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: August 31, 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
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
[photo of Fairy basslet fish darting among blooms of lettuce coral]
Semi-annual report for the six months ended August 31, 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 30 American Funds. For 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.
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 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 September 30, 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 | — | +6.36 | % | +10.36 | % | |||||
Cumulative total return | +1.30 | % | +36.13 | % | +167.94 | % |
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 pages 18 to 21 for details.
Results for other share classes can be found on page 22. Please see the inside back cover for important information about other share classes.
Fellow shareholders:
[black-and-white photo of striped fish swimming among coral]
Strength in energy and financial stocks helped the U.S. stock market post a modest gain for the six months ended August 31, 2006. Corporate earnings continued to grow at a strong rate, but investors became increasingly concerned about a possible slowing of consumer spending and a weakening housing market.
In this environment, AMCAP Fund’s total return for the six months ended August 31, 2006, was
-0.8% compared to the 2.8% total return of the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of primarily large U.S. stocks. The Lipper Growth Funds Index, which tracks the largest growth funds, declined 1.1%; and the Lipper Multi-Cap Core Funds Index, which measures mutual funds that invest in companies of different sizes and varying growth rates, gained 0.8%.
Over the long term (five years or more), AMCAP’s results generally surpassed the S&P 500 and these Lipper fund indexes. AMCAP’s average annual total return over the 10 years ended August 31, 2006, was 11.7%, compared with 8.9% for the S&P 500, 6.9% for the Lipper Growth Funds Index and 8.6% for the Lipper Multi-Cap Core Funds Index. Viewed on a cumulative basis, total returns are shown in the table below.
What helped the fund
Information technology, health care service and financial companies aided results. Three of our largest technology holdings — Oracle (+26.0%), Cisco Systems (+8.6%) and Google (+4.4%) — were major contributors. Health care service companies were helped by favorable demographic trends and corporate and government efforts to contain health care costs; examples included Caremark (+16.5%) and Medco Health Solutions (+13.7%). Financial holdings that added to returns included Wells Fargo (+8.3%), Fidelity National (+6.5%) and Golden West Financial (+6.3%). On August 31, 2006, Golden West Financial shareholders agreed to be acquired by Wachovia, one of the nation’s largest financial services companies.
[Begin Sidebar]
Cumulative total returns
For periods ended August 31, 2006 | 1 year | 5 years | 10 years | |||||||
AMCAP | +4.7 | % | +27.0 | % | +201.4 | % | ||||
Standard & Poor’s 500 Composite Index* | +8.9 | +25.5 | +134.6 | |||||||
Lipper Multi-Cap Core Funds Index† | +8.0 | +32.4 | +127.2 | |||||||
Lipper Growth Funds Index† | +6.2 | +17.0 | + 94.0 |
*The S&P 500 is unmanaged and does not reflect sales charges, commissions or expenses.
† Lipper indexes do not include the effects of sales charges.
[End Sidebar]
What detracted from results
High gasoline prices, lower consumer confidence and a weakening housing market contributed to a difficult environment for Lowe’s (-20.6%), Best Buy (-12.7%) and Target (-11.0%). These three companies have been long-term holdings of AMCAP and we continue to believe that they are sound investments.
Looking Ahead
As we reach the midpoint in fiscal 2007, it is helpful to review two growth engines for the U.S. and global economies. The engine for growth in the United States has been consumer spending. While American consumers tempered their spending a bit during the summer, growth was still quite acceptable. Employment, inflation and interest rates all remain at reasonable levels. At this point, there is no clear evidence that the consumer is about to slow spending rates dramatically, although weakness in the housing market bears watching.
Growth in emerging market economies is and will be a big driver for the global economy. While increased global trade and capital flows have caused adjustments in some countries and markets, the overall effect has been very positive for the U.S. economy and for U.S. companies. Many of the companies in the AMCAP portfolio are effective global competitors.
We will continue to invest in companies that we believe are well-managed and have a history of growth, a sustainable competitive edge and good future prospects. With our long-term perspective, we seek to identify companies that can sustain their growth over many years. While there may be ups and downs in the short term, we feel certain that we will continue to find many good quality businesses in which to invest at reasonable prices.
As always, we recommend that you also take a long-term perspective toward your mutual fund investment.
Sincerely,
/s/ R. Michael Shanahan
R. Michael Shanahan
Vice Chairman of the Board
/s/ Claudia P. Huntington
Claudia P. Huntington
President and Principal Executive Officer
October 12, 2006
For current information about the fund, visit americanfunds.com.
Summary investment portfolio, August 31, 2006
unaudited
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.
Industry sector diversification
[begin pie chart]
Percent of net assets | ||||
Information technology | 20.18 | % | ||
Consumer discretionary | 17.60 | |||
Health care | 17.17 | |||
Financials | 8.40 | |||
Consumer staples | 6.83 | |||
Other industries | 14.61 | |||
Short-term securities & other assets less liabilities | 15.21 |
[end pie chart]
