amf497.htm

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AMERICAN MUTUAL FUND, INC.

Part B
Statement of Additional Information

July 30, 2008

(as supplemented December 3, 2008)

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of American Mutual Fund, Inc.
(the "fund" or "AMF") dated July 30, 2008. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:

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

Certain privileges and/or services described below may not be available to all
shareholders (including shareholders who purchase shares at net asset value
through eligible retirement plans) depending on the shareholder's investment
dealer or retirement plan recordkeeper. Please see your financial adviser,
investment dealer, plan recordkeeper or employer for more information.

TABLE OF CONTENTS

Item Page no.
---- --------

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 5
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 8
Execution of portfolio transactions . . . . . . . . . . . . . . . . 27
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 29
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 32
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 37
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 44
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Shareholder account services and privileges . . . . . . . . . . . . 49
General information . . . . . . . . . . . . . . . . . . . . . . . . 51
Financial statements

American Mutual Fund -- Page 1
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CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

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

GENERAL GUIDELINE

. The fund's equity investments are limited to securities included on its
eligible list, which consists of securities deemed suitable by the fund's
investment adviser in light of the fund's investment objectives and
policies. Securities are added to, or deleted from, the eligible list by
the fund's board of directors after reviewing and acting upon the
recommendations of the fund's investment adviser.

EQUITY SECURITIES

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

. The fund may invest up to 5% of its assets in companies that do not pay a
dividend.

DEBT SECURITIES

. The fund may invest in debt securities rated investment grade or better
(i.e., Baa3 or better by Moody's Investors Service ("Moody's") or BBB- or
better by Standard & Poor's Corporation ("S&P")) or unrated but determined
by the fund's investment adviser to be of equivalent quality.

INVESTING OUTSIDE THE U.S.

. The fund may invest up to 5% of its assets in securities of issuers
domiciled outside the United States and Canada and are not included in the
S&P 500 Composite Index.

* * * * * *

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

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."

EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the fund typically consist of common stocks
and may also include securities with equity or purchase rights. The prices of
equity securities fluctuate based on, among other things, events specific to
their issuers and market, economic and other conditions. For example, prices of
these securities can be affected by financial contracts held by the issuer or
third parties (such as derivatives) relating to the security or other assets or
indices.

American Mutual Fund -- Page 2
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There may be little trading in the secondary market for particular equity
securities, which may adversely affect the fund's ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.

DEBT SECURITIES -- Debt securities are used by issuers to borrow money.
Generally, issuers pay investors periodic interest and repay the amount borrowed
either periodically during the life of the security and/or at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but are
purchased at a discount from their face values and their values accrete over
time to face value at maturity. The market prices of debt securities fluctuate
depending on such factors as interest rates, credit quality and maturity. In
general, market prices of debt securities decline when interest rates rise and
increase when interest rates fall. For example, prices of these securities can
be affected by financial contracts held by the issuer or third parties (such as
derivatives) relating to the security or other assets or indices.

Credit ratings for debt securities provided by rating agencies reflect an
evaluation of the safety of principal and interest payments, not market value
risk. The rating of an issuer is a rating agency's view of past and future
potential developments related to the issuer and may not necessarily reflect
actual outcomes. There can be a lag between the time of developments relating to
an issuer and the time a rating is assigned and updated.

Bond rating agencies may assign modifiers (such as +/-) to ratings categories to
signify the relative position of a credit within the rating category. Investment
policies that are based on ratings categories should be read to include any
security within that category, without giving consideration to the modifier. See
the Appendix for more information about credit ratings.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt or vice versa. Some
types of convertible bonds, preferred stocks or other preferred securities
automatically convert into common stocks or other securities at a stated
conversion ratio and some may be subject to redemption at the option of the
issuer at a predetermined price. These securities, prior to conversion, may pay
a fixed rate of interest or a dividend. Because convertible securities have both
debt and equity characteristics, their values vary in response to many factors,
including the values of the securities into which they are convertible, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.

The prices and yields of nonconvertible preferred securities or preferred stocks
generally move with changes in interest rates and the issuer's credit quality,
similar to the factors affecting debt securities. Nonconvertible preferred
securities will be treated as debt for fund investment limit purposes.

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends.

American Mutual Fund -- Page 3
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Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.

REAL ESTATE INVESTMENT TRUSTS -- The fund may invest in securities issued by
real estate investment trusts (REITs), which primarily invest in real estate or
real estate-related loans. Equity REITs own real estate properties, while
mortgage REITs hold construction, development and/or long-term mortgage loans.
The values of REITs may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property taxes,
interest rates, tax laws and regulatory requirements, such as those relating to
the environment. Both types of REITs are dependent upon management skill and the
cash flows generated by their holdings, the real estate market in general and
the possibility of failing to qualify for any applicable pass-through tax
treatment or failing to maintain any applicable exemptive status afforded under
relevant laws.

U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed
by the full faith and credit of the U.S. government. U.S. government obligations
include the following types of securities:

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

FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The
securities of certain U.S. government agencies and government-sponsored
entities are guaranteed as to the timely payment of principal and interest
by the full faith and credit of the U.S. government. Such agencies and
entities include the Government National Mortgage Association (Ginnie Mae),
the Veterans Administration (VA), the Federal Housing Administration (FHA),
the Export-Import Bank (Exim Bank), the Overseas Private Investment
Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small
Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter; some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.

CASH AND CASH EQUIVALENTS -- The fund may hold cash or invest in cash
equivalents. Cash equivalents include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where

American Mutual Fund -- Page 4
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the bank accepts an irrevocable obligation to pay at maturity)) or bank notes,
(c) savings association and savings bank obligations (for example, bank notes
and certificates of deposit issued by savings banks or savings associations),
(d) securities of the U.S. government, its agencies or instrumentalities that
mature, or may be redeemed, in one year or less, and (e) corporate bonds and
notes that mature, or that may be redeemed, in one year or less.

4(2) COMMERCIAL PAPER -- The fund may purchase commercial paper issued pursuant
to Section 4(2) of the Securities Act of 1933 (the "1933 Act"). 4(2) commercial
paper has substantially the same price and liquidity characteristics as
commercial paper generally, except that the resale of 4(2) commercial paper is
limited to the institutional investor marketplace. Such a restriction on resale
makes 4(2) commercial paper technically a restricted security under the 1933
Act. In practice, however, 4(2) commercial paper can be resold as easily as any
other unrestricted security held by the fund. Accordingly, 4(2) commercial paper
has been determined to be liquid under procedures adopted by the fund's board of
directors.

* * * * * *

PORTFOLIO TURNOVER -- The fund's portfolio turnover rates for the fiscal years
ended 2007 and 2006 were 19% for both years and the average of the last five
years were 20%. The portfolio turnover rate would equal 100% if each security in
a fund's portfolio was replaced once per year. See "Financial highlights" in the
prospectus for the fund's annual portfolio turnover for each of the last five
fiscal years.

With the fund's focus on long term investing, the fund does not engage in high
portfolio turnover (100% or more). High turnover generates greater transaction
costs in the form of dealer spreads or brokerage commissions, and may result in
the realization of excessive short-term capital gains, which are taxable at the
highest rate when distributed to shareholders. Short-term trading profits are
not the fund's objective, and changes in its investments are generally
accomplished gradually, though short-term transactions may occasionally be made.

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

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

These restrictions provide that the fund shall make no investment:

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

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

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

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

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

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

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

The fund is not permitted to:

7. Invest in real estate;

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

9. Buy securities on margin;

10. Sell securities short; or

11. Borrow money.

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

NONFUNDAMENTAL POLICIES -- Further investment policies of the fund, which may be
changed by action of the board of directors, without shareholder approval, state
that the fund will not:

1. Purchase or retain the securities of any issuer if those officers and
directors of the fund or the Investment Adviser who own beneficially more than
1/2 of 1% of such issuer together own more than 5% of the securities of such
issuer;

2. Invest in the securities of other investment companies (except in
connection with the administration of a deferred compensation plan adopted by
directors and to the extent such

American Mutual Fund -- Page 6
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investments are allowed by an exemptive order granted by the Securities and
Exchange Commission);

3. Invest in securities of companies which, with their predecessors, have a
record of less than three years' continuous operations;

4. Ordinarily purchase securities which are non-income-producing at the time
of purchase if, as a result, more than 5% of the fund's portfolio is invested in
such securities;

5. Invest in puts, calls, straddles, spreads or any combination thereof;

6. Purchase partnership interests in oil, gas, or mineral exploration,
drilling or mining ventures;

7. Invest more than 5% of the value of the fund's net assets in warrants,
valued at the lower of cost or market, with no more than 2% being unlisted on
the New York or American Stock Exchanges (warrants acquired by the fund in units
or attached to securities may be deemed to be without value);

8. Invest more than 15% of the value of its total assets in securities which
are not readily marketable (including repurchase agreements maturing in more
than seven days or securities for which there is no active and substantial
market); and

9. Issue senior securities, except as permitted by the 1940 Act.

10. The fund may not acquire securities of open-end investment companies or
unit investment trusts registered under the 1940 Act in reliance on Sections
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.

American Mutual Fund -- Page 7
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MANAGEMENT OF THE FUND

BOARD OF DIRECTORS AND OFFICERS

"INDEPENDENT" DIRECTORS/1/

NAME, AGE AND NUMBER OF
POSITION WITH FUND PORTFOLIOS/3/
(YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/2/) DURING PAST FIVE YEARS BY DIRECTOR BY DIRECTOR
------------------------------------------------------------------------------------------------------------

H. Frederick Christie, 75 Private investor; former 21 AECOM Technology
Director (1972) President and CEO, The Corporation;
Mission Group (non-utility DineEquity, Inc.;
holding company, subsidiary Ducommun Incorporated;
of Southern California Edison Southwest Water Company
Company)
------------------------------------------------------------------------------------------------------------
Mary Anne Dolan, 61 Founder and President, 5 None
Chairman of the Board M.A.D., Inc. (communications
(Independent and company); former
Non-Executive) (1993) Editor-in-Chief, The Los
Angeles Herald Examiner

------------------------------------------------------------------------------------------------------------
Martin Fenton, 73 Chairman of the Board, Senior 18 None
Director (1981) Resource Group LLC
(development and management
of senior living communities)

------------------------------------------------------------------------------------------------------------
William D. Jones, 53 President and CEO, CityLink 2 Sempra Energy; Southwest
Director (2006) Investment Corporation (real Water Company
estate development and
management)
------------------------------------------------------------------------------------------------------------
Mary Myers Kauppila, 54 Private investor; Chairman of 6 None
Director (1991) the Board and CEO, Ladera
Management Company (venture
capital and agriculture);
former owner and President,
Energy Investment, Inc.

------------------------------------------------------------------------------------------------------------
William H. Kling,/5/ 66 President and CEO, American 7 Irwin Financial Corporation
Director (2006) Public Media Group

------------------------------------------------------------------------------------------------------------
Bailey Morris-Eck, 64 Director and Programming 3 None
Director (1999) Chair, WYPR Baltimore/
Washington (public radio
station); Senior Adviser,
Financial News (London);
Senior Fellow, Institute for
International Economics;
former Senior Associate and
head of the Global Policy
Initiative, Reuters
Foundation
------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton, 68 Chairman of the Board and 7 None
Director (1998) CEO, Cairnwood, Inc. (venture
capital investment)
------------------------------------------------------------------------------------------------------------
Olin C. Robison, Ph.D., 72 Fellow, The Oxford Centre for 3 American Shared Hospital
Director (1991) the Study of Christianity and Services
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., President, University of 2 Intermec, Inc.;
67 Southern California William Wrigley Jr. Company
Director (1999)
------------------------------------------------------------------------------------------------------------

American Mutual Fund -- Page 8
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"INTERESTED" DIRECTORS/6,7/

PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS
NAME, AGE AND AND POSITIONS NUMBER OF
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/
(YEAR FIRST ELECTED OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/OFFICER/2/) OF THE FUND BY DIRECTOR BY DIRECTOR
--------------------------------------------------------------------------------------------------------

James K. Dunton, 70 Senior Vice President - 2 None
President and Vice Capital Research Global
Chairman of the Board Investors, Capital Research
(1984) and Management Company;
Director, Capital Research
and Management Company
--------------------------------------------------------------------------------------------------------

American Mutual Fund -- Page 9
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OTHER OFFICERS/7/

NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST AND POSITIONS HELD WITH AFFILIATED ENTITIES
ELECTED/2/ OR THE PRINCIPAL UNDERWRITER OF THE FUND
AS AN OFFICER)
-------------------------------------------------------------------------------

Joyce E. Gordon, 51 Senior Vice President - Capital Research Global
Executive Vice Investors, Capital Research and Management Company;
President (2005) Director, Capital Research and Management Company
-------------------------------------------------------------------------------
James B. Lovelace, Senior Vice President - Capital Research Global
52 Investors, Capital Research and Management Company;
Senior Vice Director, Capital Research and Management Company
President (2006)
-------------------------------------------------------------------------------
Paul F. Roye, 54 Senior Vice President - Fund Business Management
Senior Vice Group, Capital Research and Management Company;
President (2007) Director, American Funds Service Company*; former
Director of Investment Management, United States
Securities and Exchange Commission
-------------------------------------------------------------------------------
Christopher D. Senior Vice President - Capital Research Global
Buchbinder, 36 Investors, Capital Research Company*; Director,
Vice President Capital Research Company*
(2006)
-------------------------------------------------------------------------------
William L. Robbins, Senior Vice President - Capital Research Global
39 Investors, Capital Research Company*; Director,
Vice President Capital Research Company*
(2004)
-------------------------------------------------------------------------------
James Terrile, 43 Senior Vice President - Capital Research Global
Vice President Investors, Capital Research Company*
(2007)
-------------------------------------------------------------------------------
Vincent P. Corti, 52 Vice President - Fund Business Management Group,
Secretary (1994) Capital Research and Management Company
-------------------------------------------------------------------------------
Karl C. Grauman, 40 Vice President - Fund Business Management Group,
Treasurer (2006) Capital Research and Management Company
-------------------------------------------------------------------------------
Courtney R. Taylor, Assistant Vice President - Fund Business Management
33 Group, Capital Research and Management Company
Assistant Secretary
(2007)
-------------------------------------------------------------------------------
Jeffrey P. Regal, 36 Vice President - Fund Business Management Group,
Assistant Treasurer Capital Research and Management Company
(2003)
-------------------------------------------------------------------------------

* Company affiliated with Capital Research and Management Company.
1 The term "independent" director refers to a director who is not an "interested
person" of the fund within the meaning of the 1940 Act.

2 Directors and officers of the fund serve until their resignation, removal or
retirement.
3 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /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.
4 This 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.
5 During the past two years, Karin Larson (President and Chairman of Capital
International Research, Inc., an affiliate of the investment adviser) has been
a trustee of Minnesota Public Radio, of which Mr. Kling is President. During
the past two years, Gordon Crawford (Senior Vice President, Capital Research
Global Investors, Capital Research and Management Company and Director, The
Capital Group Companies, Inc.) has been a trustee of Southern California Public
Radio, where Mr. Kling serves as a trustee and as Second Vice Chair. Neither
Ms. Larson nor Mr. Crawford participates in decisions directly related to Mr.
Kling's status or compensation.
6 "Interested persons" of the fund within the meaning of the 1940 Act, on the
basis of their affiliation with the fund's investment adviser, Capital Research
and Management Company, or affiliated entities (including the fund's principal
underwriter).
7 All of the officers listed, with the exception of Christopher D. Buchbinder,
are officers and/or directors/trustees of one or more of the other funds for
which Capital Research and Management Company serves as investment adviser.

THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY.

American Mutual Fund -- Page 10
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FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2007

AGGREGATE DOLLAR RANGE/1/
OF SHARES
OWNED IN ALL FUNDS
IN THE AMERICAN FUNDS
DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN
NAME SHARES OWNED/2/ BY DIRECTOR
-------------------------------------------------------------------------------

"INDEPENDENT" DIRECTORS
-------------------------------------------------------------------------------
H. Frederick Christie Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Mary Anne Dolan Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Martin Fenton $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
William D. Jones $10,001 - $50,000 $10,001 - $50,000
-------------------------------------------------------------------------------
Mary Myers Kauppila Over $100,000 Over $100,000
-------------------------------------------------------------------------------
William H. Kling Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Bailey Morris-Eck $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Kirk P. Pendleton $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Olin C. Robison None Over $100,000
-------------------------------------------------------------------------------
Steven B. Sample $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
"INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
James K. Dunton Over $100,000 Over $100,000
-------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
2 An independent director may have exposure to the fund through an allocation of
some or all of his or her nonqualified deferred compensation account.

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of one or more other such funds
with substantially overlapping board membership (in each case referred to as a
"board cluster"). The fund typically pays each independent director an annual
fee, which ranges from $17,000 to $35,000, based primarily on the total number
of board clusters on which that independent director serves.

In addition, the fund generally pays independent directors attendance and other
fees for meetings of the board and its committees. Board and committee chairs
receive additional fees for their services.

Independent directors also receive attendance fees for certain special joint
meetings and information sessions with directors and trustees of other groupings
of funds advised by the investment adviser. The fund and the other funds served
by each independent director each pay an equal portion of these attendance fees.

American Mutual Fund -- Page 11
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No pension or retirement benefits are accrued as part of fund expenses.
Independent directors may elect, on a voluntary basis, to defer all or a portion
of their fees through a deferred compensation plan in effect for the fund. The
fund also reimburses certain expenses of the independent directors.

DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED OCTOBER 31, 2007

TOTAL COMPENSATION (INCLUDING
AGGREGATE COMPENSATION VOLUNTARILY DEFERRED
(INCLUDING VOLUNTARILY COMPENSATION/1/)
DEFERRED COMPENSATION/1/) FROM ALL FUNDS MANAGED BY
NAME FROM THE FUND CAPITAL RESEARCH AND
------------------------------------------------------------------------------------------------------- MANAGEMENT
COMPANY OR ITS AFFILIATES/2/
-----------------------------

H. Frederick Christie/3/ $50,738 $419,260
------------------------------------------------------------------------------------------------------------------------------------
Mary Anne Dolan 48,374 198,000
------------------------------------------------------------------------------------------------------------------------------------
Martin Fenton, Jr./3/ 34,722 380,702
------------------------------------------------------------------------------------------------------------------------------------
William D. Jones/3/ 51,400 116,333
------------------------------------------------------------------------------------------------------------------------------------
Mary Myers Kauppila/3/ 42,583 304,458
------------------------------------------------------------------------------------------------------------------------------------
William H. Kling 40,797 319,750
------------------------------------------------------------------------------------------------------------------------------------
Bailey Morris-Eck/3/ 43,124 183,500
------------------------------------------------------------------------------------------------------------------------------------
Kirk P. Pendleton/3/ 42,718 280,333
------------------------------------------------------------------------------------------------------------------------------------
Olin C. Robison/3/ 43,124 196,000
------------------------------------------------------------------------------------------------------------------------------------
Steven B. Sample 50,400 103,800
------------------------------------------------------------------------------------------------------------------------------------

1 Amounts may be deferred by eligible directors under a nonqualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the directors. Compensation shown in this table for the fiscal
year ended October 31, 2007 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Funds managed by Capital Research and Management Company, including the
American Funds; American Funds Insurance Series,(R) which is composed of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts; American Funds Target Date Retirement Series,(R)/ /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.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2007
fiscal year for participating directors is as follows: H. Frederick Christie
($403,595), Martin Fenton, Jr. ($378,443), William D. Jones ($17,163), Mary
Myers Kauppila ($719,483), Bailey Morris-Eck ($429,432), Kirk P. Pendleton
($381,450) and Olin C. Robison ($334,425). Amounts deferred and accumulated
earnings thereon are not funded and are general unsecured liabilities of the
fund until paid to the directors.

As of June 1, 2008, the officers and directors of the fund and their families,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the fund.

