UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-00862
The Growth Fund of America, Inc.
(Exact Name of Registrant as Specified in Charter)
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (415) 421-9360
Date of fiscal year end: August 31
Date of reporting period: February 28, 2010
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(Name and Address of Agent for Service)
Copies to:
Mark D. Perlow
K&L Gates LLP
Four Embarcadero Center, Suite 1200
San Francisco, California 94111
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
[logo - - American Funds®]
The right choice for the long term®
The Growth Fund of America
[photo of people climbing up a snow-covered mountain]
Semi-annual report for the six months ended February 28, 2010
The Growth Fund of America® invests in a wide range of companies that appear to offer superior opportunities for growth of capital.
This fund is one of the 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors 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, so they may lose value. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2010 (the most recent calendar quarter-end): | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | ||||||||||||
Reflecting 5.75% maximum sales charge | 37.54 | % | 2.87 | % | 0.51 | % |
The total annual fund operating expense ratio was 0.76% for Class A shares as of August 31, 2009.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 to 29 for details.
Results for other share classes can be found on page 4.
Equity investments are subject to market fluctuations. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow shareholders:
[photo of people climbing up a snow-covered mountain]
The six months ended February 28, 2010, proved to be generally good for stocks with a handful of healthy market corrections along the way. After the U.S. banking system stabilized and investors became less concerned, corporations around the United States reported pockets of business improvement.
After four quarters of negative gross domestic product growth, the U.S. economy grew at a 2.2% annual rate in the third quarter and by a 5.6% annual rate in the fourth quarter of 2009. Manufacturing activity increased, benefiting from improved demand for U.S. products from developing nations, and inventories stopped falling, which had been a drag on growth. But unemployment remained high. Even though housing starts improved in January, housing prices and sales of new single-family homes declined.
[Begin Sidebar]
Results at a glance | ||||||||||||||||||||
Total returns for periods ended February 28, 2010, with all distributions reinvested | ||||||||||||||||||||
Total returns | Average annual total returns | |||||||||||||||||||
6 months | 1 year | 5 years | 10 years | Lifetime1 | ||||||||||||||||
The Growth Fund of America | ||||||||||||||||||||
(Class A shares) | 8.74 | % | 49.69 | % | 2.63 | % | 0.90 | % | 13.65 | % | ||||||||||
Standard & Poor’s 500 Composite Index2 | 9.32 | 53.55 | 0.37 | –0.31 | 10.41 | |||||||||||||||
Lipper Capital Appreciation Funds Index3 | 10.51 | 54.15 | 3.16 | –1.22 | 10.65 | |||||||||||||||
Lipper Growth Funds Index3 | 10.63 | 56.71 | 0.11 | –2.79 | 9.32 | |||||||||||||||
Lipper Large-Cap Core Funds Index3 | 8.40 | 52.72 | 0.55 | –0.86 | — | 4 | ||||||||||||||
Lipper Large-Cap Growth Funds Index3 | 10.32 | 53.31 | 1.20 | –4.79 | — | 4 | ||||||||||||||
1 Since Capital Research and Management Company (CRMC) began managing the fund on December 1, 1973. | ||||||||||||||||||||
2 The S&P 500 is unmanaged and its results do not reflect the effect of sales charges, commissions or expenses. | ||||||||||||||||||||
3 Lipper indexes do not reflect the effect of sales charges. | ||||||||||||||||||||
4 This Lipper index was not in existence when CRMC began managing the fund. |
[End Sidebar]
In this mixed environment, The Growth Fund of America (GFA) posted a total return of 8.7%. On a relative basis, the fund slightly lagged the 9.3% return of the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market, and three of the four Lipper peer indexes, as shown in the table on page 1. In January, Lipper reclassified GFA into its large-cap growth funds category from its multi-cap growth funds category; as a result, we are using two Lipper large-cap indexes for comparison purposes rather than the Lipper multi-cap indexes.
Over longer periods, GFA has continued to outpace the S&P 500. For the five years ended February 28, GFA had an average annual total return of 2.6% compared with 0.4% by the S&P 500. In addition, GFA’s total return was better than three of the four Lipper peer group indexes. For its 36-year lifetime, GFA had an average annual total return of 13.6% compared with 10.4% for the S&P 500. The applicable Lipper peer group indexes posted returns of 10.6% and 9.3% over the same period. We urge shareholders to measure the fund’s progress by focusing on its long-term results, which is how we look at GFA’s returns ourselves.
Investment results analysis
Information technology companies, which comprise five of the fund’s largest holdings, played a major role in the fund’s positive returns. They included Apple (21.7%), Microsoft (16.3%), Google (14.1%), Oracle (12.7%) and Cisco Systems (12.6%). Information technology is GFA’s largest industry sector with 22.5% of the portfolio’s net assets. Telecommunication companies also helped results.
Many energy companies, which had a difficult year in fiscal 2009, made a comeback in the past six months. Large contributors included Baker Hughes (39.1%) and EOG Resources (30.6%). Schlumberger, provider of services and technology to the petroleum industry, showed a gain of 8.7%, after a decline of 40.4% in fiscal 2009. Economically sensitive companies from the industrial and consumer discretionary sectors also did better than average in the recent period including Johnson Controls (25.6%) and News Corp. (24.7%).
Financial companies detracted from results including two of the fund’s 10 largest holdings, Bank of America (–5.3%) and JPMorgan Chase (–3.4%). In addition, the fund’s cash, short-term securities and other net assets of 8.4%, which provided almost no return, didn’t help in the upmarket of the past six months. By contrast, the fund’s cash holding did help the portfolio in the first half of the 2009 fiscal year when U.S. markets were weak across the board. This is why results need to be considered over the long term, to get the full picture.
During the past six months, the fund’s cash position declined from 12.1% to 8.4% as portfolio counselors found companies selling at what they considered to be attractive stock valuations. It is important to point out that the cash position represents the aggregate views of the 10 portfolio counselors and is not a top-down decision.
The road ahead
It appears that the United States is healing from the economic recession in fits and spurts. The stock market has responded positively so far but we are not yet out of the woods. As we cautioned shareholders six months ago, there may be some volatility ahead. If jobs, housing and consumer spending continue to be slow to recover from the recession, we could go through some difficult economic times and a weaker stock market. If, on the other hand, we have a normal or strong recovery, many companies that have sharply cut costs may produce very good earnings that could result in a robust stock market. We are also in a period where the policies and decisions of the public sector could have a large impact on these factors, relative to recent years. We will be closely monitoring events and using our fundamental research with a global perspective to navigate the challenging times ahead.
We appreciate your continued support of The Growth Fund of America and your commitment to taking a long-term perspective on your mutual fund investments.
Cordially,
/s/ James F. Rothenberg
James F. Rothenberg
Vice Chairman of the Board
/s/ Donald D. O’Neal
Donald D. O’Neal
President
April 6, 2010
For current information about the fund, visit americanfunds.com.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended March 31, 2010 | ||||||||||||
(the most recent calendar quarter-end): | 10 years1/ | |||||||||||
1 year | 5 years | Life of class | ||||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales | ||||||||||||
charge (CDSC), maximum of 5%, payable only | ||||||||||||
if shares are sold within six years of purchase | 39.87 | % | 2.97 | % | 0.50 | % | ||||||
Not reflecting CDSC | 44.87 | 3.33 | 0.50 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 43.78 | 3.27 | 2.82 | |||||||||
Not reflecting CDSC | 44.78 | 3.27 | 2.82 | |||||||||
Class F-1 shares3 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 46.05 | 4.12 | 3.65 | |||||||||
Class F-2 shares3 — first sold 8/1/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 46.33 | — | –2.52 | |||||||||
Class 529-A shares4 — first sold 2/15/02 | ||||||||||||
Reflecting 5.75% maximum sales charge | 37.56 | 2.83 | 3.98 | |||||||||
Not reflecting maximum sales charge | 45.92 | 4.06 | 4.74 | |||||||||
Class 529-B shares2,4 — first sold 2/15/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, | ||||||||||||
payable only if shares are sold within six years | ||||||||||||
of purchase | 39.72 | 2.85 | 3.86 | |||||||||
Not reflecting CDSC | 44.72 | 3.21 | 3.86 | |||||||||
Class 529-C shares4 — first sold 2/15/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 43.72 | 3.22 | 3.86 | |||||||||
Not reflecting CDSC | 44.72 | 3.22 | 3.86 | |||||||||
Class 529-E shares3,4 — first sold 3/1/02 | 45.49 | 3.74 | 4.24 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/16/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 46.20 | 4.26 | 8.13 |
1Applicable to Class B shares only. All other share classes reflect results for the life of the class. |
2These shares are not available for purchase. |
3These shares are sold without any initial or contingent deferred sales charge. |
4Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 26 to 29 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Summary investment portfolio, February 28, 2010
unaudited
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See page 35 for details on how to obtain a complete schedule of portfolio holdings.
[begin pie chart]
Industry sector diversification (percent of net assets) | ||||
Information technology | 22.54 | % | ||
Health care | 12.11 | |||
Energy | 9.88 | |||
Financials | 9.87 | |||
Consumer discretionary | 9.58 | |||
Other industries | 27.56 | |||
Convertible securities | .05 | |||
Bonds & notes | .05 | |||
Short-term & other assets less liabilities | 8.36 |
[end pie chart]
Percent | ||||
of net | ||||
Largest equity holdings | assets | |||
Microsoft | 3.6 | % | ||
Oracle | 2.9 | |||
2.7 | ||||
Apple | 1.8 | |||
Cisco Systems | 1.8 | |||
Medtronic | 1.3 | |||
JPMorgan Chase | 1.2 | |||
Barrick Gold | 1.2 | |||
Bank of America | 1.1 | |||
Philip Morris International | 1.1 |
Percent | ||||||||||||
Value | of net | |||||||||||
Common stocks - 91.54% | Shares | (000 | ) | assets | ||||||||
Information technology - 22.54% | ||||||||||||
