[THE AMERICAN FUNDS GROUP(R)]
THE GROWTH FUND OF AMERICA
INVESTING FOR GROWTH
25 YEARS
[watermark: depiction of line graph]
Semi-Annual Report for the six months ended February 28, 1999
THE GROWTH FUND OF AMERICA(R) invests in a wide range of companies that appear
to offer superior opportunities for growth of capital.
The Growth Fund of America is one of the 28 mutual funds in The American Funds
Group,(r) 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:
This year The Growth Fund of America celebrates its 25th anniversary under the
management of Capital Research and Management Company. The sketch of how an
investment in the fund has grown since December 1, 1973, illustrates that
investing for growth is unpredictable in the short run but can be rewarding for
long-term investors.
RESULTS AT A GLANCE (THROUGH 2/28/99)
<TABLE>
<CAPTION>
<S> <C> <C>
Total Average annual
returns compound returns
6 months +42.6% -
12 months +26.4 -
5 years +153.3 +20.4%
10 years +401.1 +17.5
Lifetime* +5,807.0 +17.5
</TABLE>
All figures assume reinvestment of distributions.
*Since 12/1/73, when Capital Research and Management Company became the fund's
investment adviser.
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the fund's total returns and average annual
compound returns with all distributions reinvested for periods ended March 31,
1999 (the most recent calendar quarter), assuming payment of the 5.75% maximum
sales charge at the beginning of the stated periods - 10 years: +372.55%, or
+16.80% a year; 5 years: +155.47%, or +20.63% a year; 12 months: +17.82%. 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 first half of The Growth
Fund of America's 1999 fiscal year. In fact, this period is the second most
successful fiscal half-year in the 25 years the fund has been managed by
Capital Research and Management Company.
Over the six months ended February 28, the value of your shares increased 42.6%
if you reinvested the dividend of 9 cents a share and the capital gain
distribution of $2.21 a share paid in December. The fund's gains handily
outpaced the unmanaged Standard & Poor's 500 Stock Composite Index,* which rose
30.3% during the period. Meanwhile, the Lipper Capital Appreciation Funds Index
rose 29.5% and the Lipper Growth Funds Index rose 31.9%.
You should keep in mind, however, the effect of timing on the fund's reported
gains. The beginning of the fund's 1999 fiscal year coincided with the bottom
of last year's 19% market decline (the fund reported a loss of 0.2% in fiscal
1998, which ended on the day the market hit its low). Another way to look at
the fund's results would be to measure gains from last year's market peak on
July 17; measured in that way, the fund's return through the end of February
would have been 12.8% versus 5.1% for the S&P 500 - respectable, to be sure,
but not as spectacular in an absolute sense as our reported results might
indicate.
These ups and downs illustrate the volatility that often accompanies investing
for growth. Fortunately, growth investing is also associated with long-term
rewards for patient investors. The fund's 12-month return and average annual
lifetime return (since December 1, 1973) compare favorably with the S&P 500 and
most similar funds, as shown below.
<TABLE>
<CAPTION>
<S> <C> <C>
LIFETIME AVERAGE
12-MONTH TOTAL RETURNS ANNUAL COMPOUND RETURNS
(3/1/98-2/28/99) (12/1/73-2/28/99)
The Growth Fund of America +26.4% +17.5%
S&P 500 +19.7 +14.9
Lipper Capital Appreciation +11.1 +14.4
Funds Index
Lipper Growth Funds Index +17.5 +13.8
</TABLE>
[Begin Footnote]
*Standard & Poor's 500 Stock Composite Index tracks 500 relatively large
companies listed primarily on U.S. exchanges. The index is weighted by market
value, which means the largest companies have the greatest effect on returns.
[End Footnote]
TECHNOLOGY STOCKS SURGE
The remarkable recovery of technology stocks helped drive the fund on its
strong upward trend. Technology companies began to emerge from the slump
precipitated by the 1997 Asian financial crisis. A strong demand for
semiconductor technologies helped buoy companies like Texas Instruments, whose
stock rose 87% over the period. Texas Instruments is the leading maker of
digital signal processors (DSPs), telecommunications chips that can process 1.6
billion instructions per second - 40 times the processing power of a typical
computer modem chip. DSPs are used in cellular phones, modems, compact disk
players and digital cameras.
