[The American Funds Group(R)]
THE GROWTH FUND OF AMERICA
[background photo: hourglass]
[photos: Horace Hodlen, Jr., Mike, Pat and Jim Thurman, Reverend Burton
Carley]
Semi-Annual Report for the Six Months Ended February 28, 1998
The Growth Fund of America(R) invests in a wide range of companies that appear
to offer superior opportunities for growth of capital.
The Growth Fund of America is one of the 28 mutual funds in The American Funds
Group,(R) managed by Capital Research and Management Company. Since 1931,
Capital has invested with a long-term focus based on thorough research and
attention to risk.
[watermark: face of a clock]
Results at a glance (through 2/28/98)
<TABLE>
<CAPTION>
<S> <C> <C>
Total Average annual
returns compound returns
6 months +12.5% -
12 months +31.5 -
5 years +133.9 +18.5%
10 years +351.4 +16.3
Lifetime* +4,574.7 +17.2
</TABLE>
All figures assume reinvestment of distributions.
*Since 12/1/73, when Capital Research and Management Company became the fund's
investment adviser.
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the fund's average annual compound returns
with all distributions reinvested for periods ended March 31, 1998 (the most
recent calendar quarter), assuming payment of the 5.75% maximum sales charge at
the beginning of the stated periods:
10 years: +16.08%
5 years: +17.71%
12 months: +32.88%
Sales charges are lower for accounts of $50,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY,
ENTITY OR PERSON.
[illustration: detail of hourglass from cover]
Fellow Shareholders:
We are pleased to report another period of strong gains for The Growth Fund of
America during the six months through February 28.
Over this period, which marked the first half of the fund's 1998 fiscal year,
the value of your shares increased 12.5% if you reinvested the dividend of 13
cents a share and the capital gain distribution of $2.06 a share paid in
December. In absolute terms, this was a very satisfactory six-month return,
though the broad stock market rose even further: The unmanaged Standard &
Poor's 500 Composite Index, driven by large-capitalization companies, increased
17.6% with dividends reinvested.
Largest Equity Holdings Percent of
Net Assets
Time Warner 4.70%
Fannie Mae 3.89
America Online 3.34
Walt Disney 2.55
Philip Morris 2.33
Viacom 2.31
Comcast 2.24
Tele-Communications, TCI Group 2.19
Tele-Communications,
Liberty Media Group 2.09
Intel 1.68
Largest Industry Holdings
[pie chart]
Broadcasting & Publishing 18.16%
Electronic Components 12.54%
Business & Public Services 9.15%
Data Processing & Reproduction 6.67%
Financial Services 5.62%
Other Industries 37.59%
Cash & Equivalents 10.27%
[end pie chart]
This brings the fund's 12-month return to 31.5% (versus 35.0% for the S&P 500)
and the fund's average annual lifetime return, since December 1, 1973, to 17.2%
(versus 14.7% for the S&P 500).
The fund lagged the index over the six months primarily because of the mixed
results of technology stocks. Many technology companies were adversely affected
by the financial crisis in Asia, as Asian competitors sold products at very low
prices. The stock of Advanced Micro Devices, a manufacturer of integrated
circuits for computers and telecommunications equipment, fell more than 37%
over the period. However, some technology companies fared much better: The
stock of Digital Equipment, a maker of computer systems that has received a
takeover offer from Compaq Computer, rose 32%, while the dominant Internet
service provider America Online - the fund's third-largest holding - saw its
stock increase a remarkable 88%. We have taken advantage of lower prices to add
to the fund's positions in certain technology stocks we believe continue to
have strong growth prospects.
The most positive development during the period was the continued resurgence of
media stocks. As we discussed in our 1997 annual report, cable television
companies have shaken off the effects of rate reductions caused by government
regulation, and they are benefiting from improved cash flow.
Entertainment companies are reaping the benefits of cost-cutting measures and
management decisions to refocus on core competencies. The media conglomerates
Time Warner, the fund's largest holding, and Viacom, which owns Blockbuster and
Paramount (the studio that co-produced the hit movie Titanic), were among our
most rewarding holdings during the six months. Pharmaceu-tical manufacturers
and financial services companies also generally did well over the period.
