<PAGE>
The Growth Fund of America/(R)/
Prospectus
NOVEMBER 1, 1999
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
---------------------------------------------------------
THE GROWTH FUND OF AMERICA, INC.
One Market Steuart Tower, Suite 1800 San Francisco, California 94105
<TABLE>
<CAPTION>
<S> <C> <C>
TICKER SYMBOL: AGTHX NEWSPAPER ABBREV: Gwth FUND NO: 05
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objective, Strategies and Risks 6
-------------------------------------------------------
Year 2000 9
-------------------------------------------------------
Management and Organization 10
-------------------------------------------------------
Shareholder Information 12
-------------------------------------------------------
Purchase and Exchange of Shares 13
-------------------------------------------------------
Distribution Arrangements 18
-------------------------------------------------------
Financial Highlights 19
-------------------------------------------------------
</TABLE>
1
05-010-1199/B
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow by investing primarily in common
stocks of companies that appear to offer superior opportunities for growth of
capital.
The fund is designed for investors seeking capital appreciation through stocks.
Investors in the fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations. An investment in the fund is
subject to risks, including the possibility that the fund may decline in value
in response to economic, political or social events in the U.S. or abroad. The
prices of equity securities owned by the fund will be affected by events
specifically involving the companies issuing those securities.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information illustrates how the fund's results fluctuate. Past
results are not an indication of future results.
Here are the fund's results calculated without a sales charge on a calendar
year basis. (If a sales charge were included, results would be lower.)
[bar chart]
1989 30.06
1990 -4.12
1991 35.79
1992 7.40
1993 14.50
1994 .02
1995 29.80
1996 14.84
1997 26.86
1998 31.78
[end bar chart]
The fund's year-to-date return for the nine months ended September 30, 1999
was 16.47%.
------------------------------------------------------------------------------
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
Highest 27.17% (quarter ended December 31, 1998)
Lowest -17.64% (quarter ended September 30, 1990)
</TABLE>
3
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
THE FUND WITH
AVERAGE ANNUAL MAXIMUM SALES
TOTAL RETURN CHARGE DEDUCTED/1/ S&P 500/2/ CPI/3/
<S> <C> <C> <C>
One Year 24.18% 28.52% 1.61%
--------------------------------------------------------------
Five Years 18.63% 24.02% 2.37%
--------------------------------------------------------------
Ten Years 17.20% 19.16% 3.12%
--------------------------------------------------------------
Lifetime/4/ 17.22% 14.97% 5.21%
--------------------------------------------------------------
</TABLE>
1 These fund results were calculated according to a formula which requires that
the maximum sales charge of 5.75% be deducted and include the reinvestment of
dividend and capital gain distributions. Results would be higher if they were
calculated at net asset value.
2 The Standard & Poor's 500 Composite Index represents primarily U.S. stocks.
This index is unmanaged and does not reflect sales charges, commissions or
expenses.
3 The Consumer Price Index is a measure of inflation and is computed from data
supplied by the U.S. Department of Labor, Bureau of Labor Statistics.
4 For the period beginning December 1, 1973 (when Capital Research and
Management Company became the fund's investment adviser).
4
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
The following describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment)
----------------------------------------------------------------
<S> <C>
Maximum sales charge imposed on purchases 5.75%/1/
(as a percentage of offering price)
----------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0%
----------------------------------------------------------------
Maximum deferred sales charge 0%/2/
----------------------------------------------------------------
Redemption or exchange fees 0%
</TABLE>
1 Sales charges are reduced or eliminated for larger purchases.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following certain purchases made without a sales charge.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
----------------------------------------------------------
<S> <C>
Management Fees 0.34%
Service (12b-1) Fees 0.25%*
Other Expenses 0.11%
Total Annual Fund Operating Expenses 0.70%
</TABLE>
* 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
<S> <C>
One year $ 642
-----------------------------------------------------------
Three years $ 786
-----------------------------------------------------------
Five years $ 942
-----------------------------------------------------------
Ten years $1,395
</TABLE>
5
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
The fund's investment objective is to provide you with growth of capital. It
invests primarily in common stocks.
The prices of equity securities held by the fund will decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations. The growth-oriented, equity-type
securities generally purchased by the fund may involve large price swings and
potential for loss.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objective, but it also
provides greater liquidity to meet redemptions or to make additional
investments, and it would reduce the fund's exposure in the event of a market
downturn.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of Capital Research and Management
Company is to seek undervalued securities that represent good long-term
investment opportunities. Securities may be sold when they no longer represent
good long-term value.
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund
has other investment practices that are described here and in the statement of
additional information.
The fund may invest up to 10% of its assets in securities of issuers domiciled
outside the U.S. and not included in the Standard & Poor's 500 Composite Index.
Investments outside the U.S. may be subject to certain risks. For example,
the prices of non-U.S. securities can decline in response to currency
fluctuations or political, social and economic instability.
The fund may invest up to 10% of its assets in lower-quality straight debt
securities (rated Ba and BB or below or unrated but determined to be of
equivalent quality). The prices of debt securities fluctuate depending on such
factors as changing interest rates, credit quality of the issuers and maturity.
For example, their prices decline when interest rates rise and vice versa.
6
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
Debt securities are also subject to credit risk which is the possibility that
an issuer of a debt security will fail to make timely payments of principal or
interest and the security will go into default. The values of lower quality and
longer maturity bonds will be subject to greater price fluctuations than higher
quality and shorter maturity bonds. The fund's investment adviser attempts to
reduce these risks through diversification of the portfolio and by doing a
credit analysis of each issuer as well as by monitoring economic and
legislative developments.
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1998:
<TABLE>
<CAPTION>
AVERAGE ANNUAL THE FUND WITH LIPPER CAPITAL
TOTAL RETURN NO SALES CHARGE/1/ APPRECIATION INDEX/2/
<S> <C> <C>
One Year 31.78% 19.98%
-------------------------------------------------------------
Five Years 20.04% 16.26%
-------------------------------------------------------------
Ten Years 17.90% 15.71%
-------------------------------------------------------------
Lifetime/3/ 17.50% 14.50%
-------------------------------------------------------------
</TABLE>
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The Lipper Capital Appreciation Funds Index is an equally weighted
performance index that represents funds that aim for maximum capital
appreciation. The results of the underlying funds in the index include the
reinvestment of dividend and capital gain distributions, but do not reflect
sales charges and commissions.
3 For the period beginning December 1, 1973 (when Capital Research and
Management Company became the fund's investment adviser).
7
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, August 31, 1999.
[pie chart]
U.S. Equities 77.79%
Non-U.S. Equities 11.82%
Cash and Equivalents 10.59%
[end pie chart]
<TABLE>
<CAPTION>
PERCENT OF
Largest Industry Holdings NET ASSETS
--------------------------------------------------------------------------------
<S> <C>
Broadcasting & Publishing 17.49%
--------------------------------------------------------------------------------
Electronic Components 17.15
--------------------------------------------------------------------------------
Data Processing & Reproduction 8.22
--------------------------------------------------------------------------------
Health & Personal Care 6.56
--------------------------------------------------------------------------------
Business & Public Services 6.41
--------------------------------------------------------------------------------
Other Industries 33.58
Largest Equity Holdings
--------------------------------------------------------------------------------
Time Warner 3.92%
--------------------------------------------------------------------------------
Viacom 3.06
--------------------------------------------------------------------------------
AT&T -- Liberty Media Group 2.98
--------------------------------------------------------------------------------
Texas Instruments 2.50
--------------------------------------------------------------------------------
Fannie Mae 2.09
--------------------------------------------------------------------------------
Philip Morris 1.78
--------------------------------------------------------------------------------
Intel 1.75
--------------------------------------------------------------------------------
Applied Materials 1.67
--------------------------------------------------------------------------------
News Corp. 1.58
--------------------------------------------------------------------------------
Microsoft 1.58
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
YEAR 2000
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders. However, the fund understands that its key service providers -
including the investment adviser and its affiliates - are taking steps to
address the issue. In addition, the Year 2000 problem may adversely affect the
issuers in which the fund invests. For example, issuers may incur substantial
costs to address the problem. They may also suffer losses caused by corporate
and governmental data processing errors. These risks may be particularly acute
in certain countries outside the U.S. in which the fund may invest and may
adversely affect the fund's net asset value and total return. The fund and its
investment adviser will continue to monitor developments relating to this
issue.
9
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as 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 total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
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.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The Growth Fund of America are listed on the following
page.
10
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDNG THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
PORTFOLIO (AND RESEARCH PROFESSIONAL, WITH CAPITAL
COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
THE GROWTH FUND THE GROWTH FUND OF AMERICA MANAGEMENT
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
OR AFFILIATES TOTAL YEARS
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JAMES F. Chairman of the fund. 11 years (plus 3 years as a 29 years 29 years
ROTHENBERG President and Director, research professional prior
Capital Research and to becoming a portfolio
Management Company counselor for the fund)
------------------------------------------------------------------------------------------------------------------
JAMES E. DRASDO President and Director of the 14 years (plus 9 years as a 22 years 28 years
fund. Senior Vice President, research professional prior
Capital Research and to becoming a portfolio
Management Company counselor for the fund)
------------------------------------------------------------------------------------------------------------------
GORDON CRAWFORD Senior Vice President of the 8 years (plus 16 years as a 28 years 28 years
fund. Senior Vice President research professional prior
and Director, Capital to becoming a portfolio
Research and Management counselor for the fund)
Company
------------------------------------------------------------------------------------------------------------------
DONALD D. O'NEAL Senior Vice President of the 6 years (plus 6 years as a 14 years 14 years
fund. Vice President, Capital research professional prior
Research and Management to becoming a portfolio
Company counselor for the fund)
------------------------------------------------------------------------------------------------------------------
MICHAEL T. Vice President of the fund. 1 year (plus 5 years as a 14 years 16 years
KERR Senior Vice President, research professional prior
Capital Research Company* to becoming a portfolio
counselor for the fund)
------------------------------------------------------------------------------------------------------------------
WILLIAM C. Senior Partner, The Capital 26 years** 40 years 46 years
NEWTON Group Partners L.P.*
------------------------------------------------------------------------------------------------------------------
R. MICHAEL Chairman of the Board and 14 years 35 years 35 years
SHANAHAN Principal Executive Officer,
Capital Research and
Management Company
* Company affiliated with Capital Research and Management Company.