Microsoft Corp. | 193,445,100 | $ | 5,544,137 | 3.61 | % | |||||||
Oracle Corp. | 179,049,376 | 4,413,567 | 2.88 | |||||||||
Google Inc., Class A (1) | 7,942,900 | 4,184,320 | 2.73 | |||||||||
Apple Inc. (1) | 13,565,000 | 2,775,670 | 1.81 | |||||||||
Cisco Systems, Inc. (1) | 110,870,000 | 2,697,467 | 1.76 | |||||||||
Corning Inc. (2) | 78,423,846 | 1,382,612 | .90 | |||||||||
Yahoo! Inc. (1) (2) | 79,922,100 | 1,223,607 | .80 | |||||||||
QUALCOMM Inc. | 32,446,694 | 1,190,469 | .78 | |||||||||
EMC Corp. (1) | 56,300,000 | 984,687 | .64 | |||||||||
Hewlett-Packard Co. | 18,965,000 | 963,232 | .63 | |||||||||
International Business Machines Corp. | 6,660,000 | 846,886 | .55 | |||||||||
Other securities | 8,368,521 | 5.45 | ||||||||||
34,575,175 | 22.54 | |||||||||||
Health care - 12.11% | ||||||||||||
Medtronic, Inc. | 45,325,000 | 1,967,105 | 1.28 | |||||||||
Teva Pharmaceutical Industries Ltd. (ADR) | 26,989,307 | 1,619,628 | 1.06 | |||||||||
Roche Holding AG | 9,605,000 | 1,605,607 | 1.05 | |||||||||
Merck & Co., Inc. | 40,180,191 | 1,481,845 | .97 | |||||||||
Gilead Sciences, Inc. (1) | 27,120,000 | 1,291,183 | .84 | |||||||||
Celgene Corp. (1) | 13,800,000 | 821,376 | .54 | |||||||||
Other securities | 9,793,127 | 6.37 | ||||||||||
18,579,871 | 12.11 | |||||||||||
Energy - 9.88% | ||||||||||||
Schlumberger Ltd. | 25,301,700 | 1,545,934 | 1.01 | |||||||||
Suncor Energy Inc. (CAD denominated) | 46,610,366 | 1,346,974 | ||||||||||
Suncor Energy Inc. | 5,360,000 | 154,958 | .98 | |||||||||
Apache Corp. | 11,685,000 | 1,211,033 | .79 | |||||||||
Devon Energy Corp. | 16,774,600 | 1,155,099 | .75 | |||||||||
Occidental Petroleum Corp. | 11,830,000 | 944,626 | .62 | |||||||||
EOG Resources, Inc. | 8,825,237 | 830,014 | .54 | |||||||||
Other securities | 7,958,384 | 5.19 | ||||||||||
15,147,022 | 9.88 | |||||||||||
Financials - 9.87% | ||||||||||||
JPMorgan Chase & Co. | 43,975,000 | 1,845,631 | 1.20 | |||||||||
Bank of America Corp. | 102,109,655 | 1,701,147 | 1.11 | |||||||||
Wells Fargo & Co. | 58,727,000 | 1,605,596 | 1.05 | |||||||||
Berkshire Hathaway Inc., Class A (1) | 8,610 | 1,031,478 | .67 | |||||||||
Bank of New York Mellon Corp. | 30,913,100 | 881,642 | .57 | |||||||||
Other securities | 8,078,280 | 5.27 | ||||||||||
15,143,774 | 9.87 | |||||||||||
Consumer discretionary - 9.58% | ||||||||||||
Time Warner Inc. | 45,674,667 | 1,326,392 | .86 | |||||||||
News Corp., Class A | 93,860,800 | 1,254,919 | .82 | |||||||||
McDonald's Corp. | 18,088,000 | 1,154,919 | .75 | |||||||||
Johnson Controls, Inc. | 30,292,800 | 942,106 | .61 | |||||||||
Time Warner Cable Inc. (2) | 18,152,120 | 847,522 | .55 | |||||||||
NIKE, Inc., Class B | 11,838,974 | 800,315 | .52 | |||||||||
Other securities | 8,374,967 | 5.47 | ||||||||||
14,701,140 | 9.58 | |||||||||||
Materials - 7.87% | ||||||||||||
Barrick Gold Corp. | 47,100,000 | 1,773,786 | 1.16 | |||||||||
Syngenta AG (2) | 4,750,000 | 1,230,432 | .80 | |||||||||
Rio Tinto PLC | 19,963,764 | 1,023,892 | .67 | |||||||||
Freeport-McMoRan Copper & Gold Inc. | 12,049,600 | 905,648 | .59 | |||||||||
Monsanto Co. | 12,539,400 | 885,909 | .58 | |||||||||
Newmont Mining Corp. | 17,648,000 | 869,693 | .57 | |||||||||
Potash Corp. of Saskatchewan Inc. | 7,050,000 | 778,743 | .51 | |||||||||
BHP Billiton PLC (ADR) | 7,885,000 | 486,978 | ||||||||||
BHP Billiton PLC | 9,290,000 | 284,262 | .50 | |||||||||
Other securities | 3,834,819 | 2.49 | ||||||||||
12,074,162 | 7.87 | |||||||||||
Industrials - 7.06% | ||||||||||||
Union Pacific Corp. | 21,167,200 | 1,426,034 | .93 | |||||||||
Boeing Co. | 16,842,598 | 1,063,778 | .69 | |||||||||
United Parcel Service, Inc., Class B | 17,140,000 | 1,006,804 | .66 | |||||||||
General Dynamics Corp. | 12,481,400 | 905,526 | .59 | |||||||||
United Technologies Corp. | 11,375,000 | 780,894 | .51 | |||||||||
Other securities | 5,652,505 | 3.68 | ||||||||||
10,835,541 | 7.06 | |||||||||||
Consumer staples - 6.01% | ||||||||||||
Philip Morris International Inc. | 33,546,700 | 1,643,117 | 1.07 | |||||||||
Coca-Cola Co. | 27,184,700 | 1,433,177 | .93 | |||||||||
Colgate-Palmolive Co. | 12,964,400 | 1,075,267 | .70 | |||||||||
PepsiCo, Inc. | 13,225,000 | 826,166 | .54 | |||||||||
Other securities | 4,245,676 | 2.77 | ||||||||||
9,223,403 | 6.01 | |||||||||||
Telecommunication services - 1.12% | ||||||||||||
Other securities | 1,718,397 | 1.12 | ||||||||||
Utilities - 0.65% | ||||||||||||
Other securities | 995,240 | .65 | ||||||||||
Miscellaneous - 4.85% | ||||||||||||
Other common stocks in initial period of acquisition | 7,437,575 | 4.85 | ||||||||||
Total common stocks (cost: $126,657,202,000) | 140,431,300 | 91.54 | ||||||||||
Percent | ||||||||||||
Value | of net | |||||||||||
Preferred stocks - 0.00% | (000 | ) | assets | |||||||||
Telecommunication services - 0.00% | ||||||||||||
Other securities | $ | 990 | .00 | % | ||||||||
Total preferred stocks (cost: $21,000,000) | 990 | .00 | ||||||||||
Percent | ||||||||||||
Value | of net | |||||||||||
Warrants - 0.00% | (000 | ) | assets | |||||||||
Financials - 0.00% | ||||||||||||
Other securities | $ | - | .00 | % | ||||||||
Total warrants (cost: $10,949,000) | - | .00 | ||||||||||
Percent | ||||||||||||
Value | of net | |||||||||||
Convertible securities - 0.05% | (000 | ) | assets | |||||||||
Other - 0.04% | ||||||||||||
Other securities | $ | 63,182 | .04 | % | ||||||||
Miscellaneous - 0.01% | ||||||||||||
Other convertible securities in initial period of acquisition | 9,300 | .01 | ||||||||||
Total convertible securities (cost: $46,234,000) | 72,482 | .05 | ||||||||||
Percent | ||||||||||||
Principal | Value | of net | ||||||||||
Bonds & notes - 0.05% | amount (000) | (000 | ) | assets | ||||||||
Bonds & notes of U.S. government agencies - 0.03% | ||||||||||||
Fannie Mae 2.50% 2010 | $ | 50,000 | $ | 50,140 | .03 | % | ||||||
Consumer discretionary - 0.02% | ||||||||||||
Other securities | 24,854 | .02 | ||||||||||
Total bonds & notes (cost: $69,448,000) | 74,994 | .05 | ||||||||||
Percent | ||||||||||||
Principal | Value | of net | ||||||||||
Short-term securities - 8.05% | amount (000) | (000 | ) | assets | ||||||||
Freddie Mac 0.12%-0.41% due 3/1-10/25/2010 | $ | 3,791,935 | $ | 3,790,129 | 2.47 | % | ||||||
Fannie Mae 0.13%-0.70% due 3/3-12/1/2010 | 3,536,277 | 3,532,639 | 2.30 | |||||||||
U.S. Treasury Bills 0.145%-0.405% due 5/6-11/18/2010 | 2,554,300 | 2,552,129 | 1.66 | |||||||||
JPMorgan Chase Funding Inc. 0.23% due 3/18/2010 (3) | 75,000 | 74,992 | ||||||||||
JPMorgan Chase & Co. 0.12%-0.25% due 3/26-7/8/2010 | 90,000 | 89,945 | ||||||||||
Jupiter Securitization Co., LLC 0.20% due 5/19/2010 (3) | 20,000 | 19,984 | ||||||||||
Park Avenue Receivables Co., LLC 0.17% due 4/20/2010 (3) | 17,500 | 17,496 | .13 | |||||||||
Bank of America Corp. 0.37% due 3/16-3/17/2010 | 180,000 | 179,985 | .12 | |||||||||
Microsoft Corp. 0.16%-0.17% due 4/14-5/26/2010 (3) | 51,900 | 51,889 | .03 | |||||||||
Other securities | 2,047,425 | 1.34 | ||||||||||
Total short-term securities (cost: $12,352,580,000) | 12,356,613 | 8.05 | ||||||||||
Total investment securities (cost: $139,157,413,000) | 152,936,379 | 99.69 | ||||||||||
Other assets less liabilities | 470,937 | .31 | ||||||||||
Net assets | $ | 153,407,316 | 100.00 | % |
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. |
"Other securities" include all issues that are not disclosed separately in the summary investment portfolio. These include securities that were valued under fair value procedures adopted by authority of the board of directors and may be subject to legal or contractual restrictions on resale; the total value of all such securities was $990,000, which represented less than .01% of the net assets of the fund. |
Investments in affiliates | ||||||
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the six months ended February 28, 2010, appear below. |
Beginning shares | Additions | Reductions | Ending shares | Dividend income (000) | Value of affiliates at 2/28/10 (000) | |||||||||||||||||||
Corning Inc. | 77,858,846 | 565,000 | - | 78,423,846 | $ | 7,814 | $ | 1,382,612 | ||||||||||||||||
Syngenta AG | 4,540,000 | 210,000 | - | 4,750,000 | - | 1,230,432 | ||||||||||||||||||
Yahoo! Inc. (1) | 84,601,100 | 250,000 | 4,929,000 | 79,922,100 | - | 1,223,607 | ||||||||||||||||||
Time Warner Cable Inc. | 16,202,120 | 1,950,000 | - | 18,152,120 | 7,261 | 847,522 | ||||||||||||||||||
Intuit Inc. (1) | 20,800,000 | - | - | 20,800,000 | - | 673,088 | ||||||||||||||||||
Linear Technology Corp. | 19,850,000 | - | - | 19,850,000 | 8,933 | 539,325 | ||||||||||||||||||
Vertex Pharmaceuticals Inc. (1) | 11,253,000 | 1,152,175 | - | 12,405,175 | - | 503,774 | ||||||||||||||||||
CONSOL Energy Inc. | 3,456,400 | 6,675,700 | 275,700 | 9,856,400 | 1,339 | 496,368 | ||||||||||||||||||
CONSOL Energy Inc. | 7,400,000 | - | 7,400,000 | - | 740 | - | ||||||||||||||||||
Xilinx, Inc. | 17,400,000 | - | 244,700 | 17,155,300 | 5,490 | 443,121 | ||||||||||||||||||
KLA-Tencor Corp. | 12,940,000 | - | - | 12,940,000 | 3,882 | 376,942 | ||||||||||||||||||
Sigma-Aldrich Corp. | 6,155,000 | - | - | 6,155,000 | 1,877 | 293,532 | ||||||||||||||||||
Kerry Group PLC, Class A | 8,965,824 | - | - | 8,965,824 | 1,030 | 284,020 | ||||||||||||||||||
Harman International Industries, Inc. (1) | 4,277,800 | - | 16,200 | 4,261,600 | - | 183,845 | ||||||||||||||||||
Avon Products, Inc. (4) | 21,875,000 | 2,050,000 | 2,750,000 | 21,175,000 | 8,675 | - | ||||||||||||||||||
Baker Hughes Inc. (4) | 14,116,178 | 2,825,000 | 2,400,000 | 14,541,178 | 4,706 | - | ||||||||||||||||||
BJ Services Co. (4) | 14,641,200 | 8,102,000 | 14,641,200 | 8,102,000 | 810 | - | ||||||||||||||||||
Johnson Controls, Inc. (4) | 30,792,800 | - | 500,000 | 30,292,800 | 7,941 | - | ||||||||||||||||||
Johnson Controls, Inc. 11.50% convertible preferred 2012, units (4) | 99,040 | - | - | 99,040 | 285 | - | ||||||||||||||||||
Paychex, Inc. (4) | 20,241,400 | - | 6,662,500 | 13,578,900 | 10,484 | - | ||||||||||||||||||
Qwest Communications International Inc. (4) | 96,418,000 | - | 50,000,000 | 46,418,000 | 26,365 | - | ||||||||||||||||||
Smith International, Inc. (4) | 10,857,098 | 1,840,000 | 9,006,724 | 3,690,374 | 2,827 | - | ||||||||||||||||||
Trimble Navigation Ltd. (4) | 6,047,200 | - | 6,047,200 | - | - | - | ||||||||||||||||||
$ | 100,459 | $ | 8,478,188 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. |
(1) Security did not produce income during the last 12 months. |
(2) Represents an affiliated company as defined under the Investment Company Act of 1940. |
(3) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $1,092,411,000, which represented .71% of the net assets of the fund. |
(4) Unaffiliated issuer at 2/28/2010 |
Key to abbreviations |
ADR = American Depositary Receipts |
CAD = Canadian dollars |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | unaudited | |||||||
at February 28, 2010 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $130,158,050) | $ | 144,458,191 | ||||||
Affiliated issuers (cost: $8,999,363) | 8,478,188 | $ | 152,936,379 | |||||
Cash denominated in currencies other than U.S. dollars | ||||||||
(cost: $30,122) | 30,122 | |||||||
