Products - 1.73%
Colgate-Palmolive Co. 100,000 5.712 .07
ConAgra, Inc. 800,000 15.100 .17
General Mills, Inc. 1,400,000 50.925 .59
H.J. Heinz Co. 1,200,000 40.800 .47
Ralston Purina Co. 250,000 4.422 .05
Sara Lee Corp. 2,172,400 32.586 .38
Health & Personal Care - 6.29%
Abbott Laboratories 1,500,000 57.656 .67
Avon Products, Inc. 600,000 24.900 .29
Becton, Dickinson and Co. 1,370,000 35.106 .41
Bristol-Myers Squibb Co. 650,000 34.085 .39
Eli Lilly and Co. 800,000 61.850 .72
Johnson & Johnson 400,000 33.000 .38
Kimberly-Clark Corp. 400,000 23.225 .27
Mallinckrodt Inc. 2,000,000 53.750 .62
Pfizer Inc 600,000 25.275 .29
Pharmacia Corp. (merger of
Pharmacia & Upjohn, Inc. and Monsanto Co.) 2,513,225 125.504 1.46
Warner-Lambert Co. 600,000 68.288 .79
Recreation, Other Consumer Products - 1.22%
Pennzoil-Quaker State Co. 1,875,000 20.508 .24
Stanley Works 2,875,000 84.812 .98
Textiles & Apparel - 0.87%
NIKE, Inc., Class B 970,000 42.134 .49
VF Corp. 1,150,000 32.488 .38
---------- ----------
937.715 10.87
---------- ----------
Services
Broadcasting & Publishing - 0.43%
Knight-Ridder, Inc. 750,000 36.797 .43
Business & Public Services - 1.99%
Galileo International, Inc. 1,200,000 27.750 .32
Interpublic Group of Companies, Inc. 150,000 6.150 .07
Pitney Bowes Inc. 950,000 38.831 .45
ServiceMaster Co. 5,200,000 70.850 .82
Waste Management, Inc. 1,750,000 27.782 .33
Merchandising - 2.92%
Albertson's, Inc. 2,402,200 78.222 .91
J.C. Penney Co., Inc. 3,579,100 49.436 .57
Lowe's Companies, Inc. 500,000 24.750 .29
May Department Stores Co. 3,096,800 85.162 .99
Walgreen Co. 500,000 14.062 .16
Diversified Telecommunication Services - 8.65%
AT&T Corp. 2,400,000 112.050 1.30
CenturyTel, Inc. 2,910,000 71.295 .83
GTE Corp. 1,155,000 78.251 .91
SBC Communications Inc. 2,843,892 124.598 1.44
Sprint FON Group 3,035,700 186.695 2.16
U S WEST, Inc. 2,435,000 173.342 2.01
Transportation: Rail & Road - 1.98%
Burlington Northern Santa Fe Corp. 250,000 6.031 .07
CSX Corp. 2,700,000 56.531 .66
Norfolk Southern Corp. 4,940,000 87.068 1.01
Union Pacific Corp. 500,000 21.063 .24
---------- ----------
1,376.716 15.97
---------- ----------
Finance
Banking - 8.75%
AmSouth Bancorporation 2,000,000 29.125 .34
Bank of America Corp. 3,250,000 159.250 1.85
Bank of New York Co., Inc. 750,000 30.797 .36
BANK ONE CORP. 3,732,000 113.826 1.32
Chase Manhattan Corp. 800,000 57.650 .67
Comerica Inc. 300,000 12.713 .15
First Security Corp. 1,250,000 17.656 .20
First Union Corp. 2,700,000 86.063 1.00
FleetBoston Financial Corp.
