Loading...
Docoh

Amcap Fund (CAFBX)

Filed: 8 May 06, 8:00pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies

Investment Company Act File Number: 811-01435



AMCAP Fund, Inc.
(Exact Name of Registrant as specified in charter)

333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)




Registrant's telephone number, including area code: (213) 486-9200

Date of fiscal year end: February 28 or 29

Date of reporting period: February 28, 2006





Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)


Copies to:
Eric A.S. Richards, Esq.
O’Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)




ITEM 1 - Reports to Stockholders


[Logo - American Funds®]

The right choice for the long term®

AMCAP Fund

Consistency and continuity:
Building long-term growth from multiple perspectives
 
[photo of Fairy basslet fish darting among blooms of lettuce coral]
 
Annual report for the year ended February 28, 2006

AMCAP Fund® seeks long-term growth of capital by investing primarily in U.S. companies with a record of above-average growth.

This fund is one of the 29 American Funds. For nearly 75 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.

Contents
 
  
Letter to shareholders1
The value of a long-term perspective4
Consistency and continuity:
 
Building long-term growth from multiple perspectives
6
Summary investment portfolio12
Financial statements16
Directors and officers28
What makes American Funds different?back cover

Figures shown are past results for Class A shares and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors 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. For the most current information and month-end results, visit americanfunds.com. Fund results shown, unless otherwise indicated, are at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower.

Here are returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2006 (the most recent calendar quarter):

Class A shares
 
1 year
 
5 years
 
10 years
 
           
Reflecting 5.75% maximum sales charge
          
           
Average annual total return
    +4.56% +10.92%
Cumulative total return
  +7.06% +24.99% +181.94%

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on page 23 for details.

Other share class results and important information can be found on page 3.
 

 
Fellow shareholders:
 
[photo of striped fish swimming among coral]

Resilient is a good word to describe the U.S. economy over the past 12 months ended February 28. Despite heavy destruction on the Gulf Coast caused by hurricanes Rita and Katrina and a spike in oil prices, the U.S. economy stayed quite strong. Corporate profits increased an estimated 13% for the 2005 calendar year, continuing the double-digit growth of the past four calendar years. Corporate profit margins remained at high levels and consumer spending continued at a healthy pace through much of the year.
 
In this environment, AMCAP Fund produced a total return of 10.9% for the fiscal year, compared with a total return of 8.4% for the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of large-company, primarily U.S. stocks. Two other benchmarks, the Lipper Growth Funds Index and the Lipper Multi-Cap Core Funds Index, were up 11.4% and 12.1% respectively.

To get a clearer picture of AMCAP’s long-term record, we can view the fund’s results over a market cycle rather than focusing on a single fiscal year. While the past 10 years could be deemed an unusual market cycle given the heights reached during the “bubble” period and the subsequent market decline, the relative pattern is still informative. AMCAP produced an average annual total return of 11.2% over the past 10 years, compared with 8.9% by the S&P 500, 7.1% by the Lipper Growth Funds Index and 8.8% by the Lipper Multi-Cap Core Funds Index. On a cumulative basis, shareholders who invested $10,000 on March 1, 1996, found that their investment had grown to $28,866 as of February 28, 2006 compared with $23,502 by the S&P 500, $23,197 by the Lipper Multi-Cap Core Funds Index and $19,843 by the Lipper Growth Funds Index.

Over its lifetime of almost 39 years, AMCAP has provided an average annual total return of 12.4%, compared with 10.5% by the S&P 500. You can see that the longer term point of view gives an even better indication of how the fund is meeting its objective of long-term growth of capital.

The economy and the stock market

The U.S. economy has been helped by a confluence of positive developments for consumers and companies over the past three years. Tax cuts, low interest rates, home mortgage refinancing and low inflation have boosted consumer spending and encouraged corporate capital investment. Corporations have initiated and increased dividends and share buybacks, turning some of their profits back to shareholders. Countries outside the United States have helped to keep U.S. interest rates and inflation low. Foreign investors, primarily Asian-centered banks, continued to buy large amounts of U.S. Treasury securities. With the obvious exception of energy, low-cost imports have helped to keep U.S. inflation in check. The Federal Reserve raised the federal funds rate from 2.75% in March 2005 in a series of short increases to 4.5% at the end of the fiscal year. As we look ahead, the issue is whether interest rates will rise to a level that will impact overall consumer spending, since rates have already begun to impact the housing sector. Another major influence will be the direction of capital flows, which will affect both interest rates and the value of the dollar.

[Begin Sidebar]

Cumulative total returns (for periods ended 2/28/2006)
       
   
1 year
  
5 years
  
10 years
 
           
AMCAP
  +10.9% +23.6% +188.7%
Standard & Poor’s 500 Composite Index1 
  +8.4  +12.4  +135.0 
Lipper Multi-Cap Core Funds Index2
  +12.1  +22.4  +132.0 
Lipper Growth Funds Index2
  +11.4  +5.5  +98.4 
           
AMCAP’s lifetime results (5/1/1967 - 2/28/2006)
          
      
Cumulative total return
  
Average annual total return
 
           
AMCAP     +9,413.9% +12.4%
Standard & Poor’s 500 Composite Index1
     +4,763.5  +10.5 
Consumer Price Index (inflation)3
     +500.3  +4.7 

1The S&P 500 is unmanaged and does not reflect sales charges, commissions or expenses.
2Lipper indexes do not include the effects of sales charges.
3Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
[End Sidebar]

What helped the fund’s results

Energy, health care providers, and services and consumer discretionary companies helped the fund during this fiscal year. Although the fund had a relatively small holding in energy stocks, oil and gas production and services companies in the AMCAP portfolio did exceptionally well. Among the fund’s contributors were Schlumberger (+52.4%), FMC Technologies (+35.8%), Noble (+29.5%), Devon Energy (+25.3%) and Smith International (+20.5%). Health care service companies benefited from private-pay rate increases, favorable demographic trends and efforts by governments and businesses to contain health costs. Contributors were Express Scripts (+131.8%), Caremark Rx (+30.0%) and Medco Health Solutions (+25.4%). In the consumer discretionary category, Best Buy, a leading consumer electronics retailer, rose 49.6%. Lowe’s, one of the biggest do-it-yourself home improvement retailers, posted a gain of 16.0%.

What detracted from results

Pharmaceutical companies were one of the groups that held the fund back. These companies were hurt by the lack of new blockbuster drugs going to market during the period and issues of litigation and regulation affecting individual companies. Among our pharmaceutical holdings that declined during the period were Abbott Laboratories (-3.9%), Bristol-Myers Squibb (-7.7%) and Johnson & Johnson (-12.1%). On the plus side, Forest Laboratories had a gain of 7.5%.

Looking forward

Much of the easy part of the recovery from the bottom of the bear market in October 2002 has already been completed. The coming months could continue to be positive for corporate earnings, but companies may find it difficult to expand their profit margins. They face a number of challenges: higher energy and borrowing costs, tighter labor markets and higher capacity utilization. The American consumer’s spending power remains generally strong, but it is unlikely that the benefits of past tax cuts and mortgage refinancing will be as great in the future. In addition, the U.S. stock market is increasingly being affected by events outside its control. Geopolitical events in the Middle East and elsewhere, foreign demand for U.S. goods and services, stocks and bonds and the relative level of our currency can impact our markets significantly.

In the meantime, we will continue to invest in well-managed companies with a history of growth, a sustainable competitive edge and good future prospects. Our time horizon is long, and we work very hard to identify and invest in businesses that we believe can sustain their growth over many years. While there may be economic crosscurrents in the near term, we are optimistic that we will continue to find good quality growth businesses to invest in at reasonable prices.

We are pleased to report that in the past 12 months the number of shareholder accounts has increased by about 200,000 to more than 1.4 million. We welcome our new shareholders and thank our long-term investors for their continuing support of AMCAP Fund.

Cordially,

/s/ R. Michael Shanahan
 
R. Michael Shanahan
Vice Chairman of the Board

/s/ Claudia P. Huntington
 
Claudia P. Huntington
President

April 11, 2006

For current information about the fund, visit americanfunds.com.

[Begin Sidebar]
AMCAP’s last 10 years

One-year total returns for the past 10 fiscal years (ended 2/28 or 2/29)
   
     
1997  +11.7%
1998  +37.0 
1999  +21.1 
2000  +22.3 
2001  +3.0 
2002  -7.1 
2003  -15.7 
2004  +37.0 
2005  +3.9 
2006  +10.9 
     
Cumulative total return for the 10-year period ended 2/28/2006
  +188.7%
Average annual total return for the 10-year period ended 2/28/2006
  +11.2%
[End Sidebar]
 

 
Other share class results 
unaudited

Class B, Class C, Class F and Class 529

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For the most current information and month-end results, visit americanfunds.com.

Average annual total returns for periods ended March 31, 2006 (the most recent calendar quarter):    
           
   
1 year
  
5 years
  
Life of class
 
           
Class B shares— first sold 3/15/00
          
Reflecting applicable contingent deferred sales          
charge (CDSC), maximum of 5%, payable only          
if shares are sold within six years of purchase  +7.73% +4.65% +3.45%
Not reflecting CDSC  +12.73% +4.98% +3.45%
           
Class C shares— first sold 3/15/01
          
Reflecting CDSC, maximum of 1%, payable only          
if shares are sold within one year of purchase  +11.63% +4.88% +4.44%
Not reflecting CDSC  +12.63% +4.88% +4.44%
           
Class F shares*— first sold 3/16/01
          
Not reflecting annual asset-based fee charged          
by sponsoring firm  +13.53% +5.72% +5.61%
           
Class 529-A shares— first sold 2/15/02
          
Reflecting 5.75% maximum sales charge  +6.98%   +5.62%
Not reflecting maximum sales charge  +13.54%   +7.14%
           
Class 529-B shares— first sold 2/19/02
          
Reflecting applicable CDSC, maximum of 5%,payable          
only if shares are sold within six years of purchase  +7.55%   +6.26%
Not reflecting CDSC  +12.55%   +6.66%
           
Class 529-C shares— first sold 2/19/02
          
Reflecting CDSC, maximum of 1%, payable only          
if shares are sold within one year of purchase  +11.60%   +6.68%
Not reflecting CDSC  +12.60%   +6.68%
           
Class 529-E shares*— first sold 3/7/02
  +13.16%   +5.87%
           
Class 529-F shares*— first sold 9/17/02
          
Not reflecting annual asset-based fee charged          
by sponsoring firm  +13.68%   +14.12%

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.  Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on page 23 for details.

*These shares are sold without any initial or contingent deferred sales charge.
 Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee.

There are several ways to invest in AMCAP Fund. Class A shares are subject to a 5.75% maximum up-front sales charge that declines for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. Other share classes, which are generally not available for certain employer-sponsored retirement plans, have no up-front sales charges but are subject to additional annual expenses and fees. Annual expenses for Class B shares were 0.79 percentage points higher than for Class A shares; Class B shares convert to Class A shares after eight years of ownership. If redeemed within six years, Class B shares may also be subject to a contingent deferred sales charge (“CDSC”) of up to 5% that declines over time. Class C shares were subject to annual expenses 0.84 percentage points higher than those for Class A shares and a 1% CDSC if redeemed within the first year after purchase. Class C shares convert to Class F shares after 10 years. Class F shares, which are available only through certain fee-based programs offered by broker-dealer firms and registered investment advisers, had higher annual expenses (by 0.03 percentage points) than did Class A shares, and an annual asset-based fee charged by the sponsoring firm. Expenses are deducted from income earned by the fund. As a result, dividends and investment results will differ for each share class.

The value of a long-term perspective

How a $10,000 investment has grown

Figures shown are past results for Class A shares and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For the most current information and month-end results, visit americanfunds.com. Fund figures reflect deduction of the maximum sales charge of 5.75% on the $10,000 investment.1 Thus the net amount invested was $9,425.2 

The chart and accompanying table illustrate how a $10,000 investment in AMCAP grew between May 1, 1967 — when the fund began operations — and February 28, 2006.

