[The American Funds Group(r)]
AMCAP FUND
Building for the Future
[photograph: young girl looking at art object]
2000 Annual Report
for the year ended February 29
AMCAP FUND(r) seeks long-term growth of capital by investing in growing,
profitable companies.
AMCAP Fund is one of the 29 mutual funds in The American Funds Group,(r) the
nation's third-largest mutual fund family. For nearly seven decades, Capital
Research and Management Company, the American Funds adviser, 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 29, 2000, with all distributions
reinvested
<TABLE>
<CAPTION>
Total Average Annual
Return Compound Return
<S> <C> <C>
AMCAP +7369.7% +14.0%
Standard & Poor's 500 +4574.6 +12.4
Composite Index/1/
Consumer Price Index 412.7 + 5.1
(inflation)/2/
</TABLE>
/1/The index is unmanaged and does not reflect sales charges, commissions or
expenses.
/2/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
AMCAP'S ANNUAL RETURNS
For the past 10 fiscal years (ended 2/28 or 2/29)
1991 +16.8%
1992 +20.4
1993 +5.9
1994 +11.3
1995 +3.4
1996 +29.3
1997 +11.7
1998 +37.0
1999 +21.1
2000 +22.3
Total Return Over Entire 10-Year Period: +402.3
Average Annual Compound Return: +17.5
There are two ways to invest in this fund. Class A shares are subject to a
5.75% maximum up-front sales charge that declines for accounts of $25,000 or
more. Class B shares, which are not available for certain employer-sponsored
retirement plans, have no up-front charge. They are, however, subject to
additional expenses of approximately 0.75% a year over the first eight years of
ownership. If redeemed within six years, they may also be subject to a
contingent deferred sales charge (5% maximum) that declines over time.
Fund results in this report were calculated for A shares at net asset value
(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, 2000 (the most recent calendar quarter), assuming
payment of the 5.75% maximum sales charge at the beginning of the stated
periods:
<TABLE>
<CAPTION>
Total Average Annual
Return Compound Return
<S> <C> <C>
Ten Years +388.26% +17.18%
Five Years +189.23 +23.67
One Year +22.04 -
</TABLE>
Sales charges are lower for accounts of $25,000 or more.
Figures shown are past results and are not predictive of future results. Share
price and return will vary, so you may lose money. Investing for short periods
makes losses more likely. Investments are not FDIC-insured, nor are they
deposits of or guaranteed by a bank or any other entity.
Fellow Shareholders:
Fiscal year 2000 proved to be another very rewarding period for shareholders of
AMCAP Fund. In a turbulent stock market, the fund produced a 22.3% increase in
the value of your investment if you reinvested dividends totaling 10 cents a
share and capital gain distributions totaling $2.48 a share.
It was AMCAP's fifth consecutive fiscal year of double-digit increases,
bringing the fund's five-year average compound total return to 24.0% a year.
Your fund's return this year was almost double that of Standard & Poor's 500
Composite Index, a measure of the U.S. stock market composed primarily of large
companies. AMCAP also surpassed its lifetime average return of 14.0% a year and
was nearly even with the 22.7% gain of its new benchmark, the Lipper Multi-Cap
Core Fund Index, a measure of mutual funds which, like AMCAP, invest in a wide
variety of companies of different sizes. Standard & Poor's 400 Midcap Index,
which tracks medium-sized companies and is heavily weighted in technology, had
a total return of 31.0%.
TECHNOLOGY STOCKS LEAD THE WAY
This was an unusual year in which the stock market exhibited a distinctly split
personality. Many stocks of companies in the so-called "new economy" - mostly
technology and communications companies, including Internet and media firms -
did extremely well. By contrast, stocks in the "old economy" (finance and
capital equipment, for example) fell out of favor, even though many continued
to show good growth in earnings and revenues.
AMCAP is nestled between the two "economies," finding companies with proven
growth in both. Our technology investments have helped results a great deal in
recent years and, in fact, dominated the list of the fund's top ten gainers for
the past 12 months. Explosive growth in the Internet and in communications
hardware, software and services sectors has helped accelerate the growth rates
of many well-managed technology companies. AMCAP has benefited from investments
in this area, including Texas Instruments, the world's leading producer of
digital signal processors and the fund's third-largest holding (+273.4%); Cisco
Systems, a supplier of computer networking systems and telecommunications
products (+170.3%); and Lexmark International, a leading computer printer
manufacturer (+131.1%).
MEDIA AND MEDICAL DEVICE STOCKS DELIVER SOLID GAINS
Media and entertainment companies also did well this past year. Time Warner,
the fund's second-largest holding, rose 32.6%; it announced a merger with
America Online, bringing media content and access to a large group of Internet
subscribers under one roof. Viacom, which announced a more traditional marriage
with CBS, increased 26.2%.
[Begin Pull Quote]
AMCAP is nestled between the two "economies," finding companies of proven
growth in both.
[End Pull Quote]
Medical instrument companies proved again they could produce steady
above-average growth, hallmarks of AMCAP Fund investments. Medtronic, a leader
in medical devices including pacemakers and implantable defibrillators, gained
37.2%. Guidant, a leading producer of medical devices such as stents and
defibrillators for heart disease, increased 18.2%. Heart disease remains a
serious health problem around the world, and these devices can greatly improve
the length and quality of life.
FINANCIAL SERVICES STOCKS ARE HURT BY RISING INTEREST RATES
Interest rates rose for much of the year. As a result, interest-rate sensitive
companies suffered. Fannie Mae, which purchases mortgage loans and issues
mortgage-backed securities, fell 24.3% and Freddie Mac, which buys conventional
mortgages and issues mortgage-backed securities, declined 29.1%. Bank stocks,
in general, fared poorly.
VALUATIONS FOR GROWTH COMPANIES DIVERGE
As we mentioned earlier, we have seen an increasing divergence in valuations
between the so-called new and old economy companies. While some of this is
justified by the future growth prospects for the new economy, many other growth
companies with solid records have been neglected. Some of our non-technology
investments have good growth histories and solid future prospects, but they
have been out of favor in the recent year. We still believe in the long-term
outlook for these companies and think their stock prices will eventually
reflect their true values. In the meantime, we continue to look across many
industries from both the new and the old economies, seeking to invest in
quality growth companies at reasonable prices.
