<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
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AMCAP Fund(R)
Prospectus
MAY 1, 1997
<PAGE>
AMCAP FUND
333 South Hope Street
Los Angeles, CA 90071
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TABLE OF CONTENTS
Expenses 3
Financial Highlights 4
Investment Policies and Risks 5
Securities and Investment Techniques 6
Multiple Portfolio Counselor System 7
Investment Results 8
Dividends, Distributions and Taxes 9
Fund Organization and Management 10
Shareholder Services 13
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The fund's investment objective is to provide shareholders with long-term
growth of capital. Whatever current income is generated by the fund is likely
to be incidental to the objective of capital growth. Normally, the fund will
invest primarily in common stocks.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
02-010-0597
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AMCAP FUND / PROSPECTUS
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EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's assets
and are factored into its share price.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets)
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Management fees 0.39%
................................................................................
12b-1 expenses 0.19%/1/
................................................................................
Other expenses 0.11%
................................................................................
Total fund operating expenses 0.69%
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
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One year $ 64
Three years $ 78
Five years $ 94
Ten years $138
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
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AMCAP FUND / PROSPECTUS
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FINANCIAL HIGHLIGHTS
The following information has been audited by Deloitte & Touche llp,
independent auditors. This table should be read together with the financial
statements which are included in the statement of additional information and
annual report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28/29
-------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.40 $12.28 $12.98 $13.52 $13.23 $11.57 $10.87 $10.63 $10.37 $11.72
- ----------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income .12 .16 .14 .12 .13 .17 .22 .27 .23 .21
..........................................................................................................
Net realized and
unrealized gain (loss)
on investments 1.51 3.32 .24 1.28 .63 2.10 1.44 1.22 .71 (.57)
..........................................................................................................
Total income (loss) from
investment operations 1.63 3.48 .38 1.40 .76 2.27 1.66 1.49 .94 (.36)
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LESS DISTRIBUTIONS:
Dividends from
net investment
income (.12) (.17) (.13) (.12) (.15) (.15) (.25) (.27) (.29) (.30)
..........................................................................................................
Distributions from
net realized gains (1.31) (1.19) (.95) (1.82) (.32) (.46) (.71) (.98) (.39) (.69)
..........................................................................................................
Total distributions (1.43) (1.36) (1.08) (1.94) (.47) (.61) (.96) (1.25) (.68) (.99)
- ----------------------------------------------------------------------------------------------------------
Net asset value,
end of year $14.60 $14.40 $12.28 $12.98 $13.52 $13.23 $11.57 $10.87 $10.63 $10.37
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Total return/1/ 11.74% 29.29% 3.41% 11.31% 5.94% 20.41% 16.76% 14.00% 9.63% (3.14)%
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RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
year (in millions) $3,807 $3,693 $2,970 $3,063 $3,016 $2,796 $2,205 $1,928 $1,722 $1,691
..........................................................................................................
Ratio of expenses to
average net assets .69% .71% .71% .72% .73% .75% .79% .72% .70% .63%
..........................................................................................................
Ratio of net income
to average net assets .81% 1.16% 1.16% .89% 1.02% 1.37% 2.06% 2.33% 2.16% 1.90%
..........................................................................................................
Average commissions paid
per share/2/ 5.05c 5.95c 5.95c 6.54c 7.28c 7.40c 7.72c 7.68c 7.42c 7.20c
..........................................................................................................
Portfolio turnover
rate 24.14% 35.16% 17.92% 22.18% 14.72% 7.74% 16.32% 18.15% 14.46% 12.00%
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</TABLE>
/1/ Excludes maximum sales charge of 5.75%.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
separately reflected in the fund's statement of operations. Shares traded on
a principal basis (without commission), such as fixed-income transactions,
are excluded.
4
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AMCAP FUND / PROSPECTUS
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INVESTMENT POLICIES AND RISKS
The fund's investment objective is to provide shareholders with long-term
growth of capital. Whatever current income is generated by the fund is likely
to be incidental to the objective of capital growth.
Under normal market conditions the fund will invest primarily in common stocks
of issuers domiciled in the U.S. In determining whether an issuer of a
security is domiciled in the U.S., Capital Research and Management
Company takes into account such factors as where the company is
legally organized, and/or maintains principal corporate offices, and/or
conducts its principal operations. In addition, the fund will
only invest in U.S. securities that are traded in U.S. markets and that are
substantially subject to laws of the U.S. However, assets may also be held in
securities convertible into common stocks, straight debt securities (it is the
fund's current intention to restrict these investments to those rated in the
top three quality categories by Moody's Investors Service, Inc. or Standard &
Poor's Corporation or unrated but determined to be of equivalent quality by
Capital Research and Management Company), cash or cash equivalents (such as
commercial paper, commercial bank obligations, and securities of the U.S.
Government, its agencies and instrumentalities), U.S. Government securities,
or nonconvertible preferred stocks. The fund reserves the right to invest
all or a portion of its assets in securities other than common stocks,
including cash equivalents, for temporary defensive purposes. MORE
INFORMATION ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN ITS
STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objective may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
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SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks, preferred stocks, and securities with
equity conversion or purchase rights. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall market
for these securities. The growth-oriented, equity-type securities generally
purchased by the fund may involve greater risk than is customarily associated
with investing in stocks of larger, more established companies and may be
subject to greater price swings.
5
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AMCAP FUND / PROSPECTUS
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DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest, and must repay the amount borrowed at maturity. Some
debt securities, such as zero coupon bonds, do not pay current interest, but
are purchased at a discount from their face value.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality and maturity. In general their prices decline when
interest rates rise and vice versa.
The fund may invest in debt securities rated A or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation. The fund may
continue to hold these securities if downgraded, but such holdings, excluding
convertible securities, will not exceed 5% of net assets.
U.S. GOVERNMENT SECURITIES
Securities guaranteed by the U.S. Government include (1) direct obligations of
the U.S. Treasury (such as Treasury bills, notes and bonds) and (2) federal
agency obligations guaranteed as to principal and interest by the U.S.
Treasury.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another: some are backed by specific types of collateral; some are supported
by the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality.
6
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AMCAP FUND / PROSPECTUS
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MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments which are managed by individual
counselors. Counselors decide how their respective segments will be invested
(within the limits provided by the fund's objective and policies and by Capital
Research and Management Company's investment committee). In addition, Capital
Research and Management Company's research professionals make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed below.
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
-------------------
YEARS OF
EXPERIENCE AS
PORTFOLIO
COUNSELOR
(AND RESEARCH
PROFESSIONAL, WITH CAPITAL
IF RESEARCH AND
APPLICABLE) MANAGEMENT
PORTFOLIO COUNSELORS FOR AMCAP COMPANY OR
FOR FUND, INC. ITS TOTAL
AMCAP FUND, INC. PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
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<S> <C> <C> <C> <C>
TIMOTHY D. Vice President of 1 year (plus 14 years 14 years
ARMOUR the Fund. 8 years as a
Director, Capital research
Research and professional
Management prior to
Company. Senior becoming a
Vice President and portfolio
Director, Capital counselor for
Research Company* the fund)
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CLAUDIA P. Vice President of 1 year (plus 19 years 21 years
HUNTINGTON the Fund. Senior 14 years as a
Vice President, research
Capital Research professional
Company* prior to
becoming a
portfolio
counselor for
the fund)
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JAMES B. Vice President of 3 years (plus 15 years 15 years
LOVELACE the Fund. Vice 5 years as a
President, Capital research
Research and professional
Management Company prior to
becoming a
portfolio
counselor for
the fund)
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WILLIAM C. Senior Partner, 30 years 38 years 44 years
NEWTON The Capital Group (since the
Partners, L.P.* fund began
operations)
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R. MICHAEL President and 11 years 32 years 32 years
SHANAHAN Principal
Executive Officer
of the fund.
Chairman of the
Board and
Principal
Executive Officer.
Capital Research
and Management
Company
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</TABLE>
The fund began operations on May 1, 1967.
*Company affiliated with Capital Research and Management Company.
7
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AMCAP FUND / PROSPECTUS
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INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
- - TOTAL RETURN is the change in value of an investment in the fund over a given
period, assuming reinvestment of any dividends and capital gain
distributions.
- - YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula may
be different than the income actually paid to shareholders.
- - DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED MARCH 31, 1997)
<TABLE>
<CAPTION>
THE FUND
AVERAGE ANNUAL AT NET THE FUND AT MAXIMUM S&P
TOTAL RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ 500/3/
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One year 9.27% 2.98% 19.79%
................................................................................
Five years 11.92% 10.61% 16.39%
................................................................................
Ten years 11.10% 10.45% 13.35%
................................................................................
Lifetime 12.64% 12.42% 11.36%
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Yield/1/,/2/: 0.80%
Distribution rate/2/: 0.74%
</TABLE>
/1/ These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/ The maximum sales charge has been deducted.
/3/ The Standard & Poor's 500 Index represents stocks. This index is unmanaged
and does not reflect sales charges, commissions or expenses.
8
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AMCAP FUND / PROSPECTUS
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[GRAPH APPEARS HERE]
Past results are not an indication of future results.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends are usually paid twice each year. Capital gains, if any, are also
usually distributed twice each year. When a dividend or capital gain is
distributed, the net asset value per share is reduced by the amount of the
payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
9
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AMCAP FUND / PROSPECTUS
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YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
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FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1966 and reorganized as a Maryland corporation in
1990. All fund operations are supervised by the fund's board of directors who
meet periodically and perform duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in the statement of additional information.
