[The American Funds Group(r)
THE GROWTH FUND OF AMERICA
[photos: garden and flowers]
Annual Report
for the year ended
August 31, 1999
CULTIVATING YOUR FUND'S PORTFOLIO
THE GROWTH FUND OF AMERICA(R)
invests in a wide range of companies that appear to offer superior
opportunities for growth of capital. The Growth Fund of America is one of the
29 mutual funds in The American Funds Group,(r) the nation's third-largest
mutual fund family. For more than six decades, Capital Research and Management
Company, the American Funds adviser, has invested with a long-term focus based
on thorough research and attention to risk.
ON OUR COVER:
Managing The Growth Fund of America has a lot in common with gardening.
Starting on page 4, we discuss our investment tools and take a look at some of
the fund's holdings and their different growth patterns since becoming part of
the GFA garden.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TWO-YEAR LIFETIME
12-MONTH AVERAGE ANNUAL AVERAGE ANNUAL
TOTAL RETURNS COMPOUND RETURNS COMPOUND RETURNS
(9/1/98-8/31/99) (9/1/97-8/31/99) (12/1/73-8/31/99)
THE GROWTH FUND OF AMERICA +61.3% +26.8% +17.7%
Standard & Poor's 500 +39.8 +22.9 +14.9
Composite Index
Lipper Capital Appreciation +44.4 +17.5 +14.6
Funds Index
Lipper Growth Funds Index +41.3 +20.1 +13.8
</TABLE>
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the fund's total returns and average annual
compound returns with all distributions reinvested for periods ended September
30, 1999 (the most recent calendar quarter), assuming payment of the 5.75%
maximum sales charge at the beginning of the stated periods - 10 years:
+326.28% or +15.60% a year; 5 years: +172.19%, or +22.17% a year; 12 months:
+39.59%. Sales charges are lower for accounts of $50,000 or more.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.
FELLOW SHAREHOLDERS:
We are pleased to report exceptional gains for The Growth Fund of America's
1999 fiscal year. The fund rose more than 60%, making this the most successful
fiscal period in 21 years.
The value of your holdings rose 61.3% for the 12 months ended August 31 if you
reinvested the dividend of 9 cents a share and capital gain distribution of
$2.21 a share paid in December. Meanwhile, the unmanaged Standard & Poor's 500
Stock Composite Index rose 39.8% and the Lipper Capital Appreciation Index rose
44.4%.
While we are enthusiastic about this year's gain, we should point out that its
magnitude, as well as the small loss we reported last year, owe as much to the
vagaries of the calendar as anything else. The beginning of the 1999 fiscal
year (on September 1, 1998) coincided with the end of last year's sharp market
decline, thus exaggerating last year's reported loss and this year's reported
gain.
That's why we believe in this unusual instance it may be more realistic to look
at the fund's returns over the past two years (the 24 months ended August 31).
In that period, the fund gained 60.9%, or an average annual compound return of
26.8%. Even at 26.8%, it is an exceptional return relative to the fund's
history and benchmarks.
TECHNOLOGY STOCKS CONTINUE TO SURGE
Technology companies have been on an upward trend during the past year, driven
by strong global demand for sophisticated electronic technologies. The
explosive growth of the Internet fueled much of this demand as companies
embraced electronic commerce and other Internet applications.
The fund's technology holdings are concentrated in companies that provide
infrastructure for the Internet, including hardware, software and networking
materials. Among the most significant of these holdings are Oracle, a leading
developer of business computer software (the company's stock rose 175% over the
12 months), and Microsoft, the world's largest software company (+93%). Other
Internet infrastructure companies in the portfolio include Corning, a
manufacturer of fiber-optic cables (+170%), and Cisco Systems (+148%), the
world's largest supplier of routers and other network products.
Makers of semiconductors and other electronic components also showed
spectacular growth for the 12-month period. The stock of Texas Instruments, the
fund's fourth-largest holding, rose 244%. Intel, a leading maker of
microprocessors and the fund's seventh-largest holding, saw its stock rise
131%. Other notable performers were PMC-Sierra (+509%), a maker of
semiconductors for high-speed network communications products, and Micron
Technology (+228%), a manufacturer of dynamic random access memory and other
semiconductor components. Each of these four holdings constitutes more than 1%
of the fund's assets.