As you can see, that $10,000 grew to $895,855 with all distributions reinvested, a gain of 8,859%. Over the same period, $10,000 would have grown to $486,349 in the unmanaged 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, 1996. At that time, according to the table, the value of the investment illustrated here was $310,345. Since then, it has nearly tripled in value, to $895,855. Thus, in that same 10-year period, the value of your investment — regardless of size — has also nearly tripled.

Average annual total returns based on a $1,000 investment
(for periods ended February 28, 2006)*

  
1 year
 
5 years
 
10 years
 
           
Class A shares
  +4.49% +3.11% +10.53%

*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge.

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on page 23 for details.
 

S&P 500 with dividends reinvested5
AMCAP with dividends reinvested4
Consumer Price Index (inflation)6
   
5/1/1967$ 10,0005/1/1967$ 9,4255/1/1967$ 10,000
2/29/1968$ 9,7782/29/1968$ 10,0562/29/1968$ 10,332
2/28/1969$ 11,0742/28/1969$ 12,2122/28/1969$ 10,816
2/28/1970$ 10,4422/28/1970$ 11,8352/28/1970$ 11,480
2/28/1971$ 11,7132/28/1971$ 12,6432/28/1971$ 12,054
2/29/1972$ 13,3052/29/1972$ 14,9022/29/1972$ 12,477
2/28/1973$ 14,3452/28/1973$ 13,9782/28/1973$ 12,961
2/28/1974$ 12,7762/28/1974$ 11,0372/28/1974$ 14,260
2/28/1975$ 11,3542/28/1975$ 9,9032/28/1975$ 15,861
2/29/1976$ 14,4532/29/1976$ 13,8832/29/1976$ 16,858
2/28/1977$ 15,0622/28/1977$ 14,1732/28/1977$ 17,855
2/28/1978$ 13,8072/28/1978$ 16,6122/28/1978$ 19,003
2/28/1979$ 16,1052/28/1979$ 22,7382/28/1979$ 20,876
2/29/1980$ 20,0712/29/1980$ 33,5412/29/1980$ 23,837
2/28/1981$ 24,4002/28/1981$ 40,5482/28/1981$ 26,556
2/28/1982$ 22,1752/28/1982$ 42,6432/28/1982$ 28,580
2/28/1983$ 30,6902/28/1983$ 61,4562/28/1983$ 29,577
2/29/1984$ 34,0132/29/1984$ 62,1282/29/1984$ 30,937
2/28/1985$ 41,1082/28/1985$ 72,1652/28/1985$ 32,024
2/28/1986$ 53,6362/28/1986$ 88,7382/28/1986$ 33,021
2/28/1987$ 69,4622/28/1987$ 115,6642/28/1987$ 33,716
2/29/1988$ 67,5862/29/1988$ 112,0372/29/1988$ 35,045
2/28/1989$ 75,6082/28/1989$ 122,8272/28/1989$ 36,737
2/28/1990$ 89,8632/28/1990$ 140,0272/28/1990$ 38,671
2/28/1991$ 103,0182/28/1991$ 163,4922/28/1991$ 40,725
2/29/1992$ 119,4502/29/1992$ 196,8562/29/1992$ 41,873
2/28/1993$ 132,1582/28/1993$ 208,5572/28/1993$ 43,233
2/28/1994$ 143,1492/28/1994$ 232,1372/28/1994$ 44,320
2/28/1995$ 153,6722/28/1995$ 240,0472/28/1995$ 45,589
2/29/1996$ 206,9412/29/1996$ 310,3452/29/1996$ 46,798
2/28/1997$ 261,0462/28/1997$ 346,7832/28/1997$ 48,218
2/28/1998$ 352,3822/28/1998$ 475,0032/28/1998$ 48,912
2/28/1999$ 421,9352/28/1999$ 575,0892/28/1999$ 49,698
2/29/2000$ 471,4312/29/2000$ 703,3582/29/2000$ 51,299
2/28/2001$ 432,7992/28/2001$ 724,6382/28/2001$ 53,112
2/28/2002$ 391,6542/28/2002$ 673,3272/28/2002$ 53,716
2/28/2003$ 302,8602/28/2003$ 567,6182/28/2003$ 55,317
2/29/2004$ 419,4522/29/2004$ 777,4202/29/2004$ 56,254
2/28/2005$ 448,6882/28/2005$ 808,0372/28/2005$ 57,946
2/28/2006$ 486,3492/28/2006$ 895,8552/28/2006$ 60,030
 
 
Average annual total return for 38-3/4 years 12.3%4

Year ended February 28 or 29
19683
196919701971197219731974
        
Total value (dollars in thousands)
       
Dividends reinvested$.1.2.2.2.2.2
Value at fiscal year-end1
$10.112.211.812.614.914.011.0
AMCAP total return0.6%21.4(3.1)6.817.9(6.2)(21.0)
        
Year ended February 28 or 291975197619771978197919801981
        
Total value (dollars in thousands)
       
Dividends reinvested.3.3.2.3.3.4.7
Value at fiscal year-end1
9.913.914.216.622.733.540.5
AMCAP total return(10.3)40.22.117.236.947.520.9
        
Year ended February 28 or 291982198319841985198619871988
        
Total value (dollars in thousands)
       
Dividends reinvested2.61.21.61.91.51.63.0
Value at fiscal year-end1
42.661.562.172.288.7115.7112.0
AMCAP total return5.244.11.116.223.030.3(3.1)
        
Year ended February 28 or 291989199019911992199319941995
        
Total value (dollars in thousands)
       
Dividends reinvested3.23.23.32.22.31.92.4
Value at fiscal year-end1
122.8140.0163.5196.9208.6232.1240.0
AMCAP total return9.614.016.820.45.911.33.4
        
Year ended February 28 or 291996199719981999200020012002
        
Total value (dollars in thousands)
       
Dividends reinvested3.42.62.53.73.34.13.7
Value at fiscal year-end1
310.3346.8475.0575.1703.4724.6673.3
AMCAP total return29.311.737.021.122.33.0(7.1)
        
Year ended February 28 or 292003200420052006   
        
Total value (dollars in thousands)
       
Dividends reinvested1.1.12.04.1   
Value at fiscal year-end1
567.6777.4808.0895.9   
AMCAP total return(15.7)37.03.910.9   
 
1 As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $25,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares.
2 The maximum initial sales charge was 8.5% prior to July 1, 1988.
3 For the period May 1, 1967 (when the fund began operations), through February 29, 1968.
4 Includes reinvested dividends of $62,206 and reinvested capital gain distributions of $517,450.
5 The S&P 500 cannot be invested in directly.
6 Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
The indexes are unmanaged and do not reflect sales charges, commissions or expenses.
Past results are not predictive of future results. The results shown are before taxes on fund distributions and sale of fund shares.
 
 
 
Consistency and continuity:
Building long-term growth from multiple perspectives
 
[photo of the Maldives, Kurumba Island, coral in foreground]
 
[photo of flower coral]
[photo of leather coral]
[photo of bubble coral]
 
[Begin Sidebar]
A coral reef, like the one on our cover, is created by the individual behavior of millions of tiny microorganisms. As these tiny corals produce calcium carbonate, a reef structure grows and strengthens in a way that is far greater, stronger and longer lived than any individual organism could. In a way, AMCAP Fund’s investment process has parallels to the coral reef structure.
[End Sidebar]

[Begin Photo Caption]
[photo of Claudia Huntington]
Claudia Huntington
[End Photo Caption]

[Begin Photo Caption]
[photo of Michael Shanahan]
Michael Shanahan
[End Photo Caption]

Like the 28 other American Funds, AMCAP manages its investments with a time-tested method called the multiple portfolio counselor system. Blending teamwork with individuality, this strategy has been a key factor in AMCAP’s successful long-term record. One benefit of the approach is that the fund’s decision-makers bring different perspectives to the investment process.

The system works like this: AMCAP’s portfolio is divided into five segments. Four segments are each managed by one of the fund’s portfolio counselors. The fifth is managed through a portfolio that incorporates the best investment ideas of the fund’s 22 investment analysts.

The portfolio counselors are generalists who invest broadly across many industries, while the 22 research analysts are specialists with deep expertise in specific industries. As in all American Funds, an investment committee makes certain that AMCAP remains true to its mandate of investing in quality growth companies and that each individual’s investment choices reflects that mandate. But within this constraint, each individual analyst or portfolio counselor is free to make his or her investment decisions.

“Many of our portfolio counselors and analysts come from widely varied backgrounds,” says Claudia Huntington, the fund’s president. “They range from company veterans who have spent decades at Capital Research and Management Company, the investment adviser for the American Funds, to more recent arrivals, who bring new ideas and fresh perspectives. They have differences in backgrounds, expertise, points of view and investment styles. All of these investment experts share one thing in common: They focus on finding companies that have a record of above-average growth in the past that they believe will continue into the future.”

But forecasting the future is always difficult. That’s why AMCAP has carefully assembled a group of portfolio counselors and research analysts with different styles and approaches. “Most importantly, some do well in up markets, and some do well in down markets,” Claudia says. “The beauty of our approach is that shareholders get the benefit of many different points of view instead of just one. The result has produced a strong lifetime record and has shown that the fund has had less volatility in both up and down markets.”

We sat down with five of AMCAP’s contributors to learn more about the different perspectives, backgrounds and experiences of the fund’s decision-makers, and why the multiple portfolio counselor system has been so important to the fund’s long-term investment record.

Mike Shanahan: Focusing on the forecasts of individual companies
Mike Shanahan, the fund’s vice chairman, focuses on the risks in the fund’s forecasts of individual companies’ growth over the next five to 10 years. He asks such challenging questions as “What needs to happen to enable a company to continue its above-average growth? Does it need new products, new market penetrations or expansion outside the United States? How difficult is it for the company to accomplish some of the things it is promising?” In electronics or health care, you often depend on new products to continue above-average growth, Mike explains. “If the company has to solve a scientific problem or innovate, that’s a lot riskier than exploiting already existing technology.” He notes, however, that “everything may work out for a company, but the price may still be too high.”
 
[photo of tube coral]
[photo of tray of test tubes]

 
[Begin Pull Quote]
In electronics or health care, you often depend on new products to continue above-average growth. If the company has to solve a scientific problem or innovate, that’s a lot riskier than exploiting already existing technology.
— Mike Shanahan
[End Pull Quote]

Mike joined Capital Research in 1965 and has 41 years of investment experience. He began as Capital’s first technology analyst and has a background in technology companies, venture capital and corporate management. His experience as a former technology analyst gives him a different feel than others might have for what it takes to get things done in that world. “One of the features of electronics is that the time to market for known technology is relatively fast and can be done by lots of people,” he says. “Companies can sell a lot of products, but the competition is so great that very few companies make money.”

Claudia Huntington: Investing in mid-sized or smaller companies that are global competitors
Claudia prefers to invest in mid-cap or small-cap companies if she can find them at an attractive valuation. She is comfortable with the possibility of more volatility for “an opportunity for somewhat faster growth.” She likes to be invested in firms that are “good global competitors.” Like Mike, she also spends a lot of time deciding whether the price for a growth company is reasonable and a good investment for AMCAP shareholders over the next five to 10 years.

Claudia says she “is comfortable paying a relatively high price for a high growth company if, through our extensive and long-term oriented research, we have determined that we have a good handle on the risks and opportunities of that growth. Forecasting a company’s ability to grow in the future is more of an art than science. When we speak of the words ‘value’ and ‘growth,’ it should be the future we refer to, and not the past. There are many growth companies who have a fine history, but who may not be growth companies in the future. There are also companies with modest growth in the past who may have an opportunity to accelerate that growth in the future.”

Claudia, who joined Capital Research in 1975, has 33 years of investment experience. She formerly worked as an economist and a technology analyst for Capital Research and continues to look at the big picture of the global economy, noting that the global competitive environment has accelerated in the past decade. “The opening of emerging market economies, increased global trade and global capital flows have caused dramatic changes for emerging countries and developed countries alike.”

