AMCAP Fund
Annual Report
for the year ended
February 28, 1995
What Is an AMCAP Investment?
[The American Funds Group(R)]
AMCAP Fund(R) seeks long-term growth of capital by investing in growing,
profitable companies.
About our cover:
In seeking long-term growth of capital, AMCAP invests in companies like United
HealthCare, Disney, Oracle Systems and Duracell International - four classic
examples of growing, profitable businesses that appear well-positioned for
continued success.
AMCAP'S Total Return Year by Year
FOR THE PAST 10 FISCAL YEARS
(ENDED 2/28 OR 2/29)
<TABLE>
<CAPTION>
<S> <C>
1986 +23.0%
1987 +30.3
1988 -3.1
1989 +9.6
1990 +14.0
1991 +16.8
1992 +20.4
1993 +5.9
1994 +11.3
1995 +3.4
Total return over +232.6
entire 10-year period
Average compound rate +12.8
of return over
the past 10 years
</TABLE>
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns for periods ended March 31,1995 (the most recent calendar quarter), on
an investment at the 5.75% maximum sales charge with all distributions
reinvested. Also shown are AMCAP's rankings by Lipper Analytical Services
versus comparable growth funds. Lipper rankings do not reflect the effects of
sales charges.
<TABLE>
<CAPTION>
As of Total Average Annual Lipper Rankings
March 31, 1995 Return Compound Return of AMCAP Fund
<S> <C> <C> <C>
10 Years +226.01% +12.54% 56th out of 135 funds
Five Years + 59.09% + 9.73% 104th out of 229 funds
One Year + 3.01% -- 240th out of 498 funds
</TABLE>
Sales charges are lower for accounts of $50,000 or more. Fund results through
August 1988 do not reflect service and distribution expenses now paid under its
Plan of Distribution. Such expenses may not exceed 0.25% of the fund's average
net assets per year and currently amount to approximately 0.18%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
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. All investments are subject
to certain risks. For example, those which include common stocks are affected
by fluctuating stock prices. Accordingly, investors should maintain a long-term
perspective.
Fellow Shareholders:
The 1995 fiscal year proved to be a challenging period for AMCAP Fund. While
the expanding U.S. economy buoyed many of its holdings, efforts by the Federal
Reserve to contain inflation hindered numerous others. Overall, AMCAP fared
relatively well in the face of these strong economic crosscurrents.
For the 12 months ended February 28, the value of your investment grew 3.4% if
you reinvested the dividends of five cents and eight cents a share paid in May
and November last year, and the capital gain distributions of 57 cents and 38
cents a share, also paid in May and November.
The stocks of large companies had a somewhat better year, gaining 7.3% as
measured by the unmanaged Standard & Poor's 500 Composite Index with dividends
reinvested. The stocks of small and midsized companies, however, fared quite
poorly. The NASDAQ O-T-C Industrial Index, for example, declined 6.9% with
dividends taken in cash. (AMCAP rose 2.3% with dividends taken in cash.) This
unmanaged index is composed of over 2,700 equities, including many of AMCAP's
over-the-counter holdings, and thereby serves as a much broader reflection of
last year's difficult stock market environment.
AMCAP's results come into even clearer focus when compared with other
growth-oriented mutual funds, which gained an average of 0.9% during the past
12 months, as reported by Lipper Analytical Services. Over its 28-year lifetime
through February 28, AMCAP's average compound return of 12.3% a year places it
fifth out of 50 comparable funds (the top 10%) in existence over the same
period, according to Lipper. For the 12 months ended February 28, the fund
ranked 162nd out of 492 such funds, or the top 33%; for the past five years, it
ranked 91st out of 231 funds, or the top 40%; and over 10 years, it ranked 59th
out of 134 funds, or the top 45%. Lipper rankings do not reflect the effects of
sales charges.
A YEAR OF HIGHER INTEREST RATES
As we wrote in our semi-annual report six months ago, the main cause of the
market's volatility has been the Federal Reserve's policy on interest rates. In
early February 1994 - coincidentally, just before the start of the fund's
fiscal year - the Federal Reserve initiated a series of moves to slow down the
economy and curb inflation. To date, the Fed has increased short-term interest
rates seven times, including two rate hikes since we last reported to you in
October. While this credit-tightening program finally appears to be bringing
about the desired economic slowdown, a great deal of market uncertainty
remains.
Long-term bonds took the brunt of the Fed's actions, experiencing
unprecedented volatility as interest rates climbed higher. Stock prices,
meanwhile, reacted to the succession of rate increases in different ways.
Stocks sensitive to interest rate changes, such as utilities, were adversely
affected, while stocks more responsive to economic growth, such as electronic
component manufacturers, benefited. Among the stocks in AMCAP's portfolio
throughout the fiscal year, 41 gained ground and 31 declined.
HOW AMCAP'S HOLDINGS FARED
Worldwide business growth fueled the rise of the fund's technology stocks.
Throughout the reporting period, strong consumer demand for high-tech products
lifted the stock prices of Microsoft (+52%), Oracle Systems (+42%), Analog
Devices (+36%) and AMCAP's second-largest holding, Intel (+16%).
