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, 2004
Date of reporting period: February 29, 2004
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)
<Page>
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]
Semi-annual report for the six months ended February 29, 2004
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.
RESULTS AT A GLANCE
as of February 29, 2004
Five-year Lifetime
Six-month One-year average annual average annual
total returns total returns total returns total returns*
The Growth Fund of America +14.1% +42.9% +7.6% +15.8%
Standard & Poor's
500 Composite Index +14.6 +38.5 - 0.1 +12.3
Lipper Capital Appreciation
Funds Index +13.0 +39.9 +1.0 +12.1
Lipper Growth Funds Index +11.8 +36.5 -1.5 +11.1
Lipper Multi-Cap Core
Funds Index +14.8 ` +41.3 +2.3 +11.7
Lipper Multi-Cap
Growth Funds Index +13.4 +43.9 -1.1 +12.0
*Since Capital Research and Management Company began managing the fund on
December 1, 1973.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended March 31, 2004 (the most recent
calendar quarter):
Class A shares 1 year 5 years 10 years
Reflecting 5.75% maximum sales charge +32.90% +5.54% +13.50%
Results for other share classes can be found on page 28. Please see the inside
back cover for important information about other share classes.
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.
[photo of construction worker]
FELLOW SHAREHOLDERS:
The strong U.S. stock market recovery continued during the six months ended
February 29, 2004. Rising corporate earnings, tax cuts, low interest rates and
weakness of the U.S. dollar helped fuel a rise in stock prices.
The Growth Fund of America participated in the broad stock market rebound with a
total return of 14.1% for the recent six-month period. As the table at left
shows, the fund outpaced three of the five benchmark indexes we use to measure
its progress. It slightly trailed Standard & Poor's 500 Composite Index, a broad
measure of U.S. stocks, for the past six months.
For the 12 months ended February 29, The Growth Fund of America posted a total
return of 42.9%, outpacing four of the five benchmarks. We urge shareholders to
remember that, since these returns occurred during the market's recovery from a
steep decline, they are unusually high and should not be expected to continue.
For the 10 years ended February 29, 2004, the fund has outpaced all of its
benchmarks by significant margins. For its lifetime of just over 30 years, the
fund has an average annual total return of 15.8%, compared with 12.3% of the S&P
500.
THE U.S. ECONOMY AND THE FEDERAL RESERVE
The U.S. economy continued to expand during the past six months. Dividend and
capital gains tax cuts and continued mortgage refinancing at low interest rates
have given consumers money to spend. After three years of little or no growth,
business spending has grown in the past 12 months. U.S.-based multinational
corporations have been helped by the falling dollar, which has made U.S. exports
more competitive.
The Federal Reserve has maintained an accomodative monetary stance with the
federal funds target rate at 1.0%, its lowest level since the summer of 1958. If
the economy continues to grow, it would be typical for interest rates to rise.
Commodity-based prices of metals, crude oil and agricultural products have
increased in the past six months, a sign that inflation bears watching. These
commodity-based prices are another source of potential upward pressure on
interest rates.
[Begin Sidebar]
Figures shown on these two pages are past results for Class A shares and are not
predictive of results in future periods. Current and future results may be lower
or higher than those shown. Share prices and returns will vary, so investors may
lose money. For the most current information and month-end results, visit
americanfunds.com. Fund results shown, unless otherwise indicated, are at net
asset value. If a sales charge (maximum 5.75%) had been deducted, the results
would have been lower.
[End Sidebar]
WHAT HELPED RESULTS
Telecommunications companies, whose stocks had fared badly during the three-year
bear market, came back strongly. AT&T Wireless Services, one of the fund's
largest telecommunications holdings, rose 57.5%. Cingular, a joint venture of
SBC and Bell South, agreed to acquire AT&T Wireless Services in February for $41
billion in cash. Vodafone Group, a global operator of mobile telephone services,
climbed 36.6%. Other telecommunications stocks showing large gains were Sprint
PCS and Motorola.
Rising commodity prices helped materials and energy companies. Metals companies
benefiting from increasing demand in China were Phelps Dodge (+79.7%), Inco
(+47.4%) and Freeport-McMoRan Copper & Gold (+42.2%). Energy companies LUKoil
Holding, one of the largest oil companies in Russia (+43.7%), and Suncor Energy
(+38.6%) were among the contributors, as crude oil prices remained high.
A mixture of individual stocks provided signicant gains. Forest Laboratories, a
pharmaceutical manufacturer, increased 60.6% on good market acceptance for
Namenda, a new drug to treat Alzheimer's disease. Altria Group, a food, beverage
and tobacco company, rose 39.6% because of improving earnings and favorable
litigation news.
WHAT HURT RESULTS
Technology and media companies, which led the early part of the stock market
rebound, lagged. For example, the NASDAQ Composite Index, which is dominated by
large technology stocks, gained 3.5% in the last three months of the period
while The Growth Fund of America rose 8.7%. Among our larger holdings that
posted below-market results for the six-month period were Time Warner (+5.4%),
Taiwan Semiconductor Manufacturing (-2.9%) and InterActiveCorp (-12.0%). These
stocks made large contributions to the fund's 2003 fiscal results, and we
believe they remain attractive long-term investments.
A large number of new investors have joined the fund in the past six months,
bringing the number of shareholder accounts to more than 4 million. We welcome
our new investors and thank our long-term ones for their continuing support.
Cordially,
/s/ James F. Rothenberg /s/ Donald D. O'Neal
James F. Rothenberg Donald D. O'Neal
Chairman of the Board President
April 8, 2004
Figures shown on this page are past results for Class A shares and are not
predictive of results in future periods. Current and future results may be lower
or higher than those shown. Share prices and returns will vary, so investors may
lose money.
Fund results shown are at net asset value. If a sales charge (maximum 5.75%) had
been deducted, the results would have been lower. For current information about
the fund, visit americanfunds.com.
