SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 64 (X)
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23 (X)
THE GROWTH FUND OF AMERICA, INC.
(Exact name of registrant as specified in charter)
P.O. Box 7650, One Market, Steuart Tower, San Francisco, California 94120
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (415) 421-9360
Patrick F. Quan, Secretary
The Growth Fund of America, Inc.
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and address of agent for service)
Copy to:
Robert E. Carlson, Esq.
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
The Registrant has filed a declaration
pursuant to Rule 24f-2. On
October 16, 1996, it filed its 24f-2
Notice for fiscal 1996.
Approximate date of proposed public offering:
[X] It is proposed that this filing will
become effective on January 1, 1997
pursuant to paragraph (a) of Rule 485.
<PAGE>
THE GROWTH FUND OF AMERICA, INC.
Cross Reference Sheet
<TABLE>
<CAPTION>
Item Number Captions in
of Part "A" Prospectus
of Form N-1A (Part "A")
<S> <C> <C> <C>
1. Cover Page Cover Page
2. Synopsis Expenses
3. Condensed Financial Information Financial Highlights;
Investment Results
4. General Description of Registrant Fund Organization
and Management;
Investment Policies and
Risks; Securities and
Investment Techniques
5. Management of the Fund Financial Highlights;
Fund Organization and
Management; Multiple
Portfolio Counselor
System
6. Capital Stock and Other Securities Investment Policies
and Risks; Fund
Organization and
Management; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares;
Fund Organization and
Management; Other
Important Things to
Remember
8. Redemption or Repurchase Selling Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Captions in Statement
Item Number of Additional
of Part "B" Information
of Form N-1A (Part "B")
<S> <C> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History None
13. Investment Objectives and Policies Description of Certain
Securities; Fundamental
Policies and Investment
Restrictions
14. Management of the Fund Fund Officers and
Directors
15. Control Persons and Principal Fund Officers and
Holders of Securities Directors; Fund
Organization and
Management (Part A)
16. Investment Advisory and Other Services Fund Officers and
Directors; Fund
Organization and
Management (Part "A");
General Information;
Management
17. Brokerage Allocation and Other Practices Execution of Portfolio
Transactions; Fund
Organization and
Management (Part "A")
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing Purchase of Shares;
of Securities Being Offered Redeeming Shares;
Shareholder Account
Services and Privileges;
Purchasing Shares (Part
"A"); General Information
20. Tax Status Dividends,
Distributions and Federal
Taxes
21. Underwriter Management; Fund
Organization and
Management (Part "A")
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Item in
Part "C"
24. Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control
with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriter
30. Location of Accounts and Records
31. Management Services
32. Undertakings
</TABLE>
Signature Page
<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
- --------------------------------------------------------------------------------
The Growth Fund
of America(R)
Prospectus
JANUARY 1, 1997
<PAGE>
THE GROWTH FUND OF AMERICA
One Market
Steuart Tower, Suite 1800
San Francisco, CA 94105
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Expenses 3
Financial Highlights 4
Investment Policies and Risks 5
Securities and Investment Techniques 6
Multiple Portfolio Counselor System 8
Investment Results 9
Dividends,.Distributions.and.Taxes 10
Fund.Organization.and.Management 11
Shareholder.Services 14
- --------------------------------------------------------------------------------
The fund's investment objective is growth of capital. The realization of
current income will not be a consideration. The fund strives to accomplish this
objective by investing primarily in common stocks.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
06-010-0197
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Annual fund operating expenses are paid out of the fund's
earned income.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 5.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is no sales
charge on reinvested dividends, and no deferred sales charge or redemption or
exchange fees. A contingent deferred sales charge of 1% applies on certain
redemptions made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets for the fiscal period ended August 31,
1996)
- --------------------------------------------------------------------------------
Management fees 0.37%
12b-1 expenses 0.24%/1/
Other expenses 0.13%
Total fund operating expenses 0.74%
/1/ 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
One year $ 65
Three years $ 80
Five years $ 96
Ten years $144
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Deloitte & Touche LLP, independent
auditors. This table should be read together with the financial statements which
are included in the statement of additional information and annual report.
SELECTED PER-SHARE DATA*
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.55 $13.81 $13.58 $11.02 $11.21 $9.22 $11.53 $8.71 $10.61 $8.58
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .13 .13 .07 .07 .12 .21 .28 .27 .14 .14
Net realized and
unrealized gain (loss)
on investments (.01) 3.21 .71 2.63 .40 2.43 (1.29) 3.00 (1.34) 2.43
Total income
from investment
operations .12 3.34 .78 2.70 .52 2.64 (1.01) 3.27 (1.20) 2.57
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from net
investment income (.14) (.08) (.06) (.09) (.17) (.24) (.31) (.15) (.15) (.14)
Distributions from net
realized gains (1.14) (.52) (.49) (.05) (.54) (.41) (.99) (.30) (.55) (.40)
Total distributions (1.28) (.60) (.55) (.14) (.71) (.65) (1.30) (.45) (.70) (.54)
Net asset value, end of
year $15.39 $16.55 $13.81 $13.58 $11.02 $11.21 $9.22 $11.53 $8.71 $10.61
Total return/1/ .90% 25.56% 5.98% 24.64% 4.91% 30.55% (9.76%) 39.35% (10.73%) 32.27%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions) $8,511 $7,525 $5,427 $5,018 $3,700 $2,903 $1,912 $1,686 $ 1,038 $1,237
Ratio of expenses to
average net assets .74% .75% .78% .77% .79% .83% .79% .78% .71% .66%
Ratio of net income to
average net assets .82% .90% .49% .56% 1.11% 2.13% 2.67% 2.82% 1.56% 1.50%
Average commissions
paid/2/ 5.62c 5.94c 6.05c 6.82c 6.94c 7.23c 7.13c 7.00c 6.64c 6.33c
Portfolio turnover rate 27.95% 26.90% 24.77% 25.23% 10.64% 18.92% 17.69% 30.28% 18.33% 19.61%
</TABLE>
/1/ Excludes maximum sales charge of 5.75%.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
reflected in the fund's statement of operations. Shares traded on a
principal basis, such as most over-the-counter and fixed-income
transactions, are excluded.
* All per share data reflect the 100% stock dividend effected on
December 13, 1996.
4
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RISKS
The fund aims to provide you with growth of capital.
The fund's investment objective is growth of capital. The realization of
current income will not be a consideration. The fund seeks to achieve its
objective by investing in a diversified portfolio consisting primarily of
common stocks. However, assets may also be held in securities convertible into
common stocks, cash or cash equivalents, straight debt securities (including
U.S. Government securities), or nonconvertible preferred stocks. The fund will
maintain at least 65% of the value of its total assets in growth-type
securities under normal market conditions.
The fund will attempt to take prompt advantage of market conditions and as a
result may at times have a high rate of portfolio turnover relative to many
other mutual funds. The fund may dispose of any security at any time, and it is
the fund's intention to take either short- or long-term profits or losses
consistent with its objective and sound investment practice, and when such
action would not impair the fund's tax status. MORE INFORMATION ON THE FUND'S
INVESTMENT POLICIES IS CONTAINED IN ITS STATEMENT OF ADDITIONAL INFORMATION.
The fund's investment restrictions (which are described in the statement of
additional information as fundamental) and objective may not be changed without
shareholder approval. All other investment practices may be changed by the
fund's board of directors.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
5
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
EQUITY SECURITIES
Equity securities represent an ownership position in a company. These
securities may include common stocks, preferred stocks, and securities with
equity conversion or purchase rights. The prices of equity securities fluctuate
based on changes in the financial condition of their issuers and on overall
market and economic conditions. The fund's results will be related to the
overall market for these securities. The growth-oriented, equity-type
securities generally purchased by the fund may involve greater risk than is
customarily associated with investing in stocks of larger, more established
companies and may be subject to greater price swings.
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. The issuer
pays the investor a fixed or variable rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds,
do not pay current interest, but are purchased at a discount from their face
values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality and maturity. In general their prices decline when
interest rates rise and vice versa.
The fund may invest up to 10% of its total assets in debt securities rated Ba
and BB or below by Moody's Investor Service, Inc. or Standard & Poor's
Corporation or in unrated securities that are determined to be of equivalent
quality. These securities are commonly known as "high-yield, high-risk" or
"junk" bonds and are described by the ratings agencies as speculative. These
securities are subject to greater risk of default and can significantly decline
in price particularly in periods of general economic difficulty. It may be more
difficult to dispose of, or to determine the value of, high-yield, high-risk
bonds. The fund's high-yield, high-risk securities may be rated as low as C or
D which are described by the ratings agencies as "in default" or "having
extremely poor prospects of ever attaining any real investment standing."
See the statement of additional information for a complete description of the
ratings.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
6
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
PRIVATE PLACEMENTS
Private placements may be either purchased from another institutional investor
that originally acquired the securities in a private placement or directly from
the issuers of the securities. Generally, securities acquired in private
placements are subject to contractual restrictions on resale and may not be
resold except pursuant to a registration statement under the Securities Act of
1933 or in reliance upon an exemption from the registration requirements under
the Act, for example, private placements sold pursuant to Rule 144A.
Accordingly, all private placements will be considered illiquid unless they
have been specifically determined to be liquid taking into account factors such
as the frequency and volume of trading and the commitment of dealers to make
markets under procedures adopted by the fund's board of directors.
Additionally, the liquidity of any particular security will depend on such
factors as the availability of "qualified" institutional investors and the
extent of investor interest in the security, which can change from time to
time.
INVESTING IN VARIOUS COUNTRIES
The fund has the flexibility to invest up to 10% of its total assets outside
the U.S. and which are not included in the Standard & Poor's 500 Composite
Index (a broad measure of the U.S. stock market). Investing outside the U.S.
involves special risks particularly in certain developing countries, caused
by, among other things: fluctuating currency values; different accounting,
auditing, and financial reporting regulations and practices in some countries;
changing local and regional economic, political, and social conditions;
greater market volatility; differing securities market structures; and various
administrative difficulties such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. However, in the opinion
of Capital Research and Management Company, investing outside the U.S. also
can reduce certain portfolio risks due to greater diversification
opportunities.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
- --------------------------------------------------------------------------------
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this
- --------------------------------------------------------------------------------
7 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
system the portfolio of the fund is divided into segments which are managed
by individual counselors. Each counselor decides how their segment will be
invested (within the limits provided by the fund's objective and policies and
by Capital Research and Management Company's investment committee). In
addition, Capital Research and Management Company's research professionals
make investment decisions with respect to a portion of the fund's portfolio.
The primary individual portfolio counselors for the fund are listed below.
===============================================================================
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
......................
YEARS OF EXPERIENCE WITH CAPITAL
AS PORTFOLIO COUNSELOR RESEARCH AND
(AND RESEARCH PROFESSIONAL, MANAGEMENT
PORTFOLIO COUNSELORS IF APPLICABLE) FOR THE COMPANY OR
FOR THE GROWTH FUND GROWTH FUND OF AMERICA, INC. ITS TOTAL
OF AMERICA, INC. PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GORDON Senior Vice 5 years (in 25 years 25 years
CRAWFORD President and addition to 16
Director, years as a
Capital research
Research and professional
Management prior to
Company becoming a
portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
JAMES E. Senior Vice 11 years (in 19 years 25 years
DRASDO President addition to 7
of the fund. years as a
Senior Vice research
President and professional
Director, prior to
Capital becoming a
Research and portfolio
Management counselor for
Company the fund)
- -----------------------------------------------------------------------------------------
WILLIAM C. Senior Partner, 23 years** 37 years 43 years
NEWTON The Capital
Group
Partners L.P.*
- -----------------------------------------------------------------------------------------
DONALD D. Vice President 3 years (in 11 years 11 years
O'NEAL of the fund. addition to 8
Vice President, years as a
Capital research
Research and professional
Managment prior to
Company becoming a
portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
JAMES F. President of 8 years (in 26 years 26 years
ROTHENBERG the fund. addition
President and to 3 years as a
Director, research
Capital professional
Research and prior to
Management becoming a
Company portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
R. MICHAEL Chairman, 11 years 32 years 32 years
SHANAHAN Capital
Research and
Management
Company
</TABLE>
* Company affiliated with Capital Research and Management Company.
** Since Capital Research and Management Company took over management of the
fund in 1973.
8
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield,
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
- - TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gain
distributions.
- - YIELD refers to the income the fund expects to earn based on its current
portfolio over a given period of time, expressed as an annual percentage
rate. Because yield is calculated using a formula mandated by the Securities
and Exchange Commission, this quoted yield may be different than the income
actually paid to shareholders.
- - DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED SEPTEMBER 30, 1996)
<TABLE>
<CAPTION>
THE FUND THE FUND AT
AT NET MAXIMUM
ASSET VALUE SALES CHARGE/1/ CPI/2/ S&P 500/3/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE ANNUAL
TOTAL RETURNS:
................................................................................
One year 6.41% 0.31% 3.00% 20.32%
................................................................................
Five years 13.28% 11.95% 2.84% 15.21%
................................................................................
Ten years 14.44% 13.76% 3.66% 14.96%
................................................................................
Lifetime/4/ 16.34% 16.04% 5.56% 13.46%
</TABLE>
/1/ These fund results were calculated according to a standard formula that is
required for all stock and bond funds. The maximum sales charge has been
deducted.
/2/ Consumer Price Index is computed from data supplied by the U.S. Department
of Labor, Bureau of Labor Statistics.
/3/ The Standard & Poor's 500 Index represents stocks. This index is unmanaged
and does not reflect sales charges, commissions or expenses.
/4/ For the period beginning December 1, 1973 (when Capital Research and
Management Company became the fund's investment adviser).
9
<PAGE>
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THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Here are the fund's annual total returns calculated without a sales charge. This
information is being supplied on a calendar year basis.
1986 16.16
1987 7.32
1988 18.46
1989 30.06
1990 -4.12
1991 35.79
1992 7.40
1993 14.50
1994 .02
1995 29.80
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends are usually paid in December. Capital gains, if any, are also usually
distributed in December. When a dividend or capital gain is distributed, the
net asset value per share is reduced by the amount of the payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash -- unless you are exempt from taxation or
entitled to tax deferral. Early each year, you will be notified as to the
amount and federal tax status of all income distributions paid during the prior
year. Such distributions may also be subject to state or local taxes. The tax
treatment of redemptions from a retirement plan account may differ from
redemptions from an ordinary shareholder account.
10
<PAGE>
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THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. Federal law
also requires the fund to withhold 30% or the applicable tax treaty rate from
dividends paid to certain nonresident alien, non-U.S. partnership and non-U.S.
corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the fund. Please see the statement of additional information and your tax
adviser for further information.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1958 and reorganized as a Maryland corporation in
1983. All fund operations are supervised by the fund's board of directors who
meet periodically and perform duties required by applicable state and federal
laws. Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in the statement of additional information.
They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund. The fund does not hold annual
meetings of shareholders. However, significant corporate matters which require
shareholder approval, such as certain elections of board members or a change in
a fundamental investment policy, will be presented to shareholders at a meeting
called for such purpose. Shareholders have one vote per share owned. At the
request of the holders of at least 10% of the shares, the fund will hold a
meeting at which any member of the board could be removed by a majority vote.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company, a wholly owned subsidiary of The Capital Group
Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, CA
90071. Capital Research and Management Company manages the investment portfolio
and business affairs of the fund. The management fee paid by the fund to
Capital Research and Management Company may not exceed 0.50% of the fund's
average net assets annually and
11
<PAGE>
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THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
declines at certain asset levels. The total management fee paid by the fund for
the previous fiscal year is listed above under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
plan were incurred within the preceding 12 months and accrued while the plan is
in effect. The 12b-1 fee paid by the fund for the last fiscal year is listed
above under "Expenses."