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Delaware
corporation on September 6, 1949 and reincorporated in Maryland on December 20,
1983. Although the board of directors has delegated day-to-day oversight to the
investment adviser, all fund operations are supervised by the fund's board,
which meets periodically and performs duties required by applicable state and
federal laws.

American Mutual Fund -- Page 12
<PAGE>

Under Maryland law, the business affairs of a fund are managed under the
direction of the board of directors, and all powers of the fund are exercised by
or under the authority of the board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each director to
perform his/her duties as a director, including his/her duties as a member of
any board committee on which he/she serves, in good faith, in a manner he/she
reasonably believes to be in the best interest of the fund, and with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.

Independent board members are paid certain fees for services rendered to the
fund as described above. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund.

The fund has several different classes of shares. Shares of each class represent
an interest in the same investment portfolio. Each class has pro rata rights as
to voting, redemption, dividends and liquidation, except that each class bears
different distribution expenses and may bear different transfer agent fees and
other expenses properly attributable to the particular class as approved by the
board of directors and set forth in the fund's rule 18f-3 Plan. Each class'
shareholders have exclusive voting rights with respect to the respective class'
rule 12b-1 plans adopted in connection with the distribution of shares and on
other matters in which the interests of one class are different from interests
in another class. Shares of all classes of the fund vote together on matters
that affect all classes in substantially the same manner. Each class votes as a
class on matters that affect that class alone. Note that 529 college savings
plan account owners invested in Class 529 shares are not shareholders of the
fund and, accordingly, do not have the rights of a shareholder, such as the
right to vote proxies relating to fund shares. As the legal owner of the fund's
Class 529 shares, the Virginia College Savings Plan/SM/ will vote any proxies
relating to such fund shares.

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

The fund's articles of incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with independent
directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

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

American Mutual Fund -- Page 13
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of Martin Fenton, William D. Jones, William H. Kling, Bailey
Morris-Eck, Kirk P. Pendleton and Olin C. Robison, none of whom is an
"interested person" of the fund within the meaning of the 1940 Act. The
committee provides oversight regarding the fund's accounting and financial
reporting policies and practices, its internal controls and the internal
controls of the fund's principal service providers. The committee acts as a
liaison between the fund's independent registered public accounting firm and the
full board of directors. Four audit committee meetings were held during the 2007
fiscal year.

The fund has a contracts committee comprised of H. Frederick Christie, Mary Anne
Dolan, Martin Fenton, William D. Jones, Mary Myers Kauppila, William H. Kling,
Bailey Morris-Eck, Kirk P. Pendleton, Olin C. Robison and Steven B. Sample, none
of whom is an "interested person" of the fund within the meaning of the 1940
Act. The committee's principal function is to request, review and consider the
information deemed necessary to evaluate the terms of certain agreements between
the fund and its investment adviser or the investment adviser's affiliates, such
as the Investment Advisory and Service Agreement, Principal Underwriting
Agreement, Administrative Services Agreement and Plans of Distribution adopted
pursuant to rule 12b-1 under the 1940 Act, that the fund may enter into, renew
or continue, and to make its recommendations to the full board of directors on
these matters. One contracts committee meeting was held during the 2007 fiscal
year.

The fund has a nominating committee comprised of Mary Anne Dolan, Mary Myers
Kauppila and Steven B. Sample, none of whom is an "interested person" of the
fund within the meaning of the 1940 Act. 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. The committee also evaluates, selects and nominates
independent director candidates to the full board of directors. While the
committee normally is able to identify from its own and other 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 fund,
addressed to the fund'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 committee. Four nominating committee meetings were held during the 2007
fiscal year.

PROXY VOTING PROCEDURES AND PRINCIPLES -- The fund and its investment adviser
have adopted Proxy Voting Procedures and Principles (the "Principles") with
respect to voting proxies of securities held by the fund, other American Funds,
Endowments and American Funds Insurance Series. The complete text of these
principles is available on the American Funds website at americanfunds.com.
Certain American Funds have established separate proxy voting committees that
vote proxies or delegate to a voting officer the authority to vote on behalf of
those funds. Proxies for all other funds (including the fund) are voted by a
committee of the appropriate equity investment division of the investment
adviser under authority delegated by those funds' boards. Therefore, if more
than one fund invests in the same company, they may vote differently on the same
proposal.

All U.S. proxies are voted. Proxies for companies outside the U.S. also are
voted, provided there is sufficient time and information available. After a
proxy statement is received, the investment adviser prepares a summary of the
proposals contained in the proxy statement. A discussion of any potential
conflicts of interest also is included in the summary. For proxies of securities

American Mutual Fund -- Page 14
<PAGE>

managed by a particular investment division of the investment adviser, the
initial voting recommendation is made by one or more of the division's
investment analysts familiar with the company and industry. A second
recommendation is made by a proxy coordinator (an investment analyst with
experience in corporate governance and proxy voting matters) within the
appropriate investment division, based on knowledge of these Principles and
familiarity with proxy-related issues. The proxy summary and voting
recommendations are made available to the appropriate proxy voting committee for
a final voting decision.

The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy voting committee members
are alerted to the potential conflict. The proxy voting committee may then elect
to vote the proxy or seek a third-party recommendation or vote of an ad hoc
group of committee members.

The Principles, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are not exhaustive and do not address all potential
issues. The Principles provide a certain amount of flexibility so that all
relevant facts and circumstances can be considered in connection with every
vote. As a result, each proxy received is voted on a case-by-case basis
considering the specific circumstances of each proposal. The voting process
reflects the funds' understanding of the company's business, its management and
its relationship with shareholders over time.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website and (c) on the SEC's website at sec.gov.

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Principles is available upon request, free
of charge, by calling American Funds Service Company or visiting the American
Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director generally is supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions also may be
supported.

GOVERNANCE PROVISIONS -- Typically, proposals to declassify a board (elect
all directors annually) are supported based on the belief that this
increases the directors' sense of accountability to shareholders. Proposals
for cumulative voting generally are supported in order to promote
management and board accountability and an opportunity for leadership
change. Proposals designed to make director elections more meaningful,
either by requiring a majority vote or by requiring any director receiving
more withhold votes to tender his or her resignation, generally are
supported.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill generally
are supported. (There may be certain circumstances, however, when a proxy
voting committee of a fund or an investment division of the investment
adviser believes that a company needs to maintain anti-takeover
protection.) Proposals to eliminate the right of shareholders to

American Mutual Fund -- Page 15
<PAGE>

act by written consent or to take away a shareholder's right to call a
special meeting typically are not supported.

COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting shareholder interests and a knowledge of the company and its
management. Considerations include the pricing (or repricing) of options
awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be
structured to attract, motivate and retain existing employees and qualified
directors; however, they should not be excessive.

ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items generally are voted in favor of
management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on June 1, 2008. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

NAME AND ADDRESS OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Edward D. Jones & Co. Class A 26.71%
Maryland Heights, MO Class B 13.65
----------------------------------------------------------------------------
First Clearing LLC Class B 5.34
Glen Allen, VA Class C 5.18
----------------------------------------------------------------------------
Citigroup Global Markets, Inc. Class C 10.92
New York, NY
----------------------------------------------------------------------------
Merrill Lynch Class C 10.89
Jacksonville, FL
----------------------------------------------------------------------------
A G Edwards & Sons Inc, Class C 6.06
Saint Louis, MO
----------------------------------------------------------------------------
Hartford Life Insurance Co. Class R-1 26.68
Hartford, CT Class R-3 28.10
----------------------------------------------------------------------------
Methods Machine Tools Inc. Class R-4 5.48
Englewood, CO
----------------------------------------------------------------------------
American Funds 2010 Target Date Retirement Fund Class R-5 9.28
Norfolk, VA
----------------------------------------------------------------------------
American Funds 2020 Target Date Retirement Fund Class R-5 8.77
Norfolk, VA
----------------------------------------------------------------------------
American Funds 2015 Target Date Retirement Fund Class R-5 7.70
Norfolk, VA
----------------------------------------------------------------------------
American Funds 2025 Target Date Retirement Fund Class R-5 6.67
Norfolk, VA
----------------------------------------------------------------------------
Capital Group Companies Class R-5 6.26
Los Angeles, CA
----------------------------------------------------------------------------
Fidelity Investments Institutional Operations Co. Class R-5 5.60
Covington, KY
----------------------------------------------------------------------------
American Funds 2030 Target Date Retirement Fund Class R-5 5.50
Norfolk, VA
----------------------------------------------------------------------------

American Mutual Fund -- Page 16
<PAGE>

UNLESS OTHERWISE NOTED, REFERENCES IN THIS STATEMENT OF ADDITIONAL INFORMATION
TO CLASS F SHARES, CLASS R SHARES OR CLASS 529 SHARES REFER TO BOTH F SHARE
CLASSES, ALL R SHARE CLASSES OR ALL 529 SHARE CLASSES, RESPECTIVELY.

INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
investment adviser, founded in 1931, maintains research facilities in the United
States and abroad (Los Angeles, San Francisco, New York, Washington, DC, London,
Geneva, Hong Kong, Singapore and Tokyo). These facilities are staffed with
experienced investment professionals. The investment adviser is located at 333
South Hope Street, Los Angeles, CA 90071 and 6455 Irvine Center Drive, Irvine,
CA 92618. It is a wholly owned subsidiary of The Capital Group Companies, Inc.,
a holding company for several investment management subsidiaries. Capital
Research and Management Company manages equity assets through two investment
divisions, Capital World Investors and Capital Research Global Investors, and
manages fixed-income assets through its Fixed Income division. Capital World
Investors and Capital Research Global Investors make investment decisions on an
independent basis.

The investment adviser has adopted policies and procedures that address issues
that may arise as a result of an investment professional's management of the
fund and other funds and accounts. Potential issues could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, investment professional compensation and
voting relating to portfolio securities. The investment adviser believes that
its policies and procedures are reasonably designed to address these issues.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing plans will vary depending on
the individual's portfolio results, contributions to the organization and other
factors.

To encourage a long-term focus, bonuses based on investment results are
calculated by comparing pretax total investment returns to relevant benchmarks
over the most recent year, a four-year rolling average and an eight-year rolling
average with much greater weight placed on the four-year and eight-year rolling
averages. For portfolio counselors, benchmarks may include measures of the
marketplaces in which the fund invests and measures of the results of comparable
mutual funds. For investment analysts, benchmarks may include relevant market

American Mutual Fund -- Page 17
<PAGE>

measures and appropriate industry or sector indexes reflecting their areas of
expertise. Capital Research and Management Company makes periodic subjective
assessments of analysts' contributions to the investment process and this is an
element of their overall compensation. The investment results of the fund's
portfolio counselors may be measured against one or more of the following
benchmarks, depending on his or her investment focus: Lipper Growth & Income
Funds Index; S&P 500; and the securities that are eligible to be purchased by
the fund.

PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage portions of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF OCTOBER 31, 2007:

NUMBER
NUMBER OF OTHER
OF OTHER POOLED NUMBER
REGISTERED IN WHICH OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) IN WHICH
IN WHICH IN WHICH PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR IS A MANAGER
OF FUND IS A MANAGER IS A MANAGER (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
--------------------------------------------------------------------------------------------------

James K. Dunton Over $1,000,000 2 $201.2 None None
---------------------------------------------------------------------------------------------------
Joyce E. Gordon Over $1,000,000 3 $209.7 None None
---------------------------------------------------------------------------------------------------
James B. Lovelace $100,001 - 4 $322.1 None None
$500,000
---------------------------------------------------------------------------------------------------
R. Michael $100,001 - 3 $325.7 None None
Shanahan $500,000
---------------------------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not
indicative of the total assets managed by the individual, which is a
substantially lower amount. No fund has an advisory fee that is based on the
performance of the fund.
3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the funds or accounts and are
not indicative of the total assets managed by the individual, which is a
substantially lower amount. No fund or account has an advisory fee that is
based on the performance of the fund or account.
4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until March 31, 2008, unless sooner terminated, and may be
renewed from year to year

American Mutual Fund -- Page 18
<PAGE>

thereafter, provided that any such renewal has been specifically approved at
least annually by (a) the board of directors, or by the vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the fund, and
(b) the vote of a majority of directors who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement provides that the investment adviser has no liability to the fund for
its acts or omissions in the performance of its obligations to the fund not
involving willful misconduct, bad faith, gross negligence or reckless disregard
of its obligations under the Agreement. The Agreement also provides that either
party has the right to terminate it, without penalty, upon 60 days' written
notice to the other party, and that the Agreement automatically terminates in
the event of its assignment (as defined in the 1940 Act).

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

As compensation for its services, the investment adviser receives a monthly fee
that is based on prior month-end net assets, calculated at the following
annualized rates:

Net asset level

RATE IN EXCESS OF UP TO
------------------------------------------------------------------------------

0.384% $ 0 $ 1,000,000,000
------------------------------------------------------------------------------
0.330 1,000,000,000 2,000,000,000
------------------------------------------------------------------------------
0.294 2,000,000,000 3,000,000,000
------------------------------------------------------------------------------
0.270 3,000,000,000 5,000,000,000
------------------------------------------------------------------------------
0.252 5,000,000,000 8,000,000,000
------------------------------------------------------------------------------
0.240 8,000,000,000 13,000,000,000
------------------------------------------------------------------------------
0.230 13,000,000,000 21,000,000,000
------------------------------------------------------------------------------
0.225 21,000,000,000
------------------------------------------------------------------------------

Under the Agreement, a different rate schedule would apply if it resulted in a
lower overall advisory fee. This could happen if the fund's net assets fell
below $3 billion. In addition, the Agreement provides that the investment
adviser shall pay the fund the amount by which total expenses of the fund's
Class A shares, with the exception of taxes and such expenses, if any, as

American Mutual Fund -- Page 19
<PAGE>

may be incurred in connection with any merger, reorganization, or
recapitalization, exceed the sum of 1% of the first $25 million of the monthly
average of total assets of the fund for the year and 3/4 of 1% of such average
in excess of $25 million.

Expenses which are not subject to these limitations are interest, taxes and
extraordinary expenses. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses. To
the extent the fund's management fee must be waived due to Class A share expense
ratios exceeding the expense limitations described above, management fees will
be reduced similarly for all classes of shares of the fund, or other Class A
fees will be waived in lieu of management fees.

For the fiscal years ended October 31, 2007, 2006 and 2005, the investment
adviser was entitled to receive from the fund management fees of $52,131,000,
$45,815,000 and $40,923,000, respectively. After giving effect to the management
fee waivers/expense reimbursements described below, the fund paid the investment
adviser management fees of $46,918,000 (a reduction of $5,213,000), $41,233,000
(a reduction of $4,582,000) and $37,654,000 (a reduction of $3,269,000) for the
fiscal years ended October 31, 2007, 2006 and 2005, respectively.

For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. Beginning April 1, 2005, this waiver increased
to 10% of the management fees that the investment adviser is otherwise entitled
to receive, and this waiver is expected to continue at this level until further
review. As a result of this waiver, management fees are reduced similarly for
all classes of shares of the fund.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until March
31, 2008, unless sooner terminated, and may be renewed from year to year
thereafter, provided that any such renewal has been specifically approved at
least annually by the vote of a majority of directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The fund may terminate the Administrative Agreement at any time
by vote of a majority of independent directors. The investment adviser has the
right to terminate the Administrative Agreement upon 60 days' written notice to
the fund. The Administrative Agreement automatically terminates in the event of
its assignment (as defined in the 1940 Act).

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and Class R and 529 shares. The investment adviser may contract
with third parties, including American Funds Service Company/(R)/, the fund's
Transfer Agent, to provide some of these services. Services include, but are not
limited to, shareholder account maintenance, transaction processing, tax
information reporting and shareholder and fund communications. In addition, the
investment adviser monitors, coordinates, oversees and assists with the
activities performed by third parties providing such services. For Class R-1 and
R-2 shares, the investment adviser has agreed to pay a portion of the fees
payable under the Administrative Agreement that would otherwise have been paid
by the fund. For the year ended October 31, 2007, the total fees paid by the
investment adviser were $86,000.

American Mutual Fund -- Page 20
<PAGE>

The investment adviser receives an administrative services fee at the annual
rate of up to 0.15% of the average daily net assets for Class C, F, R (excluding
Class R-5 shares) and 529 shares for administrative services provided to these
share classes. Administrative services fees are paid monthly and accrued daily.
The investment adviser uses a portion of this fee to compensate third parties
for administrative services provided to the fund. Of the remainder, the
investment adviser does not retain more than 0.05% of the average daily net
assets for each applicable share class. For Class R-5 shares, the administrative
services fee is calculated at the annual rate of up to 0.10% of the average
daily net assets. The administrative services fee includes compensation for
transfer agent and shareholder services provided to the fund's Class C, F, R and
529 shares. In addition to making administrative service fee payments to
unaffiliated third parties, the investment adviser also makes payments from the
administrative services fee to American Funds Service Company according to a fee
schedule, based principally on the number of accounts serviced, contained in a
Shareholder Services Agreement between the fund and American Funds Service
Company.

During the 2007 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

ADMINISTRATIVE SERVICES FEE
--------------------------------------------------------------------------------

CLASS C $1,146,000
--------------------------------------------------------------------------------
CLASS F-1 564,000
--------------------------------------------------------------------------------
CLASS 529-A 229,000
--------------------------------------------------------------------------------
CLASS 529-B 47,000
--------------------------------------------------------------------------------
CLASS 529-C 75,000
--------------------------------------------------------------------------------
CLASS 529-E 12,000
--------------------------------------------------------------------------------
CLASS 529-F-1 7,000
--------------------------------------------------------------------------------
CLASS R-1 25,000
--------------------------------------------------------------------------------
CLASS R-2 706,000
--------------------------------------------------------------------------------
CLASS R-3 456,000
--------------------------------------------------------------------------------
CLASS R-4 97,000
--------------------------------------------------------------------------------
CLASS R-5 250,000
--------------------------------------------------------------------------------

PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds
Distributors/(R)/, Inc. (the "Principal Underwriter") is the principal
underwriter of the fund's shares. The Principal Underwriter is located at 333
South Hope Street, Los Angeles, CA 90071; 6455 Irvine Center Drive, Irvine, CA
92618; 3500 Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues relating to sales of the fund's
shares, as follows:

. For Class A and 529-A shares, the Principal Underwriter receives
commission revenue consisting of the balance of the Class A and 529-A
sales charge remaining after the allowances by the Principal
Underwriter to investment dealers.

American Mutual Fund -- Page 21
<PAGE>

. For Class B and 529-B shares, the Principal Underwriter sells its
rights to the 0.75% distribution-related portion of the 12b-1 fees
paid by the fund, as well as any contingent deferred sales charges, to
a third party. The Principal Underwriter compensates investment
dealers for sales of Class B and 529-B shares out of the proceeds of
this sale and keeps any amounts remaining after this compensation is
paid.

. For Class C and 529-C shares, the Principal Underwriter receives any
contingent deferred sales charges that apply during the first year
after purchase.

In addition, the fund reimburses the Principal Underwriter for advancing
immediate service fees to qualified dealers and advisers upon the sale of Class
B, 529-B, C and 529-C shares. The fund also reimburses the Principal Underwriter
for service fees (and, in the case of Class 529-E shares, commissions) paid on a
quarterly basis to qualified dealers and advisers in connection with investments
in Class F-1, 529-F-1, 529-E, R-1, R-2, R-3 and R-4 shares.

Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:

COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
-----------------------------------------------------------------------------------------------------

CLASS A 2007 $6,813,000 $29,253,000
2006 7,002,000 30,158,000
2005 9,354,000 40,772,000
-----------------------------------------------------------------------------------------------------
CLASS B 2007 341,000 2,124,000
2006 407,000 2,596,000
2005 596,000 3,975,000
-----------------------------------------------------------------------------------------------------
CLASS C 2007 80,000 1,442,000
2006 441,000 1,346,000
2005 243,000 2,029,000
-----------------------------------------------------------------------------------------------------
CLASS 529-A 2007 244,000 1,118,000
2006 241,000 1,103,000
2005 304,000 1,395,000
-----------------------------------------------------------------------------------------------------
CLASS 529-B 2007 23,000 142,000
2006 27,000 169,000
2005 40,000 240,000
-----------------------------------------------------------------------------------------------------
CLASS 529-C 2007 -- 134,000
2006 16,000 123,000
2005 9,000 139,000
-----------------------------------------------------------------------------------------------------

American Mutual Fund -- Page 22
<PAGE>

Plans of distribution -- The fund has adopted plans of distribution (the
"Plans") pursuant to rule 12b-1 under the 1940 Act. The Plans permit the fund to
expend amounts to finance any activity primarily intended to result in the sale
of fund shares, provided the fund's board of directors has approved the category
of expenses for which payment is being made.

Each Plan is specific to a particular share class of the fund. As the fund has
not adopted a Plan for Class F-2 or Class R-5, no 12b-1 fees are paid from Class
F-2 or Class R-5 share assets and the following disclosure is not applicable to
these share classes.

Payments under the Plans may be made for service-related and/or
distribution-related expenses. Service-related expenses include paying service
fees to qualified dealers. Distribution-related expenses include commissions
paid to qualified dealers. The amounts actually paid under the Plans for the
past fiscal year, expressed as a percentage of the fund's average daily net
assets attributable to the applicable share class, are disclosed in the
prospectus under "Fees and expenses of the fund." Further information regarding
the amounts available under each Plan is in the "Plans of Distribution" section
of the prospectus.

Following is a brief description of the Plans:

CLASS A AND 529-A -- For Class A and 529-A shares, up to 0.25% of the
fund's average daily net assets attributable to such shares is reimbursed
to the Principal Underwriter for paying service-related expenses, and the
balance available under the applicable Plan may be paid to the Principal
Underwriter for distribution-related expenses. The fund may annually expend
up to 0.25% for Class A shares and up to 0.50% for Class 529-A shares under
the applicable Plan.

Distribution-related expenses for Class A and 529-A shares include dealer
commissions and wholesaler compensation paid on sales of shares of $1
million or more purchased without a sales charge. Commissions on these "no
load" purchases (which are described in further detail under the "Sales
Charges" section of this statement of additional information) in excess of
the Class A and 529-A Plan limitations and not reimbursed to the Principal
Underwriter during the most recent fiscal quarter are recoverable for five
quarters, provided that the reimbursement of such commissions does not
cause the fund to exceed the annual expense limit. After five quarters,
these commissions are not recoverable.

CLASS B AND 529-B -- The Plans for Class B and 529-B shares provide for
payments to the Principal Underwriter of up to 0.25% of the fund's average
daily net assets attributable

American Mutual Fund -- Page 23
<PAGE>

to such shares for paying service-related expenses and 0.75% for
distribution-related expenses, which include the financing of commissions
paid to qualified dealers.

OTHER SHARE CLASSES (CLASS C, 529-C, F-1, 529-F-1, 529-E, R-1, R-2, R-3 AND
R-4) -- The Plans for each of the other share classes that have adopted
Plans provide for payments to the Principal Underwriter for paying
service-related and distribution-related expenses of up to the following
amounts of the fund's average daily net assets attributable to such shares:

TOTAL
SERVICE DISTRIBUTION ALLOWABLE
RELATED RELATED UNDER
SHARE CLASS PAYMENTS/1/ PAYMENTS/1/ THE PLANS/2/
-------------------------------------------------------------------------

Class C 0.25% 0.75% 1.00%
-------------------------------------------------------------------------
Class 529-C 0.25 0.75 1.00
-------------------------------------------------------------------------
Class F-1 0.25 -- 0.50
-------------------------------------------------------------------------
Class 529-F-1 0.25 -- 0.50
-------------------------------------------------------------------------
Class 529-E 0.25 0.25 0.75
-------------------------------------------------------------------------
Class R-1 0.25 0.75 1.00
-------------------------------------------------------------------------
Class R-2 0.25 0.50 1.00
-------------------------------------------------------------------------
Class R-3 0.25 0.25 0.75
-------------------------------------------------------------------------
Class R-4 0.25 -- 0.50
-------------------------------------------------------------------------

1Amounts in these columns represent the amounts approved by the board of
directors under the applicable Plan.
2The fund may annually expend the amounts set forth in this column under
the current Plans with the approval of the board of directors.

During the 2007 fiscal year, 12b-1 expenses accrued and paid, and if applicable,
unpaid, were:

12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
------------------------------------------------------------------------------

CLASS A $39,689,000 $5,436,000
------------------------------------------------------------------------------
CLASS B 7,374,000 759,000
------------------------------------------------------------------------------
CLASS C 8,767,000 1,272,000
------------------------------------------------------------------------------
CLASS F-1 1,347,000 237,000
------------------------------------------------------------------------------
CLASS 529-A 488,000 79,000
------------------------------------------------------------------------------
CLASS 529-B 439,000 48,000
------------------------------------------------------------------------------
CLASS 529-C 715,000 116,000
------------------------------------------------------------------------------
CLASS 529-E 65,000 11,000
------------------------------------------------------------------------------
CLASS 529-F-1 -- --
------------------------------------------------------------------------------
CLASS R-1 140,000 23,000
------------------------------------------------------------------------------
CLASS R-2 1,133,000 191,000
------------------------------------------------------------------------------
CLASS R-3 1,137,000 182,000
------------------------------------------------------------------------------
CLASS R-4 159,000 28,000
------------------------------------------------------------------------------

American Mutual Fund -- Page 24
<PAGE>

Approval of the Plans -- As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full board of directors and separately by a majority of the independent
directors of the fund who have no direct or indirect financial interest in the
operation of the Plans or the Principal Underwriting Agreement. In addition, the
selection and nomination of independent directors of the fund are committed to
the discretion of the independent directors during the existence of the Plans.

Potential benefits of the Plans to the fund include quality shareholder
services, savings to the fund in transfer agency costs, and benefits to the
investment process from growth or stability of assets. The Plans may not be
amended to materially increase the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly by the board of
directors and the Plans must be renewed annually by the board of directors.

OTHER COMPENSATION TO DEALERS -- As of July 2008, the top dealers (or their
affiliates) that American Funds Distributors anticipates will receive additional
compensation (as described in the prospectus) include:

AIG Advisors Group
Advantage Capital Corporation
AIG Financial Advisors, Inc.
American General Securities Incorporated
FSC Securities Corporation
Royal Alliance Associates, Inc.
AXA Advisors, LLC

Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Genworth Financial Securities Corporation
Hefren-Tillotson, Inc.
HTK / Janney Montgomery Group
Hornor, Townsend & Kent, Inc.
Janney Montgomery Scott LLC
ING Advisors Network Inc.
Bancnorth Investment Group, Inc.
Financial Network Investment Corporation
Guaranty Brokerage Services, Inc.
ING Financial Partners, Inc.
Multi-Financial Securities Corporation
Primevest Financial Services, Inc.

American Mutual Fund -- Page 25
<PAGE>

Intersecurities / Transamerica
InterSecurities, Inc.
Transamerica Financial Advisors, Inc.
JJB Hilliard/PNC Bank
J.J.B. Hilliard, W.L. Lyons, Inc.
PNC Bank, National Association
PNC Investments LLC
Lincoln Financial Advisors Corporation
LPL Group
Associated Securities Corp.
LPL Financial Corporation
Mutual Service Corporation
Uvest Investment Services
Waterstone Financial Group, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Metlife Enterprises
Metlife Securities Inc.
New England Securities
Walnut Street Securities, Inc.
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley & Co., Incorporated
National Planning Holdings Inc.
Invest Financial Corporation
Investment Centers of America, Inc.
National Planning Corporation
SII Investments, Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC
Park Avenue Securities LLC
Princor Financial Services Corporation
Raymond James Group
Raymond James & Associates, Inc.
Raymond James Financial Services Inc.
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Incorporated
Securian / C.R.I.
CRI Securities, LLC
Securian Financial Services, Inc.
Smith Barney
Legg Mason
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Wachovia Group
A. G. Edwards, a Division of Wachovia Securities, LLC
First Clearing LLC
Wachovia Securities Financial Network, LLC
Wachovia Securities Investment Services Group
Wachovia Securities Latin American Channel
Wachovia Securities Private Client Group
Wells Fargo Investments, LLC

American Mutual Fund -- Page 26
<PAGE>

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. Purchases and sales of equity securities on a securities
exchange or an over-the-counter market are effected through broker-dealers who
receive commissions for their services. Generally, commissions relating to
securities traded on foreign exchanges will be higher than commissions relating
to securities traded on U.S. exchanges and may not be subject to negotiation.
Equity securities may also be purchased from underwriters at prices that include
underwriting fees. Purchases and sales of fixed-income securities are generally
made with an issuer or a primary market-maker acting as principal with no stated
brokerage commission. The price paid to an underwriter for fixed-income
securities includes underwriting fees. Prices for fixed-income securities in
secondary trades usually include undisclosed compensation to the market-maker
reflecting the spread between the bid and ask prices for the securities.

In selecting broker-dealers, the investment adviser strives to obtain "best
execution" (the most favorable total price reasonably attainable under the
circumstances) for the fund's portfolio transactions, taking into account a
variety of factors. These factors include the size and type of transaction, the
nature and character of the markets for the security to be purchased or sold,
the cost, quality and reliability of the executions and the broker-dealer's
ability to offer liquidity and anonymity. The investment adviser considers these
factors, which involve qualitative judgments, when selecting broker-dealers and
execution venues for fund portfolio transactions. The investment adviser views
best execution as a process that should be evaluated over time as part of an
overall relationship with particular broker-dealer firms rather than on a
trade-by-trade basis. The fund does not consider the investment adviser as
having an obligation to obtain the lowest commission rate available for a
portfolio transaction to the exclusion of price, service and qualitative
considerations.

The investment adviser may execute portfolio transactions with broker-dealers
who provide certain brokerage and/or investment research services to it, but
only when in the investment adviser's judgment the broker-dealer is capable of
providing best execution for that transaction. The receipt of these services
permits the investment adviser to supplement its own research and analysis and
makes available the views of, and information from, individuals and the research
staffs of other firms. Such views and information may be provided in the form of
written reports, telephone contacts and meetings with securities analysts. These
services may include, among other things, reports and other communications with
respect to individual companies, industries, countries and regions, economic,
political and legal developments, as well as scheduling meetings with corporate
executives and seminars and conferences related to relevant subject matters. The
investment adviser considers these services to be supplemental to its own
internal research efforts and therefore the receipt of investment research from
broker-dealers does not tend to reduce the expenses involved in the investment
adviser's research efforts. If broker-dealers were to discontinue providing such
services it is unlikely the investment adviser would attempt to replicate them
on its own, in part because they would then no longer provide an independent,
supplemental viewpoint. Nonetheless, if it were to attempt to do so, the
investment adviser would incur substantial additional costs. Research services
that the investment adviser receives from broker-dealers may be used by the
investment adviser in servicing the fund and other funds and accounts that it
advises; however, not all such services will necessarily benefit the fund.

The investment adviser may pay commissions in excess of what other
broker-dealers might have charged - including on an execution-only basis - for
certain portfolio transactions in recognition of

American Mutual Fund -- Page 27
<PAGE>

brokerage and/or investment research services provided by a broker-dealer. In
this regard, the investment adviser has adopted a brokerage allocation procedure
consistent with the requirements of Section 28(e) of the U.S. Securities
Exchange Act of 1934. Section 28(e) permits an investment adviser to cause an
account to pay a higher commission to a broker-dealer that provides certain
brokerage and/or investment research services to the investment adviser, if the
investment adviser makes a good faith determination that such commissions are
reasonable in relation to the value of the services provided by such
broker-dealer to the investment adviser in terms of that particular transaction
or the investment adviser's overall responsibility to the fund and other
accounts that it advises. Certain brokerage and/or investment research services
may not necessarily benefit all accounts paying commissions to each such
broker-dealer; therefore, the investment adviser assesses the reasonableness of
commissions in light of the total brokerage and investment research services
provided by each particular broker-dealer.

In accordance with its internal brokerage allocation procedure, each equity
investment division of the investment adviser periodically assesses the
brokerage and investment research services provided by each broker-dealer from
which it receives such services. Using its judgment, each equity investment
division of the investment adviser then creates lists with suggested levels of
commissions for particular broker-dealers and provides those lists to its
trading desks. Neither the investment adviser nor the fund incurs any obligation
to any broker-dealer to pay for research by generating trading commissions. The
actual level of business received by any broker-dealer may be less than the
suggested level of commissions and can, and often does, exceed the suggested
level in the normal course of business. As part of its ongoing relationships
with broker-dealers, the investment adviser routinely meets with firms,
typically at the firm's request, to discuss the level and quality of the
brokerage and research services provided, as well as the perceived value and
cost of such services. In valuing the brokerage and investment research services
the investment adviser receives from broker-dealers for its good faith
determination of reasonableness, the investment adviser does not attribute a
dollar value to such services, but rather takes various factors into
consideration, including the quantity, quality and usefulness of the services to
the investment adviser.

The investment adviser seeks, on an ongoing basis, to determine what the
reasonable levels of commission rates are in the marketplace. The investment
adviser takes various considerations into account when evaluating such
reasonableness, including, (a) rates quoted by broker-dealers, (b) the size of a
particular transaction in terms of the number of shares and dollar amount, (c)
the complexity of a particular transaction, (d) the nature and character of the
markets on which a particular trade takes place, (e) the ability of a
broker-dealer to provide anonymity while executing trades, (f) the ability of a
broker-dealer to execute large trades while minimizing market impact, (g) the
extent to which a broker-dealer has put its own capital at risk, (h) the level
and type of business done with a particular broker-dealer over a period of time,
(i) historical commission rates, and (j) commission rates that other
institutional investors are paying.

When executing portfolio transactions in the same equity security for the funds
and accounts, or portions of funds and accounts, over which the investment
adviser, through its equity investment divisions, has investment discretion,
each of the investment divisions will normally aggregate its respective
purchases or sales and execute them as part of the same transaction or series of
transactions. When executing portfolio transactions in the same fixed-income
security for the fund and the other funds or accounts over which it or one of
its affiliated companies has investment discretion, the investment adviser will
normally aggregate such purchases or sales and execute them as part of the same
transaction or series of transactions. The objective of aggregating purchases
and sales of a security is to allocate executions in an equitable manner

American Mutual Fund -- Page 28
<PAGE>

among the funds and other accounts that have concurrently authorized a
transaction in such security.

The investment adviser may place orders for the fund's portfolio transactions
with broker-dealers who have sold shares in the funds managed by the investment
adviser or its affiliated companies; however, it does not consider whether a
broker-dealer has sold shares of the funds managed by the investment adviser or
its affiliated companies when placing any such orders for the fund's portfolio
transactions.

Brokerage commissions paid on portfolio transactions for the fiscal years ended
October 31, 2007, 2006 and 2005 amounted to $4,897,000, $5,299,000 and
$5,738,000, respectively. The decrease in commissions paid between 2006 and 2007
was largely due to a decrease in brokerage commissions as a percent of total
transactions.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year.

At the end of the fund's most recent fiscal year, the fund's regular
broker-dealers included Citigroup Global Markets Inc., J.P. Morgan, Securities
Inc. and Wachovia Securities Private Client Group. As of the fund's most recent
fiscal year-end, the fund held equity securities of Citigroup Inc. in the amount
of $391,137,000, JPMorgan Chase & Co. in the amount of $213,662,000 and Wachovia
Corporation in the amount of $68,595,000.

DISCLOSURE OF PORTFOLIO HOLDINGS

The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and procedures have been reviewed by the fund's board
of directors and compliance will be periodically assessed by the board in
connection with reporting from the fund's Chief Compliance Officer.

Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. In addition, the fund's list of top 10 equity portfolio
holdings measured by percentage of net assets invested, dated as of the end of
each calendar month, is permitted to be posted on the American Funds website no
earlier than the tenth day after such month. Such portfolio holdings information
may then be disclosed to any person pursuant to an ongoing arrangement to
disclose portfolio holdings information to such person no earlier than one day
after the day on which the information is posted on the American Funds website.
The fund's custodian, outside counsel and auditor, each of which requires
portfolio holdings information for legitimate business and fund oversight
purposes, may receive the information earlier.

American Mutual Fund -- Page 29
<PAGE>

Affiliated persons of the fund as described above who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements to maintain the confidentiality of such information, preclear
securities trades and report securities transactions activity, as applicable.
Third party service providers of the fund receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons may be bound by agreements (including confidentiality agreements)
that restrict and limit their use of the information to legitimate business uses
only. Neither the fund nor its investment adviser or any affiliate thereof
receives compensation or other consideration in connection with the disclosure
of information about portfolio securities.

Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the appropriate investment-related committees of the fund's investment
adviser. In exercising their authority, the committees determine whether
disclosure of information about the fund's portfolio securities is appropriate
and in the best interest of fund shareholders. The investment adviser has
implemented policies and procedures to address conflicts of interest that may
arise from the disclosure of fund holdings. For example, the investment
adviser's code of ethics specifically requires, among other things, the
safeguarding of information about fund holdings and contains prohibitions
designed to prevent the personal use of confidential, proprietary investment
information in a way that would conflict with fund transactions. In addition,
the investment adviser believes that its current policy of not selling portfolio
holdings information and not disclosing such information to unaffiliated third
parties until such holdings have been made public on the American Funds website
(other than to certain fund service providers for legitimate business and fund
oversight purposes) helps reduce potential conflicts of interest between fund
shareholders and the investment adviser and its affiliates.

PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer should be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.

Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is

American Mutual Fund -- Page 30
<PAGE>

calculated once daily as of approximately 4 p.m. New York time, which is the
normal close of trading on the New York Stock Exchange, each day the Exchange is
open. If, for example, the Exchange closes at 1 p.m., the fund's share price
would still be determined as of 4 p.m. New York time. The New York Stock
Exchange is currently closed on weekends and on the following holidays: New
Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Good Friday; Memorial
Day; Independence Day; Labor Day; Thanksgiving; and Christmas Day. Each share
class of the fund has a separately calculated net asset value (and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as indicated below. The fund follows
standard industry practice by typically reflecting changes in its holdings of
portfolio securities on the first business day following a portfolio trade.

1. Equity securities, including depositary receipts, 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 are valued at
prices obtained from an independent pricing service, when such prices are
available; however, in circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the mean quoted bid and
asked prices (or bid prices, if asked prices are not available) or at prices for
securities of comparable maturity, quality and type. The pricing services base
bond prices on, among other things, an evaluation of the yield curve as of
approximately 3 p.m. New York time. The fund's investment adviser performs
certain checks on these prices prior to calculation of the fund's net asset
value.

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), 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.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.

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

Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's board. Subject to board oversight, the
fund's board has delegated the obligation to make fair valuation determinations
to a valuation committee established by the fund's investment adviser. The board
receives regular reports describing fair-valued securities and the valuation
methods used.

American Mutual Fund -- Page 31
<PAGE>

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable by the investment adviser, are valued in good
faith by the valuation committee based upon what the fund might reasonably
expect to receive upon their current sale. The valuation committee considers all
indications of value available to it in determining the fair value to be
assigned to a particular security, including, without limitation, 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.

2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other expense
items attributable to particular share classes, are deducted from total assets
attributable to such share classes.

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

TAXES AND DISTRIBUTIONS

FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
that amount.

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the

American Mutual Fund -- Page 32
<PAGE>

outstanding voting securities of such issuer) and (ii) not more than 25% of the
value of its assets is invested in the securities of (other than U.S. government
securities or the securities of other regulated investment companies) any one
issuer; two or more issuers which the fund controls and which are determined to
be engaged in the same or similar trades or businesses; or the securities of
certain publicly traded partnerships.