** Since Capital Research and Management Company took over management of the fund in 1973.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services 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. For your convenience, American Funds Service
Company has four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
LOGO
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED 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.
You may invest in the fund through various retirement plans. However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan administrator/
trustee or dealer.
12
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge. Exchanges of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge. Exchanges have the same tax consequences as
ordinary sales and purchases. See "Transactions by Telephone..." for
information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
INVESTMENT MINIMUMS
<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 through payroll deduction $ 25
</TABLE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time, which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value,
market prices are used when available. If a market price for a particular
security is not available, the fund will determine the appropriate price for
the security.
13
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and
accepts your request. The offering price is the net asset value plus a sales
charge, if applicable.
SALES CHARGE
A sales charge may apply to your purchase. Your sales charge may be reduced for
larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$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 CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE
MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution-type
plans investing $1 million or more, or with 100 or more eligible employees, may
invest with no sales charge and are not subject to a contingent deferred sales
charge. Investments made by retirement plans, endowments or foundations with
$50 million or more in assets may also be made with no sales charge and are not
subject to a contingent deferred sales charge. The fund may pay a dealer
concession of up to 1% under its Plan of Distribution on investments made with
no initial sales charge.
14
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
REDUCING YOUR SALES CHARGE
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your sales charge. 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 and in the statement of additional information and "Welcome to
the Family."
AGGREGATING ACCOUNTS
To receive a reduced sales charge, investments made by you and your immediate
family (see above) may be aggregated if made for their own account(s) and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts
- single-participant retirement plans
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of two or more American Funds, except
direct purchases of money market funds, to qualify for a reduced sales charge.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing holdings in The
American Funds Group, as well as individual holdings in various American Legacy
products, to determine your sales charge. Direct purchases of money market
funds are excluded.
STATEMENT OF INTENTION
You may establish a Statement of Intention (SOI) that allows you to combine the
purchases you intend to make over a 13-month period in any non-money market
fund or individual American Legacy product. At your request purchases made
during the previous 90 days may be included; however, capital appreciation and
reinvested dividends and capital gains do not apply toward these combined
purchases. An SOI allows you to take immediate advantage of the
15
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
maximum quantity discount available. 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 13-month period do not qualify for the applicable sales
charge reduction.
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 fund's board of directors. 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. The 12b-1 fee
paid by the fund, as a percentage of average net assets, for the previous
fiscal year is indicated earlier under "Fees and Expenses of the Fund." Since
these fees are paid out of the fund's assets on an ongoing basis, over time
they will increase the cost of an investment and may cost you more than paying
higher initial sales charges.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
16
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE, OR AMERICAN FUNDSLINE
ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), 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 liabilities (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.
17
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, usually in December. Capital
gains, if any, are usually distributed in December. When a capital gain is
distributed, the net asset value per share is reduced by the amount of the
payment.
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences. If you are not investing through a tax-advantaged retirement
account, you should consider these tax consequences.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes to the extent they include income from
debt securities that are not exempt from tax - unless you are exempt from
taxation or entitled to tax deferral.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of
long-term capital gains are taxable to you as capital gains. Any taxable
distributions you receive from the fund will normally be taxable to you when
made, regardless of whether you reinvest distributions or receive them in cash.
Dividends derived from taxable interest income, distributions of capital gains
and dividends on gains from the disposition of certain market discount bonds
will not be exempt from federal, state or local income tax.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
18
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years. Certain information reflects financial results
for a single fund share. The total returns in the table represent the rate that
an investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, are included in the statement of additional information, which is
available upon request.
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31/1/
---------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $17.95 $20.14 $15.39 $16.55 $13.81
Beginning of Year
----------------------------------------------------------------------------------------
Income From Investment
Operations:
Net investment income .07 .10 .13 .13 .13
Net gains or losses on
securities (both
realized and 10.48 (.10) 5.59 (.01) 3.21
unrealized)
----------------------------------------------------------------------------------------
Total from investment 10.55 .00 5.72 .12 3.34
operations
----------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net
investment income) (.09) (.13) (.11) (.14) (.08)
Distributions (from (2.21) (2.06) (.86) (1.14) (.52)
capital gains)
----------------------------------------------------------------------------------------
Total distributions (2.30) (2.19) (.97) (1.28) (.60)
----------------------------------------------------------------------------------------
Net Asset Value, $26.20 $17.95 $20.14 $15.39 $16.55
End of Year
----------------------------------------------------------------------------------------
Total Return/2/ 45.96% (.24)% 38.54% .90% 25.56%
----------------------------------------------------------------------------------------
Ratios/Supplemental
Data:
Net assets, end of $20,673 $11,798 $11,646 $8,511 $7,525
year (in millions)
----------------------------------------------------------------------------------------
Ratio of expenses to .70% .70% .72% .74% .75%
average net assets
----------------------------------------------------------------------------------------
Ratio of net income .28% .48% .73% .82% .90%
to average net assets
----------------------------------------------------------------------------------------
Portfolio turnover
rate 45.61% 38.84% 34.10% 27.95% 26.90%
1Adjusted to reflect the 100% share dividend effective at the close of business on
December 12, 1996.
2 Excludes maximum sales charge of 5.75%.
</TABLE>
19
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
20
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
21
THE GROWTH FUND OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR SHAREHOLDER FOR RETIREMENT PLAN FOR DEALER
SERVICES SERVICES SERVICES
American Funds Call your employer or American Funds
Service Company plan administrator Distributors
800/421-0180 800/421-9900 ext. 11
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FOR 24-HOUR INFORMATION
American FundsLine(R) American FundsLine OnLine(R)
800/325-3590 http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
---------------------------------------------------------
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages. If there is any
inconsistency or ambiguity as to the meaning of any word or phrase in a
translation, the English text will prevail.
---------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS
Contains additional information about the fund including financial statements,
investment results, portfolio holdings, a statement from portfolio management
discussing market conditions and the fund's investment strategies, and the
independent accountants' report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Contains more detailed information on all aspects of the fund, including the
fund's financial statements.
CODE OF ETHICS
Includes a description of the fund's personal investing policy.
The fund's code of ethics and current SAI has been filed with the Securities
and Exchange Commission ("SEC"). The SAI is incorporated by reference into
this prospectus. These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington,
D.C. (1-800-SEC-0330) or on the SEC's Internet Web site at http://www.sec.gov.
To request a free copy of any of the documents above:
<TABLE>
<CAPTION>
<S> <C> <C>
Call American Funds Write to the Secretary of the fund
Service Company or P.O. Box 7650 San Francisco,
800/421-0180 ext. 1 California 94120
</TABLE>
Investment Company File No. 811-862
Printed on recycled paper
<PAGE>
THE GROWTH FUND OF AMERICA, INC.
Part B
Statement of Additional Information
November 1, 1999
This document is not a prospectus but should be read in conjunction with the
current prospectus of The Growth Fund of America (the "fund" or "GFA") dated
November 1, 1999. 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, Suite 1800
San Francisco, California 94105
(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
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 6
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 7
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 8
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 15
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 19
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Shareholder Account Services and Privileges . . . . . . . . . . . . 27
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 30
General Information . . . . . . . . . . . . . . . . . . . . . . . . 30
Investment Results and Related Statistics . . . . . . . . . . . . . 32
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Financial Statements
</TABLE>
The Growth Fund of America -- Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
OBJECTIVE
- - Under normal market conditions, the fund will invest at least 65% of its
assets in securities of companies that appear to offer superior
opportunities for growth of capital.
DEBT SECURITIES
- - The fund may invest up to 10% of its assets in straight debt securities
rated Ba by Moody's Investors Service, Inc. and BB by Standard & Poor's
Corporation or below or unrated but determined to be of equivalent quality.
NON-U.S. SECURITIES
- - The fund may invest up to 10% of its assets in securities of issuers
domiciled outside the U.S. and not included in the S&P 500 Composite Index.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions. The
descriptions below are intended to supplement the material in the prospectus
under "Investment Objective, Strategies and Risks."
EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. These securities may include common 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 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 large price swings and potential for loss.
INVESTING IN SMALLER CAPITALIZATION STOCKS - The fund may invest in the stocks
of smaller companies (typically companies with market capitalizations of less
than $1.2 billion at the time of purchase). The Investment Adviser believes that
the issuers of smaller capitalization stocks often provide attractive investment
opportunities. However, investing in smaller capitalization stocks can involve
greater risk than is customarily associated with investing in stocks of larger,
more established companies. For example, smaller companies often have limited
product lines, markets, or financial resources, may be dependent for management
on one or a few key persons, and can be more susceptible to losses. Also, their
securities may be thinly traded (and therefore have to be sold at a discount
from current prices or sold in small lots over an extended period of time), may
be followed by fewer investment research analysts, and may be subject to wider
price swings thus creating a greater chance of loss than securities of larger
capitalization companies.
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt
The Growth Fund of America -- Page 2
<PAGE>
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.
High-yield, high-risk bonds rated Ba or below by Standard & Poor's Corporation
and BB or below by Moody's Investors Services, Inc. (or unrated but considered
to be of equivalent quality) are described by the rating agencies as speculative
and involve greater risk of default or price changes due to changes in the
issuer's creditworthiness than higher rated bonds, or they may already be in
default. The market prices of these securities may fluctuate more than higher
quality securities and may decline significantly 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. Certain risk factors relating to "high-yield,
high-risk bonds" are discussed below.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES - High-yield, high-risk
bonds can be sensitive to adverse economic changes and political and
corporate developments and may be less sensitive to interest rate changes.
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. 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.