LOOKING FORWARD
While we are very pleased to report another excellent year, bringing AMCAP's
cumulative total return to 193% for the past five years, we continue to caution
our shareholders to maintain realistic expectations. Fundamental growth
opportunities are certainly plentiful. However, narrow markets like we've seen
in the past 12 months - in which a small sector does well while the rest of the
stocks lag behind - usually don't persist for long. In the past, these periods
of unusual divergence in the market have often ended suddenly, leaving those
who put all their assets in just one sector of the market disappointed that
they didn't have a more diversified portfolio.
AMCAP Fund seeks a wide variety of investments in companies of all sizes and in
many different industries, with the connective thread of quality growth. We try
very hard to identify companies that have a proven record of growth and a
future with a sustainable competitive advantage. We invite you to read how we
choose our investments in the feature, "Building for the Future," which begins
on page 6.
[Begin Pull Quote]
AMCAP Fund seeks a wide variety of investments in companies that have a record
of strong earnings and a future with a sustainable competitive advantage.
[End Pull Quote]
We would also like to report that Herbert Hoover III, a Director since AMCAP's
inception in 1967, has retired from the Board. We thank him for his wise
counsel through the years.
We look forward to reporting to you again in the autumn.
Cordially,
/s/ Michael Shanahan
R. Michael Shanahan
CHAIRMAN OF THE BOARD
/s/ Claudia P. Huntington
Claudia P. Huntington
PRESIDENT
April 12, 2000
[Begin Sidebar]
TOTAL RETURN
for the 12 months ended February 29, 2000
AMCAP Fund +22.3
S&P 500 Composite Index/1/ +11.7
S&P 400 Midcap Index/1/ +31.0
Lipper Multi-Cap Core Fund Index/2/ +22.7
/1/The S&P Indexes are unmanaged and do not reflect sales charges, commissions
or expenses.
/2/Recently, Lipper broke its growth fund category into smaller units. AMCAP is
classified as a Multi-Cap Core Fund. Lipper indexes do not include the effects
of sales charges.
[End Sidebar]
The Value of a Long-Term Perspective
HOW A $10,000 INVESTMENT HAS GROWN
Here's how a $10,000 investment in AMCAP grew between May 1, 1967 - when the
fund began operations - and February 29, 2000. As you can see, that $10,000
grew to $703,358 with all distributions reinvested, a gain of 6,934%. Over the
same period, $10,000 would have grown to $467,456 in Standard & Poor's 500
Composite Index. The chart also records the fund's progress relative to the
rate of inflation as measured by the Consumer Price Index.
The fund's year-by-year results appear in the table under the chart. You can
use this table to estimate how much the value of your own holdings has grown.
Let's say, for example, that you have been reinvesting all your dividends and
capital gain distributions since February 28, 1990. At that time, according to
the table, the value of the investment illustrated here was $140,027. Since
then, it has increased over five times in value, to $703,358. Thus, in that
same 10-year period, the value of your investment - regardless of size - has
also more than quintupled.
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended February 29, 2000)
Ten Years +16.83%
Five Years +22.53%
One Year +15.26%
*Assumes reinvestment of all distributions and payment of the 5.75% maximum
sales charge at the beginning of the stated periods.
[Begin mountain chart]
<TABLE>
<CAPTION>
Year ended 2/28 or 29 S&P 500 with Consumer Price Index
dividends reinvested/3/ (inflation) /4/
<S> <C> <C>
5/1/67 $10,000 $10,000
1968 9,747 10,332
1969 11,039 10,816
1970 10,404 11,480
1971 11,674 12,054
1972 13,258 12,477
1973 14,293 12,961
1974 12,716 14,260
1975 11,306 15,861
1976 14,404 16,858
1977 14,984 17,855
1978 13,703 19,003
1979 15,976 20,876
1980 19,891 23,837
1981 24,192 26,556
1982 21,965 28,580
1983 30,441 29,577
1984 33,720 30,937
1985 40,747 32,024
1986 53,179 33,021
1987 68,925 33,716
1988 66,959 35,045
1989 74,851 36,737
1990 88,933 38,671
1991 101,986 40,725
1992 118,322 41,873
1993 130,943 43,233
1994 141,799 44,320
1995 152,298 45,589
1996 205,095 46,798
1997 258,809 48,218
1998 349,461 48,912
1999 418,430 49,698
2000 467,456 31,269
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL VALUE 1968/#/ 1969 1970 1971
Dividends Reinvested -$ 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 1999
Dividends Reinvested 3,363 2,643 2,465 3,727
Value At Year End/1/ 310,345 346,783 475,003 575,089
AMCAP TOTAL RETURN 29.3 11.7 37.0 21.1
Total Value 2000
Dividends Reinvested 3,329
Value At Year End/1/ 703,358
AMCAP TOTAL RETURN 22.3
</TABLE>
$703,358/1,2/
AMCAP
with dividends
reinvested
$467,456/3/
S&P 500
with dividends
reinvested
$51,269/4/
Consumer
Price Index
(inflation)
$10,000/1/
original
investment
Average
annual
compound
return for
32 3/4 years
13.8%/1,2/
#For the period May 1, 1967 (when the fund began operations), through February
29, 1968.
/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 investments over $25,000. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares. The
maximum initial sales charge was 8.50% prior to July 1, 1988.
/2/Includes reinvested dividends of $51,149 and reinvested capital gain
distributions of $374,368.
/3/The index is unmanaged and does not reflect sales charges, commissions or
expenses.
/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
Past results are not predictive of future results.
Building for the Future
How AMCAP Fund Chooses Its Investments
[abstract illustration]
[Begin Caption]
Guidant
[End Caption]
WHAT MAKES AMCAP FUND DIFFERENT in a world where investors have almost 7,000
different equity mutual funds competing for their attention and money?
The answer is best expressed by two words: quality growth, says Claudia
Huntington, fund president. "Your fund specializes in quality growth companies
of any size, in any industry. The overriding principle behind all our
selections is that each company must have a history of steady, above-average
growth - and must show future growth potential." AMCAP's ideal company has had
several consecutive years of strong gains in sales, earnings per share and cash
flow, without recent operating losses.
AMCAP analysts and portfolio counselors are looking to build a portfolio for
the future. "We focus on growth potential for the long term - not just the next
quarter's earnings projections," says Michael Shanahan, AMCAP chairman. With
every investment AMCAP Fund considers, analysts try to look as far ahead as
possible. Claudia says one of her favorite questions for executives when she
visits companies is: "Tell me what you want your company to look like five
years from now."