Shares | Market | Percent | ||||||||
value | of net | |||||||||
Common stocks - 84.79% | (000 | ) | assets | |||||||
Information technology - 20.18% | ||||||||||
Intel Corp. | 30,232,000 | $ | 590,733 | 2.52 | % | |||||
Cisco Systems, Inc. (1) | 24,604,300 | 541,049 | 2.31 | |||||||
Oracle Corp. (1) | 32,960,000 | 515,824 | 2.20 | |||||||
eBay Inc. (1) | 14,245,000 | 396,866 | 1.69 | |||||||
Google Inc., Class A (1) | 1,030,000 | 389,886 | 1.66 | |||||||
First Data Corp. | 7,285,600 | 313,062 | 1.33 | |||||||
Microsoft Corp. | 12,095,000 | 310,721 | 1.32 | |||||||
Affiliated Computer Services, Inc., Class A (1) | 3,610,000 | 185,337 | .79 | |||||||
Automatic Data Processing, Inc. | 3,500,000 | 165,200 | .70 | |||||||
Other securities | 1,329,430 | 5.66 | ||||||||
4,738,108 | 20.18 | |||||||||
Consumer discretionary - 17.60% | ||||||||||
Lowe's Companies, Inc. | 20,300,000 | 549,318 | 2.34 | |||||||
Target Corp. | 9,250,000 | 447,607 | 1.91 | |||||||
Carnival Corp., units | 8,525,200 | 357,206 | 1.52 | |||||||
Best Buy Co., Inc. | 6,300,000 | 296,100 | 1.26 | |||||||
Johnson Controls, Inc. | 3,090,000 | 222,264 | .95 | |||||||
Harley-Davidson Motor Co. | 3,666,900 | 214,550 | .91 | |||||||
YUM! Brands, Inc. | 3,638,000 | 177,825 | .76 | |||||||
Other securities | 1,866,639 | 7.95 | ||||||||
4,131,509 | 17.60 | |||||||||
Health care - 17.17% | ||||||||||
UnitedHealth Group Inc. | 10,080,000 | 523,656 | 2.23 | |||||||
WellPoint, Inc. (1) | 6,700,000 | 518,647 | 2.21 | |||||||
Medco Health Solutions, Inc. (1) | 4,510,000 | 285,799 | 1.22 | |||||||
Forest Laboratories, Inc. (1) | 5,165,000 | 258,147 | 1.10 | |||||||
Medtronic, Inc. | 5,200,000 | 243,880 | 1.04 | |||||||
Alcon, Inc. | 1,730,000 | 203,777 | .87 | |||||||
Roche Holding AG | 982,000 | 180,754 | .77 | |||||||
St. Jude Medical, Inc. (1) | 4,929,200 | 179,472 | .76 | |||||||
Express Scripts, Inc. (1) | 1,930,000 | 162,274 | .69 | |||||||
Other securities | 1,475,114 | 6.28 | ||||||||
4,031,520 | 17.17 | |||||||||
Financials - 8.40% | ||||||||||
Fannie Mae | 8,640,000 | 454,896 | 1.94 | |||||||
Capital One Financial Corp. | 4,901,200 | 358,278 | 1.53 | |||||||
American International Group, Inc. | 4,765,000 | 304,102 | 1.29 | |||||||
Golden West Financial Corp. | 2,956,100 | 223,156 | .95 | |||||||
Freddie Mac | 2,550,000 | 162,180 | .69 | |||||||
Other securities | 469,439 | 2.00 | ||||||||
1,972,051 | 8.40 | |||||||||
Consumer staples - 6.83% | ||||||||||
CVS Corp. | 7,000,000 | 234,850 | 1.00 | |||||||
PepsiCo, Inc. | 3,300,000 | 215,424 | .92 | |||||||
Altria Group, Inc. | 2,500,000 | 208,825 | .89 | |||||||
L'Oréal SA | 1,518,800 | 158,756 | .68 | |||||||
Other securities | 784,483 | 3.34 | ||||||||
1,602,338 | 6.83 | |||||||||
Energy - 5.89% | ||||||||||
Schlumberger Ltd. | 5,310,000 | 325,503 | 1.39 | |||||||
Devon Energy Corp. | 3,020,000 | 188,720 | .80 | |||||||
FMC Technologies, Inc. (1) | 2,735,000 | 160,873 | .68 | |||||||
Other securities | 707,989 | 3.02 | ||||||||
1,383,085 | 5.89 | |||||||||
Industrials - 5.16% | ||||||||||
United Parcel Service, Inc., Class B | 3,200,000 | 224,160 | .95 | |||||||
Precision Castparts Corp. | 3,640,000 | 212,721 | .91 | |||||||
Robert Half International Inc. | 6,800,000 | 210,392 | .90 | |||||||
General Electric Co. | 5,400,000 | 183,924 | .78 | |||||||
Other securities | 381,030 | 1.62 | ||||||||
1,212,227 | 5.16 | |||||||||
Telecommunication services - 2.25% | ||||||||||
Sprint Nextel Corp., Series 1 | 14,270,004 | 241,448 | 1.03 | |||||||
Other securities | 285,943 | 1.22 | ||||||||
527,391 | 2.25 | |||||||||
Other - 0.43% | ||||||||||
Other securities | 101,214 | .43 | ||||||||
Miscellaneous - 0.88% | ||||||||||
Other common stocks in initial period of acquisition | 205,535 | .88 | ||||||||
Total common stocks (cost: $15,847,086,000) | 19,904,978 | 84.79 | ||||||||
Short-term securities - 15.25% | Principal amount | ) | ||||||||
Federal Home Loan Bank 5.01%-5.265% due 9/1-11/24/2006 | $ | 733,132 | 728,671 | 3.10 | ||||||
CAFCO, LLC 5.28%-5.36% due 9/18-10/11/2006 (2) | 266,200 | 265,056 | 1.13 | |||||||
Edison Asset Securitization LLC 5.28%-5.36% due 9/15-10/23/2006 (2) | 193,047 | 192,136 | ||||||||
General Electric Capital Corp. 5.27% due 10/17/2006 | 50,000 | 49,660 | 1.03 | |||||||
Clipper Receivables Co., LLC 5.25%-5.35% due 9/1-10/13/2006 (2) | 236,000 | 235,023 | 1.00 | |||||||
Bank of America Corp. 5.27%-5.385% due 9/29-10/27/2006 | 125,000 | 124,287 | ||||||||
Ranger Funding Co. LLC 5.25%-5.27% due 9/28-10/26/2006 (2) | 97,598 | 96,981 | .94 | |||||||
Freddie Mac 5.14%-5.22% due 10/2-12/19/2006 | 185,400 | 183,891 | .78 | |||||||
Fannie Mae 4.97%-5.30% due 9/13-10/4/2006 | 170,764 | 170,177 | .73 | |||||||
Variable Funding Capital Corp. 5.25%-5.34% due 9/14-10/6/2006 (2) | 152,800 | 152,316 | .65 | |||||||
AIG Funding, Inc. 5.29% due 9/12/2006 | 25,000 | 24,956 | ||||||||
International Lease Finance Corp. 5.24% due 10/10/2006 | 20,850 | 20,729 | ||||||||
American General Finance Corp. 5.30% due 9/12/2006 | 15,000 | 14,973 | .26 | |||||||
Concentrate Manufacturing Co. of Ireland 5.21% due 9/14/2006 (2) | 29,000 | 28,941 | .12 | |||||||
Harley-Davidson Funding Corp. 5.22% due 9/14/2006 (2) | 25,000 | 24,949 | .11 | |||||||
United Parcel Service Inc. 5.21% due 10/19/2006 | 25,000 | 24,829 | .11 | |||||||
Medtronic Inc. 5.22% due 10/26/2006 (2) | 25,000 | 24,797 | .11 | |||||||
Other securities | 1,216,451 | 5.18 | ||||||||
Total short-term securities (cost: $3,578,807,000) | 3,578,823 | 15.25 | ||||||||
Total investment securities (cost: $19,425,893,000) | 23,483,801 | 100.00 | ||||||||
Other assets less liabilities | (8,577 | ) | (.04 | ) | ||||||
Net assets | $ | 23,475,224 | 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 their respective industry sectors in the preceding summary investment portfolio. Further details on these
holdings and related transactions during the six months ended August 31, 2006, appear below.