PAYMENT EXPECTATIONS - High-yield, high-risk bonds, like other bonds, may
contain redemption or call provisions. If an issuer exercises 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. 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.
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.
The Investment Adviser 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, but there can be no assurance that it will be successful in doing
so.
WARRANTS AND RIGHTS -- The fund may purchase warrants, which are usually issued
together with bonds or preferred stocks. Warrants generally entitle the holder
to buy a proportionate amount of common stock at a specified price, usually
higher than the current market price. Warrants may be issued with an expiration
date or in perpetuity. Rights are similar to warrants except that they normally
entitle the holder to purchase common stock at a lower price than the current
market price. Rights generally expire in less than four weeks.
The Growth Fund of America -- Page 3
<PAGE>
INVESTING IN VARIOUS COUNTRIES -- Investing outside the U.S. involves special
risks, caused by, among other things: currency controls, fluctuating currency
values; different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; expropriation or confiscatory taxation; 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.
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries. The fund may only invest in securities of issuers in
developing countries to a limited extent.
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.
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures that have been adopted by the fund's board of directors, taking
into account factors such as the frequency and volume of trading, the commitment
of dealers to make markets and the availability of qualified investors, all of
which can change from time to time. The fund may incur certain additional costs
in disposing of illiquid securities.
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; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Farmers Home Administration, Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee
Valley Authority, and Federal Farm Credit Bank System.
The Growth Fund of America -- Page 4
<PAGE>
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities at a future date. When the fund agrees to purchase such securities it
assumes the risk of any decline in value of the security beginning on the date
of the agreement. When the fund agrees to sell such securities it does not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails to
deliver or pay for the securities, the fund could miss a favorable price or
yield opportunity, or could experience a loss.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily in an amount sufficient to meet its payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent the fund's aggregate
commitments under these transactions exceed its segregated assets, the fund
temporarily could be in a leveraged position (because it may have an amount
greater than its net assets subject to market risk). Should market values of the
fund's portfolio securities decline while the fund is in a leveraged position,
greater depreciation of its net assets would likely occur than were it not in
such a position. As the fund's aggregate commitments under these transactions
increase the opportunity for leverage similarly may increase. The fund will not
borrow money to settle these transactions and therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations thereunder.
CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper
(short-term notes up to 9 months in maturity issued by corporations or
governmental bodies), (ii) commercial bank obligations (e.g., certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity)), (iii) savings
association and saving bank obligations (e.g., certificates of deposit issued by
savings banks or savings associations), (iv) securities of the U.S. Government,
its agencies or instrumentalities that mature, or may be redeemed, in one year
or less, and (v) corporate bonds and notes that mature, or that may be redeemed,
in one year or less.
The fund may also engage in the following investment practices, although it has
no current intention to do so over the next twelve months:
CURRENCY TRANSACTIONS - The fund can purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. 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. Forward currency contracts
entered into by the fund will involve the purchase or sale of a currency against
the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates. The fund will segregate liquid
assets which will be marked to market daily to meet its forward contract
commitments to the extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
The Growth Fund of America -- Page 5
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
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 or sell 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.
The Growth Fund of America -- Page 6
<PAGE>
12. Invest in the securities of any issuer for the purpose of exercising
control or management.
13. Deal in commodoties or commodity contracts.
14. Act as underwriter of securities issued by other persons.
For purposes of Investment Restriction #4, the fund will not invest more than
15% of its net assets in illiquid securities. 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 the 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 ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation on 1958 and reorganized as a Maryland corporation on
September 22, 1983.
All fund operations are supervised by the fund's board of directors which meets
periodically and performs 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 "Directors and Director Compensation" below. 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
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 Growth Fund of America -- Page 7
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS AUGUST 31, 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Guilford C. Babcock Director Associate Professor of Finance, School $ 20,500
1500 Park Place of Business Administration, University
San Marino, CA 91108 of Southern California
Age: 68
- --------------------------------------------------------------------------------------------------------------------
+ James E. Drasdo President and Senior Vice President, Capital None/5/
333 South Hope Street Director Research and Management Company
Los Angeles, CA 90071
Age: 53
- --------------------------------------------------------------------------------------------------------------------
Robert A. Fox Director President and Chief Executive Officer, $19,000/4/
P.O. Box 457 Foster Farms, Inc.
1000 Davis Street
Livingston, CA 95333
Age: 62
- --------------------------------------------------------------------------------------------------------------------
Roberta L. Hazard Director Consultant; Rear Admiral, United $ 20,500
1419 Audmar Drive States Navy (Retired)
McLean, VA 22101
Age: 64
- --------------------------------------------------------------------------------------------------------------------
Leonade D. Jones Director Management consultant; former $ 21,833
1536 Los Montes Drive Treasurer, The Washington Post Company
Burlingame, CA 94010
Age: 51
- --------------------------------------------------------------------------------------------------------------------
John G. McDonald Director The IBJ Professor of Finance, Graduate $ 27,400
Graduate School of Business School of Business, Stanford
Stanford University University
Stanford, CA 94305
Age: 62
- --------------------------------------------------------------------------------------------------------------------
Gail L. Neale Director President, The Lovejoy Consulting $ 26,750
The Lovejoy Consulting Group, Group, Inc.; former Executive Vice
Inc. President, Salzburg Seminar
154 Prospect Parkway
Burlington, VT 05401
Age: 64
- --------------------------------------------------------------------------------------------------------------------
+ James W. Ratzlaff Director Senior Partner, The Capital Group None/5/
333 South Hope Street Partners L.P.
Los Angeles, CA 90071
Age: 63
- --------------------------------------------------------------------------------------------------------------------
Henry E. Riggs Director President, Keck Graduate Institute of $25,400/4/
Keck Graduate Institute of Applied Life Sciences; former
Applied Life Science President and Professor of
535 Watson Drive Engineering, Harvey Mudd College
Claremont, CA 91711
Age: 64
- --------------------------------------------------------------------------------------------------------------------
+ James F. Rothenberg Chairman President and Director, Capital None/5/
333 South Hope Street of the Board Research and Management Company
Los Angeles, CA 90071
Age: 52
- --------------------------------------------------------------------------------------------------------------------
Patricia K. Woolf Director Private investor; Lecturer, Department $ 25,900
506 Quaker Road of Molecular Biology, Princeton
Princeton, NJ 08540 University; Corporate Director
Age: 65
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED AUGUST 31, 1999 SERVES/3/
- -----------------------------------------------------------------------------
<S> <C> <C>
Guilford C. Babcock $ 38,500 2
1500 Park Place
San Marino, CA 91108
Age: 68
- -----------------------------------------------------------------------------
+ James E. Drasdo None/5/ 2
333 South Hope Street
Los Angeles, CA 90071
Age: 53
- -----------------------------------------------------------------------------
Robert A. Fox $126,500/4/ 6
P.O. Box 457
1000 Davis Street
Livingston, CA 95333
Age: 62
- -----------------------------------------------------------------------------
Roberta L. Hazard $ 78,000 4
1419 Audmar Drive
McLean, VA 22101
Age: 64
- -----------------------------------------------------------------------------
Leonade D. Jones $ 138,000 6
1536 Los Montes Drive
Burlingame, CA 94010
Age: 51
- -----------------------------------------------------------------------------
John G. McDonald $ 256,250 8
Graduate School of Business
Stanford University
Stanford, CA 94305
Age: 62
- -----------------------------------------------------------------------------
Gail L. Neale $ 91,500 5
The Lovejoy Consulting Group,
Inc.
154 Prospect Parkway
Burlington, VT 05401
Age: 64
- -----------------------------------------------------------------------------
+ James W. Ratzlaff None/5/ 8
333 South Hope Street
Los Angeles, CA 90071
Age: 63
- -----------------------------------------------------------------------------
Henry E. Riggs $104,450/4/ 5
Keck Graduate Institute of
Applied Life Science
535 Watson Drive
Claremont, CA 91711
Age: 64
- -----------------------------------------------------------------------------
+ James F. Rothenberg None/5/ 3
333 South Hope Street
Los Angeles, CA 90071
Age: 52
- -----------------------------------------------------------------------------
Patricia K. Woolf $ 138,950 6
506 Quaker Road
Princeton, NJ 08540
Age: 65
- -----------------------------------------------------------------------------
</TABLE>
The Growth Fund of America -- Page 8
<PAGE>
The Growth Fund of America -- Page 9
<PAGE>
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 funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 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., New World 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 vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Includes funds managed by Capital Research and Management Company and
affiliates.
4 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of fiscal year
ended August 31, 1999 for participating Directors is as follows: Robert A. Fox
($237,205), Leonard D. Jones ($88,380), John G. McDonald ($132,051) and Henry
E. Riggs ($202,972). Amounts deferred and accumulated earnings thereon are not
funded and are general unsecured liabilities of the fund until paid to the
Directors.
5 James E. Drasdo, James W. Ratzlaff and James F. Rothenberg are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
The Growth Fund of America -- Page 10
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Gordon Crawford 52 Senior Vice Senior Vice President and
333 South Hope Street President Director, Capital Research and
Los Angeles, CA 90071 Management Company
- -------------------------------------------------------------------------------
Paul G. Haaga, Jr. 50 Senior Vice Executive Vice President and
333 South Hope Street President Director,
Los Angeles, CA 90071 Capital Research and Management
Company
- -------------------------------------------------------------------------------
Donald D. O'Neal 39 Senior Vice Vice President, Capital Research
P.O. Box 7650 President and Management Company
San Francisco, CA
94120
- -------------------------------------------------------------------------------
Richard M. Beleson 45 Vice President Senior Vice President and
P.O. Box 7650 Director, Capital Research
San Francisco, CA Company
94120
- -------------------------------------------------------------------------------
Michael T. Kerr 40 Vice President Executive Vice President and
333 South Hope Street Research Director, Capital
Los Angeles, CA 90071 Research
and Management Company
- -------------------------------------------------------------------------------
Julie F. Williams 51 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
- -------------------------------------------------------------------------------
Sheryl F. Johnson 31 Treasurer Vice President - Fund Business
5300 Robin Hood Road Management Group, Capital
Norfolk, VA 23513 Research and Management Company
- -------------------------------------------------------------------------------
Robert P. Simmer 38 Assistant Vice President - Fund Business
5300 Robin Hood Road Treasurer Management Group, Capital
Norfolk, VA 23513 Research and Management Company
- -------------------------------------------------------------------------------
</TABLE>
All of the officers listed are officers, and/or directors/trustees of one of
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by a fund to any officer or Director who is a director,
officer or employee of the Investment Adviser or affiliated companies. The fund
pays annual fees of $14,000 to Directors who are not affiliated with the
Investment Adviser, plus $1,000 for each Board of Directors meeting attended,
plus $500 for each meeting attended as a member of a committee of the Board of
Directors. In lieu of meeting attendance fees, members of the Proxy Committee
receive an annual retainer fee of $4,000 per annum from the fund if they serve
as a member of four proxy committees, or $5,500 if they serve as a member of two
proxy committees, meeting jointly.