The fund's consumer growth stocks, initially set back by the Fed's earliest
rate hikes, ultimately went on to have a respectable year. Capital Cities/ABC
(+33%) and Motorola (+13%), two of AMCAP's 10 largest holdings, exemplify the
type of high-quality, long-term, consistent-growth companies we seek. An
article profiling four classic AMCAP stocks begins on page 4 of this report. We
hope you find it interesting reading.
The midyear stall in President Clinton's health care reform plan - and the
shift in perceptions regarding its prospects - strongly enhanced the value of
AMCAP's health care stocks, including Amgen (+65%) and Medtronic (+50%).
Other parts of the fund's portfolio did not fare as well. Banking and
financial services stocks, comprising 12% of AMCAP's assets at year-end, reeled
every time the Fed raised interest rates. Two of the fund's 10 largest
holdings, Federal National Mortgage ("Fannie Mae") and Golden West Financial,
lost between 7% and 8% of their value over the course of the year.
Cable television companies also hurt the fund's results. Time Warner, Comcast
and Tele-Communications (three of AMCAP's 10 largest holdings) suffered
declines in the early part of fiscal 1994, when several years of rising
regulatory pressure culminated in new rate regulations and, subsequently, the
breakup of three cable takeover deals, one of which involved
Tele-Communications. Since then, the industry has staged a modest comeback.
In any given year, some stocks do well and some do not. Sometimes we sell
stocks that have not lived up to expectations or, conversely, that have done
better than we felt they deserved. During the past six months, in fact, we
eliminated eight holdings from AMCAP's portfolio while adding another 11. More
often than not, however, we will continue to hold out-of-favor stocks if their
long-term outlook remains promising. We believe that with in-depth research,
careful selection and continuous monitoring, the vast majority of our holdings
will do well over time.
In the coming year, we will continue to look carefully for long-term growth
opportunities. By investing selectively and keeping our portfolio turnover low,
we believe we can offer share-holders a reasonable long-term return while
keeping tax consequences - and expenses - at a minimum. We have found that this
long-term approach to investing is unequivocally the most appropriate course.
We look forward to reporting to you in six months.
Cordially,
Walter P. Stern
Chairman of the Board
R. Michael Shanahan
President
April 11, 1995
[Chart Caption]
CHARTING THE COURSE OF AN INVESTMENT IN AMCAP
Here's how a $10,000 investment in the fund grew between May 1, 1967 - when
AMCAP began operations - and February 28, 1995.
As you can see, that $10,000 would have grown to $240,047 with all
distributions reinvested, a gain of 2,300%. Over the same period, $10,000 would
have grown to $152,779 if invested in Standard & Poor's 500 Composite Index.
The chart also records the fund's progress relative to the rate of inflation as
measured by the Consumer Price Index.
The fund's year-by-year results appear in the table under the chart. You can
use this table to estimate how much the value of your own holdings has grown.
Let's say, for example, that you have been reinvesting all your dividends and
capital gain distributions since February 28, 1985. At that time, according to
the table, the value of the investment illustrated here was $72,165. Since
then, it has more than tripled in value to $240,047. Thus, in that same 10-year
period, the value of your investment - regardless of its size - has also more
than tripled.
[End Chart Caption]
WHAT IS AN AMCAP INVESTMENT?
AMCAP Fund seeks opportunities for long-term capital growth in companies large
and small. But the task of finding "growing, profitable" investments that can
help the fund meet its objective requires patience, vigilance and the ability
to back up our strongest convictions with a body of accurate research.
Q: In what types of companies does AMCAP invest?
A: Many of our portfolio holdings have exceptional proficiency in specific
areas of expertise - including marketing, management or technology, to name a
few. Some offer a unique product or service that enables them to do well
regardless of swings in the economy. Still others have strong positions in
industries with unusually good prospects. Technology plays a significant role
in numerous AMCAP holdings. Some are computer-related companies, while others
in fields such as broadcasting and publishing are benefiting from the latest
technological advances.
Q: What role does research play in finding them?
A: It takes a great deal of effort to find stocks that can help the fund meet
its objective of long-term capital growth. That is where the outstanding
research capabilities of AMCAP's investment adviser, Capital Research and
Management Company (CRMC), play a key role. The Capital organization has 10
offices around the world. Its research analysts and portfolio counselors travel
millions of miles each year to meet with the corporate executives, competitors
and suppliers of the companies in which they are interested. They also speak
with industry experts, consumer groups, government officials and economists. By
gathering and evaluating the raw data upon which AMCAP's investment decisions
are made, this team of investment professionals is primarily responsible for
the fund's success.
Q: How does the fund seek to meet its objective?
A: When AMCAP's stock holdings go up in price, the value of your investment in
the fund appreciates. To achieve long-term capital growth, however, we must
invest in many companies whose stock prices are expected to increase at an
above-average rate for the foreseeable future. Although we consider numerous
opportunities where the prospects for growth are good, we give special
attention to companies whose earnings are expected to climb at a steady pace
over time.