In the coming months, the financial turmoil in Asia may have a dampening effect
on the earnings of some U.S. companies, although the damage to date has been
minor. We are confident that selected companies will continue to offer good
investment opportunities, and that a well-managed portfolio of growth stocks
will continue to be rewarding over the long term.
In February, Walter Stern stepped down as chairman of the fund, a position he
had held since 1994. He served with the fund in a number of capacities for 24
years, including as director since 1974 and as president between 1986 and 1994.
Those of us who have been privileged to work closely with him over the years
would like to express our sincere appreciation for his leadership, his
professionalism and his many contributions to the fund.
We look forward to reporting to you again in six months.
Cordially,
/s/James F. Rothenberg /s/James E. Drasdo
James F. Rothenberg James E. Drasdo
Chairman of the Board President
April 15, 1998
In February, The Growth Fund of America's board of directors elected James
Drasdo president of the fund, succeeding James Rothenberg. Mr. Rothenberg was
elected chairman of the fund, succeeding Walter Stern. The board also elected
Guilford Babcock and Gail Neale directors of the fund.
<TABLE>
THE GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO, February 28, 1998 Unaudited
Percent
of Net
Assets
----------
<S> <C> <C> <C>
Largest Industry Holdings
- -----------------------------
Broadcasting & Publishing 18.16%
Electronic Components 12.54%
Business & Public Services 9.15%
Data Processing & Reproduction 6.67%
Financial Services 5.62%
Other Industries 37.59%
Cash & Equivalents 10.27%
Largest Equity Holdings
- -------------------------------------
Time Warner 4.70%
Fannie Mae 3.89
America Online 3.34
Walt Disney 2.55
Philip Morris 2.33
Viacom 2.31
Comcast 2.24
Tele-Communications, TCI Group 2.19
Tele-Communications, Liberty Media Group 2.09
Intel 1.68
.
THE GROWTH FUND OF AMERICA
INVESTMENT PORTFOLIO, February 28, 1998
Market Percent
EQUITY SECURITIES (Common & Preferred Stocks) Value of Net
Shares (000) Assets
- ------------------------------------- ----------- -------- ----------
Broadcasting & Publishing - 18.16%
Time Warner Inc. 9,250,750 $624,426 4.70%
Viacom Inc., Class B (1) 6,400,000 307,200 2.31
Comcast Corp., Class A special stock 6,839,762 239,392
Comcast Corp., Class A 1,680,000 58,485 2.24
Tele-Communications, Inc., Series A, TCI Group (1) 9,992,299 290,401 2.19
Tele-Communications, Inc., Series A, Liberty Media Group 10,128,355 277,897 2.09
News Corp. Ltd. (American Depositary Receipts) (Australia 5,400,000 137,362
News Corp. Ltd., preferred (American Depositary Receipts) 3,563,750 77,289 1.62
Cox Communications, Inc., Class A (1) 3,250,000 125,328 .94
USA Networks, Inc. (formerly HSN, Inc.) (1) 1,510,000 77,765 .59
E.W. Scripps Co., Class A 1,425,000 75,614 .57
Chris-Craft Industries, Inc. (1) 1,050,085 58,608 .44
CANAL+ (France) 168,089 35,418 .27
Century Communications Corp., Class A (1) 1,328,100 13,530 .10
BHC Communications, Inc., Class A (1) 62,840 8,672 .06
Jacor Communications, Inc. (1) 100,000 5,787 .04
Electronic Components - 12.54%
Intel Corp. 2,300,000 206,281
Intel Corp., warrants, expire 1998 (1) 250,000 17,125 1.68
Texas Instruments Inc. 3,830,000 221,661 1.67
Micron Techhnology, Inc. (1) 4,398,300 145,969 1.10
