UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-00572
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
Date of fiscal year end: October 31
Date of reporting period: October 31, 2008
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
O’Melveny & Myers LLP
400 South Hope Street, 10th Floor
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
[logo - American Funds®]
The right choice for the long term®
American Mutual Fund
[photo of trees - a river running between them - a mountain in the background]
Annual report for the year ended October 31, 2008
American Mutual Fund® strives for the balanced accomplishment of three objectives — current income, growth of capital and conservation of principal — through investments in companies that participate in the growth of the American economy.
This fund is one of the 31 American Funds. American Funds is one of the nation’s largest mutual fund families. For more than 75 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended September 30, 2008 (the most recent calendar quarter-end): | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | ||||||||||||
Reflecting 5.75% maximum sales charge | –23.63 | % | 4.36 | % | 4.68 | % |
The total annual fund operating expense ratio was 0.60% for Class A shares as of the most recent fiscal year-end. This figure does not reflect the fee waiver described below. Therefore, the actual expense ratio for the period was lower.
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 26 and 27 for details.
The fund’s 30-day yield for Class A shares as of November 30, 2008, calculated in accordance with the Securities and Exchange Commission formula, was 2.95% (2.92% without the fee waiver). The fund’s distribution rate for Class A shares as of that date was 2.97%. Both reflect the 5.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.
Results for other share classes can be found on page 32.
Fellow shareholders:
The U.S. economy and stock market experienced serious setbacks during the 12 months ended October 31, 2008. After six years of economic expansion, the gross domestic product (GDP) — the sum of all goods and services produced in the United States — contracted in two of the last four quarters and is headed lower. Overlapping the economic retrenchment, stocks fell sharply in one of the worst declines in post-war history. This was precipitated by a downturn in the housing industry, the failure of complex mortgage securities and a worldwide credit crunch.
The crisis forced major financial institutions into an unprecedented wave of government takeovers, consolidations and bankruptcies. U.S. government agencies launched numerous programs to strengthen credit markets and increase the flow of capital to businesses. The Federal Reserve also lowered the federal funds rate from 4.5% to 1.0% during the period to stimulate the economy. Congress is considering additional stimulus and rescue plans.
In this very difficult environment, American Mutual Fund (AMF) posted a loss of 30.9%, as compared to a loss of 36.1% for the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of large-company U.S. stocks. The fund’s conservative approach and focus on the balanced accomplishment of three objectives — current income, preservation of capital and capital appreciation — helped cushion the blow to some extent. Part of our relative advantage over the broader market was our cash position, which comprised 18.7% of total assets at fiscal year-end. Following the fund’s philosophy to protect assets as much as possible on the downside, we maintained an above-average cash position throughout the decline.
Portfolio review
It is important for shareholders to recognize that this is one of the times when even some of the most successful, high-quality companies in our conservative portfolio underwent significant price declines. Indeed, in the past 12 months, share prices of several outstanding companies fell substantially. The list included General Electric, our second largest holding (–52.6%); Microsoft, the fund’s largest position (–39.3%); AT&T (–35.9%) and IBM (–19.9%), also significant holdings. Although the majority of our stock positions fared badly, a few bucked the trend. They include retail chains with a low-price approach such as Wal-Mart (+23.0%) and Ross Stores (+21.0%).
[photo of trees - a river running between them - a mountain in the background]
[Begin Sidebar]
In this report | |
Special feature | |
6 | How American Mutual Fund |
finds investment opportunities | |
in a bear market | |
During its 58-year lifetime, American | |
Mutual Fund has experienced wars, | |
national disasters, terrorist attacks | |
and international financial crises. | |
Contents | |
1 | Letter to shareholders |
3 | The value of a long-term |
perspective | |
13 | Summary investment |
portfolio | |
17 | Financial statements |
33 | Board of directors and |
other officers |
[End Sidebar]
[Begin Sidebar]
Dividends paid in calendar year 2008 |
For tax purposes, here are the income dividends Class A shareholders received in calendar year 2008. |
Income dividends per share: |
$0.16 paid 3/17/08 |
$0.16 paid 6/23/08 |
$0.16 paid 9/22/08 |
$0.16 to be paid on 12/16/08 |
The fund will pay a special dividend from accumulated, undistributed income on 12/16/08. |
Form 1099-DIV, which provides the information you will need to prepare your federal income tax return for 2008, will be mailed to you with your American Funds Tax Guide in late January 2009. |
No segment of the stock market was spared from the steep declines of September and October. In any bear market, there is usually some sector that provides shelter. In this case, U.S. government securities were that shelter.
AMF continued its long-term record of posting more favorable results than the broad stock market during difficult periods. As the chart on pages 10 and 11 shows, AMF has fallen less than the S&P 500 in all 13 declines of 15% or more since the fund began operations in 1950. The current market turmoil already qualifies as a major decline, but it has not yet completed its run. Of course, there have been periods when the fund has lagged the S&P 500, particularly in strong markets.
Over the fund’s 58-year lifetime, AMF has an average annual total return of 11.5%, as compared to 10.9% for the S&P 500. For the 10-year period ended October 31, the fund has provided a cumulative total return of 34.8% as contrasted with a cumulative total return of 4.0% for the S&P 500.
The road ahead
The present stock market downturn anticipated the recession which is now underway. As is often the case, the stock market recovery will probably also anticipate the recession’s end. But the fallout from this financial and credit crisis could result in a deeper and longer recession than we have been accustomed to in recent decades. We believe that a large measure of this outlook has already been discounted in the market’s sharp decline. Importantly, the U.S. government and central banks around the world have taken decisive action to alleviate the current emergency. While much progress has been made, it does not mean that the identified problems have all been resolved. Hopefully the final chapters of this financial crisis will be written in the not too distant future.
In the meantime, we are grateful that so many of you were willing to stay the course with AMF. At the end of the fiscal year, the net number of shareholder accounts in the fund had declined by only 1.8%. We appreciate your support during this period and look forward to brighter days.
Cordially,
/s/ James K. Dunton
James K. Dunton
President
December 5, 2008
For current information about the fund, visit americanfunds.com.
The value of a long-term perspective
Results of a $10,000 investment in American Mutual Fund
Fund results shown are for Class A shares and reflect deduction of the maximum sales charge of 5.75% on the $10,000 investment.1 Thus, the net amount invested was $9,425.2 Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
For more than 58 years, American Mutual Fund has been providing investors with an opportunity to achieve their financial goals. A meaningful way to compare the fund’s results with the return on other investments is through its total return.
Total return is a combination of income return and capital results. This chart illustrates an assumed $10,000 investment in American Mutual Fund from February 21, 1950 — when the fund began operations — through October 31, 2008. The table beneath the chart shows the fund’s total return in each of the 58 fiscal years, broken down into its income and capital components.
As you can see, during this period a $10,000 investment in the fund, with all dividends reinvested, would have grown to $5,670,574.3
You can use this table to estimate how the value of your own holding has grown over the years. Let’s say, for example, that you have been reinvesting all your dividends and want to know how your investment has done since the end of 1998. At the time, the table indicates the value of the investment illustrated here was $4.2 million. Since then, it has grown to almost $5.7 million. Thus, in the same period, the value of your 1998 investment — regardless of its size — also has grown.
Average annual total returns | ||||||||||||
based on a $1,000 investment | ||||||||||||
(for periods ended October 31, 2008)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | –34.83 | % | 0.33 | % | 2.43 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge. |
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 26 and 27 for details.
[begin mountain chart]
Date | American Mutual Fund with dividends reinvested3 | American Mutual Fund with dividends excluded5 | ||||||
02/21/50 | 9,426 | 9,426 | ||||||
07/13/50 | 9,004 | 8,918 | ||||||
10/07/50 | 10,274 | 10,075 | ||||||
10/31/50 | 10,018 | 9,708 | ||||||
10/31/51 | 12,234 | 11,334 | ||||||
07/16/52 | 13,421 | 12,181 | ||||||
10/31/52 | 13,164 | 11,710 | ||||||
03/19/53 | 14,577 | 12,882 | ||||||
09/14/53 | 13,004 | 11,256 | ||||||
10/31/53 | 14,076 | 12,009 | ||||||
10/31/54 | 19,261 | 15,876 | ||||||
09/23/55 | 26,727 | 21,627 | ||||||
10/31/55 | 25,050 | 20,087 | ||||||
08/02/56 | 31,861 | 25,028 | ||||||
10/31/56 | 29,652 | 23,142 | ||||||
12/31/56 | 30,831 | 24,062 | ||||||
10/22/57 | 26,773 | 20,267 | ||||||
10/31/57 | 28,050 | 21,241 | ||||||
01/02/58 | 27,933 | 20,944 | ||||||
09/30/58 | 34,818 | 25,718 | ||||||
10/31/58 | 36,140 | 26,511 | ||||||
08/03/59 | 43,480 | 31,294 | ||||||
10/31/59 | 41,489 | 29,668 | ||||||
12/31/59 | 43,319 | 30,977 | ||||||
09/28/60 | 40,277 | 27,959 | ||||||
10/31/60 | 40,865 | 28,371 | ||||||
10/31/61 | 54,348 | 36,806 | ||||||
12/12/61 | 57,113 | 38,678 | ||||||
06/25/62 | 42,687 | 28,545 | ||||||
10/31/62 | 46,572 | 30,677 | ||||||
10/31/63 | 61,289 | 39,309 | ||||||
10/31/64 | 71,355 | 44,625 | ||||||
06/28/65 | 70,430 | 43,509 | ||||||
10/31/65 | 79,919 | 48,769 | ||||||
12/17/65 | 82,334 | 50,242 | ||||||
10/07/66 | 71,747 | 42,538 | ||||||
10/31/66 | 77,646 | 46,067 | ||||||
01/04/67 | 79,886 | 47,052 | ||||||
09/25/67 | 98,623 | 57,321 | ||||||
10/31/67 | 92,836 | 53,558 | ||||||
03/25/68 | 89,187 | 51,057 | ||||||
10/31/68 | 109,586 | 61,257 | ||||||
11/29/68 | 115,011 | 64,289 | ||||||
10/09/69 | 98,399 | 53,023 | ||||||
10/31/69 | 103,216 | 55,651 | ||||||
05/26/70 | 78,408 | 41,363 | ||||||
10/31/70 | 93,358 | 48,100 | ||||||
04/29/71 | 120,955 | 61,139 | ||||||
10/31/71 | 112,886 | 55,961 | ||||||
11/23/71 | 106,468 | 52,779 | ||||||
08/23/72 | 128,118 | 61,708 | ||||||
10/31/72 | 125,226 | 59,737 | ||||||
12/11/72 | 136,043 | 64,897 | ||||||
08/22/73 | 112,151 | 51,865 | ||||||
10/31/73 | 124,800 | 57,130 | ||||||
03/14/74 | 126,331 | 57,130 | ||||||
10/03/74 | 91,007 | 38,810 | ||||||
10/31/74 | 105,122 | 44,985 | ||||||
12/06/74 | 96,877 | 41,457 | ||||||
07/15/75 | 138,200 | 56,926 | ||||||
10/31/75 | 132,196 | 53,330 | ||||||
12/05/75 | 130,346 | 52,584 | ||||||
09/21/76 | 174,044 | 67,986 | ||||||
10/31/76 | 167,379 | 64,276 | ||||||
12/31/76 | 182,661 | 70,144 | ||||||
10/31/77 | 176,434 | 64,554 | ||||||
01/26/78 | 175,846 | 63,480 | ||||||
09/12/78 | 229,322 | 80,818 | ||||||
10/31/78 | 198,947 | 69,119 | ||||||
10/05/79 | 257,885 | 86,418 | ||||||
10/31/79 | 232,805 | 76,959 | ||||||
10/15/80 | 315,866 | 100,651 | ||||||
10/31/80 | 303,585 | 95,432 | ||||||
06/23/81 | 350,366 | 107,612 | ||||||
09/25/81 | 317,838 | 96,442 | ||||||
10/31/81 | 334,117 | 99,943 | ||||||
08/10/82 | 334,437 | 93,802 | ||||||
10/22/82 | 434,703 | 120,458 | ||||||
10/31/82 | 426,438 | 118,168 | ||||||
01/03/83 | 444,289 | 120,550 | ||||||
10/10/83 | 562,833 | 149,553 | ||||||
10/31/83 | 544,917 | 143,286 | ||||||
11/29/83 | 564,778 | 148,509 | ||||||
07/24/84 | 507,745 | 128,657 | ||||||
10/31/84 | 577,161 | 144,417 | ||||||
01/04/85 | 583,499 | 144,219 | ||||||
07/17/85 | 704,992 | 170,303 | ||||||
10/31/85 | 701,836 | 167,598 | ||||||
09/04/86 | 936,477 | 216,971 | ||||||
10/31/86 | 913,072 | 209,413 | ||||||
08/25/87 | 1,136,870 | 253,230 | ||||||
10/19/87 | 886,283 | 195,646 | ||||||
10/31/87 | 960,889 | 212,116 | ||||||
12/04/87 | 893,638 | 197,270 | ||||||
06/22/88 | 1,071,388 | 229,884 | ||||||
10/31/88 | 1,081,202 | 227,085 | ||||||
01/03/89 | 1,071,656 | 220,598 | ||||||
10/31/89 | 1,299,788 | 259,386 | ||||||
12/13/89 | 1,346,639 | 268,736 | ||||||
10/31/90 | 1,239,346 | 235,204 | ||||||
01/09/91 | 1,280,467 | 238,543 | ||||||
08/28/91 | 1,533,066 | 279,429 | ||||||
10/31/91 | 1,544,414 | 278,500 | ||||||
12/10/91 | 1,500,849 | 267,729 | ||||||
08/03/92 | 1,715,846 | 299,703 | ||||||
10/31/92 | 1,690,017 | 292,156 | ||||||
12/04/92 | 1,720,976 | 294,489 | ||||||
10/15/93 | 2,018,685 | 335,881 | ||||||
10/31/93 | 2,004,864 | 333,581 | ||||||
11/01/93 | 2,003,137 | 333,294 | ||||||