[Chart Caption]
THE 10 MOST SUCCESSFUL INVESTMENTS IN AMCAP'S PORFOLIO
Based on highest average annual appreciation (excluding dividends) for stocks
held three or more years
Solid research has led AMCAP to invest in a number of companies whose stock
prices have increased at a substantial average annual rate over time. The
fund's 10 most successful current investments are shown above. While AMCAP's
other holdings, of course, have not performed as well on a year-by-year basis,
the fund's positive results in 22 of the past 27 fiscal years attest to its
successful long-term investment approach.
[End Chart Caption]
Q: Why does AMCAP take a long-term perspective?
A: While owning stocks for relatively long periods may be unusual for other
growth funds, it's a matter of course for AMCAP. It is not the fund's practice
to trade actively in securities for short-term profits. Rather, we have found
that growth investing calls for a great deal of patience and a high degree of
conviction. We search out good values and watch them carefully. An investment
that is fulfilling our expectations but that has not yet received the favorable
market response we anticipate may be held for years until the market recognizes
its value. Of course, when a stock appears to have become overpriced relative
to other available investments, we prefer to sell it - no matter how highly we
regard the company - and put the money to work elsewhere.
On the next eight pages, we profile four classic AMCAP companies and introduce
you to the research professionals who follow them. While these are four stocks
of particular interest to our analysts currently, please keep in mind that one
of AMCAP's great strengths is the diversification it achieves by investing in
large numbers of companies, which minimizes the effect on the portfolio of the
ups - and downs - of any single holding.
A Key Provider of Managed Health Care Services:
United HealthCare
Reducing costs by accumulating data
Whether or not national health care reform is within the realm of possibility,
managed health care is here to stay. One of the companies providing leadership
in this field is Minneapolis-based United HealthCare.
As the largest publicly traded health maintenance organization (HMO) in the
country, United HealthCare provides a broad range of high-quality,
cost-effective health care services to more than 3.6 million members in 18
major metropolitan areas. It does so by contracting and negotiating prices with
physicians, hospitals and other health care providers, who then provide
services to United HealthCare's members.
"There are many qualities that distinguish United HealthCare," says Richard
Beleson, a research analyst who follows the U.S. health care industry for
AMCAP's investment adviser, Capital Research and Management Company (CRMC).
"Let me cite just two.
"First, the company makes an exceptional effort to promote healthier lifestyles
among its members. It also works with the medical community to place an
emphasis on preventive care and the appropriate utilization of health care
resources.
"Second, after many years of collecting data, United HealthCare has accumulated
a proprietary database on medical outcomes. This information has enabled it to
develop expertise in controlling expenditures while offering superior quality
of care."
United HealthCare has grown in a deliberate fashion. It manages HMOs and then
subsequently acquires them. "This strategy," states Rick, "has produced an
enviable record of revenue and earnings growth. In recent years, the company
has expanded its core position in the Midwest and is presently poised for
significant growth in the Southeast.
"Moreover, after the recent sale of one of its subsidiaries to pharmaceutical
giant SmithKline Beecham, United HealthCare has the strongest cash position in
the managed-care industry."
Why does AMCAP invest in United HealthCare?
"This corporation has achieved a superb record of growth," says Rick, "and we
believe it is better positioned than any other company to take advantage of the
changing dynamics of health care delivery in the United States."
[Side Bar]
"By managing HMOs and then subsequently acquiring them, United HealthCare has
produced an enviable record of revenue and earnings growth."
RICHARD BELESON, a CRMC research analyst covering the U.S. health care industry
[End Side Bar]
The Global Entertainment Powerhouse:
The Walt Disney Company
Creating magic for generations
Just mention a few words - The Lion King - to any three-year-old and watch how
fast his or her eyes light up and a smile appears. Say the same words to a
group of adults and you're likely to observe a similar reaction.
This example underscores the extraordinary marketing power of The Walt Disney
Company, a current AMCAP holding. Disney products - including movies, animated
characters and theme parks - are recognized internationally as representing
good, clean family fun. Moreover, unlike any other entertainment organization,
Disney has a unique lock on this long-held image.
"No one is going to see a movie this summer simply because it was made by
Warner Brothers or Paramount Communications," says Gordon Crawford, one of
AMCAP's portfolio counselors and a research analyst who has been following the
entertainment industry for 25 years. "But when Pocahontas opens this summer as
Disney's once-a-year animated feature, parents across America will bring their
children to see it based solely on the Disney name."
As Gordon points out, that's what it means to have one of the world's greatest
consumer franchises. "If you or I or anyone else made an animated Pocahontas
and brought it to theaters, nobody would go to see it. It's been proven over
and over again. People will only see an animated feature if it's a Disney film
because they know it will offer an unmatched level of quality and creativity."
Further enhancing the Disney franchise is the company's ability to reuse - and
reconfigure - its original products. Although the animated classic Snow White
was made in the 1930s, millions of videocassettes of the film were sold in
1994. Beauty and the Beast, Disney's blockbuster movie of a few years ago, has
not only been issued on videocassette and broadcast on pay television but it
also has spun off a Saturday morning cartoon, several books, a soundtrack
recording, stuffed animals, a Broadway show and an ice skating tour.