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

The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.

Distributions of investment company taxable income and net realized capital
gains to shareholders will be taxable whether received in shares or in cash,
unless such shareholders are exempt from taxation. Shareholders electing to
receive distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share so received equal to the net asset
value of that share on the reinvestment date. Dividends and capital gain
distributions by the fund to a tax-deferred retirement plan account are not
taxable currently.

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income. Investment
company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and
certain foreign currency gains, if any, less expenses and certain foreign
currency losses. To the extent the fund invests in stock of domestic and
certain foreign corporations and meets the applicable holding period
requirement, it may receive "qualified dividends". The fund will designate
the amount of "qualified dividends" to its shareholders in a notice sent
within 60 days of the close of its fiscal year and will report "qualified
dividends" to shareholders on Form 1099-DIV.

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign

American Mutual Fund -- Page 33
<PAGE>

currency and the time the fund actually collects such receivables, or pays
such liabilities, generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in a foreign
currency and on disposition of certain futures contracts, forward contracts
and options, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or
contract and the date of disposition are also treated as ordinary gain or
loss. These gains or losses, referred to under the Code as Section 988
gains or losses, may increase or decrease the amount of the fund's
investment company taxable income to be distributed to its shareholders as
ordinary income.

If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the fund's investment company taxable
income and, accordingly, would not be taxable to the fund to the extent
distributed by the fund as a dividend to its shareholders.

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.

Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute
any of the fund's gross income, a portion of the income distributions of
the fund may be eligible for the deduction for dividends received by
corporations. Corporate shareholders will be informed of the portion of
dividends that so qualifies. The dividends-received deduction is reduced to
the extent that either the fund shares, or the underlying shares of stock
held by the fund, with respect to which dividends are received, are treated
as debt-financed under federal income tax law, and is eliminated if the
shares are deemed to have been held by the shareholder or the fund, as the
case may be, for less than 46 days during the 91-day period beginning on
the date that is 45 days before the date on which the shares become
ex-dividend. Capital gain distributions are not eligible for the
dividends-received deduction.

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

American Mutual Fund -- Page 34
<PAGE>

the qualification of the fund as a regulated investment company and to
avoid federal income taxation at the level of the fund.

The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.

Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Some
foreign countries impose taxes on capital gains with respect to investments
by foreign investors.

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carryforward of
the fund.

If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.

SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
All or a portion of a fund's dividend distribution may be a "qualified
dividend." If the fund meets the applicable holding period requirement, it
will distribute dividends derived from qualified corporation dividends to
shareholders as qualified dividends. Interest income from bonds and money
market instruments and nonqualified foreign dividends will be distributed
to shareholders as nonqualified fund dividends. The fund will report on
Form 1099-DIV the amount of each shareholder's dividend that may be treated
as a qualified dividend. If a shareholder other than a corporation meets
the requisite holding period requirement, qualified dividends are taxable
at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be

American Mutual Fund -- Page 35
<PAGE>

treated as a long-term capital loss to the extent of any amounts treated as
distributions of long-term capital gains during such six-month period.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.

Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other fund(s).

Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.

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

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

Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.

American Mutual Fund -- Page 36
<PAGE>

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F-1 SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR
529-F-1 SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE APPLICABLE
PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY
RELATING TO THESE ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.

PURCHASE AND EXCHANGE OF SHARES

PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.

BY MAIL -- for initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.

The amount of time it takes for us to receive regular U.S. postal mail may
vary and there is no assurance that we will receive such mail on the day
you expect. Mailing addresses for regular U.S. postal mail can be found in
the prospectus. To send investments or correspondence to us via overnight
mail or courier service, use any of the following addresses:

American Funds
8332 Woodfield Crossing Blvd.
Indianapolis, IN 46240-2482

American Funds
3500 Wiseman Blvd.
San Antonio, TX 78251-4321

American Funds
5300 Robin Hood Rd.
Norfolk, VA 23513-2407

BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this statement of additional
information for more information regarding this service.

BY INTERNET -- using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this statement of additional
information for more information regarding this service.

American Mutual Fund -- Page 37
<PAGE>

BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:

Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178

Your bank should include the following information when wiring funds:

For credit to the account of:
American Funds Service Company
(fund's name)

For further credit to:
(shareholder's fund account number)
(shareholder's name)

You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.

OTHER PURCHASE INFORMATION -- The Principal Underwriter will not knowingly sell
shares of the fund directly or indirectly to any person or entity, where, after
the sale, such person or entity would own beneficially directly or indirectly
more than 3.0% of the outstanding shares of the fund without the consent of a
majority of the fund's board.

Class 529 shares may be purchased only through CollegeAmerica by investors
establishing qualified higher education savings accounts. Class 529-E shares may
be purchased only by investors participating in CollegeAmerica through an
eligible employer plan. Class R-5 shares are also available to clients of the
Personal Investment Management group of Capital Guardian Trust Company who do
not have an intermediary associated with their accounts and without regard to
the $1 million purchase minimum. In addition, the American Funds state
tax-exempt funds are qualified for sale only in certain jurisdictions, and
tax-exempt funds in general should not serve as retirement plan investments. The
fund and the Principal Underwriter reserve the right to reject any purchase
order.

PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. As noted in the prospectus,
purchase minimums may be waived or reduced in certain cases.

In the case of American Funds non-tax-exempt funds, the initial purchase minimum
of $25 may be waived for the following account types:

. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and

. Employer-sponsored CollegeAmerica accounts.

The following account types may be established without meeting the initial
purchase minimum:

. Retirement accounts that are funded with employer contributions; and

. Accounts that are funded with monies set by court decree.

American Mutual Fund -- Page 38
<PAGE>

The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:

. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and

. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.

Certain accounts held on the fund's books, known as omnibus accounts, contain
multiple underlying accounts that are invested in shares of the fund. These
underlying accounts are maintained by entities such as financial intermediaries
and are subject to the applicable initial purchase minimums as described in the
prospectus and this statement of additional information.

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds for
dollar cost averaging purposes. Exchanges are not permitted from Class A shares
of The Cash Management Trust of America to Class B or C shares of Intermediate
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America and
Short-Term Bond Fund of America. Exchange purchases are subject to the minimum
investment requirements of the fund purchased and no sales charge generally
applies. However, exchanges of shares from American Funds money market funds are
subject to applicable sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange from a fund having a sales
charge, or by reinvestment or cross-reinvestment of dividends or capital gain
distributions. Exchanges of Class F shares generally may only be made through
fee-based programs of investment firms that have special agreements with the
fund's distributor and certain registered investment advisers.

You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" in this statement of additional
information. THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES
AND PURCHASES.

Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" in this
statement of additional information).

FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.

American Mutual Fund -- Page 39
<PAGE>

OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.

MOVING BETWEEN SHARE CLASSES

If you wish to "move" your investment between share classes (within the
same fund or between different funds), we generally will process your
request as an exchange of the shares you currently hold for shares in the
new class or fund. Below is more information about how sales charges are
handled for various scenarios.

EXCHANGING CLASS B SHARES FOR CLASS A SHARES -- If you exchange Class B
shares for Class A shares during the contingent deferred sales charge
period you are responsible for paying any applicable deferred sales charges
attributable to those Class B shares, but you will not be required to pay a
Class A sales charge. If, however, you exchange your Class B shares for
Class A shares after the contingent deferred sales charge period, you are
responsible for paying any applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS A SHARES -- If you exchange Class C
shares for Class A shares, you are still responsible for paying any Class C
contingent deferred sales charges and applicable Class A sales charges.

EXCHANGING CLASS C SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class C shares
for Class F shares to be held in the program, you are still responsible for
paying any applicable Class C contingent deferred sales charges.

EXCHANGING CLASS F SHARES FOR CLASS A SHARES -- You can exchange Class F
shares held in a qualified fee-based program for Class A shares without
paying an initial Class A sales charge if all of the following requirements
are met: (a) you are leaving or have left the fee-based program, (b) you
have held the Class F shares in the program for at least one year, and (c)
you notify American Funds Service Company of your request. If you have
already redeemed your Class F shares, the foregoing requirements apply and
you must purchase Class A shares within 90 days after redeeming your Class
F shares to receive the Class A shares without paying an initial Class A
sales charge.

In addition, you may redeem Class F-1 shares held in a fee-based brokerage
account/ program for less than one year and with the redemption proceeds
purchase Class A shares without a sales charge if the redemption is
necessary to comply with the repeal of SEC Rule 202 under the Investment
Advisers Act of 1940 and the transaction occurs prior to October 1, 2007,
or such other date as determined by rule, regulation or court order.

EXCHANGING CLASS A SHARES FOR CLASS F SHARES -- If you are part of a
qualified fee-based program and you wish to exchange your Class A shares
for Class F shares to be held in the program, any Class A sales charges
(including contingent deferred sales charges) that you paid or are payable
will not be credited back to your account.

American Mutual Fund -- Page 40
<PAGE>

EXCHANGING CLASS A SHARES FOR CLASS R SHARES -- Provided it is eligible to
invest in Class R shares, a retirement plan currently invested in Class A
shares may exchange its shares for Class R shares. Any Class A sales
charges that the retirement plan previously paid will not be credited back
to the plan's account.

EXCHANGING CLASS F-1 SHARES FOR CLASS F-2 SHARES -- If you are part of a
qualified fee-based program that offers Class F-2 shares, you may exchange
your Class F-1 shares for Class F-2 shares to be held in the program.

MOVING BETWEEN OTHER SHARE CLASSES -- If you desire to move your investment
between share classes and the particular scenario is not described in this
statement of additional information, please contact American Funds Service
Company at 800/421-0180 for more information.

NON-REPORTABLE TRANSACTIONS -- Automatic conversions described in the
prospectus will be non-reportable for tax purposes. In addition, except in
the case of a movement between a 529 share class and a non-529 share class,
an exchange of shares from one share class of a fund to another share class
of the same fund will be treated as a non-reportable exchange for tax
purposes, provided that the exchange request is received in writing by
American Funds Service Company and processed as a single transaction.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

Individual 403(b) plans may be treated similarly to employer-sponsored
plans for Class A sales charge purposes (i.e., individual participant
accounts are eligible to be aggregated together) if: (a) the American Funds
are principal investment options; (b) the employer facilitates the
enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (c) there is only one dealer firm
assigned to the plans.

PURCHASES BY SEP PLANS AND SIMPLE IRA PLANS

Participant accounts in a Simplified Employee Pension (SEP) plan or a
Savings Incentive Match Plan for Employees of Small Employers IRA (SIMPLE
IRA) plan will be aggregated together for Class A sales charge purposes if
the SEP plan or SIMPLE IRA plan was established after November 15, 2004 by
an employer adopting a prototype plan produced by American Funds
Distributors, Inc. In the case where the employer adopts any other plan
(including, but not limited to, an IRS model agreement), each participant's
account in the plan will be aggregated with the participant's own personal
investments that qualify under the aggregation policy. A SEP plan or SIMPLE
IRA plan with a certain method of aggregating participant accounts as of
November 15, 2004 may continue with that method so long as the employer has
not modified the plan document since that date.

American Mutual Fund -- Page 41
<PAGE>

OTHER PURCHASES

Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:

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

(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans for the dealers, and plans that include as
participants only the Eligible Persons, their spouses, parents and/or
children;

(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds, plans for the RIA firms,
and plans that include as participants only the Eligible Persons,
their spouses, parents and/or children;

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

(5) insurance company separate accounts;

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

(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;

(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying

American Mutual Fund -- Page 42
<PAGE>

investments are managed by any affiliate of The Capital Group
Companies, Inc.; and

(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.

Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.

TRANSFERS TO COLLEGEAMERICA -- A transfer from the Virginia Prepaid
Education Program/SM/ or the Virginia Education Savings Trust/SM/ to a
CollegeAmerica account will be made with no sales charge. No commission
will be paid to the dealer on such a transfer.

MOVING BETWEEN ACCOUNTS -- Investments in certain account types may be moved to
other account types without incurring additional Class A sales charges. These
transactions include, for example:

. redemption proceeds from a non-retirement account (for example, a
joint tenant account) used to purchase fund shares in an IRA or other
individual-type retirement account;

. required minimum distributions from an IRA or other individual-type
retirement account used to purchase fund shares in a non-retirement
account; and

. death distributions paid to a beneficiary's account that are used by
the beneficiary to purchase fund shares in a different account.

LOAN REPAYMENTS -- Repayments on loans taken from a retirement plan or an
individual-type retirement account are not subject to sales charges if American
Funds Service Company is notified of the repayment.

DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to initial sales charges. These purchases consist of purchases of $1
million or more, purchases by employer-sponsored defined contribution-type
retirement plans investing $1 million or more or with 100 or more eligible
employees, and purchases made at net asset value by certain retirement plans,
endowments and foundations with assets of $50 million or more. Commissions on
such investments (other than IRA rollover assets that roll over at no sales
charge under the fund's IRA rollover policy as described in the prospectus) are
paid to dealers at the following rates: 1.00% on amounts of less than $4
million, 0.50% on amounts of at least $4 million but less than $10 million and
0.25% on amounts of at least $10 million. Commissions are based on cumulative
investments over the life of the account with no adjustment for redemptions,
transfers, or market declines. For example, if a shareholder has accumulated
investments in excess of $4 million (but less than $10 million) and subsequently
redeems all or a portion of the account(s), purchases following the redemption
will generate a dealer commission of 0.50%.

American Mutual Fund -- Page 43
<PAGE>

A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.

STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
the American Funds (excluding money market funds) over a 13-month period
and receive the same sales charge (expressed as a percentage of your
purchases) as if all shares had been purchased at once.

The Statement period starts on the date on which your first purchase made
toward satisfying the Statement is processed. The market value of your
existing holdings eligible to be aggregated (see below) as of the day
immediately before the start of the Statement period may be credited toward
satisfying the Statement.

The Statement may be revised upward at any time during the Statement
period, and such a revision will be treated as a new Statement, except that
the Statement period during which the purchases must be made will remain
unchanged. Purchases made from the date of revision will receive the
reduced sales charge, if any, resulting from the revised Statement.

The Statement will be considered completed if the shareholder dies within
the 13-month Statement period. Commissions to dealers will not be adjusted
or paid on the difference between the Statement amount and the amount
actually invested before the shareholder's death.

When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement may be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser may be required to remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge
which would have been paid if the total of such purchases had been made at
a single time. Any dealers assigned to the shareholder's account at the
time a purchase was made during the Statement period will receive a
corresponding commission adjustment if appropriate. If the difference is
not paid by the close of the Statement period, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser may be liable
to the Principal Underwriter for the balance still outstanding.

Certain payroll deduction retirement plans purchasing Class A shares under
a Statement on or before November 12, 2006, may continue to purchase Class
A shares at the sales charge determined by that particular Statement until
the plans' values reach the amounts

American Mutual Fund -- Page 44
<PAGE>

specified in their Statements. Upon reaching such amounts, the Statements
for these plans will be deemed completed and will terminate. After such
termination, these plans are eligible for additional sales charge
reductions by meeting the criteria under the fund's rights of accumulation
policy.

In addition, if you currently have individual holdings in American Legacy
variable annuity contracts or variable life insurance policies that were
established on or before March 31, 2007, you may continue to apply
purchases under such contracts and policies to a Statement.

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

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:

. individual-type employee benefit plans, such as an IRA, individual
403(b) plan (see exception in "Purchases by certain 403(b) plans"
under "Sales charges") or single-participant Keogh-type plan;

. SEP plans and SIMPLE IRA plans established after November 15, 2004 by
an employer adopting any plan document other than a prototype plan
produced by American Funds Distributors, Inc.;

. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);

. trust accounts established by you or your immediate family (for trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);

. endowments or foundations established and controlled by you or your
immediate family; or

. 529 accounts, which will be aggregated at the account owner level
(Class 529-E accounts may only be aggregated with an eligible employer
plan).

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

. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;

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

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

American Mutual Fund -- Page 45
<PAGE>

. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations;

. for individually established participant accounts of a 403(b) plan
that is treated similarly to an employer-sponsored plan for sales
charge purposes (see "Purchases by certain 403(b) plans" under "Sales
charges" above), or made for two or more such 403(b) plans that are
treated similarly to employer-sponsored plans for sales charge
purposes, in each case of a single employer or affiliated employers as
defined in the 1940 Act; or

. for a SEP or SIMPLE IRA plan established after November 15, 2004 by an
employer adopting a prototype plan produced by American Funds
Distributors, Inc.

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

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as holdings in Endowments and applicable holdings
in the American Funds Target Date Retirement Series. Shares of money market
funds purchased through an exchange, reinvestment or cross-reinvestment
from a fund having a sales charge also qualify. However, direct purchases
of American Funds money market funds are excluded. If you currently have
individual holdings in American Legacy variable annuity contracts or
variable life insurance policies that were established on or before March
31, 2007, you may continue to combine purchases made under such contracts
and policies to reduce your Class A sales charge.

RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments and applicable holdings in the American Funds Target Date
Retirement Series, to determine your sales charge on investments in
accounts eligible to be aggregated. Direct purchases of American Funds
money market funds are excluded. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals (the "cost value"). Depending on the entity on whose books your
account is held, the value of your holdings in that account may not be
eligible for calculation at cost value. For example, accounts held in
nominee or street name may not be eligible for calculation at cost value
and instead may be calculated at market value for purposes of rights of
accumulation.

The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or

American Mutual Fund -- Page 46
<PAGE>

decrease according to actual investments or withdrawals. You must contact
your financial adviser or American Funds Service Company if you have
additional information that is relevant to the calculation of the value of
your holdings.

When determining your American Funds Class A sales charge, if your
investment is not in an employer-sponsored retirement plan, you may also
continue to take into account the market value (as of the day prior to your
American Funds investment) of your individual holdings in various American
Legacy variable annuity contracts and variable life insurance policies that
were established on or before March 31, 2007. An employer-sponsored
retirement plan may also continue to take into account the market value of
its investments in American Legacy Retirement Investment Plans that were
established on or before March 31, 2007.

You may not purchase Class B or 529-B shares if your combined American
Funds and applicable American Legacy holdings cause you to be eligible to
purchase Class A or 529-A shares at the $100,000 or higher sales charge
discount rate. In addition, you may not purchase Class C or 529-C shares if
such combined holdings cause you to be eligible to purchase Class A or
529-A shares at the $1 million or more sales charge discount rate (i.e. at
net asset value).

If you make a gift of American Funds Class A shares, upon your request, you
may purchase the shares at the sales charge discount allowed under rights
of accumulation of all of your American Funds and applicable American
Legacy accounts.

CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or postpurchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions made after the Transfer Agent is
notified of the death of a joint tenant will be subject to a CDSC.

In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):

. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).

. Redemptions through an automatic withdrawal plan ("AWP") (see
"Automatic withdrawals" under "Shareholder account services and
privileges" in this statement of additional information). For each AWP
payment, assets that are not subject to a CDSC, such as appreciation
on shares and shares acquired through reinvestment of dividends and/or
capital gain distributions, will be redeemed first and will count
toward the 12% limit. If there is an insufficient amount of assets not
subject to a CDSC to cover a particular AWP payment, shares subject to
the lowest CDSC will be redeemed next until the 12% limit is reached.
Any dividends and/or capital gain distributions taken in cash by a
shareholder who receives

American Mutual Fund -- Page 47
<PAGE>

payments through an AWP will also count toward the 12% limit. In the
case of an AWP, the 12% limit is calculated at the time an automatic
redemption is first made, and is recalculated at the time each
additional automatic redemption is made. Shareholders who establish an
AWP should be aware that the amount of a payment not subject to a CDSC
may vary over time depending on fluctuations in the value of their
accounts. This privilege may be revised or terminated at any time.