Tim Armour: Seeking strong growth companies that have had a misstep
Tim, a veteran portfolio counselor, hunts for companies that have a strong earnings and sales record but “somewhere along the line, there has been a misstep — something has temporarily gone wrong to drive the stock price down. That means that the company’s stock price does not reflect what we see as the inherent value of the entire enterprise.” Tim describes himself as a bottom-up, value-oriented investor. He invests in a wide range of industries including retail, medical instruments, health care services and financial companies. “Macroeconomics and the world economic view is interesting, but I don’t spend much time on it,” Tim says. “I invest in companies for a very specific reason: They should grow in the coming economic environment. I look at it company-by-company.”

Tim joined Capital in 1983. He began as a financial analyst covering global telecommunications companies, high-yielding industrial companies and recreational companies. He has 23 years of investment experience.

One of Tim’s favorite measures to identify quality growth companies is sales growth per share. “If a company has been able to maintain sales per share growth for a long time, that should flow through to the bottom line — providing profit margins remain consistent,” he says. “I like to see five years of sales growth per share. I am looking for a pattern of predictability and sustainability. I am not as impressed with a company that is flat for two years, dips slightly for two years and then goes up sharply another year.

“We maintain a list of potential AMCAP companies that have a proven growth track record,” Tim says. “The trick is that you have to pay a reasonable or cheap price for these companies. Quite often, you can buy very good companies for an inflated price, but if you pay that price, it won’t be a good investment. We are interested in buying good companies at a reasonable — if not a cheap — price.”

Ross Sappenfield: Investing in companies with a positive tailwind
Ross likes to invest in companies “where I see a positive trend that might last for several years.” Two of his favorite industries are non-bank financial service companies and managed health care. “My investing in health care services is based on the aging demographics of the United States. While I don’t try to predict the macro economy, it is possible to identify some big trends and tailwinds that should continue for a number of years.”

He says he tries to identify those “scarce situations” where the market has ceased to believe that certain growth companies can continue to grow. Ross’s investments for AMCAP in managed care are examples of just such a situation. “The stock market generally believed that the managed care companies’ earnings growth would slow down or even turn negative,” he says. “But I believed that, because of the consolidation of the industry and the departure of some companies, the surviving companies would continue to grow. And our investments have done that.”

The key is to have a view based on thorough research of a company’s prospects. Ross prefers to invest in companies with a low valuation to reduce risk. Ross joined Capital Research in 1992 after working in investment banking. He has 14 years of investment experience.
 
[Begin Photo Caption]
[photo of Tim Armour]
Tim Armour
[End Photo Caption]

[Begin Pull Quote]
Somewhere along the line, there has been a misstep — something has temporarily gone wrong to drive the stock price down. That means that the company’s stock price does not reflect what we see as the inherent value of the entire enterprise.
— Tim Armour
[End Pull Quote]

[Begin Photo Caption]
[photo of Ross Sappenfield]
Ross Sappenfield
[End Photo Caption]

[Begin Pull Quote]
The stock market generally believed that the managed care companies’ earnings growth would slow down or even turn negative. But I believed that, because of the consolidation of the industry, the surviving companies would continue to grow.
— Ross Sappenfield
[End Pull Quote]
 
Barry Crosthwaite: Specializing in cyclical growth companies in energy and telecommunications
Barry, an investment analyst, specializes in companies in the volatile energy and telecommunications industries. “With AMCAP, you need to find companies with a sustainable competitive advantage,” Barry says. “To achieve this, I invest in industry leaders — not just good companies.” 

Barry is somewhat unusual in that he began his career by working 14 years as a general manager with a chemical company. “It gives you a degree of common sense that — in reality — is not all that common,” he says. “When you live through major changes at a company, such as rapid growth, downsizing a business, integrating an acquisition, and attempting to change a culture, you see how hard it is to accomplish all these things. Therefore, I find myself questioning a lot of management’s timelines on changes they are making. I have seen senior managements fail so I’m less inclined to take their statements at face value. I’ve steered away from a lot of situations that seemed attractive on the surface but turned out to be higher risk than they looked.”

Barry joined Capital Research in 1996 and has 10 years of investment experience. He is the coordinator for AMCAP’s research portfolio. While he doesn’t make decisions for the 22 analysts in the portfolio, he coordinates their activities in the fund and makes sure that the analysts are focused on the fund’s mandate of investing in quality growth stocks.

What does this mean to the AMCAP shareholder?
The multiple portfolio counselor system “has helped bring consistency and continuity to AMCAP Fund,” Claudia says. “Over time, having more than one person managing assets has tended to smooth out the peaks and valleys of investing. When one portfolio counselor’s particular style is out of favor in the market, the shareholders benefit because another counselor’s style may be doing well. Smooth, gradual transitions help AMCAP Fund provide consistency, and the shareholder doesn’t have to be concerned about a situation in which the whole fund would undergo a complete change of managers. Diversity of investment styles, backgrounds, opinions and approaches helps the fund provide continuity and consistency.”
 
[close-up photo of the reflection of a computer screen in a person's eyeglass]
[photo of coral]
[photo of a hand holding a pacemaker - chest x-ray in the background with pacemaker inserted]

 
[Begin Pull Quote]
I invest in industry leaders — not just good companies…I’ve steered away from a lot of situations that seemed attractive on the surface but turned out to be higher risk than they looked.
— Barry Crosthwaite
[End Pull Quote]

[Begin Photo Caption]
[photo of Barry Crosthwaite]
Barry Crosthwaite
[End Photo Caption]

AMCAP’s wealth of experience

AMCAP Fund’s four portfolio counselors bring together 111 years of investment experience to managing your investment. Here are the specific years of experience* for these primary decision-makers for the fund:

 
Years of
 
investment
Portfolio counselor
experience*
R. Michael Shanahan
41
Claudia P. Huntington
33
Timothy D. Armour
23
C. Ross Sappenfield
14
*As of May 1, 2006.
 
[photo of a woman snorkling]

 
[Begin Pull Quote]
The beauty of our approach is that shareholders get the benefit of many different points of view instead of one. The result has produced a strong lifetime record.
— Claudia Huntington
[End Pull Quote]
 
[black and white photo of the Maldives, Kurumba Island, coral in foreground]
 
 
Summary investment portfolio, February 28, 2006

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.
 
[pie chart]
INDUSTRY SECTOR DIVERSIFICATION
 
Information technology                    17.24%
Health care                                    15.62
Financials                                       8.89
Consumer staples                           6.18
Consumer discretionary                  20.69
Other industries                             13.59
Short-term securities &
  other assets less liabilities           17.79
 
[end pie chart]

    
Market
 
Percent
 
   
Shares
  
value (000
)
 
of net
 
Common stocks - 82.21%
        
assets
 
           
Consumer discretionary - 20.69%
          
Lowe's Companies, Inc.  8,600,000 $586,348  2.51%
Among America's largest do-it-yourself home improvement retailers.          
Target Corp.  8,650,000  470,560  2.02 
Operates Target, the second largest chain of discount stores in the U.S.          
Best Buy Co., Inc.  8,650,000  465,889  2.00 
This leading consumer electronics retailer also sells home office products, entertainment software and appliances.          
Johnson Controls, Inc.  3,090,000  220,224  .94 
A leader in manufacturing interior components and electronics, as well as in building control services.          
Harley-Davidson Motor Co.  3,341,900  175,483  .75 
The world's leading producer of heavyweight motorcycles.          
Ross Stores, Inc.  5,775,000  163,548  .70 
Sells apparel and household goods through its chain of discount stores.          
Other securities     2,745,735  11.77 
      4,827,787  20.69 
           
Information technology - 17.24%
          
Cisco Systems, Inc. (1)  22,804,300  461,559  1.98 
The leading maker of equipment used in Internet networking.          
Microsoft Corp.  16,720,000  449,768  1.93 
A world leader in software and Internet technologies. Its products include the Windows operating system and Office software.          
Oracle Corp. (1)  32,960,000  409,363  1.75 
The world's largest supplier of database management software. Also develops business applications and provides consulting and support.          
First Data Corp.  7,909,825  356,970  1.53 
Provides credit card transactions, operates an extensive ATM network and offers money transfers through its Western Union unit.          
Google Inc., Class A (1)  980,000  355,368  1.52 
Google is one of the most frequently used website search engines in the world.          
Affiliated Computer Services, Inc., Class A (1)  3,110,000  195,681  .84 
Provides business and technology outsourcing services for private and public agencies.          
Automatic Data Processing, Inc.  3,500,000  161,665  .69 
The largest payroll and tax filing processor in the world.          
Other securities     1,634,384  7.00 
      4,024,758  17.24 
           
Health care - 15.62%
          
WellPoint, Inc. (1)  6,100,000  468,419  2.01 
One of the nation's largest managed care providers, with Blue Cross Blue Shield licenses in 13 states.          
Medco Health Solutions, Inc. (1)  4,735,000  263,834  1.13 
Manages pharmacy benefits for clients including unions, corporations and HMOs.          
Medtronic, Inc.  4,740,000  255,723  1.10 
A leading producer of medical devices, including pacemakers and implantable defibrillators.          
Guidant Corp.  3,100,000  237,956  1.02 
One of the world's leading producers of medical devices for the treatment of heart disease.          
Express Scripts, Inc. (1)  2,680,000  233,884  1.00 
Operates a network of pharmacies and mail-order prescription services. Its customers include HMOs, health insurers and union benefits plans.          
Forest Laboratories, Inc. (1)  4,440,000  203,796  .87 
Licenses and markets drugs to treat psychiatric disorders, neurologic diseases, and heart disease.          
Biogen Idec Inc. (1)  3,537,000  167,123  .72 
A leader in developing therapies to treat multiple sclerosis and cancer.          
Cephalon, Inc. (1)  2,000,000  158,960  .68 
An emerging pharmaceutical company best known for the drug Provigil, which is used to treat sleep disorders.          
AmerisourceBergen Corp.  3,420,000  157,286  .67 
Distributes pharmaceuticals, toiletries and medical supplies to hospitals, clinics and retailers.          
Other securities     1,498,956  6.42 
      3,645,937  15.62 
           
Financials - 8.89%
          
Fannie Mae  8,640,000  472,435  2.02 
This federally sponsored company purchases mortgage loans and issues mortgage-backed securities.          
American International Group, Inc.  6,165,000  409,109  1.75 
A world leader in providing insurance and other financial services to corporations and individuals.          
Capital One Financial Corp.  4,401,200  385,545  1.65 
One of the largest U.S. credit card issuers.          
Golden West Financial Corp.  3,276,100  232,701  1.00 
Owns World Savings and Loan Association, one of the largest S&L's in the nation.          
Freddie Mac  2,550,000  171,845  .74 
A federally chartered corporation that buys conventional mortgages and issues mortgage-backed securities.          
Wells Fargo & Co.  1,720,000  110,424  .47 
One of the largest banks in the U.S. and a leader in online banking.          
Bank of America Corp.  800,000  36,680  .16 
Offers banking services across the U.S. Also has offices throughout the world. Recently merged with FleetBoston Financial Corporation.          
Other securities     256,691  1.10 
      2,075,430  8.89 
           
Consumer staples - 6.18%
          
CVS Corp.  8,250,000  233,723  1.00 
A major U.S. drugstore chain.          
PepsiCo, Inc.  3,300,000  195,063  .84 
A global soft drink and snack foods company.          
Altria Group, Inc.  2,500,000  179,750  .77 
The largest tobacco company in the world. The group also controls Kraft Foods, and owns a large interest in the global brewer SABMiller.          
Other securities     834,094  3.57 
      1,442,630  6.18 
           
Energy - 5.38%
          
Schlumberger Ltd.  2,840,000  326,600  1.40 
A leading provider of services and technology to the petroleum industry.          
Smith International, Inc.  5,430,000  210,304  .90 
Makes drilling equipment used by oil and gas producers.          
Devon Energy Corp.  3,020,000  177,063  .76 
A major independent producer of oil and natural gas.          
Other securities     540,392  2.32 
      1,254,359  5.38 
           
Industrials - 4.68%
          
Robert Half International Inc.  6,800,000  244,256  1.05 
One of the world's largest providers of professional staffing services.          
United Parcel Service, Inc., Class B  2,850,000  212,923  .91 
The world's largest package delivery company and express carrier.          
Precision Castparts Corp.  3,640,000  193,066  .83 
Manufactures jet engine parts, valves and industrial tools.          
General Electric Co.  4,000,000  131,480  .56 
One of the world's top makers of power turbines, aircraft engines and medical imaging equipment. Operates finance businesses and NBC Universal, the entertainment conglomerate, and makes consumer appliances, lighting and industrial equipment.
          