National Semiconductor Corp. (1) 4,652,930 111,089 .84
Analog Devices, Inc. (1) 3,233,333 104,275 .78
Altera Corp. (1) 2,200,000 94,875 .71
Advanced Micro Devices, Inc. (1) 4,028,600 94,420 .71
Bay Networks, Inc. (1) 2,731,800 92,540 .70
ADC Telecommunications, Inc. (1) 3,400,000 87,762 .66
Quantum Corp. (1) 3,416,000 85,827 .64
Adaptec, Inc. (1) 2,900,000 76,669 .58
LSI Logic Corp. (1) 2,850,000 67,509 .51
Microchip Technology Inc. (1) 2,675,000 64,702 .49
Linear Technology Corp. 848,100 64,244 .48
Seagate Technology (1) 2,500,000 60,781 .46
Newbridge Networks Corp. (Canada) (1) 1,100,000 25,850 .19
Western Digital Corp. (1) 1,200,000 21,900 .16
Tellabs, Inc. (1) 235,000 14,188 .11
Xilinx, Inc. (1) 200,000 8,775 .07
Business & Public Services - 9.15%
America Online, Inc. (1) 3,665,000 443,923 3.34
Cendant Corp.(formerly CUC International Inc. and HFS Inc 5,842,301 219,086 1.65
Columbia/HCA Healthcare Corp. 4,753,125 128,929 .97
FDX Corp. (formerly Federal Express Corp.) (1) 1,560,000 99,352 .75
Electronic Data Systems Corp. 1,350,000 59,147 .44
Shared Medical Systems Corp. 747,000 57,099 .43
Manpower Inc. 1,285,700 54,240 .41
USA Waste Services, Inc. (1) 1,050,000 43,706 .33
Corrections Corp. of America (1) 706,500 27,024 .20
Paychex, Inc. 390,000 20,134 .15
Waste Management, Inc. 582,759 14,569 .11
Ecolab Inc. 500,000 14,406 .11
TeleTech Holdings, Inc. (1) 1,449,500 13,861 .10
Pittston Brink's Group 334,800 12,931 .10
Concord EFS, Inc. (1) 200,000 6,225 .05
Quorum Health Group, Inc. (1) 59,550 1,651 .01
Data Processing & Reproduction - 6.67%
Oracle Corp. (1) 5,400,000 132,975 1.00
Solectron Corp. (1) 2,271,000 109,860 .83
Digital Equipment Corp. (1) 1,783,200 101,531 .76
Silicon Graphics, Inc. (1) 5,475,500 82,475 .62
Netscape Communications Corp. (1) 2,425,500 46,994 .35
Intuit Inc. (1) 978,600 45,505 .34
Sequent Computer Systems, Inc. (1) 1,980,000 41,951 .32
International Business Machines Corp. 400,000 41,775 .31
Cisco Systems, Inc. (1) 600,000 39,525 .30
Vantive Corp. (1) 1,250,000 34,219 .26
Compaq Computer Corp. 1,000,000 32,062 .24
Lexmark International Group, Inc., Class A (1) 750,000 32,062 .24
Data General Corp. (1) 1,520,000 31,350 .24
3Com Corp. (1) 825,000 29,494 .22
PeopleSoft, Inc. (1) 400,000 17,875 .14
Ascend Communications, Inc. (1) 475,000 17,783 .13
Remedy Corp. (1) 800,000 15,350 .12
Computer Associates International, Inc. 250,000 11,781 .09
Sybase, Inc. (1) 1,111,400 11,670 .09
Mentor Graphics Corp. (1) 515,000 5,375 .04
Sun Microsystems, Inc. (1) 94,800 4,515 .03
Financial Services - 5.62%
Fannie Mae (formerly Federal National Mortgage Assn.) 8,100,000 516,881 3.89
Capital One Financial Corp. 1,850,000 124,297 .94
SLM Holding Corp. 1,575,000 65,067 .49
Freddie Mac (formerly Federal Home Loan Mortgage Corp.) 850,400 40,182 .30
Leisure & Tourism - 5.16%
Walt Disney Co. 3,025,000 338,611 2.55
King World Productions, Inc. (1) 3,674,000 98,050 .74
MGM Grand, Inc. (1) 2,600,000 93,925 .71
Mirage Resorts, Inc. (1) 3,000,000 68,625 .51
Carnival Corp., Class A 900,000 52,988 .40
Harrah's Entertainment, Inc. (1) 900,000 18,956 .14
Outback Steakhouse, Inc. (1) 400,000 14,300 .11
Health & Personal Care - 4.69%
Guidant Corp. 1,200,000 87,525 .66
Forest Laboratories, Inc. (1) 1,000,000 62,562 .47
MedImmune, Inc. (1) 1,064,000 55,195 .42
AB Astra, Class A (American Depositary Receipts) (Sweden) 2,600,000 52,488 .39
