[The American Funds Group(r)]
AMCAP FUND
[illustration: woman's eye, close-up of measuring tape, jigsaw puzzle, median
line of highway]
["AMCAP" printed vertically]
How We Invest in Businesses for the Long Term
Annual Report for the year ended February 28, 1998
[Begin sidebar]
AMCAP'S TOTAL RETURN YEAR BY YEAR
For the past 10 fiscal years (ended 2/28 or 2/29)
1989 +9.6%
1990 +14.0
1991 +16.8
1992 +20.4
1993 +5.9
1994 +11.3
1995 +3.4
1996 +29.3
1997 +11.7
1998 +37.0
Total return over entire 10-year period +324.0
Average annual compound return +15.5
About our cover: Elements of AMCAP's investment process are illustrated by the
images in the square. Eye: identification. Tape measure: analysis. Puzzle:
fitting all the pieces of investment information together. Road: investing for
the long term.
[End sidebar]
AMCAP FUND(r) seeks long-term growth of capital by investing in growing,
profitable companies.
AMCAP Fund is one of the 28 mutual funds in The American Funds Group,(r)
managed by Capital Research and Management Company. Since 1931, Capital has
invested with a long-term focus based on thorough research and attention to
risk.
AMCAP'S LIFETIME RESULTS
For the period May 1, 1967 to February 28, 1998 with all distributions
reinvested
<TABLE>
<CAPTION>
<S> <C> <C>
Total Average Annual
Return Compound Return
AMCAP +4,944.5% +13.6%
Standard & Poor's 500 Composite Index* +3,407.9 +12.2
Consumer Price Index (inflation)(+) + 389.1 + 5.3
</TABLE>
*This index is unmanaged.
(+)Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended March 31, 1998 (the
most recent calendar quarter), assuming payment of the 5.75% maximum sales
charge at the beginning of the stated periods:
Total Average Annual
Return Compound Return
Ten years + 326.69% + 15.61%
Five years + 120.73 + 17.16
One year + 40.94 -
Sales charges are lower for accounts of $50,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
We are pleased to report that fiscal 1998 was AMCAP Fund's best year in over a
decade - and the fourth-best year in the fund's 31-year history.
The value of your investment grew 37.0% in the 12-month period ended February
28 if you reinvested dividends totaling 10 cents a share and capital gain
distributions totaling $2.47 per share. Meanwhile, the unmanaged Standard &
Poor's 500 Composite Index, a measure of the stocks of 500 large U.S.
companies, increased 35.0% on a reinvested basis.
AMCAP surpassed the 30.4% total return of the average growth fund, as measured
by Lipper Analytical Services, and also exceeded other indexes that we often
use to evaluate its returns. The Russell 2000 Index, a gauge of smaller U.S.
stocks, was up 30.0% for the period and Standard & Poor's 400 Midcap Index,
which tracks medium-size companies, rose 36.5%. We track these various
unmanaged indexes because AMCAP invests in a mix of large, medium-size and
small companies that have demonstrated proven earnings growth, solid management
and a strong business outlook.
Much of the credit for fiscal 1998's total return of 37.0% can be traced to a
resurgence in cable and entertainment stocks and contributions from financial
services, banking and pharmaceutical holdings.
CABLE TELEVISION stocks rebounded in fiscal 1998 after a difficult 1997.
Investors recognized that cable companies' prospects were brighter than they
had previously thought. Going forward, cable companies should benefit from
improved cash flow and more opportunities for revenue growth driven by new
technologies such as cable modems and digital set-top boxes. Furthermore,
direct satellite television systems have not turned out to be the serious
competitive threat that many had feared. In fiscal 1998 Tele-Communications,
TCI Group, the largest operator of cable TV systems in the U.S., rose 144.7%.
Comcast, one of the country's fastest growing cable operators and one of the
fund's largest holdings, increased 96.0% in price.
In MEDIA AND ENTERTAINMENT, two stocks that ran into some difficulties in the
1997 fiscal year also came back strongly in fiscal 1998. Buoyed in part by good
results from its cable TV operations, Time Warner, the fund's largest holding,
gained 64.6%. Disney, AMCAP's second-largest holding, was up 50.8% on the
strength of solid results from its theme parks, movies and other operations. A
year ago, investors reacted negatively to large acquisitions and heavy
investment spending that had affected earnings of both companies.
BANKS AND FINANCIAL SERVICES companies did well because of continued low
interest rates and a merger and consolidation trend that should further reduce
costs and improve efficiency. The federally sponsored mortgage company, Fannie
Mae, rose 59.5%. Capital One Financial, a major credit card issuer, was up
69.0%. Norwest, a large bank holding company, gained 64.6%. Fannie Mae and
Norwest were among our 10 largest holdings at fiscal year-end.
Many of the fund's health care holdings likewise had strong years. Pfizer, one
of the world's largest pharmaceutical companies, was up 93.2%, while Medtronic,
the leading manufacturer of pacemakers and other medical devices, rose 64.1%.
The fund's health maintenance companies, however, continued to struggle with
increased competition, higher-than-expected costs and regulatory problems.
TECHNOLOGY companies experienced mixed results. Solectron, which provides
computer manufacturing outsourcing services to electronics firms, rose 83.0%.
But several computer-related firms didn't live up to investor expectations in a
volatile year. These include software developer Oracle (down 5.9%), Silicon
Graphics, a maker of graphics workstations (off 37.6%), and disk-drive maker
Seagate Technology (down 48.5% - our worst holding for the year).
While we are pleased with the results of this past fiscal year, we would be
remiss if we did not caution investors about the future. It has been more than
seven years since the last correction of 15% or more by the S&P 500 - the
longest such period in the past 60 years. Strong periods like this have often
been followed by greater volatility and lower market returns. Currently, with
the economy strong, interest rates low and inflation subdued, it is hard to
imagine what might go wrong. However, market valuations by many measures are at
or above historic highs, so even a modest reduction in investor expectations or
business fundamentals could have a negative effect on the market.
