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
Date of reporting period: August 31, 2005
Patrick F. Quan
Capital Research and Management Company
P.O. Box 7650, One Market, Steuart Tower
San Francisco, California 94120
(name and address of agent for service)
Copies to:
Michael Glazer
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
How GFA builds its portfolio
[cover: photo of the frame of a log cabin]
Annual report for the year ended August 31, 2005
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 organization ranks among the
nation's three largest mutual fund families. 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
How GFA builds its portfolio 6
Summary investment portfolio 11
Financial statements 17
Board of Directors and officers 32
What makes American Funds different? back cover
ABOUT THE COVER: The construction of a log cabin, log by log, represents how the
research analysts and portfolio counselors of The Growth Fund of America
communicate and collaborate to build the fund's portfolio, company by company,
from the bottom up.
FIGURES SHOWN 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. 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. 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.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended September 30, 2005 (the most recent
calendar quarter):
1 year 5 years 10 years
CLASS A SHARES
Reflecting 5.75% maximum sales charge +12.34% -1.06% +12.09%
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 24 for details.
Other share class results and important information can be found on page 3.
FELLOW SHAREHOLDERS:
[photo of the frame of the roof of a log cabin]
The stock market and the economy produced solid returns for the 12 months ended
August 31, 2005. Strong corporate earnings and cash flow, an improving U.S.
economy and benign interest rates helped fuel an above-average rise in stock
prices.
FISCAL 2005 RESULTS
Against this backdrop, we are pleased to report that The Growth Fund of America
(GFA) posted a total return of 21.2% for the 2005 fiscal year. As the table
below shows, GFA's return widely outpaced the general stock market, as
represented by Standard & Poor's 500 Composite Index, and also exceeded the four
benchmark indexes the fund uses to measure its progress. The unmanaged S&P 500
gained 12.6%. The fund's Lipper benchmark indexes had increases ranging from
14.9% to 20.0%. Over longer periods, GFA has continued to outpace the general
market and the fund's comparable indexes by significant margins.
WHAT HELPED THE FUND
Oil and gas production and service companies led the way with help from
information technology, specialty retail and health care services companies. A
growing demand for energy from China, India and other developing nations, along
with increasing questions about the ability to increase supply, fueled a sharp
rise in oil and gas prices in the past 12 months. Companies that made a major
contribution included Canadian Natural Resources (+203.0%), EOG Resources
(+121.0%), Burlington Resources (+103.7%), Devon Energy (+87.5%) and
Schlumberger (+39.5%). Burlington and Schlumberger were two of the fund's 10
largest individual holdings.
Information technology companies that made a sizable contribution included the
fund's second-largest holding Google (+179.2%), and Corning (+97.2%). Specialty
retailing firms that bolstered the fund's results were Whole Foods (+66.3%),
Best Buy (+53.7%), and Lowe's, the fund's third largest holding (+29.4%). Health
care service providers that did well were Express Scripts (+83.1%) and WellPoint
(+82.8%). Our feature story on page 6 explains how the fund built its positions
in energy, Internet services and health care stocks. In addition, Altria, a
tobacco, food and brewing company, gained 44.4%.
[Begin Sidebar]
RESULTS AT A GLANCE (with all distributions reinvested)
5-year 10-year Lifetime*
average average average
1-year annual annual annual
total returns total returns total returns total returns
(9/1/04 - (9/1/00 - (9/1/95 - (12/1/73 -
8/31/05) 8/31/05) 8/31/05) 8/31/05)
THE GROWTH FUND OF AMERICA +21.2% -0.9% +12.7% +15.5%
STANDARD & POOR'S 500 COMPOSITE INDEX+ +12.6 -2.7 +9.8 +12.0
LIPPER CAPITAL APPRECIATION FUNDS INDEX +19.3 -4.3 +7.5 +11.9
LIPPER GROWTH FUNDS INDEX +14.9 -6.0 +7.3 +10.8
LIPPER MULTI-CAP CORE FUNDS INDEX +17.5 -1.1 +9.3 +11.6
LIPPER MULTI-CAP GROWTH FUNDS INDEX +20.0 -9.0 +7.1 +11.8
*Since Capital Research and Management Company began managing the fund on
December 1, 1973.
+Unmanaged.
[End Sidebar]
[photo of a tractor in the foreground with a log cabin being built in the
background]
WHAT HURT THE FUND
Financial service, insurance, pharmaceutical and biotechnology companies
detracted from the fund's results. Federal National Mortgage Association
(-31.4%), insurance giant American International Group (-16.9%) and Federal Home
Loan Mortgage (-10.0%) faced varying degrees of accounting and regulatory
difficulties over the past year. Pharmaceutical companies continued to operate
in an extremely competitive environment. Eli Lilly declined by 13.3% as a result
of market share losses by its schizophrenia drug Zyprexa. Shares of
biotechnology companies Elan (-60.6%) and Biogen Idec (-29.0%), both of which
had been among our best performing stocks in the previous year, declined upon
the surprise withdrawal of their multiple sclerosis drug Tysabri due to the
appearance of unexpected side effects a few months after its launch.
INDEPENDENT CHAIRMAN ELECTED
Henry E. Riggs, an independent Director of the fund since 1989, has been elected
non-executive chairman of the Board. James F. Rothenberg, the previous chairman,
has been elected vice chairman and principal executive officer. Donald D. O'Neal
continues as president. As independent Board chair, Mr. Riggs will chair Board
meetings, including executive sessions of the independent Directors, and will be
responsible for Board agendas, but will not have other executive or management
responsibilities with the fund. He will remain unaffiliated with Capital
Research and Management Company, the fund's investment adviser, and any of its
affiliates.
LOOKING AHEAD
Just before our fiscal year-end, Hurricane Katrina inflicted incredible damage
to New Orleans and the Gulf Coast area. Three weeks later, Hurricane Rita
compounded the human misery. It's too soon to determine the exact economic
impact of the hurricanes' wide swath of damage to homes, businesses, oil and gas
production in the Gulf of Mexico, and to ports that handle agricultural and
industrial trade. In the short term, it may depress the economy with many jobs
lost and thousands of people displaced from their homes. Costlier energy could
adversely affect consumer spending, corporate profits and inflation. The Growth
Fund of America's team of energy research analysts will be closely monitoring
the situation.
It's worth looking at how the economy fared in the wake of three fairly recent
disasters. Neither Hurricane Andrew in 1992, the Northridge, California,
earthquake in 1994 nor the terrorist attacks in 2001 appear to have altered the
basic trend of economic activity beyond the short term. After these disasters
had an initial impact, the economy largely continued along the path it was on
before the disaster hit, testament to not only this country's economic
resilience, but to its spirit as well. We express our deepest sympathies to the
family and friends of those who have lost their lives in the hurricanes and the
many other Gulf Coast residents who have been displaced.
No matter what kind of natural or economic storms lie ahead, it is reassuring to
know our research-driven approach focusing on long-term investment will remain
the same. We will continue to seek out the best opportunities for capital
appreciation for the fund and its shareholders.
We thank you for your continuing faith in The Growth Fund of America.
Sincerely,
/s/ James F. Rothenberg /s/ Donald D. O'Neal
James F. Rothenberg Donald D. O'Neal
Vice Chairman of the Board President
and Principal Executive Officer
October 3, 2005
For current information about the fund, visit americanfunds.com.
OTHER SHARE CLASS RESULTS unaudited
Class B, Class C, Class F and Class 529
Figures shown 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.
Average annual total returns for periods ended September 30, 2005 (the most
recent calendar quarter):
1 year 5 years Life of class
Class B shares -- first sold 3/15/00
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares are
sold within six years of purchase +13.34% -0.99% +0.28%
Not reflecting CDSC +18.34% -0.64% +0.44%
Class C shares -- first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +17.25% -- +4.22%
Not reflecting CDSC +18.25% -- +4.22%
Class F shares(1) -- first sold 3/15/01
Not reflecting annual asset-based fee charged
by sponsoring firm +19.21% -- +5.06%
Class 529-A shares(2) -- first sold 2/15/02
Reflecting 5.75% maximum sales charge +12.26% -- +6.25%
Not reflecting maximum sales charge +19.13% -- +8.00%
Class 529-B shares(2) -- first sold 2/15/02
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase +13.16% -- +6.35%
Not reflecting CDSC +18.16% -- +7.05%
Class 529-C shares(2) -- first sold 2/15/02
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +17.16% -- +7.06%
Not reflecting CDSC +18.16% -- +7.06%
Class 529-E shares(1,2) -- first sold 3/1/02 +18.77% -- +7.29%
Class 529-F shares(1,2) -- first sold 9/16/02
Not reflecting annual asset-based fee charged
by sponsoring firm +19.15% -- +17.24%
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 24 for details.
(1) These shares are sold without any initial or contingent deferred sales
charge.
(2) Results shown do not reflect the $10 initial account setup fee and an
annual $10 account maintenance fee.
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 and is eliminated for purchases
of $1 million 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 0.75 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 0.80 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 annual expenses (by 0.02
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.
THE VALUE OF A LONG-TERM PERSPECTIVE
How a $10,000 investment has grown
Figures shown 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 figures reflect deduction of the maximum sales charge of
5.75% on the $10,000 investment.(1) Thus, the net amount invested was $9,425.(2)
Average annual total returns based on a $1,000 investment (for periods ended
August 31, 2005)*
1 year 5 years 10 years
Class A shares +14.24% -2.05% +12.02%
*Assumes reinvestment of all distributions and payment of the maximum 5.75%
sales charge.
The fund's investment adviser waived 5% of its management fees from September 1,
2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005.
Fund results shown reflect the waiver, without which they would have been lower.
Please see the Financial Highlights table on page 24 for details.
[begin mountain chart]
<table>
<s> <c> <c> <c> <c> <c> <c>
Lipper Standard Poor's 500
The Growth Multi-Cap Composite index Lipper Multi- Consumer
Fund of Core Funds with dividends Cap Growth Price Index Original
Year America (3) Index (4) reinvested(4)(5) Funds Index(4) (inflation)(6) 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 $249,447 $289,889 $272,701 $40,218 $10,000
2004 $762,451 $274,632 $323,073 $285,459 $41,285 $10,000
2005 $924,112 $322,690 $363,626 $342,600 $42,789 $10,000
Year ended August 31
</table>
[end mountain chart]
Year ended August 31 1974+ 1975 1976 1977 1978 1979 1980
Total value
Dividends reinvested -- $362 283 -- 254 -- 307
Value at year-end $7,874 9,792 11,165 12,377 20,136 23,595 31,496
GFA total return (21.3%) 24.4 14.0 10.9 62.7 17.2 33.5
Year ended August 31 1981 1982 1983 1984 1985 1986 1987
Total value
Dividends reinvested 546 1,673 2,290 1,643 1,249 979 1,354
Value at year-end 35,383 38,595 56,382 56,805 64,493 82,962 109,731
GFA total return 12.3 9.1 46.1 0.8 13.5 28.6 32.3
Year ended August 31 1988 1989 1990 1991 1992 1993 1994
Total value
Dividends reinvested 1,503 1,743 3,611 3,208 2,510 1,454 929
Value at year-end 97,962 136,507 123,184 160,815 168,703 210,269 222,852
GFA total return (10.7) 39.3 (9.8) 30.5 4.9 24.6 6.0
Year ended August 31 1995 1996 1997 1998 1999 2000 2001
Total value
Dividends reinvested 1,372 2,452 2,019 2,525 1,956 1,081 3,900
Value at year-end 279,812 282,323 391,124 390,174 629,203 965,880 721,756
GFA total return 25.6 0.9 38.5 (0.2) 61.3 53.5 (25.3)
Year ended August 31 2002 2003 2004 2005
Total value
Dividends reinvested 1,400 592 190 2,809
Value at year-end 578,827 701,724 762,451 924,112
GFA total return (19.8) 21.2 8.7 21.2
Average annual total return for 31-3/4 years 15.3%(3)
+ For the period December 1, 1973 (when Capital Research and Management Company
became the fund's investment adviser) through August 31, 1974.
The results shown are before taxes on fund distributions and sale of fund
shares.
(1) As outlined in the prospectus, the sales charge is reduced for accounts
(and aggregated investments) of $25,000 or more and is eliminated for
purchases of $1 million or more. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares.
(2) The maximum initial sales charge was 8.5% prior to July 1, 1988.
(3) Includes reinvested dividends of $46,196 and reinvested capital gain
distributions of $369,777.
(4) Includes reinvested dividends.
(5) The S&P 500 is unmanaged, does not reflect sales charges, commissions or
expenses and cannot be invested in directly.
(6) Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
HOW GFA BUILDS ITS PORTFOLIO
The Growth Fund of America's investment professionals communicate and
collaborate to build the fund's portfolio company by company from the bottom up.
[photo of construction workers building a house]
[Begin Pull Quote]
We need to go to more and more remote areas, more hostile areas or do things
like oil sands or other alternative sources that are even more costly.
- -- Gordon Crawford
[End Pull Quote]
[photo of construction workers building a log cabin - a lake in the background]
[Begin Pull Quote]
You have to get out into the field and talk to people face to face. Going there
enables you to understand the scope of what companies are doing.
- -- Cathy Kehr
[End Pull Quote]
[photo of Gordon Crawford]
[Begin Photo Caption]
Gordon Crawford
[End Photo Caption]
[photo of Donnalisa Barnum]
[Begin Photo Caption]
Donnalisa Barnum
[End Photo Caption]
[photo of Frank Hu]
[Begin Photo Caption]
Frank Hu
[End Photo Caption]
[photo of Cathy Kehr]
[Begin Photo Caption]
Cathy Kehr
[End Photo Caption]
Do you ever wonder how The Growth Fund of America (GFA) selects the stocks for
its portfolio? In the pages ahead, you will meet several research analysts and
portfolio counselors who tell how they make their investment choices.