INVESTMENT PORTFOLIO, February 29, 2004 unaudited
[begin pie chart]
Percent
of net
INDUSTRY DIVERSIFICATION assets
Pharmaceuticals & biotechnology 9.76 %
Media 8.60
Retailing 8.30
Semiconductors & semiconductor equipment 8.03
Energy 7.20
Other industries 46.10
Cash & equivalents 12.01
[end pie chart]
Percent
of net
LARGEST EQUITY HOLDINGS assets
Time Warner 2.65 %
American International Group 2.49
Lowe's Companies 1.97
Altria Group 1.93
Forest Laboratories 1.85
Target 1.83
Microsoft 1.83
InterActiveCorp 1.63
Comcast 1.57
Taiwan Semiconductor Manufacturing 1.46
Market
value
EQUITY SECURITIES - 87.97% Shares (000)
(common and preferred stocks)
PHARMACEUTICALS & BIOTECHNOLOGY - 9.76%
Forest Laboratories, Inc. (1) 18,110,000 $ 1,366,943
Biogen Idec Inc. (formerly Biogen, Inc.) (1) 15,811,000 876,720
AstraZeneca PLC (Sweden) 10,818,000 521,501
AstraZeneca PLC (United Kingdom) 2,800,000 133,323
AstraZeneca PLC (ADR) 2,472,000 120,189
Sanofi-Synthelabo (France) 10,260,000 703,908
Eli Lilly and Co. 9,500,000 702,430
Amgen Inc. (1) 9,910,000 629,582
Genentech, Inc. (1) 3,700,000 399,193
Gilead Sciences, Inc. (1) 4,650,000 252,077
Allergan, Inc. 2,725,000 238,546
Elan Corp., PLC (ADR) (Ireland) (1) 13,565,000 195,607
Barr Pharmaceuticals, Inc. (1) 1,600,000 123,856
Pfizer Inc 3,100,000 113,615
Novartis AG (Switzerland) 2,134,000 94,535
Novartis AG (ADR) 400,843 17,697
Amylin Pharmaceuticals, Inc. (1) 4,500,000 103,140
Watson Pharmaceuticals, Inc. (1) 2,000,000 91,840
Celgene Corp. (1) 2,200,000 90,178
IDEXX Laboratories, Inc. (1) 1,705,000 87,074
Sepracor Inc. (1) 3,000,000 85,260
ImClone Systems Inc. (1) 2,000,000 83,960
Affymetrix, Inc. (1) 2,000,000 67,980
OSI Pharmaceuticals, Inc. (1) 1,500,000 49,125
ICOS Corp. (1) 1,000,000 38,280
Cell Therapeutics, Inc. (1) 1,150,000 10,166
Applera Corp. - Celera Genomics Group (1) 528,800 7,668
Schering-Plough Corp. 278,200 4,996
MEDIA - 8.58%
Time Warner Inc. (formerly AOL Time Warner Inc.) (1) 113,400,000 1,956,150
Comcast Corp., Class A (1) 22,355,062 671,546
Comcast Corp., Class A, special nonvoting stock (1) 16,756,000 489,610
News Corp. Ltd., preferred (ADR) (Australia) 24,520,367 802,552
Liberty Media Corp., Class A (1) 68,625,000 782,325
Cox Communications, Inc., Class A (1) 15,250,000 494,100
Clear Channel Communications, Inc. 7,500,000 322,800
Fox Entertainment Group, Inc., Class A (1) 8,870,000 257,407
UnitedGlobalCom, Inc., Class A (1) 23,731,200 225,209
Walt Disney Co. 7,000,000 185,710
Viacom Inc., Class B, nonvoting 2,525,000 97,111
Viacom Inc., Class A 250,000 9,690
Hughes Electronics Corp. (formerly General Motors Corp., Class H - Hughes
Electronic Corp.) (1) 2,500,000 43,350
NTL Inc., Series A, warrants, expire 2011 (1) 95,425 978
RETAILING - 8.30%
Lowe's Companies, Inc. 25,934,000 1,452,304
Target Corp. 30,720,000 1,350,451
InterActiveCorp (1) 37,000,000 1,205,090
Kohl's Corp. (1) 11,800,000 607,700
eBay Inc. (1) 6,246,600 430,141
Limited Brands, Inc. 20,700,000 408,825
Office Depot, Inc. (1) 15,450,000 269,294
Michaels Stores, Inc. 3,350,000 160,934
Big Lots, Inc. (1) (2) 6,500,000 93,600
TJX Companies, Inc. 3,000,000 70,650
Yamada Denki Co., Ltd. (Japan) 1,725,000 54,619
Circuit City Stores, Inc. 2,300,000 25,714
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.03%
Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan) (1) 563,090,200 1,076,346
Applied Materials, Inc. (1) 40,343,500 856,896
Texas Instruments Inc. 24,571,200 753,107
Micron Technology, Inc. (1) (2) 32,498,800 488,782
Maxim Integrated Products, Inc. 8,440,800 421,280
Analog Devices, Inc. 6,816,666 340,152
Xilinx, Inc. (1) 6,875,000 289,025
Linear Technology Corp. 6,654,359 266,108
Microchip Technology Inc. 8,725,000 248,662
Altera Corp. (1) 10,892,000 240,495
KLA-Tencor Corp. (1) 4,080,000 215,424
ASML Holding NV (New York registered)(Netherlands) (1) 6,450,000 117,777
Teradyne, Inc. (1) 4,480,000 110,432
Tokyo Electron Ltd. (Japan) 1,835,000 110,344
Samsung Electronics Co., Ltd. (South Korea) 195,000 90,216
Agere Systems Inc., Class A (1) 22,166,247 86,005
Rohm Co., Ltd. (Japan) 632,000 71,222
LSI Logic Corp. (1) 7,000,000 70,700
PMC-Sierra, Inc. (1) 3,000,000 59,700
Cypress Semiconductor Corp. (1) 997,000 21,515
ENERGY - 7.20%
Schlumberger Ltd. 12,480,000 804,835
Halliburton Co. 14,855,000 474,766
