AMERICAN MUTUAL FUND INC, 485BPOS, 2000-01-07

AMERICAN MUTUAL FUND INC
485BPOS, 2000-01-07

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SEC File Nos. 2-10607
811-572

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 106
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 26

AMERICAN MUTUAL FUND, INC.
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200

Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)

Copies to:
ERIC A.S. RICHARDS, ESQ.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)

Approximate date of proposed public offering:
It is proposed that this filing become effective on January 10, 2000, pursuant
to paragraph (b) of rule 485.

<PAGE>

American Mutual Fund/(R)/

Prospectus
JANUARY 10, 2000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<PAGE>

---------------------------------------------------------
AMERICAN MUTUAL FUND, INC.

333 South Hope Street
Los Angeles, California 90071

<TABLE>
<CAPTION>
<S> <C> <C>
TICKER SYMBOL: AMRMX NEWSPAPER ABBREV: Amutl FUND NO: 03
</TABLE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objectives, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 11
-------------------------------------------------------
Purchase and Exchange of Shares 12
-------------------------------------------------------
Distributions and Taxes 17
-------------------------------------------------------
Financial Highlights 18
-------------------------------------------------------
</TABLE>

AMF-010-0100/B
AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
RISK/RETURN SUMMARY

The fund seeks to provide you with current income, growth of capital and
conservation of principal. The fund invests primarily in common stocks of
larger, more established companies that have long records of increasing
earnings and dividends.

The fund is designed for investors seeking both income and capital
appreciation, as well as conservation of principal. In pursuing its
objectives, the fund tends to invest in stocks that are more resilient to
market declines. The fund's equity investments are limited to securities
included on its eligible list, which consists of securities that are deemed
suitable by the fund's board of directors in light of the fund's investment
objectives and policies. An investment in the fund is subject to risks,
including the possibility that the fund may decline in value in response to
economic, political or social events in the U.S. or abroad. The prices of
equity securities owned by the fund may be affected by events specifically
involving the companies issuing those securities.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

INVESTMENT RESULTS

The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.

Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)

[bar chart]
1989 25.25%
1990 -1.62%
1991 21.72%
1992 7.83%
1993 14.28%
1994 0.33%
1995 31.38%
1996 16.22%
1997 26.39%
1998 14.76%

The fund's year-to-date return for the nine months ended September 30, 1999
was 0.63%.
------------------------------------------------------------------------------

The fund's highest/lowest quarterly results during this time period were:

<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 12.44% (quarter ended December 31, 1998)
LOWEST -8.68% (quarter ended September 30, 1990)
</TABLE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

For periods ended December 31, 1998:

<TABLE>
<CAPTION>
THE FUND WITH
AVERAGE ANNUAL MAXIMUM SALES LIPPER MULTI-CAP
TOTAL RETURN CHARGE DEDUCTED/1/ S&P 500/2/ VALUE INDEX/3/
-------------------------------------------------------------------
<S> <C> <C> <C>
One Year 8.17% 28.52% 6.53%
-------------------------------------------------------------------
Five Years 15.93% 24.02% 16.49%
-------------------------------------------------------------------
Ten Years 14.50% 19.16% 14.56%
-------------------------------------------------------------------
Lifetime/4/ 13.29% 13.41% n/a
-------------------------------------------------------------------
</TABLE>

30-day yield/1/: 2.38%
(For current yield information, please call American FundsLine/^/ at
1-800-325-3590)

1 These fund results were calculated according to a formula which requires that
the maximum sales charge of 5.75% be deducted and include the reinvestment of
dividend and capital gain distributions. Results would be higher if they were
calculated at net asset value.

2 The Standard & Poor's 500 Composite Index is a broad-based measurement of
changes in stock market conditions based on the average performance of 500
widely held common stocks. This index is unmanaged and does not reflect sales
charges, commissions or expenses.

3 The Lipper Multi-Cap Value Funds Index is an equally weighted index of thirty
funds which, by practice, invest in a variety of market capitalization ranges.
These funds seek long-term growth of capital by investing in companies that
are considered to be undervalued relative to a major unmanaged stock index
based on price-to-current earnings or other factors. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions.

4 The fund began investment operations on February 21, 1950.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FEES AND EXPENSES OF THE FUND

The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.

<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment)
----------------------------------------------------------------
<S> <C>
Maximum sales charge imposed on purchases 5.75%/1/
(as a percentage of offering price)
----------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0%
----------------------------------------------------------------
Maximum deferred sales charge 0%/2/
----------------------------------------------------------------
Redemption or exchange fees 0%
</TABLE>

1 Sales charges are reduced or eliminated for larger purchases.

2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
----------------------------------------------------------
<S> <C>
Management Fees 0.28%
Service (12b-1) Fees 0.22%*
Other Expenses 0.07%
Total Annual Fund Operating Expenses 0.57%
</TABLE>

/*/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.

EXAMPLE

This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your cumulative expenses would
be:

<TABLE>
<CAPTION>
<S> <C>
One year $ 630
-----------------------------------------------------------
Three years $ 747
-----------------------------------------------------------
Five years $ 875
-----------------------------------------------------------
Ten years $1,248
</TABLE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

The fund strives for the balanced accomplishment of three objectives: current
income, growth of capital and conservation of principal. The fund invests
primarily in common stocks of companies that are likely to participate in the
growth of the American economy and whose dividends are well protected. In
addition, the fund may invest in global companies that are part of the Standard
& Poor's 500 Composite Index which is considered a broad measure of the U.S.
market. The fund's equity investments are limited to securities included on
its eligible list, which is approved by the fund's board of directors. The
list consists of securities deemed suitable in light of the fund's investment
objectives and policies generally described above. Securities are added to, or
deleted from, the eligible list by the fund's board of directors after
reviewing and acting upon the recommendations of the fund's investment adviser.

The prices of equity securities held by the fund will decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations.

The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objectives, but it also
provides greater liquidity to meet redemptions or to make additional
investments, and it would reduce the fund's exposure in the event of a market
downturn. The fund may also invest in other debt securities.

The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

<TABLE>
<CAPTION>
AVERAGE ANNUAL THE FUND WITH LIPPER MULTI-CAP
TOTAL RETURN NO SALES CHARGE/1/ VALUE INDEX/2/
------------------------------------------------------------------------------
<S> <C> <C>
Nine Months ended September 30, 1999 0.63% 0.51%
------------------------------------------------------------------------------
(For periods ended December 31, 1998): 14.76% 6.53%
One Year
------------------------------------------------------------------------------
Five Years 17.32% 16.49%
------------------------------------------------------------------------------
Ten Years 15.17% 14.56%
------------------------------------------------------------------------------
Lifetime/3/ 13.42% n/a
------------------------------------------------------------------------------
</TABLE>

1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.

2 The Lipper Multi-Cap Value Funds Index is an equally weighted index of thirty
funds which, by practice, invest in a variety of market capitalization ranges.
These funds seek long-term growth of capital by investing in companies that
are considered to be undervalued relative to a major unmanaged stock index
based on price-to-current earnings or other factors. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions.

3 The fund began investment operations on February 21, 1950.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, October 31, 1999.

[pie chart]

Banking 10.34%
Diversified Telecommunications Services 9.54%
Energy Sources 6.28%
Utilities: Electric & Gas 6.01%
Health & Personal Care 4.88%
Other Industries 34.33%
Bonds, Notes, Cash & Cash Equivalents 28.62%

<TABLE>
<CAPTION>
PERCENT OF
LARGEST INDIVIDUAL EQUITY HOLDINGS NET ASSETS
---------------------------------------------------------------------------------
<S> <C>
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
</TABLE>

Because the fund is actively managed, its holdings will change from time to
time.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."

Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for American Mutual Fund are listed on the following page.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDNG THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
PORTFOLIO (AND RESEARCH PROFESSIONAL, WITH CAPITAL
COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
AMERICAN MUTUAL AMERICAN MUTUAL FUND MANAGEMENT
FUND PRIMARY TITLE(S) (APPROXIMATE) COMPANY
---------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
JAMES K. DUNTON Chairman of the Board of 30 years 37 years 37 years
the fund. Senior Vice
President and Director,
Capital Research and
Management Company
---------------------------------------------------------------------------------------------------------------
ROBERT G. President and Director of 12 years (plus 12 years as a 24 years 27 years
O'DONNELL the fund. Senior Vice research professional prior
President and Director, to becoming a portfolio
Capital Research and counselor for the fund)
Management Company
---------------------------------------------------------------------------------------------------------------
JON B. LOVELACE, Chairman Emeritus of the 40 years 48 years 48 years
JR. fund. Chairman Emeritus,
Capital Research and
Management Company
---------------------------------------------------------------------------------------------------------------
TIMOTHY D. Senior Vice President of 8 years (plus 6 years as a 17 years 17 years
ARMOUR the fund. Chairman and research professional prior
Chief Executive Officer, to becoming a portfolio
Capital Research Company*; counselor for the fund)
Director, Capital Research
and Management Company
-----------------------------------------------------------------
----------------------------------------------
R. MICHAEL Chairman of the Board and 14 years (plus 7 years as a 35 years 35 years
SHANAHAN Principal Executive research professional prior
Officer, Capital Research to becoming a portfolio
and Management Company counselor for the fund)

The fund began investment operations on February 21, 1950.
* Company affiliated with Capital Research and Management Company.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
SHAREHOLDER INFORMATION

SHAREHOLDER SERVICES

American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180

[map of the United States]

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>

A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.

You may invest in the fund through various retirement plans. However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan administrator/
trustee or dealer.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES

PURCHASE

Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."

EXCHANGE

You may exchange your shares into other funds in The American Funds Group,
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone..." for
information regarding electronic exchanges.

THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.

<TABLE>
<CAPTION>
INVESTMENT MINIMUMS
<S> <C>
To establish an account (including retirement plan accounts) $250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
</TABLE>

SHARE PRICE

The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value,
market prices are used when available. If a market price for a particular
security is not available, the fund will determine the appropriate price for
the security.

Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and
accepts

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

your request. The offering price is the net asset value plus a sales charge, if
applicable.

SALES CHARGE

A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.