Gilead Sciences, Inc. (1) 1,440,000 51,570 .39
Sepracor Inc. (1) 1,100,000 44,275 .33
Pfizer Inc 500,000 44,250 .33
BioChem Pharma Inc. (Canada) (1) 1,600,000 35,900 .27
Avon Products, Inc. 450,000 31,697 .24
Warner-Lambert Co. 200,000 29,250 .22
Medtronic, Inc. 411,900 21,882 .16
Guilford Pharmaceuticals, Inc. (1) 900,000 19,800 .15
Alza Corp. (1) 500,000 18,688 .14
Dura Pharmaceuticals, Inc. (1) 615,400 15,462 .12
Gensia Sicor Inc. (1) 1,332,202 7,535
Gensia Sicor Inc.(1,2) 1,125,000 6,363 .11
Gensia Sicor Inc., warrants, expire 2002 (1,2) 1,125,000 826
NeXstar Pharmaceuticals, Inc. (1,2) 1,000,000 11,750
NeXstar Pharmaceuticals, Inc. (1) 200,000 2,350 .11
United States Surgical Corp. 400,000 12,250 .09
Pharmacia & Upjohn, Inc. 290,000 11,473 .09
Energy Equipment - 3.31%
Schlumberger Ltd. (Netherlands Antilles) 1,650,000 124,369 .94
Diamond Offshore Drilling, Inc. 1,980,000 89,719 .67
Transocean Offshore Inc. 1,871,934 80,493 .61
Cooper Cameron Corp. (1) 919,400 49,303 .37
R&B Falcon Corp. (formerly Reading & Bates Corp.) (1) 1,416,000 37,524 .28
Western Atlas Inc. (1) 479,600 36,420 .27
Camco International, Inc. 200,000 11,700 .09
BJ Services Co. (1) 300,000 10,312 .08
Telecommunications - 3.19%
Tele-Communications, Inc., Series A, TCI Ventures Group 7,994,002 123,407 .93
AirTouch Communications (1) 2,615,700 117,543 .88
LCI International, Inc. (1) 2,650,000 87,450 .66
MCI Communications Corp. 1,500,000 71,719 .54
WorldCom, Inc. (1) 500,000 19,094 .14
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) (Mexico) 100,000 5,069 .04
Merchandising - 2.79%
Limited Inc. 3,300,000 95,700 .72
Woolworth Corp. (1) 3,000,000 71,250 .54
Cardinal Health, Inc., Class A 625,000 51,172 .39
Circuit City Stores, Inc. - Circuit City Group 900,000 34,762 .26
Payless ShoeSource, Inc. (1) 500,000 33,625 .25
Lowe's Companies, Inc. 400,000 23,375 .18
Intimate Brands, Inc., Class A 800,000 21,700 .16
Consolidated Stores Corp. (1) 500,000 20,563 .15
Boise Cascade Office Products Corp. (1) 1,015,000 18,333 .14
Beverages & Tobacco - 2.44%
Philip Morris Companies Inc. 7,125,000 309,492 2.33
PepsiCo, Inc. 400,000 14,625 .11
Transportation: Airlines - 2.22%
Southwest Airlines Co. 4,434,675 127,220 .96
AMR Corp. (1) 860,000 108,844 .82
Delta Air Lines, Inc. 515,000 58,227 .44
Banking - 1.81%
Citicorp 500,000 66,250 .50
Associated Banc-Corp. 936,590 49,054 .37
Norwest Corp. 1,166,900 47,770 .36
Washington Mutual, Inc. 650,000 43,631 .33
PNC Bank Corp. 600,000 33,300 .25
Insurance - 1.64%
EXEL Ltd. (Incorporated in Bermuda) 2,705,000 179,037 1.35
Aetna Inc. 300,000 26,213 .20
Everest Reinsurance Holdings, Inc. 350,000 12,906 .09
Chemicals - 1.39%
Monsanto Co. 2,497,600 127,065 .96
A. Schulman, Inc. 1,522,500 38,824 .29
Air Products and Chemicals, Inc. 225,000 18,886 .14
Electrical & Electronics - 1.29%
Telefonaktiebolaget LM Ericsson, Class B
(American Depositary Receipts) (Sweden) 2,000,000 90,625 .68
Nokia Corp., Class A (American Depositary Receipts) (Finl 600,000 60,450 .46
Digital Microwave Corp. (1) 600,000 11,025 .08
General Instrument Corp. (1) 534,000 8,911 .07
Energy Sources - 1.09%
Oryx Energy Co. (1) 1,600,000 40,700 .31
Talisman Energy Inc. (Canada) (1) 1,300,000 38,504 .29
TOTAL, Class B (American Depositary Receipts) (France) 550,000 30,422 .23
Enterprise Oil PLC (United Kingdom) 2,500,000 23,100 .17
Woodside Petroleum Ltd. (Australia) 2,000,000 12,283 .09
