Annual Report for the year ended August 31, 1995
GFA THE GROWTH FUND OF AMERICA
Looking Out for Shareholders:
The Role of Independent Directors
[The American Funds Group(R)]
THE GROWTH FUND OF AMERICA(R)
invests in a wide range of companies that appear to offer superior
opportunities for growth of capital.
ON OUR COVER:
Buck Rock lookout in California's Sequoia National Forest. Forest rangers train
their practiced eyes on thousands of acres of woodland, watching for signs of
trouble. Their job requires constant vigilance.
The independent directors of a mutual fund also must exercise constant
vigilance. On page 4, we'll introduce you to the people who watch over The
Growth Fund of America on your behalf.
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the fund's average annual compound returns, with
all distributions reinvested, through September 30, 1995 (the most recent
calendar quarter), assuming payment of the 5.75% maximum sales charge at the
beginning of the stated periods:
10 years: +15.84%
5 years: +17.83
1 year: +21.89
Sales charges are lower for accounts of $50,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
If only every year could be the third year of a presidential administration!
The third year after 1600 Pennsylvania Avenue changes hands has often
proved to be a very good one for stocks, and this has been no exception.
The value of your shares in The Growth Fund of America increased 25.6% over the
12 months through August 31, if you reinvested the dividend of 17 cents per
share and capital gain distribution of $1.04 per share paid in December 1994.
The fund's gain outpaced the 21.5% gain recorded by the stock market overall,
as measured by Standard & Poor's 500 Composite Index on the same reinvested
basis. The fund's results were achieved despite the fact that we held nearly
20% of assets in cash or cash equivalents throughout the period to help cushion
the potential effects of a market decline and take advantage of opportunities
as they arose.
Of the 104 stocks owned by the fund throughout the entire year, 61 recorded
double-digit gains. Only 23 lost ground.
[Side Bar]
OUR 10 MOST SUCCESSFUL HOLDINGS
among stocks held throughout
the 12 months ended August 31, 1995
Micron Technology (semiconductors) +282%
LSI Logic (semiconductors) +213
Cisco Systems (computer systems) +165
MedImmune (biotechnology) +161
Electronic Arts (software) +114
Applied Materials (semiconductor equipment) +106
Mentor Graphics (software) +95
Texas Instruments (electronics) +92
Intel (semiconductors) +87
Hewlett-Packard (electronics) +78
OUR 10 LEAST SUCCESSFUL HOLDINGS
among stocks held throughout
the 12 months ended August 31, 1995
Cyrix (semiconductors) -13%
Pyxis (health care) -13
Tandem Computers (computers) -19
United HealthCare (health care) -19
Coltec Industries (aerospace) -20
U.S. Healthcare (health care) -26
Delta Woodside Industries (apparel) -28
Toys "R" Us (retail) -29
Telefonos de Mexico (telecommunications) -48
Gensia Pharmaceuticals (biotechnology) -50
[End Side Bar]
HIGH-TECH STOCKS LED RESULTS
The stocks of technology companies were responsible for much of the fund's
success. They represented about a quarter of the portfolio but contributed a
great deal more than that to the fund's total return for the year. In fact,
nine of our 10 most successful holdings over the past year were
computer-related firms. Among them was our largest holding, semiconductor giant
Intel (+87%).
Our interest in technology companies - in particular those that provide
products or services for businesses, rather than for individuals - goes back a
long way. When Capital Research and Management Company became the fund's
investment adviser in 1973, the portfolio included just one technology stock.
Two years later we had increased the list substantially, and nearly 20% of the
fund's assets were invested in technology companies. The fund's two largest
technology holdings in 1975 are also in the current portfolio: National
Semiconductor (+52% for the most recent year) and IBM (+51%).
[Pull Quote]
The fund's portfolio includes most of the companies involved
in the recent entertainment/media mega-mergers.
[End Pull Quote]
Lately, everyone else seems to like technology stocks, too. When that happens
in the stock market, share prices often become unreasonably high. In short, it
is usually time to make some changes. So during the past few months, we have
selectively pruned our technology holdings. Among those eliminated altogether
were Microsoft and Dell Computer, outstanding companies we may well choose to
invest in again when they are somewhat less popular.
Despite the recent run-ups, we believe the potential of several technology
companies still has not been recognized. Accordingly, we have added to our
positions in LSI Logic and Digital Equipment, among others.
MEDIA MERGERS HELPED, TOO
We had anticipated some time ago that entertainment and broadcasting firms
would take dramatic steps to become fully integrated global media
organizations. The fund owns significant portions of most of the companies
involved in the recent mega-mergers that have redefined those fields -
including both Disney (+36%) and its new partner Capital Cities/ABC (+37%), in
addition to CBS (+24%). Since the end of our fiscal year, the fund's
second-largest holding, Time Warner (+10%), completed an agreement to acquire
Turner Broadcasting (+70%), also part of our portfolio.
HEALTH CARE, TELECOMMUNICATIONS OFF
A number of health care holdings lagged the market - although one, MedImmune,
rose from last year's least successful holdings list to this year's most
successful holdings list. Several of our telecommunications holdings also
recorded relatively poor results. Among them were: AT&T (+3%), MCI (-1%), LIN
Broadcasting (-4%), Sprint (-10%) and Telefonos de Mexico (-48%).
We expect many telecommunications companies will benefit from recently passed
congressional legislation which deregulates cable television, loosens
restrictions on the number of radio and TV stations a company can own, and
enables more carriers to offer long-distance phone service.
For example, cable providers such as Tele-Communications, Inc., TCI Group
(formerly Tele-Communications, Inc.) and Comcast, substantial fund holdings,
would enjoy greater freedoms in programming and pricing. Program suppliers such
as Viacom could expect greater demand for movies and syndicated shows.
Meanwhile, News Corp., based in Australia, could add to its Fox Network by
buying more U.S. TV stations.
LOOKING AHEAD
When we survey the investment landscape, there is cause for worry, and there is
cause for optimism.
On the minus side, the bull market has lasted for a long, long time. Dividend
yields on stocks in the S&P 500 are at the lowest levels on record. Some
sectors of the U.S. economy - notably retail - have not been doing well.
Perhaps most troublesome is that it seems as if everybody is trying to get into
the stock market.
On the plus side, inflation is not accelerating. An increasingly strong dollar
is attracting investors from overseas. Interest rates seem relatively stable.
