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: 811-862
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, 2003
Date of reporting period: August 31, 2003
Patrick F. Quan
Secretary
The Growth Fund of America, Inc.
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
The Growth Fund of America
[front cover: four craftsmen assembling a sailing vessel]
Putting it all together
page 6
Annual report for the year ended August 31, 2003
The Growth Fund of America(R) invests in a wide range of companies that appear
to offer superior opportunities for growth of capital.
This fund is one of the 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, 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.
Contents
Letter to shareholders 1
The value of a long-term perspective 4
FEATURE STORY: PUTTING IT ALL TOGETHER
How research analysts help
select your fund's investments 6
Investment portfolio 13
Financial statements 27
Directors and officers 39
The American Funds family back cover
About the cover: Craftsmen assemble a sailing vessel using time-tested skills.
Their teamwork, collaboration and cooperation embody The Growth Fund of
America's investment approach -- putting it all together.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the average
annual total returns on a $1,000 investment with all distributions reinvested
for periods ended September 30, 2003 (the most recent calendar quarter):
1 year 5 years 10 years
CLASS A SHARES
Reflecting 5.75% maximum sales charge +19.42% +8.75% +11.81%
Results for other share classes can be found on page 3. For the most current
investment results, please refer to americanfunds.com. Please see the inside
back cover for important information about other share classes.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.
[photograph: one of the craftsmen from front cover carrying lumber]
FELLOW SHAREHOLDERS:
The 12 months ended August 31 were a story of both good and bad stock markets.
In the first half of the fiscal year, the bear market played out its final
innings. In March, with the end of major combat in Iraq and signs of better
corporate earnings, the market began a strong recovery that continued for the
remainder of the fiscal year.
FISCAL 2003 RESULTS
The Growth Fund of America (GFA) outpaced the general stock market, as
represented by Standard & Poor's 500 Composite Index, in both the good and bad
periods of the 12 months. As a result, the value of the fund's holdings rose
21.2% for the fiscal year. The unmanaged S&P 500, a measure of large company
U.S. stocks, gained 12.1%. As the table below shows, the fund's Lipper
benchmarks posted increases ranging from 13.8% to 21.1%.
During the down market period of the fiscal year, GFA was helped by its widely
diversified portfolio of stocks, its focus on companies with more reasonable
valuations, and its cash position.
During the rebound, GFA benefited from its early effort to put more money to
work in technology and retailing, two groups that experienced strong price gains
in the second half of the fiscal year.
Over longer periods, The Growth Fund of America also outpaced its competitors
and benchmark indexes by significant margins. The fund's average annual total
returns were 12.5% for five years, 12.8% for 10 years and 15.6% for its
lifetime. (See table below.)
WHAT HELPED RESULTS
Technology, media and Internet-related companies, whose stocks fared badly in
fiscal 2001 and 2002, played an important role in GFA's fiscal 2003 results. The
fund started adding technology investments in late calendar 2002. As the
three-year bear market was coming to an end, we began to realize that many of
the surviving Internet companies were sound businesses now selling at attractive
prices. Among the leaders were InterActiveCorp (+72.8%), a company involved in
electronic retailing, online travel services and ticket sales, and Yahoo!
(+224.6%), a leading global Internet portal that offers online media, commerce
and communications services.
[begin sidebar]
Results at a glance
5-year 10-year Lifetime*
average average average
1-year annual annual annual
total returns total returns total returns total returns
(9/1/02 - 8/31/03) (9/1/98 - 8/31/03) (9/1/93 - 8/31/03) (12/1/73 - 8/31/03)
The Growth Fund of America +21.2% +12.5% +12.8% +15.6%
Standard & Poor's 500 Composite Index +12.1 +2.5 +10.1 +12.0
Lipper Growth Funds Index +13.8 +1.8 +7.8 +10.9
Lipper Capital Appreciation Funds Index +17.4 +3.8 +7.5 +11.8
Lipper Multi-Cap Core Funds Index +14.8 +4.1 +9.0 +11.4
Lipper Multi-Cap Growth Funds Index +21.1 +2.4 +7.4 +11.8
* Since Capital Research and Management Company began managing the fund on
December 1, 1973.
[end sidebar]
[photograph: hands doing woodwork]
Semiconductor and semiconductor equipment stocks, which are now the fund's
largest industry group, also participated strongly in the technology rebound.
Two of our largest ten holdings are Applied Materials (+61.7%), a supplier of
manufacturing equipment to the semiconductor industry, and Taiwan Semiconductor
Manufacturing (+45.5%). AOL Time Warner, the fund's largest individual stock
holding, rose 29.3% as investors began to recognize that its media holdings were
still good businesses even though its AOL unit was struggling with some
problems.
Retail stocks, which were generally weak in fiscal 2002, came back in fiscal
2003. Starbucks, the global coffee retail chain, rose 41.5%. Lowe's, one of
America's largest "do-it-yourself" retailers and our second largest holding,
increased 32.6%.
WHAT HURT THE FUND
A number of companies in diverse areas had a difficult year. Pharmaceutical
manufacturer Pfizer (-4.5%) reported a loss stemming from merger-related costs
following its Pharmacia acquisition. HCA (-18.4%), an operator of hospitals,
increased its estimated allowance for doubtful accounts. Altria Group (formerly
Philip Morris) declined 17.6% because of unfavorable litigation developments.
MAINTAINING REALISTIC EXPECTATIONS
After a strong stock market rebound and a fine year, it is worthwhile to remind
shareholders that it is unwise to expect that we will soon return to the
exceptionally high returns that we experienced in the 1990s. A modest outlook is
more likely, with some volatility ahead. In that kind of environment, GFA's
approach of doing fundamental research and investing in companies on a
one-by-one basis could make all the difference.
We are happy to report that the number of shareholder accounts has increased 22%
from last year to almost 3.8 million. We welcome our new shareholders and thank
our long-term investors for their continuing faith in The Growth Fund of
America.
Cordially,
/s/ James F. Rothenberg
James F. Rothenberg
Chairman of the Board
/s/ Donald D. O'Neal
Donald D. O'Neal
President
October 9, 2003
OTHER SHARE CLASS RESULTS (unaudited)
Class B, Class C, Class F and Class 529
Returns for periods ended September 30, 2003 (the most recent calendar quarter):
1 year Life of class
CLASS B SHARES
Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%,
payable only if shares are
sold within six years of purchase +20.75% -8.08%(1)
Not reflecting CDSC +25.75% -7.39%(1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if
shares are sold within one year of purchase +24.66% -4.15%(2)
Not reflecting CDSC +25.66% -4.15%(2)
CLASS F SHARES(3)
Not reflecting annual asset-based fee charged by sponsoring firm +26.67% -3.37%(2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge +19.54% -5.46%(4)
Not reflecting maximum sales charge +26.80% -1.94%(4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase +20.60% -5.25%(4)
Not reflecting CDSC +25.60% -2.83%(4)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase +24.60% -2.83%(4)
Not reflecting CDSC +25.60% -2.83%(4)
CLASS 529-E SHARES(3) +26.26% -3.21%(5)
CLASS 529-F SHARES(3)
Not reflecting annual asset-based fee charged
by sponsoring firm +26.52% +18.19%(6)
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 15, 2002, when Class 529-A, Class
529-B and Class 529-C shares were first sold.
(5) Average annual total return from March 1, 2002, when Class 529-E shares
were first sold.
(6) Average annual total return from September 16, 2002, when Class 529-F
shares were first sold.
The value of a
long-term perspective
How a $10,000 investment has grown
Average annual total returns
for periods ended August 31, 2003
(based on a $1,000 investment with all distributions reinvested)
CLASS A SHARES*
reflecting 5.75% maximum sales charge
1 year 14.28%
5 years 11.13%
10 years 12.14%
*Results for other share classes can be found on page 3.
[begin mountain chart]
<table>
<s> <c> <c> <c> <c> <c> <c>
Lipper Standard &
The Growth Multi-Cap Poor's 500 Lipper Multi- Consumer
Fund of Core Funds Composite Cap Growth Price Index Original
Year America Index Index Funds Index (inflation) Investment
1974* $7,874 $7,761 $7,749 $ 7,845 $10,893 $10,000
1975 $9,792 $9,873 $9,776 $ 9,431 $11,830 $10,000
1976 $11,165 $11,715 $12,043 $10,765 $12,505 $10,000
1977 $12,377 $11,697 $11,835 $11,007 $13,333 $10,000
1978 $20,136 $14,369 $13,315 $14,823 $14,379 $10,000
1979 $23,595 $16,280 $14,881 $17,014 $16,078 $10,000
1980 $31,496 $20,040 $17,588 $22,374 $18,148 $10,000
1981 $35,383 $21,228 $18,539 $24,287 $20,109 $10,000
1982 $38,595 $22,123 $19,134 $25,570 $21,285 $10,000
1983 $56,382 $32,033 $27,582 $38,044 $21,830 $10,000
1984 $56,805 $31,782 $29,280 $36,701 $22,767 $10,000
1985 $64,493 $36,607 $34,616 $41,413 $23,529 $10,000
1986 $82,962 $48,803 $48,158 $55,640 $23,900 $10,000
1987 $109,731 $62,610 $64,779 $72,149 $24,924 $10,000
1988 $97,962 $51,546 $53,241 $58,985 $25,926 $10,000
1989 $136,507 $69,658 $74,101 $83,543 $27,146 $10,000
1990 $123,184 $65,613 $70,400 $76,088 $28,671 $10,000
1991 $160,815 $82,704 $89,300 $101,155 $29,760 $10,000
1992 $168,703 $87,795 $96,368 $106,268 $30,697 $10,000
1993 $210,269 $104,956 $110,996 $133,701 $31,547 $10,000
1994 $222,852 $112,215 $117,057 $138,309 $32,462 $10,000
1995 $279,812 $132,843 $142,129 $172,196 $33,312 $10,000
1996 $282,323 $153,447 $168,734 $192,309 $34,270 $10,000
1997 $391,124 $207,038 $237,282 $252,795 $35,033 $10,000
1998 $390,174 $204,380 $256,505 $241,989 $35,599 $10,000
1999 $629,203 $273,501 $358,611 $359,870 $36,405 $10,000
2000 $965,880 $340,564 $417,104 $549,013 $37,647 $10,000
2001 $721,756 $263,388 $315,433 $308,552 $38,671 $10,000
2002 $578,827 $217,245 $258,698 $225,096 $39,368 $10,000
2003 $701,724(1),(2) $249,447(3) $289,889(3) $272,701(3) $40,218(4) $10,000(1)
Year ended August 31
</table>
[end mountain chart]
1974# 1975 1976 1977 1978 1979
Total value
Dividends reinvested -- $362 283 -- 254 --
Value at year-end1 $7,874 9,792 11,165 12,377 20,136 23,595
GFA total return (21.3%) 24.4 14.0 10.9 62.7 17.2
1980 1981 1982 1983 1984 1985
Total value
Dividends reinvested 307 546 1,673 2,290 1,643 1,249
Value at year-end1 31,496 35,383 38,595 56,382 56,805 64,493
GFA total return 33.5 12.3 9.1 46.1 0.8 13.5
1986 1987 1988 1989 1990 1991
Total value
Dividends reinvested 979 1,354 1,503 1,743 3,611 3,208
Value at year-end1 82,962 109,731 97,962 136,507 123,184 160,815
GFA total return 28.6 32.3 (10.7) 39.3 (9.8) 30.5
1992 1993 1994 1995 1996 1997
Total value
Dividends reinvested 2,510 1,454 929 1,372 2,452 2,019
Value at year-end1 168,703 210,269 222,852 279,812 282,323 391,124
GFA total return 4.9 24.6 6.0 25.6 0.9 38.5
1998 1999 2000 2001 2002 2003
Average
Total value annual total
Dividends reinvested 2,525 1,956 1,081 3,900 1,400 592 return for
Value at year-end1 390,174 629,203 965,880 721,756 578,827 701,724 29-3/4years
GFA total return (0.2) 61.3 53.5 (25.3) (19.8) 21.2 15.4(1),(2)
# For the period December 1, 1973 (when Capital Research and Management
Company became the fund's investment adviser) through August 31, 1974.