No pension or retirement benefits are accrued as part of fund expenses. The
Directors may elect, on a voluntary basis, to defer all or a portion of their
fees through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the Directors who are not
The Growth Fund of America -- Page 11
<PAGE>
affiliated with the Investment Adviser. As of October 1, 1999 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 of the fund.
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, Hong Kong, Singapore 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 State 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. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
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 $200 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types throughout the world. 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 will
continue in effect until October 31, 2000, unless sooner terminated, 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, 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 the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. 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 the 1940
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, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of 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
The Growth Fund of America -- Page 12
<PAGE>
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.
The management fee is based upon 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, 0.33% on net assets in excess of $5 billion but not
exceeding $8 billion, 0.315% on net assets in excess of $8 billion but not
exceeding $13 billion, 0.30% on net assets in excess of $13 billion but not
exceeding $21 billion and 0.29% on net assets in excess of $21 billion.
The Agreement provides for a management fee reduction to the extent that the
fund's annual ordinary operating expenses exceed 1-1/2% of the first $30 million
of the net assets of the fund and 1% of the 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, 1999, 1998, 1997, the Investment Adviser
received advisory fees of $57,694,000, $45,511,000, and $36,531,000,
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, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 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, 1999 amounted to $11,334,000 after allowance of $55,805,000 to
dealers. During the fiscal years ended 1998 and 1997 the Principal Underwriter
retained $6,615,000 and $4,855,000, respectively after an allowance of
$32,726,000 and $24,257,000 to dealers, respectively.
As required by rule 12b-1 and the 1940 Act, 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
The Growth Fund of America -- Page 13
<PAGE>
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, any defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).
Commissions on sales of shares exceeding $1 million (including 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 any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, commissions are not recoverable. During the
fiscal year ended August 31, 1999, the fund paid or accrued $42,790,000 for
compensation to dealers under the Plan. As of August 31, 1999, accrued and
unpaid distribution expenses were $10,210,000.
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.
The Growth Fund of America -- Page 14
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute the amount
of capital gain and/or net investment income required to be distributed by an
excise tax provision of the Code, the fund may be subject to that excise tax. In
certain circumstances, the fund may determine that it is in the interest of
shareholders to distribute less than the required amount. In this case, the fund
will pay any income or excise taxes due.
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
TAXES - The fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Code. A regulated investment company
qualifying under Subchapter M of the Code is required to distribute to its
shareholders at least 90% of its investment company taxable income (including
the excess of net short-term capital gain over net long-term capital losses) and
generally is not subject to federal income tax to the extent that it distributes
annually its investment company taxable income and net realized capital gains in
the manner required under the Code. The fund intends to distribute annually all
of its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
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 (generally net investment income)
for the calendar year, (ii) 98% of capital gain (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 during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by a fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends
The Growth Fund of America -- Page 15
<PAGE>
to elect to treat such capital gains as having been distributed to shareholders.
As a result, each shareholder will report such capital gains as long-term
capital gains taxable to individual shareholders at a maximum 20% capital gains
rate, will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax liability,
and will be entitled to increase the adjusted tax basis on fund shares by the
difference between a pro rata share of the retained gains and their related tax
credit.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a
The Growth Fund of America -- Page 16
<PAGE>
partial return of investment capital upon the distribution, which will
nevertheless be taxable to them.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund which must
be distributed to shareholders in order to maintain the qualification of the
fund as a regulated investment company and to avoid federal income tax at the
level of the fund. Shareholders will be subject to income tax on such original
issue discount, whether or not they elect to receive their distributions in
cash.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of the shares of a regulated investment
company may be subject to withholding of federal income tax at the rate of 31%
in the case of non-exempt U.S. shareholders who fail to furnish the investment
company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law.
Withholding may also be required if the fund is notified by the IRS or a broker
that the taxpayer identification number furnished by the shareholder is
incorrect or that the shareholder has previously failed to report interest or
dividend income. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
Dividend and interest income received by the fund from sources outside the U.S.
may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however. Most foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
The Growth Fund of America -- Page 17
<PAGE>
The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or deduction
on their federal income tax returns for, and will be required to treat as part
of the amounts distributed to them, their pro rata portion of qualified taxes
paid by the Fund to foreign countries (which taxes relate primarily to
investment income). The fund may make an election under Section 853 of the Code,
provided that more than 50% of the value of the total assets of the fund at the
close of the taxable year consists of securities in foreign corporations. The
foreign tax credit available to shareholders is subject to certain limitations
imposed by the Code.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the fund accrues receivables or liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the value
of foreign currency between the date of acquisition of the security or contract
and the date of disposition are also treated as ordinary gain or loss. These
gains or losses, referred to under the Code as "Section 988" gains or losses,
may increase or decrease the amount of the fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
If the fund invests in stock of certain passive foreign investment companies,
the fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the fund's investment company taxable income
and, accordingly, would not be taxable to the fund to the extent distributed by
the fund as a dividend to its shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any gains
for tax purposes at that time. Under this election, deductions for losses are
allowable only to the extent of any prior recognized gains, and both gains and
losses will be treated as ordinary income or loss. The fund will be required to
distribute any resulting income, even though it has not sold the security and
received cash to pay such distributions.
The Growth Fund of America -- Page 18
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Investment $50 minimum (except where a
Minimums and Fund lower minimum is noted under
Numbers "for initial "Investment Minimums and Fund
investment minimums. Numbers").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an 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>
The Growth Fund of America -- Page 19
<PAGE>
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 FundsLine/(R)/ (see description
below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 02
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 500 11
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 03
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . . . . . . 1,000 12
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . . . . . . 1,000 33
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 250 16
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . . . . . . 250 10
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 1,000 05
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . . . . . . 1,000 06
The Investment Company of America/(R)/ . . . . . . . . . . . . . . . . . 250 04
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 1,000 14
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 250 07
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 36
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . . 1,000 35
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . . . . . . 250 01
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . . . . . . 1,000 40
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . . . . . . 1,000 21
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . . . . . . 1,000 08
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . 1,000 31
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 1,000 23
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . . . . . . 1,000 43
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . . . . . . 1,000 19
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . . . . . . 1,000 20
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . . . . . . 1,000 24
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . . . . . . 1,000 25
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . . . . . . 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . . . . . . 2,500 09
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . . . . . . 2,500 39
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . . . . . . 2,500 49
___________
*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
The Growth Fund of America -- Page 20
<PAGE>
SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional
investments (except as noted above).
SALES CHARGES -- 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>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
- ------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
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 . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES - Investment of $1 million or more are
sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED SALES
CHARGE MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF PURCHASE.
Employer-sponsored defined contribution-type plans investing $1 million or more,
or with 100 or more eligible employees, may invest with no sales charge and are
not subject to a contingent deferred sales charge. Investments made by
retirement plans, endowments or foundations with $50 million or more in assets
may also 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 the fund
under its Plan of Distribution on investments made with no initial sales charge.
In addition, 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 Man-
The Growth Fund of America -- Page 21
<PAGE>
agement 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 the
Principal Underwriter (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 $50 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.
DEALER COMMISSIONS - 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 100 or more eligible employees, and for purchases made at net
asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more: 1.00% on amounts of $1 million to
$4 million, 0.50% on amounts over $4 million to $10 million, and 0.25% on
amounts over $10 million.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
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.
REDUCING YOUR SALES CHARGE - You and your "immediate family" (your spouse and
your children under age 21) may combine investments to reduce your costs. You
must let your investment dealer or American Funds Service Company (the "Transfer
Agent") know if you qualify for a reduction in your sales charge using one or
any combination of the methods described below.
The Growth Fund of America -- Page 22
<PAGE>
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a over a 13-month period and receive the
same sales charge as if all shares had been purchased at once. This
includes purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. 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"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to utilize a 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 by the close of
the period, 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. Existing holdings eligible for rights
of accumulation (see the account application) and any individual
investments in American Legacy products (American Legacy, American Legacy
II and American Legacy III variable annuities, American Legacy Life,
American Legacy Variable Life, and American Legacy Estate Builder) 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.
When the trustees of certain retirement plans purchase shares 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, and
any individual investments in American Legacy products 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, a sales charge will be assessed according to the
sales charge breakpoint thus determined.
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 accounts and/or:
- employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
The Growth Fund of America -- Page 23
<PAGE>
- business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
- for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
- made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or
- 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.
CONCURRENT PURCHASES - You may combine purchases of two or more funds in
The American Funds Group, except direct purchases of the money market
funds. Shares of money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a sales charge do
qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing holdings in The American Funds Group, as well as your
holdings in Endowments (shares of which may be owned only by tax-exempt
organizations), to determine your sales charge on investments in accounts
eligible to be aggregated, or when making a gift to an individual or
charity. When determining your sales charge, you may also take into account
the value of your individual holdings, as of the end of the week prior to
your investment, in various American Legacy products (American Legacy,
American Legacy II and American Legacy III variable annuities, American
Legacy Life, American Legacy Variable Life, and American Legacy Estate
Builder). Direct purchases of the money market funds are excluded.