How does the fund work? The majority of the fund is managed by GFA's portfolio
counselors who are generalists and invest broadly. With the recent addition of
Donnalisa Barnum, the fund now has nine portfolio counselors. Each is allocated
a portion of the portfolio to manage in line with the fund's broad objective of
"investing in companies that appear to offer superior opportunities for growth
of capital." The 10th portion of the portfolio, up to 25% of the fund's assets,
is assigned to a group of research analysts, specialists who focus on individual
industries, to manage by themselves.
Now let's take a closer look at three key investment areas in the past year:
energy, Internet and media, and health care companies.
SEARCHING THE WORLD FOR PROMISING ENERGY INVESTMENTS
The price of oil, gas and coal and every other natural resource has surged in
recent years. One reason is that the economies of China, India, Russia, Eastern
Europe and Brazil -- with a population of 2.8 billion -- are growing much faster
than the developed world and consuming far more energy. Portfolio counselor
Gordon Crawford says, "They are just beginning to buy cars, refrigerators and
air conditioning. And so demand has been very, very high. It has taken up all
the spare capacity in the production of oil and we are right at a drum-tight
supply-demand balance. Many old pools of oil are in decline. It is tougher to
bring on new oil or natural gas. We need to go to more and more remote areas,
more hostile areas or do things like oil sands or other alternative sources that
are even more costly."
As a result, American Funds energy analysts are globetrotters by necessity.
Cathy Kehr, who has covered energy for the past 12 years, recently visited oil
companies in China, western Canada and Texas. "You have to get out into the
field and talk to people face to face," Cathy says. "Going there enables you to
understand the scope of what companies are doing, and what the potential of the
project might be. I once had to fly in a Soviet bomber plane two hours to remote
oil fields in Kazakhstan. But it was worth it."
Frank Hu, who has been an energy analyst for two years, recently toured oil
operations in Egypt, Libya, Texas and Canada. He, too, values the insights he
has received from field visits. Although relatively new to GFA, Frank is a
veteran of 14 years in financial management in the oil industry. One of his jobs
was running a joint venture in China for ARCO. "With my background in China, I
understand what it takes to run a company in a developing market," he says.
It's important not only to read the documents and check the figures, but also to
see an executive's body language and facial expressions when he or she describes
a new project, says Cathy. Take the example of an executive that Cathy had known
for many years who was usually understated in his descriptions of the company's
projects. Not long ago she met him again, and this time, she recalls, "he was a
totally different person. I'd never seen so much enthusiasm." Further research
led her to the conclusion that the company had been conservative in its
assumptions of the possible success of this project, and that the potential
could be far greater -- if things worked out. Everything did work out, and the
project and the stock turned out to be big successes.
[photo of a the frame of a log cabin]
[Begin Pull Quote]
I bring the perspective of 32 years of following the energy industry. ... I have
been through the cycles, moves and changes that have occurred over long
stretches of time.
- -- Gregg Ireland
[End Pull Quote]
[Begin Pull Quote]
Our Google position was an outgrowth of prior investments. In the past four
years I have looked at every paid search opportunity I could.
- -- Mark Casey
[End Pull Quote]
[photo of construction workers building a log cabin]
[photo of Jim Drasdo]
[Begin Photo Caption]
Jim Drasdo
[End Photo Caption]
[Begin Sidebar]
A WEALTH OF EXPERIENCE
The Growth Fund of America currently has nine portfolio counselors who bring
together 261 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 41
James F. Rothenberg 35
Gordon Crawford 34
James E. Drasdo 34
Gregg E. Ireland 32
Donnalisa Barnum 24
Michael T. Kerr 22
Donald D. O'Neal 20
Timothy P. Dunn 19
*As of November 1, 2005.
[End Sidebar]
Cathy and Frank are two of the six research analysts who cover various parts of
the energy industry on a global basis for GFA and other American Funds. "We are
very generous about sharing information with each other. If I see something of
interest regarding an international oil company with operations in Asia, I will
call my colleague in Asia to get his view," Cathy says.
Portfolio counselors play a key role in helping Cathy and Frank frame their
investment ideas. Several portfolio counselors who have lived through previous
oil price bubbles in the 1970s and 1980s have offered valuable perspective on
the current oil price increase. Donnalisa helped Frank work out company
valuations at a wide range of possible oil prices. Portfolio counselors also
visit companies with research analysts and have added value there. Jim Drasdo, a
veteran GFA portfolio counselor, "has developed the art of asking company
executives simple questions that produce meaningful answers," says Frank.
Gregg Ireland, a GFA portfolio counselor, was once an energy analyst and brings
the perspective of 32 years of following the energy industry to the stock
selection process. "I have been through the cycles, moves and changes that have
occurred over long stretches of time," Gregg says. "Cathy and Frank are experts
in energy with a great grasp of the company fundamentals. In contrast, I am
looking at the bigger picture. I am continually asking the question: Is this
energy stock better than an investment in chemicals, health care or technology?"
Investment analysts and portfolio counselors sometimes disagree on the virtues
and drawbacks of a stock. "In our disagreement and in the healthy discussion
that follows, you can learn more," says Gregg. "It's good to have different
styles, points of view and perspective. From debates come some of our best
ideas."
UNDERSTANDING GOOGLE, THE WORLD'S LARGEST COMPUTER SEARCH ENGINE
Mark Casey, Internet and media analyst, has been studying the "paid search"
business and Google since 2001. "Paid search" refers to the sponsored links in
the light blue color at the beginning and along the side of the typical Google
search reply. These are paid for by advertisers seeking customers. Mark had
previously made investments in eBay, the world's largest online auction company;
Yahoo!, an Internet provider of online products and services; and Ask Jeeves, a
computer search engine. So he was prepared when Google went public in August
2004. "Our Google position was an outgrowth of prior investments," he says. "In
the past four years I have looked at every paid search opportunity I could."
Many of Mark's insights have come from his hands-on participation with the
products of the online companies he is researching. Prior to his investment in
eBay, he sold and bought 300 products online through the online auction service,
including shoes, books and even a used car in Texas. With Yahoo!, Mark spent
hours at his desk, using every Yahoo! free service and corresponding with fellow
customers to see if they would be willing to pay a small amount for some Yahoo!
services. With Google, Mark advertised his San Francisco a cappella singing
group. The results were surprisingly good. Mark became convinced that Google
would be growing in earnings and revenues more than most Wall Street analysts
projected and that its stock was actually underpriced. The Google investments
have turned out very well.
[photo of Gregg Ireland]
[Begin Photo Caption]
Gregg Ireland
[End Photo Caption]
[photo of Mark Casey]
[Begin Photo Caption]
Mark Casey
[End Photo Caption]
[photo of Don O'Neal]
[Begin Photo Caption]
Don O'Neal
[End Photo Caption]
[photo of James Terrile]
[Begin Photo Caption]
James Terrile
[End Photo Caption]
Mark discussed his Google ideas with portfolio counselors Don O'Neal and Gordon
Crawford. "The first interesting thing was that Google was trying to come public
with a different process -- an auction process," says Don. "Whenever there are
confusing situations, we like to do as much work as we can to unravel the
situation. Google was probably the biggest deal to hit the technology world
since the bubble burst. Mark has been doing good work in the area for quite some
time. But there was a little bit of extra hype around Google. This gave us
reasons to be skeptical because of our experience with hype in the technology
bubble."
In discussing the stock, another cause for concern was the high short-term
price/earnings ratio, but in the months after the offering, one thing became
more and more clear: Google had quite a good business model and competitive
position. Don says, "If you took a longer term point of view, this could be a
very successful investment if the company was able to sustain its business model
and earnings growth rate. We came to the conclusion that Google was a bargain
and we put a lot of money to work. We're happy the stock has done well so far,
but we must constantly re-evaluate the situation."
TRACKING PROMISING NEW DRUGS IN A CHALLENGING NEW HEALTH CARE ENVIRONMENT
The 1990s were a perfect world for pharmaceutical manufacturers, recalls James
Terrile, a research analyst who follows drug and medical instrument companies.
"Drugs were not making a big dent in people's wallets. Patents on major drugs
were new and reimbursement from government and corporations was friendly." By
2005, however, the environment for drug companies had changed for the worse.
"Major blockbuster drugs were coming off of their patent protection," James
says. "Managed care companies began to off-load expensive drug brands to plan
members, increasing their out-of-pocket costs, which in turn drove heightened
sensitivity to drug prices. The American public became convinced that U.S. drug
prices were too high relative to the rest of the world." These trends -- plus a
number of highly publicized drug side effects cases, including a Texas jury
verdict against Merck and its anti-pain drug Vioxx -- made fiscal 2005 a
difficult year for many drug stocks.
Jim Rothenberg, vice chairman of GFA and a veteran portfolio counselor, agrees
that the current period is tough but maintains that it's still possible to find
ways to make money investing in health care stocks. "We know that the United
States is spending a substantial amount of its gross national product on health
care. Given the demographics and the aging of the baby boom generation, there
will be substantial pressures to spend a lot of money on health care over the
next five years," he says. "Against that, we have another set of trends which
show some turmoil in the big pharmaceutical companies, their drug pipelines and
problems of individual drugs that are company-specific. We are trying to find
those companies which have the cleanest current product portfolios and the most
attractive pipelines."
James Terrile talks to as many sources as he can to help track promising new
drugs and to estimate their economic potential. Besides the pharmaceutical
companies themselves, he finds consulting scientists, pharmacy benefit managers,
Medicare officials and Food and Drug Administration consultants all helpful in
putting together the picture.
[Begin Pull Quote]
Managed care companies began to off-load expensive drug brands to plan members,
increasing their out-of-pocket costs, which in turn drove heightened sensitivity
to drug prices.
- -- James Terrile
[End Quote]
[photo of a construction worker building a log cabin - trees in the background]
[photo of Jim Rothenberg]
[Begin Photo Caption]
Jim Rothenberg
[End Photo Caption]
[photo of Ray Joseph, Jr.]
[Begin Photo Caption]
Ray Joseph, Jr.
[End Photo Caption]
[photo of a log cabin]
Even after talking to all these sources and making careful financial models of
the companies, not all stocks chosen for the portfolio rise. AstraZeneca is one
example. Despite good management and an interesting pipeline of drugs, the
market was generally negative on the company because of concerns over patent
exposure, James says. Then one AstraZeneca project suffered setbacks despite
good feedback from investigators and FDA consultants. Crestor, a
cholesterol-lowering drug, became controversial because of possible muscle
damage at high doses.
James felt that investors were missing the potential earnings power of the
company. "Now, thanks to robust fundamentals and low expectations, the stock has
been climbing again," James says.
UNRAVELING THE COMPLEX HEALTH CARE SERVICES BUSINESS
While James tries to find the most effective drugs, research analyst Ray Joseph,
Jr. is deeply involved in trying to decide which health care services will be
the most helpful in the coming years. He meets with chief financial officers and
chief information officers of hospitals and health care consultants. Ray
believes one thing is certain: "Controlling health care costs will be one of the
biggest challenges federal and state governments and corporations face over the
next five years. The companies that can help cut costs will be able to make
money and they may be good investments."
His strategy for following the health care services companies is "seeking
sources and information off the beaten path." Therefore, he often visits
hospitals, drug distribution centers and skilled-care facilities in his quest
for insights that the rest of Wall Street may not have. He recently attended a
meeting of the 20 most significant customers of one of the largest health care
services companies to hear how the customers are trying to resolve difficulties
with the firm. "By going to these off-the-beaten-path meetings, you develop a
web of contacts to which Wall Street seldom talks," he says.
What's the bottom line of this discussion for shareholders? Research analysts
and portfolio counselors have developed a consistent and sustainable system that
combines experienced investment professionals, a long-term investment approach
and an unparalleled, integrated global research effort. We hope we have given
you insight on how GFA's investment professionals use this system to choose the
fund's equity investments.
[Begin Pull Quote]
Controlling health care costs will be one of the biggest challenges federal and
state governments and corporations face over the next five years.
- -- Ray Joseph, Jr.
[End Pull Quote]
Summary investment portfolio, August 31, 2005
The following summary investment portfolio is designed to streamline the report
and help investors better focus on a fund's principal holdings. For details on
how to obtain a complete schedule of portfolio holdings, please see the inside
back cover.
