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, 2009
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]
Annual report for the year ended October 31, 2009
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 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 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, so they may lose value. 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, 2009 (the most recent calendar quarter-end): | ||||||||||||
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 5.75% maximum sales charge | –9.10 | % | 0.76 | % | 3.02 | % |
The total annual fund operating expense ratio was 0.67% for Class A shares as of October 31, 2009.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. 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, 2009, calculated in accordance with the Securities and Exchange Commission formula, was 2.29%. The fund’s distribution rate for Class A shares as of that date was 2.98%. 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.
Equity investments are subject to market fluctuations. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow shareholders:
If you were to look at only the beginning and end of American Mutual Fund’s fiscal year, you might not appreciate what happened in the interval. You might even think that there had been little change.
But it was a momentous 12-month period by any measure. During the fiscal year ended October 31, 2009, investors were exposed to the steepest postwar decline in the stock market and the worst economic collapse since the 1930s — and the fastest stock market surge since 1938.
In the most precipitous months of the decline, American Mutual Fund (AMF) was aided by its inherent defensive characteristics of investing in high-quality, above-average, and income-producing equities. For every month of the past fiscal year until the low in early March of 2009, the fund fared well, compared with the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of large-company U.S. stocks. In the recovery since that time, AMF could not match the spectacular price gains following the worst market decline since the 1930s. However, taking the full 12-month period into account, AMF posted a gain of 11.3%, compared with 9.8% for the S&P 500.
In addition, AMF continued its long-term record of posting more favorable results than the broad equity market during significant stock market declines. As the chart on pages 10 and 11 shows, AMF has fallen less than the S&P 500 in all 13 major declines of 15% or more since the fund began operations in 1950. 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 decline to some extent. Of course, there have been periods when AMF has lagged the S&P 500, particularly in strong markets like this past spring and summer.
AMF’s downside strength supported its ability to post better results than the S&P 500 over the lifetime of the fund and, in particular, over periods like the last 10 years, when the S&P 500 sustained an average annual loss of 0.9%. Over that same period, AMF’s average annual total return was 3.2%. Over the fund’s 59-year lifetime, it has had an average annual total return of 11.5%, compared with 10.9% of the S&P 500.
[Begin Sidebar]
[photo of trees]
In this report | |
Special feature | |
6 | The road ahead for American Mutual Fund after a turbulent year |
Where does the fund go from here? Several American Mutual Fund decision-makers give us their perspectives. | |
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 2009 | |
For tax purposes, here are the income dividends Class A shareholders received in calendar year 2009. | |
Income dividends per share: | $0.15 paid 3/23/2009 |
$0.15 paid 6/22/2009 | |
$0.15 paid 9/21/2009 | |
$0.15 to be paid on 12/23/2009 | |
The fund will pay a special dividend from accumulated, undistributed income on 12/23/2009. | |
Form 1099-DIV, which provides the information you will need to prepare your federal income tax return for 2009, will be mailed to you with your American Funds Tax Guide in late January 2010. |
[End Sidebar]
Portfolio review
At fiscal year-end, the fund was 86% invested in equities with its largest concentration in industrials, information technology, health care and energy. Together these four constituted 56% of our equity exposure. Half the fund’s 10 largest holdings were in technology or energy companies. After a difficult 2008 fiscal year, many technology companies made positive contributions during the last 12 months. Three of the fund’s largest holdings had negative results, including Abbott Laboratories (–8.3%), AT&T (–4.1%) and ConocoPhillips (–3.5%).
In an ongoing effort to provide our shareholders with current income, AMF distributed dividend income above the amount offered by the S&P 500 for the fiscal year of 2009. AMF’s dividends per share for the fiscal year were 95% of those of a year earlier. This was achieved during a time when the S&P 500 companies cut dividend payments by 20% over the last 12 months.
We are grateful that the total number of accounts in the fund declined only 1% during the recent fiscal year. We appreciate that AMF shareholders have stayed with us through the most difficult period that we have witnessed in our investment lifetime. We have come through this with total assets at the end of the period higher than in the beginning, with good comparative results and with the maintenance of our long-term record of posting more favorable results than the broad market during difficult periods.
We are also thankful for the confidence shown our investment team, which has recently been augmented by two portfolio counselors. James Terrile, who specializes in health care companies, has 14 years of investment experience; and Will Robbins, who covers U.S. banks, has 16 years of investment experience. Joyce E. Gordon, a veteran portfolio counselor in the fund with 30 years of investment experience, has been elected president of American Mutual Fund.
Looking forward
We believe that the worst of the stock market free fall is behind us. With the government’s support and low interest rates, the economic recovery under way since midyear should gather momentum in coming quarters. Still, there is a persisting concern that the strength of the economic recovery over the next several years may not match that of past cycles. We believe that the greatest shock to the system in our investment lifetimes seems to have ended, and we look forward to better days ahead.
Cordially,
/s/ James K. Dunton
James K. Dunton
Vice Chairman
/s/ Joyce E. Gordon
Joyce E. Gordon
President
December 10, 2009
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 59 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 return. This chart illustrates an assumed $10,000 investment in American Mutual Fund from February 21, 1950 — when the fund began operations — through October 31, 2009. The table beneath the chart shows the fund’s total return in each of the 59 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 $6,309,734.3
You can use this table to estimate how the value of your own holding has grown over the years. Let’s say that you have been reinvesting all your dividends and want to know how your investment has done since the end of fiscal 1999. At the time, the table indicates the value of the investment illustrated here was $4.6 million. Since then, it has grown to $6.3 million. Thus, in the same period, the value of your 1999 investment — regardless of its size — also has grown.
Average annual total returns based on a $1,000 investment | ||||||||||||
(for periods ended October 31, 2009)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 4.88 | % | 0.42 | % | 2.63 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge. | ||||||||||||
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. 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 | ||||||
03/09/09 | 4,303,671 | 473,029 | ||||||
10/19/09 | 6,619,809 | 710,800 | ||||||
10/31/09 | 6,309,734 | 677,506 |
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 | |||
3/9/2009 | 3,102,365 | |||
10/19/2009 | 5,101,006 | |||
10/31/2009 | 4,820,186 |
Year | Month | Consumer Price Index6 | |||
1950 | 31-Oct | 10,468 | |||
1951 | 31-Oct | 11,149 | |||
1952 | 31-Oct | 11,362 | |||
1953 | 31-Oct | 11,489 | |||
1954 | 31-Oct | 11,404 | |||
1955 | 31-Oct | 11,447 | |||
1956 | 31-Oct | 11,702 | |||
1957 | 31-Oct | 12,043 | |||
1958 | 31-Oct | 12,298 | |||
1959 | 31-Oct | 12,511 | |||
1960 | 31-Oct | 12,681 | |||
1961 | 31-Oct | 12,766 | |||
1962 | 31-Oct | 12,936 | |||
1963 | 31-Oct | 13,106 | |||
1964 | 31-Oct | 13,234 | |||
1965 | 31-Oct | 13,489 | |||
1966 | 31-Oct | 14,000 | |||
1967 | 31-Oct | 14,340 | |||
1968 | 31-Oct | 15,021 | |||
1969 | 31-Oct | 15,872 | |||
1970 | 31-Oct | 16,766 | |||
1971 | 31-Oct | 17,404 | |||
1972 | 31-Oct | 18,000 | |||
1973 | 31-Oct | 19,404 | |||
1974 | 31-Oct | 21,745 | |||
1975 | 31-Oct | 23,362 | |||
1976 | 31-Oct | 24,638 | |||
1977 | 31-Oct | 26,213 | |||
1978 | 31-Oct | 28,553 | |||
1979 | 31-Oct | 32,000 | |||
1980 | 31-Oct | 36,085 | |||
1981 | 31-Oct | 39,745 | |||
1982 | 31-Oct | 41,787 | |||
1983 | 31-Oct | 42,979 | |||
1984 | 31-Oct | 44,809 | |||
1985 | 31-Oct | 46,255 | |||
1986 | 31-Oct | 46,936 | |||
1987 | 31-Oct | 49,064 | |||
1988 | 31-Oct | 51,149 | |||
1989 | 31-Oct | 53,447 | |||
1990 | 31-Oct | 56,809 | |||
1991 | 31-Oct | 58,468 | |||
1992 | 31-Oct | 60,340 | |||
1993 | 31-Oct | 62,000 | |||
1994 | 31-Oct | 63,617 | |||
1995 | 31-Oct | 65,404 | |||
1996 | 31-Oct | 67,362 | |||
1997 | 31-Oct | 68,766 | |||
1998 | 31-Oct | 69,787 | |||
1999 | 31-Oct | 71,574 | |||
2000 | 31-Oct | 74,043 | |||
2001 | 31-Oct | 75,617 | |||
2002 | 31-Oct | 77,149 | |||
2003 | 31-Oct | 78,723 | |||
2004 | 10/31/2004 | 81,234 | |||
2005 | 10/31/2005 | 84,766 | |||
2006 | 10/31/2006 | 85,872 | |||
2007 | 10/31/2007 | 88,909 | |||
2008 | 10/31/2008 | 92,159 | |||
2009 | 10/31/2009 | 91,990 |
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 return | (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 return | (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 return | 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 return | 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 return | 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 return | 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 return | 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 return | 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 | 2009 | ||||||||||||||||||||||||
Average annual total return for AMF’s lifetime | ||||||||||||||||||||||||||||
Year-by-year summary of results (dollars in thousands) | ||||||||||||||||||||||||||||
Dividends reinvested8 | 135.1 | 157.0 | 175.0 | 206.6 | ||||||||||||||||||||||||
Value at year-end | 7,309.5 | 8,200.6 | 5,670.6 | 6,309.7 | ||||||||||||||||||||||||
Dividends excluded9 | 15.9 | 18.2 | 19.8 | 22.7 | ||||||||||||||||||||||||
Value at year-end | 852.1 | 937.2 | 632.6 | 677.5 | ||||||||||||||||||||||||
Annual percentage returns assuming reinvestment of dividends | ||||||||||||||||||||||||||||
Income return | 2.2 | 2.1 | 2.1 | 3.6 | 4.01 | % | ||||||||||||||||||||||
Capital return | 14.2 | 10.1 | (33.0 | ) | 7.7 | 7.40 | ||||||||||||||||||||||
AMF total return | 16.4 | 12.2 | (30.9 | ) | 11.3 | 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 $3,756,770 in the years 1950–2009 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 $589,593 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 $91,990 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, $8,996 in 1991 and $32,002 in 2009. |
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, $1,707 in 1991 and $3,570 in 2009. |
The road ahead for
American Mutual Fund
after a turbulent year
[photo of a concrete path - trees on both sides of the path]
[Begin Sidebar]
Fund results shown 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. For current information and month-end results, visit americanfunds.com.