Cash | 60 | |||||||
Receivables for: | ||||||||
Sales of investments | 683,046 | |||||||
Sales of fund's shares | 275,836 | |||||||
Dividends and interest | 235,158 | 1,194,040 | ||||||
154,160,601 | ||||||||
Liabilities: | ||||||||
Payables for: | ||||||||
Purchases of investments | 363,568 | |||||||
Repurchases of fund's shares | 220,511 | |||||||
Investment advisory services | 31,616 | |||||||
Services provided by affiliates | 107,725 | |||||||
Directors' deferred compensation | 3,110 | |||||||
Non-U.S. taxes | 20,589 | |||||||
Other | 6,166 | 753,285 | ||||||
Net assets at February 28, 2010 | $ | 153,407,316 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of capital stock | $ | 152,666,809 | ||||||
Distributions in excess of net investment income | (41,232 | ) | ||||||
Accumulated net realized loss | (12,978,017 | ) | ||||||
Net unrealized appreciation | 13,759,756 | |||||||
Net assets at February 28, 2010 | $ | 153,407,316 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Total authorized capital stock - 7,500,000 shares, $.001 par value (5,739,954 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||||
Class A | $ | 64,426,990 | 2,394,954 | $ | 26.90 | |||||||
Class B | 3,768,352 | 144,562 | 26.07 | |||||||||
Class C | 7,841,884 | 302,730 | 25.90 | |||||||||
Class F-1 | 16,747,570 | 626,602 | 26.73 | |||||||||
Class F-2 | 4,086,242 | 151,959 | 26.89 | |||||||||
Class 529-A | 2,854,523 | 106,667 | 26.76 | |||||||||
Class 529-B | 435,202 | 16,661 | 26.12 | |||||||||
Class 529-C | 849,866 | 32,577 | 26.09 | |||||||||
Class 529-E | 147,623 | 5,552 | 26.59 | |||||||||
Class 529-F-1 | 92,587 | 3,466 | 26.71 | |||||||||
Class R-1 | 552,896 | 21,150 | 26.14 | |||||||||
Class R-2 | 2,545,874 | 96,925 | 26.27 | |||||||||
Class R-3 | 12,453,075 | 469,925 | 26.50 | |||||||||
Class R-4 | 17,050,533 | 638,839 | 26.69 | |||||||||
Class R-5 | 14,650,615 | 545,244 | 26.87 | |||||||||
Class R-6 | 4,903,484 | 182,141 | 26.92 | |||||||||
*Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Classes A and 529-A, for which the maximum offering prices per share were $28.54 and $28.39, respectively. | ||||||||||||
See Notes to Financial Statements |
Statement of operations | unaudited | |||||||
for the six months ended February 28, 2010 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Dividends (net of non-U.S. | ||||||||
taxes of $11,881; also includes | ||||||||
$100,459 from affiliates) | $ | 964,804 | ||||||
Interest | 25,649 | $ | 990,453 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 205,551 | |||||||
Distribution services | 228,066 | |||||||
Transfer agent services | 53,547 | |||||||
Administrative services | 61,041 | |||||||
Reports to shareholders | 4,353 | |||||||
Registration statement and prospectus | 9,003 | |||||||
Directors' compensation | 479 | |||||||
Auditing and legal | 96 | |||||||
Custodian | 1,786 | |||||||
Other | 3,018 | 566,940 | ||||||
Net investment income | 423,513 | |||||||
Net realized gain and unrealized | ||||||||
appreciation on investments | ||||||||
and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (net of non-U.S. taxes of $1,865; also includes $271,083 net gain from affiliates) | 5,146,709 | |||||||
Currency transactions | (3,218 | ) | 5,143,491 | |||||
Net unrealized appreciation on: | ||||||||
Investments (net of non-U.S. taxes of $20,589) | 6,837,962 | |||||||
Currency translations | 337 | 6,838,299 | ||||||
Net realized gain and | ||||||||
unrealized appreciation | ||||||||
on investments and currency | 11,981,790 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 12,405,303 | ||||||
*Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | ||||||||
See Notes to Financial Statements | ||||||||
Statements of changes in net assets | (dollars in thousands) | |||||||
Six months ended February 28, 2010* | Year ended August 31, 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 423,513 | $ | 1,203,911 | ||||
Net realized gain (loss) on investments and currency transactions | 5,143,491 | (17,896,133 | ) | |||||
Net unrealized appreciation (depreciation) on investments and currency translations | 6,838,299 | (16,034,743 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 12,405,303 | (32,726,965 | ) | |||||
Dividends paid to shareholders from net investment income | (1,158,259 | ) | (1,231,544 | ) | ||||
Net capital share transactions | (1,169,706 | ) | (1,830,651 | ) | ||||
Total increase (decrease) in net assets | 10,077,338 | (35,789,160 | ) | |||||
Net assets: | ||||||||
Beginning of period | 143,329,978 | 179,119,138 | ||||||
End of period (including distributions in excess of and undistributed | ||||||||
net investment income: $(41,232) and $693,514, respectively) | $ | 153,407,316 | $ | 143,329,978 | ||||
*Unaudited. | ||||||||
See Notes to Financial Statements |
Notes to financial statements
unaudited
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.
On November 24, 2009, shareholders approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund. On December 23, 2009, shareholders approved a proposal to reorganize the fund from a Maryland corporation to a Delaware statutory trust. The reorganization may be completed in 2010 or early 2011; however, the fund reserves the right to delay the implementation.
The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 5.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:
Net asset value – The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Security valuation – Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from one or more independent pricing vendors when such prices are available. However, where the investment adviser deems it appropriate to do so, such securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted by authority of the fund's board of directors. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly securities outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
2. Risk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
The prices of the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations. The growth-oriented common stocks and other equity-type securities, such as preferred stocks, convertible preferred stocks and convertible bonds, generally purchased by the fund may involve large price swings and potential for loss.
Investments in securities issued by entities based outside the U.S. may also be affected by currency controls; different accounting, auditing, financial reporting, and legal standards and practices; expropriation; changes in tax policy; greater market volatility; different securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. Investments in securities issued by entities domiciled in the U.S. may also be subject to many of these risks.
3. Taxation and distributions
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended February 28, 2010, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2005, by state tax authorities for tax years before 2005 and by tax authorities outside the U.S. for tax years before 2005.
Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; cost of investments sold; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of August 31, 2009, the components of distributable earnings on a tax basis were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 850,404 | ||
Capital loss carryforward expiring 2017* | (4,449,264 | ) | ||
Post-October capital loss deferrals (realized during the period November 1, 2008, through August 31, 2009)† | (13,392,433 | ) | ||
*The capital loss carryforward will be used to offset any capital gains realized by the fund in the current year or in subsequent years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. | ||||
†These deferrals are considered incurred in the subsequent year. |
As of February 28, 2010, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Gross unrealized appreciation on investment securities | $ | 22,657,378 | ||
Gross unrealized depreciation on investment securities | (9,326,388 | ) | ||
Net unrealized appreciation on investment securities | 13,330,990 | |||
Cost of investment securities | 139,605,389 |
Ordinary income distributions paid to shareholders from net investment income were as follows (dollars in thousands):
Six months ended February 28, 2010 | Year ended August 31, 2009 | |||||||
Class A | $ | 508,625 | $ | 597,313 | ||||
Class B | 1,938 | 1,325 | ||||||
Class C | 13,544 | 3,481 | ||||||
Class F-1 | 140,687 | 182,282 | ||||||
Class F-2 | 42,452 | 10,468 | ||||||
Class 529-A | 22,126 | 22,729 | ||||||
Class 529-B | 359 | 220 | ||||||
Class 529-C | 1,150 | 679 | ||||||
Class 529-E | 798 | 786 | ||||||
Class 529-F-1 | 856 | 839 | ||||||
Class R-1 | 1,358 | 992 | ||||||
Class R-2 | 5,449 | 4,376 | ||||||
Class R-3 | 75,896 | 71,878 | ||||||
Class R-4 | 140,976 | 138,342 | ||||||
Class R-5 | 163,718 | 195,834 | ||||||
Class R-6* | 38,327 | - | ||||||
Total | $ | 1,158,259 | $ | 1,231,544 | ||||
*Class R-6 was offered beginning May 1, 2009. |
4. Fees and transactions with related parties
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.50% on the first $1 billion of daily net assets and decreasing to 0.233% on such assets in excess of $210 billion. For the six months ended February 28, 2010, the investment advisory services fee was $205,551,000, which was equivalent to an annualized rate of 0.272% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Classes A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of February 28, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.
Share class | Currently approved limits | Plan limits |
Class A | 0.25% | 0.25% |
Class 529-A | 0.25 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC as described below.
Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described above for the six months ended February 28, 2010, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | ||
CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||
Class A | $75,862 | $50,574 | Not applicable | Not applicable | Not applicable |
Class B | 19,985 | 2,973 | Not applicable | Not applicable | Not applicable |
Class C | 39,056 | Included in administrative services | $5,864 | $1,031 | Not applicable |
Class F-1 | 20,648 | 9,865 | 684 | Not applicable | |
Class F-2 | Not applicable | 2,676 | 95 | Not applicable | |
Class 529-A | 2,857 | 1,452 | 272 | $1,371 | |
Class 529-B | 2,166 | 230 | 74 | 217 | |
Class 529-C | 4,086 | 435 | 126 | 411 | |
Class 529-E | 356 | 76 | 14 | 71 | |
Class 529-F-1 | - | 46 | 8 | 44 | |
Class R-1 | 2,574 | 358 | 50 | Not applicable | |
Class R-2 | 9,383 | 1,814 | 2,863 | Not applicable | |
Class R-3 | 30,445 | 8,643 | 2,178 | Not applicable | |
Class R-4 | 20,648 | 11,993 | 95 | Not applicable | |
Class R-5 | Not applicable | 7,062 | 49 | Not applicable | |
Class R-6 | Not applicable | 867 | 7 | Not applicable | |
Total | $228,066 | $53,547 | $ 51,381 | $7,546 | $2,114 |
Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $479,000, shown on the accompanying financial statements, includes $300,000 in current fees (either paid in cash or deferred) and a net increase of $179,000 in the value of the deferred amounts.
Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.