Other securities     311,204  1.33 
      1,092,929  4.68 
           
Telecommunication services - 1.82%
          
Sprint Nextel Corp., Series 1  8,235,008  197,887  .85 
A wireless giant, operating a nationwide digital wireless network with more than 44 million subscribers.          
Other securities     227,491  .97 
      425,378  1.82 
           
Other - 0.45%
          
Other securities     105,148  .45 
           
           
Miscellaneous - 1.26%
          
Other common stocks in initial period of acquisition     294,472  1.26 
           
           
Total common stocks (cost: $14,317,310,000)
     19,188,828  82.21 
           
           
           
Short-term securities - 17.66%
  
Principal amount
(000
)
      
           
Federal Home Loan Bank 4.30%-4.545% due 3/17-5/17/2006 $335,200  333,503  1.43 
Atlantic Industries 4.36%-4.54% due 3/27-5/2/2006 (2)  162,300  161,447    
Coca-Cola Co. 4.30%-4.38% due 3/6-4/3/2006  110,000  109,754  1.16 
Freddie Mac 4.28%-4.575% due 3/27-5/23/2006  242,179  240,536  1.03 
J.P. Morgan Chase & Co. 4.45%-4.53% due 3/30-4/11/2006  81,000  80,617    
Park Avenue Receivables Co., LLC 4.39%-4.51% due 3/3-3/10/2006 (2)  75,000  74,951    
Preferred Receivables Funding Corp. 4.38%-4.54% due 3/8-4/7/2006 (2)  70,380  70,115  .97 
Fannie Mae 4.25%-4.58% due 3/1-6/12/2006  225,200  224,225  .96 
Bank of America Corp. 4.375%-4.625% due 3/6-4/24/2006  225,000  223,998  .96 
CAFCO, LLC 4.37%-4.57% due 3/6-4/25/2006 (2)  149,300  148,707    
Citigroup Funding Inc. 4.60% due 4/24/2006  50,000  49,656    
Ciesco LLC 4.44% due 4/5/2006 (2)  25,000  24,892  .96 
Wells Fargo Bank, N.A. 4.39%-4.51% due 3/1-3/24/2006  205,000  204,998  .88 
Clipper Receivables Co., LLC 4.46%-4.58% due 3/28-4/13/2006 (2)  152,600  151,816    
State Street Corp. 4.36% due 3/7/2006  50,000  49,958  .86 
Variable Funding Capital Corp. 4.39%-4.54% due 3/7-4/3/2006 (2)  200,000  199,588  .86 
General Electric Capital Corp. 4.40%-4.50% due 3/3-4/5/2006  134,300  133,945    
Edison Asset Securitization LLC 4.52% due 4/3-4/6/2006 (2)  50,000  49,784  .78 
Pfizer Investment Capital PLC 4.35%-4.56% due 3/6-5/16/2006 (2)  176,416  175,734  .75 
Concentrate Manufacturing Co. of Ireland 4.36%-4.52% due 3/14-4/10/2006 (2)  175,000  174,497  .75 
International Lease Finance Corp. 4.48%-4.56% due 4/6-4/19/2006  54,500  54,222  .23 
Medtronic Inc. 4.47% due 3/6/2006 (2)  10,300  10,292  .05 
Other securities     1,173,408  5.03 
           
           
Total short-term securities (cost: $4,120,721,000)
     4,120,643  17.66 
           
           
Total investment securities (cost: $18,438,031,000)
     23,309,471  99.87 
Other assets less liabilities     30,707  .13 
           
Net assets
    $23,340,178  100.00%
           
           
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. 
           
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.  
 
Investments in affiliates
 
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company.  The market value of the fund's holdings in affiliated companies is included in "Other securities" under the respective industry sectors in the preceding summary investment portfolio. Further details on these holdings and related transactions during the year ended February 28, 2006, appear below.

Company  Beginning shares  Purchases  Sales  Ending shares  
Dividend
income
(000)
 
Market value
of affiliates
at 2/28/2006
(000)
                 
Outback Steakhouse, Inc.  3,710,000  40,000  -  3,750,000 $1,950$156,788
Medicis Pharmaceutical Corp., Class A  3,625,000  -  -  3,625,000  435 103,095
Fossil, Inc. (1)  -  4,415,000  -  4,415,000  - 75,143
Power Integrations, Inc. (1)  1,850,000  -  -  1,850,000  - 45,935
              $2,385$380,961
 
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
 
           
(1) Security did not produce income during the last 12 months.          
(2) Restricted security that can be resold only to institutional investors. In practice, this security is typically as liquid as unrestricted securities in the portfolio. The total value of all such restricted securities, including those in "Other securities" in the summary investment portfolio, was $1,817,936,000, which represented 7.79% of the net assets of the fund.
 
           
The descriptions of the companies in the summary investment portfolio, which were obtained from published reports and other sources believed to be reliable, are supplemental and are not covered by the Report of Independent Registered Public Accounting Firm.
 
           
See Notes to Financial Statements          
 
 
Financial statements
 
Statement of assets and liabilities
at February 28, 2006
 (dollars and shares in thousands, except per-share amounts) 
        
Assets:
       
Investment securities at market:       
Unaffiliated issuers (cost: $18,053,971) $22,928,510    
Affiliated issuers (cost: $384,060)  380,961 $23,309,471 
Cash     246 
Receivables for:       
Sales of investments  64,314    
Sales of fund's shares  57,917    
Dividends and interest  15,339  137,570 
      23,447,287 
Liabilities:
       
Payables for:       
Purchases of investments  56,131    
Repurchases of fund's shares  28,181    
Investment advisory services  5,157    
Services provided by affiliates  15,689    
Deferred directors' compensation  1,655    
Other fees and expenses  296  107,109 
Net assets at February 28, 2006
    $23,340,178 
        
Net assets consist of:
       
Capital paid in on shares of capital stock    $18,274,083 
Undistributed net investment income     19,070 
Undistributed net realized gain     175,585 
Net unrealized appreciation     4,871,440 
Net assets at February 28, 2006
    $23,340,178 
 

Total authorized capital stock - 2,000,000 shares, $1.00 par value (1,204,885 total shares outstanding)     
   Net assets  Shares outstanding  Net asset value per share* 
           
Class A $16,090,555  825,795 $19.48 
Class B  1,139,262  60,492  18.83 
Class C  1,607,071  85,831  18.72 
Class F  2,132,385  109,912  19.40 
Class 529-A  339,286  17,446  19.45 
Class 529-B  73,405  3,881  18.91 
Class 529-C  109,960  5,810  18.93 
Class 529-E  20,092  1,042  19.28 
Class 529-F  9,619  494  19.46 
Class R-1  34,681  1,821  19.04 
Class R-2  357,539  18,793  19.03 
Class R-3  662,168  34,339  19.28 
Class R-4  405,225  20,867  19.42 
Class R-5  358,930  18,362  19.55 
*Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $20.67 and $20.64, respectively.
 
           
See Notes to Financial Statements          
 

Statement of operations
       
for the year ended February 28, 2006  (dollars in thousands) 
Investment income:
       
Income:       
Dividends (includes $2,385 from affiliates) $143,744    
Interest  128,501 $272,245 
        
Fees and expenses:*       
Investment advisory services  67,456    
Distribution services  70,094    
Transfer agent services  16,795    
Administrative services  9,434    
Reports to shareholders  895    
Registration statement and prospectus  1,147    
Postage, stationery and supplies  2,063    
Directors' compensation  490    
Auditing and legal  183    
Custodian  136    
State and local taxes  418    
Other  122    
Total fees and expenses before reimbursements/waivers  169,233    
Less reimbursement/waiver of fees and expenses:       
Investment advisory services  6,486    
Administrative services  469    
Total fees and expenses after reimbursements/waivers     162,278 
Net investment income     109,967 
        
Net realized gain and unrealized
       
appreciation on investments and non-U.S. currency:
       
Net realized gain (loss) on:       
Investments  383,810    
Non-U.S. currency transactions  (1,005) 382,805 
Net unrealized appreciation on investments     1,685,059 
Net realized gain and unrealized appreciation       
on investments and non-U.S. currency     2,067,864 
Net increase in net assets resulting
       
from operations
    $2,177,831 
        
        
Statements of changes in net assets
  (dollars in thousands) 
        
   
Year ended
February 28,
  
Year ended
February 28,
 
   2006  2005 
Operations:
       
Net investment income $109,967 $39,827 
Net realized gain on investments and       
non-U.S. currency transactions  382,805  442,289 
Net unrealized appreciation on investments  1,685,059  212,227 
Net increase in net assets resulting from operations  2,177,831  694,343 
        
Dividends and distributions paid to shareholders:
       
Dividends from net investment income and non-U.S. currency gains  (88,586) (34,346)
Distributions from net realized gain on investments  (433,776) (123,204)
Total dividends and distributions paid to shareholders  (522,362) (157,550)
        
Capital share transactions
  3,068,453  3,686,135 
        
Total increase in net assets
  4,723,922  4,222,928 
        
Net assets:
       
Beginning of year  18,616,256  14,393,328 
End of year (including undistributed and distributions in       
excess of net investment income: $19,070 and $(1,274), respectively) $23,340,178 $18,616,256 
        
*Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. 
        
See Notes to Financial Statements       
 

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 primarily in U.S. companies with a record of above-average growth.

The fund offers 14 share classes consisting of four retail share classes, five CollegeAmericaÒ savings plan share classes and five retirement plan share classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:
 
Share class
Initial sales charge
Contingent deferred sales charge upon redemption
Conversion feature
Class A and 529-AUp to 5.75%None (except 1% for certain redemptions within one year of purchase without an initial sales charge)None
Class B and 529-BNoneDeclines from 5% to 0% for redemptions within six years of purchaseClass B and 529-B convert to Class A and 529-A, respectively, after eight years
Class CNone1% for redemptions within one year of purchaseClass C converts to Class F after 10 years
Class 529-CNone1% for redemptions within one year of purchaseNone
Class 529-ENoneNoneNone
Class F and 529-FNoneNoneNone
Class R-1, R-2, R-3, R-4 and R-5NoneNoneNone

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation - Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Securities and other assets for which representative market quotations are not readily available are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income - Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. 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 fixed-income securities are amortized daily over the expected life of the security.

Class allocations - Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders - Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

2. Federal income taxation and distributions  

The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made.  

Distributions - Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; deferred expenses; and cost of investments sold. 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 for financial reporting purposes. As of February 28, 2006, the cost of investment securities for federal income tax purposes was $18,439,563,000.

During the year ended February 28, 2006, the fund reclassified $32,000 from undistributed net investment income and $13,000,000 from undistributed net realized gains to capital paid in on shares of capital stock, and $1,005,000 from undistributed net investment income to undistributed net realized gains to align financial reporting with tax reporting. 

As of February 28, 2006, the components of distributable earnings on a tax basis were as follows (dollars in thousands):

Undistributed net investment income and non-U.S. currency gains $20,919 
Loss deferrals related to non-U.S. currency that were realized during the period November 1, 2005, through February 28, 2006  (194)
Undistributed short-term capital gains  12,794 
Undistributed long-term capital gains 
  164,323 
Gross unrealized appreciation on investment securities  5,144,556 
Gross unrealized depreciation on investment securities  (274,648)
Net unrealized appreciation on investment securities  4,869,908 

During the year ended February 28, 2006, the fund realized, on a tax basis, a net capital gain of $383,779,000.