Recreation & Consumer Products - 1.02%
Mattel, Inc. 1,486,300 62,889 .48
Hasbro, Inc. 1,283,300 46,600 .35
Electronic Arts (1) 416,200 18,365 .14
Acclaim Entertainment, Inc. (1) 1,325,000 6,873 .05
Machinery & Engineering - 0.59%
Thermo Electron Corp. (1) 1,925,000 78,925 .59
Transportation: Rail & Road - 0.52%
Wisconsin Central Transportation Corp. (1) 2,524,300 68,472 .52
Textiles & Apparel - 0.42%
Nine West Group Inc. (1) 1,475,000 40,563 .30
NIKE, Inc., Class B 350,000 15,356 .12
Utilities: Electric & Gas - 0.40%
K N Energy, Inc. 1,027,300 53,355 .40
Electronic Instruments - 0.22%
KLA -Tencor Corp. (1) 635,900 29,351 .22
Aerospace & Military - 0.21%
Gulfstream Aerospace Corp. (1) 700,000 28,350 .21
Miscellaneous Materials & Commodities - 0.15%
Potash Corp. of Saskatchewan Inc. (Canada) 225,000 20,109 .15
Industrial Components - 0.14%
Danaher Corp. 250,000 17,984 .14
Multi-Industry - 0.06%
U.S. Industries, Inc. 300,000 8,363 .06
Wholesale & International Trade - 0.05%
Tech Data Corp. (1) 142,800 6,640 .05
Transportation: Shipping - 0.03%
Overseas Shipholding Group, Inc. 200,000 4,150 .03
Other equity securities in initial period of 366,585 2.76
acquisition -------------------------
TOTAL EQUITY SECURITIES (cost: $6,860,355,000) 11,921,895 89.73
-------------------------
Principal
Amount
SHORT-TERM SECURITIES (000)
- ------------------------------------- --------
Corporate Short-Term Notes - 8.32%
Procter & Gamble Co. 5.45%-5.72% due 3/11-3/19/98 $85,900 85,678 .64
AT&T Corp. 5.46%-5.70% due 3/2-3/18/98 67,000 66,861 .50
Shell Oil Co. 5.42%-5.43% due 3/19-3/26/98 66,500 66,252 .50
Xerox Corp. 5.41%-5.45% due 3/26-4/17/98 61,500 61,191 .46
H.J. Heinz Co. 5.44%-5.50% due 3/6-4/16/98 60,400 60,232 .45
Emerson Electric Co. 5.44%-5.45% due 3/13-3/20/98 55,000 54,853 .41
Coca-Cola Co. 5.41%-5.50% due 3/27-5/15/98 54,600 54,137 .41
IBM Credit Corp. 5.44%-5.46% due 3/25-4/7/98 53,300 53,055 .40
Gannett Co., Inc. 5.45% due 4/6/98 (2) 50,000 49,720 .37
Atlantic Richfield Co. 5.41%-5.46% due 3/3-4/22/98 48,700 48,454 .37
Electronic Data Systems Corp. 5.48%-5.70% due 3/9-3/18/98 45,700 45,618 .34
SBC Communications Inc. 5.46%-5.50% due 3/10-4/2/98 (2) 44,600 44,447 .33
Duke Energy Corp. 5.42%-5.43% due 5/7-5/13/98 44,600 44,124 .33
American Express Credit Corp. 5.45% due 4/8/98 41,500 41,255 .31
General Electric Capital Corp. 5.44%-5.68% due 3/2-3/11/9 41,100 41,067 .31
Ford Motor Credit Co. 5.47%-5.48% due 4/3-4/21/98 40,500 40,211 .30
Minnesota Mining and Manufacturing Co. 5.40% due 4/20-5/1 40,000 39,640 .30
BellSouth Telecommunications, Inc. 5.41%-5.47% due 3/3-4/ 37,500 37,429 .28
Monsanto Co. 5.43%-5.48% due 3/5-3/17/98 32,800 32,739 .25
Hewlett-Packard Co. 5.43% due 4/13/98 32,800 32,581 .25
Walt Disney Co. 5.53% due 3/23/98 30,000 29,896 .23
Hershey Foods Corp. 5.40%-5.41% due 4/27-5/4/98 27,000 26,728 .20
Lucent Technologies Inc. 5.45% due 4/3/98 25,000 24,874 .19
Ciesco LP 5.45% due 4/2/98 (2) 25,000 24,873 .19
-------------------------
1,105,915 8.32
-------------------------
Federal Agency Discount Notes - 1.74%
Freddie Mac 5.35%-5.60% due 3/6-5/15/98 107,800 106,929 .81
Fannie Mae 5.35%-5.63% due 3/4-5/18/98 99,466 98,831 .74
Federal Home Loan Banks 5.38% due 4/1/98 25,000 24,880 .19
-------------------------
230,640 1.74
-------------------------
U.S. Treasury Bills - 0.38%
5.29% due 4/23/98 36,200 35,913 .27