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. Fixed-income
securities are generally traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed price which includes an
amount of compensation to the dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers are in a position to
offer comparable prices and executions, preference may be given to brokers who
have sold shares of the fund or have provided investment research, statistical,
and other related services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
12
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421/0180
[MAP]
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas 78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana 46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia 23501-2280
Fax: 804/670-4773
13
<PAGE>
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THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS. IF
YOU ARE INVESTING THROUGH A RETIREMENT PLAN, YOU SHOULD CONTACT YOUR PLAN
ADMINISTRATOR/TRUSTEE ABOUT WHAT SERVICES ARE AVAILABLE AND WITH QUESTIONS
ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
- - Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
- - Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the
fund (with no sales charge). This will be done automatically unless you
elect to have the dividends and/or capital gain distributions paid to you
in cash.
- - Cross-Reinvestment
You may invest your dividend and capital gain distributions into any other
fund in The American Funds Group.
14
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
- - Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to
automatically exchange shares among any of the funds in The American Funds
Group. Exchange requests may be made in writing, by telephone including
American FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
- - Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
15
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS
<TABLE>
- ----------------------------------------------------------------
<S> <C>
To establish an account $1,000
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
-----------------
DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
................................................................................
$50,000 but less than $100,000 4.50% 4.71% 3.75%
................................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
................................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
................................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
................................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans with $100
million or more in assets may be made with no sales charge and are not subject
to a contingent deferred sales charge. A dealer concession of up to 1% may be
paid by American Funds Distributors on these investments. Investments by
certain individuals and entities including employees and other associated
persons of dealers authorized to sell shares of the fund and Capital
16
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
Research and Management Company and its affiliated companies are not subject to
a sales charge.
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company know if you
qualify for a reduction in your sales charge using one or any combination of
the methods described below.
- - Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
- - Concurrent Purchases
You may combine concurrent purchases of two or more funds in The American
Funds Group, except direct purchases of the money market funds. Shares of
the money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
17
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
- - Right of Accumulation
You may take into account the current value of your existing holdings in
The American Funds Group to determine your sales charge. Direct purchases
of the money market funds are excluded.
- - Statement of Intention
You may enter into a non-binding commitment to invest a certain amount in
non-money market fund shares over a 13-month period. A portion of your
account may be held in escrow to cover additional sales charges which may
be due if your total investments over the statement period are insufficient
to qualify for the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received and accepted by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $10,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 15 days. Proceeds
will not be mailed until sufficient time has passed to provide reasonable
assurance that checks or drafts (including certified or cashier's checks) for
shares purchased have cleared (which may take up to 15 calendar days from the
purchase date). Except for delays relating to clearance of checks for share
purchases or in extraordinary circumstances (and as permissible under the
Investment Company Act of 1940), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
18
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature must be guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc., that is an eligible guarantor institution. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made payable to the registered shareholder(s) and is
mailed to the address of record on the account, provided the address has been
used with the account for at least 15 days. Additional documentation may be
required for sale of shares held in corporate, partnership or fiduciary
accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell shares (up to $10,000 per fund, per account each
day), or exchange shares around the clock with American FundsLine(R). To use
this service, call 800/325-3590 from a TouchTone(TM) telephone.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), you agree to hold the fund,
American Funds Service Company, any of its affiliates or mutual funds managed
by such affiliates, and each of their respective directors, trustees, officers,
employees and agents harmless from any losses, expenses, costs or liability
(including attorney fees) which may be incurred in connection with the exercise
of these privileges provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
Generally, all shareholders are automatically eligible to use these options.
However, you may elect to opt out of these options by writing American Funds
19
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
Service Company. (You may also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
20
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
21
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
22
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
American Funds American Funds American
Service Company Distributors FundsLine(R)
800/421-0180 ext. 1 800/421-9900 ext. 11 800/325-3590
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
--------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects of
performance information, the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the auditor's
report.
CODE OF ETHICS A current SAI has been filed
with the Securities and
Includes a description of the Exchange Commission and is
fund's personal investing incorporated by reference (is
policy. legally part of the
prospectus).
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the
Service Company 800/421-0180 Fund 333 South Hope Street
ext. 1 Los Angeles, CA 90071
This prospectus has been printed on recycled paper.
[RECYCLE LOGO]
24
<PAGE>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
- --------------------------------------------------------------------------------
The Growth Fund
of America(R)
Prospectus
for Eligible Retirement Plans
JANUARY 1, 1997
<PAGE>
THE GROWTH FUND OF AMERICA, INC.
One Market
Steuart Tower, Suite 1800
San Francisco, CA 94105
The investment objective of the fund is growth of capital. The realization of
current income will not be a consideration. The fund strives to accomplish
this objective by investing primarily in common stocks.
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND OFFERED WITHOUT A SALES
CHARGE TO ELIGIBLE RETIREMENT PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE
FUND TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF THE FUND AT THE
ADDRESS INDICATED ABOVE.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
More detailed information about the fund, including the fund's financial
statements, is contained in the statement of additional information dated
January 1, 1997, which has been filed with the Securities and Exchange
Commission and is available to you without charge, by writing to the Secretary
of the fund at the above address or calling American Funds Service Company.
SHARES OF THE FUND 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. THE
PURCHASE OF FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
RP 05-010-0197
<PAGE>
================================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses 1
Financial Highlights 2
Investment Objective and Policies 4
Certain Securities and
Investment Techniques 5
Multiple Portfolio
Counselor System 6
Investment Results 8
Dividends, Distributions and Taxes 8
Fund Organization and Management 9
Purchasing Shares 11
Shareholder Services 13
Redeeming Shares 13
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF EXPENSES
Average annual expenses paid over a 10-year period would be approximately $9
per year, assuming a $1,000 investment and a 5% annual return.
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund also has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.37%
12b-1 expenses 0.24%/2/
Other expenses (including audit, legal, shareholder services, trans-
fer agent and custodian expenses) 0.13%
Total fund operating expenses 0.74%
</TABLE>
Summary of Expenses continued on the following page . . .
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 1
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
EXAMPLES
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return./3/
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 8
................................................................................
Three years $24
................................................................................
Five years $41
................................................................................
Ten years $92
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or in combination with
shares of other funds in The American Funds Group other than the money
market funds) may purchase shares at net asset value; however, a contingent
deferred sales charge of 1% applies on certain redemptions within 12 months
following such purchases. (See "Redeeming Shares--Contingent Deferred Sales
Charge.")
/2/ These expenses may not exceed 0.25% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the fiscal year)
The following information for the ten years ended August 31, 1996 has been
derived from financial statements which have been audited by Deloitte & Touche
LLP, independent accountants. This information should be read in conjunction
with the financial statements and related notes, which are included in the
statement of additional information.
- --------------------------------------------------------------------------------
2 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
SELECTED PER-SHARE DATA*
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $16.55 $13.81 $13.58 $11.02 $11.21 $9.22 $11.53 $8.71 $10.61 $8.58
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .13 .13 .07 .07 .12 .21 .28 .27 .14 .14
Net realized and
unrealized gain (loss)
on investments (.01) 3.21 .71 2.63 .40 2.43 (1.29) 3.00 (1.34) 2.43
Total income
from investment
operations .12 3.34 .78 2.70 .52 2.64 (1.01) 3.27 (1.20) 2.57
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from net
investment income (.14) (.08) (.06) (.09) (.17) (.24) (.31) (.15) (.15) (.14)
Distributions from net
realized gains (1.14) (.52) (.49) (.05) (.54) (.41) (.99) (.30) (.55) (.40)
Total distributions (1.28) (.60) (.55) (.14) (.71) (.65) (1.30) (.45) (.70) (.54)
Net asset value, end of
year $15.39 $16.55 $13.81 $13.58 $11.02 $11.21 $9.22 $11.53 $8.71 $10.61
Total return/1/ .90% 25.56% 5.98% 24.64% 4.91% 30.55% (9.76%) 39.35% (10.73%) 32.27%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions) $8,511 $7,525 $5,427 $5,018 $3,700 $2,903 $1,912 $1,686 $ 1,038 $1,237
Ratio of expenses to
average net assets .74% .75% .78% .77% .79% .83% .79% .78% .71% .66%
Ratio of net income to
average net assets .82% .90% .49% .56% 1.11% 2.13% 2.67% 2.82% 1.56% 1.50%
Average commissions
paid/2/ 5.62c 5.94c 6.05c 6.82c 6.94c 7.23c 7.13c 7.00c 6.64c 6.33c
Portfolio turnover rate 27.95% 26.90% 24.77% 25.23% 10.64% 18.92% 17.69% 30.28% 18.33% 19.61%
</TABLE>
/1/ Calculated with no sales charge.
/2/ Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
reflected in the fund's statement of operations. Shares traded on a
principal basis, such as most over-the-counter and fixed-income
transactions, are excluded.
* All per share data reflect the 100% stock dividend effected on
December 13, 1996.
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 3
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The fund aims to provide you with growth of capital.
The fund's investment objective is growth of capital. The realization of
current income will not be a consideration. The fund seeks to achieve its
objective by investing in a diversified portfolio consisting primarily of
common stocks. However, assets may also be held in securities convertible into
common stocks, cash or cash equivalents, straight debt securities (including
U.S. Government securities), or nonconvertible preferred stocks. (See the
statement of additional information for a description of cash equivalents.) The
fund will maintain at least 65% of the value of its total assets in growth-type
securities under normal market conditions.
Up to 10% of the fund's assets may be invested in "high-yield, high-risk"
straight debt securities (commonly referred to as "junk bonds") which are rated
BB or below by Standard & Poor's Corporation and Ba or below by Moody's
Investors Service, Inc. or in unrated securities that are determined to be of
equivalent quality, provided the fund's investment adviser, Capital Research
and Management Company, determines that these securities have characteristics
similar to the equity securities eligible for purchase by the fund. "High-
yield, high-risk" securities carry a higher degree of investment risk than
higher rated bonds and are considered speculative.
The fund may invest up to 10% in the securities of issuers domiciled outside
the U.S. and may purchase or sell various currencies on a spot basis in
connection with such investments.
The fund will attempt to take prompt advantage of market conditions and as a
result may at times have a high rate of portfolio turnover relative to many
other mutual funds. The fund may dispose of any security at any time, and it is
the fund's intention to take either short- or long-term profits or losses
consistent with its objective and sound investment practice, and when such
action would not impair the fund's tax status.
The growth-oriented, equity-type securities generally purchased by the fund may
involve greater risk than is customarily associated with investing in stocks of
larger, more established companies and may be subject to greater price swings.
The fund's investment restrictions (which are described in the statement of
additional information) and objective cannot be changed without shareholder
approval. All other investment practices may be changed by the fund's board.
- --------------------------------------------------------------------------------
4 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVE CANNOT, OF COURSE, BE ASSURED
DUE TO THE RISK OF CAPITAL LOSS FROM FLUCTUATING PRICES INHERENT IN ANY
INVESTMENT IN SECURITIES.
- --------------------------------------------------------------------------------
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
Investing in stocks and bonds involves certain risks.
RISKS OF INVESTING
Because the fund invests in common stocks or securities convertible into common
stocks, the fund is subject to stock market risks. For example, the fund is
subject to the possibility that stock prices in general will decline over short
or even extended periods.
The fund may also invest in high-yield, high-risk securities provided that
Capital Research and Management Company determines that these securities have
characteristics similar to the equity securities eligible for purchase by the
fund. The values of these securities may be subject to fluctuations that tend
to reflect short-term corporate and market developments and investor
perceptions of the issuers. It may be more difficult to dispose of, or
determine the value of these high-yield, high-risk securities. See the
statement of additional information for a description of the ratings and for
more information about the risks of high-yield, high-risk securities. High-
yield, high-risk securities rated CC or Ca generally are described by the
rating agencies as "speculative in a high degree; often in default or [having]
other marked shortcomings."
RISKS OF INVESTING IN VARIOUS COUNTRIES
The fund may invest up to 10% in the securities of issuers which are domiciled
outside the U.S. and which are not included in the Standard & Poor's 500
Composite Index (a broad measure of the U.S. stock market). These companies may
not be subject to uniform accounting, auditing and financial reporting
standards and practices or regulatory requirements comparable to those
applicable to U.S. companies. There may also be less public information
available about non-U.S. companies. Additionally, specific local political and
economic factors must be evaluated in making these investments including trade
balances and imbalances, and related economic policies; expropriation or
confiscatory taxation; limitations on the removal of funds or other assets;
political or social instability; the diverse structure and liquidity of the
various securities markets; and nationalization policies of governments around
the world. However, investing outside the U.S. can also reduce certain of these
risks due to greater diversification opportunities.
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 5
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
PRIVATE PLACEMENTS
Private placements may be either purchased from another institutional investor
that originally acquired the securities in a private placement or directly from
the issuers of the securities. Generally, securities acquired in private
placements are subject to contractual restrictions on resale and may not be
resold except pursuant to a registration statement under the Securities Act of
1933 or in reliance upon an exemption from the registration requirements under
the Act, for example, private placements sold pursuant to Rule 144A.
Accordingly, any such obligation will be deemed illiquid unless it has been
specifically determined to be liquid under procedures adopted by the fund's
board of directors.
In determining whether these securities are liquid, factors such as the
frequency and volume of trading and the commitment of dealers to make markets
will be considered. Additionally, the liquidity of any particular security will
depend on such factors as the availability of "qualified" institutional
investors and the extent of investor interest in the security, which can change
from time to time.
- --------------------------------------------------------------------------------
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
The basic investment philosophy of Capital Research and Management Company is
to seek fundamental values at reasonable prices, using a system of multiple
portfolio counselors in managing mutual fund assets. Under this system the
portfolio of the fund is divided into segments which are managed by individual
counselors. Each counselor decides how their segment will be invested (within
the limits provided by the fund's objective and policies and by Capital
Research and Management Company's investment committee). In addition, Capital
Research and Management Company's research professionals make investment
decisions with respect to a portion of the fund's portfolio. The primary
individual portfolio counselors for the fund are listed on the next page.
- --------------------------------------------------------------------------------
6 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
===============================================================================
<TABLE>
<CAPTION>
YEARS OF EXPERIENCE
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
......................