<TABLE>
<CAPTION> SALES CHARGE AS A
PERCENTAGE OF

-------------------- DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE

-----------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
-----------------------------------------------------------------------
$25,000 but less than $50,000 5.00% 5.26% 4.25%
-----------------------------------------------------------------------
$50,000 but less than $100,000 4.50% 4.71% 3.75%
-----------------------------------------------------------------------
$100,000 but less than $250,000 3.50% 3.63% 2.75%
-----------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
-----------------------------------------------------------------------
$500,000 but less than $750,000 2.00% 2.04% 1.60%
-----------------------------------------------------------------------
$750,000 but less than $1 million 1.50% 1.52% 1.20%
-----------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>

PURCHASES NOT SUBJECT TO SALES CHARGE

Investments of $1 million or more are sold with no initial sales charge.
HOWEVER A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE
MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type
plans investing $1 million or more, or with 100 or more eligible employees, may
invest with no sales charge and are not subject to a contingent deferred sales
charge. Investments made by retirement plans, endowments or foundations with
$50 million or more in assets may also be made with no sales charge and are not
subject to a contingent deferred sales charge. The fund may pay a dealer
concession of up to 1% under its Plan of Distribution on investments made with
no initial sales charge.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

REDUCING YOUR SALES CHARGE

You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your sales charge. You must let your
investment dealer or American Funds Service Company know if you qualify for a
reduction in your sales charge using one or any combination of the methods
described below and in the statement of additional information and "Welcome to
the Family."

AGGREGATING ACCOUNTS

To receive a reduced sales charge, investments made by you and your immediate
family (see above) may be aggregated if made for their own account(s) and/or:

- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.

- solely controlled business accounts.

- single-participant retirement plans.

Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.

CONCURRENT PURCHASES

You may combine simultaneous purchases of two or more American Funds, as well
as individual holdings in various American Legacy variable annuities or
variable life insurance policies, to qualify for a reduced sales charge. Direct
purchases of money market funds are excluded.

RIGHTS OF ACCUMULATION

You may take into account the current value of your existing holdings in The
American Funds Group, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to determine your sales
charge. Direct purchases of money market funds are excluded.

STATEMENT OF INTENTION

You may establish a Statement of Intention (SOI) that allows you to combine the
purchases you intend to make over a 13-month period in any non-money market
fund or individual American Legacy variable annuity or variable life insurance
policy. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

capital gains do not apply toward these combined purchases. An SOI allows you
to take immediate advantage of the maximum quantity discount available. A
portion of your account may be held in escrow to cover additional sales charges
which may be due if your total investments over the 13-month period do not
qualify for the applicable sales charge reduction.

PLAN OF DISTRIBUTION

The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. Up to 0.25%
of average net assets is paid annually to qualified dealers for providing
certain shareholder services. The 12b-1 fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is indicated earlier under
"Fees and Expenses of the Fund." Since these fees are paid out of the fund's
assets or income on an ongoing basis, over time they will increase the cost and
reduce the return of an investment and may cost you more than paying higher
initial sales charges.

OTHER COMPENSATION TO DEALERS

American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.

HOW TO SELL SHARES

Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:

THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)

- Shares held for you in your dealer's name must be sold through the dealer.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

- Requests must be signed by the registered shareholder(s).

- A signature guarantee is required if the redemption is:

-- Over $50,000;

-- Made payable to someone other than the registered shareholder(s); or

-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:

- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.

- Checks must be made payable to the registered shareholder.

- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.

TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE
ONLINE

Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.

Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The fund intends to distribute dividends to you, usually in March, June,
September and December. Capital gains, if any, are usually distributed in
December. When a capital gain is distributed, the net asset value per share is
reduced by the amount of the payment.

You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.

TAXES ON DISTRIBUTIONS

Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.

For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.

Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.

<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31
----------------------------
1999 1998 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $31.18 $30.14 $26.54 $24.17 $21.60
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .82 .84 .83 .84 .87
Net gains on securities (both 1.78 3.48 5.19 3.52 3.41
realized and unrealized)
------------------------------------------------------------------------------
Total from investment 2.60 4.32 6.02 4.36 4.28
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.76) (.80) (.81) (.84) (.84)
Distributions (from capital (2.93) (2.48) (1.61) (1.15) (.87)
gains)
------------------------------------------------------------------------------
Total distributions (3.69) (3.28) (2.42) (1.99) (1.71)
------------------------------------------------------------------------------
Net Asset Value, $30.09 $31.18 $30.14 $26.54 $24.17
End of Year
------------------------------------------------------------------------------
Total return* 9.01% 15.15% 24.19% 18.89% 21.25%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in $10,421 $10,215 $9,362 $7,759 $6,552
millions)
------------------------------------------------------------------------------
Ratio of expenses to .57% .56% .58% .59% .59%
average net assets
------------------------------------------------------------------------------
Ratio of net income 2.67% 2.75% 2.95% 3.36% 3.92%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 41.53% 28.97% 19.16% 24.21% 23.31%
* Excludes maximum sales charge of 5.75%.
</TABLE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext. 11
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
FOR 24-HOUR INFORMATION
American FundsLine(R) American FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
</TABLE>

Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.

---------------------------------------------------------
MULTIPLE TRANSLATIONS

This prospectus may be translated into other languages. If there is any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, the English text will prevail.

---------------------------------------------------------
OTHER FUND INFORMATION

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS

Contains additional information about the fund including financial statements,
investment results, portfolio holdings, a statement from portfolio management
discussing market conditions and the fund's investment strategies, and the
independent auditors' report (in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more detailed information on all aspects of the fund, including the
fund's financial statements.

CODE OF ETHICS

Includes a description of the fund's personal investing policy.

The fund's code of ethics and current SAI has been filed with the Securities
and Exchange Commission ("SEC"). The SAI is incorporated by reference into
this prospectus. These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington,
D.C. (1-800-SEC-0330) or on the SEC's Internet Web site at http://www.sec.gov.

To request a free copy of any of the documents above:

<TABLE>
<CAPTION>
<S> <C> <C>
Call American Funds Write to the Secretary of the fund
Service Company or 333 South Hope StreetLos Angeles,
800/421-0180 ext. 1 California 90071
</TABLE>

Investment Company File No. 811-572
Printed on recycled paper

THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.

/s/ Vincent P. Corti
Vincent P. Corti
Secretary

<PAGE>

American Mutual Fund/(R)/

Prospectus
JANUARY 10, 2000

<PAGE>

---------------------------------------------------------
AMERICAN MUTUAL FUND, INC.

333 South Hope Street
Los Angeles, California 90071

<TABLE>
<CAPTION>
<S> <C> <C>
TICKER SYMBOL: AMRMX NEWSPAPER ABBREV: Amutl FUND NO: 03
</TABLE>

AMF-010-0100/B
AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
RISK/RETURN SUMMARY

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

INVESTMENT RESULTS

The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.

Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)

[bar chart]
1989 25.25%
1990 -1.62%
1991 21.72%
1992 7.83%
1993 14.28%
1994 0.33%
1995 31.38%
1996 16.22%
1997 26.39%
1998 14.76%

The fund's year-to-date return for the nine months ended September 30, 1999
was 0.63%.
------------------------------------------------------------------------------

The fund's highest/lowest quarterly results during this time period were:

<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 12.44% (quarter ended December 31, 1998)
LOWEST -8.68% (quarter ended September 30, 1990)
</TABLE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

For periods ended December 31, 1998:

30-day yield/1/: 2.38%
(For current yield information, please call American FundsLine/^/ at
1-800-325-3590)

4 The fund began investment operations on February 21, 1950.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FEES AND EXPENSES OF THE FUND

The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.

1 Sales charges are reduced or eliminated for larger purchases.

2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.

/*/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.

EXAMPLE

This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.

3 The fund began investment operations on February 21, 1950.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, October 31, 1999.

[pie chart]

Because the fund is actively managed, its holdings will change from time to
time.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
SHAREHOLDER INFORMATION

SHAREHOLDER SERVICES

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180

[map of the United States]

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES

PURCHASE

EXCHANGE

SHARE PRICE

Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and
accepts

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

your request. The offering price is the net asset value plus a sales charge, if
applicable.

SALES CHARGE

A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.

<TABLE>
<CAPTION> SALES CHARGE AS A
PERCENTAGE OF

-------------------- DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE

PURCHASES NOT SUBJECT TO SALES CHARGE

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

REDUCING YOUR SALES CHARGE

AGGREGATING ACCOUNTS

To receive a reduced sales charge, investments made by you and your immediate
family (see above) may be aggregated if made for their own account(s) and/or:

- solely controlled business accounts.

- single-participant retirement plans.

Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.

CONCURRENT PURCHASES

RIGHTS OF ACCUMULATION

STATEMENT OF INTENTION

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

PLAN OF DISTRIBUTION

OTHER COMPENSATION TO DEALERS

American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.

HOW TO SELL SHARES

THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)

- Shares held for you in your dealer's name must be sold through the dealer.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

- Requests must be signed by the registered shareholder(s).

- A signature guarantee is required if the redemption is:

-- Over $50,000;

-- Made payable to someone other than the registered shareholder(s); or

-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:

- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.

- Checks must be made payable to the registered shareholder.

- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.

TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE
ONLINE

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

TAXES ON DISTRIBUTIONS

Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.

TAXES ON TRANSACTIONS

Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FINANCIAL HIGHLIGHTS

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

AMERICAN MUTUAL FUND / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
FOR 24-HOUR INFORMATION
American FundsLine(R) American FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
</TABLE>

Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.

---------------------------------------------------------
MULTIPLE TRANSLATIONS

This prospectus may be translated into other languages. If there is any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, the English text will prevail.

---------------------------------------------------------
OTHER FUND INFORMATION

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more detailed information on all aspects of the fund, including the
fund's financial statements.

CODE OF ETHICS

Includes a description of the fund's personal investing policy.

To request a free copy of any of the documents above:

<TABLE>
<CAPTION>
<S> <C> <C>
Call American Funds Write to the Secretary of the fund
Service Company or 333 South Hope StreetLos Angeles,
800/421-0180 ext. 1 California 90071
</TABLE>

Investment Company File No. 811-572
Printed on recycled paper

<PAGE>

AMERICAN MUTUAL FUND, INC.

Part B
Statement of Additional Information

January 10, 2000

This document is not a prospectus but should be read in conjunction with the
current prospectus of American Mutual Fund (the "fund" or "AMF") dated January
10, 2000. The prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:

American Mutual Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
(213) 486-9200

Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 4
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 5
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 7
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 13
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 17
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Shareholder Account Services and Privileges . . . . . . . . . . . . 25
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 28
General Information . . . . . . . . . . . . . . . . . . . . . . . . 28
Investment Results and Related Statistics . . . . . . . . . . . . . 29
Financial Statements
</TABLE>

American Mutual Fund -- Page 1

<PAGE>

CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.

GENERAL GUIDELINE
- - The fund's equity investments are limited to securities included on its
eligible list, which consists of securities deemed suitable by the fund's
board of directors in light of the fund's investment objectives and
policies.