MEDIA FIRMS CONSOLIDATE AND EXPAND
Media and entertainment stocks also benefited from the rise of the Internet.
The cable television industry continued to compete with telephone companies for
the delivery of high-speed data, video and telephone services over advanced
communications lines, known as broadband. This precipitated a wave of mergers
in the past year, including AT&T's acquisitions of Tele-Communications for $32
billion and of MediaOne Group for about $60 billion. AT&T's offer for MediaOne
topped an earlier bid from Comcast (+56%).
Meanwhile, media companies prospered on the heels of their own "merger mania,"
often in the form of alliances between content producers and distributors. Just
after the close of the fund's fiscal year, the entertainment conglomerate
Viacom (+70%), the owner of Paramount Pictures, MTV and Nickelodeon, announced
plans to purchase broadcasting giant CBS. Viacom has also bought King World
Productions (+82%), the producer and distributor of syndicated TV shows like
"Jeopardy" and "Wheel of Fortune." Viacom is the fund's second-largest holding;
CBS stock was recently purchased for the fund.
BIOTECHNOLOGY SOARS
A number of pharmaceutical and biotechnology stocks in the fund's portfolio
have done well this year, with many new promising drugs coming to the market.
Immunex, a maker of drugs to treat cancer, arthritis and asthma, launched a
successful new treatment for rheumatoid arthritis and saw its stock rise more
than 400% during the 12 months. Gilead Sciences, which specializes in antiviral
drugs, also had a spectacular year (+327%).
Other new treatments on the market include Celexa, an antidepression drug
developed by Forest Laboratories (+48%), and Xopenex, an improved version of
the asthma drug Albuterol, developed by Sepracor (+57%). Elan, an Irish
pharmaceutical company whose vaccine against Alzheimer's disease is now in
clinical trials, was recently added to the fund's portfolio.
In any period, some companies will progress while others lag. This period we
were fortunate that most of our holdings did very well. Indeed, of the 131
stocks held in the fund's portfolio throughout the year, only 19 declined in
value. Two of our worst stocks were Waste Management (-51%) and Allied Waste
Industries (-33%), both leading providers of waste management services. The
agrochemical giant Monsanto (-25%) was hurt by consumer concerns about
genetically altered crops, which overshadowed the commercial success of its new
agricultural biotechnology products.
LOOKING AHEAD
The past 12 months marked the eighth consecutive year of solid economic growth
in the United States. Reflecting on this continued prosperity as well as a year
of exceptional gains for your fund, we continue to believe that growth-oriented
investors should maintain a long-term perspective.
Our cautious approach has served shareholders well during the 26 years we have
managed The Growth Fund of America and the 68 years since the founding of
Capital Research and Management Company, adviser to the fund and its 28
counterparts in the American Funds family. Through careful research and a
unique approach to investment management, we remain committed to finding the
best investment opportunities for shareholders with the patience to ride out
the ups and downs of the stock market.
Cordially,
/s/James F. Rothenberg /s/James E. Drasdo
James F. Rothenberg James E. Drasdo
Chairman of the Board President
October 14, 1999
THE VALUE OF A LONG-TERM PERSPECTIVE:
How A $10,000 Investment Grew From December 1, 1973 Through August 31, 1999
$629,203/1//2/
The Growth
Fund of America
$357,431/3/
Standard
& Poor's 500
Composite Index
$332,052/4/
Lipper Capital
Appreciation
Funds Index
$277,049/4/
Lipper Growth
Funds Index
$36,405/5/
Consumer
Price Index
$10,000/1/
original
investment
[begin mountain chart]
<TABLE>
<CAPTION>
Year The Growth Standard & Lipper Capital Lipper Consumer
Ended Fund Poor's 500 Appreciation Growth Price Index/5/
August 31 of Composite Fund Index/4/ Fund