In particular, the Asian economic crisis bears close watching. It has had a
devastating impact on parts of Asia, but so far the effects have generally been
contained to the region itself. The impact on companies in AMCAP's portfolio
that have exposure to Asian demand has been minimal, although we will continue
to monitor the situation carefully.
As we move forward in the new fiscal year, it is important to note that the
fund expects to declare a capital gain distribution in June. Many shareholders
have found that reinvesting capital gain distributions can be an effective way
to build capital growth over the long term.
AMCAP's uniqueness as a growth fund stems from its emphasis on quality growth
companies with a proven growth record, strong management and a positive
outlook. We thought it would be worthwhile to examine how our analysts and
portfolio counselors select quality growth companies. Besides taking you behind
the scenes, our feature article, beginning on page 6, stresses the importance
of investing for the long term, a concept that makes sense in any market
environment.
On a personal note, we wish to thank Walter Stern, who recently retired as
chairman of AMCAP, for his many years of service to the fund.
We look forward to reporting to you again in the autumn.
Cordially,
/s/ R. Michael Shanahan /s/ Claudia P. Huntington
R. Michael Shanahan Claudia P. Huntington
Chairman of the Board President
April 10, 1998
[Begin sidebar]
In December, R. Michael Shanahan, former president of the fund and current
chairman of the board of the fund's adviser, Capital Research and Management
Company, was elected chairman of AMCAP Fund.
Claudia P. Huntington, a portfolio counselor for AMCAP and a senior vice
president of Capital Research and Management Company, was elected president of
the fund. For more information on board elections, please see page 25.
[End sidebar]
HOW A $10,000 INVESTMENT HAS GROWN
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended February 28, 1998)
Ten Years +14.86%
Five Years +16.51
One Year +29.10
*Assumes reinvestment of all distributions and payment of the 5.75% current
maximum sales charge at the beginning of the stated periods.
$475,003(1,2)
AMCAP with
dividends reinvested
$350,789
S&P 500 with
dividends reinvested
$48,912(3)
Consumer Price
Index (inflation)
$10,000(1)
original
investment
[begin chart]
<TABLE>
<CAPTION>
Year ended 2/28 or 29 S&P 500 with Consumer Price Index
dividends reinvested (inflation) /3/
<S> <C> <C>
5/1/67 $10,000 $10,000
1968 9,752 10,332
1969 11,047 10,816
1970 10,406 11,480
1971 11,678 12,054
1972 13,274 12,477
1973 14,310 12,961
1974 12,737 14,260
1975 11,297 15,861
1976 14,396 16,858
1977 14,997 17,855
1978 13,720 19,003
1979 15,999 20,876
1980 19,949 23,837
1981 24,234 26,556
1982 21,983 28,580
1983 30,461 29,577
1984 33,768 30,937
1985 40,829 32,024
1986 53,293 33,021
1987 69,042 33,716
1988 67,142 35,045
1989 75,100 36,737
1990 89,250 38,671
1991 102,334 40,725
1992 118,773 41,873
1993 131,422 43,233
1994 142,336 44,320
1995 152,779 45,589
1996 205,875 46,798
1997 259,792 48,218
1998 350,789 48,912
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Value 1968# 1969 1970 1971
Dividends Reinvested - $75 190 200
Value At Year End /1/ $10,057 12,212 11,835 12,643
AMCAP TOTAL RETURN 0.6% 21.4 -3.1 6.8
Total Value 1972 1973 1974 1975
Dividends Reinvested 244 228 196 294
Value At Year End/1/ 14,902 13,978 11,037 9,903
AMCAP TOTAL RETURN 17.9 -6.2 -21.0 -10.3
Total Value 1976 1977 1978 1979
Dividends Reinvested 328 208 263 335
Value At Year End/1/ 13,883 14,173 16,612 22,738
AMCAP TOTAL RETURN 40.2 2.1 17.2 36.9
Total Value 1980 1981 1982 1983
Dividends Reinvested 438 724 2,594 1,231
Value At Year End/1/ 33,541 40,548 42,643 61,456
AMCAP TOTAL RETURN 47.5 20.9 5.2 44.1
Total Value 1984 1985 1986 1987
Dividends Reinvested 1,591 1,944 1,548 1,629
Value At Year End/1/ 62,128 72,165 88,738 115,664
AMCAP TOTAL RETURN 1.1 16.2 23.0 30.3
Total Value 1988 1989 1990 1991
Dividends Reinvested 3,017 3,167 3,160 3,293
Value At Year End/1/ 112,037 122,827 140,027 163,492
AMCAP TOTAL RETURN -3.1 9.6 14.0 16.8
Total Value 1992 1993 1994 1995
Dividends Reinvested 2,156 2,252 1,918 2,399
Value At Year End/1/ 196,856 208,557 232,137 240,047
AMCAP TOTAL RETURN 20.4 5.9 11.3 3.4
Total Value 1996 1997 1998
Dividends Reinvested 3,363 2,643 2,465
Value At Year End/1/ 310,345 346,783 475,003
AMCAP TOTAL RETURN 29.3 11.7 37.0
</TABLE>
Average annual compound return for 30 3/4 years 13.3%(1)
[end chart]
(1) These figures, unlike those shown elsewhere in this report, reflect payment
of the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net
amount invested was $9,425. As outlined in the prospectus, the sales charge is
reduced for larger investments. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares. The
maximum initial sales charge was 8.5% prior to July 1, 1988. Results shown do
not take into account income or capital gain taxes.
(2) Includes reinvested dividends of $44,093 and reinvested capital gain
distributions of $226,391.
(3) Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
# For the period May 1, 1967 (when the fund began operations) through February
29, 1968.
The indexes are unmanaged and do not reflect sales charges, commissions or
expenses.
Past results are not predictive of future results.
CHARTING THE COURSE OF AN INVESTMENT IN AMCAP
Here's how a $10,000 investment in AMCAP grew between May 1, 1967 - when the
fund began operations - and February 28, 1998. As you can see, that $10,000
grew to $475,003 with all distributions reinvested, a gain of 4,650%. Over the
same period, $10,000 would have grown to $350,789 in Standard & Poor's 500
Composite Index. The chart also records the fund's progress relative to the
rate of inflation as measured by the Consumer Price Index.