Past results are not predictive of future results. The results shown are before
taxes on fund distributions and sale of fund shares. The market indexes are
unmanaged and do not reflect sales charges, commissions or expenses. No
adjustment has been made for income or capital gain taxes.
(1) These figures, unlike those shown earlier in this report, reflect payment
of the maximum sales charge of 5.75% on the $10,000 investment. Thus, the
net amount invested was $9,425. As outlined in the prospectus, the sales
charge is reduced for larger investments. The maximum initial sales charge
was 8.5% prior to July 1, 1988. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares.
(2) Includes reinvested dividends of $43,197 and reinvested capital gain
distributions of $369,777.
(3) Includes reinvested dividends.
(4) Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
[photographs: four craftsmen assembling a sailing vessel; one craftsman working
on the sailing vessel; aerial shot down the mast of the sailing vessel; hand
holding a connector cable]
Putting it all together
The Growth Fund of America's research analysts use time-tested strategies in
their search for promising investments
[begin sidebar]
The Growth Fund of America's research analysts play a vital role in selecting
GFA's investments. Working with the fund's portfolio counselors, they helped
select the companies that enabled the fund to participate in the stock market's
recovery during the past year.
[end sidebar]
[photograph: Jim Drasdo]
[begin photo caption]
Jim Drasdo
[end photo caption]
In the pages ahead, we introduce you to five of the fund's research analysts.
They cover industries ranging from media and technology to insurance and
biotechnology. They come from diverse backgrounds but have one thing in common:
years of experience with the businesses they cover.
They pore over hundreds of annual reports and research documents, develop
financial models for their companies, talk with company managers and meet with a
company's customers, suppliers and competitors. "But each analyst's approach to
developing investment insights on what makes a company appropriate for GFA's
portfolio is unique," says Jim Drasdo, a veteran portfolio counselor and vice
chairman for the fund.
[photograph: Mark Casey]
[begin photo caption]
Mark Casey
[end photo caption]
Here is how the five analysts choose investments in a changing market:
MARK CASEY: A HANDS-ON APPROACH TO INVESTING IN YOUNG INTERNET COMPANIES
Mark Casey follows infrastructure software, imaging, Internet media and
newspaper publishing from his post in San Francisco. He takes a close interest
in "young, rapidly growing companies" whose ultimate destiny, although
promising, may be uncertain. "Research is especially important when the
difference in potential outcomes is wide," he says. "If you look at the 14 major
newspaper publishers in the United States, for example, the difference between
the fastest and slowest growing companies over a five-year period may be only 3%
to 5% per year," he explains. In contrast, with the Internet companies that Mark
follows, a difference of more than 100% per year may separate the best and the
worst companies.
Two of his larger positions are eBay, the world's largest online auction
company, and Yahoo!, an Internet provider of online products and services to
consumers and business. Mark's investment insights into these companies come
from his hands-on participation with their products.
To understand how eBay's auction system works, he sold and bought 300 different
products online through eBay. He bought a used car from Texas, sold his old
shoes and books and bought new ones, all online. He corresponded with hundreds
of eBay users. His conclusion: eBay's auction system was going to be a bigger
success than most investors on Wall Street thought. His insight turned out to be
correct.
Yahoo! was "famous for giving away all kinds of services for free to Internet
users," Mark says. As long as Internet advertising was going strong, that
strategy worked fine, with Yahoo! supporting itself by running paid advertising
on its free website. But when the tech bubble burst, Internet advertising dried
up. In the summer of 2001, a new management team headed by Terry Semel, a former
Warner Brothers executive, took the helm of the company and started charging
users "premium" rates for various formerly free services. Mark spent hours at
his desk, using every Yahoo! service and corresponding with customers to see if
the new approach would appeal to them. He became convinced that a sizable number
of people would pay for these formerly free services. Even though the percentage
of paying customers compared with the total number of users might be small,
revenues would likely still be quite impressive, he concluded.
RICK BELESON: TRACKING NEW DRUGS BY DEVELOPING A NETWORK OF PHYSICIANS AND
SCIENTISTS
Rick Beleson has been associated with the biopharmaceutical industry for over 20
years. Prior to joining Capital Research and Management Company, Rick pursued
graduate studies in genetic engineering and participated in the founding of a
biotechnology company. His role in raising start-up capital introduced him to
the investment side of the business, and he eventually decided to become an
investment analyst covering pharmaceutical and biotechnology companies. "When we
started our company we could not afford to pay ourselves much in the way of
salary, so I supported myself by investing in the stock market. I found that I
really enjoyed analyzing companies and making stock investment decisions."
Rick's extensive contacts in the pharmaceutical industry have enabled him to
build a network of physicians and scientists whom he can call for advice on
whether an experimental new drug will eventually make it to market. He spends
much of his time talking to doctors and attending medical conferences to
interact with specialists.
Even though Rick has an undergraduate degree in biological sciences and an MBA
in finance, he is backed up by Eric Keisman Jr., a research associate, for
insights on whether the science behind a new medical compound will work. Eric
has a recent Ph.D. in biology from Stanford University. Eric provides
much-needed help on scouting out which of the hundreds of potential new drugs
are worth investigating further. Working with three investment analysts who
cover pharmaceuticals, Eric delves into special projects and helps coordinate
the trio's database of scientific and medical contacts.
Rick seeks to answer two questions on every potential drug he investigates:
"Will it work? Will it win in the commercial arena?" Rick is looking beyond
short-term price action. Rick wants to know if the drug will be a substantial
revenue-generating product over the next three to five years and whether it will
play a key role in helping the company over the long run.
[photograph: Rick Beleson]
[begin photo caption]
Rick Beleson
[end photo caption]
[begin pull quote]
Rick Beleson seeks to answer two questions on every potential drug he
investigates: "Will it work? Will it win in the commercial arena?"
[end pull quote]
[photograph: hands holding a device testing pharmaceutical material]
RAY JOSEPH, JR.: OFF-THE-BEATEN-PATH SOURCES PROVIDE THE BEST INVESTMENT
INSIGHTS
Insurance and health care analyst Ray Joseph, Jr. takes a long time studying a
company's books. He pores over his companies' financial statements and meets
with top executives. "I like to meet with the chief financial officer and the
chief actuary in addition to the chief executive officer," he says. "I like to
drill as deep as I can."
But his best investment insights have come from sources that are available to
the public but off the beaten path. "If you just use official company financial
statements, you have no competitive edge," he says.
Ray, who joined Capital Research four years ago, has found good insights into
insurance companies by reading statements filed with state regulators that many
analysts bypass. "They provide specific details that can illuminate a company's
strategy," he says. "Rating agencies can also provide in-depth information on
insurance and health care companies." Ray talks to Capital Research's own
insurance managers for their perspective on industry trends. He also gets
insights, he says, from "veteran portfolio counselors at Capital Research who
have been investing for 20, 30 years or more."
Other Capital Research analysts in the insurance cluster, a group of insurance
analysts that meets monthly, also help. The group consists of an analyst in
Asia, two in Europe, three in the U.S. and one in London who specializes in
small companies. "These group meetings serve as a sounding board for investment
ideas," Ray says. "Collaboration is especially important in covering American
International Group, one of the fund's larger holdings, which has insurance and
financial services operations around the world."
[begin sidebar]
[photograph: two people's hands holding pens over documentation]
USING OUR EXPERTISE
Many of the research analysts involved with The Growth Fund of America have
built up a depth of experience that is unusual in the investment profession.
They have covered their companies and industries through changes in management
and market cycles. This background is very helpful for making informed
investment recommendations.
Of the 33 analysts who participate in GFA, 30 have five or more years of
investment experience, 17 have been in the business for 10 years or more, and
eight have been professional investors for 15 years or more.
They have both graduate degrees in business from the nation's premier
universities and experience in the industries they cover. For example, seven
have graduate business degrees from Harvard, five from Stanford, five from
Columbia and three from the Wharton School at the University of Pennsylvania.
Seven have Chartered Financial Analysts certificates. A semiconductor analyst
once worked as a lawyer assisting venture capital firms and other technology
companies. A software and Internet analyst spent several years as a software
developer. And a pharmaceuticals analyst once managed a biotechnology firm.
Most work in the Los Angeles and San Francisco offices of Capital Research and
Management Company, the investment adviser to American Funds, but analysts also
operate out of London, Geneva, New York and Washington, D.C.
Research analysts in GFA and the other American Funds have a unique channel to
demonstrate the strength of their investment convictions. Besides making
recommendations to portfolio counselors, they can actually invest in their
favorite companies through a research portfolio, a portion of assets set aside
to be managed by the analysts themselves.
[end sidebar]
[begin pull quote]
Ray gains insight into a company by meeting with its top executives as well as
digging into statements filed with state regulators.
[end pull quote]
[photograph: Ray Joseph, Jr.]