America /1,2/ Index/3/ Index/4/
<S> <C> <C> <C> <C> <C>
1974 7,874 7,737 7,563 7,204 10,893
1975 9,792 9,769 9,379 9,126 11,830
1976 11,165 12,040 11,009 10,607 12,505
1977 12,377 11,823 11,796 10,558 13,333
1978 20,136 13,292 15,352 13,315 14,379
1979 23,595 14,849 17,603 15,033 16,078
1980 31,496 17,539 23,344 19,013 18,148
1981 35,383 18,469 25,992 20,125 20,109
1982 38,595 19,034 27,089 20,339 21,285
1983 56,382 27,501 43,555 30,631 21,830
1984 56,805 29,185 41,112 29,823 22,767
1985 64,493 34,516 47,110 34,712 23,529
1986 82,962 48,055 63,140 46,117 23,900
1987 109,730 64,672 81,186 59,044 24,924
1988 97,962 53,072 65,886 49,752 25,926
1989 136,507 73,928 89,371 67,293 27,146
1990 123,184 70,156 81,474 62,015 28,671
1991 160,815 89,046 103,691 79,872 29,760
1992 168,703 96,145 108,930 84,053 30,697
1993 210,268 110,784 134,479 101,030 31,547
1994 222,852 116,826 140,353 105,782 32,462
1995 279,811 141,884 171,806 128,702 33,312
1996 282,323 168,467 192,511 142,829 34,270
1997 391,123 237,076 240,565 191,969 35,033
1998 390,174 255,636 229,985 196,093 35,599
1999 629,203 357,431 332,052 277,049 36,405
</TABLE>
[end chart]
<TABLE>
<CAPTION>
<S> <C>
AVERAGE ANNUAL COMPOUND RETURNS*
for the periods ended August 31, 1999
10 years: +15.82%
5 years: +21.62
1 year: +51.95
</TABLE>
*Assumes reinvestment of all distributions and payment of the maximum 5.75%
sales charge at the beginning of the stated periods.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended August 31 1974# 1975 1976 1977 1978 1979 1980
TOTAL VALUE
Dividends reinvested -- $362 283 -- 254 -- 307
Value at year-end/1/ $7,874 9,792 11,165 12,377 20,136 23,595 31,496
GFA Total Return (21.3) 24.4 14.0 10.9 62.7 17.2 33.5
Year ended August 31 1981 1982 1983 1984 1985 1986 1987
TOTAL VALUE
Dividends reinvested 546 1,673 2,290 1,643 1,249 979 1,354
Value at year-end/1/ 35,383 38,595 56,382 56,805 64,493 82,962 109,730
GFA Total Return 12.3 9.1 46.1 0.8 13.5 28.6 32.3
Year ended August 31 1988 1989 1990 1991 1992 1993 1994
TOTAL VALUE
Dividends reinvested 1,502 1,743 3,611 3,208 2,510 1,454 929
Value at year-end/1/ 97,962 136,507 123,184 160,815 168,703 210,268 222,852
GFA Total Return (10.7) 39.3 (9.8) 30.5 4.9 24.6 6.0
Year ended August 31 1995 1996 1997 1998 1999
TOTAL VALUE
Dividends reinvested 1,372 2,452 2,019 2,525 1,956
Value at year-end/1/ 279,811 282,323 391,123 390,174 629,203
GFA Total Return 25.6 0.9 38.5 (0.2) 61.3
</TABLE>
Average
annual
compound
return
for 25-3/4
years
17.5%/1/
Past results are not predictive of future results. The indexes are unmanaged
and do not reflect sales charges, commissions or expenses.
# For the period December 1, 1973 (when Capital Research and Management Company
became the fund's investment adviser) through August 31, 1974.
/1/These figures, unlike those shown earlier in this report, reflect payment of
the maximum sales charge of 5.75% on the $10,000 investment. Thus, the net
amount invested was $9,425. As outlined in the prospectus, the sales charge is
reduced for larger investments. The maximum initial sales charge was 8.5% prior
to July 1, 1988. There is no sales charge on dividends or capital gain
distributions that are invested in additional shares. Results shown do not take
into account income or capital gain taxes.
/2/Includes reinvested dividends of $36,221 and reinvested capital gain
distributions of $182,904.
/3/Includes reinvested dividends of $50,094.
/4/Includes reinvested dividends.
/5/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
CULTIVATING YOUR FUND'S PORTFOLIO
[photos: gardens]
BUILDING A GARDEN
OF GROWTH FOR
THE FUTURE
GARDENING IS AN ART FORM. For the weekend hobbyist or serious horticulturist,
the process is much the same: select the seedlings, plant in the right
conditions and provide the essential nutrients. The real challenge is caring
for the plants daily while maintaining a critical eye over the development of
the garden as a whole. Size, color, time of bloom and rate of growth are all
things that every gardener must consider.