YEARS OF EXPERIENCE WITH CAPITAL
AS PORTFOLIO COUNSELOR RESEARCH AND
(AND RESEARCH PROFESSIONAL, MANAGEMENT
PORTFOLIO COUNSELORS IF APPLICABLE) FOR THE COMPANY OR
FOR THE GROWTH FUND GROWTH FUND OF AMERICA, INC. ITS TOTAL
OF AMERICA, INC. PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GORDON Senior Vice 5 years (in 25 years 25 years
CRAWFORD President and addition to 16
Director, years as a
Capital research
Research and professional
Management prior to
Company becoming a
portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
JAMES E. Senior Vice 11 years (in 19 years 25 years
DRASDO President addition to 7
of the fund. years as a
Senior Vice research
President and professional
Director, prior to
Capital becoming a
Research and portfolio
Management counselor for
Company the fund)
- -----------------------------------------------------------------------------------------
WILLIAM C. Senior Partner, 23 years** 37 years 43 years
NEWTON The Capital
Group
Partners L.P.*
- -----------------------------------------------------------------------------------------
DONALD D. Vice President 3 years (in 11 years 11 years
O'NEAL of the fund. addition to 8
Vice President, years as a
Capital research
Research and professional
Managment prior to
Company becoming a
portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
JAMES F. President of 8 years (in 26 years 26 years
ROTHENBERG the fund. addition
President and to 3 years as a
Director, research
Capital professional
Research and prior to
Management becoming a
Company portfolio
counselor for
the fund)
- -----------------------------------------------------------------------------------------
R. MICHAEL Chairman, 11 years 32 years 32 years
SHANAHAN Capital
Research and
Management
Company
</TABLE>
* Company affiliated with Capital Research and Management Company.
** Since Capital Research and Management Company took over management of the
fund in 1973.
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 7
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The fund has averaged a total return (at no sales charge) of +16.34% a year
under Capital Research and Management Company's management.
(December 1, 1973 through September 30, 1996)
The fund may from time to time compare its investment results to various
unmanaged indices or other mutual funds in reports to shareholders, sales
literature and advertisements. The results may be calculated on a yield, total
return and/or distribution rate basis for various periods, with or without
sales charges. Results calculated without a sales charge will be higher. Total
returns assume the reinvestment of all dividends and capital gain
distributions. The fund's distribution rate is calculated by dividing the
dividends paid by the fund over the last 12 months by the sum of the month-end
price and the capital gains paid over the last 12 months. The SEC yield
reflects income the fund expects to earn based on its current portfolio of
securities, while the distribution rate is based solely on the fund's past
dividends. Accordingly, the fund's SEC yield and distribution rate may differ.
As of September 30, 1996, the fund's total return over the past 12 months and
average annual total returns over the past five- and ten-year periods were
+6.41%, +13.28% and +14.44%, respectively. These results were calculated in
accordance with Securities and Exchange Commission requirements at no sales
charge. Of course, past results are not an indication of future results.
Further information regarding the fund's investment results is contained in the
fund's annual report which may be obtained without charge by writing to the
Secretary of the fund at the address indicated on the cover of this prospectus.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
Income distributions are usually made in December.
DIVIDENDS AND DISTRIBUTIONS
Dividends are usually paid in December. Capital gains, if any, are also usually
distributed in December. When a dividend or capital gain is distributed, the
net asset value per share is reduced by the amount of the payment.
The terms of your plan will govern how your plan may receive distributions from
the fund. Generally, periodic distributions from the fund to your plan are
reinvested in additional fund shares, although your plan may permit fund
distributions from net investment income to be received by you in cash while
reinvesting capital gain distributions in additional shares or all fund
- --------------------------------------------------------------------------------
8 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
distributions to be received in cash. Unless you select another option, all
distributions will be reinvested in additional fund shares.
FEDERAL TAXES
The fund intends to operate as a "regulated investment company" under the
Internal Revenue Code. In any fiscal year in which the fund so qualifies and
distributes to shareholders all of its net investment income and net capital
gains, the fund itself is relieved of federal income tax. The tax treatment of
redemptions from a retirement plan may differ from redemptions from an ordinary
shareholder account.
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION AND YOUR TAX ADVISER FOR
FURTHER INFORMATION.
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND MANAGEMENT
The fund is a member of The American Funds Group, which is managed by one of
the largest and most experienced investment advisers.
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation in 1958 and reorganized as a Maryland corporation in
1983. The fund's board supervises fund operations and performs duties required
by applicable state and federal law. Members of the board who are not employed
by Capital Research and Management Company or its affiliates are paid certain
fees for services rendered to the fund as described in the statement of
additional information. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. Shareholders have
one vote per share owned and, at the request of the holders of at least 10% of
the shares, the fund will hold a meeting at which any member of the board could
be removed by a majority vote. There will not usually be a shareholder meeting
in any year, except, for example, when the election of the board is required to
be acted upon by shareholders under the Investment Company Act of 1940.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment adviser to the fund
and other funds, including those in The American Funds Group. Capital Research
and Management Company is located at 333 South
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 9
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Hope Street, Los Angeles, CA 90071, and at 135 South State College Boulevard,
Brea, CA 92821. Capital Research and Management Company manages the investment
portfolio and business affairs of the fund and receives a fee at the annual
rates of 0.50% on the first $1 billion of the fund's net assets, 0.40% on net
assets in excess of $1 billion but not exceeding $2 billion, 0.37% on net
assets in excess of $2 billion but not exceeding $3 billion, 0.35% on net
assets in excess of $3 billion but not exceeding $5 billion, 0.335% on net
assets in excess of $5 billion but not exceeding $8 billion, and 0.325% on net
assets in excess of $8 billion.
Capital Research and Management Company is a wholly owned subsidiary of The
Capital Group Companies, Inc. (formerly "The Capital Group, Inc."), which is
located at 333 South Hope Street, Los Angeles, CA 90071. The research
activities of Capital Research and Management Company are conducted by
affiliated companies which have offices in Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo.
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the Investment Company
Institute's Advisory Group on Personal Investing. (See the statement of
additional information.)
PORTFOLIO TRANSACTIONS
Orders for the fund's portfolio securities transactions are placed by Capital
Research and Management Company, which strives to obtain the best available
prices, taking into account the costs and quality of executions. In the over-
the-counter market, purchases and sales are transacted directly with principal
market-makers except in those circumstances where it appears better prices and
executions are available elsewhere.
Subject to the above policy, when two or more brokers are in a position to
offer comparable prices and executions, preference may be given to brokers that
have sold shares of the fund or have provided investment research, statistical,
and other related services for the benefit of the fund and/or of other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc., a wholly owned subsidiary of Capital
Research and Management Company, is the principal underwriter of the fund's
shares. American Funds Distributors, Inc. is located at 333 South Hope Street,
- --------------------------------------------------------------------------------
10 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Los Angeles, CA 90071, 135 South State College Boulevard, Brea, CA 92821, 8000
IH-10 West, San Antonio, TX 78230, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, and 5300 Robin Hood Road, Norfolk, VA 23513. Telephone
conversations with American Funds Distributors may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
PLAN OF DISTRIBUTION
The fund has a plan of distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the board and the expenses paid under the
plan were incurred within the last 12 months and accrued while the plan was in
effect. Expenditures by the fund under the plan may not exceed 0.25% of its
average net assets annually (all of which may be for service fees).
TRANSFER AGENT
American Funds Service Company, 800/421-0180, a wholly owned subsidiary of
Capital Research and Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service Company is located at 333
South Hope Street, Los Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92821, 8000 IH-10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240 and 5300 Robin Hood Road, Norfolk, VA 23513.
It was paid a fee of $8,079,000 for the fiscal year ended August 31, 1996.
Telephone conversations with American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality assurance purposes.
- --------------------------------------------------------------------------------
PURCHASING SHARES
ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR RETIREMENT PLAN. FOR
MORE INFORMATION ABOUT HOW TO PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE CONSULT WITH YOUR
EMPLOYER. Shares are sold to eligible retirement plans at the net asset value
per share next determined after receipt of an order by the fund or American
Funds Service Company. Orders must be received before the close of regular
trading on the New York Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective retirement plan assets of $100
million or more may purchase shares at net asset value. In addition, any
employer-sponsored 403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a "401(k)" plan with 200
or more eligible employees or any other plan that invests at least $1 million
in
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 11
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
shares of the fund (or in combination with shares of other funds in The
American Funds Group other than money market funds) may purchase shares at net
asset value; however, a contingent deferred sales charge of 1% is imposed on
certain redemptions within one year of such purchase. (See "Redeeming Shares--
Contingent Deferred Sales Charge.") Plans may also qualify to purchase shares
at net asset value by completing a statement of intention to purchase
$1 million in fund shares subject to commission over a maximum of
13 consecutive months. Certain redemptions of such shares may also be subject
to a contingent deferred sales charge as described above. (See the statement of
additional information.)
The minimum initial investment is $250, except that the money market funds have
a minimum of $1,000 for individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic Investment Plans" (except for
the money market funds) or to $25 for purchases by retirement plans through
payroll deductions and may be reduced or waived for shareholders of other funds
in The American Funds Group.
During 1997, American Funds Distributors will provide additional compensation
to the top one hundred dealers who have sold shares of the fund or other funds
in The American Funds Group based on a pro rata share of a qualifying dealer's
sales. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these promotional incentives.
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets annually in order to promote selling efforts and to
compensate them for providing certain services. (See "Fund Organization and
Management--Plan of Distribution.") These services include processing purchase
and redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
Shares of the fund are offered to other shareholders pursuant to another
prospectus at public offering prices that may include an initial sales charge.
SHARE PRICE
Shares are offered to eligible retirement plans at the net asset value after
the order is received by the fund or American Funds Service Company. In the
case of orders sent directly to the fund or American Funds Service Company, an
investment dealer must be indicated. Dealers are responsible for promptly
transmitting orders. (See the statement of additional information under
"Purchase of Shares--Price of Shares.")
- --------------------------------------------------------------------------------
12 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
===============================================================================
The fund's net asset value per share is determined as of the close of trading
(currently 4:00 p.m., New York time) on each day the New York Stock Exchange is
open. The current value of the fund's total assets, less all liabilities, is
divided by the total number of shares outstanding and the result, rounded to
the nearer cent, is the net asset value per share.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
Subject to any restrictions contained in your plan, you can exchange your
shares for shares of other funds in The American Funds Group which are offered
through the plan at net asset value. In addition, again depending on your plan,
you may be able to exchange shares automatically or cross-reinvest dividends in
shares of other funds. Contact your plan administrator/trustee regarding how to
use these services. Also, see the fund's statement of additional information
for a description of these and other services that may be available through
your plan. These services are available only in states where the fund to be
purchased may be legally offered and may be terminated or modified at any time
upon 60 days' written notice.
- --------------------------------------------------------------------------------
REDEEMING SHARES
Subject to any restrictions imposed by your plan, you can sell your shares
through the plan any day the New York Stock Exchange is open. For more
information about how to sell shares of the fund through your retirement plan,
including any charges that may be imposed by the plan, please consult with your
employer.
By contacting Your plan administrator/trustee must send a letter of
your plan instruction specifying the name of the fund, the number of
administrator/ shares or dollar amount to be sold, and, if applicable, your
trustee name and account number. For your protection, if you redeem
more than $50,000, the signatures of the registered owners
(i.e., trustees or their legal representatives) must be
guaranteed by a bank, savings association, credit union, or
member firm of a domestic stock exchange or the National
Association of Securities Dealers, Inc., that is an eligible
guarantor institution. Your plan administrator/trustee should
verify with the institution that it is an eligible guarantor
prior to signing. Additional documentation may be required to
redeem shares from certain accounts. Notarization by a Notary
Public is not an acceptable signature guarantee.
By contacting Shares may also be redeemed through an investment dealer;
an investment however, you or your plan may be charged for this service.
dealer SHARES HELD FOR YOU IN AN INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 13
- --------------------------------------------------------------------------------
<PAGE>
===============================================================================
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE NET ASSET VALUE NEXT
DETERMINED AFTER YOUR ORDER AND ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE
FUND OR AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING SHARES--SHARE PRICE.")
CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge of 1% applies to certain redemptions within
the first year on investments of $1 million or more and on any investment made
with no initial sales charge by any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the Internal Revenue Code
including a "401(k)" plan with 200 or more eligible employees. The charge is 1%
of the lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such shares.
Shares held for the longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is waived for exchanges (except
if shares acquired by exchange were then redeemed within 12 months of the
initial purchase); for distributions from qualified retirement plans and other
employee benefit plans; for redemptions resulting from participant-directed
switches among investment options within a participant-directed employer-
sponsored retirement plan; and for redemptions in connection with loans made by
qualified retirement plans.
OTHER IMPORTANT THINGS TO REMEMBER
The net asset value for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's net asset value
fluctuates, reflecting the market value of the portfolio, the amount you
receive for shares redeemed may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), redemption proceeds will
be paid on or before the seventh day following receipt of a proper redemption
request.
- --------------------------------------------------------------------------------
14 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
NOTES
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND OFFERED WITHOUT A SALES
CHARGE TO ELIGIBLE RETIREMENT PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE
FUND TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF THE FUND AT THE ADDRESS
INDICATED ON THE FRONT.
- --------------------------------------------------------------------------------
THE GROWTH FUND OF AMERICA / PROSPECTUS 15
- --------------------------------------------------------------------------------
<PAGE>
===============================================================================
NOTES
[RECYCLED This prospectus has been printed on recycled paper that meets the
LOGO] guidelines of the United States Environmental Protection Agency
- --------------------------------------------------------------------------------
16 THE GROWTH FUND OF AMERICA / PROSPECTUS
- --------------------------------------------------------------------------------
<PAGE>
THE GROWTH FUND OF AMERICA, INC.
Part B
Statement of Additional Information
JANUARY 1, 1997
This document is not a prospectus but should be read in conjunction with
the current Prospectus of The Growth Fund of America, Inc. (the fund or GFA)
dated January 1, 1997. The Prospectus may be obtained from your investment
dealer or financial planner or by writing to the fund at the following
address:
THE GROWTH FUND OF AMERICA, INC.
ATTENTION: SECRETARY
ONE MARKET, STEUART TOWER
P.O. BOX 7650
SAN FRANCISCO, CA 94120
TELEPHONE: (415) 421-9360
Shareholders who purchase shares at net asset value through eligible
retirement plans should note that not all of the services or features described
below may be available to them, and they should contact their employer for
details.
Table of Contents
Item
DESCRIPTION OF CERTAIN SECURITIES
CERTAIN RISK FACTORS RELATING TO BELOW INVESTMENT GRADE BONDS
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUND OFFICERS AND DIRECTORS
MANAGEMENT
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
PURCHASE OF SHARES
REDEEMING SHARES
EXECUTION OF PORTFOLIO TRANSACTIONS
GENERAL INFORMATION
INVESTMENT RESULTS
DESCRIPTION OF BOND RATINGS
FINANCIAL STATEMENTS
DESCRIPTION OF CERTAIN SECURITIES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Policies and Risks."
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury. For these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. Government,
and thus they are of the highest possible credit quality. Such securities are
subject to variations in market value due to fluctuations in interest rates,
but, if held to maturity, will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but
are not limited to, Federal Land Banks, Farmers Home Administration, Central
Bank for Cooperatives, and Federal Intermediate Credit Banks.
CASH AND CASH EQUIVALENTS - The fund may maintain assets in cash or cash
equivalents. Cash equivalents include (1) commercial paper (short-term notes
up to 9 months in maturity issued by corporations or governmental bodies); (2)
commercial bank obligations such as certificates of deposit, (interest-bearing
time deposits), bankers' acceptances (time drafts on a commercial bank where
the bank accepts an irrevocable obligation to pay at maturity) and documented
discount notes (corporate promissory discount notes accompanied by a commercial
bank guarantee to pay at maturity); (3) savings association obligations
(certificates of deposit issued by mutual savings banks or savings and loan
associations); (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less; and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
CURRENCY TRANSACTIONS - The fund has the ability to hold a portion of its
assets in U.S. dollars and other currencies and to enter into certain currency
contracts in connection with investing in non-U.S. dollar denominated
securities. A forward currency contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. For example, the fund might purchase a particular currency or
enter into a foreign exchange contract to preserve the U.S. dollar price of
securities it intends or has contracted to purchase. The fund does not
currently intend to engage in any forward currency transactions other than
purchasing and selling currencies and foreign exchange contracts which will be
used to facilitate settlement of trades.