The relationship of stock prices to corporate earnings appears reasonable in
the current interest rate environment.
On balance, it is important to remember that years like fiscal 1995 are seldom
soon repeated. The types of stocks in which the fund invests are often somewhat
more volatile than the market as a whole, and the fund's results have often
changed dramatically from year to year (as illustrated on our inside front
cover). As always, we encourage long-term investors to take all short-term
results in stride. This year's return was outsized; it is unrealistic to expect
such growth to continue indefinitely.
Cordially,
Walter P. Stern James F. Rothenberg
Chairman of the Board President
October 2, 1995
[Side Bar]
AVERAGE ANNUAL COMPOUND RETURNS*
(for periods ended August 31,1995)
10 years +15.13%
5 years +16.45
1 year +18.32
*Assumes reinvestment of all distributions and payment of the 5.75% sales
charge at the beginning of the stated periods.
[End Side Bar]
LOOKING OUT FOR YOU: THE ROLE OF THE FUND'S INDEPENDENT DIRECTORS
[Photo Caption]
THE FUND'S BOARD OF DIRECTORS
Front row: Bobbie Hazard, Jack McDonald, Hank Riggs, Leonade Jones, Bob Fox.
Back row: Jim Ratzlaff (former Chairman of the Board), Ted Hinshaw, Pat Woolf,
Wally Stern (Chairman of the Board), Ted Nierenberg. Not present: Rick Holmes.
[End Photo Caption]
There are more than half-a-million shareholders in The Growth Fund of America.
Nine of them officially keep watch over all of the fund's relationships and
represent the interests of shareholders.
They are the fund's independent directors, a group of men and women that
includes corporate executives, academicians, a scientist, an entrepreneur and a
U.S. Navy officer.
"It is a remarkably diverse group," says Jack McDonald, Professor of Finance in
the Graduate School of Business at Stanford University and a member of the
fund's board since 1976. "As an investor, I know that's important. When I look
at corporate annual reports, I always check the list of directors. I think it's
a source of strength when the directors have a variety of relevant
backgrounds."
The group meets four or five times a year. Agendas typically include a thorough
review of the portfolio, detailed reports from fund executives on investment
results, discussions of any significant developments, and several specialized
presentations by analysts or portfolio counselors. At a recent board meeting,
for example, the analyst whose responsibilities include computer-related
communications briefed the directors on competition among on-line services. One
of the liveliest parts of the meetings typically follows such presentations,
when the directors ask questions and explore implications for the fund's
holdings.
Between meetings, directors read materials including the business press and
monthly reports from the fund's officers. From time to time they visit the
fund's service centers to monitor the quality of service to shareholders.
The Investment Company Act of 1940 requires only that 50% of the fund's
directors have no current business affiliation with the fund or its investment
adviser; The Growth Fund of America has a higher percentage. Indeed, the full
board includes only two "inside" directors - Wally Stern and Jim Ratzlaff, the
current and former Chairman of the Board.
Three of the fund's independent directors contribute previous experience with
the fund's investment adviser: Ted Hinshaw retired as a director of Capital
Research and Management Company in 1983, Rick Holmes retired as a vice
president in 1985, and Leonade Jones was an investment analyst from 1973
through 1975. The other six independent directors have never been employed by
the investment adviser.
Wally notes the fund's emphasis on outsiders is crucial: "You can't have
management overseeing itself."
Director Ted Nierenberg agrees: "Independent directors are important because
they can go against management. Inside directors can't do that. It's harder for
an inside director to probe and to criticize - and that's what directors are
supposed to do."
All of the fund's current directors were elected (or re-elected) by
shareholders in December 1993. When there's a vacancy on the board, the
independent directors nominate and select a replacement. Shareholders vote on
the whole slate whenever the proportion of directors elected by the board
reaches one-third of the total.
Independent directors set their own pay, striving to reach a delicate balance.
As longtime director Bob Fox notes, "We don't want the fund to be at the top or
bottom of the compensation list. The pay has to be high enough to attract and
keep talented people, but low enough that it doesn't compromise our
independence. It shouldn't be a reason for someone to take the job - or not
to."
We recently asked several of the independent directors to tell us, in their own
words, about their jobs. You'll find their responses on the following pages.
[Side Bar]
WHAT DO THE FUND'S DIRECTORS DO?
Among their principal duties:
- - They supervise the investment adviser (Capital Research and Management
Company) and its service affiliates to make sure those organizations do the
best job possible for the shareholders.
- - They interview the fund's investment professionals about the pluses and
minuses of industries and companies, as well as the overall course of the
markets and the fund.
- - They determine whether fees are appropriate and reasonable.
- - They decide, annually, whether or not to rehire the fund's investment adviser
and its auditor.*
- - They authorize the fund's dividends and capital gain distributions.
- - They elect fund officers.
- - They select new independent directors as vacancies occur.*
- - They follow industry trends, media coverage and shareholder surveys.
- - They review reports to shareholders and legal filings with the Securities
and Exchange Commission.
* All recommendations are made by a committee composed entirely of independent
directors.
[End Side Bar]
DIFFERENT PERSPECTIVES
PAT WOOLF
ONE OF PAT WOOLF'S COLLEAGUES ON THE BOARD SAYS HE WAS IMPRESSED THAT AT HER
FIRST MEETING, IN 1985, SHE INSISTED ON UNDERSTANDING EVERY STEP OF EVERY
PROCESS. PAT'S INSATIABLE CURIOSITY HAS SERVED HER WELL IN THE MOLECULAR
BIOLOGY DEPARTMENT AT PRINCETON UNIVERSITY, WHERE SHE LECTURES ON RESPONSIBLE
CONDUCT IN RESEARCH AND DEBUNKS DISHONEST SCIENCE.
"I used to work as a lifeguard. You watch the water for a very long time before
you have to pull someone out. But you always have to be alert and prepared, and
you try to prevent problems whenever you can by warning people against
dangerous things. This job is a lot like that one."
"As a director, you listen hard to people responding to tough questions,
because the way they respond in those situations helps you see their integrity
and intelligence. You listen for the words, but also for the music."
"It's important that we have a number of women on the board. Women tend to
outlive their husbands and end up owning a lot of fund shares. Our perspectives
are often different from those of men; I feel that I've learned as much from
being a mother and a wife as I have from my formal education."