Managing The Growth Fund of America has a lot in common with gardening. The
companies in the fund's portfolio are a blend of plants at various stages of
growth. Some are seedlings, others are budding flowers and still others are
flowers in full bloom. In the pages that follow, we will discuss some of the
tools we use to manage your investment and then take a closer look at some of
the fund's holdings and their different growth patterns since becoming part of
the GFA garden.
OUR INVESTMENT MANAGEMENT TOOLS
We seek a diversity of ideas, we promote collaboration among our analysts and
portfolio counselors, and we value independence and conviction in selecting
investments for your fund. These are all qualities that help create a beautiful
garden, which must have a variety of color and type of planting, a selection of
plants based on thorough knowledge of local growing conditions, and a design
that reflects the individual vision of the gardener.
We accomplish these goals with a unique system that was pioneered more than 40
years ago by the fund's investment adviser, Capital Research and Management
Company. The multiple portfolio counselor system divides GFA's assets into a
number of distinct parts. The fund's six portfolio counselors manage their
respective parts autonomously, subject to overall fund guidelines and
objectives. The seventh piece of the fund, known as the research portfolio, is
managed by more than two dozen research analysts who, in addition to providing
investment ideas to portfolio counselors, also invest in their best research
ideas. Analysts cover specific industries while portfolio counselors are "big
picture" investors who select companies from a range of industries.
DIVERSIFICATION
The portfolio counselors and research analysts bring different investment
styles, ideas and strengths to the management of the fund. Since they all
select companies for the fund, the result is a diverse mixture of stocks chosen
from many different perspectives. Shareholders benefit from this
diversification because it tends to reduce risk while allowing participation in
the growth of a wide variety of companies.
COLLABORATION
GFA portfolio counselors and research analysts share information with each
other and the 85 other investment professionals at Capital Research. From nine
research offices worldwide, these individuals exchange investment ideas and
discuss financial trends by phone, e-mail or in person. This close partnership
is designed to turn up the very best companies for GFA and the 28 other funds
in the American Funds family.
INDEPENDENCE AND CONVICTION
Unlike a committee system, which requires consensus among fund managers, the
multiple portfolio counselor system allows portfolio counselors and research
analysts to act independently and follow their convictions. After researching
every aspect of the companies they follow, analysts recommend as well as invest
in the companies they believe have the greatest potential. Shareholders, in
turn, reap the benefits of investing in more companies at good values.
Let's take a look at a few of these investments now.
SEEDLING COMPANIES
[photos: gardens]
SOWING THE SEEDS OF GROWTH
[Begin Sidebar]
Opportunities to sow the seeds of GROWTH can be found in many places. That's
why our investment PROFESSIONALS spend hundreds of hours and travel millions of
miles searching for good companies around the globe. In 1998, Capital Research
spent more than $90 million on investment research, making more than 9,000
RESEARCH visits to 47 countries.
[End Sidebar]
Promising new companies, new technologies or unusual market conditions can
create exceptionally fertile conditions for growth. Here are examples of
several opportunities that are developing for the fund.
AFFYMETRIX
Affymetrix, a biotechnology company, pioneered a gene analysis technology known
as GeneChip. Using miniaturized probes, the chip simultaneously monitors
thousands of genes, allowing researchers to map out the genes expressed in
individual cells and to establish whether a specific drug turns these genes
"on" or "off."
With sales in the first half of calendar 1999 up nearly 150% year over year,
the company's share price has grown nicely since becoming a GFA holding six
months ago. "I feel confident that the GeneChip technology has tremendous
potential to help researchers and companies harness the power of genetic
information," says Rick Beleson, the fund's health care analyst.
BUSINESS-TO-BUSINESS E-COMMERCE
An increasing number of consumers are using the Internet for retail purchases
such as clothing, books, CDs and computers. Electronic commerce between
businesses, however, is still in its infancy.
"Business-to-business e-commerce is far more complex than transactions between
consumers and businesses because it requires customized platforms that are
costly and difficult to build," says Peter Labon, one of GFA's technology
analysts. "I'm researching a number of promising companies that are providing
the software and building the portals and other infrastructure to make it
possible." Business-to-business e-commerce is projected to grow in volume from
$15 billion in 1998 to almost $200 billion in 2003.