LUKoil Holding (ADR) (Russia) 3,750,000 420,375
Burlington Resources Inc. 6,820,000 399,243
Devon Energy Corp. 6,114,000 347,153
Suncor Energy Inc. (Canada) 13,263,369 344,953
Petro-Canada (Canada) 7,050,000 318,091
EOG Resources, Inc. (2) 6,200,000 275,838
BG Group PLC (United Kingdom) 40,291,737 238,309
Nexen Inc. (Canada) 6,200,000 231,648
Occidental Petroleum Corp. 5,000,000 222,000
Norsk Hydro ASA (ADR) (Norway) 2,799,800 202,594
Canadian Natural Resources, Ltd. (Canada) 3,100,000 169,852
Pogo Producing Co. (2) 3,644,400 165,346
Shell Canada Ltd. (Canada) 2,980,000 137,153
Apache Corp. 3,145,060 129,482
Baker Hughes Inc. 2,794,100 105,114
Imperial Oil Ltd. (Canada) 2,000,000 91,331
Exxon Mobil Corp. 1,900,000 80,123
Noble Energy, Inc. 1,280,000 59,878
Murphy Oil Corp. 878,000 55,077
Nabors Industries Ltd. (1) 600,000 28,410
Patterson-UTI Energy, Inc. (1) 425,000 15,419
SOFTWARE & SERVICES - 6.15%
Microsoft Corp. 50,875,000 1,348,188
First Data Corp. (formed by the merger of First Data Corp. and Concord EFS,Inc.) 16,790,000 688,054
Yahoo! Inc. (1) 11,885,800 527,730
Automatic Data Processing, Inc. 10,550,000 447,848
PeopleSoft, Inc. (1) 10,888,200 234,967
Paychex, Inc. 7,200,000 231,624
T-Online International AG (Germany) (1) 16,000,000 218,944
Cadence Design Systems, Inc. (1) 12,400,000 191,332
Yahoo Japan Corp. (Japan) (1) 10,035 184,053
Sabre Holdings Corp., Class A 7,062,811 160,255
Ceridian Corp. (1) 6,240,900 118,140
SINA Corp. (Hong Kong) (1) (2) 2,552,000 112,750
Oracle Corp. (1) 4,475,000 57,638
Homestore, Inc. (1) 4,100,000 20,008
ProAct Technologies Corp., Series C, convertible preferred (1) (3) (4) 6,500,000 2,665
CAPITAL GOODS - 4.65%
Tyco International Ltd. 31,175,000 890,670
Illinois Tool Works Inc. 7,450,000 592,424
General Dynamics Corp. 5,120,700 471,719
General Electric Co. 14,190,000 461,459
Boeing Co. 10,200,000 442,374
Northrop Grumman Corp. 2,950,100 298,285
Bombardier Inc., Class B (Canada) 27,500,000 133,499
Deere & Co. 1,200,000 77,076
Raytheon Co. 2,100,000 63,840
BANKS & DIVERSIFIED FINANCIALS - 4.13%
Freddie Mac 14,130,000 874,930
Fannie Mae 11,123,200 833,128
Bank of New York Co., Inc. 12,695,000 418,935
CIT Group Inc. 4,950,000 195,376
Capital One Financial Corp. 2,500,000 176,800
Wells Fargo & Co. 2,730,000 156,565
SunTrust Banks, Inc. 1,500,000 108,465
SMFG Finance (Cayman) Ltd. 2.25% mandatorily exchangeable preferred 2005,
units (Japan) 4,572,000,000 82,135
Citigroup Inc. 1,535,000 77,149
MBNA Corp. 2,000,000 54,660
City National Corp. 675,000 41,958
J.P. Morgan Chase & Co. 775,000 31,790
TECHNOLOGY HARDWARE & EQUIPMENT - 3.90%
QUALCOMM Inc. 10,595,000 672,253
Cisco Systems, Inc. (1) 15,714,500 363,005
Flextronics International Ltd. (Singapore) (1) 14,025,000 253,853
CDW Corp. 3,500,000 242,130
International Business Machines Corp. 1,980,000 191,070
Fujitsu Ltd. (Japan) (1) 31,048,000 186,418
Sun Microsystems, Inc. (1) 32,921,000 175,798
Solectron Corp. (1) 20,970,600 134,002
Hirose Electric Co., Ltd. (Japan) 1,040,000 114,448
Hoya Corp. (Japan) 1,051,000 98,300
Murata Manufacturing Co., Ltd. (Japan) 1,694,000 93,828
National Instruments Corp. 2,250,000 77,760
Hewlett-Packard Co. 3,138,500 71,275
Hon Hai Precision Industry Co., Ltd. (Taiwan) 11,400,000 50,789
Jabil Circuit, Inc. (1) 1,500,000 41,970
Dell Inc. (1) 1,080,000 35,262
Nortel Networks Corp. (Canada) (1) 3,800,000 30,324
Sanmina-SCI Corp. (1) 2,000,000 25,380
Motorola, Inc. 1,276,500 23,551
TELECOMMUNICATION SERVICES - 3.83%
AT&T Wireless Services, Inc. (1) 64,174,500 871,490
Vodafone Group PLC (ADR) (United Kingdom) 29,075,000 726,003
Vodafone Group PLC 57,065,000 142,938
Sprint Corp. - PCS Group, Series 1 (1) 37,770,300 339,933
Sprint Corp. - FON Group 3,000,000 53,190
Sprint Corp. 7.125% convertible preferred 2004 1,000,000 units 9,990
Telefonica, SA (ADR) (Spain) 4,232,411 208,277
China Unicom Ltd. (China) (1) 150,000,000 192,723
KDDI Corp. (Japan) 20,000 103,477
Deutsche Telekom AG (Germany) (1) 5,000,000 98,108
AT&T Corp. 2,500,000 50,075
Royal KPN NV (Netherlands) (1) 3,680,000 29,149
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
INSURANCE - 3.79%
American International Group, Inc. 24,880,200 1,841,135
XL Capital Ltd., Class A 4,870,000 373,334
Berkshire Hathaway Inc., Class A (1) 1,850 174,825