[begin pie chart]
Percent
of net
Industry Sector diversification assets
Information Technology 20.34 %
Energy 15.45
Consumer Discretionary 14.61
Health Care 11.67
Industrials 8.27
Other industries 20.12
Cash & equivalents 9.54
[end pie chart]
Percent
of net
Largest Equity Holdings assets
Microsoft 2.03 %
Google 2.02
Lowe's Companies 1.86
Target 1.71
Altria Group 1.69
Schlumberger 1.57
Time Warner 1.50
Vodafone 1.38
Burlington Resources 1.30
Sanofi-Aventis 1.24
Shares Market Percent
value of net
Common stocks - 90.21% (000) assets
Information technology - 20.34%
Microsoft Corp. 84,999,715 $ 2,328,992 2.03%
Google Inc., Class A (1) 8,095,400 2,315,284 2.02
Texas Instruments Inc. 43,120,200 1,409,168 1.23
Corning Inc. (1) 66,970,000 1,336,721 1.16
Taiwan Semiconductor Manufacturing Co. Ltd. 576,377,968 951,642
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 24,675,200 203,077 1.01
Applied Materials, Inc. 58,665,000 1,074,156 .94
Maxim Integrated Products, Inc. 17,640,000 752,346 .66
Cisco Systems, Inc. (1) 40,840,000 719,601 .63
Yahoo! Inc. (1) 21,450,554 715,161 .62
First Data Corp. 16,540,000 687,237 .60
Analog Devices, Inc. 16,716,666 609,322 .53
Other securities 10,223,338 8.91
23,326,045 20.34
Energy - 15.45%
Schlumberger Ltd. 20,863,300 1,799,042 1.57
Burlington Resources Inc. 20,260,000 1,494,985 1.30
Canadian Natural Resources, Ltd. 22,890,000 1,127,055 .98
Suncor Energy Inc. 18,351,847 1,087,202 .95
Devon Energy Corp. 17,680,000 1,074,414 .94
Halliburton Co. 12,905,000 799,723 .70
EOG Resources, Inc. 12,430,000 793,407 .69
Transocean Inc. (1) 12,649,900 746,850 .65
Apache Corp. 9,395,060 672,874 .59
Petro-Canada 16,300,000 658,863 .57
Baker Hughes Inc. 10,270,000 603,362 .53
Other securities 6,852,836 5.98
17,710,613 15.45
Consumer discretionary - 14.61%
Lowe's Companies, Inc. 33,160,400 2,132,545 1.86
Target Corp. 36,435,000 1,958,381 1.71
Time Warner Inc. 95,650,000 1,714,048 1.50
Best Buy Co., Inc. 23,663,400 1,127,798 .98
Carnival Corp., units 16,750,000 826,445 .72
News Corp. Inc., Class A 45,936,216 744,626 .65
Clear Channel Communications, Inc. 22,335,000 743,755 .65
Liberty Media Corp., Class A (1) 82,375,000 684,536 .60
Comcast Corp., Class A (1) 20,611,500 633,804 .55
Other securities 6,181,229 5.39
16,747,167 14.61
Health care - 11.67%
Sanofi-Aventis 16,730,175 1,427,016 1.24
WellPoint, Inc. (1) 15,470,000 1,148,648 1.00
Roche Holding AG 7,705,000 1,063,097 .93
Forest Laboratories, Inc. (1) 19,755,600 877,149 .77
Genentech, Inc. (1) 9,230,500 867,113 .76
Guidant Corp. 11,325,000 799,998 .70
AstraZeneca PLC (Sweden) 7,468,000 342,161
AstraZeneca PLC (ADR) 6,072,000 280,041 .54
Other securities 6,575,435 5.73
13,380,658 11.67
Industrials - 8.27%
General Electric Co. 34,710,000 1,166,603 1.02
Tyco International Ltd. 38,463,900 1,070,450 .93
United Parcel Service, Inc., Class B 13,117,800 929,921 .81
Boeing Co. 12,400,000 831,048 .73
Illinois Tool Works Inc. 7,770,100 654,864 .57
Other securities 4,827,447 4.21
9,480,333 8.27
Financials - 6.72%
Fannie Mae 21,623,200 1,103,648 .96
American International Group, Inc. 18,475,200 1,093,732 .95
Freddie Mac 17,102,300 1,032,637 .90
Other securities 4,480,098 3.91
7,710,115 6.72
Consumer staples - 5.00%
Altria Group, Inc. 27,436,700 1,939,775 1.69
Walgreen Co. 19,866,000 920,392 .80
Coca-Cola Co. 16,965,000 746,460 .65
Other securities 2,131,971 1.86
5,738,598 5.00
Telecommunication services - 3.31%
Vodafone Group PLC (ADR) 45,755,000 1,246,824
Vodafone Group PLC 120,765,000 330,383 1.38
Sprint Nextel Corp. 24,521,007 635,830 .55
Other securities 1,584,242 1.38
3,797,279 3.31
Materials - 2.90%
3,319,347 2.90
Utilities - 0.17%
193,100 .17
Miscellaneous - 1.77%
Other common stocks in initial period of acquisition 2,032,268 1.77
Total common stocks (cost: $79,765,812,000) 103,435,523 90.21
Preferred stocks - 0.00%
Total preferred stocks (cost: $21,000,000) 550 .00
Convertible securities - 0.00%
Total convertible securities (cost: $255,000) 95 .00
Bonds & notes - 0.25%
Total bonds & notes (cost: $254,565,000) 281,023 .25
Principal
amount
Short-term securities - 9.58% (000)
U.S. Treasury Bills 2.901%-3.375% due 9/1-11/3/2005 $ 1,437,400 1,433,136 1.25
Federal Home Loan Bank 3.195%-3.67% due 9/2-11/30/2005 1,333,585 1,329,258 1.16
Freddie Mac 3.24%-3.63% due 9/6-11/15/2005 1,119,454 1,115,020 .97
General Electric Capital Corp 3.44%-3.64% due 10/3-11/1/2005 161,400 160,650
General Electric Capital Services, Inc. 3.39%-3.53% due 9/16-10/13/2005 125,000 124,623 .25
International Lease Finance Corp. 3.42%-3.58% due 9/23-10/21/2005 105,000 104,633
AIG Funding, Inc. 3.40% due 9/16/2005 50,000 49,928
American General Finance Corp. 3.36%-3.60% due 9/1-10/19/2005 50,000 49,880 .18
Fannie Mae 3.28%-3.585% due 9/21-11/2/2005 150,400 149,816 .13
Other securities 6,465,323 5.64
Total short-term securities (cost: $10,982,548,000) 10,982,267 9.58
Total investment securities (cost: $91,024,180,000) 114,699,458 100.04
Other assets less liabilities (44,257) (.04)
Net assets $114,655,201 100.00%
"Miscellaneous" securities include holdings in their initial period of
acquisition that have not previously been publicly disclosed.
"Other securities" includes all issues that are not disclosed separately in the
summary investment portfolio.
Investments in affiliates
A company is considered to be an affiliate of the fund under the Investment
Company Act of 1940 if the fund's holdings in that company represent 5% or more
of the outstanding voting shares of that company. Some of the fund's affiliated
holdings listed below are also among the fund's largest holdings and are shown
in the preceding summary investment portfolio. The market value of the
affiliated companies which are not among the fund's largest holdings is included
in "Other securities" under their respective industry sectors. Further details
on these holdings and related transactions during the year ended August 31,
2005, appear below.
Company Beginning shares Purchases Sales
or principal amount
Burlington Resources Inc. 19,760,000 500,000 -
Forest Laboratories, Inc. (1) 20,311,800 1,500,000 2,056,200
EOG Resources, Inc. 6,200,000 6,230,000 -
Maxim Integrated Products, Inc. 16,590,000 1,050,000 -
Qwest Communications International Inc. (1) - 117,900,000 -
Qwest Capital Funding, Inc. 7.75% 2031 - $ 53,800,000 -
U S WEST Capital Funding, Inc. 6.875% 2028 - $ 36,000,000 -
Qwest Capital Funding, Inc. 7.625% 2021 - $ 25,000,000 -
U S WEST Capital Funding, Inc. 6.50% 2018 - $ 25,250,000 -
BJ Services Co. 3,000,000 5,975,000 -
Noble Corp. 6,675,000 910,000 -
Xilinx, Inc. 14,800,000 4,050,000 -
KLA-Tencor Corp. 6,475,000 3,900,000 -
Express Scripts, Inc. (1) 4,710,000 4,554,600 264,600
Limited Brands, Inc. 20,700,000 - -
Altera Corp. (1) 15,700,000 4,700,000 -
Freeport-McMoRan Copper & Gold Inc., Class B 8,011,100 1,584,900 -
Microchip Technology Inc. 10,225,000 2,530,000 -
CONSOL Energy Inc. (2) 3,700,000 - -
CONSOL Energy Inc. 800,000 928,200 -
Teradyne, Inc. (1) 6,250,000 6,475,000 -
Ceridian Corp. (1) 7,240,900 1,979,000 -
Brinker International, Inc. (1) 3,000,000 2,000,000 -
American Pharmaceutical Partners, Inc. (1) 3,800,000 - -
Sabre Holdings Corp., Class A 7,062,811 - -
Harrah's Entertainment, Inc. (3) 4,650,000 3,669,036 -
ENSCO International Inc. (3) 8,235,000 - 3,617,550
USX-U.S. Steel Group (3) - 7,375,000 4,354,000
Advanced Micro Devices, Inc. (1) (3) 12,000,000 7,800,000 -
Big Lots, Inc (1) (3) 7,000,000 - 4,000,000
Broadview Networks Holdings Inc., Series E, convertible preferred (1) (3) 1,588,972 - 1,588,972
Broadview Networks Holdings, Inc., Series E, warrants, expire 2012 (1) (3) 634,116 - 634,116
Broadview Networks Holdings, Inc., Series E, warrants, expire 2012 (1) (3) 96,812 - 96,812
Broadview Networks Holdings, Inc., Class A (1) (2) (3) (4) - 31,812 -
Broadview Networks Holdings, Inc., Series B (1) (2) (3) (4) - 1,272 -
Pogo Producing Co. (3) 3,644,400 - 3,644,400
Rowan Companies, Inc. (3) 6,450,000 - 3,475,000
SINA Corp. (1) (3) 2,552,000 - 2,552,000
Market value
Dividend or of affiliates
Company Ending shares or interest at 8/31/05
principal amount income (000) (000)
Burlington Resources Inc. 20,260,000 $ 6,761 $ 1,494,985
Forest Laboratories, Inc. (1) 19,755,600 - 877,149
EOG Resources, Inc. 12,430,000 1,739 793,407
Maxim Integrated Products, Inc. 17,640,000 6,846 752,346
Qwest Communications International Inc. (1) 117,900,000 - 459,810
Qwest Capital Funding, Inc. 7.75% 2031 $ 53,800,000 3,565 47,075
U S WEST Capital Funding, Inc. 6.875% 2028 $ 36,000,000 2,258 30,060
Qwest Capital Funding, Inc. 7.625% 2021 $ 25,000,000 1,663 22,250
U S WEST Capital Funding, Inc. 6.50% 2018 $ 25,250,000 1,633 21,463
BJ Services Co. 8,975,000 2,343 566,143
Noble Corp. 7,585,000 400 540,810
Xilinx, Inc. 18,850,000 4,280 529,496
KLA-Tencor Corp. 10,375,000 2,442 526,635
Express Scripts, Inc. (1) 9,000,000 - 520,740
Limited Brands, Inc. 20,700,000 39,744 454,986
Altera Corp. (1) 20,400,000 - 446,148
Freeport-McMoRan Copper & Gold Inc., Class B 9,596,000 16,374 404,663
Microchip Technology Inc. 12,755,000 4,283 396,936
CONSOL Energy Inc. (2) 3,700,000 2,072 257,890
CONSOL Energy Inc. 1,728,200 578 120,456
Teradyne, Inc. (1) 12,725,000 - 213,780
Ceridian Corp. (1) 9,219,900 - 187,164
Brinker International, Inc. (1) 5,000,000 - 185,750
American Pharmaceutical Partners, Inc. (1) 3,800,000 - 174,724
Sabre Holdings Corp., Class A 7,062,811 2,437 135,465
Harrah's Entertainment, Inc. (3) 8,319,036 8,558 -
ENSCO International Inc. (3) 4,617,450 618 -
USX-U.S. Steel Group (3) 3,021,000 1,612 -
Advanced Micro Devices, Inc. (1) (3) 19,800,000 - -
Big Lots, Inc (1) (3) 3,000,000 - -
Broadview Networks Holdings Inc., Series E, convertible preferred (1) (3) - - -
Broadview Networks Holdings, Inc., Series E, warrants, expire 2012 (1) (3) - - -
Broadview Networks Holdings, Inc., Series E, warrants, expire 2012 (1) (3) - - -
Broadview Networks Holdings, Inc., Class A (1) (2) (3) (4) 31,812 - -
Broadview Networks Holdings, Inc., Series B (1) (2) (3) (4) 1,272 - -
Pogo Producing Co. (3) - 502 -
Rowan Companies, Inc. (3) 2,975,000 2,654 -
SINA Corp. (1) (3) - - -
$ 113,362 $ 10,160,331
(1) Security did not produce income during the last 12 months.
(2) Purchased in a private placement transaction; resale may be limited to
qualified institutional buyers; resale to the public may require
registration. The total value of all such restricted securities,
including those in "Other securities" in the summary investment portfolio,
was $3,704,926,000, which represented 3.23% of the net assets of the fund.
(3) Unaffiliated issuer at 8/31/2005
(4) Valued under fair value procedures adopted by authority of the Board of
Directors.
ADR = American Depositary Receipts
See Notes to Financial Statements
FINANCIAL STATEMENTS
Statement of assets and liabilities
at August 31, 2005 (dollars and shares in thousands,
except per-share amounts)
Assets:
Investment securities at market:
Unaffiliated issuers (cost: $84,162,814) $104,539,127
Affiliated issuers (cost: $6,861,366) 10,160,331 $114,699,458
Cash denominated in non-U.S. currencies
(cost: $10,782) 10,566
Cash 124
Receivables for:
Sales of investments 243,490
Sales of fund's shares 216,217
Dividends and interest 108,300
Other 3,369 571,376
115,281,524
Liabilities:
Payables for:
Purchases of investments 351,470
Repurchases of fund's shares 157,260
Investment advisory services 24,302
Services provided by affiliates 82,305
Deferred Directors' compensation 1,853
Other fees and expenses 9,133 626,323
Net assets at August 31, 2005 $114,655,201
Net assets consist of:
Capital paid in on shares of capital stock $89,963,596
Undistributed net investment income 383,091
Undistributed net realized gain 640,797
Net unrealized appreciation 23,667,717
Net assets at August 31, 2005 $114,655,201
Total authorized capital stock - 5,500,000 shares, $.001 par value (3,908,881
total shares outstanding)
Net assets Shares outstanding Net asset value per share
(1)
Class A $67,792,765 2,297,028 $29.51
Class B 6,098,096 213,609 28.55
Class C 7,054,138 247,782 28.47
Class F 12,122,385 412,803 29.37
Class 529-A 1,386,413 47,133 29.42
Class 529-B 334,422 11,647 28.71
Class 529-C 447,032 15,563 28.72
Class 529-E 75,625 2,588 29.23
Class 529-F 29,952 1,019 29.38
Class R-1 122,134 4,229 28.88
Class R-2 1,566,860 54,285 28.86
Class R-3 6,388,908 219,149 29.15
Class R-4 8,032,096 273,644 29.35
Class R-5 3,204,375 108,402 29.56
(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 $31.31 and
$31.21, respectively.