The tax character of distributions paid to shareholders was as follows (dollars in thousands):
 
   Year ended February 28, 2006   Year ended February 28, 2005 
Share class
  Ordinary income  Long-term capital gains  Total distributions paid  Ordinary income  Long-term capital gains  Total distributions paid 
                    
Class A $72,208 $301,745 $373,953 $31,410 $89,230 $120,640 
Class B  -  22,692  22,692  -  6,795  6,795 
Class C  -  30,880  30,880  -  8,483  8,483 
Class F  9,265  38,509  47,774  1,614  9,563  11,177 
Class 529-A  1,362  5,755  7,117  199  1,359  1,558 
Class 529-B  -  1,370  1,370  -  367  367 
Class 529-C  -  1,978  1,978  -  486  486 
Class 529-E  30  349  379  -  84  84 
Class 529-F  42  152  194  -  34  34 
Class R-1  -  558  558  -  140  140 
Class R-2  -  6,340  6,340  -  1,515  1,515 
Class R-3  1,283  11,210  12,493  -  2,532  2,532 
Class R-4  2,042  5,723  7,765  58  963  1,021 
Class R-5  2,354  6,515  8,869  1,065  1,653  2,718 
Total $88,586 $433,776 $522,362 $34,346 $123,204 $157,550 

3. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company ("AFS"), the fund’s transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.485% on the first $1 billion of daily net assets and decreasing to 0.295% on such assets in excess of $21 billion. The board of directors approved an amended agreement effective April 1, 2006, continuing the series of rates to include an additional annual rate of 0.290% on daily net assets in excess of $27 billion. CRMC is currently waiving a portion of investment advisory services fees. At the beginning of the period, CRMC waived 5% of these fees and increased the waiver to 10% on April 1, 2005. During the year ended February 28, 2006, total investment advisory services fees waived by CRMC were $6,486,000. As a result, the fee shown on the accompanying financial statements of $67,456,000, which was equivalent to an annualized rate of 0.324%, was reduced to $60,970,000, or 0.293% of average daily net assets.

Class-specific fees and expenses - Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below: 

Distribution services - The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted on the following page. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD for providing certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Class A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of February 28, 2006, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class
Currently approved limits
Plan limits
Class A0.25%0.25%
Class 529-A0.250.50
Class B and 529-B1.001.00
Class C, 529-C and R-11.001.00
Class R-20.751.00
Class 529-E and R-30.500.75
Class F, 529-F and R-40.250.50

Transfer agent services - The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services - The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the year ended February 28, 2006, the total administrative services fees paid by CRMC were $3,000 and $466,000 for Class R-1 and R-2, respectively. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the CollegeAmerica plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described above for the year ended February 28, 2006, were as follows (dollars in thousands):
 
Share class
Distribution services
Transfer agent services
Administrative services
CRMC administrative services
Transfer agent services
Commonwealth of Virginia administrative services
Class A$32,753$15,552Not applicableNot applicableNot applicable
Class B10,5541,243Not applicableNot applicableNot applicable
Class C14,196
 
 
 
 
 
 
Included
in
administrative services
$2,142$384Not applicable
Class F4,5811,932234Not applicable
Class 529-A47229850$277
Class 529-B640703264
Class 529-C9181003892
Class 529-E8318317
Class 529-F3817
Class R-12683817Not applicable
Class R-22,2494461,267Not applicable
Class R-32,688793361Not applicable
Class R-468941118Not applicable
Class R-5Not applicable3106Not applicable 
Total$70,094$16,795$6,566$2,411$457

Deferred directors’ compensation - Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $490,000, shown on the accompanying financial statements, includes $256,000 in current fees (either paid in cash or deferred) and a net increase of $234,000 in the value of the deferred amounts.

Affiliated officers and directors - Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.

4. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):
 
Share class Sales* Reinvestments of dividends and distributions Repurchases* Net increase 
   Amount  Shares  Amount  Shares  Amount  Shares  Amount  Shares 
Year ended February 28, 2006                         
Class A $3,092,186  166,408 $357,200  19,030 $(1,871,812) (100,597)$1,577,574  84,841 
Class B  167,343  9,346  21,789  1,206  (114,314) (6,354) 74,818  4,198 
Class C  426,454  23,913  29,319  1,631  (220,054) (12,296) 235,719  13,248 
Class F  844,870  45,759  43,406  2,321  (417,815) (22,471) 470,461  25,609 
Class 529-A  102,618  5,518  7,116  380  (17,125) (915) 92,609  4,983 
Class 529-B  14,294  792  1,370  75  (3,143) (173) 12,521  694 
Class 529-C  33,083  1,829  1,978  109  (8,504) (464) 26,557  1,474 
Class 529-E  5,660  307  380  20  (874) (46) 5,166  281 
Class 529-F  4,055  216  194  10  (973) (51) 3,276  175 
Class R-1  19,809  1,083  557  30  (11,112) (620) 9,254  493 
Class R-2  153,311  8,437  6,340  347  (70,666) (3,872) 88,985  4,912 
Class R-3  301,219  16,370  12,486  672  (116,779) (6,309) 196,926  10,733 
Class R-4  277,912  14,949  7,765  412  (71,175) (3,823) 214,502  11,538 
Class R-5  104,143  5,563  8,804  467  (52,862) (2,812) 60,085  3,218 
Total net increase                         
(decrease) $5,546,957  300,490 $498,704  26,710 $(2,977,208) (160,803)$3,068,453  166,397 
                          
Year ended February 28, 2005                         
Class A $3,202,015  183,922 $114,988  6,388 $(1,447,417) (83,011)$1,869,586  107,299 
Class B  287,369  17,026  6,534  374  (75,571) (4,465) 218,332  12,935 
Class C  508,556  30,182  8,086  464  (135,629) (8,029) 381,013  22,617 
Class F  685,307  39,475  10,183  568  (206,673) (11,931) 488,817  28,112 
Class 529-A  96,472  5,534  1,558  87  (8,290) (475) 89,740  5,146 
Class 529-B  18,906  1,111  367  21  (1,433) (84) 17,840  1,048 
Class 529-C  31,213  1,828  486  27  (3,266) (190) 28,433  1,665 
Class 529-E  5,359  309  84  5  (783) (45) 4,660  269 
Class 529-F  2,679  153  34  2  (404) (23) 2,309  132 
Class R-1  15,979  932  140  8  (4,964) (292) 11,155  648 
Class R-2  142,782  8,330  1,515  86  (35,337) (2,056) 108,960  6,360 
Class R-3  278,314  16,067  2,528  141  (60,046) (3,468) 220,796  12,740 
Class R-4  128,491  7,381  1,021  56  (26,875) (1,543) 102,637  5,894 
Class R-5  173,592  9,718  2,694  149  (34,429) (1,964) 141,857  7,903 
Total net increase                         
(decrease) $5,577,034  321,968 $150,218  8,376 $(2,041,117) (117,576)$3,686,135  212,768 
                          
*Includes exchanges between share classes of the fund.  ��                   
 
5. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $5,392,853,000 and $3,359,614,000, respectively, during the year ended February 28, 2006. 
 

Financial highlights(1)
                                           
                                                
        Income (loss) from investment operations(2)   Dividends and distributions                                  
                                                                    
     Net asset value, beginning of period  Net investment income (loss)    Net gains (losses) on securities (both realized and unrealized)    Total from investment operations  Dividends (from net investment income)    Distributions (from capital gains) Total dividends and distributions     Net asset value, end of period  Total return(3) Net assets, end of period (in millions)    Ratio of expenses to average net assets before reimbursements/ waivers     Ratio of expenses to average net assets after reimbursements/ waivers  (4) Ratio of net income (loss) to average net assets    
Class A:
                                                                   
Year ended 2/28/2006    $18.02 $.12    $1.82    $1.94 $(.09)   $(.39)$(.48)   $19.48  10.87%$16,091     .68%    .65%   ��.66%   
Year ended 2/28/2005     17.50  .06     .63     .69  (.04)    (.13) (.17)    18.02  3.94  13,350     .69     .68     .36    
Year ended 2/29/2004     12.78  .02     4.70     4.72  -  (5) -  -  (5) 17.50  36.96  11,086     .73     .73     .11    
Year ended 2/28/2003     15.29  .03     (2.42)    (2.39) (.02)    (.10) (.12)    12.78  (15.70) 6,641     .77     .77     .25    
Year ended 2/28/2002     17.24  .09     (1.24)    (1.15) (.09)    (.71) (.80)    15.29  (7.08) 7,356     .71     .71     .58    
Class B:
                                                                   
Year ended 2/28/2006     17.48  (.02)    1.76     1.74  -     (.39) (.39)    18.83  10.04  1,139     1.47     1.44     (.13)   
Year ended 2/28/2005     17.07  (.07)    .61     .54  -     (.13) (.13)    17.48  3.13  984     1.48     1.47     (.41)   
Year ended 2/29/2004     12.56  (.10)    4.61     4.51  -     -  -     17.07  35.91  740     1.50     1.50     (.66)   
Year ended 2/28/2003     15.12  (.07)    (2.39)    (2.46) -     (.10) (.10)    12.56  (16.36) 299     1.55     1.55     (.52)   
Year ended 2/28/2002     17.14  (.04)    (1.23)    (1.27) (.04)    (.71) (.75)    15.12  (7.82) 174     1.49     1.49     (.27)   
Class C:
                                                                   
Year ended 2/28/2006     17.39  (.03)    1.75     1.72  -     (.39) (.39)    18.72  9.98  1,607     1.52     1.49     (.18)   
Year ended 2/28/2005     16.99  (.08)    .61     .53  -     (.13) (.13)    17.39  3.09  1,262     1.54     1.53     (.47)   
Year ended 2/29/2004     12.51  (.11)    4.59     4.48  -     -  -     16.99  35.81  849     1.56     1.56     (.73)   
Year ended 2/28/2003     15.07  (.07)    (2.39)    (2.46) -     (.10) (.10)    12.51  (16.42) 274     1.59     1.59     (.55)   
Period from 3/15/2001 to 2/28/2002     16.50  (.07)    (.59)    (.66) (.06)    (.71) (.77)    15.07  (4.44) 112     1.61  (6) 1.61  (6) (.46) (6)
Class F:
                                                                   
Year ended 2/28/2006     17.94  .12     1.82     1.94  (.09)    (.39) (.48)    19.40  10.90  2,132     .71     .68     .63    
Year ended 2/28/2005     17.41  .06     .62     .68  (.02)    (.13) (.15)    17.94  3.88  1,513     .76     .75     .31    
Year ended 2/29/2004     12.73  .01     4.67     4.68  -  (5) -  -  (5) 17.41  36.81  978     .78     .78     .05    
Year ended 2/28/2003     15.25  .03     (2.41)    (2.38) (.04)    (.10) (.14)    12.73  (15.74) 289     .82     .82     .22    
Period from 3/16/2001 to 2/28/2002     16.34  .05     (.33)    (.28) (.10)    (.71) (.81)    15.25  (2.12) 131     .84  (6) .84  (6) .31  (6)
Class 529-A:
                                                                   
Year ended 2/28/2006     17.99  .11     1.82     1.93  (.08)    (.39) (.47)    19.45  10.85  339     .75     .72     .60    
Year ended 2/28/2005     17.46  .06     .62     .68  (.02)    (.13) (.15)    17.99  3.86  224     .77     .76     .31    
Year ended 2/29/2004     12.76  .01     4.70     4.71  (.01)    -  (.01)    17.46  36.90  128     .77     .77     .06    
Year ended 2/28/2003     15.29  .04     (2.43)    (2.39) (.04)    (.10) (.14)    12.76  (15.73) 39     .78     .78     .28    
Period from 2/15/2002 to 2/28/2002     15.48  .01     (.20)    (.19) -     -  -     15.29  (1.23) 1     .03     .03     .03    
Class 529-B:
                                                                   
Year ended 2/28/2006     17.58  (.05)    1.77     1.72  -     (.39) (.39)    18.91  9.87  73     1.61     1.58     (.27)   
Year ended 2/28/2005     17.20  (.10)    .61     .51  -     (.13) (.13)    17.58  2.94  56     1.66     1.65     (.59)   
Year ended 2/29/2004     12.68  (.13)    4.65     4.52  -     -  -     17.20  35.65  37     1.68     1.68     (.85)   
Year ended 2/28/2003     15.28  (.08)    (2.42)    (2.50) -     (.10) (.10)    12.68  (16.45) 12     1.71     1.71     (.65)   
Period from 2/19/2002 to 2/28/2002     15.21  -  (5) .07     .07  -     -  -     15.28  .46  -  (7) .04     .04     -  (8)
Class 529-C:
                                                                   