Marsh & McLennan Companies, Inc. 2,475,900 118,818
Aon Corp. 3,218,600 84,424
Chubb Corp. 1,075,000 76,304
Mitsui Sumitomo Insurance Co., Ltd. (Japan) 8,000,000 70,079
Protective Life Corp. 1,500,000 57,060
FOOD, BEVERAGE & TOBACCO - 3.71%
Altria Group, Inc. 24,725,000 1,422,924
Coca-Cola Co. 6,470,000 323,241
Anheuser-Busch Companies, Inc. 5,280,000 281,002
Unilever NV (New York registered) (Netherlands) 3,300,000 239,910
PepsiCo, Inc. 4,000,000 207,600
Kerry Group PLC, Class A (Ireland) 6,214,826 117,836
Adolph Coors Co., Class B 1,180,000 79,980
General Mills, Inc. 1,235,000 56,785
Wm. Wrigley Jr. Co. 235,600 13,250
HEALTH CARE EQUIPMENT & SERVICES - 2.82%
HCA Inc. 12,720,000 540,854
Cardinal Health, Inc. 7,520,000 490,530
Express Scripts, Inc. (1) (2) 4,710,000 342,700
Medtronic, Inc. 4,760,000 223,244
Anthem, Inc. (1) 1,752,400 150,619
Applera Corp. - Applied Biosystems Group 4,100,000 93,480
Caremark Rx, Inc. (1) 2,700,000 87,102
Andrx Group (1) 2,720,000 81,491
Lincare Holdings Inc. (1) 2,200,000 71,148
MATERIALS - 2.56%
Freeport-McMoRan Copper & Gold Inc., Class B 7,330,000 312,625
Inco Ltd. (Canada) (1) 7,000,000 260,120
Phelps Dodge Corp. (1) 2,500,000 215,650
Rio Tinto PLC (United Kingdom) 7,000,000 188,203
BHP Billiton Ltd. (Australia) 19,516,661 184,935
Dow Chemical Co. 3,185,000 138,452
CRH PLC (Ireland) 5,900,000 123,642
Nitto Denko Corp. (Japan) 2,111,000 104,019
Potash Corp. of Saskatchewan Inc. (Canada) 1,202,000 99,405
CONSOL Energy Inc. (3) 3,700,000 93,351
Sealed Air Corp. (1) 1,580,000 78,763
Newmont Mining Corp. 1,500,000 65,175
Millennium Chemicals Inc. (1) 2,000,000 26,740
TRANSPORTATION - 2.48%
FedEx Corp. 8,396,300 576,658
Southwest Airlines Co. 33,524,877 462,979
United Parcel Service, Inc., Class B 6,078,300 429,310
Ryanair Holdings PLC (ADR) (Ireland) (1) 6,835,000 236,559
Burlington Northern Santa Fe Corp. 3,950,000 127,111
HOTELS, RESTAURANTS & LEISURE - 2.05%
Carnival Corp., units 13,050,000 579,029
Starbucks Corp. (1) 8,329,200 311,595
Harrah's Entertainment, Inc. 4,650,000 241,568
MGM Mirage, Inc. (1) 4,700,000 204,685
Mandalay Resort Group 2,750,000 141,350
McDonald's Corp. 1,300,000 36,790
FOOD & STAPLES RETAILING - 1.21%
Walgreen Co. 14,683,200 523,603
Wal-Mart Stores, Inc. 3,050,000 181,658
Whole Foods Market, Inc. 974,800 75,401
Wal-Mart de Mexico, SA de CV, Series V (ADR) (Mexico) 1,895,100 58,085
Wal-Mart de Mexico, SA de CV, Series V 4,750,000 14,615
Wal-Mart de Mexico, SA de CV, Series C 5,788 18
SYSCO Corp. 1,000,000 39,650
COMMERCIAL SERVICES & SUPPLIES - 0.73%
Allied Waste Industries, Inc. (1) 10,650,000 134,510
Monster Worldwide, Inc. (1) 5,300,000 116,600
Robert Half International Inc. (1) 4,610,000 103,587
Republic Services, Inc. 3,000,000 78,720
Cendant Corp. 3,000,000 68,100
United Rentals, Inc. (1) 1,927,600 33,810
AUTOMOBILES & COMPONENTS - 0.30%
Harley-Davidson Motor Co. 2,130,000 113,146
Dana Corp. 5,000,000 106,950
OTHER - 0.24%
Questar Corp. 2,475,000 88,729
Avon Products, Inc. 997,200 70,402
Estee Lauder Companies Inc., Class A 500,000 21,300
MISCELLANEOUS - 3.55%
Other equity securities in initial period of acquisition 2,621,288
TOTAL EQUITY SECURITIES (cost: $53,757,376,000) 64,976,054
Market
Principal amount value
FIXED-INCOME SECURITIES - 0.02% (000) (000)
MEDIA - 0.02%
AOL Time Warner Inc. 5.625% 2005 $ 10,795 $ 11,278
TOTAL FIXED-INCOME SECURITIES (cost: $10,429,000) 11,278
Market
Principal amount value
SHORT-TERM SECURITIES - 11.65% (000) (000)
U.S. TREASURIES - 5.27%
U.S. Treasury Bills 0.841%-1.045% due 3/4-7/22/2004 $ 3,899,200 $ 3,891,792
CORPORATE SHORT-TERM NOTES - 4.77%
Edison Asset Securitization LLC 1.04% due 3/5-5/7/2004 (3) 95,000 94,887
General Electric Capital Services, Inc. 1.03%-1.06% due 4/7-5/7/2004 80,000 79,891
Pfizer Inc 0.99% due 3/2-5/13/2004 (3) 160,000 159,806
Exxon Asset Management Co. 0.98%-0.99% due 3/10-3/26/2004 (3) 100,000 99,951
Exxon Project Investment Corp. 0.99% due 3/4/2004 (3) 50,000 49,994
Wal-Mart Stores Inc. 0.98%-0.99% due 3/2-4/6/2004 (3) 150,000 149,924
Variable Funding Capital Corp. 1.02%-1.03% due 3/5-4/16/2004 (3) 150,000 149,910
CAFCO, LLC 1.02%-1.03% due 3/16-3/22/2004 (3) 100,000 99,938
Ciesco LLC 1.04% due 4/6/2004 (3) 50,000 49,947
Triple-A One Funding Corp. 1.02%-1.03% due 3/9-4/8/2004 (3) 150,000 149,881