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund does not hold annual
meetings of shareholders. However, significant corporate matters which 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 INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management
10
<PAGE>
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AMCAP FUND / PROSPECTUS
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Company manages the investment portfolio and business affairs of the fund. The
management fee paid by the fund to Capital Research and Management Company is
composed of a management fee, which may not exceed 0.485% of the fund's average
net assets annually and declines at certain asset levels. The total management
fee paid by the fund, as a percentage of average net assets, for the previous
fiscal year is listed earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
Plan were incurred within the preceding 12 months and accrued while the Plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is listed earlier under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
11
<PAGE>
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AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
Subject to the above policy, when two or more brokers (either directly or
through their correspondent clearing agents) are in a position to offer
comparable prices and executions, preference may be given to brokers who have
sold shares of the fund or have provided investment research, statistical, and
other related services for the benefit of the fund and/or other funds served by
Capital Research and Management Company.
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
[MAP APPEARS HERE]
12
<PAGE>
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AMCAP FUND / PROSPECTUS
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SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS OR
ACCOUNTS HELD BY INVESTMENT DEALERS. IF YOU ARE INVESTING IN SUCH A MANNER, YOU
SHOULD CONTACT YOUR PLAN ADMINISTRATOR/TRUSTEE OR DEALER ABOUT WHAT SERVICES
ARE AVAILABLE AND WITH QUESTIONS ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order for
any reason. This includes exchange purchase orders that may place an unfair
burden on other shareholders due to their frequency.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
- - Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
- - Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the fund
(with no sales charge). This will be done automatically unless you elect to
have the dividends and/or capital gain distributions paid to you in cash.
13
<PAGE>
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AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
- - Cross-Reinvestment
You may invest your dividends and capital gain distributions into any other
fund in The American Funds Group.
- - Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to automatically
exchange shares among any of the funds in The American Funds Group. Exchange
requests may be made in writing, by telephone including American
FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX CONSEQUENCES
AS ORDINARY SALES AND PURCHASES.
- - Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
<TABLE>
- ----------------------------------------------------------------
<S> <C>
To establish an account $1,000
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
14
<PAGE>
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AMCAP FUND / PROSPECTUS
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
-----------------
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans,
foundations or endowments with $50 million or more in assets may be made with
no sales charge and are not subject to a contingent deferred sales charge. A
dealer concession of up to 1% may be paid by American Funds Distributors on
these investments. Investments by certain individuals and entities including
employees and other associated persons of dealers authorized to sell shares of
the fund and Capital Research and Management Company and its affiliated
companies are not subject to a sales charge.
15
<PAGE>
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AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
- - Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
- - Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or cross-
reinvestment from a fund having a sales charge do qualify.
- - Right of Accumulation
You may take into account the current value of your existing holdings in The
American Funds Group to determine your sales charge. Direct purchases of the
money market funds are excluded.
16
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
- - Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous 90
days) in non-money market fund shares over a 13-month period. A portion of
your account may be held in escrow to cover additional sales charges which
may be due if your total investments over the statement period are
insufficient to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $50,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. 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 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
17
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sales of shares
held in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R). To use this
service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, 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 liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
18
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
19
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
20
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
21
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
22
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
AMCAP FUND / PROSPECTUS
- --------------------------------------------------------------------------------
FOR SHAREHOLDER SERVICES FOR DEALER SERVICES
American Funds American Funds
Service Company Distributors
800/421-0180 ext. 1 800/421-9900 ext. 11
FOR 24-HOUR INFORMATION
American American Funds
FundsLine(R) Internet Web site
800/325-3590 http://www.americanfunds.com
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects
performance information, of the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the auditor's
report.
A current SAI has been filed
with the Securities and
CODE OF ETHICS Exchange Commission ("SEC").
It is incorporated by
Includes a description of reference into this
the fund's personal prospectus and is available
investing policy. along with other related
materials on the SEC's
Internet Web site at
http://www.sec.gov.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of
Service Company the fund
800/421-0180 ext. 1 333 South Hope Street
Los Angeles, CA 90071
This prospectus has been printed on recycled paper.
[RECYCLE LOGO]
24
<PAGE>
AMCAP FUND, INC.
Part B
Statement of Additional Information
May 1, 1997
This document is not a prospectus but should be read in conjunction with the
current Prospectus of AMCAP Fund, Inc. (the "fund") dated May 1, 1997. The
prospectus may be obtained from your investment dealer or financial planner or
by writing to the fund at the following address:
AMCAP Fund, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible
retirement plans should note that not all of the services or features described
below may be available to them, and they should contact their employer for
details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
<S> <C>
Investment Philosophy 1
Description of Certain Securities 2
Description of Bond Ratings 3
Investment Restrictions 3
Fund Directors and Officers 6
Director Compensation 6
Management 11
Dividends, Distributions and Federal Taxes 14
Purchase of Shares 16
Redeeming Shares 22
Shareholder Account Services and Privileges 23
Execution of Portfolio Transactions 25
General Information. 25
Investment Results 27
Financial Statements Attached
</TABLE>
INVESTMENT PHILOSOPHY
The Investment Adviser strives for a broad and flexible approach to investing.
In managing the portfolio of the fund, which has the objective of long-term
growth of capital, investment consideration is given to companies whose
earnings are expected to show rapid or consistent growth or are cyclically
depressed, but have good potential for recovery.
Good companies are not always good investments. At times even the strongest,
best-managed companies can become overvalued in the marketplace. The key to
investment problem-solving is in the correct appraisal of the relationship
between fundamental value and market price. When a stock appears to have
become overpriced relative to other available investments, it may be sold by
the fund -- no matter how highly the company itself is regarded -- and the
money put to work elsewhere. Although it is not the fund's practice to trade
actively in securities for short-term profits, securities may be disposed of
without regard for the length of time held -- if such sales appear to the
Investment Adviser to further the investment objective of the fund.
DESCRIPTION OF CERTAIN SECURITIES
The descriptions below are intended to supplement the material in the
Prospectus under "Investment Policies and Risks."
Subsequent to its purchase by the fund, an issue of straight debt securities
may cease to be rated or its rating may be reduced below the minimum rating
required for its purchase. Neither event requires the elimination of such
obligation from the fund's portfolio, but the Investment Adviser will consider
such an event in its determination of whether the fund should continue to hold
such obligation in its portfolio. The fund has no current intention (at
least during the next 12 months) to invest more than 5% of its assets in
convertible securities rated below A by Moody's Investors Service Inc.
or Standard & Poor's Corporation. If, as a result of a downgrade or otherwise,
the fund holds more than 5% of its net assets in securities rated Ba or BB or
below (also known as "high-yield, high-risk securities"), the fund will dispose
of the excess as expeditiously as possible.
CASH EQUIVALENTS - The fund may maintain assets in cash or cash equivalents.
Cash equivalents include (1) commercial paper (short-term notes up to 9 months
in maturity issued by corporations or governmental bodies), (2) commercial bank
obligations such as certificates of deposit (interest-bearing time deposits)
and bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity) (3) savings association
obligations ( certificates of deposit issued by mutual savings banks or savings
and loan associations), (4) securities of the U.S. Government, its agencies or
instrumentalities that at time of purchase mature, or may be redeemed, in one
year or less, and (5) corporate bonds and notes that at time of purchase
mature, or that may be redeemed, in one year or less.
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities from "Aaa" to "C." Moody's applies the numerical modifiers 1,
2, and 3 in each generic rating classification from AA through B in its
corporate bond rating system. The modifier 1 indicates that the security ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category. The top three rating categories are
described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
Standard & Poor's Corporation rate the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality. The
ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
The top three rating categories are described as follows:
"Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
INVESTMENT RESTRICTIONS
The fund has adopted certain investment restrictions which may not be changed
without a majority vote of its outstanding shares. Such majority is defined by
the Investment Company Act of 1940 (the "1940 Act") as the vote of the lesser
of (i) 67% or more of the outstanding voting securities present at a meeting,
if the holders of more than 50% of the outstanding voting securities are
present in person or by proxy, or (ii) more than 50% of the outstanding voting
securities. These restrictions provide that:
1. The fund may not invest in:
(a) real estate (although it has not been the practice of the fund to make
such investments, the fund may invest in the securities of real estate
investment trusts);
(b) commodities or commodity contracts;
(c) companies for the purpose of exercising control or management;
(d) the securities of companies which, with their predecessors, have a record
of less than three years' continuing operation, if such purchase at the time
thereof would cause more than 5% of the value of the fund's total assets to be
invested in the securities of such companies;
(e) securities which would subject the fund to unlimited liability (such as
assessable shares or partnership interests);
(f) any securities of another issuer if immediately after and as a result of
such purchase (1) the market value of the securities of such other issuer shall
exceed 5% of the market value of the total assets of the fund or (2) the fund
shall own more than 10% of any class of securities or of the outstanding voting
securities of such issuer; or
(g) any securities if immediately after and as a result of such purchase more
than 25% of the market value of the total assets of the fund are invested in
securities of companies in any one industry.