CERTAIN RISK FACTORS RELATING TO BELOW INVESTMENT GRADE BONDS
Certain risk factors relating to investing in below investment grade
securities ("high-yield, high-risk bonds") are discussed below. During the
previous fiscal year, the fund held none of its assets in below investment
grade securities.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a bond defaults on its obligations to pay interest
or principal or enters into bankruptcy proceedings, the fund may incur losses
or expenses in seeking recovery of amounts owed to it. In addition, periods of
economic uncertainty and changes can be expected to result in increased
volatility of market prices and yields of high-yield, high-risk bonds and the
fund's net asset value. From time to time legislation has been proposed that
would limit the use of high-yield, high-risk bonds in certain instances. The
impact that such legislation if enacted, could have on the market for such
bonds cannot be predicted.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercised these provisions
in a declining interest rate market, the fund would have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's value will decrease in a
rising interest rate market, as will the value of the fund's assets. If the
fund experiences unexpected net redemptions, this may force it to sell
high-yield, high-risk bonds without regard to their investment merits, thereby
decreasing the asset base upon which expenses can be spread and possibly
reducing the fund's rate of return.
LIQUIDITY AND VALUATION - There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
The fund has adopted certain fundamental policies and investment restrictions
which cannot be changed without shareholder approval. Approval requires the
affirmative vote of 67% or more of the voting securities present at a meeting
of shareholders, provided more than 50% of such securities are represented at
the meeting, or the vote of more than 50% of the outstanding voting securities,
whichever is less.
The fund may not:
1. Purchase the securities of any issuer, except the U.S. Government or any
subdivision thereof, if upon such purchase more than 5% of the value of its
total assets would consist of securities of such issuer.
2. Purchase the securities of companies in a particular industry (other than
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities) if thereafter 25% or more of the value of its total assets
would consist of securities issued by companies in that industry.
3. Purchase more than 10% of the voting or non-voting securities of any one
issuer.
4. Invest more than 15% of the value of its assets in securities that are
illiquid.
5. Purchase securities on margin.
6. Purchase any real estate unless necessary for office space for the fund or
for the protection of investments already made.
7. Make loans to anyone (the purchase of a portion of an issue of bonds,
debentures or other securities, whether or not on the original issue of such
securities, is not to be considered the making of a loan).
8. Sell securities or property short or permit any of its officers, directors
or any of its affiliated persons to take short positions on shares of the fund.
9. Purchase the securities of a company which has an officer or director who
is an officer or director of the fund, or an officer or director of its
investment adviser, if, to the knowledge of the fund, one or more of such
persons own beneficially more than 1/2 of 1% of the shares of the company and
in the aggregate more than 5% of the outstanding securities of such company.
10. Borrow more than an amount equal to 5% of the value of its total assets,
determined immediately after the time of the borrowing, and then only from
banks, as a temporary measure for extraordinary or emergency purposes.
11. Invest in the securities of other managed investment companies.
12. Invest in the securities of any issuer for the purpose of exercising
control or management.
13. Deal in commodities or commodity contracts.
14. Act as underwriter of securities issued by other persons.
Although not fundamental policies, the fund has further agreed that it will
not invest any part of its total assets in real estate or interests therein
(excluding readily marketable securities) or invest in oil, gas or other
mineral leases. The fund has also agreed that it will not purchase any
warrants if immediately after and as a result of such purchase more than 5% of
the market value of the total assets of the fund would be invested in such
warrants, with no more than 2% being unlisted on the New York or American Stock
Exchanges.
Notwithstanding Investment Restriction #11, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission. Furthermore, Investment Restriction #13 does not prevent the fund
from engaging in transactions involving forward currency contracts.
FUND OFFICERS AND DIRECTORS
DIRECTORS AND DIRECTOR COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION PRINCIPAL OCCUPATION(S) AGGREGATE TOTAL NUMBER OF
AND AGE WITH DURING PAST 5 YEARS COMPENSATION COMPENSATION FUND BOARDS
REGISTRANT (POSITIONS WITHIN THE (INCLUDING FROM ALL ON WHICH
ORGANIZATIONS LISTED VOLUNTARILY FUNDS MANAGED DIRECTOR SERVES
MAY HAVE CHANGED DURING DEFERRED BY CAPITAL
THIS PERIOD) COMPENSATION/1/) RESEARCH AND
FROM THE MANAGEMENT
COMPANY DURING COMPANY/2/
FISCAL YEAR FOR THE YEAR
ENDED 8/31/96 ENDED 8/31/96
- ------------------- ----------- ----------------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert A. Fox Director President and Chief $14,700/3/ $81,450 5
P.O. Box 457 Executive Officer,
1000 Davis Street Foster Farms; former
Livingston, CA 95334 President,
Age: 59 Revlon International,
Chairman and
Chief Executive Officer,
Clarke
Hooper America
(advertising),
President, Continental
Can Company,
Inc.
Roberta L. Hazard Director Consultant; Rear $14,700 $43,550 3
1419 Audmar Drive Admiral, United States
McLean, VA 22101 Navy (Retired)
Age: 61
Leonade D. Jones Director Former Treasurer, The $14,700/3/ $71,500 5
4105 Illinois Avenue, Washington Post Company
N.W.
Washington, D.C. 20011
Age: 48
John G. McDonald Director The IBJ Professor of $15,900/3/ $140,450 7
Graduate School of Finance, Graduate
Business School of
Stanford University Business, Stanford
Stanford, CA 94305 University
Age: 59
Theodore D. Nierenberg Director Private investor; former $14,100 $41,750 3
15 Middle Patent Road President, Dansk
Armonk, NY 10504 International Designs,
Age: 73 Ltd.
+James W. Ratzlaff Director Senior Partner, The None None 8
P.O. Box 7650 Capital Group Partners
San Francisco, CA 94120 L.P.
Age: 60
Henry E. Riggs Director President and Professor $15,600/3/ $72,850 5
Kingston Hall 201 of Engineering, Harvey
Harvey Mudd College Mudd College
Claremont, CA 91711
Age: 61
+Walter P. Stern Chairman of Chairman, Capital Group None None 8
630 Fifth Avenue the Board International, Inc.;
New York, NY 10111 Vice Chairman,
Age: 68 Capital Research
International;
Director, The Capital
Group Companies, Inc.;
Chairman, Capital
International, Inc.;
Director, Temple-
Inland Inc. (forest
products)
Patricia K. Woolf Director Private investor; $15,300 $71,700 5
506 Quaker Road Lecturer, Department
Princeton, NJ 08540 of Molecular Biology,
Age: 62 Princeton
University
</TABLE>
+ "Interested persons" within the meaning of the Investment Company Act of 1940
(the 1940 Act) on the basis of their affiliation with the fund's Investment
Adviser, Capital Research and Management Company or the parent company of the
Investment Adviser, The Capital Group Companies, Inc.
/1/ Amounts may be deferred by eligible directors under a non-qualified
deferred compensation plan adopted by the fund in 1993. Deferred amounts
accumulate at an earnings rate determined by the total return of one or more of
the funds in the American Funds Group as designated by the director.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America.
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicles for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amounts of deferred compensation
accrued by the fund (plus earnings thereon) for participating Directors are as
follows: Robert A. Fox ($_______), Leonade D. Jones ($_______), John G.
McDonald ($_______) and Henry E. Riggs ($_______). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Director.
/4/ James W. Ratzlaff and Walter P. Stern are affiliated with the Investment
Adviser and, accordingly, receive no compensation from the fund.
OFFICERS
(with their principal occupations for the past five years)#
Walter P. Stern, Chairman of the Board.
Fund officers whose other positions are not described above are:
James F. Rothenberg, President /1/; President and Director, Capital Research
and Management Company.
James E. Drasdo, Senior Vice President /1/; Senior Vice President and Director,
Capital Research and Management Company.
Paul G. Haaga, Jr., Senior Vice President /1/; Executive Vice President and
Director, Capital Research and Management Company; Director, American Funds
Service Company. </r?
Richard M. Beleson, Vice President /3/; Senior Vice President and Director,
Capital Research Company.
Steven N. Kearsley, Vice President /2/; Vice President and Treasurer, Capital
Research and Management Company; Director, American Funds Service Company.
Donald D. O'Neal, Vice President /3/, Vice President, Capital Research and
Management Company.
Patrick F. Quan, Secretary /3/; Vice President - Fund Business Management
Group, Capital Research and Management Company.
Mary C. Hall, Treasurer /2/; Senior Vice President - Fund Business
Management Group, Capital Research and Management Company.
R. Marcia Gould, Assistant Treasurer /2/; Vice President - Fund Business
Management Group, Capital Research and Management Company.
/1/ Address is 333 South Hope Street, Los Angeles, CA 90071.
/ 2/ Address is 135 South State College Boulevard, Brea, CA 92821.
/3/ Address is P.O. Box 7650, San Francisco, CA 94120.
# The principal occupation shown reflects the principal employment of each
individual during the past five years. Corporate positions may, in some
instances, have changed during this period.
All of the directors and officers are also officers and/or directors and/or
trustees of one or more of the other funds for which Capital Research and
Management Company serves as Investment Adviser. No compensation is paid by
the fund to any officer or director who is a director, officer or employee of
the Investment Adviser or affiliated companies. The fund pays fees of $10,000
per annum to directors who are not affiliated with the Investment Adviser, plus
$700 for each Board of Directors meeting attended, plus $300 for each meeting
attended as a member of a committee of the Board of Directors. The directors
may elect, on a voluntary basis, to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the unaffiliated directors. As of August 31,
1996 the officers and directors of the fund and their families, as a group,
owned beneficially or of record less than 1% of the outstanding shares.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience. The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South College Boulevard, Brea, Ca 92821. The
Investment Adviser's research professionals travel several million miles a
year, making more than 5,000 research visits in more than 50 countries around
the world. The Investment Adviser believes that it is able to attract and
retain quality personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for managing more than $100 billion
of stocks, bonds and money market instruments and serves over five million
investors of all types. These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the Agreement) between the fund and the Investment Adviser,
dated January 1, 1994, and approved by the shareholders on December 14, 1993,
shall be in effect until the close of business on November 30, 1997 and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors of the
fund, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the fund, and (ii) the vote of a majority of
directors who are not parties to the Agreement or interested persons (as
defined in said Act) of any such party, cast in person, at a meeting called for
the purpose of voting on such approval. The Agreement also provides that
either party has the right to terminate it without penalty, upon 60 days'
written notice to the other party, and that the Agreement automatically
terminates in the event of its assignment (as defined in said Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, as well as general purpose accounting forms, supplies, and
postage to be used at the offices of the fund relating to the services
furnished by the Investment Adviser. The fund pays all expenses not
specifically assumed by the Investment Adviser, including, but not limited to,
custodian, stock transfer and dividend disbursing fees and expenses; costs of
designing, printing and mailing reports, prospectuses, proxy statements, and
notices to shareholders; taxes; expenses for the issuance and redemption of
shares of the fund (including stock certificates, registration and
qualification fees and expenses); expenses pursuant to the fund's Plan of
Distribution (described below); legal and auditing expenses; compensation,
fees, and expenses paid to directors unaffiliated with the Investment Adviser;
association dues; costs of stationery and forms prepared exclusively for the
fund; and costs of assembling and storing shareholder account data.
Capital Research and Management Company receives a management fee at the
annual rates of 0.50% on the first $1 billion of the fund's net assets, 0.40%
on net assets in excess of $1 billion but not exceeding $2 billion, 0.37% on
net assets in excess of $2 billion but not exceeding $3 billion, 0.35% on net
assets in excess of $3 billion but not exceeding $5 billion, 0.335% on net
assets in excess of $5 billion but not exceeding $8 billion, and 0.325% on net
assets in excess of $8 billion.
The Agreement provides that the Investment Adviser shall reduce the fee
payable by the fund the amount, if any, by which the total expenses of the fund
for any fiscal year (excluding interest, taxes and extraordinary expenses)
exceed 1.5% of the first $30 million of average net assets of the fund for such
fiscal year, plus 1% of such average net assets in excess thereof. Expenses
which are not subject to this limitation are interest, taxes, and extraordinary
expenses. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses.
For the fiscal years ended August 31, 1996, 1995, and 1994, the Investment
Adviser received advisory fees of $30,625,000, $22,942,000, and $19,861,000,
respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the Principal
Underwriter) is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 8000 IH-10 West, San Antonio, TX
78230, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240, and 5300
Robin Hood Road, Norfolk, VA 23513. The fund has adopted a Plan of
Distribution (the Plan), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by
the Principal Underwriter on sales of fund shares during the fiscal year ended
August 31, 1996 amounted to $7,465,000 after allowance of $38,496,000 to
dealers. During the fiscal years ended 1995 and 1994, the Principal
Underwriter received $4,384,000 and $3,323,000, after allowance of $22,595,000
and $17,123,000 to dealers, respectively.
As required by rule 12b-1, the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Directors, and separately by
a majority of the directors who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by the
vote of a majority of the outstanding voting securities of the fund. The
officers and directors who are "interested" persons of the fund may be
considered to have a direct or indirect financial interest in the operation of
the Plan due to present or past affiliations with the Investment Adviser and
related companies. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of directors who
are not "interested persons" of the fund are committed to the discretion of the
directors who are not interested persons during the existence of the Plan. The
Plan is reviewed quarterly and must be renewed annually by the Board of
Directors.
Under the Plan the fund may expend up to 0.25% of its net assets annually
to finance any activity which is primarily intended to result in the sale of
fund shares, provided the fund's Board of Directors has approved the category
of expenses for which payment is being made. These include service fees for
qualified dealers and dealer commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan or by any defined contribution plan qualified under Section 401(a)
of the Internal Revenue Code including a "401(k)" plan with 200 or more
eligible employees). Only expenses incurred during the preceding 12 months and
accrued while the Plan is in effect may be paid by the fund. During the fiscal
year ended August 31, 1996, the fund paid or accrued $19,612,000 for
compensation to dealers under the Plan.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit commercial banks from engaging in the business of
underwriting, selling or distributing securities, but permit banks to make
shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements, and has elected the tax status
of a "regulated investment company," under the provisions of Subchapter M of
the Internal Revenue Code of 1986 (the Code). Under Subchapter M, if the fund
distributes within specified times at least 90% of its investment company
taxable income, it will be taxed only on that portion of such investment
company taxable income that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
gains on sale or other disposition of stock or securities held less than three
months; and (c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities which must be
limited, in respect of any one issuer, to an amount not greater than 5% of the
fund's assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies), or in two or more issuers which the fund
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income for the calendar year, (ii) 98% of
capital gains (both long-term and short-term) for the one-year period ending on
October 31 (as though the one-year period ending on October 31 were the
regulated investment company's taxable year), and (iii) the sum of any untaxed,
undistributed net investment income and net capital gains of the regulated
investment company for prior periods. The term "distributed amount" generally
means the sum of (i) amounts actually distributed by the fund from its current
year's ordinary income and capital gain net income and (ii) any amount on which
the fund pays income tax for the year. The fund intends to distribute net
investment income and net capital gains so as to minimize or avoid excise tax
liability.