Coca-Cola Co. 1.00%-1.02% due 3/1-5/14/2004 150,000 149,867
DuPont (E.I.) de Nemours & Co. 0.99%-1.02% due 3/24-5/12/2004 150,000 149,812
Household Finance Corp. 1.03% due 4/5-4/26/2004 150,000 149,789
Bank of America Corp. 1.02%-1.10% due 3/15-4/16/2004 120,500 120,385
Receivables Capital Corp. 1.05% due 3/15/2004 (3) 25,000 24,989
ChevronTexaco Corp. 0.98%-1.03% due 3/29-4/16/2004 125,000 124,872
Procter & Gamble Co. 0.97%-1.00% due 3/17-4/20/2004 (3) 110,000 109,880
American Express Credit Corp. 1.01%-1.02% due 4/28-5/10/2004 105,000 104,808
Verizon Network Funding Corp. 0.99%-1.00% due 3/19-4/13/2004 100,000 99,918
New Center Asset Trust 1.02%-1.03% due 3/16-4/28/2004 100,000 99,871
Clipper Receivables Corp. 1.03%-1.04% due 4/26-5/19/2004 (3) 100,000 99,806
Gannett Co. 0.98%-0.99% due 3/10-3/24/2004 (3) 90,000 89,955
Caterpillar Financial Services Corp. 0.99%-1.02% due 3/2-6/1/2004 85,000 84,914
FCAR Owner Trust I 1.03%-1.04% due 3/19-4/27/2004 80,000 79,891
Merck & Co. Inc. 0.98% due 3/10-3/17/2004 78,400 78,368
Private Export Funding Corp. 1.05%-1.10% due 3/11-5/18/2004 (3) 77,900 77,819
Archer Daniels Midland Co. 1.02%-1.10% due 3/2-5/25/2004 (3) 75,000 74,954
Netjets Inc. 1.01%-1.04% due 3/3-4/5/2004 (3) 67,600 67,575
Three Pillars Funding Corp. 1.03% due 3/1-3/26/2004 (3) 65,000 64,980
Park Avenue Receivables Corp. 1.03%-1.04% due 3/3-3/23/2004 (3) 60,000 59,972
Abbott Laboratories Inc. 0.98% due 3/30/2004 (3) 60,000 59,951
American General Finance Corp. 1.00%-1.02% due 3/15-4/13/2004 40,000 39,971
AIG Funding, Inc. 1.01% due 4/19/2004 20,000 19,973
Medtronic Inc. 0.97%-0.98% due 3/24-3/29/2004 (3) 55,000 54,959
Preferred Receivables Funding Corp. 1.02%-1.03% due 3/24-4/20/2004 (3) 50,000 49,944
Kimberly-Clark Worldwide Inc. 0.97% due 3/3-3/23/2004 (3) 45,500 45,483
SBC International Inc. 0.99% due 3/12/2004 (3) 45,000 44,985
Clorox Co. 0.98% due 4/7/2004 45,000 44,953
USAA Capital Corp. 0.99% due 3/16/2004 40,000 39,982
Harvard University 1.02% due 3/17/2004 30,000 29,986
Colgate-Palmolive Co. 0.97% due 3/31/2004 (3) 30,000 29,975
IBM Credit Corp. 1.00% due 3/17/2004 25,000 24,988
Yale University 1.03% due 4/7/2004 25,000 24,974
Eli Lilly and Co. 0.98% due 3/5/2004 (3) 20,000 19,997
FEDERAL AGENCY DISCOUNT NOTES - 1.34%
International Bank for Reconstruction and Development 0.93%-1.01%
due 3/12-5/17/2004 245,000 244,698
Federal Farm Credit Banks 0.94%-1.10% due 3/15-8/5/2004 237,500 236,839
Federal Home Loan Bank 0.98%-1.00% due 3/17-4/16/2004 175,000 174,846
Freddie Mac 1.00%-1.015% due 4/20-5/11/2004 150,000 149,758
Fannie Mae 1.00%-1.015% due 4/14-5/5/2004 100,000 99,845
Student Loan Marketing Assn. 0.997%-1.007% due 5/20-6/17/2004 (5) 53,500 53,501
Tennessee Valley Authority 0.94% due 3/18/2004 30,000 29,986
CERTIFICATES OF DEPOSIT - 0.27%
Wells Fargo & Co. 1.02%-1.04% due 3/5-5/26/2004 150,000 149,992
State Street Bank & Trust 1.04% due 3/3/2004 50,000 50,000
TOTAL SHORT-TERM SECURITIES (cost: $8,607,551,000) 8,607,932
TOTAL INVESTMENT SECURITIES (cost: $62,375,356,000) 73,595,264
New Taiwanese Dollar (cost: $2,148,000) NT$73,393 2,209
Other assets less liabilities 262,407
NET ASSETS $73,859,880
(1) Security did not produce income during the last 12 months.
(2) The fund owns 6.07%, 5.71%, 5.56%, 5.39%, 5.33% and 5.28% of the
outstanding voting securities of Express Scripts, Inc., Pogo Producing Co.,
Big Lots, Inc., EOG Resources, Inc., Micron Technology, Inc. and SINA
Corp., respectively, and thus is considered an affiliate of these companies
under the Investment Company Act of 1940.
(3) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration.
(4) Valued under fair value procedures adopted by authority of the Board of
Directors.
(5) Coupon rate may change periodically.
ADR = American Depositary Receipts
See Notes to Financial Statements
EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE AUGUST 31, 2003
Avon Products
Barr Pharmaceuticals
Boeing
Caremark Rx
Celgene
City National
CONSOL Energy
Cox Communications
CRH
Dana
Exxon Mobil
Fujitsu
Harley-Davidson Motor
Harrah's Entertainment
MGM Mirage
Micron Technology
Mitsui Sumitomo Insurance
NTL
Occidental Petroleum
Phelps Dodge
QUALCOMM
SINA
SunTrust Banks
SYSCO
Tokyo Electron
T-Online International
UnitedGlobalCom
Wal-Mart Stores
Watson Pharmaceuticals
Wells Fargo
Wm. Wrigley Jr.