[End Sidebar]
The 2009 fiscal year ended October 31 is one that few American Mutual Fund shareholders would like to experience again. Jim Dunton, vice chairman of AMF, describes the past 12 months as highlighted by “the most disruptive financial crisis in the fund’s 59-year lifetime.”
So where does the fund go from here? In the wake of this turbulent year, we met with several AMF portfolio counselors to get their perspectives on the road ahead. In the pages that follow, we will discuss the steep market decline, the recovery, how the fund fared in the volatile market, and the future for the economy, for the stock market and for AMF.
Why did the financial crisis happen, and when did it begin?
The real estate bubble had been fueled by an excess availability of credit. Difficulties began to surface in the spring of 2007 when HSBC, a large multinational bank-holding company, reported a write-down on its subprime real estate business. “From then on, the crisis developed like a slow-motion train wreck,” says veteran portfolio counselor Jim Lovelace.
“The bad-loan problem was facilitated by development of special-purpose pools of securities,” says long-time portfolio counselor Michael Shanahan. “Derivatives and other products added complexity to the mix. No one approved the system, but it just kept growing. Troubles in real estate eventually flowed back into the heart of the financial system — the retail banks, the mortgage market and investment banks. From there, trouble spread to the financial markets as a whole and to the rest of the economy.”
Still, many investors believed that the subprime housing bubble and the spreading economic problems would remain localized in the United States. By the fourth quarter of 2008, in the face of the collapse of several prominent financial institutions, a rapidly increasing number of businesses and individuals moved to preserve their liquidity. Banks ceased making loans even to their best customers, freezing the gears in the U.S. economy and economies around the world. Stock markets panicked. The subsequent highly correlated decline in virtually all equity and commodity markets dispelled the notion that the crisis was limited to U.S. markets. The worldwide economic integration that has been brought about by technology and telecommunications has tied markets together more completely than was understood.
[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]
Distribution rate (%) at net asset value | ||||||||
Date | AMF | S&P 500 | ||||||
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 | % | ||||
10/31/2009 | 3.35 | % | 2.26 | % |
[end bar chart]
[End Sidebar]
[End Sidebar]
[photo of a leaf]
Joyce Gordon, president of AMF, provides more specifics on how dire the situation was at the bottom of the market in early March 2009. “The financial system was in disarray. Banks were not lending, and the bond market was not receptive to companies refinancing debt as it was coming due. Industrial companies were reporting that new orders were so low that they didn’t know how to forecast from them. As a result, companies were laying off employees at a very rapid rate and many companies reduced their level of inventories, which added to the economy’s weakness. In addition, economies around the world were experiencing similar problems. Stock markets in most countries moved down together. Every industry sector in the S&P 500 was down; only U.S. government issues posted gains. The situation was so dismal that many economists were even comparing the period with 1929.”
How did governments respond?
“Central banks and governments around the world worked to prevent a catastrophe,” Joyce says. “The move shored up confidence in the U.S. financial system and kept credit flowing, while bankers and government officials worked to rebuild banks’ depleted capital.”
[photo of tree trunks]
“We are now experiencing a synchronized global recovery,” says Jim Dunton. Real gross domestic product has already turned up in Germany, France, Japan and much of Asia. The U.S. economy expanded in the third quarter of 2009, with the gross domestic product showing a 2.8% annual rate — its first increase since the second quarter of 2008.
“The fuel that was pumped into the system from central banks around the world should be more than adequate to sustain an upward tilt to profitability into 2010,” Jim Dunton says. Other good things have been happening as well. Earnings reports for the recent two quarters for industrial America have been much better than expected, says Joyce. “However, much of the surprise came from cost reductions and not growth in orders, revenues or prices. We have seen cost-cutting help offset the decline in sales. This has helped earnings, but there is a limit to cost-cutting. We will need to see a follow-through on new orders to maintain the strength in earnings and stock prices.
“We have been hearing more positive comments than negative comments from companies,” Joyce says. “Airlines, freight, health care, financial services and advertising are reporting business activity that is either stable or improving, providing optimism that the economic recovery may be sustainable.”
[photo of leaves]
What are the most significant questions about the U.S. economy in the coming months?
“Two important questions have to do with employment: the strength and timing of its recovery,” Jim Dunton says. “So far, the recession has cost us 7 million jobs. We know employment is a lagging indicator, but this is the biggest number of layoffs that we have seen since the 1930s. The financial system might also gain confidence if housing prices stopped falling. When you look at where the layoffs have occurred so far, about 25% are connected with the real estate market in some way.”
[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]
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 | - | Mar. 9, 2009 | Global financial crisis | (48.3) | (55.2) |
[end bar chart]
*Major stock market declines are defined as a decline in price of 15% or more without dividends reinvested.
There have been periods in which the fund has lagged the S&P 500, particularly in strong markets.
[End Sidebar]
[photo of leaves in against the trunk of a tree]
How did AMF fare in the stock market decline and recovery?
AMF continued its long-term record of declining less than Standard & Poor’s 500 Composite Index in each of the 13 major declines since the fund began operations in 1950. During the recent downturn, which began on October 9, 2007, and lasted until March 9, 2009, AMF declined 48.3%, compared with 55.2% by the S&P 500. (Major declines are defined as a drop in price of 15% or more without dividends reinvested. For more details, see the chart above.) Of course, there have been periods when AMF has lagged the S&P 500, particularly in strong markets.
AMF’s historic approach of selecting investments from a list of prescreened high-quality securities kept the fund away from speculative investments that suffered considerably in the past year, Jim Lovelace says. Although there were winners and losers in the financial group at the end of the year, many banks and financial service companies were badly damaged during the first four months of the year. They were unable to pay their dividends, and they lost their debt rating. As a result, many banks fell from AMF’s eligible list.
How selective is the eligible list? Consider that more than 5,000 stocks are listed on the major U.S. stock exchanges. They range from fledgling companies with no earnings and small sales to mature firms that not only have strong balance sheets and growing earnings but pay dividends. The fund invests primarily in companies that pay dividends, are based in the United States or Canada or included in the S&P 500, and are leaders in their industries. The list, which is approved by the fund’s board of directors, includes about 300 companies. The AMF portfolio itself reflects holdings in 170 companies.
The fund strives to reduce risk by investing primarily in companies that pay dividends. Even though dividends have hit a rough patch during the past year, AMF portfolio counselors still consider dividend-paying companies as their core investment and expect dividends to be even more important in the years ahead. That will be especially true if the stock market takes awhile to recover or continues sideways for a number of years, Joyce says. “In that scenario, dividends will deliver most of the appreciation and value for investors,” she says.
AMF’s investment in dividend-paying stocks has enabled the fund to typically produce a higher yield than companies in the S&P 500. (See the chart on page 8.) However, 2009 is expected to show the biggest decrease in dividend payments since 1938. Jim Lovelace points out that even though about as many companies have cut dividends as those that have increased dividends so far this year, the problem is that when companies raise dividend payments, they increase them by 5% to 10%. When they cut them, they have often been by 50% or more.
[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.
[End Sidebar]
[Begin Sidebar]
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, 2009
[information illustrated in graphic format and table format]
Average annual total return | Volatility | |||||||
AMF | 3.25 | % | 12.66 | % | ||||
Lipper Growth and Income Funds Index | 0.91 | 15.05 | ||||||
Lipper Multi-Cap Value Funds Index | 2.62 | 16.10 | ||||||
S&P 500 Index | -0.95 | 16.05 |
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]
The road ahead
What does the future hold? “Our inclinations at this moment are that the economy may continue to expand for the next several years, accompanied by rising corporate profits and stock prices,” Jim Dunton says. “But the opportunity to reach new highs on the stock market may be some years away.”