[begin photo caption]
Ray Joseph, Jr.
[end photo caption]
[begin sidebar]
A WEALTH OF EXPERIENCE
The Growth Fund of America currently has six portfolio counselors who bring
together 174 years of investment experience to managing your investment. Here
are the specific years of experience for these primary decision makers for the
fund.
Years of
investment
Portfolio counselor experience
R. Michael Shanahan 39
James F. Rothenberg 33
Gordon Crawford 32
James E. Drasdo 32
Michael T. Kerr 20
Donald D. O'Neal 18
[end sidebar]
[begin pull quote]
"It's vital to have a vision of where the media business is going so you can
figure out which portfolio will be best positioned in the coming environment."
Gordon Crawford
[end pull quote]
[photograph: unwound film reel]
GORDON CRAWFORD: IN-DEPTH KNOWLEDGE OF ENTERTAINMENT AND MEDIA COMPANIES THROUGH
LONG ASSOCIATIONS WITH TOP MEDIA EXECUTIVES
Many of GFA's analysts have covered the same companies and industries for a long
time. They have built up a depth of knowledge about companies and industries
that is rare in the investment business and invaluable for making informed
investment recommendations. At Capital Research, research is so highly regarded
that it is viewed as an independent career path rather than a steppingstone to
portfolio management.
At Capital Research, it's even possible to do both. Gordon Crawford is a prime
example. Although he is a portfolio counselor in several mutual funds in the
American Funds family and serves as an officer of four (including GFA), he
remains a research analyst covering the entertainment industry. By covering
media and entertainment since the early 1970s, he has established a network of
top-level industry relationships that competitors envy.
There is more to the analyst's job than building financial models and studying
company financial statements. "It's always important to know the people who run
the companies," Gordon says. "Each of the media companies has a different
portfolio of assets. It's vital to have a vision of where the media business is
going so you can figure out which portfolio will be best positioned in the
coming environment. The quality of a company's top executives is important
because even though they may start with a solid portfolio of assets, executives
can grow these assets with wise decisions or fritter them away with bad
management."
Gordon and the other GFA analysts have the freedom to go against short-term
market opinion and select companies whose stocks are unpopular and are selling
for less than what they believe they are worth. Their knowledge of companies and
industries gives them the courage to make decisions that are sometimes contrary
to popular thinking.
As a portfolio counselor for GFA, Gordon also invests in technology stocks.
After March 2000, "it was extremely important to be more conservative and have
more cash and fewer technology companies in your portfolio," Gordon says. He
moved to a more conservative posture, shifting some of his assets from
technology to insurance companies. By October 9, 2002, two-and-a-half years
later, many technology stocks had fallen by more than 90%. Many newer companies
had gone out of business. Surviving companies had cleaned up their balance
sheets. Some companies brought in new management teams that focused on
controlling costs and cutting back on overly aggressive expansion plans. So
Gordon began moving back into the stronger technology stocks last fall.
Even though many investors hated even hearing the word "Internet" after the
bubble burst, Gordon still believes that the Internet "is transforming the way
we live and work, and that it will continue to do so. It will be one of the
fastest growing parts of the global economy, producing new business models. It's
important for GFA to know what is going on in the Internet."
[photograph: Gordon Crawford]
[begin photo caption]
Gordon Crawford
[end photo caption]
[begin pull quote]
"Over the short term, semiconductor stocks are heavily influenced by current
events. Where we can add value is figuring out where opportunities are likely to
occur over the next several years."
Terry McGuire
[end pull quote]
[photograph: Terry McGuire]
[photograph: semiconductor chip]
TERRY MCGUIRE: COLLABORATING WITH COLLEAGUES AROUND THE GLOBE TO COVER THE
VOLATILE SEMICONDUCTOR INDUSTRY
Terry McGuire covers 80 semiconductor companies in the volatile semiconductor
chip industry. "When the market is running, these stocks usually perform very
well," he says. "But when investors are panicking, these stocks plunge. The
price swings are just enormous." Semiconductor chips are used in almost every
technology product so when their sales begin to pick up, it's a sign that
technology product orders are increasing.
Collaboration with other members of the Capital Research technology cluster
around the world has paid off, Terry says. The group meets every Monday by
telephone. Analysts in Tokyo, Hong Kong, Singapore, London, New York, San
Francisco and Los Angeles join in to discuss trends and the latest developments.
Today the technology business is so global that it's very important for GFA to
have a worldwide intelligence network. "There is a tremendous amount of data
coming out of Asia that impacts U.S.-based companies," Terry says. "Taiwan, for
example, is the largest manufacturer of semiconductor chips and computer
motherboards. These main boards contain the circuitry for the central processing
unit, keyboard and monitor of computers. Motherboard sales are a good early
indicator of the direction of the personal computer market."
"Over the short term, semiconductor stocks are heavily influenced by current
events," Terry says. "Where we can add value is figuring out where opportunities
are likely to occur over the next several years." The group just completed a
major research project showing how consumer products play into the demand for
technology.
It's a "must" to attend industry functions and the major conferences, Terry
notes. But he adds, "I'm a real believer in serendipity. More often than not, I
find that some of the best investment ideas come from wholly unexpected places.
You might go to a conference expecting to develop one idea and then speak to
someone at lunch and discover a completely different investment possibility."
Whichever way the stock market moves, the key to success for The Growth Fund of
America will be identifying well-positioned companies whose prospects are
improving and others whose potential has been undervalued or misjudged by the
rest of the market. "The unique strategies and work ethic of GFA's research
analysts have been an important factor in the fund's long-term record," says Don
O'Neal, the fund's president.
[photograph: Don O'Neal]
[begin photo caption]
Don O'Neal
[end photo caption]
INVESTMENT PORTFOLIO, August 31, 2003
[pie chart]
INDUSTRY DIVERSIFICATION
Semiconductors & semiconductor equipment 12.78%
Retailing 9.70%
Media 9.63%
Phamaceuticals & biotechnology 8.82%
Energy 6.01%
Other industries 42.80%
Cash & equivalents 10.26%
[end pie chart]
Market
value
Equity securities (common and preferred stocks and convertible debentures) Shares (000)
- -------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 12.78%
Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) (1) 562,748,200 $ 1,107,967
Applied Materials, Inc. (1) 42,650,000 921,240
Texas Instruments Inc. 32,917,800 785,090
Samsung Electronics Co., Ltd. (South Korea) 1,401,000 519,110
Maxim Integrated Products, Inc. 11,430,000 513,321
Altera Corp. (1) 16,700,000 374,748
Xilinx, Inc. (1) 11,412,500 351,961
Linear Technology Corp. 8,343,159 343,905
Analog Devices, Inc. (1) 7,566,666 310,233
Microchip Technology Inc. 10,175,000 285,002
Broadcom Corp., Class A (1) 10,400,000 284,128
KLA-Tencor Corp. (1) 4,080,000 242,189
National Semiconductor Corp. (1) 4,448,500 129,629
Cypress Semiconductor Corp. (1) (2) 6,150,000 114,206
ASML Holding NV, New York registered (Netherlands) (1) 6,450,000 102,555
PMC-Sierra, Inc. (1) 6,000,000 85,560
Applied Micro Circuits Corp. (1) 14,500,000 84,245
Rohm Co., Ltd. (Japan) 632,000 82,626
LSI Logic Corp. (1) 7,000,000 80,780
Teradyne, Inc. (1) 4,480,000 79,878
Agere Systems Inc., Class A (1) 22,166,247 66,942
RETAILING - 9.70%
Lowe's Companies, Inc. 24,113,200 1,322,850
Target Corp. 27,720,000 1,125,432
InterActiveCorp (formerly USA Interactive) (1) 29,300,000 1,084,393
Kohl's Corp. (1) 8,175,000 517,069
Limited Brands, Inc. 20,000,000 339,200
Office Depot, Inc. (1) 15,100,000 275,424
eBay Inc. (1) 4,046,600 224,101
Michaels Stores, Inc. (2) 3,350,000 152,257
Big Lots, Inc. (1) 5,800,000 106,140
TJX Companies, Inc. 1,650,000 35,739
Circuit City Stores, Inc. 2,300,000 23,989
MEDIA - 9.63%
AOL Time Warner Inc. (1) 107,900,000 1,765,244
Viacom Inc., Class B, nonvoting 19,075,000 858,375
Viacom Inc., Class A 1,879,400 84,554
Comcast Corp., Class A, special stock, nonvoting (1) 14,600,000 414,056