The amount of any realized gain or loss on closing out a futures contract such
as a forward commitment for the purchase or sale of foreign currency will
generally result in a realized capital gain or loss for tax purposes. Futures
contracts held by the fund at the end of each fiscal year will be required to
be "marked to market" for federal income tax purposes, that is, deemed to have
been sold at market value. Sixty percent (60%) of any net gain or loss
recognized on these deemed sales and sixty percent (60%) of any net realized
gain or loss from any actual sales will be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Currency transactions that are not subject to Section 1256 of the Code may be
subject to Section 988 of the Code, in which case the 60%/40%
long-term/short-term capital gain or loss rule of Section 1256 would not apply.
Rather, each Section 988 foreign currency gain or loss would generally be
computed separately and treated as ordinary income or loss. The fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
If the fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies" (PFIC), the fund may be subject to U.S.
federal income tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a taxable
dividend by the fund to its shareholders. Additional charges in the nature of
interest may be imposed on either the fund or its shareholders in respect of
deferred taxes arising from such distributions or gains. If the fund were to
invest in a PFIC and elected to treat the PFIC as a "qualified electing fund"
under the Code, in lieu of the foregoing requirements, the fund might be
required to include in income each year a portion of the ordinary earnings and
net capital gains of the qualified electing fund, even if not distributed to
the fund, and such amounts would be subject to the 90% and calendar year
distribution requirements described above.
The fund also intends to continue distributing to shareholders all of the
excess of net long-term capital gain over net short-term capital loss on sales
of securities. If the net asset value of shares of the fund should, by reason
of a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes.
Dividends generally are taxable to shareholders at the time they are paid.
However, dividends declared in October, November and December and made payable
to shareholders of record in such a month are treated as paid and are thereby
taxable as of December 31, provided that the fund pays the dividend no later
than the end of January of the following year.
Corporate shareholders of the fund may be eligible for the
dividends-received deduction on the dividends (excluding the net capital gain
distributions) paid by the fund to the extent that the fund's income is derived
from dividends (which if received directly, would qualify for such deduction)
received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the fund shares
paying the dividends upon which the deduction is based for at least 46
days.
If a shareholder exchanges or otherwise disposes of shares of the fund within
90 days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
The fund may be required to pay withholding and other taxes imposed by foreign
countries generally at rates from 10% to 40% which would reduce the fund's
investment income. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. Not more than 50% of the total assets of the
fund are expected to consist of securities of foreign issuers. Therefore, the
fund will not be eligible to elect to "pass through" foreign tax credits to
shareholders and, to the extent the fund does pay foreign withholding or other
foreign taxes on investments in foreign securities, shareholders will not be
able to deduct their pro rata share of such taxes in computing their taxable
income and will not be able to take their share of such taxes as a credit
against their U.S. income taxes.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation or foreign
partnership (a foreign shareholder) will be subject to U.S. withholding tax (at
a rate of 30% or lower treaty rate). Withholding will not apply if a dividend
paid by the fund to a foreign shareholder is "effectively connected" with a
U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. Distributions of net long-term capital gains are not
subject to tax withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, such distributions ordinarily will be subject to
U.S. income tax at a rate of 30% if the individual is physically present in the
U.S. for more than 182 days during the taxable year.
As of the date of this statement of additional information, the maximum
federal individual stated tax rate applicable to ordinary income is 39.6%
(effective tax rates may be higher for some individuals due to phase out of
exemptions and elimination of deductions); the maximum individual tax rate
applicable to net capital gains is 28%; and the maximum corporate tax
applicable to ordinary income and net capital gains is 35%. However, to
eliminate the benefit of lower marginal corporate income tax rates,
corporations which have taxable income in excess of $100,000 for a taxable year
will be required to pay an additional amount of tax of up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of tax of up to $100,000.
Naturally, the amount of tax payable by a shareholder with respect to either
distributions from the fund or disposition of fund shares will be affected by a
combination of tax law rules covering, E.G., deductions, credits, deferrals,
exemptions, sources of income and other matters. Under the Code, an individual
is entitled to establish an IRA each year (prior to the tax return filing
deadline for the year) whereby earnings on investments are tax-deferred. In
addition, in some cases, the IRA contribution itself may be deductible.
The foregoing is limited to a summary of federal taxation and should not be
viewed as a comprehensive discussion of all provisions of the Code relevant to
investors. Dividends and capital gain distributions may also be subject to
state or local taxes. Investors are urged to consult their tax advisers with
specific reference to their own tax situations.
PURCHASE OF SHARES
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower
Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer who Mail directly to your investment
your is registered in the state dealer's address printed on your
investment where the purchase is made and account statement.
dealer who has a sales agreement with
American Funds Distributors.
By mail Make your check payable to the Fill out the account additions form
fund and mail to the address at the bottom of a recent account
indicated on the account statement, make your check payable to
application. Please indicate the fund, write your account number
an investment dealer on the on your check, and mail the check and
account application. form in the envelope
provided with your account statement.
By telephone Please contact your investment Complete the "Investments by Phone"
dealer to open account, then section on the account application or
follow the procedures for American FundsLink Authorization
additional investments. Form. Once you establish the
privilege, you, your financial
advisor or any person with your
account information can call American
FundsLineR and make investments by
telephone (subject to conditions
noted in "Telephone Purchases,
Redemptions and
Exchanges" below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "Initial Investment."
investment dealer on the
account. Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco, CA 94106
(ABA #121000248)
For credit to the account of:
American Funds Service
Company
a/c #4600-076178
(fund name)
(your fund acct. no.)
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER.
</TABLE>
INVESTMENT MINIMUMS AND FUND NUMBERS - Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLineR (see
description below):
<TABLE>
<CAPTION>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP FundR 02
$1,000
American Balanced FundR 11
500
American Mutual FundR 03
250
Capital Income BuilderR 12
1,000
Capital World Growth and Income Fund$ 33
1,000
EuroPacific Growth FundR 16
250
Fundamental Investors$ 10
250
The Growth Fund of AmericaR 05
1,000
The Income Fund of AmericaR 06
1,000
The Investment Company of AmericaR 04
250
The New Economy FundR 14
1,000
New Perspective FundR 07
250
SMALLCAP World FundR 35
1,000
Washington Mutual Investors Fund$ 01
250
BOND FUNDS
American High-Income Municipal Bond FundR 40
1,000
American High-Income Trust$ 21
1,000
The Bond Fund of America$ 08
1,000
Capital World Bond FundR 31
1,000
Intermediate Bond Fund of America$ 23
1,000
Limited Term Tax-Exempt Bond Fund of America$ 43
1,000
The Tax-Exempt Bond Fund of AmericaR 19
1,000
The Tax-Exempt Fund of CaliforniaR* 20
1,000
The Tax-Exempt Fund of MarylandR* 24
1,000
The Tax-Exempt Fund of VirginiaR* 25
1,000
U.S. Government Securities Fund$ 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of AmericaR 09
2,500
The Tax-Exempt Money Fund of America$ 39
2,500
The U.S. Treasury Money Fund of America$ 49
2,500
___________
*Available only in certain states.
</TABLE>
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs). Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below.
The money market funds of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
STOCK AND STOCK/BOND FUNDS
Less than $50,000
6.10% 5.75% 5.00%
$50,000 but less than $100,000
4.71 4.50 3.75
BOND FUNDS
Less than $25,000
4.99 4.75 4.00
$25,000 but less than $50,000
4.71 4.50 3.75
$50,000 but less than $100,000
4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000
3.63 3.50 2.75
$250,000 but less than $500,000
2.56 2.50 2.00
$500,000 but less than $1,000,000
2.04 2.00 1.60
$1,000,000 or more (see below)
none none </R
</TABLE>
Commissions of up to 1% will be paid to dealers who initiate and are
responsible for purchases of $1 million or more, for purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million. The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
American Funds Distributors, at its expense (from a designated percentage
of its income), will, during calendar year 1997, provide additional
compensation to dealers. Currently these payments are limited to the top one
hundred dealers who have sold shares of the fund or other funds in The American
Funds Group. These payments will be based on a pro rata share of a qualifying
dealer's sales. American Funds Distributors will, on an annual basis, determine
the advisability of continuing these payments.
Any employer-sponsored 403(b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at least
$1 million in shares of the fund (or in combination with shares of other funds
in The American Funds Group other than the money market funds) may purchase
shares at net asset value; however, a contingent deferred sales charge of 1% is
imposed on certain redemptions made within twelve months of the purchase. (See
"Redeeming Shares--Contingent Deferred Sales Charge.")
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services. These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
NET ASSET VALUE PURCHASES - The stock, stock/bond and bond funds may sell
shares at net asset value to: (1) current or retired directors, trustees,
officers and advisory board members of the funds managed by Capital Research
and Management Company, employees of Washington Management Corporation,
employees and partners of The Capital Group Companies, Inc. and its affiliated
companies, certain family members of the above persons, and trusts or plans
primarily for such persons; (2) current registered representatives, retired
registered representatives with respect to accounts established while active,
or full-time employees (and their spouses, parents, and children) of dealers
who have sales agreements with American Funds Distributors (or who clear
transactions through such dealers) and plans for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer; (4) trustees or other fiduciaries purchasing shares for
certain retirement plans of organizations with retirement plan assets of $100
million or more; (5) insurance company separate accounts; (6) accounts managed
by subsidiaries of The Capital Group Companies, Inc.; and (7) The Capital Group
Companies, Inc., its affiliated companies and Washington Management
Corporation. Shares are offered at net asset value to these persons and
organizations due to anticipated economies in sales effort and expense.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the Prospectus apply to purchases of $50,000 or more made within a
13-month period subject to the following statement of intention (the Statement)
terms. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder elects to utilize the Statement in order to qualify
for a reduced sales charge, shares equal to 5% of the dollar amount specified
in the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and any capital gain distributions on shares held in escrow will
be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If the difference is not paid within 45 days after written request by
the Principal Underwriter or the investment dealer, the appropriate number of
shares held in escrow will be redeemed to pay such difference. If the proceeds
from this redemption are inadequate, the purchaser will be liable to the
Principal Underwriter for the balance still outstanding. The Statement may be
revised upward at any time during the 13-month period, and such a revision will
be treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holding
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the statement. During the
statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans by
payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the statement of intention, a sales charge will be assessed
according to the sales charge breakpoint thus determined. There will be no
retroactive adjustments in sales charges on investments previously made during
the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. Purchases made for nominee or street name accounts
(securities held in the name of an investment dealer or another nominee such as
a bank trust department instead of the customer) may not be aggregated with
those made for other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer must be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter. Orders received by the investment dealer, the Transfer Agent, or
the fund after the time of the determination of the net asset value will be
entered at the next calculated offering price. Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily at the close of trading
(currently 4:00 p.m., New York time) each day the New York Stock Exchange is
open. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas Day. The net
asset value per share is determined as follows:
1. Stocks, convertible bonds and debentures, 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
sales was reported on that date, are stated at the last quoted bid price.
Non-convertible bonds and debentures, and other long-term debt securities
normally are valued at prices obtained for the day of valuation from a bond
pricing service when such prices are available; however, in circumstances where
the Investment Adviser deems it appropriate to do so, an over-the-counter or
exchange quotation may be used. U.S. Treasury bills, and other short-term
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, certificates of deposit issued by banks, corporate
short-term notes and other short-term investments with original or remaining
maturities in excess of 60 days are valued at the mean of representative quoted
bid and asked prices for such securities or, if such prices are not available,
for securities of comparable maturity, quality and type. Short-term securities
with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Other securities are valued on the basis of last
sale or bid prices in what is, in the opinion of the Investment Adviser, the
broadest and most representative market, which may be either a securities
exchange or the over-the-counter market. Where quotations are not readily
available, securities are valued at fair value as determined in good faith by
the Valuation Committee of the Board of Directors. The fair value of all other
assets is added to the value of securities to arrive at the fund's total
assets;
2. There are deducted from the total assets, thus determined, the liabilities,
including proper accruals of taxes and other expense items; and
3. The value of the net assets so obtained is then divided by the total number
of shares outstanding, and the result, rounded to the nearer cent, is the net
asset value per share.
Any purchase order may be rejected by the Principal Underwriter or the
fund. The Principal Underwriter will not knowingly sell shares of the fund
directly or indirectly to any person or entity, where, after the sale, such
person or entity would own beneficially directly or indirectly more than 4.5%
of the outstanding shares of the fund without the consent of a majority of the
fund's directors.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Funds Send a letter of instruction specifying the name
Service Company (at the of the fund, the number of shares or dollar
appropriate address indicated amount to be sold, your name and account number.
under "Principal Underwriter You should also enclose any share certificates
and Transfer Agent" in the you wish to redeem. For redemptions over
prospectus) $50,000 and for certain redemptions of $50,000
or less (see below), your signature must be
guaranteed by a bank, savings association,
credit union, or member firm of a domestic stock
exchange or the National Association of
Securities Dealers, Inc. that is an eligible
guarantor institution. You should verify with
the institution that it is an eligible guarantor
prior to signing. Additional documentation may
be required for redemption of shares held in
corporate, partnership or fiduciary accounts.
Notarization by a Notary Public is not an
acceptable signature guarantee.
By contacting your investment If you redeem shares through your investment
dealer dealer, you may be charged for this service.
SHARES HELD FOR YOU IN YOUR INVESTMENT
DEALER'S STREET NAME MUST BE REDEEMED THROUGH
THE DEALER.
You may have a redemption You may use this option, provided the account is
check sent to you by using registered in the name of an individual(s), a
American FundsLineR or by UGMA/UTMA custodian, or a non-retirement plan
telephoning, faxing, or trust. These redemptions may not exceed $10,000
telegraphing American Funds per day, per fund account and the check must be
Service Company (subject to made payable to the shareholder(s) of record and
the conditions noted in this be sent to the address of record provided the
section and in "Telephone address has been used with the account for at
Purchases, Redemptions and least 10 days. See "Principal Underwriter and
Exchanges" below) Transfer Agent" in the prospectus and "Exchange
Privilege" below for the appropriate telephone
or fax number.
In the case of the money Upon request (use the account application for
market funds, you may have the money market funds) you may establish
redemptions wired to your telephone redemption privileges (which
bank by telephoning American will enable you to have a redemption sent to
Funds Service Company your bank account) and/or check writing
($1,000 or more) or by privileges. If you request check writing
writing a check ($250 or privileges, you will be provided with checks
more) that you may use to draw against your account.
These checks may be made payable to anyone you
designate and must be signed by the authorized
number of registered shareholders exactly as
indicated on your checking account signature
card.