PRICE OF SHARES - Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or the Transfer
Agent; 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 the case of orders sent directly to the fund or the Transfer Agent, 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
The Growth Fund of America -- Page 24
<PAGE>
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. For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m. New
York time on both days. The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. 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. Fixed-income securities are valued at prices obtained
from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Short-term securities maturing within 60 days are valued at amortized cost which
approximates market value.
Assets or liabilities initially expressed in terms of non-U.S. 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.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
3. Net assets so obtained are 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 by 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 Board of
Directors.
The Growth Fund of America -- Page 25
<PAGE>
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. You may sell (redeem) shares in
your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be sold through
the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered shareholder(s);
or
- Sent to an address other than the address of record, or an address
of record which has been changed within the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in certificate
form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/ and
American FundsLine OnLine/(R)/) are limited to $50,000 per shareholder each
day.
- Checks must be made payable to the registered shareholder(s).
- Checks must be mailed to an address of record that has been used with
the account for at least 10 days.
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by
writing American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application).
The Growth Fund of America -- Page 26
<PAGE>
- If you request check writing privileges, you will be provided with
checks 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 or registered shareholders exactly as indicated on
your checking account signature card.
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 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group within
90 days after the date of the redemption or distribution. Redemption proceeds of
shares representing direct purchases in the money market funds are excluded.
Proceeds will be reinvested at the next calculated net asset value after your
request is received and accepted by the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds made
within twelve months of purchase on investments of $1 million or more (other
than redemptions by employer-sponsored retirement plans). 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 403(b) plans or IRAs due to death, disability
or attainment of age 591/2; for tax-free returns of excess contributions to
IRAs; and for redemptions through certain automatic withdrawals not exceeding
10% of the amount that would otherwise be subject to the charge.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. If your
bank account cannot be debited due to insufficient funds, a stop-payment or the
closing of the account, the plan may be terminated and the related investment
reversed. You 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
The Growth Fund of America -- Page 27
<PAGE>
may elect to have dividends and/or capital gain distributions paid in cash by
informing the fund, the Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
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 the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" 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 the Transfer Agent. (See "Telephone and Computer
Purchases, 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, computer, 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 (a) meet the minimum initial investment requirement for the
receiving fund OR (b) the originating fund's balance must be at least $5,000 and
the receiving fund's minimum must be met within one year.
The Growth Fund of America -- Page 28
<PAGE>
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 will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, 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 AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, 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 the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent 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.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
REDEMPTION OF SHARES - The fund's articles of incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder owns of record
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in
The Growth Fund of America -- Page 29
<PAGE>
the fund's current registration statement under the 1940 Act, and subject to
such further terms and conditions as the Board of Directors of the fund may from
time to time adopt.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
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.
Brokerage commissions paid on portfolio transactions for the fiscal years ended
August 31, 1999, 1998 and 1997, amounted to $12,088,000, $7,217,000 and
$5,577,000, 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 State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02101, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or foreign branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records 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
$13,441,000 for the fiscal year ended August 31, 1999.
INDEPENDENT AUDITORS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, serves as the fund's independent accountants
providing audit services, preparation of tax returns and review of certain
documents to be filed with the Securities and Exchange Commission. The financial
statements included in this Statement of Additional Information from the Annual
Report have been so included in reliance on the report Deloitte & Touche LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing. The selection of the fund's independent accountants is
reviewed and determined annually by the Board of Directors.
The Growth Fund of America -- Page 30
<PAGE>
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on August 31. Shareholders
are provided at least semiannually with reports showing the investment
portfolio, financial statements and other information. The fund's annual
financial statements are audited by the fund's independent accountants, Deloitte
& Touche LLP. In an effort to reduce the volume of mail shareholders receive
from the fund when a household owns more than one account, the Transfer Agent
has taken steps to eliminate duplicate mailings of shareholder reports. To
receive additional copies of a report, shareholders should contact the Transfer
Agent.
YEAR 2000 - The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers. Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations. The fund understands that these
service providers are taking steps to address the "Year 2000 problem". However,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the fund. In addition, the fund's investments could be
adversely affected by the Year 2000 problem. For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is 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; 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.
OTHER INFORMATION - 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, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding). . . . . . . . . . $26.20
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) . . . . . . . . . . . . . . . . . . . . . . . . $27.80
</TABLE>
The Growth Fund of America -- Page 31
<PAGE>
INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield is 0.28% based on a 30-day (or one month) period ended August
31, 1999, 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 average total return ("T") is computed by equating the value at the end of
the period ("ERV") with 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 fund's one year total return and average annual total return for the five-
and ten-year periods ended August 31, 1999 were 51.95%, 21.62% and 15.82%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on August 31, 1999 were 61.26%, 23.07%
and 16.51, respectively.
In calculating average annual total return, the fund assumes: (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. In addition, the fund will provide lifetime
average total return figures.
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
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 and Poor's 500 Composite Stock
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 also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The Growth Fund of America -- Page 32
<PAGE>
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may 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).
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 investment results for the fund set forth below were calculated as described
in the fund's prospectus. The fund's results will vary from time to time
depending upon market conditions, the composition of the fund's portfolio and
operating expenses of the fund, so that any investment results reported by the
fund should not be considered representative of what an investment in the fund
may earn in any future period. These factors and possible differences in
calculation methods should be considered when comparing the fund's investment
results with those published for other mutual funds, other investment vehicles
and unmanaged indices. The fund's results also should be considered relative to
the risks associated with the fund's investment objective and policies.
The Growth Fund of America -- Page 33
<PAGE>
GFA VS. VARIOUS UNMANAGED INDICES
<TABLE>
<CAPTION>
10-YEAR AVERAGE
PERIODS SAVINGS
9/1 - 8/31 GFA DJIA (2) S&P 500 (3) ACCOUNT (4)
- ---------- --- -------- ----------- -----------
<S> <C> <C> <C> <C>
1989 - 1999 +334% +417% +384% + 61%
1988 - 1998 +275% +396% +382% + 65%
1987 - 1997 +236 +289 +266 + 67
1986 - 1996 +221 +308 +250 + 70
1985 - 1995 +309 +384 +311 + 75
1984 - 1994 +270 +358 +300 + 83
1983 - 1993 +251 +339 +302 + 93
1982 - 1992 +312 +439 +404 +105
1981 - 1991 +328 +434 +382 +115
1980 - 1990 +269 +343 +299 +122
1979 - 1989 +445 +399 +397 +124
1978 - 1988 +358 +282 +299 +124
1977 - 1987 +735 +422 +446 +124
1976 - 1986 +600 +233 +298 +124
1975 - 1985 +521 +173 +253 +121
1974 - 1984 +579 +211 +277 +116
1973/1/- 1983 +464 +151 +175 +106
</TABLE>
_________________
1 From December 1, 1973
2 The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
3 The Standard and 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
issuers traded on the American Stock Exchange are also included.
4 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.
IF YOU ARE CONSIDERING GFA FOR AN
INDIVIDUAL RETIREMENT ACCOUNT HERE ARE THE BENEFITS OF SYSTEMATIC INVESTING:
<TABLE>
<CAPTION>
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:
3 years 5 years 10 years
(9/1/96-8/31/99) (9/1/94-8/31/99) (9/1/89-8/31/99)
- ------------------------------------------------------------------------------------
<S> <C> <C>
$10,272 $19,832 $58,196
- ------------------------------------------------------------------------------------
</TABLE>
The Growth Fund of America -- Page 34
<PAGE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
. . . 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 . . . AUGUST 31, 1999
NUMBER PERIODS
OF YEARS 9/1 - 8/31 VALUE
<S> <C> <C>
1
1998 - 1999 $ 15,195
2
1997 - 1999 15,161
3
1996 - 1999 21,003
4
1995 - 1999 21,193
5
1994 - 1999 26,606
6
1993 - 1999 28,200
7
1992 - 1999 35,159
8
1991 - 1999 36,873
9
1990 - 1999 48,152
10
1989 - 1999 43,437
11
1988 - 1999 60,546
12
1987 - 1999 54,053
13
1986 - 1999 71,467
14
1985 - 1999 91,976
15
1984 - 1999 104,431
16
1983 - 1999 105,164
17
1982 - 1999 153,694
18
1981 - 1999 167,641
19
1980 - 1999 188,274
20
1979 - 1999 251,386
21
1978 - 1999 294,489
22
1977 - 1999 479,036
23
1976 - 1999 531,127
24
1975 - 1999 606,137
25
1974 - 1999 752,231
26
1973#- 1999 629,203
</TABLE>
# From December 1, 1973
The Growth Fund of America -- Page 35
<PAGE>
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, 1999)
<TABLE>
<CAPTION>
COST OF SHARES VALUE OF SHARES**
Year Annual Dividends Total From From From Total
Ended Dividends (cumulative) Investment Initial CapitalGains Dividends Value
Aug 31 --------- ------------ Cost Investment 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
1997 2,019 31,740 41,740 131,682 171,693 87,748 391,123
1998 2,525 34,265 44,265 117,363 192,135 80,676 390,174
1999 1,956 36,221 46,221 171,304 337,808 120,091 629,203
</TABLE>
The Growth Fund of America -- Page 36
<PAGE>
The dollar amount of capital gain distributions during the period was $182,904.
# From December 1, 1973
The Growth Fund of America -- Page 37
<PAGE>
EXPERIENCE OF INVESTMENT ADVISER - The Investment Adviser manages nine growth
and growth-income funds that are at least 10 years old. In the rolling 10-year
periods since January 1, 1969 (138 in all), those funds have had better total
returns than their comparable Lipper indexes and 128 of 138 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.
APPENDIX
Description of Bond Ratings
BOND RATINGS -- The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
Moody's rates the long-term debt securities issued by various entities from
- -------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They 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."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. 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."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. 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."