5. Disclosure of fair value measurements
The fund classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high-quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of February 28, 2010 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common stocks: | ||||||||||||||||
Information technology | $ | 34,575,175 | $ | - | $ | - | $ | 34,575,175 | ||||||||
Health care | 18,579,871 | - | - | 18,579,871 | ||||||||||||
Energy | 15,147,022 | - | - | 15,147,022 | ||||||||||||
Financials | 15,143,774 | - | - | 15,143,774 | ||||||||||||
Consumer discretionary | 14,701,140 | - | - | 14,701,140 | ||||||||||||
Materials | 12,074,162 | - | - | 12,074,162 | ||||||||||||
Industrials | 10,835,541 | - | - | 10,835,541 | ||||||||||||
Consumer staples | 9,223,403 | - | - | 9,223,403 | ||||||||||||
Telecommunication services | 1,718,397 | - | - | 1,718,397 | ||||||||||||
Utilities | 995,240 | - | - | 995,240 | ||||||||||||
Miscellaneous | 7,437,575 | - | - | 7,437,575 | ||||||||||||
Preferred stocks | - | - | 990 | 990 | ||||||||||||
Convertible securities | - | 72,482 | - | 72,482 | ||||||||||||
Bonds & notes | - | 74,994 | - | 74,994 | ||||||||||||
Short-term securities | - | 12,356,613 | - | 12,356,613 | ||||||||||||
Total | $ | 140,431,300 | $ | 12,504,089 | $ | 990 | $ | 152,936,379 |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the six months ended February 28, 2010 (dollars in thousands): | ||||||||||||||||
Beginning value at 9/1/2009 | Net unrealized appreciation* | Net sales | Ending value at 2/28/2010 | |||||||||||||
Investment securities | $ | 847 | $ | 21,148 | $ | (21,005 | ) | $ | 990 | |||||||
Net unrealized appreciation during the period on Level 3 investment securities held at February 28, 2010 (dollars in thousands)*: | $ | 541 | ||||||||||||||
*Net unrealized appreciation is included in the related amounts on investments in the statement of operations. |
6. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales* | Reinvestments of dividends and distributions | Repurchases* | Net (decrease) increase | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Six months ended February 28, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 3,570,921 | 133,853 | $ | 489,387 | 18,025 | $ | (6,045,876 | ) | (226,962 | ) | $ | (1,985,568 | ) | (75,084 | ) | ||||||||||||||||
Class B | 34,551 | 1,340 | 1,866 | 71 | (660,450 | ) | (25,597 | ) | (624,033 | ) | (24,186 | ) | ||||||||||||||||||||
Class C | 446,611 | 17,431 | 12,789 | 489 | (724,503 | ) | (28,313 | ) | (265,103 | ) | (10,393 | ) | ||||||||||||||||||||
Class F-1 | 1,659,203 | 62,613 | 127,953 | 4,744 | (2,855,333 | ) | (107,838 | ) | (1,068,177 | ) | (40,481 | ) | ||||||||||||||||||||
Class F-2 | 1,023,900 | 38,443 | 31,492 | 1,161 | (472,354 | ) | (17,702 | ) | 583,038 | 21,902 | ||||||||||||||||||||||
Class 529-A | 227,279 | 8,543 | 22,122 | 819 | (137,753 | ) | (5,183 | ) | 111,648 | 4,179 | ||||||||||||||||||||||
Class 529-B | 4,053 | 157 | 358 | 14 | (19,711 | ) | (762 | ) | (15,300 | ) | (591 | ) | ||||||||||||||||||||
Class 529-C | 72,833 | 2,815 | 1,147 | 43 | (53,981 | ) | (2,087 | ) | 19,999 | 771 | ||||||||||||||||||||||
Class 529-E | 11,985 | 454 | 797 | 30 | (8,477 | ) | (321 | ) | 4,305 | 163 | ||||||||||||||||||||||
Class 529-F-1 | 13,213 | 497 | 856 | 32 | (6,914 | ) | (260 | ) | 7,155 | 269 | ||||||||||||||||||||||
Class R-1 | 89,848 | 3,457 | 1,351 | 51 | (52,223 | ) | (2,028 | ) | 38,976 | 1,480 | ||||||||||||||||||||||
Class R-2 | 338,675 | 13,040 | 5,441 | 205 | (357,165 | ) | (13,743 | ) | (13,049 | ) | (498 | ) | ||||||||||||||||||||
Class R-3 | 1,694,919 | 64,466 | 75,727 | 2,830 | (1,705,982 | ) | (64,781 | ) | 64,664 | 2,515 | ||||||||||||||||||||||
Class R-4 | 2,425,748 | 91,418 | 140,952 | 5,234 | (2,729,892 | ) | (103,602 | ) | (163,192 | ) | (6,950 | ) | ||||||||||||||||||||
Class R-5 | 2,531,192 | 95,254 | 162,119 | 5,982 | (3,135,582 | ) | (118,196 | ) | (442,271 | ) | (16,960 | ) | ||||||||||||||||||||
Class R-6 | 2,769,057 | 103,835 | 38,267 | 1,409 | (230,122 | ) | (8,575 | ) | 2,577,202 | 96,669 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 16,913,988 | 637,616 | $ | 1,112,624 | 41,139 | $ | (19,196,318 | ) | (725,950 | ) | $ | (1,169,706 | ) | (47,195 | ) | ||||||||||||||||
Year ended August 31, 2009 | ||||||||||||||||||||||||||||||||
Class A | $ | 9,244,844 | 423,547 | $ | 574,110 | 28,966 | $ | (13,898,783 | ) | (646,021 | ) | $ | (4,079,829 | ) | (193,508 | ) | ||||||||||||||||
Class B | 266,626 | 12,803 | 1,273 | 66 | (1,259,968 | ) | (60,385 | ) | (992,069 | ) | (47,516 | ) | ||||||||||||||||||||
Class C | 1,125,020 | 53,313 | 3,301 | 172 | (1,827,122 | ) | (88,819 | ) | (698,801 | ) | (35,334 | ) | ||||||||||||||||||||
Class F-1 | 4,693,646 | 216,560 | 161,986 | 8,227 | (8,500,584 | ) | (397,082 | ) | (3,644,952 | ) | (172,295 | ) | ||||||||||||||||||||
Class F-2 | 3,242,431 | 145,682 | 8,094 | 409 | (417,431 | ) | (19,744 | ) | 2,833,094 | 126,347 | ||||||||||||||||||||||
Class 529-A | 389,954 | 17,918 | 22,722 | 1,152 | (223,093 | ) | (10,417 | ) | 189,583 | 8,653 | ||||||||||||||||||||||
Class 529-B | 31,539 | 1,526 | 220 | 11 | (35,303 | ) | (1,694 | ) | (3,544 | ) | (157 | ) | ||||||||||||||||||||
Class 529-C | 133,286 | 6,288 | 678 | 35 | (90,547 | ) | (4,335 | ) | 43,417 | 1,988 | ||||||||||||||||||||||
Class 529-E | 22,370 | 1,046 | 785 | 40 | (12,294 | ) | (579 | ) | 10,861 | 507 | ||||||||||||||||||||||
Class 529-F-1 | 19,232 | 879 | 838 | 42 | (11,069 | ) | (521 | ) | 9,001 | 400 | ||||||||||||||||||||||
Class R-1 | 143,419 | 6,772 | 983 | 51 | (86,836 | ) | (4,125 | ) | 57,566 | 2,698 | ||||||||||||||||||||||
Class R-2 | 776,562 | 36,643 | 4,373 | 226 | (644,723 | ) | (30,415 | ) | 136,212 | 6,454 | ||||||||||||||||||||||
Class R-3 | 3,233,689 | 149,528 | 71,742 | 3,670 | (2,607,100 | ) | (120,810 | ) | 698,331 | 32,388 | ||||||||||||||||||||||
Class R-4 | 5,362,070 | 245,270 | 138,302 | 7,035 | (3,654,967 | ) | (173,090 | ) | 1,845,405 | 79,215 | ||||||||||||||||||||||
Class R-5 | 4,895,084 | 223,005 | 194,941 | 9,860 | (5,353,280 | ) | (236,997 | ) | (263,255 | ) | (4,132 | ) | ||||||||||||||||||||
Class R-6† | 2,054,518 | 86,542 | - | - | (26,189 | ) | (1,070 | ) | 2,028,329 | 85,472 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 35,634,290 | 1,627,322 | $ | 1,184,348 | 59,962 | $ | (38,649,289 | ) | (1,796,104 | ) | $ | (1,830,651 | ) | (108,820 | ) | ||||||||||||||||
*Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
7. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $22,003,415,000 and $19,144,212,000, respectively, during the six months ended February 28, 2010.
��
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income (loss) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return(3)(4) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers(4) | Ratio of net income (loss) to average net assets(4) | |||||||||||||||||||||||||||||||||||||||||
Class A: | Six months ended 2/28/2010(5) | $ | 24.93 | $ | .08 | $ | 2.10 | $ | 2.18 | $ | (.21 | ) | $ | - | $ | (.21 | ) | $ | 26.90 | 8.74 | % | $ | 64,427 | .69 | %(6) | .69 | %(6) | .62 | %(6) | ||||||||||||||||||||||||
Year ended 8/31/2009 | 30.61 | .22 | (5.67 | ) | (5.45 | ) | (.23 | ) | - | (.23 | ) | 24.93 | (17.59 | ) | 61,587 | .76 | .75 | 1.00 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.77 | .36 | (3.10 | ) | (2.74 | ) | (.36 | ) | (2.06 | ) | (2.42 | ) | 30.61 | (8.24 | ) | 81,529 | .65 | .62 | 1.09 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.93 | .32 | 4.89 | 5.21 | (.27 | ) | (1.10 | ) | (1.37 | ) | 35.77 | 16.69 | 90,125 | .64 | .62 | .94 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.51 | .28 | 2.56 | 2.84 | (.19 | ) | (.23 | ) | (.42 | ) | 31.93 | 9.66 | 78,854 | .65 | .63 | .89 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.43 | .21 | 4.96 | 5.17 | (.09 | ) | - | (.09 | ) | 29.51 | 21.20 | 67,793 | .68 | .66 | .76 | ||||||||||||||||||||||||||||||||||||||
Class B: | Six months ended 2/28/2010(5) | 24.08 | (.02 | ) | 2.02 | 2.00 | (.01 | ) | - | (.01 | ) | 26.07 | 8.32 | 3,768 | 1.45 | (6) | 1.45 | (6) | (.14 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.44 | .06 | (5.41 | ) | (5.35 | ) | (.01 | ) | - | (.01 | ) | 24.08 | (18.18 | ) | 4,063 | 1.50 | 1.49 | .27 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.48 | .11 | (2.99 | ) | (2.88 | ) | (.10 | ) | (2.06 | ) | (2.16 | ) | 29.44 | (8.91 | ) | 6,367 | 1.39 | 1.37 | .34 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 30.83 | .06 | 4.73 | 4.79 | (.04 | ) | (1.10 | ) | (1.14 | ) | 34.48 | 15.82 | 7,596 | 1.39 | 1.36 | .20 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.55 | .04 | 2.47 | 2.51 | - | (.23 | ) | (.23 | ) | 30.83 | 8.80 | 6,839 | 1.40 | 1.38 | .14 | ||||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 23.73 | - | (7) | 4.82 | 4.82 | - | - | - | 28.55 | 20.31 | 6,098 | 1.43 | 1.41 | .01 | |||||||||||||||||||||||||||||||||||||||
Class C: | Six months ended 2/28/2010(5) | 23.96 | (.02 | ) | 2.00 | 1.98 | (.04 | ) | - | (.04 | ) | 25.90 | 8.28 | 7,842 | 1.48 | (6) | 1.48 | (6) | (.16 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.30 | .06 | (5.39 | ) | (5.33 | ) | (.01 | ) | - | (.01 | ) | 23.96 | (18.18 | ) | 7,502 | 1.50 | 1.49 | .26 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.34 | .09 | (2.97 | ) | (2.88 | ) | (.10 | ) | (2.06 | ) | (2.16 | ) | 29.30 | (8.95 | ) | 10,209 | 1.44 | 1.41 | .29 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 30.73 | .05 | 4.70 | 4.75 | (.04 | ) | (1.10 | ) | (1.14 | ) | 34.34 | 15.74 | 11,091 | 1.45 | 1.42 | .14 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.47 | .02 | 2.47 | 2.49 | - | (.23 | ) | (.23 | ) | 30.73 | 8.75 | 9,036 | 1.47 | 1.44 | .07 | ||||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 23.68 | (.01 | ) | 4.80 | 4.79 | - | - | - | 28.47 | 20.23 | 7,054 | 1.48 | 1.46 | (.05 | ) | ||||||||||||||||||||||||||||||||||||||
Class F-1: | Six months ended 2/28/2010(5) | 24.78 | .08 | 2.09 | 2.17 | (.22 | ) | - | (.22 | ) | 26.73 | 8.76 | 16,748 | .66 | (6) | .66 | (6) | .65 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.41 | .24 | (5.63 | ) | (5.39 | ) | (.24 | ) | - | (.24 | ) | 24.78 | (17.52 | ) | 16,531 | .69 | .68 | 1.08 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.56 | .36 | (3.08 | ) | (2.72 | ) | (.37 | ) | (2.06 | ) | (2.43 | ) | 30.41 | (8.23 | ) | 25,528 | .63 | .61 | 1.09 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.76 | .32 | 4.87 | 5.19 | (.29 | ) | (1.10 | ) | (1.39 | ) | 35.56 | 16.71 | 25,404 | .63 | .61 | .95 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.37 | .28 | 2.54 | 2.82 | (.20 | ) | (.23 | ) | (.43 | ) | 31.76 | 9.62 | 17,613 | .64 | .61 | .91 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.33 | .20 | 4.94 | 5.14 | (.10 | ) | - | (.10 | ) | 29.37 | 21.18 | 12,122 | .70 | .68 | .73 | ||||||||||||||||||||||||||||||||||||||
Class F-2: | Six months ended 2/28/2010(5) | 24.97 | .12 | 2.09 | 2.21 | (.29 | ) | - | (.29 | ) | 26.89 | 8.86 | 4,086 | .44 | (6) | .44 | (6) | .88 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.61 | .26 | (5.63 | ) | (5.37 | ) | (.27 | ) | - | (.27 | ) | 24.97 | (17.31 | ) | 3,247 | .46 | .46 | 1.19 | |||||||||||||||||||||||||||||||||||
Period from 8/1/2008 to 8/31/2008 | 30.43 | .03 | .15 | .18 | - | - | - | 30.61 | .59 | 114 | .04 | .03 | .09 | ||||||||||||||||||||||||||||||||||||||||
Class 529-A: | Six months ended 2/28/2010(5) | 24.81 | .08 | 2.08 | 2.16 | (.21 | ) | - | (.21 | ) | 26.76 | 8.71 | 2,854 | .73 | (6) | .73 | (6) | .58 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.47 | .22 | (5.64 | ) | (5.42 | ) | (.24 | ) | - | (.24 | ) | 24.81 | (17.60 | ) | 2,543 | .77 | .76 | .99 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.62 | .34 | (3.08 | ) | (2.74 | ) | (.35 | ) | (2.06 | ) | (2.41 | ) | 30.47 | (8.27 | ) | 2,859 | .69 | .66 | 1.03 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.81 | .31 | 4.87 | 5.18 | (.27 | ) | (1.10 | ) | (1.37 | ) | 35.62 | 16.66 | 2,725 | .69 | .66 | .90 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.42 | .27 | 2.54 | 2.81 | (.19 | ) | (.23 | ) | (.42 | ) | 31.81 | 9.57 | 1,968 | .68 | .66 | .86 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.38 | .19 | 4.95 | 5.14 | (.10 | ) | - | (.10 | ) | 29.42 | 21.13 | 1,386 | .73 | .71 | .69 | ||||||||||||||||||||||||||||||||||||||