(formerly Fleet Boston Corp.) 1,000,000 35.437 .41
Huntington Bancshares Inc. 1,500,000 27.375 .32
J.P. Morgan & Co. Inc. 250,000 32.094 .37
KeyCorp 1,000,000 18.500 .21
National City Corp. 1,600,000 27.200 .32
SunTrust Banks, Inc. 400,000 20.300 .23
Wachovia Corp. 500,000 31.344 .36
Wells Fargo & Co. 1,350,000 55.434 .64
Financial Services - 1.74%
Associates First Capital Corp., Class A 393,336 8.727 .10
Fannie Mae 50,000 3.016 .04
Household International, Inc. 3,300,000 137.775 1.60
Insurance - 4.13%
Allstate Corp. 4,175,000 98.634 1.14
American General Corp. 1,110,000 62.160 .72
Aon Corp. 755,500 20.446 .24
Jefferson-Pilot Corp. 1,000,000 66.562 .77
Lincoln National Corp. 600,000 20.888 .24
SAFECO Corp. 2,200,000 48.675 .57
St. Paul Companies, Inc. 1,085,700 38.678 .45
Real Estate - 0.58%
Equity Residential Properties Trust 1,100,000 50.050 .58
---------- ----------
1,310.375 15.20
---------- ----------
Multi-Industry & Miscellaneous
Multi-Industry - 2.21%
BFGoodrich Co. 1,217,100 38.795 .45
Harsco Corp. 2,025,000 60.117 .69
Honeywell International Inc.
(formerly AlliedSignal Inc.) 1,200,000 67.200 .78
Textron Inc. 400,000 24.775 .29
Miscellaneous - .56%
Other equity securities in
initial period of acquisition 48.877 0.56
---------- ----------
239.764 2.77
---------- ----------
TOTAL EQUITY SECURITIES (cost: $5,651.134 million) 6,390.549 74.11
---------- ----------
Principal
Amount
Bonds & Notes
-------------------------------------------- ----------
CORPORATE - 0.14%
J.C. Penney Co., Inc. 9.05% 2001 $12,000,000 11.887 .14
U.S. TREASURY OBLIGATIONS - 6.90%
3.921% January 2009 (1) 100,000,000 102.462 1.19
13.75% August 2004 48,500,000 61.087 .71
3.756% July 2002 (1) 100,000,000 105.708 1.22
7.75% February 2001 56,000,000 56.560 .66
5.625% November 2000 90,000,000 89.606 1.04
6.25% August 2000 90,000,000 89.986 1.04
6.375% May 2000 90,000,000 90.014 1.04
---------- ----------
TOTAL BONDS & NOTES (cost: $608.436 million) 607.310 7.04
---------- ----------
TOTAL INVESTMENT SECURITIES
(cost: $6,259.570 million) 6,997.859 81.15
Short Term Securities
--------------------------------------------
Corporate Short-Term Notes 16.32%
AIG Funding, Inc. 5.85%-6.03% due 5/4-6/16/00 $77,000,000 76.651 .89 %
Associates First Capital Corp.
6.02%-6.24% due 5/16-7/6/00 80,500,000 80.034 .93
Bell Atlantic Financial Services, Inc.
5.92%-6.10% due 5/12-6/22/00 100,000,000 99.595 1.15
Campbell Soup Co. 5.84%-6.00% due 5/1-5/22/00 75,000,000 74.900 .87
Coca-Cola Co. 5.91%-6.09% due 5/5-7/5/00 105,000,000 104.619 1.22
Eastman Kodak Co.
5.86%-6.08% due 5/18-7/12/00 105,000,000 104.105 1.21
E.I. du Pont de Nemours and Co.
5.90%-6.04% due 5/23-6/12/00 50,000,000 49.740 .58
Emerson Electric Co.
5.88%-6.03% due 5/15-6/2/00 (2) 64,500,000 64.290 .75
Ford Motor Credit Co. 6.02% due 5/10/00 51,500,000 51.414 .60
General Electric Capital Corp.
5.90%-6.10% due 5/8-6/14/00 107,950,000 107.331 1.25
General Motors Acceptance Corp.