The fund's year-by-year results appear in the table under the chart. You can
use this table to estimate how much the value of your own holdings has grown.
Let's say, for example, that you have been reinvesting all your dividends and
capital gain distributions since February 29, 1988. At that time, according to
the table, the value of the investment illustrated here was $112,037. Since
then, it has more than quadrupled in value to $475,003. Thus, in that same
10-year period, the value of your investment - regardless of its size - has
also more than quadrupled.
HOW AMCAP INVESTS IN BUSINESSES FOR THE LONG TERM
[watermark: "AMCAP" printed vertically]
"BUY QUALITY GROWTH COMPANIES AND HOLD THEM." The approach sounds simple. But
if that was all there was to it, investing in the stock market would be a
cinch. Professional investment managers would not be in demand - and mutual
funds wouldn't be so popular.
Unfortunately, what seems simple in principle is complicated and difficult in
practice. Most people can identify the leading growth companies. Everyone knows
that Gillette, Wal-Mart and Coca-Cola are great companies - and their high
stock prices reflect that. The problem is that it's possible to fill a
portfolio with great companies - and still not make a good return on your
investment because you paid too much for their stocks.
High expectations are sometimes justified, but just as often they are not. When
stocks are highly valued, any little misstep or earnings setback can send a
company's stock price plummeting. At that point, do you sell, hang on or buy
more shares? Individual investors can't get the company president on the
telephone to ask what is going on. Nor do they have contacts among the
company's competitors, suppliers and customers to ascertain exactly how serious
the problem may be.
WE VALUE COMPANIES - NOT STOCKS
That's where investment professionals and mutual funds come in. AMCAP Fund has
been investing in growth companies for 31 years, through up and down market
cycles. "AMCAP's objective is to invest in quality businesses when their stock
prices do not fully reflect their fundamental values or prospects," says
Michael Shanahan, AMCAP's new chairman and a long-time portfolio counselor of
the fund. AMCAP invests with the intention of holding these stocks for the long
term.
"We work very hard to identify and analyze both a company's past and its future
potential," says Claudia Huntington, the fund's new president and a former
technology analyst.
In contrast with individual investors, who typically rely on news media for
accounts of what is happening to their holdings, AMCAP has a large number of
investment analysts who intensely study individual companies and industries.
They interview hundreds of corporate executives, suppliers, customers and
competitors of companies that AMCAP holds or is considering for investment.
[illustration: "1998" in quadrants]
WHAT ARE THE CHARACTERISTICS OF AN AMCAP STOCK?
Which companies qualify as good long-term investments for AMCAP? Claudia
Huntington says: "We look for companies with a history of steady, above-average
earnings or cash flow growth with a positive outlook. We focus on quality of
management and growth potential for the long term rather than the next
quarter's earnings projections."
STEADY GROWTH: The company should grow faster than the general market with less
fluctuation in earnings. The important consideration, Claudia says, is to
determine whether you can count on the company to produce reliable earnings
increases year after year. The ideal AMCAP stock would have at least several
consecutive years of sales and earnings per share gains and no operating
losses.
SOLID MANAGEMENT: According to Claudia, the fund's investment professionals try
to find company executives "who truly understand their business and what it
takes to succeed." They must have the experience and know-how to cope with
rapid growth and should have compensation programs to attract and hold key
people. They should also keep the interests of company shareholders in the
forefront of their minds.
SUSTAINABLE MARKET ADVANTAGE: Not only must the company have a history of
growing earnings, it should also have a competitive advantage and opportunities
to expand its profit margins, says Tim Armour, a portfolio counselor for the
fund. Claudia's favorite question for executives when she visits a company is:
"What do you want your company to look like five years from now?"
REASONABLE STOCK PRICE: "There are only a handful of truly great companies that
deliver large earnings increases every year <UNDEF> and most times they are
priced accordingly," says Michael Shanahan. But occasionally, a negative
development happens in an industry or to a company itself. Sometimes, investors
overreact and sell shares indiscriminately <UNDEF> and the stock price falls
sharply. That's when AMCAP prefers to buy shares of these companies. In other
situations, analysts seek to find growing companies that are not well
understood by most other investors and are therefore still priced reasonably.
WE INVEST IN LARGE, MEDIUM AND SMALL COMPANIES
The size of the company is not a major consideration. AMCAP's portfolio
includes large, medium-size and small companies. In all categories, however,
quality remains the key.
Fannie Mae, one of our largest holdings, fits the definition of a large company
- - its revenues were $27.8 billion last year. Over the past three years, the
company's earnings per share grew at a compound annual rate of 13.0%.
Solectron, a contract manufacturer for electronics companies, is medium-size by
AMCAP's standards; it had 1997 revenues of $3.7 billion, and its earnings per
share grew at 26.0% annually over the past three years. Mondavi, a California
producer of premium table wines, is a "small" company, with 1997 revenues of
$300.8 million; its earnings per share grew at a rate of 23.7% a year over the
past three years. Each of these companies exceeded the 9.4% annual earnings per
share growth of the unmanaged Standard & Poor's 500 Stock Composite Index, a
standard measure of the largest U.S. corporations, over the same period.
Like other investors, AMCAP's portfolio counselors are concerned about
short-term fluctuations in a company's stock price, but if the company's
fundamentals remain sound, they will typically hold on for the long term. "We
don't think of trading in and out of companies," Claudia says. "We think of
investing in businesses rather than stocks. In an ideal world, our holding
period for these companies would be measured in years or decades, not months."
FINDING QUALITY GROWTH
Now That We've Explored the Kinds of Companies AMCAP Seeks To Invest In, let's
discover how AMCAP's analysts go about finding quality growth companies.
Scott Bonham covers technology companies, one of the fund's largest industry
holdings. Prior to joining the fund's investment adviser, Capital Research and
Management Company (CRMC), in 1996, Scott was responsible for marketing
computer workstations and worked as a business consultant.
"Sometimes we find successful companies no one else knows about," he says. "But
most of the time we are looking at companies that have already been discovered.
We are trying to find out whether their success is a fluke or whether it will
continue."