Company | Beginning shares | Purchases | Sales | Ending shares | Dividend income (000 | ) | Market value of affiliates at 8/31/2006(000 | ) | |||||||||||
Medicis Pharmaceutical Corp., Class A | 3,625,000 | - | - | 3,625,000 | $ | 218 | $ | 106,176 | |||||||||||
Mine Safety Appliances Co. | - | 1,880,000 | - | 1,880,000 | 527 | 66,646 | |||||||||||||
P.F. Chang's China Bistro, Inc. (1) | - | 1,650,000 | - | 1,650,000 | - | 58,163 | |||||||||||||
Fossil, Inc. (3) | 4,415,000 | - | 2,455,000 | 1,960,000 | - | - | |||||||||||||
OSI Restaurant Partners, Inc.(3) | 3,750,000 | - | 1,500,000 | 2,250,000 | 780 | - | |||||||||||||
Power Integrations, Inc. (3) | 1,850,000 | - | 1,850,000 | - | - | - | |||||||||||||
$ | 1,525 | $ | 230,985 |
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 $1,968,695,000, which represented 8.39% of the net assets of the fund. | ||||||||||
(3) Unaffiliated issuer at 8/31/2006. | ||||||||||
See Notes to Financial Statements |
Financial statements | |||||||
Statement of assets and liabilities | unaudited | ||||||
at August 31, 2006 | (dollars and shares in thousands, except per-share amounts) | ||||||
Assets: | |||||||
Investment securities at market: | |||||||
Unaffiliated issuers (cost: $19,186,794) | $ | 23,252,816 | |||||
Affiliated issuers (cost: $239,099) | 230,985 | $ | 23,483,801 | ||||
Cash | 103 | ||||||
Receivables for: | |||||||
Sales of investments | $ | 41,477 | |||||
Sales of fund's shares | 28,739 | ||||||
Dividends | 20,298 | 90,514 | |||||
23,574,418 | |||||||
Liabilities: | |||||||
Payables for: | |||||||
Purchases of investments | 47,950 | ||||||
Repurchases of fund's shares | 26,811 | ||||||
Investment advisory services | 5,665 | ||||||
Services provided by affiliates | 16,966 | ||||||
Deferred directors' compensation | 1,689 | ||||||
Other fees and expenses | 113 | 99,194 | |||||
Net assets at August 31, 2006 | $ | 23,475,224 | |||||
Net assets consist of: | |||||||
Capital paid in on shares of capital stock | $ | 18,833,165 | |||||
Undistributed net investment income | 86,360 | ||||||
Undistributed net realized gain | 497,780 | ||||||
Net unrealized appreciation | 4,057,919 | ||||||
Net assets at August 31, 2006 | $ | 23,475,224 |
Total authorized capital stock - 2,000,000 shares, $1.00 par value (1,233,789 total shares outstanding) | ||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||
Class A | $ | 16,046,042 | 838,051 | $ | 19.15 | |||||
Class B | 1,109,950 | 60,163 | 18.45 | |||||||
Class C | 1,566,566 | 85,440 | 18.34 | |||||||
Class F | 2,182,257 | 114,478 | 19.06 | |||||||
Class 529-A | 366,881 | 19,204 | 19.10 | |||||||
Class 529-B | 75,874 | 4,098 | 18.52 | |||||||
Class 529-C | 116,286 | 6,275 | 18.53 | |||||||
Class 529-E | 21,428 | 1,133 | 18.92 | |||||||
Class 529-F | 11,104 | 580 | 19.13 | |||||||
Class R-1 | 37,010 | 1,984 | 18.65 | |||||||
Class R-2 | 378,882 | 20,332 | 18.63 | |||||||
Class R-3 | 694,809 | 36,721 | 18.92 | |||||||
Class R-4 | 425,956 | 22,327 | 19.08 | |||||||
Class R-5 | 442,179 | 23,003 | 19.22 | |||||||
(*) 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 $20.32 and $20.27, respectively. | ||||||||||
See Notes to Financial Statements |
Statement of operations | unaudited | ||||||
for the six months ended August 31, 2006 | (dollars in thousands) | ||||||
Investment income: | |||||||
Income: | |||||||
Interest | $ | 92,951 | |||||
Dividends (net of non-U.S. taxes of $667; also includes | |||||||
$1,525 from affiliates) | 87,026 | $ | 179,977 | ||||
Fees and expenses(*): | |||||||
Investment advisory services | 37,883 | ||||||
Distribution services | 40,233 | ||||||
Transfer agent services | 9,005 | ||||||
Administrative services | 5,313 | ||||||
Reports to shareholders | 400 | ||||||
Registration statement and prospectus | 803 | ||||||
Postage, stationery and supplies | 1,017 | ||||||
Directors' compensation | 119 | ||||||
Auditing and legal | 18 | ||||||
Custodian | 85 | ||||||
State and local taxes | 1 | ||||||
Other | 15 | ||||||
Total fees and expenses before reimbursements/waivers | 94,892 | ||||||
Less reimbursements/waivers of fees and expenses: | |||||||
Investment advisory services | 3,788 | ||||||
Administrative services | 241 | ||||||
Total fees and expenses after reimbursements/waivers | 90,863 | ||||||
Net investment income | 89,114 | ||||||
Net realized gain and unrealized depreciation on investments | |||||||
and non-U.S. currency: | |||||||
Net realized gain on: | |||||||
Investments (including $44,325 net loss from affiliates) | 500,716 | ||||||
Non-U.S. currency transactions | 369 | 501,085 | |||||
Net unrealized (depreciation) appreciation on: | |||||||
Investments | (813,532 | ) | |||||
Non-U.S. currency translations | 11 | (813,521 | ) | ||||
Net realized gain and unrealized depreciation | |||||||
on investments and non-U.S. currency | (312,436 | ) | |||||
Net decrease in net assets resulting from operations | $ | (223,322 | ) | ||||
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | |||||||
See Notes to Financial Statements | |||||||
Statements of changes in net assets | (dollars in thousands) | ||||||
Six months | Year ended | ||||||
ended August 31, | February 28, | ||||||
2006* | 2006 | ||||||
Operations: | |||||||
Net investment income | $ | 89,114 | $ | 109,967 | |||
Net realized gain on investments and | |||||||
non-U.S. currency transactions | 501,085 | 382,805 | |||||
Net unrealized (depreciation) appreciation | |||||||
on investments and non-U.S. currency translations | (813,521 | ) | 1,685,059 | ||||
Net (decrease) increase in net assets | |||||||
resulting from operations | (223,322 | ) | 2,177,831 | ||||
Dividends and distributions paid to shareholders: | |||||||
Dividends from net investment income and non-U.S. currency gain | (21,824 | ) | (88,586 | ) | |||
Distributions from net realized gain on investments | (178,890 | ) | (433,776 | ) | |||
Total dividends and distributions paid to shareholders | (200,714 | ) | (522,362 | ) | |||
Capital share transactions | 559,082 | 3,068,453 | |||||
Total increase in net assets | 135,046 | 4,723,922 | |||||
Net assets: | |||||||
Beginning of period | 23,340,178 | 18,616,256 | |||||
End of period (including undistributed net investment | |||||||
income: $86,360 and $19,070, respectively) | $ | 23,475,224 | $ | 23,340,178 | |||
*Unaudited. | |||||||
See Notes to Financial Statements |
Notes to financial statements unaudited
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 CollegeAmerica® 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-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Class B and 529-B | None | Declines from 5% to 0% for redemptions within six years of purchase | Class B and 529-B convert to Class A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Class F and 529-F | None | None | None |
Class R-1, R-2, R-3, R-4 and R-5 | None | None | None |
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 or are considered unreliable 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. Therefore, no federal income tax provision is required.
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; 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.
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year end. As of February 28, 2006, the fund had a tax basis undistributed ordinary income of $33,713,000 and undistributed long-term capital gain of $164,323,000.