"JAPAN, INC."
For the last decade, Japan's economy has experienced its worst crisis since
World War II. Consumers and investors have lost confidence following the
collapse of the stock market, real estate prices, company profits and some of
the country's best-known banks. Thanks in part to government efforts to save
the banks and flood the market with liquidity, there are signs that the economy
is beginning to emerge from the doldrums.
"A lot of what happened to industrial America in the mid-1980s is happening in
Japan now. Companies are laying off employees, implementing performance-based
compensation and selling off unprofitable divisions," says Gordon Crawford, a
GFA analyst and portfolio counselor. "I think this is a great opportunity for
us to buy Japanese companies at good values in growth industries like
electronics and semiconductors." Up to 10% of the fund's assets can be invested
in companies based outside the United States.
The promise for seedling companies and investment concepts may not be fulfilled
immediately, so it takes patience and a long-term outlook to invest in them
successfully.
BUDDING COMPANIES
TENDING TO THE BUDS OF GROWING PLANTS
[photos: gardens]
[Begin Sidebar]
It's important to keep a CLOSE EYE on budding companies. Through frequent
visits to companies as well as conversations with customers, suppliers and
competitors, the fund's analysts DIAGNOSE potential problems and evaluate
future prospects - and discern as WELL as they can the direction and pattern of
a company's growth.
[End Sidebar]
We have chosen three holdings in the fund's portfolio to illustrate the
complexity of growing companies: first, a pioneer of new technology with a
148-year history; second, a retailer that has contributed to fashion for more
than three decades; and third, an up-and-coming biopharmaceutical company.
CORNING > IN THE FUND SINCE JULY 1998
Founded as a glass company in 1851, Corning is now a leading manufacturer of
high-tech communications materials such as fiber-optic cable and liquid crystal
display glass. The company has always been at the forefront of invention: It
supplied the glass for Thomas Edison's first light bulb and developed the
red-yellow-green traffic light system.
In 1993, AT&T chose Corning to provide fiber-optic couplers for its
next-generation telecommunications system, giving the company a leading role in
the fiber-optic revolution. "Corning is the world leader in optical fiber and
cable," says Barry Crosthwaite, the fund's capital equipment analyst. "It has
one of the highest research and development budgets in the industry, which has
helped the company maintain low costs and remain on the cutting edge of new
products like high-capacity optical fiber."
THE LIMITED > IN THE FUND SINCE APRIL 1996
The Limited, a national retailer of fashionable clothing for young people,
began as a single store in 1963. After expanding the brand nationwide, in the
early 1980s the company entered a new growth phase, acquiring specialty
retailers and launching new businesses like Express and Bath & Body Works.
Financial difficulties caused by a decade of overexpansion led the company to
reassess its business. Since the mid-1990s, management has focused on
consolidating brands; nonperforming parts of the business have been sold or
eliminated. "The restructuring has added depth to the company's divisions,
particularly in the areas of management, product quality and marketing," says
Mark Merritt, GFA's retail analyst. "Parts of the company, like Victoria's
Secret, are in full bloom now. And I see seeds of future growth in the
successful divisions as well as the ones that are still turning around."
IMMUNEX > IN THE FUND SINCE JULY 1998
Immunex, a leading biopharmaceutical company with 1998 sales of $170 million,
has a number of promising drugs on the market and in development. Among them is
Enbrel, a drug to treat rheumatoid arthritis, a painful disease that affects
more than 2 million Americans. "This is really a miracle drug because it allows
many patients to lead a normal life, usually within a few days of starting
treatment," says health care analyst Rick Beleson. "Enbrel is the first in a
new class of drugs that actually interferes with the process that causes
arthritis."
Other Immunex products include Leukine, a drug that stimulates white blood
cells for leukemia patients, and Novantrone, an approved drug for certain rare
cancers that is under study as a treatment for progressive multiple sclerosis.
BLOOMING COMPANIES
BRINGING YOUR GARDEN TO FULL BLOOM
[Begin Sidebar]
As companies mature, their product lines and consumer markets expand. To help
manage the wealth of INFORMATION and capitalize on individual EXPERTISE, many
analysts at Capital Research collaborate through a RESEARCH "cluster," a group
of analysts who cover different segments of the same industry, such as
telecommunications or banking.