5.12% due 3/5/98 15,000 14,990 .11
-------------------------
50,903 .38
-------------------------
TOTAL SHORT-TERM SECURITIES (cost: $1,387,536,000) 1,387,458 10.44
-------------------------
TOTAL INVESTMENT SECURITIES (cost: $8,247,891,000) 13,309,353 100.17
Excess of payables over cash and receivables 22,590 .17
-------------------------
NET ASSETS 13,286,763 100.00%
========== =======
(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
- -----------------------------
Equity securities
appearing in the portfolio
since August 31, 1997
- -----------------------------
Altera
Associated Banc-Corp.
Camco International
Concord EFS
Consolidated Stores
Digital Microwave
General Instrument
Hasbro
Jacor Communications
KLA-Tencor
Linear Technology
Loews
Micron Techhnology
Mirage Resorts
Monsanto
NIKE
Norwest
Oryx Energy
Outback Steakhouse
Quorum Health Group
Remedy
Sepracor
Tech Data
Tele-Communications, TCI Ventures
TeleTech Holdings
TOTAL
Vantive
Washington Mutual
Western Atlas
Western Digital
Woolworth
WorldCom
Xilinx
- -------------------------------
Equity securities
eliminated from the portfolio
since August 31, 1997
- -------------------------------
AccuStaff
Agouron Pharmaceuticals
BankAmerica
Danka Business Systems
Dresser Industries
Gillette
Marriott International
McDermott International
Omnicare
PacifiCare Health Systems
Pioneer Hi-Bred International
Republic Industries
Sports Authority
US WEST Media Group
Vodafone Group
</TABLE>
<TABLE>
The Growth Fund of America
Financial Statements Unaudited
- ---------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities (dollars in
at February 28, 1998 thousands)
- ---------------------------------------------- ---------------- ----------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $8,247,891) $13,309,353
Cash 62
Receivables for-
Sales of investments $74,873
Sales of fund's shares 25,968
Dividends and accrued interest 3,422 104,263
---------------- ----------------
13,413,678
Liabilities:
Payables for-
Purchases of investments 99,782
Repurchases of fund's shares 16,482
Management services 3,464
Accrued expenses 7,187 126,915
---------------- ----------------
Net Assets at February 28, 1998-
Equivalent to $20.25 per share on
656,197,144 shares of $0.10 par value
capital stock outstanding (authorized
capital stock--800,000,000 shares) $13,286,763
================
- ---------------------------------------------- ---------------- ----------------
Statement of Operations (dollars in
for the six months ended February 28, 1998 thousands)
- ---------------------------------------------- ---------------- ----------------
Investment Income:
Income:
Dividends $ 29,893
Interest 47,357 $ 77,250
Expenses:
Management services fee 21,313
Distribution expenses 14,860
Transfer agent fee 4,517
Reports to shareholders 285
Registration statement and prospectus 322
Postage, stationery and supplies 915
Directors' fees 66
Auditing and legal fees 50
Custodian fee 112
Other expenses 51 42,491
---------------- ----------------
Net investment income 34,759
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 378,439
Net increase in unrealized appreciation:
on investments
Beginning of period 4,007,264
End of period 5,061,455 1,054,191
---------------- ----------------
Net realized gain and unrealized appreciation
on investments 1,432,630
----------------
Net Increase in Net Assets Resulting