As of August 31, 2006, unrealized appreciation (depreciation) and cost of investments on a tax basis were as follows:
(dollars in thousands) | |||
Gross unrealized appreciation on investment securities | $ | 4,470,302 | |
Gross unrealized depreciation on investment securities | (413,926 | ) | |
Net unrealized appreciation on investment securities | 4,056,376 | ||
Cost of investment securities | 19,427,425 |
The tax character of distributions paid to shareholders was as follows (dollars in thousands):
Six months ended August 31, 2006 | Year ended February 28, 2006 | ||||||||||||||||||
Ordinary income | Long-term capital gains | Total distributions paid | Ordinary income | Long-term capital gains | Total distributions paid | ||||||||||||||
Share class | |||||||||||||||||||
Class A | $ | 26,730 | $ | 112,766 | $ | 139,496 | $ | 72,208 | $ | 301,745 | $ | 373,953 | |||||||
Class B | 665 | 8,159 | 8,824 | - | 22,692 | 22,692 | |||||||||||||
Class C | 945 | 11,602 | 12,547 | - | 30,880 | 30,880 | |||||||||||||
Class F | 3,663 | 15,217 | 18,880 | 9,265 | 38,509 | 47,774 | |||||||||||||
Class 529-A | 581 | 2,513 | 3,094 | 1,362 | 5,755 | 7,117 | |||||||||||||
Class 529-B | 44 | 544 | 588 | - | 1,370 | 1,370 | |||||||||||||
Class 529-C | 67 | 825 | 892 | - | 1,978 | 1,978 | |||||||||||||
Class 529-E | 24 | 147 | 171 | 30 | 349 | 379 | |||||||||||||
Class 529-F | 20 | 75 | 95 | 42 | 152 | 194 | |||||||||||||
Class R-1 | 21 | 258 | 279 | - | 558 | 558 | |||||||||||||
Class R-2 | 216 | 2,645 | 2,861 | - | 6,340 | 6,340 | |||||||||||||
Class R-3 | 794 | 4,853 | 5,647 | 1,283 | 11,210 | 12,493 | |||||||||||||
Class R-4 | 679 | 2,949 | 3,628 | 2,042 | 5,723 | 7,765 | |||||||||||||
Class R-5 | 852 | 2,860 | 3,712 | 2,354 | 6,515 | 8,869 | |||||||||||||
Total | $ | 35,301 | $ | 165,413 | $ | 200,714 | $ | 88,586 | $ | 433,776 | $ | 522,362 |
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 SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, Inc.SM ("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 0.290% on such assets in excess of $27 billion. CRMC is currently waiving 10% of investment advisory services fees. During the six months ended August 31, 2006, total investment advisory services fees waived by CRMC were $3,788,000. As a result, the fee shown on the accompanying financial statements of $37,883,000, which was equivalent to an annualized rate of 0.321%, was reduced to $34,095,000, or 0.289% 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 on the following page:
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 below/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 to provide 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 August 31, 2006, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Class B and 529-B | 1.00 | 1.00 |
Class C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Class 529-E and R-3 | 0.50 | 0.75 |
Class F, 529-F and R-4 | 0.25 | 0.50 |
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 six months ended August 31, 2006, the total administrative services fees paid by CRMC were $241,000 for Class R-2. 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 on the previous page for the six months ended August 31, 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 | $18,699 | $8,361 | Not applicable | Not applicable | Not applicable |
Class B | 5,665 | 644 | Not applicable | Not applicable | Not applicable |
Class C | 8,008 | Included in administrative services | $1,192 | $209 | Not applicable |
Class F | 2,714 | 906 | 119 | Not applicable | |
Class 529-A | 342 | 163 | 31 | $178 | |
Class 529-B | 376 | 34 | 18 | 38 | |
Class 529-C | 569 | 52 | 22 | 57 | |
Class 529-E | 52 | 10 | 2 | 11 | |
Class 529-F | - | 5 | 1 | 5 | |
Class R-1 | 182 | 22 | 9 | Not applicable | |
Class R-2 | 1,388 | 271 | 734 | Not applicable | |
Class R-3 | 1,714 | 497 | 212 | Not applicable | |
Class R-4 | 524 | 303 | 8 | Not applicable | |
Class R-5 | Not applicable | 201 | 3 | Not applicable | |
Total | $40,233 | $9,005 | $3,656 | $1,368 | $289 |
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 $119,000, shown on the accompanying financial statements, includes $150,000 in current fees (either paid in cash or deferred) and a net decrease of $31,000 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 (decrease) | |||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||
Six months ended August 31, 2006 | |||||||||||||||||||||||||
Class A | $ | 1,298,475 | 67,318 | $ | 133,473 | 7,122 | $ | (1,193,828 | ) | (62,184 | ) | $ | 238,120 | 12,256 | |||||||||||
Class B | 63,355 | 3,398 | 8,471 | 469 | (77,632 | ) | (4,196 | ) | (5,806 | ) | (329 | ) | |||||||||||||
Class C | 142,895 | 7,726 | 11,923 | 664 | (161,426 | ) | (8,781 | ) | (6,608 | ) | (391 | ) | |||||||||||||
Class F | 349,993 | 18,262 | 17,093 | 917 | (279,174 | ) | (14,613 | ) | 87,912 | 4,566 | |||||||||||||||
Class 529-A | 44,358 | 2,309 | 3,094 | 165 | (13,638 | ) | (716 | ) | 33,814 | 1,758 | |||||||||||||||
Class 529-B | 6,187 | 332 | 588 | 32 | (2,723 | ) | (147 | ) | 4,052 | 217 | |||||||||||||||
Class 529-C | 14,457 | 774 | 892 | 49 | (6,650 | ) | (358 | ) | 8,699 | 465 | |||||||||||||||
Class 529-E | 2,486 | 131 | 171 | 9 | (940 | ) | (49 | ) | 1,717 | 91 | |||||||||||||||
Class 529-F | 2,451 | 127 | 95 | 5 | (876 | ) | (46 | ) | 1,670 | 86 | |||||||||||||||
Class R-1 | 7,464 | 397 | 279 | 15 | (4,663 | ) | (249 | ) | 3,080 | 163 | |||||||||||||||
Class R-2 | 73,037 | 3,890 | 2,859 | 157 | (47,106 | ) | (2,508 | ) | 28,790 | 1,539 | |||||||||||||||
Class R-3 | 122,713 | 6,436 | 5,643 | 305 | (82,777 | ) | (4,359 | ) | 45,579 | 2,382 | |||||||||||||||
Class R-4 | 75,827 | 3,957 | 3,628 | 194 | (51,522 | ) | (2,691 | ) | 27,933 | 1,460 | |||||||||||||||
Class R-5 | 129,482 | 6,667 | 3,693 | 196 | (43,045 | ) | (2,222 | ) | 90,130 | 4,641 | |||||||||||||||
Total net increase | |||||||||||||||||||||||||
(decrease) | $ | 2,333,180 | 121,724 | $ | 191,902 | 10,299 | $ | (1,966,000 | ) | (103,119 | ) | $ | 559,082 | 28,904 | |||||||||||
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 | |||||||||||
* 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 $3,745,141,000 and $2,582,906,000, respectively, during the six months ended August 31, 2006.