</TABLE>
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY REDEMPTION OF $50,000
OR LESS PROVIDED THE REDEMPTION CHECK IS MADE PAYABLE TO THE REGISTERED
SHAREHOLDER(S) AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE ADDRESS HAS
BEEN USED WITH THE ACCOUNT FOR AT LEAST 10 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase on
investments of $1 million or more and on any investment made with no initial
sales charge by any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested dividends
and capital gain distributions) or the total cost of such shares. Shares held
for the longest period are assumed to be redeemed first for purposes of
calculating this charge. The charge is waived for exchanges (except if shares
acquired by exchange were then redeemed within 12 months of the initial
purchase); for distributions from qualified retirement plans and other employee
benefit plans; for redemptions resulting from participant-directed switches
among investment options within a participant-directed employer-sponsored
retirement plan; for distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 591/2; for tax-free returns of excess
contributions to IRAs; for redemptions through certain automatic withdrawals
not exceeding 10% of the amount that would otherwise be subject to the charge;
and for redemptions in connection with loans made by qualified retirement
plans.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables
shareholders to make regular monthly or quarterly investments in shares through
automatic charges to their bank accounts. With shareholder authorization and
bank approval, the Transfer Agent will automatically charge the bank account
for the amount specified ($50 minimum), which will be automatically invested in
shares at the offering price on or about the dates you select. Bank accounts
will be charged on the day or a few days before investments are credited,
depending on the bank's capabilities, and shareholders will receive a
confirmation statement at least quarterly. Participation in the plan will
begin within 30 days after receipt of the account application. If the
shareholder's bank account cannot be charged due to insufficient funds, a
stop-payment order or the closing of the account, the plan may be terminated
and the related investment reversed. The shareholder may change the amount of
the investment or discontinue the plan at any time by writing to the Transfer
Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one
fund may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the paying fund) into any other fund in The
American Funds Group (the receiving fund) subject to the following conditions:
(I) the aggregate value of the shareholder's account(s) in the paying fund(s)
must equal or exceed $5,000 (this condition is waived if the value of the
account in the receiving fund equals or exceeds that fund's minimum initial
investment requirement), (ii) as long as the value of the account in the
receiving fund is below that fund's minimum initial investment requirement,
dividends and capital gain distributions paid by the receiving fund must be
automatically reinvested in the receiving fund, and (iii) if this privilege is
discontinued with respect to a particular receiving fund, the value of the
account in that fund must equal or exceed the fund's minimum initial investment
requirement or the fund shall have the right, if the shareholder fails to
increase the value of the account to such minimum within 90 days after being
notified of the deficiency, to automatically redeem the account and send the
proceeds to the shareholder. These cross-reinvestments of dividends and
capital gain distributions will be at net asset value (without sales charge).
EXCHANGE PRIVILEGE - You may exchange shares into other funds in The
American Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the money market funds are subject to
applicable sales charges on the fund being purchased, unless the money market
fund shares were acquired by an exchange from a fund having a sales charge, or
by reinvestment or cross-reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLineR (see "American FundsLineR" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent" in the
prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone Redemptions and Exchanges" below.) Shares held
in corporate-type retirement plans for which Capital Guardian Trust Company
serves as trustee may not be exchanged by telephone, fax or telegraph. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS
ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares (in amounts of
$50 or more) among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate. You must either meet the minimum initial investment requirement
for the receiving fund OR the originating fund's balance must be at least
$5,000 and the receiving fund's minimum must be met within one year.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments and dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service Company. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
AMERICAN FUNDSLINER - You may check your share balance, the price of your
shares, or your most recent account transaction, redeem shares (up to $10,000
per fund, per account each day), or exchange shares around the clock with
American FundsLineR. To use this service, call 800/325-3590 from a TouchTonet
telephone. Redemptions and exchanges through American FundsLineR are subject
to the conditions noted above and in "Redeeming Shares--Telephone Redemptions
and Exchanges" below. You will need your fund number (see the list of funds in
The American Funds Group under "Purchase of Shares--Investment Minimums and
Fund Numbers"), personal identification number (the last four digits of your
Social Security number or other tax identification number associated with your
account) and account number.
TELEPHONE REDEMPTIONS AND EXCHANGES - By using the telephone (including
American FundsLineR), fax or telegraph redemption and/or exchange options, you
agree to hold the fund, American Funds Service Company, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing American Funds Service Company (you may also
reinstate them at any time by writing American Funds Service Company). If
American Funds Service Company does not employ reasonable procedures to confirm
that the instructions received from any person with appropriate account
information are genuine, the fund may be liable for losses due to unauthorized
or fraudulent instructions. In the event that shareholders are unable to reach
the fund by telephone because of technical difficulties, market conditions, or
a natural disaster, redemption and exchange requests may be made in writing
only.
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund will not pay a mark-up for
research in principal transactions.
The fund is required to disclose information regarding investments in the
securities of broker-dealers which have certain relationships with the fund.
During the last fiscal year, American Express Credit Corp. was among the top 10
dealers that acted as principals in portfolio transactions. The fund held debt
securities of American Express Credit Corp. in the amount of $63,182,000 as of
the close of its most recent fiscal year.
Brokerage commissions paid on portfolio transactions during the fiscal
years ended August 31, 1996, 1995 and 1994, amounted to $5,390,000, $3,385,000,
and $2,290,000, respectively.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including
proceeds from the sale of shares of the fund and of securities in the fund's
portfolio, are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, NY 10081, as Custodian.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary
of the Investment Adviser, maintains the record of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $8,079,000 for the fiscal year ended August 31, 1996.
INDEPENDENT AUDITORS - Deloitte & Touche LLP located at 1000 Wilshire
Boulevard, Los Angeles, CA 90017, serves as the fund's independent auditors
providing audit services, preparation of tax returns and review of certain
documents of the fund to be filed with the Securities and Exchange Commission.
The financial statements incorporated in this Statement of Additional
Information have been so included in reliance on the report of Deloitte &
Touche LLP given on the authority of said firm as experts in accounting and
auditing.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on August 31.
Shareholders are provided at least semi-annually with reports showing the
investment portfolio, financial statements and other information. The annual
financial statements are audited by the fund's independent auditors, Deloitte &
Touche LLP, whose selection is determined annually by the Board of
Directors.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
DETERMINATION OF NET ASSET VALUE,
REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE--AUGUST 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $ 30.77
Maximum offering price per share
(100/94.25 of net asset value per share
which takes into account the fund's current
maximum sales charge) $ 32.65
</TABLE>
REMOVAL OF DIRECTORS BY SHAREHOLDERS - At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of
removed directors. The fund has made an undertaking, at the request of the
staff of the Securities and Exchange Commission, to apply the provisions of
section 16(c) of the 1940 Act with respect to the removal of directors as
though the fund were a common-law trust. Accordingly, the directors of the
fund shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
INVESTMENT RESULTS
The fund's yield is 0.69% based on a 30-day (or one month) period ended
August 31, 1996, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)/6/-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund's average annual total return for the one, five and ten-year
periods ended on August 31, 1996 were -4.91%, +10.59% and +12.36%,
respectively. The average annual total return (T) is computed by using the
value at the end of the period (ERV) of a hypothetical initial investment of
$1,000 (P) over a period of years (n) according to the following formula as
required by the Securities and Exchange Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased. Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors. The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value. The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return. The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period. Total return may be calculated for one year, five years,
ten years and for other periods of years. The average annual total return over
periods greater than one year also may be computed by utilizing ending values
as determined above.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by dividing the dividends
paid by the fund over the last 12 months by the sum of the month-end net asset
value or maximum offering price and the capital gains paid over the last 12
months. The distribution rate may differ from the yield.
The fund may include information on its investment results and/or comparisons
of its investment results to various unmanaged indices (such as The Dow Jones
Average of 30 Industrial Stocks and The Standard & Poor's 500 Stock Composite
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may refer to results compiled by organizations such as CDA Investment
Technologies, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc. and Wiesenberger Investment Companies Services and by the U.S. Department
of Commerce. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
The fund may, from time to time, illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
The fund may, from time to time, compare its investment results with the
Consumer Price Index, which is a measure of the average change in prices over
time in a fixed market basket of goods and services (E.G. food, clothing, and
fuels, transportation, and other goods and services that people buy for
day-to-day living).
GFA vs. Various Unmanaged Indices
<TABLE>
<CAPTION>
10-Year Average
Periods Savings
9/1 - 8/31 GFA DJIA/1/ S&P 500/2/ Account/3/
<S> <C> <C> <C> <C>
1986 - 1996
+221% +309% +251% + 69%
1985 - 1995
+309 +386 +311 + 74
1984 - 1994
+270 +359 +300 + 83
1983 - 1993
+251 +340 +303 + 94
1982 - 1992
+312 +441 +405 +106
1981 - 1991
+328 +435 +382 +117
1980 - 1990
+269 +344 +300 +124
1979 - 1989
+445 +400 +398 +125
1978 - 1988
+358 +283 +299 +125
1977 - 1987
+735 +422 +447 +125
1976 - 1986
+600 +234 +299 +124
1975 - 1985
+521 +173 +253 +121
1974 - 1984
+579 +211 +277 +116
1973#- 1983
+464 +151 +175 +106
</TABLE>
_________________
# From December 1, 1973
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
/2/ The Standard & Poor's 500 Stock Composite Index is comprised of industrial,
transportation, public utilities and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange. Selected
issues traded on the American Stock Exchange are also included.
/3/ Based on figures supplied by the U.S. League of Savings Institutions and
the Federal Reserve Board which reflect all kinds of savings deposits,
including longer-term certificates. Savings accounts offer a guaranteed return
of principal, but no opportunity for capital growth. During a portion of the
period, the maximum rates paid on some savings deposits were fixed by law.
<TABLE>
<CAPTION>
If you are considering GFA for an
Individual Retirement Account. . .
Here's how much you would have if you had invested $2,000 a year on September 1
of each year in GFA over the past 3, 5 and 10 years:
<S> <C> <C>
3 years 5 years 10 years
(9/1/93-8/31/96) (9/1/91-8/31/96) (9/1/86-8/31/96)
$6,820 $13,284 $38,142
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
<S> <C> <C>
. . . and had taken
all dividends and
capital gain
distributions
in shares, your
If you had investment would
invested $10,000 have been worth
in GFA this many this much at
years ago . . . 8/31/96
| |
Number Periods
of Years 9/1 - 8/31 Value
1 1995 - 1996 $9,509
2 1994 - 1996 11,938
3 1993 - 1996 12,653
4 1992 - 1996 15,776
5 1991 - 1996 16,545
6 1990 - 1996 21,606
7 1989 - 1996 19,490
8 1988 - 1996 27,167
9 1987 - 1996 24,254
10 1986 - 1996 32,067
11 1985 - 1996 41,270
12 1984 - 1996 46,858
13 1983 - 1996 47,187
14 1982 - 1996 68,962
15 1981 - 1996 75,220
16 1980 - 1996 84,478
17 1979 - 1996 112,797
18 1978 - 1996 132,137
19 1977 - 1996 214,943
20 1976 - 1996 238,316
21 1975 - 1996 271,973
22 1974 - 1996 337,525
23 1973#- 1996 282,323
</TABLE>
__________________
#From December 1, 1973
Illustration of a $10,000 investment in GFA with
dividends reinvested and capital gain distributions taken in shares
(for the period December 1, 1973 through August 31, 1996)
<TABLE>
<CAPTION>
COST OF SHARES
VALUE OF SHARES
Year Annual Dividends Total From Initial From From Total
Ended Dividends (cumulative) Investment Investment Capital Gains Dividends Value
August 31 Cost Reinvested Reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1974# - - $10,000 $ 7,874 - - $ 7,874
1975 $ 362 $ 362 10,362 9,322 - $ 470 9,792
1976 283 645 10,645 10,327 - 838 11,165
1977 - 645 10,645 11,449 - 928 12,377
1978 254 899 10,899 18,364 - 1,772 20,136
1979 - 899 10,899 21,519 - 2,076 23,595
1980 307 1,206 11,206 28,318 - 3,178 31,496
1981 546 1,752 11,752 31,304 - 4,079 35,383
1982 1,673 3,425 13,425 32,507 - 6,088 38,595
1983 2,290 5,715 15,715 44,886 - 11,496 56,382
1984 1,643 7,358 17,358 43,120 $ 1,064 12,621 56,805
1985 1,249 8,607 18,607 47,370 1,744 15,379 64,493
1986 979 9,586 19,586 56,066 7,355 19,541 82,962
1987 1,354 10,940 20,940 69,339 14,360 26,031 109,730
1988 1,502 12,442 22,442 56,949 18,289 22,724 97,962
1989 1,743 14,185 24,185 75,387 28,688 32,432 136,507
1990 3,611 17,796 27,796 60,251 33,708 29,225 123,184
1991 3,208 21,004 31,004 73,295 47,920 39,600 160,815
1992 2,510 23,514 33,514 72,052 55,106 41,545 168,703
1993 1,454 24,968 34,968 88,758 68,670 52,840 210,268
1994 929 25,897 35,897 90,294 77,818 54,740 222,852
1995 1,372 27,269 37,269 108,176 104,252 67,383 279,811
1996 2,452 29,721 39,721 100,592 116,565 65,166 282,323
</TABLE>
The dollar amount of capital gain distributions during the period was $79,079.
#From December 1, 1973
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages nine common stock funds that are at least 10 years old. In the rolling
10-year periods since January 1, 1966 (121 in all), those funds have had better
total returns than the Standard & Poor's 500 Composite Stock Index in 94 of the
121 periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
DESCRIPTION OF BOND RATINGS
Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. rates the long-term debt securities issued by
various entities from "Aaa" to "C" according to quality.
"AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as 'gilt edge.' Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
"AA -- High quality by all standards. They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
"BAA -- Medium grade obligations. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
"BA -- Have speculative elements; future cannot be considered as well assured.
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Bonds in this class are characterized by uncertainty of position."
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or there may be present
elements of danger with respect to principal or interest."
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
"AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong."
"AA -- High grade. Very strong capacity to pay interest and repay principal.
Generally, these bonds differ from AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
"C1 -- Reserved for income bonds on which no interest is being paid."
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
Subsequent to its purchase by the fund, the rating of an issue of bonds may be
changed from the rating required for its purchase, or in the case of an unrated
issue of bonds, its credit quality may become equivalent to an issue of bonds
ineligible for purchase by the fund. Neither event requires the elimination of
such an obligation from the fund's portfolio, but Capital Research and
Management Company (the Investment Adviser) will consider such an event in
determining whether the fund should continue to hold such an obligation in its
portfolio.