Many of the fund's other technology holdings benefited from the explosive
growth of the Internet. We have avoided the high valuations of many Internet
stocks (the fund sold its remaining holdings in America Online at a
considerable gain), choosing instead to invest in companies that provide
infrastructure and technology for the Internet. Corning, a manufacturer of
fiber-optic cables, saw its stock rise 117% over the period, while the stock of
Ascend Communications, a maker of network data equipment, rose 120%.
Semiconductor companies like Micron Technology (+153%) and PMC-Sierra (+132%)
did very well, as did software companies like Intuit (+189%) and Oracle
(+180%).
[Begin Sidebar]
<TABLE>
<CAPTION>
<S> <C>
LARGEST EQUITY HOLDINGS PERCENT OF
NET ASSETS
TIME WARNER 5.59%
VIACOM 3.90
COMCAST 3.32
FANNIE MAE 2.88
TELE-COMMUNICATIONS, LIBERTY MEDIA GROUP 2.72
PHILIP MORRIS 2.03
TEXAS INSTRUMENTS 1.95
NEWS CORP. 1.86
CENDANT 1.73
FDX 1.32
</TABLE>
[End Sidebar]
MEDIA AND PHARMACEUTICAL COMPANIES ALSO PROSPER
Media and entertainment stocks also piggybacked on the growth of the Internet.
Tele-Communications, TCI Group (+90%), Cox Communications (+68%) and other
cable companies benefitted from building a new gateway to the Internet and
providing other enhancements to consumers. Cable stocks also rose amid rapid
consolidation in the industry. AT&T completed its acquisition of cable giant
Tele-Communications in early March, and Comcast (+88%) announced plans to buy
MediaOne Group soon after. Meanwhile, media companies like Time Warner (+60%)
and Viacom (+78%), the fund's largest and second-largest holdings, continued to
be rewarding investments.
Another positive development was the strong growth of pharmaceutical and
biotechnology stocks. Investors renewed their confidence in companies working
on promising new drugs with large market potentials. Gilead Sciences (+126%)
and BioChem Pharma (+60%), both leading developers of antiviral drugs, saw
their stocks rise significantly over the period. The stock of Immunex, a maker
of drugs to treat cancer, arthritis and asthma, increased a spectacular 180%.
Amgen and Genentech, biotechnology companies with strong growth prospects, were
recently added to the fund's portfolio.
Hurt by the global depression of commodity prices, energy and chemical stocks
were among the few that did not fare well over the period. Oil prices dipped
below $10 a barrel in mid-February, a 25-year low. The stock of Monsanto, the
agro-chemical giant, was down 17%, while that of Enterprise Oil, a leading oil
exploration and production company, fell 30%. Overall, chemical and energy
companies constitute a small part of the fund's portfolio.
LOOKING AHEAD
We are fortunate to be living through an economic boom that has turned out to
be the longest in U.S. history. In the coming months, we hope to see a
broadening of the stock market, away from an intense focus on a small number of
very large companies. Through careful research, we will continue to seek out
promising opportunities among small and medium-size companies, as well as among
large, more established ones.
The fund's exceptional gains during the past six months were due to a
convergence of favorable developments in the technology, media and health care
sectors. Of the 151 companies held in the fund's portfolio for the entire
six-month period, only 23 declined in value. We would observe that such gains,
while gratifying, are unusual. We urge you to take a long view of the ups and
downs of growth investing. Staying the course and adopting a long-term
perspective can help you reap the potential rewards of investing in growing
companies.
Cordially,
/s/James F. Rothenberg /s/James E. Drasdo
James F. Rothenberg James E. Drasdo
Chairman of the Board President
<TABLE>
The Growth Fund of America, Inc.