Financial highlights | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Loss) income from investment operations(2) | Dividends and distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income (loss | ) | Net (losses) gains 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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | $ | 19.48 | $ | .09 | $ | (.25 | ) | $ | (.16 | ) | $ | (.02 | ) | $ | (.15 | ) | $ | (.17 | ) | $ | 19.15 | (.82 | )% | $ | 16,046 | .68 | % | (6 | ) | .65 | % | (6 | ) | .88 | % | (6 | ) | ||||||||||||||||||||||||||||
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 | - | (7 | ) | - | - | (7 | ) | 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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 18.83 | .01 | (.24 | ) | (.23 | ) | - | (.15 | ) | (.15 | ) | 18.45 | (1.23 | ) | 1,110 | 1.46 | (6 | ) | 1.42 | (6 | ) | .10 | (6 | ) | |||||||||||||||||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 18.72 | - | (7 | ) | (.23 | ) | (.23 | ) | - | (.15 | ) | (.15 | ) | 18.34 | (1.23 | ) | 1,567 | 1.52 | (6 | ) | 1.49 | (6 | ) | .04 | (6 | ) | |||||||||||||||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.40 | .08 | (.25 | ) | (.17 | ) | (.02 | ) | (.15 | ) | (.17 | ) | 19.06 | (.87 | ) | 2,182 | .68 | (6 | ) | .65 | (6 | ) | .88 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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 | - | (7 | ) | - | - | (7 | ) | 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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.45 | .08 | (.26 | ) | (.18 | ) | (.02 | ) | (.15 | ) | (.17 | ) | 19.10 | (.93 | ) | 367 | .74 | (6 | ) | .71 | (6 | ) | .81 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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: | �� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 18.91 | - | (7 | ) | (.24 | ) | (.24 | ) | - | (.15 | ) | (.15 | ) | 18.52 | (1.28 | ) | 76 | 1.58 | (6 | ) | 1.55 | (6 | ) | (.02 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||
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 | - | (7 | ) | .07 | .07 | - | - | - | 15.28 | .46 | - | (8 | ) | .04 | .04 | - | (9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-C: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 18.93 | - | (7 | ) | (.25 | ) | (.25 | ) | - | (.15 | ) | (.15 | ) | 18.53 | (1.33 | ) | 116 | 1.57 | (6 | ) | 1.54 | (6 | ) | (.01 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||
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 | - | (7 | ) | .07 | .07 | - | - | - | 15.28 | .46 | - | (8 | ) | .04 | .04 | - | (9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Class 529-E: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.28 | .05 | (.25 | ) | (.20 | ) | (.01 | ) | (.15 | ) | (.16 | ) | 18.92 | (1.04 | ) | 21 | 1.05 | (6 | ) | 1.02 | (6 | ) | .51 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | $ | 19.46 | $ | .10 | $ | (.25 | ) | $ | (.15 | ) | (.03 | ) | $ | (.15 | ) | $ | (.18 | ) | $ | 19.13 | (.79 | )% | $ | 11 | .55 | % | (6 | ) | .52 | % | (6 | ) | 1.01 | % | (6 | ) | |||||||||||||||||||||||||||||
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 | - | (7 | ) | - | - | (7 | ) | 17.46 | 36.66 | 3 | .89 | .89 | (.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Period from 9/17/2002 to 2/28/2003 | 12.80 | .01 | - | (7 | ) | .01 | (.03 | ) | - | (.03 | ) | 12.78 | .05 | - | (8 | ) | .40 | .40 | .07 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R-1: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.04 | - | (7 | ) | (.24 | ) | (.24 | ) | - | (.15 | ) | (.15 | ) | 18.65 | (.01 | ) | 37 | .02 | (6 | ) | .01 | (6 | ) | .00 | (6 | ) | |||||||||||||||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.03 | .01 | (.26 | ) | (.25 | ) | - | (.15 | ) | (.15 | ) | 18.63 | (1.27 | ) | 379 | 1.63 | (6 | ) | 1.47 | (6 | ) | .06 | (6 | ) | |||||||||||||||||||||||||||||||||||||||||
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 | - | (7 | ) | - | - | (7 | ) | 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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.28 | .05 | (.25 | ) | (.20 | ) | (.01 | ) | (.15 | ) | (.16 | ) | 18.92 | (1.04 | ) | 695 | 1.04 | (6 | ) | 1.01 | (6 | ) | .52 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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 | - | (7 | ) | .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 | - | (7 | ) | - | - | (7 | ) | 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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.42 | .08 | (.25 | ) | (.17 | ) | (.02 | ) | (.15 | ) | (.17 | ) | 19.08 | (.88 | ) | 426 | .73 | (6 | ) | .70 | (6 | ) | .82 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 8/31/2006 | (5 | ) | 19.55 | .11 | (.26 | ) | (.15 | ) | (.03 | ) | (.15 | ) | (.18 | ) | 19.22 | (.77 | ) | 442 | .44 | (6 | ) | .40 | (6 | ) | 1.12 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
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 | ) |
Six months ended August 31, | Year ended February 28 or 29 | ||||||||||||||||||
2006(5 | ) | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||
Portfolio turnover rate for all classes of shares | 13 | % | 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) Unaudited. |
(6) Annualized. |
(7) Amount less than $.01. |
(8) Amount less than $1 million. |
(9) Amount less than .01%. |
See Notes to Financial Statements |
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 current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended | Life | |||||||||
September 30, 2006 (the most recent calendar quarter): | 1 year | 5 years | 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 | +1.63 | % | +6.50 | % | +3.10 | % | ||||
Not reflecting CDSC | +6.63 | % | +6.81 | % | +3.10 | % | ||||
Class C shares— first sold 3/15/01 | ||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||
if shares are sold within one year of purchase | +5.56 | % | +6.75 | % | +3.93 | % | ||||
Not reflecting CDSC | +6.56 | % | +6.75 | % | +3.93 | % | ||||
Class F shares*— first sold 3/16/01 | ||||||||||
Not reflecting annual asset-based fee charged | ||||||||||
by sponsoring firm | +7.48 | % | +7.59 | % | +5.07 | % | ||||
Class 529-A shares†— first sold 2/15/02 | ||||||||||
Reflecting 5.75% maximum sales charge | +1.22 | % | — | +4.96 | % | |||||
Not reflecting maximum sales charge | +7.38 | % | — | +6.31 | % | |||||
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 | +1.49 | % | — | +5.44 | % | |||||
Not reflecting CDSC | +6.49 | % | — | +5.79 | % | |||||
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 | +5.48 | % | — | +5.81 | % | |||||
Not reflecting CDSC | +6.48 | % | — | +5.81 | % | |||||
Class 529-E shares*†— first sold 3/7/02 | +7.04 | % | — | +5.14 | % | |||||
Class 529-F shares*†— first sold 9/17/02 | ||||||||||
Not reflecting annual asset-based fee charged | ||||||||||
by sponsoring firm | +7.59 | % | — | +12.26 | % |
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 pages 18 to 21 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.
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 (March 1, 2006, through August 31, 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 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 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 3/1/2006 | Ending account value 8/31/2006 | Expenses paid during period* | Annualized expense ratio | ||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 991.84 | $ | 3.26 | .65 | % | |||||
Class A -- assumed 5% return | 1,000.00 | 1,021.93 | 3.31 | .65 | |||||||||
Class B -- actual return | 1,000.00 | 987.74 | 7.11 | 1.42 | |||||||||
Class B -- assumed 5% return | 1,000.00 | 1,018.05 | 7.22 | 1.42 | |||||||||
Class C -- actual return | 1,000.00 | 987.66 | 7.46 | 1.49 | |||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.69 | 7.58 | 1.49 | |||||||||
Class F -- actual return | 1,000.00 | 991.29 | 3.26 | .65 | |||||||||
Class F -- assumed 5% return | 1,000.00 | 1,021.93 | 3.31 | .65 | |||||||||
Class 529-A -- actual return | 1,000.00 | 990.74 | 3.56 | .71 | |||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.63 | 3.62 | .71 | |||||||||
Class 529-B -- actual return | 1,000.00 | 987.25 | 7.76 | 1.55 | |||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.39 | 7.88 | 1.55 | |||||||||
Class 529-C -- actual return | 1,000.00 | 986.72 | 7.71 | 1.54 | |||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.44 | 7.83 | 1.54 | |||||||||
Class 529-E -- actual return | 1,000.00 | 989.63 | 5.12 | 1.02 | |||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,020.06 | 5.19 | 1.02 | |||||||||
Class 529-F -- actual return | 1,000.00 | 992.06 | 2.61 | .52 | |||||||||
Class 529-F -- assumed 5% return | 1,000.00 | 1,022.58 | 2.65 | .52 | |||||||||
Class R-1 -- actual return | 1,000.00 | 987.33 | 7.36 | 1.47 | |||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.80 | 7.48 | 1.47 | |||||||||
Class R-2 -- actual return | 1,000.00 | 987.34 | 7.36 | 1.47 | |||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.80 | 7.48 | 1.47 | |||||||||
Class R-3 -- actual return | 1,000.00 | 989.65 | 5.07 | 1.01 | |||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,020.11 | 5.14 | 1.01 | |||||||||
Class R-4 -- actual return | 1,000.00 | 991.23 | 3.51 | .70 | |||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.68 | 3.57 | .70 | |||||||||
Class R-5 -- actual return | 1,000.00 | 992.27 | 2.01 | .40 | |||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,023.19 | 2.04 | .40 | |||||||||
* 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 (184), and divided by 365 (to reflect the one-half year period). |
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through March 31, 2007. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The information, material factors and conclusions that formed the basis for the committee’s recommendation and the board’s subsequent approval are described below.
