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Amcap Fund (CAFBX)

Filed: 7 Nov 06, 7:00pm

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



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

Investment Company Act File Number: 811-01435



AMCAP Fund, Inc.
(Exact name of registrant as specified in charter)

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




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

Date of fiscal year end: February 28 or 29

Date of reporting period: 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
(000
)
      
           
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-AUp to 5.75%None (except 1% for certain redemptions within one year of purchase without an initial sales charge)None
Class B and 529-BNoneDeclines from 5% to 0% for redemptions within six years of purchaseClass B and 529-B convert to Class A and 529-A, respectively, after eight years
Class CNone1% for redemptions within one year of purchaseClass C converts to Class F after 10 years
Class 529-CNone1% for redemptions within one year of purchaseNone
Class 529-ENoneNoneNone
Class F and 529-FNoneNoneNone
Class R-1, R-2, R-3, R-4 and R-5NoneNoneNone

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

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

Security valuation - Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type.  Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Securities and other assets for which representative market quotations are not readily available 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 A0.25%0.25%
Class 529-A0.250.50
Class B and 529-B1.001.00
Class C, 529-C and R-11.001.00
Class R-20.751.00
Class 529-E and R-30.500.75
Class F, 529-F and R-40.250.50

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

Administrative services - The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the 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$8,361Not applicableNot applicableNot applicable
Class B5,665644Not applicableNot applicableNot applicable
Class C8,008
 
 
 
 
 
 
Included
in
administrative services
$1,192$209Not applicable
Class F2,714906119Not applicable
Class 529-A34216331$178
Class 529-B376341838
Class 529-C569522257
Class 529-E5210211
Class 529-F-515
Class R-1182229Not applicable
Class R-21,388271734Not applicable
Class R-31,714497212Not applicable
Class R-45243038Not applicable
Class R-5Not applicable2013Not 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.

 
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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

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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