See Notes to Financial Statements
Statement of operations
for the year ended August 31, 2005 (dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. withholding
tax of $29,201; also includes
$104,244 from affiliates) $1,104,697
Interest (net of non-U.S. withholding
tax of $1; also includes
$9,118 from affiliates) 264,788 $1,369,485
Fees and expenses: (1)
Investment advisory services 276,238
Distribution services 344,109
Transfer agent services 75,687
Administrative services 53,867
Reports to shareholders 2,051
Registration statement and prospectus 3,839
Postage, stationery and supplies 9,044
Directors' compensation 617
Auditing and legal 199
Custodian 6,629
State and local taxes 1
Other 271
Total fees and expenses before reimbursements/waivers 772,552
Less reimbursement/waiver of fees and expenses:
Investment advisory services 20,117
Administrative services 534
Total fees and expenses after reimbursements/waivers 751,901
Net investment income 617,584
Net realized gain and unrealized
appreciation on investments
and non-U.S. currency:
Net realized gain (loss) on:
Investments including $6,372 net gain from affiliates 1,059,576
Non-U.S. currency transactions (4,872) 1,054,704
Net unrealized appreciation on:
Investments 16,659,996
Non-U.S. currency translations 99 16,660,095
Net realized gain and
unrealized appreciation
on investments and non-U.S. currency 17,714,799
Net increase in net assets resulting
from operations $18,332,383
(1) Additional information related to class-specific fees and expenses is
included in the Notes to Financial Statements.
See Notes to Financial Statements
Statements of changes in net assets (dollars in thousands)
Year ended August 31
2005 2004
Operations:
Net investment income $617,584 $57,036
Net realized gain on investments and
non-U.S. currency transactions 1,054,704 1,517,009
Net unrealized appreciation
on investments and non-U.S. currency translations 16,660,095 2,933,858
Net increase in net assets
resulting from operations 18,332,383 4,507,903
Dividends paid to shareholders
from net investment income (281,650) (20,306)
Capital share transactions 17,405,596 21,009,117
Total increase in net assets 35,456,329 25,496,714
Net assets:
Beginning of year 79,198,872 53,702,158
End of year (including undistributed
net investment income: $383,091 and $52,263, respectively) $114,655,201 $79,198,872
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(R) 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 0% 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 proceeds. Each share class has identical voting rights, except for
the exclusive right to vote on matters affecting only its class. Share classes
have different fees and expenses ("class-specific fees and expenses"), primarily
due to different arrangements for distribution, administrative and shareholder
services. Differences in class-specific fees and expenses will result in
differences in net investment income and, therefore, the payment of different
per-share dividends by each class.
- --------
CollegeAmerica is a registered trademark of the Virginia College Savings
Plan.(SM)
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, including short-term securities
purchased with more than 60 days left to maturity, 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 bid prices, if asked prices are not available) or at
prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or
equity securities traded principally among fixed-income dealers, are
valued in the manner described above for either equity or fixed-income
securities, depending on which method is deemed most appropriate by
the investment adviser. Short-term securities purchased within 60 days
to maturity are valued at amortized cost, which approximates market
value. The value of short-term securities originally purchased with
maturities greater than 60 days are determined based on an amortized
value to par when they reach 60 days or less remaining to maturity.
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 under procedures adopted 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. withholding taxes paid.
Gains realized by the fund on the sale of securities in certain countries are
subject to non-U.S. taxes. The fund records a liability based on unrealized
gains to provide for potential non-U.S. taxes payable upon the sale of these
securities. For the year ended August 31, 2005, there were no non-U.S.
withholding taxes paid on realized gains. As of August 31, 2005, non-U.S. taxes
provided on unrealized gains were $7,298,000.
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 certain securities within 30 days of purchase;
deferred expenses; and cost of investments sold. The fiscal year in which
amounts are distributed may differ from the year in which the net investment
income and net realized gains are recorded by the fund for financial reporting
purposes. As of August 31, 2005, the cost of investment securities for federal
income tax purposes was $91,038,039,000.
During the year ended August 31, 2005, the fund reclassified $4,872,000 from
undistributed net investment income to undistributed net realized gains and
$234,000 from undistributed net investment income to capital paid in on shares
of capital stock to align financial reporting with tax reporting.
As of August 31, 2005, the components of distributable earnings on a tax basis
were as follows (dollars in thousands):
Undistributed net investment income and non-U.S. currency gains $387,628
Loss deferrals related to non-U.S. currency that were realized during the period
November 1, 2004 through August 31, 2005 (2,683)
Undistributed long-term capital gains 654,656
Gross unrealized appreciation on investment securities 26,048,163
Gross unrealized depreciation on investment securities (2,386,744)
Net unrealized appreciation on investment securities 23,661,419
At the beginning of the period, the fund had a capital loss carryforward of
$405,043,000 expiring in 2011. The capital loss carryforward was utilized to
offset capital gains realized during the current year. During the year ended
August 31, 2005, the fund realized, on a tax basis, a net capital gain of
$1,059,699,000.
Ordinary income distributions paid to shareholders from net investment income
and non-U.S. currency gains were as follows (dollars in thousands):
Share class Year ended August 31, 2005 Year ended August 31, 2004
Class A $ 196,961 $ 11,834
Class B - -
Class C - -
Class F 33,311 4,078
Class 529-A 3,701 640
Class 529-B - -
Class 529-C - -
Class 529-E 20 -
Class 529-F 69 9
Class R-1 - -
Class R-2 - -
Class R-3 9,434 1,019
Class R-4 24,656 1,782
Class R-5 13,498 944
Total $ 281,650 $ 20,306
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. At the beginning of the
period, these fees were based on a declining series of annual rates beginning
with 0.50% on the first $1 billion of daily net assets and decreasing to 0.260%
on such assets in excess of $89 billion. The Board of Directors approved an
amended agreement effective, September 1, 2005, continuing the series of rates
to include additional annual rates of 0.255% on daily net assets in excess of
$102.5 billion but not exceeding $116 billion; 0.250% on such assets in excess
of $116 billion but not exceeding $130 billion; and 0.245% on such assets in
excess of $130 billion. During the year ended August 31, 2005, CRMC reduced
investment advisory services fees to the rates provided by the amended
agreement. CRMC is also currently waiving a portion of investment advisory
services fees. At the beginning of the period, CRMC waived 5% of these fees and
increased the waiver to 10% on April 1, 2005. During the year ended August 31,
2005, total investment advisory services fees waived by CRMC were $20,117,000.
As a result, the fee shown on the accompanying financial statements of
$276,238,000, which was equivalent to an annualized rate of 0.285%, was reduced
to $256,121,000, or 0.264% 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 and service
existing accounts. The plans provide for payments, based on an
annualized percentage of average daily net assets, ranging from 0.25%
to 1.00% as noted below. In some cases, the Board of Directors has
limited the amounts that may be paid to less than the maximum allowed
by the plans. All share classes 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. The remaining amounts
available to be paid under each plan are paid to selling dealers to
compensate them for their selling activities.
For classes A and 529-A, the Board of Directors has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for
certain shares sold without a sales charge. These classes reimburse
AFD for amounts billed within the prior 15 months but only to the
extent that the overall annual expense limit of 0.25% is not exceeded.
As of August 31, 2005, unreimbursed expenses subject to reimbursement
totaled $13,851,000 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 share classes other than classes A and B.
Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for
Class R-5) based on its respective average daily net assets. Each
relevant share class also pays AFS additional amounts for certain
transfer agent services. CRMC and AFS may use these fees to compensate
third parties for performing these services. CRMC has agreed to pay
AFS on the fund's behalf for a portion of the transfer agent services
fees for some of the retirement plan share classes. For the year ended
August 31, 2005, the total administrative services fees paid by CRMC
were $534,000 for class R-2. Administrative services fees are
presented gross of any payments made by CRMC. 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.
Expenses under the agreements described on the previous page for the
year ended August 31, 2005, 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 $150,085 $69,362 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 54,762 6,325 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 58,814 Included $8,871 $1,482 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 23,890 Included 13,135 1,042 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 1,845 Included 1,505 186 $ 1,094
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 2,777 Included 384 126 278
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 3,569 Included 493 135 358
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 299 Included 82 10 60
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 36 Included 32 4 23
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 879 Included 133 36 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 9,175 Included 1,834 3,801 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 23,709 Included 7,055 719 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 14,269 Included 8,652 117 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 2,181 39 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $344,109 $75,687 $44,357 $7,697 $1,813
--------------------------------------------------------------------------------------------------------------
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 of $617,000, shown on the accompanying
financial statements, includes $344,000 in current fees (either paid in cash or
deferred) and a net increase of $273,000 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):
Reinvestments of
Share class Sales(1) dividends and distributions
Amount Shares Amount Shares
Year ended August 31, 2005
Class A $ 11,936,861 441,726 $ 188,689 7,094
Class B 792,730 30,457 - -
Class C 1,888,048 72,219 - -
Class F 4,413,012 163,978 28,586 1,080
Class 529-A 411,150 15,278 3,701 139
Class 529-B 73,941 2,818 - -
Class 529-C 129,269 4,900 - -
Class 529-E 22,803 854 20 1
Class 529-F 11,393 427 69 2
Class R-1 77,632 2,932 - -
Class R-2 766,575 28,964 - -
Class R-3 3,313,918 124,192 9,421 358
Class R-4 4,688,956 175,888 24,612 930
Class R-5 2,033,183 75,500 13,271 499
Total net increase
(decrease) $ 30,559,471 1,140,133 $ 268,369 10,103
Year ended August 31, 2004
Class A $ 13,997,627 571,535 $ 11,368 479
Class B 1,361,390 57,197 - -
Class C 2,272,540 95,568 - -
Class F 4,026,826 165,027 3,553 150
Class 529-A 396,211 16,197 640 27
Class 529-B 94,663 3,934 - -
Class 529-C 135,685 5,626 - -
Class 529-E 21,280 876 - -
Class 529-F 10,194 420 9 -*
Class R-1 45,559 1,891 - -
Class R-2 652,292 26,868 - -
Class R-3 2,767,267 113,203 1,018 43
Class R-4 3,346,408 136,236 1,779 75
Class R-5 1,025,373 41,161 907 38
Total net increase
(decrease) $ 30,153,315 1,235,739 $ 19,274 812
Share class Repurchases(1) Net increase
Amount Shares Amount Shares
Year ended August 31, 2005
Class A $ (8,043,207) (297,741) $ 4,082,343 151,079
Class B (487,396) (18,609) 305,334 11,848
Class C (726,215) (27,757) 1,161,833 44,462
Class F (1,339,348) (49,720) 3,102,250 115,338
Class 529-A (46,982) (1,733) 367,869 13,684
Class 529-B (8,482) (320) 65,459 2,498
Class 529-C (19,885) (747) 109,384 4,153
Class 529-E (2,601) (97) 20,222 758
Class 529-F (1,256) (46) 10,206 383
Class R-1 (28,663) (1,077) 48,969 1,855
Class R-2 (277,631) (10,385) 488,944 18,579
Class R-3 (952,949) (35,566) 2,370,390 88,984
Class R-4 (1,063,809) (39,544) 3,649,759 137,274
Class R-5 (423,820) (15,721) 1,622,634 60,278
Total net increase
(decrease) $ (13,422,244) (499,063) $ 17,405,596 651,173
Year ended August 31, 2004
Class A $ (6,407,752) (261,061) $ 7,601,243 310,953
Class B (337,205) (14,098) 1,024,185 43,099
Class C (430,258) (18,004) 1,842,282 77,564
Class F (824,402) (33,759) 3,205,977 131,418
Class 529-A (23,708) (964) 373,143 15,260
Class 529-B (4,482) (185) 90,181 3,749
Class 529-C (8,634) (359) 127,051 5,267
Class 529-E (1,490) (62) 19,790 814
Class 529-F (487) (20) 9,716 400
Class R-1 (13,212) (547) 32,347 1,344
Class R-2 (118,354) (4,877) 533,938 21,991
Class R-3 (399,246) (16,323) 2,369,039 96,923
Class R-4 (439,571) (17,816) 2,908,616 118,495
Class R-5 (154,671) (6,245) 871,609 34,954
Total net increase
(decrease) $ (9,163,472) (374,320) $ 21,009,117 862,231
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $32,791,075,000 and $17,763,268,000, respectively, during the
year ended August 31, 2005.