Yahoo Japan
Yamada Denki
EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE AUGUST 31, 2003
Adelphia Communications
ALLTEL
ALSTOM
Applied Micro Circuits
Arch Coal
Becton, Dickinson
Broadcom
Celestica
El Paso
FleetBoston Financial
National Semiconductor
New UPC
Novell
NTT DoCoMo
Sallie Mae
SAP
Scientific-Atlanta
Telewest Communications
Univision Communications
Waste Management
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES unaudited
at February 29, 2004 (dollars and shares in thousands,
except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $61,188,033) $72,116,248
Affiliated issuers (cost: $1,187,323) 1,479,016 $73,595,264
Cash denominated in non-U.S. currencies
(cost: $2,148) 2,209
Cash 13,639
Receivables for:
Sales of investments 305,567
Sales of fund's shares 274,360
Dividends and interest 40,584 620,511
74,231,623
LIABILITIES:
Payables for:
Purchases of investments 257,969
Repurchases of fund's shares 48,264
Investment advisory services 16,915
Services provided by affiliates 46,303
Deferred Directors' compensation 1,306
Other fees and expenses 986 371,743
NET ASSETS AT FEBRUARY 29, 2004 $73,859,880
NET ASSETS CONSIST OF:
Capital paid in on shares of capital stock $63,365,110
Accumulated net investment loss (8,209)
Accumulated net realized loss (716,908)
Net unrealized appreciation 11,219,887
NET ASSETS AT FEBRUARY 29, 2004 $73,859,880
TOTAL AUTHORIZED CAPITAL STOCK - 3,500,000 SHARES, $.001 PAR VALUE
Net assets Shares Net asset value
outstanding per share(1)
Class A $51,977,947 2,025,688 $25.66
Class B 4,630,262 185,100 25.01
Class C 4,331,272 173,485 24.97
Class F 6,068,105 237,471 25.55
Class 529-A 680,357 26,573 25.60
Class 529-B 188,762 7,483 25.22
Class 529-C 229,465 9,095 25.23
Class 529-E 37,541 1,473 25.48
Class 529-F 11,714 458 25.58
Class R-1 45,339 1,790 25.33
Class R-2 611,256 24,151 25.31
Class R-3 2,105,379 82,770 25.44
Class R-4 2,165,966 84,715 25.57
Class R-5 776,515 30,224 25.69
(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 $27.23 and $27.16,
respectively.
See Notes to Financial Statements
STATEMENT OF OPERATIONS unaudited
for the six months ended February 29, 2004 (dollars in thousands)
INVESTMENT INCOME:
Income:
Dividends (net of non-U.S. withholding
tax of $4,123; also includes
$869 from affiliates) $212,623
Interest 37,353 $249,976
Fees and expenses:
Investment advisory services 92,785
Distribution services 109,175
Transfer agent services 31,495
Administrative services 12,461
Reports to shareholders 1,534
Registration statement and prospectus 1,706
Postage, stationery and supplies 3,789
Directors' compensation 256
Auditing and legal 83
Custodian 2,399
State and local taxes 1
Other 179
Total expenses before reimbursement 255,863
Reimbursement of expenses 278 255,585
Net investment loss (5,609)
NET REALIZED GAIN AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized gain on:
Investments 1,221,091
Non-U.S. currency transactions (523) 1,220,568
Net unrealized appreciation on:
Investments 7,145,199
Non-U.S. currency translations 924 7,146,123
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 8,366,691
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $8,361,082
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months Year ended
ended February 29, August 31,
2004* 2003
OPERATIONS:
Net investment (loss) income $ (5,609) $78,333
Net realized gain on investments and
non-U.S. currency transactions 1,220,568 220,101
Net unrealized appreciation
on investments and non-U.S. currency translations 7,146,123 8,438,265
Net increase in net assets
resulting from operations 8,361,082 8,736,699
DIVIDENDS PAID TO SHAREHOLDERS FROM NET INVESTMENT INCOME (20,306) (37,508)
CAPITAL SHARE TRANSACTIONS 11,816,946 8,890,875
TOTAL INCREASE IN NET ASSETS 20,157,722 17,590,066
NET ASSETS:
Beginning of period 53,702,158 36,112,092
End of period (including accumulated net investment loss
and undistributed net investment income: $(8,209) and $17,706,
respectively) $73,859,880 $53,702,158
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The Growth Fund of America, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund invests in a wide range of companies that appear to
offer superior opportunities for growth of capital.
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% to zero Classes B and 529-B convert to
for redemptions within classes A and 529-A,
six years of purchase respectively, after eight years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase 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 fair valued as determined in good faith
by authority of the fund's Board of Directors. Various factors may be
reviewed in order to make a good faith determination of a security's
fair value. These factors include, but are not limited to, the type
and cost of the security; contractual or legal restrictions on resale
of the security; relevant financial or business developments of the
issuer; actively traded similar or related securities; conversion or
exchange rights on the security; related corporate actions;
significant events occurring after the close of trading in the
security; and changes in overall market conditions.
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
February 29, 2004, the cost of investment securities and cash denominated in
non-U.S. currencies for federal income tax purposes was $62,381,177,000.
As of February 29, 2004, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Distributions in excess of net investment income and currency losses $ (7,507)
Accumulated short-term capital losses (1,178,532)
Accumulated long-term capital gains 465,821
Gross unrealized appreciation on investment securities 13,375,769
Gross unrealized depreciation on investment securities (2,159,473)
Accumulated short-term capital losses 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 the current year or in subsequent years through the expiration
dates. The fund will not make distributions from capital gains while capital
loss carryforwards remain.
Distributions paid to shareholders from net investment income and currency gains
were as follows (dollars in thousands):
Share class Six months ended February 29, 2004 Year ended August 31, 2003
Class A $ 11,834 $ 31,898
Class B - -
Class C - -
Class F 4,078 4,413
Class 529-A 640 455
Class 529-B - -
Class 529-C - -
Class 529-E - 13
Class 529-F 9 1
Class R-1 - 2
Class R-2 - 63
Class R-3 1,019 218
Class R-4 1,782 109
Class R-5 944 336
Total $ 20,306 $ 37,508
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 six months ended February 29, 2004, the investment advisory
services fee was $92,785,000, which was equivalent to an annualized rate of
0.298% of average 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. 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
February 29, 2004, unreimbursed expenses subject to reimbursement
totaled $21,065,000 for Class A. There were no unreimbursed expenses
subject to reimbursement for Class 529-A.