In the months ahead, it can be reassuring to realize that the fund’s key decision-makers have a depth of knowledge that few mutual funds can match — they average 30 years of investment experience. Jim Dunton has 47 years; Mike Shanahan, 45; Joyce Gordon, 30; and Jim Lovelace, 28. AMF’s two new portfolio counselors, announced in October, also fit the profile. Will Robbins, who covers U.S. banks, has 16 years of experience; and James Terrile, who specializes in health care companies, has 14 years of investment experience. The portfolio counselors’ years of accumulated wisdom have helped them navigate challenging markets in the past. “One of the great things about this fund is that we have people who have seen it all before,” says Jim Lovelace. “They are not likely to panic at the bottom of a market cycle or the top.” n
[Begin Sidebar]
American Mutual Fund’s | |
portfolio counselors | |
American Mutual Fund’s six portfolio counselors have an average 30 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 | 47 |
R. Michael Shanahan | 45 |
Joyce E. Gordon | 30 |
James B. Lovelace | 28 |
Will Robbins | 16 |
James Terrile | 14 |
*Years of experience as of January 1, 2010. |
[End Sidebar]
Summary investment portfolio, October 31, 2009
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
[begin pie chart]
Industry sector diversification (percent of net assets) | ||||
Industrials | 15.88 | % | ||
Information technology | 14.13 | |||
Health care | 9.55 | |||
Energy | 9.02 | |||
Consumer discretionary | 7.71 | |||
Other industries | 28.03 | |||
Convertible securities and preferred stocks | 1.68 | |||
Bonds & notes | 8.08 | |||
Short-term securities & other assets less liabilities | 5.92 |
[end pie chart]
Percent | ||||||||||||
Value | of net | |||||||||||
Common stocks - 84.32% | Shares | (000 | ) | assets | ||||||||
Energy - 9.02% | ||||||||||||
Chevron Corp. | 1,973,911 | $ | 151,083 | 1.03 | % | |||||||
ConocoPhillips | 4,177,900 | 209,647 | 1.43 | |||||||||
Devon Energy Corp. | 1,925,000 | 124,567 | .85 | |||||||||
Marathon Oil Corp. | 5,353,600 | 171,155 | 1.17 | |||||||||
Royal Dutch Shell PLC, Class A (ADR) | 4,076,000 | 242,155 | 1.65 | |||||||||
Other securities | 422,661 | 2.89 | ||||||||||
1,321,268 | 9.02 | |||||||||||
Materials - 3.60% | ||||||||||||
Air Products and Chemicals, Inc. | 2,467,300 | 190,303 | 1.30 | |||||||||
MeadWestvaco Corp. | 6,209,864 | 141,771 | .97 | |||||||||
Other securities | 195,078 | 1.33 | ||||||||||
527,152 | 3.60 | |||||||||||
Industrials - 15.88% | ||||||||||||
3M Co. | 2,013,700 | 148,148 | 1.01 | |||||||||
Avery Dennison Corp. | 3,710,000 | 132,261 | .90 | |||||||||
Boeing Co. | 2,585,000 | 123,563 | .84 | |||||||||
Burlington Northern Santa Fe Corp. | 2,315,000 | 174,366 | 1.19 | |||||||||
CSX Corp. | 2,742,500 | 115,679 | .79 | |||||||||
General Electric Co. | 8,417,500 | 120,034 | .82 | |||||||||
Pitney Bowes Inc. | 4,166,900 | 102,089 | .70 | |||||||||
R.R. Donnelley & Sons Co. | 6,212,657 | 124,750 | .85 | |||||||||
Union Pacific Corp. | 1,990,000 | 109,729 | .75 | |||||||||
United Parcel Service, Inc., Class B | 3,550,000 | 190,564 | 1.30 | |||||||||
United Technologies Corp. | 4,030,000 | 247,643 | 1.69 | |||||||||
Waste Management, Inc. | 4,345,000 | 129,829 | .89 | |||||||||
Other securities | 607,751 | 4.15 | ||||||||||
2,326,406 | 15.88 | |||||||||||
Consumer discretionary - 7.71% | ||||||||||||
Darden Restaurants, Inc. | 3,365,000 | 101,993 | .70 | |||||||||
Johnson Controls, Inc. | 5,990,000 | 143,281 | .98 | |||||||||
Staples, Inc. | 1,600,000 | 34,720 | .24 | |||||||||
Time Warner Inc. | 4,002,666 | 120,560 | .82 | |||||||||
Other securities | 728,410 | 4.97 | ||||||||||
1,128,964 | 7.71 | |||||||||||
Consumer staples - 6.56% | ||||||||||||
Coca-Cola Co. | 1,850,000 | 98,623 | .67 | |||||||||
Kellogg Co. | 2,685,600 | 138,416 | .95 | |||||||||
Kimberly-Clark Corp. | 1,900,000 | 116,204 | .79 | |||||||||
PepsiCo, Inc. | 2,305,000 | 139,568 | .95 | |||||||||
Other securities | 468,417 | 3.20 | ||||||||||
961,228 | 6.56 | |||||||||||
Health care - 9.55% | ||||||||||||
Abbott Laboratories | 4,179,600 | 211,362 | 1.44 | |||||||||
Bristol-Myers Squibb Co. | 4,662,500 | 101,642 | .69 | |||||||||
Medtronic, Inc. | 3,452,000 | 123,236 | .84 | |||||||||
Merck & Co., Inc. | 11,635,000 | 359,871 | 2.46 | |||||||||
Novartis AG (ADR) | 1,900,000 | 98,705 | .67 | |||||||||
Pfizer Inc | 9,895,000 | 168,512 | 1.15 | |||||||||
Schering-Plough Corp. | 4,800,000 | 135,360 | .93 | |||||||||
Other securities | 200,132 | 1.37 | ||||||||||
1,398,820 | 9.55 | |||||||||||
Financials - 3.24% | ||||||||||||
JPMorgan Chase & Co. | 3,293,000 | 137,549 | .94 | |||||||||
Other securities | 337,548 | 2.30 | ||||||||||
475,097 | 3.24 | |||||||||||
Information technology - 14.13% | ||||||||||||
Hewlett-Packard Co. | 4,320,000 | 205,027 | 1.40 | |||||||||
Intel Corp. | 9,423,000 | 180,074 | 1.23 | |||||||||
International Business Machines Corp. | 2,810,000 | 338,914 | 2.31 | |||||||||
Linear Technology Corp. | 3,845,000 | 99,509 | .68 | |||||||||
Microsoft Corp. | 16,849,198 | 467,228 | 3.19 | |||||||||
Oracle Corp. | 6,815,000 | 143,796 | .98 | |||||||||
Other securities | 635,981 | 4.34 | ||||||||||
2,070,529 | 14.13 | |||||||||||
Telecommunication services - 6.41% | ||||||||||||
AT&T Inc. | 18,195,597 | 467,081 | 3.19 | |||||||||
CenturyTel, Inc. | 9,097,822 | 295,315 | 2.02 | |||||||||
Verizon Communications Inc. | 5,967,612 | 176,582 | 1.20 | |||||||||
938,978 | 6.41 | |||||||||||
Utilities - 7.62% | ||||||||||||
Exelon Corp. | 3,893,720 | 182,849 | 1.25 | |||||||||
FirstEnergy Corp. | 2,552,900 | 110,489 | .75 | |||||||||
Questar Corp. | 3,000,000 | 119,520 | .82 | |||||||||
Other securities | 703,292 | 4.80 | ||||||||||
1,116,150 | 7.62 | |||||||||||
Miscellaneous - 0.60% | ||||||||||||
Other common stocks in initial period of acquisition | 87,683 | .60 | ||||||||||
Total common stocks (cost: $12,044,741,000) | 12,352,275 | 84.32 | ||||||||||
Preferred stocks - 1.43% | ||||||||||||
Financials - 1.43% | ||||||||||||
JPMorgan Chase & Co., Series I, 7.90% (1) | 87,080,000 | 87,841 | .60 | |||||||||
Other securities | 122,210 | .83 | ||||||||||
Total preferred stocks (cost: $189,814,000) | 210,051 | 1.43 | ||||||||||
Convertible securities - 0.25% | ||||||||||||
Consumer discretionary - 0.02% | ||||||||||||
Johnson Controls, Inc. 11.50% convertible preferred 2012, units | 22,000 | 2,752 | .02 | |||||||||
Financials - 0.23% | ||||||||||||
Other securities | 33,865 | .23 | ||||||||||
Total convertible securities (cost: $29,090,000) | 36,617 | .25 | ||||||||||
Principal | ||||||||||||
amount | ||||||||||||
Bonds & notes - 8.08% | (000 | ) | ||||||||||
Energy - 0.20% | ||||||||||||
Chevron Corp. 3.95% 2014 | $ | 5,000 | 5,271 | .04 | ||||||||
Shell International Finance B.V. 4.00% 2014 | 5,000 | 5,260 | .03 | |||||||||
Other securities | 18,499 | .13 | ||||||||||
29,030 | .20 | |||||||||||
Industrials - 0.27% | ||||||||||||
Burlington Northern Santa Fe Corp. 6.75% 2011 | 8,442 | 9,177 | .06 | |||||||||
Other securities | 30,876 | .21 | ||||||||||
40,053 | .27 | |||||||||||
Consumer discretionary - 1.66% | ||||||||||||
AOL Time Warner Inc. 6.75%-6.875% 2011-2012 | 32,941 | 35,472 | ||||||||||
Time Warner Inc. 5.50% 2011 | 13,875 | 14,841 | .34 | |||||||||
Johnson Controls, Inc. 5.50% 2016 | 1,720 | 1,764 | .01 | |||||||||
Staples, Inc. 7.75% 2011 | 9,380 | 10,084 | ||||||||||
Staples, Inc. 9.75% 2014 | 101,450 | �� | 123,051 | .91 | ||||||||
Other securities | 58,497 | .40 | ||||||||||
243,709 | 1.66 | |||||||||||
Health care - 0.48% | ||||||||||||
Abbott Laboratories 5.125% 2019 | 5,000 | 5,310 | .04 | |||||||||
Merck & Co., Inc. 1.875% 2011 | 3,765 | 3,814 | .02 | |||||||||
Pfizer Inc. 4.45% 2012 | 5,000 | 5,305 | .04 | |||||||||
Other securities | 55,886 | .38 | ||||||||||
70,315 | .48 | |||||||||||
Financials - 2.08% | ||||||||||||
JPMorgan Chase & Co. 4.75% 2013 | 5,000 | 5,304 | .04 | |||||||||
Other securities | 298,685 | 2.04 | ||||||||||
303,989 | 2.08 | |||||||||||
Telecommunication services - 0.24% | ||||||||||||
AT&T Inc. 4.85% 2014 | 5,000 | 5,345 | .04 | |||||||||
Verizon Communications Inc. 5.55%-8.50% 2014-2018 (2) | 20,000 | 24,172 | .16 | |||||||||
Other securities | 5,430 | .04 | ||||||||||
34,947 | .24 | |||||||||||
Mortgage-backed obligations (3) - 1.41% | ||||||||||||
Fannie Mae 4.00%-5.50% 2023-2039 | 196,688 | 203,108 | 1.38 | |||||||||
Other securities | 4,063 | .03 | ||||||||||
207,171 | 1.41 | |||||||||||
Bonds & notes of U.S. government & government agencies- 1.08% | ||||||||||||
Fannie Mae 2.50%-2.625% 2014 | 40,775 | 40,865 | .28 | |||||||||
Freddie Mac 1.75% 2012 | 50,240 | 50,666 | .35 | |||||||||
U.S. Treasury 0.875%-3.25% 2011-2016 | 45,000 | 45,508 | .31 | |||||||||
Other securities | 20,376 | .14 | ||||||||||
157,415 | 1.08 | |||||||||||
Other - 0.66% | ||||||||||||
Other securities | 96,943 | .66 | ||||||||||
Total bonds & notes (cost: $1,089,110,000) | 1,183,572 | 8.08 | ||||||||||
Short-term securities - 6.04% | ||||||||||||
Abbott Laboratories 0.13% due 12/16/2009 (2) | 13,700 | 13,696 | .09 | |||||||||
Fannie Mae 0.17%-0.20% due 11/2-12/22/2009 | 95,700 | 95,694 | .65 | |||||||||
Federal Home Loan Bank 0.15%-0.17% due 11/17-12/16/2009 | 99,400 | 99,393 | .68 | |||||||||
Freddie Mac 0.18%-0.245% due 1/21-5/19/2010 | 209,568 | 209,454 | 1.43 | |||||||||
JPMorgan Chase Funding Inc. 0.16% due 11/23/2009 (2) | 27,000 | 26,997 | .18 | |||||||||
Merck & Co. Inc. 0.14% due 12/14/2009 (2) | 19,700 | 19,697 | .14 | |||||||||
U.S. Treasury Bills 0.22%-0.338% due 5/6-8/26/2010 | 170,600 | 170,307 | 1.16 | |||||||||
Other securities | 248,987 | 1.71 | ||||||||||
Total short-term securities (cost: $884,121,000) | 884,225 | 6.04 | ||||||||||
Total investment securities (cost: $14,236,876,000) | 14,666,740 | 100.12 | ||||||||||
Other assets less liabilities | (16,863 | ) | (.12 | ) | ||||||||
Net assets | $ | 14,649,877 | 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. |
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) Coupon rate may change periodically. |
(2) 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 $359,391,000, which represented 2.45% of the net assets of the fund. |
(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
Key to abbreviation |
ADR = American Depositary Receipts |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at October 31, 2009 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value (cost: $14,236,876) | $ | 14,666,740 | ||||||
Cash | 3,514 | |||||||
Receivables for: | ||||||||