<PAGE>
<TABLE>
<S> <C> <C> <C>
THE GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO, August 31, 1996
Percent
of Net
Assets
----------
Largest Industry Holdings
- -----------------------------
Broadcasting & Publishing 12.60%
Electronic Components 12.26%
Business & Public Services 9.86%
Data Processing & Reproduction 9.23%
Leisure & Tourism 5.39%
Other Industries 34.33%
Cash & Equivalents 16.33%
Largest Individual Holdings
- -------------------------------------
Federal National Mortgage Assn. 3.10%
Intel 2.84
Walt Disney 2.68
Philip Morris 2.50
Time Warner 2.10
News Corp. 1.91
Viacom 1.85
Columbia/HCA Healthcare 1.56
America Online 1.46
Tele-Communications, TCI Group 1.41
THE GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO, August 31, 1996
Market Percent
EQUITY-TYPE SECURITIES Value of Net
(Common & Preferred Stocks) Shares (000) Assets
- ------------------------------------- ----------- -------- ----------
Broadcasting & Publishing- 12.60%
Time Warner Inc. 5,352,000 $178,623 2.10%
News Corp. Ltd. (American Depositary
Receipts) (Australia) 5,400,000 114,750
News Corp. Ltd., preferred
(American Depositary Receipts) 2,675,000 47,481 1.91
Viacom Inc., Class B/1/ 5,000,000 157,500 1.85
Tele-Communications, Inc., Series A, TCI Group/1/ 8,039,300 119,585 1.41
Comcast Corp., Class A special stock 4,210,000 67,886
Comcast Corp., Class A 1,680,000 26,670 1.11
Turner Broadcasting System, Inc., Class B 3,625,000 89,719 1.05
Tele-Communications, Inc., Series A, Liberty Media Group/1/ 3,062,325 80,769 .95
E.W. Scripps Co., Class A 1,700,000 75,650 .89
Chris-Craft Industries, Inc./1/ 1,019,500 41,290 .49
US WEST Media Group/1/ 1,400,000 25,375 .30
New World Communications Group Inc., Class A/1/ 665,000 15,337 .18
LIN Television Corp./1/ 253,000 9,045 .11
Century Communications Corp., Class A/1/ 1,002,550 7,895 .09
Marvel Entertainment Group, Inc./1/ 877,800 7,571 .09
BHC Communications, Inc., Class A/1/ 62,840 5,844 .07
Electronic Components- 12.26%
Intel Corp. 3,029,000 241,752 2.84
National Semiconductor Corp./1/ 6,300,530 115,772 1.36
LSI Logic Corp./1/ 4,325,000 94,609 1.11
Texas Instruments Inc. 1,710,000 79,943 .94
Xilinx, Inc./1/ 1,700,000 59,500 .70
Seagate Technology/1/ 1,200,000 57,600 .68
Adaptec, Inc./1/ 1,018,000 50,773 .60
Linear Technology Corp. 1,365,100 46,413 .55
Advanced Micro Devices,Inc./1/ 3,178,600 40,527 .48
ADC Telecommunications, Inc./1/ 678,000 38,477 .45
Altera Corp./1/ 800,000 35,200 .41
Bay Networks, Inc./1/ 1,275,000 35,063 .41
Quantum Corp./1/ 2,219,400 34,123 .40
Newbridge Networks Corp. (Canada)/1/ 550,000 31,694 .37
Analog Devices, Inc./1/ 1,125,000 27,141 .32
AMP Inc. 400,000 15,300 .18
Tellabs, Inc./1/ 235,000 14,893 .18
EMC Corp./1/ 600,000 11,550 .14
Western Digital Corp./1/ 234,500 8,237 .10
Maxim Integrated Products/1/ 100,000 3,069 .04
Business & Public Services- 9.86%
Columbia/HCA Healthcare Corp. 2,352,500 132,622 1.56
America Online, Inc./1/ 4,100,400 124,037 1.46
United HealthCare Corp. 2,600,000 100,425 1.18
ADT Ltd./1/ 3,970,000 77,911 .92
Electronic Data Systems Holding Corp.
(formerly General Motors Corp., Class E) 1,303,300 71,030 .83
Federal Express Corp./1/ 930,000 69,634 .82
Manpower Inc. 1,835,700 65,397 .77
CUC International Inc./1/ 1,475,000 50,703 .59
Pitney Bowes Inc. 600,000 28,950 .34
USA Waste Services, Inc./1/ 1,050,000 28,875 .34
Vencor, Inc./1/ 561,000 17,601 .21
WMX Technologies, Inc. 500,000 15,813 .19
Apria Healthcare Group Inc./1/ 600,000 15,150 .18
Value Health, Inc./1/ 570,000 9,049 .11
Dun & Bradstreet Corp. 140,000 8,068 .09
PacifiCare Health Systems, Inc., Class B/1/ 100,000 8,050 .09
Ecolab Inc. 250,000 7,594 .09
Oxford Health Plans, Inc./1/ 159,600 7,302 .09
Data Processing & Reproduction- 9.23%
Oracle Corp./1/ 3,196,450 112,675 1.32
Silicon Graphics, Inc./1/ 3,940,000 91,605 1.07
Digital Equipment Corp./1/ 2,200,000 84,975 1.00
Solectron Corp./1/ 1,836,600 68,643 .81
Dell Computer Corp./1/ 1,000,000 67,125 .79
Informix Corp./1/ 2,271,900 51,118 .60
Adobe Systems Inc. 1,445,000 50,394 .59
International Business Machines Corp. 400,000 45,750 .54
Hewlett-Packard Co. 800,000 35,000 .40
Sybase, Inc./1/ 1,675,000 26,983 .32
Electronic Arts/1/ 814,000 25,132 .30
Compaq Computer Corp./1/ 400,000 22,650 .27
Cisco Systems, Inc./1/ 400,000 21,100 .25
Autodesk, Inc. 750,000 17,250 .20
Tandem Computers Inc./1/ 1,540,000 16,170 .19
Acclaim Entertainment, Inc./1/ 1,325,000 10,766 .13
3Com Corp./1/ 200,000 9,350 .11
Compuware Corp./1/ 200,000 8,600 .10
Apple Computer, Inc. 300,000 7,275 .09
Mentor Graphics Corp./1/ 515,000 7,049 .08
Compuserve Corp./1/ 500,000 6,063 .07
Leisure & Tourism- 5.39%
Walt Disney Co. 4,002,466 228,141 2.68
MGM Grand, Inc./1/ 1,840,000 69,460 .82
Harrah's Entertainment, Inc./1/ 2,560,000 48,640 .57
King World Productions, Inc./1/ 1,350,000 47,588 .56
Promus Hotel Corp./1/ 735,800 22,166 .26
Carnival Corp., Class A 725,000 20,481 .24
Mirage Resorts, Inc./1/ 600,000 13,950 .16
Marriot International, Inc. 150,000 8,231 .10
Financial Services- 4.32%
Federal National Mortgage Assn. 8,500,000 263,500 3.10
Capital One Financial Corp. 1,738,000 52,357 .62
Student Loan Marketing Assn. 450,000 33,131 .39
Federal Home Loan Mortgage Corp. 212,600 18,789 .21
Telecommunications- 3.50%
AirTouch Communications/1/ 2,650,000 72,875
AirTouch Communications, Class B convertible preferred 241,669 6,948
6.00% Series 1996/1/
AirTouch Communications, Class C convertible preferred
4.25% Series 1996/1/ 155,205 7,392 1.02
MCI Communications Corp. 3,375,000 84,797 1.00
Vodafone Group PLC (American Depositary Receipts)
(United Kingdom) 1,220,000 46,208 .54
MFS Communications Co., Inc./1/ 950,000 40,256 .47
AT&T Corp. 500,000 26,250 .31
Telefonos de Mexico, SA de CV, Class L (American
Depositary Receipts) (Mexico) 412,000 13,545 .16
Beverages & Tobacco- 2.64%
Philip Morris Companies Inc. 2,375,000 213,156 2.50
PepsiCo, Inc. 400,000 11,500 .14
Health & Personal Care- 2.60%
Nellcor Puritan Bennett Inc./1/ 1,700,000 43,775 .51
Forest Laboratories, Inc./1/ 1,000,000 41,125 .48
NeXstar Pharmaceuticals, Inc./1/ 1,000,000 22,000 .26
Genetics Institute, Inc./1/ 333,000 20,646 .24
Pfizer Inc. 200,000 14,200 .17
MedImmune, Inc./1/ 1,000,100 14,001 .16
Kimberly-Clark Corp 175,000 13,716 .16
Alza Corp./1/ 500,000 13,688 .16
Guidant Corp. 240,000 12,180 .14
Pharmacia & Upjohn, Inc. 290,000 12,180 .14
Omnicare, Inc. 360,000 8,820 .10
Gensia Pharmaceuticals, Inc./1/ 1,332,202 6,744 .08
Merchandising- 2.33%
Wal-Mart Stores, Inc. 1,750,000 46,375 .54
Limited Inc. 2,100,000 38,850 .46
Circuit City Stores, Inc. 1,200,000 37,800 .44
Home Shopping Network, Inc./1/ 2,656,100 28,553 .34
Sports Authority, Inc./1/ 562,500 13,430 .16
Intimate Brands, Inc., Class A 600,000 12,000 .14
Cardinal Health, Inc., Class A 150,000 11,006 .13
Toys 'R' Us, Inc./1/ 350,000 10,325 .12
Transportation: Airlines- 2.03%
AMR Corp./1/ 860,000 70,520 .83
Southwest Airlines Co. 2,856,450 65,341 .77
Delta Air Lines, Inc. 515,000 36,501 .43
Banking- 1.50%
Citicorp 800,000 66,600 .78
PNC Bank Corp. 600,000 18,750 .22
BankAmerica Corp. 220,000 17,050 .20
First Security Corp. 543,750 14,817 .17
Commerce Bancshares, Inc. 303,187 11,066 .13
Recreation & Consumer Products- 1.49%
Mattel, Inc. 4,296,875 113,330 1.33
Hasbro, Inc. 265,000 9,739 .11
Duracell International Inc. 100,000 4,513 .05
Insurance- 1.42%
EXEL Ltd. (Incorporated in Bermuda) 2,480,000 83,080 .98
CNA Financial Corp./1/ 159,800 16,060 .19
NAC Re Corp. 350,000 13,213 .16
Everest Reinsurance Holdings, Inc.
(formerly Prudential Reinsurance Holdings Ltd.) 350,000 8,531 .09
Machinery & Engineering- 1.41%
Thermo Electron Corp./1/ 2,175,000 86,184 1.01
Caterpillar Inc. 500,000 34,438 .40
Energy Equipment- 1.34%
Schlumberger Ltd. (Netherlands Antilles) 541,000 45,647 .54
Sonat Offshore Drilling Inc. 600,000 32,775 .39
Transocean Drilling AS (Norway)/1/ 809,000 21,511 .25
Dresser Industries, Inc. 500,000 14,500 .16
Electrical & Electronic Instruments- 1.25%
General Instrument Corp./1/ 1,384,000 37,887 .45
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 1,412,500 32,576 .38
Nokia Corp., Class A
(American Depositary Receipts) (Finland) 750,000 31,688 .37
Lucent Technologies Inc. 120,000 4,425 .05
Chemicals- 1.16%
A. Schulman, Inc. 1,522,500 33,114 .39
Great Lakes Chemical Corp. 470,000 27,025 .32
H.B. Fuller Co. 550,000 19,456 .23
Air Products and Chemicals, Inc. 225,000 12,319 .14
Loctite Corp. 150,000 6,581 .08
Utilities: Electric & Gas- 0.98%
Columbia Gas System, Inc. 756,400 42,547 .50
K N Energy, Inc. 800,000 27,499 .32
PanEnergy Corp. 400,000 13,249 .16
Multi-Industry- 0.45%
U.S. Industries, Inc./1/ 1,475,000 37,980 .45
Miscellaneous Materials & Commodities- 0.36%
Potash Corp. of Saskatchetwan Inc. (Canada) 400,000 30,399 .36
Electronic Instruments- 0.31%
Applied Materials, Inc./1/ 1,100,000 26,674 .31
Transportation: Rail- 0.14%
Conrail, Inc. 180,000 12,262 .14
Energy Sources- 0.07%
NGC Corp. 400,000 6,049 .07
Transportation: Shipping- 0.04%
Overseas Shipholding Group, Inc. 200,000 3,749 .04
Other equity-type securities in initial period of 424,520 4.99
acquisition ---------------------
TOTAL EQUITY-TYPE SECURITIES (cost: $5,208,254,000) 7,121,450 83.67
---------------------
Principal
Amount
SHORT-TERM SECURITIES (000)
- ------------------------------------- --------
Corporate Short-Term Notes- 14.82%
Raytheon Co. 5.25%-5.27% due 9/5-10/15/96 $146,500 145,852 1.71
International Lease Finance Corp. 5.27%-5.31% due 9/3-11/19/96 90,971 90,331 1.06
J.C. Penney Funding Corp. 5.27%-5.40% due 9/12-11/8/96 89,500 88,891 1.04
Hewlett-Packard Co. 5.27%-5.42% due 9/23-11/13/96 81,400 80,836 .95
Gannett Co. Inc. 5.47%-5.48% due 10/8-10/18/96 /2/ 75,000 74,504 .88
National Rural Utilities Cooperative Finance Corp.
5.26%-5.39% due 9/25-10/30/96 72,000 71,526 .84
Safeco Credit Co. Inc. 5.27%-5.39% due 9/23-11/18/96 65,500 65,014 .76
American Express Credit Corp. 5.29%-5.33% due 9/16-10/29/96 63,600 63,182 .74
Xerox Corp. 5.28%-5.40% due 9/6-11/4/96 60,700 60,428 .71
Eli Lilly and Co. 5.27%-5.43% due 9/16-10/21/96 59,800 59,469 .70
Monsanto Co. 5.28%-5.40% due 9/18-10/16/96 /2/ 58,800 58,546 .69
Walt Disney Co. 5.23%-5.32% due 9/4-11/4/96 56,300 55,920 .66
H. J. Heinz Co. 5.27%-5.30% due 9/5-10/10/96 56,006 55,804 .66
A.I. Credit Corp. 5.27%-5.43% due 9/6-10/7/96 49,600 49,523 .58
Weyerhaeuser Co. 5.27%-5.30% due 10/2-10/21/96 45,300 45,018 .53
CIT Group Holdings, Inc. 5.35% due 9/19/96 39,800 39,688 .47
Kimberly-Clark Corp. 5.27%-5.34% due 9/18-10/29/96 36,500 36,308 .43
Pitney Bowes Credit Corp. 5.26%-5.44% due 10/15-11/12/96 27,300 27,073 .32
IBM Credit Corp. 5.29% due 10/24/96 25,300 25,099 .29
Yale University 5.33%-5.35% due 9/4-11/25/96 25,000 24,804 .29
Ford Motor Credit Co. 5.44% due 10/4/96 22,700 22,576 .27
Procter & Gamble Co. 5.27% due 11/14/96 20,800 20,569 .24
---------------------
1,260,961 14.82
---------------------
Federal Agency Short-Term Obligations- 1.52%
Federal National Mortgage Assn. 5.265%-5.35%
due 9/17-11/26/96 77,900 77,382 .91
Federal Home Loan Bank 5.24%-5.35%
due 10/22-11/20/96 52,160 51,716 .61
---------------------
129,098 1.52
---------------------
TOTAL SHORT-TERM SECURITIES (cost: $1,390,077,000) 1,390,059 16.34
---------------------
TOTAL INVESTMENT SECURITIES (cost: $6,598,331,000) 8,511,509 100.01
---------------------
Excess of payables over cash and receivables 797 .01
---------------------
NET ASSETS $8,510,712 100.00%
========== =======
/1/Non-income-producing securities
/2/Purchased in a private placement transaction; resale to the public may require
registration or sale only to qualified institutional buyers.
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.