5.86%-6.16% due 5/2-6/19/00 80,300,000 80.030 .93
H.J. Heinz Co. 6.02%-6.05% due 5/30-6/7/00 51,000,000 50.700 .59
Household Finance Corp. 6.03% due 6/5-6/9/00 59,020,000 58.631 .68
Lucent Technologies Inc.
5.75%-6.04% due 5/1-6/12/00 85,000,000 84.598 .99
Pharmacia Corp. 5.90%-5.93% due 5/17/00 36,750,000 36.645 .42
Motorola, Inc. 6.07%-6.08% due 6/19-7/05/00 59,000,000 58.386 .68
Procter & Gamble Co.
6.00%-6.01% due 5/31-6/07/00 79,700,000 79.229 .92
SBC Communications Inc.
5.85%-5.87% due 5/2-5/24/00 (2) 97,000,000 96.868 1.12
Wal-Mart Stores, Inc. 6.02% due 5/8/00 (2) 50,000,000 49.933 .54
Federal Agency Discount Notes - 2.48%
Freddie Mac 5.81%-6.05% due 5/4-7/13/00 47,500,000 47.083 .55
Fannie Mae 5.63%-6.05% due 5/18-7/13/00 167,120,000 166.120 1.93
---------- ----------
TOTAL SHORT-TERM SECURITIES
(cost: $1,621.061 million) 1,620.902 18.80
Excess of cash and receivables over payables 4.724 .05
---------- ----------
TOTAL SHORT-TERM SECURITIES, CASH AND RECEIVABLES 1,625.626 18.85
---------- ----------
NET ASSETS $ 8,623.49 100.00 %
========== ==========
(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 October 31, 1999
Avon Products
BFGoodrich
Becton, Dickinson
Coca-Cola
CSX
Ferro
Galileo International
Goodyear Tire & Rubber
H.J. Heinz
Interpublic Group of Companies
Lowe's Companies
Pall
Pitney Bowes
Ralston Purina
ServiceMaster
Unocal
USX-Marathon Group
Walgreen
Equity securities eliminated from the portfolio
since October 31, 1999
Atlantic Richfield
Bestfoods
Electronic Data Systems
Exxon
Gannett
Merck
Mobil
Schering-Plough
U.S. Bancorp
Wal-Mart Stores
Weyerhaeuser
</TABLE>
<TABLE>
American Mutual Fund
Financial Statements
Statement of Assets and Liabilities (dollars in
at April 30, 2000 millions)
(Unaudited)
<S> <C> <C>
ASSETS:
Investment securities at market
(cost: $6,259.570) $6,997.859
Short-term securities
(cost: $1,621.061) 1,620.902
Cash .901
Receivables for--
Sales of investments $20.952
Sales of fund's shares 3.300
Dividends and accrued interest 23.832 48.084
-------- --------
8,667.746
LIABILITIES:
Payables for--
Purchases of investments 28.763
Repurchases of fund's shares 9.454
Forward currency contracts - net .000
Management services 2.045
Other expenses 3.999 44.261
-------- --------
NET ASSETS AT APRIL 30, 2000-- $8,623.485
========
Total authorized capital stock--
500,000,000 shares
Class A shares, $0.001 par value
Net assets $8,621.142
Shares outstanding 369,478,540
Net asset value per share $23.33
Class B shares, $0.001 par value
Net assets $2.343
Shares outstanding 100,510
Net asset value per share $23.31
Statement of Operations (dollars in
for the six months ended April 30, 2000 millions)
(Unaudited)
INVESTMENT INCOME:
Income:
Dividends $101.606
Interest 77.671 $179.277
--------
Expenses:
Management services fee 12.804
Distribution expenses - Class A 9.778
Distribution expenses - Class B .002
Transfer agent fee - Class A 2.880
Transfer agent fee- Class B -
Reports to shareholders .268
Registration statement and prospectus .307
Postage, stationery and supplies 1.050
Directors' fees .075
Auditing and legal fees .057
Custodian fee .073
Taxes other than federal income tax .111
Other expenses .063 27.468
-------- --------
Net investment income 151.809
--------
REALIZED GAIN AND UNREALIZED
DEPRECIATION ON INVESTMENTS:
Net realized gain 433.372
Net decrease in unrealized appreciation on
investments:
Beginning of period 1,831.596
End of period 738.130 (1,093.466)
-------- --------
Net realized gain and
unrealized depreciation
on investments (660.094)
--------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ($508.285)
========
Six months Year ended
Statement of Changes in Net Assets ended April 30, October 31,
(dollars in millions) 2000 * 1999
(Unaudited) -------- --------
OPERATIONS:
Net investment income $ 151.809 $ 283.463
Net realized gain on investments 433.372 1,844.287
Net urealized depreciation
on investments (1,093.466) (1,216.205)
-------- --------
Net increase (decrease) in net assets