Year ended 2/28/2006     17.59  (.05)    1.78     1.73  -     (.39) (.39)    18.93  9.92  110     1.59     1.56     (.25)   
Year ended 2/28/2005     17.21  (.10)    .61     .51  -     (.13) (.13)    17.59  2.93  76     1.65     1.64     (.58)   
Year ended 2/29/2004     12.68  (.13)    4.66     4.53  -     -  -     17.21  35.72  46     1.67     1.67     (.84)   
Year ended 2/28/2003     15.28  (.08)    (2.42)    (2.50) -     (.10) (.10)    12.68  (16.45) 14     1.69     1.69     (.63)   
Period from 2/19/2002 to 2/28/2002     15.21  -  (5) .07     .07  -     -  -     15.28  .46  -  (7) .04     .04     -  (8)
Class 529-E:
                                                                   
Year ended 2/28/2006     17.85  .05  ��  1.80     1.85  (.03)    (.39) (.42)    19.28  10.46  20     1.08     1.05     .27    
Year ended 2/28/2005     17.37  (.01)    .62     .61  -     (.13) (.13)    17.85  3.48  14     1.13     1.12     (.05)   
Year ended 2/29/2004     12.73  (.05)    4.69     4.64  -     -  -     17.37  36.45  8     1.14     1.14     (.31)   
Period from 3/7/2002 to 2/28/2003     16.08  (.01)    (3.22)    (3.23) (.02)    (.10) (.12)    12.73  (20.18) 3     1.16  (6) 1.16  (6) (.09) (6)
Class 529-F:
                                                                   
Year ended 2/28/2006     17.99  .14     1.82     1.96  (.10)    (.39) (.49)    19.46  10.99  10     .62     .59     .73    
Year ended 2/28/2005     17.46  .04     .62     .66  -     (.13) (.13)    17.99  3.75  6     .88     .87     .20    
Year ended 2/29/2004     12.78  (.01)    4.69     4.68  -  (5) -  -  (5) 17.46  36.66  3     .89     .89     (.07)   
Period from 9/17/2002 to 2/28/2003     12.80  .01     -  (5) .01  (.03)    -  (.03)    12.78  .05  -  (7) .40     .40     .07    
                                                                    
                                                                    
                                                                    
Class
R-1:
                                                                   
Year ended 2/28/2006    $17.69 $(.03)   $1.77    $1.74 $-    $(.39)$(.39)   $19.04  9.92%$35     1.55%    1.51%    (.19)%   
Year ended 2/28/2005     17.28  (.08)    .62     .54  -     (.13) (.13)    17.69  3.09  23     1.57     1.54     (.47)   
Year ended 2/29/2004     12.73  (.12)    4.68     4.56  (.01)    -  (.01)    17.28  35.81  12     1.60     1.57     (.75)   
Period from 6/26/2002 to 2/28/2003     13.96  (.04)    (1.19)    (1.23) -     -  -     12.73  (8.81) 1     3.01  (6) 1.58  (6) (.49) (6)
Class
R-2:
                                                                   
Year ended 2/28/2006     17.66  (.03)    1.79     1.76  -     (.39) (.39)    19.03  10.05  358     1.66     1.48     (.17)   
Year ended 2/28/2005     17.26  (.07)    .60     .53  -     (.13) (.13)    17.66  3.04  245     1.73     1.51     (.43)   
Year ended 2/29/2004     12.71  (.11)    4.66     4.55  -  (5) -  -  (5) 17.26  35.80  130     1.91     1.53     (.70)   
Period from 5/21/2002 to 2/28/2003     15.51  (.05)    (2.63)    (2.68) (.02)    (.10) (.12)    12.71  (17.37) 25     2.21  (6) 1.54  (6) (.46) (6)
Class
R-3:
                                                                   
Year ended 2/28/2006     17.86  .05     1.80     1.85  (.04)    (.39) (.43)    19.28  10.45  662     1.06     1.02     .29    
Year ended 2/28/2005     17.37  -  (5) .62     .62  -     (.13) (.13)    17.86  3.54  421     1.08     1.07     .01    
Year ended 2/29/2004     12.75  (.05)    4.67     4.62  -  (5) -  -  (5) 17.37  36.27  189     1.16     1.15     (.32)   
Period from 6/4/2002 to 2/28/2003     15.06  (.01)    (2.17)    (2.18) (.03)    (.10) (.13)    12.75  (14.58) 24     1.29  (6) 1.16  (6) (.09) (6)
Class
R-4:
                                                                   
Year ended 2/28/2006     17.99  .11     1.81     1.92  (.10)    (.39) (.49)    19.42  10.79  405     .75     .71     .61    
Year ended 2/28/2005     17.45  .06     .62     .68  (.01)    (.13) (.14)    17.99  3.85  168     .76     .75     .35    
Year ended 2/29/2004     12.76  .01     4.69     4.70  (.01)    -  (.01)    17.45  36.84  60     .78     .78     .05    
Period from 5/20/2002 to 2/28/2003     15.67  .02     (2.78)    (2.76) (.05)    (.10) (.15)    12.76  (17.74) 3     .95  (6) .81  (6) .24  (6)
Class
R-5:
                                                                   
Year ended 2/28/2006     18.07  .17     1.83     2.00  (.13)    (.39) (.52)    19.55  11.19  359     .44     .41     .90    
Year ended 2/28/2005     17.54  .11     .63     .74  (.08)    (.13) (.21)    18.07  4.20  274     .45     .44     .62    
Year ended 2/29/2004     12.78  .06     4.71     4.77  (.01)    -  (.01)    17.54  37.32  127     .47     .47     .37    
Period from 5/15/2002 to 2/28/2003     15.72  .06     (2.85)    (2.79) (.05)    (.10) (.15)    12.78  (17.83) 53     .48  (6) .48  (6) .58  (6)


    Year ended February 28 or 29  
   2006  2005  2004  2003  2002 
                 
Portfolio turnover rate for all classes of shares  20% 16% 17% 18% 25%


(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred sales charges.
(4) The ratios in this column reflect the impact, if any, of certain reimbursements/waivers from CRMC.
During some of the periods shown, CRMC reduced fees for investment advisory services for all share classes.
In addition, during the start-up period for the retirement plan share classes (except Class R-5),
CRMC agreed to pay a portion of the fees related to transfer agent services.
(5) Amount less than one cent.
(6) Annualized.
(7) Amount less than $1 million.
(8) Amount less than .01 percent.
 
See Notes to Financial Statements





Report of independent registered public accounting firm

To the shareholders and board of directors of AMCAP Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of AMCAP Fund, Inc. (the “Fund”), including the summary investment portfolio, as of February 28, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AMCAP Fund, Inc. as of February 28, 2006, 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 financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.


Deloitte & Touche LLP
Costa Mesa, California
April 7, 2006



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 certain distributions received by shareholders during such fiscal year. The information below is provided for the fund’s fiscal year ended February 28, 2006.

During the fiscal year ended, the fund paid a long-term capital gain distribution of $433,776,000.

Individual shareholders are eligible for reduced tax rates on qualified dividend income. The fund designates 100% of the dividends received as qualified dividend income.

Corporate shareholders may exclude up to 70% of qualifying dividends. The fund designates 100% of dividends received as qualified dividend income.

For state tax purposes, certain states may exempt from income taxation that portion of the income dividends paid by the fund that were derived from direct U.S. government obligations. The fund designates $7,671,000 as interest derived on direct U.S. government obligations.

Individual shareholders should refer to their Form 1099-DIV or other tax information, which will be mailed in January 2007, to determine the calendar year amounts to be included on their 2006 tax returns. Shareholders should consult their tax advisers.



 
Expense example            unaudited
 
As a shareholder of the fund, you incur two types of costs: (1) transaction costs such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2005, through February 28, 2006).
 
Actual expenses:
 
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period. There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and CollegeAmerica accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and Class 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
 
Hypothetical example for comparison purposes:
 
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds. There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts and CollegeAmerica accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and Class 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
 
 
  Beginning account value 9/1/2005 Ending account value 2/28/2006 Expenses paid during period* Annualized expense ratio 
              
Class A -- actual return $1,000.00 $1,056.13 $3.31  .65%
Class A -- assumed 5% return  1,000.00  1,021.57  3.26  .65 
Class B -- actual return  1,000.00  1,052.48  7.28  1.43 
Class B -- assumed 5% return  1,000.00  1,017.70  7.15  1.43 
Class C -- actual return  1,000.00  1,051.63  7.58  1.49 
Class C -- assumed 5% return  1,000.00  1,017.41  7.45  1.49 
Class F -- actual return  1,000.00  1,056.23  3.31  .65 
Class F -- assumed 5% return  1,000.00  1,021.57  3.26  .65 
Class 529-A -- actual return  1,000.00  1,056.45  3.52  .69 
Class 529-A -- assumed 5% return  1,000.00  1,021.37  3.46  .69 
Class 529-B -- actual return  1,000.00  1,051.68  7.88  1.55 
Class 529-B -- assumed 5% return  1,000.00  1,017.11  7.75  1.55 
Class 529-C -- actual return  1,000.00  1,051.62  7.83  1.54 
Class 529-C -- assumed 5% return  1,000.00  1,017.16  7.70  1.54 
Class 529-E -- actual return  1,000.00  1,054.64  5.20  1.02 
Class 529-E -- assumed 5% return  1,000.00  1,019.74  5.11  1.02 
Class 529-F -- actual return  1,000.00  1,057.22  2.65  .52 
Class 529-F -- assumed 5% return  1,000.00  1,022.22  2.61  .52 
Class R-1 -- actual return  1,000.00  1,051.88  7.58  1.49 
Class R-1 -- assumed 5% return  1,000.00  1,017.41  7.45  1.49 
Class R-2 -- actual return  1,000.00  1,052.49  7.48  1.47 
Class R-2 -- assumed 5% return  1,000.00  1,017.50  7.35  1.47 
Class R-3 -- actual return  1,000.00  1,054.54  5.20  1.02 
Class R-3 -- assumed 5% return  1,000.00  1,019.74  5.11  1.02 
Class R-4 -- actual return  1,000.00  1,055.81  3.62  .71 
Class R-4 -- assumed 5% return  1,000.00  1,021.27  3.56  .71 
Class R-5 -- actual return  1,000.00  1,057.69  2.09  .41 
Class R-5 -- assumed 5% return  1,000.00  1,022.76  2.06  .41 
              
* Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (181), and divided by 365 (to reflect the one-half year period).
 
 

Board of directors

 
“Non-interested” directors

 
Year first
 
 
elected
 
 
a director
 
Name and age
of the fund1
Principal occupation(s) during past five years
   
H. Frederick Christie, 721998Private investor; former President and CEO,
Chairman of the Board The Mission Group (non-utility holding company,
(Independent and Non-Executive) subsidiary of Southern California Edison Company)
   
Mary Anne Dolan, 591998Founder and President, M.A.D., Inc. (communications company); former Editor-in-Chief, The Los Angeles Herald Examiner
   
Martin Fenton, 701990Chairman of the Board, Senior Resource Group LLC (development and management of senior living communities)
   
Mary Myers Kauppila, 521998Private investor; Chairman of the Board and CEO, Ladera Management Company (venture capital and agriculture); former owner and President, Energy Investment, Inc.
   