Investment Portfolio, February 28, 1999
[begin pie chart]
<S> <C> <C> <C>
Largest Industry Holdings
- -----------------------------
Broadcasting & Publishing 24.33
Electronic Components 11.64
Data Processing & Reproduction 8.05
Health & Personal Care 6.17
Business & Public Services 5.60
Other Industries 32.54
Cash & Equivalents 11.67
[end pie chart]
Market Percent
Value of Net
EQUITY SECURITIES (Common & Preferred Stocks) Shares (000) Assets
- -------------------------------------------- -------- -------- --------
Broadcasting & Publishing - 24.33%
Time Warner Inc. 14,746,500 $951,149 5.59%
Viacom Inc., Class B (1) 6,700,000 592,112
Viacom Inc., Class A (1) 814,700 71,133 3.90
Comcast Corp., Class A, special stock 6,687,262 474,378
Comcast Corp., Class A 1,350,000 91,631 3.32
Tele-Communications, Inc., Series A, Liberty Media Group (1) 8,606,655 463,684 2.72
News Corp. Ltd., preferred (ADR) (Australia) 6,153,750 161,536
News Corp. Ltd. (ADR) 5,450,000 154,644 1.86
CSC Holdings, Inc., Class A (1) 3,100,000 201,500 1.18
Tele-Communications, Inc., Series A, TCI Ventures Group (1) 6,318,982 174,957 1.03
Cox Communications, Inc., Class A (1) 2,350,000 166,263 .98
Fox Entertainment Group, Inc., Class A (1) 6,240,000 162,240 .95
Tele-Communications, Inc., Series A, TCI Group (1) 2,300,000 144,469 .84
USA Networks, Inc. (1) 3,520,000 139,920 .82
CANAL + (France) 195,100 61,172 .36
Century Communications Corp., Class A (1) 1,505,000 52,205 .31
Chris-Craft Industries, Inc. (1) 1,218,000 51,613 .30
E.W. Scripps Co., Class A 271,400 11,127 .07
Chancellor Media Corp., Class A (1) 214,300 9,376 .06
BHC Communications, Inc., Class A (1) 62,840 7,195 .04
Electronic Components - 11.64%
Texas Instruments Inc. 3,720,000 331,777 1.95
Intel Corp. 1,620,000 194,299 1.14
Micron Technology, Inc. (1) 3,318,300 191,217 1.12
Corning Inc. 2,627,900 140,593 .83
Altera Corp. (1) 2,750,000 133,719 .79
Linear Technology Corp. 2,600,000 113,912 .67
Sanmina Corp. (1) 1,800,000 94,050 .55
PMC-Sierra, Inc. (1) 1,303,300 92,371 .54
ADC Telecommunications, Inc. (1) 2,200,000 89,100 .52
Maxim Integrated Products, Inc. (1) 1,757,100 73,249 .43
Quantum Corp. (1) 4,450,000 73,147 .43
Microchip Technology Inc. (1,2) 2,675,000 72,894 .43
Seagate Technology (1) 2,500,000 72,344 .43
Adaptec, Inc. (1) 3,400,000 67,787 .40
LSI Logic Corp. (1) 2,000,000 51,875 .30
Analog Devices, Inc. (1) 2,033,333 50,960 .30
Advanced Micro Devices, Inc. (1) 2,020,500 36,116 .21
National Semiconductor Corp. (1) 2,747,930 28,853 .17
Newbridge Networks Corp. (Canada) (1) 1,100,000 26,812 .16
Tellabs, Inc. (1) 235,000 18,815 .11
SCI Systems, Inc. (1) 554,400 17,152 .10
Level One Communications, Inc. (1) 300,000 10,050 .06
Data Processing & Reproduction - 8.05%
Oracle Corp. (1) 2,925,000 163,434 .96
PeopleSoft, Inc. (1) 8,100,000 152,887 .90
Solectron Corp. (1) 2,942,000 131,471 .77
Computer Associates International, Inc. 3,025,000 127,050 .75
Storage Technology Corp. (1) 3,100,000 107,919 .63
Intuit Inc. (1) 978,600 96,820 .57
Microsoft Corp. (1) 620,000 93,077 .55
Cisco Systems, Inc. (1) 900,000 88,031 .52
Silicon Graphics, Inc. (1) 4,975,500 79,297 .47
Autodesk, Inc. 1,669,000 66,969 .39
International Business Machines Corp. 325,000 55,250 .32
Gateway 2000, Inc. (1) 700,000 50,881 .30
Lexmark International Group, Inc., Class A (1) 375,000 38,695 .23