Sales of investments | $ | 8,445 | ||||||
Sales of fund's shares | 18,887 | |||||||
Dividends and interest | 37,945 | 65,277 | ||||||
14,735,531 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 51,806 | |||||||
Repurchases of fund's shares | 20,610 | |||||||
Investment advisory services | 3,236 | |||||||
Services provided by affiliates | 7,210 | |||||||
Directors' deferred compensation | 2,078 | |||||||
Other | 714 | 85,654 | ||||||
Net assets at October 31, 2009 | $ | 14,649,877 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 15,509,046 | ||||||
Undistributed net investment income | 26,823 | |||||||
Accumulated net realized loss | (1,315,856 | ) | ||||||
Net unrealized appreciation | 429,864 | |||||||
Net assets at October 31, 2009 | $ | 14,649,877 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 1,000,000 shares, $.001 par value (679,790 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||||
Class A | $ | 11,861,700 | 549,899 | $ | 21.57 | |||||||
Class B | 425,445 | 19,876 | 21.41 | |||||||||
Class C | 609,924 | 28,558 | 21.36 | |||||||||
Class F-1 | 402,834 | 18,728 | 21.51 | |||||||||
Class F-2 | 129,660 | 6,011 | 21.57 | |||||||||
Class 529-A | 228,116 | 10,591 | 21.54 | |||||||||
Class 529-B | 34,347 | 1,601 | 21.46 | |||||||||
Class 529-C | 65,155 | 3,037 | 21.46 | |||||||||
Class 529-E | 12,432 | 579 | 21.48 | |||||||||
Class 529-F-1 | 9,088 | 421 | 21.56 | |||||||||
Class R-1 | 16,913 | 789 | 21.43 | |||||||||
Class R-2 | 132,182 | 6,178 | 21.40 | |||||||||
Class R-3 | 180,571 | 8,415 | 21.46 | |||||||||
Class R-4 | 75,433 | 3,504 | 21.53 | |||||||||
Class R-5 | 108,114 | 5,012 | 21.57 | |||||||||
Class R-6 | 357,963 | 16,591 | 21.58 | |||||||||
(*) 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 $22.89 and $22.85, respectively. | ||||||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended October 31, 2009 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. taxes of $3,073) | $ | 414,061 | ||||||
Interest | 76,691 | $ | 490,752 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 35,594 | |||||||
Distribution services | 38,455 | |||||||
Transfer agent services | 15,056 | |||||||
Administrative services | 3,542 | |||||||
Reports to shareholders | 1,056 | |||||||
Registration statement and prospectus | 2,188 | |||||||
Directors' compensation | 399 | |||||||
Auditing and legal | 145 | |||||||
Custodian | 92 | |||||||
State and local taxes | 122 | |||||||
Other | 951 | |||||||
Total fees and expenses before waiver | 97,600 | |||||||
Less investment advisory services waiver | 590 | |||||||
Total fees and expenses after waiver | 97,010 | |||||||
Net investment income | 393,742 | |||||||
Net realized loss and unrealized appreciation on investments | ||||||||
Net realized loss on investments | (1,311,942 | ) | ||||||
Net unrealized appreciation on investments | 2,323,264 | |||||||
Net realized loss and unrealized appreciation on investments | 1,011,322 | |||||||
Net increase in net assets resulting from operations | $ | 1,405,064 | ||||||
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | ||||||||
Statements of changes in net assets | (dollars in thousands) | |||||||
Year ended October 31 | ||||||||
2009 | 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 393,742 | $ | 402,269 | ||||
Net realized (loss) gain on investments | (1,311,942 | ) | 165,743 | |||||
Net unrealized appreciation (depreciation) on investments | 2,323,264 | (6,930,935 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 1,405,064 | (6,362,923 | ) | |||||
Dividends and distributions paid to shareholders: | ||||||||
Dividends from net investment income | (483,060 | ) | (427,515 | ) | ||||
Distributions from net realized gain on investments | (37,493 | ) | (872,259 | ) | ||||
Total dividends and distributions paid to shareholders | (520,553 | ) | (1,299,774 | ) | ||||
Net capital share transactions | (16,251 | ) | 223,819 | |||||
Total increase (decrease) in net assets | 868,260 | (7,438,878 | ) | |||||
Net assets: | ||||||||
Beginning of year | 13,781,617 | 21,220,495 | ||||||
End of year (including undistributed | ||||||||
net investment income: $26,823 and $116,779, respectively) | $ | 14,649,877 | $ | 13,781,617 | ||||
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 has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six 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 six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) 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, R-5 and R-6 | None | None | None |
*Effective April 21, 2009, Class B and 529-B shares of the fund are not available for purchase.
On May 1, 2009, the fund made an additional retirement plan share class (Class R-6) available for sale pursuant to an amendment to its registration statement filed with the Securities and Exchange Commission (“SEC”). Refer to the fund’s retirement plan 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:
Net asset value – The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
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 one or more independent pricing vendors when such prices are available. However, where the investment adviser deems it appropriate to do so, such securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. 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 guidelines 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. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
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. Risk 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, the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, 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; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.
The prices 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, 2009, 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 2005 and by state tax authorities for tax years before 2004.
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 different 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; cost of investments sold; paydowns on fixed-income securities; net capital losses; and income on certain investments. 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.
During the year ended October 31, 2009, the fund reclassified $188,000 from undistributed net investment income to capital paid in on shares of capital stock and $450,000 from undistributed net investment income to accumulated net realized loss to align financial reporting with tax reporting.
As of October 31, 2009, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 28,346 | ||
Capital loss carryforward expiring 2017* | (1,310,988 | ) | ||
Gross unrealized appreciation on investment securities | 1,657,271 | |||
Gross unrealized depreciation on investment securities | (1,232,189 | ) | ||
Net unrealized appreciation on investment securities | 425,082 | |||
Cost of investment securities | 14,241,658 | |||
*The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. |
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
Year ended October 31, 2009 | Year ended October 31, 2008 | |||||||||||||||||||||||
Share class | Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid | ||||||||||||||||||
Class A | $ | 405,415 | $ | 31,214 | $ | 436,629 | $ | 369,421 | $ | 730,542 | $ | 1,099,963 | ||||||||||||
Class B | 12,408 | 1,229 | 13,637 | 10,304 | 31,107 | 41,411 | ||||||||||||||||||
Class C | 16,302 | 1,585 | 17,887 | 12,522 | 38,154 | 50,676 | ||||||||||||||||||
Class F-1 | 12,755 | 954 | 13,709 | 11,629 | 23,835 | 35,464 | ||||||||||||||||||
Class F-2* | 2,130 | 31 | 2,161 | 29 | - | 29 | ||||||||||||||||||
Class 529-A | 7,009 | 521 | 7,530 | 5,513 | 10,805 | 16,318 | ||||||||||||||||||
Class 529-B | 889 | 87 | 976 | 620 | 1,926 | 2,546 | ||||||||||||||||||
Class 529-C | 1,575 | 148 | 1,723 | 1,047 | 3,192 | 4,239 | ||||||||||||||||||
Class 529-E | 354 | 28 | 382 | 266 | 597 | 863 | ||||||||||||||||||
Class 529-F-1 | 268 | 18 | 286 | 184 | 328 | 512 | ||||||||||||||||||
Class R-1 | 384 | 34 | 418 | 233 | 600 | 833 | ||||||||||||||||||
Class R-2 | 3,153 | 306 | 3,459 | 2,124 | 6,663 | 8,787 | ||||||||||||||||||
Class R-3 | 5,058 | 402 | 5,460 | 4,009 | 9,338 | 13,347 | ||||||||||||||||||
Class R-4 | 2,127 | 148 | 2,275 | 1,569 | 2,936 | 4,505 | ||||||||||||||||||
Class R-5 | 8,585 | 788 | 9,373 | 8,045 | 12,236 | 20,281 | ||||||||||||||||||
Class R-6† | 4,648 | - | 4,648 | - | - | - | ||||||||||||||||||
Total | $ | 483,060 | $ | 37,493 | $ | 520,553 | $ | 427,515 | $ | 872,259 | $ | 1,299,774 | ||||||||||||
*Class F-2 was offered beginning August 1, 2008. | ||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
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. CRMC waived a portion of its investment advisory services fee commencing on September 1, 2004, and terminating on December 31, 2008. During the year ended October 31, 2009, total investment advisory services fees waived by CRMC were $590,000. As a result, the fee shown on the accompanying financial statements of $35,594,000, which was equivalent to an annualized rate of 0.268%, was reduced to $35,004,000, or 0.263% 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, R-5 and R-6. 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 with a plan 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, 2009, 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 as 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 and 0.05% for Class R-6) 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. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. 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, 2009, 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 | $24,858 | $14,476 | Not applicable | Not applicable | Not applicable |
Class B | 4,101 | 580 | Not applicable | Not applicable | Not applicable |
Class C | 5,481 | Included in administrative services | $813 | $136 | Not applicable |
Class F-1 | 843 | 411 | 35 | Not applicable | |
Class F-2 | Not applicable | 65 | 3 | Not applicable | |
Class 529-A | 402 | 215 | 34 | $193 | |
Class 529-B | 308 | 35 | 11 | 31 | |
Class 529-C | 546 | 62 | 17 | 55 | |
Class 529-E | 53 | 12 | 2 | 11 | |
Class 529-F-1 | - | 8 | 1 | 7 | |
Class R-1 | 131 | 14 | 9 | Not applicable | |
Class R-2 | 840 | 168 | 475 | Not applicable | |
Class R-3 | 746 | 224 | 125 | Not applicable | |
Class R-4 | 146 | 86 | 7 | Not applicable | |
Class R-5 | Not applicable | 200 | 3 | Not applicable | |
Class R-6* | Not applicable | 74 | -† | Not applicable | |
Total | $38,455 | $15,056 | $2,387 | $858 | $297 |
*Class R-6 was offered beginning May 1, 2009.