Why does AMCAP invest in The Walt Disney Company?
"With great consistency, Disney has been a high-growth company in a growth
business," says Gordon. "It has quality management, offers quality products and
its stock is selling at what I think is a reasonable valuation. It makes a
great AMCAP holding."
[Side Bar]
"When Pocahontas opens this summer as Disney's once-a-year animated feature,
parents across America will bring their children to see it based solely on the
Disney name."
GORDON CRAWFORD, an AMCAP portfolio counselor and research analyst covering the
entertainment industry
[End Side Bar]
The Leading Database Software Producer
Oracle Systems
Making headway on the information superhighway
The one computer software company that can accurately state that it is second
in size only to Microsoft is Oracle Systems - and this AMCAP holding is not
resigned to being second best.
Oracle is currently the number one producer of database software. A database
serves as an electronic file cabinet, enabling a corporation to easily store
information and retrieve it later. This is a complicated task when, for
example, a company's 10 million credit cardholders each do 20 transactions a
month for a monthly total of 200 million transactions. You can imagine that
storing that information - and retrieving it for billing purposes - is a
monumental undertaking, considering the volume.
In addition to serving this important market, Oracle is aggressively trying to
leap ahead of Microsoft in other areas of information management. Simply
speaking, the company wants to be the front-runner in bringing the much-touted
information superhighway to your door. So it is racing to develop software that
will store and send video and other digitized data from central repositories to
the homes of consumers worldwide.
Peter Labon, a research analyst who covers the software industry for AMCAP's
investment adviser, CRMC, says Oracle is up to the challenge.
"This is a company that stands out in its industry," states Peter . "Founded by
several former `IBM-ers' in 1977, Oracle has grown to having 12,500 employees
and offices in 93 countries. It had $2 billion in sales in its 1994 fiscal
year. The company's success as a technology leader has enabled it to keep
investing in product development and sales, which will help it sustain its
above-average growth."
Three years ago, Oracle came out with the industry-hailed Oracle 7, which
gives virtually every company the opportunity to run complex databases with
greater speed and more features on a wider range of computers. With Oracle 7 as
its foundation, the company remains on solid ground.
Why does AMCAP invest in Oracle Systems?
"I believe Oracle has the size, sales and technological strength to help keep
it successful," says Peter. "It also has a strong, aggressive management team
that is committed to maintaining the company's leadership in a very favorable
industry."
[Pull Quote]
"I believe Oracle has the size, sales and technological strength to help keep
it successful."
PETER LABON, a CRMC research analyst who covers the software industry
[End Pull Quote]
The World's Top Manufacturer of Alkaline Batteries:
Duracell International
Gaining ground in a growing market
Chances are, if you jog with a Walkman, check your pager for messages or
channel surf with your television's remote control, you own plenty of Duracell
batteries.
What's more, as an AMCAP shareholder, you also own part of Duracell
International itself. At the end of fiscal 1995, almost 1% of the fund's total
assets consisted of stock in the company, which sold $1.9 billion of its
familiar copper-topped product last year.
"The company makes some of the highest performance alkaline batteries in the
world," says research analyst Carl Kawaja, who covers household product
manufacturers on a global basis for AMCAP's investment adviser, CRMC.
"Customers buy the product because Duracell is a brand name they trust."
Carl says the company is planning to leverage that reputation for quality by
expanding into the field of high-energy batteries - the type that power laptop
computers, cellular phones and other portable electronic products.
He also points out that Duracell should see good global growth in its alkaline
battery division. The pace will be driven by the international proliferation of
the same products people in this country use.
"Duracell's geographic reach is considerable," states Carl. "It sells a
substantial percentage of its batteries in developing countries, and I think
these areas will grow quickly. The company has already established markets in
Eastern Europe, Southeast Asia and Latin America."
In addition, China and India hold significant long-term growth potential for
Duracell. The company is investing heavily in these countries to increase its
presence.
Duracell also has good financial discipline. The company has a healthy balance
sheet with moderate long-term debt and plans to use its excess cash flow to
raise dividends and repurchase stock.
Why does AMCAP invest in Duracell International?
As Carl says, Duracell is a company with everything going its way. "It has
brand name recognition around the world, great manufacturing and distribution,
and very good management. Plus I think the valuation is reasonable for such a
high-quality growth company."
[Side Bar]
"Duracell has brand name recognition around the world, great manufacturing and
distribution, and very good management."
CARL KAWAJA, a CRMC research analyst who follows the manufacturers of household
products worldwide
[End Side Bar]
AMCAP Fund, Inc.