Class 529-B: | Six months ended 2/28/2010(5) | 24.14 | (.03 | ) | 2.03 | 2.00 | (.02 | ) | - | (.02 | ) | 26.12 | 8.29 | 435 | 1.54 | (6) | 1.54 | (6) | (.23 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.56 | .04 | (5.45 | ) | (5.41 | ) | (.01 | ) | - | (.01 | ) | 24.14 | (18.28 | ) | 416 | 1.58 | 1.57 | .17 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.62 | .07 | (2.99 | ) | (2.92 | ) | (.08 | ) | (2.06 | ) | (2.14 | ) | 29.56 | (9.00 | ) | 514 | 1.50 | 1.48 | .23 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 30.97 | .03 | 4.74 | 4.77 | (.02 | ) | (1.10 | ) | (1.12 | ) | 34.62 | 15.69 | 534 | 1.51 | 1.48 | .08 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.71 | .01 | 2.48 | 2.49 | - | (.23 | ) | (.23 | ) | 30.97 | 8.68 | 424 | 1.52 | 1.50 | .02 | ||||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 23.91 | (.04 | ) | 4.84 | 4.80 | - | - | - | 28.71 | 20.08 | 335 | 1.59 | 1.57 | (.16 | ) | ||||||||||||||||||||||||||||||||||||||
Class 529-C: | Six months ended 2/28/2010(5) | 24.13 | (.03 | ) | 2.03 | 2.00 | (.04 | ) | - | (.04 | ) | 26.09 | 8.27 | 850 | 1.53 | (6) | 1.53 | (6) | (.22 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.55 | .04 | (5.44 | ) | (5.40 | ) | (.02 | ) | - | (.02 | ) | 24.13 | (18.25 | ) | 767 | 1.58 | 1.57 | .18 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.62 | .07 | (2.99 | ) | (2.92 | ) | (.09 | ) | (2.06 | ) | (2.15 | ) | 29.55 | (8.99 | ) | 881 | 1.50 | 1.47 | .23 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 30.99 | .03 | 4.74 | 4.77 | (.04 | ) | (1.10 | ) | (1.14 | ) | 34.62 | 15.66 | 849 | 1.50 | 1.48 | .08 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.72 | .01 | 2.49 | 2.50 | - | (.23 | ) | (.23 | ) | 30.99 | 8.71 | 619 | 1.52 | 1.49 | .03 | ||||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 23.91 | (.04 | ) | 4.85 | 4.81 | - | - | - | 28.72 | 20.12 | 447 | 1.58 | 1.56 | (.15 | ) | ||||||||||||||||||||||||||||||||||||||
Class 529-E: | Six months ended 2/28/2010(5) | $ | 24.63 | $ | .04 | $ | 2.07 | $ | 2.11 | $ | (.15 | ) | $ | - | $ | (.15 | ) | $ | 26.59 | 8.55 | % | $ | 148 | 1.03 | %(6) | 1.03 | %(6) | .29 | %(6) | ||||||||||||||||||||||||
Year ended 8/31/2009 | 30.21 | .15 | (5.57 | ) | (5.42 | ) | (.16 | ) | - | (.16 | ) | 24.63 | (17.82 | ) | 133 | 1.07 | 1.06 | .68 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.34 | .24 | (3.06 | ) | (2.82 | ) | (.25 | ) | (2.06 | ) | (2.31 | ) | 30.21 | (8.55 | ) | 147 | .99 | .97 | .73 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.58 | .20 | 4.84 | 5.04 | (.18 | ) | (1.10 | ) | (1.28 | ) | 35.34 | 16.29 | 143 | .99 | .97 | .59 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.23 | .17 | 2.52 | 2.69 | (.11 | ) | (.23 | ) | (.34 | ) | 31.58 | 9.21 | 107 | 1.00 | .97 | .54 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.22 | .10 | 4.92 | 5.02 | (.01 | ) | - | (.01 | ) | 29.23 | 20.73 | 76 | 1.06 | 1.04 | .36 | ||||||||||||||||||||||||||||||||||||||
Class 529-F-1: | Six months ended 2/28/2010(5) | 24.79 | .10 | 2.08 | 2.18 | (.26 | ) | - | (.26 | ) | 26.71 | 8.82 | 93 | .53 | (6) | .53 | (6) | .79 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.46 | .26 | (5.64 | ) | (5.38 | ) | (.29 | ) | - | (.29 | ) | 24.79 | (17.41 | ) | 79 | .57 | .56 | 1.18 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.61 | .41 | (3.08 | ) | (2.67 | ) | (.42 | ) | (2.06 | ) | (2.48 | ) | 30.46 | (8.09 | ) | 85 | .49 | .47 | 1.24 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.80 | .37 | 4.87 | 5.24 | (.33 | ) | (1.10 | ) | (1.43 | ) | 35.61 | 16.86 | 81 | .49 | .47 | 1.09 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.38 | .33 | 2.53 | 2.86 | (.21 | ) | (.23 | ) | (.44 | ) | 31.80 | 9.79 | 52 | .50 | .47 | 1.05 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.34 | .19 | 4.94 | 5.13 | (.09 | ) | - | (.09 | ) | 29.38 | 21.12 | 30 | .72 | .70 | .70 | ||||||||||||||||||||||||||||||||||||||
Class R-1: | Six months ended 2/28/2010(5) | 24.19 | (.02 | ) | 2.04 | 2.02 | (.07 | ) | - | (.07 | ) | 26.14 | 8.33 | 553 | 1.45 | (6) | 1.45 | (6) | (.13 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.65 | .06 | (5.46 | ) | (5.40 | ) | (.06 | ) | - | (.06 | ) | 24.19 | (18.17 | ) | 476 | 1.47 | 1.46 | .29 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.76 | .10 | (3.02 | ) | (2.92 | ) | (.13 | ) | (2.06 | ) | (2.19 | ) | 29.65 | (8.96 | ) | 503 | 1.42 | 1.39 | .30 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.13 | .05 | 4.77 | 4.82 | (.09 | ) | (1.10 | ) | (1.19 | ) | 34.76 | 15.79 | 408 | 1.43 | 1.40 | .16 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.88 | .03 | 2.49 | 2.52 | (.04 | ) | (.23 | ) | (.27 | ) | 31.13 | 8.75 | 245 | 1.45 | 1.42 | .11 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.02 | (.01 | ) | 4.87 | 4.86 | - | - | - | 28.88 | 20.23 | 122 | 1.47 | 1.44 | (.05 | ) | ||||||||||||||||||||||||||||||||||||||
Class R-2: | Six months ended 2/28/2010(5) | 24.30 | (.01 | ) | 2.04 | 2.03 | (.06 | ) | - | (.06 | ) | 26.27 | 8.33 | 2,546 | 1.41 | (6) | 1.41 | (6) | (.10 | )(6) | |||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 29.77 | .06 | (5.48 | ) | (5.42 | ) | (.05 | ) | - | (.05 | ) | 24.30 | (18.17 | ) | 2,367 | 1.48 | 1.47 | .27 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 34.84 | .12 | (3.01 | ) | (2.89 | ) | (.12 | ) | (2.06 | ) | (2.18 | ) | 29.77 | (8.87 | ) | 2,708 | 1.36 | 1.33 | .37 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.16 | .05 | 4.77 | 4.82 | (.04 | ) | (1.10 | ) | (1.14 | ) | 34.84 | 15.76 | 2,815 | 1.42 | 1.40 | .16 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 28.86 | .03 | 2.50 | 2.53 | - | (.23 | ) | (.23 | ) | 31.16 | 8.77 | 2,164 | 1.46 | 1.43 | .09 | ||||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.01 | (.01 | ) | 4.86 | 4.85 | - | - | - | 28.86 | 20.20 | 1,567 | 1.51 | 1.45 | (.04 | ) | ||||||||||||||||||||||||||||||||||||||
Class R-3: | Six months ended 2/28/2010(5) | 24.55 | .04 | 2.07 | 2.11 | (.16 | ) | - | (.16 | ) | 26.50 | 8.59 | 12,453 | .97 | (6) | .97 | (6) | .34 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.11 | .16 | (5.56 | ) | (5.40 | ) | (.16 | ) | - | (.16 | ) | 24.55 | (17.78 | ) | 11,477 | .99 | .98 | .76 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.23 | .26 | (3.05 | ) | (2.79 | ) | (.27 | ) | (2.06 | ) | (2.33 | ) | 30.11 | (8.50 | ) | 13,098 | .94 | .91 | .79 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.49 | .21 | 4.83 | 5.04 | (.20 | ) | (1.10 | ) | (1.30 | ) | 35.23 | 16.33 | 13,652 | .96 | .93 | .63 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.15 | .18 | 2.52 | 2.70 | (.13 | ) | (.23 | ) | (.36 | ) | 31.49 | 9.30 | 9,724 | .96 | .94 | .59 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.18 | .12 | 4.91 | 5.03 | (.06 | ) | - | (.06 | ) | 29.15 | 20.83 | 6,389 | .96 | .94 | .46 | ||||||||||||||||||||||||||||||||||||||
Class R-4: | Six months ended 2/28/2010(5) | 24.75 | .08 | 2.09 | 2.17 | (.23 | ) | - | (.23 | ) | 26.69 | 8.75 | 17,050 | .69 | (6) | .69 | (6) | .63 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.38 | .23 | (5.62 | ) | (5.39 | ) | (.24 | ) | - | (.24 | ) | 24.75 | (17.53 | ) | 15,985 | .70 | .69 | 1.04 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.52 | .35 | (3.08 | ) | (2.73 | ) | (.35 | ) | (2.06 | ) | (2.41 | ) | 30.38 | (8.26 | ) | 17,215 | .67 | .64 | 1.06 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.73 | .31 | 4.85 | 5.16 | (.27 | ) | (1.10 | ) | (1.37 | ) | 35.52 | 16.63 | 17,856 | .68 | .65 | .91 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.35 | .27 | 2.54 | 2.81 | (.20 | ) | (.23 | ) | (.43 | ) | 31.73 | 9.60 | 12,558 | .69 | .66 | .86 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.35 | .19 | 4.94 | 5.13 | (.13 | ) | - | (.13 | ) | 29.35 | 21.15 | 8,032 | .70 | .68 | .72 | ||||||||||||||||||||||||||||||||||||||
Class R-5: | Six months ended 2/28/2010(5) | 24.94 | .12 | 2.10 | 2.22 | (.29 | ) | - | (.29 | ) | 26.87 | 8.90 | 14,651 | .39 | (6) | .39 | (6) | .92 | (6) | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2009 | 30.66 | .30 | (5.69 | ) | (5.39 | ) | (.33 | ) | - | (.33 | ) | 24.94 | (17.30 | ) | 14,023 | .40 | .40 | 1.36 | |||||||||||||||||||||||||||||||||||
Year ended 8/31/2008 | 35.82 | .45 | (3.09 | ) | (2.64 | ) | (.46 | ) | (2.06 | ) | (2.52 | ) | 30.66 | (7.96 | ) | 17,362 | .37 | .34 | 1.35 | ||||||||||||||||||||||||||||||||||
Year ended 8/31/2007 | 31.98 | .41 | 4.89 | 5.30 | (.36 | ) | (1.10 | ) | (1.46 | ) | 35.82 | 16.97 | 12,630 | .38 | .35 | 1.21 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2006 | 29.56 | .37 | 2.55 | 2.92 | (.27 | ) | (.23 | ) | (.50 | ) | 31.98 | 9.92 | 6,863 | .39 | .36 | 1.17 | |||||||||||||||||||||||||||||||||||||
Year ended 8/31/2005 | 24.50 | .28 | 4.97 | 5.25 | (.19 | ) | - | (.19 | ) | 29.56 | 21.52 | 3,204 | .40 | .38 | 1.02 | ||||||||||||||||||||||||||||||||||||||
Class R-6: | Six months ended 2/28/2010(5) | 24.97 | .13 | 2.10 | 2.23 | (.28 | ) | - | (.28 | ) | 26.92 | 8.92 | 4,903 | .35 | (6) | .35 | (6) | 1.00 | (6) | ||||||||||||||||||||||||||||||||||
Period from 5/1/2009 to 8/31/2009 | 21.68 | .09 | 3.20 | 3.29 | - | - | - | 24.97 | 15.17 | 2,134 | .14 | .14 | .38 |
Six months ended February 28, | Year ended August 31 | |||||||||||||||||||||||
2010(5) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
Portfolio turnover rate for all classes of shares | 14 | % | 38 | % | 32 | % | 26 | % | 22 | % | 20 | % |
(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. | |||||||||||||
(2)Based on average shares outstanding. | |||||||||||||
(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
(5)Unaudited. | |||||||||||||
(6)Annualized. | |||||||||||||
(7)Amount less than $.01. | |||||||||||||
See Notes to Financial Statements |
Expense example
0;unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2009, through February 28, 2010).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 9/1/2009 | Ending account value 2/28/2010 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,087.38 | $ | 3.57 | .69 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.37 | 3.46 | .69 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,083.16 | 7.49 | 1.45 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.60 | 7.25 | 1.45 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,082.78 | 7.64 | 1.48 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.46 | 7.40 | 1.48 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,087.56 | 3.42 | .66 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.52 | 3.31 | .66 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,088.56 | 2.28 | .44 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.61 | 2.21 | .44 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,087.07 | 3.78 | .73 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.17 | 3.66 | .73 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,082.88 | 7.95 | 1.54 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.16 | 7.70 | 1.54 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,082.68 | 7.90 | 1.53 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.21 | 7.65 | 1.53 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,085.46 | 5.33 | 1.03 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.69 | 5.16 | 1.03 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,088.23 | 2.74 | .53 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.17 | 2.66 | .53 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,083.35 | 7.49 | 1.45 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.60 | 7.25 | 1.45 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,083.35 | 7.28 | 1.41 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.80 | 7.05 | 1.41 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,085.94 | 5.02 | .97 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.98 | 4.86 | .97 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,087.46 | 3.57 | .69 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.37 | 3.46 | .69 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,089.01 | 2.02 | .39 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.86 | 1.96 | .39 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,089.16 | 1.81 | .35 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.06 | 1.76 | .35 |
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period).