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, 2005, the custodian fee of $6,629,000, shown on the
accompanying financial statements, includes $96,000 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 8/31/2005 $24.43 $.21 $4.96 $5.17
Year ended 8/31/2004 22.49 .05 1.90 1.95
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)
Class B:
Year ended 8/31/2005 23.73 - 4.82 4.82
Year ended 8/31/2004 22.00 (.13) 1.86 1.73
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)
Class C:
Year ended 8/31/2005 23.68 (.01) 4.80 4.79
Year ended 8/31/2004 21.96 (.14) 1.86 1.72
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 8/31/2005 24.33 .20 4.94 5.14
Year ended 8/31/2004 22.41 .04 1.90 1.94
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 8/31/2005 24.38 .19 4.95 5.14
Year ended 8/31/2004 22.47 .04 1.90 1.94
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 8/31/2005 23.91 (.04) 4.84 4.80
Year ended 8/31/2004 22.20 (.18) 1.89 1.71
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 8/31/2005 23.91 (.04) 4.85 4.81
Year ended 8/31/2004 22.21 (.17) 1.87 1.70
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 8/31/2005 24.22 .10 4.92 5.02
Year ended 8/31/2004 22.37 (.05) 1.90 1.85
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:
Year ended 8/31/2005 24.34 .19 4.94 5.13
Year ended 8/31/2004 22.45 .02 1.89 1.91
Period from 9/16/2002 to 8/31/2003 18.39 .03 4.06 4.09
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:
Year ended 8/31/2005 $24.02 $(.01) $4.87 $4.86
Year ended 8/31/2004 22.28 (.15) 1.89 1.74
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 8/31/2005 24.01 (.01) 4.86 4.85
Year ended 8/31/2004 22.26 (.14) 1.89 1.75
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 8/31/2005 24.18 .12 4.91 5.03
Year ended 8/31/2004 22.35 (.03) 1.88 1.85
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 8/31/2005 24.35 .19 4.94 5.13
Year ended 8/31/2004 22.44 .05 1.90 1.95
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 8/31/2005 24.50 .28 4.97 5.25
Year ended 8/31/2004 22.52 .12 1.91 2.03
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)
Financial highlights (1)
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 8/31/2005 $(.09) $ - $(.09) $29.51
Year ended 8/31/2004 (.01) - (.01) 24.43
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
Class B:
Year ended 8/31/2005 - - - 28.55
Year ended 8/31/2004 - - - 23.73
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
Class C:
Year ended 8/31/2005 - - - 28.47
Year ended 8/31/2004 - - - 23.68
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 8/31/2005 (.10) - (.10) 29.37
Year ended 8/31/2004 (.02) - (.02) 24.33
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 8/31/2005 (.10) - (.10) 29.42
Year ended 8/31/2004 (.03) - (.03) 24.38
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 8/31/2005 - - - 28.71
Year ended 8/31/2004 - - - 23.91
Year ended 8/31/2003 - - - 22.20
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-C:
Year ended 8/31/2005 - - - 28.72
Year ended 8/31/2004 - - - 23.91
Year ended 8/31/2003 - - - 22.21
Period from 2/15/2002 to 8/31/2002 - - - 18.48
Class 529-E:
Year ended 8/31/2005 (.01) - (.01) 29.23
Year ended 8/31/2004 - - - 24.22
Year ended 8/31/2003 (.03) - (.03) 22.37
Period from 3/1/2002 to 8/31/2002 - - - 18.55
Class 529-F:
Year ended 8/31/2005 (.09) - (.09) 29.38
Year ended 8/31/2004 (.02) - (.02) 24.34
Period from 9/16/2002 to 8/31/2003 (.03) - (.03) 22.45
Financial highlights (1) (continued)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class R-1:
Year ended 8/31/2005 $ - $ - $ - $28.88
Year ended 8/31/2004 - - - 24.02
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 8/31/2005 - - - 28.86
Year ended 8/31/2004 - - - 24.01
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 8/31/2005 (.06) - (.06) 29.15
Year ended 8/31/2004 (.02) - (.02) 24.18
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 8/31/2005 (.13) - (.13) 29.35
Year ended 8/31/2004 (.04) - (.04) 24.35
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 8/31/2005 (.19) - (.19) 29.56
Year ended 8/31/2004 (.05) - (.05) 24.50
Year ended 8/31/2003 (.06) - (.06) 22.52
Period from 5/15/2002 to 8/31/2002 - - - 18.58
Financial highlights (1)
Ratio of expenses Ratio of expenses
to average net to average net Ratio of net
Net assets, assets before assets after income (loss)
Total end of period reimbursements/ reimbursements/ to average
return (3) (in millions) waivers waivers (4) net assets
Class A:
Year ended 8/31/2005 21.20% $67,793 .68% .66% .76%
Year ended 8/31/2004 8.65 52,432 .70 .70 .20
Year ended 8/31/2003 21.23 41,267 .76 .76 .28
Year ended 8/31/2002 (19.80) 30,644 .75 .75 .18
Year ended 8/31/2001 (25.28) 34,312 .71 .71 .56
Class B:
Year ended 8/31/2005 20.31 6,098 1.43 1.41 .01
Year ended 8/31/2004 7.86 4,788 1.44 1.44 (.55)
Year ended 8/31/2003 20.35 3,490 1.53 1.53 (.49)
Year ended 8/31/2002 (20.45) 2,170 1.52 1.52 (.60)
Year ended 8/31/2001 (25.83) 1,437 1.48 1.48 (.29)
Class C:
Year ended 8/31/2005 20.23 7,054 1.48 1.46 (.05)
Year ended 8/31/2004 7.83 4,814 1.50 1.50 (.60)
Year ended 8/31/2003 20.26 2,762 1.55 1.55 (.52)
Year ended 8/31/2002 (20.44) 1,370 1.55 1.55 (.63)
Period from 3/15/2001 to 8/31/2001 (3.49) 385 .80 .80 (.34)
Class F:
Year ended 8/31/2005 21.18 12,122 .70 .68 .73
Year ended 8/31/2004 8.66 7,237 .72 .72 .17
Year ended 8/31/2003 21.22 3,721 .75 .75 .28
Year ended 8/31/2002 (19.83) 1,576 .77 .77 .15
Period from 3/15/2001 to 8/31/2001 (3.05) 350 .38 .38 .08
Class 529-A:
Year ended 8/31/2005 21.13 1,386 .73 .71 .69
Year ended 8/31/2004 8.63 815 .74 .74 .16
Year ended 8/31/2003 21.35 409 .67 .67 .36
Period from 2/15/2002 to 8/31/2002 (17.95) 144 .86 (6) .86 (6) .07 (6)
Class 529-B:
Year ended 8/31/2005 20.08 335 1.59 1.57 (.16)
Year ended 8/31/2004 7.70 219 1.62 1.62 (.72)
Year ended 8/31/2003 20.13 120 1.66 1.66 (.63)
Period from 2/15/2002 to 8/31/2002 (18.30) 39 1.66 (6) 1.66 (6) (.74)(6)
Class 529-C:
Year ended 8/31/2005 20.12 447 1.58 1.56 (.15)
Year ended 8/31/2004 7.65 273 1.61 1.61 (.71)
Year ended 8/31/2003 20.18 136 1.65 1.65 (.61)
Period from 2/15/2002 to 8/31/2002 (18.30) 45 1.64 (6) 1.64 (6) (.72)(6)
Class 529-E:
Year ended 8/31/2005 20.73 76 1.06 1.04 .36
Year ended 8/31/2004 8.27 44 1.09 1.09 (.19)
Year ended 8/31/2003 20.78 23 1.11 1.11 (.08)
Period from 3/1/2002 to 8/31/2002 (19.17) 6 .56 .56 (.10)
Class 529-F:
Year ended 8/31/2005 21.12 30 .72 .70 .70
Year ended 8/31/2004 8.53 16 .84 .84 .07
Period from 9/16/2002 to 8/31/2003 22.27 5 .86 (6) .86 (6) .16 (6)
Financial highlights (1) (continued)
Ratio of expenses Ratio of expenses
to average net to average net Ratio of net
Net assets, assets before assets after (loss) income
Total end of period reimbursements/ reimbursements/ to average
return (in millions) waivers waivers (4) net assets
Class R-1:
Year ended 8/31/2005 20.23% $122 1.47% 1.44% (.05)%
Year ended 8/31/2004 7.81 57 1.51 1.51 (.61)
Year ended 8/31/2003 20.29 23 1.59 1.53 (.53)
Period from 6/6/2002 to 8/31/2002 (12.10) 1 .46 .36 (.16)
Class R-2:
Year ended 8/31/2005 20.20 1,567 1.51 1.45 (.04)
Year ended 8/31/2004 7.86 857 1.60 1.48 (.57)
Year ended 8/31/2003 20.29 305 1.82 1.49 (.49)
Period from 5/21/2002 to 8/31/2002 (16.19) 8 .49 .42 (.17)
Class R-3:
Year ended 8/31/2005 20.83 6,389 .96 .94 .46
Year ended 8/31/2004 8.28 3,148 1.05 1.05 (.14)
Year ended 8/31/2003 20.75 743 1.11 1.11 (.11)
Period from 5/21/2002 to 8/31/2002 (16.10) 11 .33 .31 (.06)
Class R-4:
Year ended 8/31/2005 21.15 8,032 .70 .68 .72
Year ended 8/31/2004 8.70 3,320 .71 .71 .20
Year ended 8/31/2003 21.19 401 .74 .74 .26
Period from 5/28/2002 to 8/31/2002 (15.63) 3 .25 .20 .05
Class R-5:
Year ended 8/31/2005 21.52 3,204 .40 .38 1.02
Year ended 8/31/2004 9.02 1,179 .41 .41 .50
Year ended 8/31/2003 21.61 297 .43 .43 .56
Period from 5/15/2002 to 8/31/2002 (17.05) 95 .13 .13 .14
Year ended August 31
2005 2004 2003 2002 2001
Portfolio turnover rate for all classes of shares 20% 19% 25% 30% 36%
(1) Based on operations for the period shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent deferred
sales charges.
(4) The ratios in this column reflect the impact, if any, of certain
reimbursements/waivers from CRMC. During the year ended 8/31/2005, CRMC
reduced fees for investment advisory services for all share classes.
In addition, during the start-up period for the retirement plan share
classes (except Class R-5), CRMC agreed to pay a portion of the fees
related to transfer agent services.
(5) Amount less than one cent.
(6) Annualized.
See Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors 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 summary investment
portfolio, as of August 31, 2005, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. 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 standards of the Public Company
Accounting Oversight Board (United States). 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. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. 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, 2005, 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 periods presented, in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
October 4, 2005
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. The information below is provided for the
fund's fiscal year ending August 31, 2005.
Individual shareholders are eligible for reduced tax rates on qualified dividend
income. The fund designates 100% of the dividends received as qualified dividend
income.
Corporate shareholders may exclude up to 70% of qualifying dividends. The fund
designates $612,977,000 of dividends received as qualified dividend income.
For state tax purposes, certain states may exempt from income taxation that
portion of the income dividends paid by the fund that were derived from direct
U.S. government obligations. The fund designates $38,997,000 as interest derived
on direct U.S. government obligations.
INDIVIDUAL SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099-DIV OR OTHER TAX
INFORMATION WHICH WILL BE MAILED IN JANUARY 2006 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR 2005 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT
THEIR TAX ADVISERS.
EXPENSE EXAMPLE unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs such as initial sales charges on purchase payments and contingent deferred
sales charges on redemptions (loads); and (2) ongoing costs, including
management fees; distribution and service (12b-1) fees; and other expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the fund so you can compare these costs with the ongoing costs of
investing in other mutual funds. The example is based on an investment of $1,000
invested at the beginning of the period and held for the entire period (March 1,
2005, through August 31, 2005).
ACTUAL EXPENSES:
The first line of each share class in the table on the next page provides
information about actual account values and actual expenses. You may use the
information in this line, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading entitled
"Expenses paid during period" to estimate the expenses you paid on your account
during this period. There are some account fees that are charged to certain
types of accounts, such as Individual Retirement Accounts and CollegeAmerica
accounts (generally, a $10 fee is charged to set up the account and an
additional $10 fee is charged to the account annually) that would increase the
amount of expenses paid on your account. In addition, retirement plan
participants may be subject to certain fees charged by the plan sponsor, and
Class F and Class 529-F shareholders may be subject to fees charged by financial
intermediaries, typically ranging from 0.75% to 1.50% of assets annually
depending on services offered. You can estimate the impact of these fees by
adding the amount of the fees to the total estimated expenses you paid on your
account during the period as calculated above. In addition, your ending account
value would also be lower by the amount of these fees.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES:
The second line of each share class in the table on the next page provides
information about hypothetical account values and hypothetical expenses based on
the actual expense ratio for the share class and an assumed rate of return of
5.00% per year before expenses, which is not the actual return of the share
class. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare the ongoing costs of investing in the fund and
other funds. To do so, compare this 5.00% hypothetical example with the 5.00%
hypothetical examples that appear in the shareholder reports of the other funds.
There are some account fees that are charged to certain types of accounts, such
as Individual Retirement Accounts and CollegeAmerica accounts (generally, a $10
fee is charged to set up the account and an additional $10 fee is charged to the
account annually) that would increase the amount of expenses paid on your
account. In addition, retirement plan participants may be subject to certain
fees charged by the plan sponsor, and Class F and Class 529-F shareholders may
be subject to fees charged by financial intermediaries, typically ranging from
0.75% to 1.50% of assets annually depending on services offered. You can
estimate the impact of these fees by adding the amount of the fees to the total
estimated expenses you paid on your account during the period as calculated
above. In addition, your ending account value would also be lower by the amount
of these fees.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of each share class in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning account Ending account Expenses paid Annualized
value 3/1/2005 value 8/31/2005 during period(1) expense ratio
Class A -- actual return $1,000.00 $1,082.13 $3.36 .64%
Class A -- assumed 5% return 1,000.00 1,021.98 3.26 .64
Class B -- actual return 1,000.00 1,078.16 7.28 1.39
Class B -- assumed 5% return 1,000.00 1,018.20 7.07 1.39
Class C -- actual return 1,000.00 1,077.99 7.54 1.44
Class C -- assumed 5% return 1,000.00 1,017.95 7.32 1.44
Class F -- actual return 1,000.00 1,082.17 3.46 .66
Class F -- assumed 5% return 1,000.00 1,021.88 3.36 .66
Class 529-A -- actual return 1,000.00 1,082.01 3.73 .71
Class 529-A -- assumed 5% return 1,000.00 1,021.63 3.62 .71
Class 529-B -- actual return 1,000.00 1,077.29 8.12 1.55
Class 529-B -- assumed 5% return 1,000.00 1,017.39 7.88 1.55
Class 529-C -- actual return 1,000.00 1,077.26 8.06 1.54
Class 529-C -- assumed 5% return 1,000.00 1,017.44 7.83 1.54
Class 529-E -- actual return 1,000.00 1,080.19 5.35 1.02
Class 529-E -- assumed 5% return 1,000.00 1,020.06 5.19 1.02
Class 529-F -- actual return 1,000.00 1,082.12 3.20 .61
Class 529-F -- assumed 5% return 1,000.00 1,022.13 3.11 .61
Class R-1 -- actual return 1,000.00 1,078.00 7.39 1.41
Class R-1 -- assumed 5% return 1,000.00 1,018.10 7.17 1.41
Class R-2 -- actual return 1,000.00 1,077.66 7.54 1.44
Class R-2 -- assumed 5% return 1,000.00 1,017.95 7.32 1.44
Class R-3 -- actual return 1,000.00 1,080.42 4.82 .92
Class R-3 -- assumed 5% return 1,000.00 1,020.57 4.69 .92
Class R-4 -- actual return 1,000.00 1,082.22 3.52 .67
Class R-4 -- assumed 5% return 1,000.00 1,021.83 3.41 .67
Class R-5 -- actual return 1,000.00 1,083.58 1.94 .37
Class R-5 -- assumed 5% return 1,000.00 1,023.34 1.89 .37
(1) Expenses are equal to the annualized expense ratio, multiplied by the
average account value over the period, multiplied by the number of days in
the period (184), and divided by 365 (to reflect the one-half year period).