Ascend Communications, Inc. (1) 300,000 23,081 .14
Compaq Computer Corp. 600,000 21,150 .12
Data General Corp. (1) 1,520,000 20,995 .12
Sequent Computer Systems, Inc. (1) 1,980,000 18,872 .11
Vantive Corp. (1) 1,305,000 15,007 .09
3Com Corp. (1) 400,000 12,575 .07
Mentor Graphics Corp. (1) 515,000 7,210 .04
Health & Personal Care - 6.17%
Sepracor Inc. (1) 1,100,000 137,225 .81
Immunex Corp. (1) 840,000 118,860 .70
Forest Laboratories, Inc. (1) 2,250,000 111,234 .65
Guidant Corp. 1,820,000 103,740 .61
Amgen Inc. (1) 700,000 87,412 .51
Zeneca Group PLC (United Kingdom) 1,950,000 81,152 .48
Gilead Sciences, Inc. (1) 1,495,000 61,669 .36
Eli Lilly and Co. 500,000 47,344 .28
Genentech, Inc.(1) 500,000 39,906 .23
Astra AB, Class A (ADR) (Sweden) 2,000,000 39,625 .23
Pfizer Inc 300,000 39,581 .23
BioChem Pharma Inc. (Canada) (1) 1,600,000 39,300 .23
Warner-Lambert Co. 400,000 27,625 .16
Alza Corp. (1) 500,000 26,219 .16
Avon Products, Inc. 500,000 20,812 .12
NeXstar Pharmaceuticals, Inc. (1,3) 1,000,000 13,813
NeXstar Pharmaceuticals, Inc. (1) 200,000 2,762 .10
Pharmacia & Upjohn, Inc. 290,000 15,805 .09
Medtronic, Inc. 180,000 12,713 .08
Gensia Sicor Inc. (1) 1,332,202 6,161
Gensia Sicor Inc. (1,3) 1,125,000 5,203 .07
Gensia Sicor Inc., warrants, expire 2002 (1,3) 1,125,000 246
Guilford Pharmaceuticals, Inc. (1) 900,000 11,419 .07
Business & Public Services - 5.60%
Cendant Corp. (1) 17,771,900 294,347 1.73
FDX Corp. (1) 2,350,000 224,425 1.32
Waste Management, Inc. 1,400,000 68,425 .40
Allied Waste Industries, Inc. (1) 3,455,000 67,373 .40
First Data Corp. 1,200,000 45,900 .27
Columbia/HCA Healthcare Corp. 2,450,000 43,794 .26
Republic Industries, Inc. (1) 3,500,000 42,875 .25
Apollo Group, Inc. (1) 1,200,000 36,075 .21
Modis Professional Services, Inc. (1) 2,500,000 34,219 .20
Universal Health Services, Inc., Class B (1) 600,000 24,375 .14
Paychex, Inc. 460,000 19,493 .11
Snyder Communications, Inc. (1) 500,000 17,125 .10
Cambridge Technology Partners (Massachusetts), Inc. (1) 400,000 10,050 .06
TeleTech Holdings, Inc. (1) 1,261,900 8,833 .05
Pittston Brink's Group 350,000 8,575 .05
Concord EFS, Inc. (1) 250,000 7,984 .05
Financial Services - 4.20%
Fannie Mae 7,011,600 490,812 2.88
SLM Holding Corp. 1,780,000 76,318 .45
Household International, Inc. 1,300,000 52,813 .31
Providian Financial Corp. 500,000 51,063 .30
Capital One Financial Corp. 350,000 44,669 .26
Leisure & Tourism - 3.75%
Walt Disney Co. 4,080,000 143,565 .84
Starbucks Corp. (1) 2,100,000 111,038 .65
Mirage Resorts, Inc. (1) 5,520,000 107,640 .63
MGM Grand, Inc. (1) 2,600,000 98,150 .58
King World Productions, Inc. (1,2) 3,674,000 97,131 .57
Carnival Corp., Class A 1,829,800 81,426 .48
Telecommunications - 2.68%
AirTouch Communications (1) 2,140,000 194,874 1.14
Nextel Communications, Inc., Class A (1) 2,545,500 76,524 .45
MCI WorldCom, Inc. (1) 800,000 66,000 .39
Crown Castle International Corp. (1) 2,000,000 34,000 .20
Teleglobe Inc. (Canada) 1,018,779 31,964 .19
Sprint Corp. 250,000 21,453 .13
Paging Network, Inc. (1) 5,000,000 20,000 .12
American Tower Systems Corp., Class A (1) 400,000 10,725 .06
Beverages & Tobacco - 2.58%
Philip Morris Companies Inc. 8,850,000 346,256 2.03
PepsiCo, Inc. 1,250,000 47,031 .28
Seagram Co. Ltd. (Canada) 710,000 32,926 .19
RJR Nabisco Holdings Corp. 500,000 13,656 .08