2. The fund may not engage in short sales or margin purchases.
3. The fund may not lend money or securities. The making of deposits with
banks and the purchase of a portion of the issue of bonds, debentures, or other
debt securities which are publicly distributed or of a type generally purchased
by institutional investors, are not regarded as loans.
4. The fund may not invest more than 10% of the value of its total assets in
securities that are illiquid, nor may it engage in the business of underwriting
securities of other issuers.
5. The fund may not borrow in excess of 10% of its total assets taken at cost
or pledge its assets taken at market value to an extent greater than 15% of
total assets taken at cost. Asset coverage of at least 300% taken at market
value must be maintained. No borrowing may be undertaken except as a temporary
measure for extraordinary or emergency purposes. (The fund may borrow only
from banks. The fund, however, has never borrowed and does not currently
anticipate borrowing.)
The following policies are non-fundamental policies which may be changed by
action of the Board of Directors, without shareholder approval.
Investment restriction #1 does not apply to deposits in banks or to the
purchase of securities issued or fully guaranteed by the U.S. Government (or
its agencies or instrumentalities). For purposes of investment restriction
#1(g), the fund will not invest 25% or more (rather than "more than 25%") of
its total assets in the securities of issuers in the same industry.
Notwithstanding investment restriction #5, the fund has no current
intention (at least during the next 12 months) to leverage its assets.
In addition to the foregoing policies, it is also the policy of the fund not
to invest in securities of open-end investment companies except in connection
with a merger, consolidation or acquisition of assets, but the fund may invest
in securities of closed-end investment companies within the limitations imposed
by the 1940 Act. (Notwithstanding this restriction, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.) In general, this means (i) that the fund will not own more than
3% of the outstanding voting stock of a closed-end investment company, (ii)
that the fund will not invest more than an aggregate of 5% of its total assets
in securities issued by closed-end investment companies, and (iii) that the
fund, together with all other investment companies served by the Investment
Adviser, will not own more than 10% of the outstanding voting stock of a
closed-end investment company. Any such purchases will be made only in the
open market or as a part of a merger, consolidation, or acquisition of assets,
and will not involve commissions or profits to a sponsor or dealer other than
customary brokerage commissions.
FUND OFFICERS AND DIRECTORS
Directors and Director Compensation
(with their principal occupations during the past five years)#
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
WITH PAST 5 YEARS (POSITIONS WITHIN COMPENSATION (INCLUDING VOLUNTARILY OF FUND BOARDS
REGISTRANT THE ORGANIZATIONS LISTED MAY (INCLUDING DEFERRED ON WHICH
HAVE CHANGED DURING THIS VOLUNTARILY DEFERRED COMPENSATION/1/) DIRECTOR
PERIOD) COMPENSATION/1/) FROM ALL FUNDS SERVES/2/
FROM FUND DURING MANAGED BY CAPITAL
FISCAL YEAR ENDED RESEARCH AND
2/28/97 MANAGEMENT COMPANY/2/
<S> <C> <C> <C> <C> <C>
Guilford C. Babcock Director Associate Professor of Finance, $13,800/3/ $28,700
1575 Circle Drive Marshall School of Business , 2
San Marino, CA 91108 University of Southern California
Age: 65
Charles H. Black Director Private investor and consultant; $13,800 $112,500
525 Alma Real Drive former Executive Vice President 4
Pacific Palisades, CA and Director, KaiserSteel
90272 Corporation
Age: 70
Martin Fenton, Jr. Director Chairman, Senior Resource $14,200/3/ $128,750
Senior Resource Group Group (management of senior 16
4350 Executive Drive living centers)
Suite 101
San Diego, CA
92121-2116
Age: 61
James D. Fullerton Chairman Retired; former Vice Chairman of $5,300 $5,300
595 E. Colorado Emeritus the Board, The Capital Group 1
Boulevard Companies, Inc.
Suite 323
Pasadena, CA 91101
Age: 80
Herbert Hoover III Director Private Investor $11,800 $64,050
1520 Circle Drive 14
San Marino, CA 91108
Age: 69
Gail L. Neale Director President, The Lovejoy $13,000/3/ $48,250
Salzburg Seminar Consulting Group, Inc. and 4
P.O. Box 886 special adviser to the Salzburg
The Marbleworks Seminar; former Executive Vice
Middlebury, VT 05753 President, Salzburg Seminar;
Age: 62 former Director of Development
and the Capital Campaign,
Hampshire College; Special
Advisor, The Commonwealth
Fund and Mount Holyoke College
Kirk P. Pendleton Director President, Cairnwood, Inc. $13,000/3/ $62,494
Cairnwood, Inc. 5
75 James Way
Southampton, PA 18966
Age: 57
+ James W. Ratzlaff Director Senior Partner, The Capital
Capital Research and Group Partners, L.P. none/4/ none/4/ 8
Management Company
One Market Plaza,
Steuart Tower, Suite 1800
San Francisco, CA 94105-1016
Age: 60
Henry E. Riggs Director President, Graduate Institute of $13,000/3/ $77,200
Graduate Institute of Applied Life Sciences at 5
Applied Life Sciences Claremont; former President and
at Claremont Professor of Engineering, Harvey
1263 North Darthmouth Mudd College; former
Claremont, CA 91711 Thomas W. Ford Professor of
Age: 62 Engineering and Vice President
of Development, Stanford
University
+* R. Michael Shanahan Director Chairman of the Board and
Age:58 Principal Executive Officer, none/4/ none/4/ 2
Capital Research and
Management Company; Director,
The Capital Group Companies,
Inc.; Director, Capital Group
Research, Inc.
+ Walter P. Stern Chairman of Chairman, Capital Group
Capital Research Company the Board International, Inc.; Vice none/4/ none/4/ 8
630 Fifth Avenue Chairman, Capital Research
New York, NY 10111 International; Chairman, Capital
Age: 69 International, Inc.; Director,
Temple-Inland, Inc.
Charles Wolf, Jr. Director Dean, The RAND Graduate $13,000/3/ $54,950
The RAND Graduate School; Director, International 4
School Economic Studies, The RAND
1700 Main Street Corporation
Santa Monica, CA 90406
Age: 72
</TABLE>
# Positions within the organizations listed may have changed during this
period.
+ Directors who are considered "interested persons as defined in the 1940 Act,
on the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
* Address is 333 South Hope Street, Los Angeles, CA 90071
/1/ Amounts may be deferred by eligible directors under a non-qualified
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
funds in The American Funds Group as designated by the Director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: American Balanced Fund, Inc., American High-Income
Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund,
Inc., The Bond Fund of America, Inc., The Cash Management Trust of America,
Capital Income Builder, Inc., Capital World Growth and Income Fund, Inc.,
Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental Investors,
Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc.,
Intermediate Bond Fund of America, The Investment Company of America, Limited
Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The
Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S.
Treasury Money Fund of America, U.S. Government Securities Fund and Washington
Mutual Investors Fund, Inc. Capital Research and Management Company also
manages American Variable Insurance Series and Anchor Pathway Fund which serve
as the underlying investment vehicle for certain variable insurance contracts;
and Bond Portfolio for Endowments, Inc. and Endowments, Inc. whose shares may
be owned only by tax-exempt organizations. These amounts reflect the aggregate
compensation paid during the most recent fiscal year of the funds involved.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors is as
follows: Guilford C. Babcock ($58,491), Martin Fenton, Jr. ($21,751), Gail L.
Neale ($39,309), Kirk P. Pendleton ($51,410), Henry E. Riggs ($53,104) and
Charles Wolf, Jr. ($50,547). Amounts deferred and accumulated earnings thereon
are not funded and are general unsecured liabilities of the fund until paid to
the Director.
/4/ James W. Ratzlaff, R. Michael Shanahan and Walter P. Stern are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
OFFICERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
WITH REGISTRANT PAST 5 YEARS
<S> <C> <C> <C>
Gordon Crawford 50 Senior Vice Director and Senior Vice President, Capital
333 South Hope Street President Research and Management Company
Los Angeles, CA 90071
Paul G. Haaga, Jr. 48 Senior Vice Director and Executive Vice President, Capital
333 South Hope Street President Research and Management Company
Los Angeles, CA 90071
Timothy D. Armour 36 Vice President Director, Capital Research and Management
333 South Hope Street Company; Director and Senior Vice President,
Los Angeles, CA 90071 Capital Research Company
Claudia P. Huntington 45 Vice President Senior Vice President, Capital Research and
333 South Hope Street Management Company
Los Angeles, CA 90071
James B. Lovelace 40 Vice President Vice President, Capital Research and
333 South Hope Street Management Company
Los Angeles, CA 90071
Julie F. Williams 48 Secretary Vice President - Fund Business Management
333 South Hope Street Group, Capital Research and Management
Los Angeles, CA 90071 Company
Mary C. Hall 39 Treasurer Senior Vice President - Fund Business
135 South State College Blvd. Management Group, Capital Research and
Brea, CA 92821 Management Company
Robert P. Simmer 36 Assistant Treasurer Vice President - Fund Business Management
5300 Robin Hood Road Group, Capital Research and Management
Norfolk, VA 23513 Company
</TABLE>
No compensation is paid by the fund to any officer or director who is a
director or officer of the Investment Adviser. The fund pays annual fees of
$9,000 to directors who are not affiliated with the Investment Adviser, plus
$800 for each Board of Directors meeting attended, plus $400 for each meeting
attended as a member of a committee of the Board of Directors. No pension or
retirement benefits are accrued as part of fund expenses. The 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 directors who are not affiliated with the Investment
Adviser. As of April 1, 1997, 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.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821.