Solid management is another key factor in company selection. "We've found that
quality growth companies are typically managed by executives with proven
records and the ability to position their companies for the future," says
Claudia. "Excellent growth companies rarely do well in the long run without
excellent leadership at the top."
And they must have a clear edge over competitors in their industry, adds Mike.
"These companies should have some combination of attractive characteristics,
including a sustainable competitive advantage, opportunities to expand profit
margins and/or sales, earnings and cash flow growth."
Not surprisingly, these quality growth companies are usually not easy to find
at a reasonable price. Choosing the companies for AMCAP's portfolio is
therefore a big challenge. We thought you might find it interesting to read
just how we did it with several specific case studies from a range of
industries.
Some of AMCAP's companies are household names, but others you may not
recognize at first. The fund's investments range from companies in technology,
media and telecommunications to firms in the airline, pharmaceutical and
contract manufacturing businesses. All of them illustrate the qualities we
seek, but as Mike puts it: "There's a unique story behind every AMCAP holding."
Here are a few of them:
GUIDANT: DEVELOPING NEW PRODUCTS TO BATTLE HEART DISEASE
AMCAP has long been an investor in the medical instruments and pharmaceutical
industries. In previous annual reports, we've highlighted Medtronic, the
leading manufacturer of pacemakers and defibrillators. Here's a look at one of
our newer investments in the field - Guidant.
James Terrile analyzes medical instrument and pharmaceutical stocks for
Capital Research and Management Company, AMCAP's investment adviser. He
believes Guidant, one of the leaders in cardiovascular therapy products, is a
"classic AMCAP stock. It has high-quality management, high-quality financials
and a high-quality business. You hope to buy and hold it forever," he says.
James first began investing in Guidant in 1997 after he completed a review of
the medical instruments industry. He could see that Guidant had a number of key
AMCAP characteristics. First, it was in a growth business - cardiovascular
disease is unfortunately the nation's number one killer. Secondly, Guidant had
a sustainable market edge and a barrier to entry for competitors. Guidant makes
defibrillators and pacemakers to detect and treat irregular heartbeats. It also
makes stents and other products to open blocked arteries. These devices are
protected by patents and are difficult to copy.
[photograph of flight attendant with young girl]
[Begin Caption]
Southwest Airlines
[End Caption]
[Begin Pull-Quote]
Maintaining firsthand knowledge of managers, companies and industries is a key
strength of AMCAP's analysts.
[End Pull-Quote]
[photograph of medical instrument]
[Begin Caption]
Texas Instruments
[End Caption]
[photograph of medical technicians in laboratory]
Guidant has another competitive advantage: a sales force of highly trained
representatives who work closely with cardiologists. The sales people often
take information from physicians back to the research laboratory to produce new
devices the doctors need. As a result, Guidant is able to come
up with new variations of its products as often as every six months.
To keep up to date on Guidant and other medical instrument companies, James
spends considerable time attending medical conventions and talking to
physicians who specialize in heart disease. This helps him understand Guidant's
products better. That's good, because Guidant is a stock that fits AMCAP's
objectives very well.
SOUTHWEST AIRLINES: KEEPING COSTS LOW AND DEVELOPING A UNIQUE CULTURE
"We are not an airline with great customer service," says Herb Kelleher,
president of Southwest. "We are a great customer service organization that
happens to be in the airline business."
To airline analyst Grant Cambridge, that quote rings especially true.
Southwest, a mid-sized company, stands out as one of the best companies in his
coverage, he says.
Why? The company has a simplified operating strategy that keeps costs low. It
flies only one type of aircraft - the Boeing 737 - and it flies from point to
point instead of to major hubs like most other airlines. In that way, it avoids
the congestion at the largest airports. Southwest offers no assigned seats and
no meals; that keeps fares low, and planes fly fairly full. An increasing
number of its tickets are booked on the Internet, which also saves money for
the company and its customers. "Southwest has the best operating margins in the
airline business," says Grant.
It also has excellent labor relations, having just signed a 10-year contract
with several unions, Grant says. "It has been voted one of the ten best places
to work in America several times. It's all because of the unique culture that
the company has developed."
Southwest stock has historically been priced at a premium to the rest of the
airline industry. But, last August, Southwest's stock price began to fall as a
result of higher fuel costs. At that time, AMCAP began investing in the stock.
"When fuel prices reached their nine-year high, the stock plunged along with
the rest of the airline industry, and we found our opportunity," he says.
Not many airlines fit AMCAP's steady growth principle, but Southwest continues
to shine.
TEXAS INSTRUMENTS: REFOCUSING A FORMIDABLE FRANCHISE
AMCAP has a solid position in technology investments and in electronic
components manufacturers
in particular. Texas Instruments has long been an AMCAP holding, but over the
past four years it has undergone a remarkable transformation. The company has
shifted from being a broad semiconductor company with a wide range of products
to a highly focused semi-conductor company concentrating on a few high-growth
areas.
[Begin Pull-Quote]
CBS will merge with Viacom this spring to round out one of the world's most
outstanding collections of media assets.
[End Pull-Quote]
[photograph of person holding television remote control]
[Begin Caption]
Viacom
[End Caption]
The company used to be involved in many different businesses, from making
memory chips to providing equipment for the defense industry. When memory chip
prices collapsed in the wake of the 1997 Asian financial crisis, many investors
sold the stock because they felt the company was working on too many different
products and had lost focus. AMCAP held on because the fund's analysts could
see the promising transformation beginning to unfold. "We were convinced there
were parts of the company with tremendous potential," says Claudia Huntington.
Over the next few years, Texas Instruments sold its computer printers,
defense, industrial equipment and old-line memory chip businesses. It
concentrated instead on producing digital signal processors, or DSPs, as they
are known. DSPs are the central chips for many communications devices. Every
cellular phone has one, for example. They are also used in digital cameras and
in MP3 players, the devices used to download music from the Internet. The
company also manufactures analog semiconductors, which often work in
conjunction with DSPs.
Analyst Terry McGuire credits Tom Engibous, chief executive officer of Texas
Instruments, with the successful resurgence. "To sum up, they sold most of
their assets that weren't growing, leaving behind a highly focused company,"
Terry says.
The refocused Texas Instruments, now one of AMCAP's largest investments, is
doing very well. Over the past five years, the company has steadily gained
market share in the DSP business; today it controls close to 50% of the market.
The DSP market has grown at about 30% annually over the past five years, and is
expected to continue to grow 20% to 30% annually for the foreseeable future,
Terry says. The moral of the story for investors: it pays to thoroughly
understand all parts of a company's business.