The Growth Fund of America -- Page 38
<PAGE>
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often 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. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated 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."
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
S & P rates the long-term securities debt of various entities in categories
- -----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
The Growth Fund of America -- Page 39
<PAGE>
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."
The Growth Fund of America -- Page 40
<TABLE>
The Growth Fund of America, Inc.
Investment Portfolio, August 31, 1999
<S> <C> <C> <C>
Percent
of Net
Largest Industry Holdings Assets
- -------------------------
Broadcasting & Publishing 17.49
Electronic Components 17.15
Data Processing & Reproduction 8.22
Health & Personal Care 6.56
Business & Public Services 6.41
Other Industries 33.58
Cash & Equivalents 10.59
Largest Equity Holdings
- -----------------------
Time Warner 3.92
Viacom 3.06
AT&T -- Liberty Media Group 2.98
Texas Instruments 2.50
Fannie Mae 2.09
Philip Morris 1.78
Intel 1.75
Applied Materials 1.67
News Corp. 1.58
Microsoft 1.58
The Growth Fund of America, Inc.
Investment Portfolio, August 31, 1999
Market ValuPercent Of
Equity Securitites (Common & Preferred Stocks) Shares (000)Net Assets
- -------------------------------------------------- -----------------------
BROADCASTING & PUBLISHING - 17.49%
Time Warner Inc. 13,646,50 $809,407 3.92%
Viacom Inc., Class B (1) 13,400,00 563,638
Viacom Inc., Class A (1) 1,629,400 68,944 3.06
AT&T Corp. - Liberty Media Group, Class A 19,281,43 617,006 2.98
(formerly Tele-Communications, Liberty Media Group) (1)
News Corp. Ltd., preferred (ADR) (Australia) 6,353,750 167,977
News Corp. Ltd. (ADR) 5,450,000 159,753 1.58
Comcast Corp., Class A, special stock 8,521,218 278,005
Comcast Corp., Class A 300,000 8,831 1.39
AMFM Inc. (formerly Chancellor Media Corp.) (1) 3,950,000 194,538 .94
Cablevision Systems Corp., Class A (1) 2,653,800 185,766 .90
USA Networks, Inc., Class A (1) 3,520,000 157,960 .76
Fox Entertainment Group, Inc., Class A (1) 6,240,000 143,910 .70
Nippon Television Network Corp. (Japan) 177,760 97,510 .47
Chris-Craft Industries, Inc. (1) 1,254,540 63,511 .31
CBS Corp. (1) 1,000,000 47,000 .23
Sinclair Broadcast Group, Inc., Class A (1) 2,230,000 36,238 .18
BHC Communications, Inc., Class A (1) 62,840 8,263 .04
E.W. Scripps Co., Class A 150,000 7,200 .03
Knight-Ridder, Inc. 12,200 658 .00
ELECTRONIC COMPONENTS - 17.15%
Texas Instruments Inc. 6,300,000 516,993 2.50
Intel Corp. 4,400,000 361,625 1.75
PMC-Sierra, Inc. (1) 2,606,600 242,414 1.17
Solectron Corp. (1) 2,942,000 230,211 1.11
Micron Technology, Inc. (1) 3,005,000 224,060 1.08
Altera Corp. (1) 4,600,000 193,775 .94
Corning Inc. 2,627,900 174,755 .85
LSI Logic Corp. (1) 3,000,000 170,250 .82
Linear Technology Corp. 2,450,000 154,197 .75
Microchip Technology Inc. (1) (2) 2,675,000 146,456 .71
Sanmina Corp. (1) 1,950,000 146,250 .71
Adaptec, Inc. (1) 3,400,000 132,600 .64
Rohm Co., Ltd. (Japan) 600,000 119,583 .58
Quantum Corp. (1) 7,400,000 112,019 .54
Analog Devices, Inc. (1) 2,033,333 104,717 .51
Maxim Integrated Products, Inc. (1) 1,500,000 100,969 .49
Jabil Circuit, Inc. (1) 2,100,000 94,106 .46
Taiwan Semiconductor Manufacturing Co. Ltd. 20,910,00 89,049 .43
(Taiwan) (1)
Seagate Technology (1) 2,500,000 82,969 .40
Murata Manufacturing Co., Ltd. (Japan) 875,000 70,397 .34
SCI Systems, Inc. (1) 554,400 27,616 .13
Advanced Micro Devices, Inc. (1) 1,200,000 24,825 .12
Newbridge Networks Corp. (Canada) (1) 900,400 24,705 .12
DATA PROCESSING & REPRODUCTION - 8.22%
Microsoft Corp. (1) 3,540,000 327,671 1.58
Computer Associates International, Inc. 5,775,000 326,287 1.58
Oracle Corp. (1) 5,420,000 197,830 .96
Cisco Systems, Inc. (1) 2,600,000 176,313 .85
Gateway, Inc. (formerly Gateway 2000, Inc.) (1) 1,125,000 109,055 .53
Storage Technology Corp. (1) 4,400,000 92,400 .45
International Business Machines Corp. 600,000 74,737 .36
Lexmark International Group, Inc., Class A (1) 750,000 59,062 .28
Rambus Inc. (1) 581,100 56,367 .27
National Computer Systems, Inc. 1,215,000 47,385 .23
Intuit Inc. (1) 500,600 44,835 .22
Siebel Systems, Inc. (1) 600,000 41,213 .20
BMC Software, Inc. (1) 700,000 37,669 .18
Autodesk, Inc. 1,501,000 34,523 .17
PeopleSoft, Inc. (1) 1,500,000 21,188 .10
Silicon Graphics, Inc. (1) 1,440,000 16,470 .08
Compaq Computer Corp. 600,000 13,912 .07
Vantive Corp. (1) 1,305,000 10,848 .05
3Com Corp. (1) 400,000 9,925 .05
Momentum Business Applications, Inc., Class A (1) 146,000 1,122 .01
HEALTH & PERSONAL CARE - 6.56%
Guidant Corp. 2,750,000 161,391 .78
AstraZeneca PLC (United Kingdom) (formerly 3,250,000 129,384
Zeneca Group PLC)
AstraZeneca PLC (ADR) (formerly Astra AB) 380,000 14,963 .70
Gilead Sciences, Inc. (1) 1,504,300 117,241 .57
Forest Laboratories, Inc. (1) 2,400,000 116,400 .56
Amgen Inc. (1) 1,300,000 108,144 .52
Elan Corp., PLC (ADR) (Ireland) (1) 3,100,000 99,394 .48
Biogen, Inc. (1) 1,200,000 92,100 .45
Immunex Corp. (1) 1,240,000 83,467 .40
Sepracor Inc. (1) 1,064,500 79,704 .39
Cardinal Health, Inc. 1,210,950 77,198 .37
MedImmune, Inc. (1) 500,000 51,594 .25
BioChem Pharma Inc. (Canada) (1) 1,600,000 41,475 .20
Eli Lilly and Co. 500,000 37,312 .18
Warner-Lambert Co. 400,000 26,500 .13
Avon Products, Inc. 500,000 21,937 .10
Omnicare, Inc. 2,200,000 21,175 .10
IDEXX Laboratories, Inc. (1) 1,100,000 18,700 .09
Pharmacia & Upjohn, Inc. 290,000 15,152 .07
Medtronic, Inc. 180,000 14,085 .07
Guilford Pharmaceuticals, Inc. (1) 900,000 12,150 .06
Sicor Inc. (formerly Gensia Sicor Inc.) (1) 1,332,202 5,329
Sicor Inc. (1) (3) 1,125,000 4,500 .05
Sicor Inc., warrants expire 2002 (1) (3) 1,125,000 -----
Celera Genomics (formerly Perkin-Elmer Corp.) (1) 264,400 7,602 .04
BUSINESS & PUBLIC SERVICES - 6.41%
Cendant Corp. (1) 18,021,90 323,268 1.56
FDX Corp. (1) 4,200,000 178,238 .86
Juniper Networks, Inc. (1) 485,600 99,548 .48
Quintiles Transnational Corp. (1) 2,400,000 85,950 .42
Flextronics International Ltd. (Singapore) (1) 1,300,000 76,294 .37
Allied Waste Industries, Inc. (1) 5,500,000 70,125 .34
Snyder Communications, Inc. (1) 3,000,000 61,125 .30
Columbia/HCA Healthcare Corp. 2,200,000 54,175 .26
Robert Half International Inc. (1) 1,900,000 49,875 .24
Galileo International, Inc. 1,000,000 48,500 .23
Universal Health Services, Inc., Class B (1) 1,450,000 48,394 .23
Sabre Group Holdings, Inc., Class A (1) 750,000 42,000 .21
Waste Management, Inc. 1,550,000 33,809 .16
Modis Professional Services, Inc. (1) 2,000,000 31,625 .15
Apollo Group, Inc., Class A (1) 1,400,000 30,713 .15
Cintas Corp. 435,900 22,394 .11
Paychex, Inc. 690,000 20,312 .10
ServiceMaster Co. 1,000,000 16,500 .08
First Data Corp. 300,000 13,200 .06
Sapient Corp. (1) 137,500 10,038 .05
Concord EFS, Inc. (1) 250,000 9,280 .05
ELECTRONIC INSTRUMENTS - 4.26%
Applied Materials, Inc. (1) 4,850,000 344,653 1.67
KLA - Tencor Corp. (1) 4,350,000 273,234 1.32
Affymetrix, Inc. (1) (3) (4) 1,000,000 77,063 .37
PE Biosystems Group (formerly Perkin-Elmer Corp.) 1,057,600 72,776 .35
ADVANTEST CORP. (Japan) 500,000 67,883 .33
Teradyne, Inc. (1) 675,000 45,942 .22
FINANCIAL SERVICES - 3.26%
Fannie Mae 6,956,700 432,185 2.09
SLM Holding Corp. 1,880,000 83,072 .41
Capital One Financial Corp. 1,450,000 54,738 .26
Providian Financial Corp. 700,000 54,337 .26
Household International, Inc. 1,300,000 49,075 .24
LEISURE & TOURISM - 3.02%
Seagram Co. Ltd. (Canada) 3,010,000 159,718 .77
Starbucks Corp. (1) 6,100,000 139,537 .68
King World Productions, Inc. (1) 3,034,200 115,679 .56
Carnival Corp. 1,729,800 77,300 .37
MGM Grand, Inc. (1) 1,570,541 77,153 .37
Mirage Resorts, Inc. (1) 4,200,000 54,863 .27
TELECOMMUNICATIONS - 2.63%
Nextel Communications, Inc., Class A (1) 1,850,000 106,953 .52
MCI WorldCom, Inc. (1) 1,400,000 106,050 .51
NTT Mobile Communications Network, Inc. 4,000 66,191
(Japan) (1) (5)
NTT Mobile Communications Network, Inc. 1,000 16,639 .40
AT&T Corp. 1,700,000 76,500 .37
Teleglobe Inc. (Canada) 3,045,000 51,967 .25
Crown Castle International Corp. (1) 2,450,000 37,056 .18
American Tower Systems Corp., Class A (1) 1,300,000 29,575 .14
Sprint FON Group 500,000 22,188 .11
SkyTel Communications Inc. (1) 1,000,000 19,813 .10
Paging Network, Inc. (1) 3,500,000 10,828 .05
ENERGY SOURCES - 2.25%
Apache Corp. 2,157,100 98,148 .47
Burlington Resources Inc. 1,800,000 75,263 .36
Suncor Energy Inc. (Canada) 1,700,000 70,013 .34
TOTAL-FINA SA, Class B (ADR) (France) 750,000 48,797 .24
(formerly TOTAL)
Talisman Energy Inc. (Canada) (1) 1,567,700 45,946 .22
Union Pacific Resources Group Inc. 2,500,000 44,844 .22
Pogo Producing Co. 1,994,400 41,633 .20
Enterprise Oil PLC (United Kingdom) 3,950,000 28,504 .14
Petro-Canada (Canada) 600,000 9,013 .04
Devon Energy Corp. 94,200 3,638 .02
BEVERAGES & TOBACCO - 2.25%
Philip Morris Companies Inc. 9,850,000 368,759 1.78
Nabisco Group Holdings Corp. (formerly 2,650,000 47,038 .23
RJR Nabisco, Inc. Holdings Corp.)