Transportation: Airlines - 2.28%
Southwest Airlines Co. 6,439,512 193,990 1.14
AMR Corp. (1) 2,360,000 130,833 .77
Delta Air Lines, Inc. 1,030,000 62,637 .37
Insurance - 2.20%
EXEL Ltd., Class A (Incorporated in Bermuda) 2,961,500 181,392 1.07
American International Group, Inc. 1,000,000 113,938 .67
Mercury General Corp. 1,275,000 44,466 .26
MGIC Investment Corp. 1,000,000 34,063 .20
Merchandising - 1.66%
Limited Inc. 2,868,000 101,814 .60
Lowe's Companies, Inc. 800,000 47,450 .28
Consolidated Stores Corp. (1) 1,873,600 47,191 .28
Circuit City Stores, Inc. - Circuit City Group 800,000 43,400 .25
Cardinal Health, Inc., Class A 310,950 22,447 .13
Intimate Brands, Inc., Class A 500,000 19,656 .12
Chemicals - 1.56%
Monsanto Co. 4,106,500 187,102 1.10
Air Products and Chemicals, Inc. 800,000 25,700 .15
A. Schulman, Inc. 1,522,500 25,121 .15
Millennium Chemicals Inc. 900,000 16,256 .09
International Flavors & Fragrances Inc. 291,200 11,994 .07
Electronic Instruments - 1.30%
Applied Materials, Inc. (1) 3,033,300 168,727 .99
Perkin-Elmer Corp. 528,800 50,104 .29
Security Dynamics Technologies, Inc. (1) 214,700 3,972 .02
Electical & Electronics - 1.17%
Northern Telecom Ltd. (Canada) 1,986,120 115,319 .68
General Instrument Corp. (1) 1,340,000 39,195 .23
Nokia Corp., Class A (ADR) (Finland) 210,000 28,481 .17
Telefonaktiebolaget LM Ericsson, Class B (ADR) (Sweden) 600,000 15,600 .09
Banking - 1.03%
Washington Mutual, Inc. 1,534,000 61,360 .36
BankAmerica Corp. 850,000 55,516 .33
Citigroup Inc. 500,000 29,375 .17
Wells Fargo & Co. 779,100 28,632 .17
Food & Household Products - .57%
Keebler Foods Co. (1) 1,900,000 74,100 .44
Nabisco, Inc., Class A 500,000 22,187 .13
Textiles & Apparel - .54%
NIKE, Inc., Class B 1,700,000 91,163 .54
Energy Sources - .53%
TOTAL, Class B (ADR) (France) 750,000 38,719 .22
Talisman Energy Inc. (Canada) (1) 1,400,000 21,984 .13
Pogo Producing Co. 1,994,400 18,448 .11
Enterprise Oil PLC (United Kingdom) 2,700,000 11,665 .07
Recreation & Consumer Products - .48%
Hasbro, Inc. 2,200,000 81,400 .48
Miscellaneous Materials & Commodities - .39%
Sealed Air Corp. (1) 1,300,000 65,975 .39
Aerospace & Military - .32%
Bombardier Inc., Class B (Canada) 2,350,000 34,488 .20
Gulfstream Aerospace Corp. (1) 458,000 20,495 .12
Energy Equipment - .23%
Schlumberger Ltd. (Netherlands Antilles) 650,000 31,566 .19
Baker Hughes Inc. 400,000 7,200 .04
Transportation: Rail & Road - .17%
Wisconsin Central Transportation Corp. (1) 2,124,300 29,209 .17
Industrial Components - .15%
Danaher Corp. 541,000 26,103 .15
Machinery & Engineering - .14%
Thermo Electron Corp. (1) 1,725,000 23,827 .14
Real Estate - .04%
Catellus Development Corp. (1) 500,000 7,219 .04
Other equity securities in initial period of acquisition 779,159 4.57
---------- ----------
TOTAL EQUITY SECURITIES (cost: $8,787,550,000) 15,038,433 88.33
Principal Market
Amount Value Percent of
SHORT-TERM SECURITIES (000) (000) Net Assets
- -------------------------------------------- ---------- ---------- ----------
Corporate Short-Term Notes - 9.15%
Johnson & Johnson 4.70%-4.72% due 6/7-6/16/1999 $109,500 $107,934 .63%
Coca-Cola Co. 4.74%-4.79% due 3/12-5/11/1999 107,600 106,883 .63
E.I. du Pont de Nemours and Co. 4.79%-5.02% due 3/5-5/13/1999 86,500 86,060 .51
Bellsouth Capital Funding Corp. 4.74%-4.75% due 3/26-4/14/1999 72,000 71,623 .42