1. Information reviewed
Materials reviewed — During the course of each year, the board members review a wide variety of materials relating to the services provided by CRMC, including reports on the fund’s investment results; portfolio composition; portfolio trading practices; shareholder services; and other information relating to the nature, extent and quality of services provided by CRMC to the fund. In addition, the committee requests and reviews supplementary information that includes materials regarding the fund’s investment results, advisory fee and expense comparisons, CRMC’s financial statements and profitability, descriptions of various functions such as compliance monitoring and portfolio trading practices, and information about the personnel providing investment management and administrative services to the fund.
Review process — The committee received assistance and advice regarding legal and industry standards from independent counsel to the board. The committee discussed the approval of the agreement with CRMC representatives and in a private session with counsel at which no representatives of CRMC were present. In deciding to recommend the approval of the agreement, the committee did not identify any single issue or particular piece of information that, in isolation, was the controlling factor. This summary describes the most important, but not all, of the factors considered by the board and the committee.
2. Nature, extent and quality of services
CRMC, its personnel and its resources — The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address the recent growth in assets under management. The board and the committee also considered that CRMC made available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, investment results and portfolio accounting. They considered CRMC’s commitment to investing in information technology supporting investment management and compliance. They further considered CRMC’s continuing need to attract and retain qualified personnel and to maintain and enhance its resources and systems. The board and the committee also considered the benefits to fund shareholders from investing in a fund that is part of a large family of funds offering a variety of investment objectives.
Other services — The board and the committee considered CRMC’s policies, procedures and systems designed to comply with applicable laws and regulations and its commitment to compliance; its efforts to keep board members informed; and its attention to matters that may involve potential conflicts of interest with the fund. The board and the committee also considered the nature, extent, quality and cost of administrative, distribution and shareholder services provided by CRMC to the fund under the agreement and other agreements, including the administrative, legal and fund accounting and treasury functions.
3. Investment results
The board and the committee considered the fund’s investment objective to seek capital appreciation and the investment results of the fund in light of this objective. They compared the fund’s total returns with the Lipper Multi-Cap Core Funds Index (the Lipper category that includes the fund) and the Lipper Growth Funds Index (another relevant Lipper category given the fund’s investment objective). The board and the committee noted that the fund’s investment results exceeded the results of both indexes for the five- and 10-year periods ended September 30, 2005, although the fund’s results trailed both indexes for the shorter nine-month and one-year periods ended September 30, 2005. The board and the committee, nevertheless, observed that the fund’s long-term investment results have exceeded those of the unmanaged S&P 500 Index and that the fund has produced relatively better investment results in comparison with many of its peers during periods of broad market decline.
4. Advisory fees and total expenses
The board and the committee reviewed the advisory fees and total expenses of the fund (each as a percentage of average net assets) and compared such amounts with the average fee and expense levels of other funds in the Lipper Multi-Cap Core Funds Index. The board and the committee observed that the fund’s advisory fees and total expenses (each as a percentage of average net assets) were well below the median levels for the fund’s peer group funds in that index among the lowest of all 30 funds currently in the index. The board and the committee also noted the 10% advisory fee waiver that CRMC put into effect on April 1, 2005.
The board and the committee also reviewed information and materials regarding the advisory fees paid by institutional clients of an affiliate of CRMC with similar investment mandates. They noted that, although the fees paid by those clients generally were lower than those paid by the American Funds, these differences reflected the significant investment, operational and regulatory differences between advising mutual funds and institutional clients.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, as well as the resulting level of profits to CRMC, comparing those to the reported results of several large publicly held investment management companies. The committee also received information during previous periods regarding the structure and manner in which CRMC’s investment professionals were compensated and CRMC’s view of the relationship of such compensation to the attraction and retention of quality personnel. The board and the committee considered CRMC’s willingness to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements. They further considered that breakpoint discounts in the fund’s advisory fee structure reduce the level of fees charged by CRMC to the fund as fund assets increase. They also considered the impact of the current 10% advisory fee waiver.
6. Ancillary benefits
The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including: fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers.
7. Conclusions
Based on their review, including their consideration of each of the factors referred to above, the board and the committee concluded that the agreement is fair and reasonable to the fund and its shareholders and that the fund’s shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund. The board and the committee concluded that the nature, extent and quality of services provided by CRMC, including its investment record, the fund’s cost structure and low level of fees, benefit and are in the best interests of the fund and, along with the consideration of other factors, support approval of the agreement.
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