04/04/94 | 1,902,057 | 313,572 | ||||||
10/31/94 | 2,039,874 | 326,417 | ||||||
12/08/94 | 1,968,379 | 311,824 | ||||||
10/19/95 | 2,505,170 | 386,113 | ||||||
10/31/95 | 2,473,446 | 381,224 | ||||||
01/10/96 | 2,579,741 | 394,322 | ||||||
10/21/96 | 2,965,119 | 442,248 | ||||||
10/31/96 | 2,940,742 | 438,613 | ||||||
12/16/96 | 2,977,645 | 440,717 | ||||||
10/07/97 | 3,809,732 | 552,257 | ||||||
10/31/97 | 3,652,205 | 529,422 | ||||||
01/09/98 | 3,718,525 | 535,657 | ||||||
04/17/98 | 4,289,166 | 613,976 | ||||||
10/31/98 | 4,205,471 | 594,159 | ||||||
11/23/98 | 4,395,647 | 621,027 | ||||||
12/14/98 | 4,240,060 | 595,287 | ||||||
10/31/99 | 4,584,199 | 631,823 | ||||||
11/16/99 | 4,643,616 | 640,013 | ||||||
03/07/00 | 3,918,147 | 536,579 | ||||||
10/31/00 | 4,639,429 | 620,069 | ||||||
05/21/01 | 5,217,427 | 686,711 | ||||||
09/21/01 | 4,560,805 | 591,103 | ||||||
10/31/01 | 4,811,535 | 623,599 | ||||||
03/19/02 | 5,400,265 | 694,828 | ||||||
10/09/02 | 3,957,009 | 500,364 | ||||||
10/31/02 | 4,406,372 | 557,186 | ||||||
03/11/03 | 4,149,192 | 521,398 | ||||||
10/31/03 | 5,257,312 | 648,807 | ||||||
11/18/03 | 5,200,587 | 641,807 | ||||||
10/06/04 | 5,895,199 | 713,980 | ||||||
10/31/04 | 5,825,570 | 705,547 | ||||||
11/02/04 | 5,823,249 | 705,266 | ||||||
08/03/05 | 6,444,871 | 770,270 | ||||||
10/31/05 | 6,279,702 | 746,895 | ||||||
12/31/05 | 6,489,117 | 768,159 | ||||||
10/26/06 | 7,359,693 | 857,928 | ||||||
10/31/06 | 7,309,525 | 852,080 | ||||||
03/05/07 | 7,416,422 | 860,226 | ||||||
07/19/07 | 8,390,997 | 963,860 | ||||||
10/31/07 | 8,200,608 | 937,203 | ||||||
11/06/07 | 8,072,187 | 922,526 | ||||||
10/27/08 | 5,106,324 | 569,630 | ||||||
10/31/08 | 5,670,574 | 632,574 |
Date | Standard & Poor’s 500 Composite Index with dividends reinvested4 | |||
02/21/50 | 10,000 | |||
3/9/1950 | 9,980 | |||
10/24/1950 | 12,242 | |||
10/31/1950 | 12,023 | |||
12/4/1950 | 11,810 | |||
10/15/1951 | 15,620 | |||
10/31/1951 | 15,125 | |||
11/24/1951 | 14,703 | |||
8/8/1952 | 17,629 | |||
10/31/1952 | 17,157 | |||
1/5/1953 | 18,855 | |||
9/14/1953 | 16,653 | |||
10/31/1953 | 18,185 | |||
11/17/1953 | 17,970 | |||
10/6/1954 | 25,456 | |||
10/31/1954 | 24,752 | |||
11/1/1954 | 24,838 | |||
9/23/1955 | 36,907 | |||
10/31/1955 | 34,492 | |||
11/1/1955 | 34,443 | |||
8/2/1956 | 41,741 | |||
10/31/1956 | 38,605 | |||
7/15/1957 | 42,684 | |||
10/22/1957 | 34,205 | |||
10/31/1957 | 36,167 | |||
12/18/1957 | 34,818 | |||
10/13/1958 | 47,125 | |||
10/31/1958 | 47,009 | |||
11/25/1958 | 46,725 | |||
8/3/1959 | 56,925 | |||
10/31/1959 | 54,385 | |||
1/5/1960 | 57,427 | |||
10/25/1960 | 51,038 | |||
10/31/1960 | 52,268 | |||
11/1/1960 | 52,806 | |||
10/31/1961 | 69,287 | |||
12/12/1961 | 73,541 | |||
6/26/1962 | 53,780 | |||
10/31/1962 | 59,004 | |||
11/1/1962 | 59,630 | |||
10/28/1963 | 80,093 | |||
10/31/1963 | 79,835 | |||
11/22/1963 | 75,088 | |||
10/12/1964 | 94,552 | |||
10/31/1964 | 94,408 | |||
6/28/1965 | 92,427 | |||
10/27/1965 | 105,817 | |||
10/31/1965 | 106,023 | |||
2/9/1966 | 108,804 | |||
10/7/1966 | 86,547 | |||
10/31/1966 | 95,134 | |||
11/22/1966 | 94,505 | |||
9/25/1967 | 118,979 | |||
10/31/1967 | 115,082 | |||
3/5/1968 | 108,692 | |||
10/21/1968 | 132,432 | |||
10/31/1968 | 130,788 | |||
11/29/1968 | 137,411 | |||
7/29/1969 | 115,515 | |||
10/31/1969 | 126,935 | |||
11/10/1969 | 128,357 | |||
5/26/1970 | 92,108 | |||
10/31/1970 | 112,877 | |||
11/18/1970 | 112,254 | |||
4/28/1971 | 143,982 | |||
10/31/1971 | 131,895 | |||
11/23/1971 | 126,198 | |||
8/14/1972 | 161,027 | |||
10/31/1972 | 160,791 | |||
1/11/1973 | 174,099 | |||
8/22/1973 | 148,093 | |||
10/31/1973 | 160,825 | |||
11/1/1973 | 159,934 | |||
10/3/1974 | 96,094 | |||
10/31/1974 | 114,517 | |||
12/6/1974 | 101,201 | |||
7/15/1975 | 152,757 | |||
10/31/1975 | 144,279 | |||
12/5/1975 | 141,160 | |||
9/21/1976 | 180,440 | |||
10/31/1976 | 173,368 | |||
12/31/1976 | 182,351 | |||
10/25/1977 | 159,782 | |||
10/31/1977 | 162,890 | |||
3/6/1978 | 156,091 | |||
9/12/1978 | 197,202 | |||
10/31/1978 | 173,229 | |||
11/14/1978 | 172,001 | |||
10/5/1979 | 217,506 | |||
10/31/1979 | 200,011 | |||
3/27/1980 | 196,407 | |||
10/15/1980 | 275,888 | |||
10/31/1980 | 264,126 | |||
11/28/1980 | 292,265 | |||
9/25/1981 | 243,451 | |||
10/31/1981 | 265,623 | |||
8/12/1982 | 233,339 | |||
10/20/1982 | 320,276 | |||
10/31/1982 | 308,890 | |||
11/23/1982 | 307,088 | |||
10/10/1983 | 415,677 | |||
10/31/1983 | 395,213 | |||
1/6/1984 | 412,027 | |||
7/24/1984 | 368,402 | |||
10/31/1984 | 420,380 | |||
12/13/1984 | 411,175 | |||
7/17/1985 | 509,869 | |||
10/31/1985 | 501,639 | |||
11/4/1985 | 505,418 | |||
9/4/1986 | 691,048 | |||
10/31/1986 | 668,098 | |||
8/25/1987 | 943,691 | |||
10/19/1987 | 632,928 | |||
10/31/1987 | 710,847 | |||
12/4/1987 | 634,197 | |||
10/21/1988 | 827,986 | |||
10/31/1988 | 815,773 | |||
11/16/1988 | 771,471 | |||
10/9/1989 | 1,087,429 | |||
10/31/1989 | 1,030,770 | |||
7/16/1990 | 1,143,973 | |||
10/11/1990 | 924,581 | |||
10/31/1990 | 953,671 | |||
11/7/1990 | 959,977 | |||
8/28/1991 | 1,275,819 | |||
10/31/1991 | 1,272,350 | |||
11/29/1991 | 1,221,224 | |||
9/14/1992 | 1,415,354 | |||
10/31/1992 | 1,398,929 | |||
11/4/1992 | 1,393,683 | |||
10/15/1993 | 1,611,215 | |||
10/31/1993 | 1,607,499 | |||
2/2/1994 | 1,667,508 | |||
4/4/1994 | 1,526,617 | |||
10/31/1994 | 1,669,519 | |||
12/8/1994 | 1,579,580 | |||
10/19/1995 | 2,140,536 | |||
10/31/1995 | 2,110,427 | |||
11/1/1995 | 2,120,298 | |||
10/18/1996 | 2,635,548 | |||
10/31/1996 | 2,618,637 | |||
11/1/1996 | 2,613,067 | |||
10/7/1997 | 3,713,963 | |||
10/31/1997 | 3,459,189 | |||
11/12/1997 | 3,426,436 | |||
7/17/1998 | 4,535,102 | |||
10/31/1998 | 4,219,865 | |||
11/3/1998 | 4,266,609 | |||
7/16/1999 | 5,497,678 | |||
10/31/1999 | 5,302,788 | |||
3/24/2000 | 5,967,503 | |||
10/12/2000 | 5,229,586 | |||
10/31/2000 | 5,625,358 | |||
11/6/2000 | 5,636,338 | |||
9/21/2001 | 3,842,757 | |||
10/31/2001 | 4,225,243 | |||
1/4/2002 | 4,686,796 | |||
10/9/2002 | 3,141,633 | |||
10/31/2002 | 3,587,381 | |||
03/11/03 | 3,264,697 | |||
10/31/03 | 4,333,074 | |||
11/20/2003 | 4,262,720 | |||
2/11/2004 | 4,794,947 | |||
10/31/2004 | 4,740,913 | |||
11/1/2004 | 4,742,213 | |||
8/3/2005 | 5,293,460 | |||
10/31/2005 | 5,154,100 | |||
11/1/2005 | 5,135,952 | |||
10/26/2006 | 6,037,882 | |||
10/31/2006 | 5,995,606 | |||
11/3/2006 | 5,936,256 | |||
10/9/2007 | 6,930,573 | |||
10/31/2007 | 6,868,057 | |||
11/6/2007 | 6,739,019 | |||
10/27/2008 | 3,840,047 | |||
10/31/2008 | 4,389,986 |
Date | Consumer Price Index6 | ||||||
28-Feb | 10,000 | ||||||
1950 | 28-Feb | 10,000 | |||||
31-Oct | 10,468 | ||||||
1951 | 11/50 | 10,511 | |||||
31-Oct | 11,149 | ||||||
1952 | 28-Feb | 11,191 | |||||
31-Aug | 11,362 | ||||||
31-Oct | 11,362 | ||||||
1953 | 28-Feb | 11,277 | |||||
31-Oct | 11,489 | ||||||
1954 | 31-Jan | 11,447 | |||||
30-Apr | 11,404 | ||||||
31-Oct | 11,404 | ||||||
1955 | 12/54 | 11,362 | |||||
30-Sep | 11,447 | ||||||
31-Oct | 11,447 | ||||||
1956 | 12/55 | 11,404 | |||||
31-Oct | 11,702 | ||||||
1957 | 11/56 | 11,702 | |||||
31-Jul | 12,043 | ||||||
31-Oct | 12,043 | ||||||
1958 | 11/57 | 12,085 | |||||
31-Jul | 12,340 | ||||||
31-Oct | 12,298 | ||||||
1959 | 12/58 | 12,298 | |||||
31-Oct | 12,511 | ||||||
1960 | 31-Jan | 12,468 | |||||
31-Oct | 12,681 | ||||||
1961 | 11/60 | 12,681 | |||||
31-Jul | 12,766 | ||||||
31-Oct | 12,766 | ||||||
1962 | 11/61 | 12,766 | |||||
30-Sep | 12,936 | ||||||
31-Oct | 12,936 | ||||||
1963 | 11/62 | 12,936 | |||||
31-Oct | 13,106 | ||||||
1964 | 11/63 | 13,106 | |||||
31-Jul | 13,234 | ||||||
31-Oct | 13,234 | ||||||
1965 | 11/64 | 13,277 | |||||
31-Oct | 13,489 | ||||||
1966 | 11/65 | 13,489 | |||||
31-Oct | 14,000 | ||||||
1967 | 11/66 | 14,000 | |||||
31-Oct | 14,340 | ||||||
1968 | 11/67 | 14,383 | |||||
31-Oct | 15,021 | ||||||
1969 | 11/68 | 15,064 | |||||
31-Oct | 15,872 | ||||||
1970 | 11/69 | 15,957 | |||||
31-Oct | 16,766 | ||||||
1971 | 11/70 | 16,851 | |||||
31-Oct | 17,404 | ||||||
1972 | 11/71 | 17,404 | |||||
31-Oct | 18,000 | ||||||
1973 | 11/72 | 18,043 | |||||
31-Oct | 19,404 | ||||||
1974 | 11/73 | 19,532 | |||||
31-Oct | 21,745 | ||||||
1975 | 11/74 | 21,915 | |||||
31-Oct | 23,362 | ||||||
1976 | 11/75 | 23,532 | |||||
31-Oct | 24,638 | ||||||
1977 | 11/76 | 24,681 | |||||
31-Oct | 26,213 | ||||||
1978 | 11/77 | 26,340 | |||||
31-Oct | 28,553 | ||||||
1979 | 11/78 | 28,681 | |||||
31-Oct | 32,000 | ||||||
1980 | 11/79 | 32,298 | |||||
31-Oct | 36,085 | ||||||
1981 | 11/80 | 36,383 | |||||
31-Oct | 39,745 | ||||||
1982 | 11/81 | 39,872 | |||||
31-Oct | 41,787 | ||||||
1983 | 12/82 | 41,532 | |||||
31-Oct | 42,979 | ||||||
1984 | 11/83 | 43,064 | |||||
31-Oct | 44,809 | ||||||
1985 | 11/84 | 44,809 | |||||
31-Oct | 46,255 | ||||||
1986 | 4 | 46,213 | |||||
31-Oct | 46,936 | ||||||
1987 | 11/86 | 46,979 | |||||
31-Oct | 49,064 | ||||||
1988 | 11/87 | 49,106 | |||||
31-Oct | 51,149 | ||||||
1989 | 11/88 | 51,191 | |||||
31-Oct | 53,447 | ||||||
1990 | 11/89 | 53,574 | |||||
31-Oct | 56,809 | ||||||
1991 | 11/90 | 56,936 | |||||
31-Oct | 58,468 | ||||||
1992 | 11/91 | 58,638 | |||||
31-Oct | 60,340 | ||||||
1993 | 12/92 | 60,383 | |||||
31-Oct | 62,000 | ||||||
1994 | 11/93 | 62,043 | |||||
31-Oct | 63,617 | ||||||
1995 | 11/94 | 63,702 | |||||
31-Oct | 65,404 | ||||||
1996 | 12/95 | 65,319 | |||||
31-Oct | 67,362 | ||||||
1997 | 11/96 | 67,489 | |||||
31-Oct | 68,766 | ||||||
1998 | 12/97 | 68,638 | |||||
31-Oct | 69,787 | ||||||
1999 | 12/98 | 69,745 | |||||
31-Oct | 71,574 | ||||||
2000 | 11/99 | 71,617 | |||||
31-Oct | 74,043 | ||||||
2001 | 12/00 | 74,043 | |||||
9/01 | 75,872 | ||||||
31-Oct | 75,617 | ||||||
2002 | 12/01 | 75,192 | |||||
31-Oct | 77,149 | ||||||
2003 | 12/02 | 76,979 | |||||
9/03 | 78,809 | ||||||
31-Oct | 78,723 | ||||||
2004 | 16-Dec | 78,426 | |||||
10/31/2004 | 81,234 | ||||||
2005 | 12/16/2004 | 80,979 | |||||
10/31/2005 | 84,766 | ||||||
2006 | 12/16/2005 | 83,745 | |||||
8/16/2006 | 86,766 | ||||||
10/31/2006 | 85,872 | ||||||
2007 | 11/16/2006 | 85,745 | |||||
10/16/2007 | 88,909 | ||||||
10/31/2007 | 88,909 | ||||||
2008 | 11/1/2007 | 88,909 | |||||
7/16/2008 | 93,602 | ||||||
10/31/2008 | 92,159 |
[end mountain chart]
Year ended October 31 | 1950 | 7 | 1951 | 1952 | 1953 | 1954 | 1955 | 1956 | ||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | $ | 0.3 | 0.5 | 0.5 | 0.6 | 0.6 | 0.7 | 0.8 | ||||||||||||||||||||
Value at year-end | $ | 10.0 | 12.2 | 13.2 | 14.1 | 19.3 | 25.1 | 29.7 | ||||||||||||||||||||
Dividends excluded9 | $ | 0.3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.6 | ||||||||||||||||||||
Value at year-end | $ | 9.7 | 11.3 | 11.7 | 12.0 | 15.9 | 20.1 | 23.1 | ||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 3.1 | % | 5.3 | 4.3 | 4.4 | 4.4 | 3.5 | 3.2 | ||||||||||||||||||||
Capital results | (2.9 | ) | 16.8 | 3.3 | 2.5 | 32.4 | 26.6 | 15.2 | ||||||||||||||||||||
AMF total return | 0.2 | 22.1 | 7.6 | 6.9 | 36.8 | 30.1 | 18.4 | |||||||||||||||||||||
Year ended October 31 | 1957 | 1958 | 1959 | 1960 | 1961 | 1962 | 1963 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 0.9 | 1.0 | 1.0 | 1.2 | 1.3 | 1.4 | 1.5 | |||||||||||||||||||||
Value at year-end | 28.1 | 36.1 | 41.5 | 40.9 | 54.3 | 46.6 | 61.3 | |||||||||||||||||||||
Dividends excluded9 | 0.7 | 0.8 | 0.8 | 0.9 | 0.9 | 0.9 | 1.0 | |||||||||||||||||||||
Value at year-end | 21.2 | 26.5 | 29.7 | 28.4 | 36.8 | 30.7 | 39.3 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 3.1 | 3.6 | 2.9 | 2.9 | 3.1 | 2.5 | 3.3 | |||||||||||||||||||||
Capital results | (8.5 | ) | 25.2 | 11.9 | (4.4 | ) | 29.9 | (16.8 | ) | 28.3 | ||||||||||||||||||
AMF total return | (5.4 | ) | 28.8 | 14.8 | (1.5 | ) | 33.0 | (14.3 | ) | 31.6 | ||||||||||||||||||
Year ended October 31 | 1964 | 1965 | 1966 | 1967 | 1968 | 1969 | 1970 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 1.7 | 1.8 | 2.3 | 2.6 | 3.2 | 3.8 | 4.2 | |||||||||||||||||||||
Value at year-end | 71.4 | 79.9 | 77.6 | 92.8 | 109.6 | 103.2 | 93.4 | |||||||||||||||||||||
Dividends excluded9 | 1.1 | 1.1 | 1.4 | 1.5 | 1.8 | 2.1 | 2.2 | |||||||||||||||||||||
Value at year-end | 44.6 | 48.8 | 46.1 | 53.6 | 61.3 | 55.7 | 48.1 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 2.8 | 2.6 | 2.8 | 3.3 | 3.4 | 3.4 | 4.0 | |||||||||||||||||||||
Capital results | 13.6 | 9.4 | (5.6 | ) | 16.3 | 14.6 | (9.2 | ) | (13.6 | ) | ||||||||||||||||||
AMF total return | 16.4 | 12.0 | (2.8 | ) | 19.6 | 18.0 | (5.8 | ) | (9.6 | ) | ||||||||||||||||||
Year ended October 31 | 1971 | 1972 | 1973 | 1974 | 1975 | 1976 | 1977 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 4.4 | 4.7 | 5.1 | 7.3 | 7.3 | 7.9 | 8.6 | |||||||||||||||||||||
Value at year-end | 112.9 | 125.2 | 124.8 | 105.1 | 132.2 | 167.4 | 176.4 | |||||||||||||||||||||
Dividends excluded9 | 2.2 | 2.3 | 2.4 | 3.3 | 3.1 | 3.1 | 3.2 | |||||||||||||||||||||
Value at year-end | 56.0 | 59.7 | 57.1 | 45.0 | 53.3 | 64.3 | 64.6 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 4.7 | 4.2 | 4.0 | 5.8 | 6.9 | 6.0 | 5.1 | |||||||||||||||||||||
Capital results | 16.2 | 6.7 | (4.3 | ) | (21.6 | ) | 18.9 | 20.6 | 0.3 | |||||||||||||||||||
AMF total return | 20.9 | 10.9 | (0.3 | ) | (15.8 | ) | 25.8 | 26.6 | 5.4 | |||||||||||||||||||
Year ended October 31 | 1978 | 1979 | 1980 | 1981 | 1982 | 1983 | 1984 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 10.0 | 11.3 | 13.9 | 16.4 | 26.8 | 26.2 | 26.6 | |||||||||||||||||||||
Value at year-end | 198.9 | 232.8 | 303.6 | 334.1 | 426.4 | 544.9 | 577.2 | |||||||||||||||||||||
Dividends excluded9 | 3.6 | 3.9 | 4.5 | 5.0 | 7.8 | 7.1 | 6.9 | |||||||||||||||||||||
Value at year-end | 69.1 | 77.0 | 95.4 | 99.9 | 118.2 | 143.3 | 144.4 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 5.7 | 5.7 | 6.0 | 5.4 | 8.0 | 6.2 | 4.9 | |||||||||||||||||||||
Capital results | 7.1 | 11.3 | 24.4 | 4.7 | 19.6 | 21.6 | 1.0 | |||||||||||||||||||||