†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 $399,000, shown on the accompanying financial statements, includes $459,000 in current fees (either paid in cash or deferred) and a net decrease of $60,000 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. Disclosure of fair value measurements
The fund classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high-quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of October 31, 2009 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common stocks: | ||||||||||||||||
Energy | $ | 1,321,268 | $ | - | $ | - | $ | 1,321,268 | ||||||||
Materials | 527,152 | - | - | 527,152 | ||||||||||||
Industrials | 2,326,406 | - | - | 2,326,406 | ||||||||||||
Consumer discretionary | 1,128,964 | - | - | 1,128,964 | ||||||||||||
Consumer staples | 961,228 | - | - | 961,228 | ||||||||||||
Health care | 1,398,820 | - | - | 1,398,820 | ||||||||||||
Financials | 475,097 | - | - | 475,097 | ||||||||||||
Information technology | 2,070,529 | - | - | 2,070,529 | ||||||||||||
Telecommunication services | 938,978 | - | - | 938,978 | ||||||||||||
Utilities | 1,116,150 | - | - | 1,116,150 | ||||||||||||
Miscellaneous | 87,683 | - | - | 87,683 | ||||||||||||
Preferred stocks | - | 210,051 | - | 210,051 | ||||||||||||
Convertible securities | 2,752 | 33,865 | 36,617 | |||||||||||||
Bonds & notes: | ||||||||||||||||
Corporate bonds & notes | - | 722,043 | - | 722,043 | ||||||||||||
Mortgage-backed obligations | - | 207,171 | - | 207,171 | ||||||||||||
Bonds & notes of U.S. government & government agencies | - | 157,415 | - | 157,415 | ||||||||||||
Other | - | 96,943 | - | 96,943 | ||||||||||||
Short-term securities | - | 884,225 | - | 884,225 | ||||||||||||
Total | $ | 12,355,027 | $ | 2,311,713 | $ | - | $ | 14,666,740 |
6. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales(1) | Reinvestments of dividends and distributions | Repurchases(1) | Net (decrease) increase | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended October 31, 2009 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,860,461 | 97,853 | $ | 407,646 | 21,693 | $ | (2,607,917 | ) | (138,962 | ) | $ | (339,810 | ) | (19,416 | ) | ||||||||||||||||
Class B | 39,546 | 2,129 | 13,209 | 711 | (105,762 | ) | (5,637 | ) | (53,007 | ) | (2,797 | ) | ||||||||||||||||||||
Class C | 129,260 | 6,812 | 17,037 | 917 | (148,530 | ) | (8,046 | ) | (2,233 | ) | (317 | ) | ||||||||||||||||||||
Class F-1 | 158,801 | 8,295 | 11,954 | 636 | (139,120 | ) | (7,409 | ) | 31,635 | 1,522 | ||||||||||||||||||||||
Class F-2 | 122,928 | 6,248 | 1,676 | 84 | (13,189 | ) | (676 | ) | 111,415 | 5,656 | ||||||||||||||||||||||
Class 529-A | 42,720 | 2,211 | 7,528 | 400 | (26,889 | ) | (1,417 | ) | 23,359 | 1,194 | ||||||||||||||||||||||
Class 529-B | 3,048 | 165 | 975 | 52 | (3,592 | ) | (190 | ) | 431 | 27 | ||||||||||||||||||||||
Class 529-C | 15,115 | 792 | 1,722 | 92 | (9,981 | ) | (529 | ) | 6,856 | 355 | ||||||||||||||||||||||
Class 529-E | 2,458 | 128 | 382 | 20 | (1,505 | ) | (79 | ) | 1,335 | 69 | ||||||||||||||||||||||
Class 529-F-1 | 3,644 | 187 | 284 | 15 | (1,388 | ) | (74 | ) | 2,540 | 128 | ||||||||||||||||||||||
Class R-1 | 7,120 | 364 | 413 | 22 | (4,200 | ) | (222 | ) | 3,333 | 164 | ||||||||||||||||||||||
Class R-2 | 43,114 | 2,273 | 3,447 | 185 | (33,534 | ) | (1,775 | ) | 13,027 | 683 | ||||||||||||||||||||||
Class R-3 | 58,265 | 3,002 | 5,443 | 290 | (43,651 | ) | (2,293 | ) | 20,057 | 999 | ||||||||||||||||||||||
Class R-4 | 33,113 | 1,697 | 2,272 | 120 | (19,358 | ) | (1,020 | ) | 16,027 | 797 | ||||||||||||||||||||||
Class R-5 | 127,217 | 6,857 | 9,154 | 503 | (306,801 | ) | (16,178 | ) | (170,430 | ) | (8,818 | ) | ||||||||||||||||||||
Class R-6(2) | 316,908 | 16,479 | 4,648 | 223 | (2,342 | ) | (111 | ) | 319,214 | 16,591 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 2,963,718 | 155,492 | $ | 487,790 | 25,963 | $ | (3,467,759 | ) | (184,618 | ) | $ | (16,251 | ) | (3,163 | ) | ||||||||||||||||
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(3) | 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 | ||||||||||||||||||
(1) Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
(2)Class R-6 was offered beginning May 1, 2009. | ||||||||||||||||||||||||||||||||
(3)Class F-2 was offered beginning August 1, 2008. |
7. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $4,642,572,000 and $3,141,892,000, respectively, during the year ended October 31, 2009.
8. Subsequent events
On November 24, 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization is expected to be completed in 2010; however, the fund reserves the right to delay the implementation. Shareholders also approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund. As of December 10, 2009, the date the financial statements were available to be issued, no other subsequent events or transactions had occurred that would have materially impacted the financial statements as presented.
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) 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 10/31/2009 | $ | 20.20 | $ | .59 | $ | 1.56 | $ | 2.15 | $ | (.72 | ) | $ | (.06 | ) | $ | (.78 | ) | $ | 21.57 | 11.27 | % | $ | 11,862 | .67 | % | .66 | % | 3.05 | % | |||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.05 | .44 | 1.56 | 2.00 | (.58 | ) | (.06 | ) | (.64 | ) | 21.41 | 10.45 | 426 | 1.45 | 1.44 | 2.29 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.01 | .43 | 1.55 | 1.98 | (.57 | ) | (.06 | ) | (.63 | ) | 21.36 | 10.39 | 610 | 1.48 | 1.47 | 2.24 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.14 | .59 | 1.56 | 2.15 | (.72 | ) | (.06 | ) | (.78 | ) | 21.51 | 11.31 | 403 | .67 | .67 | 3.03 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.20 | .58 | 1.63 | 2.21 | (.78 | ) | (.06 | ) | (.84 | ) | 21.57 | 11.58 | 130 | .43 | .43 | 2.86 | ||||||||||||||||||||||||||||||||||||
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 10/31/2009 | 20.17 | .57 | 1.57 | 2.14 | (.71 | ) | (.06 | ) | (.77 | ) | 21.54 | 11.22 | 228 | .74 | .74 | 2.95 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.10 | .42 | 1.56 | 1.98 | (.56 | ) | (.06 | ) | (.62 | ) | 21.46 | 10.31 | 34 | 1.55 | 1.55 | 2.16 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.10 | .42 | 1.56 | 1.98 | (.56 | ) | (.06 | ) | (.62 | ) | 21.46 | 10.33 | 65 | 1.54 | 1.54 | 2.15 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.12 | .51 | 1.57 | 2.08 | (.66 | ) | (.06 | ) | (.72 | ) | 21.48 | 10.88 | 12 | 1.04 | 1.03 | 2.66 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | $ | 20.19 | $ | .61 | $ | 1.57 | $ | 2.18 | $ | (.75 | ) | $ | (.06 | ) | $ | (.81 | ) | $ | 21.56 | 11.44 | % | $ | 9 | .54 | % | .53 | % | 3.14 | % | |||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.07 | .43 | 1.57 | 2.00 | (.58 | ) | (.06 | ) | (.64 | ) | 21.43 | 10.43 | 17 | 1.48 | 1.47 | 2.22 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.05 | .40 | 1.56 | 1.96 | (.55 | ) | (.06 | ) | (.61 | ) | 21.40 | 10.22 | 132 | 1.62 | 1.62 | 2.08 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.10 | .51 | 1.57 | 2.08 | (.66 | ) | (.06 | ) | (.72 | ) | 21.46 | 10.89 | 181 | 1.03 | 1.03 | 2.66 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.16 | .57 | 1.58 | 2.15 | (.72 | ) | (.06 | ) | (.78 | ) | 21.53 | 11.26 | 75 | .71 | .71 | 2.96 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/2009 | 20.20 | .65 | 1.55 | 2.20 | (.77 | ) | (.06 | ) | (.83 | ) | 21.57 | 11.55 | 108 | .40 | .39 | 3.47 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/2009 | 18.74 | .31 | 2.86 | 3.17 | (.33 | ) | - | (.33 | ) | 21.58 | 16.99 | 358 | .36 | (5) | .36 | (5) | 3.03 | (5) |
Year ended October 31 | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 27 | % | 23 | % | 19 | % | 19 | % | 22 | % |
(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 some of 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. | |||||||||||||
(5)Annualized. | |||||||||||||
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, 2009, 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, 2009, 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, 2009, 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, 2009
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, 2009:
Long-term capital gains | $ | 37,493,000 | ||
Qualified dividend income | 100 | % | ||
Corporate dividends received deduction | $ | 396,859,000 | ||
U.S. government income that may be exempt from state taxation | $ | 2,814,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2010, to determine the calendar year amounts to be included on their 2009 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, 2009, through October 31, 2009).
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 be lower by the amount of these fees.
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 5/1/2009 | Ending account value 10/31/2009 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,178.48 | $ | 3.68 | .67 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.83 | 3.41 | .67 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,174.38 | 7.89 | 1.44 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.95 | 7.32 | 1.44 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,174.12 | 8.17 | 1.49 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.69 | 7.58 | 1.49 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,178.45 | 3.79 | .69 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.73 | 3.52 | .69 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,180.12 | 2.36 | .43 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,023.04 | 2.19 | .43 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,178.37 | 4.12 | .75 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.42 | 3.82 | .75 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,173.28 | 8.49 | 1.55 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.39 | 7.88 | 1.55 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,173.48 | 8.44 | 1.54 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.44 | 7.83 | 1.54 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,176.70 | 5.71 | 1.04 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.96 | 5.30 | 1.04 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,179.38 | 2.97 | .54 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.48 | 2.75 | .54 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,174.15 | 8.11 | 1.48 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.74 | 7.53 | 1.48 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,172.96 | 8.76 | 1.60 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.14 | 8.13 | 1.60 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,176.37 | 5.71 | 1.04 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.96 | 5.30 | 1.04 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,178.79 | 3.95 | .72 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.58 | 3.67 | .72 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,179.79 | 2.25 | .41 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,023.14 | 2.09 | .41 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,169.85 | 1.96 | .36 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.39 | 1.84 | .36 |
*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 365 (to reflect the one-half year period).