Investment Portfolio February 28, 1995
<TABLE>
<CAPTION>
Percent of
Net Assets
<S> <C>
- ---------------------------- ----------------
Largest Industry Holdings
Broadcasting & Publishing 12.71%
Business & Public Services 10.50
Electronic Components 8.43
Data Processing & Reproduction 8.07
Banking 7.59
Other Industries 34.54
Cash & Equivalents 18.16
Largest Individual Holdings
Time Warner 4.18%
Intel 3.62
Comcast 2.86
Federal National Mortgage 2.62
Capital Cities/ABC 2.55
Medtronic 2.42
Tele-Communications 2.08
Golden West Financial 2.06
Loctite 2.01
Motorola 1.86
</TABLE>
- ----------
<TABLE>
<CAPTION>
- - - - -
Number Market Value Percent of
COMMON STOCKS of Shares (000) Net Assets
- - - - -
<S> <C> <C> <C>
BROADCASTING & PUBLISHING - 8.53%
Time Warner Inc. 3,216,000 $124,218 4.18%
Comcast Corp., Class A 760,000 11,970
Comcast Corp., Class A special stock 4,685,625 73,213 2.86
Capital Cities/ABC, Inc. 855,000 75,667 2.55
Tele-Communications, Inc., Class A/1/ 2,714,000 61,744 2.08
LIN Television Corp./1/ 560,050 16,241 .55
Infinity Broadcasting Corp., Class A/1/ 415,000 14,629 .49
BUSINESS & PUBLIC SERVICES - 10.50%
Federal Express Corp./1/ 765,000 49,821 1.68
Pitney Bowes Inc. 1,375,000 48,813 1.64
WMX Technologies, Inc. 1,370,000 36,134 1.22
United HealthCare Corp. 795,000 34,185 1.15
U.S. Healthcare, Inc. 725,000 30,994 1.04
CUC International Inc./1/ 727,500 25,644 .86
Bay Networks Inc./1/ 625,625 19,551 .66
Dun & Bradstreet Corp. 325,000 16,778 .56
General Motors Corp., Class E 410,000 15,734 .53
Interpublic Group of Companies, Inc. 400,000 13,650 .46
Avery Dennison Corp. 300,000 11,250 .38
Humana Inc./1/ 400,000 9,500 .32
ELECTRONIC COMPONENTS - 8.43%
Intel Corp. 1,350,000 107,494 3.62
Motorola, Inc. 960,000 55,200 1.86
Analog Devices, Inc./1/ 1,425,000 35,803 1.21
Texas Instruments Inc. 300,000 23,625 .80
AMP Inc. 200,000 15,000 .51
ADC Telecommunications, Inc./1/ 230,000 12,822 .43
DATA PROCESSING & REPRODUCTION - 8.07%
Microsoft Corp./1/ 840,000 52,815 1.78
Oracle Systems Corp./1/ 1,312,500 41,016 1.38
Lotus Development Corp./1/ 850,000 35,275 1.19
International Business Machines Corp. 451,000 33,938 1.14
Tandem Computers Inc./1/ 1,278,900 21,741 .73
Apple Computer, Inc. 481,800 19,031 .64
Sequent Computer Systems, Inc./1/ 679,900 11,643 .39
Electronic Arts/1/ 495,000 10,642 .36
Compaq Computer Corp./1/ 300,000 10,350 .35
Novell, Inc./1/ 150,000 3,131 .11
BANKING - 7.59%
Golden West Financial Corp. 1,596,800 61,078 2.06
Banc One Corp. 1,676,188 49,238 1.66
Norwest Corp. 1,700,000 43,775 1.47
Northern Trust Corp. 850,000 28,900 .97
PNC Bank Corp. 775,000 19,762 .67
Signet Banking Corp. 470,000 17,096 .58
SunTrust Banks, Inc. 100,000 5,388 .18
TELECOMMUNICATIONS - 6.43%
Cellular Communications, Inc.,
preference shares/1/ 1,095,000 54,750 1.84
Telephone and Data Systems, Inc. 1,200,000 54,750 1.84
AirTouch Communications/1/ 1,100,000 29,975 1.01
LIN Broadcasting Corp./1/ 146,100 18,810 .63
MCI Communications Corp. 850,000 17,000 .57
Cellular Communications of Puerto
Rico, Inc./1/ 249,998 8,437 .28
AT&T Corp. 150,000 7,762 .26
FINANCIAL SERVICES - 4.42%
Federal National Mortgage Assn. 1,010,000 77,896 2.62
ADVANTA Corp., Class B 500,000 15,750
ADVANTA Corp., Class A 355,000 11,893 .93
Student Loan Marketing Assn. 700,000 25,813 .87
HEALTH & PERSONAL CARE - 4.11%
Medtronic, Inc. 1,200,000 72,000 2.42
Pyxis Corp./1/ 1,300,000 29,412 .99
Amgen Inc./1/ 200,000 13,775 .46
Upjohn Co. 200,000 7,050 .24
LEISURE & TOURISM - 3.62%
Walt Disney Co. 1,000,000 53,375 1.80
Promus Companies Inc./1/ 750,000 26,812 .90
Marriott International, Inc. 500,000 15,500 .52