APPROVAL OF RENEWAL OF INVESTMENT ADVISORY AND SERVICE AGREEMENT
The fund's Board members have approved the renewal of the fund's Investment
Advisory and Service Agreement (the "agreement") with Capital Research and
Management Company ("CRMC") for an additional one-year term through August 31,
2006. The renewal of the agreement was approved by the Board following the
recommendation of the fund's Governance and Contracts Committee (the
"committee"), which is comprised of all of the fund's independent Board members.
The information, material facts and conclusions that formed the basis for the
committee's recommendation and the Board's subsequent approval are described
below.
1. INFORMATION RECEIVED
Materials reviewed -- During the course of each year, the independent Board
members receive a wide variety of materials relating to the services provided by
CRMC, including reports on the fund's investment results, portfolio composition,
portfolio trading practices, shareholder services, and other information
relating to the nature, extent and quality of services provided by CRMC to the
fund. In addition, the committee requests and reviews supplementary information
that includes extensive materials regarding the fund's investment results,
advisory fee and expense comparisons (including comparisons to advisory fees
charged by an affiliate of CRMC to institutional clients), financial and
profitability information regarding CRMC, descriptions of various functions such
as compliance monitoring and portfolio trading practices, and information about
the personnel providing investment management and administrative services to the
fund.
Review process -- The committee received assistance and advice regarding legal
and industry standards from independent counsel to the independent Board
members. The committee discussed the renewal of the agreement with CRMC
representatives and in a private session with independent legal counsel at which
no representatives of CRMC were present. In deciding to recommend the renewal of
the agreement, the committee did not identify any single or particular piece of
information that, in isolation, was the controlling factor. This summary
describes the most important, but not all, of the factors considered by the
Board and the Committee.
2. NATURE, EXTENT AND QUALITY OF SERVICES
CRMC, its personnel and its resources -- The Board and the committee considered
the depth and quality of CRMC's investment management process, including its
global research capabilities; the experience, capability and integrity of its
senior management and other personnel; the low turnover rates of its key
personnel; the overall financial strength and stability of its organization; and
the ability of its organizational structure to address the recent growth in
assets under management. The Board and the committee also considered that CRMC
made available to its investment professionals a variety of resources and
systems relating to investment management, compliance, trading, results and
portfolio accounting. They considered CRMC's commitment to investing in
information technology supporting investment management and compliance. They
further considered CRMC's continuing need to attract and retain qualified
personnel and to maintain and enhance its resources and systems.
Other services -- The Board and the committee considered CRMC's policies,
procedures and systems to ensure compliance with applicable laws and regulations
and its commitment to these programs; its efforts to keep the Board members
informed; and its attention to matters that may involve conflicts of interest
with the fund. The Board and the committee also considered the nature, extent,
quality and cost of administrative, distribution and shareholder services
provided by CRMC to the fund under the agreement and other agreements, including
the information technology, legal, and fund accounting and treasury functions.
The Board and the committee concluded that the nature, extent and quality of the
services provided by CRMC have benefited and will continue to benefit the fund
and its shareholders.
3. INVESTMENT RESULTS
The Board and committee considered the investment results of the fund in light
of its objective of providing growth of capital. They compared the fund's total
returns with the total returns of the Lipper Multi-Cap Growth Index (the Lipper
category that includes the fund), the Lipper Multi-Cap Core Index, the averages
of the funds included in those Indexes each year, and the averages of a group of
selected growth funds with assets over $1 billion. The Board and the committee
noted that for the one-, five- and 10-year periods ended March 31, 2005, the
fund's investment results were better than all of these measurements (except for
the five-year comparison to the average of the funds in the Multi-Cap Core
Index). The Board and the committee concluded that CRMC's record in managing the
fund indicates that its continued management will benefit the fund and its
shareholders.
4. ADVISORY FEES AND TOTAL EXPENSES
The Board and the committed compared the advisory fees of the fund (as a
percentage of average net assets) with the median fee levels of all other funds
(excluding index funds and funds of funds) in the Lipper Multi-Cap Growth Index
and the Lipper Multi-Cap Core Index (the "Lipper Indexes"), and with the
effective advisory fee rates at various asset levels of a number of the largest
other funds in the Multi-Cap Core Index (the "selected large funds"). The Board
and the committee observed that the fund's advisory fees were well below the
median for all such other funds in the Lipper Indexes for the entire 10-year
period ended August 31, 2004, and that its effective advisory fee rates were
below those of all of the selected large funds at asset levels in excess of
approximately $5 billion. The Board and the committee also noted the complexwide
5% voluntary advisory fee waiver that CRMC put into effect during 2004, and the
additional 5% advisory fee waiver implemented effective April 1, 2005. The Board
and the committee concluded that the relatively low level of the advisory fees
charged by CRMC will benefit the fund and its shareholders.
The Board and the committee also reviewed information regarding the advisory
fees paid by institutional clients of an affiliate of CRMC with similar
investment mandates. They concluded that, although the fees paid by those
clients generally were lower than those paid by American Funds, the differences
appropriately reflected CRMC's significantly greater responsibilities with
respect to American Funds and the more comprehensive regulatory regime
applicable to mutual funds.
In addition, the Board and the committee reviewed information regarding the
total expenses of the fund (as a percentage of average net assets) and compared
such amounts with the median expense levels of all other funds (excluding index
funds and funds of funds) in the Lipper Indexes and the Lipper Growth Fund
Index. The Board and the committee noted that the fund's total expenses were
well below the median for all other funds in these Indexes for the entire
10-year period ended August 31, 2004.
5. ADVISER COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board and the committee reviewed information regarding CRMC's costs of
providing services to the American Funds, as well as the resulting level of
profits to CRMC, noting that those results were comparable to the reported
results of several large, publicly held investment management companies. The
committee also received information during the past year regarding the structure
and manner in which CRMC's investment professionals were compensated and CRMC's
view of the relationship of such compensation to the attraction and retention of
quality personnel. The Board and the committee considered CRMC's willingness to
invest in technology, infrastructure and staff to reinforce and offer new
services and to accommodate changing regulatory requirements. They further
considered that breakpoints in the fund's advisory fee structure (including
additional breakpoints for net assets of the fund in excess of $89 billion
adopted in connection with the renewal of the agreement) provide for reductions
in the level of fees charged by CRMC to the fund as fund assets increase,
reflecting economies of scale in the cost of operations that are shared with
fund shareholders. The Board and the committee concluded that the fund's cost
structure was reasonable and that CRMC was sharing economies of scale with the
fund and its shareholders, to their benefit.
6. ANCILLARY BENEFITS
The Board and the committee considered a variety of other benefits received by
CRMC and its affiliates as a result of CRMC's relationship with the fund and the
other American Funds, including fees for administrative services provided to
certain share classes; fees paid to CRMC's affiliated transfer agent; sales
charges and distribution fees received and retained by the fund's principal
underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC's
institutional management affiliate. The Board and the committee reviewed CRMC's
portfolio trading practices, noting that, while CRMC receives the benefit of
research provided by broker-dealers executing portfolio transactions on behalf
of the fund, it does not obtain third-party research or other services in return
for allocating brokerage to such broker-dealers.
7. CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board and the committee concluded that the agreement is
fair and reasonable to the fund and its shareholders, that the fund's
shareholders received reasonable value in return for the advisory fees and other
amounts paid to CRMC by the fund, and that the renewal of the agreement was in
the best interests of the fund and its shareholders.
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
Joseph C. Berenato, 59 2003 Chairman of the Board and CEO, Ducommun Incorporated (aerospace
components manufacturer)
Robert J. Denison, 64 2005 Chair, First Security Management (private investments)
Robert A. Fox, 68 1970 Managing General Partner, Fox Investments LP; former Professor,
University of California; retired President and CEO, Foster Farms
(poultry producer)
Leonade D. Jones, 57 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, 68 1976 Professor of Finance, Graduate School of Business, Stanford University
Gail L. Neale, 70 1998 President, The Lovejoy Consulting Group, Inc. (a pro bono consulting
group advising nonprofit organizations)
Henry E. Riggs, 70 1989 President Emeritus, Keck Graduate Institute of
Chairman of the Board Applied Life Sciences
(Independent and Non-Executive)
Patricia K. Woolf, Ph.D., 71 1985 Private investor; corporate director; former Lecturer, Department of
Molecular Biology, Princeton University
"NON-INTERESTED" DIRECTORS
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX(2)
OVERSEEN BY
NAME AND AGE DIRECTOR OTHER DIRECTORSHIPS(3) HELD BY DIRECTOR
Joseph C. Berenato, 59 4 Ducommun Incorporated
Robert J. Denison, 64 6 None
Robert A. Fox, 68 7 Crompton Corporation
Leonade D. Jones, 57 6 None
John G. McDonald, 68 8 iStar Financial, Inc.; Plum Creek Timber Co.; Scholastic Corporation;
Varian, Inc.
Gail L. Neale, 70 6 None
Henry E. Riggs, 70 4 None
Chairman of the Board
(Independent and Non-Executive)
Patricia K. Woolf, Ph.D., 71 6 Crompton Corporation; First Energy Corporation
"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, 59 1997 President and Director, Capital Research and
Vice Chairman of the Board Management Company; Director, American Funds Distributors, Inc.;(5)
Director, The Capital Group Companies, Inc.;(5) Director, Capital
Group Research, Inc.(5)
Donald D. O'Neal, 45 1995 Senior Vice President, Capital Research and
President Management Company
"INTERESTED" DIRECTORS(4)
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX(2)
NAME, AGE AND OVERSEEN BY
POSITION WITH FUND DIRECTOR OTHER DIRECTORSHIPS(3) HELD BY DIRECTOR
James F. Rothenberg, 59 2 None
Vice Chairman of the Board
Donald D. O'Neal, 45 3 None
President
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) which serves as the underlying
investment vehicle 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.
(6) All of the officers listed, except Messrs. Beleson, Merritt 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.
OTHER OFFICERS
YEAR FIRST
ELECTED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
NAME, AGE AND AN OFFICER AND POSITIONS HELD WITH AFFILIATED ENTITIES OR
POSITION WITH FUND OF THE FUND(1) THE PRINCIPAL UNDERWRITER OF THE FUND
Gordon Crawford, 58 1992 Senior Vice President and Director, Capital
Senior Vice President Research and Management Company
Paul G. Haaga, Jr., 56 1994 Executive Vice President and Director, Capital
Senior Vice President Research and Management Company;
Director, The Capital Group Companies, Inc.(5)
Bradley J. Vogt,(6) 40 1999 President and Director, Capital Research
Senior Vice President Company;(5) Director, American Funds Distributors, Inc.(5)
Richard M. Beleson,(6) 51 1992 Director, Capital Research and Management
Vice President Company; Senior Vice President,
Capital Research Company(5)
Michael T. Kerr, 46 1998 Vice President, Capital Research and Management
Vice President Company; Senior Vice President,
Capital Research Company(5)
Mark E. Merritt,(6) 36 2004 Vice President, Capital Research Company(5)
Vice President
Patrick F. Quan, 47 1986-1998 Vice President -- Fund Business Management
Secretary 2000 Group, Capital Research and Management Company
Sheryl F. Johnson, 37 1998 Vice President -- Fund Business Management
Treasurer Group, Capital Research and Management Company
David A. Pritchett, 39 1999 Vice President -- Fund Business Management
Assistant Treasurer Group, Capital Research and Management Company
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 REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF THE AMERICAN FUNDS AND COLLEGEAMERICA. THIS AND OTHER IMPORTANT
INFORMATION IS CONTAINED IN THE FUND'S PROSPECTUS AND THE COLLEGEAMERICA PROGRAM
DESCRIPTION, WHICH CAN BE OBTAINED FROM YOUR FINANCIAL ADVISER AND SHOULD BE
READ CAREFULLY BEFORE INVESTING. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY (AFS) AT 800/421-0180 OR VISIT THE AMERICAN FUNDS WEBSITE AT
AMERICANFUNDS.COM. IF YOU RESIDE IN A STATE OTHER THAN VIRGINIA, THERE MAY BE AN
IN-STATE PLAN THAT PROVIDES TAX AND OTHER BENEFITS NOT AVAILABLE THROUGH
COLLEGEAMERICA. TALK TO YOUR TAX ADVISER. COLLEGEAMERICA IS DISTRIBUTED BY
AMERICAN FUNDS DISTRIBUTORS AND SOLD THROUGH UNAFFILIATED INTERMEDIARIES.
"American Funds Proxy Voting Guidelines" -- which describes how we vote proxies
relating to portfolio securities -- is available free of charge on the U.S.
Securities and Exchange Commission (SEC) website at www.sec.gov, on the American
Funds website or upon request by calling AFS. The fund files its proxy voting
record with the SEC for the 12 months ended June 30 by August 31. The report
also is available on the SEC and American Funds websites.
A complete August 31, 2005, portfolio of The Growth Fund of America's
investments is available free of charge on the SEC website or upon request by
calling AFS.
The Growth Fund of America files a complete list of its portfolio holdings with
the SEC for the first and third quarters of each fiscal year on Form N-Q. This
form is available free of charge on the SEC website or upon request by calling
AFS. You may also review or, for a fee, copy the form at the SEC's Public
Reference Room in Washington, D.C. (800/SEC-0330).
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, 2005, this report must be accompanied by an
American Funds statistical update for the most recently completed calendar
quarter.