The question is important because, inevitably, some of today's growth companies
will be tomorrow's also-rans. Of these, some will revive and resume their
growth, but others will fade. After all the shaking out, a few companies will
continue to maintain their earnings growth year in and year out.
[photo collage: Scott Bonham, Greg Johnson, Blair Frank, computer chip, retail
store mannequins, close-up of machine]
[Begin sidebar]
left to right:
SCOTT BONHAM covers technology companies.
GREG JOHNSON is the fund's retail analyst.
BLAIR FRANK follows emerging industries.
[End sidebar]
WHY NETWORKING IS IMPORTANT
In Scott's quest to find steady growth companies, he spends a lot of time
developing relationships with management, competitors and suppliers. Covering
the Silicon Valley from CRMC's San Francisco office, he has developed a source
list of hundreds of industry and company contacts. "To cover technology, you
have to develop a perspective on the entire industry. Things change so fast,"
he says. "You have to keep building your network. Managers move often from
company to company. You have to get to know them personally. You have to
develop trust in them to do what they say they will do. The more experience you
get and the more people you know, the better off you are when you make a
judgment call on a company."
Firsthand knowledge of the managers, the companies and the industry is
extremely important in technology. All companies are vulnerable to changes in
investor attitudes, but technology companies have been among the most
sensitive. In addition, most of these companies lack a dividend yield that can
cushion stock prices in market declines.
There is also the matter of expectations. Generally, the higher the expected
growth rate of a company, the higher the price investors are willing to pay.
However, when valuations are high and expectations are not met, the market can
punish these stocks viciously - even if earnings show a positive result on an
absolute basis. Similarly, earnings that surpass projections can lead to sharp
price increases. This is why Scott needs to monitor AMCAP's technology holdings
- - to make sure that they will be able to continue to produce steady earnings
increases.
FINDING A COMPANY CULTURE AND A COMPETITIVE ADVANTAGE
GREG JOHNSON, who follows retail companies, looks for "a positive company
culture." A positive company culture is hard to define, but it's important
because employees need to understand and believe in the company's strategies
and goals. Happy and motivated employees lead to satisfied customers and sales
increases. Wal-Mart accomplishes this by encouraging employees to think like
owners and take responsibility, Greg says. The late Sam Walton, founder of
Wal-Mart, exemplified outstanding management. "He motivated ordinary people to
do extraordinary things. He created an atmosphere where risk-taking was
allowed."
A retail company also needs a competitive advantage that is sustainable for the
long term. For example, with Wal-Mart, its competitive edge is a low-cost
structure; with the clothing chain Gap Stores, it's merchandising expertise.
Greg seeks to find these attributes by visiting stores and talking to managers,
employees and customers.
Prior to joining Capital in 1993, Greg worked as a certified public accountant
and field services audit manager. Analyzing income statements and balance
sheets is important, he says, but he also gives significant weight to "learning
how to interact with people to get information. It's like putting a jigsaw
puzzle together."
TALKING WITH A PRODUCT'S END USERS
JAMES TERRILE covers the medical device industry, searching for products that
will significantly impact a company's earnings. He spends much of his time
talking to doctors, the end users of medical instruments. He attends medical
conferences and trade shows and checks clinical trial results. "Sometimes the
devil is in the details," he says.
Technology shifts occur rapidly in this industry. After the initial launch of a
product, a company will upgrade a medical device within six months to a year.
Therefore, patents, technology, innovation and leadership are paramount. "This
is a highly competitive, price-sensitive market, driven by technology," he
says. "So it is absolutely essential to talk to the end users about a product's
strengths and weaknesses."
[photo collage: Alexandra, Jarilowsky, James Terrille, surgery room,
stethoscope]
[Begin sidebar]
left to right:
ALEXANDRA JARISLOWSKY covers the health care service industry.
JAMES TERRILE follows medical device companies.
[End sidebar]
CONSTANTLY MONITORING
Sometimes Entire Industries Run Into Trouble for an Extended Period of Time -
and it's the analysts' job to recommend the sale of stocks as well as their
purchase. Alexandra Jarislowsky, who tracks the health care service industry,
sold a number of investments last year, particularly in the health maintenance
organization (HMO) group. The reason: "There was a vast discrepancy between
what certain companies said they could earn and what I thought they could
realistically earn."
DECIDING WHEN TO SELL (OR NOT TO BUY) IS ALSO IMPORTANT
All in all, it was a very rough year for the health care industry. In 1997, the
HMO industry did not adequately price its product in the face of accelerating
cost trends, Alexandra says. The assimilation of large acquisitions also hurt
many companies.
For the long term, Alexandra says she is "not optimistic about the growth
prospects for the HMOs. In the coming year, however, some companies may
recover." She says she finds hospital management companies more interesting
than HMOs as investments.
To help analysts understand these complicated and fast-moving trends, CRMC
provides them with a wide array of research tools. The resources available are
"unbelievable," says Alexandra. "We have access to every possible publication
and information service, which allows me to do a lot of background digging on
health care service companies." So if and when selected companies are poised to
continue their past earnings growth, Alexandra intends to be ready to increase
her investments in health care.
LOOKING OUTSIDE THE TRADITIONAL INDUSTRY CATEGORIES
BLAIR FRANK covers "emerging companies" that do not show up in traditional
industry lists. One of his current favorites is outsourcing companies - firms
that provide contract work for other companies. "Outsourcing is a solution for
lots of companies as markets get more competitive," he says. "Companies find
what they do best and keep it. They outsource the rest to third-party providers
who can do the work more cheaply and efficiently."
Personal computer profitability used to be high, but due to competition, price
per unit has dropped. "What many computer companies do best is product design
and marketing," Blair says. "They have become marketing companies that have
established a brand and a distribution channel. They have contract
manufacturers assemble the computers at separate plants around the world."
Solectron, one of AMCAP's larger holdings, is an example of an outsourcing
company that has delivered consistent financial results year after year.
MANAGING THE PORTFOLIO
Like the Other American Funds, AMCAP Relies on a Process of Investing Called
the Multiple Portfolio Counselor System.