Comcast Corp., Class A (1) 12,394,387 368,733
News Corp. Ltd., preferred (ADR) (Australia) 19,383,193 560,562
Liberty Media Corp., Class A (1) 41,441,900 501,447
Fox Entertainment Group, Inc., Class A (1) 8,870,000 280,115
Walt Disney Co. 7,000,000 143,500
Clear Channel Communications, Inc. (1) 2,500,000 112,800
General Motors Corp., Class H - Hughes Electronic Corp. (1) 3,700,000 55,278
Univision Communications Inc., Class A (1) 600,000 22,494
Adelphia Communications Corp., Class A (1) 8,177,100 2,290
New UPC, Inc. (formerly United Pan-Europe Communications NV, Class A) (1) (3) 13,455 656
PHARMACEUTICALS & BIOTECHNOLOGY - 8.82%
Forest Laboratories, Inc. (1) 18,110,000 851,170
Eli Lilly and Co. 10,900,000 725,177
AstraZeneca PLC (Sweden) 10,818,000 428,917
AstraZeneca PLC (United Kingdom) 2,800,000 107,143
AstraZeneca PLC (ADR) 2,472,000 98,015
Sanofi-Synthelabo (France) 8,160,000 457,984
Amgen Inc. (1) 6,600,000 434,940
Genentech, Inc. (1) 3,700,000 293,780
Biogen, Inc. (1) 5,140,000 202,824
Allergan, Inc. 2,525,000 200,636
Gilead Sciences, Inc. (1) 2,150,000 143,405
Amylin Pharmaceuticals, Inc. (1) 4,500,000 128,475
Pfizer Inc (acquired Pharmacia Corp.) 3,900,000 116,688
Novartis AG (Switzerland) 2,134,000 78,288
Novartis AG (ADR) 400,843 14,819
ImClone Systems Inc. (1) 2,000,000 84,060
Sepracor Inc. (1) 3,000,000 80,760
IDEXX Laboratories, Inc. (1) 1,698,800 70,687
OSI Pharmaceuticals, Inc. (1) 1,500,000 57,150
Elan Corp., PLC (ADR) (Ireland) (1) 11,580,700 50,492
Affymetrix, Inc. (1) 2,000,000 46,040
ICOS Corp. (1) 1,000,000 38,940
Cell Therapeutics, Inc. (1) 1,445,000 15,794
Applera Corp. - Celera Genomics Group (1) 528,800 5,383
Schering-Plough Corp. 278,200 4,226
ENERGY - 6.01%
Devon Energy Corp. (acquired Ocean Energy, Inc.) 5,826,291 301,511
LUKoil Holding (ADR) (Russia) 3,750,000 292,500
Schlumberger Ltd. 5,680,000 281,217
Suncor Energy Inc. (Canada) 13,216,005 248,045
Halliburton Co. 10,000,000 241,800
EOG Resources, Inc. 5,700,000 241,680
Burlington Resources Inc. 4,500,000 217,890
Petro-Canada (Canada) 5,250,000 206,998
Nexen Inc. (Canada) 6,037,096 159,197
Norsk Hydro ASA (ADR) (Norway) 2,799,800 146,430
Pogo Producing Co. 2,844,400 130,729
BG Group PLC (United Kingdom) 27,383,474 117,612
Shell Canada Ltd. (Canada) 2,980,000 112,506
Apache Corp. 1,572,530 108,473
Canadian Natural Resources, Ltd. (Canada) 2,690,000 104,334
Imperial Oil Ltd. (Canada) 2,522,651 90,850
Baker Hughes Inc. 2,600,000 86,996
Murphy Oil Corp. 878,000 50,687
Noble Energy, Inc. 1,280,000 50,675
Nabors Industries Ltd. (1) 600,000 24,090
Patterson-UTI Energy, Inc. (1) 425,000 12,682
SOFTWARE & SERVICES - 5.13%
Microsoft Corp. 23,200,000 615,264
Yahoo! Inc. (1) 11,885,800 396,986
Automatic Data Processing, Inc. 8,700,000 347,217
SAP AG (Germany) 1,750,000 209,676
SAP AG (ADR) 1,500,000 44,910
Paychex, Inc. 5,600,000 201,600
PeopleSoft, Inc. (1) 10,888,200 197,076
Cadence Design Systems, Inc. (1) 12,400,000 176,328
Sabre Holdings Corp., Class A 7,062,811 159,761
Ceridian Corp. (1) 6,240,900 121,323
Concord EFS, Inc. (1) 6,000,000 83,100
First Data Corp. 2,000,000 76,800
Oracle Corp. (1) 4,475,000 57,190
Novell, Inc. (1) 9,700,000 48,791
Homestore, Inc. (1) 4,100,000 14,637
ProAct Technologies Corp., Series C, convertible preferred (1) (3) (4) 6,500,000 2,665
TELECOMMUNICATION SERVICES - 4.24%
AT&T Wireless Services, Inc. (1) 89,572,300 772,113
Vodafone Group PLC (ADR) (United Kingdom) 29,075,000 532,072
Vodafone Group PLC 33,300,000 60,696
Sprint Corp. - PCS Group, Series 1 (1) 35,168,000 182,522
Sprint Corp. - FON Group 3,000,000 44,310
Sprint Corp. 7.125% convertible preferred 2004, units 1,000,000 units 7,000
AT&T Corp. 6,865,000 153,089
Telefonica, SA (ADR) (Spain) (1) 4,232,411 150,251
China Unicom Ltd. (China) 150,000,000 106,743
KDDI Corp. (Japan) 20,000 102,428
Deutsche Telekom AG (Germany) (1) 4,000,000 57,002
NTT DoCoMo, Inc. (Japan) 20,000 51,471
Royal KPN NV (Netherlands) (1) 3,680,000 25,455
ALLTEL Corp. 540,000 24,732
Broadview Networks Holdings, Inc., Series E, convertible preferred (1) (3) (4) 1,588,972 3,337
Broadview Networks Holdings, Inc., Series E, warrants, expire 2012 (1) (3) (4) 730,928 1,527
Telewest Communications PLC (United Kingdom) (1) 50,000,000 1,260
CAPITAL GOODS - 4.17%
Tyco International Ltd. 29,675,000 610,710
General Electric Co. 14,190,000 419,598
General Dynamics Corp. 4,775,000 411,175
Northrop Grumman Corp. 2,866,200 273,665
Illinois Tool Works Inc. 3,460,000 250,123
Bombardier Inc., Class B (Canada) 27,500,000 105,410
Deere & Co. 1,700,000 96,067
Raytheon Co. 2,100,000 67,326
ALSTOM SA (France) (1) 2,413,448 5,926
BANKS & DIVERSIFIED FINANCIALS - 4.12%
Fannie Mae 9,953,200 644,868
Freddie Mac 9,560,000 508,114
Bank of New York Co., Inc. 12,452,000 366,338
Capital One Financial Corp. 6,250,000 333,750
CIT Group Inc. 5,500,000 149,875
SMFG Finance (Cayman) Ltd. 2.25% mandatorily exchangeable preferred 2005,
units (Japan) 4,572,000,000 53,537
MBNA Corp. 2,000,000 46,680
Citigroup Inc. 980,000 42,483
J.P. Morgan Chase & Co. 775,000 26,521
SLM Corp. 600,000 24,108
FleetBoston Financial Corp. 640,000 18,938
INSURANCE - 4.05%
American International Group, Inc. 20,965,000 1,248,885
XL Capital Ltd., Class A 4,870,000 368,902
Berkshire Hathaway Inc., Class A (1) 4,225 320,149
Chubb Corp. 1,075,000 73,035
Aon Corp. 3,218,600 71,453
Marsh & McLennan Companies, Inc. 962,200 48,110
Protective Life Corp. 1,500,000 43,635
FOOD, BEVERAGE & TOBACCO - 3.45%
Altria Group, Inc. 21,625,000 891,383
Coca-Cola Co. 6,260,000 272,435
Unilever NV, New York registered (Netherlands) 3,300,000 184,734
Anheuser-Busch Companies, Inc. 3,300,000 170,082
PepsiCo, Inc. 3,000,000 133,620
Kerry Group PLC, Class A (Ireland) 6,214,826 98,580
Adolph Coors Co., Class B 1,180,000 65,077
General Mills, Inc. 770,000 35,697
TECHNOLOGY HARDWARE & EQUIPMENT - 3.28%
Cisco Systems, Inc. (1) 18,000,000 344,700
Flextronics International Ltd. (Singapore) (1) 23,025,000 310,607
CDW Corp. (formerly CDW Computer Centers, Inc.) (1) 3,500,000 180,635
International Business Machines Corp. 1,980,000 162,380
Solectron Corp. (1) 26,307,200 156,002
Hirose Electric Co., Ltd. (Japan) 1,195,000 128,039
Murata Manufacturing Co., Ltd. (Japan) 1,317,500 74,143
National Instruments Corp. 1,500,000 59,415
Hewlett-Packard Co. 2,738,500 54,551
Hoya Corp. (Japan) 700,900 53,693
Hon Hai Precision Industry Co., Ltd. (Taiwan) (3) 11,400,000 48,416
Jabil Circuit, Inc. (1) 1,500,000 42,225
Dell Inc. (formerly Dell Computer Corp.) (1) 1,080,000 35,240
Sun Microsystems, Inc. (1) 8,500,000 32,810
Celestica Inc. (Canada) (1) 1,550,000 27,202
Sanmina-SCI Corp. (1) 2,000,000 17,960
Motorola, Inc. 1,276,500 13,697
Nortel Networks Corp. (Canada) (1) 3,800,000 12,350
Scientific-Atlanta, Inc. 243,700 8,286
TRANSPORTATION - 2.56%
Southwest Airlines Co. 31,624,877 540,469
FedEx Corp. 5,899,400 395,850
Ryanair Holdings PLC (ADR) (Ireland) (1) 5,835,000 246,762
Burlington Northern Santa Fe Corp. 3,950,000 111,983
United Parcel Service, Inc., Class B 1,278,300 80,226
HEALTH CARE EQUIPMENT & SERVICES - 2.52%
HCA Inc. 12,275,000 466,327
Cardinal Health, Inc. 5,328,200 303,334
Express Scripts, Inc. (1) 3,890,000 252,111
Applera Corp. - Applied Biosystems Group 4,100,000 89,216
Lincare Holdings Inc. (1) 2,575,000 89,172
Anthem, Inc. (1) 752,400 55,076
Andrx Group (1) 2,720,000 48,960
Medtronic, Inc. 760,000 37,681
Becton, Dickinson and Co. 275,400 10,063
MATERIALS - 1.96%
Inco Ltd. (Canada) (1) 7,000,000 176,470
Freeport-McMoRan Copper & Gold Inc., Class B 5,332,600 159,978
Rio Tinto PLC (United Kingdom) 6,978,700 152,862
BHP Billiton Ltd. (Australia) 17,966,661 127,310
Dow Chemical Co. 3,020,000 104,281
Nitto Denko Corp. (Japan) 2,111,000 93,263
Sealed Air Corp. (1) 1,580,000 76,883
Newmont Mining Corp. 1,500,000 58,890
Potash Corp. of Saskatchewan Inc. (Canada) 702,000 49,772
Arch Coal, Inc. 1,300,000 29,835
Millennium Chemicals Inc. 2,000,000 21,640
HOTELS, RESTAURANTS & LEISURE - 1.45%
Carnival Corp., units 13,050,000 451,400
Starbucks Corp. (1) 6,799,200 193,369
Mandalay Resort Group 2,750,000 104,500
McDonald's Corp. 1,300,000 29,146
COMMERCIAL SERVICES & SUPPLIES - 1.11%
Monster Worldwide, Inc. (formerly TMP Worldwide Inc.) (1) 5,300,000 144,796
Robert Half International Inc. (1) 4,610,000 102,526
Allied Waste Industries, Inc. (1) 8,600,000 95,116
Republic Services, Inc. (1) 3,000,000 73,860
United Rentals, Inc. (1) 3,800,000 64,144
Waste Management, Inc. 2,400,000 63,864
Cendant Corp. (1) 3,000,000 53,940
FOOD & STAPLES RETAILING - 1.02%
Walgreen Co. 10,608,100 345,506
Whole Foods Market, Inc. (1) 2,624,800 142,290
Wal-Mart de Mexico, SA de CV, Series V (ADR) (Mexico) 1,725,100 47,319
Wal-Mart de Mexico, SA de CV, Series V 4,750,000 12,974
Wal-Mart de Mexico, SA de CV, Series C 5,788 14
UTILITIES - 0.36%
El Paso Corp. 15,150,000 111,201
Questar Corp. 2,475,000 79,398
HOUSEHOLD & PERSONAL PRODUCTS - 0.03%