[logo - American Funds(R)]
CollegeAmerica is sponsored by
Virginia College Savings Plan(SM)
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 30 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. More than half 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 Fund(SM)
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 Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(R)
Washington Mutual Investors Fund(SM)
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 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
Emphasis on tax-free current income through municipal bonds
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
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. MFGEAR-905-1005P
Litho in USA AGD/AL/8057-S4354
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, One Market, Steuart Tower,
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 or
her 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
Registrant:
a) Audit Fees:
2004 $57,000
2005 $67,000
b) Audit- Related Fees:
2004 $8,000
2005 none
The audit-related fees consist of assurance and related
services relating to the examination of the Registrant's
investment adviser conducted in accordance with Statement on
Auditing Standards Number 70 issued by the American
Institute of Certified Public Accountants.
c) Tax Fees:
2004 $6,000
2005 $6,000
The tax fees consist of professional services relating to
the preparation of the Registrant's tax returns.
d) All Other Fees:
2004 none
2005 none
Adviser and affiliates (includes only fees for non-audit services billed to
the adviser and affiliates for engagements that relate directly to the
operations and financial reporting of the Registrant and were subject to
the pre-approval policies described below):
a) Not Applicable
b) Audit- Related Fees:
2004 $259,000
2005 $428,000
The audit-related fees consist of assurance and related
services relating to the examination of the Registrant's
transfer agency and investment adviser conducted in
accordance with Statement on Auditing Standards Number 70
issued by the American Institute of Certified Public
Accountants.
c) Tax Fees:
2004 none
2005 none
d) All Other Fees:
2004 none
2005 none
The Registrant's Audit Committee will pre-approve all audit and permissible
non-audit services that the Committee considers compatible with maintaining the
auditors' independence. The pre-approval requirement will extend to all
non-audit services provided to the Registrant, the investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Registrant, if the engagement
relates directly to the operations and financial reporting of the Registrant.
The Committee will not delegate its responsibility to pre-approve these services
to the investment adviser. The Committee may delegate to one or more Committee
members the authority to review and pre-approve audit and permissible non-audit
services. Actions taken under any such delegation will be reported to the full
Committee at its next meeting. The pre-approval requirement is waived with
respect to non-audit services if certain conditions are met. The pre-approval
requirement was not waived for any of the non-audit services listed above
provided to the Registrant, adviser, and affiliates.
Aggregate non-audit fees paid to the Registrant's auditors, including fees for
all services billed to the Registrant and the adviser and affiliates that
provide ongoing services to the Registrant were $779,000 for fiscal year 2004
and $1,178,000 for fiscal year 2005. The non-audit services represented by these
amounts were brought to the attention of the Committee and considered to be
compatible with maintaining the auditors' independence.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed
issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 - Schedule of Investments
[logo - American Funds(R)]
THE GROWTH FUND OF AMERICA(R)
Investment portfolio
August 31, 2005
Market value
COMMON STOCKS -- 90.21% Shares (000)
INFORMATION TECHNOLOGY -- 20.34%
Microsoft Corp. 84,999,715 $2,328,992
Google Inc., Class A(1) 8,095,400 2,315,284
Texas Instruments Inc. 43,120,200 1,409,168
Corning Inc.(1) 66,970,000 1,336,721
Taiwan Semiconductor Manufacturing Co. Ltd. 576,377,968 951,642
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 24,675,200 203,077
Applied Materials, Inc. 58,665,000 1,074,156
Maxim Integrated Products, Inc.(2) 17,640,000 752,346
Cisco Systems, Inc.(1) 40,840,000 719,601
Yahoo! Inc.(1) 21,450,554 715,161
First Data Corp. 16,540,000 687,237
Analog Devices, Inc. 16,716,666 609,322
Samsung Electronics Co., Ltd. 1,133,800 593,065
Linear Technology Corp. 15,175,000 575,588
Xilinx, Inc.(2) 18,850,000 529,496
KLA-Tencor Corp.(2) 10,375,000 526,635
Altera Corp.(1,2) 20,400,000 446,148
Advanced Micro Devices, Inc.(1) 19,800,000 411,246
Microchip Technology Inc.(2) 12,755,000 396,936
SOFTBANK CORP. 7,220,000 366,090
Telefonaktiebolaget LM Ericsson, Class B (ADR) 10,300,000 359,470
Micron Technology, Inc.(1) 28,510,000 339,554
Automatic Data Processing, Inc. 7,500,000 320,625
Intuit Inc.(1) 6,334,900 290,392
Sun Microsystems, Inc.(1) 71,546,700 271,877
International Business Machines Corp. 3,195,000 257,581
EMC Corp.(1) 17,700,000 227,622
Oracle Corp.(1) 17,475,000 226,651
Dell Inc.(1) 6,210,000 221,076
Teradyne, Inc.(1,2) 12,725,000 213,780
CDW Corp. 3,500,000 206,780
Cadence Design Systems, Inc.(1) 12,400,000 198,524
Flextronics International Ltd.(1) 14,815,000 193,484
Ceridian Corp.(1,2) 9,219,900 187,164
AU Optronics Corp. 125,786,000 185,760
Murata Manufacturing Co., Ltd. 3,524,000 183,781
Rohm Co., Ltd. 1,932,000 175,493
ASML Holding NV (New York registered)(1) 9,625,000 162,662
Hirose Electric Co., Ltd. 1,289,100 146,806
Mediatek Incorporation 16,408,434 138,969
Hoya Corp. 1,051,000 136,885
Sabre Holdings Corp., Class A(2) 7,062,811 135,465
Nortel Networks Corp.(1) 44,300,000 134,672
Fujitsu Ltd. 22,260,000 131,983
Hewlett-Packard Co. 4,638,500 128,765
Solectron Corp.(1) 30,470,600 124,929
Hon Hai Precision Industry Co., Ltd.(1) 22,884,974 118,252
Compuware Corp.(1) 13,000,000 117,780
Intel Corp. 4,000,000 102,880
VeriSign, Inc.(1) 4,500,000 98,100
Lam Research Corp.(1) 3,000,000 95,100
Freescale Semiconductor, Inc., Class A(1) 3,500,000 83,580
Freescale Semiconductor, Inc., Class B(1) 140,944 3,394
Lucent Technologies Inc.(1) 27,500,000 84,700
Paychex, Inc. 2,273,019 77,578
National Instruments Corp. 2,250,000 63,877
Jabil Circuit, Inc.(1) 1,640,000 48,282
Alcatel (ADR)(1) 4,000,000 46,680
Agere Systems Inc., Class A(1) 3,682,124 41,682
QUALCOMM Inc.(1) 1,000,000 39,710
Motorola, Inc. 1,276,500 27,930
Sanmina-SCI Corp.(1) 4,570,000 23,170
Cypress Semiconductor Corp.(1) 300,000 4,689
23,326,045
ENERGY -- 15.45%
Schlumberger Ltd. 20,863,300 1,799,042
Burlington Resources Inc.(2) 20,260,000 1,494,985
Canadian Natural Resources, Ltd. 22,890,000 1,127,055
Suncor Energy Inc. 18,351,847 1,087,202
Devon Energy Corp. 17,680,000 1,074,414
Halliburton Co. 12,905,000 799,723
EOG Resources, Inc.(2) 12,430,000 793,407
Transocean Inc.(1) 12,649,900 746,850
Apache Corp. 9,395,060 672,874
Petro-Canada 16,300,000 658,863
Baker Hughes Inc. 10,270,000 603,362
BJ Services Co.(2) 8,975,000 566,143
Noble Corp.(2) 7,585,000 540,810
Diamond Offshore Drilling, Inc. 6,425,000 379,460
CONSOL Energy Inc.(2,3) 3,700,000 257,890
CONSOL Energy Inc.(2) 1,728,200 120,456
MOL Magyar Olaj- es Gazipari Rt., Class A 3,425,000 376,455
Occidental Petroleum Corp. 4,490,000 372,805
Nexen Inc. 8,486,211 367,819
Anadarko Petroleum Corp. 4,000,000 363,480
BG Group PLC 40,291,737 362,827
LUKoil Holding (ADR) 7,080,000 344,796
Shell Canada Ltd. 10,500,000 340,421
Smith International, Inc. 8,874,600 308,304
Newfield Exploration Co.(1) 5,674,800 267,964
Cameco Corp. 4,500,000 226,762
Imperial Oil Ltd. 2,018,744 204,679
Weatherford International Ltd.(1) 3,000,000 203,130
ENSCO International Inc. 4,617,450 188,669
National Oilwell Varco Inc.(1) 2,889,300 185,522
Norsk Hydro ASA (ADR) 1,567,800 168,319
Cross Timbers Oil Co. 3,500,000 139,300
Premcor Inc.(4) 1,438,300 128,149
Repsol YPF, SA 4,000,000 118,231
Exxon Mobil Corp. 1,900,000 113,810
Rowan Companies, Inc. 2,975,000 110,670
Murphy Oil Corp. 1,756,000 95,965
17,710,613
CONSUMER DISCRETIONARY -- 14.61%
Lowe's Companies, Inc. 33,160,400 2,132,545
Target Corp. 36,435,000 1,958,381
Time Warner Inc. 95,650,000 1,714,048
Best Buy Co., Inc. 23,663,400 1,127,798
Comcast Corp., Class A(1) 20,611,500 633,804
Comcast Corp., Class A, special nonvoting stock(1) 10,400,000 313,872
Carnival Corp., units 16,750,000 826,445
News Corp. Inc., Class A 45,936,216 744,626
Clear Channel Communications, Inc. 22,335,000 743,755
Liberty Media Corp., Class A(1) 82,375,000 684,536
Harrah's Entertainment, Inc. 8,319,036 578,672
Starbucks Corp.(1) 11,699,200 573,729
IAC/InterActiveCorp(1) 21,375,000 524,756
Expedia, Inc.(1) 21,375,000 475,808
Liberty Global International, Inc., Class A(1) 9,210,206 467,418
Limited Brands, Inc.(2) 20,700,000 454,986
Gap, Inc. 20,567,600 390,990
International Game Technology 12,329,000 341,760
Michaels Stores, Inc. 6,700,000 243,210
YUM! Brands, Inc. 4,003,200 189,672
Brinker International, Inc.(1,2) 5,000,000 185,750
Yamada Denki Co., Ltd. 2,640,000 168,937
Ross Stores, Inc. 5,887,000 146,469
Harley-Davidson Motor Co. 2,957,200 145,672
Magna International Inc., Class A 1,701,000 124,955
Outback Steakhouse, Inc. 2,940,000 122,333
A. H. Belo Corp., Class A 4,850,000 119,116
Toyota Motor Corp. 2,730,000 111,036
Interpublic Group of Companies, Inc.(1) 7,700,000 93,401
Lennar Corp., Class A 1,500,000 93,150
CarMax, Inc.(1) 2,500,000 79,650
Gentex Corp. 4,600,000 78,752
TJX Companies, Inc. 3,000,000 62,730
Big Lots, Inc.(1) 3,000,000 35,430
MGM Mirage, Inc.(1) 772,200 32,633
Viacom Inc., Class B, nonvoting 775,000 26,342
16,747,167
HEALTH CARE -- 11.67%
Sanofi-Aventis 16,730,175 1,427,016
WellPoint, Inc.(1) 15,470,000 1,148,648
Roche Holding AG 7,705,000 1,063,097
Forest Laboratories, Inc.(1,2) 19,755,600 877,149
Genentech, Inc.(1) 9,230,500 867,113
Guidant Corp. 11,325,000 799,998
AstraZeneca PLC (Sweden) 7,468,000 342,161
AstraZeneca PLC (ADR) 6,072,000 280,041
Amgen Inc.(1) 7,160,000 572,084
Cardinal Health, Inc. 9,105,000 542,749
Medtronic, Inc. 9,380,000 534,660
Express Scripts, Inc.(1,2) 9,000,000 520,740
Biogen Idec Inc.(1) 9,978,000 420,573
Schering-Plough Corp. 17,839,800 381,950
Eli Lilly and Co. 5,480,000 301,510
Celgene Corp.(1) 5,900,000 296,180
Aetna Inc. 3,640,000 289,999
Gilead Sciences, Inc.(1) 6,591,249 283,424
AmerisourceBergen Corp. 3,650,000 272,546
Allergan, Inc. 2,725,000 250,836
Abbott Laboratories 4,700,000 212,111
Sepracor Inc.(1) 3,882,600 194,907
Novo Nordisk A/S, Class B 3,630,000 186,894
McKesson Corp. 3,900,000 182,013
American Pharmaceutical Partners, Inc.(1,2) 3,800,000 174,724
Merck & Co., Inc. 6,000,000 169,380
CIGNA Corp. 1,000,000 115,320
Medco Health Solutions, Inc.(1) 2,330,000 114,799
Affymetrix, Inc.(1) 2,000,000 98,980
Applera Corp. - Applied Biosystems Group 4,100,000 88,150
Applera Corp. - Celera Genomics Group(1) 528,800 6,208
Lincare Holdings Inc.(1) 2,200,000 93,148
AMERIGROUP Corp.(1) 2,440,000 83,350
OSI Pharmaceuticals, Inc.(1) 1,500,000 49,200
Caremark Rx, Inc.(1) 700,000 32,711
IDEXX Laboratories, Inc.(1) 510,000 32,660
Chugai Pharmaceutical Co., Ltd. 1,535,100 28,859
ICOS Corp.(1) 700,000 18,291
ImClone Systems Inc.(1) 450,000 14,724
Elan Corp., PLC (ADR)(1) 1,070,000 9,534
Andrx Group(1) 122,500 2,221
13,380,658
INDUSTRIALS -- 8.27%
General Electric Co. 34,710,000 1,166,603
Tyco International Ltd. 38,463,900 1,070,450
United Parcel Service, Inc., Class B 13,117,800 929,921
Boeing Co. 12,400,000 831,048
Illinois Tool Works Inc. 7,770,100 654,864
General Dynamics Corp. 5,120,700 586,781
Southwest Airlines Co. 38,868,877 517,733
3M Co. 6,940,000 493,781
Caterpillar Inc. 5,966,000 331,053
Mitsubishi Corp. 18,490,000 303,654
Raytheon Co. 6,700,000 262,774
Robert Half International Inc. 7,610,000 256,305