[photo collage: Bill Newton, James B. Lovelace, Claudia Huntington, Tim
Armour, Mike Shanahan]
DIVIDING THE PORTFOLIO INTO SIX PARTS
The process works like this: AMCAP's assets are divided into six segments. Five
pieces are individually managed by Claudia Huntington, Michael Shanahan, Tim
armour, James B. Lovelace and Bill Newton. All are veteran investment
professionals with many years of experience - an average of about 24 years
among them.
THE PORTFOLIO COUNSELORS' ROLE
These five portfolio counselors manage their parts of AMCAP as if the segments
were separate funds. They develop their own approaches, conduct some of their
own research, work with analysts and invest their portfolios in the way they
think best meets AMCAP's "proven growth" philosophy.
THE RESEARCH PORTFOLIO
A group of research analysts has responsibility for the sixth segment of the
fund, which consists of just under 30% of AMCAP's assets. At many other
investment firms, research analysts simply make recommendations to others on
the purchase and sale of stocks. At CRMC, they have the added opportunity to
invest in companies they believe in.
In brief, portfolio counselors are "generalists" who select from a wide range
of investments; research analysts are "specialists" who invest in the
industries they follow.
SMOOTHING OUT THE PEAKS AND VALLEYS OF INVESTING
The American Funds have had 40 years to fine-tune this system, which combines
the best elements of individual responsibility with teamwork. Over the years,
having more than one person manage each fund's assets has tended to smooth out
the peaks and valleys of investing and has provided a measure of consistency,
continuity and flexibility. It also provides diversification of styles and
approaches. While one portfolio counselor may be experiencing an off-year,
another may be having an outstanding one.
THE BOTTOM LINE: LONG-TERM INVESTING RESULTS
The multiple portfolio counselor system approach certainly has worked well for
AMCAP. There have been periods when the fund outpaced the market and times when
it didn't. Still, over the fund's 31-year lifetime, AMCAP's 13.6% average
annual compound return is well ahead of the S&P 500's 12.2% return.
As you can see, the "simple approach" of buying and holding quality growth
companies is in practice quite complicated. AMCAP shareholders who have
remained in the fund for the long run have clearly reaped the benefits of this
process.
[Begin sidebar]
[begin pie chart with Research Portfolio indicated as one piece of 6-piece pie]
The fund's five portfolio counselors (top) manage separate segments of AMCAP. A
sixth segment, the research portfolio, is managed by a group of analysts.
[end pie chart]
[End sidebar]
<TABLE>
AMCAP Fund Investment Portfolio Percent
February 28, 1998 of Net
Assets
- --------------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
[begin pie chart]
Largest Industry Holdings
Broadcasting & Publishing 12.06%
Business & Public Services 10.39
Health & Personal Care 9.40
Financial Services 8.83
Data Processing & Reproduction 7.94
Other Industries 41.02
Cash & Equivalents 10.36
[end pie chart]
- --------------------------------------------------------- ------- ------- -------
Largest Individual Equity Holdings
Time Warner 4.44%
Walt Disney 3.32
Fannie Mae 3.08
Medtronic 2.78
Philip Morris 2.58
Norwest 2.34
Comcast 2.27
SLM Holding 2.07
Viacom 1.93
Cendant 1.82
- --------------------------------------------------------- ------- ------- -------
Number Market Percent
of Value of Net
Equity Securities (common stocks) Shares (000) Assets
- --------------------------------------------------------- ------- ------- -------
Broadcasting & Publishing - 12.06%
Time Warner Inc. 3216000 $217,080 4.44%
Comcast Corp., Class A special stock 2925000 102375
Comcast Corp., Class A 260000 9051 2.27
Viacom Inc., Class B(1) 1962200 94185 1.93
Tele-Communications, Inc., Series A,
Liberty Media Group(1) 3131250 85914 1.76
Harte-Hanks Communications, Inc. 1070000 46478 .95
Tele-Communications, Inc., Series A,
TCI Group(1) 1195935 34757 .71
Business & Public Services - 10.39%
Cendant Corp. (formerly CUC International Inc.)(1) 2370000 88875 1.82
Avery Dennison Corp. 1200000 60600 1.24
Concord EFS, Inc.(1) 1764600 54923 1.12
Electronic Data Systems Corp. 1162800 50945 1.04
United HealthCare Corp. 790000 47943 .98
American Management Systems, Inc.(1) 1450000 37881 .77
Interpublic Group of Companies, Inc. 600000 32700 .67
First Data Corp. 800000 27200 .56
IKON Office Solutions, Inc. 800000 26150 .53
Manpower Inc. 470200 19837 .40
America Online, Inc.(1) 160000 19380 .40
Ceridian Corp.(1) 300000 13969 .29
Columbia/HCA Healthcare Corp. 500000 13563 .28
TeleTech Holdings, Inc.(1) 800000 7650 .16
National TechTeam, Inc.(1) 628000 6476 .13
Health & Personal Care - 9.40%
Medtronic, Inc. 2560000 136,000 2.78
Gillette Co. 685200 73916 1.51
Pfizer Inc 800000 70800 1.45
Guidant Corp. 550000 40116 .82
Avon Products, Inc. 480000 33810 .69
Boston Scientific Corp.(1) 467400 27927 .57
Merck & Co., Inc. 200000 25512 .52