CHECKS AND BALANCES
BOB FOX
AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF POULTRY GIANT FOSTER FARMS, IN
LIVINGSTON, CALIFORNIA, BOB FOX IS QUICK TO NOTE HE'S LITERALLY A FOX IN THE
HENHOUSE. BOB'S A WORLD-RANKED COMPETITIVE SWIMMER WHOSE CAREER HAS INCLUDED
EXECUTIVE POSTS WITH A NUMBER OF WELL-KNOWN CONSUMER PRODUCTS FIRMS. HE'S THE
FUND'S SENIOR INDEPENDENT DIRECTOR, HAVING SERVED SINCE 1970.
"A director's role is not just 'Here's the contract, approve it.' We challenge
costs. We watch expenses. And, when appropriate, we have insisted on changing
the terms of contracts to benefit shareholders."
"Where is the economy? What's going on? What could happen with interest rates,
GNP, today's boom in technology? These things set the stage for investment
decisions. We don't make those decisions, but we're vitally interested in
testing and evaluating the thinking of those who do."
INSIGHTFUL
HANK RIGGS
MOST DAYS, SOUTHERN CALIFORNIA'S CLIMATE ENABLES HANK RIGGS TO RIDE HIS BIKE TO
WORK AT THE CLAREMONT CAMPUS OF HARVEY MUDD COLLEGE, WHERE HE SERVES AS
PRESIDENT AND PROFESSOR OF ENGINEERING. HANK JOINED THE BOARD IN 1989.
"In my work with the college endowment, I get to interact with many money
managers, and that gives me a good perspective on the fund's managers."
The Growth Fund of America is probably my largest personal investment. I put
every penny I earn as a director right back into the fund. I've also got my
three kids in it, as well as a fair number of nieces and nephews."
"I live near one of the fund's service centers, and I look in on things there
from time to time. You can't get a sense of the importance of service and the
extreme dedication to careful control and accuracy by sitting around a
conference table. You need to be there."
WATCHFUL
BOBBIE HAZARD
IT SEEMS LIKE BOBBIE HAZARD HAS ALMOST ALWAYS BEEN LOOKING OUT FOR GROUPS OF
PEOPLE. SHE WAS A HIGH SCHOOL TEACHER BEFORE SHE JOINED THE NAVY, WHERE SHE
ROSE THROUGH THE RANKS TO REAR ADMIRAL, RESPONSIBLE AT ONE POINT FOR 24,000
SERVICEMEN AND SERVICEWOMEN AND THEIR FAMILIES. BOBBIE RETIRED IN 1992. THE
MCLEAN, VIRGINIA RESIDENT IS AMONG THE FUND'S NEWEST INDEPENDENT DIRECTORS,
HAVING JOINED THE BOARD IN 1993.
"I was concerned that I wasn't an expert on mutual funds. But the existing
board members assured me they were looking for an investor advocate - someone
who'd ask questions that shareholders would be likely to ask and make sure that
the answers were logical and accurate. I knew I could do that because I've
performed the role of watchdog in many other incarnations in my life."
"The most important part of the job is to do the right thing by the
shareholders. Loyalty goes first to them."
COMPREHENSIVE
LEONADE JONES
LEONADE JONES' FATHER GAVE HER A COUPLE OF STOCKS BACK IN THE 1960S, RIGHT WHEN
THE MARKET PEAKED - SO SHE LEARNED QUICKLY HOW IMPORTANT IT IS TO TAKE A
REALISTIC, LONG-TERM APPROACH. THESE DAYS, LEONADE MANAGES HER FATHER'S
PORTFOLIO. SHE'S ALSO TREASURER OF THE WASHINGTON POST COMPANY, WHERE HER
RESPONSIBILITIES INCLUDE COORDINATING RETIREMENT PLANS WHICH FEATURE A VARIETY
OF MUTUAL FUND CHOICES. SHE JOINED THE FUND'S BOARD IN 1993.
"Thanks largely to the popularity of 401(k) plans, mutual funds now touch many
more people. As funds have grown, they have become more powerful. It isn't
unusual for The Growth Fund of America, for example, to be the largest
shareholder of a company. Our job as directors is to keep pace with these
changes."
"If the investment managers can't explain an investment choice to the
directors, they probably can't explain it to the shareholders, either."
LOOKING AHEAD
TED NIERENBERG
DO YOU REALLY NEED TWO KINDS OF CHINA - THE FORMAL STUFF AND THE EVERYDAY
STUFF? DANSK INTERNATIONAL DESIGNS FOUNDER TED NIERENBERG DIDN'T THINK SO, AND
THE COMPANY'S HUGELY SUCCESSFUL "EVERYDAY" LINE PROVED THE VALUE OF ASKING THE
RIGHT QUESTIONS. SINCE RETIRING IN 1985, TED'S PASSION FOR PHOTOGRAPHING HIS
GARDEN IN ARMONK, NEW YORK, HAS BEEN REWARDED WITH THE PUBLICATION OF THE
BECKONING PATH: LESSONS OF A LIFELONG GARDEN. HE HAS BEEN PART OF THE FUND'S
BOARD SINCE 1972.
"For years we've asked about high-tech, is this for real? It IS for real. Now
we're asking similar questions about things like biotechnology."
"We've been known to discuss whether or not we should be invested in certain
industries, and it's not unusual for one or more directors to object on a
personal basis. But we make our judgments based on our responsibilities to all
the shareholders."
"Wall Street wants returns 12 to 18 months from now, which isn't our style.
We're concerned with laying the groundwork and having the talent that might pay
off in five years or more."
"I constantly test our backroom operations by calling other fund groups. I keep
a few shares in a number of other funds so I can see how their service stacks
up against ours."
"It's amazing how many more shareholders we're looking out for these days. If
you'd asked any of us a decade ago would the fund - or the mutual fund industry
- - ever be this size, we'd have said, 'You've got to be kidding.'"
GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO,
August 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------- ----- ----------------------------- -----
Percent Percent
of Net of Net
Largest Industry Holdings Assets Largest Individual Holdings Assets
- ----------------------------- ----- ------------------------------- -----
Broadcasting & Publishing 16.57% Intel 3.21%
Electronic Components 13.17% Time Warner 3.00
Data Processing & 2.69
Reproduction
Business & Public Services 8.00% Federal National Mortgage Assn. 2.63
Telecommunications 6.11% Viacom 2.52
Other Industries 28.78% News Corp. 2.34
Cash & Equivalents 19.14% Silicon Graphics 2.07
Walt Disney 2.04
Advanced Micro Devices 1.90
National Semiconductor 1.88
</TABLE>
THE GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO, August 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EQUITY-TYPE SECURITIES Value of Net
(Common & Preferred Stocks) Shares (000) Assets
- ------------------------------------- -------- -------- ------
Broadcasting & Publishing- 16.57%
Time Warner Inc. 5,352,000 $225,453 3.00%
TELE-COMMUNICATIONS, INC., SERIES A, TCI GROUP 1 8,039,300 148,727
TELE-COMMUNICATIONS, INC., SERIES A, LIBERTY MEDIA GROUP 1 2,009,825 53,386 2.69
VIACOM INC., CLASS B 1 3,900,000 189,637 2.52
News Corp. Ltd. (American Depositary
Receipts)(Australia) 5,350,000 121,712
News Corp. Ltd., preferred
(American Depositary Receipts) 2,675,000 54,169 2.34
Comcast Corp., Class A 1,680,000 35,700
Comcast Corp., Class A Special Stock 4,210,000 89,989 1.67
Turner Broadcasting System, Inc., Class B 3,625,000 111,469 1.48
Capital Cities/ABC, Inc. 965,000 110,975 1.47
E.W. Scripps Co., Class A 1,400,000 47,075 .63
CBS Inc. 326,480 26,037 .35
Century Communications Corp., Class A 1 1,002,550 9,900 .13
New York Times Co., Class A 350,000 8,706 .12
LIN Television Corp. 1 220,800 8,059 .10
BHC Communications, Inc., Class A 1 62,840 5,703 .07
Electronic Components- 13.17%
Intel Corp. 3,939,000 241,756 3.21
Advanced Micro Devices,Inc. 1 4,238,000 143,033 1.90
National Semiconductor Corp. 1 4,997,930 141,191 1.88
Texas Instruments Inc. 1,710,000 128,036 1.69
LSI Logic Corp. 1 2,400,000 118,200 1.57
Seagate Technology 1 2,000,000 88,500 1.18
Micron Technology, Inc. 500,000 38,437 .51
ANALOG DEVICES, INC. 1 750,000 25,969 .35
AMP Inc. 400,000 16,250 .22
Quantum Corp. 1 669,400 16,066 .21
TELLABS, INC. 235,000 10,986 .15
Newbridge Networks Corp. (Canada) 1 300,000 8,663 .12
ADC TELECOMMUNICATIONS, INC. 1 178,000 6,898 .09
Cyrix Corp. 1 200,000 6,875 .09
Data Processing & Reproduction- 8.23%
Silicon Graphics, Inc. 1 3,690,000 155,902 2.07
Adobe Systems Inc. 1,725,000 87,975 1.17
International Business Machines Corp. 680,000 70,295 .93
Digital Equipment Corp. 1 1,600,000 66,800 .89
Electronic Arts 1 900,000 34,200 .45
Acclaim Entertainment, Inc. 1 1,280,000 32,320 .43
Hewlett-Packard Co. 400,000 32,000 .43
Compaq Computer Corp. 1 600,000 28,650 .38
SYBASE, INC. 1 884,000 28,398 .38
Oracle Corp. 1 (Formerly Oracle Systems Corp.) 597,500 23,975 .32
Tandem Computers Inc. 1 1,540,000 18,865 .26
Mentor Graphics Corp. 1 715,000 13,764 .18
Cisco Systems, Inc. 1 200,000 13,125 .17
Apple Computer, Inc. 300,000 12,900 .17
Business & Public Services- 8.00%
Columbia/HCA Healthcare Corp. 2,352,500 110,568 1.47
United HealthCare Corp. 2,555,000 107,949 1.43
CUC International Inc. 1 2,325,000 79,341 1.05
Federal Express Corp. 1 930,000 66,727 .89
WMX Technologies, Inc. 1,680,000 49,350 .65
Pitney Bowes Inc. 1,075,000 43,672 .58
ADT Ltd. 1 3,280,000 42,640 .57
General Motors Corp., Class E 900,000 41,962 .56
U.S. Healthcare, Inc. 500,000 16,000 .21
Value Health, Inc. 1 370,000 12,811 .17
FHP International Corp. 1 385,000 9,529 .13
Dun & Bradstreet Corp. 140,000 8,102 .11
Ecolab Inc. 250,000 6,844 .09
Oxford Health Plans, Inc. 1 79,800 3,910 .05
Coram Healthcare Corp. 1 650,000 3,169 .04
Telecommunications- 6.11%
Vodafone Group PLC (American Depositary Receipts)
(United Kingdom) 2,350,000 98,406 1.31
Cellular Communications, Inc. 1 1,755,000 95,647 1.27
MCI Communications Corp. 3,275,000 78,805 1.05
AirTouch Communications 1 2,165,000 70,363 .94
LIN Broadcasting Corp. 1 381,600 49,036 .65
AT&T Corp. 500,000 28,250 .38
Sprint Corp. 450,000 15,975 .21
Cellular Communications of Puerto Rico, Inc. 1 374,998 11,531 .15
Telefonos de Mexico, SA de CV, Class L (American
Depositary Receipts) (Mexico) 350,000 11,462 .15
Leisure & Tourism- 4.53%
Walt Disney Co. 2,735,000 153,502 2.04