EQUITY SECURITIES
- - The fund will invest principally in equity-type securities such as common
stocks and securities that are convertible into common stock.

DEBT SECURITIES
- - The fund's investments in straight debt securities (i.e., not convertible
into equity) will be rated A or better or unrated but determined to be of
equivalent quality.

NON-U.S. SECURITIES
- - The fund may invest in securities of issuers domiciled outside the U.S.
that are part of the Standard & Poor's 500 Stock Composite Index.

The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment Objectives, Strategies and Risks."

EQUITY SECURITIES - Equity securities represent an ownership position in a
company. These securities may include common stocks and securities with equity
conversion or purchase rights. The prices of equity securities fluctuate based
on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall markets
for these securities.

DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in
securities that have a combination of equity and debt characteristics such as
non-convertible preferred stocks and convertible securities. These securities
may at times resemble equity more than debt and vice versa. The risks of
convertible preferred stocks are similar to those of equity securities and they
often automatically convert into common stock. Non-convertible preferred stocks
with stated redemption rates are similar to debt in that they have a stated
dividend rate akin to the coupon of

American Mutual Fund -- Page 2

<PAGE>

a bond or note even though they are often classified as equity securities. The
prices and yields of non-convertible preferred stocks generally move with
changes in interest rates and the issuer's credit quality, similar to the
factors affecting debt securities.

Bonds, convertible preferred stocks, and other securities may sometimes be
converted into common stock or other securities at a stated conversion ratio.
These securities prior to conversion pay a fixed rate of interest or a dividend.
Because convertible securities have both debt and equity characteristics, their
value varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer.

U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury. For these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government, and
thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.

Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Farmers Home Administration, Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee
Valley Authority, and Federal Farm Credit Bank System.

CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper
(short-term notes up to 9 months in maturity issued by corporations or
governmental bodies), (ii) commercial bank obligations (e.g., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity)), (iii) savings
association and saving bank obligations (e.g., certificates of deposit issued by
savings banks or savings associations), (iv) securities of the U.S. Government,
its agencies or instrumentalities that mature, or may be redeemed, in one year
or less, and (v) corporate bonds and notes that mature, or that may be redeemed,
in one year or less.

RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which may be adopted by the fund's board of directors, taking
into account factors such as the frequency and volume of trading, the commitment
of dealers to make markets and the availability of qualified investors, all of
which can change from time to time. The fund may incur certain additional costs
in disposing of illiquid securities.

American Mutual Fund -- Page 3

<PAGE>

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.

These restrictions provide that the fund shall make no investment:

1. Which involves promotion or business management by the fund;

2. In any security about which information is not available with respect to
the history, management, assets, earnings, and income of the issuer;

3. If the investment would cause more than 5% of the value of the assets of
the fund, as they exist at the time of investment, to be invested in the
securities of any one issuer;

4. If the investment would cause more than 20% of the value of the assets of
the fund to be invested in securities of companies in any one industry;

5. If the investment would cause the fund to own more than 10% of any class of
securities of any one issuer or more than 10% of the outstanding voting
securities of any one issuer;

6. In any security which has not been placed on the fund's "Eligible List"
(See Prospectus).

The foregoing restrictions do not apply to the purchase of securities issued or
fully guaranteed by the U.S. Government. Such restrictions also do not apply to
the acquisition of securities or property in satisfaction of claims or as
distributions on securities owned, or to the exercise of rights distributed on
securities owned; but if any securities or property so acquired would not be
permitted as an investment under the foregoing restrictions, they must be
converted into a permissible investment as soon as reasonably practicable.

The fund is not permitted to:

7. Invest in real estate;

8. Make any investment which would subject it to unlimited liability;

9. Buy securities on margin;

10. Sell securities short; nor

11. Borrow money.

American Mutual Fund -- Page 4

<PAGE>

The fund does not concentrate investments in one industry or group of
industries, invest in commodities, or make loans except in the very occasional
instance where interest returns on a loan are particularly favorable, the loan
is secured by at least 150% of marketable securities, the total loans
outstanding would not exceed 20% of the current market value of the assets of
the fund, and total loans to any one borrower would not exceed 5% of the value
of such assets. No loans have ever been made to any person under the foregoing
authority. Loans may not be made to persons affiliated with the fund. The fund
does not invest to control other companies. While the fundamental policies of
the fund permit it to act as underwriter of securities issued by others, it is
not the practice of the fund to do so. The fundamental policies set forth in
this paragraph also may not be changed without shareholder approval.

Further investment policies of the fund include the following: the fund will not
purchase or retain the securities of any issuer if those officers and directors
of the fund or the Investment Adviser who own beneficially more than 1/2 of 1%
of such issuer together own more than 5% of the securities of such issuer; the
fund will not invest in the securities of other investment companies (except in
connection with the administration of a deferred compensation plan adopted by
Directors and to the extent such investments are allowed by an exemptive order
granted by the Securities and Exchange Commission); the fund will not invest in
securities of companies which, with their predecessors, have a record of less
than three years' continuous operations; the fund will not ordinarily purchase
securities which are non-income-producing at the time of purchase; the fund will
not invest in puts, calls, straddles, spreads or any combination thereof; the
fund will not purchase partnership interests in oil, gas, or mineral
exploration, drilling or mining ventures; nor will the fund invest more than 5%
of the value of the fund's net assets in warrants, valued at the lower of cost
or market, with no more than 2% being unlisted on the New York or American Stock
Exchanges (warrants acquired by the fund in units or attached to securities may
be deemed to be without value); nor invest more than 15% of the value of its
total assets in securities which are not readily marketable (including
repurchase agreements maturing in more than seven days or securities for which
there is no active and substantial market).

FUND ORGANIZATION AND VOTING RIGHTS

The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation on September 6, 1949 and reincorporated in Maryland on
December 20, 1983.

All fund operations are supervised by the fund's board of directors, which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Directors and Director Compensation" below. They may elect
to defer all or a portion of these fees through a deferred compensation plan in
effect for the fund.

The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.

American Mutual Fund -- Page 5

<PAGE>

REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, shareholders may, by the affirmative
vote of the holders of a majority of the votes entitled to be cast, remove any
Director from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed Directors. The fund has
agreed, at the request of the staff of the Securities and Exchange Commission,
to apply the provisions of section 16(c) of the 1940 Act with respect to the
removal of Directors, as though the fund were a common-law trust. Accordingly,
the Directors of the fund will promptly call a meeting of shareholders for the
purpose of voting upon the removal of any Directors when requested in writing to
do so by the record holders of at least 10% of the outstanding shares.

American Mutual Fund -- Page 6

<PAGE>

FUND DIRECTORS AND OFFICERS

Directors and Director Compensation

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS OCTOBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
H. Frederick Christie Director Private Investor. Former President $24,750/3/
P.O. Box 144 and Chief Executive Officer, The
Palos Verdes Estates,CA Mission Group (non-utility holding
90274 company, subsidiary of Southern
Age: 66 California Edison Company)
- -----------------------------------------------------------------------------------------------------------------
Mary Anne Dolan Director Founder and President, M.A.D., Inc. $ 23,000
1033 Gayley Avenue (a communications company)
Los Angeles, CA 90024
Age: 52
- -----------------------------------------------------------------------------------------------------------------
+ James K. Dunton Chairman of the Senior Vice President and Director, none/4/
333 South Hope Street Board Capital Research and Management
Los Angeles, CA 90071 Company
Age: 61
- -----------------------------------------------------------------------------------------------------------------
Martin Fenton, Jr. Director Chairman, Senior Resource Group LLC $23,500/3/
4660 La Jolla Village (development and management of
Drive senior living communities)
Suite 725
San Diego, CA 92121
Age: 64
- -----------------------------------------------------------------------------------------------------------------
Mary Myers Kauppila Director Private Investor; former Owner and $24,000/3/
One Winthrop Square President, Energy Investment, Inc.
Boston, MA 02210
Age: 45
- -----------------------------------------------------------------------------------------------------------------
Bailey Morris-Eck Director Senior Associate, Reuters 0/5/
1333 H Street, NW Foundation; Senior Fellow, Institute
Washington, DC 20005 for International Economics;
Consultant, The Independent of
London
- -----------------------------------------------------------------------------------------------------------------
+ Robert G. O'Donnell President and Senior Vice President and Director, none/4/
P.O. Box 7650 Director Capital Research and Management
San Francisco, CA 94120 Company
Age: 55
- -----------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton Director Chairman/Chief Executive Officer, $23,000/3/
P.O. Box 546 Cairnwood, Inc. (venture capital
Bryn Athyn, PA 19009 investment)
Age: 60
- -----------------------------------------------------------------------------------------------------------------
+ James W. Ratzlaff Vice Chairman Senior Partner, The Capital Group none/4/
P.O. Box 7650 of the Board Partners L.P.
San Francisco, CA 94120
Age: 63
- -----------------------------------------------------------------------------------------------------------------
Olin C. Robison Director President of the Salzburg Seminar; $23,500/3/
The Marble Works President Emeritus, Middlebury
P.O. Box 886 College
Middlebury, VT 05753
Age: 63
- -----------------------------------------------------------------------------------------------------------------
Steven B. Sample Director President, University of Southern 0/5/
Bovard Administration 110 California
Los Angeles, CA 90089
Age: 59
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED OCTOBER 31, 1999 SERVES/2/
- --------------------------------------------------------------------------
<S> <C> <C>
H. Frederick Christie $ 209,200 19
P.O. Box 144
Palos Verdes Estates,CA
90274
Age: 66
- --------------------------------------------------------------------------
Mary Anne Dolan $ 41,000 2
1033 Gayley Avenue
Los Angeles, CA 90024
Age: 52
- --------------------------------------------------------------------------
+ James K. Dunton none/4/ 1
333 South Hope Street
Los Angeles, CA 90071
Age: 61
- --------------------------------------------------------------------------
Martin Fenton, Jr. $130,200/3/ 15
4660 La Jolla Village
Drive
Suite 725
San Diego, CA 92121
Age: 64
- --------------------------------------------------------------------------
Mary Myers Kauppila $120,000/3/ 5
One Winthrop Square
Boston, MA 02210
Age: 45
- --------------------------------------------------------------------------
Bailey Morris-Eck 0/5/ 3
1333 H Street, NW
Washington, DC 20005
- --------------------------------------------------------------------------
+ Robert G. O'Donnell none/4/ 2
P.O. Box 7650
San Francisco, CA 94120
Age: 55
- --------------------------------------------------------------------------
Kirk P. Pendleton $132,000/3/ 5
P.O. Box 546
Bryn Athyn, PA 19009
Age: 60
- --------------------------------------------------------------------------
+ James W. Ratzlaff none/4/ 7
P.O. Box 7650
San Francisco, CA 94120
Age: 63
- --------------------------------------------------------------------------
Olin C. Robison $97,000/3/ 3
The Marble Works
P.O. Box 886
Middlebury, VT 05753
Age: 63
- --------------------------------------------------------------------------
Steven B. Sample 0/5/ 2
Bovard Administration 110
Los Angeles, CA 90089
Age: 59
- --------------------------------------------------------------------------
</TABLE>

American Mutual Fund -- Page 7

<PAGE>

American Mutual Fund -- Page 8

<PAGE>

+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.