Estee Lauder Companies Inc., Class A 500,000 17,245
MISCELLANEOUS - 3.33%
Other equity securities in initial period of acquisition 1,789,461
----------------
TOTAL EQUITY SECURITIES (cost: $44,104,186,000) 48,177,863
----------------
Principal Market
amount value
Fixed-income securities (000) (000)
- -------------------------------------------------------------------------------------------------------------
MEDIA - 0.02%
AOL Time Warner Inc. 5.625% 2005 $ 10,795 $ 11,320
----------------
TOTAL FIXED-INCOME SECURITIES (cost: $10,284,000) 11,320
----------------
Principal Market
amount value
Short-term securities (000) (000)
- -------------------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES - 4.23%
J.P. Morgan Chase & Co. 1.01%-1.03% due 9/8-10/23/2003 $ 150,000 $ 149,861
Merck & Co. Inc. 1.00%-1.02% due 9/10-10/22/2003 150,000 149,856
Coca-Cola Co. 0.99%-1.02% due 9/9-10/27/2003 150,000 149,852
Pfizer Inc 1.01%-1.025% due 9/22-10/15/2003 (4) 149,900 149,763
Preferred Receivables Funding Corp. 1.04%-1.07% due 9/18-11/20/2003 (4) 140,000 139,871
Edison Asset Securitization LLC 0.93%-1.06% due 9/22-10/23/2003 (4) 125,000 124,847
Corporate Asset Funding Co., LLC 1.04%-1.07% due 10/10-11/12/2003 (4) 125,000 124,808
Triple-A One Funding Corp. 1.03%-1.05% due 9/12-10/6/2003 (4) 100,000 99,935
E.I. DuPont de Nemours & Co. 1.01%-1.04% due 9/5-10/20/2003 100,000 99,925
American Express Credit Corp. 1.03%-1.04% due 9/29-10/21/2003 100,000 99,885
Procter & Gamble Co. 1.02%-1.03% due 9/26-10/31/2003 (4) 100,000 99,854
Johnson & Johnson 1.01%-1.02% due 11/4-11/7/2003 (4) 100,000 99,807
Bank of America Corp. 1.00% due 9/5/2003 34,200 34,195
Receivables Capital Corp. 1.03% due 9/8/2003 (4) 50,000 49,989
SBC International Inc. 1.02%-1.03% due 9/8-9/18/2003 (4) 75,000 74,972
Verizon Network Funding Corp. 1.02%-1.03% due 9/23-10/21/2003 75,000 74,931
ChevronTexaco Corp. 0.99%-1.03% due 9/23-11/3/2003 75,000 74,897
Kimberly-Clark Worldwide Inc. 0.99%-1.02% due 9/25-11/12/2003 (4) 75,000 74,875
Netjets Inc. 1.03%-1.05% due 10/3-10/21/2003 (4) 60,100 60,031
IBM Credit Corp. 1.06% due 9/11/2003 50,000 49,984
Colgate-Palmolive Co. 1.02% due 9/23/2003 (4) 50,000 49,967
New Center Asset Trust 1.02%-1.04% due 9/23/2003 50,000 49,967
FCAR Owner Trust I 1.03%-1.05% due 9/16-10/7/2003 50,000 49,961
Archer Daniels Midland Co. 1.05%-1.06% due 9/30-10/7/2003 (4) 50,000 49,952
Wells Fargo & Co. 1.02% due 9/26/2003 35,000 34,975
Caterpillar Financial Serivces Corp. 1.01% due 10/6/2003 29,500 29,469
USAA Capital Corp. 1.03% due 11/14/2003 25,000 24,944
U.S. TREASURIES - 3.23%
U.S. Treasury Bills 0.785%-1.17% due 9/4-12/18/2003 1,739,400 1,736,666
FEDERAL AGENCY DISCOUNT NOTES - 2.79%
Freddie Mac 1.06%-1.21% due 9/2-10/31/2003 906,445 905,868
Fannie Mae 0.95%-1.16% due 9/3-10/29/2003 398,760 398,467
Federal Home Loan Bank 0.91%-1.13% due 9/3-9/12/2003 175,600 175,561
Federal Farm Credit Banks 1.01% due 11/20/2003 20,000 19,954
CERTIFICATES OF DEPOSIT - 0.22%
Wells Fargo & Co. 1.02%-1.06% due 9/9-10/17/2003 90,000 90,000
State Street Bank & Trust 0.90% due 9/18/2003 25,000 24,998
----------------
TOTAL SHORT-TERM SECURITIES (cost: $5,622,843,000) 5,622,887
----------------
TOTAL INVESTMENT SECURITIES (cost: $49,737,313,000) 53,812,070
New Taiwanese Dollar (cost: $1,302,000) NT$44,755 1,315
OTHER ASSETS LESS LIABILITIES (111,227)
----------------
NET ASSETS $53,702,158
================
(1) Security did not produce income during the last 12 months.
(2) The fund owns 5.20% and 5.03% of the outstanding voting securities of
Cypess Semiconductor Corp. and Michaels Stores, Inc., respectively, and
thus is considered an affiliate of these companies under the Investment
Company Act of 1940.
(3) Valued under fair value procedures adopted by authority of the Board of
Directors.
(4) Purchased in a private placement transaction; resale may be
limited to qualified institutional buyers; resale to the public
may require registration.
ADR = American Depositary Receipts
See Notes to Financial Statements
The descriptions of the companies shown in the portfolio, which were obtained
from published reports and other sources believed to be reliable, are
supplemental and are not covered by the Independent Auditors' Report.
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE FEBRUARY 28, 2003
ALLTEL
ALSTOM
Amgen
Big Lots
Biogen
Broadcom
Burlington Resources
China Unicom
Chubb
Deutsche Telekom
Express Scripts
First Data
FleetBoston Financial
Freddie Mac
Freeport-McMoRan Copper & Gold
Hewlett-Packard
Hoya
Inco
MBNA
Murata Manufacturing
Newmont Mining
Nitto Denko
Potash Corp. of Saskatchewan
Republic Services
Rohm
Scientific-Atlanta
SMFG Finance
Telefonica
Walt Disney
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE FEBRUARY 28, 2003
Avery Dennison
BEA Systems
Continental Airlines
Fairmont Hotels & Resorts
ILEX Oncology
Johnson & Johnson
Lexmark International
Macromedia
Mizuho Holdings
Monsanto
MPS Group
Nextel Communications
Nokia
Payless ShoeSource
Progressive
R.J. Reynolds Tobacco Holdings
Scios
Surgutneftegas
Telefonos de Mexico
TXU
VERITAS Software
WellPoint Health Networks
Wells Fargo
FINANCIAL STATEMENTS
Statement of assets and liabilities
at August 31, 2003 (dollars and shares in thousands, except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $49,533,492) $53,545,607
Affiliated issuers (cost: $203,821) 266,463 $53,812,070
Cash denominated in non-U.S. currencies
(cost: $1,302) 1,315
Cash 78,230
Receivables for:
Sales of investments 43,979
Sales of fund's shares 190,742
Dividends and interest 36,348 271,069
54,162,684
LIABILITIES:
Payables for:
Purchases of investments 374,783
Repurchases of fund's shares 36,866
Investment advisory services 13,131
Services provided by affiliates 33,779
Deferred Directors' compensation 1,089
Other fees and expenses 878 460,526
NET ASSETS AT AUGUST 31, 2003 $53,702,158
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $51,548,164
Undistributed net investment income 17,706
Accumulated net realized loss (1,937,476)
Net unrealized appreciation 4,073,764
NET ASSETS AT AUGUST 31, 2003 $53,702,158
TOTAL AUTHORIZED CAPITAL STOCK - 3,500,000 SHARES, $.001 PAR VALUE Net asset
Net assets Shares outstanding value per
share (1)
Class A $41,266,818 1,834,996 $22.49
Class B 3,490,231 158,662 22.00
Class C 2,761,786 125,756 21.96
Class F 3,721,192 166,047 22.41
Class 529-A 408,665 18,189 22.47
Class 529-B 119,891 5,400 22.20
Class 529-C 136,409 6,143 22.21
Class 529-E 22,714 1,016 22.37
Class 529-F 5,298 236 22.45
Class R-1 22,953 1,030 22.28
Class R-2 305,332 13,715 22.26
Class R-3 743,018 33,242 22.35
Class R-4 401,201 17,875 22.44
Class R-5 296,650 13,170 22.52
(1) 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 $23.86 and $23.84,
respectively.
See Notes to Financial Statements
Statement of operations
for the year ended August 31, 2003 (dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding
tax of $12,297; also includes
$335 from affiliates) $301,457
Interest 125,701 $427,158
Fees and expenses:
Investment advisory services 126,978
Distribution services 138,098
Transfer agent services 59,169
Administrative services 11,221
Reports to shareholders 1,554
Registration statement and prospectus 2,062
Postage, stationery and supplies 6,967
Directors' compensation 368
Auditing and legal 68
Custodian 2,519
State and local taxes 1
Other 213
Total expenses before reimbursement 349,218
Reimbursement of expenses 393 348,825
Net investment income 78,333
NET REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized gain (loss) on:
Investments 221,638
Non-U.S. currency transactions (1,537) 220,101
Net unrealized appreciation (depreciation) on:
Investments 8,439,427
Non-U.S. currency translations (1,162) 8,438,265
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 8,658,366
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $8,736,699
See Notes to Financial Statements
Statement of changes in net assets (dollars in thousands)
Year ended August 31
2003 2002
OPERATIONS:
Net investment income $78,333 $45,279
Net realized gain (loss) on investments and
non-U.S. currency transactions 220,101 (2,196,947)
Net unrealized appreciation (depreciation)
on investments and non-U.S. currency translations 8,438,265 (6,613,569)
Net increase (decrease) in net assets
resulting from operations 8,736,699 (8,765,237)
DIVIDENDS PAID TO SHAREHOLDERS
from net investment income (37,508) (70,809)
CAPITAL SHARE TRANSACTIONS 8,890,875 8,463,322
TOTAL INCREASE (DECREASE) IN NET ASSETS 17,590,066 (372,724)
NET ASSETS:
Beginning of year 36,112,092 36,484,816
End of year (including
undistributed net investment income:
$17,706 and $15,477,
respectively) $53,702,158 $36,112,092
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The Growth Fund of America, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund invests in a wide range of companies that appear to
offer superior opportunities for growth of capital.