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. Annualized expenses for Class B shares were 0.77 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 annualized 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 the same annualized expenses as 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.
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 August 31, 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 December 31, 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 75 years, we have followed a consistent philosophy that we firmly believe is in our investors’ best interests. The range of opportunities offered by our family of just 30 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 seek to buy securities at reasonable prices relative to their prospects 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.
30 mutual funds, consistent philosophy, consistent results
• Growth funds
> 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
American Mutual Fund®
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America®
Washington Mutual Investors FundSM
• Equity-income funds
Capital Income Builder®
The Income Fund of America®
• Balanced fund
American Balanced Fund®
• Bond funds
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund®
Intermediate Bond Fund of America®
Short-Term Bond Fund of AmericaSM
U.S. Government Securities FundSM
• Tax-exempt bond funds
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. MFGESR-902-1006P
Litho in USA AGD/LPT/8078-S7491
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
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
August 31, 2006
unaudited
Common stocks — 84.79% | Shares | Market value (000) | |||||
INFORMATION TECHNOLOGY — 20.18% | |||||||
Intel Corp. | 30,232,000 | $ | 590,733 | ||||
Cisco Systems, Inc.1 | 24,604,300 | 541,049 | |||||
Oracle Corp.1 | 32,960,000 | 515,824 | |||||
eBay Inc.1 | 14,245,000 | 396,866 | |||||
Google Inc., Class A1 | 1,030,000 | 389,886 | |||||
First Data Corp. | 7,285,600 | 313,062 | |||||
Microsoft Corp. | 12,095,000 | 310,721 | |||||
Affiliated Computer Services, Inc., Class A1 | 3,610,000 | 185,337 | |||||
Automatic Data Processing, Inc. | 3,500,000 | 165,200 | |||||
Texas Instruments Inc. | 4,350,000 | 141,767 | |||||
Maxim Integrated Products, Inc. | 3,775,000 | 109,853 | |||||
Linear Technology Corp. | 3,200,000 | 108,832 | |||||
Altera Corp.1 | 5,250,000 | 106,207 | |||||
Intuit Inc.1 | 3,311,800 | 100,083 | |||||
Yahoo! Inc.1 | 3,000,000 | 86,460 | |||||
Intersil Corp., Class A | 3,400,000 | 86,190 | |||||
Microchip Technology Inc. | 2,500,000 | 85,400 | |||||
Analog Devices, Inc. | 2,213,200 | 67,812 | |||||
Paychex, Inc. | 1,600,000 | 57,456 | |||||
Xilinx, Inc. | 2,500,000 | 57,175 | |||||
EMC Corp.1 | 4,500,000 | 52,425 | |||||
Applied Materials, Inc. | 2,700,000 | 45,576 | |||||
Rogers Corp.1 | 750,000 | 43,515 | |||||
NAVTEQ Corp.1 | 1,349,700 | 35,848 | |||||
National Instruments Corp. | 1,151,049 | 31,953 | |||||
KLA-Tencor Corp. | 700,000 | 30,737 | |||||
Jabil Circuit, Inc. | 1,087,000 | 29,164 | |||||
Solectron Corp.1 | 6,500,000 | 20,410 | |||||
Sabre Holdings Corp., Class A | 888,800 | 19,482 | |||||
Cadence Design Systems, Inc.1 | 796,400 | 13,085 | |||||
4,738,108 | |||||||
CONSUMER DISCRETIONARY — 17.60% | |||||||
Lowe’s Companies, Inc. | 20,300,000 | 549,318 | |||||
Target Corp. | 9,250,000 | 447,607 | |||||
Carnival Corp., units | 8,525,200 | 357,206 | |||||
Best Buy Co., Inc. | 6,300,000 | 296,100 | |||||
Johnson Controls, Inc. | 3,090,000 | 222,264 | |||||
Harley-Davidson Motor Co. | 3,666,900 | 214,550 | |||||
YUM! Brands, Inc. | 3,638,000 | 177,825 | |||||
Williams-Sonoma, Inc. | 4,900,000 | 144,354 | |||||
Ross Stores, Inc. | 5,775,000 | 141,430 | |||||
E.W. Scripps Co., Class A | 3,100,000 | 140,957 | |||||
Time Warner Inc. | 7,647,500 | 127,101 | |||||
Brinker International, Inc. | 3,125,000 | 120,219 | |||||
Walt Disney Co. | 4,000,000 | 118,600 | |||||
Dollar General Corp. | 8,000,000 | 102,880 | |||||
Liberty Media Holding Corp., Liberty Capital, Series A1 | 700,000 | 60,431 | |||||
Liberty Media Holding Corp., Liberty Interactive, Series A1 | 1,750,000 | 33,355 | |||||
Comcast Corp., Class A, special nonvoting stock1 | 2,500,000 | 87,275 | |||||
Kohl’s Corp.1 | 1,275,000 | 79,700 | |||||
Gentex Corp. | 5,130,000 | 74,282 | |||||
Amazon.com, Inc.1 | 2,400,000 | 73,992 | |||||
Harman International Industries, Inc. | 900,000 | 73,008 | |||||
IAC/InterActiveCorp1 | 2,557,500 | 72,838 | |||||
OSI Restaurant Partners, Inc. | 2,250,000 | 69,683 | |||||
Sonic Corp.1 | 3,000,000 | 65,790 | |||||
Expedia, Inc.1 | 3,635,000 | 59,323 | |||||
P.F. Chang’s China Bistro, Inc.1,2 | 1,650,000 | 58,163 | |||||
Discovery Holding Co., Class A1 | 3,245,000 | 45,462 | |||||
Fossil, Inc.1 | 1,960,000 | 36,887 | |||||
Applebee’s International, Inc. | 1,100,000 | 22,825 | |||||
Tractor Supply Co.1 | 525,000 | 22,355 | |||||
Clear Channel Communications, Inc. | 738,300 | 21,440 | |||||
Gap, Inc. | 850,000 | 14,289 | |||||
4,131,509 | |||||||
HEALTH CARE — 17.17% | |||||||
UnitedHealth Group Inc. | 10,080,000 | 523,656 | |||||
WellPoint, Inc.1 | 6,700,000 | 518,647 | |||||
Medco Health Solutions, Inc.1 | 4,510,000 | 285,799 | |||||
Forest Laboratories, Inc.1 | 5,165,000 | 258,147 | |||||
Medtronic, Inc. | 5,200,000 | 243,880 | |||||
Alcon, Inc. | 1,730,000 | 203,777 | |||||
Roche Holding AG | 982,000 | 180,754 | |||||
St. Jude Medical, Inc.1 | 4,929,200 | 179,472 | |||||
Express Scripts, Inc.1 | 1,930,000 | 162,274 | |||||
Boston Scientific Corp.1 | 8,047,890 | 140,355 | |||||
Caremark Rx, Inc. | 2,300,000 | 133,262 | |||||
Amgen Inc.1 | 1,875,000 | 127,369 | |||||
IDEXX Laboratories, Inc.1 | 1,340,000 | 123,293 | |||||
Biogen Idec Inc.1 | 2,719,100 | 120,021 | |||||
Cephalon, Inc.1 | 2,000,000 | 114,040 | |||||
Medicis Pharmaceutical Corp., Class A2 | 3,625,000 | 106,176 | |||||
Lincare Holdings Inc.1 | 2,800,000 | 103,684 | |||||
Bristol-Myers Squibb Co. | 4,225,000 | 91,894 | |||||
Becton, Dickinson and Co. | 1,200,000 | 83,640 | |||||
Genentech, Inc.1 | 1,000,000 | 82,520 | |||||
Abbott Laboratories | 1,400,000 | 68,180 | |||||
McKesson Corp. | 1,100,000 | 55,880 | |||||
Eli Lilly and Co. | 900,000 | 50,337 | |||||
Johnson & Johnson | 500,000 | 32,330 | |||||
Henry Schein, Inc.1 | 500,000 | 24,935 | |||||
Celgene Corp.1 | 422,655 | 17,198 | |||||
4,031,520 | |||||||
FINANCIALS — 8.40% | |||||||
Fannie Mae | 8,640,000 | 454,896 | |||||
Capital One Financial Corp. | 4,901,200 | 358,278 | |||||
American International Group, Inc. | 4,765,000 | 304,102 | |||||
Golden West Financial Corp. | 2,956,100 | 223,156 | |||||
Freddie Mac | 2,550,000 | 162,180 | |||||
Wells Fargo & Co. | 3,440,000 | 119,540 | |||||
M&T Bank Corp. | 959,230 | 117,468 | |||||