[End Sidebar]
Like a flower, a company that is in full bloom is easy to spot. The difficulty
is in knowing when the bloom has peaked. Two of the following three companies
from the fund's portfolio were recently sold after their stock prices soared.
The third holding has bloomed often during the 15 years it has been owned in
the fund.
AIRTOUCH > SOLD IN JUNE 1999
AirTouch, a leading wireless communications company, became a fund holding
after it was spun off from its parent in 1994. "The stock went nowhere for a
few years as the company invested aggressively in cellular systems outside the
U.S., which depressed cash flow," says Brad Vogt, the fund's telecom analyst
and coordinator of the research portfolio. "With two of our analysts in Europe,
I looked at a joint venture between AirTouch and the German conglomerate
Mannesmann. This led us to buy more AirTouch stock because the market wasn't
recognizing the potential of wireless in Europe."
The recent AirTouch merger with Vodafone has created the world's largest
wireless operator, with 28 million subscribers and a market capitalization of
$115 billion (more than the combined market caps of Ford and General Motors).
The decision to sell the stock a few months ago was based on the high valuation
it reached and the emergence of other attractive opportunities in the
telecommunications market.
COX COMMUNICATIONS > SOLD IN MAY 1999
The broadband network of Cox Communications delivers cable television, digital
video, telephone and Internet access to more than 3.8 million U.S. customers. A
flood of mergers has swept the cable industry this year as the business
consolidates into a handful of companies. Many of Cox's rivals, including Time
Warner and Comcast, are significant GFA holdings.
In May, portfolio counselor Gordon Crawford made a decision to sell the fund's
shares of Cox Communications. "Cox is a very well-managed company and it's had
a great run since we bought it at the bottom of the cable market in 1997. The
market has since recognized Cox's strengths and the valuation is not as
attractive anymore, though we might get interested again in the future," he
says.
TEXAS INSTRUMENTS > IN THE FUND SINCE APRIL 1984
Texas Instruments is a pioneer in building the infrastructure of the
Information Age: It is the leading manufacturer of digital signal processors
(DSPs), which are used in cellular phones, modems and other advanced electronic
devices. "The DSP is a central chip of the communications age. The ones built
by Texas Instruments today can process a record 2 billion instructions a
second," says Terry McGuire, one of the fund's technology analysts.
The company's core business used to be memory chips. When prices collapsed in
the wake of the 1997 Asian financial crisis, many investors bailed out of Texas
Instruments, but the fund held on. The market has since recognized the
potential of DSPs and the wisdom of the company's decision to sell its memory
chip business last year. During the fund's 1999 fiscal year, the stock of Texas
Instruments rose nearly 250%.
In the years to come, the portfolio counselors and research analysts of the
fund will continue to search for the best investment opportunities. We hope you
will maintain a long-term perspective - through good and bad seasons - as we
help you cultivate a garden of growth for your future.
WHAT MAKES THE AMERICAN FUNDS DIFFERENT?
[photo: American flag]
As a shareholder in The Growth Fund of America, you are also a member of THE
AMERICAN FUNDS GROUP, the nation's THIRD-LARGEST mutual fund family. You won't
find us advertised, yet thousands of financial advisers RECOMMEND the American
Funds for their clients' serious money - money set aside for education, a home,
retirement and other IMPORTANT DREAMS.
What the 29 funds in our group have in common is a commitment to your best
interests and the proven approach of our investment adviser, Capital Research
and Management Company.
In business since 1931, Capital's calling cards include:
A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow short-term fads, we rely on our own intensive research to
find well-managed companies with reasonably priced shares and solid, long-term
potential. Despite our size, we offer relatively few funds compared with many
large fund families, allowing us to maintain a careful focus on our objectives
and enabling you to benefit from economies of scale.
A GLOBAL PERSPECTIVE
We opened our first overseas office in 1962, well before most mutual funds
began investing internationally. Today, the American Funds draw on one of the
industry's most globally integrated research networks. We spend substantial
resources getting to know companies and industries around the world.