AMF total return | 12.8 | 17.0 | 30.4 | 10.1 | 27.6 | 27.8 | 5.9 | |||||||||||||||||||||
Year ended October 31 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 30.1 | 34.1 | 39.3 | 50.0 | 59.9 | 66.1 | 71.8 | |||||||||||||||||||||
Value at year-end | 701.8 | 913.1 | 960.9 | 1,081.2 | 1,299.8 | 1,239.3 | 1,544.4 | |||||||||||||||||||||
Dividends excluded9 | 7.4 | 8.0 | 8.9 | 10.8 | 12.3 | 13.0 | 13.4 | |||||||||||||||||||||
Value at year-end | 167.6 | 209.4 | 212.1 | 227.1 | 259.4 | 235.2 | 278.5 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 5.2 | 4.9 | 4.3 | 5.2 | 5.5 | 5.1 | 5.8 | |||||||||||||||||||||
Capital results | 16.4 | 25.2 | 0.9 | 7.3 | 14.7 | (9.8 | ) | 18.8 | ||||||||||||||||||||
AMF total return | 21.6 | 30.1 | 5.2 | 12.5 | 20.2 | (4.7 | ) | 24.6 | ||||||||||||||||||||
Year ended October 31 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 67.5 | 70.9 | 76.5 | 83.2 | 90.2 | 95.0 | 104.1 | |||||||||||||||||||||
Value at year-end | 1,690.0 | 2,004.9 | 2,039.9 | 2,473.4 | 2,940.7 | 3,652.2 | 4,205.5 | |||||||||||||||||||||
Dividends excluded9 | 12.0 | 12.1 | 12.5 | 13.1 | 13.7 | 14.0 | 14.9 | |||||||||||||||||||||
Value at year-end | 292.2 | 333.6 | 326.4 | 381.2 | 438.6 | 529.4 | 594.2 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 4.4 | 4.2 | 3.8 | 4.1 | 3.6 | 3.2 | 2.9 | |||||||||||||||||||||
Capital results | 5.0 | 14.4 | (2.1 | ) | 17.2 | 15.3 | 21.0 | 12.2 | ||||||||||||||||||||
AMF total return | 9.4 | 18.6 | 1.7 | 21.3 | 18.9 | 24.2 | 15.1 | |||||||||||||||||||||
Year ended October 31 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | |||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 110.5 | 132.2 | 145.4 | 121.4 | 115.8 | 105.4 | 112.3 | |||||||||||||||||||||
Value at year-end | 4,584.2 | 4,639.4 | 4,811.5 | 4,406.4 | 5,257.3 | 5,825.6 | 6,279.7 | |||||||||||||||||||||
Dividends excluded9 | 15.5 | 18.0 | 19.2 | 15.6 | 14.5 | 12.9 | 13.5 | |||||||||||||||||||||
Value at year-end | 631.8 | 620.1 | 623.6 | 557.2 | 648.8 | 705.5 | 746.9 | |||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 2.6 | 2.9 | 3.1 | 2.5 | 2.6 | 2.0 | 1.9 | |||||||||||||||||||||
Capital results | 6.4 | (1.7 | ) | 0.6 | (10.9 | ) | 16.7 | 8.8 | 5.9 | |||||||||||||||||||
AMF total return | 9.0 | 1.2 | 3.7 | (8.4 | ) | 19.3 | 10.8 | 7.8 | ||||||||||||||||||||
Year ended October 31 | 2006 | 2007 | 2008 | |||||||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | Average | |||||||||||||||||||||||||||
Dividends reinvested8 | 135.1 | 157.0 | 175.0 | annual total | ||||||||||||||||||||||||
Value at year-end | 7,309.5 | 8,200.6 | 5,670.6 | return for | ||||||||||||||||||||||||
Dividends excluded9 | 15.9 | 18.2 | 19.8 | AMF’s lifetime | ||||||||||||||||||||||||
Value at year-end | 852.1 | 937.2 | 632.6 | |||||||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 2.2 | 2.1 | 2.1 | 3.90 | % | |||||||||||||||||||||||
Capital results | 14.2 | 10.1 | (33.0 | ) | 7.51 | % | ||||||||||||||||||||||
AMF total return | 16.4 | 12.2 | (30.9 | ) | 11.41 | % |
The results shown are before taxes on fund distributions and sale of fund shares.
1As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares. |
2The maximum initial sales charge was 8.5% prior to July 1, 1988. |
3Includes reinvested capital gain distributions totaling $3,741,330 in the years 1950-2008 and reinvested dividends. |
4The S&P 500 is unmanaged, and its results do not reflect the effect of sales charges, commissions or expenses. |
5Includes reinvested capital gain distributions taken in shares totaling $587,871 but does not reflect income dividends taken in cash. |
6Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. It would take $92,159 to buy today what $10,000 bought when the fund began. |
7For the period February 21, 1950 (when the fund began operations), through October 31, 1950. |
8Includes special dividends of $1,691 in 1974, $989 in 1975, $7,524 in 1982, $3,967 in 1983, $6,064 in 1988, $9,850 in 1989, $9,497 in 1990 and $8,996 in 1991. |
9Includes special dividends of $746 in 1974, $407 in 1975, $2,251 in 1982, $1,099 in 1983, $1,339 in 1988, $2,069 in 1989, $1,895 in 1990 and $1,707 in 1991. |
[photo of trees - leaves covering the ground]
How American Mutual Fund finds investment opportunities in a bear market
[Begin Pull-Quote]
We have colleagues who have seen it all before. When you have been following the market or an industry for 20, 30 or even 40 years, you have a perspective that few others have. You are not likely to panic at the bottom or top of a market cycle.
— Joyce Gordon
[End Pull-Quote]
[photo of a branch with leaves on it]
During its 58-year lifetime, American Mutual Fund has experienced wars, national disasters, terrorist attacks and international financial crises. Investment fads and fancies have come and gone. Bull markets have eventually been followed by bear markets. Throughout all of this, American Mutual Fund (AMF) has survived and thrived.
Figures shown are past results for Class A shares and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. Unless otherwise indicated, results shown are at net asset value with all distributions reinvested. If the maximum 5.75% Class A sales charge had been deducted, results would have been lower. For current information and month-end results, visit americanfunds.com.
Over the fund’s lifetime, AMF has provided an average annual total return of 11.5% compared with 10.9% for the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the stock market. The fund has produced this return with considerably less volatility than the stock market or two Lipper peer group indexes the fund uses to measure its results.
AMF’s basic objective — to provide investors with current income, growth and preservation of capital — has remained constant. In the wake of one of the worst years in stock market history, the fund’s approach remains as relevant today as it was on February 21, 1950, the day the fund began operations.
In this time of economic uncertainty, we sat down with AMF’s four veteran portfolio counselors to get their perspective on the recent market decline, learn how they are searching for investment opportunities and how they see the road ahead.
Drawing from experience
It can be reassuring for shareholders to realize that the fund’s key decision-makers have a depth of experience few mutual funds can match. Jim Dunton, Mike Shanahan, Joyce Gordon and Jim Lovelace average 36 years of investment experience. Mike has 44 years and Jim Dunton has 46 years. The two “new” portfolio counselors, Joyce and Jim Lovelace, who joined the fund in 2006, have 29 and 27 years of experience, respectively.
Their years of accumulated knowledge and wisdom have helped them navigate difficult markets in the past. “We have colleagues who have seen it all before,” says Joyce Gordon. “When you have been following the market or an industry for 20, 30 or even 40 years, you have a perspective that few others have. You are not likely to panic at the bottom or top of a market cycle.”
“What helps us in these difficult periods is AMF’s organizational memory,” explains Jim Lovelace. “The fact that Jim Dunton and Mike Shanahan’s experience precedes the 1973-1974 bear market is acutely valuable today. Jim and Mike can tell us firsthand what was going on in 1974, the last time the market was this bad. If we didn’t have them around, we wouldn’t have a compass.” In 1974, for example, the stresses and shocks of that year — which included the failure of the Franklin National Bank — led to a crisis of confidence that brought the international banking system close to disaster. Franklin’s failure forced the United States and foreign regulatory authorities to devise new ways to avert a global banking crisis, and served as a catalyst for later efforts to bring international banking under government management. More than three decades later, governments worldwide have responded to today’s crisis in a somewhat similar manner.
[Begin Sidebar]
Generally higher yields over time — AMF vs. the S&P 500
American Mutual Fund typically has had a higher dividend yield than the S&P 500. One reason for this: Many companies in the S&P 500 don’t pay dividends, while AMF primarily invests in those that do.
[begin bar chart]
[end bar chart]
[End Sidebar]
Distribution rate (%) at net asset value | ||||||||
Date | AMF | S&P 500 | ||||||
10/31/1989 | 4.67 | % | 3.21 | % | ||||
10/31/1990 | 5.35 | % | 3.91 | % | ||||
10/31/1991 | 4.77 | % | 3.09 | % | ||||
10/31/1992 | 4.01 | % | 2.95 | % | ||||
10/31/1993 | 3.52 | % | 2.68 | % | ||||
10/31/1994 | 3.70 | % | 2.76 | % | ||||
10/31/1995 | 3.35 | % | 2.35 | % | ||||
10/31/1996 | 3.03 | % | 2.10 | % | ||||
10/31/1997 | 2.55 | % | 1.68 | % | ||||
10/31/1998 | 2.38 | % | 1.46 | % | ||||
10/31/1999 | 2.29 | % | 1.22 | % | ||||
10/31/2000 | 2.52 | % | 1.15 | % | ||||
10/31/2001 | 2.96 | % | 1.49 | % | ||||
10/31/2002 | 2.73 | % | 1.81 | % | ||||
10/31/2003 | 2.21 | % | 1.61 | % | ||||
10/31/2004 | 1.83 | % | 1.68 | % | ||||
10/31/2005 | 1.81 | % | 1.77 | % | ||||
10/31/2006 | 1.82 | % | 1.76 | % | ||||
10/31/2007 | 1.91 | % | 1.76 | % | ||||
10/31/2008 | 2.98 | % | 2.99 | % |
[End Sidebar]
[Begin Pull-Quote]
The fact that Jim Dunton and Mike Shanahan’s experience precedes the 1973-1974 bear market is acutely valuable today. Jim and Mike can tell us firsthand what was going on in 1974, the last time the market was this bad. If we didn’t have them around, we wouldn’t have a compass.
— Jim Lovelace
[End Pull-Quote]
[Begin Sidebar]
American Mutual Fund’s portfolio counselors | |
American Mutual Fund’s four portfolio counselors have an average 36.5 years of investment experience.* The knowledge and wisdom they have accumulated over the years have helped them manage your fund through many stock market cycles. | |
Years of | |
investment | |
Portfolio counselor | experience* |
James K. Dunton | 46 |
R. Michael Shanahan | 44 |
Joyce E. Gordon | 29 |
James B. Lovelace | 27 |
*Years of experience as of January 1, 2009. |
[End Sidebar]
Hunting for true value in uncertain times
How do AMF portfolio counselors and investment analysts search for blue chip companies at bargain prices today? “There is more to being a value investor than just looking for low price-to-earnings or price-to-book ratios and applying other value metrics,” notes Jim Dunton, the fund’s president. “We invest in well-financed companies that we believe will come out of this period as strong or stronger than before. We focus on those with competitive positions in their industries and good cash flows. Although it seems attractive to invest in secondary or tertiary companies whose stock prices have collapsed, they may also have further significant risks in troubled times. In AMF, we don’t invest in speculative companies.”
AMF’s historic approach of selecting investments only from a list of prescreened, high-quality securities has undoubtedly kept the fund away from speculative investments that suffered considerably in this difficult period. Adds Jim, “Our time-tested approach is well suited for this challenging environment. We are beating our benchmarks. Could we have done even better? Possibly so. However, if you were going into a period like the one we now have, you would have wanted a structure exactly like AMF. With its balanced objective of current income, long-term growth and capital preservation, AMF is the right kind of fund for this time. We have achieved better results than the S&P 500 in every significant down market in the fund’s history. That is also true in this downturn to date.”
Joyce Gordon looks for companies with strong balance sheets, a minimum of debt and no liquidity problems. To keep a close eye on the situation, she is assessing debt requirements for companies over the next six months. “I also ask myself this question: ‘If we end up in a prolonged recession, how will this company be affected?’”
Although the fund owns financial and bank stocks, they are currently not on Joyce’s buying list. “If the recession worsens, they will face increasing problems with losses on credit cards and commercial lending. And now that government has become so involved in their business as owner, financier and partner, banks will be less profitable and have higher capital requirements. The government is likely to limit the types of businesses in which they can participate. Any bank that has accepted funds from TARP (Troubled Asset Relief Program) will have to get approval from the government before increasing its dividend. All of this will make banks less attractive as an investment.”
[Begin Sidebar]
Figures shown are past results for Class A shares and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so you may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. Unless otherwise indicated, results shown are at net asset value with all distributions reinvested. If the maximum 5.75% Class A sales charge had been deducted, results would have been lower. For current information and month-end results, visit americanfunds.com.
Above-average returns with less volatility
American Mutual Fund strives to meet its objectives. If we look back 10 years, as shown below, the fund has provided slightly higher returns than the three benchmarks the fund uses to measure its results. It accomplished this while showing lower volatility than the three benchmarks.
For the 10-year period ended October 31, 2008
[illustrated in graphic format]
Average annual total return | Volatility | |||||||
AMF | 3.03 | % | 11.67 | |||||
S&P 500 | 0.40 | 15.08 | ||||||
Lipper | ||||||||
Growth and Income | ||||||||
Funds Index | 1.14 | 13.69 | ||||||
Lipper | ||||||||
Multi-Cap Value | ||||||||
Funds Index | 2.27 | 14.78 |
[end graphical format]
Sources: Stocks — Standard & Poor’s Corporation, Lipper.