William H. Kling, 642006President, American Public Media Group
   
Bailey Morris-Eck, 611999Director and Programming Chair, WYPR Baltimore/ Washington (public radio station); Senior Adviser, Financial News (London); Senior Fellow, Institute for International Economics
   
Kirk P. Pendleton, 661986Chairman of the Board and CEO, Cairnwood, Inc. (venture capital investment)
   
Olin C. Robison, Ph.D., 691998President Emeritus of the Salzburg Seminar; President Emeritus, Middlebury College
   
Stephen B. Sample, Ph.D., 651999President, University of Southern California
   
“Non-interested” directors
  
   
 
Number of
 
 
portfolios
 
 
in fund
 
 
complex2
 
 
overseen by
 
Name and age
director
Other directorships3 held by director
   
H. Frederick Christie, 7219Ducommun Incorporated;
Chairman of the Board IHOP Corporation; Southwest Water Company
(Independent and Non-Executive)  
   
Mary Anne Dolan, 593None
   
Martin Fenton, 7016None
   
Mary Myers Kauppila, 525None
   
William H. Kling, 648Irwin Financial Corporation
   
Bailey Morris-Eck, 613None
   
Kirk P. Pendleton, 666None
   
Olin C. Robison, Ph.D., 693American Shared Hospital Services
   
Stephen B. Sample, Ph.D., 652UNOVA, Inc.; William Wrigley Jr. Company
   
“Interested” directors4
  
   
 
Year first
 
 
elected a
 
 
director or
Principal occupation(s) during past five years and
Name, age and
officer of
positions held with affiliated entities or the principal
position with fund
the fund1 
underwriter of the fund
   
R. Michael Shanahan, 671986Chairman of the Board, Capital Research and
Vice Chairman of the Board 
Management Company; Director, American Funds Distributors, Inc.;5 Non-Executive Chair, The Capital Group Companies, Inc.;5 Chairman of the Board, Capital Management Services, Inc.;5 Director, Capital Strategy Research, Inc.5
   
Claudia P. Huntington, 541992-1994Senior Vice President, Capital Research and
President1996
Management Company; Director, The Capital Group Companies, Inc.5
   
“Interested” directors4
  
   
 
Number of
 
 
portfolios
 
 
in fund
 
 
complex2
 
Name, age and
overseen by
 
position with fund
director
Other directorships3 held by director
   
R. Michael Shanahan, 672None
Vice Chairman of the Board  
   
Claudia P. Huntington, 541None
President  
   
Chairman Emeritus  
   
James D. Fullerton, 89 
Retired; former Chairman of the Board, The Capital Group Companies, Inc.5
 
 
The statement of additional information includes additional information about fund directors and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all directors and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Fund Secretary.

1 Directors and officers of the fund serve until their resignation, removal or retirement.
2 Capital Research and Management Company manages the American Funds, consisting of 29 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which serves as the underlying investment vehicle for certain variable insurance contracts, and Endowments, whose shareholders are limited to certain nonprofit organizations.
3 This includes all directorships (other than those in the American Funds) that are held by each director as a director of a public company or a registered investment company.
4 “Interested persons” within the meaning of the 1940 Act, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter).
5 Company affiliated with Capital Research and Management Company.
 

Other officers
  
   
 
Year first
 
 
elected
Principal occupation(s) during past five years
Name, age and
an officer
and positions held with affiliated entities or
position with fund
of the fund1
the principal underwriter of the fund
   
Timothy D. Armour, 451996Executive Vice President and Director, Capital
Senior Vice President Research and Management Company;
  
Director, The Capital Group Companies, Inc.5
   
Paul G. Haaga, Jr., 571994Executive Vice President and Director, Capital
Senior Vice President 
Research and Management Company; Director, The Capital Group Companies, Inc.5 
   
Barry S. Crosthwaite, 472006
Vice President, Capital Research Company5
Vice President  
   
Brady L. Enright, 392002
Senior Vice President, Capital Research Company5
Vice President  
   
Joanna F. Jonsson, 421998
Senior Vice President, Capital Research Company;5 
Vice President 
Director, The Capital Group Companies, Inc.5
   
C. Ross Sappenfield, 401999Vice President, Capital Research and Management
Vice President Company
   
Vincent P. Corti, 491998Vice President — Fund Business Management
Secretary Group, Capital Research and Management Company
   
Karl C. Grauman, 382006Vice President — Fund Business Management
Treasurer Group, Capital Research and Management Company
   
Jeffrey P. Regal, 342003Vice President — Fund Business Management
Assistant Treasurer Group, Capital Research and Management Company
 
Offices of the fund and of the investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406

135 South State College Boulevard
Brea, CA 92821-5823

Transfer agent for shareholder accounts
American Funds Service Company
(Please write to the address nearest you.)

P.O. Box 25065
Santa Ana, CA 92799-5065

P.O. Box 659522
San Antonio, TX 78265-9522

P.O. Box 6007
Indianapolis, IN 46206-6007

P.O. Box 2280
Norfolk, VA 23501-2280

Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070

Counsel
O’Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071-2899

Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188

Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus, which can be obtained from your financial adviser and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.

A complete February 28, 2006, portfolio of AMCAP Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

AMCAP Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.

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, 2006, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

[Logo - American Funds®]

The right choice for the long term®

What makes American Funds different?

For nearly 75 years, we have followed a consistent philosophy that we firmly believe is in our investors’ best interest. The range of opportunities offered by our family of just 29 carefully conceived, broadly diversified funds has attracted over 35 million shareholder accounts.

Our unique combination of strengths includes these five factors:

 A long-term, value-oriented approach
We buy stocks and bonds of well-managed companies at reasonable prices and hold them for the long term.

 An extensive global research effort
American Funds investment professionals search the world to gain a comprehensive understanding of companies and markets.

 The multiple portfolio counselor system
Our unique method of portfolio management, developed nearly 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives.

 Experienced investment professionals
American Funds portfolio counselors have an average of 23 years of investment experience, providing a wealth of knowledge and experience that few organizations have.

 A commitment to low operating expenses
The American Funds provide exceptional value for shareholders, with operating expenses that are among the lowest in the mutual fund industry.

29 mutual funds, consistent philosophy, consistent results

 Growth funds
Emphasis on long-term growth through stocks
> AMCAP Fund®
EuroPacific Growth Fund®
The Growth Fund of America®
The New Economy Fund®
New Perspective Fund®
New World FundSM
SMALLCAP World Fund®

 Growth-and-income funds
Emphasis on long-term growth and dividends through stocks
American Mutual Fund®
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America®
Washington Mutual Investors FundSM

 Equity-income funds
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder®
The Income Fund of America®

 Balanced fund
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund®

 Bond funds
Emphasis on current income through bonds
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund®
Intermediate Bond Fund of America®
U.S. Government Securities FundSM

 Tax-exempt bond funds
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund®
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America®
State-specific tax-exempt funds
The Tax-Exempt Fund of California®
The Tax-Exempt Fund of Maryland®
The Tax-Exempt Fund of Virginia®

 Money market funds
The Cash Management Trust of America®
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM

The Capital Group Companies

American Funds       Capital Research and Management         Capital International         Capital Guardian          Capital Bank and Trust

Lit. No. MFGEAR-902-0406P

Litho in USA AGD/GP/8051-S4353

Printed on recycled paper

 
ITEM 2 - Code of Ethics

The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los Angeles, California 90071.


ITEM 3 - Audit Committee Financial Expert

The Registrant’s Board has determined that Martin Fenton, a member of the Registrant’s Audit Committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the Audit Committee and of the Board, nor will it reduce the responsibility of the other Audit Committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the Board had designated them as such. Most importantly, the Board believes each member of the Audit Committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.


ITEM 4 - Principal Accountant Fees and Services

 Registrant:
  a) Audit Fees:
   2005$54,000
   2006$62,000
    
  b) Audit-Related Fees:
   2005$4,000
   2006$6,000
   The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants.
  c) Tax Fees:
   2005$6,000
   2006$6,000
   The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns.
  d) All Other Fees:
   2005none
   2006none
    
 
 
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below):
  a) Not Applicable
  b) Audit-Related Fees:
   2005$247,000
   2006$469,000
   The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agency and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants.
  c) Tax Fees:
   2005none
   2006none
   
  d) All Other Fees:
   2005none
   2006$36,000
   The other fees consist of consulting services related to the registrant’s compliance program.

The Registrant’s Audit Committee will pre-approve all audit and permissible non-audit services that the Committee considers compatible with maintaining the auditors’ independence. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The Committee will not delegate its responsibility to pre-approve these services to the investment adviser. The Committee may delegate to one or more Committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full Committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser, and affiliates.

Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant and the adviser and affiliates that provide ongoing services to the Registrant were $1,110,000 for fiscal year 2005 and $975,000 for fiscal year 2006. The non-audit services represented by these amounts were brought to the attention of the Committee and considered to be compatible with maintaining the auditors’ independence.


ITEM 5 - Audit Committee of Listed Registrants

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.


ITEM 6 - Schedule of Investments

[Logo - American Funds®]

AMCAP Fund
Investment portfolio

February 28, 2006
 

Common stocks — 82.21% Shares
 
Market value
(000)
 
        
CONSUMER DISCRETIONARY — 20.69%
       
Lowe’s Companies, Inc.  8,600,000 $586,348 
Target Corp.  8,650,000  470,560 
Best Buy Co., Inc.  8,650,000  465,889 
Johnson Controls, Inc.  3,090,000  220,224 
Harley-Davidson Motor Co.  3,341,900  175,483 
Ross Stores, Inc.  5,775,000  163,548 
Outback Steakhouse, Inc.1 
  3,750,000  156,788 
Carnival Corp., units  3,025,200  156,252 
Liberty Media Corp., Class A2 
  18,300,000  150,792 
Time Warner Inc.  8,647,500  149,688 
E.W. Scripps Co., Class A  3,100,000  149,048 
Starbucks Corp.2
  4,040,000  146,733 
Brinker International, Inc.  3,125,000  130,156 
Williams-Sonoma, Inc.2 
  3,205,200  129,779 
Michaels Stores, Inc.  4,010,000  128,721 
Kohl’s Corp.2
  2,625,000  126,289 
YUM! Brands, Inc.  2,600,000  124,020 
Walt Disney Co.  4,000,000  111,960 
IAC/InterActiveCorp2 
  3,635,000  106,287 
Garmin Ltd.  1,400,000  96,348 
Amazon.com, Inc.2 
  2,400,000  89,976 
Gentex Corp.  5,130,000  85,466 
Fossil, Inc.1,2
  4,415,000  75,143 
Dollar General Corp.  4,250,000  74,035 
Expedia, Inc.2
  3,635,000  68,956 
Comcast Corp., Class A, special nonvoting stock2
  2,500,000  66,875 
Clear Channel Communications, Inc.  2,362,500  66,859 
Sonic Corp.2 
  2,000,000  63,220 
CarMax, Inc.2
  2,000,000  62,840 
P.F. Chang’s China Bistro, Inc.2 
  1,000,000  48,340 
Discovery Holding Co., Class A2 
  3,245,000  47,377 
Panera Bread Co., Class A2 
  500,000  35,430 
International Game Technology  850,000  30,404 
Getty Images, Inc.2
  330,000  26,740 
Applebee’s International, Inc.  1,100,000  25,454 
Gap, Inc.  850,000  15,759 
      
4,827,787
 
        
INFORMATION TECHNOLOGY — 17.24%
       
Cisco Systems, Inc.2
  22,804,300 $461,559 
Microsoft Corp.  16,720,000  449,768 
Oracle Corp.2
  32,960,000  409,363 
First Data Corp.  7,909,825  356,970 
Google Inc., Class A2
  980,000  355,368 
Affiliated Computer Services, Inc., Class A2
  3,110,000  195,681 
Automatic Data Processing, Inc.  3,500,000  161,665 
Adobe Systems Inc.2
  3,510,000  135,556 
Texas Instruments Inc.  4,350,000  129,847 
Analog Devices, Inc.  3,250,000  123,955 
Intuit Inc.2 
  2,154,300  104,656 
Intersil Corp., Class A  3,400,000  96,356 
Linear Technology Corp.  2,600,400  95,851 
Microchip Technology Inc.  2,500,000  88,000 
Yahoo! Inc.2
  2,500,000  80,150 
National Instruments Corp.  2,343,750  76,055 
Xilinx, Inc.  2,500,000  68,200 
Paychex, Inc.  1,600,000  64,080 
NAVTEQ Corp.2 
  1,349,700  62,505 
Altera Corp.2 
  2,850,000  57,114 
eBay Inc.2 
  1,400,000  56,084 
Applied Materials, Inc.  2,700,000  49,518 
Power Integrations, Inc.1,2
  1,850,000  45,935 
EMC Corp.2
  3,150,000  44,163 
Jabil Circuit, Inc.2 
  1,087,000  41,143 
Maxim Integrated Products, Inc.  1,000,000  39,090 
Solectron Corp.2
  10,500,000  37,905 
Rogers Corp.2
  750,000  36,780 
KLA-Tencor Corp.  700,000  36,561 
Cadence Design Systems, Inc.2 
  1,685,800  29,923 
Sabre Holdings Corp., Class A  888,800  21,447 
Sanmina-SCI Corp.2
  3,500,000  13,510 
      