Results of meeting of shareholders held November 24, 2009
(adjourned session December 23, 2009)1
Shares outstanding (all classes) on record date (August 28, 2009): | 5,788,752,232 | |
Total shares voting on November 24, 2009 (all proposals except to approve an Agreement and Plan of Reorganization): | 3,356,582,756 | (58.0% of shares outstanding) |
Total shares voting on December 23, 2009 (proposal to approve an Agreement and Plan of Reorganization only): | 3,867,023,593 | (66.8% of shares outstanding) |
Election of board members
Directors2 | Votes for | Percent of shares voting for | Votes withheld | Percent of shares withheld | ||||||||||||
Ronald P. Badie | 3,238,625,824 | 96.5 | % | 117,956,932 | 3.5 | % | ||||||||||
Joseph C. Berenato | 3,238,711,326 | 96.5 | 117,871,430 | 3.5 | ||||||||||||
Louise H. Bryson | 3,238,834,985 | 96.5 | 117,747,771 | 3.5 | ||||||||||||
Robert J. Denison | 3,238,591,231 | 96.5 | 117,991,525 | 3.5 | ||||||||||||
Mary Anne Dolan | 3,238,657,338 | 96.5 | 117,925,418 | 3.5 | ||||||||||||
Robert A. Fox | 3,238,098,114 | 96.5 | 118,484,642 | 3.5 | ||||||||||||
John G. Freund | 3,236,609,867 | 96.4 | 119,972,889 | 3.6 | ||||||||||||
Leonade D. Jones | 3,238,445,467 | 96.5 | 118,137,289 | 3.5 | ||||||||||||
William H. Kling | 3,237,577,636 | 96.5 | 119,005,120 | 3.5 | ||||||||||||
John G. McDonald | 3,236,158,020 | 96.4 | 120,424,736 | 3.6 | ||||||||||||
Donald D. O’Neal | 3,238,774,133 | 96.5 | 117,808,623 | 3.5 | ||||||||||||
James F. Rothenberg | 3,238,778,634 | 96.5 | 117,804,122 | 3.5 | ||||||||||||
Christopher E. Stone | 3,238,725,285 | 96.5 | 117,857,471 | 3.5 |
Votes for | Percent of outstanding shares voting for | Votes against | Percent of outstanding shares voting against | Votes abstaining | Percent of outstanding shares abstaining | |||||||||||||||||||
To approve an Agreement and Plan of Reorganization | 2,955,351,847 | 51.1 | % | 139,294,470 | 2.4 | % | 772,377,276 | 3 | 13.3 | % |
Votes for | Percent of shares voting for | Votes against | Percent of shares voting against | Votes abstaining | Percent of shares abstaining | |||||||||||||||||||
To update the fund’s fundamental investment policies regarding: | ||||||||||||||||||||||||
Borrowing | 2,444,876,541 | 72.8 | % | 83,503,168 | 2.5 | % | 828,203,047 | 3 | 24.7 | % | ||||||||||||||
Issuance of senior securities | 2,443,278,254 | 72.8 | 83,698,969 | 2.5 | 829,605,533 | 3 | 24.7 | |||||||||||||||||
Underwriting | 2,418,153,415 | 72.0 | 108,772,455 | 3.3 | 829,656,886 | 3 | 24.7 | |||||||||||||||||
Investments in real estate or commodities | 2,410,249,263 | 71.8 | 117,864,493 | 3.5 | 828,469,000 | 3 | 24.7 | |||||||||||||||||
Lending | 2,434,427,141 | 72.5 | 92,813,904 | 2.8 | 829,341,711 | 3 | 24.7 | |||||||||||||||||
Industry concentration | 2,415,846,882 | 72.0 | 111,052,363 | 3.3 | 829,683,511 | 3 | 24.7 | |||||||||||||||||
Elimination of certain policies | 2,401,027,094 | 71.5 | 123,270,177 | 3.7 | 832,285,485 | 3 | 24.8 | |||||||||||||||||
To approve a policy allowing CRMC to appoint subsidiary advisers for the fund’s day-to-day investment management without additional shareholder approval | 2,430,790,857 | 72.4 | 79,296,537 | 2.4 | 846,495,362 | 3 | 25.2 | |||||||||||||||||
To approve amendments to the fund’s Investment Advisory and Service Agreement with CRMC | 2,434,338,497 | 72.5 | 72,711,696 | 2.2 | 849,532,563 | 3 | 25.3 | |||||||||||||||||
To approve a form of Subsidiary Agreement and appointment of one or more subsidiary advisers for the fund | 2,434,330,755 | 72.5 | 74,213,659 | 2.2 | 848,038,342 | 3 | 25.3 | |||||||||||||||||
To consider a shareholder proposal regarding genocide-free investing | 282,678,062 | 10.9 | 2,173,524,825 | 83.8 | 137,370,586 | 5.3 | ||||||||||||||||||
(broker non-votes = 763,009,283) |
1The meeting for the proposal to approve an Agreement and Plan of Reorganization only was held on December 23, 2009. The meeting for all other proposals was held on November 24, 2009. |
2Gail L. Neale and Henry E. Riggs did not stand for election at the Meeting of Shareholders because they plan to retire in December 2010. |
3Includes broker non-votes. |
Office of the fund
One Market
Steuart Tower, Suite 1800
Mailing address: P.O. Box 7650
San Francisco, CA 94120-7650
Investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Custodian of assets
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Counsel
K&L Gates LLP
Four Embarcadero Center, Suite 1200
San Francisco, CA 94111-5994
Independent registered public
accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus and prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete February 28, 2010, portfolio of The Growth Fund of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
The Growth Fund of America files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of The Growth Fund of America, but it also may be used as sales literature when preceded or accompanied by the current summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after June 30, 2010, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
[logo - American Funds®]
The right choice for the long term®
What makes American Funds different?
For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 30 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.
Our unique combination of strengths includes these five factors:
•A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. |
•An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets. |
•The multiple portfolio counselor system |
Our unique approach to portfolio management, developed more than 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives. |
•Experienced investment professionals |
American Funds portfolio counselors have an average of 26 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have. |
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry. |
American Funds span a range of investment objectives
•Growth funds |
AMCAP Fund® |
EuroPacific Growth Fund® |
>The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World Fund® |
SMALLCAP World Fund® |
•Growth-and-income funds |
American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Capital Income Builder® |
The Income Fund of America® |
•Balanced fund |
American Balanced Fund® |
•Bond funds |
American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM |
U.S. Government Securities FundSM |
•Tax-exempt bond funds |
American Funds Short-Term Tax-Exempt Bond FundSM |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
•Money market fund |
American Funds Money Market FundSM |
•American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGESR-905-0410P
Litho in USA AGD/B/8084-S20698
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
ITEM 2 – Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 – Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 – Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
[logo – American Funds®]
The Growth Fund of America®
Investment portfolio
February 28, 2010
unaudited
Common stocks — 91.54% | Shares | Value (000) | ||||||
INFORMATION TECHNOLOGY — 22.54% | ||||||||
Microsoft Corp. | 193,445,100 | $ | 5,544,137 | |||||
Oracle Corp. | 179,049,376 | 4,413,567 | ||||||
Google Inc., Class A1 | 7,942,900 | 4,184,320 | ||||||
Apple Inc.1 | 13,565,000 | 2,775,670 | ||||||
Cisco Systems, Inc.1 | 110,870,000 | 2,697,467 | ||||||
Corning Inc.2 | 78,423,846 | 1,382,612 | ||||||
Yahoo! Inc.1,2 | 79,922,100 | 1,223,607 | ||||||
QUALCOMM Inc. | 32,446,694 | 1,190,469 | ||||||
EMC Corp.1 | 56,300,000 | 984,687 | ||||||
Hewlett-Packard Co. | 18,965,000 | 963,232 | ||||||
International Business Machines Corp. | 6,660,000 | 846,886 | ||||||
Intuit Inc.1,2 | 20,800,000 | 673,088 | ||||||
Intel Corp. | 32,251,800 | 662,130 | ||||||
Accenture PLC, Class A | 16,150,000 | 645,516 | ||||||
SAP AG | 11,210,000 | 500,364 | ||||||
SAP AG (ADR) | 2,715,000 | 121,035 | ||||||
Texas Instruments Inc. | 24,924,000 | 607,647 | ||||||
Linear Technology Corp.2 | 19,850,000 | 539,325 | ||||||
Applied Materials, Inc. | 39,810,000 | 487,274 | ||||||
Xilinx, Inc.2 | 17,155,300 | 443,121 | ||||||
Paychex, Inc. | 13,578,900 | 406,552 | ||||||
Automatic Data Processing, Inc. | 9,695,000 | 403,409 | ||||||
KLA-Tencor Corp.2 | 12,940,000 | 376,942 | ||||||
Juniper Networks, Inc.1 | 10,000,000 | 279,800 | ||||||
Flextronics International Ltd.1 | 36,705,464 | 255,470 | ||||||
Samsung Electronics Co. Ltd. | 338,000 | 216,973 | ||||||
Fidelity National Information Services, Inc. | 9,429,999 | 212,552 | ||||||
Nokia Corp. (ADR) | 13,089,474 | 176,315 | ||||||
Nokia Corp. | 2,500,000 | 33,705 | ||||||
Canon, Inc. | 4,930,000 | 204,770 | ||||||
Tyco Electronics Ltd. | 7,363,000 | 188,714 | ||||||
Analog Devices, Inc. | 5,000,000 | 146,200 | ||||||
ASML Holding NV (New York registered) | 2,977,778 | 91,805 | ||||||
ASML Holding NV | 1,130,000 | 34,657 | ||||||
Maxim Integrated Products, Inc. | 4,470,000 | 82,784 | ||||||
Micron Technology, Inc.1 | 8,600,000 | 77,916 | ||||||
Quanta Computer Inc. | 36,214,258 | 73,861 | ||||||
Rohm Co., Ltd. | 1,005,000 | 68,574 | ||||||
Lender Processing Services, Inc. | 1,550,000 | 59,179 | ||||||
Motorola, Inc.1 | 8,225,000 | 55,601 | ||||||
Hirose Electric Co., Ltd. | 489,700 | 52,020 | ||||||
Comverse Technology, Inc.1 | 6,000,000 | 51,600 | ||||||
Microchip Technology Inc. | 1,818,000 | 49,195 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) | 3,338,859 | 32,554 | ||||||