Volatility is calculated at net asset value by Lipper using annualized standard deviation (based on monthly returns), a measure of how returns over time have varied from the mean; a lower number signifies lower volatility. Standard & Poor’s 500 Composite Index is an unmanaged index of 500 large-company stocks selected to represent the stock market. The Lipper Multi-Cap Value Funds Index is an equally weighted index of the 30 largest mutual funds following a value approach to investing in companies of various sizes. The Lipper Growth and Income Funds Index is an equally weighted index of the 30 largest mutual funds that combine a growth of earnings orientation and an income requirement for dividends.
[End Sidebar]
Jim Lovelace believes that the financial sector is badly impaired; as a result, many available investments are nonetheless too speculative for AMF. “Certain companies have survived the trial-by-fire extremes of this period, and they are great candidates for the fund. While it’s true that some of the more depressed financial stocks may well offer opportunities, they are simply too risky.”
Dividends carry greater importance
AMF portfolio counselors consider dividend-paying companies their core investment and expect dividends to be even more important in the years ahead. “If the stock market takes a while to recover or goes sideways, dividends will provide most of the appreciation and value for investors,” Joyce says.
Companies with growing dividends are Joyce’s investment of choice. “A rising dividend is an indication of how fast the company is growing on a sustained basis,” she explains. “A dividend is cash. It can’t be dressed up like earnings. When a board of directors commits to a dividend level, they are very reluctant to cut it. They don’t increase a dividend unless they think it can be sustained. If you put a ruler through the dividend increases of a company over time, that ruler (with an upward slope) is actually the long-term growth rate of the company. So I like companies with effective business models, a solid record of being able to compete in the marketplace, and good earnings and dividend growth. I place more emphasis on the dividend growth than the earnings growth.”
Dividends have recently run into a rough patch. In late October 2008, Standard & Poor’s announced that the dividend growth rate for companies in the S&P 500 had slowed, primarily because of dividend cuts by financial companies. “While we continue to have strong concerns over deterioration within the financials sector, Standard & Poor’s Index Services believes that the majority of S&P 500 companies will continue their long history of dividend payments and increases, with over half of them expected to pay out more this year than last,” maintains Howard Silverblatt, Senior Index Analyst at Standard & Poor’s.
[Begin Sidebar]
How American Mutual Fund has fared during market declines*
Total returns for AMF and S&P 500. (S&P 500 assumes monthly reinvestment of dividends.)
[begin bar chart/time line]
Total returns (%) | |||||
AMF | S&P 500 | ||||
Jan. 5, 1953 | - | Sept. 14, 1953 | Korean War ends; recession begins | (9.7) | (11.7) |
Aug. 2, 1956 | - | Oct. 22, 1957 | Egypt seizes Suez Canal | (16.0) | (18.1) |
Dec. 12, 1961 | - | June 26, 1962 | Kennedy confronts steel industry | (25.0) | (26.9) |
Feb. 9, 1966 | - | Oct. 7, 1966 | Economy overheats, interest rates rise | (15.1) | (20.5) |
Nov. 29, 1968 | - | May 26, 1970 | Vietnam War sparks civil unrest, recession | (31.8) | (33.0) |
Jan. 11, 1973 | - | Oct. 3, 1974 | OPEC oil embargo; Watergate scandal | (32.2) | (44.8) |
Sept. 21, 1976 | - | March 6, 1978 | Carter warns of energy crisis | 3.1 | (13.5) |
Nov. 28, 1980 | - | Aug. 12, 1982 | Record-high interest rates | 3.5 | (20.2) |
Aug. 25, 1987 | - | Dec. 4, 1987 | Overvalued stocks trigger market crash | (21.4) | (32.8) |
July 16, 1990 | - | Oct. 11, 1990 | Iraq invades Kuwait | (12.1) | (19.2) |
July 17, 1998 | - | Aug. 31, 1998 | “Asian flu” spreads to Russia | (12.1) | (19.1) |
March 24, 2000 | - | Oct. 9, 2002 | Internet bubble bursts | (7.1) | (47.4) |
Oct. 9, 2007 | - | Oct. 27, 2008 | Global financial crisis | (38.6) | (44.6) |
[end bar chart/time line]
[End Sidebar]
“We know there have been numerous dividend cuts, and we expect more,” says Jim Lovelace. “However, dividends remain very important. Unlike the stock price, a dividend return is always positive. In addition, companies that have the wherewithal to pay dividends are typically more stable investments than those that don’t. Bear markets do more to reinforce the religion of dividends than anything else because dividend-paying stocks have tended to hold up better.”
Dividends are also attractive given the uncertain times in which we live. “Dividends can’t be faked,” Mike Shanahan states. “They are reliable. They’re not dependent upon what someone else wants to pay for your stock. They are perhaps the clearest indicator of a company’s stability. Dividends are also the single most important way for a company to communicate with its shareholders. Dividends provide value today — not tomorrow or next year.”
Cushioning the fall
When the stock market is falling, dividend payments can cushion the blow for investors. Consider this: The S&P 500 needed about six years after the market low to fully recover from the 1973-1974 bear market on a price appreciation basis. With reinvested dividends included, the recovery time dropped to about two years. But it may take the broader market longer to bounce back from the current bearishness because fewer companies are paying dividends now. When the stock market began to climb in 1974, nine of 10 companies in the S&P 500 paid dividends. Today, three of four do.
In spite of the difficult market, AMF continued to pay its quarterly dividend of 16.0 cents a share, for a current annual yield of 3.0%. The yield alone provides a greater return than the current rate on many types of bank savings accounts, certificates of deposits (CDs) and Treasury bills, as of the fiscal year-end. Of course, unlike savings accounts, CDs and Treasury bills, the amounts invested in fund shares are not guaranteed.
[Begin Pull-Quote]
Our time-tested approach is well suited for this challenging environment. We are beating our benchmarks. Could we have done even better? Possibly so. However, if you were going into a period like the one we now have, you would have wanted a structure exactly like AMF.
— Jim Dunton
[End Pull-Quote]
[photo of the underside of a tree]
In recent months, as stocks declined sharply, many investors responded by moving their money into bonds and cash instruments like CDs and money market funds. This so-called “flight to quality” may have seemed practical after several months of extreme market volatility. Yet just as too much exposure to stocks may have hurt investors over the past year, too great a position in bonds and cash over a prolonged period could deprive them of higher investment returns in the future. Cautions Jim Dunton, “Investors can sit on cash or bonds temporarily, but they shouldn’t for too long if they hope to accumulate enough for a comfortable retirement or a child’s college tuition. The returns currently offered by government bonds and cash are too low to provide for longer term goals.”
Dividends are an important reason why AMF has been able to lose less than the S&P 500 during the 13 major declines of the stock market in the fund’s lifetime. (Major declines are defined as a drop in price of 15% or more without dividends reinvested. For more details, see the chart on pages 10 and 11.)
Comparing the current bear market with the 2000-2002 Internet decline
The extraordinarily sharp stock market decline that occurred between March 2000 and October 2002 offers a clear example of how the fund’s conservative investment approach benefited shareholders. During those 31 months, the S&P 500 lost 47% while AMF’s total return declined only 7%. Over a full market cycle (from the low of August 1998 to the low of October 2002), the S&P 500 lost 14%. AMF, on the other hand, gained nearly 5%. However, as Jim Dunton noted in the 2004 annual report, “It is not likely that this unusually strong relative performance will recur during any future declines of this magnitude.”
Why hasn’t AMF fared as well in the current market situation (AMF declined 39% while the S&P 500 fell 45%)? “The reason that we withstood the worst of the tech crash was that Internet stocks were so clearly overvalued. As fundamental investors, we weren’t willing to put our money there,” explains Jim. “We could not rationalize paying 35 times earnings for the S&P 500 in 1999 and 2000. It was one of the easy bubbles to see. In contrast, at the top of this 2007 market the average company was selling at 16 times earnings — near average long-term valuations, and did not appear particularly overpriced. It’s more difficult to spot the potential for trouble in markets that only sustain average valuations.”
“No segment of the market was spared this time,” Jim Lovelace adds. “Everything has gone down in a remarkably synchronized manner. In any bear market, there is usually some sector that provides shelter. In this case, there has been almost no shelter — unless you consider U.S. government securities.”
Summary investment portfolio, October 31, 2008
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.
[begin pie chart]
Industry sector diversification | Percent of net assets | |||
Industrials | 13.39 | % | ||
Information technology | 13.20 | |||
Health care | 8.42 | |||
Energy | 8.01 | |||
Consumer discretionary | 7.38 | |||
Other industries | 28.23 | |||
Convertible securities & preferred stocks | 1.74 | |||
Bonds & notes | 0.77 | |||
Short-term securities & other assets less liabilities | 18.86 |
Common stocks - 78.63% | Shares | Value (000) | Percent of net assets | |||||||||
Energy - 8.01% | ||||||||||||
Chevron Corp. | 3,519,304 | $ | 262,540 | 1.91 | % | |||||||
ConocoPhillips | 2,125,000 | 110,542 | .80 | |||||||||
Devon Energy Corp. | 2,225,000 | 179,914 | 1.30 | |||||||||
Hess Corp. | 1,939,000 | 116,747 | .85 | |||||||||
Marathon Oil Corp. | 5,353,600 | 155,790 | 1.13 | |||||||||
Royal Dutch Shell PLC, Class A (ADR) | 1,735,000 | 96,830 | .70 | |||||||||
Other securities | 181,835 | 1.32 | ||||||||||
1,104,198 | 8.01 | |||||||||||
Materials - 3.38% | ||||||||||||
Other securities | 465,615 | 3.38 | ||||||||||
Industrials - 13.39% | ||||||||||||
3M Co. | 1,412,000 | 90,792 | .66 | |||||||||
Avery Dennison Corp. | 3,375,000 | 118,192 | .86 | |||||||||
Burlington Northern Santa Fe Corp. | 1,535,000 | 136,707 | .99 | |||||||||
General Electric Co. | 15,387,500 | 300,210 | 2.18 | |||||||||
Norfolk Southern Corp. | 1,485,500 | 89,041 | .64 | |||||||||
United Parcel Service, Inc., Class B | 3,550,000 | 187,369 | 1.36 | |||||||||
United Technologies Corp. | 3,700,000 | 203,352 | 1.48 | |||||||||
Other securities | 720,146 | 5.22 | ||||||||||
1,845,809 | 13.39 | |||||||||||
Consumer discretionary - 7.38% | ||||||||||||
Lowe's Companies, Inc. | 3,971,773 | 86,187 | .62 | |||||||||
Target Corp. | 2,670,000 | 107,120 | .78 | |||||||||
Other securities | 824,251 | 5.98 | ||||||||||
1,017,558 | 7.38 | |||||||||||
Consumer staples - 7.27% | ||||||||||||
Coca-Cola Co. | 1,750,000 | 77,105 | .56 | |||||||||
Kimberly-Clark Corp. | 2,410,000 | 147,709 | 1.07 | |||||||||
PepsiCo, Inc. | 3,710,000 | 211,507 | 1.53 | |||||||||
Procter & Gamble Co. | 810,000 | 52,277 | .38 | |||||||||
Wal-Mart Stores, Inc. | 1,465,000 | 81,762 | .59 | |||||||||
Other securities | 431,825 | 3.14 | ||||||||||
1,002,185 | 7.27 | |||||||||||
Health care - 8.42% | ||||||||||||
Abbott Laboratories | 3,635,000 | 200,470 | 1.45 | |||||||||
Bristol-Myers Squibb Co. | 9,182,200 | 188,694 | 1.37 | |||||||||
Eli Lilly and Co. | 2,900,000 | 98,078 | .71 | |||||||||
Johnson & Johnson | 600,000 | 36,804 | .27 | |||||||||
Medtronic, Inc. | 3,007,000 | 121,272 | .88 | |||||||||
Merck & Co., Inc. | 2,740,000 | 84,803 | .61 | |||||||||
Pfizer Inc | 7,145,000 | 126,538 | .92 | |||||||||
Other securities | 304,124 | 2.21 | ||||||||||
1,160,783 | 8.42 | |||||||||||
Financials - 4.97% | ||||||||||||
Bank of New York Mellon Corp. | 3,746,000 | 122,120 | .88 | |||||||||
Citigroup Inc. | 5,128,000 | 69,997 | .51 | |||||||||
Fannie Mae | 1,050,000 | 998 | .01 | |||||||||
Freddie Mac | 800,000 | 800 | .01 | |||||||||
JPMorgan Chase & Co. | 4,072,000 | 167,970 | 1.22 | |||||||||
Other securities | 322,573 | 2.34 | ||||||||||
684,458 | 4.97 | |||||||||||
Information technology - 13.20% | ||||||||||||
Automatic Data Processing, Inc. | 3,800,000 | 132,810 | .96 | |||||||||
Hewlett-Packard Co. | 4,750,000 | 181,830 | 1.32 | |||||||||
Intel Corp. | 10,640,000 | 170,240 | 1.24 | |||||||||
International Business Machines Corp. | 3,090,000 | 287,277 | 2.09 | |||||||||
Microchip Technology Inc. | 7,056,625 | 173,805 | 1.26 | |||||||||
Microsoft Corp. | 14,335,998 | 320,123 | 2.32 | |||||||||
Oracle Corp. (1) | 8,485,000 | 155,191 | 1.13 | |||||||||
Other securities | 397,529 | 2.88 | ||||||||||
1,818,805 | 13.20 | |||||||||||
Telecommunication services - 4.39% | ||||||||||||
AT&T Inc. | 8,820,597 | 236,127 | 1.71 | |||||||||
Embarq Corp. | 5,214,250 | 156,428 | 1.14 | |||||||||
Verizon Communications Inc. | 7,162,334 | 212,506 | 1.54 | |||||||||
605,061 | 4.39 | |||||||||||
Utilities - 6.86% | ||||||||||||
Ameren Corp. | 3,953,680 | 128,297 | .93 | |||||||||
Exelon Corp. | 2,788,720 | 151,260 | 1.10 | |||||||||
FirstEnergy Corp. | 1,620,000 | 84,499 | .61 | |||||||||
Questar Corp. | 3,000,000 | 103,380 | .75 | |||||||||
Other securities | 477,524 | 3.47 | ||||||||||
944,960 | 6.86 | |||||||||||
Miscellaneous - 1.36% | ||||||||||||
Other common stocks in initial period of acquisition | 186,953 | 1.36 | ||||||||||
Total common stocks (cost: $12,480,527,000) | 10,836,385 | 78.63 | ||||||||||
Preferred stocks - 1.17% | ||||||||||||
FINANCIALS - 1.17% | ||||||||||||
Bank of America Corp., Series M, 8.125% noncumulative (2) | 100,000 | 77,618 | .56 | |||||||||
Citigroup Inc., Series E, 8.40% (2) | 85,000,000 | 59,190 | .43 | |||||||||
JPMorgan Chase & Co., Series I, 7.90% (2) | 25,000 | 20,313 | .15 | |||||||||
Fannie Mae, Series T, 8.25% noncumulative | 2,000,000 | 3,880 | .03 | |||||||||
Total preferred stocks (cost: $260,793,000) | 161,001 | 1.17 | ||||||||||
Convertible securities - 0.57% | ||||||||||||
Financials - 0.49% | ||||||||||||
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred (3) (4) | 1,725,000 | 58,340 | .42 | |||||||||
Fannie Mae, Series 2008-1, 8.75% noncumulative convertible preferred | 556,000 | 767 | .01 | |||||||||
Other securities | 8,790 | .06 | ||||||||||
67,897 | .49 | |||||||||||
Miscellaneous - 0.08% | ||||||||||||
Other convertible securities in initial period of acquisition | 10,194 | .08 | ||||||||||
Total convertible securities (cost: $214,323,000) | 78,091 | .57 | ||||||||||
Bonds & notes - 0.77% | Principal amount (000) | |||||||||||
INDUSTRIALS - 0.33% | ||||||||||||
General Electric Capital Corp., Series A, 4.80% 2013 | $ | 50,000 | 44,978 | .33 | ||||||||
HEALTH CARE - 0.12% | ||||||||||||