A MULTIPLE PORTFOLIO COUNSELOR SYSTEM
More than 40 years ago, we developed a unique strategy for managing investments
that blends teamwork with individual accountability. Every American Fund is
divided among a number of portfolio counselors, each of whom manages his or her
portion independently, within each fund's objectives; in most cases, research
analysts manage a portion as well. Over time, this method has contributed to
consistency of results and continuity of management.
EXPERIENCED INVESTMENT PROFESSIONALS
Nearly 90% of the portfolio counselors who serve the American Funds were in the
investment business before the stock market decline in October 1987. Long
tenure and experience through a variety of market conditions mean we aren't
"practicing" with your money.
A COMMITMENT TO LOW OPERATING EXPENSES
You can't control market returns, but you can control what you invest in and
how much you pay to own it. American Funds provide exceptional value for
shareholders, with operating expenses that are among the lowest in the mutual
fund industry. Our portfolio turnover rate is low as well, keeping transaction
costs and tax consequences contained.
[photo: globe]
A PORTFOLIO FOR EVERY INVESTOR
Most financial advisers suggest that investors balance their portfolios by
investing across several types of investments. Which mix is right for you? That
depends on a number of things - including your risk tolerance, investment time
horizon and financial goals. The American Funds Group offers 29 funds with an
array of investment objectives to help you and your financial adviser build a
portfolio specifically tailored to your needs.
GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(r)
EuroPacific Growth Fund(r)
The Growth Fund of America(r)
The New Economy Fund(r)
New Perspective Fund(r)
New World Fund(SM)
SMALLCAP World Fund(r)
GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(r)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(r)
Washington Mutual Investors Fund(SM)
EQUITY-INCOME FUNDS
Emphasis on above-average income and growth
through stocks and/or bonds
Capital Income Builder(r)
The Income Fund of America(r)
BALANCED FUND
Emphasis on long-term growth and current income
through stocks and bonds
American Balanced Fund(r)
INCOME FUNDS
Emphasis on current income through bonds
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(r)
Intermediate Bond Fund of America(r)
U.S. Government Securities Fund(SM)
TAX-EXEMPT INCOME FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(r)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(r)
State-specific tax-exempt funds
The Tax-Exempt Fund of California(r)
The Tax-Exempt Fund of Maryland(r)
The Tax-Exempt Fund of Virginia(r)
MONEY MARKET FUNDS
Seek stable monthly income through money market instruments
The Cash Management Trust of America(r)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
For more complete information about any of the funds, including charges and
expenses, please obtain a prospectus from your investment dealer, download one
from our Web site at www.americanfunds.com, or phone the fund's transfer agent,
American Funds Service Company, at 800/421-0180. Read the prospectus carefully
before you invest or send money. For further information, ask your investment
dealer for a copy of A Portfolio for Every Investor.
<TABLE>
The Growth Fund of America, Inc.
Investment Portfolio, August 31, 1999
<S> <C> <C> <C>
[pie charts]
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
[end pie charts]
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.
SHAREHOLDER SERVICES
AMERICAN FUNDSLINE(R)
[illustration: phone]
Use our 24-hour automated phone system for fund information and transactions.
FUNDSLINE ONLINE(R)
[illustration: computer]
Visit our Web site when you want to access your account, download a prospectus,
or find fund information.
REDUCED SALES CHARGE
[illustration: coins]
Larger purchases may qualify for a reduced sales charge. To help reach a
breakpoint, you may -
* Add your present purchase to the value of all eligible household accounts
and/or
* Add your present purchase to purchases you intend to make over 13 months
Assets in money market funds generally do not apply when determining sales
charges.
RETIREMENT PLANS
[illustration: crossroad]
A wide range of fund choices for individual and company-sponsored retirement
plans.
AMERICAN FUNDSLINK(SM)
[illustration: two buildings]
Link your fund account to your bank account for direct transfers between the
two and to purchase shares using American FundsLine or FundsLine OnLine.
AUTOMATIC TRANSACTIONS
[illustration: calendar]
Use this service when you want to purchase, sell and exchange shares on a
regular basis.
FLEXIBLE DIVIDEND OPTIONS
[illustration: money flowing from one source to another]
Use your dividend and capital gain distributions to meet your changing needs.
You may -
* Invest dividends and capital gain distributions back into the fund
* Diversify by investing dividends and capital gain distributions into another
American Fund
* Take dividends in cash
* Have dividends paid directly to someone else
Because certain transactions have restrictions or tax consequences, please
consult your financial adviser before requesting changes.