The fund offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- ---------------------------------------------------------------------------------------------------------
Share class Initial sales charge Contingent deferred sales Conversion feature
charge upon redemption
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 5.75% None (except 1% for None
certain redemptions
within one year of
purchase without an
initial sales charge)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% Classes B and 529-B
to zero convert to
for redemptions within classes A and 529-A,
six years of respectively, after
purchase eight years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class
one year of purchase F after 10 years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one year of purchase
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-E None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- ---------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. 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:
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 are valued at prices obtained from an
independent pricing service, when such prices are available. However,
where the investment adviser deems it appropriate, such securities will
be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. Short-term
securities maturing within 60 days are valued at amortized cost, which
approximates market value. The ability of the issuers of the debt
securities held by the fund to meet their obligations may be affected
by economic developments in a specific industry, state or region.
Securities and other assets for which representative market quotations
are not readily available are valued at fair value as determined in
good faith by authority of the fund's Board of Directors.
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.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are
translated into U.S. dollars at the exchange rates in effect at the end
of the reporting period. 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. In the accompanying
financial statements, the effects of changes in non-U.S. 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 non-U.S.
currencies are disclosed separately.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers may
include, but are not limited to, investment and repatriation restrictions;
revaluation of currencies; adverse political, social and economic developments;
government involvement in the private sector; limited and less reliable investor
information; lack of liquidity; certain local tax law considerations; and
limited regulation of the securities markets.
TAXATION - Dividend income is recorded net of non-U.S. taxes paid.
3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
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.
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 differing treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses related to sales of securities within 30 days of purchase; deferred
expenses; cost of investments sold; and net capital losses. 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. As of August
31, 2003, the cost of investment securities and cash denominated in non-U.S.
currencies for federal income tax purposes was $49,742,436,000.
During the year ended August 31, 2003, the fund reclassified $38,596,000 from
undistributed net investment income to accumulated net realized loss to align
financial reporting with tax reporting.
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Undistributed net investment income and currency gains $20,094
Loss deferrals related to non-U.S. currency that were realized during the period November 1, (1,298)
2002 through August 31, 2003
Short-term capital loss deferrals (1,933,655)
Gross unrealized appreciation on investment securities 7,990,215
Gross unrealized depreciation on investment securities (3,919,266)
Short-term capital loss deferrals above include capital loss carryforwards of
$424,032,000 and $1,509,623,000 expiring in 2010 and 2011, respectively. The
capital loss carryforwards will be used to offset any capital gains realized by
the fund in future years through the expiration dates. The fund will not make
distributions from capital gains while capital loss carryforwards remain.
The tax character of distributions paid to shareholders was as follows (dollars
in thousands):
Distributions from ordinary income Distributions Total
Share class(1) Net investment income Short-term from long-term distributions
and currency gains capital gains capital gains paid
Year ended August 31, 2003
Class A $ 31,898 - - $ 31,898
Class B - - - -
Class C - - - -
Class F 4,413 - - 4,413
Class 529-A 455 - - 455
Class 529-B - - - -
Class 529-C - - - -
Class 529-E 13 - - 13
Class 529-F 1 - - 1
Class R-1 2 - - 2
Class R-2 63 - - 63
Class R-3 218 - - 218
Class R-4 109 - - 109
Class R-5 336 - - 336
Total $ 37,508 - - $ 37,508
Year ended August 31, 2002
Class A $ 68,401 - - $ 68,401
Class B - - - -
Class C - - - -
Class F 2,408 - - 2,408
Class 529-A - - - -
Class 529-B - - - -
Class 529-C - - - -
Class 529-E - - - -
Class 529-F - - - -
Class R-1 - - - -
Class R-2 - - - -
Class R-3 - - - -
Class R-4 - - - -
Class R-5 - - - -
Total $ 70,809 - - $ 70,809
* Amount less than one thousand.
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning
February 15, 2002. Class R-1, R-2, R-3, R-4 and R-5 shares were offered
beginning May 15, 2002.
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 Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
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 0.276% on such assets in excess of $55
billion. For the year ended August 31, 2003, the investment advisory services
fee was $126,978,000, which was equivalent to an annualized rate of 0.308% 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 Class R-5. Under the plans, the Board of
Directors approves certain categories of expenses that are used to
finance activities primarily intended to sell fund shares. The plans
provide for annual expenses, based on a percentage of average daily net
assets, ranging from 0.25% to 1.00% as noted below. In some cases, the
Board of Directors has approved expense amounts lower than plan limits.
------------------------------------------------ ----------------------------- -----------------------------
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, 529-F and R-4 0.25 0.50
------------------------------------------------ ----------------------------- -----------------------------
All share classes 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 for providing certain
shareholder services. Expenses in excess of these amounts, up to
approved limits, may be used to compensate dealers and wholesalers for
shares sold.
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. Each class reimburses 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
August 31, 2003, unreimbursed expenses subject to reimbursement totaled
$17,784,000 for Class A. There were no unreimbursed expenses subject to
reimbursement for Class 529-A.
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
described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services
agreement with CRMC to provide transfer agent and other related
shareholder services for all classes of shares other than classes A and
B. Each relevant class pays CRMC annual fees of 0.15% (0.10% for Class
R-5) based on its respective average daily net assets. Each relevant
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. During the start-up period for classes
R-1, R-2, R-3 and R-4, CRMC has voluntarily agreed to pay a portion of
these fees. Each 529 share class is subject to an additional annual
administrative services fee of 0.10% of its respective average daily
net assets; this fee is payable to the Commonwealth of Virginia for the
maintenance of the CollegeAmerica plan. Although these amounts are
included with administrative services fees in the accompanying
financial statements, the Commonwealth of Virginia is not considered a
related party. Administrative services fees are presented gross of any
payments made by CRMC.
Expenses under the agreements described above for the year ended August
31, 2003, were as follows (dollars in thousands):
- ---------------------------------------------------------------------------------------------------------------
Share class Distribution Transfer agent Administrative services
services services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
CRMC Transfer agent Commonwealth of
administrative services Virginia
services administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class A $83,270 $54,298 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class B 25,996 4,871 Not applicable Not applicable Not applicable
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class C 18,500 Included $2,775 $1,162 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class F 5,820 Included 3,492 492 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-A 153 Included 380 59 $253
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-B 728 Included 109 49 73
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-C 832 Included 125 45 83
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-E 65 Included 19 3 13
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class 529-F 5 Included 3 1 2
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-1 95 Included 14 11 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-2 883 Included 177 699 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-3 1,368 Included 410 369 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-4 383 Included 230 23 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 143 7 Not applicable
in
administrative
services
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total $138,098 $59,169 $7,877 $2,920 $424
- ---------------------------------------------------------------------------------------------------------------
DEFERRED DIRECTORS' 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 in the accompanying financial statements
includes $222,000 in current fees (either paid in cash or deferred), and a net
increase of $146,000 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. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
Share class(1) Sales(2) Reinvestments of dividends
Amount Shares Amount Shares
Year ended August 31, 2003
Class A $ 9,047,567 464,304 $ 30,635 1,635
Class B 1,070,469 55,879 - -
Class C 1,255,978 65,233 - -
Class F 2,106,047 107,747 3,909 209
Class 529-A 210,052 10,828 455 24
Class 529-B 65,004 3,377 - -
Class 529-C 74,845 3,886 - -
Class 529-E 14,036 728 13 1
Class 529-F 4,649 239 1 -*
Class R-1 20,507 1,061 2 -*
Class R-2 304,985 15,642 63 3
Class R-3 740,993 37,695 218 12
Class R-4 400,549 20,284 109 6
Class R-5 190,807 9,343 292 16
Total net increase
(decrease) $ 15,506,488 796,246 $ 35,697 1,906
Year ended August 31, 2002
Class A $ 10,104,102 461,456 $ 67,563 2,886
Class B 1,493,185 68,694 - -
Class C 1,426,724 65,844 - -
Class F 1,822,121 83,859 2,205 94
Class 529-A 168,094 7,848 - -
Class 529-B 45,892 2,159 - -
Class 529-C 52,677 2,472 - -
Class 529-E 6,190 300 - -
Class 529-F - - - -
Class R-1 1,362 73 - -
Class R-2 8,326 448 - -
Class R-3 12,900 681 - -
Class R-4 3,131 171 - -
Class R-5 112,787 5,312 - -
Total net increase
(decrease) $ 15,257,491 699,317 $ 69,768 2,980
Share class(1) Repurchases(2) Net increase
Amount Shares Amount Shares
Year ended August 31, 2003
Class A $ (5,340,089) (281,360) $ 3,738,113 184,579
Class B (293,438) (15,873) 777,031 40,006
Class C (269,689) (14,499) 986,289 50,734
Class F (511,381) (26,978) 1,598,575 80,978
Class 529-A (8,258) (429) 202,249 10,423
Class 529-B (2,057) (107) 62,947 3,270
Class 529-C (3,782) (195) 71,063 3,691
Class 529-E (218) (11) 13,831 718
Class 529-F (57) (3) 4,593 236
Class R-1 (1,954) (99) 18,555 962
Class R-2 (45,532) (2,350) 259,516 13,295
Class R-3 (98,763) (5,062) 642,448 32,645
Class R-4 (51,101) (2,582) 349,557 17,708
Class R-5 (24,991) (1,283) 166,108 8,076
Total net increase
(decrease) $ (6,651,310) (350,831) $ 8,890,875 447,321
Year ended August 31, 2002
Class A $ (6,165,610) (293,074) $ 4,006,055 171,268
Class B (255,386) (12,588) 1,237,799 56,106
Class C (150,771) (7,614) 1,275,953 58,230
Class F (282,984) (13,977) 1,541,342 69,976
Class 529-A (1,635) (82) 166,459 7,766
Class 529-B (576) (29) 45,316 2,130
Class 529-C (395) (20) 52,282 2,452
Class 529-E (42) (2) 6,148 298
Class 529-F - - - -
Class R-1 (83) (5) 1,279 68
Class R-2 (514) (28) 7,812 420
Class R-3 (1,567) (84) 11,333 597
Class R-4 (70) (4) 3,061 167
Class R-5 (4,304) (218) 108,483 5,094
Total net increase
(decrease) $ (6,863,937) (327,725) $ 8,463,322 374,572
* Amount less than one thousand.