------------------------------------------------ ----------------------------- -----------------------------
Share class Currently approved limits Plan limits
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class A 0.25% 0.25%
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class 529-A 0.25 0.50
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Classes B and 529-B 1.00 1.00
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Classes C, 529-C and R-1 1.00 1.00
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Class R-2 0.75 1.00
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Classes 529-E and R-3 0.50 0.75
------------------------------------------------ ----------------------------- -----------------------------
------------------------------------------------ ----------------------------- -----------------------------
Classes F, 529-F and R-4 0.25 0.50
------------------------------------------------ ----------------------------- -----------------------------
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with
AFS for classes A and B. Under this agreement, these share classes
compensate AFS for transfer agent services including shareholder
recordkeeping, communications and transaction processing. AFS is also
compensated for certain transfer agent services provided to all other
share classes from the administrative services fees paid to CRMC
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 six months ended
February 29, 2004, 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 $57,198 $29,024 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 20,014 2,471 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 17,336 Included $2,600 $545 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 5,982 Included 3,589 401 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 440 Included 393 49 $262
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 751 Included 113 40 75
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 877 Included 132 38 88
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 73 Included 22 3 4
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 10 Included 6 1 15
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 167 Included 25 9 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 1,635 Included 327 859 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 3,269 Included 981 778 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 1,423 Included 854 7 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 238 7 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $109,175 $31,495 $9,280 $2,737 $444
--------------------------------------------------------------------------------------------------------------
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 $104,000 in current fees (either paid in cash or deferred) and a net
increase of $152,000 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 Sales(1) Reinvestments of dividends
Amount Shares Amount Shares
Six months ended February 29, 2004
Class A $ 7,424,579 309,639 $ 11,367 479
Class B 752,768 32,302 - -
Class C 1,281,307 54,902 - -
Class F 2,040,673 85,518 3,553 150
Class 529-A 210,263 8,755 640 27
Class 529-B 51,156 2,164 - -
Class 529-C 73,176 3,086 - -
Class 529-E 11,559 485 - -
Class 529-F 5,393 227 9 -*
Class R-1 23,029 974 - -
Class R-2 300,584 12,617 - -
Class R-3 1,331,653 55,560 1,018 44
Class R-4 1,769,689 73,437 1,779 75
Class R-5 460,062 18,779 907 38
Total net increase
(decrease) $ 15,735,891 658,445 $ 19,273 813
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
Share class Repurchases(1) Net increase
Amount Shares Amount Shares
Six months ended February 29, 2004
Class A $ (2,867,913) (119,426) $ 4,568,033 190,692
Class B (137,350) (5,864) 615,418 26,438
Class C (168,091) (7,173) 1,113,216 47,729
Class F (341,256) (14,244) 1,702,970 71,424
Class 529-A (9,576) (398) 201,327 8,384
Class 529-B (1,937) (81) 49,219 2,083
Class 529-C (3,154) (134) 70,022 2,952
Class 529-E (652) (28) 10,907 457
Class 529-F (132) (5) 5,270 222
Class R-1 (5,153) (214) 17,876 760
Class R-2 (52,145) (2,181) 248,439 10,436
Class R-3 (145,806) (6,076) 1,186,865 49,528
Class R-4 (162,608) (6,672) 1,608,860 66,840
Class R-5 (42,445) (1,763) 418,524 17,054
Total net increase
(decrease) $ (3,938,218) (164,259) $ 11,816,946 494,999
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
* Amount less than one thousand.
(1) 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 February 29, 2004, the total value
of restricted securities was $2,080,000, which represented 2.82% 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 $14,439,662,000 and $6,040,049,000, respectively, during the six
months ended February 29, 2004.
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
six months ended February 29, 2004, the custodian fee of $2,399,000 included
$11,000 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:
Six months ended 2/29/2004 (4) $22.49 $.01 $3.17 $3.18
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:
Six months ended 2/29/2004 (4) 22.00 (.08) 3.09 3.01
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 - (6) 3.35 3.35
Class C:
Six months ended 2/29/2004 (4) 21.96 (.08) 3.09 3.01
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:
Six months ended 2/29/2004 (4) 22.41 .01 3.15 3.16
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:
Six months ended 2/29/2004 (4) 22.47 - (6) 3.16 3.16
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:
Six months ended 2/29/2004 (4) 22.20 (.10) 3.12 3.02
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:
Six months ended 2/29/2004 (4) 22.21 (.10) 3.12 3.02
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:
Six months ended 2/29/2004 (4) 22.37 (.04) 3.15 3.11
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:
Six months ended 2/29/2004 (4) 22.45 (.01) 3.16 3.15
Period from 9/16/2002 to 8/31/2003 18.39 .03 4.06 4.09
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class A:
Six months ended 2/29/2004 (4) $(.01) $- $(.01) $25.66
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:
Six months ended 2/29/2004 (4) - - - 25.01
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:
Six months ended 2/29/2004 (4) - - - 24.97
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:
Six months ended 2/29/2004 (4) (.02) - (.02) 25.55
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:
Six months ended 2/29/2004 (4) (.03) - (.03) 25.60
Year ended 8/31/2003 (.04) - (.04) 22.47
Period from 2/15/2002 to 8/31/2002 - - - 18.56
Class 529-B:
Six months ended 2/29/2004 (4) - - - 25.22
Year ended 8/31/2003 - - - 22.20
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-C:
Six months ended 2/29/2004 (4) - - - 25.23
Year ended 8/31/2003 - - - 22.21
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-E:
Six months ended 2/29/2004 (4) - - - 25.48
Year ended 8/31/2003 (.03) - (.03) 22.37
Period from 3/1/2002 to 8/31/2002 - - - 18.55
Class 529-F:
Six months ended 2/29/2004 (4) (.02) - (.02) 25.58
Period from 9/16/2002 to 8/31/2003 (.03) - (.03) 22.45
Ratio of Ratio of net
Net assets, expenses income (loss)
Total end of period to average to average
return(3) (in millions) net assets net assets
Class A:
Six months ended 2/29/2004 (4) 14.12% $51,978 .71% (5) .10% (5)
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:
Six months ended 2/29/2004 (4) 13.73 4,630 1.45 (5) (.65) (5)
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:
Six months ended 2/29/2004 (4) 13.71 4,331 1.51 (5) (.71) (5)
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:
Six months ended 2/29/2004 (4) 14.11 6,068 .74 (5) .06 (5)
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:
Six months ended 2/29/2004 (4) 14.07 680 .77 (5) .03 (5)
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:
Six months ended 2/29/2004 (4) 13.60 189 1.63 (5) (.83) (5)