Mirage Resorts, Inc. 1 2,050,000 70,469 .94
HARRAH'S ENTERTAINMENT, INC. 1 2,200,000 70,125 .93
MGM GRAND, INC. 1 1,275,000 31,875 .42
Promus Hotel Corp. 1 735,800 15,176 .20
Financial Services- 3.43%
Federal National Mortgage Assn. 2,075,000 197,903 2.63
CAPITAL ONE FINANCIAL CORP. 1,105,000 28,730 .38
Student Loan Marketing Assn. 450,000 24,356 .32
FEDERAL HOME LOAN MORTGAGE CORP. 113,200 7,273 .10
Transportation: Airlines- 2.20%
Southwest Airlines Co. 2,573,450 66,588 .88
AMR Corp. 1 860,000 60,630 .81
Delta Air Lines, Inc. 515,000 38,303 .51
Recreation & Consumer Products- 2.06%
Mattel, Inc. 3,377,200 97,939 1.30
DURACELL INTERNATIONAL INC. 500,000 22,313 .30
NINTENDO CO., LTD. (JAPAN) 215,000 13,495 .18
WMS Industries Inc. 1 550,000 12,512 .17
Hasbro, Inc. 265,000 8,579 .11
Banking- 1.63%
Citicorp 800,000 53,100 .71
BankAmerica Corp. 320,000 18,080 .24
Commerce Bancshares, Inc. 446,250 16,009 .21
PNC Bank Corp. 600,000 15,750 .21
First Security Corp. 362,500 11,419 .15
Northern Trust Corp. 180,000 8,100 .11
Health & Personal Care- 1.55%
Forest Laboratories, Inc. 1 600,000 26,850 .36
NELLCOR PURITAN BENNETT INC. 1 485,760 25,259 .34
BIOGEN, INC. 1 280,000 15,330 .20
Tambrands Inc. 200,000 8,975 .12
MedImmune, Inc. 1 704,100 8,713 .12
Upjohn Co. 200,000 8,475 .10
Gensia Pharmaceuticals, Inc. 1 1,325,000 7,453 .10
MAYBELLINE, INC. 200,000 5,050 .07
Pyxis Corp. 1 200,000 4,525 .06
BAUSCH & LOMB INC. 100,000 3,975 .05
PERRIGO CO. 1 175,000 2,363 .03
Beverages & Tobacco- 1.48%
Philip Morris Companies Inc. 1,375,000 102,609 1.36
PepsiCo, Inc. 200,000 9,050 .12
Insurance- 1.37%
EXEL Ltd. (United Kingdom) 1,140,000 62,700 .83
TIG Holdings, Inc. 675,000 17,297 .23
NAC Re Corp. 350,000 12,775 .17
AMBAC Inc. 250,000 10,562 .14
Machinery & Engineering- 1.34%
Thermo Electron Corp. 1 1,275,000 54,984 .73
Caterpillar Inc. 680,000 45,645 .61
Electrical & Electronic Instruments- 1.33%
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 2,725,000 58,247 .77
NOKIA CORP.
(AMERICAN DEPOSITARY RECEIPTS) (FINLAND) 600,000 41,625 .56
Chemicals- 1.25%
A. Schulman, Inc. 1,522,500 40,346 .54
Great Lakes Chemical Corp. 420,000 27,772 .37
H.B. FULLER CO. 383,700 13,142 .17
Loctite Corp. 150,000 7,200 .10
Raychem Corp. 125,000 5,484 .07
Merchandising- 1.18%
WAL-MART STORES, INC. 1,000,000 24,625 .34
Home Shopping Network, Inc. 1 2,300,000 24,150 .32
Toys 'R' Us, Inc. 1 925,000 24,050 .32
Gap, Inc. 476,500 15,308 .20
Energy Equipment- 0.51%
Schlumberger Ltd. (Netherlands Antilles) 575,000 37,088 .49
Western Atlas Inc. 1 40,000 1,815 .02
Textiles & Apparel- 0.48%
FRUIT OF THE LOOM, INC. 1 1,300,000 30,550 .41
Delta Woodside Industries, Inc. 600,000 5,025 .07
Transportation: Rail- 0.41%
Southern Pacific Rail Corp. 1 750,000 18,375 .25
Conrail, Inc. 180,000 12,105 .16
Multi-Industry- 0.30%
U.S. INDUSTRIES, INC. 1 1,175,000 18,359 .24
Textron Inc. 40,000 2,740 .04
Tenneco Inc. 30,000 1,455 .02
Aerospace & Military Technology- 0.18%
Coltec Industries Inc 1 800,000 12,000 .16
Litton Industries, Inc. 1 40,000 1,550 .02
Energy Sources- 0.14%
NOBLE AFFILIATES, INC. 377,600 10,431 .14
Electronic Instruments- 0.14%
Applied Materials, Inc. 1 100,000 10,400 .14
Transportation: Shipping- 0.06%
Overseas Shipholding Group, Inc. 200,000 4,175 .06
Forest Products & Paper- 0.01%
Rayonier Inc. 12,500 480 .01
-------- --------
Other equity-type securities in initial period of 242,420 3.20
acquisition -------- ------
TOTAL EQUITY-TYPE SECURITIES (cost: $3,568,327,000) 6,084,508 80.86
-------- ------
Principal
Amount
SHORT-TERM SECURITIES (000)
- ------------------------------------- --------
Corporate Short-Term Notes- 18.58%
AMERICAN TELEPHONE AND TELEGRAPH CO. 5.64%-5.68%
DUE 10/4-10/13/95 $102,000 101,376 1.35
COCA-COLA FINANCE CO. 5.65%-5.82% DUE 9/8-10/19/95 98,750 98,381 1.31
E.I. DU PONT DE NEMOURS AND CO. 5.66%-5.71%
DUE 9/22-10/6/95 96,220 95,807 1.27
PFIZER INC 5.68%-5.71% DUE 9/5-9/25/95 92,700 92,449 1.23
GENERAL ELECTRIC CAPITAL CORP. 5.65%-5.72% DUE 9/8-10/19/95 84,700 84,319 1.12
J.C. PENNEY FUNDING CORP. 5.72%-5.74% DUE 9/14-10/12/95 83,600 83,361 1.10
WAL-MART STORES, INC. 5.70% DUE 10/24-10/25/95 80,000 79,308 1.06
FORD MOTOR CREDIT CO. 5.70%-5.73% DUE 9/20-11/2/95 74,500 73,956 .99
CENTRAL AND SOUTH WEST CORP. 5.73%-5.77% DUE 9/12-10/20/95 72,300 71,908 .96
ELI LILLY AND CO. 5.65%-5.70% DUE 9/18-10/24/95 70,000 69,599 .92
U S WEST COMMUNICATIONS 5.63%-5.70% DUE 9/13-9/20/95 68,500 68,310 .90
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP.