Ryanair Holdings PLC (ADR)(1) 4,606,400 210,927
Burlington Northern Santa Fe Corp. 3,950,000 209,429
FedEx Corp. 2,550,000 207,672
Monster Worldwide Inc.(1) 5,775,000 180,411
Northrop Grumman Corp. 3,182,000 178,478
Lockheed Martin Corp. 2,800,000 174,272
Deutsche Post AG 6,460,000 162,755
Union Pacific Corp. 2,000,000 136,540
Allied Waste Industries, Inc.(1) 16,000,000 127,680
Bombardier Inc., Class B 43,021,750 114,121
Manpower Inc. 2,500,000 112,650
ChoicePoint Inc.(1) 2,400,000 103,032
JetBlue Airways Corp.(1) 4,144,000 78,943
Deere & Co. 1,200,000 78,456
9,480,333
FINANCIALS -- 6.72%
Fannie Mae 21,623,200 1,103,648
American International Group, Inc. 18,475,200 1,093,732
Freddie Mac 17,102,300 1,032,637
Citigroup Inc. 10,660,000 466,588
UFJ Holdings, Inc.(1) 62,761 391,405
Banco Bradesco SA, preferred nominative (ADR) 8,800,000 374,704
Mitsubishi Estate Co., Ltd. 27,050,000 322,722
Bank of New York Co., Inc. 9,195,000 281,091
SunTrust Banks, Inc. 3,640,000 255,819
XL Capital Ltd., Class A 3,545,000 246,378
State Street Corp. 5,000,000 241,650
Mizuho Financial Group, Inc. 38,500 213,657
Capital One Financial Corp. 2,500,000 205,600
Marshall & Ilsley Corp. 4,000,000 175,080
Wells Fargo & Co. 2,730,000 162,763
ICICI Bank Ltd. 14,230,000 155,854
Berkshire Hathaway Inc., Class A(1) 1,650 137,198
Chubb Corp. 1,500,000 130,440
Marsh & McLennan Companies, Inc. 4,425,000 124,121
Genworth Financial, Inc., Class A 3,368,300 108,358
Golden West Financial Corp. 1,600,000 97,584
Aon Corp. 3,218,600 96,301
American Express Co. 1,700,000 93,908
AXIS Capital Holdings Ltd. 3,140,000 88,705
Protective Life Corp. 1,500,000 61,545
City National Corp. 675,000 48,627
7,710,115
CONSUMER STAPLES -- 5.00%
Altria Group, Inc. 27,436,700 1,939,775
Walgreen Co. 19,866,000 920,392
Coca-Cola Co. 16,965,000 746,460
Avon Products, Inc. 11,689,000 383,633
PepsiCo, Inc. 6,635,000 363,930
Anheuser-Busch Companies, Inc. 7,505,000 332,547
Kerry Group PLC, Class A 8,965,824 218,815
Bunge Ltd. 3,500,000 205,520
Whole Foods Market, Inc. 974,800 126,003
Wm. Wrigley Jr. Co. 1,630,000 115,812
Procter & Gamble Co. 2,073,500 115,038
Constellation Brands, Inc., Class A(1) 3,200,000 88,064
SYSCO Corp. 2,350,000 78,443
General Mills, Inc. 1,235,000 56,958
Wal-Mart Stores, Inc. 1,050,000 47,208
5,738,598
TELECOMMUNICATION SERVICES -- 3.31%
Vodafone Group PLC (ADR) 45,755,000 1,246,824
Vodafone Group PLC 120,765,000 330,383
Sprint Nextel Corp. 24,521,007 635,830
Qwest Communications International Inc.(1,2) 117,900,000 459,810
Telefonica, SA (ADR) 5,200,000 258,856
Telefonica, SA 6,240,000 102,911
KDDI Corp. 38,000 200,235
Telephone and Data Systems, Inc. 1,993,100 81,418
Telephone and Data Systems, Inc., Special Common Shares 1,993,100 76,734
Bharti Tele-Ventures Ltd.(1) 21,000,000 150,494
France Telecom, SA 4,600,000 138,404
MCI, Inc. 4,500,000 115,380
Broadview Networks Holdings, Inc., Class A(1,3,4) 31,812 --
3,797,279
MATERIALS -- 2.90%
Barrick Gold Corp. 17,610,000 461,734
Freeport-McMoRan Copper & Gold Inc., Class B(2) 9,596,000 404,663
BHP Billiton Ltd. 19,516,661 300,801
Phelps Dodge Corp. 2,500,000 268,825
CRH PLC 9,299,204 252,398
Rio Tinto PLC 6,075,000 214,550
Inco Ltd. 5,000,000 211,650
Potash Corp. of Saskatchewan Inc. 1,904,000 209,573
Sealed Air Corp.(1) 3,384,400 171,758
Monsanto Co. 2,500,000 159,600
Newmont Mining Corp. 3,650,000 144,467
Nitto Denko Corp. 2,111,000 134,132
Alcoa Inc. 5,000,000 133,950
USX-U.S. Steel Group 3,021,000 126,640
Newcrest Mining Ltd. 8,700,000 111,348
Dow Chemical Co. 306,900 13,258
3,319,347
UTILITIES -- 0.17%
Questar Corp. 2,475,000 193,100
MISCELLANEOUS -- 1.77%
Other common stocks in initial period of acquisition 2,032,268
Total common stocks (cost: $79,765,812,000) 103,435,523
Market value
Preferred stocks -- 0.00% Shares (000)
TELECOMMUNICATION SERVICES -- 0.00%
Broadview Networks Holdings, Inc., Series B(1,3,4) 1,272 550
Total preferred stocks (cost: $21,000,000) 550
Convertible securities -- 0.00%
INFORMATION TECHNOLOGY -- 0.00%
ProAct Technologies Corp., Series C, convertible preferred(1,3,4) 6,500,000 95
Total convertible securities (cost: $255,000) 95
Principal amount
Bonds & notes -- 0.25% (000)
CONSUMER DISCRETIONARY -- 0.14%
General Motors Corp. 8.375% 2033 $ 106,649 90,118
General Motors Acceptance Corp. 8.00% 2031 53,730 49,837
General Motors Corp. 8.25% 2023 24,000 20,220
160,175
TELECOMMUNICATION SERVICES -- 0.11%
Qwest Capital Funding, Inc. 7.75% 2031(2) 53,800 47,075
U S WEST Capital Funding, Inc. 6.875% 2028(2) 36,000 30,060
Qwest Capital Funding, Inc. 7.625% 2021(2) 25,000 22,250
U S WEST Capital Funding, Inc. 6.50% 2018(2) 25,250 21,463
120,848
Total bonds & notes (cost: $254,565,000) 281,023
Short-term securities -- 9.58%
U.S. Treasury Bills 2.901%-3.375% due 9/1-11/3/2005 1,437,400 1,433,136
Federal Home Loan Bank 3.195%-3.67% due 9/2-11/30/2005 1,333,585 1,329,258
Freddie Mac 3.24%-3.63% due 9/6-11/15/2005 1,119,454 1,115,020
Federal Farm Credit Banks 3.10%-3.57% due 9/8-11/17/2005 413,300 412,054
International Bank for Reconstruction and Development 3.295%-3.47% due 9/26-10/28/2005 382,400 380,802
Tennessee Valley Authority 3.21%-3.465% due 9/1-10/13/2005 371,900 371,409
Preferred Receivables Funding Corp. 3.54%-3.61% due 10/4-10/24/2005(3) 200,000 199,044
Park Avenue Receivables Co., LLC 3.42%-3.64% due 9/12-10/19/2005(3) 157,997 157,437
Variable Funding Capital Corp. 3.44%-3.57% due 9/23-10/20/2005(3) 355,000 353,728
Bank of America Corp. 3.40%-3.73% due 9/19-11/7/2005 350,000 348,684
CAFCO, LLC 3.35%-3.69% due 9/2-11/8/2005(3) 350,000 348,464
Procter & Gamble Co. 3.24%-3.63% due 9/7-11/7/2005(3) 325,000 323,817
Clipper Receivables Co., LLC 3.44%-3.73% due 9/12-11/16/2005(3) 310,000 308,653
DuPont (E.I.) de Nemours & Co. 3.34%-3.57% due 9/8-10/20/2005 300,000 299,206
General Electric Capital Corp. 3.44%-3.64% due 10/3-11/1/2005 161,400 160,650
General Electric Capital Services, Inc. 3.39%-3.53% due 9/16-10/13/2005 125,000 124,623
Wells Fargo & Co. 3.48%-3.57% due 9/23-10/28/2005 275,000 274,971
Gannett Co. 3.35%-3.49% due 9/6-9/21/2005(3) 266,200 265,888
Three Pillars Funding, LLC 3.33%-3.53% due 9/2-10/19/2005(3) 182,751 182,418
SunTrust Banks, Inc. 3.74% due 11/22/2005 50,000 50,000
Wal-Mart Stores Inc. 3.35%-3.57% due 9/13-10/18/2005(3) 225,750 225,137
HSBC Finance Corp. 3.42%-3.66% due 9/27-11/9/2005 225,400 224,447
International Lease Finance Corp. 3.42%-3.58% due 9/23-10/21/2005 105,000 104,633
AIG Funding, Inc. 3.40% due 9/16/2005 50,000 49,928
American General Finance Corp. 3.36%-3.60% due 9/1-10/19/2005 50,000 49,880
Coca-Cola Co. 3.38%-3.59% due 9/16-11/1/2005 200,000 199,122
Exxon Asset Management Co. 3.34%-3.57% due 9/7-10/24/2005(3) 155,600 155,130
Fannie Mae 3.28%-3.585% due 9/21-11/2/2005 150,400 149,816
BellSouth Corp. 3.37%-3.47% due 9/2-9/28/2005(3) 136,100 135,894
Private Export Funding Corp. 3.20%-3.67% due 9/6-11/15/2005(3) 133,375 132,840
American Express Credit Corp. 3.46%-3.67% due 9/19-11/9/2005 130,000 129,302
Triple-A One Funding Corp. 3.37%-3.58% due 9/9-10/5/2005(3) 113,139 112,829
PepsiCo Inc. 3.40%-3.51% due 9/2-9/28/2005(3) 95,300 95,158
Medtronic Inc. 3.33%-3.47% due 9/1-9/19/2005(3) 91,250 91,154
ChevronTexaco Funding Corp. 3.50%-3.53% due 10/11-10/19/2005 75,000 74,666
SBC Communications Inc. 3.40%-3.55% due 9/15-10/3/2005(3) 74,724 74,532
NetJets Inc. 3.57%-3.61% due 10/3-10/19/2005(3) 70,000 69,720
3M Co. 3.53%-3.54% due 10/21-10/24/2005 70,000 69,635
FCAR Owner Trust I 3.38%-3.64% due 9/12-10/24/2005 55,000 54,829
Colgate-Palmolive Co. 3.41%-3.52% due 9/2-9/26/2005(3) 50,000 49,931
Verizon Network Funding Corp. 3.53%-3.57% due 9/26-9/29/2005 50,000 49,864
Abbott Laboratories Inc. 3.50% due 9/29/2005(3) 50,000 49,859
IBM Capital Inc. 3.455% due 10/5/2005(3) 50,000 49,835
Anheuser-Busch Companies, Inc. 3.24% due 9/6/2005(3) 35,000 34,981
Harvard University 3.45%-3.52% due 10/3-10/17/2005 30,350 30,215
Scripps (E.W.) Co. 3.40% due 9/21/2005(3) 30,000 29,942
New Center Asset Trust Plus 3.53% due 10/3/2005 25,000 24,919
USAA Capital Corp. 3.64% due 11/15/2005 25,000 24,807
Total short-term securities (cost: $10,982,548,000) 10,982,267
Total investment securities (cost: $91,024,180,000) 114,699,458
Other assets less liabilities (44,257)
Net assets $114,655,201
"Miscellaneous" securities include holdings in their initial period of
acquisition that have not previously been publicly disclosed.
(1) Security did not produce income during the last 12 months.
(2) Represents an affiliated company as defined under the Investment 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. The total value of all such restricted securities was
$3,704,926,000, which represented 3.23% of the net assets of the fund.
(4) Valued under fair value procedures adopted by authority of the Board of
Directors.
ADR = American Depositary Receipts
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Directors of
The Growth Fund of America, Inc.:
We have audited, in accordance with standards of the Public Company Accounting
Oversight Board (United States), the financial statements of The Growth Fund of
America, Inc. (the "Fund") as of August 31, 2005, and for the year then ended
and have issued our report thereon dated October 4, 2005, which report and
financial statements are included in Item 1 of this Certified Shareholder Report
on Form N-CSR. Our audit also included the Fund's investment portfolio (the
"Schedule") as of August 31, 2005 appearing in Item 6 of this Form N-CSR. This
Schedule is the responsibility of the Fund's management. Our responsibility is
to express an opinion based on our audit. In our opinion, the Schedule referred
to above, when considered in relation to the basic financial statements taken as
a whole of the Fund referred to above, presents fairly, in all material
respects, the information set forth therein.
DELOITTE & TOUCHE LLP
October 4, 2005
Costa Mesa, California
ITEM 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 8 - Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.
ITEM 10 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's Board of Directors since the Registrant
last submitted a proxy statement to its shareholders. The procedures are as
follows. The Registrant has a Nominating Committee comprised solely of persons
who are not considered "interested persons" of the Registrant within the meaning
of the Investment Company Act of 1940, as amended. The committee periodically
reviews such issues as the Board's composition, responsibilities, committees,
compensation and other relevant issues, and recommends any appropriate changes
to the full Board of Directors. While the committee normally is able to identify
from its own resources an ample number of qualified candidates, it will consider
shareholder suggestions of persons to be considered as nominees to fill future
vacancies on the Board. Such suggestions must be sent in writing to the
Nominating 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 11 - Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal Financial
Officer have concluded, based on their evaluation of the Registrant's
disclosure controls and procedures (as such term is defined in Rule 30a-3
under the Investment Company Act of 1940), that such controls and
procedures are adequate and reasonably designed to achieve the purposes
described in paragraph (c) of such rule.
(b) There were no changes in the Registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control
over financial reporting.
ITEM 12 - Exhibits
(a) (1) The Code of Ethics that is the subject of the disclosure required by
Item 2 is attached as an exhibit hereto.
(a) (2) 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, Vice Chairman and PEO
Date: November 8, 2005
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, Vice Chairman and PEO
Date: November 8, 2005
By /s/ Sheryl F. Johnson
- ------------------------------------------
Sheryl F. Johnson, Treasurer and PFO
Date: November 8, 2005