Luby's Cafeterias, Inc. 525,000 11,944 .40
CHEMICALS - 2.62%
Loctite Corp. 1,295,000 59,570 2.01
Nalco Chemical Co. 525,000 18,047 .61
BEVERAGES & TOBACCO - 2.07%
PepsiCo, Inc. 600,000 23,475 .79
UST Inc. 700,000 20,825 .70
Philip Morris Companies Inc. 285,000 17,314 .58
INSURANCE - 1.58%
American International Group, Inc. 225,000 23,344 .79
Cincinnati Financial Corp. 300,000 16,725 .56
Arthur J. Gallagher & Co. 195,000 6,825 .23
MERCHANDISING - 1.39%
Toys "R" Us, Inc./1/ 950,000 26,481 .89
Lands' End, Inc./1/ 885,000 14,713 .50
TRANSPORTATION: AIRLINES - 1.34%
AMR Corp./1/ 350,000 21,394 .72
Delta Air Lines, Inc. 210,000 12,180 .41
Southwest Airlines Co. 350,250 6,173 .21
RECREATION & OTHER CONSUMER PRODUCTS - 1.33%
Duracell International Inc. 705,700 29,375 .99
Hasbro, Inc. 320,000 10,080 .34
METALS: STEEL - 0.67%
Worthington Industries, Inc. 1,000,000 19,875 .67
ENERGY SOURCES - 0.53%
Helmerich & Payne, Inc. 600,000 15,600 .53
FOOD & HOUSEHOLD PRODUCTS - 0.43%
Colgate-Palmolive Co. 200,000 12,900 .43
AEROSPACE & MILITARY TECHNOLOGY - 0.19%
General Motors Corp., Class H 150,000 5,644 .19
CONSTRUCTION & HOUSING - 0.10%
Jacobs Engineering Group Inc./1/ 150,000 2,963 .10
MISCELLANEOUS
Other common stocks in initial period of
acquisition 52,220 1.76
- -
TOTAL COMMON STOCKS (cost: $1,599,766,000) 2,372,926 79.89
- -
Principal Market Value Percent of
Amount (000) Net Assets
BONDS (000)
- - - - -
INDUSTRIALS - 1.95%
Time Warner Inc. 0% due 2002/2/ $59,812 57,943 1.95
- -
TOTAL BONDS (cost: $49,132,000) 57,943 1.95
- -
SHORT-TERM SECURITIES
- - - - -
CORPORATE SHORT-TERM NOTES - 15.77%
J.C. Penney Funding Corp. 5.80%-5.98% due
3/8-3/23/95 59,400 59,307 2.00
American Express Credit Corp. 5.98%-6.03% due
3/6-4/10/95 56,600 56,427 1.90
Ford Motor Credit Co. 5.92%-6.04% due
3/10-4/24/95 53,600 53,336 1.80
Xerox Corp. 5.90%-6.05% due 3/21-4/4/95 42,000 41,805 1.41
National Rural Utilities Cooperative Finance
Corp. 5.97%-6.02% due 3/17-4/17/95 37,200 36,939 1.24
Pfizer Inc. 5.90%-5.93% due 3/3-3/21/95 30,900 30,847 1.04
Kimberly-Clark Corp. 5.95% due 3/20/95 30,000 29,901 1.01
Beneficial Corp. 6.00%-6.08% due 3/2-4/13/95 27,000 26,877 .90
Commercial Credit Co. 6.00% due 5/4/95 20,000 19,782 .67
Chevron Transport Corp. 5.98% due 3/22/95 19,300 19,229 .65
John Deere Capital Corp. 5.99% due 4/19/95 19,200 19,041 .64
Central and South West Corp. 6.03% due 3/9/95 19,000 18,971 .64
Eli Lilly and Co. 6.00% due 3/9/95 18,000 17,973 .60
PepsiCo, Inc. 5.98% due 3/1-3/24/95 14,900 14,890 .50
Campbell Soup Co. 6.02% due 3/27/95 10,000 9,955 .34
U S WEST Communications, Inc. 6.00% due 4/12/95 9,500 9,431 .32
Associates Corp. of North America 6.10%
due 3/1/95 3,200 3,200 .11
FEDERAL AGENCY SHORT-TERM OBLIGATIONS - 2.15%
Federal Home Loan Mortgage Corp.
5.90% due 3/14-3/20/95 29,800 29,726 1.00
Student Loan Marketing Assn. 6.59% due
3/23/95/3/ 20,000 20,000 .67
Federal Farm Credit Bank 5.86% due 3/13/95 14,400 14,370 .48
- -
TOTAL SHORT-TERM SECURITIES (cost:
$532,012,000) 532,007 17.92
- -
TOTAL INVESTMENT SECURITIES (cost:
$2,180,910,000) 2,962,876 99.76
Excess of cash and receivables over payables 7,239 .24
- -
NET ASSETS $2,970,115 100.00%
= =
/1/ Non-income producing securities.
/2/ Represents a zero coupon bond which
will convert to an interest-bearing
security at a later date.
/3/ Coupon rate may change periodically.
The descriptions of the companies shown in the
portfolio, which were obtained from published
reports and other sources believed to be
reliable, are supplemental and are not covered
by the Independent Auditors' Report.