PepsiCo, Inc. 1,250,000 42,656 .21
R.J. Reynolds Tobacco Holdings, Inc. 216,666 5,945 .03
ELECTRICAL & ELECTRONICS - 2.10%
Nortel Networks Corp.(Canada) (formerly 3,522,240 144,632 .70
Northern Telecom Ltd.)
NEC Corp. (Japan) 6,000,000 97,641 .47
General Instrument Corp. (1) 1,340,000 65,911 .32
Telefonaktiebolaget LM Ericsson, Class B (ADR) (Sweden) 2,000,000 65,125 .32
Nokia Corp., Class A (ADR) (Finland) 420,000 35,018 .16
Lucent Technologies Inc. 412,500 26,426 .13
TRANSPORTATION: AIRLINES - 1.76%
AMR Corp. (1) 2,860,000 167,667 .81
Southwest Airlines Co. 8,659,268 144,502 .70
Delta Air Lines, Inc. 1,030,000 52,337 .25
INSURANCE - 1.56%
XL Capital Ltd. (formerly EXEL Ltd.) (Incorporated 2,840,800 142,927 .68
in Bermuda)
Protective Life Corp. 1,860,000 55,335 .27
Mercury General Corp. 1,275,000 38,569 .19
American International Group, Inc. 375,000 34,758 .17
MGIC Investment Corp. 600,000 26,063 .13
Mutual Risk Management Ltd. (Incorporated in Bermuda) 900,000 24,750 .12
CHEMICALS - 1.36%
Monsanto Co. 4,625,000 189,914 .92
Air Products and Chemicals, Inc. 700,000 23,800 .12
Millennium Chemicals Inc. 1,000,000 23,000 .11
A. Schulman, Inc. 965,625 17,321 .08
Praxair, Inc. 300,000 14,100 .07
International Flavors & Fragrances Inc. 174,700 7,119 .04
Bayer AG (Germany) 110,000 4,790 .02
MERCHANDISING - 1.15%
Limited Inc. 2,900,000 109,838 .53
Lowe's Companies, Inc. 800,000 36,200 .18
Albertson's, Inc. 598,500 28,691 .14
Intimate Brands, Inc., Class A 525,000 20,245 .10
Lands' End , Inc. (1) 350,000 17,631 .09
PETsMART, Inc. (1) 2,100,000 10,106 .04
Circuit City Stores, Inc. - Circuit City Group 200,000 8,600 .04
Consolidated Stores Corp. (1) 400,000 6,450 .03
BANKING - 0.79%
Washington Mutual, Inc. 1,684,000 53,467 .26
Bank of America Corp. (formerly BankAmerica Corp.) 850,000 51,425 .25
Wells Fargo & Co. 779,100 31,018 .15
Charter One Financial, Inc. 850,000 19,895 .10
BankBoston Corp. 145,000 6,734 .03
RECREATION OTHER CONSUMER PRODUCTS - 0.54%
Hasbro, Inc. 3,550,000 86,753 .42
American Greetings Corp., Class A 875,000 24,227 .12
FOOD & HOUSEHOLD PRODUCTS - 0.43%
Keebler Foods Co. (1) 1,900,000 56,644 .27
Dole Food Co., Inc. 1,273,000 32,063 .16
TEXTILES & APPAREL - 0.43%
NIKE, Inc., Class B 1,900,000 87,875 .43
ENERGY EQUIPMENT - 0.38%
BJ Services Co. (1) 1,200,000 41,100 .20
Schlumberger Ltd. (Netherlands Antilles) 550,000 36,712 .18
MISCELLANEOUS MATERIALS & COMMODITIES - 0.37%
Sealed Air Corp. (1) 1,300,000 76,375 .37
METALS: NONFERROUS - 0.23%
Freeport-McMoRan Copper & Gold Inc., Class B 3,000,000 48,188 .23
UTILITIES: ELECTRIC & GAS - 0.20%
Questar Corp. 2,225,000 41,997 .20
AEROSPACE & MILITARY TECHNOLOGY - 0.18%
Bombardier Inc., Class B (Canada) 2,350,000 36,559 .18
TRANSPORTATION: RAIL & ROAD - 0.16%
Wisconsin Central Transportation Corp. (1) 2,094,300 33,378 .16
MACHINERY & ENGINEERING - 0.13%
Thermo Electron Corp. (1) 1,725,000 27,384 .13
INDUSTRIAL COMPONENTS - 0.11%
Danaher Corp. 400,000 23,500 .11
REAL ESTATE - 0.03%
Catellus Development Corp. (1) 500,000 6,844 .03
Miscellaneous - 4.00%
Other equity securities in initial period of 827,241 4.00
acquisition
-----------------------
TOTAL EQUITY SECURITIES (COST: $11,288,131,000) 18,483,738 89.41
-----------------------
Principal
Amount
Short Term Securities (000)
- -------------------------------------------------- --------------------------------
CORPORATE SHORT-TERM NOTES - 7.00%
Associates First Capital Corp. 4.96%-5.70% $124,500 123,401 .60
due 9/1/1999-2/7/2000
Bellsouth Capital Funding Corp. 5.09%-5.30% 85,000 83,889 .41
due 10/13/1999-1/27/2000 (3)
Ciesco LP 5.13%-5.25% due 10/7-10/18/1999 84,000 83,469 .40
General Electric Capital Corp. 5.41%-5.53% 75,550 74,709 .36
due 9/1/1999-1/25/2000
IBM Credit Corp. 5.55%-5.70% due 1/21-2/11/2000 75,000 73,215 .35
Merck & Co., Inc. 5.29%-5.30% due 2/2-2/4/2000 74,000 72,191 .35
Procter & Gamble Co. 5.10%-5.28% due 10/20-10/27/1999 70,000 69,468 .34
E.I. du Pont de Nemours and Co. 5.29%-5.60% 71,000 69,205 .33
due 2/2-2/11/2000
Lucent Technologies Inc. 5.08%-5.33% 69,900 68,992 .33
due 9/24/1999-2/1/2000
Ford Motor Credit Co. 5.13%-5.56% due 69,700 68,912 .33
10/7/1999-1/31/2000
National Rural Utilities Cooperative Finance Corp. 65,203 64,902 .31
4.92%-5.23% due 9/10-10/15/1999
CIT Group Holdings, Inc. 5.15%-5.25% due 61,700 61,220 .30
10/19-10/26/1999
Ameritech Capital Funding Corp. 5.10%-5.16% 60,000 59,820 .29
due 9/13-9/29/1999
Eastman Kodak Co. 4.82%-5.30% due 9/10-11/18/1999 60,000 59,573 .29
Coca-Cola Co. 4.88%-5.29% due 9/16/1999-1/25/2000 53,500 53,303 .26
American Express Credit Corp. 5.09%-5.62% 54,000 53,275 .26
due 9/28/1999-2/8/2000
PACCAR Financial Corp. 5.25% due 11/2-11/10/1999 45,811 45,352 .22
Archer Daniels Midland Co. 5.30%-5.33% due 44,046 43,328 .21
11/16/1999-1/24/2000
H.J. Heinz Co. 5.07%-5.34% due 9/9/1999-1/28/2000 40,916 40,460 .19
Emerson Electric Co. 5.31%-5.60% due 1/28-2/23/2000 40,500 39,487 .19
American Home Products Corp. 4.85%-5.09% 34,400 34,353 .17
due 9/3-9/15/1999 (3)
Equilon Enterprises, LLC 5.25% due 10/21/1999 30,000 29,777 .14
International Lease Finance Corp. 5.09%-5.22% 29,300 29,080 .14
due 10/14-10/25/1999
Monsanto Co. 4.80% due 9/9/1999 24,705 24,674 .12
Campbell Soup Co. 4.82% due 1/18/2000 22,514 22,018 .11
-----------------------
1,448,073 7.00
-----------------------
FEDERAL AGENCY DISCOUNT NOTES - 4.19%
Freddie Mac 4.90%-5.40% due 9/10/1999-2/28/2000 453,638 446,315 2.16
Fannie Mae 4.90%-5.21% due 9/3-11/8/1999 304,100 303,313 1.47
Federal Home Loan Banks 5.15%-5.45% due 119,000 116,330 .56
10/15/1999-2/25/2000
-----------------------
865,958 4.19
-----------------------
NON-U.S. CURRENCY - 0.02%
New Taiwanese Dollar NT $125,2 3,950 .02
-----------------------
TOTAL SHORT-TERM SECURITIES (cost: $ 2,318,825,000) 2,317,981 11.21
-----------------------
TOTAL INVESTMENT SECURITIES (cost: $13,606,956,000) 20,801,719 100.62
-----------------------
Excess of payables over cash and receivables 128,806 .62
-----------------------
NET ASSETS $20,672,913 100.00%
========================
(1)Non-income-producing security.