WOULD YOU LIKE MORE INFORMATION?
Your financial adviser will be happy to explain these services in greater
detail, or you may contact American Funds Service Company.
TO CONTACT AMERICAN FUNDS SERVICE COMPANY:
SHAREHOLDER SERVICES REPRESENTATIVE - 8 a.m. to 8 p.m. Eastern time -
800/421-0180
AMERICAN FUNDSLINE - 24-hour automated telephone system - 800/325-3590
FUNDSLINE ONLINE - Web site - www.americanfunds.com
By mail - Write to the service center nearest you.
(If you live outside the United States, please write to the Western service
center.)
[maps of states]
WESTERN
American Funds
Service Company
P.O. Box 2205
Brea, CA 92822-2205
WEST CENTRAL
American Funds
Service Company
P.O. Box 659522
San Antonio, TX 78265-9522
EAST CENTRAL
American Funds
Service Company
P.O. Box 6007
Indianapolis, IN 46206-6007
EASTERN
American Funds
Service Company
P.O. Box 2280
Norfolk, VA 23501-2280
Please obtain the applicable prospectuses from your financial adviser or our
Web site and read them carefully before investing or sending money. American
Funds reserves the right to terminate or modify these services.
BOARD OF DIRECTORS
GUILFORD C. BABCOCK
San Marino, California
Associate Professor of Finance,
Marshall School of Business,
University of Southern California
JAMES E. DRASDO
Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and
Management Company
ROBERT A. FOX
Livingston, California
President and Chief Executive Officer,
Foster Farms Inc.
ROBERTA L. HAZARD
McLean, Virginia
Consultant; Rear Admiral,
U.S. Navy (retired)
LEONADE D. JONES
Burlingame, California
Management consultant;
former Treasurer,
The Washington Post Company
JOHN G. MCDONALD
Stanford, California
The IBJ Professor of Finance,
Graduate School of Business,
Stanford University
GAIL L. NEALE
Burlington, Vermont
President, The Lovejoy Consulting
Group, Inc.; former Executive Vice
President of the Salzburg Seminar
JAMES W. RATZLAFF
San Francisco, California
Senior Partner,
The Capital Group Partners L.P.
HENRY E. RIGGS
Claremont, California
President, Keck Graduate Institute
of Applied Life Sciences
JAMES F. ROTHENBERG
Los Angeles, California
Chairman of the Board of the fund
President and Director,
Capital Research and
Management Company
PATRICIA K. WOOLF, PH.D.
Princeton, New Jersey
Private investor; lecturer,
Department of Molecular Biology,
Princeton University;
corporate director
OTHER OFFICERS
GORDON CRAWFORD
Los Angeles, California
Senior Vice President of the fund
Senior Vice President and Director,
Capital Research and
Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Senior Vice President of the fund
Executive Vice President and Director,
Capital Research and
Management Company
DONALD D. O'NEAL
San Francisco, California
Senior Vice President of the fund
Vice President,
Capital Research and
Management Company
RICHARD M. BELESON
San Francisco, California
Vice President of the fund
Senior Vice President and Director,
Capital Research Company
MICHAEL T. KERR
Los Angeles, California
Vice President of the fund
Senior Vice President,
Capital Research Company
BRADLEY J. VOGT
Washington, D.C.
Vice President of the fund
Vice President and Director,
Capital Research Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and
Management Company
SHERYL F. JOHNSON
Norfolk, Virginia
Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and
Management Company
ROBERT P. SIMMER
Norfolk, Virginia
Assistant Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and
Management Company
[The American Funds Group(r)]
OFFICE OF THE FUND
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, California 94120-7650
INVESTMENT ADVISER
Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
have updated all computer systems to process date-related information properly
following the turn of the century. Other preparations continue, including
external monitoring and contingency planning. If you'd like more detailed
information, call Shareholder Services at 800/421-0180, ext. 21, or visit our
Web site at www.americanfunds.com
This report is for the information of shareholders of The Growth Fund of
America, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after December 31, 1999, this report must be accompanied by an
American Funds Group Statistical Update for the most recetly completed calendar
quarter.
Printed on recycled paper
Litho in USA CD/L/4360
Lit. No. GFA-011-1099