The Investment Adviser's research professionals travel several million miles a
year, making more than 5,000 research visits in more than 50 countries around
the world. The Investment Adviser believes that it is able to attract and
retain quality personnel. The Investment Adviser is a wholly owned subsidiary
of The Capital Group Companies, Inc.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of stocks,
bonds and money market instruments and serves over five million investors of
all types throughout the world. These investors include privately owned
businesses and large corporations, as well as schools, colleges, foundations
and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser, unless
sooner terminated, will continue until March 31, 1998 and may be renewed from
year to year thereafter, provided that any such renewal has been specifically
approved at least annually by (i) the Board of Directors, or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities, and
(ii) 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).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform executive, administrative, clerical and
bookkeeping functions of the fund; provides suitable office space and
utilities; and furnishes necessary small office equipment and general purpose
accounting forms, supplies, and postage used at the offices of the fund
relating to the services furnished by the Investment Adviser.
The fund pays all expenses not specifically assumed by the Investment Adviser,
including, but not limited to, custodian, registrar, stock transfer and
dividend disbursing fees and expenses; expenses pursuant to the fund's Plan of
Distribution (see below); costs of designing, printing and mailing reports,
prospectuses, proxy statements and notices to shareholders; taxes; expenses of
the issuance, sale, redemption, or repurchase of shares of the fund (including
stock certificates, registration and qualification fees and expenses); legal
and auditing fees and expenses; compensation, fees, and expenses paid to
directors not affiliated with the Investment Adviser; association dues; and
costs of stationery and forms prepared exclusively for the fund.
The Investment Adviser receives a management fee at the annual rates of 0.485%
on the first $1 billion of the fund's net assets, 0.385% on net assets in
excess of $1 billion but not exceeding $2 billion, 0.355% on net assets in
excess of $2 billion but not exceeding $3 billion, 0.335% on net assets in
excess of $3 billion but not exceeding $5 billion, 0.32% on net assets in
excess of $5 billion but not exceeding $8 billion, and 0.31% on net assets in
excess of $8 billion.
The Investment Adviser has agreed to pay to the fund annually, immediately
after the fiscal year end the amount by which the total expenses of the fund
for any particular fiscal year, except taxes and interest, exceed an amount
equal to 1% of the average of the total net assets of the fund for the year.
During the fiscal years ended February 28, 1997, February 29, 1996, and
February 28, 1995, the Investment Adviser's fees amounted to $14,491,000,
$13,418,000, and $11,954,000, respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, 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, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the "Plan"), pursuant to rule 12b-1 under the 1940 Act . The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares during the fiscal year ended
February 28, 1997 amounted to $638,000 after allowance of $3,121,000 to
dealers. During the fiscal years ended February 29, 1996, and February 28,
1995, the Principal Underwriter retained $747,000 and $639,000, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors and separately by a
majority of the directors who are not "interested persons" of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested persons" of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of directors who
are not "interested persons" of the fund are committed to the discretion of the
directors who are not "interested persons" during the existence of the Plan.
Plan expenditures are reviewed quarterly and the Plan must be renewed annually
by the Board of Directors.
Under the Plan the fund may expend up to 0.25% of its average net assets
annually to finance any activity which is 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. These include service
fees for qualified dealers and dealer commissions and wholesaler compensation
on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees). Only expenses incurred
during the preceding 12 months and accrued while the Plan is in effect may be
paid by the fund. During the fiscal year ended February 28, 1997 the fund paid
$6,849,000 under the Plan. As of February 28, 1997 accrued and unpaid
distribution expenses were $1,858,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). Under Subchapter M, if
the fund distributes within specified times at least 90% of its investment
company taxable income (net investment income and the excess of net short-term
capital gains over net long-term capital losses) , it will be taxed only on the
portion of its investment company taxable income that it retains.
To qualify as a regulated investment company, the fund must (a) derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, and gains from the sale or other disposition of
stock, securities, currencies or other income derived with respect to its
business of investing in such stock, securities or currencies; (b) derive less
than 30% of its gross income from the sale or other disposition of stock or
securities held for less than three months; and (c) 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 other
securities which must be limited, in respect of any one issuer, to an amount
not greater than 5% of the fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies), or in two or more issuers which the fund controls and which are
engaged in the same or similar trades or businesses or related trades or
businesses.
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"
generally means the sum of (i) 98% of taxable net investment income for the
calendar year, (ii) 98% of capital gains (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 (iii)
the sum of any untaxed, undistributed taxable net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts distributed by the
fund during the calendar year and (ii) any amount on which the fund pays
income tax during the periods described above. The fund intends to distribute
net investment income and net capital gains so as to minimize or avoid the
excise tax liability. Distributions of investment company taxable income,
including short-term capital gains, generally are taxable to the shareholders
as ordinary income, regardless of whether such distributions are paid in cash
or invested in additional shares of the fund's stock.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. A capital gain distribution, whether paid in cash or
re-invested in shares, is taxable to shareholders as long-term capital gains,
regardless of the length a shareholder has held his shares or whether such gain
was realized by the fund before the shareholder acquired such shares and was
reflected in the price paid for the shares. If the net asset value of shares of
the fund should, by reason of a distribution of realized capital gains, be
reduced below a shareholder's cost, such distribution should, by reason of a
distribution of realized capital gains, be reduced below a shareholder's cost,
such distribution would be a taxable dividend to the shareholder, even though
the distribution is economically a return of capital. In particular,
investors should consider the tax implications of purchasing shares just
prior to a dividend or capital gain distribution record date.
Dividends and capital gain distributions generally are taxable to shareholders
at the time they are paid. However, such dividends and distributions declared
in October, November and December and made payable to shareholders of record in
such a month are treated as paid and are thereby taxable as of December 31,
provided that the fund pays the dividend and/or capital gain distributions no
later than the end of January of the following year.
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 purpose 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 shares. Also, any loss realized on a redemption or exchange of
shares of a 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.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual rate
applicable to net capital gain is 28%; and the maximum corporate tax rate
applicable to ordinary income and net capital gain is 35% (however, to
eliminate the benefit of lower marginal corporate income tax rates,
corporations which have income in excess of $100,000 for a taxable year will be
required to pay an additional income tax liability of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of tax of up to $100,000).
Naturally, the amount of tax payable by a taxpayer will be affected by a
combination of tax law rules covering deductions, credits, deferrals,
exemptions, sources of income and other matters. Under the Code, an individual
is generally entitled to establish and contribute to an IRA each year (prior
to the tax return filing deadline for that year) whereby earnings on
investments are tax-deferred. In addition, in some cases, the IRA contribution
itself may be deductible.
The foregoing is a summary discussion of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and distributions may also be subject to state or local
taxes. Investors should consult their own tax advisers for additional details
as to their particular tax status.
PURCHASE OF SHARES
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METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower
Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer who is Mail directly to your investment
your registered in the state where the dealer's address printed on your
investment purchase is made and who has a account statement.
dealer sales agreement with American
Funds Distributors.
By mail Make your check payable to the Fill out the account additions form at
fund and mail to the address the bottom of a recent account
indicated on the account application. statement, make your check payable
Please indicate an investment to the fund, write your account number
dealer on the account application. on your check, and mail the check and
form in the envelope provided with
your account statement.
By telephone Please contact your investment Complete the "Investments by Phone"
dealer to open account, then follow section on the account application or
the procedures for additional American FundsLink Authorization
investments. Form. Once you establish the
privilege, you, your financial advisor or
any person with your account
information can call American
FundsLineR and make investments by
telephone (subject to conditions noted
in "Telephone Purchases, Sales and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "Initial Investment."
investment dealer on the
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
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INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLine(R) (see
description below):
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FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R) $1,000 02
American Balanced Fund(R) 500 11
American Mutual Fund(R) 250 03
Capital Income Builder(R) 1,000 12
Capital World Growth and Income Fund(SM) 1,000 33
EuroPacific Growth Fund(R) 250 16
Fundamental Investors(SM) 250 10
The Growth Fund of America(R) 1,000 05
The Income Fund of America(R) 1,000 06
The Investment Company of America(R) 250 04
The New Economy Fund(R) 1,000 14
New Perspective Fund(R) 250 07
SMALLCAP World Fund(R) 1,000 35
Washington Mutual Investors Fund(SM) 250 01
BOND FUNDS
American High-Income Municipal Bond Fund(R) 1,000 40
American High-Income Trust(SM) 1,000 21
The Bond Fund of America(SM) 1,000 08
Capital World Bond Fund(R) 1,000 31
Intermediate Bond Fund of America(SM) 1,000 23
Limited Term Tax-Exempt Bond Fund of 1,000 43
America(SM)
The Tax-Exempt Bond Fund of America(R) 1,000 19
The Tax-Exempt Fund of California(R)* 1,000 20
The Tax-Exempt Fund of Maryland(R)* 1,000 24
The Tax-Exempt Fund of Virginia(R)* 1,000 25
U.S. Government Securities Fund(SM) 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R) 2,500 09
The Tax-Exempt Money Fund of America(SM) 2,500 39
The U.S. Treasury Money Fund of America(SM) 2,500 49
___________
*Available only in certain states.