Commerce Bancorp, Inc. | 3,000,000 | 99,930 | |||||
Bank of New York Co., Inc. | 1,740,000 | 58,725 | |||||
City National Corp. | 510,000 | 33,558 | |||||
Fidelity National Financial, Inc. | 600,000 | 24,138 | |||||
Arthur J. Gallagher & Co. | 600,000 | 16,080 | |||||
1,972,051 | |||||||
CONSUMER STAPLES — 6.83% | |||||||
CVS Corp. | 7,000,000 | 234,850 | |||||
PepsiCo, Inc. | 3,300,000 | 215,424 | |||||
Altria Group, Inc. | 2,500,000 | 208,825 | |||||
L’Oréal SA | 1,518,800 | 158,756 | |||||
Bunge Ltd. | 2,059,000 | 116,004 | |||||
Avon Products, Inc. | 4,000,000 | 114,840 | |||||
Church & Dwight Co., Inc. | 2,867,800 | 110,410 | |||||
Dean Foods Co.1 | 2,500,000 | 99,050 | |||||
Wm. Wrigley Jr. Co. | 1,870,000 | 86,805 | |||||
Walgreen Co. | 1,600,000 | 79,136 | |||||
Costco Wholesale Corp. | 1,600,000 | 74,864 | |||||
Anheuser-Busch Companies, Inc. | 1,187,800 | 58,654 | |||||
Wal-Mart Stores, Inc. | 1,000,000 | 44,720 | |||||
1,602,338 | |||||||
ENERGY — 5.89% | |||||||
Schlumberger Ltd. | 5,310,000 | 325,503 | |||||
Devon Energy Corp. | 3,020,000 | 188,720 | |||||
FMC Technologies, Inc.1 | 2,735,000 | 160,873 | |||||
Newfield Exploration Co.1 | 3,520,531 | 152,228 | |||||
Apache Corp. | 2,150,000 | 140,352 | |||||
Murphy Oil Corp. | 2,200,000 | 107,602 | |||||
EOG Resources, Inc. | 1,522,900 | 98,714 | |||||
Smith International, Inc. | 2,130,000 | 89,396 | |||||
Noble Corp. | 1,200,000 | 78,468 | |||||
ConocoPhillips | 650,000 | 41,229 | |||||
1,383,085 | |||||||
INDUSTRIALS — 5.16% | |||||||
United Parcel Service, Inc., Class B | 3,200,000 | 224,160 | |||||
Precision Castparts Corp. | 3,640,000 | 212,721 | |||||
Robert Half International Inc. | 6,800,000 | 210,392 | |||||
General Electric Co. | 5,400,000 | 183,924 | |||||
Avery Dennison Corp. | 1,744,200 | 108,036 | |||||
FedEx Corp. | 790,000 | 79,814 | |||||
Mine Safety Appliances Co.2 | 1,880,000 | 66,646 | |||||
Southwest Airlines Co. | 3,685,000 | 63,824 | |||||
United Technologies Corp. | 1,000,000 | 62,710 | |||||
1,212,227 | |||||||
TELECOMMUNICATION SERVICES — 2.25% | |||||||
Sprint Nextel Corp., Series 1 | 14,270,004 | $ | 241,448 | ||||
Telephone and Data Systems, Inc., Special Common Shares | 2,000,000 | 81,960 | |||||
Telephone and Data Systems, Inc. | 1,575,000 | 66,796 | |||||
CenturyTel, Inc. | 2,690,000 | 107,116 | |||||
United States Cellular Corp.1 | 501,600 | 30,071 | |||||
527,391 | |||||||
MATERIALS — 0.26% | |||||||
Sealed Air Corp. | 1,200,000 | 62,244 | |||||
UTILITIES — 0.17% | |||||||
Duke Energy Corp. | 1,299,000 | 38,970 | |||||
MISCELLANEOUS — 0.88% | |||||||
Other common stocks in initial period of acquisition | 205,535 | ||||||
Total common stocks (cost: $15,847,086,000) | 19,904,978 | ||||||
Short-term securities — 15.25% | Principal amount (000 | ) | |||||
Federal Home Loan Bank 5.01%-5.265% due 9/1-11/24/2006 | $ | 733,132 | 728,671 | ||||
CAFCO, LLC 5.28%-5.36% due 9/18-10/11/20063 | 266,200 | 265,056 | |||||
Edison Asset Securitization LLC 5.28%-5.36% due 9/15-10/23/20063 | 193,047 | 192,136 | |||||
General Electric Capital Corp. 5.27% due 10/17/2006 | 50,000 | 49,660 | |||||
Clipper Receivables Co., LLC 5.25%-5.35% due 9/1-10/13/20063 | 236,000 | 235,023 | |||||
Bank of America Corp. 5.27%-5.385% due 9/29-10/27/2006 | 125,000 | 124,287 | |||||
Ranger Funding Co. LLC 5.25%-5.27% due 9/28-10/26/20063 | 97,598 | 96,981 | |||||
Freddie Mac 5.14%-5.22% due 10/2-12/19/2006 | 185,400 | 183,891 | |||||
Fannie Mae 4.97%-5.30% due 9/13-10/4/2006 | 170,764 | 170,177 | |||||
Variable Funding Capital Corp. 5.25%-5.34% due 9/14-10/6/20063 | 152,800 | 152,316 | |||||
Gannett Co. 5.20%-5.21% due 9/25-10/12/20063 | 146,200 | 145,478 | |||||
Wal-Mart Stores Inc. 5.20%-5.24% due 9/19-10/31/20063 | 132,695 | 131,966 | |||||
International Bank for Reconstruction and Development 5.14%-5.19% due 9/15-10/23/2006 | 114,900 | 114,110 | |||||
Abbott Laboratories 5.20%-5.27% due 9/12-10/17/20063 | 108,700 | 108,180 | |||||
Private Export Funding Corp. 5.24%-5.33% due 11/16/2006-2/28/20073 | 109,393 | 106,945 | |||||
Park Avenue Receivables Co., LLC 5.25%-5.26% due 9/14-10/3/20063 | 76,482 | 76,183 | |||||
Preferred Receivables Funding Corp. 5.26% due 10/12/20063 | 8,600 | 8,547 | |||||
General Dynamics Corp. 5.22%-5.23% due 9/15-9/29/20063 | 84,200 | 83,910 | |||||
Caterpillar Financial Services Corp. 5.28%-5.30% due 9/11-9/18/2006 | 83,800 | 83,629 | |||||
NetJets Inc. 5.22%-5.24% due 9/26-9/28/20063 | 72,500 | 72,212 | |||||
AIG Funding, Inc. 5.29% due 9/12/2006 | 25,000 | 24,956 | |||||
International Lease Finance Corp. 5.24% due 10/10/2006 | 20,850 | 20,729 | |||||
American General Finance Corp. 5.30% due 9/12/2006 | 15,000 | 14,973 | |||||
AT&T Inc. 5.26%-5.27% due 9/1-9/20/20063 | 52,400 | 52,253 | |||||
Three Pillars Funding, LLC 5.26%-5.32% due 9/7-9/29/20063 | 46,290 | 46,214 | |||||
BellSouth Corp. 5.30%-5.32% due 9/5-9/7/20063 | 35,000 | 34,966 | |||||
Concentrate Manufacturing Co. of Ireland 5.21% due 9/14/20063 | 29,000 | 28,941 | |||||
Colgate-Palmolive Co. 5.20% due 9/18/20063 | 26,800 | 26,730 | |||||
Wm. Wrigley Jr. Co. 5.25% due 9/7/20063 | 25,000 | 24,974 | |||||
Harley-Davidson Funding Corp. 5.22% due 9/14/20063 | 25,000 | 24,949 | |||||
3M Co. 5.20% due 9/25/2006 | 25,000 | 24,910 | |||||
Hershey Co. 5.19% due 10/2/20063 | 25,000 | 24,885 | |||||
United Parcel Service Inc. 5.21% due 10/19/2006 | 25,000 | 24,829 | |||||
FCAR Owner Trust I 5.28% due 10/17/2006 | 25,000 | 24,829 | |||||
Medtronic Inc. 5.22% due 10/26/20063 | 25,000 | 24,797 | |||||
Harvard University 5.24% due 9/6/2006 | 15,700 | 15,686 | |||||
Coca-Cola Co. 5.20% due 11/2/20063 | 5,100 | 5,053 | |||||
U.S. Treasury Bills 5.14%-5.15% due 9/15/2006 | 4,800 | 4,791 | |||||
Total short-term securities (cost: $3,578,807,000) | 3,578,823 | ||||||
Total investment securities (cost: $19,425,893,000) | 23,483,801 | ||||||
Other assets less liabilities | (8,577 | ) | |||||
Net assets | $ | 23,475,224 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Security did not produce income during the last 12 months.
2Represents an affiliated company as defined under the Investment Company Act of 1940.
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 $1,968,695,000, which represented 8.39% of the net assets of the fund.
MFGEFP-902-1006-S6843
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) | Not applicable for filing of semi-annual reports to shareholders. |
(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 Principal Executive Officer | |
Date: November 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 Principal Executive Officer |
Date: November 8, 2006 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: November 8, 2006 |