- -----------------------------
Equity-type securities
appearing in the portfolio
since February 29, 1996
- -----------------------------
Adaptec
Altera
Alza
Applied Materials
Cardinal Health
Circuit City Stores
Columbia Gas System
Compuserve
Dresser Industries
EMC
General Instrument
Genetics Institute
Informix
Intimate Brands
King World Productions
K N Energy
Limited
Linear Technology
Lucent Technologies
Maxim Integrated Products
MFS Communications
NeXstar Pharmaceuticals
NGC
Omnicare
PacifiCare Health System
PanEnergy
Sports Authority
3Com
US West Media Group
Vencor
Western Digital
Xilinx
- -------------------------------
Equity-type securities
eliminated from the portfolio
since February 29, 1996
- -------------------------------
AMBAC
Bausch & Lomb
Cellular Communications
Cellular Communications of Puerto Rico
Circus Circus Enterprises
Coram Healthcare
Cyrix
FHP International
Fruit of the Loom
Grand Casinos
Litton Industries
Mercury General
Michaels Stores
Nintendo
Noble Affiliates
Northern Trust
Olsten
Perrigo
Progressive
Pyxis
Rayonier
Southern Pacific Rail
Telephone and Data Systems
Tenneco
TIG Holdings
U.S. Healthcare
WMS Industries
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
The Growth Fund of America
Financial Statements
- ---------------------------------------------- --------------------------------
Statement of Assets and Liabilities (dollars in
at August 31, 1996 thousands)
- ---------------------------------------------- --------------------------------
Assets:
Investment securities at market
(cost: $6,598,331) $8,511,509
Cash 314
Receivables for-
Sales of investments $15,005
Sales of fund's shares 12,007
Dividends and accrued interest 2,486 29,498
--------------------------------
8,541,321
Liabilities:
Payables for-
Purchases of investments 16,212
Repurchases of fund's shares 7,824
Management services 2,672
Accrued expenses 3,901 30,609
--------------------------------
Net Assets at August 31, 1996-
Equivalent to $30.77 per share on
276,596,692 shares of $0.10 par value
capital stock outstanding (authorized
capital stock--400,000,000 shares) $8,510,712
================
- ---------------------------------------------- --------------------------------
Statement of Operations (dollars in
for the year ended August 31, 1996 thousands)
- ---------------------------------------------- --------------------------------
Investment Income:
Income:
Dividends $ 47,741
Interest 81,413 $ 129,154
----------------
Expenses:
Management services fee 30,625
Distribution expenses 19,612
Transfer agent fee 8,079
Reports to shareholders 633
Registration statement and prospectus 785
Postage, stationery and supplies 1,123
Directors' fees 131
Auditing and legal fees 53
Custodian fee 215
Taxes other than federal income tax 2
Other expenses 94 61,352
--------------------------------
Net investment income 67,802
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 583,665
Net change in unrealized appreciation:
Beginning of year 2,516,141
End of year 1,913,178 (602,963)
--------------------------------
Net realized gain and unrealized depreciation
on investments (19,298)
----------------
Net Increase in Net Assets Resulting
from Operations $ 48,504
================
- ---------------------------------------------- --------------------------------
Statement of Changes in Net Assets Year ended August 31
(dollars in thousands) 1996 1995
- ---------------------------------------------- --------------------------------
Operations:
Net investment income $ 67,802 $ 54,090
Net realized gain on investments 583,665 353,525
Net unrealized appreciation (depreciation)
on investments (602,963) 1,054,869
--------------------------------
Net increase in net assets
resulting from operations 48,504 1,462,484
--------------------------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (68,664) (33,653)
Distributions from net realized gain on
investments (537,427) (205,865)
--------------------------------
Total dividends and distributions (606,091) (239,518)
--------------------------------
Capital Share Transactions:
Proceeds from shares sold: 88,063,294
and 69,486,188 shares, respectively 2,814,262 1,994,344
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 19,284,224 and 9,099,784 shares,
respectively 580,427 229,196
Cost of shares repurchased: 58,145,510
and 47,721,869 shares, respectively (1,851,280) (1,349,094)
--------------------------------
Net increase in net assets resulting from
capital share transactions 1,543,409 874,446
--------------------------------
Total Increase in Net Assets 985,822 2,097,412
Net Assets:
Beginning of year 7,524,890 5,427,478
--------------------------------
End of year (including undistributed
net investment income: $38,609
and $39,471, respectively) $ 8,510,712 $7,524,890
================================
See Notes to Financial Statements
</TABLE>
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 fund invests in a wide range of companies that appear
to offer superior opportunities for growth of capital. 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 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. The fund does not amortize premiums on securities purchased.
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 effects of
changes in foreign currency exchange rates on investment securities are
included with the net realized and unrealized gain or loss on investment
securities.
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 $215,000 includes $159,000 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, 1996, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $1,913,178,000 of which
$2,237,863,000 related to appreciated securities and $324,685,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended August 31, 1996. The cost
of portfolio securities for book and federal income tax purposes was
$6,598,331,000 at August 31, 1996.
3. The fee of $30,625,000 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, 1996,
distribution expenses under the Plan were $19,612,000. As of August 31, 1996,
accrued and unpaid distribution expenses were $3,663,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $8,079,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $7,465,000 (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, 1996, aggregate amounts deferred and earnings thereon were
$202,000.
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, 1996, accumulated undistributed net realized gain on
investments was $372,226,000 and additional paid-in capital was $6,159,043,000.
The fund made purchases and sales of investment securities excluding
short-term securities, of $2,890,045,000 and $1,901,258,000 respectively,
during the year ended August 31, 1996.
Net realized currency losses on dividends were $4,000 for the year ended
August 31, 1996.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share Data and Ratios
Year ended August 31
1996 1995 1994 1993 1992
------- ------- ------- --------- -------
Net Asset Value, Beginning of Year $33.09 $27.62 $27.15 $22.04 $22.42
------- ------- ------- --------- -------
Income from Investment Operations:
Net investment income .26 .25 .13 .13 .23
Net realized and unrealized gain (loss)
on investments (.02) 6.43 1.43 5.26 .81
------- ------- ------- --------- -------
Total income from
investment operations .24 6.68 1.56 5.39 1.04
------- ------- ------- --------- -------
Less Distributions:
Dividends from net investment income (.29) (.17) (.12) (.19) (.35)
Distributions from net realized gains (2.27) (1.04) (.97) (.09) (1.07)
------- ------- ------- --------- -------
Total distributions (2.56) (1.21) (1.09) (.28) (1.42)
------- ------- ------- --------- -------
Net Asset Value, End of Year $30.77 $33.09 $27.62 $27.15 $22.04
======= ======= ======= ========= ========
Total Return/1/ .90% 25.56% 5.98% 24.64% 4.91%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $8,511 $7,525 $5,427 $5,018 $3,700
Ratio of expenses to average net
assets .74% .75% .78% .77% .79%
Ratio of net income to average net
assets .82% .90% .49% .56% 1.11%
Average commissions paid/2/ 5.62 cent5.94 cent6.05 cent6.82 cents6.94 cents
Portfolio turnover rate 27.95% 26.90% 24.77% 25.23% 10.64%
/1/Calculated without
deducting a sales charge. The
maximum sales charge is 5.75% of
the fund's offering price.
/2/Brokerage commissions paid on
portfolio transactions increase
the cost of securities purchased
or reduce the proceeds of securities
sold, and are not reflected in the
fund's statement of operations.
Shares traded on a principal basis, such as most
over-the-counter and fixed-income transactions,
are excluded.
</TABLE>
<PAGE>
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 31,1996,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, 1996 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, 1996, 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.
[signature: Deloitte & Touche LLP]
Los Angeles, California
September 27, 1996
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Selected Per-Share Data and Ratios
Independent Auditors' Report
(b) Exhibits.
1. On file (see SEC file nos. 811-862 and 2-14728)
2. On file (see SEC file nos. 811-862 and 2-14728)
3. None
4. On file (see SEC file nos. 811-862 and 2-14728)
5. On file (see SEC file nos. 811-862 and 2-14728)
6. On file (see SEC file nos. 811-862 and 2-14728)
7. None
8. On file (see SEC file nos. 811-862 and 2-14728)
9. On file (see SEC file nos. 811-862 and 2-14728)
10. Not applicable to this filing
11. Consent of Independent Auditors
12. None
13. None
14. On file (see SEC file nos. 811-862 and 2-14728)
15. On file (see SEC file nos. 811-862 and 2-14728)
16. On file (see SEC file nos. 811-862 and 2-14728)
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of November 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Title of Class Number of Record-Holders
Common Stock 538,818
($0.10 Par Value)
</TABLE>
Item 27. Indemnification.
Registrant is a joint-insured under Investment Advisor/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company, and ICI Mutual which insures its
officers and directors against certain liabilities.
The Articles of Incorporation state:
The Corporation shall indemnify (a) its directors to the full extent provided
by the general laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures provided by such laws;
(b) its officers to the same extent it shall indemnify its directors; and (c)
its officers who are not directors to such further extent as shall be
authorized by the Board of Directors and be consistent with law. The foregoing
shall not limit the authority of the Corporation to indemnify other employees
and agents consistent with law.
The By-Laws of the Corporation state:
Section 5.01. Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, may be indemnified by the Corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding in the manner and on the terms provided by, and to the fullest
extent authorized by, applicable state law, and shall be indemnified by the
Corporation against such expenses, judgments, fines, and amounts in the manner
and to the fullest extent required by applicable state law. However, no
indemnification may be made under this section in the absence of a judicial or
administrative determination absolving the prospective indemnitee of liability
to the Corporation or its security holders unless, based upon a review of all
material facts, (1) a majority of a quorum of directors who are neither
interested persons of the Corporation nor parties to the proceeding, or (2)
independent legal counsel in a written opinion, concludes that such person was
not guilty of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties initiated in the conduct of his office.
Section 5.02. No expenses incurred by a director, officer, employee, or
agent of the Corporation in defending a civil or criminal action, suit, or
proceeding to which he is a party may be paid or reimbursed by the Corporation
in advance of the final disposition of such action, suit, or proceeding
unless:
(1) One of the following determines, on the basis of the facts then known to
it, that there is reason to believe that indemnification would be permissible:
(a) a majority of a quorum of disinterested non-party directors, or, if such
a quorum cannot be obtained, a majority of a committee of two or more
disinterested non-party directors duly designated to act in the matter by a
majority vote of the full board;
(b) special legal counsel selected by such a committee or such a quorum of
disinterested non-party directors; or
(c) the stockholders; and
(2) the Corporation receives the following from the prospective recipient of
the advance:
(a) a written affirmation of his good faith belief that he met the standard
of conduct necessary for indemnification; and
(b) an undertaking to repay the advance if it is ultimately determined that
he is not entitled to indemnification under this Article.
Section 5.03. The Corporation is authorized to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
Anything in this Article V to the contrary notwithstanding, however, the
Corporation shall not pay for insurance which protects any director or officer
against liabilities arising from action involving willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office; provided, that any such insurance may cover any of such
categories if it provides only for payment to the Corporation and/or third
parties of any damages caused by a director or officer, and also provides that
the insurance company would be subrogated to the rights of the Corporation to
recover from the director or officer.
Item 28. Business and Other Connections of Investment Adviser.
None.
Item 29. Principal Underwriters.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific
Growth Fund, Fundamental Investors, Inc., The Income Fund of America, Inc.,
Intermediate Bond Fund of America, The Investment Company of America, Limited
Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective
Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America, The U.S. Treasury Money Fund of
America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(b) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David A. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University Drive, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
& Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
3100 West End Avenue, Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Senior Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
609 W. Littleton Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Vice President None
111 W. Chicago Avenue
Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
* Larry P. Clemmensen Director and Treasurer None
* Kevin G. Clifford Director and Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th Street, #12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
4116 Woodbine Street
Chevy Chase, MD 20815
* Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P.O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
+ Lloyd G. Edwards Vice President None
* Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
* Mark P. Freeman, Jr. Director and President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Senior Vice President
David E. Harper Vice President None
R.D. 1, Box 210, Rte. 519
Frenchtown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
* Michael J. Johnston Chairman of the Board None
* Robert L. Johansen Vice President and Controller None
# Damien Jordan Senior Vice President None
V. John Kriss Senior Vice President None
P.O. Box 274
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
* Lorin E. Liesy Assistant Vice President None
* Susan G. Lindgren Vice President - Institutional None
Investment Services Division
Stephen A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 S. Race Street
Littleton, CO 80121
* John C. Massar Director and Senior Vice President None
* E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
3500 W. Camino de Urania
Tucson, AZ 85741
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98029
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02161
# Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
* John O. Post, Jr. Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07960
* Julie D. Roth Vice President None
* James F. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
* Christopher S. Rowey Regional Vice President None
Dean B. Rydquist Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, Suite 4
Marina del Rey, CA 90292
Joseph D. Scarpitti Regional Vice President None
31465 St. Andrews
Westlake, OH 44145
* Daniel B. Seivert Assistant Vice President None
* R. Michael Shanahan Director None
David W. Short Director and Senior Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Assistant Vice President - None
Institutional Investment Services Division
* Mary E. Smith Assistant Vice President - None
Institutional Investment Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
* Drew Taylor Assistant Vice President None
& James P. Toomey Assistant Vice President None
+ Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional Investment
Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34238
# J. Kelly Webb Senior Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
** N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
# Laura Wimberly Assistant Vice President None
@ Marshall D. Wingo Director and Senior Vice President None
* Robert L. Winston Director and Senior Vice President None
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
209 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA
94105
# Business Address, 135 South State College Blvd., Brea, CA 92821
& Business Address, 8000 IH-10 West, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
+ Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
% Business Address, 3000 K. Street, N.W., Suite 230, Washington, D.C.
20007-5124
(c) None.
Item 30. Location of Accounts and Records.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, are maintained and held in the offices of its
investment adviser, Capital Research and Management Company, 333 South Hope
Street, Los Angeles, California 90071, and/or 135 South State College
Boulevard, Brea, California 92821, and/or the offices of the Registrant, One
Market, Steuart Tower, Suite 1800, San Francisco, California 94105.
Registrant's records covering shareholder accounts are maintained and kept by
the fund's transfer agent, American Funds Service Company, 135 South State
College Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 8000 IH-10, Suite 1400, San Antonio, Texas 78230 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by the fund's custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza,
New York, New York 10081.
Item 31. Management Services.
None.
Item 32. Undertakings.
As reflected in the prospectus, the fund undertakes to provide each person to
whom a prospectus is delivered with a copy of the fund's latest annual report
to shareholders, upon request and without charge.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City and County of San Francisco, and State of California on the 20th day
of December, 1996.
THE GROWTH FUND OF AMERICA, INC.
By /s/ Patrick F. Quan
Patrick F. Quan, Secretary
ATTEST:
/s/ Louise M. Pescetta
Louise M. Pescetta
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its registration statement has been signed below on December 20, 1996 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signature Title
(1) Principal Executive Officer: President
/s/ James F. Rothenberg
(James F. Rothenberg)
(2) Principal Financial Officer and Treasurer
Principal Accounting Officer:
/s/ Mary C. Hall
(Mary C. Hall)
(3) Directors:
Robert A. Fox* Director
Roberta L. Hazard* Director
Richard H. M. Holmes* Director
Leonade D. Jones* Director
John G. McDonald* Director
Theodore D. Nierenberg* Director
/s/ James W. Ratzlaff Director
(James W. Ratzlaff)
Henry E. Riggs* Director
Walter P. Stern* Chairman
Patricia K. Woolf* Director
</TABLE>
*By /s/ Patrick F. Quan
Patrick F. Quan, Attorney-in-Fact
CONSENT OF INDEPENDENT AUDITORS
The Growth Fund of America, Inc.
We consent to (a) the use in this Post-Effective Amendment No. 64 to
Registration Statement No. 2-14728 on Form N-1A of our report dated September
27, 1996 appearing in the Financial Statements, which are included in Part B,
the Statement of Additional Information of such Registration Statement, (b) the
references to us under the heading "General Information" in such Statement of
Additional Information and (c) the reference to us under the heading "Financial
Highlights" in the Prospectus, which is a part of such Registration Statement.
Deloitte & Touche LLP
December 20, 1996
Los Angeles, California