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For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
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AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000 6.10% 5.75% 5.00%
$50,000 but less than $100,000 4.71 4.50 3.75
BOND FUNDS
Less than $25,000 4.99 4.75 4.00
$25,000 but less than $50,000 4.71 4.50 3.75
$50,000 but less than $100,000 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND
FUNDS
$100,000 but less than $250,000 3.63 3.50 2.75
$250,000 but less than $500,000 2.56 2.50 2.00
$500,000 but less than $1,000,000 2.04 2.00 1.60
$1,000,000 or more none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These payments will be based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at least
$1 million in shares of the fund (or in combination with shares of other funds
in The American Funds Group other than the money market funds) may purchase
shares at net asset value; however, a contingent deferred sales charge of 1% is
imposed on certain redemptions made within twelve months of the purchase.
Investments by retirement plans, foundations or endowments with $50 million or
more in assets may be made with no sales charge and are not subject to a
contingent deferred sales charge. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
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) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $50
million or more; (5) insurance company separate accounts; (6) accounts managed
by subsidiaries of The Capital Group Companies, Inc.; and (7) The Capital Group
Companies, Inc., its affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to these persons and
organizations due to anticipated economies in sales effort and expense.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to the following statement of intention (the
"Statement") terms. The Statement is not a binding obligation to purchase the
indicated amount. When a shareholder elects to utilize the Statement in order
to qualify for a reduced sales charge, shares equal to 5% of the dollar amount
specified in the Statement will 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 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 13-month period, the purchaser will 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. If the difference is not paid within 45 days after written
request by the Principal Underwriter or the securities dealer, 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 will be liable
to the Principal Underwriter for the balance still outstanding. The Statement
may be revised upward at any time during the 13-month period, and such a
revision will be treated as a new Statement, except that the 13-month period
during which the purchase must be made will remain unchanged and there will be
no retroactive reduction of the sales charges paid on prior purchases.
Existing holdings eligible for rights of accumulation (see the prospectus and
account application) may be credited toward satisfying the Statement. During
the Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the Statement, a sales charge will be assessed according to
the sales charge breakpoint thus determined. There will be no retroactive
adjustments in sales charges on investments previously made during the 13-month
period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan, by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above, (2) made for two or
more employee benefit plans of a single employer or of affiliated employers as
defined in the 1940 Act, again excluding employee benefit plans described
above, or (3) for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund shares.
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.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering 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, accepted by the Principal Underwriter prior to its close
of business. In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value and
orders received by a dealer prior to such time but not forwarded promptly
to the Principal Underwriter will be entered at the next calculated offering
price. Prices which appear in the newspaper are not always indicative of
prices at which you will be purchasing and redeeming shares of the fund, since
such prices generally reflect the previous day's closing price whereas
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 calculated once daily at the close of trading
(currently 4:00 p.m., New York Time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Stocks, convertible bonds and debentures traded on the New York Stock
Exchange are valued at the last sale price on such exchange on the day of
valuation, or if there is no sale on the day of valuation, at the last-reported
bid price. Non-convertible bonds and debentures and other long-term debt
securities and U.S. Treasury notes normally are valued at prices obtained for
the day of valuation from a bond pricing service, when such prices are
available; however, in circumstances where the Investment Adviser deems it
appropriate to do so, an over-the-counter or exchange quotation may be used.
U.S. Treasury bills, and other short-term obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, certificates of deposit
issued by banks, corporate short-term notes and other short-term investments
with original or remaining maturities in excess of 60 days are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, for securities of comparable maturity, quality
and type. Short-term securities with 60 days or less to maturity are amortized
to maturity based on their cost to the fund if acquired within 60 days of
maturity or, if already held by the fund on the 60th day, based on the value
determined on the 61st day. Other securities are valued on the basis of last
sale or bid prices in what is, in the opinion of the Investment Adviser, the
broadest and most representative market, which may be either a securities
exchange or the over-the-counter market. Where quotations are not readily
available, securities are valued at fair value as determined in good faith by
the Board of Directors. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including accruals of taxes and other expense items; and
3. The net assets so obtained are then divided by the total number of shares
outstanding and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or by the
fund. The fund will not knowingly sell shares (other than for the reinvestment
of dividends or capital gain distributions) directly or indirectly or through a
unit investment trust to any other investment company, person or entity, where,
after the sale, such investment company, person, or entity would own
beneficially directly, indirectly, or through a unit investment trust more than
3% of the outstanding shares of the fund without the consent of a majority of
the Board of Directors.
REDEEMING SHARES
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By writing to American Send a letter of instruction specifying the name of the fund,
Funds Service Company (at the number of shares or dollar amount to be sold, your name
the appropriate address and account number. You should also enclose any share
indicated under "Principal certificates you wish to redeem. For redemptions over
Underwriter and Transfer $50,000 and for certain redemptions of $50,000 or less (see
Agent" in the Prospectus) below), your signature must be guaranteed by a bank,
savings association, credit union, or member firm of a
domestic stock exchange or the National Association of
Securities Dealers, Inc. that is an eligible guarantor institution.
You should verify with the institution that it is an eligible
guarantor prior to signing. Additional documentation may be
required for redemption of shares held in corporate,
partnership or fiduciary accounts. Notarization by a Notary
Public is not an acceptable signature guarantee.
By contacting your If you redeem shares through your investment dealer, you
investment may be charged for this service. SHARES HELD FOR YOU IN
dealer YOUR INVESTMENT DEALER'S STREET NAME MUST BE REDEEMED
THROUGH THE DEALER.
You may have a redemption You may use this option, provided the account is registered in
check sent to you by using the name of an individual(s), a UGMA/UTMA custodian, or a
American FundsLine(R) or non-retirement plan trust. These redemptions may not
by telephoning, faxing, or exceed $50,000 per shareholder per day, and the check
telegraphing American must be made payable to the shareholder(s) of record and be
Funds Service Company sent to the address of record provided the address has been
(subject to the conditions used with the account for at least 10 days. See "Principal
noted in this section and in Underwriter and Transfer Agent" in the Prospectus and
"Telephone Purchases, "Exchange Privilege" below for the appropriate telephone or
Sales and Exchanges" fax number.
below)
In the case of the money Upon request (use the account application for the money
market funds, you may have market funds) you may establish telephone redemption
redemptions wired to your privileges (which will enable you to have a redemption sent to
bank by telephoning your bank account) and/or check writing privileges. If you
American Funds Service request check writing privileges, you will be provided with
Company ($1,000 or more) checks that you may use to draw against your account.
or by writing a check ($250 These checks may be made payable to anyone you designate
or more) and must be signed by the authorized number of registered
shareholders exactly as indicated on your checking account
signature card.
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A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables you to make
regular monthly or quarterly investments in shares through automatic charges to
your bank accounts. With shareholder authorization and bank approval, the
Transfer Agent will automatically charge the bank account for the amount
specified ($50 minimum), which will be automatically invested in shares at the
offering price on or about the dates you select. Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
at least quarterly. Participation in the plan will begin within 30 days after
receipt of the account application. If your bank account cannot be charged due
to insufficient funds, a stop-payment order or closing of your 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 writing the
Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge 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, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the 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.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(R) (see "American FundsLine(R)" below), or by telephoning
800/421-0180 toll-free, faxing (see "Principal Underwriter and Transfer Agent"
in the Prospectus for the appropriate fax numbers) or telegraphing American
Funds Service Company. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for which Capital Guardian Trust
Company serves as trustee may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simultaneously at the share
prices next determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of $50
or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into your
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 your account. The Transfer Agent arranges
for the redemption by the fund of sufficient shares, deposited by you with the
Transfer Agent, to provide the withdrawal payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINE(R) - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $50,000
per shareholder per day), or exchange shares around the clock with American
FundsLine(R). To use this service, call 800/325-3590 from a TouchTone(TM)
telephone. Redemptions and exchanges through American FundsLine(R) are subject
to the conditions noted above and in "Redeeming Shares--Telephone Redemptions
and Exchanges" below. You will need your fund number (see the list of funds in
The American Funds Group under "Purchase of Shares--Investment Minimums and
Fund Numbers"), personal identification number (the last four digits of your
Social Security number or other tax identification number associated with your
account) and account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLine(R)), fax or telegraph redemption and/or exchange options,
you agree to hold the fund, American Funds Service Company, 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) which may
be incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, 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.
REDEMPTION OF SHARES - The fund's Articles of Incorporation permit the fund to
direct the Transfer Agent to redeem your shares if the value of the shares in
your account is less than the minimum initial investment amount applicable to
that account 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.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser. The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions. When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through its
correspondent clearing agent) is in a position to obtain the best price and
execution, the order is placed with that broker. This may or may not be a
broker who has provided investment research, statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser. The fund does not consider that it has
an obligation to obtain the lowest available commission rate to the exclusion
of price, service and qualitative considerations.
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund does not intend to pay a mark-up
in exchange for research in connection with principal transactions.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal years ended February 28, 1997,
February 29, 1996, and February 28, 1995 , amounted to $1,648,000, $1,963,000,
and $1,092,000, respectively.
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 The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian.