4,024,758
 
        
HEALTH CARE — 15.62%
       
WellPoint, Inc.2
  6,100,000  468,419 
Medco Health Solutions, Inc.2
  4,735,000  263,834 
Medtronic, Inc.  4,740,000  255,723 
Guidant Corp.  3,100,000  237,956 
Express Scripts, Inc.2 
  2,680,000  233,884 
Forest Laboratories, Inc.2 
  4,440,000  203,796 
Biogen Idec Inc.2 
  3,537,000  167,123 
Cephalon, Inc.2 
  2,000,000  158,960 
AmerisourceBergen Corp.  3,420,000  157,286 
Celgene Corp.2
  3,968,600  150,807 
Lincare Holdings Inc.2
  2,800,000  114,520 
Caremark Rx, Inc.2 
  2,300,000  114,425 
St. Jude Medical, Inc.2
  2,424,200  110,544 
IDEXX Laboratories, Inc.2
  1,340,000  105,297 
Medicis Pharmaceutical Corp., Class A1
  3,625,000  103,095 
Roche Holding AG  682,000  100,946 
Bristol-Myers Squibb Co.  4,225,000  97,598 
Genentech, Inc.2
  1,000,000  85,690 
Amgen Inc.2
  1,035,000  78,132 
Becton, Dickinson and Co.  1,200,000  76,620 
Abbott Laboratories  1,400,000  61,852 
McKesson Corp.  1,100,000  59,543 
Eli Lilly and Co.  900,000  50,058 
Kinetic Concepts, Inc.2
  1,245,000  46,190 
HCA Inc.  900,000  43,110 
Sanofi-Aventis  350,000  29,793 
Johnson & Johnson  500,000  28,825 
Henry Schein, Inc.2
  500,000  23,325 
UnitedHealth Group Inc.  275,000  16,013 
Schering-Plough Corp.  139,100  2,573 
      
3,645,937
 
        
FINANCIALS — 8.89%
       
Fannie Mae  8,640,000  472,435 
American International Group, Inc.  6,165,000  409,109 
Capital One Financial Corp.  4,401,200  385,545 
Golden West Financial Corp.  3,276,100  232,701 
Freddie Mac  2,550,000  171,845 
Wells Fargo & Co.  1,720,000  110,424 
M&T Bank Corp.  959,230  107,817 
Bank of New York Co., Inc.  1,740,000  59,578 
City National Corp.  510,000  38,740 
Bank of America Corp.  800,000  36,680 
Fidelity National Financial, Inc.  600,000  22,656 
Arthur J. Gallagher & Co.  600,000  17,694 
Alabama National BanCorporation  146,700  10,206 
      
2,075,430
 
        
CONSUMER STAPLES — 6.18%
       
CVS Corp.  8,250,000  233,723 
PepsiCo, Inc.  3,300,000  195,063 
Altria Group, Inc.  2,500,000  179,750 
Avon Products, Inc.  4,500,000  129,825 
Bunge Ltd.  2,059,000  116,725 
L’Oréal SA  1,250,000  110,651 
Dean Foods Co.2
  2,300,000  86,181 
Costco Wholesale Corp.  1,600,000  82,048 
Constellation Brands, Inc., Class A2
  2,800,000  73,752 
Walgreen Co.  1,600,000  71,776 
Church & Dwight Co., Inc.  1,981,900  68,435 
Anheuser-Busch Companies, Inc.  1,187,800  49,341 
Wal-Mart Stores, Inc.  1,000,000  45,360 
      
1,442,630
 
        
ENERGY — 5.38%
       
Schlumberger Ltd.  2,840,000  326,600 
Smith International, Inc.  5,430,000  210,304 
Devon Energy Corp.  3,020,000  177,063 
Apache Corp.  2,150,000  143,878 
FMC Technologies, Inc.2 
  2,735,000  128,326 
Newfield Exploration Co.2
  2,965,000  114,597 
Noble Corp.  1,200,000  88,692 
EOG Resources, Inc.  962,900  64,899 
      
1,254,359
 
        
INDUSTRIALS — 4.68%
       
Robert Half International Inc.  6,800,000 $244,256 
United Parcel Service, Inc., Class B  2,850,000  212,923 
Precision Castparts Corp.  3,640,000  193,066 
General Electric Co.  4,000,000  131,480 
Avery Dennison Corp.  1,744,200  104,652 
FedEx Corp.  790,000  84,720 
Southwest Airlines Co.  3,685,000  61,797 
Jacobs Engineering Group Inc.2
  700,200  60,035 
      
1,092,929
 
        
TELECOMMUNICATION SERVICES — 1.82%
       
Sprint Nextel Corp., Series 1  8,235,008  197,887 
Telephone and Data Systems, Inc., Special Common Shares  2,000,000  71,800 
Telephone and Data Systems, Inc.  1,575,000  58,905 
CenturyTel, Inc.  2,690,000  96,786 
      
425,378
 
        
MATERIALS — 0.29%
       
Sealed Air Corp.2
  1,200,000  
68,256
 
        
        
UTILITIES — 0.16%
       
Duke Energy Corp.  1,299,000  
36,892
 
        
        
MISCELLANEOUS — 1.26%
       
Other common stocks in initial period of acquisition     
294,472
 
        
        
Total common stocks (cost: $14,317,310,000)
     
19,188,828
 
        
        
Short-term securities — 17.66%  
Principal amount
(000
)   
        
Federal Home Loan Bank 4.30%-4.545% due 3/17-5/17/2006 $335,200 $333,503 
Atlantic Industries 4.36%-4.54% due 3/27-5/2/20063 
  162,300  161,447 
Coca-Cola Co. 4.30%-4.38% due 3/6-4/3/2006  110,000  109,754 
Freddie Mac 4.28%-4.575% due 3/27-5/23/2006  242,179  240,536 
J.P. Morgan Chase & Co. 4.45%-4.53% due 3/30-4/11/2006  81,000  80,617 
Park Avenue Receivables Co., LLC 4.39%-4.51% due 3/3-3/10/20063 
  75,000  74,951 
Preferred Receivables Funding Corp. 4.38%-4.54% due 3/8-4/7/20063
  70,380  70,115 
Fannie Mae 4.25%-4.58% due 3/1-6/12/2006  225,200  224,225 
Bank of America Corp. 4.375%-4.625% due 3/6-4/24/2006  225,000  223,998 
CAFCO, LLC 4.37%-4.57% due 3/6-4/25/20063 
  149,300  148,707 
Citigroup Funding Inc. 4.60% due 4/24/2006  50,000  49,656 
Ciesco LLC 4.44% due 4/5/20063
  25,000  24,892 
Wells Fargo Bank, N.A. 4.39%-4.51% due 3/1-3/24/2006  205,000  204,998 
Clipper Receivables Co., LLC 4.46%-4.58% due 3/28-4/13/20063 
  152,600  151,816 
State Street Corp. 4.36% due 3/7/2006  50,000  49,958 
Variable Funding Capital Corp. 4.39%-4.54% due 3/7-4/3/20063
  200,000  199,588 
General Electric Capital Corp. 4.40%-4.50% due 3/3-4/5/2006  134,300  133,945 
Edison Asset Securitization LLC 4.52% due 4/3-4/6/20063
  50,000  49,784 
Pfizer Investment Capital PLC 4.35%-4.56% due 3/6-5/16/20063
  176,416  175,734 
Concentrate Manufacturing Co. of Ireland 4.36%-4.52% due 3/14-4/10/20063
  175,000  174,497 
HSBC Finance Corp. 4.41%-4.54% due 3/10-4/18/2006  117,700  117,206 
Caterpillar Financial Services Corp. 4.48%-4.50% due 3/28-4/24/2006  110,979  110,425 
Wal-Mart Stores Inc. 4.39%-4.45% due 3/7-4/11/20063 
  100,200  99,789 
Gannett Co. 4.48% due 3/21/20063
  100,000  99,738 
U.S. Treasury Bills 4.415%-4.43% due 5/4-5/18/2006  100,000  99,118 
NetJets Inc. 4.38%-4.53% due 3/13-4/5/20063
  70,000  69,785 
Anheuser-Busch Companies, Inc. 4.33%-4.40% due 3/27-4/18/20063 
  70,000  69,629 
IBM Capital Inc. 4.33%-4.47% due 3/9-3/27/20063
  59,037  58,917 
International Lease Finance Corp. 4.48%-4.56% due 4/6-4/19/2006  54,500  54,222 
Tennessee Valley Authority 4.44% due 4/13/2006  50,000  49,729 
BellSouth Corp. 4.32%-4.33% due 3/3-3/9/20063 
  46,700  46,661 
Federal Farm Credit Banks 4.27%-4.38% due 3/6-3/31/2006  42,100  41,996 
FCAR Owner Trust I 4.40% due 3/20/2006  40,000  39,902 
Harvard University 4.36%-4.48% due 3/21-4/7/2006  37,746  37,600 
ChevronTexaco Funding Corp. 4.34% due 3/20/2006  31,600  31,523 
Hershey Co. 4.46% due 3/24/20063
  30,000  29,911 
Triple-A One Funding Corp. 4.51% due 3/9/20063
  29,329  29,296 
Private Export Funding Corp. 4.42%-4.50% due 4/12-4/26/20063 
  28,000  27,815 
American Express Credit Corp. 4.38% due 3/16/2006  25,000  24,954 
Bank of New York Co., Inc. 4.47% due 3/23/2006  25,000  24,929 
United Parcel Service Inc. 4.49% due 4/4/2006  20,000  19,914 
Procter & Gamble Co. 4.46% due 3/2/20063 
  17,900  17,896 
Wm. Wrigley Jr. Co. 4.41% due 5/2/20063
  15,000  14,879 
Kimberly-Clark Worldwide Inc. 4.45% due 3/3/20063
  11,800  11,796 
Medtronic Inc. 4.47% due 3/6/20063
  10,300  10,292 
        
        
Total short-term securities (cost: $4,120,721,000)
     
4,120,643
 
        
Total investment securities (cost: $18,438,031,000)
     
23,309,471
 
Other assets less liabilities
     
30,707
 
        
Net assets
    
$
23,340,178
 
 

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1Represents an affiliated company as defined under the Investment Company Act of 1940.
2Security did not produce income during the last 12 months.
3Restricted security that can be resold only to institutional investors. In practice, this security is typically as liquid as unrestricted securities
in the portfolio. The total value of all restricted securities was $1,817,936,000, which represented 7.79% of the net assets of the fund.
 

MFGEFP-902-0406-S4537


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO

To the Shareholders and
Board of Directors of
AMCAP Fund, Inc.:

We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of AMCAP Fund, Inc. (the “Fund”) as of February 28, 2006, and for the year then ended and have issued our report thereon dated April 7, 2006, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audit also included the Fund’s investment portfolio (the “Schedule”) as of February 28, 2006 appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
 
DELOITTE & TOUCHE LLP
April 7, 2006
Costa Mesa, California


ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 8 - Portfolio Managers of Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 10 - Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a Nominating Committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the Board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full Board of Directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the Board. Such suggestions must be sent in writing to the Nominating Committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the Nominating Committee.

 
ITEM 11 - Controls and Procedures

(a)The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.
  
(b)There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.


ITEM 12 - Exhibits

(a)(1)The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto.
  
(a)(2)The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 AMCAP FUND, INC.
  
 
By /s/ Claudia P. Huntington
 
Claudia P. Huntington, President and PEO
  
 Date: May 8, 2006



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


By /s/ Claudia P. Huntington
Claudia P. Huntington, President and PEO
 
Date: May 8, 2006



By /s/ Karl C. Grauman
Karl C. Grauman, Treasurer and PFO
 
Date: May 8, 2006