resulting from operations (508.285) 911.545
-------- --------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (133.069) (259.303)
Class B - -
Distributions from net realized
gain on investments:
Class A (1,723.079) (957.004)
Class B - -
-------- --------
Total dividends and distributions (1,856.148) (1,216.307)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 319.475 766.619
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments 1,696.458 1,105.758
Cost of shares repurchased (1,449.242) (1,361.752)
-------- --------
Net increase in net assets resulting from
capital share transactions 566.691 510.625
-------- --------
TOTAL INCREASE(DECREASE) IN NET ASSETS (1,797.742) 205.863
NET ASSETS:
Beginning of period 10,421.227 10,215.364
-------- --------
End of period (including
undistributed net investment
income: $111.023 and $92.283,
respectively) $8,623.485 $10,421.227
======== ========
*Unaudited
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.
The fund offers Class A and Class B shares. Class A shares are sold with an
initial sales charge of up to 5.75%. Class B shares are sold without an initial
sales charge but are subject to a contingent deferred sales charge paid upon
redemption. This charge declines from 5% to zero over a period of six years.
Class B shares have higher distribution expenses and transfer agent fees than
Class A shares. Class B shares are automatically converted to Class A shares
eight years after the date of purchase. Holders of both classes of shares have
equal pro rata rights to assets and identical voting, dividend, liquidation and
other rights, except that each class bears different distribution and transfer
agent expenses, and each class shall have exclusive rights to vote on matters
affecting only their class.
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.
COMMON EXPENSES - Income, expenses other than class-specific expenses and
realized and unrealized gains and losses are allocated daily between the
classes based on their relative net asset values. Distribution expenses,
transfer agent fees, and any other class-specific expenses are accrued daily
and charged to the applicable share class.
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 April 30, 2000, net unrealized appreciation on investments for federal
income tax purposes aggregated $738,886,000; $1,401,903,000 related to
appreciated securities and $663,017,000 related to depreciated securities.
During the six months ended April 30, 2000, the fund realized, on a tax basis,
a net capital gain of $433,374,000 on securities transactions.
The cost of portfolio securities for federal income tax purposes was
$7,879,875,000 at April 30, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $12,804,000 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 the following rates and average net asset levels:
<TABLE>
<CAPTION>
Average Net Asset Level
Rate In Excess of Up to
<S> <C> <C>
0.384% $0 $1 billion
0.33% $1 billion $2 billion
0.294% $2 billion $3 billion
0.27% $3 billion $5 billion
0.252% $5 billion $8 billion
0.24% $8 billion
</TABLE>
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution for Class A shares,
the fund may expend up to 0.25% of Class A average daily 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.
Pursuant to a Plan of Distribution for Class B shares, the fund may expend up
to 1.00% of Class B average daily net assets annually to compensate dealers for
their selling and servicing efforts. During the six months ended April 30,
2000, distribution expenses under the Plans of Distribution for Class A and
Class B shares were $9,778,000 and $2,000, respectively. As of April 30, 2000,
accrued and unpaid distribution expenses for Class A and Class B shares were
$3,228,000 and $1,000, respectively. American Funds Distributors, Inc. (AFD),
the principal underwriter of the fund's shares received $934,000 (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 $2,880,000.