Amgen Inc. 6.90% 2038 | 20,000 | 17,151 | .12 | |||||||||
FINANCIALS - 0.32% | ||||||||||||
KeyCorp 6.50% 2013 | 50,000 | 44,063 | .32 | |||||||||
Total bonds & notes (cost: $119,760,000) | 106,192 | .77 | ||||||||||
Short-term securities - 18.70% | ||||||||||||
AT&T Inc. 2.12% due 11/10/2008 (5) | 45,000 | 44,973 | .33 | |||||||||
Chevron Funding Corp. 1.95% due 11/28/2008 | 75,000 | 74,886 | .54 | |||||||||
Coca-Cola Co. 1.75%-2.15% due 11/5/2008-1/16/2009 (5) | 157,000 | 156,839 | 1.14 | |||||||||
Fannie Mae 1.55%-2.65% due 12/3/2008-2/24/2009 | 144,400 | 144,010 | 1.05 | |||||||||
Federal Home Loan Bank 1.30%-3.10% due 11/3/2008-4/13/2009 | 277,000 | 275,809 | 2.00 | |||||||||
Freddie Mac due 1.30%-2.50% due 12/8/2008-4/7/2009 | 385,082 | 383,396 | 2.78 | |||||||||
Hewlett-Packard Co. 2.55%-2.95% due 11/3-12/16/2008 (5) | 121,900 | 121,595 | .88 | |||||||||
Honeywell International Inc. 2.00%-2.08% due 11/13-12/12/2008 (5) | 100,000 | 99,702 | .72 | |||||||||
Johnson & Johnson due 1.35%-2.05% due 11/7-12/22/2008 (5) | 103,400 | 103,156 | .75 | |||||||||
Merck & Co. Inc. 1.80%-2.15% due 11/14-12/12/2008 | 134,500 | 134,224 | .97 | |||||||||
Pfizer Inc 2.09%-2.28% due 11/7/2008-1/7/2009 (5) | 119,500 | 119,141 | .86 | |||||||||
Procter & Gamble International Funding S.C.A. 1.85%-2.15% due 11/7/2008-1/29/2009 (5) | 238,305 | 237,683 | 1.73 | |||||||||
Target Corp. 1.80%-2.10% due 12/1-12/19/2008 | 37,600 | 37,482 | .27 | |||||||||
U.S. Treasury Bills 0.44%-1.85% due 11/20/2008-4/9/2009 | 294,400 | 293,842 | 2.13 | |||||||||
Wal-Mart Stores Inc. 2.20% due 12/2/2008 (5) | 70,300 | 70,075 | .51 | |||||||||
Other securities | 281,162 | 2.04 | ||||||||||
Total short-term securities (cost: $2,577,641,000) | 2,577,975 | 18.70 | ||||||||||
Total investment securities (cost: $15,653,044,000) | 13,759,644 | 99.84 | ||||||||||
Other assets less liabilities | 21,973 | .16 | ||||||||||
Net assets | $ | 13,781,617 | 100.00 | % | ||||||||
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. | ||||||||||||
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
Investments in affiliates | ||||||
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the | ||||||
fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The security listed below is included in the value of | ||||||
"Other securities" under its respective industry sector in the preceding summary investment portfolio. Further details on such holdings and related transactions during the | ||||||
year ended October 31, 2008, appear below. |
Beginning shares | Additions | Reductions | Ending shares | Dividend income (000) | Value of affiliate at 10/31/08 (000) | |||||||||||||||||||
Brunswick Corp (6) | - | 5,575,000 | 1,667,231 | 3,907,769 | $ | – | $ | – |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. | ||||||||||||
(1) Security did not produce income during the last 12 months. | ||||||||||||
(2) Coupon rate may change periodically. | ||||||||||||
(3) Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 1/15/2008 at a cost of $86,250,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities was $58,340,000, which represented 0.42% of the net assets of the fund. | ||||||||||||
(4) Valued under fair value procedures adopted by authority of the board of directors. | ||||||||||||
The total value of all such securities was $58,340,000, which represented 0.42% of the net assets of the fund. | ||||||||||||
(5) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $1,072,960,000, which represented 7.79% of the net assets of the fund. | ||||||||||||
(6)Unaffiliated issuer at 10/31/2008. | ||||||||||||
The industry classifications shown in the summary investment portfolio were obtained from sources | ||||||||||||
believed to be reliable and are not covered by the Report of Independent Registered Public Accounting Firm. | ||||||||||||
Key to abbreviation | ||||||||||||
ADR = American Depositary Receipts | ||||||||||||
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at October 31, 2008 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value (cost: $15,653,044) | $ | 13,759,644 | ||||||
Cash | 260 | |||||||
Receivables for: | ||||||||
Sales of investments | 9,435 | |||||||
Sales of fund's shares | 20,440 | |||||||
Dividends and interest | 29,161 | 59,036 | ||||||
13,818,940 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 5,169 | |||||||
Repurchases of fund's shares | 19,409 | |||||||
Investment advisory services | 2,763 | |||||||
Services provided by affiliates | 7,667 | |||||||
Directors' deferred compensation | 2,284 | |||||||
Other | 31 | 37,323 | ||||||
Net assets at October 31, 2008 | $ | 13,781,617 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 15,525,109 | ||||||
Undistributed net investment income | 116,779 | |||||||
Undistributed net realized gain | 33,129 | |||||||
Net unrealized depreciation | (1,893,400 | ) | ||||||
Net assets at October 31, 2008 | $ | 13,781,617 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 1,000,000 shares, $.001 par value (682,953 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||||
Class A | $ | 11,498,586 | 569,315 | $ | 20.20 | |||||||
Class B | 454,576 | 22,673 | 20.05 | |||||||||
Class C | 577,703 | 28,875 | 20.01 | |||||||||
Class F-1 | 346,585 | 17,206 | 20.14 | |||||||||
Class F-2 | 7,174 | 355 | 20.20 | |||||||||
Class 529-A | 189,545 | 9,397 | 20.17 | |||||||||
Class 529-B | 31,640 | 1,574 | 20.10 | |||||||||
Class 529-C | 53,900 | 2,682 | 20.10 | |||||||||
Class 529-E | 10,262 | 510 | 20.12 | |||||||||
Class 529-F-1 | 5,924 | 293 | 20.19 | |||||||||
Class R-1 | 12,544 | 625 | 20.07 | |||||||||
Class R-2 | 110,147 | 5,495 | 20.05 | |||||||||
Class R-3 | 149,054 | 7,416 | 20.10 | |||||||||
Class R-4 | 54,574 | 2,707 | 20.16 | |||||||||
Class R-5 | 279,403 | 13,830 | 20.20 | |||||||||
*Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Classes A and 529-A, for which the maximum offering prices per share were $21.43 and $21.40, respectively. | ||||||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended October 31, 2008 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $1,248) | $ | 440,539 | ||||||
Interest | 80,232 | $ | 520,771 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 46,740 | |||||||
Distribution services | 54,368 | |||||||
Transfer agent services | 15,317 | |||||||
Administrative services | 3,949 | |||||||
Reports to shareholders | 545 | |||||||
Registration statement and prospectus | 479 | |||||||
Postage, stationery and supplies | 1,429 | |||||||
Directors' compensation | (169 | ) | ||||||
Auditing and legal | 136 | |||||||
Custodian | 107 | |||||||
State and local taxes | 167 | |||||||
Other | 112 | |||||||
Total fees and expenses before reimbursements/waivers | 123,180 | |||||||
Less reimbursements/waivers of fees and expenses: | ||||||||
Investment advisory services | 4,674 | |||||||
Administrative services | 4 | |||||||
Total fees and expenses after reimbursements/waivers | 118,502 | |||||||
Net investment income | 402,269 | |||||||
Net realized gain and unrealized | ||||||||
depreciation on investments | ||||||||
Net realized gain on investments (including $2,023 net loss from affiliate) | 165,743 | |||||||
Net unrealized depreciation on investments | (6,930,935 | ) | ||||||
Net realized gain and unrealized depreciation on investments | (6,765,192 | ) | ||||||
Net decrease in net assets resulting | ||||||||
from operations | $ | (6,362,923 | ) | |||||
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | ||||||||
See Notes to Financial Statements | ||||||||
Statements of changes in net assets | (dollars in thousands) | |||||||
Year ended October 31 | ||||||||
2008 | 2007 | |||||||
Operations: | ||||||||
Net investment income | $ | 402,269 | $ | 410,806 | ||||
Net realized gain on investments | 165,743 | 909,949 | ||||||
Net unrealized (depreciation) appreciation on investments | (6,930,935 | ) | 973,349 | |||||
Net (decrease) increase in net assets resulting from operations | (6,362,923 | ) | 2,294,104 | |||||
Dividends and distributions paid to | ||||||||
shareholders: | ||||||||
Dividends from net investment income | (427,515 | ) | (391,275 | ) | ||||
Distributions from net realized gain on investments | (872,259 | ) | (463,340 | ) | ||||
Total dividends and distributions paid to shareholders | (1,299,774 | ) | (854,615 | ) | ||||
Net capital share transactions | 223,819 | 741,397 | ||||||
Total (decrease) increase in net assets | (7,438,878 | ) | 2,180,886 | |||||
Net assets: | ||||||||
Beginning of year | 21,220,495 | 19,039,609 | ||||||
End of year (including undistributed | ||||||||
net investment income: $116,779 and $142,145, respectively) | $ | 13,781,617 | $ | 21,220,495 | ||||
See Notes to Financial Statements |
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, growth of capital and conservation of principal – through investments in companies that participate in the growth of the American economy.
The fund offers 15 share classes consisting of five retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4 and R-5 | None | None | None |
On August 1, 2008, the fund made an additional retail share class (Class F-2) available for sale pursuant to an amendment to its registration statement filed with the Securities and Exchange Commission (“SEC”). In addition, Class F shares were renamed Class F-1 and Class 529-F shares were renamed Class 529-F-1. Refer to the fund’s prospectus for more details.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:
Security valuation – Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
2. Rsk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
The prices of, and the income generated by, securities held by the fund may decline in response to certain events, including those directly involving the companies whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency, interest rate and commodity price fluctuations.
The values of, and the income generated by, most debt securities held by the fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the values of debt securities in the fund's portfolio generally will decline when interest rates rise and increase when interest rates fall.
3. Taxation and distributions
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended October 31, 2008, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2004 and by state tax authorities for tax years before 2003.
Non-U.S. taxation – Dividend income is recorded net of non-U.S. taxes paid.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; deferred expenses; and cost of investments sold. 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 for financial reporting purposes. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
During the year ended October 31, 2008, the fund reclassified $120,000 from undistributed net investment income and $26,500,000 from undistributed net realized gain to capital paid in on shares of capital stock to align financial reporting with tax reporting.
As of October 31, 2008, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 115,057 | ||
Undistributed long-term capital gain | 36,983 | |||
Gross unrealized appreciation on investment securities | 1,318,612 | |||
Gross unrealized depreciation on investment securities | (3,215,177 | ) | ||
Net unrealized depreciation on investment securities | (1,896,565 | ) | ||
Cost of investment securities | 15,656,209 |
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
Year ended October 31, 2008 | Year ended October 31, 2007 | |||||||||||||||||||||||
Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid | |||||||||||||||||||
Share class | ||||||||||||||||||||||||
Class A | $ | 369,421 | $ | 730,542 | $ | 1,099,963 | $ | 342,770 | $ | 389,742 | $ | 732,512 | ||||||||||||
Class B | 10,304 | 31,107 | 41,411 | 9,168 | 16,908 | 26,076 | ||||||||||||||||||
Class C | 12,522 | 38,154 | 50,676 | 10,541 | 19,696 | 30,237 | ||||||||||||||||||
Class F-1 | 11,629 | 23,835 | 35,464 | 10,540 | 12,069 | 22,609 | ||||||||||||||||||
Class F-2* | 29 | - | 29 | - | - | - | ||||||||||||||||||
Class 529-A | 5,513 | 10,805 | 16,318 | 4,530 | 5,132 | 9,662 | ||||||||||||||||||
Class 529-B | 620 | 1,926 | 2,546 | 491 | 979 | 1,470 | ||||||||||||||||||
Class 529-C | 1,047 | 3,192 | 4,239 | 805 | 1,550 | 2,355 | ||||||||||||||||||
Class 529-E | 266 | 597 | 863 | 212 | 281 | 493 | ||||||||||||||||||
Class 529-F-1 | 184 | 328 | 512 | 140 | 133 | 273 | ||||||||||||||||||
Class R-1 | 233 | 600 | 833 | 156 | 406 | 562 | ||||||||||||||||||
Class R-2 | 2,124 | 6,663 | 8,787 | 1,782 | 3,362 | 5,144 | ||||||||||||||||||
Class R-3 | 4,009 | 9,338 | 13,347 | 3,686 | 5,283 | 8,969 | ||||||||||||||||||
Class R-4 | 1,569 | 2,936 | 4,505 | 1,203 | 1,317 | 2,520 | ||||||||||||||||||
Class R-5 | 8,045 | 12,236 | 20,281 | 5,251 | 6,482 | 11,733 | ||||||||||||||||||
Total | $ | 427,515 | $ | 872,259 | $ | 1,299,774 | $ | 391,275 | $ | 463,340 | $ | 854,615 | ||||||||||||
* Class F-2 was offered beginning August 1, 2008. |
4. Fees and transactions with related parties
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company® ("AFS"), the fund’s transfer agent, and American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.384% on the first $1 billion of month-end net assets and decreasing to 0.225% on such assets in excess of $21 billion. During the year ended October 31, 2008, total investment advisory services fees waived by CRMC were $4,674,000. As a result, the fee shown on the accompanying financial statements of $46,740,000, which was equivalent to an annualized rate of 0.255%, was reduced to $42,066,000, or 0.230% of average month-end net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2 and R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes except Classes F-2 and R-5 may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of October 31, 2008, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.
Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the year ended October 31, 2008, the total administrative services fees paid by CRMC were $4,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described on the previous page for the year ended October 31, 2008, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | ||
CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||
Class A | $35,079 | $14,707 | Not applicable | Not applicable | Not applicable |
Class B | 6,293 | 610 | Not applicable | Not applicable | Not applicable |
Class C | 7,797 | Included in administrative services | $1,007 | $130 | Not applicable |
Class F-1 | 1,205 | 538 | 39 | Not applicable | |
Class F-2 * | Not applicable | 1 | -† | Not applicable | |
Class 529-A | 497 | 212 | 29 | $ 236 | |
Class 529-B | 409 | 36 | 11 | 41 | |
Class 529-C | 685 | 61 | 15 | 68 | |
Class 529-E | 65 | 12 | 2 | 13 | |
Class 529-F-1 | - | 6 | 1 | 7 | |
Class R-1 | 142 | 11 | 10 | Not applicable | |
Class R-2 | 1,053 | 207 | 488 | Not applicable | |
Class R-3 | 976 | 259 | 122 | Not applicable | |
Class R-4 | 167 | 89 | 8 | Not applicable | |
Class R-5 | Not applicable | 286 | 4 | Not applicable | |
Total | $54,368 | $15,317 | $2,725 | $859 | $365 |
* Class F-2 was offered beginning August 1, 2008.
† Amount less than one thousand.
Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $(169,000), shown on the accompanying financial statements, includes $415,000 in current fees (either paid in cash or deferred) and a net decrease of $584,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
5. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales* | Reinvestments of dividends and distributions | Repurchases* | Net increase (decrease) | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended October 31, 2008 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,592,424 | 62,923 | $ | 1,036,100 | 37,601 | $ | (2,530,152 | ) | (100,436 | ) | $ | 98,372 | 88 | ||||||||||||||||||
Class B | 46,912 | 1,843 | 39,997 | 1,451 | (124,162 | ) | (4,942 | ) | (37,253 | ) | (1,648 | ) | ||||||||||||||||||||
Class C | 109,819 | 4,342 | 48,556 | 1,764 | (174,340 | ) | (6,962 | ) | (15,965 | ) | (856 | ) | ||||||||||||||||||||
Class F-1 | 141,671 | 5,596 | 31,676 | 1,151 | (198,056 | ) | (7,886 | ) | (24,709 | ) | (1,139 | ) | ||||||||||||||||||||
Class F-2† | 8,786 | 392 | 22 | 1 | (805 | ) | (38 | ) | 8,003 | 355 | ||||||||||||||||||||||
Class 529-A | 40,303 | 1,560 | 16,308 | 593 | (26,376 | ) | (1,035 | ) | 30,235 | 1,118 | ||||||||||||||||||||||
Class 529-B | 3,725 | 144 | 2,545 | 92 | (3,862 | ) | (154 | ) | 2,408 | 82 | ||||||||||||||||||||||
Class 529-C | 12,352 | 478 | 4,237 | 153 | (10,984 | ) | (430 | ) | 5,605 | 201 | ||||||||||||||||||||||
Class 529-E | 2,328 | 90 | 863 | 31 | (1,766 | ) | (70 | ) | 1,425 | 51 | ||||||||||||||||||||||
Class 529-F-1 | 2,081 | 80 | 512 | 19 | (1,423 | ) | (56 | ) | 1,170 | 43 | ||||||||||||||||||||||
Class R-1 | 7,468 | 292 | 822 | 30 | (3,955 | ) | (155 | ) | 4,335 | 167 | ||||||||||||||||||||||
Class R-2 | 43,021 | 1,674 | 8,774 | 319 | (43,645 | ) | (1,695 | ) | 8,150 | 298 | ||||||||||||||||||||||
Class R-3 | 49,191 | 1,917 | 13,326 | 485 | (59,453 | ) | (2,324 | ) | 3,064 | 78 | ||||||||||||||||||||||
Class R-4 | 29,233 | 1,118 | 4,503 | 164 | (21,368 | ) | (826 | ) | 12,368 | 456 | ||||||||||||||||||||||
Class R-5 | 161,112 | 6,137 | 19,437 | 710 | (53,938 | ) | (2,064 | ) | 126,611 | 4,783 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 2,250,426 | 88,586 | $ | 1,227,678 | 44,564 | $ | (3,254,285 | ) | (129,073 | ) | $ | 223,819 | 4,077 | ||||||||||||||||||
Year ended October 31, 2007 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,764,245 | 58,027 | $ | 687,421 | 23,069 | $ | (1,899,226 | ) | (62,416 | ) | $ | 552,440 | 18,680 | ||||||||||||||||||
Class B | 66,160 | 2,197 | 25,142 | 853 | (76,860 | ) | (2,542 | ) | 14,442 | 508 | ||||||||||||||||||||||
Class C | 160,389 | 5,325 | 28,963 | 985 | (124,676 | ) | (4,128 | ) | 64,676 | 2,182 | ||||||||||||||||||||||
Class F-1 | 139,532 | 4,593 | 20,118 | 677 | (119,805 | ) | (3,951 | ) | 39,845 | 1,319 | ||||||||||||||||||||||
Class 529-A | 45,897 | 1,515 | 9,661 | 324 | (19,288 | ) | (635 | ) | 36,270 | 1,204 | ||||||||||||||||||||||
Class 529-B | 4,953 | 164 | 1,469 | 50 | (2,861 | ) | (95 | ) | 3,561 | 119 | ||||||||||||||||||||||
Class 529-C | 15,317 | 508 | 2,355 | 80 | (7,519 | ) | (248 | ) | 10,153 | 340 | ||||||||||||||||||||||
Class 529-E | 2,856 | 94 | 493 | 17 | (1,207 | ) | (40 | ) | 2,142 | 71 | ||||||||||||||||||||||
Class 529-F-1 | 2,435 | 80 | 273 | 9 | (711 | ) | (24 | ) | 1,997 | 65 | ||||||||||||||||||||||
Class R-1 | 7,271 | 242 | 560 | 19 | (9,594 | ) | (323 | ) | (1,763 | ) | (62 | ) | ||||||||||||||||||||
Class R-2 | 52,002 | 1,724 | 5,138 | 174 | (38,885 | ) | (1,286 | ) | 18,255 | 612 | ||||||||||||||||||||||
Class R-3 | 63,083 | 2,084 | 8,958 | 303 | (82,359 | ) | (2,703 | ) | (10,318 | ) | (316 | ) | ||||||||||||||||||||
Class R-4 | 36,688 | 1,214 | 2,514 | 84 | (27,964 | ) | (921 | ) | 11,238 | 377 | ||||||||||||||||||||||
Class R-5 | 134,294 | 4,392 | 10,808 | 364 | (146,643 | ) | (4,871 | ) | (1,541 | ) | (115 | ) | ||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 2,495,122 | 82,159 | $ | 803,873 | 27,008 | $ | (2,557,598 | ) | (84,183 | ) | $ | 741,397 | 24,984 | ||||||||||||||||||
* Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
† Class F-2 was offered beginning August 1, 2008. |
6. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $3,680,885,000 and $4,758,354,000, respectively, during the year ended October 31, 2008.
Financial highlights (1)
(Loss) income from investment operations(2) | Dividends and distributions | |||||||||||||||
Net asset value, beginning of period | Net investment income | Net (losses) gains on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return (3) (4) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements /waivers | Ratio of expenses to average net assets after reimbursements /waivers (4) | Ratio of net income to average net assets (4) | ||||
Class A: | ||||||||||||||||
Year ended 10/31/2008 | $31.29 | $.60 | $ | (9.76) | $(9.16) | $(.64) | $(1.29) | $(1.93) | $20.20 | (30.85)% | $11,499 | .60% | .57% | 2.28% | ||
Year ended 10/31/2007 | 29.14 | .64 | 2.83 | 3.47 | (.61) | (.71) | (1.32) | 31.29 | 12.19 | 17,809 | .58 | .56 | 2.09 | |||
Year ended 10/31/2006 | 26.52 | .63 | 3.55 | 4.18 | (.55) | (1.01) | (1.56) | 29.14 | 16.40 | 16,044 | .58 | .55 | 2.31 | |||
Year ended 10/31/2005 | 25.10 | .54 | 1.41 | 1.95 | (.48) | (.05) | (.53) | 26.52 | 7.80 | 13,850 | .58 | .56 | 2.06 | |||
Year ended 10/31/2004 | 23.17 | .48 | 2.00 | 2.48 | (.46) | (.09) | (.55) | 25.10 | 10.81 | 12,044 | .60 | .60 | 1.97 | |||
Class B: | ||||||||||||||||
Year ended 10/31/2008 | 31.06 | .40 | (9.69) | (9.29) | (.43) | (1.29) | (1.72) | 20.05 | (31.37) | 455 | 1.37 | 1.34 | 1.52 | |||
Year ended 10/31/2007 | 28.95 | .40 | 2.80 | 3.20 | (.38) | (.71) | (1.09) | 31.06 | 11.28 | 756 | 1.36 | 1.33 | 1.32 | |||
Year ended 10/31/2006 | 26.36 | .41 | 3.53 | 3.94 | (.34) | (1.01) | (1.35) | 28.95 | 15.48 | 689 | 1.37 | 1.34 | 1.52 | |||
Year ended 10/31/2005 | 24.94 | .33 | 1.41 | 1.74 | (.27) | (.05) | (.32) | 26.36 | 7.00 | 595 | 1.38 | 1.36 | 1.26 | |||
Year ended 10/31/2004 | 23.04 | .29 | 1.98 | 2.27 | (.28) | (.09) | (.37) | 24.94 | 9.92 | 497 | 1.39 | 1.39 | 1.18 | |||
Class C: | ||||||||||||||||
Year ended 10/31/2008 | 31.00 | .38 | (9.66) | (9.28) | (.42) | (1.29) | (1.71) | 20.01 | (31.40) | 578 | 1.42 | 1.39 | 1.47 | |||
Year ended 10/31/2007 | 28.89 | .38 | 2.80 | 3.18 | (.36) | (.71) | (1.07) | 31.00 | 11.26 | 922 | 1.41 | 1.38 | 1.27 | |||
Year ended 10/31/2006 | 26.31 | .39 | 3.52 | 3.91 | (.32) | (1.01) | (1.33) | 28.89 | 15.41 | 796 | 1.42 | 1.40 | 1.46 | |||
Year ended 10/31/2005 | 24.90 | .31 | 1.41 | 1.72 | (.26) | (.05) | (.31) | 26.31 | 6.91 | 666 | 1.44 | 1.42 | 1.19 | |||
Year ended 10/31/2004 | 23.01 | .27 | 1.97 | 2.24 | (.26) | (.09) | (.35) | 24.90 | 9.82 | 500 | 1.47 | 1.46 | 1.09 | |||
Class F-1: | ||||||||||||||||
Year ended 10/31/2008 | 31.21 | .59 | (9.74) | (9.15) | (.63) | (1.29) | (1.92) | 20.14 | (30.89) | 347 | .64 | .61 | 2.25 | |||
Year ended 10/31/2007 | 29.07 | .62 | 2.83 | 3.45 | (.60) | (.71) | (1.31) | 31.21 | 12.14 | 573 | .63 | .60 | 2.05 | |||
Year ended 10/31/2006 | 26.46 | .62 | 3.54 | 4.16 | (.54) | (1.01) | (1.55) | 29.07 | 16.36 | 495 | .62 | .60 | 2.26 | |||
Year ended 10/31/2005 | 25.04 | .52 | 1.41 | 1.93 | (.46) | (.05) | (.51) | 26.46 | 7.71 | 434 | .67 | .65 | 1.97 | |||
Year ended 10/31/2004 | 23.12 | .45 | 2.00 | 2.45 | (.44) | (.09) | (.53) | 25.04 | 10.70 | 324 | .70 | .70 | 1.86 | |||
Class F-2: | ||||||||||||||||
Period from 8/5/2008 to 10/31/2008 | 25.64 | .12 | (5.39) | (5.27) | (.17) | - | (.17) | 20.20 | (20.69) | 7 | .09 | .08 | .54 | |||
Class 529-A: | ||||||||||||||||
Year ended 10/31/2008 | 31.25 | .57 | (9.74) | (9.17) | (.62) | (1.29) | (1.91) | 20.17 | (30.93) | 189 | .69 | .66 | 2.19 | |||
Year ended 10/31/2007 | 29.11 | .60 | 2.83 | 3.43 | (.58) | (.71) | (1.29) | 31.25 | 12.07 | 259 | .68 | .65 | 1.99 | |||
Year ended 10/31/2006 | 26.50 | .60 | 3.55 | 4.15 | (.53) | (1.01) | (1.54) | 29.11 | 16.29 | 206 | .66 | .64 | 2.21 | |||
Year ended 10/31/2005 | 25.07 | .51 | 1.42 | 1.93 | (.45) | (.05) | (.50) | 26.50 | 7.71 | 151 | .70 | .68 | 1.93 | |||
Year ended 10/31/2004 | 23.15 | .45 | 2.00 | 2.45 | (.44) | (.09) | (.53) | 25.07 | 10.70 | 99 | .71 | .71 | 1.85 | |||
Class 529-B: | ||||||||||||||||
Year ended 10/31/2008 | 31.14 | .36 | (9.71) | (9.35) | (.40) | (1.29) | (1.69) | 20.10 | (31.47) | 32 | 1.49 | 1.46 | 1.39 | |||
Year ended 10/31/2007 | 29.01 | .36 | 2.82 | 3.18 | (.34) | (.71) | (1.05) | 31.14 | 11.19 | 46 | 1.48 | 1.46 | 1.19 | |||
Year ended 10/31/2006 | 26.42 | .37 | 3.53 | 3.90 | (.30) | (1.01) | (1.31) | 29.01 | 15.29 | 40 | 1.50 | 1.47 | 1.38 | |||
Year ended 10/31/2005 | 25.00 | .29 | 1.41 | 1.70 | (.23) | (.05) | (.28) | 26.42 | 6.79 | 32 | 1.55 | 1.53 | 1.09 | |||
Year ended 10/31/2004 | 23.09 | .24 | 1.99 | 2.23 | (.23) | (.09) | (.32) | 25.00 | 9.72 | 24 | 1.59 | 1.59 | .97 | |||
Class 529-C: | ||||||||||||||||
Year ended 10/31/2008 | 31.13 | .36 | (9.70) | (9.34) | (.40) | (1.29) | (1.69) | 20.10 | (31.45) | 54 | 1.48 | 1.46 | 1.40 | |||
Year ended 10/31/2007 | 29.01 | .36 | 2.81 | 3.17 | (.34) | (.71) | (1.05) | 31.13 | 11.17 | 77 | 1.48 | 1.45 | 1.19 | |||
Year ended 10/31/2006 | 26.42 | .38 | 3.53 | 3.91 | (.31) | (1.01) | (1.32) | 29.01 | 15.31 | 62 | 1.49 | 1.46 | 1.39 | |||
Year ended 10/31/2005 | 25.00 | .29 | 1.41 | 1.70 | (.23) | (.05) | (.28) | 26.42 | 6.82 | 48 | 1.54 | 1.52 | 1.10 | |||
Year ended 10/31/2004 | 23.09 | .24 | 1.99 | 2.23 | (.23) | (.09) | (.32) | 25.00 | 9.74 | 33 | 1.58 | 1.58 | .98 | |||
Class 529-E: | ||||||||||||||||
Year ended 10/31/2008 | 31.17 | .50 | (9.72) | (9.22) | (.54) | (1.29) | (1.83) | 20.12 | (31.11) | 10 | .97 | .95 | 1.91 | |||
Year ended 10/31/2007 | 29.04 | .51 | 2.82 | 3.33 | (.49) | (.71) | (1.20) | 31.17 | 11.74 | 14 | .97 | .95 | 1.70 | |||
Year ended 10/31/2006 | 26.44 | .52 | 3.54 | 4.06 | (.45) | (1.01) | (1.46) | 29.04 | 15.92 | 11 | .97 | .95 | 1.90 | |||
Year ended 10/31/2005 | 25.02 | .42 | 1.41 | 1.83 | (.36) | (.05) | (.41) | 26.44 | 7.35 | 8 | 1.02 | 1.00 | 1.61 | |||
Year ended 10/31/2004 | 23.10 | .37 | 1.99 | 2.36 | (.35) | (.09) | (.44) | 25.02 | 10.32 | 6 | 1.06 | 1.06 | 1.50 | |||
Class 529-F-1: | ||||||||||||||||
Year ended 10/31/2008 | $31.28 | $.63 | $ | (9.76) | $(9.13) | $(.67) | $(1.29) | $(1.96) | $20.19 | (30.78)% | $6 | .47% | .45% | 2.41% | ||
Year ended 10/31/2007 | 29.13 | .66 | 2.84 | 3.50 | (.64) | (.71) | (1.35) | 31.28 | 12.32 | 8 | .47 | .45 | 2.19 | |||
Year ended 10/31/2006 | 26.52 | .65 | 3.55 | 4.20 | (.58) | (1.01) | (1.59) | 29.13 | 16.49 | 5 | .47 | .44 | 2.37 | |||
Year ended 10/31/2005 | 25.08 | .52 | 1.42 | 1.94 | (.45) | (.05) | (.50) | 26.52 | 7.77 | 3 | .64 | .62 | 1.99 | |||
Year ended 10/31/2004 | 23.16 | .43 | 2.00 | 2.43 | (.42) | (.09) | (.51) | 25.08 | 10.58 | 2 | .81 | .80 | 1.75 | |||
Class R-1: | ||||||||||||||||
Year ended 10/31/2008 | 31.10 | .38 | (9.70) | (9.32) | (.42) | (1.29) | (1.71) | 20.07 | (31.41) | 13 | 1.41 | 1.38 | 1.47 | |||
Year ended 10/31/2007 | 28.97 | .37 | 2.80 | 3.17 | (.33) | (.71) | (1.04) | 31.10 | 11.18 | 14 | 1.45 | 1.43 | 1.22 | |||
Year ended 10/31/2006 | 26.38 | .38 | 3.54 | 3.92 | (.32) | (1.01) | (1.33) | 28.97 | 15.38 | 15 | 1.46 | 1.43 | 1.42 | |||
Year ended 10/31/2005 | 24.97 | .31 | 1.40 | 1.71 | (.25) | (.05) | (.30) | 26.38 | 6.86 | 12 | 1.48 | 1.45 | 1.17 | |||
Year ended 10/31/2004 | 23.06 | .26 | 1.99 | 2.25 | (.25) | (.09) | (.34) | 24.97 | 9.83 | 10 | 1.51 | 1.49 | 1.07 | |||
Class R-2: | ||||||||||||||||
Year ended 10/31/2008 | 31.06 | .36 | (9.69) | (9.33) | (.39) | (1.29) | (1.68) | 20.05 | (31.47) | 110 | 1.51 | 1.48 | 1.37 | |||
Year ended 10/31/2007 | 28.94 | .38 | 2.81 | 3.19 | (.36) | (.71) | (1.07) | 31.06 | 11.24 | 161 | 1.49 | 1.41 | 1.24 | |||
Year ended 10/31/2006 | 26.36 | .39 | 3.52 | 3.91 | (.32) | (1.01) | (1.33) | 28.94 | 15.36 | 133 | 1.61 | 1.41 | 1.43 | |||
Year ended 10/31/2005 | 24.95 | .31 | 1.41 | 1.72 | (.26) | (.05) | (.31) | 26.36 | 6.90 | 99 | 1.65 | 1.42 | 1.19 | |||
Year ended 10/31/2004 | 23.05 | .27 | 1.99 | 2.26 | (.27) | (.09) | (.36) | 24.95 | 9.86 | 64 | 1.76 | 1.45 | 1.10 | |||
Class R-3: | ||||||||||||||||
Year ended 10/31/2008 | 31.14 | .50 | (9.71) | (9.21) | (.54) | (1.29) | (1.83) | 20.10 | (31.10) | 149 | .96 | .94 | 1.92 | |||
Year ended 10/31/2007 | 29.01 | .52 | 2.81 | 3.33 | (.49) | (.71) | (1.20) | 31.14 | 11.76 | 228 | .97 | .95 | 1.71 | |||
Year ended 10/31/2006 | 26.41 | .52 | 3.54 | 4.06 | (.45) | (1.01) | (1.46) | 29.01 | 15.94 | 222 | .96 | .93 | 1.92 | |||
Year ended 10/31/2005 | 25.00 | .44 | 1.40 | 1.84 | (.38) | (.05) | (.43) | 26.41 | 7.37 | 181 | .98 | .96 | 1.65 | |||
Year ended 10/31/2004 | 23.09 | .37 | 1.99 | 2.36 | (.36) | (.09) | (.45) | 25.00 | 10.32 | 113 | 1.05 | 1.04 | 1.49 | |||
Class R-4: | ||||||||||||||||
Year ended 10/31/2008 | 31.23 | .58 | (9.74) | (9.16) | (.62) | (1.29) | (1.91) | 20.16 | (30.90) | 54 | .66 | .64 | 2.21 | |||
Year ended 10/31/2007 | 29.09 | .61 | 2.82 | 3.43 | (.58) | (.71) | (1.29) | 31.23 | 12.08 | 70 | .67 | .65 | 2.00 | |||
Year ended 10/31/2006 | 26.48 | .60 | 3.54 | 4.14 | (.52) | (1.01) | (1.53) | 29.09 | 16.26 | 55 | .68 | .66 | 2.20 | |||
Year ended 10/31/2005 | 25.06 | .51 | 1.41 | 1.92 | (.45) | (.05) | (.50) | 26.48 | 7.69 | 43 | .69 | .67 | 1.94 | |||
Year ended 10/31/2004 | 23.14 | .46 | 1.99 | 2.45 | (.44) | (.09) | (.53) | 25.06 | 10.69 | 34 | .70 | .70 | 1.86 | |||
Class R-5: | ||||||||||||||||
Year ended 10/31/2008 | 31.29 | .65 | (9.75) | (9.10) | (.70) | (1.29) | (1.99) | 20.20 | (30.69) | 279 | .36 | .34 | 2.52 | |||
Year ended 10/31/2007 | 29.14 | .71 | 2.82 | 3.53 | (.67) | (.71) | (1.38) | 31.29 | 12.42 | 283 | .37 | .35 | 2.32 | |||
Year ended 10/31/2006 | 26.53 | .68 | 3.54 | 4.22 | (.60) | (1.01) | (1.61) | 29.14 | 16.58 | 267 | .38 | .35 | 2.49 | |||
Year ended 10/31/2005 | 25.10 | .58 | 1.43 | 2.01 | (.53) | (.05) | (.58) | 26.53 | 8.05 | 198 | .39 | .36 | 2.22 | |||
Year ended 10/31/2004 | 23.17 | .53 | 2.00 | 2.53 | (.51) | (.09) | (.60) | 25.10 | 11.04 | 62 | .39 | .39 | 2.18 |
Year ended October 31 | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 23 | % | 19 | % | 19 | % | 22 | % | 17 | % |
(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. |
(2) Based on average shares outstanding. |
(3) Total returns exclude any applicable sales charges, including contingent deferred sales charges. |
(4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. |
During the periods shown, CRMC reduced fees for investment advisory services. In addition, during |
some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. |
See Notes to Financial Statements |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of American Mutual Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of American Mutual Fund, Inc. (the “Fund”), as of October 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of American Mutual Fund, Inc. as of October 31, 2008, 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 financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
December 10, 2008
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 certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended October 31, 2008:
Long-term capital gains | $ | 898,759,000 | ||
Qualified dividend income | 100 | % | ||
Corporate dividends received deduction | 100 | % | ||
U.S. government income that may be exempt from state taxation | $ | 10,851,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2009, to determine the calendar year amounts to be included on their 2008 tax returns. Shareholders should consult their tax advisers.