Warner-Lambert Co. 150000 21937 .45
Schering-Plough Corp. 200000 15213 .31
Thermedics Inc.(1) 900000 14738 .30
Financial Services - 8.83%
Fannie Mae 2360000 150598 3.08
SLM Holding Corp. 2450000 101216 2.07
Capital One Financial Corp. 1245000 83648 1.71
Freddie Mac 1374400 64940 1.33
First Empire State Corp. 37000 17464 .36
Associates First Capital Corp., Class A 175000 14000 .28
Data Processing & Reproduction - 7.94%
Oracle Corp.(1) 3337500 82186 1.68
Lexmark International Group, Inc., Class A(1) 1400000 59850 1.22
Solectron Corp.(1) 860400 41622 .85
Intuit Inc.(1) 829700 38581 .79
Silicon Graphics, Inc.(1) 1850000 27866 .57
PeopleSoft, Inc. (1) 600000 26812 .55
3Com Corp.(1) 700000 25025 .51
International Business Machines Corp. 200000 20888 .43
Cisco Systems, Inc.(1) 300000 19,762 .41
Sequent Computer Systems, Inc.(1) 560000 11865 .24
Ascend Communications, Inc.(1) 275000 10295 .21
Netscape Communications Corp.(1) 493500 9562 .20
Computer Associates International, Inc. 200000 9425 .19
Sun Microsystems, Inc.(1) 94800 4515 .09
Merchandising - 6.09%
Viking Office Products, Inc.(1) 2800000 61600 1.26
Cardinal Health, Inc., Class A 628693 51474 1.05
Consolidated Stores Corp.(1) 1245312 51213 1.05
AutoZone, Inc.(1) 1500000 45375 .93
Wal-Mart Stores, Inc. 650000 30103 .61
Albertson's, Inc. 500000 23406 .48
Intimate Brands, Inc., Class A 700000 18988 .39
Circuit City Stores, Inc. 400000 15450 .32
Leisure & Tourism - 5.39%
Walt Disney Co. 1450000 162309 3.32
Brinker International, Inc.(1) 3250000 67844 1.39
McDonald's Corp. 330000 18067 .37
Marriott International, Inc. 200000 15150 .31
Banking - 5.33%
Norwest Corp. 2800000 114625 2.34
Golden West Financial Corp. 700000 62475 1.28
Marshall & Ilsley Corp. 590100 34595 .71
Northern Trust Corp. 450000 34228 .70
SunTrust Banks, Inc. 200000 14750 .30
Electronic Components - 4.97%
Intel Corp. 650000 58297 1.19
Bay Networks, Inc.(1) 1200000 40650 .83
Texas Instruments Inc. 700000 40512 .83
Analog Devices, Inc.(1) 825000 26606 .54
ADC Telecommunications, Inc.(1) 1020000 26329 .54
Adaptec, Inc.(1) 806300 21317 .44
Littelfuse, Inc.(1) 590000 16667 .34
Sanmina Corp.(1) 100000 7969 .16
Seagate Technology(1) 200000 4863 .10
Beverages & Tobacco - 3.79%
Philip Morris Companies Inc. 2905000 126186 2.58
PepsiCo, Inc. 1200000 43875 .90
Robert Mondavi Corp., Class A(1) 366700 15218 .31
Telecommunications - 2.26%
AirTouch Communications(1) 1250000 56172 1.15
LCI International, Inc.(1) 1200000 39600 .81
Tele-Communications, Inc., Series A,
TCI Ventures Group(1) 945876 14602 .30
Recreation & Other Consumer Products - 1.73%
Harley-Davidson, Inc. 1125000 32625 .67
Electronic Arts(1) 668900 29515 .60
Broderbund Software, Inc.(1) 900000 22275 .46
Insurance - 1.42%
American International Group, Inc. 506250 60845 1.24
Aetna Inc. 100000 8737 .18
Chemicals - 1.38%
Airgas, Inc.(1) 1500000 26906 .55
Cambrex Corp. 530000 26235 .54
Praxair, Inc. 300000 14344 .29
Industrial Components - 0.84%
Tower Automotive, Inc.(1) 600000 27262 .56
Lear Corp.(1) 265000 14012 .28
Machinery & Engineering - 0.84%
Thermo Electron Corp.(1) 1000000 41000 .84
Transportation: Rail - 0.68%
Wisconsin Central Transportation Corp.(1) 1225000 33228 .68
Aerospace & Military Technology - 0.45%
General Motors Corp., Class H 300000 12431 .25
Raytheon Co., Class A 168720 9786 .20
Transportation: Airlines - 0.31%
Southwest Airlines Co. 525375 15072 .31
Textiles & Apparel - 0.29%
Tommy Hilfiger Corp.(1) 268900 14403 .29
Appliances & Household Durables - 0.17%
Corning Inc. 200000 8125 .17
Energy Equipment - 0.16%
Camco International, Inc. 132400 7745 .16
Miscellaneous - 4.92%
Other equity securities in initial period of
acquisition 240575 4.92
------- -------
TOTAL EQUITY SECURITIES (cost: $2,437,661,000) 4383657 89.64
------- -------
Principal
Amount
SHORT-TERM SECURITIES (000)
- --------------------------------------------------------- ------- ------- -------
Corporate Short-Term Notes - 8.41%
E.I. du Pont de Nemours and Co. 5.41%-5.45% due 3/18-4/6/ $65,200 $64,924 1.33%
AT&T Corp. 5.42%-5.70% due 3/2-3/18/98 62900 62806 1.28
H.J. Heinz Co. 5.44%-5.46% due 3/25-4/1/98 56,300 56050 1.15
Procter & Gamble Co. 5.45%-5.50% due 3/3-3/27/98 40800 40716 .83
General Electric Capital Corp. 5.45%-5.52% due 3/10-3/20/ 40500 40412 .83
Xerox Corp. 5.43%-5.46% due 3/19-4/17/98 40000 39804 .81
A.I. Credit Corp. 5.44%-5.60% due 3/4-3/17/98 37,400 37,349 .76
Ford Motor Credit Co. 5.46%-5.47% due 3/12-4/21/98 37300 37135 .76
Emerson Electric Co. 5.44% due 3/25-4/2/98 32250 32117 .66
Federal Agency Discount Notes - 2.23%
Fannie Mae 5.35%-5.38% due 4/9-5/26/98 50700 50122 1.03
Freddie Mac 5.37%-5.58% due 3/6-4/24/98 34900 34837 .71
Federal Home Loan Banks 5.34%-5.35% due 5/6-5/8/98 24400 24141 .49
------- -------
TOTAL SHORT-TERM SECURITIES (cost:
$520,449,000) 520413 10.64
------- -------
TOTAL INVESTMENT SECURITIES (cost:
$2,958,110,000) 4904070 100.28
Excess of payables over cash and receivables 13536 .28
------- -------
NET ASSETS $4,890,534 100.00%
======= =======
(1) Non-income-producing securities.