VIACOM: ASSEMBLING A MEGA-MEDIA POWERHOUSE
The media and entertainment industry has provided fertile ground for AMCAP
through the years, with several companies providing strong earnings growth and
stock price appreciation. Gordon Crawford, a veteran analyst and portfolio
counselor, is a big believer in Viacom.
Strong management is one of the leading characteristics of Viacom, Gordon
says. "It's run by Sumner Redstone. We've made a lot of money with him over
time. He is very smart and has a global vision of where the entertainment and
media businesses are going."
Gordon thinks that Viacom owns one of the world's outstanding collections of
media assets. When it is combined with CBS, a merger to be concluded this
spring, it will be an even stronger company.
Viacom owns Paramount Studios, one of the premier producers of motion pictures
and television shows, and two of the most valuable cable networks: MTV and
Nickelodeon. Viacom also operates several television stations, which should fit
well with the television stations that CBS owns.
CBS Chief Executive Officer Mel Karmazin also ranks high as a manager. "He's
one of the best in the business," says Gordon. "He built a radio empire, making
his investors rich in the process."
The two companies - Viacom and CBS - should fit together hand in glove. "You
get to vertically integrate the CBS television network and its television
stations with Viacom's Paramount, which produces television programming," says
Gordon. "You get to take two smaller cable television networks that CBS owns
and combine them with Paramount's cable television operation. Both companies
also have many Internet assets yet to be developed fully. CBS has Sportsline
and CBS Marketwatch. Viacom has MTV.com and Nickelodeon.com. When they get all
these assets in one place, they will be able to get them working better and
cross-promote them on their television and radio stations, billboards and the
CBS Television network."
The combined company, Gordon says, "will have very little debt and huge excess
cash flow - and it will be run by two very smart guys." The bottom line: if you
combine the right companies, sometimes one plus one can equal more than two.
WELLS FARGO: INVESTING IN SYNERGY
In the past two years, many big banks have merged to cut costs and gain market
share. Will Robbins, banking analyst, believes that of all these combinations,
one of the most exciting is the new Wells Fargo Corp. It was formed by the
merger of the old Wells Fargo & Co., based in San Francisco, and Norwest Corp.,
a large Minneapolis bank.
Will thinks investing in the synergy of the combined banks will pay off for
shareholders. "The old Wells Fargo is known for efficiency and for cutting
costs," he says. "It's also known for having the largest retail Internet
banking operation in the United States. On the other hand, the former Norwest
bank gained a reputation for its sales ability and cross-selling of financial
products to its growing customer base."
[Begin Pull-Quote]
AMCAP has a long record of successful investing in the media and entertainment
industries.
[End Pull-Quote]
[photograph of children being entertained]
[Begin Caption]
Medicis
[End Caption]
[photograph of medical professional examining patient]
[Begin Pull-Quote]
Portfolio counselors and analysts thoroughly review a company's fundamental
growth history and future prospects before they decide to invest.
[End Pull-Quote]
[photograph of branch operations]
[Begin Caption]
Wells Fargo
[End Caption]
[photograph of Wells Fargo stagecoach]
The new Wells Fargo was chosen for AMCAP because of the proven growth record
of the old Norwest Corp., a long-time holding of the fund. "Norwest's revenues
grew at a 16% annual rate compounded for the 10 years prior to the merger in
November 1998," says Will. "Since the old Norwest group is playing a key role
in current management, it meets our objectives for AMCAP," he says.
AMCAP's Wells Fargo investment illustrates the benefit of collaboration among
the banking analysts that follow the industry for AMCAP and the other 28
American Funds. Several analysts are involved in the banking cluster. They meet
regularly on long telephone calls and in person at various conferences. The
group discussed such issues as the importance of Wells Fargo's strong Internet
banking position and the value of core deposits as compared to borrowed money
in a bank. This kind of collaboration adds to the breadth and depth of AMCAP's
analytical coverage.
MEDICIS: A SMALL PHARMACEUTICAL COMPANY FOCUSING ON DERMATOLOGY
One of AMCAP's strengths is that it can invest in companies of any size; as a
result, the fund's portfolio includes large, medium-size and small companies.
Analyst Brady Enright seeks to find small companies for the fund. He prefers
companies that have a franchise, a niche that is defensible against
competitors. "If you don't have that, you're not going to have a consistent
performer - the kind of company that AMCAP favors," he says.
Medicis is a small company that specializes in dermatology. "It's an
interesting market because there really aren't any blockbuster drugs in
dermatology," Brady says. "In cardiology and arthritis you have drugs with
multiple billions of dollars in annual sales. It's very rare in dermatology to
find drugs with more than $100 million in annual sales. So something that can
be a very interesting opportunity for Medicis is not really on the radar screen
of the big pharmaceutical companies," says Brady.
In this small niche, Medicis has a big presence. They have built a sales force
of 70 people with a wide array of products to treat all kinds of common
dermatological problems such as acne, fungal infections, rosacea and psoriasis.
What makes a product work on someone's skin is difficult to quantify, says
Brady. "The fact that one product does better on your skin than another product
has a lot more to do with information about how to use the product and
cosmetics than results that were calculated in a scientific lab," Brady says.
The company has done very well in differentiating its products on that basis,
he says. "What they have done is to combine a sales culture with a consumer
orientation in producing products that people are really going to enjoy using."
Half of their products have come from internal research and development.
THE NEVER-ENDING SEARCH FOR QUALITY GROWTH
Effective customer service, strong management, a sustainable competitive edge,
a history of above-average earnings and revenue increases, a growing market -
all these attributes figure into the choice of an AMCAP investment. The fund's
analysts and portfolio counselors use these guidelines every day in their
search for quality growth companies. "We work hard at finding companies with a
strong fundamental history and a bright future outlook," says Claudia. Over the
long haul, this approach has paid off. For its 33-year lifetime, AMCAP has
produced an average annual compound return of 14.0%. It has outpaced the 12.4%
return of the Standard & Poor's 500 Composite Index, one of the fund's old
benchmarks, as well as the 11.6% return of the average Lipper Multi-Cap Core
Fund, our new benchmark.
[photograph of young male student]
WHAT MAKES THE AMERICAN FUNDS DIFFERENT?
As a shareholder in AMCAP Fund, you are also a member of The American Funds
Group, the nation's third-largest mutual fund family. You won't find us
advertised, yet thousands of financial advisers recommend the American Funds
for their clients' serious money - money set aside for education, a home,
retirement and other important dreams.