Expense example
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2008, through October 31, 2008).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 5/1/2008 | Ending account value 10/31/2008 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 757.30 | $ | 2.56 | .58 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,022.22 | 2.95 | .58 | ||||||||||||
Class B -- actual return | 1,000.00 | 754.36 | 5.91 | 1.34 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,018.40 | 6.80 | 1.34 | ||||||||||||
Class C -- actual return | 1,000.00 | 754.14 | 6.13 | 1.39 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,018.15 | 7.05 | 1.39 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 756.90 | 2.69 | .61 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,022.07 | 3.10 | .61 | ||||||||||||
Class F-2 -- actual return † | 1,000.00 | 793.11 | .75 | .35 | ||||||||||||
Class F-2 -- assumed 5% return † | 1,000.00 | 1,023.38 | 1.78 | .35 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 756.70 | 2.87 | .65 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.87 | 3.30 | .65 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 753.81 | 6.44 | 1.46 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.80 | 7.41 | 1.46 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 753.85 | 6.39 | 1.45 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.85 | 7.35 | 1.45 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 755.71 | 4.15 | .94 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,020.41 | 4.77 | .94 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 757.69 | 1.99 | .45 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.87 | 2.29 | .45 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 754.01 | 6.04 | 1.37 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,018.25 | 6.95 | 1.37 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 753.78 | 6.61 | 1.50 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.60 | 7.61 | 1.50 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 755.82 | 4.15 | .94 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,020.41 | 4.77 | .94 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 757.01 | 2.78 | .63 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.97 | 3.20 | .63 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 757.96 | 1.46 | .33 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,023.48 | 1.68 | .33 |
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 366 (to reflect the one-half year period).
† The period for the “annualized expense ratio” and “actual return” line is based on the number of days from August 5, 2008 (the initial sale of the share class), through October 31, 2008, and accordingly, is not representative of a full period. The “assumed 5% return” line is based on 184 days.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended September 30, 2008 (the most recent calendar quarter-end): | ||||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares — first sold 3/15/00 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares are | ||||||||||||
sold within six years of purchase | –23.39 | % | 4.44 | % | 5.03 | % | ||||||
Not reflecting CDSC | –19.60 | 4.78 | 5.03 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable | ||||||||||||
only if shares are sold within one year of purchase | –20.40 | 4.71 | 3.42 | |||||||||
Not reflecting CDSC | –19.64 | 4.71 | 3.42 | |||||||||
Class F-1 shares1 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –18.98 | 5.53 | 4.21 | |||||||||
Class F-2 shares1 — first sold 8/5/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | — | — | –7.54 | 2 | ||||||||
Class 529-A shares3 — first sold 2/19/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | –23.70 | 4.26 | 3.30 | |||||||||
Not reflecting maximum sales charge | –19.04 | 5.50 | 4.23 | |||||||||
Class 529-B shares3 — first sold 2/19/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | –23.47 | 4.28 | 3.33 | |||||||||
Not reflecting CDSC | –19.69 | 4.61 | 3.33 | |||||||||
Class 529-C shares3 — first sold 2/20/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | –20.44 | 4.63 | 3.20 | |||||||||
Not reflecting CDSC | –19.68 | 4.63 | 3.20 | |||||||||
Class 529-E shares1,3 — first sold 3/7/02 | –19.29 | 5.16 | 2.85 | |||||||||
Class 529-F-1 shares1,3 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –18.87 | 5.61 | 6.67 | |||||||||
1 These shares are sold without any initial or contingent deferred sales charge. | ||||||||||||
2 Results are cumulative total returns; they are not annualized. | ||||||||||||
3 Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee. |
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 26 and 27 for details.
For information regarding the differences among the various share classes, please refer to the fund’s prospectus.
Board of directors and other officers
“Independent” directors | ||
Year first | ||
elected | ||
a director | ||
Name and age | of the fund1 | Principal occupation(s) during past five years |
Mary Anne Dolan, 61 | 1993 | Founder and President, M.A.D., Inc. (communications |
Chairman of the Board | company); former Editor-in-Chief, The Los Angeles | |
(Independent and Non-Executive) | Herald Examiner | |
Martin Fenton, 73 | 1981 | Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities) |
William D. Jones, 53 | 2006 | Real estate developer/owner, President and CEO, CityLink Investment Corporation (acquires, develops and manages real estate ventures in selected urban communities) and City Scene Management Company (provides commercial asset and property management services) |
Mary Myers Kauppila, 54 | 1991 | Chairman and CEO, Ladera Management Company (private investment company); former owner and President, Energy Investment, Inc. |
William H. Kling, 66 | 2006 | President and CEO, American Public Media Group |
Bailey Morris-Eck, 64 | 1999 | Director and Programming Chair, WYPR Baltimore/Washington (public radio station); Senior Adviser, Financial News (London); Senior Fellow, Institute for International Economics; former Senior Associate and head of the Global Policy Initiative, Reuters Foundation |
Kirk P. Pendleton, 69 | 1998 | Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment) |
Olin C. Robison, Ph.D., 72 | 1991 | Fellow, The Oxford Centre for the Study of Christianity and Culture; Director, The Oxford Project on Religion and Public Policy; President Emeritus of the Salzburg Seminar; President Emeritus, Middlebury College |
Steven B. Sample, Ph.D., 68 | 1999 | President, University of Southern California |
“Independent” directors | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
overseen by | ||
Name and age | director | Other directorships3 held by director |
Mary Anne Dolan, 61 | 5 | None |
Chairman of the Board | ||
(Independent and Non-Executive | ||
Martin Fenton, 73 | 18 | None |
William D. Jones, 53 | 5 | Sempra Energy; SouthWest Water Company |
Mary Myers Kauppila, 54 | 6 | None |
William H. Kling, 66 | 7 | Irwin Financial Corporation |
Bailey Morris-Eck, 64 | 3 | None |
Kirk P. Pendleton, 69 | 7 | None |
Olin C. Robison, Ph.D., 72 | 3 | American Shared Hospital Services |
Steven B. Sample, Ph.D., 68 | 2 | Intermec, Inc. |
H. Frederick Christie, a director of the fund since 1972, retired from the board in December 2008. The directors thank Mr. Christie for his dedication and long service to the fund.
“Interested” directors4 | ||
Year first | ||
elected a | ||
director or | Principal occupation(s) during past five years and | |
Name, age and | officer of | positions held with affiliated entities or the principal |
position with fund | the fund1 | underwriter of the fund |
James K. Dunton, 70 | 1984 | Senior Vice President — Capital Research Global |
President and | Investors, Capital Research and Management | |
Vice Chairman of the Board | Company; Director, Capital Research and Management Company | |
“Interested” directors4 | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
Name, age and | overseen by | |
position with fund | director | Other directorships3 held by director |
James K. Dunton, 70 | 2 | None |
President and | ||
Vice Chairman of the Board | ||
Chairman emeritus | ||
Jon B. Lovelace, Jr., 81 | Chairman Emeritus, Capital Research and Management Company |
The fund’s statement of additional information includes additional information about fund directors and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all directors and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
Please see page 34 for footnotes.
Other officers | ||
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities or the |
position with fund | of the fund1 | principal underwriter of the fund |
Joyce E. Gordon, 52 | 2005 | Senior Vice President — Capital Research Global |
Executive Vice President | Investors, Capital Research and Management Company; Director, Capital Research and Management Company | |
James B. Lovelace, 52 | 2006 | Senior Vice President — Capital Research Global |
Senior Vice President | Investors, Capital Research and Management Company; Director, Capital Research and Management Company; Director, The Capital Group Companies, Inc.5 | |
Paul F. Roye, 55 | 2007 | Senior Vice President — Fund Business Management |
Senior Vice President | Group, Capital Research and Management Company; Director, American Funds Service Company;5 former Director of Investment Management, United States Securities and Exchange Commission | |
Christopher D. Buchbinder, 37 | 2006 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company;5 Director, Capital Research Company5 | |
William L. Robbins, 40 | 2004 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company;5 Director, Capital Research Company5 | |
James Terrile, 43 | 2007 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company5 | |
Vincent P. Corti, 52 | 1994 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Karl C. Grauman, 40 | 2006 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Courtney R. Taylor, 33 | 2007 | Assistant Vice President — Fund Business |
Assistant Secretary | Management Group, Capital Research and Management Company | |
Jeffrey P. Regal, 37 | 2003 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
1Directors and officers of the fund serve until their resignation, removal or retirement. |
2Capital Research and Management Company manages the American Funds, consisting of 31 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® Inc., which is composed of nine funds and is available through tax-deferred retirement plans and IRAs; and Endowments, which is composed of two portfolios and is available to certain nonprofit organizations. |
3This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each director as a director of a public company or a registered investment company. |
4“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 affiliated entities (including the fund’s principal underwriter). |
5Company affiliated with Capital Research and Management Company. |
Offices of the fund and of the investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Counsel
O’Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.
A complete October 31, 2008, portfolio of American Mutual Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
American Mutual Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.
This report is for the information of shareholders of American Mutual Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2008, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
[logo - American Funds®]
The right choice for the long term®
What makes American Funds different?
For more than 75 years, we have followed a consistent philosophy to benefit our investors. Our 31 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.