</TABLE>
See Notes to Financial Statements
Common stocks appearing in the portfolio
since August 31, 1994
- ---------------------------------------
ADC Telecommunications
ADVANTA
AT&T
Bay Networks
Electronic Arts
Humana
Infinity Broadcasting
Jacobs Engineering
LIN Television
Promus
Pyxis
Common stocks eliminated from the portfolio
since August 31, 1994
- ----------------------------------------
Alaska Air Group
Informix
McCaw Cellular Communications
QVC Network
Safety-Kleen
SynOptics Communications
TJX
Washington Post
AMCAP FUND Financial Statements
<TABLE>
<CAPTION>
- ------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities
at February 28, 1995 (dollars in thousands)
- ------------------------------------------- ---------------- ----------------
<S> <C> <C>
Assets:
Investment securities at market
(COST: $2,180,910) $2,962,876
Cash 126
Receivables for-
Sales of investments $14,134
Sales of fund's shares 5,969
Dividends and accrued interest 3,424 23,527
------------------ -----------------
2,986,529
Liabilities:
Payables for-
Purchases of investments 10,877
Repurchases of fund's shares 3,295
Management services 927
Accrued expenses 1,315 16,414
------------------ -----------------
Net Assets at February 28, 1995-
EQUIVALENT TO $12.28 PER SHARE ON
241,866,998 SHARES OF $1 PAR VALUE
CAPITAL STOCK OUTSTANDING (AUTHORIZED
CAPITAL STOCK--300,000,000 SHARES) $2,970,115
=================
Statement of Operations
FOR THE YEAR ENDED FEBRUARY 28, 1995
------------------ -----------------
Investment Income:
Income:
Dividends $ 28,733
Interest 25,837 $ 54,570
------------------
Expenses:
Management services fee 11,954
Distribution expenses 5,181
Transfer agent fee 2,430
Reports to shareholders 297
Registration statement and prospectus 128
Postage, stationery and supplies 461
Directors' fees 109
Auditing and legal fees 47
Custodian fee 88
Taxes other than federal income tax 48
Other expenses 43 20,786
------------------ -----------------
Net investment income 33,784
-----------------
REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS:
NET REALIZED GAIN 131,656
Net change in unrealized
appreciation on investments:
Beginning of year 854,664
End of year 781,966
------------------
Net unrealized depreciation
on investments (72,698)
-----------------
NET REALIZED GAIN AND UNREALIZED
depreciation on investments 58,958
-----------------
NET INCREASE IN NET ASSETS RESULTING
from Operations $ 92,742
=================
Statement of Changes in Net
Assets
- --------------------------------------------- ------------------ -----------------
Year ended February 28
1995 1994
Operations: ------------------ -----------------
Net investment income $ 33,784 $ 26,934
NET REALIZED GAIN ON INVESTMENTS 131,656 368,911
NET UNREALIZED DEPRECIATION
on investments (72,698) (70,728)
------------------ -----------------
NET INCREASE IN NET ASSETS RESULTING
from operations 92,742 325,117
------------------ -----------------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (30,685) (26,587)
Distributions from net realized
gain on investments (222,989) (402,968)
------------------ -----------------
Total dividends and distributions (253,674) (429,555)
------------------ -----------------
Capital Share Transactions:
Proceeds from shares sold:
35,758,474 AND 47,420,145
shares, respectively 435,956 623,367
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
19,996,561 and 31,645,787 shares,
respectively 237,314 399,494
Cost of shares repurchased:
49,806,739 and 66,170,029
shares, respectively (605,581) (870,615)
------------------ -----------------
NET INCREASE IN NET ASSETS RESULTING
from capital share transactions 67,689 152,246
------------------ -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (93,243) 47,808
Net Assets:
Beginning of year 3,063,358 3,015,550
------------------ -----------------
End of year (including undistributed
net investment income of $7,659 and
$4,560, RESPECTIVELY) $2,970,115 $3,063,358
================== =================
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. AMCAP Fund, Inc. (the "fund") is registered under the Investment Company Act
of 1940 as an open-end, diversified management investment company. The
following paragraphs summarize the significant accounting policies consistently
followed by the fund in the preparation of its financial statements:
Common stocks are stated at market value based upon closing sales prices
reported on recognized securities exchanges on the last business day of the
year or, for listed securities having no sales reported and for unlisted
securities, upon last-reported bid prices on that date. Bonds are valued at
prices obtained from a bond-pricing service provided by a major dealer in
bonds, 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 of their representative quoted bid and asked prices or, if
such prices are not available, at the mean of such prices for securities of
comparable maturity, quality, and type. Short-term securities with original or
remaining maturities in excess of 60 days are valued at the mean of their
quoted bid and asked prices. Short-term securities with 60 days or less to
maturity are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Valuation Committee of the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis.
Discounts on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends and distributions paid to shareholders are recorded on the
ex-dividend date.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $88,000 includes $10,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of February 28, 1995, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $781,966,000, of which $857,338,000
related to appreciated securities and $75,372,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended February 28, 1995. The cost of
portfolio securities for book and federal income tax purposes was
$2,180,910,000 at February 28, 1995.