What the 29 funds in our group have in common is a commitment to your best
interests and the proven approach of our investment adviser, Capital Research
and Management Company. In business since 1931, Capital's calling cards
include:
A long-term, value-oriented approach. Rather than follow short-term fads, we
rely on our own intensive research to find well-managed companies with
reasonably priced shares and solid, long-term potential. Despite our size, we
offer relatively few funds compared with many large fund families, allowing us
to maintain a careful focus on our objectives and to benefit from economies of
scale.
An unparalleled global research effort. We opened our first overseas office in
1962, well before most mutual funds began investing internationally. Today, the
American Funds draw on one of the industry's most globally integrated research
networks. Capital Research spends substantial resources getting to know
companies and industries around the world.
A multiple portfolio counselor system. More than 40 years ago, we developed a
unique strategy for managing investments that blends teamwork with individual
accountability. Every American Fund is divided among a number of portfolio
counselors, each of whom manages his or her portion independently, within each
fund's objectives; in most cases, research analysts manage a portion as well.
Over time, this method has contributed to consistency of results and continuity
of management.
Experienced investment professionals. Nearly 90% of the portfolio counselors
who serve the American Funds were in the investment business before the sharp
stock market decline in October 1987. Long tenure and experience through a
variety of market conditions mean we aren't "practicing" with your money.
A commitment to low operating expenses. You can't control market returns, but
you can control what you invest in and how much you pay to own it. American
Funds provide exceptional value for shareholders, with operating expenses that
are among the lowest in the mutual fund industry. Our portfolio turnover rate
is low as well, keeping transaction costs and tax consequences contained.
A Portfolio for Every Investor
Most financial advisers suggest that investors balance their portfolios by
investing across several types of investments. Which mix is right for you? That
depends on a number of things - including your risk tolerance, investment time
horizon and financial goals. The American Funds Group offers 29 funds with an
array of investment objectives to help you and your financial adviser build a
portfolio specifically tailored to your needs.
[photograph of American flag]
Growth Funds
Emphasis on long-term growth through stocks
AMCAP Fund(r)
EuroPacific Growth Fund(r)
The Growth Fund of America(r)
The New Economy Fund(r)
New Perspective Fund(r)
New World Fund(SM)
SMALLCAP World Fund(r)
Growth-and-Income Funds
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(r)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(r)
Washington Mutual Investors Fund(SM)
Equity-Income Funds
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(r)
The Income Fund of America(r)
Balanced Fund
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(r)
Income Funds
Emphasis on current income through bonds
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(r)
Intermediate Bond Fund of America(r)
U.S. Government Securities Fund(SM)
Tax-Exempt Income Funds
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(r)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(r)
State-specific tax-exempt funds:
The Tax-Exempt Fund of California(r)
The Tax-Exempt Fund of Maryland(r)
The Tax-Exempt Fund of Virginia(r)
Money Market Funds
Seek stable monthly income through money market instruments
The Cash Management Trust of America(r)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
We also offer a full line of retirement plans and variable annuities.
For more complete information about any of the funds, including charges and
expenses, please obtain a prospectus from your financial adviser, download one
from our Web site at www.americanfunds.com, or phone the fund's transfer agent,
American Funds Service Company, at 800/421-0180. Please read the prospectus
carefully before you invest or send money. For more information, ask your
financial adviser for a copy of A Portfolio for Every Investor.
<TABLE>
Amcap Fund, Inc. Percent
Investment Portfolio, February 29, 2000 of Net
Assets
Largest Industry Holdings
<S> <C> <C> <C>
Data Processing & Reproduction 12.42%
Electronic Components 10.94%
Broadcasting & Publishing 10.12%
Business Services 9.48%
Health & Personal Care 7.90%
Other Industries 32.89%
Cash & Equivalents 16.25%
Largest Equity Holdings
Medtronic 3.41%
Time Warner 2.94%
Texas Instruments 2.75%
Robert Half International 2.54%
Viacom 2.47%
Cisco Systems 2.00%
AT&T Liberty Media Group 1.96%
Computer Associates International 1.90%
Lexmark International Group 1.89%
Analog Devices 1.78%
Number of Market Percent
Shares Value of Net
Equity Securitites (common stocks) (000) Assets
- -------------------------------------------- -------- -------- --------
DATA PROCESSING & REPRODUCTION - 12.42%
Computer Associates International, Inc. 2,150,000 $138,272 1.90
Lexmark International Group, Inc., Class A(1) 1,150,000 137,138 1.89
Microsoft Corp.(1) 1,330,000 118,869 1.64
Oracle Corp.(1) 1,600,000 118,800 1.63
HNC Software Inc.(1) 850,000 83,619 1.15
3Com Corp.(1) 700,000 68,600 .94
PeopleSoft, Inc.(1) 2,600,000 53,787 .74
Cadence Design Systems, Inc.(1) 1,600,000 31,900 .44
Intuit Inc.(1) 600,000 31,500 .43
International Business Machines Corp. 250,000 25,500 .35
Gateway, Inc.(1) 365,200 25,107 .35
Hewlett-Packard Co. 150,000 20,175 .28
Silicon Graphics, Inc.(1) 1,850,000 18,153 .25
Dell Computer Corp.(1) 384,200 15,680 .22
Synopsys, Inc.(1) 200,000 7,988 .11
Compaq Computer Corp. 300,000 7,462 .10
ELECTRONIC COMPONENTS - 10.94%
Texas Instruments Inc. 1,200,000 199,800 2.75
Analog Devices, Inc.(1) 825,000 129,525 1.78
Intel Corp. 1,000,000 113,000 1.55
Sanmina Corp.(1) 775,000 90,723 1.25