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 securities appearing in the portfolio
since August 31, 1997
- ---------------------------------------------------------
Adaptec
Aetna
Boston Scientific
Columbia/HCA Healthcare
Consolidated Stores
Corning
First Empire State
Tommy Hilfiger
Littelfuse
Marshall & Ilsley
McDonald's
National TechTeam
Praxair
Raytheon
Sanmina
Schering-Plough
Tele-Communications, TCI Ventures
TeleTech Holdings
Tower Automotive
Warner-Lambert
Equity securities eliminated from the portfolio
since August 31, 1997
- ---------------------------------------------------------
BDM International
Danaher
Jacobs Engineering Group
PacifiCare Health Systems
RPM
Sybase
Telephone and Data Systems
Waste Management
</TABLE>
<TABLE>
AMCAP FUND Financial Statements
- ------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities
at February 28, 1998 (dollars in thousands)
- ------------------------------------------- ---------------- ----------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $2,958,110) $4,904,070
Cash 98
Receivables for--
Sales of investments $7,794
Sales of fund's shares 7,649
Dividends and accrued interest 2,443 17,886
------------------ -----------------
4,922,054
Liabilities:
Payables for--
Purchases of investments 24,228
Repurchases of fund's shares 3,134
Management services 1,389
Accrued expenses 2,769 31,520
------------------ -----------------
Net Assets at February 28, 1998--
Equivalent to $16.93 per share on
288,917,232 shares of $1 par value
capital stock outstanding (authorized
capital stock--300,000,000 shares) $4,890,534
=================
Statement of Operations for the year
ended February 28, 1998
------------------ -----------------
Investment Income:
Income:
Dividends $ 25,036
Interest 29,697 $ 54,733
------------------
Expenses:
Management services fee 16,324
Distribution expenses 8,842
Transfer agent fee 2,127
Reports to shareholders 166
Registration statement and prospectus 108
Postage, stationery and supplies 558
Directors' fees 110
Auditing and legal fees 48
Custodian fee 68
Taxes other than federal income tax 56
Other expenses 108 28,515
------------------ -----------------
Net investment income 26,218
-----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 509,966
Net increase in unrealized
appreciation on investments:
Beginning of year 1,136,951
End of year 1,945,960
------------------
Net unrealized appreciation
on investments 809,009
-----------------
Net realized gain and unrealized
appreciation on investments 1,318,975
-----------------
Net Increase in Net Assets Resulting
From Operations $1,345,193
=================
See Notes to Financial Statements
Statement of Changes in Net
Assets
- ------------------------------------------- ------------------ -----------------
Year ended February 28
1998 1997
Operations: ------------------ -----------------
Net investment income $ 26,218 $ 29,859
Net realized gain on investments 509,966 476,706
Net unrealized appreciation (depreciation)
on investments 809,009 (93,742)
------------------ -----------------
Net increase in net assets
resulting from operations 1,345,193 412,823
------------------ -----------------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (26,109) (30,602)
Distributions from net realized
gain on investments (646,989) (334,007)
------------------ -----------------
Total dividends and distributions (673,098) (364,609)
------------------ -----------------
Capital Share Transactions:
Proceeds from shares sold:
23,535,997 and 31,306,396
shares, respectively 366,597 439,313
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
42,604,643 and 23,920,709 shares,
respectively 630,147 342,841
Cost of shares repurchased:
37,958,301 and 50,858,558
shares, respectively (585,123) (716,380)
------------------ -----------------
Net increase in net assets
resulting from capital share transaction 411,621 65,774
------------------ -----------------
Total Increase in Net Assets 1,083,716 113,988
Net Assets:
Beginning of year 3,806,818 3,692,830
------------------ -----------------
End of year (including undistributed
net investment income of $5,138 and
$5,029, respectively) $4,890,534 $3,806,818
================== =================
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 securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Securities with original maturities of one year
or less having 60 days or less to maturity are amortized to maturity based on
their cost if acquired within 60 days of maturity or, if already held on the
60th day, based on the value determined on the 61st day. Securities and assets
for which representative market quotations are not readily available are valued
at fair value as determined in good faith by a committee appointed by the Board
of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. Discounts
on securities purchased are amortized. Dividends and distributions paid to
shareholders are recorded on the ex-dividend date.
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, 1998, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $1,945,960,000, of which
$2,009,957,000 related to appreciated securities and $63,997,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended February 28, 1998. The cost
of portfolio securities for book and federal income tax purposes was
$2,958,110,000 at February 28, 1998.
3. The fee of $16,324,000 for management services was incurred 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, 1998,
distribution expenses under the Plan were $8,842,000. As of February 28, 1998,
accrued and unpaid distribution expenses were $2,363,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $2,127,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $671,000 (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,
1998, aggregate amounts deferred and earnings thereon were $423,000.
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, 1998, accumulated undistributed net realized gain on
investments was $127,380,000 and additional paid-in capital was $2,523,139,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,156,972,000 and $1,283,887,000, respectively,
during the year ended February 28, 1998.
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 $68,000 includes $19,000 that was paid by these credits
rather than in cash.