2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.

3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of fiscal year
ended October 31, 1999 for participating Directors is as follows: Frederick
Christie ($128,165), Martin Fenton, Jr. ($63,725), Mary Myers Kauppila
($224,601), Kirk P. Pendleton ($36,634) and Olin C. Robison ($12,541). Amounts
deferred and accumulated earnings thereon are not funded and are general
unsecured liabilities of the fund until paid to the Directors.

4 James K. Dunton, Robert G. O'Donnell, and James W. Ratzlaff are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.

/5 /Bailey Morris-Eck and Steven B. Sample were elected to the Board effective
November 16, 1999 and, therefore, received no compensation from the fund
during the fiscal year ended October 31, 1999.

American Mutual Fund -- Page 9

<PAGE>

OFFICERS

<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS AGE WITH REGISTRANT DURING
- ---------------------------------------------------- PAST 5 YEARS
-----------------------------
<S> <C> <C> <C>
James K. Dunton
(see above)
- ---------------------------------------------------------------------------------
James W. Ratzlaff
(see above)
- ---------------------------------------------------------------------------------
Robert G. O'Donnell
(see above)
- ---------------------------------------------------------------------------------
Timothy D. Armour 39 Senior Vice President Chairman and Chief Executive
333 South Hope Street Officer, Capital Research
Los Angeles, CA 90071 Company*; Director, Capital
Research and Management
Company
- ---------------------------------------------------------------------------------
Joyce E. Gordon 43 Vice President Senior Vice President and
333 South Hope Street Director,
Los Angeles, CA 90071 Capital Research Company*
- ---------------------------------------------------------------------------------
Joanna F. Jonsson 36 Vice President Executive Vice President and
P.O. Box 7650 Director,
San Francisco, CA Capital Research Company*
94120
- ---------------------------------------------------------------------------------
Vincent P. Corti 43 Secretary Vice President - Fund
333 South Hope Street Business
Los Angeles, CA 90071 Mangement Group, Capital
Research
and Management Company
- ---------------------------------------------------------------------------------
Sheryl F. Johnson 31 Treasurer Vice President - Fund
5300 Robin Hood Road Business
Norfolk, VA 23513 Mangement Group, Capital
Research
and Management Company
- ---------------------------------------------------------------------------------
Robert P. Simmer 38 Assistant Treasurer Vice President - Fund
5300 Robin Hood Road Business
Norfolk, VA 23513 Mangement Group, Capital
Research
and Management Company
- ---------------------------------------------------------------------------------
</TABLE>

* Company affiliated with Capital Research and Management Company.

All of the officers listed are officers, and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.

No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or affiliated companies.
The fund pays annual fees of $16,000 to Directors who are not affiliated with
the Investment Adviser, plus $1,000 for each Board of Directors meeting
attended, plus $500 for each meeting attended as a member of a committee of the
Board of Directors. No pension or retirement benefits are accrued as part of
fund expenses. The Directors may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the Directors who are not
affiliated with the Investment Adviser. As of December 10, 1999 the officers and
Directors of the fund and their families, as a group, owned beneficially or of
record less than 1% of the outstanding shares of the fund.

American Mutual Fund -- Page 10

<PAGE>

MANAGEMENT

INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.

An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital International
Perspective, providing financial and market information about more than 2,400
companies around the world.

The Investment Adviser is responsible for managing more than $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types throughout the world. These investors include privately
owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.

INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until March 31, 2000, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).

The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plan of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors unaffiliated with the Investment Adviser; association dues; costs of
stationery and forms prepared exclusively for the fund; and costs of assembling
and storing shareholder account data.

American Mutual Fund -- Page 11

<PAGE>

As compensation for its services, the Investment Adviser receives a monthly fee
which is accrued daily, calculated at the annual rate of 0.384% on the first $1
billion of net assets, plus 0.33% on net assets from $1 billion to $2 billion,
plus 0.294% on net assets from $2 billion to $3 billion, plus 0.27% on net
assets from $3 billion to $5 billion, plus 0.252% on net assets from $5 billion
to $8 billion, plus 0.24% on net assets over $8 billion. In connection with the
approval of the Agreement by the fund's Board of Directors, the Investment
Adviser has agreed to waive any fees to the extent they would exceed those
payable under the rate structure contained in its previous agreement. The fee
structure referenced above is lower than that in the previous agreement except
in the event that the fund's net assets were to fall below $3 billion. The
Agreement provides that the Investment Adviser shall pay the fund the amount by
which expenses, with the exception of taxes and expenses, if any, as may be
incurred in connection with any merger, reorganization, or recapitalization,
exceed the sum of 1% of the first $25 million of the monthly average of total
assets of the fund for the year and 3/4 of 1% of such average in excess of $25
million.

The Agreement provides for a management fee reduction to the extent that the
fund's annual ordinary operating expenses exceed 1-1/2% of the first $30 million
of the net assets of the fund and 1% of the net assets in excess thereof.
Expenses which are not subject to this limitation are interest, taxes, and
extraordinary expenses. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.

For the fiscal years ended October 31, 1999, 1998, and 1997, the Investment
Adviser received advisory fees of $29,352,000, $27,972,000, and $24,702,000,
respectively.

PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal period ended
October 31, 1999 amounted to $2,925,000 after allowance of $13,865,000 to
dealers. During the fiscal years ended 1998 and 1997 the Principal Underwriter
retained $3,200,000 and $2,985,000, respectively after an allowance of
$15,547,000 and $14,517,000 to dealers, respectively.

As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Directors and separately by a majority of the directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting securities
of the fund. The officers and directors who are "interested persons" of the fund
may be considered to have a direct or indirect financial interest in the
operation of the Plan due to present or past affiliations with the Investment
Adviser and related companies. Potential benefits of the Plan to the fund
include improved shareholder services, savings to the fund in transfer agency
costs, savings to the fund in advisory fees and other expenses, benefits to the
investment process from growth or

American Mutual Fund -- Page 12

<PAGE>

stability of assets and maintenance of a financially healthy management
organization. The selection and nomination of directors who are not "interested
persons" of the fund are committed to the discretion of the directors who are
not "interested persons" during the existence of the Plan. The Plan is reviewed
quarterly and must be renewed annually by the Board of Directors.

Under the Plan the fund may expend up to 0.25% of its net assets annually to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales of
shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan, any defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).

Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During the
fiscal period ended October 31, 1999, the fund paid or accrued $23,197,000 for
compensation to dealers under the Plan.

The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting, selling
or distributing securities, but permit banks to make shares of mutual funds
available to their customers and to perform administrative and shareholder
servicing functions. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited from so acting,
shareholder clients of such bank would be permitted to remain shareholders of
the fund and alternate means for continuing the servicing of such shareholders
would be sought. In such event, changes in the operation of the fund might occur
and shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being provided by
such bank. It is not expected that shareholders would suffer adverse financial
consequences as a result of any of these occurrences.

In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute

American Mutual Fund -- Page 13

<PAGE>

the amount of capital gain and/or net investment income required to be
distributed by an excise tax provision of the Code, the fund may be subject to
that excise tax. In certain circumstances, the fund may determine that it is in
the interest of shareholders to distribute less than the required amount. In
this case, the fund will pay any income or excise taxes due.

Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.

TAXES - The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The fund intends to distribute annually all
of its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.

Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.

Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.

If any net long-term capital gains in excess of net short-term capital losses
are retained by the fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to increase
the adjusted tax basis on fund shares by the difference between a pro rata share
of the retained gains and their related tax credit.

Distributions of investment company taxable income are taxable to shareholders
as ordinary income.

American Mutual Fund -- Page 14

<PAGE>

Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.

Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.

All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.

Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a partial return of investment
capital upon the distribution, which will nevertheless be taxable to them.

A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund which must
be distributed to shareholders in order to maintain the qualification of the
fund as a regulated investment company and to avoid federal income tax at the
level of the fund.

American Mutual Fund -- Page 15

<PAGE>

Shareholders will be subject to income tax on such original issue discount,
whether or not they elect to receive their distributions in cash.

The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company may be subject to withholding of federal income tax at the rate of 31%
in the case of non-exempt U.S. shareholders who fail to furnish the investment
company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.

Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.

Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.

American Mutual Fund -- Page 16

<PAGE>

PURCHASE OF SHARES

<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers" for initial "Investment Minimums and Fund
investment minimums. Numbers").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call 800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:

Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)

For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>

American Mutual Fund -- Page 17

<PAGE>

INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial investments
required by the funds in The American Funds Group along with fund numbers for
use with our automated phone line, American FundsLine/(R)/ (see description
below):

<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 02
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 11
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 03
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 12
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . . . . . . 250 33
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 16
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . . . . . . 250 10
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 05
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 250 06
The Investment Company of America/(R)/ . . . . . . . . . . . . . . . . . 250 04
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 14
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 07
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 36
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . 250 35
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . . . . . . 250 01
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . . . . . . 250 40
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . . . . . . 250 21
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . . . . . . 250 08
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 31
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 250 23
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . 250 43
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . . . . . . 250 19
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . . . . . . 1,000 20
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . . . . . . 1,000 24
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . . . . . . 1,000 25
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . . . . . . 250 22
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . . . . . . 1,000 09
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . . . . . . 1,000 39
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . . . . . . 1,000 49
___________
*Available only in certain states.
</TABLE>

Investment minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases by
retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American

American Mutual Fund -- Page 18

<PAGE>

Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS.
The minimum is $50 for additional investments (except as noted above).

SALES CHARGES - The sales charges you pay when purchasing the stock, stock/bond,
and bond funds of The American Funds Group are set forth below. The money market
funds of The American Funds Group are offered at net asset value. (See
"Investment Minimums and Fund Numbers" for a listing of the funds.)