INDEPENDENT AUDITORS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, has served as the fund's independent auditors
since its inception, 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 have been so included in reliance on the independent auditors'
report given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountant is reviewed and
determined annually by the Board of Directors.
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, 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 question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on the last day of
February. Shareholders are provided at least semi-annually with reports
showing the investment portfolio, financial statements and other information.
The fund's financial statements are audited annually by the fund's independent
accountants, Deloitte & Touche LLP.
PERSONAL INVESTING POLICY - The Investment Adviser and its affiliated companies
have adopted a personal investing policy consistent with Investment Company
Institute guidelines. This policy includes: a ban on acquisitions of
securities pursuant to an initial public offering; restrictions on acquisitions
of private placement securities; pre-clearance and reporting requirements;
review of duplicate confirmation statements; annual recertification of
compliance with codes of ethics; disclosure of personal holdings by certain
investment personnel prior to recommendation for purchase for the fund;
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. You may obtain a summary of the personal investing policy by
contacting the Secretary of the fund.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE -- FEBRUARY 28, 1997
<TABLE>
<CAPTION>
Net asset value and redemption price per share
<S> <C>
(Net assets divided by shares outstanding) $14.60
Maximum offering price per share $15.49
(100/94.25 of net asset value per share, which takes
into account the fund's current maximum sales
charge)
</TABLE>
INVESTMENT RESULTS
The fund's yield is 0.79% based on a 30-day (or one month) period ended
February 28, 1997, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
As of February 28, 1997, the fund's total return over the past twelve months
and average annual total returns over the past 5 and 10-year periods were
5.31%, 10.67% and 10.94%, respectively. The average total return ("T") is
computed by equating the value at the end of the period ("ERV") with a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formulas stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. The
fund will calculate total return for one-, five- and ten-year periods. In
addition, the fund may provide lifetime average total return figures.
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
Total return for the unmanaged indices will be calculated assuming reinvestment
of dividends and interest, but will not reflect any deductions for advisory
fees, brokerage costs or administrative expenses.
The fund may refer to results compiled by organizations such as CDA Investment
Technologies, Ibbottson Associates, Lipper Analytical Services, Morningstar,
Inc. and Wiesenberger Investment Companies Services. Additionally, the fund
may, from time to time, refer to results published in various periodicals,
including Barrons, Forbes, Fortune, Institutional Investor, Kiplinger's
Personal Finance Magazine, Money, U.S. News and World Report and The Wall
Street Journal.
The fund may from time to time illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may also, from time to time, refer to statistics compiled by the U.S.
Department of Commerce.
The investment results set forth below were calculated as described in the
fund's prospectus. The fund's results will vary from time to time depending
upon market conditions, the composition of the fund's portfolio and operating
expenses of the fund, so that any investment results reported by the fund
should not be considered representative of what an investment in the fund may
earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative
to the risks associated with the fund's investment objective and policies.
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the rolling
10-year periods since January 1, 1967 (127 in all), those funds have had better
total returns than the Standard and Poor's 500 Composite Stock Index in 91 of
the 127 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
IF YOU ARE CONSIDERING AMCAP FOR AN INDIVIDUAL RETIREMENT ACCOUNT . . .
<TABLE>
<CAPTION>
Here's how much you would have if you had invested $2,000 on March 1 of each year in
AMCAP over the past 5, 10, 15 and 20 years:
<S> <C> <C> <C>
5 Years 10 Years 15 years 20 Years
(3/1/92 - 2/28/97) (3/1/87 - 2/28/97) (3/1/82 - 2/28/97) (3/1/77 - 2/28/97)
$14,101 $39,574 $92,630 $243,105
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
If you had invested Periods ...and taken all
$10,000 in AMCAP 3/1 - 2/28 or 29 distributions in shares,
this many years ago... your investment would
| have been worth this
Number of Years much at Feb. 28, 1997
|
Value
<S> <C> <C>
1 1996-1997 $10,531
2 1995-1997 13,615
3 1994-1997 14,082
4 1993-1997 15,677
1992-1997 16,600
5
6 1991-1997 19,985
7 1990-1997 23,348
8 1989-1997 26,607
9 1988-1997 29,180
10 1987-1997 28,247
11 1986-1997 36,837
12 1985-1997 45,294
13 1984-1997 52,592
14 1983-1997 53,213
15 1982-1997 76,638
16 1981-1997 80,619
17 1980-1997 97,481
18 1979-1997 143,692
19 1978-1997 196,681
20 1977-1997 230,534
21 1976-1997 235,284
22 1975-1997 330,016
23 1974-1997 295,833
24 1973-1997 233,905
25 1972-1997 219,294
26 1971-1997 258,463
27 1970-1997 276,226
28 1969-1997 267,754
29 1968-1997 324,765
Lifetime *1967-1997 346,783
</TABLE>
* From May 1, 1967, the date the fund commenced operation.
<TABLE>
<CAPTION>
AMCAP VS. VARIOUS UNMANAGED INDICES
TOTAL RETURN CAPITAL APPRECIATION
Period AMCAP DJIA/1/ S&P Average AMCAP NYSE/4/ ASE/5/ NASDAQ
3/1 - 2/28 or 29 500/2/ Savings OTC/6/
Institution/3/
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 - 1997 +182% + 324% + 276% + 67% + 140% + 156% + 85% + 208%
1986 - 1996 + 230 + 346 + 286 + 71 + 177 + 162 + 118 + 206
1985 - 1995 + 214 + 343 + 274 + 77 + 161 + 152 + 99 + 179
1984 - 1994 + 252 + 382 + 322 + 88 + 186 + 187 + 124 + 214
1983 - 1993 + 220 + 348 + 331 + 99 + 156 + 186 + 118 + 156
1982 - 1992 + 335 + 505 + 440 + 112 + 242 + 249 + 213 + 253
1981 - 1991 + 280 + 364 + 322 + 122 + 184 + 167 + 104 + 129
1980 - 1990 + 294 + 387 + 347 + 126 + 194 + 182 + 133 + 169
1979 - 1989 + 409 + 356 + 369 + 125 + 282 + 201 + 301 + 226
1978 - 1988 + 535 + 366 + 389 + 125 + 381 + 211 + 370 + 262
1977 - 1987 + 669 + 304 + 360 + 125 + 487 + 199 + 484 + 349
1976 - 1986 + 502 + 201 + 270 + 123 + 361 + 145 + 398 + 298
1975 - 1985 + 587 + 198 + 261 + 119 + 422 + 144 + 489 + 289
1974 - 1984 + 430 + 130 + 165 + 113 + 304 + 75 + 332 + 168
1973 - 1983 + 315 + 98 + 113 + 106 + 219 + 42 + 235 + 118
1972 - 1982 + 170 + 47 + 66 + 95 + 111 + 10 + 99 + 43
1971 - 1981 + 202 + 79 + 108 + 85 + 147 + 41 + 204 + 95
1970 - 1980 + 167 + 76 + 92 + 79 + 120 + 30 + 158 N/A
1969 - 1979 + 76 + 38 + 45 + 75 + 45 - 2 + 8 N/A
1968 - 1978 + 56 + 33 + 41 + 72 + 30 - 3 N/A N/A
1967*- 1977 + 42 + 54 + 50 + 67 + 20 + 5 N/A N/A
</TABLE>
* From May 1, 1967, the date the fund commenced operation. N/A - Data for these
periods not available.
1. The Dow Jones Average of 30 Industrial stocks is comprised of stocks of 30
industrial companies such as General Motors and General Electric.
2. The Standard and Poor's 500 Stock Index is comprised of industrial,
transportation, public utilities and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
3. Based on figures supplied by the U.S. League of Savings Institutions and the
Federal Reserve Board which reflect all kinds of savings deposits, including
longer-term certificates. Savings deposits offer a guaranteed return of
principal and fixed rate of interest, but no opportunity for capital growth.
Maximum allowable rates were imposed by law during a portion of the period.
4. The New York Stock Exchange Composite Index is a capitalization weighted
index of all common stocks listed on the Exchange.
5. The American Stock Exchange Index is a capitalization weighted index of all
common stocks listed on the Exchange.
6. The National Association of Securities Dealers Automated Quotation Composite
Index of Over-the-Counter Stocks represents all domestic over-the-counter
stocks except those traded on exchanges and those having only one market maker,
covers some 3,500 stocks and is market value weighted.