(1) Class 529-A, 529-B, 529-C, 529-E and 529-F shares were offered beginning
February 15, 2002. Class R-1, R-2, R-3, R-4 and R-5 shares were offered
beginning May 15, 2002.
(2) Includes exchanges between share classes of the fund.
6. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of August 31, 2003, the total value
of restricted securities was $1,206,200,000, which represents 2.25% of the net
assets of the fund.
7. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities of $17,149,768,000 and $8,833,928,000, respectively, during the year
ended August 31, 2003.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
year ended August 31, 2003, the custodian fee of $2,519,000 includes $24,000
that was offset by this reduction, rather than paid in cash.
Financial Highlights (1)
Income (loss) from
investment operations(2)
Net
Net asset gains(losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income (loss) and unrealized) operations
Class A:
Year ended 8/31/2003 $18.57 $.06 $3.88 $3.94
Year ended 8/31/2002 23.20 .04 (4.62) (4.58)
Year ended 8/31/2001 35.91 .15 (8.62) (8.47)
Year ended 8/31/2000 26.20 .18 12.77 12.95
Year ended 8/31/1999 17.95 .07 10.48 10.55
Class B:
Year ended 8/31/2003 18.28 (.09) 3.81 3.72
Year ended 8/31/2002 22.98 (.13) (4.57) (4.70)
Year ended 8/31/2001 35.79 (.07) (8.56) (8.63)
Period from 3/15/2000 to 8/31/2000 32.44 - (3) 3.35 3.35
Class C:
Year ended 8/31/2003 18.26 (.10) 3.80 3.70
Year ended 8/31/2002 22.95 (.13) (4.56) (4.69)
Period from 3/15/2001 to 8/31/2001 23.78 (.08) (.75) (.83)
Class F:
Year ended 8/31/2003 18.53 .05 3.87 3.92
Year ended 8/31/2002 23.19 .03 (4.61) (4.58)
Period from 3/15/2001 to 8/31/2001 23.92 .02 (.75) (.73)
Class 529-A:
Year ended 8/31/2003 18.56 .07 3.88 3.95
Period from 2/15/2002 to 8/31/2002 22.62 .01 (4.07) (4.06)
Class 529-B:
Year ended 8/31/2003 18.48 (.12) 3.84 3.72
Period from 2/15/2002 to 8/31/2002 22.62 (.08) (4.06) (4.14)
Class 529-C:
Year ended 8/31/2003 18.48 (.12) 3.85 3.73
Period from 2/15/2002 to 8/31/2002 22.62 (.08) (4.06) (4.14)
Class 529-E:
Year ended 8/31/2003 18.55 (.02) 3.87 3.85
Period from 3/1/2002 to 8/31/2002 22.95 (.02) (4.38) (4.40)
Class 529-F:
Period from 9/16/2002 to 8/31/2003 18.39 .03 4.06 4.09
Class R-1:
Year ended 8/31/2003 18.53 (.11) 3.87 3.76
Period from 6/6/2002 to 8/31/2002 21.08 (.03) (2.52) (2.55)
Class R-2:
Year ended 8/31/2003 18.53 (.10) 3.86 3.76
Period from 5/21/2002 to 8/31/2002 22.11 (.03) (3.55) (3.58)
Class R-3:
Year ended 8/31/2003 18.55 (.02) 3.86 3.84
Period from 5/21/2002 to 8/31/2002 22.11 (.01) (3.55) (3.56)
Class R-4:
Year ended 8/31/2003 18.57 .05 3.87 3.92
Period from 5/28/2002 to 8/31/2002 22.01 .01 (3.45) (3.44)
Class R-5:
Year ended 8/31/2003 18.58 .11 3.89 4.00
Period from 5/15/2002 to 8/31/2002 22.40 .03 (3.85) (3.82)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class A:
Year ended 8/31/2003 $(.02) $- $(.02) $22.49
Year ended 8/31/2002 (.05) - (.05) 18.57
Year ended 8/31/2001 (.15) (4.09) (4.24) 23.20
Year ended 8/31/2000 (.04) (3.20) (3.24) 35.91
Year ended 8/31/1999 (.09) (2.21) (2.30) 26.20
Class B:
Year ended 8/31/2003 - - - 22.00
Year ended 8/31/2002 - - - 18.28
Year ended 8/31/2001 (.09) (4.09) (4.18) 22.98
Period from 3/15/2000 to 8/31/2000 - - - 35.79
Class C:
Year ended 8/31/2003 - - - 21.96
Year ended 8/31/2002 - - - 18.26
Period from 3/15/2001 to 8/31/2001 - - - 22.95
Class F:
Year ended 8/31/2003 (.04) - (.04) 22.41
Year ended 8/31/2002 (.08) - (.08) 18.53
Period from 3/15/2001 to 8/31/2001 - - - 23.19
Class 529-A:
Year ended 8/31/2003 (.04) - (.04) 22.47
Period from 2/15/2002 to 8/31/2002 - - - 18.56
Class 529-B:
Year ended 8/31/2003 - - - 22.20
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-C:
Year ended 8/31/2003 - - - 22.21
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-E:
Year ended 8/31/2003 (.03) - (.03) 22.37
Period from 3/1/2002 to 8/31/2002 - - - 18.55
Class 529-F:
Period from 9/16/2002 to 8/31/2003 (.03) - (.03) 22.45
Class R-1:
Year ended 8/31/2003 (.01) - (.01) 22.28
Period from 6/6/2002 to 8/31/2002 - - - 18.53
Class R-2:
Year ended 8/31/2003 (.03) - (.03) 22.26
Period from 5/21/2002 to 8/31/2002 - - - 18.53
Class R-3:
Year ended 8/31/2003 (.04) - (.04) 22.35
Period from 5/21/2002 to 8/31/2002 - - - 18.55
Class R-4:
Year ended 8/31/2003 (.05) - (.05) 22.44
Period from 5/28/2002 to 8/31/2002 - - - 18.57
Class R-5:
Year ended 8/31/2003 (.06) - (.06) 22.52
Period from 5/15/2002 to 8/31/2002 - - - 18.58
Ratio of Ratio of net
Net assets, expenses income (loss)
Total end of period to average to average
return(4) (in millions) net assets net assets
Class A:
Year ended 8/31/2003 21.23% $41,267 .76% .28%
Year ended 8/31/2002 (19.80) 30,644 .75 .18
Year ended 8/31/2001 (25.28) 34,312 .71 .56
Year ended 8/31/2000 53.51 40,671 .70 .58
Year ended 8/31/1999 61.26 20,673 .70 .28
Class B:
Year ended 8/31/2003 20.35 3,490 1.53 (.49)
Year ended 8/31/2002 (20.45) 2,170 1.52 (.60)
Year ended 8/31/2001 (25.83) 1,437 1.48 (.29)
Period from 3/15/2000 to 8/31/2000 10.33 424 .66 (.01)
Class C:
Year ended 8/31/2003 20.26 2,762 1.55 (.52)
Year ended 8/31/2002 (20.44) 1,370 1.55 (.63)
Period from 3/15/2001 to 8/31/2001 (3.49) 385 .80 (.34)
Class F:
Year ended 8/31/2003 21.22 3,721 .75 .28
Year ended 8/31/2002 (19.83) 1,576 .77 .15
Period from 3/15/2001 to 8/31/2001 (3.05) 350 .38 .08
Class 529-A:
Year ended 8/31/2003 21.35 409 .67 .36
Period from 2/15/2002 to 8/31/2002 (17.95) 144 .86 (5) .07 (5)
Class 529-B:
Year ended 8/31/2003 20.13 120 1.66 (.63)
Period from 2/15/2002 to 8/31/2002 (18.30) 39 1.66 (5) (.74)(5)
Class 529-C:
Year ended 8/31/2003 20.18 136 1.65 (.61)
Period from 2/15/2002 to 8/31/2002 (18.30) 45 1.64 (5) (.72)(5)
Class 529-E:
Year ended 8/31/2003 20.78 23 1.11 (.08)
Period from 3/1/2002 to 8/31/2002 (19.17) 6 .56 (.10)
Class 529-F:
Period from 9/16/2002 to 8/31/2003 22.27 5 .86 (5) .16 (5)
Class R-1:
Year ended 8/31/2003 20.29 23 1.53 (6) (.53)
Period from 6/6/2002 to 8/31/2002 (12.10) 1 .36 (6) (.16)
Class R-2:
Year ended 8/31/2003 20.29 305 1.49 (6) (.49)
Period from 5/21/2002 to 8/31/2002 (16.19) 8 .42 (6) (.17)
Class R-3:
Year ended 8/31/2003 20.75 743 1.11 (6) (.11)
Period from 5/21/2002 to 8/31/2002 (16.10) 11 .31 (6) (.06)
Class R-4:
Year ended 8/31/2003 21.19 401 .74 (6) .26
Period from 5/28/2002 to 8/31/2002 (15.63) 3 .20 (6) .05
Class R-5:
Year ended 8/31/2003 21.61 297 .43 .56
Period from 5/15/2002 to 8/31/2002 (17.05) 95 .13 .14
Year ended August 31
2003 2002 2001 2000 1999
Portfolio turnover rate for all classes of shares 25% 30% 36% 47% 46%
(1) Based on operations for the period shown (unless otherwise noted)
and, accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of
the year; all other periods are based on average shares outstanding.
(3) Amount less than one cent.
(4) Total returns exclude all sales charges, including contingent deferred
sales charges.
(5) Annualized.
(6) During the start-up period for this class, CRMC voluntarily agreed
to pay a portion of the fees relating to transfer agent services.
Had CRMC not paid such fees, expense ratios would have been 1.59%
and 1.82% for classes R-1 and R-2, respectively, during the year ended
August 31, 2003, and .46%, .49%, .33% and .25% for classes R-1, R-2,
R-3 and R-4, respectively, during the period ended August 31, 2002. The
expense ratios for classes R-3 and R-4 were not affected by any
payments made by CRMC during the year ended August 31, 2003.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of The Growth Fund of America, Inc.:
We have audited the accompanying statement of assets and liabilities of The
Growth Fund of America, Inc. (the "Fund"), including the investment portfolio,
as of August 31, 2003, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2003, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Growth Fund of America, Inc. as of August 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & Touche LLP
Los Angeles, California
October 7, 2003
TAX INFORMATION (UNAUDITED)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of certain distributions received by
shareholders during such fiscal year.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, all of the dividends
paid by the fund from net investment income represent qualifying dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For the purposes of computing this exclusion, 1% of the dividends
paid by the fund from net investment income were derived from interest on direct
U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
SINCE THE INFORMATION ABOVE IS REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2004 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2003 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
Board of Directors and officers
"Non-interested" Directors
Year first
elected
a Director
Name and age of the fund(1) Principal occupation(s) during past five years
GUILFORD C. BABCOCK, 72 1998 Emeritus Professor of Finance, Marshall School
of Business, University of Southern California
ROBERT A. FOX, 66 1970 Managing General Partner, Fox Investments LP;
former Professor, University of California;
retired President and CEO, Foster Farms
(poultry producer)
LEONADE D. JONES, 55 1993 Co-founder, VentureThink LLC (developed and
managed e-commerce businesses) and Versura Inc.