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:
Six months ended 2/29/2004 (4) 13.60 229 1.62 (5) (.83) (5)
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:
Six months ended 2/29/2004 (4) 13.90 38 1.10 (5) (.30) (5)
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:
Six months ended 2/29/2004 (4) 14.06 12 .85 (5) (.06) (5)
Period from 9/16/2002 to 8/31/2003 22.27 5 .86 (5) .16 (5)
Financial highlights (1) (continued)
Income (loss)from investment operations (2)
Net
Net asset gains(losses)
value, Net on securities Total from
beginning investment (both realized investment
of period (loss) income and unrealized) operations
Class R-1:
Six months ended 2/29/2004 (4) $22.28 $(.09) $3.14 $3.05
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:
Six months ended 2/29/2004 (4) 22.26 (.08) 3.13 3.05
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:
Six months ended 2/29/2004 (4) 22.35 (.04) 3.15 3.11
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:
Six months ended 2/29/2004 (4) 22.44 .01 3.16 3.17
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:
Six months ended 2/29/2004 (4) 22.52 .04 3.18 3.22
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
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class R-1:
Six months ended 2/29/2004 (4) $- $- $- $25.33
Year ended 8/31/2003 (.01) - (.01) 22.28
Period from 6/6/2002 to 8/31/2002 - - - 18.53
Class R-2:
Six months ended 2/29/2004 (4) - - - 25.31
Year ended 8/31/2003 (.03) - (.03) 22.26
Period from 5/21/2002 to 8/31/2002 - - - 18.53
Class R-3:
Six months ended 2/29/2004 (4) (.02) - (.02) 25.44
Year ended 8/31/2003 (.04) - (.04) 22.35
Period from 5/21/2002 to 8/31/2002 - - - 18.55
Class R-4:
Six months ended 2/29/2004 (4) (.04) - (.04) 25.57
Year ended 8/31/2003 (.05) - (.05) 22.44
Period from 5/28/2002 to 8/31/2002 - - - 18.57
Class R-5:
Six months ended 2/29/2004 (4) (.05) - (.05) 25.69
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 (loss) income
Total end of period to average to average
return (in millions) net assets net assets
Class R-1:
Six months ended 2/29/2004 (4) 13.69% $45 1.52%(5)(7) (.73)(5)
Year ended 8/31/2003 20.29 23 1.53 (7) (.53)
Period from 6/6/2002 to 8/31/2002 (12.10) 1 .36 (7) (.16)
Class R-2:
Six months ended 2/29/2004 (4) 13.75 611 1.49 (5)(7) (.69)(5)
Year ended 8/31/2003 20.29 305 1.49 (7) (.49)
Period from 5/21/2002 to 8/31/2002 (16.19) 8 .42 (7) (.17)
Class R-3:
Six months ended 2/29/2004 (4) 13.92 2,106 1.09 (5) (.30)(5)
Year ended 8/31/2003 20.75 743 1.11 (7) (.11)
Period from 5/21/2002 to 8/31/2002 (16.10) 11 .31 (7) (.06)
Class R-4:
Six months ended 2/29/2004 (4) 14.15 2,166 .73 (5) .05 (5)
Year ended 8/31/2003 21.19 401 .74 (7) .26
Period from 5/28/2002 to 8/31/2002 (15.63) 3 .20 (7) .05
Class R-5:
Six months ended 2/29/2004 (4) 14.32 777 .42 (5) .37 (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
Six months ended
February 29, Year ended August 31
2004(4) 2003 2002 2001 2000 1999
Portfolio turnover rate for all classes of shares 11% 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) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) Unaudited.
(5) Annualized.
(6) Amount less than one cent.
(7) 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 1.62% for Class R-2 during the
six months ended February 29, 2004, 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 were not affected by any
payments made by CRMC for Class R-1 during the period ended February 29,
2004, and for classes R-3 and R-4 during the year ended August 31, 2003.
See Notes to Financial Statements
OTHER SHARE CLASS RESULTS unaudited
CLASS B, CLASS C, CLASS F AND CLASS 529
Returns for periods ended March 31, 2004
(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 +34.93% -3.51%(1)
Not reflecting CDSC +39.93% -3.09%(1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +38.89% +1.24%(2)
Not reflecting CDSC +39.89% +1.24%(2)
CLASS F SHARES(3)
Not reflecting annual asset-based fee charged by
sponsoring firm +41.01% +2.06%(2)
CLASS 529-A SHARES
Reflecting 5.75% maximum sales charge +32.85% +2.75%(4)
Not reflecting maximum sales charge +40.97% +5.66%(4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable only
if shares are sold within six years of purchase +34.72% +2.90%(4)
Not reflecting CDSC +39.72% +4.71%(4)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +38.77% +4.73%(4)
Not reflecting CDSC +39.77% +4.73%(4)
CLASS 529-E SHARES(3) +40.44% +4.69%(5)
CLASS 529-F SHARES(3)
Not reflecting annual asset-based fee charged by
sponsoring firm +40.83% +23.31%(6)
Figures shown on this page are past results and are not predictive of results in
future periods. Current and future results may be lower or higher than those
shown. Share prices and returns will vary, so investors may lose money. For the
most current information and month-end results, visit americanfunds.com.
(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.
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.
Annualized expenses for Class B shares were 0.74 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 annualized expenses 0.80 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 higher
annualized expenses (by 0.03 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.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE GROWTH FUND OF AMERICA AND COLLEGEAMERICA. THIS AND OTHER
IMPORTANT INFORMATION IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED FROM
YOUR FINANCIAL ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY
ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT THE AMERICAN
FUNDS WEBSITE AT AMERICANFUNDS.COM.
"AMERICAN FUNDS PROXY VOTING GUIDELINES" -- WHICH DESCRIBES HOW WE VOTE PROXIES
RELATING TO PORTFOLIO SECURITIES -- IS 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 June 30, 2004, 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 25 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
AMCAP Fund(R)
EuroPacific Growth Fund(R)
> The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World Fund(SM)
SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(R)
Washington Mutual Investors Fund(SM)
o EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities Fund(SM)
o TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGESR-905-0404
Litho in USA AGD/GRS/8084
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
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 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors since the registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The registrant has a nominating committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. The committee periodically reviews such
issues as the Board's composition, responsibilities, committees, compensation
and other relevant issues, and recommends any appropriate changes to the full
Board of Directors. While the committee normally is able to identify from its
own resources an ample number of qualified candidates, it will consider
shareholder suggestions of persons to be considered as nominees to fill future
vacancies on the Board. Such suggestions must be sent in writing to the
nominating committee of the registrant, c/o the registrant's Secretary, and must
be accompanied by complete biographical and occupational data on the prospective
nominee, along with a written consent of the prospective nominee for
consideration of his or her name by the nominating committee.
ITEM 10 - 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 11 - Exhibits
(a) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(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: May 7, 2004
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: May 7, 2004
By /s/ Sheryl F. Johnson
- ---------------------------------------
Sheryl F. Johnson, Treasurer
Date: May 7, 2004