Walt Disney Co. 4.78%-4.96% due 3/2-6/14/1999 68,581 68,000 .40
Eastman Kodak Co. 4.78%-4.80% due 3/8-5/7/1999 67,600 67,155 .39
Minnesota Mining and Manufacturing Co. 4.78%-5.00% due 3/3-3/19/1999 65,000 64,888 .38
Emerson Electric Co. 4.78%-4.79% due 3/5-3/26/1999 61,800 61,657 .36
Pfizer Inc 4.75%-4.80% due 3/9-3/29/1999 60,000 59,865 .35
Associates First Capital Corp. 4.80% due 3/16-4/26/1999 60,000 59,650 .35
General Motors Acceptance Corp. 4.79%-4.80% due 3/1-4/20/1999 55,800 55,549 .32
American Express Credit Corp. 4.78%-4.80% due 3/11-3/23/1999 55,000 54,880 .32
Lucent Technologies Inc.4.78%-4.83% due 3/17-3/26/1999 55,000 54,840 .32
H.J. Heinz Co. 4.77%-4.79% due 3/4-4/23/1999 54,900 54,728 .32
Ford Motor Credit Co. 4.83%-4.85% due 4/16-4/27/1999 51,500 51,160 .30
Atlantic Richfield Co. 4.83%-5.02% due 3/1-3/4/1999 50,800 50,780 .30
Procter & Gamble Co. 4.78%-4.80% due 3/30-6/1/1999 50,000 49,582 .29
Household Finance Corp. 4.80% due 3/22-4/13/1999 47,500 47,266 .28
CIT Group Holdings, Inc. 4.80%-4.82% due 4/7-5/12/1999 47,400 47,053 .28
International Lease Finance Corp. 4.75%-4.82% due 3/17-5/26/1999 47,227 46,838 .28
General Electric Capital Corp. 4.88% due 3/17/1999 45,200 45,097 .26
A.I. Credit Corp. 4.75%-4.76% due 3/25-4/23/1999 39,300 39,095 .23
American Home Products Corp. 4.78%-4.82% due 4/6-6/2/1999 32,681 32,425 .19
Ciesco LP 4.78%-4.80% due 3/19-4/12/1999 32,400 32,252 .19
Ameritech Capital Funding Corp. 4.80% due 3/18/1999 26,000 25,938 .15
Texaco Inc. 4.80% due 3/3/1999 25,000 24,990 .15
Warner-Lambert Co. 4.81% due 3/10/1999 23,700 23,668 .14
Chevron Transportation 4.83% due 4/12/1999 20,000 19,885 .12
SBC Communications Inc. 4.77% due 4/14/1999 20,000 19,880 .12
Colgate-Palmolive Co. 4.78% due 4/9/1999 19,000 18,899 .11
General Mills, Inc. 4.78% due 3/19/1999 9,800 9,775 .06
Federal Agency Discount Notes - 2.39%
Freddie Mac 4.68%-5.10% due 3//8-4/22/1999 250,729 249,823 1.47
Fannie Mae 4.70%-5.10% due 3/18-5/4/1999 88,700 88,124 .52
Federal Home Loan Banks 4.69%-4.98% due 3/3-5/5/1999 68,515 68,148 .40
---------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $1,964,595,000) 1,964,390 11.54
---------- ----------
TOTAL INVESTMENT SECURITIES (cost: $10,752,145,000) 17,002,823 99.87
---------- ----------
Excess of cash and receivables over payables 22,786 .13
---------- ----------
NET ASSETS $17,025,609 100.00%
---------- ----------
(1) Non-income-producing securities.
(2) The fund owns 5.27% and 5.14% of the outstanding voting
securities of Microchip Tech and King World Productions,
respectively, which represent investments in an affiliate as
defined in 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 investors.
ADR = American Depositary Receipt
See Notes to Financial Statements
</TABLE>
<TABLE>
The Growth Fund of America
Financial Statements
- ---------------------------------------------- ---------------- ----------------
Statement of Assets and Liabilities Unaudited
at February 28, 1999 (dollars in thousands)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $10,752,145) $17,002,823
Cash 211
Receivables for-
Sales of investments $84,304
Sales of fund's shares 33,785
Dividends and interest 3,680 121,769
---------------- ----------------
17,124,803
Liabilities:
Payables for-
Purchases of investments 66,584
Repurchases of fund's shares 18,926