<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
- ------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $25,000 . . . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000 . 3.63 3.50 2.75
$250,000 but less than $500,000 . 2.56 2.50 2.00
$500,000 but less than $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
$1,000,000 or more . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>

PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or more are
sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans investing $1 million or more,
or with 100 or more eligible employees, may invest with no sales charge and are
not subject to a contingent deferred sales charge. Investments made by
retirement plans, endowments or foundations with $50 million or more in assets
may also be made with no sales charge and are not subject to a contingent
deferred sales charge. A dealer concession of up to 1% may be paid by the fund
under its Plan of Distribution on investments made with no initial sales charge.

American Mutual Fund -- Page 19

<PAGE>

In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:

(1) current or retired directors, trustees, officers and advisory board
members, and certain lawyers who provide services to the funds managed by
Capital Research and Management Company, employees of Washington Management
Corporation, employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the above persons, and trusts or
plans primarily for such persons;

(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;

(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;

(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;

(5) insurance company separate accounts;

(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and

(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.

DEALER COMMISSIONS - Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at net
asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million to
$4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.

OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.

Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing certain
information and assistance with respect to the fund.

REDUCING YOUR SALES CHARGE - You and your "immediate family" (your spouse and
your children under age 21) may combine investments to reduce your costs. You
must let your

American Mutual Fund -- Page 20

<PAGE>

investment dealer or American Funds Service Company (the "Transfer Agent") know
if you qualify for a reduction in your sales charge using one or any combination
of the methods described below.

STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the
same sales charge as if all shares had been purchased at once. This
includes purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $25,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to utilize a Statement in order to qualify for a reduced sales
charge, shares equal to 5% of the dollar amount specified in the Statement
will be held in escrow in the shareholder's account out of the initial
purchase (or subsequent purchases, if necessary) by the Transfer Agent. All
dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see the account application) and any individual
investments in American Legacy variable annuities or variable life
insurance policies (American Legacy, American Legacy II, American Legacy
III, and American Legacy Shareholder's Advantage variable annuities,
American Legacy Life, American Legacy Variable Life, and American Legacy
Estate Builder) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.

When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy variable annuities or
variable life insurance policies are added to the figure determined above.
The sum is the Statement amount and applicable breakpoint level. On the
first investment and all other investments made pursuant to the Statement,
a sales charge will be assessed according to the sales charge breakpoint
thus determined.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.

American Mutual Fund -- Page 21

<PAGE>

AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:

- employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;

- business accounts solely controlled by these individuals (for example,
the individuals own the entire business);

- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.

Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:

- for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;

- made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or

- for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.

Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.

CONCURRENT PURCHASES - You may combine purchases of two or more funds in
The American Funds Group, as well as individual holdings in various
American Legacy variable annuities and variable life insurance policies to
qualify for a reduced sales charge. Direct purchases of the money market
funds are excluded. Shares of money market funds purchased through an
exchange, reinvestment or cross-reinvestment from a fund having a sales
charge do qualify.

RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing holdings in The American Funds Group, as well as your
holdings in Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or
charity. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy variable annuities and variable
life insurance policies. Direct purchases of the money market funds are
excluded.

PRICE OF SHARES - Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; this offering price is effective for orders received prior to the time of
determination of the net asset value and, in the case of orders placed with
dealers, accepted by the Principal Underwriter prior to its close of business.
In

American Mutual Fund -- Page 22

<PAGE>

the case of orders sent directly to the fund or the Transfer Agent, an
investment dealer MUST be indicated. The dealer is responsible for promptly
transmitting purchase orders to the Principal Underwriter. Orders received by
the investment dealer, the Transfer Agent, or the fund after the time of the
determination of the net asset value will be entered at the next calculated
offering price. Prices which appear in the newspaper are not always indicative
of prices at which you will be purchasing and redeeming shares of the fund,
since such prices generally reflect the previous day's closing price whereas
purchases and redemptions are made at the next calculated price.

The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily as of 4:00 p.m. New York time,
which is the normal close of trading on the New York Stock Exchange each day the
Exchange is open. If the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New
York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:

1. 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.

Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.

Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.

Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;

2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and

3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share

American Mutual Fund -- Page 23

<PAGE>

Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 3% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Directors.

SELLING SHARES

Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. You may sell (redeem) shares in
your account in any of the following ways:

THROUGH YOUR DEALER (certain charges may apply)

- Shares held for you in your dealer's street name must be sold
through the dealer.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

-- Requests must be signed by the registered shareholder(s)

-- A signature guarantee is required if the redemption is:

- Over $50,000;

- Made payable to someone other than the registered
shareholder(s); or

- Sent to an address other than the address of record, or an
address of record which has been changed within the last 10 days.

Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.

-- Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.

-- You must include any shares you wish to sell that are in
certificate form.

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/

-- Redemptions by telephone or fax (including American FundsLine/(R)/
and American FundsLine OnLine/(R)/) are limited to $50,000 per
shareholder each day.

-- Checks must be made payable to the registered shareholder(s).

-- Checks must be mailed to an address of record that has been used
with the account for at least 10 days.

American Mutual Fund -- Page 24

<PAGE>

MONEY MARKET FUNDS

-- You may have redemptions of $1,000 or more wired to your bank by
writing American Funds Service Company.

-- You may establish check writing privileges (use the money market
funds application).

- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Proceeds will be reinvested at the next calculated net asset value after your
request is received and accepted by the Transfer Agent.

CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds made
within 12 months of purchase on investments of $1 million or more (other than
redemptions by employer-sponsored retirement plans). The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from 403(b) plans or IRAs due to death, disability
or attainment of age 591/2; for tax-free returns of excess contributions to
IRAs; and for redemptions through certain automatic withdrawals not exceeding
10% of the amount that would otherwise be subject to the charge.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or

American Mutual Fund -- Page 25

<PAGE>

around the date you specified. If your bank account cannot be debited due to
insufficient funds, a stop-payment or the closing of the account, the plan may
be terminated and the related investment reversed. You may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent.

AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares at no sales charge unless you indicate otherwise on the
account application. You also may elect to have dividends and/or capital gain
distributions paid in cash by informing the fund, the Transfer Agent or your
investment dealer.

If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:

(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),

(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,

(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.

EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.

You may exchange shares by writing to the Transfer Agent (see "Selling Shares"),
by contacting your investment dealer, by using American FundsLine and American
FundsLine OnLine (see "American FundsLine and American FundsLine OnLine" below),
or by telephoning 800/421-0180 toll-free, faxing (see "Principal Underwriter and
Transfer Agent" in the prospectus for the appropriate fax numbers) or
telegraphing the Transfer Agent. (See "Telephone and Computer Purchases,
Redemptions and Exchanges" below.) Shares held in corporate-type retirement
plans for which Capital Guardian Trust Company serves as trustee may not be
exchanged by telephone, computer, fax or telegraph. Exchange redemptions and
purchases are processed simultaneously at the share prices next determined after
the exchange order is received. (See "Purchase of Shares--Price of Shares.")
THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND
PURCHASES.

American Mutual Fund -- Page 26

<PAGE>

AUTOMATIC EXCHANGES - You may automatically exchange shares in amounts of $50 or
more among any of the funds in The American Funds Group on any day (or preceding
business day if the day falls on a non-business day of each month you designate.
You must either (a) meet the minimum initial investment requirement for the
receiving fund OR (b) the originating fund's balance must be at least $5,000 and
the receiving fund's minimum must be met within one year.

AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.

ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.

AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of your Social Security
number or other tax identification number associated with your account) and
account number.

TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.

REDEMPTION OF SHARES - The fund's articles of incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per

American Mutual Fund -- Page 27

<PAGE>

share if at such time the shareholder owns of record shares having an aggregate
net asset value of less than the minimum initial investment amount required of
new shareholders as set forth in the fund's current registration statement under
the 1940 Act, and subject to such further terms and conditions as the Board of
Directors of the fund may from time to time adopt.

SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.

EXECUTION OF PORTFOLIO TRANSACTIONS

The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.

There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.

Brokerage commissions paid on portfolio transactions for the fiscal years ended
October 31, 1999, 1998 and 1997, amounted to $6,660,000, $3,840,000 and
$3,046,000, respectively.

The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parents of broker-dealers that derive more than
15% of their revenue from broker-dealer activities) which have certain
relationships with the fund. During the last fiscal year, J.P. Morgan & Co. was
among the top 10 dealers that received the largest amount of brokerage
commissions and that acted as principals in portfolio transactions. The fund
held equity securities of J.P. Morgan & Co. in the amounts of $32,719,000 as of
the close of its most recent fiscal year.

GENERAL INFORMATION

CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or foreign branches of U.S. banks.

TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing

American Mutual Fund -- Page 28

<PAGE>

agent, and performs other related shareholder service functions. American Funds
Service Company was paid a fee of $5,190,000 for the fiscal period ended October
31, 1999.

INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, serves as the fund's independent auditors
providing audit services, preparation of tax returns and review of certain
documents to be filed with the Securities and Exchange Commission. The financial
statements included in this Statement of Additional Information from the Annual
Report have been so included in reliance on the report Deloitte & Touche LLP,
independent auditors, given on the authority of said firm as experts in auditing
and accounting. The selection of the fund's independent auditors is reviewed and
determined annually by the Board of Directors.

REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on October 31.
Shareholders are provided at least semiannually with reports showing the
investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent auditors,
Deloitte & Touche LLP. In an effort to reduce the volume of mail shareholders
receive from the fund when a household owns more than one account, the Transfer
Agent has taken steps to eliminate duplicate mailings of shareholder reports. To
receive additional copies of a report, shareholders should contact the Transfer
Agent.

PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.

OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- OCTOBER 31, 1999

<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $30.09
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $31.93
</TABLE>

INVESTMENT RESULTS AND RELATED STATISTICS

The fund's yield was 2.69% based on a 30-day (or one month) period ended October
31, 1999, computed by dividing the net investment income per share earned during
the period by the

American Mutual Fund -- Page 29

<PAGE>

maximum offering price per share on the last day of the period, according to the
following formula:

YIELD = 2[( a-b/cd + 1)/6/ -1]

Where: a = dividends and interest earned during the period.

b =
expenses accrued for the period (net of reimbursements).

c =
the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d =
the maximum offering price per share on the last day of the
period.

The fund's one year total return and average annual total return for the five-
and ten-year periods ended October 31, 1999 were 2.74%, 16.19% and 12.76%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on October 31, 1999 were 9.01%, 17.58%
and 13.43, respectively.

The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.

In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 5.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average total return figures.