Advanced Micro Devices, Inc.1 | 3,800,000 | 30,058 | ||||||
Western Union Co. | 890,000 | 14,044 | ||||||
HTC Corp. | 1,365,000 | 13,771 | ||||||
ProAct Holdings, LLC1,3,4 | 6,500,000 | — | ||||||
34,575,175 | ||||||||
HEALTH CARE — 12.11% | ||||||||
Medtronic, Inc. | 45,325,000 | 1,967,105 | ||||||
Teva Pharmaceutical Industries Ltd. (ADR) | 26,989,307 | 1,619,628 | ||||||
Roche Holding AG | 9,605,000 | 1,605,607 | ||||||
Merck & Co., Inc. | 40,180,191 | 1,481,845 | ||||||
Gilead Sciences, Inc.1 | 27,120,000 | 1,291,183 | ||||||
Celgene Corp.1 | 13,800,000 | 821,376 | ||||||
Eli Lilly and Co. | 20,340,000 | 698,476 | ||||||
Intuitive Surgical, Inc.1 | 1,896,730 | 658,431 | ||||||
Biogen Idec Inc.1 | 11,500,000 | 632,615 | ||||||
Stryker Corp. | 11,125,000 | 590,737 | ||||||
Amgen Inc.1 | 10,078,900 | 570,567 | ||||||
UnitedHealth Group Inc. | 16,756,000 | 567,358 | ||||||
St. Jude Medical, Inc.1 | 14,025,000 | 536,035 | ||||||
Zimmer Holdings, Inc.1 | 9,270,000 | 531,449 | ||||||
Vertex Pharmaceuticals Inc.1,2 | 12,405,175 | 503,774 | ||||||
Novartis AG | 9,000,000 | 501,072 | ||||||
Abbott Laboratories | 8,700,000 | 472,236 | ||||||
Aetna Inc. | 14,820,000 | 444,452 | ||||||
Hospira, Inc.1 | 7,750,000 | 405,557 | ||||||
Baxter International Inc. | 6,300,000 | 358,659 | ||||||
Allergan, Inc. | 5,940,000 | 347,074 | ||||||
Boston Scientific Corp.1 | 41,872,131 | 324,090 | ||||||
Novo Nordisk A/S, Class B | 4,227,400 | 298,888 | ||||||
McKesson Corp. | 4,500,000 | 266,175 | ||||||
Covidien PLC | 4,910,475 | 241,203 | ||||||
ResMed Inc.1 | 3,640,500 | 207,800 | ||||||
Johnson & Johnson | 3,050,000 | 192,150 | ||||||
Covance Inc.1 | 3,150,000 | 178,353 | ||||||
Thermo Fisher Scientific Inc.1 | 1,900,000 | 92,663 | ||||||
Hologic, Inc.1 | 3,095,000 | 53,389 | ||||||
Pharmaceutical Product Development, Inc. | 2,061,082 | 43,406 | ||||||
Nobel Biocare Holding AG | 1,300,302 | 33,101 | ||||||
Illumina, Inc.1 | 700,000 | 25,424 | ||||||
Abraxis BioScience, Inc.1 | 550,000 | 17,793 | ||||||
Fresenius SE1 | 1,176,253 | 200 | ||||||
18,579,871 | ||||||||
ENERGY — 9.88% | ||||||||
Schlumberger Ltd. | 25,301,700 | 1,545,934 | ||||||
Suncor Energy Inc. (CAD denominated) | 46,610,366 | 1,346,974 | ||||||
Suncor Energy Inc. | 5,360,000 | 154,958 | ||||||
Apache Corp. | 11,685,000 | 1,211,033 | ||||||
Devon Energy Corp. | 16,774,600 | 1,155,099 | ||||||
Occidental Petroleum Corp. | 11,830,000 | 944,626 | ||||||
EOG Resources, Inc. | 8,825,237 | 830,014 | ||||||
Canadian Natural Resources, Ltd. | 11,445,000 | 770,903 | ||||||
Baker Hughes Inc. | 14,541,178 | 696,813 | ||||||
Halliburton Co. | 18,445,000 | 556,117 | ||||||
Noble Energy, Inc. | 6,859,000 | 498,238 | ||||||
CONSOL Energy Inc.2 | 9,856,400 | 496,368 | ||||||
Cameco Corp. | 10,257,000 | 281,862 | ||||||
Cameco Corp. (CAD denominated) | 6,842,300 | 187,915 | ||||||
Petróleo Brasileiro SA – Petrobras, ordinary nominative (ADR) | 10,430,200 | 444,848 | ||||||
Diamond Offshore Drilling, Inc. | 4,900,000 | 427,868 | ||||||
Nexen Inc. | 14,996,847 | 338,473 | ||||||
FMC Technologies, Inc.1 | 6,000,000 | 337,020 | ||||||
BG Group PLC | 14,450,000 | 252,249 | ||||||
Petrohawk Energy Corp.1 | 11,730,000 | 251,022 | ||||||
Tenaris SA (ADR) | 5,760,000 | 238,637 | ||||||
Murphy Oil Corp. | 4,318,000 | 224,104 | ||||||
ConocoPhillips | 3,982,100 | 191,141 | ||||||
Chevron Corp. | 2,450,000 | 177,135 | ||||||
BJ Services Co. | 8,102,000 | 177,029 | ||||||
Transocean Ltd.1 | 2,186,041 | 174,490 | ||||||
Pioneer Natural Resources Co. | 3,605,000 | 168,173 | ||||||
Imperial Oil Ltd. | 4,522,754 | 166,546 | ||||||
Smith International, Inc. | 3,690,374 | 151,268 | ||||||
Peabody Energy Corp. | 2,830,000 | 130,095 | ||||||
Exxon Mobil Corp. | 1,900,000 | 123,500 | ||||||
Arch Coal, Inc. | 5,089,568 | 114,464 | ||||||
Saipem SpA, Class S | 3,200,000 | 105,904 | ||||||
Hess Corp. | 1,330,000 | 78,204 | ||||||
Core Laboratories NV | 600,000 | 74,418 | ||||||
OAO Gazprom (ADR) | 3,072,600 | 68,335 | ||||||
Patriot Coal Corp.1 | 3,316,000 | 55,245 | ||||||
15,147,022 | ||||||||
FINANCIALS — 9.87% | ||||||||
JPMorgan Chase & Co. | 43,975,000 | 1,845,631 | ||||||
Bank of America Corp. | 102,109,655 | 1,701,147 | ||||||
Wells Fargo & Co. | 58,727,000 | 1,605,596 | ||||||
Berkshire Hathaway Inc., Class A1 | 8,610 | 1,031,478 | ||||||
Bank of New York Mellon Corp. | 30,913,100 | 881,642 | ||||||
Goldman Sachs Group, Inc. | 4,330,000 | 676,995 | ||||||
Banco Bradesco SA, preferred nominative (ADR) | 38,244,571 | 662,014 | ||||||
Citigroup Inc.1 | 171,026,924 | 581,492 | ||||||
Northern Trust Corp. | 8,891,000 | 473,801 | ||||||
PNC Financial Services Group, Inc. | 8,296,602 | 446,025 | ||||||
CME Group Inc., Class A | 1,450,000 | 437,450 | ||||||
Industrial and Commercial Bank of China Ltd., Class H | 617,493,000 | 436,771 | ||||||
Aon Corp. | 10,015,742 | 410,044 | ||||||
IntercontinentalExchange, Inc.1 | 3,650,000 | 391,609 | ||||||
Morgan Stanley | 10,000,000 | 281,800 | ||||||
UBS AG1 | 19,754,666 | 272,611 | ||||||
Credit Suisse Group AG | 5,645,000 | 250,901 | ||||||
Fifth Third Bancorp | 20,000,000 | 244,200 | ||||||
Marsh & McLennan Companies, Inc. | 10,500,000 | 243,810 | ||||||
ACE Ltd. | 4,865,000 | 243,201 | ||||||
Housing Development Finance Corp. Ltd. | 4,480,000 | 243,085 | ||||||
New York Community Bancorp, Inc. | 12,000,000 | 185,880 | ||||||
State Street Corp. | 4,042,700 | 181,558 | ||||||
People’s United Financial, Inc. | 11,130,000 | 175,520 | ||||||
Banco Santander, SA | 12,675,000 | 164,908 | ||||||
Discover Financial Services | 12,011,000 | 163,950 | ||||||
Onex Corp. | 5,200,000 | 125,268 | ||||||
Jefferies Group, Inc. | 5,000,000 | 124,800 | ||||||
AMP Ltd. | 21,479,608 | 114,345 | ||||||
Franklin Resources, Inc. | 1,000,000 | 101,720 | ||||||
American Express Co. | 2,000,000 | 76,380 | ||||||
Genworth Financial, Inc., Class A1 | 4,607,500 | 73,444 | ||||||
AXIS Capital Holdings Ltd. | 2,000,000 | 62,900 | ||||||
Zions Bancorporation | 3,200,000 | 59,328 | ||||||
Marshall & Ilsley Corp. | 7,399,998 | 52,392 | ||||||
First Horizon National Corp.1 | 3,999,999 | 51,200 | ||||||
Willis Group Holdings PLC | 1,210,000 | 36,034 | ||||||
Bank of Ireland1 | 10,000,000 | 13,625 | ||||||
Deutsche Bank AG | 200,000 | 12,708 | ||||||
Washington Mutual, Inc.1 | 24,571,428 | 6,511 | ||||||
15,143,774 | ||||||||
CONSUMER DISCRETIONARY — 9.58% | ||||||||
Time Warner Inc. | 45,674,667 | 1,326,392 | ||||||
News Corp., Class A | 93,860,800 | 1,254,919 | ||||||
McDonald’s Corp. | 18,088,000 | 1,154,919 | ||||||
Johnson Controls, Inc. | 30,292,800 | 942,106 | ||||||
Time Warner Cable Inc.2 | 18,152,120 | 847,522 | ||||||
NIKE, Inc., Class B | 11,838,974 | 800,315 | ||||||
Lowe’s Companies, Inc. | 31,179,800 | 739,273 | ||||||
Comcast Corp., Class A | 36,615,000 | 601,951 | ||||||
Comcast Corp., Class A, special nonvoting shares | 8,200,000 | 127,018 | ||||||
Target Corp. | 13,676,050 | 704,590 | ||||||
Carnival Corp., units | 17,436,786 | 627,027 | ||||||
DIRECTV, Class A1 | 16,440,000 | 556,494 | ||||||
Amazon.com, Inc.1 | 4,385,000 | 519,184 | ||||||
YUM! Brands, Inc. | 14,431,000 | 486,613 | ||||||
Best Buy Co., Inc. | 11,556,875 | 421,826 | ||||||
Home Depot, Inc. | 11,648,910 | 363,446 | ||||||
Starbucks Corp.1 | 14,000,000 | 320,740 | ||||||
Las Vegas Sands Corp.1 | 16,717,500 | 278,012 | ||||||
Marriott International, Inc., Class A | 8,381,109 | 227,212 | ||||||
Staples, Inc. | 8,400,000 | 216,384 | ||||||
NVR, Inc.1 | 285,000 | 201,865 | ||||||
CarMax, Inc.1 | 9,185,000 | 185,445 | ||||||
Harman International Industries, Inc.1,2 | 4,261,600 | 183,845 | ||||||
Shaw Communications Inc., Class B, nonvoting | 9,500,000 | 179,550 | ||||||
DreamWorks Animation SKG, Inc., Class A1 | 3,900,000 | 169,494 | ||||||
Magna International Inc., Class A | 2,747,100 | 156,557 | ||||||
Nikon Corp. | 6,856,000 | 150,669 | ||||||
Omnicom Group Inc. | 4,102,240 | 150,224 | ||||||
Wynn Resorts, Ltd. | 2,185,000 | 138,900 | ||||||
Li & Fung Ltd. | 29,434,000 | 136,901 | ||||||
Toyota Motor Corp. | 2,730,000 | 102,191 | ||||||
Strayer Education, Inc. | 429,000 | 97,310 | ||||||
Brinker International, Inc. | 4,500,000 | 81,495 | ||||||
Harley-Davidson, Inc. | 3,109,500 | 76,525 | ||||||
Kohl’s Corp.1 | 900,000 | 48,438 | ||||||
Chipotle Mexican Grill, Inc.1 | 425,000 | 44,502 | ||||||
D.R. Horton, Inc. | 3,580,000 | 44,249 | ||||||
Weight Watchers International, Inc. | 1,440,000 | 37,037 | ||||||
14,701,140 | ||||||||
MATERIALS — 7.87% | ||||||||
Barrick Gold Corp. | 47,100,000 | 1,773,786 | ||||||
Syngenta AG2 | 4,750,000 | 1,230,432 | ||||||
Rio Tinto PLC | 19,963,764 | 1,023,892 | ||||||
Freeport-McMoRan Copper & Gold Inc. | 12,049,600 | 905,648 | ||||||
Monsanto Co. | 12,539,400 | 885,909 | ||||||
Newmont Mining Corp. | 17,648,000 | 869,693 | ||||||
Potash Corp. of Saskatchewan Inc. | 7,050,000 | 778,743 | ||||||
BHP Billiton PLC (ADR) | 7,885,000 | 486,978 | ||||||
BHP Billiton PLC | 9,290,000 | 284,262 | ||||||
CRH PLC | 30,131,457 | 686,877 | ||||||
Praxair, Inc. | 8,700,502 | 653,756 | ||||||
United States Steel Corp. | 7,003,200 | 370,749 | ||||||
ArcelorMittal | 9,085,000 | 346,221 | ||||||
Xstrata PLC1 | 20,500,000 | 321,919 | ||||||
Cliffs Natural Resources Inc. | 5,424,000 | 305,914 | ||||||
Sigma-Aldrich Corp.2 | 6,155,000 | 293,532 | ||||||