Illustration of a $10,000 investment in AMCAP with
DIVIDENDS REINVESTED AND CAPITAL GAIN DISTRIBUTIONS TAKEN IN SHARES
(For the lifetime of the Fund May 1, 1967 through February 28, 1997)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
COST OF SHARES VALUE OF SHARES
Fiscal Annual Dividends Total From From From Total
Year End Dividends (cumulative) Investment Initial Capital Gains Dividends Value
Feb. 28 or 29 Cost Investment Reinvested Reinvested
1968* -- -- $10,000 $10,056 -- -- $10,056
1969 $ 75 $ 75 10,075 12,128 -- $84 12,212
1970 190 265 10,265 11,149 $ 430 256 11,835
1971 200 465 10,465 11,695 451 497 12,643
1972 244 709 10,709 13,540 522 840 14,902
1973 228 937 10,937 12,109 913 956 13,978
1974 196 1,133 11,133 8,493 1,697 847 11,037
1975 294 1,427 11,427 7,401 1,479 1,023 9,903
1976 328 1,755 11,755 10,075 2,014 1,794 13,883
1977 208 1,963 11,963 10,132 2,025 2,016 14,173
1978 263 2,226 12,226 11,657 2,330 2,625 16,612
1979 335 2,561 12,561 15,650 3,128 3,960 22,738
1980 438 2,999 12,999 22,674 4,531 6,336 33,541
1981 724 3,723 13,723 25,066 7,476 8,006 40,548
1982 2,594 6,317 16,317 22,185 10,812 9,646 42,643
1983 1,231 7,548 17,548 30,546 15,837 15,073 61,456
1984 1,591 9,139 19,139 30,094 15,602 16,432 62,128
1985 1,944 11,083 21,083 33,371 18,301 20,493 72,165
1986 1,548 12,631 22,631 38,983 23,855 25,900 88,738
1987 1,629 14,260 24,260 44,143 40,258 31,263 115,664
1988 3,017 17,277 27,277 39,058 42,406 30,573 112,037
1989 3,167 20,444 30,444 40,038 48,069 34,720 122,827
1990 3,160 23,604 33,604 40,942 60,465 38,620 140,027
1991 3,293 26,897 36,897 43,578 74,977 44,937 163,492
1992 2,156 29,053 39,053 49,831 93,202 53,823 196,856
1993 2,252 31,305 41,305 50,923 100,277 57,357 208,557
1994 1,918 33,223 43,223 48,889 126,209 57,039 232,137
1995 2,399 35,622 45,622 46,252 137,347 56,448 240,047
1996 3,363 38,985 48,985 54,237 186,287 69,821 310,345
1997 2,643 41,628 51,628 54,991 218,307 73,485 346,783
</TABLE>
The dollar amount of capital gain distributions during the period was $165,159
* From May 1, 1967, the date the fund commenced operations.
<TABLE>
<S> <C> <C> <C>
AMCAP Fund Investment Portfolio
February 28, 1997
- -------------------------------------------------------------------------------------------------------
Largest Industry Holdings
Business & Public Services 13.22%
Broadcasting & Publishing 9.09
Financial Services 8.40
Health & Personal Care 6.64
Data Processing & Reproduction 6.00
Other Industries 40.49
Cash & Equivalents 16.16
- -------------------------------------------------------------------------------------------------------
Largest Equity-Type Holdings
Walt Disney 4.12%
Philip Morris 3.67
Medtronic 3.66
Federal National Mortgage 3.64
Time Warner 3.46
Comcast 2.22
PacifiCare Health Systems 2.20
Gillette 2.19
Intel 2.01
Student Loan Marketing 1.95
- -------------------------------------------------------------------------------------------------------
Shares or Market Value Percent of
Principal (000) Net Assets
EQUITY-TYPE SECURITIES Amount
- -------------------------------------------------------------------------------------------------------
Business & Public Services - 13.22%
PacifiCare Health Systems, Inc., Class B/1/ 855000 $71,606
PacifiCare Health Systems, Inc., Class A/1/ 150000 12000 2.20%
United HealthCare Corp. 1290000 64339 1.69
CUC International Inc./1/ 1800000 42975
CUC International Inc., 3.00% convertible debentures 2002/2/ $6,000,000 6060 1.29
Federal Express Corp./1/ 940000 48410 1.27
Electronic Data Systems Corp. 1012800 45703 1.20
Avery Dennison Corp. 1000000 40375 1.06
Manpower Inc. 870200 32850 .86
Ceridian Corp./1/ 830000 32474 .85
American Management Systems, Inc./1/ 1150000 20125 .53
Interpublic Group of Companies, Inc. 400000 20050 .53
First Data Corp. 500000 18312 .48
WMX Technologies, Inc. 405000 12808 .34
Vivra Inc./1/ 400000 11900 .31
Humana Inc./1/ 600000 11775 .31
BDM International, Inc./1/ 200000 8400 .22
Value Health, Inc./1/ 131200 3149 .08
Broadcasting & Publishing - 9.09%
Time Warner Inc. 3216000 131,856 3.46
Comcast Corp., Class A special stock 4475000 79990
Comcast Corp., Class A 260000 4534 2.22
Viacom Inc., Class B/1/ 1962200 69167 1.82
Tele-Communications, Inc., Series A,
TCI Group/1/ 2079900 24699 .65
Tele-Communications, Inc., Series A,
Liberty Media Group/1/ 1167750 24523 .64
A. H. Belo Corp., Class A 300000 11325 .30
Financial Services - 8.40%
Federal National Mortgage Assn. 3460000 138400 3.64
Student Loan Marketing Assn. 700000 74112 1.95
Capital One Financial Corp. 1245000 49489 1.30
Federal Home Loan Mortgage Corp. 1374400 40888 1.07
ADVANTA Corp., Class B 213300 8559 .22
Associates First Capital Corp., Class A 175000 8444 .22
Health & Personal Care - 6.64%
Medtronic, Inc. 2150000 139213 3.66
Gillette Co. 1052500 83279 2.19
Pfizer Inc 330000 30236 .79
Data Processing & Reproduction - 6.00%
Oracle Corp./1/ 1817700 71345 1.87
Silicon Graphics, Inc./1/ 1750000 42219 1.11
Solectron Corp./1/ 630200 33322 .88
Intuit Inc./1/ 1039700 23523 .62
Sybase, Inc./1/ 1184200 19391 .51
International Business Machines Corp. 100000 14375 .38
Cisco Systems, Inc./1/ 200000 11125 .29
Sequent Computer Systems, Inc./1/ 560000 9625 .25
3Com Corp./1/ 100000 3311 .09
Leisure & Tourism - 5.80%
Walt Disney Co. 2112644 156864 4.12
Brinker International, Inc./1/ 2700000 32062 .84
Marriott International, Inc. 500000 26500 .70
Harrah's Entertainment, Inc./1/ 295000 5458 .14
Electronic Components - 5.61%
Intel Corp. 540000 76612 2.01
Texas Instruments Inc. 600000 46275 1.22
ADC Telecommunications, Inc./1/ 920000 24840 .65
Bay Networks, Inc./1/ 1300000 24700 .65
Analog Devices, Inc./1/ 825000 19181 .50
Linear Technology Corp. 275000 12513 .33
Seagate Technology/1/ 200000 9450 .25
Merchandising - 5.58%
AutoZone, Inc./1/ 1800000 44550 1.17
Viking Office Products, Inc./1/ 1850000 43706 1.15
Circuit City Stores, Inc. 1000000 31250 .82
Wal-Mart Stores, Inc. 950000 25056 .66
Cardinal Health, Inc., Class A 396393 24378 .64
Walgreen Co. 350000 14963 .39
Staples, Inc./1/ 625000 13516 .36
Intimate Brands, Inc., Class A 400000 7800 .20
Albertson's, Inc. 200000 7050 .19
Banking - 5.23%
Norwest Corp. 1400000 69650 1.83
Golden West Financial Corp. 900000 60975 1.60
Northern Trust Corp. 800000 34000 .89
Banc One Corp. 550000 24269 .64
SunTrust Banks, Inc. 200000 10275 .27
Beverages & Tobacco - 5.11%
Philip Morris Companies Inc. 1035000 139854 3.67
PepsiCo, Inc. 1200000 39450 1.04
Robert Mondavi Corp., Class A/1/ 366700 15035 .40
Telecommunications - 3.11%
Telephone and Data Systems, Inc. 1200000 48000 1.26
AirTouch Communications/1/ 1250000 34062 .89
MCI Communications Corp. 850000 30388 .80
AT&T Corp. 150000 5981 .16
Insurance - 1.07%
American International Group, Inc. 337500 40837 1.07
Transportation: Rail - 1.03%
Wisconsin Central Transportation Corp./1/ 1091700 39165 1.03
Machinery & Engineering - 0.90%
Thermo Electron Corp./1/ 1000000 34125 .90
Transportation: Airlines - 0.77%
Southwest Airlines Co. 750250 17631 .46
AMR Corp./1/ 150000 11794 .31
Recreation & Other Consumer Products - 0.59%
Broderbund Software, Inc./1/ 500000 14687 .39
Electronic Arts/1/ 250000 7813 .20
Electronic Instruments - 0.53%
Applied Materials, Inc./1/ 400000 20250 .53
Aerospace & Military Technology - 0.46%
General Motors Corp., Class H 300000 17700 .46
Food & Household Products - 0.41%
Colgate-Palmolive Co. 150000 15525 .41
Industrial Components - 0.29%
Danaher Corp. 252000 10899 .29
Chemicals - 0.23%
RPM, Inc. 500000 8812 .23
Construction & Housing - 0.10%
Jacobs Engineering Group Inc./1/ 150000 3862 .10
Electrical & Electronics - 0.07%
Lucent Technologies Inc. 48612 2619 .07
Miscellaneous
Other equity-type securites in initial period of
acquisition 136959 3.60
-------------------------
TOTAL EQUITY-TYPE SECURITIES (cost: $2,054,610,000) 3191602 83.84
Principal
Amount
SHORT-TERM SECURITIES (000)
- -------------------------------------------------------------------------------------------------------
Corporate Short-Term Notes - 13.59%
Lucent Technologies Inc. 5.27%-5.32% due 3/10-5/27/97 $69,000 68541 1.80
Sara Lee Corp. 5.30% due 3/26/97 60000 59769 1.57
Coca-Cola Co. 5.23%-5.28% due 4/2-4/7/97 56,900 56617 1.49
H.J. Heinz Co. 5.24%-5.33 due 3/4-4/3/97 49900 49746 1.31
Weyerhaeuser Co. 5.28%-5.30% due 3/3-4/10/97 45500 45437 1.19
Hershey Foods Corp. 5.28% due 3/13-3/21/97 44000 43911 1.15
National Rural Utilities Cooperative Finance Corp. 5.25%-
5.29% due 3/24-5/14/97 44100 43801 1.15
Warner-Lambert Co. 5.24%-5.30% due 3/5-6/13/97 40600 40263 1.06
Motorola Credit Corp. 5.23%-5.28% due 4/3-4/8/97 30925 30768 .81
IBM Credit Corp. 5.31% due 3/19-4/15/97 28900 28739 .75
BellSouth Telecommunications, Inc. 5.31% due 3/7/97 23,500 23476 .62
Ameritech Corp. 5.25%-5.30% due 3/4-4/18/97 17400 17368 .46
General Electric Capital Corp. 5.30% due 4/1/97 9000 8957 .23
Federal Agency Discount Notes - 2.64%
Federal Home Loan Bank 5.20% due 5/15/97 49000 48456 1.27
Federal National Mortgage Assn. 5.22%-5.34% due
3/13-5/13/97 33200 32918 .87
Federal Home Loan Mortgage Corp. 5.25%-5.26% due
3/12-3/27/97 19134 19065 .50
Certificates of Deposit - 0.42%
Morgan Guaranty Trust Co. of New York 5.40% due 4/28/97 16000 16001 .42
-------------------------
TOTAL SHORT-TERM SECURITIES (cost:
$633,874,000) 633833 16.65
-------------------------
TOTAL INVESTMENT SECURITIES (cost:
$2,688,484,000) 3825435 100.49
Excess of payables over cash and receivables 18617 .49
-------------------------
NET ASSETS $3,806,818 100.00%
======== ========
/1/ Non-income-producing securities.