The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.

The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.

The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor,

American Mutual Fund -- Page 30

<PAGE>

Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.

The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.

The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).

EXPERIENCE OF INVESTMENT ADVISER - The Investment Adviser manages nine growth
and growth-income funds that are at least 10 years old. In the rolling 10-year
periods since January 1, 1969 (138 in all), those funds have had better total
returns than their comparable Lipper indexes in 128 of 138 periods.

Note that past results are not an indication of future investment results. Also,
the fund has different investment policies than the funds mentioned above. These
results are included solely for the purpose of informing investors about the
experience and history of Capital Research and Management Company.

The investment results for the fund set forth below were calculated as described
in the fund's prospectus. The fund's results will vary from time to time
depending upon market conditions, the composition of the fund's portfolio and
operating expenses of the fund, so that any investment results reported by the
fund should not be considered representative of what an investment in the fund
may earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative to
the risks associated with the fund's investment objective and policies.

AMF VS. VARIOUS UNMANAGED INDICES

<TABLE>
<CAPTION>
10-YEAR
PERIODS AVERAGE
11/1 - 10/31 AMF DJIA/2/ S&P 500/3/ SAVINGS ACCOUNT/3/
- ------------ --- ------- ---------- ------------------
<S> <C> <C> <C> <C>

1989 - 1999 +232% +426% +414% + 60%
1988 - 1998 +267 +432 +416 + 64
1987 - 1997 +258 +406 +386 + 67
1986 - 1996 +204 +341 +291 + 69
1985 - 1995 +232 +382 +320 + 73
1984 - 1994 +233 +361 +297 + 81
1983 - 1993 +247 +337 +306 + 91
1982 - 1992 +273 +382 +352 +102
1981 - 1991 +336 +452 +378 +113
1980 - 1990 +285 +316 +260 +121
1979 - 1989 +426 +423 +415 +124
1978 - 1988 +412 +346 +370 +124
1977 - 1987 +413 +309 +335 +124
1976 - 1986 +414 +232 +284 +124
1975 - 1985 +400 +181 +246 +122
1974 - 1984 +418 +211 +266 +117
1973 - 1983 +312 +120 +145 +111
1972 - 1982 +221 + 76 + 92 +103
1971 - 1981 +179 + 67 +101 + 93
1970 - 1980 +207 + 97 +133 + 83
1969 - 1979 +113 + 50 + 57 + 78
1968 - 1978 + 71 + 28 + 32 + 74
1967 - 1977 + 79 + 40 + 41 + 71
1966 - 1976 +103 + 78 + 82 + 69
1965 - 1975 + 56 + 29 + 36 + 66
1964 - 1974 + 39 + 11 + 21 + 62
1963 - 1973 + 92 + 81 +101 + 59
1962 - 1972 +154 +132 +172 + 56
1961 - 1971 + 96 + 71 + 90 + 54
1960 - 1970 +115 + 86 +116 + 52
1959 - 1969 +134 + 88 +133 + 49
1958 - 1968 +186 +147 +178 + 46
1957/1/ - 1967 +212 +184 +218 + 44
</TABLE>

American Mutual Fund -- Page 31

<PAGE>

1 Fund began operations on February 21, 1950.

2 The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric. This index is unmanaged
and does not reflect sales charges, commissions or expenses.

3 The Standard and Poor's 500 Stock Composite Index is a broad-based measurement
of changes in stock market conditions based on the average performance of 500
widely held common stocks. This index is unmanaged and does not reflect sales
charges, commissions or expenses.

4 Based on figures supplied by the U.S. League of Savings Institutions and the
Federal Reserve Board which reflect all kinds of savings deposits, including
longer-term certificates. Savings accounts offer a guaranteed return of
principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.

American Mutual Fund -- Page 32

<PAGE>

IF YOU ARE CONSIDERING AMF FOR AN
INDIVIDUAL RETIREMENT ACCOUNT HERE ARE THE BENEFITS OF SYSTEMATIC INVESTING:

Here^s how much you would have if
you had invested $2,000 a year on
November 1 of each year in AMF
over the past 5, 10, 20 and 30 years:

5 years 10 years 20 years 30 years
(11/1/94 - 10/31/99) (11/1/89 - 10/31/99) (11/1/79 - 10/31/99) (11/1/69 - 10/31/99)
<S> <C> <C> <C>
$15,089 $43,729 $225,715 $911,256
- ----------------------------------------------------------------------------------------
</TABLE>

American Mutual Fund -- Page 33

<PAGE>

SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM

<TABLE>
<CAPTION>
...and taken all distributions
If you had invested in shares, your investment
$10,000 in AMF would have been worth this
this many years ago much at October 31, 1999

Periods
Number of Years 11/1 - 10/31 Value
<S> <C> <C>
1
1998 - 1999 $ 10,274
2
1997 - 1999 11,830
3
1996 - 1999 14,692
4
1995 - 1999 17,471
5
1994 - 1999 21,179
6
1993 - 1999 21,547
7
1992 - 1999 25,564
8
1991 - 1999 27,976
9
1990 - 1999 34,867
10
1989 - 1999 33,245
11
1988 - 1999 39,958
12
1987 - 1999 44,960
13
1986 - 1999 47,311
14
1985 - 1999 61,572
15
1984 - 1999 74,855
16
1983 - 1999 79,293
17
1982 - 1999 101,297
18
1981 - 1999 129,330
19
1980 - 1999 142,353
20
1979 - 1999 185,526
21
1978 - 1999 217,130
22
1977 - 1999 244,877
23
1976 - 1999 258,080
24
1975 - 1999 326,814
25
1974 - 1999 411,273
26
1973 - 1999 346,346
27
1972 - 1999 345,055
28
1971 - 1999 382,538
29
1970 - 1999 462,820
30
1969 - 1999 418,658
31
1968 - 1999 394,191
</TABLE>

American Mutual Fund -- Page 34

<PAGE>

ILLUSTRATION OF A $10,000 INVESTMENT IN AMF WITH

DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES

(FOR THE LIFETIME OF THE FUND, FEBRUARY 21, 1950 THROUGH OCTOBER 31, 1999)

<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES
-------------- ---------------
FISCAL ANNUAL TOTAL FROM FROM
YEAR END INCOME DIVIDENDS INVESTMENT FROM INITIAL CAPITAL GAINS DIVIDENDS TOTAL
10/31 DIVIDENDS (CUMULATIVE) COST INVESTMENT REINVESTED REINVESTED VALUE
----- --------- ------------ ---- ----------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
1950 $ 310 $ 310 $ 10,310 $ 9,548 $ 163 $ 307 $ 10,018
1951 533 843 10,843 10,706 661 867 12,234
1952 524 1,367 11,367 10,536 1,267 1,360 13,163
1953 579 1,946 11,946 10,452 1,711 1,913 14,076
1954 613 2,559 12,559 13,048 3,195 3,018 19,261
1955 667 3,226 13,226 15,240 5,639 4,171 25,050
1956 789 4,015 14,015 16,087 8,412 5,152 29,651
1957 911 4,926 14,926 13,452 9,479 5,119 28,050
1958 1,010 5,936 15,936 15,936 13,037 7,167 36,140
1959 1,050 6,986 16,986 16,632 16,369 8,487 41,488
1960 1,210 8,196 18,196 15,052 16,968 8,844 40,864
1961 1,257 9,453 19,453 18,495 23,683 12,170 54,348
1962 1,372 10,825 20,825 14,638 21,047 10,887 46,572
1963 1,523 12,348 22,348 17,987 28,350 14,952 61,289
1964 1,697 14,045 24,045 19,360 34,177 17,818 71,355
1965 1,844 15,889 25,889 19,925 39,778 20,216 79,919
1966 2,271 18,160 28,160 17,611 40,060 19,975 77,646
1967 2,568 20,728 30,728 19,285 49,173 24,378 92,836
1968 3,154 23,882 33,882 20,903 58,855 29,827 109,585
1969 3,762 27,644 37,644 17,930 56,040 29,245 103,215
1970 4,168 31,812 41,812 14,506 51,046 27,806 93,358
1971 4,424 36,236 46,236 16,482 60,754 35,763 112,999
1972 4,711 40,947 50,947 16,990 66,765 41,471 125,226
1973 5,069 46,016 56,016 15,842 65,343 43,614 124,799
1974 7,273 53,289 63,289 12,474 51,452 41,195 105,121
1975 7,300 60,589 70,589 14,788 60,997 56,411 132,196
1976 7,881 68,470 78,470 17,516 75,084 74,778 167,378
1977 8,604 77,074 87,074 16,952 78,992 80,489 176,433
1978 9,989 87,063 97,063 17,516 88,475 92,955 198,946
1979 11,322 98,385 108,385 18,702 103,900 110,202 232,804
1980 13,854 112,239 122,239 22,295 135,430 145,858 303,583
1981 16,351 128,590 138,590 22,559 147,794 163,762 334,115
1982 26,841 155,431 165,431 24,271 194,579 207,586 426,436
1983 26,227 181,658 191,658 28,391 245,862 270,661 544,914
1984 26,606 208,264 218,264 27,413 260,469 289,276 577,158
1985 30,124 238,388 248,388 30,310 319,637 351,886 701,833
1986 34,058 272,446 282,446 35,974 423,333 453,761 913,068
1987 39,285 311,731 321,731 34,167 459,703 467,015 960,885
1988 50,009 361,740 371,740 35,108 513,718 532,371 1,081,197
1989 59,908 421,648 431,648 38,627 610,639 650,517 1,299,783
1990 66,101 487,749 497,749 33,697 577,410 628,234 1,239,341
1991 71,766 559,515 569,515 39,473 692,080 812,854 1,544,407
1992 67,509 627,024 637,024 40,056 755,215 894,739 1,690,010
1993 70,887 697,911 707,911 43,669 910,544 1,050,642 2,004,855
1994 76,471 774,382 784,382 40,640 943,396 1,055,829 2,039,865
1995 83,156 857,538 867,538 45,475 1,155,434 1,272,526 2,473,435
1996 90,173 947,711 957,711 49,934 1,398,546 1,492,249 2,940,729
1997 95,004 1,042,715 1,052,715 56,707 1,798,200 1,797,281 3,652,188
1998 104,111 1,146,826 1,156,826 58,664 2,180,807 1,965,981 4,205,452
1999 110,493 1,257,319 1,267,319 56,613 2,518,178 2,009,388 4,584,179
</TABLE>

American Mutual Fund -- Page 35

<PAGE>

American Mutual Fund -- Page 36

<PAGE>

The dollar amount of capital gain distributions during the period was
$1,744,017.