5.70%-5.85% DUE 9/7-10/11/95 66,700 66,400 .88
EMERSON ELECTRIC CO. 5.69%-5.70% DUE 9/1-10/10/95 65,400 65,270 .87
AMERICAN EXPRESS CREDIT CORP. 5.65%-5.73%
DUE 9/11-10/19/95 58,900 58,701 .78
PROCTER & GAMBLE CO. 5.68%-5.70% DUE 9/21-10/26/95 57,000 56,640 .76
HEWLETT-PACKARD CO. 5.62%-5.67% DUE 10/24-11/28/95 56,500 55,796 .74
XEROX CORP. 5.70%-5.75% DUE 9/26-9/28/95 56,000 55,758 .73
CHEVRON OIL FINANCIAL CORP. 5.73% DUE 9/8/95 40,000 39,949 .53
SARA LEE CORP. 5.62%-5.70% DUE 9/14-9/27/95 40,500 40,347 .53
HERSHEY FOODS CORP. 5.68% DUE 10/17/95 21,000 20,842 .28
BALTIMORE GAS AND ELECTRIC CO. 5.73% DUE 9/6/95 20,000 19,981 .27
-------- ------
1,398,458 18.58
-------- ------
Federal Agency Short-Term Obligations- 0.65%
Federal National Mortgage Assn. 5.64%
due 9/12/95 49,000 48,910 .65
-------- ------
TOTAL SHORT-TERM SECURITIES (cost: $1,447,408,000) 1,447,368 19.23
-------- ------
TOTAL INVESTMENT SECURITIES (cost: $5,015,735,000) 7,531,876 100.09
Excess of payables over cash and receivables 6,986 .09
-------- ------
NET ASSETS $7,524,890 100.00%
========== =======
</TABLE>
1 Non-income-producing securities
See Notes to Financial Statements
The descriptions of the companies shown in the portfolio, which were
obtained from published reports and other sources believed to be reliable,
are supplemental and are not covered by the Independent Auditors' Report.
<TABLE>
<S> <C>
- ----------------------------- ----- ------------------------------- -----
Equity-type securities Equity-type securities
appearing in the portfolio eliminated from the portfolio
since February 28, 1995 since February 28, 1995
- ----------------------------- -------------------------------
ADC Telecommunications H.F. Ahmanson
Analog Devices Archer Daniels Midland
Bausch & Lomb Bay Networks
Biogen CBI Industries
Capital One Financial Centocor
Cisco Systems Cordis
Duracell International Dell Computer
Federal Home Loan Mortgage Genentech
Fruit of the Loom Humana
H.B. Fuller International Game Technology
Maybelline Jefferson Smurfit
MGM Grand Lotus Development
Nintendo Microsoft
Noble Affiliates Policy Management Systems
Nokia Scios Nova
Perrigo Shoney's
Sybase Signet Banking
Tellabs
U.S. Industries
Viacom
Wal-Mart Stores
</TABLE>
The Growth Fund of America
Financial Statements
<TABLE>
<CAPTION>
- -------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities (dollars in
at August 31, 1995 thousands)
- --------------------------------------------- ---------------- ----------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $5,015,735) $7,531,876
Cash 526
Receivables for-
Sales of investments $12,336
Sales of fund's shares 25,830
Dividends and accrued interest 3,199 41,365
---------------- ----------------
7,573,767
Liabilities:
Payables for-
Purchases of investments 38,374
Repurchases of fund's shares 4,671
Management services 2,358
Accrued expenses 3,474 48,877
---------------- ----------------
Net Assets at August 31, 1995-
Equivalent to $33.09 per share on
227,394,684 shares of $0.10 par value
capital stock outstanding (authorized
capital stock--400,000,000 shares) $7,524,890
================
- --------------------------------------------- ---------------- ----------------
Statement of Operations (dollars in
for the year ended August 31, 1995 thousands)
- --------------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $ 38,080
Interest 61,312 $ 99,392
----------------
Expenses:
Management services fee 22,942
Distribution expenses 14,418
Transfer agent fee 5,731
Reports to shareholders 535
Registration statement and prospectus 436
Postage, stationery and supplies 854
Directors' fees 130
Auditing and legal fees 47
Custodian fee 152
Other expenses 57 45,302
---------------- ----------------
Net investment income 54,090
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 353,525
Net unrealized appreciation:
Beginning of year 1,461,272
End of year 2,516,141 1,054,869
---------------- ----------------
Net realized gain and unrealized
appreciation
on investments 1,408,394
----------------
Net Increase in Net Assets Resulting
from Operations $1,462,484
================
- --------------------------------------------- ---------------- ----------------
Statement of Changes in Net Assets Year ended
August 31
(dollars in thousands) 1995 1994
- --------------------------------------------- ---------------- ----------------
Operations:
Net investment income $ 54,090 $ 25,072
Net realized gain on investments 353,525 195,013
Net unrealized appreciation
on investments 1,054,869 77,980
---------------- ----------------
Net increase in net assets
resulting from operations 1,462,484 298,065
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (33,653) (21,621)
Distributions from net realized gain on
investments (205,865) (174,698)
---------------- ----------------
Total dividends and distributions (239,518) (196,319)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 69,486,188
and 59,945,125 shares, respectively 1,994,344 1,603,821
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 9,099,784 and 7,025,780 shares,
respectively 229,196 183,152
Cost of shares repurchased: 47,721,869
and 55,276,208 shares, respectively (1,349,094) (1,479,149)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 874,446 307,824
---------------- ----------------
Total Increase in Net Assets 2,097,412 409,570
Net Assets:
Beginning of year 5,427,478 5,017,908
---------------- ----------------
End of year (including undistributed
net investment income: $39,471
and $19,034, respectively) $7,524,890 $5,427,478
================ ================
</TABLE>
See Notes to Financial Statements
Notes to Financial Statements
1. The Growth Fund of America, Inc.(the "fund")is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Equity-type securities traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities and securities for which no sale was reported on
that date are stated at the last quoted bid price.
Short-term securities with original or remaining maturities of in excess
of 60 days are valued at the mean of their quoted bid and asked prices.
Short-term securities with 60 days or less to maturity are valued at amortized
cost, which approximates market value. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by the Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities
transactions are accounted for on the date the securities are purchased or
sold. Realized gains and losses from securities transactions are reported
on an identified cost basis. Dividend and interest income is
reported on the accrual basis. Discounts on securities purchased are amortized
over the life of the respective securities. Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
year. Purchases and sales of investment securities, income, and expenses are
calculated using the prevailing exchange rate as accrued. The fund does not
identify the portion of each amount shown in the fund's statement of operations
under the caption "Realized Gain and Unrealized Appreciation on Investments"
that arises from changes in non-U.S. currency exchange rates.