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, 2009 (the most recent calendar quarter-end): | ||||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares1 — 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 | –8.93 | % | 0.83 | % | 4.09 | % | ||||||
Not reflecting CDSC | –4.31 | 1.17 | 4.09 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | –5.22 | 1.12 | 2.48 | |||||||||
Not reflecting CDSC | –4.30 | 1.12 | 2.48 | |||||||||
Class F-1 shares2 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –3.59 | 1.92 | 3.27 | |||||||||
Class F-2 shares2 — first sold 8/5/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –3.32 | — | –9.26 | |||||||||
Class 529-A shares3 — first sold 2/19/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | –9.17 | 0.67 | 2.36 | |||||||||
Not reflecting maximum sales charge | –3.65 | 1.87 | 3.15 | |||||||||
Class 529-B shares1,3 — first sold 2/19/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | –9.01 | 0.70 | 2.28 | |||||||||
Not reflecting CDSC | –4.39 | 1.03 | 2.28 | |||||||||
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 | –5.30 | 1.05 | 2.17 | |||||||||
Not reflecting CDSC | –4.37 | 1.05 | 2.17 | |||||||||
Class 529-E shares2,3 — first sold 3/7/02 | –3.89 | 1.56 | 1.93 | |||||||||
Class 529-F-1 shares2,3 — first sold 9/17/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | –3.44 | 2.03 | 5.17 |
1These shares are not available for purchase. |
2These shares are sold without any initial or contingent deferred sales charge. |
3Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 and 27 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Board of directors and other officers
“Independent” directors | ||
Year first | ||
elected a | ||
director of | ||
Name and age | the fund1 | Principal occupation(s) during past five years |
Louise H. Bryson,4 65 | 2010 | Chair of the Board of Trustees, J. Paul Getty Trust; |
former President, Distribution, Lifetime Entertainment | ||
Network; former Executive Vice President and | ||
General Manager, Lifetime Movie Network | ||
Mary Anne Dolan, 62 | 1993 | Founder and President, MAD Ink (communications |
Chairman of the Board | company); former Editor-in-Chief, The Los Angeles | |
(Independent and Non-Executive) | Herald Examiner | |
James G. Ellis,4 62 | 2010 | Dean and Professor of Marketing, Marshall School of |
Business, University of Southern California | ||
Martin Fenton, 74 | 1981 | Chairman of the Board, Senior Resource Group LLC |
(development and management of senior living | ||
communities) | ||
Leonard R. Fuller,4 63 | 2010 | President and CEO, Fuller Consulting (financial |
management consulting firm) | ||
William D. Jones, 54 | 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) | ||
L. Daniel Jorndt,4 68 | 2010 | Retired; former Chairman of the Board and CEO, |
Walgreen Co. (drug store chain) | ||
William H. Kling, 67 | 2006 | President and CEO, American Public Media Group |
John G. McDonald,4 72 | 2010 | Stanford Investors Professor, Graduate School of |
Business, Stanford University | ||
Bailey Morris-Eck, 65 | 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 | ||
Olin C. Robison, Ph.D., 73 | 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., 69 | 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 |
Louise H. Bryson,4 65 | 6 | None |
Mary Anne Dolan, 62 | 9 | None |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
James G. Ellis,4 62 | 17 | Quiksilver, Inc. |
Martin Fenton, 74 | 17 | None |
Leonard R. Fuller,4 63 | 17 | None |
William D. Jones, 54 | 6 | Sempra Energy; SouthWest Water Company |
L. Daniel Jorndt,4 68 | 3 | None |
William H. Kling, 67 | 9 | None |
John G. McDonald,4 72 | 12 | iStar Financial, Inc.; Plum Creek Timber Co.; |
Scholastic Corporation; Varian, Inc. | ||
Bailey Morris-Eck, 65 | 3 | None |
Olin C. Robison, Ph.D., 73 | 3 | American Shared Hospital Services |
Steven B. Sample, Ph.D., 69 | 3 | Intermec, Inc. |
Kirk P. Pendleton and Mary Myers Kauppila retired from the board in May 2009 and September 2009, respectively. The directors thank Mr. Pendleton and Mrs. Kauppila for their dedication and service to the fund.
“Interested” directors5 | ||
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 |
position with fund | the fund1 | principal underwriter of the fund |
James K. Dunton, 71 | 1984 | Senior Vice President — Capital Research Global |
Vice Chairman of the Board | Investors, Capital Research and Management | |
Company; Director, Capital Research and | ||
Management Company | ||
Joyce E. Gordon,4 53 | 1996 | Senior Vice President — Capital Research Global |
President | Investors, Capital Research and Management | |
Company; Director, Capital Research and | ||
Management Company | ||
“Interested” directors5 | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
Name, age and | overseen by | |
position with fund | director | Other directorships3 held by director |
James K. Dunton, 71 | 2 | None |
Vice Chairman of the Board | ||
Joyce E. Gordon,4 53 | 2 | None |
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.
See page 34 for footnotes.
Chairman emeritus | |
Jon B. Lovelace, Jr., 82 | Chairman Emeritus, Capital Research and |
Management Company |
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 |
James B. Lovelace, 53 | 2006 | Senior Vice President — Capital Research Global |
Senior Vice President | Investors, Capital Research and Management | |
Company; Director, The Capital Group Companies, | ||
Inc.6 | ||
William L. Robbins, 41 | 2004 | Senior Vice President — Capital Research Global |
Senior Vice President | Investors, Capital Research Company;6 Director and | |
Co-President, Capital Research Company6 | ||
Paul F. Roye, 56 | 2007 | Senior Vice President — Fund Business Management |
Senior Vice President | Group, Capital Research and Management Company; | |
Director, American Funds Service Company;6 former | ||
Director, Division of Investment Management, United | ||
States Securities and Exchange Commission | ||
Christopher D. Buchbinder, 38 | 2006 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company;6 Director, | |
Capital Research Company6 | ||
James Terrile, 44 | 2007 | Senior Vice President — Capital Research Global |
Vice President | Investors, Capital Research Company6 | |
Vincent P. Corti, 53 | 1994 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Karl C. Grauman, 41 | 2006 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Courtney R. Taylor, 34 | 2007 | Assistant Vice President — Fund Business |
Assistant Secretary | Management Group, Capital Research and | |
Management Company | ||
Jeffrey P. Regal, 38 | 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 30 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. |
4Louise H. Bryson, James G. Ellis, Leonard R. Fuller, L. Daniel Jorndt, John G. McDonald and Joyce E. Gordon were elected to the board by the fund’s shareholders effective January 1, 2010. |
5“Interested persons” within the meaning of the 1940 Act, as amended, 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). |
6Company affiliated with Capital Research and Management Company. |
Offices
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
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
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 summary prospectus and 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 Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete October 31, 2009, 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. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings 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 summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2009, 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 nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 30 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 approach to 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 25 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have. |
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees 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 Fund® |
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 Funds Short-Term Tax-Exempt Bond FundSM |
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 fund |
American Funds Money Market FundSM |
•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-903-1209P
Litho in USA BBC/L/8052-S20663
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: | ||||
2008 | $75,000 | |||
2009 | $78,000 | |||
b) Audit-Related Fees: | ||||
2008 | $5,000 | |||
2009 | $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: | ||||
2008 | $7,000 | |||
2009 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | 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) Audit Fees: | ||||
Not Applicable | ||||
b) Audit-Related Fees: | ||||
2008 | $992,000 | |||
2009 | $1,084,000 | |||