For purposes of this paragraph, "account" means:

. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);

. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and

. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or elimination of the fund by
the Virginia College Savings Plan as an option for additional investment within
CollegeAmerica.

SELLING SHARES

The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such request must be signed by the registered
shareholders. To contact American Funds Service Company via overnight mail or
courier service, see "Purchase and exchange of shares."

A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the Financial
Industry Regulatory Authority, bank, savings association or credit union that is
an eligible guarantor institution. The Transfer Agent reserves the right to
require a signature guarantee on any redemptions.

Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 10
business days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as

American Mutual Fund -- Page 48
<PAGE>

permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders. However, certain services and privileges may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest and the date on
which you would like your investments to occur. The plan will begin within 30
days after your account application is received. Your bank account will be
debited on the day or a few days before your investment is made, depending on
the bank's capabilities. The Transfer Agent will then invest your money into the
fund you specified on or around the date you specified. If the date you
specified falls on a weekend or holiday, your money will be invested on the
following business day. However, if the following business day falls in the next
month, your money will be invested on the business day immediately preceding the
weekend or holiday. If your bank account cannot be debited due to insufficient
funds, a stop-payment or the closing of the account, the plan may be terminated
and the related investment reversed. You may change the amount of the investment
or discontinue the plan at any time by contacting the Transfer Agent.

AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.

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

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:

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

American Mutual Fund -- Page 49
<PAGE>

(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and

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

AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.

AUTOMATIC WITHDRAWALS -- For all share classes, except the R and 529 classes of
shares, you may automatically withdraw shares from any of the American Funds.
You can make automatic withdrawals of $50 or more. You can designate the day of
each period for withdrawals and request that checks be sent to you or someone
else. Withdrawals may also be electronically deposited to your bank account. The
Transfer Agent will withdraw your money from the fund you specify on or around
the date you specify. If the date you specified falls on a weekend or holiday,
the redemption will take place on the previous business day. However, if the
previous business day falls in the preceding month, the redemption will take
place on the following business day after the weekend or holiday.

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

Redemption proceeds from an automatic withdrawal plan are not eligible for
reinvestment without a sales charge.

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

AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per American Funds shareholder each day) from nonretirement plan
accounts; or exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.

American Mutual Fund -- Page 50
<PAGE>

Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.

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

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds upon meeting
the fund's initial purchase minimum of $1,000. This can be done by using an
account application. If you request check writing privileges, you will be
provided with checks that you may use to draw against your account. These checks
may be made payable to anyone you designate and must be signed by the authorized
number of registered shareholders exactly as indicated on your account
application.

REDEMPTION OF SHARES -- The fund's articles of incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder of record owns
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the board of directors of the fund may from time to time
adopt.

While payment of redemptions normally will be in cash, the fund's articles of
incorporation permit payment of the redemption price wholly or partly with
portfolio securities or other fund assets under conditions and circumstances
determined by the fund's board of directors. For example, redemptions could
be made in this manner if the board determined that making payments wholly in
cash over a particular period would be unfair and/or harmful to other fund
shareholders.

SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.

GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, as
Custodian. If the fund holds securities of issuers outside the U.S., the
Custodian may hold these securities pursuant to subcustodial arrangements in
banks outside the U.S. or branches of U.S. banks outside the U.S.

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

American Mutual Fund -- Page 51
<PAGE>

and performs other related shareholder service functions. The principal office
of American Funds Service Company is located at 6455 Irvine Center Drive,
Irvine, CA 92618. American Funds Service Company was paid a fee of $13,157,000
for Class A shares and $601,000 for Class B shares for the 2007 fiscal year.
American Funds Service Company is also compensated for certain transfer agency
services provided to all other share classes from the administrative services
fees paid to Capital Research and Management Company, as described under
"Administrative services agreement."

In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report, have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
report appearing herein. Such financial statements have been so included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing. The selection of the fund's independent registered
public accounting firm is reviewed and determined annually by the board of
directors.

INDEPENDENT LEGAL COUNSEL -- O'Melveny & Myers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as independent legal counsel ("counsel") for the fund
and for independent directors in their capacities as such. Certain legal matters
in connection with the capital shares offered by the prospectus have been passed
upon for the fund by O'Melveny & Myers LLP. Counsel does not provide legal
services to the fund's investment adviser or any of its affiliated companies or
control persons. A determination with respect to the independence of the fund's
counsel will be made at least annually by the independent directors of the fund,
as prescribed by the 1940 Act and related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on October 31. Shareholders are provided updated prospectuses annually
and at least semiannually with reports showing the fund's investment portfolio
or summary investment portfolio, financial statements and other information. The
fund's annual financial statements are audited by the fund's independent
registered public accounting firm, Deloitte & Touche LLP. In addition,
shareholders may also receive proxy statements for the fund. In an effort to
reduce the volume of mail shareholders receive from the fund when a household
owns more than one account, the Transfer Agent has taken steps to eliminate
duplicate mailings of prospectuses, shareholder reports and proxy statements. To
receive additional copies of a prospectus, report or proxy statement,
shareholders should contact the Transfer Agent.

Shareholders may also elect to receive updated prospectuses, annual reports and
semi-annual reports electronically by signing up for electronic delivery on our
website, americanfunds.com. Upon opting in to the electronic delivery of updated
prospectuses and other reports, a

American Mutual Fund -- Page 52
<PAGE>

shareholder will no longer automatically receive such documents in paper form by
mail. A shareholder who elects electronic delivery is able to cancel this
service at any time and return to receiving updated prospectuses and other
reports in paper form by mail.

Prospectuses, annual reports and semi-annual reports that are mailed to
shareholders by the American Funds organization are printed with ink containing
soy and/or vegetable oil on paper containing recycled fibers.

CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD (now the Financial Industry
Regulatory Authority, or FINRA) filed an administrative complaint against the
Principal Underwriter. The complaint alleges violations of certain NASD rules by
the Principal Underwriter with respect to the selection of broker-dealer firms
that buy and sell securities for mutual fund investment portfolios. The
complaint seeks sanctions, restitution and disgorgement. On August 30, 2006, a
FINRA Hearing Panel ruled against the Principal Underwriter and imposed a $5
million fine. On April 30, 2008, FINRA's National Adjudicatory Council affirmed
the decision by FINRA's Hearing Panel. The Principal Underwriter has appealed
this decision to the Securities and Exchange Commission.

The investment adviser and Principal Underwriter believe that the likelihood
that this matter could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. In addition, class action lawsuits have been
filed in the U.S. District Court, Central District of California, relating to
this and other matters. The investment adviser believes that these suits are
without merit and will defend itself vigorously.

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- APRIL 30, 2008

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $27.01
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $28.66

American Mutual Fund -- Page 53
<PAGE>

OTHER INFORMATION -- The fund reserves the right to modify the privileges
described in this statement of additional information at any time.

The financial statements, including the investment portfolio and the report of
the fund's independent registered public accounting firm contained in the annual
report, are included in this statement of additional information. The following
information on fund numbers is not included in the annual report:

American Mutual Fund -- Page 54
<PAGE>

FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:

FUND NUMBERS
-------------------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F-1 CLASS F-2
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . 002 202 302 402 602
American Balanced Fund/(R)/ 011 211 311 411 611
American Mutual Fund/(R)/ . 003 203 303 403 603
Capital Income Builder/(R)/ 012 212 312 412 612
Capital World Growth and
Income Fund/SM/ . . . . . . 033 233 333 433 633
EuroPacific Growth Fund/(R)/ 016 216 316 416 616
Fundamental Investors/SM/ . 010 210 310 410 610
The Growth Fund of
America/(R)/. . . . . . . . 005 205 305 405 605
The Income Fund of
America/(R)/. . . . . . . . 006 206 306 406 606
The Investment Company of
America/(R)/. . . . . . . . 004 204 304 404 604
The New Economy Fund/(R)/ . 014 214 314 414 614
New Perspective Fund/(R)/ . 007 207 307 407 607
New World Fund/SM/ . . . . 036 236 336 436 636
SMALLCAP World Fund/(R)/ . 035 235 335 435 635
Washington Mutual Investors
Fund/SM/ . . . . . . . . . 001 201 301 401 601
BOND FUNDS
American High-Income
Municipal Bond Fund/(R)/ . 040 240 340 440 640
American High-Income
Trust/SM/ . . . . . . . . . 021 221 321 421 621
The Bond Fund of America/SM/ 008 208 308 408 608
Capital World Bond Fund/(R)/ 031 231 331 431 631
Intermediate Bond Fund of
America/SM/ . . . . . . . . 023 223 323 423 623
Limited Term Tax-Exempt Bond
Fund of America/SM/ . . . . 043 243 343 443 643
Short-Term Bond Fund of
America/SM/ . . . . . . . . 048 248 348 448 648
The Tax-Exempt Bond Fund of
America/(R)/. . . . . . . . 019 219 319 419 619
The Tax-Exempt Fund of
California/(R)/*. . . . . . 020 220 320 420 620
The Tax-Exempt Fund of
Maryland/(R)/*. . . . . . . 024 224 324 424 624
The Tax-Exempt Fund of
Virginia/(R)/*. . . . . . . 025 225 325 425 625
U.S. Government Securities
Fund/SM/. . . . . . . . . . 022 222 322 422 622
MONEY MARKET FUNDS
The Cash Management Trust of
America/(R)/. . . . . . . . 009 209 309 409 609
The Tax-Exempt Money Fund of
America/SM/ . . . . . . . . 039 N/A N/A N/A N/A
The U.S. Treasury Money Fund
of America/SM/ . . . . . . 049 N/A N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.

American Mutual Fund -- Page 55
<PAGE>

FUND NUMBERS
----------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F-1
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
The Investment Company of
America. . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors
Fund . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America. . . . . . . . . . . . 1023 1223 1323 1523 1423
Short-Term Bond Fund of America 1048 1248 1348 1548 1448
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America. . . . . . . . . . . . 1009 1209 1309 1509 1409

FUND NUMBERS
----------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502
American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511
American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503
Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512
Capital World Growth and Income Fund 2133 2233 2333 2433 2533
EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516
Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510
The Growth Fund of America . . . . . 2105 2205 2305 2405 2505
The Income Fund of America . . . . . 2106 2206 2306 2406 2506
The Investment Company of America . 2104 2204 2304 2404 2504
The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514
New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507
New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536
SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535
Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540
American High-Income Trust . . . . . 2121 2221 2321 2421 2521
The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508
Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531
Intermediate Bond Fund of America . 2123 2223 2323 2423 2523
Limited Term Tax-Exempt Bond Fund of
America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543
Short-Term Bond Fund of America. . . 2148 2248 2348 2448 2548
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519
The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520
The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524
The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525
U.S. Government Securities Fund . . 2122 2222 2322 2422 2522
MONEY MARKET FUNDS
The Cash Management Trust of America 2109 2209 2309 2409 2509
The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549
___________
*Qualified for sale only in certain
jurisdictions.

American Mutual Fund -- Page 56
<PAGE>

FUND NUMBERS
--------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND CLASS A R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

AMERICAN FUNDS TARGET DATE RETIREMENT SERIES/(R)/
American Funds 2050 Target Date
Retirement Fund/(R)/ . . . . . . 069 2169 2269 2369 2469 2569
American Funds 2045 Target Date
Retirement Fund/(R)/ . . . . . . 068 2168 2268 2368 2468 2568
American Funds 2040 Target Date
Retirement Fund/(R)/ . . . . . . 067 2167 2267 2367 2467 2567
American Funds 2035 Target Date
Retirement Fund/(R)/ . . . . . . 066 2166 2266 2366 2466 2566
American Funds 2030 Target Date
Retirement Fund/(R)/ . . . . . . 065 2165 2265 2365 2465 2565
American Funds 2025 Target Date
Retirement Fund/(R)/ . . . . . . 064 2164 2264 2364 2464 2564
American Funds 2020 Target Date
Retirement Fund/(R)/ . . . . . . 063 2163 2263 2363 2463 2563
American Funds 2015 Target Date
Retirement Fund/(R)/ . . . . . . 062 2162 2262 2362 2462 2562
American Funds 2010 Target Date
Retirement Fund/(R)/ . . . . . . 061 2161 2261 2361 2461 2561

American Mutual Fund -- Page 57

....

[logo – American Funds®]

American Mutual Fund®

Investment portfolio

April 30, 2008

unaudited

Common stocks — 86.13%	Shares			Market value (000)

ENERGY — 7.83%
Apache Corp.		250,000		$	33,670
BJ Services Co.		2,033,037			57,474
Chevron Corp.		2,508,304			241,173
ConocoPhillips		3,000,000			258,450
Devon Energy Corp.		2,000,000			226,800
Halliburton Co.		1,200,000			55,092
Hess Corp.		1,900,000			201,780
Marathon Oil Corp.		5,353,600			243,964
Schlumberger Ltd.		880,400			88,524
Spectra Energy Corp		1,900,000			46,930
Sunoco, Inc.		500,000			23,205
					1,477,062

MATERIALS — 4.51%
Air Products and Chemicals, Inc.		1,850,000			182,096
Dow Chemical Co.		1,250,000			50,188
E.I. du Pont de Nemours and Co.		750,000			36,682
International Paper Co.		2,350,000			61,499
MeadWestvaco Corp.		5,000,000			131,500
Monsanto Co.		816,000			93,040
Potash Corp. of Saskatchewan Inc.		510,000			93,815
Praxair, Inc.		1,400,000			127,834
Sonoco Products Co.		1,284,000			42,308
Weyerhaeuser Co.		500,000			31,940
					850,902

INDUSTRIALS — 13.65%
3M Co.		1,185,000			91,127
Avery Dennison Corp.		3,375,000			162,641
Boeing Co.		500,000			42,430
Cintas Corp.		1,945,000			57,591
Eaton Corp.		400,000			35,136
Emerson Electric Co.		1,300,000			67,938
General Dynamics Corp.		770,000			69,623
General Electric Co.		14,250,000			465,975
Illinois Tool Works Inc.		428,000			22,380
Ingersoll-Rand Co. Ltd., Class A		1,300,000			57,694
Norfolk Southern Corp.		5,082,000			302,786
Northrop Grumman Corp.		1,000,000			73,570
Pentair, Inc.		1,950,000			71,818
Pitney Bowes Inc.		3,050,000			110,136
R.R. Donnelley & Sons Co.		5,685,000			174,188
Rockwell Automation		1,000,000			54,230
Southwest Airlines Co.		5,930,000			78,513
Tyco International Ltd.		1,020,300			47,740
United Parcel Service, Inc., Class B		3,550,000			257,056
United Technologies Corp.		3,700,000			268,139
Waste Management, Inc.		1,800,000			64,980
					2,575,691

CONSUMER DISCRETIONARY — 8.33%
Carnival Corp., units		1,475,000			59,251
Darden Restaurants, Inc.		2,800,000			99,624
Harley-Davidson, Inc.		1,508,000			57,681
Home Depot, Inc.		750,000			21,600
Johnson Controls, Inc.		3,700,000			130,462
Leggett & Platt, Inc.		5,150,000			85,490
Lowe’s Companies, Inc.		7,731,600			194,759
Magna International Inc., Class A		1,772,700			132,297
Mattel, Inc.		4,100,000			76,875
News Corp., Class A		2,350,000			42,065
Omnicom Group Inc.		1,500,000			71,610
Ross Stores, Inc.		1,000,000			33,490
Royal Caribbean Cruises Ltd.		4,400,000			140,360
Target Corp.		2,612,000			138,775
Time Warner Inc.		6,651,900			98,781
VF Corp.		1,150,000			85,537
Whirlpool Corp.		300,000			21,834
YUM! Brands, Inc.		1,980,000			80,546
					1,571,037

CONSUMER STAPLES — 7.30%
Avon Products, Inc.		500,000			19,510
Coca-Cola Co.		750,000			44,153
ConAgra Foods, Inc.		6,070,000			143,009
General Mills, Inc.		1,250,000			75,500
H.J. Heinz Co.		4,053,700			190,646
Kellogg Co.		1,585,600			81,135
Kimberly-Clark Corp.		2,410,000			154,216
PepsiCo, Inc.		3,710,000			254,246
Walgreen Co.		4,300,000			149,855
Wal-Mart Stores, Inc.		1,950,000			113,061
Wm. Wrigley Jr. Co.		2,000,000			152,320
					1,377,651

HEALTH CARE — 8.11%
Abbott Laboratories		5,363,613			282,931
Amgen Inc.1		1,447,200			60,594
AstraZeneca PLC (ADR)		1,295,000			54,364
Becton, Dickinson and Co.		600,000			53,640
Bristol-Myers Squibb Co.		9,182,200			201,733
Cardinal Health, Inc.		2,020,000			105,181
Covidien Ltd.		784,500			36,628
Eli Lilly and Co.		2,900,000			139,606
Johnson & Johnson		600,000			40,254
Medtronic, Inc.		3,707,000			180,457
Merck & Co., Inc.		1,850,000			70,374
Pfizer Inc		6,955,000			139,865
Schering-Plough Corp.		4,475,000			82,385
Wyeth		1,840,500			81,847
					1,529,859

FINANCIALS — 9.34%
Allstate Corp.		1,200,000			60,432
American International Group, Inc.		2,829,000			130,700
Aon Corp.		2,750,000			124,823
Arthur J. Gallagher & Co.		867,331			21,310
Bank of America Corp.		6,267,000			235,263
Bank of New York Mellon Corp.		2,610,000			113,613
Capital One Financial Corp.		735,000			38,955
Citigroup Inc.		8,235,000			208,098
Fannie Mae		7,158,096			202,574
Freddie Mac		3,630,700			90,441
JPMorgan Chase & Co.		4,866,000			231,865
Lincoln National Corp.		1,417,900			76,226
Marsh & McLennan Companies, Inc.		1,100,300			30,357
MGIC Investment Corp.		2,440,000			31,793
Travelers Companies, Inc.		1,000,000			50,400
U.S. Bancorp		1,750,000			59,308
Washington Mutual, Inc.		1,733,000			21,299
Wells Fargo & Co.		1,200,000			35,700
					1,763,157

INFORMATION TECHNOLOGY — 14.01%
Automatic Data Processing, Inc.		2,046,300			90,446
Cisco Systems, Inc.1		3,950,000			101,278
Hewlett-Packard Co.		6,600,000			305,910
Intel Corp.		10,640,000			236,846
International Business Machines Corp.		4,268,000			515,148
KLA-Tencor Corp.		1,242,000			54,251
Linear Technology Corp.		2,745,000			95,965
Maxim Integrated Products, Inc.		1,700,000			35,751
Microchip Technology Inc.		7,356,625			270,356
Microsoft Corp.		13,432,898			383,106
Nokia Corp. (ADR)		500,000			15,035
Oracle Corp.1		8,200,000			170,970
SAP AG (ADR)		3,334,000			167,467
Texas Instruments Inc.		4,100,000			119,556
Tyco Electronics Ltd.		900,000			33,669
Xilinx, Inc.		1,970,000			48,797
					2,644,551

TELECOMMUNICATION SERVICES — 4.02%
AT&T Inc.		8,659,097			335,194
Embarq Corp.		5,214,250			216,756
Sprint Nextel Corp., Series 1		13,860,000			110,741
Verizon Communications Inc.		2,512,334			96,675
					759,366

UTILITIES — 7.34%
Ameren Corp.		3,953,680			179,339
American Electric Power Co., Inc.		1,435,000			64,044
Dominion Resources, Inc.		2,295,200			99,589
DTE Energy Co.		750,000			30,233
Duke Energy Corp.		3,800,000			69,578
Exelon Corp.		2,548,400			217,837
FirstEnergy Corp.		1,620,000			122,537
PPL Corp.		1,724,000			82,786
Progress Energy, Inc.		200,000			8,398
Public Service Enterprise Group Inc.		1,600,000			70,256
Questar Corp.		3,000,000			186,090
Southern Co.		4,191,600			156,053
Xcel Energy Inc.		4,745,000			98,696
					1,385,436