Nucor Corp. | 5,800,000 | 240,120 | ||||||
Vale SA, ordinary nominative (ADR) | 8,000,000 | 222,880 | ||||||
Vale SA, Class A, preferred nominative (ADR) | 300,000 | 7,380 | ||||||
Ecolab Inc. | 3,055,539 | 128,760 | ||||||
Vulcan Materials Co. | 2,479,934 | 107,654 | ||||||
Air Products and Chemicals, Inc. | 830,561 | 56,960 | ||||||
AK Steel Holding Corp. | 1,940,881 | 41,787 | ||||||
Kuraray Co., Ltd. | 2,290,000 | 29,346 | ||||||
Akzo Nobel NV | 412,000 | 20,964 | ||||||
12,074,162 | ||||||||
INDUSTRIALS — 7.06% | ||||||||
Union Pacific Corp. | 21,167,200 | 1,426,034 | ||||||
Boeing Co. | 16,842,598 | 1,063,778 | ||||||
United Parcel Service, Inc., Class B | 17,140,000 | 1,006,804 | ||||||
General Dynamics Corp. | 12,481,400 | 905,526 | ||||||
United Technologies Corp. | 11,375,000 | 780,894 | ||||||
CSX Corp. | 12,213,710 | 579,663 | ||||||
Lockheed Martin Corp. | 6,430,000 | 499,997 | ||||||
Norfolk Southern Corp. | 9,286,600 | 477,610 | ||||||
First Solar, Inc.1 | 4,229,800 | 447,936 | ||||||
Southwest Airlines Co. | 33,889,000 | 426,324 | ||||||
Precision Castparts Corp. | 3,315,000 | 373,766 | ||||||
Raytheon Co. | 4,700,000 | 264,328 | ||||||
Iron Mountain Inc.1 | 10,040,000 | 259,835 | ||||||
FedEx Corp. | 2,927,776 | 248,158 | ||||||
General Electric Co. | 15,000,000 | 240,900 | ||||||
Tyco International Ltd. | 6,363,000 | 229,450 | ||||||
Caterpillar Inc. | 4,000,000 | 228,200 | ||||||
Northrop Grumman Corp. | 3,182,000 | 194,929 | ||||||
URS Corp.1 | 4,020,000 | 186,930 | ||||||
Republic Services, Inc. | 6,122,400 | 172,284 | ||||||
Roper Industries, Inc. | 3,000,000 | 166,320 | ||||||
Continental Airlines, Inc., Class B1 | 6,885,000 | 142,244 | ||||||
KBR, Inc. | 6,575,289 | 136,174 | ||||||
AMR Corp.1 | 14,500,000 | 133,255 | ||||||
Joy Global Inc. | 2,238,600 | 113,721 | ||||||
3M Co. | 881,900 | 70,684 | ||||||
Robert Half International Inc. | 1,586,010 | 44,250 | ||||||
Monster Worldwide, Inc.1 | 1,114,500 | 15,547 | ||||||
10,835,541 | ||||||||
CONSUMER STAPLES — 6.01% | ||||||||
Philip Morris International Inc. | 33,546,700 | 1,643,117 | ||||||
Coca-Cola Co. | 27,184,700 | 1,433,177 | ||||||
Colgate-Palmolive Co. | 12,964,400 | 1,075,267 | ||||||
PepsiCo, Inc. | 13,225,000 | 826,166 | ||||||
CVS/Caremark Corp. | 20,810,000 | 702,338 | ||||||
Avon Products, Inc. | 21,175,000 | 644,567 | ||||||
Altria Group, Inc. | 16,336,700 | 328,694 | ||||||
Estée Lauder Companies Inc., Class A | 5,039,000 | 302,995 | ||||||
Kerry Group PLC, Class A2 | 8,965,824 | 284,020 | ||||||
Anheuser-Busch InBev NV | 4,875,000 | 244,167 | ||||||
Molson Coors Brewing Co., Class B | 5,373,000 | 216,962 | ||||||
Pernod Ricard SA | 2,818,035 | 212,444 | ||||||
Wal-Mart Stores, Inc. | 3,915,000 | 211,684 | ||||||
Shoppers Drug Mart Corp. | 4,035,000 | 168,716 | ||||||
Clorox Co. | 2,750,000 | 168,603 | ||||||
Sysco Corp. | 4,450,000 | 128,605 | ||||||
Diageo PLC | 7,750,000 | 125,719 | ||||||
Safeway Inc. | 5,000,000 | 124,600 | ||||||
Procter & Gamble Co. | 1,760,000 | 111,373 | ||||||
L’Oréal SA | 1,010,000 | 104,613 | ||||||
General Mills, Inc. | 1,235,000 | 88,932 | ||||||
Whole Foods Market, Inc.1 | 2,159,600 | 76,644 | ||||||
9,223,403 | ||||||||
TELECOMMUNICATION SERVICES — 1.12% | ||||||||
América Móvil, SAB de CV, Series L (ADR) | 16,432,028 | 732,376 | ||||||
SOFTBANK CORP. | 13,700,000 | 358,362 | ||||||
Qwest Communications International Inc. | 46,418,000 | 211,666 | ||||||
Vodafone Group PLC | 75,000,000 | 161,741 | ||||||
Telefónica, SA | 6,735,000 | 158,248 | ||||||
Telephone and Data Systems, Inc., special common shares | 2,303,100 | 65,385 | ||||||
Sprint Nextel Corp., Series 11 | 9,195,000 | 30,619 | ||||||
Broadview Networks Holdings, Inc., Class A1,3,4 | 31,812 | — | ||||||
1,718,397 | ||||||||
UTILITIES — 0.65% | ||||||||
Edison International | 9,750,000 | 318,142 | ||||||
NRG Energy, Inc.1 | 9,300,000 | 203,112 | ||||||
Allegheny Energy, Inc. | 8,450,000 | 191,392 | ||||||
Exelon Corp. | 4,100,000 | 177,530 | ||||||
RRI Energy, Inc.1 | 17,302,000 | 73,534 | ||||||
Dynegy Inc., Class A1 | 21,020,000 | 31,530 | ||||||
995,240 | ||||||||
MISCELLANEOUS — 4.85% | ||||||||
Other common stocks in initial period of acquisition | 7,437,575 | |||||||
Total common stocks (cost: $126,657,202,000) | 140,431,300 | |||||||
Preferred stocks — 0.00% | ||||||||
TELECOMMUNICATION SERVICES — 0.00% | ||||||||
Broadview Networks Holdings, Inc., Series B1,3,4 | 1,273 | 990 | ||||||
Total preferred stocks (cost: $21,000,000) | $ | 990 | ||||||
Warrants — 0.00% | Shares | |||||||
FINANCIALS — 0.00% | ||||||||
Washington Mutual, Inc., warrants, expire 20131,3 | 2,857,142 | — | ||||||
Total warrants (cost: $10,949,000) | — | |||||||
Convertible securities — 0.05% | ||||||||
FINANCIALS — 0.03% | ||||||||
SLM Corp., Series C, 7.25% convertible preferred 2010 | 77,600 | 47,629 | ||||||
CONSUMER DISCRETIONARY — 0.01% | ||||||||
Johnson Controls, Inc. 11.50% convertible preferred 2012, units | 99,040 | 15,553 | ||||||
MISCELLANEOUS — 0.01% | ||||||||
Other convertible securities in initial period of acquisition | 9,300 | |||||||
Total convertible securities (cost: $46,234,000) | 72,482 | |||||||
Principal amount | ||||||||
Bonds & notes — 0.05% | (000 | ) | ||||||
BONDS & NOTES OF U.S. GOVERNMENT AGENCIES — 0.03% | ||||||||
Fannie Mae 2.50% 2010 | $ | 50,000 | 50,140 | |||||
CONSUMER DISCRETIONARY — 0.02% | ||||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014 | 20,700 | 20,131 | ||||||
MGM MIRAGE 13.00% 2013 | 4,125 | 4,723 | ||||||
24,854 | ||||||||
Total bonds & notes (cost: $69,448,000) | 74,994 | |||||||
Short-term securities — 8.05% | ||||||||
Freddie Mac 0.12%–0.41% due 3/1–10/25/2010 | 3,791,935 | 3,790,129 | ||||||
Fannie Mae 0.13%–0.70% due 3/3–12/1/2010 | 3,536,277 | 3,532,639 | ||||||
U.S. Treasury Bills 0.145%–0.405% due 5/6–11/18/2010 | 2,554,300 | 2,552,129 | ||||||
Federal Home Loan Bank 0.06%–0.39% due 3/15–10/19/2010 | 386,100 | 385,917 | ||||||
International Bank for Reconstruction and Development 0.19%–0.22% due 3/22–4/20/2010 | 349,200 | 349,170 | ||||||
Federal Farm Credit Banks 0.34%–0.38% due 9/1–12/17/2010 | 320,000 | 319,508 | ||||||
Johnson & Johnson 0.20%–0.28% due 5/24–8/16/20105 | 311,900 | 311,647 | ||||||
Straight-A Funding LLC 0.16%–0.19% due 3/10–5/21/20105 | 300,047 | 300,021 | ||||||
JPMorgan Chase Funding Inc. 0.23% due 3/18/20105 | 75,000 | 74,992 | ||||||
JPMorgan Chase & Co. 0.12%–0.25% due 3/26–7/8/2010 | 90,000 | 89,945 | ||||||
Jupiter Securitization Co., LLC 0.20% due 5/19/20105 | 20,000 | 19,984 | ||||||
Park Avenue Receivables Co., LLC 0.17% due 4/20/20105 | 17,500 | 17,496 | ||||||
Bank of America Corp. 0.37% due 3/16–3/17/2010 | 180,000 | 179,985 | ||||||
E.I. duPont de Nemours and Co. 0.35%–0.43% due 6/15–6/29/20105 | 130,000 | 129,892 | ||||||
Private Export Funding Corp. 0.15%–0.29% due 3/4–5/26/20105 | 113,500 | 113,485 | ||||||
General Electric Capital Services, Inc. 0.17% due 5/12/2010 | 42,800 | 42,781 | ||||||
General Electric Capital Corp. 0.10% due 3/1/2010 | 9,800 | 9,800 | ||||||
Microsoft Corp. 0.16%–0.17% due 4/14–5/26/20105 | 51,900 | 51,889 | ||||||
NetJets Inc. 0.15% due 4/21/20105 | 30,000 | 29,992 | ||||||
Coca-Cola Co. 0.22% due 7/14/20105 | 30,000 | 29,974 | ||||||
Walt Disney Co. 0.14% due 4/5/20105 | 13,041 | 13,039 | ||||||
Paccar Financial Corp. 0.16% due 3/25/2010 | 12,200 | 12,199 | ||||||
Total short-term securities (cost: $12,352,580,000) | 12,356,613 | |||||||
Total investment securities (cost: $139,157,413,000) | 152,936,379 | |||||||
Other assets less liabilities | 470,937 | |||||||
Net assets | $ | 153,407,316 |
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Security did not produce income during the last 12 months.
2Represents an affiliated company as defined under the Investment Company Act of 1940.
3Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $990,000, which represented less than .01% of the net assets of the fund.
4Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.
Acquisition date(s) | Cost (000) | Value (000) | Percent of net assets | ||||||||||
Broadview Networks Holdings, Inc., Series B | 7/7/2000–3/6/2002 | $ | 21,000 | $ | 990 | .00 | % | ||||||
Broadview Networks Holdings, Inc., Class A | 7/7/2000–3/6/2002 | — | — | .00 | |||||||||
ProAct Holdings, LLC | 1/4/2005 | 162 | — | .00 | |||||||||
Total restricted securities | $ | 21,162 | $ | 990 | .00 | % |
5Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $1,092,411,000, which represented .71% of the net assets of the fund.
Key to abbreviations
ADR = American Depositary Receipts
CAD = Canadian dollars
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus and prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
MFGEFP-905-0410O-S21506
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | Not applicable for filing of semi-annual reports to shareholders. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE GROWTH FUND OF AMERICA, INC. | |
By /s/ Paul G. Haaga, Jr. | |
Paul G. Haaga, Jr., Executive Vice President and Principal Executive Officer | |
Date: April 30, 2010 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Paul G. Haaga, Jr. |
Paul G. Haaga, Jr., Executive Vice President and Principal Executive Officer |
Date: April 30, 2010 |
By /s/ Jeffrey P. Regal |
Jeffrey P. Regal, Treasurer and Principal Financial Officer |
Date: April 30, 2010 |