3. The fee of $11,954,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.485% of the first $1 billion of average net assets;
0.385% of such assets in excess of $1 billion but not exceeding $2 billion;
0.355% of such assets in excess of $2 billion but not exceeding $3 billion;
0.335% of such assets in excess of $3 billion but not exceeding $5 billion;
0.32% of such assets in excess of $5 billion but not exceeding $8 billion; and
0.31% of such assets in excess of $8 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended February 28, 1995,
distribution expenses under the Plan were $5,181,000. As of February 28, 1995,
accrued and unpaid distribution expenses were $1,218,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $2,430,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $639,000 (after allowances
to dealers) as its portion of the sales charges paid by purchasers of the
fund's shares. Such sales charges are not an expense of the fund and, hence,
are not reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of
the fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of February 28,
1995, aggregate amounts deferred were $75,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of February 28, 1995, accumulated undistributed net realized gain on
investments was $40,263,000 and additional paid-in capital was $1,898,360,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $431,864,000 and $655,025,000, respectively, during
the year ended February 28, 1995.
AMCAP FUND
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year Ended February 28 or 29
------ -------- -------- -------- --------
1995 1994 1993 1992 1991
------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $12.98 $13.52 $13.23 $11.57 $10.87
------ -------- -------- -------- --------
Income from Investment
Operations:
Net investment income .14 .12 .13 .17 .22
Net realized and unrealized
gain on investments .24 1.28 .63 2.10 1.44
------ -------- -------- -------- --------
Total income from investment
operations .38 1.40 .76 2.27 1.66
------ -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income (.13) (.12) (.15) (.15) (.25)
Distributions from net realized
gains (.95) (1.82) (.32) (.46) (.71)
------- -------- -------- -------- --------
Total distributions (1.08) (1.94) (.47) (.61) (.96)
------- -------- -------- -------- --------
Net Asset Value, End of Year $12.28 $12.98 $13.52 $13.23 $11.57
======= ======== ======== ======== ==========
Total Return * 3.41% 11.31% 5.94% 20.41% 16.76%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $2,970 $3,063 $3,016 $2,796 $2,205
Ratio of expenses to average
net assets .71% .72% .73% .75% .79%
Ratio of net income to
average net assets 1.16% .89% 1.02% 1.37% 2.08%
Portfolio turnover rate 17.92% 22.18% 14.72% 7.74% 16.32%
</TABLE>
*This was calculated without
deducting a sales charge. The
maximum sales charge is 5.75% of
the fund's offering price.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
AMCAP Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
AMCAP Fund, Inc., including the investment portfolio, as of February 28, 1995
and the related statements of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended,
and the related per-share data and ratios for each of the five years in the
period then ended. These financial statements and the per-share data and ratios
are the responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and the per-share data and
ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 28, 1995 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of AMCAP Fund, Inc., as of February 28, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the per-share data and ratios for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche
Los Angeles, California
March 24, 1995
Tax Information (unaudited)
During the fiscal year ended February 28, 1995, 85% of the dividends paid by
the fund from investment income earned qualified for the corporate
dividends-received duration. Of those dividends, none was derived from
interest on direct U.S. Treasury obligations. This information is given to
meet certain requirements of the Internal Revenue Code.
DIRECTORS
Guilford C. Babcock, San Marino, California
Associate Professor of Finance,
School of Business Administration,
University of Southern California
Charles H. Black, Pacific Palisades, California
Private investor and consultant;
former Executive Vice President
and Director, KaiserSteel Corporation
Martin Fenton, Jr., San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
Herbert Hoover III, Pasadena, California
Private investor
Gail L. Neale, Middlebury, Vermont
Executive Vice President of the Salzburg Seminar;
former Director of Development and of the
Capital Campaign, Hampshire College
Kirk P. Pendleton, Southampton, Pennsylvania
President, Cairnwood, Inc.
(venture capital investment)
James W. Ratzlaff, San Francisco, California
Vice Chairman of the Board,
Capital Research and Management Company
Henry E. Riggs, Claremont, California
President and Professor of Engineering, Harvey Mudd College
R. Michael Shanahan, Los Angeles, California
President of the fund
Chairman of the Board,
Capital Research and Management Company
Walter P. Stern, New York, New York
Chairman of the Board of the fund
Chairman of the Board, Capital Group International, Inc.
Dr. Charles Wolf, Jr., Santa Monica, California
Dean, The RAND Graduate School;
Director, International Economic Studies, The RAND Corporation
CHAIRMAN EMERITUS
James D. Fullerton, Pasadena, California
Retired; former Chairman of the Board,
The Capital Group Companies, Inc.
OTHER OFFICERS
Gordon Crawford, Los Angeles, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research Company
Paul G. Haaga, Jr., Los Angeles, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and Management Company
Julie F. Williams, Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
Steven N. Kearsley, Los Angeles, California
Treasurer of the fund
Vice President and Treasurer,
Capital Research and Management Company
David E. Carter, Los Angeles, California
Assistant Secretary of the fund
Associate, Capital Research and Management Company
Mary C. Cremin, Los Angeles, California
Assistant Treasurer of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
Robert P. Simmer, Los Angeles, California
Assistant Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of AMCAP 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 June 30,
1995, this report must be accompanied by an American Funds Group Statistical
Update for the most recently completed calendar quarter.
Litho in USA MNC/GRS
Lit. No. AMCAP-011-0495
Printed on recycled paper
[The American Funds Group(r)]