MISCELLANEOUS — 1.69%
Other common stocks in initial period of acquisition					318,052


Total common stocks (cost: $13,426,598,000)					16,252,764



Convertible securities — 0.85%

FINANCIALS — 0.65%
Citigroup Inc., Series D, 7.00%, noncumulative convertible preferred2,3		1,725,000			89,959
SLM Corp., Series C, 7.25% convertible preferred 2010		33,925			31,804
					121,763

MISCELLANEOUS — 0.20%
Other convertible securities in initial period of acquisition					37,446


Total convertible securities (cost: $159,894,000)					159,209



	Principal amount
Bonds & notes — 1.40%		(000	)

INDUSTRIALS — 0.27%
General Electric Capital Corp., Series A, 4.80% 2013	$	50,000			50,251


FINANCIALS — 1.13%
Bank of America Corp., Series M, 8.125% noncumulative preferred (undated)4		100,000			102,323
Citigroup Inc., Series E, 8.40% (undated)4		85,000			86,133
JPMorgan Chase & Co., Series I, 7.90% (undated)4		25,000			25,550
					214,006

Total bonds & notes (cost: $260,689,000)					264,257


	Principal amount			Market value
Short-term securities — 11.60%		(000	)		(000	)

AT&T Inc. 2.10%–2.22% due 6/2–6/27/20085	$	54,000		$	53,811
Bank of America Corp. 2.96% due 5/6/2008		45,900			45,877
Caterpillar Inc. 2.17% due 5/30/20085		50,000			49,886
Coca-Cola Co. 2.08%–2.65% due 5/8–6/11/20085		176,300			175,992
E.I. duPont de Nemours and Co. 2.17% due 5/29–5/30/20085		43,500			43,423
Fannie Mae 2.05%–2.56% due 5/30–10/28/2008		353,780			351,700
Federal Home Loan Bank 1.72%–2.71% due 5/9–9/3/2008		324,950			323,779
Freddie Mac 1.93%–3.49% due 5/12–8/25/2008		245,300			244,579
Harley-Davidson Funding Corp. 2.07%–2.15% due 6/26–8/11/20085		43,000			42,712
Honeywell International Inc. 2.05%–2.12% due 6/27–7/17/20085		88,444			87,959
IBM Capital Inc. 2.40% due 6/18/20085		25,000			24,902
IBM Corp. 2.17% due 6/25/20085		20,000			19,908
IBM International Group Capital LLC 2.17% due 6/18/20085		31,000			30,879
Illinois Tool Works Inc. 2.11% due 5/16/2008		35,200			35,167
John Deere Capital Corp. 2.13%–2.16% due 6/26–6/27/20085		70,000			69,729
Johnson & Johnson 1.95% due 6/17/20085		50,000			49,811
JPMorgan Chase & Co. 2.42%–2.95% due 5/6–6/2/2008		91,500			91,401
NetJets Inc. 2.00%–2.30% due 5/1–5/14/20085		81,100			81,061
Paccar Financial Corp. 2.10%–2.70% due 5/16–7/17/2008		66,100			65,824
PepsiCo Inc. 2.08%–2.09% due 5/23–6/6/20085		58,100			58,002
Procter & Gamble International Funding S.C.A. 2.10% due 5/9/20085		45,400			45,376
U.S. Treasury Bills 1.35%–3.31% due 5/22–9/18/2008		97,980			97,850
United Parcel Service Inc. 2.00% due 7/28/20085		50,000			49,639
Walt Disney Co. 2.72%–2.73% due 5/5–5/28/2008		50,000			49,936


Total short-term securities (cost: $2,189,446,000)					2,189,203

Total investment securities (cost: $16,036,627,000)					18,865,433
Other assets less liabilities					4,310

Net assets				$	18,869,743

“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.

2Purchased in a transaction exempt from registration under the Securities Act of 1933. This security (acquired 1/15/2008 at a cost of $86,250,000)

may be subject to legal or contractual restrictions on resale.

3Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $89,959,000, which represented

.48% of the net assets of the fund.

4Coupon rate may change periodically.

5Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from

registration, normally to qualified institutional buyers. The total value of all such securities was $883,090,000, which represented 4.68% of the net assets

of the fund.

ADR = American Depositary Receipts

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information

is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.

MFGEFP-903-0608O-S10840

Financial statements

Statement of assets and liabilities			unaudited
at April 30, 2008	(dollars and shares in thousands, except per-share amounts)

Assets:

Investment securities at market (cost: $16,036,627)			$	18,865,433
Cash				84
Receivables for:
Sales of investments		29,692
Sales of fund's shares		16,162
Dividends and interest		25,094		70,948
				18,936,465
Liabilities:
Payables for:
Purchases of investments		35,395
Repurchases of fund's shares		16,404
Investment advisory services		3,640
Services provided by affiliates		8,747
Directors' deferred compensation		2,498
Other		38		66,722
Net assets at April 30, 2008			$	18,869,743

Net assets consist of:
Capital paid in on shares of capital stock			$	15,859,239
Undistributed net investment income				135,133
Undistributed net realized gain				46,565
Net unrealized appreciation				2,828,806
Net assets at April 30, 2008			$	18,869,743

Total authorized capital stock - 1,000,000 shares, $.001 par value (699,179 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share*

Class A	$	15,787,430		584,444	$	27.01
Class B		651,737		24,305		26.81
Class C		810,564		30,290		26.76
Class F		501,898		18,630		26.94
Class 529-A		245,956		9,118		26.98
Class 529-B		42,450		1,579		26.88
Class 529-C		71,450		2,658		26.88
Class 529-E		13,467		501		26.91
Class 529-F		7,349		272		27.00
Class R-1		15,227		567		26.85
Class R-2		146,124		5,450		26.81
Class R-3		201,866		7,509		26.88
Class R-4		69,321		2,571		26.96
Class R-5		304,904		11,285		27.02
(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $28.66 and $28.63, respectively.


See Notes to Financial Statements

Statement of operations				unaudited
for the six months ended April 30, 2008	(dollars in thousands)

Investment income:
Income:
Dividends (net of non-U.S. taxes of $227)	$	221,660
Interest		45,532		$	267,192

Fees and expenses*:
Investment advisory services		24,572
Distribution services		28,569
Transfer agent services		7,515
Administrative services		2,000
Reports to shareholders		324
Registration statement and prospectus		292
Postage, stationery and supplies		782
Directors' compensation		(81	)
Auditing and legal		34
Custodian		49
State and local taxes		167
Other		97
Total fees and expenses before reimbursements/waivers		64,320
Less reimbursements/waivers of fees and expenses:
Investment advisory services		2,457
Administrative services		4
Total fees and expenses after reimbursements/waivers					61,859
Net investment income					205,333

Net realized gain and unrealized depreciation on investments:
Net realized gain on investments		152,679
Net unrealized depreciation on investments		(2,208,729	)
Net realized gain and unrealized depreciation on investments					(2,056,050	)
Net decrease in net assets resulting from operations				$	(1,850,717	)

* Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.

See Notes to Financial Statements




Statements of changes in net assets	(dollars in thousands)

	Six months			Year ended
	ended April 30,			October 31,
		2008	*	2007
Operations:
Net investment income	$	205,333		$	410,806
Net realized gain on investments		152,679			909,949
Net unrealized (depreciation) appreciation on investments		(2,208,729	)		973,349
Net (decrease) increase in net assets resulting from operations		(1,850,717	)		2,294,104

Dividends and distributions paid to shareholders:
Dividends from net investment income		(212,345	)		(391,275	)
Distributions from net realized gain on investments		(872,259	)		(463,340	)
Total dividends and distributions paid to shareholders		(1,084,604	)		(854,615	)

Net capital share transactions		584,569			741,397

Total (decrease) increase in net assets		(2,350,752	)		2,180,886

Net assets:
Beginning of period		21,220,495			19,039,609
End of period (including undistributed net investment income: $135,133 and $142,145, respectively)	$	18,869,743		$	21,220,495

*Unaudited.

See Notes to Financial Statements

Notes to financial statements

unaudited

1.	Organization and significant accounting policies

Organization – American Mutual Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund strives for the balanced accomplishment of three objectives – current income, growth of capital and conservation of principal – through investments in companies that participate in the growth of the American economy.

The fund offers 14 share classes consisting of four retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be used to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Class 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
Class B and 529-B	None	Declines from 5% to 0% for redemptions within six years of purchase	Class B and 529-B convert to Class 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 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Class F and 529-F	None	None	None
Class R-1, R-2, R-3, R-4 and R-5	None	None	None

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Taxation – Dividend income is recorded net of non-U.S. taxes paid.

2. Federal income taxation and distributions

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 April 30, 2008, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2003 and by state tax authorities for tax years before 2002.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; deferred expenses; and cost of investments sold. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of October 31, 2007, the fund had tax basis undistributed ordinary income of $144,821,000 and undistributed long-term capital gains of $771,641,000.

As of April 30, 2008, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:

(dollars in thousands)
Gross unrealized appreciation on investment securities	$	4,149,361
Gross unrealized depreciation on investment securities		(1,325,305	)
Net unrealized appreciation on investment securities		2,824,056
Cost of investment securities		16,041,377

The tax character of distributions paid to shareholders was as follows (dollars in thousands):

	Six months ended April 30, 2008						Year ended October 31, 2007
Share class	Ordinary income		Long-term capital gains		Total distributions paid		Ordinary income		Long-term capital gains		Total distributions paid

Class A	$	184,029	$	730,542	$	914,571	$	342,770	$	389,742	$	732,512
Class B		5,111		31,107		36,218		9,168		16,908		26,076
Class C		6,134		38,154		44,288		10,541		19,696		30,237
Class F		5,951		23,835		29,786		10,540		12,069		22,609
Class 529-A		2,661		10,805		13,466		4,530		5,132		9,662
Class 529-B		295		1,926		2,221		491		979		1,470
Class 529-C		494		3,192		3,686		805		1,550		2,355
Class 529-E		128		597		725		212		281		493
Class 529-F		87		328		415		140		133		273
Class R-1		104		600		704		156		406		562
Class R-2		1,033		6,663		7,696		1,782		3,362		5,144
Class R-3		1,957		9,338		11,295		3,686		5,283		8,969
Class R-4		747		2,936		3,683		1,203		1,317		2,520
Class R-5		3,614		12,236		15,850		5,251		6,482		11,733
Total	$	212,345	$	872,259	$	1,084,604	$	391,275	$	463,340	$	854,615

3. 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 is currently waiving 10% of investment advisory services fees. During the six months ended April 30, 2008, total investment advisory services fees waived by CRMC were $2,457,000. As a result, the fee shown on the accompanying financial statements of $24,572,000, which was equivalent to an annualized rate of 0.254%, was reduced to $22,115,000, or 0.229% 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 Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes 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 Class 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 April 30, 2008, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.25%	0.25%
Class 529-A	0.25	0.50
Class B and 529-B	1.00	1.00
Class C, 529-C and R-1	1.00	1.00
Class R-2	0.75	1.00
Class 529-E and R-3	0.50	0.75
Class F, 529-F and R-4	0.25	0.50

Transfer agent services – The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended April 30, 2008, the total administrative services fees paid by CRMC were $4,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described above for the six months ended April 30, 2008, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$18,386	$7,204	Not applicable	Not applicable	Not applicable
Class B	3,350	311	Not applicable	Not applicable	Not applicable
Class C	4,118	Included in administrative services	$504	$67	Not applicable
Class F	652		289	19	Not applicable
Class 529-A	257		107	14	$ 120
Class 529-B	211		19	5	21
Class 529-C	352		31	8	35
Class 529-E	33		6	1	7
Class 529-F	-		3	-*	4
Class R-1	70		6	5	Not applicable
Class R-2	546		107	242	Not applicable
Class R-3	509		124	63	Not applicable
Class R-4	85		47	4	Not applicable
Class R-5	Not applicable		140	2	Not applicable
Total	$28,569	$7,515	$1,383	$430	$187

* 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 $(81,000), shown on the accompanying financial statements, includes $193,000 in current fees (either paid in cash or deferred) and a net decrease of $274,000 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.

4. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

Share class	Sales*				Reinvestments of dividends and distributions				Repurchases*						Net increase (decrease)
	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Six months ended April 30, 2008
Class A	$	745,645		27,121	$	862,679		30,793	$	(1,169,882	)		(42,697	)	$	438,442			15,217
Class B		24,217		890		34,978		1,252		(58,306	)		(2,158	)		889			(16	)
Class C		55,001		2,020		42,462		1,523		(80,714	)		(2,984	)		16,749			559
Class F		67,050		2,450		26,735		956		(84,295	)		(3,121	)		9,490			285
Class 529-A		22,182		806		13,456		481		(12,330	)		(448	)		23,308			839
Class 529-B		2,034		75		2,221		79		(1,814	)		(66	)		2,441			88
Class 529-C		6,399		234		3,684		131		(5,186	)		(188	)		4,897			177
Class 529-E		1,245		46		725		26		(812	)		(30	)		1,158			42
Class 529-F		946		34		415		15		(754	)		(27	)		607			22
Class R-1		4,071		150		694		25		(1,789	)		(66	)		2,976			109
Class R-2		23,508		864		7,686		275		(24,185	)		(888	)		7,009			251
Class R-3		27,623		1,023		11,278		404		(34,110	)		(1,256	)		4,791			171
Class R-4		16,351		592		3,683		132		(10,998	)		(404	)		9,036			320
Class R-5		89,021		3,256		15,181		543		(41,426	)		(1,560	)		62,776			2,239
Total net increase
(decrease)	$	1,085,293		39,561	$	1,025,877		36,635	$	(1,526,601	)		(55,893	)	$	584,569			20,303

Year ended October 31, 2007
Class A	$	1,764,245		58,027	$	687,421		23,069	$	(1,899,226	)		(62,416	)	$	552,440			18,680
Class B		66,160		2,197		25,142		853		(76,860	)		(2,542	)		14,442			508
Class C		160,389		5,325		28,963		985		(124,676	)		(4,128	)		64,676			2,182
Class F		139,532		4,593		20,118		677		(119,805	)		(3,951	)		39,845			1,319
Class 529-A		45,897		1,515		9,661		324		(19,288	)		(635	)		36,270			1,204
Class 529-B		4,953		164		1,469		50		(2,861	)		(95	)		3,561			119
Class 529-C		15,317		508		2,355		80		(7,519	)		(248	)		10,153			340
Class 529-E		2,856		94		493		17		(1,207	)		(40	)		2,142			71
Class 529-F		2,435		80		273		9		(711	)		(24	)		1,997			65
Class R-1		7,271		242		560		19		(9,594	)		(323	)		(1,763	)		(62	)
Class R-2		52,002		1,724		5,138		174		(38,885	)		(1,286	)		18,255			612
Class R-3		63,083		2,084		8,958		303		(82,359	)		(2,703	)		(10,318	)		(316	)
Class R-4		36,688		1,214		2,514		84		(27,964	)		(921	)		11,238			377
Class R-5		134,294		4,392		10,808		364		(146,643	)		(4,871	)		(1,541	)		(115	)
Total net increase
(decrease)	$	2,495,122		82,159	$	803,873		27,008	$	(2,557,598	)		(84,183	)	$	741,397			24,984


* Includes exchanges between share classes of the fund.

5. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $1,772,021,000 and $2,067,369,000, respectively, during the six months ended April 30, 2008.

Financial highlights (1)

			(Loss) income from investment operations(2)				Dividends and distributions
		Net asset value, beginning of period	Net investment income		Net (losses) gains on securities (both realized and unrealized)	Total from investment operations	Dividends (from net investment income)	Distributions (from capital gains)	Total dividends and distributions	Net asset value, end of period	Total return (3) (4)	Net assets, end of period (in millions)	Ratio of expenses to average net assets before reimbursements /waivers		Ratio of expenses to average net assets after reimbursements /waivers (4)		Ratio of net income to average net assets (4)
Class A:
Six months ended 4/30/2008	(5)	$31.29	$.31	$	(2.98)	$(2.67)	$(.32)	$(1.29)	$(1.61)	$27.01	(8.69)%	$15,787	.59%	(6)	.57%	(6)	2.23%	(6)
Year ended 10/31/2007		29.14	.64		2.83	3.47	(.61)	(.71)	(1.32)	31.29	12.19	17,809	.58		.56		2.09
Year ended 10/31/2006		26.52	.63		3.55	4.18	(.55)	(1.01)	(1.56)	29.14	16.40	16,044	.58		.55		2.31
Year ended 10/31/2005		25.10	.54		1.41	1.95	(.48)	(.05)	(.53)	26.52	7.80	13,850	.58		.56		2.06
Year ended 10/31/2004		23.17	.48		2.00	2.48	(.46)	(.09)	(.55)	25.10	10.81	12,044	.60		.60		1.97
Year ended 10/31/2003		20.20	.49		3.31	3.80	(.52)	(.31)	(.83)	23.17	19.31	9,716	.62		.62		2.32
Class B:
Six months ended 4/30/2008	(5)	31.06	.20		(2.95)	(2.75)	(.21)	(1.29)	(1.50)	26.81	(9.03)	652	1.37	(6)	1.34	(6)	1.46	(6)
Year ended 10/31/2007		28.95	.40		2.80	3.20	(.38)	(.71)	(1.09)	31.06	11.28	756	1.36		1.33		1.32
Year ended 10/31/2006		26.36	.41		3.53	3.94	(.34)	(1.01)	(1.35)	28.95	15.48	689	1.37		1.34		1.52
Year ended 10/31/2005		24.94	.33		1.41	1.74	(.27)	(.05)	(.32)	26.36	7.00	595	1.38		1.36		1.26
Year ended 10/31/2004		23.04	.29		1.98	2.27	(.28)	(.09)	(.37)	24.94	9.92	497	1.39		1.39		1.18
Year ended 10/31/2003		20.11	.32		3.28	3.60	(.36)	(.31)	(.67)	23.04	18.32	315	1.41		1.41		1.49
Class C:
Six months ended 4/30/2008	(5)	31.00	.19		(2.94)	(2.75)	(.20)	(1.29)	(1.49)	26.76	(9.03)	811	1.41	(6)	1.39	(6)	1.41	(6)
Year ended 10/31/2007		28.89	.38		2.80	3.18	(.36)	(.71)	(1.07)	31.00	11.26	922	1.41		1.38		1.27
Year ended 10/31/2006		26.31	.39		3.52	3.91	(.32)	(1.01)	(1.33)	28.89	15.41	796	1.42		1.40		1.46
Year ended 10/31/2005		24.90	.31		1.41	1.72	(.26)	(.05)	(.31)	26.31	6.91	666	1.44		1.42		1.19
Year ended 10/31/2004		23.01	.27		1.97	2.24	(.26)	(.09)	(.35)	24.90	9.82	500	1.47		1.46		1.09
Year ended 10/31/2003		20.09	.30		3.28	3.58	(.35)	(.31)	(.66)	23.01	18.23	267	1.49		1.49		1.39
Class F:
Six months ended 4/30/2008	(5)	31.21	.30		(2.97)	(2.67)	(.31)	(1.29)	(1.60)	26.94	(8.70)	502	.64	(6)	.61	(6)	2.19	(6)
Year ended 10/31/2007		29.07	.62		2.83	3.45	(.60)	(.71)	(1.31)	31.21	12.14	573	.63		.60		2.05
Year ended 10/31/2006		26.46	.62		3.54	4.16	(.54)	(1.01)	(1.55)	29.07	16.36	495	.62		.60		2.26
Year ended 10/31/2005		25.04	.52		1.41	1.93	(.46)	(.05)	(.51)	26.46	7.71	434	.67		.65		1.97
Year ended 10/31/2004		23.12	.45		2.00	2.45	(.44)	(.09)	(.53)	25.04	10.70	324	.70		.70		1.86
Year ended 10/31/2003		20.17	.46		3.30	3.76	(.50)	(.31)	(.81)	23.12	19.14	172	.72		.72		2.14
Class 529-A:
Six months ended 4/30/2008	(5)	31.25	.29		(2.96)	(2.67)	(.31)	(1.29)	(1.60)	26.98	(8.72)	246	.69	(6)	.66	(6)	2.13	(6)
Year ended 10/31/2007		29.11	.60		2.83	3.43	(.58)	(.71)	(1.29)	31.25	12.07	259	.68		.65		1.99
Year ended 10/31/2006		26.50	.60		3.55	4.15	(.53)	(1.01)	(1.54)	29.11	16.29	206	.66		.64		2.21
Year ended 10/31/2005		25.07	.51		1.42	1.93	(.45)	(.05)	(.50)	26.50	7.71	151	.70		.68		1.93
Year ended 10/31/2004		23.15	.45		2.00	2.45	(.44)	(.09)	(.53)	25.07	10.70	99	.71		.71		1.85
Year ended 10/31/2003		20.20	.47		3.31	3.78	(.52)	(.31)	(.83)	23.15	19.19	51	.67		.67		2.22
Class 529-B:
Six months ended 4/30/2008	(5)	31.14	.18		(2.96)	(2.78)	(.19)	(1.29)	(1.48)	26.88	(9.09)	43	1.49	(6)	1.46	(6)	1.33	(6)
Year ended 10/31/2007		29.01	.36		2.82	3.18	(.34)	(.71)	(1.05)	31.14	11.19	46	1.48		1.46		1.19
Year ended 10/31/2006		26.42	.37		3.53	3.90	(.30)	(1.01)	(1.31)	29.01	15.29	40	1.50		1.47		1.38
Year ended 10/31/2005		25.00	.29		1.41	1.70	(.23)	(.05)	(.28)	26.42	6.79	32	1.55		1.53		1.09
Year ended 10/31/2004		23.09	.24		1.99	2.23	(.23)	(.09)	(.32)	25.00	9.72	24	1.59		1.59		.97
Year ended 10/31/2003		20.16	.27		3.30	3.57	(.33)	(.31)	(.64)	23.09	18.07	14	1.61		1.61		1.27
Class 529-C:
Six months ended 4/30/2008	(5)	31.13	.18		(2.95)	(2.77)	(.19)	(1.29)	(1.48)	26.88	(9.06)	71	1.49	(6)	1.46	(6)	1.34	(6)
Year ended 10/31/2007		29.01	.36		2.81	3.17	(.34)	(.71)	(1.05)	31.13	11.17	77	1.48		1.45		1.19
Year ended 10/31/2006		26.42	.38		3.53	3.91	(.31)	(1.01)	(1.32)	29.01	15.31	62	1.49		1.46		1.39
Year ended 10/31/2005		25.00	.29		1.41	1.70	(.23)	(.05)	(.28)	26.42	6.82	48	1.54		1.52		1.10
Year ended 10/31/2004		23.09	.24		1.99	2.23	(.23)	(.09)	(.32)	25.00	9.74	33	1.58		1.58		.98
Year ended 10/31/2003		20.16	.27		3.30	3.57	(.33)	(.31)	(.64)	23.09	18.09	16	1.60		1.60		1.28
Class 529-E:
Six months ended 4/30/2008	(5)	31.17	.25		(2.95)	(2.70)	(.27)	(1.29)	(1.56)	26.91	(8.84)	14	.98	(6)	.95	(6)	1.84	(6)
Year ended 10/31/2007		29.04	.51		2.82	3.33	(.49)	(.71)	(1.20)	31.17	11.74	14	.97		.95		1.70
Year ended 10/31/2006		26.44	.52		3.54	4.06	(.45)	(1.01)	(1.46)	29.04	15.92	11	.97		.95		1.90
Year ended 10/31/2005		25.02	.42		1.41	1.83	(.36)	(.05)	(.41)	26.44	7.35	8	1.02		1.00		1.61
Year ended 10/31/2004		23.10	.37		1.99	2.36	(.35)	(.09)	(.44)	25.02	10.32	6	1.06		1.06		1.50
Year ended 10/31/2003		20.16	.38		3.30	3.68	(.43)	(.31)	(.74)	23.10	18.72	3	1.07		1.07		1.80