(education loan exchange); former Treasurer,
The Washington Post Company
JOHN G. MCDONALD, 66 1976 The IBJ Professor of Finance, Graduate School
of Business, Stanford University
GAIL L. NEALE, 68 1998 President, The Lovejoy Consulting Group, Inc.
(a pro bono consulting group advising nonprofit
organizations)
HENRY E. RIGGS, 68 1989 Chairman of the Board and President Emeritus,
Keck Graduate Institute of Applied Life Sciences
PATRICIA K. WOOLF, PH.D., 69 1985 Private investor; corporate director; lecturer,
Department of Molecular Biology, Princeton University
"Non-interested" Directors
Number of
boards within the
fund complex (2)
on which
Name and age Director serves Other directorships(3) held by Director
GUILFORD C. BABCOCK, 72 2 PIMCO Funds
ROBERT A. FOX, 66 7 Crompton Corporation
LEONADE D. JONES, 55 6 None
JOHN G. MCDONALD, 66 8 iStar Financial, Inc.; Plum Creek Timber Co.;
Scholastic Corporation; Varian, Inc.
GAIL L. NEALE, 68 5 None
HENRY E. RIGGS, 68 4 None
PATRICIA K. WOOLF, PH.D., 69 6 Crompton Corporation; First Energy Corporation;
National Life Holding Co.
"Interested" Directors(4)
Year first
elected a
Director or Principal occupation(s) during past five years and
Name, age and officer of positions held with affiliated entities or the principal
position with fund the fund(1) underwriter of the fund
JAMES F. ROTHENBERG, 57 1997 President and Director, Capital Research and Management
Chairman of the Board and Company; Director, American Funds Distributors, Inc. (5);
Principal Executive Officer Director, American Funds Service Company(5); Director,
The Capital Group Companies, Inc.(5); Director, Capital
Group Research, Inc.(5); Director, Capital Management Services, Inc.(5)
JAMES E. DRASDO, 58 1992 Senior Vice President, Capital Research and Management
Vice Chairman of the Board Company; Director, The Capital Group Companies, Inc.(5);
Director, Capital Research Company(5)
"Interested" Directors(4)
Number of
boards within the
fund complex (2)
Name, age and on which
position with fund Director serves Other directorships(3) held by Director
JAMES F. ROTHENBERG, 57 3 None
Chairman of the Board and
Principal Executive Officer
JAMES E. DRASDO, 58 2 None
Vice Chairman of the Board
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
FUND DIRECTORS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY CALLING AMERICAN
FUNDS SERVICE COMPANY AT 800/421-0180. THE ADDRESS FOR ALL DIRECTORS AND
OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET, LOS ANGELES, CA 90071, ATTENTION:
FUND SECRETARY.
(1) Directors and officers of the fund serve until their resignation, removal
or retirement.
(2) Capital Research and Management Company manages the American Funds,
consisting of 29 funds. Capital Research and Management Company also
manages American Funds Insurance Series(R) and Anchor Pathway Fund, which
serve as the underlying investment vehicles for certain variable insurance
contracts; and Endowments, whose shareholders are limited to certain
nonprofit organizations.
(3) This includes all directorships (other than those in the American Funds)
that are held by each Director as a director of a public company or a
registered investment company.
(4) "Interested persons" within the meaning of the 1940 Act on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
(5) Company affiliated with Capital Research and Management Company.
Other officers
Year first
elected an Principal occupation(s) during past five years and
Name, age and officer of positions held with affiliated entities or the principal
position with fund the fund(1) underwriter of the fund
DONALD D. O'NEAL, 43 1995 Senior Vice President, Capital Research and Management Company
President
GORDON CRAWFORD, 56 1992 Senior Vice President and Director, Capital Research and
Senior Vice President Management Company; Director, The Capital Group Companies,
Inc.(2); Senior Vice President and Director, Capital
Management Services,Inc.(2)
PAUL G. HAAGA, JR., 54 1994 Executive Vice President and Director, Capital Research and
Senior Vice President Management Company; Director, The Capital Group Companies,
Inc.(2); Director, American Funds Distributors, Inc.(2)
RICHARD M. BELESON,(3) 49 1992 Senior Vice President and Director, Capital Research Company (2)
Vice President
MICHAEL T. KERR, 44 1998 Senior Vice President, Capital Research Company(2)
Vice President
BRADLEY J. VOGT,(3) 38 1999 Senior Vice President, Capital Research Company(2)
Vice President
PATRICK F. QUAN, 45 1986-1998 Vice President-- Fund Business Management Group, Capital
Secretary 2000 Research and Management Company
SHERYL F. JOHNSON, 35 1998 Vice President-- Fund Business Management Group, Capital
Treasurer Research and Management Company
DAVID A. PRITCHETT, 37 1999 Vice President-- Fund Business Management Group, Capital
Assistant Treasurer Research and Management Company
(1) Directors and officers of the fund serve until their resignation, removal
or retirement.
(2) Company affiliated with Capital Research and Management Company.
(3) All of the officers listed, except Messrs. Beleson and Vogt, are officers
and/or Directors/Trustees of one or more of the other funds for which
Capital Research and Management Company serves as investment adviser.
OFFICES
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
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065 Santa Ana, CA 92799-5065
P.O. Box 659522 San Antonio, TX 78265-9522
P.O. Box 6007 Indianapolis, IN 46206-6007
P.O. Box 2280 Norfolk, VA 23501-2280
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02105-1713
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in The Growth Fund of America. Class A shares
are subject to a 5.75% maximum up-front sales charge that declines for accounts
(and aggregated investments) of $25,000 or more. Other share classes, which are
generally not available for certain employer-sponsored retirement plans, have no
up-front sales charges but are subject to additional annual expenses and fees.
Annual expenses for Class B shares were 0.77 percentage points higher than for
Class A shares; Class B shares convert to Class A shares after eight years of
ownership. If redeemed within six years, Class B shares may also be subject to a
contingent deferred sales charge ("CDSC") of up to 5% that declines over time.
Class C shares were subject to annual expenses 0.79 percentage points higher
than those for Class A shares and a 1% CDSC if redeemed within the first year
after purchase. Class C shares convert to Class F shares after 10 years. Class F
shares, which are available only through certain fee-based programs offered by
broker-dealer firms and registered investment advisers, had lower annual
expenses (by 0.01 percentage points) than did Class A shares, and an annual
asset-based fee charged by the sponsoring firm. Expenses are deducted from
income earned by the fund. As a result, dividends and investment results will
differ for each share class.
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISER.
YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT US AT
AMERICANFUNDS.COM. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY.
THE AMERICAN FUNDS PROXY VOTING GUIDELINES -- USED TO DETERMINE HOW TO VOTE
PROXIES RELATING TO PORTFOLIO SECURITIES -- ARE AVAILABLE UPON REQUEST, FREE OF
CHARGE, BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS
WEBSITE OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT
WWW.SEC.GOV.
This report is for the information of shareholders of The Growth Fund of
America, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after December 31, 2003, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 20 million shareholder accounts.
Our unique combination of strengths includes these five factors:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
Emphasis on long-term growth through stocks
AMCAP Fund(R)
EuroPacific Growth Fund(R)
THE GROWTH FUND OF AMERICA(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World FundSM
Smallcap World Fund(R)
o GROWTH-AND-INCOME FUNDS
Emphasis on long-term growth and dividends through stocks
American Mutual Fund(R)
Capital World Growth and Income FundSM
Fundamental InvestorsSM
The Investment Company of America(R)
Washington Mutual Investors FundSM
o EQUITY-INCOME FUNDS
Emphasis on above-average income and growth through stocks and/or bonds
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
Emphasis on long-term growth and current income through stocks and bonds
American Balanced Fund(R)
o BOND FUNDS
Emphasis on current income through bonds
American High-Income TrustSM
The Bond Fund of AmericaSM
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities FundSM
o TAX-EXEMPT BOND FUNDS
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of AmericaSM
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
Seeking stable monthly income through money market instruments
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of AmericaSM
The U.S. Treasury Money Fund of AmericaSM
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGEAR-905-1003
Litho in USA AGD/GRS/8057
Printed on recycled paper
ITEM 2 - Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal
Executive Officer and Principal Financial Officer. The Registrant undertakes to
provide to any person without charge, upon request, a copy of the Code of
Ethics. Such request can be made to American Funds Service Company at
800/421-0180 or to the Secretary of the Registrant, P.O. Box 7650, San
Francisco, California 94120.
ITEM 3 - Audit Committee Financial Expert
The Registrant's Board has determined that Leonade D. Jones, a member of the
Registrant's Audit Committee, is an "audit committee financial expert" and
"independent," as such terms are defined in this Item. This designation will not
increase the designee's duties, obligations or liability as compared to his
duties, obligations and liability as a member of the Audit Committee and of the
Board; nor will it reduce the responsibility of the other Audit Committee
members. There may be other individuals who, through education or experience,
would qualify as "audit committee financial experts" if the Board had designated
them as such. Most importantly, the Board believes each member of the Audit
Committee contributes significantly to the effective oversight of the
Registrant's financial statements and condition.
ITEM 4 - Principal Accountant Fees and Services
Form N-CSR disclosure requirement not yet effective with respect to Registrant.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
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 - Reserved
ITEM 9 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), 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 last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 10 - Exhibits
(a) The Code of Ethics that is the subject of the disclosure required by Item 2
is attached as an exhibit hereto.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, 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/ James F. Rothenberg
-------------------------
James F. Rothenberg, Chairman and PEO
Date: November 7, 2003
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/ James F. Rothenberg
--------------------------------------------------
James F. Rothenberg, Chairman and PEO
Date: November 7, 2003
By /s/ Sheryl F. Johnson
-------------------------------------------------
Sheryl F. Johnson, Treasurer
Date: November 7, 2003