SCI Systems, Inc.(1) 1,400,000 56,350 .78
Linear Technology Corp. 533,600 55,995 .77
Power Integrations, Inc.(1) 775,000 40,252 .55
Dallas Semiconductor Corp. 950,000 38,356 .53
Solectron Corp.(1) 400,000 26,200 .36
Jabil Circuit, Inc.(1) 350,000 24,303 .34
Adaptec, Inc.(1) 500,000 20,500 .28
BROADCASTING & PUBLISHING - 10.12%
Time Warner Inc. 2,500,000 213,750 2.94
Viacom Inc., Class B(1) 3,224,400 179,760 2.47
AT&T Corp. Liberty Media Group, Class A(1) 2,726,400 142,454 1.96
Infinity Broadcasting Corp., Class A(1) 1,840,400 58,778 .81
Clear Channel Communications, Inc.(1) 850,000 56,631 .78
Harte-Hanks, Inc. 2,051,200 44,742 .61
MediaOne Group, Inc.(1) 425,000 33,363 .46
Comcast Corp., Class A, special stock 150,000 6,375 .09
BUSINESS SERVICES - 9.48%
Robert Half International Inc.(1) 4,375,000 184,844 2.54
Snyder Communications, Inc.(1) 3,700,000 89,725
Snyder Communications, Inc.-Circle.com(1) 625,000 5,898 1.31
Concord EFS, Inc.(1) 4,326,750 84,642 1.16
Paychex, Inc. 1,200,000 60,075 .83
Interpublic Group of Companies, Inc. 1,265,800 50,869 .70
Avery Dennison Corp. 600,000 36,413 .50
Galileo International, Inc. 2,050,000 34,850 .48
ServiceMaster Co. 3,045,700 33,503 .46
Young & Rubicam Inc. 600,000 30,300 .42
MSC Industrial Direct Co., Inc., Class A(1) 1,675,000 26,172 .36
Cendant Corp.(1) 1,039,696 18,520 .25
Sabre Holdings Corp., Class A(1) 250,000 10,031 .14
Ventiv Health, Inc.(1)(2) 1,233,333 9,866 .14
IKON Office Solutions, Inc. 1,000,000 7,000 .10
Equifax Inc. 300,000 6,356 .09
HEALTH & PERSONAL CARE - 7.90%
Medtronic, Inc. 5,120,000 248,000 3.41
Guidant Corp.(1) 1,765,000 118,917 1.64
Pfizer Inc 1,200,000 38,550 .53
Avon Products, Inc. 1,360,000 36,805 .51
Sybron International Corp.(1) 950,000 26,600 .37
Becton, Dickinson and Co. 800,000 24,850 .34
Gillette Co. 500,000 17,625 .24
Genentech, Inc.(1) 90,400 17,436 .24
Stryker Corp. 240,000 14,040 .19
Watson Pharmaceuticals, Inc.(1) 300,000 12,000 .16
Cardinal Health, Inc. 244,589 10,089 .14
Bergen Brunswig Corp., Class A 1,000,000 4,938 .07
ALZA Corp.(1) 125,000 4,586 .06
MERCHANDISING - 4.70%
Kohl's Corp.(1) 950,000 72,022 .99
Dollar General Corp. 3,353,200 70,207 .97
Albertson's, Inc. 2,500,000 61,250 .84
AutoZone, Inc.(1) 2,000,000 49,125 .68
Lowe's Companies, Inc. 995,000 47,387 .65
Consolidated Stores Corp.(1) 3,145,312 35,385 .49
Gap, Inc. 125,000 6,039 .08
FINANCIAL SERVICES - 3.97%
Fannie Mae 2,051,000 108,703 1.50
SLM Holding Corp. 2,450,000 76,716 1.05
Providian Financial Corp. 524,200 33,975 .47
Capital One Financial Corp. 750,000 27,609 .38
Freddie Mac 630,000 26,302 .36
Associates First Capital Corp., Class A 400,000 7,950 .11
MBNA Corp. 332,700 7,569 .10
HEALTH CARE PROVIDERS & SERVICES - 2.92%
Medicis Pharmaceutical Corp., Class A(1) 1,400,000 70,613 .97
Quintiles Transnational Corp.(1) 1,884,000 55,931 .77
First Health Group Corp.(1) 1,400,000 33,775 .46
Stewart Enterprises, Inc., Class A 5,200,000 22,100 .30
Cintas Corp. 250,000 9,984 .14
Universal Health Services, Inc., Class B(1) 250,000 9,719 .13
Columbia/HCA Healthcare Corp. 500,000 9,656 .13
Triad Hospitals, Inc.(1) 26,315 421 .01
LifePoint Hospitals, Inc.(1) 26,315 396 .01
BANKING - 2.68%
Wells Fargo & Co. 2,700,000 89,269 1.22
Northern Trust Corp. 900,000 50,850 .70
M&T Bank Corp. 85,923 31,706 .44
Bank of America Corp. 500,000 23,031 .32
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.58%
CenturyTel, Inc. 2,110,000 70,949 .98
Citizens Utilities Co., Series B(1) 4,287,300 65,381 .90
MCI WorldCom, Inc.(1) 1,150,000 51,319 .70
ELECTRICAL & ELECTRONICS - 2.25%
Cisco Systems, Inc.(1) 1,100,000 145,406 2.00
Lucent Technologies Inc. 300,000 17,850 .25
BEVERAGES & TOBACCO - 2.14%
Philip Morris Companies Inc. 4,000,000 80,250 1.10
PepsiCo, Inc. 1,519,800 49,014 .67
Robert Mondavi Corp., Class A(1) 366,700 13,430 .19
Beringer Wine Estates Holdings, Inc., Class B(1) 365,000 13,163 .18
CHEMICALS - 1.61%
Cambrex Corp. 1,130,000 45,341 .62
RPM, Inc. 3,158,000 31,580 .44
Ionics, Inc.(1) 700,000 19,950 .28
Praxair, Inc. 350,000 11,812 .16
Airgas, Inc.(1) 600,000 4,163 .06
Monsanto Co. 100,000 3,881 .05
WIRELESS TELECOMMUNICATION SERVICES - 1.33%
Western Wireless Corp., Class A(1) 1,997,900 96,898 1.33
INSURANCE - 1.11%
American International Group, Inc. 734,375 64,946 .89
Mercury General Corp. 700,000 15,881 .22
LEISURE & TOURISM - 1.03%
Brinker International, Inc.(1) 2,950,000 64,163 .88
Papa John's International, Inc.(1) 450,000 10,800 .15
MACHINERY & ENGINEERING - 1.03%
Millipore Corp. 900,000 48,094 .66
IDEX Corp. 977,000 24,181 .34
Thermo Electron Corp.(1) 143,600 2,243 .03
ELECTRONIC INSTRUMENTS - 1.01%
Applied Materials, Inc.(1) 400,000 73,175 1.01
ENERGY EQUIPMENT - 0.63%
Schlumberger Ltd. 624,232 46,115 .63
INDUSTRIAL COMPONENTS - 0.53%
Tower Automotive, Inc.(1) 1,750,000 20,781 .28
Illinois Tool Works Inc. 350,000 18,091 .25
IT CONSULTING & SERVICES - 0.49%
Acxiom Corp.(1) 550,000 15,881 .22
Metamor Worldwide Inc.(1) 675,000 13,837 .19
Shared Medical Systems Corp. 150,000 5,841 .08
TRANSPORTATION: AIRLINES - 0.45%
Southwest Airlines Co. 1,790,000 33,003 .45
BUILDING MATERIALS & COMPONENTS - 0.45%
Elcor Corp. 975,000 32,663 .45
TEXTILES & APPAREL - 0.44%
NIKE, Inc., Class B 1,127,000 32,049 .44
FOOD & HOUSEHOLD PRODUCTS - 0.29%
Colgate-Palmolive Co. 400,000 20,875 .29
WHOLESALE & INTERNATIONAL TRADE - 0.27%
Tech Data Corp.(1) 900,000 19,519 .27
MULTI-INDUSTRY - 0.16%
Dover Corp. 300,000 11,569 .16
TRANSPORTATION: RAIL & ROAD - 0.12%
Wisconsin Central Transportation Corp.(1) 675,000 8,353 .12
RECREATION & OTHER CONSUMER PRODUCTS - 0.08%
Mattel, Inc. 600,000 5,775 .08
Miscellaneous - 0.62%
Other equity securities in initial period of acquisition 45,558 .62
--------------------
Total Equity Securities (cost: $3,724,191,000) 6,088,377 83.75
Principal Market Percent
Amount Value of Net
Short-Term Securities (000) (000) Assets
- -------------------------------------------- -------- -------- --------
Corporate Short-Term Notes - 13.56%
Bell Atlantic Financial Services, Inc. 5.68%-5.82% due 3/6-4/ $65,400 65,196 .90