Management services 4,431
Other expenses 9,253 99,194
---------------- ----------------
Net Assets at February 28, 1999-
Equivalent to $23.16 per share on
735,248,303 shares of $0.10 par value
capital stock outstanding (authorized
capital stock--800,000,000 shares) $17,025,609
================
- ---------------------------------------------- ---------------- ----------------
Statement of Operations Unaudited
for the six months ended February 28, 1999 (dollars in thousands)
Investment Income:
Income:
Dividends $ 34,556
Interest 45,682 $ 80,238
----------------
Expenses:
Management services fee 25,230
Distribution expenses 17,647
Transfer agent fee 5,922
Reports to shareholders 329
Registration statement and prospectus 803
Postage, stationery and supplies 1,167
Directors' fees 97
Auditing and legal fees 51
Custodian fee 156
Other expenses 161 51,563
---------------- ----------------
Net investment income 28,675
----------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 1,101,416
Net increase in unrealized appreciation:
on investments
Beginning of period 2,366,879
End of period 6,250,682 3,883,803
---------------- ----------------
Net realized gain and unrealized appreciation
on investments 4,985,219
----------------
Net Increase in Net Assets Resulting
from Operations $ 5,013,894
================
See Notes to Financial Statements
(dollars in
thousands)
- ---------------------------------------------- ---------------- ----------------
Six months ended Year ended
Statement of Changes in Net Assets February 28, 199 August 31, 1998
Operations:
Net investment income $ 28,675 $ 61,388
Net realized gain on investments 1,101,416 1,530,218
Net increase (decrease) in unrealized appreciation
on investments 3,883,803 (1,640,385)
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 5,013,894 (48,779)
---------------- ----------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (59,243) (75,837)
Distributions from net realized gain on
investments (1,454,752) (1,201,719)
---------------- ----------------
Total dividends and distributions (1,513,995) (1,277,556)
---------------- ----------------
Capital Share Transactions:
Proceeds from shares sold: 71,129,834
and 109,029,348 shares, respectively 1,566,293 2,241,289
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 64,705,907 and 66,729,473 shares,
respectively 1,419,578 1,225,124
Cost of shares repurchased: 57,959,548
and 96,539,758 shares, respectively (1,258,605) (1,987,987)
---------------- ----------------
Net increase in net assets resulting from
capital share transactions 1,727,266 1,478,426
---------------- ----------------
Total Increase in Net Assets 5,227,165 152,091
Net Assets:
Beginning of period 11,798,444 11,646,353
---------------- ----------------
End of period (including accumulated excess
distributions and undistributed net investment
income: $51 and $37,030, respectively) $ 17,025,609 $ 11,798,444
================ ================
*Unaudited
</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 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. Securities with original
maturities of one year or less having 60 days or less to maturity are amortized
to maturity based on their cost if acquired within 60 days of maturity or, if
already held on the 60th day, based on the value determined on the 61st day.