Pursuant to the custodian agreement, the fund receives credits against
its custodian fee for imputed interest on certain balances with the custodian
bank. The custodian fee of $152,000 includes $61,000 that was paid by these
credits rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of August 31, 1995, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $2,516,141,000, of which
$2,630,540,000 related to appreciated securities and $114,399,000 related to
depreciated securities. During the year ended August 31, 1995, the fund
realized, on a tax basis, a net capital gain of $353,524,000 on securities
transactions. The cost of portfolio securities for book and federal income tax
purposes was $5,015,735,000 at August 31, 1995.
3. The fee of $22,942,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.50% of the first $1 billion of net assets; 0.40% of such
assets in excess of $1 billion but not exceeding $2 billion; 0.37% of such
assets in excess of $2 billion but not exceeding $3 billion; 0.35% of such
assets in excess of $3 billion but not exceeding $5 billion; 0.335% of such
assets in excess of $5 billion but not exceeding $8 billion; and 0.325% of such
assets in excess of $8 billion.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended August 31, 1995,
distribution expenses under the Plan were $14,418,000. As of August 31, 1995,
accrued and unpaid distribution expenses were $3,336,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $5,731,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $4,384,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of August 31, 1995, aggregate amounts deferred were $107,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of August 31, 1995, accumulated undistributed net realized gain on
investments was $325,984,000 and additional paid-in capital was $4,620,554,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,531,889,000 and $1,324,192,000, respectively,
during the year ended August 31, 1995.
Net realized currency gains on dividends were $1,000 for the year ended
August 31, 1995.
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, the distributions made during the fiscal
year by the fund were earned from the following sources:
Dividends and Distributions per Share
To Shareholders of Record
December 21, 1994
Payment Date
December 22, 1994
Dividends from Net Investment Income
$0.17
From Net Realized Short-term Gains
- --
From Net
Realized Long-term Gains
$1.04
Corporate shareholders may deduct up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 24% of the
dividends paid by the fund from net investment income represents qualifying
dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099 DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 1996 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1995 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISERS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Per-Share Data and Ratios Year
ended
August 31
1995 1994 1993 1992 1991
------- ------- --------- ------- -------
Net Asset Value, Beginning of $27.62 $27.15 $22.04 $22.42 $18.43
Year
------- ------- --------- ------- -------
Income from Investment
Operations:
Net investment income .25 .13 .13 .23 .43
Net realized and unrealized
gain
on investments 6.43 1.43 5.26 .81 4.86
------- ------- --------- ------- -------
Total income from
investment operations 6.68 1.56 5.39 1.04 5.29
------- ------- --------- ------- -------
Less Distributions:
Dividends from net
investment
income (.17) (.12) (.19) (.35) (.48)
Distributions from net
realized
gains (1.04) (.97) (.09) (1.07) (.82)
------- ------- --------- ------- -------
Total distributions (1.21) (1.09) (.28) (1.42) (1.30)
------- ------- --------- ------- --------
Net Asset Value, End of Year $33.09 $27.62 $27.15 $22.04 $22.42
======= ======= ========= ======== ========
Total Return* 25.56% 5.98% 24.64% 4.91% 30.55%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $7,525 $5,427 $5,018 $3,700 $2,903
Ratio of expenses to
average net
assets .75% .78% .77% .79% .83%
Ratio of net income to
average net
assets .90% .49% .56% 1.11% 2.13%
Portfolio turnover rate 26.90% 24.77% 25.23% 10.64% 18.92%
</TABLE>
*This was calculated without
deducting a sales charge. The
maximum sales charge is 5.75% of
the fund's offering price.
Independent Auditors' Report
To the Board of Directors and Shareholders of
The Growth Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities of The
Growth Fund of America, Inc., including the schedule of portfolio investments
as of August 31, 1995, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the per-share data and ratios for each of the five
years in the period then ended. These financial statements and the per-share
data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at August 31, 1995 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of The Growth Fund of America, Inc. at August 31, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the per-share data and ratios
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Los Angeles, California
September 22, 1995
BOARD OF DIRECTORS
ROBERT A. FOX
Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ROBERTA L. HAZARD
McLean, Virginia
Rear Admiral, U.S. Navy (Retired)
E.T. HINSHAW, JR.
Newport Beach, CALIFORNIA
Private investor; former Yachting
Commissioner, Los Angeles Olympic Organizing Committee
RICHARD H.M. HOLMES
Hillsborough, California
Retired; former Vice President,
Capital Research and Management
Company
LEONADE D. JONES
Washington, D.C.
Treasurer, The Washington Post
Company
JOHN G. MCDONALD
Stanford, California
The IBJ Professor of Finance,
Graduate School of Business,
Stanford University
THEODORE D. NIERENBERG
Armonk, New York
Private investor; former President,
Dansk International Designs, Ltd.
JAMES W. RATZLAFF
San Francisco, California
Vice Chairman of the Board,
Capital Research and Management Company
HENRY C. RIGGS
Claremont, California
President and Professor of
Engineering
Harvey Mudd College
WALTER P. STERN
New York, New York
CHAIRMAN OF THE BOARD OF THE FUND
Chairman of the Board,
Capital Group International, Inc.
PATRICIA K. WOOLF
Princeton, New Jersey
Private investor, lecturer, Department
of Molecular Biology, Princeton
University
OTHER OFFICERS
JAMES F. ROTHENBERG
Los Angeles, California
PRESIDENT OF THE FUND
President and Director,
Capital Research and Management Company
JAMES E. DRASDO
Los Angeles, California
SENIOR VICE PRESIDENT OF THE FUND
Senior Vice President and Director
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
SENIOR VICE PRESIDENT OF THE FUND
Senior Vice President and Director,
Capital Research and Management Company
RICHARD M. BELESON
San Francisco, California
VICE PRESIDENT OF THE FUND
Senior Vice President,
Capital Research Company
CLAUDIA P. HUNTINGTON
Los Angeles, California
VICE PRESIDENT OF THE FUND
Senior Vice President,
Capital Research Company
STEVEN N. KEARSLEY
Brea, California
VICE PRESIDENT OF THE FUND
Vice President and Treasurer,
Capital Research and Management Company
DONALD D. O'NEAL
San Francisco, California
VICE PRESIDENT OF THE FUND
Vice President,
Capital Research and Management Company
PATRICK F. QUAN
San Francisco, California
SECRETARY OF THE FUND
Vice President - Fund Business
Management Group,
Capital Research and Management Company
MARY C. CREMIN
Brea, California
TREASURER OF THE FUND
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
R. MARCIA GOULD
Brea, California
ASSISTANT TREASURER OF THE FUND
Vice President - Fund Business
Management Group,
Capital Research and Management Company
SHAREHOLDER SERVICES
TO HELP YOU ADD TO YOUR ACCOUNT
AUTOMATIC REINVESTMENT OF DISTRIBUTIONS
All dividends and capital gain distributions can be automatically reinvested in
additional shares at net asset value (without sales charge), thus providing you
with additional potential for growth through compounding.