Procter & Gamble Co. 5.71%-5.83% due 3/24-4/17/2000 64,900 64,508 .89
Ford Motor Credit Co. 5.70%-5.71% due 3/17-3/22/2000 63,300 63,107 .87
Eastman Kodak Co. 5.75%-5.89% due 3/6-5/15/2000 62,350 61,827 .85
CIT Group Holdings, Inc 5.75%-5.86% due 3/27-4/11/2000 60,350 60,056 .83
General Motors Acceptance Corp. 5.71%-5.81% due 3/9-3/21/2000 57,600 57,487 .79
H.J. Heinz Co. 5.72%-5.82% due 3/13-4/7/2000 55,500 55,231 .76
National Rural Utilities Cooperative Finance Corp.
!5.85%-5.87% due 3/13-3/14/2000 55,200 55,083 .76
IBM Credit Corp. 5.71%-5.83% due 3/15-4/24/2000 55,000 54,672 .75
Ciesco LP 5.70%-5.82% due 3/8-3/14/2000 52,500 52,409 .72
E.I. du Pont de Nemours and Co. 5.77%-5.81% due 4/19/2000 49,600 49,199 .68
Coca-Cola Co. 5.70%-5.73% due 3/20-4/14/2000 48,800 48,527 .67
Campbell Soup Co. 5.84% due 4/26-5/4/2000 47,000 46,531 .64
American Express Credit Corp. 5.65% due 3/3/2000 41,800 41,780 .57
AT&T Corp. 5.75%-5.80% due 3/16-4/10/2000 41,000 40,793 .56
USAA Capital Corp. 5.73%-5.84% due 3/1-4/27/2000 38,460 38,289 .53
Motorola, Inc. 5.72%-5.78% due 3/30-4/6/2000 36,600 36,397 .50
Associates First Capital Corp. 5.72% due 3/29/2000 30,000 29,860 .41
Lucent Technologies Inc. 5.87% due 3/10/2000 25,000 24,960 .34
Motorola Credit Corp. 5.78% due 4/12/2000 20,200 20,059 .27
Associates Corp. of North America 5.92% due 3/1/2000 20,000 19,997 .27
Federal Agency Discount Notes - 2.94%
Fannie Mae 5.67%-5.78% due 3/2-4/20/2000 133,661 133,066 1.83
Freddie Mac 5.66%-5.79% due 3/7-6/15/2000 80,748 80,348 1.11
--------------------
Total Short-Term Securities (cost: $1,199,399,000) 1,199,382 16.50
--------------------
Total Investment Securities (cost:$4,923,590,000) 7,287,759 100.25
Excess of payables over cash and receivables 18,143 .25
--------------------
NET ASSETS 7,269,616 100.00
--------------------
(1) Non-income-producing securities.
(2) The fund owns 5.09% of the outstanding voting securities of
Ventiv Health, Inc., and thus should be considered an
affiliate as defined by the Investment Company Act of 1940.
See Notes to Financial Statements
</TABLE>
<TABLE>
AMCAP FUND Financial Statements
- ------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities
at February 29, 2000 (dollars in thousands)
- ------------------------------------------- ---------------- ----------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $4,923,590) $7,287,759
Cash 215
Receivables for--
Sales of investments $14,073
Sales of fund's shares 6,903
Dividends 2,067 23,043
----------------------------------
7,311,017
Liabilities:
Payables for--
Purchases of investments 29,320
Repurchases of fund's shares 5,728
Management services 2,075
Other expenses 4,278 41,401
----------------------------------
Net Assets at February 29, 2000--
Equivalent to $19.00 per share on
382,652,230 shares of $1 par value
capital stock outstanding (authorized
capital stock--500,000,000 shares) $7,269,616
=================
Statement of Operations for the year
ended February 29, 2000 (dollars in thousands)
----------------------------------
Investment Income:
Income:
Dividends $ 32,742
Interest 58,515 $ 91,257
------------------
Expenses:
Management services fee 23,853
Distribution expenses 14,744
Transfer agent fee 4,024
Reports to shareholders 231
Registration statement and prospectus 394
Postage, stationery and supplies 582
Directors' fees 126
Auditing and legal fees 53
Custodian fee 111
Taxes other than federal income tax 88
Other expenses 217 44,423
----------------------------------
Net investment income 46,834
-----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 999,592
Net increase in unrealized
appreciation on investments:
Beginning of year 2,082,157
End of year 2,364,169
------------------
Net unrealized appreciation
on investments 282,012
-----------------
Net realized gain and unrealized
appreciation on investments 1,281,604
-----------------
Net Increase in Net Assets Resulting
From Operations $1,328,438
=================
See Notes to Financial Statements
Statement of Changes in Net
Assets (dollars in thousands)
- --------------------------------------------- ----------------------------------
Year ended Year ended
February 29, 2000February 28, 1999
Operations: ----------------------------------
Net investment income $ 46,834 $ 36,888
Net realized gain on investments 999,592 849,757
Net unrealized appreciation
on investments 282,012 136,197
----------------------------------
Net increase in net assets
resulting from operations 1,328,438 1,022,842
----------------------------------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (34,644) (38,213)
Distributions from net realized
gain on investments (856,319) (673,768)
----------------------------------
Total dividends and distributions (890,963) (711,981)
----------------------------------
Capital Share Transactions:
Proceeds from shares sold:
48,563,421 and 46,252,114
shares, respectively 894,848 807,601
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
46,748,655 and 39,917,389 shares,
respectively 836,603 663,119
Cost of shares repurchased:
45,493,929 and 42,252,652
shares, respectively (838,228) (733,197)
----------------------------------
Net increase in net assets
resulting from capital share transactions 893,223 737,523
----------------------------------
Total Increase in Net Assets 1,330,698 1,048,384
Net Assets:
Beginning of year 5,938,918 4,890,534
----------------------------------
End of year (including distributions in excess of
net investment income and undistributed net
investment income of $(807) and $3,813, respectiv $7,269,616 $5,938,918
==================================
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - 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. Short-term securities
maturing within 60 days are valued at amortized cost, which approximates market
value. 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.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for as of the trade date. Realized gains and losses
from securities transactions are determined based on specific identified cost.