/2/ Purchased in a private placement transaction; resale to the
public may require registration or sale only to qualified
institutional buyers.
See Notes to Financial Statements
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.
Equity-type securities appearing in the portfolio
since August 31,1996
- -----------------------------------------------------------------
Applied Materials
AutoZone
Intimate Brands
Lucent Technologies
Viking Office Products
Equity-type securities eliminated from the portfolio
since August 31, 1996
- -----------------------------------------------------------------
Amgen
AMP
AVX
Delta Air Lines
Digital Equipment
Duracell International
Informix
LIN Television
Loctite
Loewen Group
LSI Logic
Maxim Integrated Products
Motorola
Pitney Bowes
Promus Hotel
Tandem Computers
UST
</TABLE>
<TABLE>
<S> <C> <C>
AMCAP FUND Financial Statements
- ------------------------------------------- -------- --------
Statement of Assets and Liabilities
at February 28, 1997 (dollars in thousands)
- ------------------------------------------- -------- --------
Assets:
Investment securities at market
(cost: $2,688,484) $3,825,435
Cash 246
Receivables for--
Sales of fund's shares $ 1,916
Dividends and accrued interest 2,059 3,975
-------- --------
3,829,656
Liabilities:
Payables for--
Purchases of investments 16,204
Repurchases of fund's shares 3,321
Management services 1,169
Accrued expenses 2,144 22,838
-------- --------
Net Assets at February 28, 1997--
Equivalent to $14.60 per share on
260,734,893 shares of $1 par value
capital stock outstanding (authorized
capital stock--300,000,000 shares) $3,806,818
==========
Statement of Operations for the year
ended February 28, 1997
-------- --------
Investment Income:
Income:
Dividends $ 29,858
Interest 25,351 $ 55,209
--------
Expenses:
Management services fee 14,491
Distribution expenses 6,849
Transfer agent fee 2,685
Reports to shareholders 179
Registration statement and prospectus 143
Postage, stationery and supplies 561
Directors' fees 111
Auditing and legal fees 58
Custodian fee 104
Taxes other than federal income tax 52
Other expenses 117 25,350
-------- --------
Net investment income 29,859
--------
Realized Gain and Unrealized
Depreciation on Investments:
Net realized gain 476,706
Net change in unrealized
appreciation on investments:
Beginning of year 1,230,693
End of year 1,136,951
--------
Net unrealized depreciation
on investments (93,742)
--------
Net realized gain and unrealized
depreciation on investments 382,964
--------
Net Increase in Net Assets Resulting
from Operations $412,823
==========
See Notes to Financial Statements
Statement of Changes in Net
Assets
- --------------------------------------------- -------- --------
Year ended February 28 or 29
1997 1996
Operations: -------- --------
Net investment income $ 29,859 $ 38,834
Net realized gain on investments 476,706 366,352
Net unrealized appreciation (depreciation)
on investments (93,742) 448,727
-------- --------
Net increase in net assets
resulting from operations 412,823 853,913
-------- --------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (30,602) (40,721)
Distributions from net realized
gain on investments (334,007) (284,911)
-------- --------
Total dividends and distributions (364,609) (325,632)
-------- --------
Capital Share Transactions:
Proceeds from shares sold:
31,306,396 and 36,019,892
shares, respectively 439,313 492,283
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
23,920,709 and 22,741,455 shares,
respectively 342,841 305,933
Cost of shares repurchased:
50,858,558 and 44,261,999
shares, respectively (716,380) (603,782)
-------- --------
Net increase in net assets
resulting from capital share transactions 65,774 194,434
-------- --------
Total Increase in Net Assets 113,988 722,715
Net Assets:
Beginning of year 3,692,830 2,970,115
-------- --------
End of year (including undistributed
net investment income of $5,029 and
$5,772, respectively) $3,806,818 $3,692,830
========== ==========
See Notes to Financial Statements
</TABLE>
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 fund
seeks long-term growth of capital by investing in growing, profitable
companies. The following paragraphs summarize the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
Equity-type securities traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities, and securities for which no sale was reported
on that date, are stated at the last quoted bid price. 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 by the Board of Directors or a committee thereof.
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. 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 $104,000 includes $24,000 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, 1997, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $1,136,951,000, of which
$1,265,096,000 related to appreciated securities and $128,145,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended February 28, 1997. The cost
of portfolio securities for book and federal income tax purposes was
$2,688,484,000 at February 28, 1997.
3. The fee of $14,491,000 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, 1997,
distribution expenses under the Plan were $6,849,000. As of February 28, 1997,
accrued and unpaid distribution expenses were $1,858,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $2,685,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $638,000 (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,
1997, aggregate amounts deferred and earnings thereon were $275,000.
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, 1997, accumulated undistributed net realized gain on
investments was $264,403,000 and additional paid-in capital was $2,139,700,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $772,063,000 and $1,220,237,000, respectively, during
the year ended February 28, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C>
AMCAP FUND
Per-Share Data and Ratios
- ----------------------------------------- ----- ----- ----- ----- -----
Year ended February 28 or 29
----- ----- ----- ----- -----
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
Net Asset Value, Beginning
of Year $ 14.40 $ 12.28 $ 12.98 $ 13.52 $ 13.23
----- ----- ----- ----- -----
Income from Investment
Operations:
Net investment income .12 .16 .14 .12 .13
Net realized and unrealized
gain on investments 1.51 3.32 .24 1.28 .63
----- ----- ----- ----- -----
Total income from investment
operations 1.63 3.48 .38 1.40 .76
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment
income (.12) (.17) (.13) (.12) (.15)
Distributions from net realized
gains (1.31) (1.19) (.95) (1.82) (.32)
----- ----- ----- ----- -----
Total distributions (1.43) (1.36) (1.08) (1.94) (.47)
----- ----- ----- ----- -----
Net Asset Value, End of Year $ 14.60 $ 14.40 $ 12.28 $ 12.98 $ 13.52
======= ======= ======= ======= =======
Total Return/1/ 11.74% 29.29% 3.41% 11.31% 5.94%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $3,807 $3,693 $2,970 $3,063 $3,016
Ratio of expenses to average `
net assets .69% .71% .71% .72% .73%
Ratio of net income to
average net assets .81% 1.16% 1.16% .89% 1.02%
Average commissions paid
per share/2/ 5.05 cents 5.95 cents 5.95 cents 6.54 cents 7.28 cents
Portfolio turnover rate 24.14% 35.16% 17.92% 22.18% 14.72%
/1/Calculated without deducting a sales charge. The maximum sales charge is 5.75% of
the fund's offering price.
/2/ Brokerage commissions paid on portfolio transactions increase
the cost of securities purchased or reduce the proceeds of
securities sold, and are not separately reflected in the fund's
statement of operations. Shares traded on a principal basis
(without commission), such as fixed-income transactions, are excluded.
</TABLE>
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.(the "fund"), including the schedule of portfolio investments,
as of February 28, 1997, and the related statement 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 per-share data and ratios for each of the five
years in the period then ended. These financial statements and 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 the 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 include confirmation of securities owned
as of February 28, 1997 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other procedures. 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 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, 1997, 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.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 26, 1997
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 33% of the dividends
paid by the fund from net investment income represent qualifying dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