INVESTING BY MAIL
Simply send a check for $50 or more to the fund's transfer agent. You can send
personal checks or you can put bonus, gift or dividend checks to work by
endorsing them to the fund for investment into your account.
AUTOMATIC INVESTMENT PLAN
You can make automatic investments regularly by authorizing the fund's transfer
agent to deduct a specified sum from your bank account.
CROSS-REINVESTMENT OF DISTRIBUTIONS
You can cross-reinvest dividends or dividends and capital gain distributions
from one fund into another at no charge if you have a balance of at least
$5,000 in the originating fund or meet the minimum initial investment for the
receiving fund.
TO HELP YOU ADD TO YOUR INVESTMENT AT A REDUCED SALES CHARGE
QUANTITY DISCOUNTS
There are discounts on large investments, whether they are in one fund or a
combination of funds in The American Funds Group, as explained in the
prospectus.
RIGHT OF ACCUMULATION
You can add the value of your present shares of any of the funds in The
American Funds Group (except shares of our money market funds that were
purchased directly) to the amount of any new purchase in order to qualify for a
quantity discount on your new investment.
STATEMENT OF INTENTION
You can, without obligation, sign a Statement of Intention that allows you to
combine the purchases you intend to make over a 13-month period so as to take
immediate advantage of the maximum quantity discount available.
TO HELP YOU PAY YOUR BILLS
DIVIDENDS IN CASH
You have the option of taking your dividends in cash.
AUTOMATIC WITHDRAWAL PLAN
You can arrange to have regular checks for specified amounts sent to you or to
anyone you designate in any month(s) you choose.
TO HELP YOU MEET YOUR CHANGING NEEDS
EXCHANGE PRIVILEGES
Should your goals or financial circumstances change, you can easily restructure
your investment program by transferring some or all of your holdings into other
funds in The American Funds Group. You can do this at no charge by mail or by
phone. Automatic exchanges of $50 or more may also be made between funds. Your
initial exchange must meet the receiving fund's minimum investment requirement
unless the originating fund's balance is at least $5,000 (in which case you
have a year to meet the minimum investment requirement). Please remember that
fund exchanges constitute a sale and purchase for tax purposes.
TO HELP YOU TAKE ADVANTAGE OF MONEY-SAVING TAX BENEFITS
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
You can set aside up to $2,000 a year in your personal tax-deferred IRA.
Deductibility of contributions depends on other retirement plan coverage and
adjusted gross income. All contributions, deductible or nondeductible, continue
to grow on a tax-deferred basis.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP)
A SEP is a tax-deferred retirement plan which enables employers to make
tax-deductible contributions to employees' IRAs. Through SAR-SEP programs,
employees can also make pre-tax contributions to their accounts. Generally,
contribution limits on SEPs and SAR-SEPs exceed the IRA limit described above.
401(K) RETIREMENT PLAN FOR EMPLOYEES OF CORPORATIONS
A 401(k) plan is a salary-deferred program, which often allows for larger
contributions than IRAs, yet has fewer withdrawal restrictions.
403(B) RETIREMENT PLAN FOR EMPLOYEES OF PUBLIC SCHOOLS OR NONPROFIT
ORGANIZATIONS
You may qualify for this tax-deferred plan if you are employed by a public
school system or by a nonprofit organization (e.g., a hospital or foundation).
OTHER RETIREMENT PLANS FOR BUSINESSES
Two prototype plans are available that enable businesses to make tax-deductible
contributions into tax-deferred retirement accounts:
- - Basic qualified plans (Keogh-type)
Suitable for smaller businesses.
- - Full-feature qualified plans (corporate-type)
Suitable for larger businesses. Trusteeship and optional plan administration
services are available with prototype or individually designed plans.
TAX INFORMATION ON PLAN DISTRIBUTIONS
We can help you minimize taxes on lump-sum or other retirement plan
distributions.
TO HELP YOU WITH RECORDKEEPING
CONFIRMATION OF TRANSACTIONS
You receive account statements reflecting the transactions in your account.
CONSOLIDATED QUARTERLY STATEMENTS
If you have more than one account with the American Funds, you can request a
quarterly statement combining certain accounts registered to the same
individual.
TELEPHONE INFORMATION SERVICE
American FundsLine(R) is a toll-free service which gives you information about
your account as well as current prices for all American Funds. Just call
800/325-3590. (Please have your account number and fund number ready.)
Shareholder Services (continued)
IMAGECHECK(SM)
If you're a shareholder in a fund that has check-writing privileges (The Cash
Management Trust of America, The U.S. Treasury Money Fund of America or The
Tax-Exempt Money Fund of America), each month you'll receive photo images of
the front and back of each cleared check on easy-to-file 8-1/2" x 11"
statements.
YEAR-END TAX REPORT
At the end of each year, you will receive an individual report which shows the
tax status of the dividends and any capital gain distributions paid to you
during the year. In many instances, these reports can help you calculate taxes
due on shares you've sold by reporting average cost.
SAFEKEEPING OF CERTIFICATES
Your shares are credited to your account and certificates are not issued unless
specifically requested. This helps eliminate the costly, irritating problem of
lost or destroyed certificates.
FOR MORE COMPLETE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN
FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR
SECURITIES DEALER OR FINANCIAL PLANNER, OR PHONE THE FUND'S TRANSFER AGENT,
AMERICAN FUNDS SERVICE COMPANY, AT 800/421-0180. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE YOU INVEST OR SEND MONEY. THESE SERVICES ARE SUBJECT TO CHANGE
OR TERMINATION.
OFFICE OF THE FUND
Four Embarcadero Center, Suite 1800
Mailing Address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
This report is for the information of shareholders of The Growth Fund of
America, 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, 1995, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA CD/GRS/2681
Lit. No. GFA-011-1095
[The American Funds Group(R)]