from Operations $ 1,467,389
================
See Notes to Financial Statements
(dollars in
thousands)
- ---------------------------------------------- ---------------- ----------------
Six months ended Year ended
Statement of Changes in Net Assets February 28, 1998 /1August 31, 1997
- ---------------------------------------------- ---------------- ----------------
Operations:
Net investment income $ 34,759 $ 73,625
Net realized gain on investments 378,439 1,086,444
Net unrealized appreciation
on investments 1,054,191 2,094,086
---------------- ----------------
Net increase in net assets
resulting from operations 1,467,389 3,254,155
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (75,837) (60,737)
Distributions from net realized gain on
investments (1,201,719) (474,852)
---------------- ----------------
Total dividends and distributions (1,277,556) (535,589)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 52,464,146
and 96,996,524 shares, respectively 1,049,315 2,011,945
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 66,730,742 and 30,970,137 shares,
respectively 1,225,125 515,288
Cost of shares repurchased: 41,150,791
and 102,494,003 shares, respectively (823,863) (2,110,158)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 1,450,577 417,075
---------------- ----------------
Total Increase in Net Assets 1,640,410 3,135,641
Net Assets:
Beginning of period 11,646,353 8,510,712
---------------- ----------------
End of period (including undistributed
net investment income: $10,419
and $51,497, respectively) $ 13,286,763 $11,646,353
================ ================
/1/Unaudited
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS Unaudited
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 securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Securities with original maturities of one year or
less having 60 days or less to maturity are amortized to maturity based on
their cost if acquired within 60 days of maturity or, if already held on the
60th day, based on the value determined on the 61st day. Assets or liabilities
initially expressed in terms of foreign currencies are translated (prior to the
next determination of the net asset value of the fund's shares) into U.S.
dollars at the prevailing market rates at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing market rates on the dates of such transactions.
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. Securities and assets for which representative market
quotations are not readily available are valued at fair value as determined in
good faith by a committee appointed by 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 and premiums on securities purchased are amortized. Dividends and
distributions paid to shareholders are recorded on the ex-dividend date.
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 February 28, 1998 net unrealized appreciation on investments for book
and federal income tax purposes aggregated $5,061,462,000, of which
$5,304,220,000 related to appreciated securities and $242,758,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the six months ended February 28, 1998.
Net gains related to non-U.S. currency transactions of $6,000 were treated as
ordinary income for federal income tax purposes. The cost of portfolio
securities for book and federal income tax purposes was $8,247,891,000 at
February 28, 1998.