Our unique combination of strengths includes these five factors:
• | A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. |
• | An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets. |
• | The multiple portfolio counselor system |
Our unique method of portfolio management, developed 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives. |
• | Experienced investment professionals |
American Funds portfolio counselors have an average of 26 years of investment experience, providing a wealth of knowledge and experience that few organizations have. |
• | A commitment to low operating expenses |
The American Funds provide exceptional value for shareholders, with operating expenses that are among the lowest in the mutual fund industry. |
American Funds span a range of investment objectives
• | Growth funds |
Emphasis on long-term growth through stocks |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World FundSM |
SMALLCAP World Fund® |
• | Growth-and-income funds |
Emphasis on long-term growth and dividends through stocks |
> | American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
• | Equity-income funds |
Emphasis on above-average income and growth through stocks and/or bonds |
Capital Income Builder® |
The Income Fund of America® |
• | Balanced fund |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
• | Bond funds |
Emphasis on current income through bonds |
American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM |
U.S. Government Securities FundSM |
• | Tax-exempt bond funds |
Emphasis on tax-exempt current income through municipal bonds |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
• | Money market funds |
The Cash Management Trust of America® |
The Tax-Exempt Money Fund of AmericaSM |
The U.S. Treasury Money Fund of AmericaSM |
• | American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGEAR-903-1208P
Litho in USA AGD/L/8052-S16810
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
ITEM 2 – Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los Angeles, California 90071.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that William D. Jones, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such. Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2007 | $71,000 | |||
2008 | $75,000 | |||
b) Audit-Related Fees: | ||||
2007 | $5,000 | |||
2008 | $5,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2007 | $6,000 | |||
2008 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2007 | None | |||
2008 | None | |||
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below): | ||||
a) Not Applicable | ||||
b) Audit-Related Fees: | ||||
2007 | $897,000 | |||
2008 | $992,000 | |||
The audit–related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2007 | $2,000 | |||
2008 | $8,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2007 | None | |||
2008 | None | |||
The Registrant’s audit committee will pre-approve all audit and permissible non-audit services that the committee considers compatible with maintaining the independent registered public accounting firm’s independence. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser, and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant and the adviser and affiliates that provide ongoing services to the Registrant were $1,195,000 for fiscal year 2007 and $1,289,000 for fiscal year 2008. The non-audit services represented by these amounts were brought to the attention of the committee and considered to be compatible with maintaining the auditors’ independence.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
[logo – American Funds®]
American Mutual Fund®
Investment portfolio
October 31, 2008
Common stocks — 78.63% | Shares | Value (000) | ||||||
ENERGY — 8.01% | ||||||||
Apache Corp. | 125,000 | $ | 10,291 | |||||
BJ Services Co. | 3,205,937 | 41,196 | ||||||
Chevron Corp. | 3,519,304 | 262,540 | ||||||
ConocoPhillips | 2,125,000 | 110,542 | ||||||
Devon Energy Corp. | 2,225,000 | 179,914 | ||||||
EOG Resources, Inc. | 340,000 | 27,513 | ||||||
Halliburton Co. | 1,200,000 | 23,748 | ||||||
Hess Corp. | 1,939,000 | 116,747 | ||||||
Marathon Oil Corp. | 5,353,600 | 155,790 | ||||||
Royal Dutch Shell PLC, Class A (ADR) | 1,735,000 | 96,830 | ||||||
Schlumberger Ltd. | 880,400 | 45,473 | ||||||
Spectra Energy Corp | 950,000 | 18,364 | ||||||
Sunoco, Inc. | 500,000 | 15,250 | ||||||
1,104,198 | ||||||||
MATERIALS — 3.38% | ||||||||
Air Products and Chemicals, Inc. | 1,200,000 | 69,756 | ||||||
Dow Chemical Co. | 750,000 | 20,002 | ||||||
E.I. du Pont de Nemours and Co. | 750,000 | 24,000 | ||||||
International Paper Co. | 1,250,000 | 21,525 | ||||||
MeadWestvaco Corp. | 5,000,000 | 70,150 | ||||||
Monsanto Co. | 910,000 | 80,972 | ||||||
Nucor Corp. | 1,060,000 | 42,941 | ||||||
Potash Corp. of Saskatchewan Inc. | 610,000 | 52,009 | ||||||
Praxair, Inc. | 1,000,000 | 65,150 | ||||||
Weyerhaeuser Co. | 500,000 | 19,110 | ||||||
465,615 | ||||||||
INDUSTRIALS — 13.39% | ||||||||
3M Co. | 1,412,000 | 90,792 | ||||||
Avery Dennison Corp. | 3,375,000 | 118,192 | ||||||
Boeing Co. | 500,000 | 26,135 | ||||||
Burlington Northern Santa Fe Corp. | 1,535,000 | 136,707 | ||||||
Cintas Corp. | 1,945,000 | 46,097 | ||||||
Eaton Corp. | 400,000 | 17,840 | ||||||
Emerson Electric Co. | 1,300,000 | 42,549 | ||||||
General Dynamics Corp. | 770,000 | 46,446 | ||||||
General Electric Co. | 15,387,500 | 300,210 | ||||||
Illinois Tool Works Inc. | 428,000 | 14,291 | ||||||
Ingersoll-Rand Co. Ltd., Class A | 1,300,000 | 23,985 | ||||||
Lockheed Martin Corp. | 910,000 | 77,396 | ||||||
Norfolk Southern Corp. | 1,485,500 | 89,041 | ||||||
Northrop Grumman Corp. | 1,000,000 | 46,890 | ||||||
Pentair, Inc. | 1,200,000 | 33,168 | ||||||
Pitney Bowes Inc. | 3,050,000 | 75,579 | ||||||
R.R. Donnelley & Sons Co. | 5,033,457 | 83,404 | ||||||
Rockwell Automation | 1,250,000 | 34,588 | ||||||
Southwest Airlines Co. | 5,440,000 | 64,083 | ||||||
Tyco International Ltd. | 1,245,300 | 31,481 | ||||||
United Parcel Service, Inc., Class B | 3,550,000 | 187,369 | ||||||
United Technologies Corp. | 3,700,000 | 203,352 | ||||||
Waste Management, Inc. | 1,800,000 | 56,214 | ||||||
1,845,809 | ||||||||
CONSUMER DISCRETIONARY — 7.38% | ||||||||
Brunswick Corp. | 3,907,769 | 13,560 | ||||||
Carnival Corp., units | 1,475,000 | 37,465 | ||||||
Darden Restaurants, Inc. | 2,800,000 | 62,076 | ||||||
Harley-Davidson, Inc. | 1,508,000 | 36,916 | ||||||
Home Depot, Inc. | 750,000 | 17,693 | ||||||
Honda Motor Co., Ltd. (ADR) | 300,000 | 7,431 | ||||||
Johnson Controls, Inc. | 4,500,000 | 79,785 | ||||||
Leggett & Platt, Inc. | 3,753,400 | 65,159 | ||||||
Lowe’s Companies, Inc. | 3,971,773 | 86,187 | ||||||
Magna International Inc., Class A | 1,982,900 | 67,042 | ||||||
Mattel, Inc. | 4,100,000 | 61,582 | ||||||
News Corp., Class A | 2,350,000 | 25,004 | ||||||
Omnicom Group Inc. | 1,500,000 | 44,310 | ||||||
Ross Stores, Inc. | 1,000,000 | 32,690 | ||||||
Royal Caribbean Cruises Ltd. | 4,400,000 | 59,664 | ||||||
Target Corp. | 2,670,000 | 107,120 | ||||||
Time Warner Inc. | 7,836,900 | 79,074 | ||||||
VF Corp. | 1,150,000 | 63,365 | ||||||
Whirlpool Corp. | 300,000 | 13,995 | ||||||
YUM! Brands, Inc. | 1,980,000 | 57,440 | ||||||
1,017,558 | ||||||||
CONSUMER STAPLES — 7.27% | ||||||||
Avon Products, Inc. | 3,250,000 | 80,697 | ||||||
Coca-Cola Co. | 1,750,000 | 77,105 | ||||||
ConAgra Foods, Inc. | 4,018,068 | 69,995 | ||||||
General Mills, Inc. | 900,000 | 60,966 | ||||||
H.J. Heinz Co. | 1,863,600 | 81,663 | ||||||
Kellogg Co. | 1,585,600 | 79,946 | ||||||
Kimberly-Clark Corp. | 2,410,000 | 147,709 | ||||||
PepsiCo, Inc. | 3,710,000 | 211,507 | ||||||
Procter & Gamble Co. | 810,000 | 52,277 | ||||||
Walgreen Co. | 2,300,000 | 58,558 | ||||||
Wal-Mart Stores, Inc. | 1,465,000 | 81,762 | ||||||
1,002,185 | ||||||||
HEALTH CARE — 8.42% | ||||||||
Abbott Laboratories | 3,635,000 | 200,470 | ||||||
Amgen Inc.1 | 1,130,000 | 67,676 | ||||||
AstraZeneca PLC (ADR) | 1,295,000 | 54,986 | ||||||
Bristol-Myers Squibb Co. | 9,182,200 | 188,694 | ||||||
Cardinal Health, Inc. | 2,020,000 | 77,164 | ||||||
Covidien Ltd. | 784,500 | 34,746 | ||||||
Eli Lilly and Co. | 2,900,000 | 98,078 | ||||||
Johnson & Johnson | 600,000 | 36,804 | ||||||
Medtronic, Inc. | 3,007,000 | 121,272 | ||||||
Merck & Co., Inc. | 2,740,000 | 84,803 | ||||||
Pfizer Inc | 7,145,000 | 126,538 | ||||||
Schering-Plough Corp. | 4,800,000 | 69,552 | ||||||
1,160,783 | ||||||||
FINANCIALS — 4.97% | ||||||||
Allstate Corp. | 1,200,000 | 31,668 | ||||||
American International Group, Inc. | 2,154,000 | 4,114 | ||||||
Arthur J. Gallagher & Co. | 867,331 | 21,128 | ||||||
Bank of America Corp. | 1,000,000 | 24,170 | ||||||
Bank of New York Mellon Corp. | 3,746,000 | 122,120 | ||||||
Capital One Financial Corp. | 735,000 | 28,753 | ||||||
Citigroup Inc. | 5,128,000 | 69,997 | ||||||
Fannie Mae | 1,050,000 | 998 | ||||||
Freddie Mac | 800,000 | 800 | ||||||
JPMorgan Chase & Co. | 4,072,000 | 167,970 | ||||||
Lincoln National Corp. | 1,000,200 | 17,243 | ||||||
Marsh & McLennan Companies, Inc. | 500,000 | 14,660 | ||||||
MGIC Investment Corp. | 2,440,000 | 9,467 | ||||||
PNC Financial Services Group, Inc. | 1,000,000 | 66,670 | ||||||
Travelers Companies, Inc. | 1,000,000 | 42,550 | ||||||
U.S. Bancorp | 1,750,000 | 52,168 | ||||||
XL Capital Ltd., Class A | 1,029,089 | 9,982 | ||||||
684,458 | ||||||||
INFORMATION TECHNOLOGY — 13.20% | ||||||||
Automatic Data Processing, Inc. | 3,800,000 | 132,810 | ||||||
Cisco Systems, Inc.1 | 3,950,000 | 70,191 | ||||||
Hewlett-Packard Co. | 4,750,000 | 181,830 | ||||||
Intel Corp. | 10,640,000 | 170,240 | ||||||
International Business Machines Corp. | 3,090,000 | 287,277 | ||||||
KLA-Tencor Corp. | 1,242,000 | 28,876 | ||||||
Linear Technology Corp. | 2,345,000 | 53,185 | ||||||
Maxim Integrated Products, Inc. | 1,700,000 | 23,120 | ||||||
Microchip Technology Inc. | 7,056,625 | 173,805 | ||||||
Microsoft Corp. | 14,335,998 | 320,123 | ||||||
Nokia Corp. (ADR) | 500,000 | 7,590 | ||||||
Oracle Corp.1 | 8,485,000 | 155,191 | ||||||
SAP AG (ADR) | 2,281,000 | 80,588 | ||||||
Texas Instruments Inc. | 4,100,000 | 80,196 | ||||||
Tyco Electronics Ltd. | 900,000 | 17,496 | ||||||
Xilinx, Inc. | 1,970,000 | 36,287 | ||||||
1,818,805 | ||||||||
TELECOMMUNICATION SERVICES — 4.39% | ||||||||
AT&T Inc. | 8,820,597 | 236,127 | ||||||
Embarq Corp. | 5,214,250 | 156,428 | ||||||
Verizon Communications Inc. | 7,162,334 | 212,506 | ||||||
605,061 | ||||||||
UTILITIES — 6.86% | ||||||||
Ameren Corp. | 3,953,680 | 128,297 | ||||||
American Electric Power Co., Inc. | 1,435,000 | 46,824 | ||||||
Dominion Resources, Inc. | 2,295,200 | 83,270 | ||||||
DTE Energy Co. | 750,000 | 26,475 | ||||||
Duke Energy Corp. | 3,800,000 | 62,244 | ||||||
Exelon Corp. | 2,788,720 | 151,260 | ||||||
FirstEnergy Corp. | 1,620,000 | 84,499 | ||||||
PPL Corp. | 2,384,000 | 78,243 | ||||||
Progress Energy, Inc. | 200,000 | 7,874 | ||||||
Public Service Enterprise Group Inc. | 1,975,000 | 55,596 | ||||||
Questar Corp. | 3,000,000 | 103,380 | ||||||
Southern Co. | 1,000,000 | 34,340 | ||||||
Xcel Energy Inc. | 4,745,000 | 82,658 | ||||||
944,960 | ||||||||
MISCELLANEOUS — 1.36% | ||||||||
Other common stocks in initial period of acquisition | 186,953 | |||||||
Total common stocks (cost: $12,480,527,000) | 10,836,385 | |||||||
Preferred stocks — 1.17% | ||||||||
FINANCIALS — 1.17% | ||||||||
Bank of America Corp., Series M, 8.125% noncumulative2 | 100,000 | 77,618 | ||||||
Citigroup Inc., Series E, 8.40%2 | 85,000,000 | 59,190 | ||||||
JPMorgan Chase & Co., Series I, 7.90%2 | 25,000 | 20,313 | ||||||
Fannie Mae, Series T, 8.25% noncumulative | 2,000,000 | 3,880 | ||||||
Total preferred stocks (cost: $260,793,000) | 161,001 | |||||||
Convertible securities — 0.57% | ||||||||
FINANCIALS — 0.49% | ||||||||
American International Group, Inc. 8.50% convertible preferred 2011, units | 875,034 | 3,894 | ||||||
Citigroup Inc., Series D, 7.00% noncumulative convertible preferred3,4 | 1,725,000 | 58,340 | ||||||
Fannie Mae, Series 2008-1, 8.75% noncumulative convertible preferred | 556,000 | 767 | ||||||
SLM Corp., Series C, 7.25% convertible preferred 2010 | 9,600 | 4,896 | ||||||
67,897 | ||||||||
MISCELLANEOUS — 0.08% | ||||||||
Other convertible securities in initial period of acquisition | 10,194 | |||||||
Total convertible securities (cost: $214,323,000) | 78,091 | |||||||
Principal amount | Value | |||||||
Bonds & notes — 0.77% | (000 | ) | (000 | ) | ||||
INDUSTRIALS — 0.33% | ||||||||
General Electric Capital Corp., Series A, 4.80% 2013 | $ | 50,000 | $ | 44,978 | ||||
HEALTH CARE — 0.12% | ||||||||
Amgen Inc. 6.90% 2038 | 20,000 | 17,151 | ||||||
FINANCIALS — 0.32% | ||||||||
KeyCorp 6.50% 2013 | 50,000 | 44,063 | ||||||
Total bonds & notes (cost: $119,760,000) | 106,192 | |||||||
Short-term securities — 18.70% | ||||||||
AT&T Inc. 2.12% due 11/10/20085 | 45,000 | 44,973 | ||||||
Bank of America Corp. 2.69% due 11/18/2008 | 24,800 | 24,760 | ||||||
Becton, Dickinson and Co. 1.65% due 11/3/2008 | 17,736 | 17,734 | ||||||
Chevron Funding Corp. 1.95% due 11/28/2008 | 75,000 | 74,886 | ||||||
Coca-Cola Co. 1.75%–2.15% due 11/5/2008–1/16/20095 | 157,000 | 156,839 | ||||||
Eaton Corp. 2.35% due 11/6/20085 | 50,000 | 49,980 | ||||||
Estée Lauder Companies Inc. 2.10% due 12/12/20085 | 15,000 | 14,925 | ||||||
Fannie Mae 1.55%–2.65% due 12/3/2008–2/24/2009 | 144,400 | 144,010 | ||||||
Federal Home Loan Bank 1.30%–3.10% due 11/3/2008–4/13/2009 | �� | 277,000 | 275,809 | |||||
Freddie Mac due 1.30%–2.50% due 12/8/2008–4/7/2009 | 385,082 | 383,396 | ||||||
Harvard University 2.03% due 11/4/2008 | 25,000 | 24,994 | ||||||
Hewlett-Packard Co. 2.55%–2.95% due 11/3–12/16/20085 | 121,900 | 121,595 | ||||||
Honeywell International Inc. 2.00%–2.08% due 11/13–12/12/20085 | 100,000 | 99,702 | ||||||
Illinois Tool Works Inc. 2.09% due 11/12/2008 | 50,000 | 49,965 | ||||||
International Bank for Reconstruction and Development 1.90%–2.10% due 1/13–1/20/2009 | 44,100 | 43,913 | ||||||
John Deere Capital Corp. 2.50% due 1/15/20095 | 33,700 | 33,522 | ||||||
Johnson & Johnson due 1.35%–2.05% due 11/7–12/22/20085 | 103,400 | 103,156 | ||||||
Merck & Co. Inc. 1.80%–2.15% due 11/14–12/12/2008 | 134,500 | 134,224 | ||||||
Pfizer Inc 2.09%–2.28% due 11/7/2008–1/7/20095 | 119,500 | 119,141 | ||||||
Private Export Funding Corp. 2.25% due 11/18/20085 | 21,400 | 21,369 | ||||||
Procter & Gamble International Funding S.C.A. 1.85%–2.15% due 11/7/2008–1/29/20095 | 238,305 | 237,683 | ||||||
Target Corp. 1.80%–2.10% due 12/1–12/19/2008 | 37,600 | 37,482 | ||||||
U.S. Treasury Bills 0.44%–1.85% due 11/20/2008–4/9/2009 | 294,400 | 293,842 | ||||||
Wal-Mart Stores Inc. 2.20% due 12/2/20085 | 70,300 | 70,075 | ||||||
Total short-term securities (cost: $2,577,641,000) | 2,577,975 | |||||||
Total investment securities (cost: $15,653,044,000) | 13,759,644 | |||||||
Other assets less liabilities | 21,973 | |||||||
Net assets | $ | 13,781,617 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Security did not produce income during the last 12 months.
2Coupon rate may change periodically.
3Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 1/15/2008 at a cost of $86,250,000)
may be subject to legal or contractual restrictions on resale.
4Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $58,340,000, which represented
0.42% of the net assets of the fund.
5Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration,
normally to qualified institutional buyers. The total value of all such securities was $1,072,960,000, which represented 7.79% of the net assets of the fund.
Key to abbreviation
ADR = American Depositary Receipts
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.
MFGEFP-903-1208O-S15858
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Directors of
American Mutual Fund, Inc.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of American Mutual Fund, Inc. (the “Fund”) as of October 31, 2008, and for the year then ended and have issued our report thereon dated December 10, 2008, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audit also included the Fund’s investment portfolio (the “Schedule”) as of October 31, 2008, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
December 10, 2008
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN MUTUAL FUND, INC. | |
By /s/ James K. Dunton | |
James K. Dunton, Vice Chairman, President and Principal Executive Officer | |
Date: January 8, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ James K. Dunton |
James K. Dunton, Vice Chairman, President and Principal Executive Officer |
Date: January 8, 2009 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: January 8, 2009 |