American Mutual Fund -- Page 37

<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.

PART C
OTHER INFORMATION
AMERICAN MUTUAL FUND, INC.

ITEM 23. EXHIBITS

(a) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(b) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(c) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(d) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(e) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(f) None
(g) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(h) None
(i) Not applicable to this filing
(j) Consent of Independent Auditors
(k) None
(l) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(m) Previously filed (see Post-Effective Amendment No. 103 filed December 30,
1997)
(n) None
(o) None
(p) Code of Ethics

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None

ITEM 25. INDEMNIFICATION

Registrant is a joint-insured under an Investment Advisor/Mutual Fund Errors
and Omissions Policies written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company and ICI Mutual Insurance
Company which insures its officers and Directors against certain liabilities.
However, in no event will Registrant maintain insurance to indemnify any such
person for any act for which Registrant itself is not permitted to indemnify
the individual.

ITEM 25. INDEMNIFICATION (CONTINUED)

Subsection (b) of Section 2-418 of the General Corporation Law of Maryland
empowers a corporation to indemnify any person who was or is party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually incurred by him in connection
with such action, suit or proceeding unless it is established that: (i) the
act or omission of the person was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the person actually received an improper personal
benefit of money, property or services; or (iii) with respect to any criminal
action or proceeding, the person had reasonable cause to believe his act or
omission was unlawful.

Indemnification under subsection (b) of Section 2-418 may not be made by a
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification is permissible under the circumstances
because the party to be indemnified has met the standard of conduct set forth
in subsection (b). This determination shall be made (i) by the Board of
Directors by a majority vote of a quorum consisting of directors not, at the
time, parties to the proceeding, or, if such quorum cannot be obtained, then by
a majority vote of a committee of the Board consisting solely of two or more
directors not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full Board in which
the designated directors who are parties may participate; (ii) by special legal
counsel selected by the Board of Directors or a committee of the Board by vote
as set forth in subparagraph (i), or, if the requisite quorum of the full Board
cannot be obtained therefor and the committee cannot be established, by a
majority vote of the full Board in which any director who is a party may
participate; or (iii) by the stockholders (except that shares held by any party
to the specific proceeding may not be voted). A court of appropriate
jurisdiction may also order indemnification if the court determines that a
person seeking indemnification is entitled to reimbursement under subsection
(b).

Section 2-418 further provides that indemnification provided for by Section
2-418 shall not be deemed exclusive of any rights to which the indemnified
party may be entitled; that the scope of indemnification extends to directors,
officers, employees or agents of a constituent corporation absorbed in a
consolidation or merger and persons serving in that capacity at the request of
the constituent corporation for another; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against or incurred by
such person in any such capacity or arising out of such person's status as such
whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 2-418.

Article VII of the Articles of Incorporation of the Fund provides that "The
Corporation shall indemnify (a) its directors to the full extent provided by
the general laws of the State of Maryland now or hereafter in force, including
the advance of expenses under the procedures provided by such laws; (b) its
officers to the same extent it shall indemnify its directors; and (c) its
officers who are not directors to such further extent as shall be consistent
with the law. The foregoing shall not limit the authority of the Corporation
to indemnify other employees and agents consistent with the law."

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

None

ITEM 27. PRINCIPAL UNDERWRITERS

(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., The Investment Company of America, Intermediate Bond Fund of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The
Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America,
U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.

<TABLE>
<CAPTION>
(B) (1) (2) (3)

NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES

BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT

<S> <C> <C> <C>
David L. Abzug Regional Vice President None

27304 Park Vista Road

Agoura Hills, CA 91301

John A. Agar Vice President None

#61 Point West Circle

Little Rock, AR 72211

Robert B. Aprison Vice President None

2983 Bryn Wood Drive

Madison, WI 53711

L William W. Bagnard Vice President None

Steven L. Barnes Senior Vice President None

5400 Mount Meeker Road

Suite 1

Boulder, CO 80301-3508

B Carl R. Bauer Assistant Vice President None

Michelle A. Bergeron Senior Vice President None

4160 Gateswalk Drive

Smyrna, GA 30080

J. Walter Best, Jr. Regional Vice President None

9013 Brentmeade Blvd.

Brentwood, TN 37027

Joseph T. Blair Senior Vice President None

148 E. Shore Ave.

Groton Long Point, CT 06340

John A. Blanchard Vice President None

6421 Aberdeen Road

Mission Hills, KS 66208

Ian B. Bodell Senior Vice President None

P.O. Box 1665

Brentwood, TN 37024-1665

Mick L. Brethower Senior Vice President None

2320 North Austin Avenue

Georgetown, TX 78626

Alan Brown Regional Vice President None

4129 Laclede Avenue

St. Louis, MO 63108

B J. Peter Burns Vice President None

Brian C. Casey Regional Vice President None

8002 Greentree Road

Bethesda, MD 20817

Victor C. Cassato Senior Vice President None

609 W. Littleton Blvd., Suite 310

Greenwood Village, CO 80120

Christopher J. Cassin Senior Vice President None

19 North Grant Street

Hinsdale, IL 60521

Denise M. Cassin Vice President None

1301 Stoney Creek Drive

San Ramon, CA 94538

L Larry P. Clemmensen Director None

L Kevin G. Clifford Director, President and Co-Chief None

Executive Officer

Ruth M. Collier Senior Vice President None

29 Landsdowne Drive

Larchmont, NY 10538

S David Coolbaugh Assistant Vice President None

H Carlo Cordasco Assistant Vice President None

Thomas E. Cournoyer Vice President None

2333 Granada Boulevard

Coral Gables, FL 33134

Douglas A. Critchell Senior Vice President None

3521 Rittenhouse Street, N.W.

Washington, D.C. 20015

L Carl D. Cutting Vice President None

Daniel J. Delianedis Regional Vice President None

8689 Braxton Drive

Eden Prairie, MN 55347

Michael A. Dilella Vice President None

P. O. Box 661

Ramsey, NJ 07446

G. Michael Dill Senior Vice President None
505 E. Main Street

Jenks, OK 74037

Kirk D. Dodge Senior Vice President None

633 Menlo Avenue, Suite 210

Menlo Park, CA 94025

Peter J. Doran Director, Senior Vice None
President

Suite 216W

100 Merrick Road

Rockville Centre, NY 11570

L Michael J. Downer Secretary None

Robert W. Durbin Vice President None

74 Sunny Lane

Tiffin, OH 44883

I Lloyd G. Edwards Senior Vice President None

L Paul H. Fieberg Senior Vice President None

John Fodor Vice President None

15 Latisquama Road

Southborough, MA 01772

Daniel B. Frick Regional Vice President None

845 Western Avenue

Glen Ellyn, IL 60137

Clyde E. Gardner Senior Vice President None

Route 2, Box 3162

Osage Beach, MO 65065

B Evelyn K. Glassford Vice President None

Jeffrey J. Greiner Vice President None

12210 Taylor Road

Plain City, OH 43064

L Paul G. Haaga, Jr. Director None

B Mariellen Hamann Assistant Vice President None

David E. Harper Senior Vice President None

150 Old Franklin School Road

Pittstown, NJ 08867

H Mary Pat Harris Assistant Vice President None

Ronald R. Hulsey Vice President None

6744 Avalon

Dallas, TX 75214

Robert S. Irish Regional Vice President None

1225 Vista Del Mar Drive

Delray Beach, FL 33483

Michael J. Johnston Director None

630 Fifth Avenue, 36th Floor

New York, NY 10111

B Damien M. Jordan Vice President None

Arthur J. Levine Senior Vice President None

12558 Highlands Place

Fishers, IN 46038

B Karl A. Lewis Assistant Vice President None

T. Blake Liberty Regional Vice President None

5506 East Mineral Lane

Littleton, CO 80122

Mark J. Lien Regional Vice President None

5570 Beechwood Terrace

West Des Moines, IA 50266

L Lorin E. Liesy Assistant Vice President None

L Susan G. Lindgren Vice President - None
Institutional

Investment Services

LW Robert W. Lovelace Director None

Stephen A. Malbasa Vice President None

13405 Lake Shore Blvd.

Cleveland, OH 44110

Steven M. Markel Senior Vice President None

5241 South Race Street

Littleton, CO 80121

L J. Clifton Massar Director, Senior Vice None
President

L E. Lee McClennahan Senior Vice President None

S John V. McLaughlin Senior Vice President None

Terry W. McNabb Vice President None

2002 Barrett Station Road

St. Louis, MO 63131

L R. William Melinat Vice President - None
Institutional

Investment Services

David R. Murray Vice President None

60 Briant Drive

Sudbury, MA 01776

Stephen S. Nelson Vice President None

P.O. Box 470528

Charlotte, NC 28247-0528

William E. Noe Regional Vice President None

304 River Oaks Road

Brentwood, TN 37027

Peter A. Nyhus Vice President None

3084 Wilds Ridge Court

Prior Lake, MN 55372

Eric P. Olson Vice President None

62 Park Drive

Glenview, IL 60025

Gary A. Peace Regional Vice President None

291 Kaanapali Drive

Napa, CA 94558

Samuel W. Perry Regional Vice President None

6133 Calle del Paisano

Scottsdale, AZ 85251

Fredric Phillips Senior Vice President None

175 Highland Avenue, 4th Floor

Needham, MA 02494

B Candance D. Pilgrim Assistant Vice President None

Carl S. Platou Vice President None

7455 80th Place, S.E.