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on an accrual basis. Market discounts, premiums and original issue
discounts on securities purchased are amortized daily over the expected life of
the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of February 29, 2000, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $2,364,169,000; $2,902,246,000
related to appreciated securities and $538,077,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the year ended February 29, 2000. The cost of
portfolio securities for book and federal income tax purposes was
$4,923,590,000 at February 29, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $23,853,000 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.
DISTRIBUTION EXPENSES - 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 29, 2000, distribution expenses under the Plan were $14,744,000. As of
February 29, 2000, accrued and unpaid distribution expenses were $3,456,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $2,191,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $4,024,000.
DEFERRED DIRECTORS' FEES - 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 29, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Directors, were $850,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,861,896,000 and $1,998,549,000, respectively,
during the year ended February 29, 2000.
As of February 29, 2000, accumulated undistributed net realized gain on
investments was $399,132,000 and additional paid-in capital was $4,124,470,000.
The fund reclassified $16,810,000 and $17,870,000 from undistributed net
investment income and undistributed net realized gains, respectively, to
paid-in capital, for the year ended February 29, 2000.
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 $111,000 includes $32,000 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 endedFebruary 28 or 29
------ ------ ------ ------ ------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Net Asset Value, Beginning
of Year $ 17.84 $ 16.93 $ 14.6 $ 14.40 $ 12.28
------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment income .13 .12 .10 .12 .16
Net gains on securities (both
realized and unrealized) 3.61 3.21 4.80 1.51 3.32
------ ------ ------ ------ ------
Total from investment operati 3.74 3.33 4.90 1.63 3.48
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income) (.10) (.13) (.10) (.12) (.17)
Distributions (from capital gai (2.48) (2.29) (2.47) (1.31) (1.19)
------ ------ ------ ------ ------
Total distributions (2.58) (2.42) (2.57) (1.43) (1.36)
------ ------ ------ ------ ------
Net Asset Value, End of Year $ 19.00 $ 17.84 $ 16.9 $ 14.60 $ 14.40
====== ====== ====== ====== ======
Total Return/1/ 22.30% 21.07% 36.97% 11.74% 29.29%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $7,270 $5,939 $4,891 $3,807 $3,693
Ratio of expenses to average
net assets .68% .67% .68% .69% .71%
Ratio of net income to
average net assets .72% .70% .62% .81% 1.16%
Portfolio turnover rate 34.36% 36.46% 31.42% 24.14% 35.16%
/1/Excludes maximum sales charge
of 5.75%.
</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 29,
2000, 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 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 29, 2000, 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 29, 2000, 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 30, 2000
2000 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>
<CAPTION>
Dividends and Distributions per Share
To Shareholders Payment Date From Net From Net Realized
of Record Investment Long-Term Gains
Income
<S> <C> <C> <C>
June 18,1999 June 21, 1999 $0.03 $0.820
December 9, 1999 December 10, 1999 0.07 1.655
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 68% 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 retirement plan trusts may need this information for their annual
information reporting.
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION, WHICH WAS MAILED IN JANUARY 2000, TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 1999 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
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); former Editor,
The Los Angeles Herald Examiner
MARTIN FENTON
San Diego, California
Managing Director, Senior Resource Group,
LLC (development and management of
senior living communities)
CLAUDIA P. HUNTINGTON
Los Angeles, California
President of the fund
Senior Vice President,
Capital Research and Management Company
MARY MYERS KAUPPILA
Boston, Massachusetts
Private investor; former owner and President,
Energy Investment, Inc.
BAILEY MORRIS-ECK*
Washington, D.C.
Senior Associate, Reuters Foundation;
Senior Fellow, Institute for
International Economics;
Consultant, The Independent of London;
former Vice President, Brookings Institution
KIRK P. PENDLETON
Huntingdon, 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
STEVEN B. SAMPLE, Ph.D.*
Los Angeles, California
President, University of Southern California;
Chairman of the Board, Association of Pacific
Rim Universities; former Chairman of the
Board, Association of American Universities
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
PAUL G. HAAGA, JR.
Los Angeles, California
Senior Vice President of the fund
Executive Vice President and Director,
Capital Research and Management Company
JOANNA F. JONSSON
San Francisco, California
Vice President of the fund
Vice President and Director,
Capital Research Company
C. ROSS SAPPENFIELD
New York, New York
Vice President of the fund
Vice President, Capital Research Company
VINCENT P. CORTI
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group, Capital Research
and Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Treasurer of the fund
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
*Effective November 16, 1999.
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 92821-5823
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
Two California Plaza
350 South Grand Avenue
Suite 200
Los Angeles, California 90071-3462
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT, ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, 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. PLEASE READ
THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
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,
2000, this report must be accompanied by an American Funds Group Statistical
Update for the most recently completed calendar quarter.
Printed on recycled paper
Litho in USA AGD/AL/4535
Lit. No. AMCAP-011-0400
[The American Funds Group(r)]
AMCAP Fund