Class 529-F:
Six months ended 4/30/2008	(5)	$31.28	$.32	$	(2.97)	$(2.65)	$(.34)	$(1.29)	$(1.63)	$27.00	(8.64)%	$7	.47%	(6)	.45%	(6)	2.35%	(6)
Year ended 10/31/2007		29.13	.66		2.84	3.50	(.64)	(.71)	(1.35)	31.28	12.32	8	.47		.45		2.19
Year ended 10/31/2006		26.52	.65		3.55	4.20	(.58)	(1.01)	(1.59)	29.13	16.49	5	.47		.44		2.37
Year ended 10/31/2005		25.08	.52		1.42	1.94	(.45)	(.05)	(.50)	26.52	7.77	3	.64		.62		1.99
Year ended 10/31/2004		23.16	.43		2.00	2.43	(.42)	(.09)	(.51)	25.08	10.58	2	.81		.80		1.75
Year ended 10/31/2003		20.22	.43		3.32	3.75	(.50)	(.31)	(.81)	23.16	19.03	1	.82		.82		1.99
Class R-1:
Six months ended 4/30/2008	(5)	31.10	.19		(2.95)	(2.76)	(.20)	(1.29)	(1.49)	26.85	(9.04)	15	1.42	(6)	1.39	(6)	1.40	(6)
Year ended 10/31/2007		28.97	.37		2.80	3.17	(.33)	(.71)	(1.04)	31.10	11.18	14	1.45		1.43		1.22
Year ended 10/31/2006		26.38	.38		3.54	3.92	(.32)	(1.01)	(1.33)	28.97	15.38	15	1.46		1.43		1.42
Year ended 10/31/2005		24.97	.31		1.40	1.71	(.25)	(.05)	(.30)	26.38	6.86	12	1.48		1.45		1.17
Year ended 10/31/2004		23.06	.26		1.99	2.25	(.25)	(.09)	(.34)	24.97	9.83	10	1.51		1.49		1.07
Year ended 10/31/2003		20.17	.26		3.33	3.59	(.39)	(.31)	(.70)	23.06	18.19	4	1.65		1.50		1.18
Class R-2:
Six months ended 4/30/2008	(5)	31.06	.18		(2.94)	(2.76)	(.20)	(1.29)	(1.49)	26.81	(9.08)	146	1.50	(6)	1.47	(6)	1.33	(6)
Year ended 10/31/2007		28.94	.38		2.81	3.19	(.36)	(.71)	(1.07)	31.06	11.24	161	1.49		1.41		1.24
Year ended 10/31/2006		26.36	.39		3.52	3.91	(.32)	(1.01)	(1.33)	28.94	15.36	133	1.61		1.41		1.43
Year ended 10/31/2005		24.95	.31		1.41	1.72	(.26)	(.05)	(.31)	26.36	6.90	99	1.65		1.42		1.19
Year ended 10/31/2004		23.05	.27		1.99	2.26	(.27)	(.09)	(.36)	24.95	9.86	64	1.76		1.45		1.10
Year ended 10/31/2003		20.17	.29		3.28	3.57	(.38)	(.31)	(.69)	23.05	18.10	32	1.86		1.47		1.35
Class R-3:
Six months ended 4/30/2008	(5)	31.14	.26		(2.96)	(2.70)	(.27)	(1.29)	(1.56)	26.88	(8.85)	202	.95	(6)	.93	(6)	1.87	(6)
Year ended 10/31/2007		29.01	.52		2.81	3.33	(.49)	(.71)	(1.20)	31.14	11.76	228	.97		.95		1.71
Year ended 10/31/2006		26.41	.52		3.54	4.06	(.45)	(1.01)	(1.46)	29.01	15.94	222	.96		.93		1.92
Year ended 10/31/2005		25.00	.44		1.40	1.84	(.38)	(.05)	(.43)	26.41	7.37	181	.98		.96		1.65
Year ended 10/31/2004		23.09	.37		1.99	2.36	(.36)	(.09)	(.45)	25.00	10.32	113	1.05		1.04		1.49
Year ended 10/31/2003		20.18	.37		3.30	3.67	(.45)	(.31)	(.76)	23.09	18.64	32	1.14		1.08		1.72
Class R-4:
Six months ended 4/30/2008	(5)	31.23	.29		(2.96)	(2.67)	(.31)	(1.29)	(1.60)	26.96	(8.72)	69	.67	(6)	.65	(6)	2.14	(6)
Year ended 10/31/2007		29.09	.61		2.82	3.43	(.58)	(.71)	(1.29)	31.23	12.08	70	.67		.65		2.00
Year ended 10/31/2006		26.48	.60		3.54	4.14	(.52)	(1.01)	(1.53)	29.09	16.26	55	.68		.66		2.20
Year ended 10/31/2005		25.06	.51		1.41	1.92	(.45)	(.05)	(.50)	26.48	7.69	43	.69		.67		1.94
Year ended 10/31/2004		23.14	.46		1.99	2.45	(.44)	(.09)	(.53)	25.06	10.69	34	.70		.70		1.86
Year ended 10/31/2003		20.19	.44		3.32	3.76	(.50)	(.31)	(.81)	23.14	19.14	16	.73		.72		2.03
Class R-5:
Six months ended 4/30/2008	(5)	31.29	.33		(2.96)	(2.63)	(.35)	(1.29)	(1.64)	27.02	(8.55)	305	.37	(6)	.34	(6)	2.45	(6)
Year ended 10/31/2007		29.14	.71		2.82	3.53	(.67)	(.71)	(1.38)	31.29	12.42	283	.37		.35		2.32
Year ended 10/31/2006		26.53	.68		3.54	4.22	(.60)	(1.01)	(1.61)	29.14	16.58	267	.38		.35		2.49
Year ended 10/31/2005		25.10	.58		1.43	2.01	(.53)	(.05)	(.58)	26.53	8.05	198	.39		.36		2.22
Year ended 10/31/2004		23.17	.53		2.00	2.53	(.51)	(.09)	(.60)	25.10	11.04	62	.39		.39		2.18
Year ended 10/31/2003		20.21	.54		3.29	3.83	(.56)	(.31)	(.87)	23.17	19.50	52	.41		.41		2.53

	Six months ended	Year ended October 31
	April, 30
	2008(5)	2007	2006	2005	2004	2003

Portfolio turnover rate for all classes of shares	10%	19%	19%	22%	17%	24%

(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) Unaudited.

(6) Annualized.

See Notes to Financial Statements

[logo – American Funds®]

American Mutual Fund®

Investment portfolio

October 31, 2007

Common stocks — 89.69%	Shares			Market value (000)

ENERGY — 7.02%
Apache Corp.		420,000		$	43,600
BJ Services Co.		3,333,037			83,959
Chevron Corp.		2,183,304			199,794
ConocoPhillips		2,200,000			186,912
Devon Energy Corp.		2,000,000			186,800
Exxon Mobil Corp.		1,135,000			104,409
Halliburton Co.		1,200,000			47,304
Hess Corp.		2,100,000			150,381
Marathon Oil Corp.		5,353,600			316,558
Schlumberger Ltd.		880,400			85,021
Spectra Energy Corp		1,900,000			49,362
Sunoco, Inc.		500,000			36,800
					1,490,900

MATERIALS — 3.78%
Air Products and Chemicals, Inc.		1,850,000			181,023
Dow Chemical Co.		2,250,000			101,340
E.I. du Pont de Nemours and Co.		1,350,000			66,838
International Paper Co.		2,350,000			86,856
MeadWestvaco Corp.		5,000,000			168,200
Praxair, Inc.		1,400,000			119,672
Sonoco Products Co.		1,284,000			39,701
Weyerhaeuser Co.		500,000			37,955
					801,585

INDUSTRIALS — 12.86%
3M Co.		970,000			83,769
Avery Dennison Corp.		3,375,000			195,412
Boeing Co.		500,000			49,295
Cintas Corp.		2,420,000			88,572
Emerson Electric Co.		1,300,000			67,951
General Dynamics Corp.		770,000			70,039
General Electric Co.		14,250,000			586,530
Illinois Tool Works Inc.		428,000			24,507
Norfolk Southern Corp.		5,082,000			262,485
Northrop Grumman Corp.		1,000,000			83,620
Pentair, Inc.		1,950,000			69,011
Pitney Bowes Inc.		2,650,000			106,106
R.R. Donnelley & Sons Co.		6,092,500			245,467
Southwest Airlines Co.		5,930,000			84,265
Tyco International Ltd.		1,595,300			65,679
United Parcel Service, Inc., Class B		3,550,000			266,605
United Technologies Corp.		4,100,000			314,019
Waste Management, Inc.		1,800,000			65,502
					2,728,834

CONSUMER DISCRETIONARY — 10.13%
Carnival Corp., units		1,475,000			70,771
Darden Restaurants, Inc.		2,800,000			120,400
Harley-Davidson, Inc.		1,508,000			77,662
Home Depot, Inc.		750,000			23,633
Johnson Controls, Inc.		5,520,000			241,334
Leggett & Platt, Inc.		5,945,000			115,511
Lowe’s Companies, Inc.		7,731,600			207,903
Magna International Inc., Class A		1,772,700			167,981
Mattel, Inc.		3,879,200			81,036
News Corp., Class A		2,350,000			50,925
Omnicom Group Inc.		1,500,000			76,470
Ross Stores, Inc.		2,250,000			60,795
Royal Caribbean Cruises Ltd.		4,400,000			188,672
Target Corp.		2,612,000			160,272
Time Warner Inc.		6,036,900			110,234
TJX Companies, Inc.		3,850,000			111,380
VF Corp.		1,150,000			100,199
YUM! Brands, Inc.		4,580,000			184,437
					2,149,615

CONSUMER STAPLES — 6.62%
Avon Products, Inc.		641,900			26,305
Coca-Cola Co.		750,000			46,320
ConAgra Foods, Inc.		4,400,000			104,412
General Mills, Inc.		1,250,000			72,163
H.J. Heinz Co.		4,053,700			189,632
Kellogg Co.		1,585,600			83,704
Kimberly-Clark Corp.		2,410,000			170,845
PepsiCo, Inc.		3,210,000			236,641
Walgreen Co.		4,300,000			170,495
Wal-Mart Stores, Inc.		4,000,000			180,840
Wm. Wrigley Jr. Co.		2,000,000			123,340
					1,404,697

HEALTH CARE — 10.63%
Abbott Laboratories		6,300,000			344,106
Amgen Inc.1		2,605,000			151,377
AstraZeneca PLC (ADR)		1,295,000			63,584
Becton, Dickinson and Co.		600,000			50,076
Bristol-Myers Squibb Co.		9,182,200			275,374
Cardinal Health, Inc.		2,020,000			137,421
Covidien Ltd.		1,595,300			66,364
Eli Lilly and Co.		4,205,000			227,701
Johnson & Johnson		600,000			39,102
Medtronic, Inc.		3,707,000			175,860
Merck & Co., Inc.		4,250,000			247,605
Pfizer Inc		7,165,000			176,331
Schering-Plough Corp.		3,975,000			121,317
Wyeth		3,698,000			179,834
					2,256,052

FINANCIALS — 13.21%
Allstate Corp.		1,200,000			62,880
American International Group, Inc.		2,829,000			178,567
Aon Corp.		2,750,000			124,630
Arthur J. Gallagher & Co.		867,331			23,080
Bank of America Corp.		7,365,000			355,582
Bank of New York Mellon Corp.		6,741,050			329,300
Citigroup Inc.		9,335,000			391,137
Fannie Mae		5,558,096			317,034
First Horizon National Corp.		1,380,000			35,990
Freddie Mac		3,630,700			189,631
Huntington Bancshares Inc.		4,720,000			84,535
JPMorgan Chase & Co.		4,546,000			213,662
Lincoln National Corp.		1,322,900			82,509
Marsh & McLennan Companies, Inc.		1,100,300			28,487
Travelers Companies, Inc.		1,536,000			80,195
U.S. Bancorp		1,750,000			58,030
Unum Group		1,000,000			23,340
Wachovia Corp.		1,500,000			68,595
Washington Mutual, Inc.		4,123,000			114,949
Wells Fargo & Co.		1,200,000			40,812
					2,802,945

INFORMATION TECHNOLOGY — 12.66%
Automatic Data Processing, Inc.		750,000			37,170
Cisco Systems, Inc.1		3,780,000			124,967
Hewlett-Packard Co.		6,600,000			341,088
Intel Corp.		9,100,000			244,790
International Business Machines Corp.		4,510,000			523,701
KLA-Tencor Corp.		1,142,000			60,126
Linear Technology Corp.		2,745,000			90,640
Maxim Integrated Products, Inc.		900,000			24,390
Microchip Technology Inc.		7,356,625			244,019
Microsoft Corp.		13,930,000			512,763
Oracle Corp.1		9,600,000			212,832
Seagate Technology		1,100,000			30,624
Texas Instruments Inc.		4,100,000			133,660
Tyco Electronics Ltd.		1,595,300			56,905
Xilinx, Inc.		1,970,000			48,068
					2,685,743

TELECOMMUNICATION SERVICES — 5.14%
ALLTEL Corp.		1,000,000			71,150
AT&T Inc.		9,644,097			403,027
Embarq Corp.		5,214,250			275,938
Sprint Nextel Corp., Series 1		10,260,000			175,446
Verizon Communications Inc.		3,600,000			165,852
					1,091,413

UTILITIES — 6.35%
Ameren Corp.		3,953,680			213,736
American Electric Power Co., Inc.		1,435,000			69,181
Dominion Resources, Inc.		850,000			77,885
DTE Energy Co.		750,000			37,200
Duke Energy Corp.		3,800,000			72,846
Exelon Corp.		2,548,400			210,957
FirstEnergy Corp.		1,620,000			112,914
PPL Corp.		1,724,000			89,131
Progress Energy, Inc.		200,000			9,600
Public Service Enterprise Group Inc.		800,000			76,480
Questar Corp.		3,000,000			171,240
Southern Co.		2,700,000			98,982
Xcel Energy Inc.		4,745,000			107,000
					1,347,152

MISCELLANEOUS — 1.29%
Other common stocks in initial period of acquisition					272,992


Total common stocks (cost: $13,994,527,000)					19,031,928


	Principal amount
Short-term securities — 10.33%		(000	)

Abbott Laboratories 4.71% due 11/6/20072	$	43,000			42,966
Bank of America Corp. 5.40%–5.45% due 11/5–12/11/2007		65,000			64,700
Caterpillar Financial Services Corp. 4.65%–4.71% due 11/5–11/21/2007		75,000			74,882
Citigroup Funding Inc. 5.28% due 11/16/2007		75,000			74,818
Coca-Cola Co. 4.63%–5.19% due 11/15/2007–1/18/20082		150,000			149,415
E.I. duPont de Nemours and Co. 4.55%–4.72% due 11/13–11/29/20072		125,000			124,660
Federal Farm Credit Banks 4.29%–4.70% due 11/1/2007–1/29/2008		70,200			69,741
Federal Home Loan Bank 4.38%–4.90% due 11/16/2007–3/12/2008		212,200			210,476
Freddie Mac 4.561%–4.91% due 11/26–12/21/2007		125,248			124,612
General Electric Co. 4.77%–5.26% due 11/19/2007		89,400			89,153
Harley-Davidson Funding Corp. 4.52%–4.57% due 12/11/2007–1/23/20082		35,000			34,686
Hewlett-Packard Co. 4.75%–5.07% due 11/16–12/14/20072		139,400			138,730
IBM Corp. 5.11%–5.13% due 11/14–11/27/20072		61,500			61,331
International Lease Finance Corp. 4.73%–5.21% due 11/16/2007–1/23/2008		107,300			106,608
JPMorgan Chase & Co. 4.95%–5.06% due 12/11/2007–3/24/2008		185,900			183,398
Kimberly Clark Worldwide 4.71% due 11/5/20072		20,000			19,987
NetJets Inc. 5.24% due 11/1/20072		50,000			49,993
Private Export Funding Corp. 4.67%–5.22% due 11/9/2007–2/20/20082		67,000			66,295
Procter & Gamble Co. 4.75%–5.00% due 12/14/20072		52,200			51,880
Procter & Gamble International Funding S.C.A. 4.74%–5.22% due 11/5/2007–2/26/20082		247,000			245,738
State Street Corp. 4.62% due 12/17/2007		100,000			99,397
U.S. Treasury Bill 4.00%–4.115% due 3/20–4/10/2008		60,000			59,041
Wal-Mart Stores, Inc. 4.72% due 12/11/20072		50,000			49,714


Total short-term securities (cost: $2,192,087,000)					2,192,221

Total investment securities (cost: $16,186,614,000)					21,224,149
Other assets less liabilities					(3,654	)

Net assets				$	21,220,495

“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.

2Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $1,035,395,000, which represented 4.88% of the net assets of the fund.

ADR = American Depositary Receipts

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from a financial professional and should be read carefully before investing.

MFGEFP-903-1207O-S10893

Long-term capital gains	$	470,340,000
Qualified dividend income		100	%
Corporate dividends received deduction		100	%
U.S. government income that may be exempt from state taxation	$	6,628,000

Statement of assets and liabilities
at October 31, 2007	(dollars and shares in thousands, except per-share amounts)

Assets:
Investment securities at market (cost: $16,186,614)			$	21,224,149
Cash				67
Receivables for:
Sales of investments		25,967
Sales of fund's shares		18,949
Dividends and interest		26,513		71,429
				21,295,645
Liabilities:
Payables for:
Purchases of investments		37,247
Repurchases of fund's shares		21,397
Investment advisory services		4,045
Services provided by affiliates		9,734
Directors' deferred compensation		2,677
Other		50		75,150
Net assets at October 31, 2007			$	21,220,495

Net assets consist of:
Capital paid in on shares of capital stock			$	15,274,670
Undistributed net investment income				142,145
Undistributed net realized gain				766,145
Net unrealized appreciation				5,037,535
Net assets at October 31, 2007			$	21,220,495

Statement of operations
for the year ended October 31, 2007	(dollars in thousands)

Investment income:
Income:


Dividends (net of non-U.S.	$	421,292
taxes of $352)
Interest		119,526		$	540,818

Fees and expenses(*):
Investment advisory services		52,131
Distribution services		61,453
Transfer agent services		13,758
Administrative services		3,986
Reports to shareholders		527
Registration statement and prospectus		636
Postage, stationery and supplies		1,442
Directors' compensation		873
Auditing and legal		133
Custodian		106
State and local taxes		152
Other		114
Total fees and expenses before reimbursements/waivers		135,311
Less reimbursements/waivers of fees and expenses:
Investment advisory services		5,213
Administrative services		86
Total fees and expenses after reimbursements/waivers					130,012
Net investment income					410,806

Net realized gain and unrealized
appreciation on investments:
Net realized gain on investments		909,949
Net unrealized appreciation on investments		973,349
Net realized gain and
unrealized appreciation
on investments					1,883,298
Net increase in net assets resulting
from operations				$	2,294,104

(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.

See Notes to Financial Statements




Statements of changes in net assets	(dollars in thousands)


	Year ended October 31, 2007			Year ended October 31, 2006
Operations:
Net investment income	$	410,806		$	391,122
Net realized gain on investments
		909,949			464,290
Net unrealized appreciation
on investments		973,349			1,810,456
Net increase in net assets
resulting from operations		2,294,104			2,665,868

Dividends and distributions paid to
shareholders:
Dividends from net investment income		(391,275	)		(338,729	)
Distributions from net realized gain
on investments		(463,340	)		(624,432	)
Total dividends and distributions paid
to shareholders		(854,615	)		(963,161	)

Net capital share transactions		741,397			1,017,074

Total increase in net assets		2,180,886			2,719,781

Net assets:
Beginning of year		19,039,609			16,319,828
End of year (including
undistributed
net investment income: $142,145 and $122,711, respectively)	$	21,220,495		$	19,039,609


See Notes to Financial Statements

(dollars in thousands)
Undistributed ordinary income	$	144,821
Undistributed long-term capital gain		771,641
Gross unrealized appreciation on investment securities		5,417,402
Gross unrealized depreciation on investment securities		(384,617	)
Net unrealized appreciation on investment securities		5,032,785
Cost of investment securities		16,191,364

Share class	Sales(1)				Reinvestments of dividends and distributions				Repurchases(1)						Net increase (decrease)
	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Year ended October 31, 2007
Class A	$	1,764,245		58,027	$	687,421		23,069	$	(1,899,226	)		(62,416	)	$	552,440			18,680
Class B		66,160		2,197		25,142		853		(76,860	)		(2,542	)		14,442			508
Class C		160,389		5,325		28,963		985		(124,676	)		(4,128	)		64,676			2,182
Class F		139,532		4,593		20,118		677		(119,805	)		(3,951	)		39,845			1,319
Class 529-A		45,897		1,515		9,661		324		(19,288	)		(635	)		36,270			1,204
Class 529-B		4,953		164		1,469		50		(2,861	)		(95	)		3,561			119
Class 529-C		15,317		508		2,355		80		(7,519	)		(248	)		10,153			340
Class 529-E		2,856		94		493		17		(1,207	)		(40	)		2,142			71
Class 529-F		2,435		80		273		9		(711	)		(24	)		1,997			65
Class R-1		7,271		242		560		19		(9,594	)		(323	)		(1,763	)		(62	)
Class R-2		52,002		1,724		5,138		174		(38,885	)		(1,286	)		18,255			612
Class R-3		63,083		2,084		8,958		303		(82,359	)		(2,703	)		(10,318	)		(316	)
Class R-4		36,688		1,214		2,514		84		(27,964	)		(921	)		11,238			377
Class R-5		134,294		4,392		10,808		364		(146,643	)		(4,871	)		(1,541	)		(115	)
Total net increase
(decrease)	$	2,495,122		82,159	$	803,873		27,008	$	(2,557,598	)		(84,183	)	$	741,397			24,984

Year ended October 31, 2006
Class A	$	1,714,194		62,868	$	775,912		29,137	$	(1,735,608	)		(63,645	)	$	754,498			28,360
Class B		78,339		2,894		29,732		1,126		(74,969	)		(2,765	)		33,102			1,255
Class C		149,275		5,516		33,091		1,254		(122,757	)		(4,544	)		59,609			2,226
Class F		125,608		4,612		23,118		870		(131,972	)		(4,857	)		16,754			625
Class 529-A		42,699		1,569		9,428		354		(14,637	)		(537	)		37,490			1,386
Class 529-B		5,603		207		1,633		62		(2,747	)		(101	)		4,489			168
Class 529-C		13,963		514		2,501		94		(7,209	)		(265	)		9,255			343
Class 529-E		2,585		95		485		18		(1,013	)		(36	)		2,057			77
Class 529-F		2,938		108		211		8		(1,103	)		(40	)		2,046			76
Class R-1		5,563		206		625		24		(4,349	)		(159	)		1,839			71
Class R-2		44,462		1,643		5,260		199		(27,668	)		(1,022	)		22,054			820
Class R-3		59,681		2,205		10,227		386		(48,500	)		(1,788	)		21,408			803
Class R-4		30,438		1,122		2,768		104		(26,702	)		(979	)		6,504			247
Class R-5		67,895		2,489		11,242		422		(33,168	)		(1,221	)		45,969			1,690
Total net increase
(decrease)	$	2,343,243		86,048	$	906,233		34,058	$	(2,232,402	)		(81,959	)	$	1,017,074			38,147

(1) Includes exchanges between share classes of the fund.

			Income from investment operations(1)						Dividends and distributions
	Net asset value, beginning of year		Net investment income		Net gains on securities (both realized and unrealized)		Total from investment operations		Dividends (from net investment income)			Distributions (from capital gains)			Total dividends and distributions			Net asset value, end of year		Total return (2) (3)			Net assets, end of year (in millions)		Ratio of expenses to average net assets before reimbursements/ waivers			Ratio of expenses to average net assets after reimbursements/ waivers (3)			Ratio of net income to average net assets (3)
Class A:
Year ended 10/31/2007		29.14		.64		2.83		3.47		(.61	)		(.71	)		(1.32	)		31.29		12.19	%		17,809		.58	%		.56	%		2.09	%
Year ended 10/31/2006		26.52		.63		3.55		4.18		(.55	)		(1.01	)		(1.56	)		29.14		16.40			16,044		.58			.55			2.31
Year ended 10/31/2005		25.10		.54		1.41		1.95		(.48	)		(.05	)		(.53	)		26.52		7.80			13,850		.58			.56			2.06
Year ended 10/31/2004		23.17		.48		2.00		2.48		(.46	)		(.09	)		(.55	)		25.10		10.81			12,044		.60			.60			1.97
Year ended 10/31/2003		20.20		.49		3.31		3.80		(.52	)		(.31	)		(.83	)		23.17		19.31			9,716		.62			.62			2.32
Class B:
Year ended 10/31/2007		28.95		.40		2.80		3.20		(.38	)		(.71	)		(1.09	)		31.06		11.28			756		1.36			1.33			1.32
Year ended 10/31/2006		26.36		.41		3.53		3.94		(.34	)		(1.01	)		(1.35	)		28.95		15.48			689		1.37			1.34			1.52
Year ended 10/31/2005		24.94		.33		1.41		1.74		(.27	)		(.05	)		(.32	)		26.36		7.00			595		1.38			1.36			1.26
Year ended 10/31/2004		23.04		.29		1.98		2.27		(.28	)		(.09	)		(.37	)		24.94		9.92			497		1.39			1.39			1.18
Year ended 10/31/2003		20.11		.32		3.28		3.60		(.36	)		(.31	)		(.67	)		23.04		18.32			315		1.41			1.41			1.49
Class C:
Year ended 10/31/2007		28.89		.38		2.80		3.18		(.36	)		(.71	)		(1.07	)		31.00		11.26			922		1.41			1.38			1.27
Year ended 10/31/2006		26.31		.39		3.52		3.91		(.32	)		(1.01	)		(1.33	)		28.89		15.41			796		1.42			1.40			1.46
Year ended 10/31/2005		24.90		.31		1.41		1.72		(.26	)		(.05	)		(.31	)		26.31		6.91			666		1.44			1.42			1.19
Year ended 10/31/2004		23.01		.27		1.97		2.24		(.26	)		(.09	)		(.35	)		24.90		9.82			500		1.47			1.46			1.09
Year ended 10/31/2003		20.09		.30		3.28		3.58		(.35	)		(.31	)		(.66	)		23.01		18.23			267		1.49			1.49			1.39
Class F:
Year ended 10/31/2007		29.07		.62		2.83		3.45		(.60	)		(.71	)		(1.31	)		31.21		12.14			573		.63			.60			2.05
Year ended 10/31/2006		26.46		.62		3.54		4.16		(.54	)		(1.01	)		(1.55	)		29.07		16.36			495		.62			.60			2.26
Year ended 10/31/2005		25.04		.52		1.41		1.93		(.46	)		(.05	)		(.51	)		26.46		7.71			434		.67			.65			1.97
Year ended 10/31/2004		23.12		.45		2.00		2.45		(.44	)		(.09	)		(.53	)		25.04		10.70			324		.70			.70			1.86
Year ended 10/31/2003		20.17		.46		3.30		3.76		(.50	)		(.31	)		(.81	)		23.12		19.14			172		.72			.72			2.14
Class 529-A:
Year ended 10/31/2007		29.11		.60		2.83		3.43		(.58	)		(.71	)		(1.29	)		31.25		12.07			259		.68			.65			1.99
Year ended 10/31/2006		26.50		.60		3.55		4.15		(.53	)		(1.01	)		(1.54	)		29.11		16.29			206		.66			.64			2.21
Year ended 10/31/2005		25.07		.51		1.42		1.93		(.45	)		(.05	)		(.50	)		26.50		7.71			151		.70			.68			1.93
Year ended 10/31/2004		23.15		.45		2.00		2.45		(.44	)		(.09	)		(.53	)		25.07		10.70			99		.71			.71			1.85
Year ended 10/31/2003		20.20		.47		3.31		3.78		(.52	)		(.31	)		(.83	)		23.15		19.19			51		.67			.67			2.22
Class 529-B:
Year ended 10/31/2007		29.01		.36		2.82		3.18		(.34	)		(.71	)		(1.05	)		31.14		11.19			46		1.48			1.46			1.19
Year ended 10/31/2006		26.42		.37		3.53		3.90		(.30	)		(1.01	)		(1.31	)		29.01		15.29			40		1.50			1.47			1.38
Year ended 10/31/2005		25.00		.29		1.41		1.70		(.23	)		(.05	)		(.28	)		26.42		6.79			32		1.55			1.53			1.09
Year ended 10/31/2004		23.09		.24		1.99		2.23		(.23	)		(.09	)		(.32	)		25.00		9.72			24		1.59			1.59			.97
Year ended 10/31/2003		20.16		.27		3.30		3.57		(.33	)		(.31	)		(.64	)		23.09		18.07			14		1.61			1.61			1.27
Class 529-C:
Year ended 10/31/2007		29.01		.36		2.81		3.17		(.34	)		(.71	)		(1.05	)		31.13		11.17			77		1.48			1.45			1.19
Year ended 10/31/2006		26.42		.38		3.53		3.91		(.31	)		(1.01	)		(1.32	)		29.01		15.31			62		1.49			1.46			1.39
Year ended 10/31/2005		25.00		.29		1.41		1.70		(.23	)		(.05	)		(.28	)		26.42		6.82			48		1.54			1.52			1.10
Year ended 10/31/2004		23.09		.24		1.99		2.23		(.23	)		(.09	)		(.32	)		25.00		9.74			33		1.58			1.58			.98
Year ended 10/31/2003		20.16		.27		3.30		3.57		(.33	)		(.31	)		(.64	)		23.09		18.09			16		1.60			1.60			1.28
Class 529-E:
Year ended 10/31/2007		29.04		.51		2.82		3.33		(.49	)		(.71	)		(1.20	)		31.17		11.74			14		.97			.95			1.70
Year ended 10/31/2006		26.44		.52		3.54		4.06		(.45	)		(1.01	)		(1.46	)		29.04		15.92			11		.97			.95			1.90
Year ended 10/31/2005		25.02		.42		1.41		1.83		(.36	)		(.05	)		(.41	)		26.44		7.35			8		1.02			1.00			1.61
Year ended 10/31/2004		23.10		.37		1.99		2.36		(.35	)		(.09	)		(.44	)		25.02		10.32			6		1.06			1.06			1.50
Year ended 10/31/2003		20.16		.38		3.30		3.68		(.43	)		(.31	)		(.74	)		23.10		18.72			3		1.07			1.07			1.80


Class 529-F:
Year ended 10/31/2007		29.13		.66		2.84		3.50		(.64	)		(.71	)		(1.35	)		31.28		12.32			8		.47			.45			2.19
Year ended 10/31/2006		26.52		.65		3.55		4.20		(.58	)		(1.01	)		(1.59	)		29.13		16.49			5		.47			.44			2.37
Year ended 10/31/2005		25.08		.52		1.42		1.94		(.45	)		(.05	)		(.50	)		26.52		7.77			3		.64			.62			1.99
Year ended 10/31/2004		23.16		.43		2.00		2.43		(.42	)		(.09	)		(.51	)		25.08		10.58			2		.81			.80			1.75
Year ended 10/31/2003		20.22		.43		3.32		3.75		(.50	)		(.31	)		(.81	)		23.16		19.03			1		.82			.82			1.99
Class R-1:
Year ended 10/31/2007		28.97		.37		2.80		3.17		(.33	)		(.71	)		(1.04	)		31.10		11.18			14		1.45			1.43			1.22
Year ended 10/31/2006		26.38		.38		3.54		3.92		(.32	)		(1.01	)		(1.33	)		28.97		15.38			15		1.46			1.43			1.42
Year ended 10/31/2005		24.97		.31		1.40		1.71		(.25	)		(.05	)		(.30	)		26.38		6.86			12		1.48			1.45			1.17
Year ended 10/31/2004		23.06		.26		1.99		2.25		(.25	)		(.09	)		(.34	)		24.97		9.83			10		1.51			1.49			1.07
Year ended 10/31/2003		20.17		.26		3.33		3.59		(.39	)		(.31	)		(.70	)		23.06		18.19			4		1.65			1.50			1.18
Class R-2:
Year ended 10/31/2007		28.94		.38		2.81		3.19		(.36	)		(.71	)		(1.07	)		31.06		11.24			161		1.49			1.41			1.24
Year ended 10/31/2006		26.36		.39		3.52		3.91		(.32	)		(1.01	)		(1.33	)		28.94		15.36			133		1.61			1.41			1.43
Year ended 10/31/2005		24.95		.31		1.41		1.72		(.26	)		(.05	)		(.31	)		26.36		6.90			99		1.65			1.42			1.19
Year ended 10/31/2004		23.05		.27		1.99		2.26		(.27	)		(.09	)		(.36	)		24.95		9.86			64		1.76			1.45			1.10
Year ended 10/31/2003		20.17		.29		3.28		3.57		(.38	)		(.31	)		(.69	)		23.05		18.10			32		1.86			1.47			1.35
Class R-3:
Year ended 10/31/2007		29.01		.52		2.81		3.33		(.49	)		(.71	)		(1.20	)		31.14		11.76			228		.97			.95			1.71
Year ended 10/31/2006		26.41		.52		3.54		4.06		(.45	)		(1.01	)		(1.46	)		29.01		15.94			222		.96			.93			1.92
Year ended 10/31/2005		25.00		.44		1.40		1.84		(.38	)		(.05	)		(.43	)		26.41		7.37			181		.98			.96			1.65
Year ended 10/31/2004		23.09		.37		1.99		2.36		(.36	)		(.09	)		(.45	)		25.00		10.32			113		1.05			1.04			1.49
Year ended 10/31/2003		20.18		.37		3.30		3.67		(.45	)		(.31	)		(.76	)		23.09		18.64			32		1.14			1.08			1.72
Class R-4:
Year ended 10/31/2007		29.09		.61		2.82		3.43		(.58	)		(.71	)		(1.29	)		31.23		12.08			70		.67			.65			2.00
Year ended 10/31/2006		26.48		.60		3.54		4.14		(.52	)		(1.01	)		(1.53	)		29.09		16.26			55		.68			.66			2.20
Year ended 10/31/2005		25.06		.51		1.41		1.92		(.45	)		(.05	)		(.50	)		26.48		7.69			43		.69			.67			1.94
Year ended 10/31/2004		23.14		.46		1.99		2.45		(.44	)		(.09	)		(.53	)		25.06		10.69			34		.70			.70			1.86
Year ended 10/31/2003		20.19		.44		3.32		3.76		(.50	)		(.31	)		(.81	)		23.14		19.14			16		.73			.72			2.03
Class R-5:
Year ended 10/31/2007		29.14		.71		2.82		3.53		(.67	)		(.71	)		(1.38	)		31.29		12.42			283		.37			.35			2.32
Year ended 10/31/2006		26.53		.68		3.54		4.22		(.60	)		(1.01	)		(1.61	)		29.14		16.58			267		.38			.35			2.49
Year ended 10/31/2005		25.10		.58		1.43		2.01		(.53	)		(.05	)		(.58	)		26.53		8.05			198		.39			.36			2.22
Year ended 10/31/2004		23.17		.53		2.00		2.53		(.51	)		(.09	)		(.60	)		25.10		11.04			62		.39			.39			2.18
Year ended 10/31/2003		20.21		.54		3.29		3.83		(.56	)		(.31	)		(.87	)		23.17		19.50			52		.41			.41			2.53