Mercer Island, WA 98040

L John O. Post Senior Vice President None

S Richard P. Prior Vice President None

Steven J. Reitman Senior Vice President None

212 The Lane

Hinsdale, IL 60521

Brian A. Roberts Vice President None

P.O. Box 472245

Charlotte, NC 28247

George S. Ross Senior Vice President None

55 Madison Avenue

Morristown, NJ 07960

L Julie D. Roth Vice President None

L James F. Rothenberg Director None

Douglas F. Rowe Vice President None

414 Logan Ranch Road

Georgetown, TX 78628

Christopher S. Rowey Regional Vice President None

9417 Beverlywood Street

Los Angeles, CA 90034

Dean B. Rydquist Senior Vice President None

1080 Bay Pointe Crossing

Alpharetta, GA 30005

Richard R. Samson Senior Vice President None

4604 Glencoe Avenue, #4

Marina del Rey, CA 90292

Joseph D. Scarpitti Vice President None

31465 St. Andrews

Westlake, OH 44145

L R. Michael Shanahan Director None

David W. Short Chairman of the Board and None

1000 RIDC Plaza, Suite 212 Co-Chief Executive Officer

Pittsburgh, PA 15238

William P. Simon Senior Vice President None

912 Castlehill Lane

Devon, PA 19333

L John C. Smith Assistant Vice President - None

Institutional Investment
Services

Rodney G. Smith Vice President None

100 N. Central Expressway

Suite 1214

Richardson, TX 75080

S Sherrie Snyder-Senft Assistant Vice President None

Anthony L. Soave Regional Vice President None

8831 Morning Mist Drive

Clarkston, MI 48348

Theresa Souiller Assistant Vice President None

2652 Excaliber Court

Virginia Beach, VA 23454

Nicholas D. Spadaccini Regional Vice President None

855 Markley Woods Way

Cincinnati, OH 45230

L Kristen J. Spazafumo Assistant Vice President None

Daniel S. Spradling Senior Vice President None

181 Second Avenue

Suite 228

San Mateo, CA 94401

LW Eric H. Stern Director None

B Max D. Stites Vice President None

Thomas A. Stout Regional Vice President None

1004 Ditchley Road

Virginia Beach, VA 23451

Craig R. Strauser Vice President None

3 Dover Way

Lake Oswego, OR 97034

Francis N. Strazzeri Senior Vice President None

31641 Saddletree Drive

Westlake Village, CA 91361

L Drew W. Taylor Assistant Vice President None

S James P. Toomey Vice President None

I Christopher E. Trede Vice President None

George F. Truesdail Vice President None

400 Abbotsford Court

Charlotte, NC 28270

Scott W. Ursin-Smith Vice President None

60 Reedland Woods Way

Tiburon, CA 94920

J. David Viale Regional Vice President None

7 Gladstone Lane

Laguna Niguel, CA 92677

Thomas E. Warren Regional Vice President None

119 Faubel Street

Sarasota, FL 34242

L J. Kelly Webb Senior Vice President, None

Treasurer and Controller

Gregory J. Weimer Vice President None

206 Hardwood Drive

Venetia, PA 15367

B Timothy W. Weiss Director None

George Wenzel Regional Vice President None

3406 Shakespeare Drive

Troy, MI 48084

H J. D. Wiedmaier Assistant Vice President None

Timothy J. Wilson Vice President None

113 Farmview Place

Venetia, PA 15367

B Laura L. Wimberly Vice President None

H Marshall D. Wingo Director, Senior Vice None
President

L Robert L. Winston Director, Senior Vice None
President

William R. Yost Vice President None

9320 Overlook Trail

Eden Prairie, MN 55347

Janet M. Young Regional Vice President None

1616 Vermont

Houston, TX 77006

Scott D. Zambon Regional Vice President None

2887 Player Lane

Tustin Ranch, CA 92782

</TABLE>

__________

L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and held in the
offices of its investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92821.

Registrant's records covering shareholder accounts are maintained and kept by
its transfer agent, American Funds Service Company, 135 South State College
Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and
5300 Robin Hood Road, Norfolk, VA 23513.

Registrant's records covering portfolio transactions are maintained and kept
by its custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, New York 10081.

ITEM 29. MANAGEMENT SERVICES

None

ITEM 30. UNDERTAKINGS

n/a

SIGNATURE OF REGISTRANT

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California on the 3rd
day of January, 2000.

AMERICAN MUTUAL FUND, INC.

By /s/ James K. Dunton
(James K. Dunton, Chairman of the Board)

Pursuant to the requirements of the Securities Act of 1933, this amendment to
Registration Statement has been signed below on January 3, 2000, by the
following persons in the capacities indicated.

<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE

(1) Chief Executive Officer:

/s/ James K. Dunton Chairman of the Board

(James K. Dunton)

(2) Principal Financial Officer and

Principal Accounting Officer:

/s/ Sheryl F. Johnson Treasurer

(Sheryl F. Johnson)

(3) Directors:

H. Frederick Christie* Director

Mary Anne Dolan* Director

/s/ James K. Dunton

(James K. Dunton) Chairman of the Board

Martin Fenton, Jr.* Director

Mary Myers Kaupilla* Director

Bailey Morris-Eck Director

Robert G. O'Donnell President and Director

Kirk P. Pendleton Director

James W. Ratzlaff* Vice Chairman of the Board

Olin C. Robison* Director

Steven B. Sample Director

</TABLE>

*By /s/ Vincent P. Corti
(Vincent P. Corti, Attorney-in-Fact)

Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Michael J. Downer
(Michael J. Downer)

INDEPENDENT AUDITORS' CONSENT

American Mutual Fund, Inc.:

We consent to (a) the use in this Post-Effective Amendment No.106 to
Registration Statement No. 2-10607 on Form N-1A of our report dated November
30, 1999 appearing in the Financial Statements, which are included in Part B,
the Statement of Additional Information of such Registration Statement, (b) the
references to us under the heading "General Information" in such Statement of
Additional Information and (c) the reference to us under the heading "Financial
Highlights" in the Prospectus, which is a part of such Registration Statement.

DELOITTE & TOUCHE LLP

Los Angeles, California
January 5, 2000

THE CAPITAL GROUP COMPANIES
CODE OF CONDUCT
(as of October 1, 1999)

All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.

Over the years we have earned a reputation for the highest integrity.
Regardless of lesser standards that may be followed through business or
community custom, we must observe exemplary standards of honesty and integrity.

REPORTING VIOLATIONS

If you know of any violation of our Code of Conduct, you have a responsibility
to report it. Deviations from controls or procedures that safeguard the
company, including the assets of shareholders and clients, should also be
reported.

You can report confidentially to:

- - Your manager or department head
- - CGC Audit Committee:

Donnalisa Barnum
Larry P. Clemmensen
Roberta Conroy
Bill Hurt
Sonny Kamm
Mike Kerr
John McLaughlin
Bob O'Donnell
Tom Rowland
John Smet
Mark Smith
Wally Stern
Antonio Vegezzi
Shaw Wagener
Kelly Webb
- - Mike Downer or any other lawyer in the CGC Legal Group
- - Don Wolfe of Deloitte & Touche LLP (CGC's auditors)

CONFLICTS OF INTEREST

A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual or
potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a business
entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.

REPORTING -- Although the limitations on accepting gifts applies to ALL
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report ALL gifts received)
and business entertainment in which an event exceeds $75.

GIFTS POLICY COMMITTEE

The Gifts Policy Committee oversees administration of and compliance with the
Policy.

INSIDER TRADING

Antifraud provisions of the federal securities laws generally prohibit persons
while in possession of material nonpublic information from trading on or
communicating the information to others. Sanctions for violations can include
civil injunctions, permanent bars from the securities industry, civil penalties
up to three times the profits made or losses avoided, criminal fines and jail
sentences.

While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply to
all CGC associates and extend to activities both within and outside each
associate's duties. All associates must read the Insider Trading Policy in the
Appendix of the CGC Handbook for Associates.

PERSONAL INVESTING POLICY

As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.

You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.

There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.

ALL ASSOCIATES

Information regarding proposed or partially completed plans by CGC companies to
buy or sell specific securities must not be divulged to outsiders.

Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to any initial public offering or any other
securities offering that is subject to allocation (so-called "hot issues").
Generally, this prohibition applies to spouses of associates and any family
member residing in the same household. However, an associate may request that
the Personal Investing Policy Committee consider granting an exception.

COVERED PERSONS

Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. You should take the time to review this memo as ongoing interpretations
of the policy will be explained therein.

Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you are
trustee or custodian have a transaction in a security when the funds or client
accounts are considering or concluding a transaction in the same security.

Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, and investment administration
personnel (see below).

PRE-CLEARANCE OF SECURITIES TRANSACTIONS

Before buying or selling securities, covered persons should find out if the
purchase or sale of a particular security would involve a conflict of interest.
This involves checking with the CGC Legal Group based in LAO by calling [phone
number]. (You will generally receive a response within one business day.)
Unless a shorter period is specified, clearance is good for two trading days
(including the day you check). If you have not executed your transaction
within this period, you must again pre-clear your transaction.

Covered persons must promptly submit quarterly reports of certain transactions.
Transactions of securities (including fixed-income securities) or options (see
below) must be pre-cleared as described above and reported except for: gifts
or bequests of securities (although pre-clearance and reporting are required if
these securities are later sold); open-end investment companies (mutual funds);
shares of CGC stock; money market instruments with maturities of one year or
less; direct obligations of the U.S. Government, bankers' acceptances, CDs or
other commercial paper; commodities; and options or futures on broad-based
indices. Covered persons must also report transactions made by family members
in their household and by those for which they are a trustee or custodian.
Reporting forms will be supplied at the appropriate times.

In addition, the following transactions must be reported but need not have been
pre-cleared: transactions in debt instruments rated "A" or above by at least
one national rating service; sales pursuant to tender offers; and dividend
reinvestment plan purchases (provided the purchase pursuant to such plan is
made with dividend proceeds only).

BROKERAGE ACCOUNTS

Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. The broker is
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may be
more favorable than the broker grants to accounts with similar characteristics.
In addition, covered persons must direct their brokers to send duplicate
confirmations and copies of all periodic statements on a timely basis to The
Legal Group of The Capital Group Companies, Inc., [P.O. Box address]. ALL
DOCUMENTS RECEIVED IN THIS POST OFFICE BOX ARE KEPT STRICTLY CONFIDENTIAL.

[If extraneous information is included on an associate's statements (E.G.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]

ANNUAL RECERTIFICATION

All access persons will be required to certify annually that they have read and
understood the Personal Investing Policy and recognize that they are subject
thereto.

ADDITIONAL RULES FOR INVESTMENT PERSONNEL

DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Any associate who is in a
position to recommend the purchase or sale of securities by the fund or client
accounts must not recommend securities that s/he personally owns without FIRST
disclosing ownership. Typically, a complete disclosure of holdings (such as in
the annual disclosure of personal securities) satisfies this requirement.

BLACKOUT PERIOD -- Portfolio counselors/managers and research analysts may not
buy or sell a security within at least seven calendar days before and after A
FUND OR CLIENT ACCOUNT THAT HIS OR HER COMPANY MANAGES transacts in that
security. Profits resulting from transactions occurring within this time
period are subject to special review and may be subject to disgorgement.

BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.

ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS - Investment personnel will
be required to disclose all personal securities holdings upon commencement of
employment and thereafter on an annual basis. Reporting forms will be supplied
for this purpose.

SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company BEFORE
SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY TRADED COMPANIES.

PERSONAL INVESTING POLICY COMMITTEE

Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Policy Committee.