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 or 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 are
included with the net realized and unrealized gain or loss on investment
securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - As is customary in the
mutual fund industry, securities transactions are accounted for on the date the
securities are purchased or sold. Realized gains and losses from securities
transactions are reported on an identified cost basis. Dividend and interest
income is reported on the accrual basis. Discounts and premiums on securities
purchased are amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. FEDERAL INCOME TAXATION - It is the fund's policy to continue to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net taxable income, including
any net realized gain on investments, to its shareholders. Therefore, no
federal income tax provision is required.
As of February 28, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $6,250,678,000, of which
$6,699,277,000 related to appreciated securities and $448,599,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the six months ended
February 28, 1999. Net losses related to non-U.S. currency transactions of
$11,000 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 $10,752,145,000 at February 28, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $25,230,000 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 six months
ended February 28, 1999, distribution expenses under the Plan were $17,647,000.
As of February 28, 1999, accrued and unpaid distribution expenses were
$8,625,000. American Funds Distributors, Inc. (AFD), the principal underwriter
of the fund's shares, received $3,530,000
(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 $5,922,000.
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 February 28, 1999, aggregate amounts deferred and earnings thereon
were $558,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $3,252,166,000 and $3,586,986,000, respectively,
during the six months ended February 28, 1999.
As of February 28, 1999, accumulated undistributed net realized gain on
investments was $915,365,000 and additional paid-in capital was $9,786,088,000.
The fund reclassified $6,513,000 from undistributed net investment income and
$43,631,000 from undistributed net realized gains to additional paid-in capital
for the six months ended February 28, 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 $156,000 includes $16,000 that was paid by these credits
rather than in cash.
Net realized currency losses on dividends, on a book basis, were $11,000 for
the six months ended February 28, 1999.
<TABLE>
Per-Share Data and Ratios /1/ Six months
ended Year EndedAugust 31
Feb. 28,
1999 /2/ 1998 1997 1996 1995 1994
------- ------- ------- ---------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.95 $20.14 $15.39 $16.55 $13.81 $13.58
------- ------- ------- ---------------------
Income from Investment Operations:
Net investment income .04 .10 .13 .13 .13 .07
Net gains(losses) on securities (both
realized and unrealized) 7.47 (.10) 5.59 (.01) 3.21 .71
------- ------- ------- ---------------------
Total from investment operations 7.51 .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 Period $23.16 $17.95 $20.14 $15.39 $16.55 $13.81
======= ======= ======= =====================
Total Return /3/ 42.55% /4/ (.24)% 38.54% .90% 25.56% 5.98%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $17,206 $11,798 $11,646 $8,511 $7,525 $5,427
Ratio of expenses to average net
assets .35% /4/ .70% .72% .74% .75% .78%
Ratio of net income to average net
assets .19% /4/ .48% .73% .82% .90% .49%
Portfolio turnover rate 24.57% /4/ 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/ Unaudited
/3/ Excludes maximum sales charge of 5.75%
/4/ Based on operations for the period shown and,
accordingly, not representative of a full year.
</TABLE>