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: | ||||
2008 | $8,000 | |||
2009 | None | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. |
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. 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, adviser and affiliates that provide ongoing services to the Registrant, were $1,289,000 for fiscal year 2008 and $1,587,000 for fiscal year 2009. 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, 2009
Common stocks — 84.32% | Shares | Value (000) | ||||||
ENERGY — 9.02% | ||||||||
Apache Corp. | 123,400 | $ | 11,614 | |||||
Baker Hughes Inc. | 1,070,000 | 45,015 | ||||||
BJ Services Co. | 4,814,837 | 92,445 | ||||||
Chevron Corp. | 1,973,911 | 151,083 | ||||||
ConocoPhillips | 4,177,900 | 209,647 | ||||||
Devon Energy Corp. | 1,925,000 | 124,567 | ||||||
EOG Resources, Inc. | 471,600 | 38,511 | ||||||
Halliburton Co. | 1,200,000 | 35,052 | ||||||
Hess Corp. | 822,200 | 45,007 | ||||||
Marathon Oil Corp. | 5,353,600 | 171,155 | ||||||
Royal Dutch Shell PLC, Class A (ADR) | 4,076,000 | 242,155 | ||||||
Schlumberger Ltd. | 880,400 | 54,761 | ||||||
Smith International, Inc. | 350,000 | 9,705 | ||||||
Spectra Energy Corp | 3,930,500 | 75,151 | ||||||
Sunoco, Inc. | 500,000 | 15,400 | ||||||
1,321,268 | ||||||||
MATERIALS — 3.60% | ||||||||
Air Products and Chemicals, Inc. | 2,467,300 | 190,303 | ||||||
Dow Chemical Co. | 750,000 | 17,610 | ||||||
International Paper Co. | 1,250,000 | 27,887 | ||||||
MeadWestvaco Corp. | 6,209,864 | 141,771 | ||||||
Monsanto Co. | 220,700 | 14,827 | ||||||
Potash Corp. of Saskatchewan Inc. | 210,000 | 19,484 | ||||||
Praxair, Inc. | 1,222,300 | 97,100 | ||||||
Weyerhaeuser Co. | 500,000 | 18,170 | ||||||
527,152 | ||||||||
INDUSTRIALS — 15.88% | ||||||||
3M Co. | 2,013,700 | 148,148 | ||||||
Avery Dennison Corp. | 3,710,000 | 132,261 | ||||||
Boeing Co. | 2,585,000 | 123,563 | ||||||
Burlington Northern Santa Fe Corp. | 2,315,000 | 174,366 | ||||||
Cintas Corp. | 785,000 | 21,737 | ||||||
CSX Corp. | 2,742,500 | 115,679 | ||||||
Eaton Corp. | 400,000 | 24,180 | ||||||
Emerson Electric Co. | 1,300,000 | 49,075 | ||||||
General Dynamics Corp. | 945,000 | 59,251 | ||||||
General Electric Co. | 8,417,500 | 120,034 | ||||||
Illinois Tool Works Inc. | 850,000 | 39,032 | ||||||
Ingersoll-Rand PLC | 1,300,000 | 41,067 | ||||||
Lockheed Martin Corp. | 1,330,000 | 91,491 | ||||||
Manpower Inc. | 740,000 | 35,083 | ||||||
Norfolk Southern Corp. | 230,000 | 10,723 | ||||||
Northrop Grumman Corp. | 1,300,000 | 65,169 | ||||||
Pentair, Inc. | 1,800,000 | 52,380 | ||||||
Pitney Bowes Inc. | 4,166,900 | 102,089 | ||||||
Precision Castparts Corp. | 314,000 | 29,996 | ||||||
R.R. Donnelley & Sons Co. | 6,212,657 | 124,750 | ||||||
Rockwell Automation | 1,250,000 | 51,187 | ||||||
Southwest Airlines Co. | 4,450,000 | 37,380 | ||||||
Union Pacific Corp. | 1,990,000 | 109,729 | ||||||
United Parcel Service, Inc., Class B | 3,550,000 | 190,564 | ||||||
United Technologies Corp. | 4,030,000 | 247,643 | ||||||
Waste Management, Inc. | 4,345,000 | 129,829 | ||||||
2,326,406 | ||||||||
CONSUMER DISCRETIONARY — 7.71% | ||||||||
Carnival Corp., units | 655,000 | 19,074 | ||||||
Comcast Corp., Class A, special nonvoting shares | 1,500,000 | 21,030 | ||||||
Darden Restaurants, Inc. | 3,365,000 | 101,993 | ||||||
Harley-Davidson, Inc. | 2,408,000 | 60,007 | ||||||
Home Depot, Inc. | 750,000 | 18,817 | ||||||
Johnson Controls, Inc. | 5,990,000 | 143,281 | ||||||
Leggett & Platt, Inc. | 2,316,074 | 44,770 | ||||||
Lowe’s Companies, Inc. | 3,200,400 | 62,632 | ||||||
Mattel, Inc. | 4,500,000 | 85,185 | ||||||
McDonald’s Corp. | 900,000 | 52,749 | ||||||
News Corp., Class A | 3,850,000 | 44,352 | ||||||
Omnicom Group Inc. | 1,500,000 | 51,420 | ||||||
Staples, Inc. | 1,600,000 | 34,720 | ||||||
Target Corp. | 2,000,000 | 96,860 | ||||||
Time Warner Cable Inc. | 322,381 | 12,715 | ||||||
Time Warner Inc. | 4,002,666 | 120,560 | ||||||
VF Corp. | 1,150,000 | 81,696 | ||||||
YUM! Brands, Inc. | 2,340,000 | 77,103 | ||||||
1,128,964 | ||||||||
CONSUMER STAPLES — 6.56% | ||||||||
Avon Products, Inc. | 2,690,000 | 86,214 | ||||||
Coca-Cola Co. | 1,850,000 | 98,623 | ||||||
Colgate-Palmolive Co. | 637,500 | 50,127 | ||||||
ConAgra Foods, Inc. | 950,000 | 19,950 | ||||||
General Mills, Inc. | 750,000 | 49,440 | ||||||
H.J. Heinz Co. | 600,000 | 24,144 | ||||||
Kellogg Co. | 2,685,600 | 138,416 | ||||||
Kimberly-Clark Corp. | 1,900,000 | 116,204 | ||||||
Kraft Foods Inc., Class A | 2,224,200 | 61,210 | ||||||
PepsiCo, Inc. | 2,305,000 | 139,568 | ||||||
Procter & Gamble Co. | 310,000 | 17,980 | ||||||
Sara Lee Corp. | 6,193,800 | 69,928 | ||||||
Wal-Mart Stores, Inc. | 1,800,000 | 89,424 | ||||||
961,228 | ||||||||
HEALTH CARE — 9.55% | ||||||||
Abbott Laboratories | 4,179,600 | 211,362 | ||||||
Amgen Inc.1 | 630,000 | 33,850 | ||||||
Bristol-Myers Squibb Co. | 4,662,500 | 101,642 | ||||||
Cardinal Health, Inc. | 1,305,000 | 36,984 | ||||||
Eli Lilly and Co. | 2,760,000 | 93,868 | ||||||
Johnson & Johnson | 600,000 | 35,430 | ||||||
Medtronic, Inc. | 3,452,000 | 123,236 | ||||||
Merck & Co., Inc. | 11,635,000 | 359,871 | ||||||
Novartis AG (ADR) | 1,900,000 | 98,705 | ||||||
Pfizer Inc | 9,895,000 | 168,512 | ||||||
Schering-Plough Corp. | 4,800,000 | 135,360 | ||||||
1,398,820 | ||||||||
FINANCIALS — 3.24% | ||||||||
Allstate Corp. | 700,000 | 20,699 | ||||||
Arthur J. Gallagher & Co. | 1,037,331 | 23,143 | ||||||
Bank of America Corp. | 3,227,933 | 47,063 | ||||||
Bank of New York Mellon Corp. | 3,456,000 | 92,137 | ||||||
Capital One Financial Corp. | 735,000 | 26,901 | ||||||
JPMorgan Chase & Co. | 3,293,000 | 137,549 | ||||||
Lincoln National Corp. | 413,300 | 9,849 | ||||||
Marsh & McLennan Companies, Inc. | 1,165,000 | 27,331 | ||||||
Travelers Companies, Inc. | 1,000,000 | 49,790 | ||||||
U.S. Bancorp | 1,750,000 | 40,635 | ||||||
475,097 | ||||||||
INFORMATION TECHNOLOGY — 14.13% | ||||||||
Analog Devices, Inc. | 700,000 | 17,941 | ||||||
Automatic Data Processing, Inc. | 2,000,000 | 79,600 | ||||||
Cisco Systems, Inc.1 | 1,950,000 | 44,558 | ||||||
Google Inc., Class A1 | 57,000 | 30,559 | ||||||
Hewlett-Packard Co. | 4,320,000 | 205,027 | ||||||
Intel Corp. | 9,423,000 | 180,074 | ||||||
International Business Machines Corp. | 2,810,000 | 338,914 | ||||||
KLA-Tencor Corp. | 694,100 | 22,565 | ||||||
Linear Technology Corp. | 3,845,000 | 99,509 | ||||||
Maxim Integrated Products, Inc. | 4,930,000 | 82,183 | ||||||
Microchip Technology Inc. | 3,890,725 | 93,222 | ||||||
Microsoft Corp. | 16,849,198 | 467,228 | ||||||
Nokia Corp. (ADR) | 1,940,000 | 24,463 | ||||||
Oracle Corp. | 6,815,000 | 143,796 | ||||||
Paychex, Inc. | 1,000,000 | 28,410 | ||||||
QUALCOMM Inc. | 800,000 | 33,128 | ||||||
SAP AG (ADR) | 1,031,000 | 46,673 | ||||||
Texas Instruments Inc. | 4,100,000 | 96,145 | ||||||
Tyco Electronics Ltd. | 900,000 | 19,125 | ||||||
Xilinx, Inc. | 800,400 | 17,409 | ||||||
2,070,529 | ||||||||
TELECOMMUNICATION SERVICES — 6.41% | ||||||||
AT&T Inc. | 18,195,597 | 467,081 | ||||||
CenturyTel, Inc. | 9,097,822 | 295,315 | ||||||
Verizon Communications Inc. | 5,967,612 | 176,582 | ||||||
938,978 | ||||||||
UTILITIES — 7.62% | ||||||||
Ameren Corp. | 3,598,680 | 87,592 | ||||||
American Electric Power Co., Inc. | 1,435,000 | 43,366 | ||||||
Dominion Resources, Inc. | 2,800,000 | 95,452 | ||||||
DTE Energy Co. | 750,000 | 27,735 | ||||||
Duke Energy Corp. | 3,800,000 | 60,116 | ||||||
Exelon Corp. | 3,893,720 | 182,849 | ||||||
FirstEnergy Corp. | 2,552,900 | 110,489 | ||||||
PPL Corp. | 3,252,000 | 95,739 | ||||||
Progress Energy, Inc. | 2,346,900 | 88,079 | ||||||
Public Service Enterprise Group Inc. | 2,575,000 | 76,735 | ||||||
Questar Corp. | 3,000,000 | 119,520 | ||||||
Southern Co. | 1,250,000 | 38,987 | ||||||
Xcel Energy Inc. | 4,745,000 | 89,491 | ||||||
1,116,150 | ||||||||
MISCELLANEOUS — 0.60% | ||||||||
Other common stocks in initial period of acquisition | 87,683 | |||||||
Total common stocks (cost: $12,044,741,000) | 12,352,275 | |||||||
Preferred stocks — 1.43% | ||||||||
FINANCIALS — 1.43% | ||||||||
JPMorgan Chase & Co., Series I, 7.90%2 | 87,080,000 | 87,841 | ||||||
PNC Financial Services Group, Inc., Series K, 8.25%2 | 900,000 | 903 | ||||||
PNC Preferred Funding Trust III 8.70%2,3 | 35,900,000 | 35,822 | ||||||
Wachovia Capital Trust III 5.80%2 | 14,885,000 | 10,799 | ||||||
Wells Fargo & Co. 7.98%2 | 79,348,000 | 74,686 | ||||||
Total preferred stocks (cost: $189,814,000) | 210,051 | |||||||
Convertible securities — 0.25% | ||||||||
CONSUMER DISCRETIONARY — 0.02% | ||||||||
Johnson Controls, Inc. 11.50% convertible preferred 2012, units | 22,000 | 2,752 | ||||||
FINANCIALS — 0.23% | ||||||||
SLM Corp., Series C, 7.25% convertible preferred 2010 | 61,000 | 33,865 | ||||||
Total convertible securities (cost: $29,090,000) | 36,617 | |||||||
Principal amount | ||||||||