3. The fee of $21,313,000 for management services was incurred 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 average 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 $2.0 billion but not exceeding $3.0 billion; 0.35% of
such assets in excess of $3.0 billion but not exceeding $5.0 billion; 0.335% of
such assets in excess of $5.0 billion but not exceeding $8.0 billion; 0.325%
of such assets in excess of $8.0 billion but not exceeding $13.0 billion; 0.30%
of such assets in excess of $13.0 billion but not exceeding $21.0 billion; and
0.29% of such assets in excess of $21.0 billion. The Board of Directors has
approved an amended Investment Advisory and Service Agreement, which provides
for reduced fees for the fund for average net assets in excess of $5.0 billion
effective November 1, 1997, at the following annual rates: 0.33% of such
assets in excess of $5.0 billion but not exceeding $8.0 billion; 0.315% of such
assets in excess of $8.0 billion but not exceeding $13.0 billion; 0.30% of such
assets in excess of $13.0 billion but not exceeding $21.0 billion; and 0.29% of
such assets in excess of $21.0 billion. Beginning September 1, 1997, CRMC has
voluntarily agreed to waive its management fees in excess of those provided by
the amended agreement.
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 six months ended February 28,
1998, distribution expenses under the Plan were $14,860,000. As of February 28,
1998, accrued and unpaid distribution expenses were $6,747,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $4,517,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $2,952,000 (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 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 February 28,
1998, aggregate amounts deferred and earnings thereon were $409,000.
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 February 28, 1998, accumulated undistributed net realized gain on
investments was $160,535,000 and additional paid-in capital was $7,988,734,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,196,454,000 and $1,659,831,000, respectively,
during the six months ended February 28, 1998.
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 $112,000 includes $36,000 that was paid by these credits
rather than in cash.
Net realized currency gains on dividends, on a book basis, were $6,000 for
the six months ended February 28, 1998.
<TABLE>
Per-Share Data and Ratios /1/ Six months
ended Year ended August 31
Feb. 28,
1998 /2/ 1997 1996 1995 1994 1993
------- ------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $20.14 $15.39 $16.55 $13.81 $13.58 $11.02
------- ------- ----------------------------
Income from Investment Operations:
Net investment income .06 .13 .13 .13 .07 .07
Net realized and unrealized gain (loss)
on investments 2.24 5.59 (.01) 3.21 .71 2.63
------- ------- ----------------------------
Total income from
investment operations 2.30 5.72 .12 3.34 .78 2.70
------- ------- ----------------------------
Less Distributions:
Dividends from net investment income (.13) (.11) (.14) (.08) (.06) (.09)
Distributions from net realized gains (2.06) (.86) (1.14) (.52) (.49) (.05)
------- ------- ----------------------------
Total distributions (2.19) (.97) (1.28) (.60) (.55) (.14)
------- ------- ----------------------------
Net Asset Value, End of Period $20.25 $20.14 $15.39 $16.55 $13.81 $13.58
======= ======= =============================
Total Return /3/ 12.54% /4/ 38.54% .90% 25.56% 5.98% 24.64%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $13,287 $11,646 $8,511 $7,525 $5,427 $5,018
Ratio of expenses to average net
assets .35% /4/ .72% .74% .75% .78% .77%
Ratio of net income to average net
assets .28% /4/ .73% .82% .90% .49% .56%
Average commissions paid per share /5/ 4.74 c 5.01 c 5.62 c 5.94 c 6.05 c 6.82 c
Portfolio turnover rate 15.62% /4/ 34.10% 27.95% 26.90% 24.77% 25.23%
/1/ Adjusted to reflect the 100% share dividend
effective at the close of business on
December 12, 1996.
/2/ Unaudited
/3/ Excludes maximum sales charge of 5.75%.
/4/ Based on operations for the period shown and,
accordingly, not representative of a full year's operations.
/5/Brokerage commissions paid on
portfolio transactions increase
the cost of securities purchased
or reduce the proceeds of securities
sold, and are not separately reflected in the
fund's statement of operations.
Shares traded on a principal basis (without commissions),
such as most over-the-counter and fixed-income transactions,
are excluded.
</TABLE>
[The American Funds Group(R)]
The Growth Fund of America
[illustration: hourglass from cover art]
OFFICE OF THE FUND
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE
WORLD WIDE WEB.