(2)The fund owns 5.26% of the outstanding voting
securities of Microchip Tech, and thus is considered
an affiliate as defined by the Investment
Company Act of 1940.
(3)Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
(4) Valued under procedures established by the
Board of Directors.
(5) When-issued security.
The descriptions of the companies shown in the
portfolio, which were obtained from published
reports and other sources believed to be reliable,
are supplemenatal and are not covered by the
Independent Auditors' Report.
ADR = Amercian Depository Receipt
See Notes to Financial Statements
</TABLE>
<TABLE>
The Growth Fund of America
Financial Statements
<S> <C> <C>
Statement of Assets and Liabilities
- ---------------------------------------------- ---------------------------------
at August 31, 1999 (dollars in thousands)
Assets:
Investment securities at market
(cost: $13,606,956) $20,801,719
Cash 88
Receivables for-
Sales of investments $29,725
Sales of fund's shares 42,497
Dividends and interest 3,429 75,651
---------------------------------
20,877,458
Liabilities:
Payables for-
Purchases of investments 169,687
Repurchases of fund's shares 18,076
Management services 5,765
Other expenses 11,017 204,545
---------------------------------
Net Assets at August 31, 1999-
Equivalent to $26.20 per share on
789,022,681 shares of $0.10 par value
capital stock outstanding (authorized
capital stock--800,000,000 shares) $20,672,913
=====================
Statement of Operations
- ---------------------------------------------- --------------------------
for the year ended August 31, 1999 (dollars in thousands)
Investment Income:
Income:
Dividends $ 72,003
Interest 94,890 $ 166,893
--------------
Expenses:
Management services fee 57,694
Distribution expenses 42,790
Transfer agent fee 13,441
Reports to shareholders 412
Registration statement and prospectus 1,122
Postage, stationery and supplies 2,328
Directors' fees 187
Auditing and legal fees 61
Custodian fee 423
Taxes other than federal income tax 59
Other expenses 233 118,750
--------------------------
Net investment income 48,143
--------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 2,423,859
Net increase in unrealized appreciation
on investments:
Beginning of year 2,366,879
End of year 7,194,763 4,827,884
--------------------------
Net realized gain and unrealized appreciation
on investments 7,251,743
--------------
Net Increase in Net Assets Resulting
from Operations $ 7,299,886
==============
Statement of Changes in Net Assets
- ---------------------------------------------- --------------------------
(dollars in
thousands)
Year ended August 31
1999 1998
Operations:
Net investment income $ 48,14 $ 61,388
Net realized gain on investments 2,423,859 1,530,218
Net increase (decrease) in unrealized appreciation
on investments 4,827,884 (1,640,385)
--------------------------
Net increase (decrease) in net assets
resulting from operations 7,299,886 (48,779)
--------------------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (59,245) (75,837)
Distributions from net realized gain on
investments (1,454,805) (1,201,719)
---------------------------------
Total dividends and distributions (1,514,050) (1,277,556)
----------------------------------
Capital Share Transactions:
Proceeds from shares sold: 174,121,917
and 109,029,348 shares, respectively 4,179,298 2,241,289
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 66,551,910 and 66,729,473 shares,
respectively 1,460,168 1,225,124
Cost of shares repurchased: 109,023,256
and 96,539,758 shares, respectively (2,550,833) (1,987,987)
--------------------------
Net increase in net assets resulting from
capital share transactions 3,088,633 1,478,426
--------------------------
Total Increase in Net Assets 8,874,469 152,091
Net Assets:
Beginning of year 11,798,444 11,646,353
--------------------------
End of year (including distributions in excess of net
investment income and net investment income of $(660)
and $37,030, respectively $ 20,672,913 $ 11,798,444
==========================
See Notes to Financial Statements
</TABLE>
THE GROWTH FUND OF AMERICA, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
SECURITY VALUATION - 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. Short-term securities
maturing within 60 days are valued at amortized cost, which approximates market
value. 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.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed
in terms of non-U.S. currencies are translated 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 non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INC - Security transactions
are accounted for as of the trade date. Realized gains and losses from
securities transactions are determined based on specific identified cost.
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on an accrual basis. Market discounts and premiums on securities
purchased are amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
paid to shareholders are recorded on the ex-dividend date.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
TAXATION - Dividend income is recorded net of non-U.S. taxes paid. For
the year ended August 31, 1999, such non-U.S. taxes were $1,099,000.
CURRENCY GAINS AND LOSSES - Net realized currency gains on dividends,
interest, and other receivables and payables, on a book basis, were $43,000 for
the year ended August 31, 1999.
3. FEDERAL INCOME TAXATION - The fund complies with the requirements of the
Internal Revenue Code applicable to regulated investment companies and intends
to distribute all of its net taxable income and net capital gains for the
fiscal year. As a regulated investment company, the fund is not subject to
income taxes if such distributions are made. Required distributions are
determined on a tax basis and may differ from net investment income and net
realized gains for financial reporting purposes. In addition, the fiscal year
in which amounts are distributed may differ from the year in which the net
investment income and net realized gains are record by the fund.
As of August 31, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $7,194,763,000, of which
$7,812,622,000 related to appreciated securities and $617,859,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the year ended August 31, 1999.
Net gains related to non-U.S. currency transactions of $43,000 were treated
as an adjustment to ordinary income for federal income tax purposes. The cost
of portfolio securities for book and federal income tax purposes was
$13,606,956,000 at August 31, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $57,694,000 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 $1.0 billion
of average net assets; 0.40% of such assets in excess of $1.0 billion but not
exceeding $2.0 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; 0.33% 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.
DISTRIBUTION EXPENSES - 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, 1999, distribution expenses under the Plan were $42,790,000. As of
August 31, 1999, accrued and unpaid distribution expenses were $10,210,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $11,344,000(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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $13,441,000.
DEFERRED DIRECTORS' FEES - 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 August 31, 1999, aggregate deferred amounts and earnings
thereon since the deferred compensation plan's adoption (1993) net of any
payments to Directors were $661,000.
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.
5. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $7,777,440,000 and $6,943,340,000, respectively,
during the year ended August 31, 1999.
As of August 31, 1999, accumulated undistributed net realized gain on
investments was $2,237,712,000 and additional paid-in capital was
$11,265,209,000. The fund reclassified $26,588,000 from undistributed net
investment income and $146,687,000 from undistributed net realized gains to
additional paid-in capital for the year ended August 31, 1999.
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 $423,000 includes $30,000 that was paid by these credits
rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Per-Share Data and Ratios /1/
Year EndAugust 31
1999 1998 1997 1996 1995 1994
-------------- --------------------------
Net Asset Value, Beginning of Year $17.95 $20.14 $15.39 $16.55$13.81$13.58
-------------- --------------------------
Income from Investment Operations:
Net investment income .07 .10 .13 .13 .13 .07
Net gains(losses) on securities (both
realized and unrealized) 10.48 (.10) 5.59 (.01) 3.21 .71
-------------- --------------------------
Total from investment operations 10.55 .00 5.72 .12 3.34 .78
-------------- --------------------------
Less Distributions:
Dividends (from net investment income) (.09) (.13) (.11) (.14) (.08) (.06)
Distributions (from captital gains) (2.21) (2.06) (.86)(1.14) (.52) (.49)
-------------- --------------------------
Total distributions (2.30) (2.19) (.97)(1.28) (.60) (.55)
-------------- --------------------------
Net Asset Value, End of Year $26.20 $17.95 $20.14 $15.39$16.55$13.81
============== ==========================
Total Return /2/ 61.26% (.24)% 38.54% .90%25.56% 5.98%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $20,673$11,798 $11,646$8,511$7,525$5,427
Ratio of expenses to average net
assets .70% .70% .72% .74% .75% .78%
Ratio of net income to average net
assets .28% .48% .73% .82% .90% .49%
Portfolio turnover rate 45.61% 38.84% 34.10% 27.95%26.90%24.77%
/1/ Adjusted to reflect the 100% share dividend
effective at the close of business on
December 12, 1996.
/2/ Excludes maximum sales charge of 5.75%
</TABLE>
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 investment portfolio, as of
August 31,1999, 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, 1999 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, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the per-share data and ratios
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Los Angeles, California
September 30, 1999
Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
Dividends and Distributions per Share
<TABLE>
<CAPTION>
<S> <C> <C> <C>
To Shareholders Payment Date From Net From Net
of Record Investment Realized
Income Long-Term
Gains
December 23, 1998 December 24, 1998 $0.09 $2.21
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 100% of the
dividends paid by the fund from net investment income represents qualifying
dividends.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
Since the amounts above are reported for the fund's FISCAL YEAR and not the
CALENDAR YEAR, shareholders should refer to their Form 1099 DIV or other tax
information which will be mailed in January 2000 to determine the CALENDAR YEAR
amounts to be included on their 1999 tax returns. Shareholders should consult
their tax advisers.