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 April 30, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $742,000.
AFFILIATED DIRECTORS AND OFFICERS -- 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 $881,618,000 and $1,268,468,000, respectively, during
the six months ended
April 30, 2000.
As of April 30, 2000, net assets consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Capital paid in on shares
of beneficial interest $ 7,381,012,000
Undistributed net investment income 111,023,000
Accumulated net realized gain 393,320,000
Net unrealized appreciation 738,130,000
Net Assets $ 8,623,485,000
</TABLE>
Capital share transations in the fund were as follows:
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 $73,000 includes $20,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS
<S> <C> <C> <C> <C> <C>
Net gains/
(losses) on
securities
Net asset (both
value, Net realized Total from
Period beginning investment and investment
Ended (1) of period income unrealized) operations
Class A :
2000 $30.09 0.41(3) (1.75) (3) ($1.34)
1999 31.18 .82 1.78 2.60
1998 30.14 .84 3.48 4.32
1997 26.54 .83 5.19 6.02
1996 24.17 .84 3.52 4.36
1995 21.60 .87 3.41 4.28
Class B (7):
2000 21.78 0.06 (3) 1.47 (3) 1.53
Dividends
(from net Distributions Net asset
investment (from capital Total value, end Total
income) gains) Distributions of period return (2)
Class A :
$ (.37) ($5.05) ($5.42) $23.33 (4.60)% (4)
(.76) (2.93) (3.69) 30.09 9.01
(.80) (2.48) (3.28) 31.18 15.15
(.81) (1.61) (2.42) 30.14 24.19
(.84) (1.15) (1.99) 26.54 18.89
(.84) (0.87) (1.71) 24.17 21.25
Class B (7):
- - - 23.31 7.03 (4)
Net
assets, Ratio of Ratio of
end of expenses Net income Portfolio
period (in to average to average turnover
millions) net assets net assets rate
Class A :
$8,621 0.58% (5) 3.28% (5) 12.17% (6)
10,421 0.57 2.67 41.53
10,215 0.56 2.75 28.97
9,362 0.58 2.95 19.16
7,759 0.59 3.36 24.21
6,552 0.59 3.92 23.31
Class B (7):
2 1.43 (5) 2.14 (5) 12.17 (6)
(1) The periods 1995 through 1999
represent fiscal years ended
October 31; the period ended 2000
represents the six months ended
April 30 (Unaudited).
(2) Excludes sales charge on
Class A shares or contingent
deferred sales charge on
Class B shares.
(3) Based on average shares
outstanding.
(4) Based on operations for the
period shown and, accordingly,
not representative of a full year.
(5) Annualized.
(6) Represents portfolio turnover
rate for the six months ended
April 30, 2000.
(7) Class B shares offered for
sale commencing March 15, 2000.
</TABLE>
[The American Funds Group(r)]
American Mutual 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 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
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
Class A and Class B Shares: There are two ways to invest in American Mutual
Fund. Class A shares are subject to a 5.75% maximum up-front sales charge that
declines for accounts of $25,000 or more. Class B shares, which are not
available for certain employer-sponsored retirement plans, have no up-front
sales charge. They are, however, subject to additional expenses of
approximately 0.75% a year over the first eight years of ownership. If redeemed
within six years, they may also be subject to a contingent deferred sales
charge (5% maximum) that declines over time. Because expenses are first
deducted from income, dividends for Class B share accounts will be lower.
For information about your account or any of the fund's services, or for a
prospectus for any of the American Funds, 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. Please read
the prospectus carefully before you invest or send money.
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
June 30, 2000, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA CD/L/4618
Lit. No. AMF-013-0600
