AMERICAN MUTUAL FUND
QUARTERLY REPORT
 
FOR THE NINE MONTHS ENDED JULY 31, 1997
 
[AMERICAN FUNDS GROUP (R)]
 
[photo: field of poppies]
 
FELLOW INVESTORS:
 
American Mutual Fund continues to strive for the balanced accomplishment of its
three objectives - current income, capital growth and conservation of principal
- through investments in companies that participate in the growth of the
American economy.
 
During the fund's latest fiscal quarter, the stock market was again buoyed by
expectations among investors that corporate earnings growth will hold steady or
improve and that the economy will continue to expand in a relatively stable,
low-inflation environment. For the three-month period ended July 31, the value
of your holdings in American Mutual Fund gained an unusually large 15.0% if,
like most shareholders, you reinvested the income dividend of 20 cents per
share. Over this same period, the unmanaged Standard & Poor's 500 Composite
Index rose 19.6% with dividends reinvested.
 
AMF's dividend yield, based on the income dividends paid over the past 12
months and the fund's net asset value on July 31, was 2.6%. This was
substantially above the S&P 500's dividend yield which, at 1.6%, is at the
lowest recorded level this century.
 
In keeping with American Mutual Fund's goal of preserving capital, we continue
to emphasize the stocks of financially strong companies with long histories of
increasing earnings and dividends. We also continue to hold about one-quarter
of the portfolio in short-term securities and bonds. This should cushion the
impact of any market decline and enable us to take advantage of new stock
opportunities as they emerge.
 
We look forward to reporting to you in more detail in three months.
 
Cordially,
/s/James K. Dunton       /s/Robert G. O'Donnell
James K. Dunton          Robert G. O'Donnell
Chairman of the Board    President
 
September 11, 1997
 
<TABLE>
<CAPTION>
PORTFOLIO SUMMARY                       Market Value         Percent of         
 
July 31, 1997                           (Millions)           Net Assets         
 
<S>                                     <C>                  <C>                
INVESTMENT MIX                                                                  
 
Equity-Type Securities                  $7,251.074           76.68%             
 
Bonds and Notes                         322.404              3.41               
 
Cash and Equivalents                    1,883.048            19.91              
 
                                                                                
 
Net Assets                              $9,456.526           100.00%            
 
                                                                                
 
TEN LARGEST INDUSTRY HOLDINGS                                                   
 
Banking                                 $1,203.740           12.73%             
 
Energy Sources                          852.351              9.01               
 
Telecommunications                      703.587              7.44               
 
Health & Personal Care                  634.250              6.71               
 
Chemicals                               450.366              4.76               
 
Utilities: Electric & Gas               335.738              3.55               
 
Insurance                               284.630              3.01               
 
Business & Public Services              267.836              2.83               
 
Merchandising                           253.022              2.68               
 
Forest Products & Paper                 233.960              2.47               
 
                                                                                
 
TEN LARGEST INDIVIDUAL HOLDINGS                                                 
 
DuPont                                  $242.648             2.57%              
 
Ameritech                               221.627              2.34               
 
Amoco                                   220.430              2.33               
 
AT&T                                    190.505              2.01               
 
Schering-Plough                         140.226              1.48               
 
American Home Products                  131.900              1.39               
 
Dow Chemical                            131.594              1.39               
 
SBC Communications                      130.045              1.38               
 
Wal-Mart Stores                         122.078              1.29               
 
Royal Dutch Petroleum                   111.875              1.18               
 
</TABLE>
 
[AMERICAN FUNDS GROUP (R)]
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the fund's average annual compound returns with
all distributions reinvested for periods ended June 30, 1997 (the most recent
calendar quarter), assuming payment of the 5.75% maximum sales charge at the
beginning of the stated periods (sales charges are lower for accounts of
$50,000 or more): 10 years: +12.03%; five years: +14.74%; 12 months: +17.74%.
The fund's 30-day yield as of August 31, 1997, calculated in accordance with
the Securities and Exchange Commission formula, was 2.66%. The fund's
distribution rate as of that date was 2.49%. The SEC yield reflects income the
fund expects to earn based on its current portfolio of securities, while the
distribution rate is based solely on the fund's past dividends. Accordingly,
the fund's SEC yield and distribution rate may differ.
 
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND WERE COMPUTED WITHOUT A
SALES CHARGE. PAST RESULTS ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE
SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF
LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED
BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
 
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE
WORLD WIDE WEB.
 
This report is for the information of shareholders of American Mutual Fund, but
it may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the fund. If used as sales material after
September 30, 1997, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
 
Litho in USA SG/L/3471
(c)1997 American Funds Distributors, Inc. 
Lit. No. AMF-012-0997
Printed on recycled paper