<TABLE>
AMCAP FUND
Per-Share Data and Ratios
- -------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Year ended February 28
------- ------- ------- ------- -------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
Net Asset Value, Beginning
of Year $14.60 $14.40 $12.28 $12.98 $13.52
------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .10 .12 .16 .14 .12
Net realized and unrealized
gain on investments 4.80 1.51 3.32 .24 1.28
------- ------- ------- ------- -------
Total income from investment
operations 4.90 1.63 3.48 0.38 1.40
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income (.10) (.12) (.17) (.13) (.12)
Distributions from net realized
gains (2.47) (1.31) (1.19) (.95) (1.82)
------- ------- ------- ------- -------
Total distributions (2.57) (1.43) (1.36) (1.08) (1.94)
------- ------- ------- ------- -------
Net Asset Value, End of Year $16.93 $14.60 $14.40 $12.28 $12.98
======= ======= ======= ======= =======
Total Return /1/ 36.97% 11.74% 29.29% 3.41% 11.31%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $4,891 $3,807 $3,693 $2,970 $3,063
Ratio of expenses to average `
net assets .68% .69% .71% .71% .72%
Ratio of net income to
average net assets .62% .81% 1.16% 1.16% .89%
Average commissions paid
per share /2/ 4.66 c 5.05 c 5.95 c 5.95 c 6.54 c
Portfolio turnover rate 31.42% 24.14% 35.16% 17.92% 22.18%
/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 commissions), such
as most over-the-counter and 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 investment portfolio as of February 28,
1998, 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 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 per-share data and ratios based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per-share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures include confirmation of securities owned as of
February 28, 1998, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing 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, 1998, 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 xx, 1998
Results of Meeting of Shareholders Held March 9, 1998
Shares Outstanding on January 6, 1998 289,392,503
Shares Voting on March 9, 1998 174,432,735 (60.3%)
Election of Directors
<TABLE>
<CAPTION>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
<S> <C> <C> <C> <C>
H. Frederick Christie 168,051,821 96% 6,380,914 4%
Mary Anne Dolan 168,002,905 96 6,429,830 4
Martin Fenton, Jr. 168,050,189 96 6,382,546 4
Herbert Hoover III 167,802,474 96 6,630,261 4
Claudia P. Huntington 168,046,827 96 6,385,908 4
Mary Myers Kauppila 168,051,903 96 6,380,832 4
Kirk P. Pendleton 168,051,343 96 6,381,392 4
James W. Ratzlaff 168,065,144 96 6,367,591 4
Olin C. Robison 168,048,813 96 6,383,922 4
R. Michael Shanahan 168,055,602 96 6,377,133 4
</TABLE>
Ratification of Auditors
<TABLE>
<CAPTION>
Percent of Percent of Percent of
Votes Shares Votes Shares Shares
For Voting For Against Voting Against Abstentions Abstaining
<S> <C> <C> <C> <C> <C> <C>
Deloitte & 167,378,141 96.0% 1,324,008 0.7% 5,730,586 3.3%
Touche llp
</TABLE>
AMCAP's board of directors welcomes H. Frederick Christie, Mary Anne Dolan,
Claudia P. Huntington, Mary Myers Kauppila and Olin C. Robison as new directors
of the fund. They were elected at the March shareholders meeting.
We also wish to thank Guilford C. Babcock, Charles H. Black, Gail L. Neale,
Henry E. Riggs and Walter P. Stern for their past service to the fund. They did
not stand for reelection as directors of AMCAP, but they will continue to serve
as directors for other American Funds as per the realignment of board clusters
described in the proxy material.
Charles Wolf, Jr., a director since 1991, has recently retired and did not
stand for reelection. We thank him for his many contributions to the fund.
1998 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. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
Dividends and
Distributions per Share
<S> <C> <C> <C> <C>
From From Net From Net
Net Realized Realized
Investment Short-Term Long-Term
To Shareholders of Record Payment Date Income Gains Gains*
May 23, 1997 May 27, 1997 0.05 0.24 0.79
November 28, 1997 December 1, 1997 0.05 ---- 1.44
* Includes $1.212 long-term
capital gains taxed at a
maximum rate of 28%.
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 31% 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.
SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV WHICH WERE MAILED IN JANUARY
1998 TO DETERMINE THE AMOUNTS TO BE INCLUDED ON THEIR 1997 TAX RETURNS.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
[THE AMERICAN FUNDS GROUP(R)]
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER, CAPITAL RESEARCH
AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of AMCAP Fund, but it may
also be used as sales literature when preceded or accompanied by the current
prospectus, which gives details about charges, expenses, investment objectives
and operating policies of the fund. If used as sales material after June 30,
1998, this report must be accompanied by an American Funds Group Statistical
Update for the most recently completed calendar quarter.
BOARD OF DIRECTORS
H. FREDERICK CHRISTIE
Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer,
The Mission Group; former President,
Southern California Edison Company
MARY ANNE DOLAN
Los Angeles, California
Founder and President,
M.A.D., Inc. (communications company)
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board,
Senior Resource Group, Inc.
(senior living centers management)
HERBERT HOOVER III
San Marino, California
Private investor
CLAUDIA P. HUNTINGTON
Los Angeles, California
President of the fund
Senior Vice President, Capital Research
and Management Company
MARY MYERS KAUPPILA
Boston, Massachusetts
Founder and President,
Energy Investment, Inc.
KIRK P. PENDLETON
Southampton, Pennsylvania
Chairman of the Board and
Chief Executive Officer, Cairnwood, Inc.
(venture capital investment)
JAMES W. RATZLAFF
San Francisco, California
Senior Partner, The Capital Group Partners L.P.
OLIN C. ROBISON, PH.D.
Middlebury, Vermont
President of the Salzburg Seminar;
President Emeritus, Middlebury College
R. MICHAEL SHANAHAN
Los Angeles, California
Chairman of the Board of the fund
Chairman of the Board and
Principal Executive Officer,
Capital Research and Management Company
CHAIRMAN EMERITUS
JAMES D. FULLERTON
Pasadena, California
Retired; former Chairman of the Board,
The Capital Group Companies, Inc.
OTHER OFFICERS
TIMOTHY D. ARMOUR
Los Angeles, California
Senior Vice President of the fund
Director, Capital Research and
Management Company;
Chairman and Chief Executive Officer,
Capital Research Company
PAUL G. HAAGA, JR.
Los Angeles, California
Senior Vice President of the fund
Executive Vice President and Director,
Capital Research and Management Company
JAMES B. LOVELACE
Los Angeles, California
Senior Vice President of the fund
Senior Vice President, Capital Research
and Management Company
VINCENT P. CORTI
Los Angeles, California
Secretary of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL
Brea, California
Treasurer of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Assistant Treasurer of the fund
Assistant Vice President -
Fund Business Management Group,
Capital Research and Management Company
ROBERT P. SIMMER
Norfolk, Virginia
Assistant Treasurer of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
Printed on recycled paper
Litho in USA SM/FS/3602
Lit. No. AMCAP-011-0498