Bonds & notes — 8.08% | (000 | ) | ||||||
ENERGY — 0.20% | ||||||||
Apache Corp. 6.00% 2013 | $ | 5,000 | 5,573 | |||||
Chevron Corp. 3.95% 2014 | 5,000 | 5,271 | ||||||
Enbridge Energy Partners, LP 5.35% 2014 | 5,075 | 5,337 | ||||||
Kinder Morgan Energy Partners LP 6.75% 2011 | 4,000 | 4,261 | ||||||
Kinder Morgan Energy Partners LP 6.85% 2020 | 3,000 | 3,328 | ||||||
Shell International Finance B.V. 4.00% 2014 | 5,000 | 5,260 | ||||||
29,030 | ||||||||
INDUSTRIALS — 0.27% | ||||||||
Burlington Northern Santa Fe Corp. 6.75% 2011 | 8,442 | 9,177 | ||||||
Honeywell International Inc. 3.875% 2014 | 3,400 | 3,561 | ||||||
Lockheed Martin Corp. 4.121% 2013 | 1,450 | 1,527 | ||||||
Norfolk Southern Corp. 8.625% 2010 | 5,000 | 5,212 | ||||||
Northrop Grumman Corp. 7.75% 2016 | 4,420 | 5,329 | ||||||
PACCAR Inc, Series A, 6.375% 2012 | 5,000 | 5,424 | ||||||
PACCAR Inc, Series A, 6.875% 2014 | 5,000 | 5,715 | ||||||
Union Pacific Corp. 5.125% 2014 | 3,830 | 4,108 | ||||||
40,053 | ||||||||
CONSUMER DISCRETIONARY — 1.66% | ||||||||
AOL Time Warner Inc. 6.75% 2011 | 24,505 | 26,187 | ||||||
AOL Time Warner Inc. 6.875% 2012 | 8,436 | 9,285 | ||||||
Time Warner Inc. 5.50% 2011 | 13,875 | 14,841 | ||||||
Black & Decker Corp. 8.95% 2014 | 18,000 | 21,263 | ||||||
Comcast Cable Communications, Inc. 6.75% 2011 | 4,335 | 4,606 | ||||||
Hasbro, Inc. 6.125% 2014 | 3,750 | 4,124 | ||||||
Home Depot, Inc. 0.42% 20092 | 20,593 | 20,592 | ||||||
Johnson Controls, Inc. 5.50% 2016 | 1,720 | 1,764 | ||||||
News America Inc. 6.90% 2019 | 3,155 | 3,543 | ||||||
Staples, Inc. 7.75% 2011 | 9,380 | 10,084 | ||||||
Staples, Inc. 9.75% 2014 | 101,450 | 123,051 | ||||||
Time Warner Cable Inc. 6.20% 2013 | 3,985 | 4,369 | ||||||
243,709 | ||||||||
CONSUMER STAPLES — 0.35% | ||||||||
Avon Products, Inc. 5.625% 2014 | 5,000 | 5,489 | ||||||
Coca-Cola Enterprises Inc. 3.75% 2012 | 5,000 | 5,262 | ||||||
ConAgra Foods, Inc. 5.875% 2014 | 5,000 | 5,471 | ||||||
CVS Caremark Corp. 1.802% 20102 | 21,055 | 21,239 | ||||||
CVS Caremark Corp. 6.60% 2019 | 2,665 | 2,978 | ||||||
Safeway Inc. 6.25% 2014 | 5,900 | 6,522 | ||||||
Sysco Corp. 5.375% 2019 | 4,000 | 4,332 | ||||||
51,293 | ||||||||
HEALTH CARE — 0.48% | ||||||||
Abbott Laboratories 5.125% 2019 | 5,000 | 5,310 | ||||||
Aetna Inc. 5.75% 2011 | 1,962 | 2,067 | ||||||
Aetna Inc. 7.875% 2011 | 435 | 461 | ||||||
Amgen Inc. 6.90% 2038 | 20,000 | 24,326 | ||||||
Cardinal Health, Inc. 5.65% 2012 | 2,800 | 2,968 | ||||||
Eli Lilly and Co. 3.55% 2012 | 4,250 | 4,452 | ||||||
Merck & Co., Inc. 1.875% 2011 | 3,765 | 3,814 | ||||||
Novartis Capital Corp. 4.125% 2014 | 5,000 | 5,286 | ||||||
Pfizer Inc. 4.45% 2012 | 5,000 | 5,305 | ||||||
Roche Holdings Inc. 6.00% 20193 | 10,000 | 11,094 | ||||||
UnitedHealth Group Inc. 0.472% 20102 | 50 | 50 | ||||||
WellPoint, Inc. 5.00% 2011 | 5,000 | 5,182 | ||||||
70,315 | ||||||||
FINANCIALS — 2.08% | ||||||||
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013 | 5,000 | 5,373 | ||||||
American Express Bank 5.55% 2012 | 28,250 | 30,177 | ||||||
American Express Centurion Bank 5.55% 2012 | 18,870 | 20,157 | ||||||
American Express Co. 7.00% 2018 | 2,870 | 3,177 | ||||||
Bank of America Corp. 4.25% 2010 | 4,720 | 4,853 | ||||||
Bank of America Corp. 4.375% 2010 | 24,110 | 24,793 | ||||||
Bank of America Corp. 4.50% 2010 | 7,965 | 8,160 | ||||||
Bank of America Corp. 6.50% 2016 | 7,000 | 7,499 | ||||||
Citigroup Funding Inc., Series D, 1.518% 20102 | 34,400 | 34,498 | ||||||
Citigroup Inc. 0.313% 20092 | 9,680 | 9,680 | ||||||
Citigroup Inc. 0.579% 20102 | 18,280 | 18,241 | ||||||
Citigroup Inc. 4.125% 2010 | 11,915 | 12,021 | ||||||
Citigroup Inc. 4.625% 2010 | 2,890 | 2,954 | ||||||
Citigroup Inc. 6.125% 2017 | 7,000 | 7,155 | ||||||
ERP Operating LP 5.50% 2012 | 1,950 | 2,042 | ||||||
ERP Operating LP 6.625% 2012 | 5,500 | 5,912 | ||||||
ERP Operating LP 6.584% 2015 | 3,500 | 3,738 | ||||||
ERP Operating LP 5.125% 2016 | 2,400 | 2,370 | ||||||
ERP Operating LP 5.375% 2016 | 13,404 | 13,293 | ||||||
ERP Operating LP 5.75% 2017 | 39,855 | 40,182 | ||||||
ERP Operating LP 7.125% 2017 | 5,000 | 5,238 | ||||||
JPMorgan Chase & Co. 4.75% 2013 | 5,000 | 5,304 | ||||||
Kimco Realty Corp. 5.304% 2011 | 2,500 | 2,525 | ||||||
MassMutual Global Funding II, 3.625% 20123 | 5,250 | 5,418 | ||||||
MetLife Global Funding 5.125% 20143 | 3,000 | 3,191 | ||||||
Metropolitan Life Global Funding I, 5.125% 20133 | 1,665 | 1,765 | ||||||
New York Life Global Funding 2.25% 20123 | 5,000 | 4,999 | ||||||
PNC Funding Corp. 0.481% 20142 | 5,000 | 4,689 | ||||||
Simon Property Group, LP 6.75% 2014 | 7,000 | 7,539 | ||||||
Westfield Group 5.75% 20153 | 7,000 | 7,046 | ||||||
303,989 | ||||||||
INFORMATION TECHNOLOGY — 0.10% | ||||||||
KLA-Tencor Corp. 6.90% 2018 | 13,700 | 14,386 | ||||||
TELECOMMUNICATION SERVICES — 0.24% | ||||||||
AT&T Inc. 4.85% 2014 | 5,000 | 5,345 | ||||||
Telecom Italia Capital SA 6.175% 2014 | 5,000 | 5,430 | ||||||
Verizon Communications Inc. 5.55% 20143 | 5,000 | 5,453 | ||||||
Verizon Communications Inc. 8.50% 20183 | 15,000 | 18,719 | ||||||
34,947 | ||||||||
UTILITIES — 0.21% | ||||||||
FirstEnergy Solutions Co. 4.80% 20153 | 3,000 | 3,078 | ||||||
FPL Group Capital, Inc. 7.875% 2015 | 20,000 | 24,330 | ||||||
Progress Energy, Inc. 6.05% 2014 | 3,500 | 3,856 | ||||||
31,264 | ||||||||
MORTGAGE-BACKED OBLIGATIONS4 — 1.41% | ||||||||
DEPFA ACS Bank 4.75% 2010 | 3,980 | 4,063 | ||||||
Fannie Mae 4.50% 2023 | 17,183 | 17,921 | ||||||
Fannie Mae 5.50% 2023 | 14,865 | 15,841 | ||||||
Fannie Mae 4.00% 2024 | 19,472 | 19,854 | ||||||
Fannie Mae 4.00% 2024 | 23,736 | 24,215 | ||||||
Fannie Mae 4.00% 2024 | 48,667 | 49,621 | ||||||
Fannie Mae 4.50% 2024 | 48,517 | 50,480 | ||||||
Fannie Mae 5.00% 2039 | 24,248 | 25,176 | ||||||
207,171 | ||||||||
BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 1.08% | ||||||||
Fannie Mae 2.50% 2014 | 25,775 | 25,870 | ||||||
Fannie Mae 2.625% 2014 | 15,000 | 14,995 | ||||||
Freddie Mac 1.75% 2012 | 50,240 | 50,666 | ||||||
U.S. Treasury 0.875% 2011 | 20,000 | 20,097 | ||||||
U.S. Treasury 1.125% 2011 | 5,000 | 5,016 | ||||||
U.S. Treasury 1.875% 2012 | 10,000 | 10,165 | ||||||
U.S. Treasury 3.25% 2016 | 10,000 | 10,230 | ||||||
United States Government Agency-Guaranteed (FDIC insured), Citigroup Inc. 1.50% 2011 | 10,000 | 10,093 | ||||||
United States Government Agency-Guaranteed (FDIC insured), General Electric Capital Corp., Series G, 2.625% 2012 | 10,000 | 10,283 | ||||||
157,415 | ||||||||
Total bonds & notes (cost: $1,089,110,000) | 1,183,572 | |||||||
Short-term securities — 6.04% | ||||||||
Abbott Laboratories 0.13% due 12/16/20093 | 13,700 | 13,696 | ||||||
Coca-Cola Co. 0.15% due 2/2/20103 | 46,300 | 46,275 | ||||||
Fannie Mae 0.17%–0.20% due 11/2–12/22/2009 | 95,700 | 95,694 | ||||||
Federal Home Loan Bank 0.15%–0.17% due 11/17–12/16/2009 | 99,400 | 99,393 | ||||||
Freddie Mac 0.18%–0.245% due 1/21–5/19/2010 | 209,568 | 209,454 | ||||||
JPMorgan Chase Funding Inc. 0.16% due 11/23/20093 | 27,000 | 26,997 | ||||||
Merck & Co. Inc. 0.14% due 12/14/20093 | 19,700 | 19,697 | ||||||
NetJets Inc. 0.14% due 11/30/20093 | 21,300 | 21,298 | ||||||
Paccar Financial Corp. 0.20% due 1/25–1/28/2010 | 46,600 | 46,571 | ||||||
Private Export Funding Corp. 0.23% due 12/1/20093 | 7,200 | 7,199 | ||||||
Procter & Gamble International Funding S.C.A. 0.23% due 1/8/20103 | 28,700 | 28,690 | ||||||
Straight-A Funding LLC 0.21% due 11/24/20093 | 50,000 | 49,992 | ||||||
U.S. Treasury Bills 0.22%–0.338% due 5/6–8/26/2010 | 170,600 | 170,307 | ||||||
Wal-Mart Stores Inc. 0.13%–0.16% due 11/30–12/7/20093 | 48,970 | 48,962 | ||||||
Total short-term securities (cost: $884,121,000) | 884,225 | |||||||
Total investment securities (cost: $14,236,876,000) | 14,666,740 | |||||||
Other assets less liabilities | (16,863 | ) | ||||||
Net assets | $ | 14,649,877 |
"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. 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 $359,391,000, which represented 2.45% of the net assets of the fund.
4Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
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 the funds’ prospectus, which can be obtained from your financial professional and should be read carefully before investing.
MFGEFP-903-1209O-S21447
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, 2009, and for the year then ended and have issued our report thereon dated December 10, 2009, 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, 2009, 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, 2009
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 and Principal Executive Officer | |
Date: December 30, 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 and Principal Executive Officer |
Date: December 30, 2009 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: December 30, 2009 |