-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BxAnqZWKXQxTQjYniycOPCjRKwM98SNNeY3VQVqErTV/k+SGOTLFE9vheUNf8jbg l9EpVvOZ6Ma+c6i8mWU4yQ== 0000039473-99-000013.txt : 19990909 0000039473-99-000013.hdr.sgml : 19990909 ACCESSION NUMBER: 0000039473-99-000013 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTMENT CO OF AMERICA CENTRAL INDEX KEY: 0000051931 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 951426645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-00116 FILM NUMBER: 99707523 BUSINESS ADDRESS: STREET 1: 333 S HOPE ST - 52ND FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 2134869200 N-30D 1 [THE AMERICAN FUNDS GROUP(R)] ICA THE INVESTMENT COMPANY OF AMERICA 1999 SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED JUNE 30 RESULTS BUILT ON CONTINUITY AND CONVICTION [cover: collage of photographs of people in various business settings] ICA(SM) The Investment Company of America(r) seeks long-term growth of capital and income, placing greater emphasis on future dividends than on current income. ICA is one of the 29 mutual funds in The American Funds Group,(r) the nation's third-largest mutual fund family. For more than six decades, Capital Research and Management Company, the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk. 1999 RESULTS AT A GLANCE For the six months ended June 30 (with dividends and capital gain distribution reinvested)
Standard & Lipper, Inc. Poor's 500 Growth & Income ICA Composite Index Funds Average* Income Return 0.8% 0.7% n.a. Capital Return 11.5% 11.7% n.a. Total Return 12.3% 12.4% 10.9%
*Average of 922 growth-and-income funds Fund results in this report were computed without a sales charge unless otherwise indicated. Here are the total returns and average annual compound returns with all distributions reinvested for periods ended June 30, 1999, assuming payment of the 5.75% maximum sales charge at the beginning of the stated periods (sales charges are lower for accounts of $50,000 or more): 10 years: +346.26%, or +16.13% a year; 5 years: +170.73%, or +22.04% a year; 12 months: +15.04%. The fund's 30-day yield as of July 31, 1999, calculated in accordance with the Securities and Exchange Commission formula, was 1.40%. FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY. FELLOW SHAREHOLDERS For the third consecutive year, ICA recorded a double-digit first-half total return. As the scope of U.S. stock market gains broadened to include more of the solid, dividend-paying companies the fund generally favors, the value of your investment in ICA grew 12.3%. That assumes reinvestment of the capital gain distribution of 30 cents a share paid in March and income dividends of 12 cents each in March and June. ICA's total return for the six months ended June 30 essentially matched the 12.4% recorded by Standard & Poor's 500 Composite Index, which is unmanaged and reflects no expenses. It was well above the 10.9% average for all growth-and-income funds, as measured by Lipper, Inc. Among ICA's larger holdings, basic industrial companies such as Royal Dutch Petroleum (up 26%) and Texas Instruments (up 69%) reflected investors' broadened interests. Telecommunications stocks, ICA's largest industry, benefited substantially from merger activity. Regulatory concerns drove drug stocks down, including Monsanto (-17%). Overall, the U.S. stock market remained mixed. The S&P 500 finished the period at a record level despite the fact that one-third of the stocks in the index were down since the first of the year. Of ICA's 20 largest holdings, 16 were up and only four were down. ICA's results for the 12 months also were strong, with a total return of 22.0% compared with 22.7% for the S&P 500 and a 14.5% Lipper average. We urge caution in projecting gains of the magnitude ICA has recently experienced. They may appear mundane by recent years' standards, but double-digit six-month returns are by no means the norm. Over its 65-1/2-year lifetime, ICA's annualized compound total return has been 13.8% compared with 12.4% for the S&P 500. As always, we will continue to base ICA's investment decisions on in-depth global research to identify long-term values rather than on choosing the favorites of the moment. Sincerely, /s/Jon B. Lovelace, Jr. /s/R. Michael Shahanan Jon B. Lovelace, Jr. R. Michael Shanahan Chairman of the Board President August 12, 1999 THE INVESTMENT COMPANY OF AMERICA INVESTMENT PORTFOLIO - JUNE 30, 1999 Unaudited - ------------------------------------------ ---------- Percent of LARGEST INDIVIDUAL HOLDINGS Net Assets - ------------------------------------------ ---------- Time Warner 2.83% Philip Morris 2.60 Fannie Mae 2.38 Viacom 2.20 AT&T Corp. - Liberty Media Group 2.06 IBM 1.94 AT&T 1.84 Bank of America 1.74 Sprint FON Group 1.67 Cendant 1.44 - ------------------------------------------ ---------- Percent of LARGEST INDUSTRY HOLDINGS Net Assets - ------------------------------------------ ---------- Telecommunications 8.22% Broadcasting & Publishing 7.92 Data Processing & Reproduction 7.87 Banking 7.34 Health & Personal Care 6.02 - ------------------------------------------ ---------- Percent of LARGEST INVESTMENT CATEGORIES Net Assets - ------------------------------------------ ---------- Services 24.56% Capital Equipment 16.78 Finance 14.43 - ------------------------------------------ ---------- COMPANIES WHOSE EQUITY SECURITIES WERE ADDED TO OR ELIMINATED FROM THE PORTFOLIO LISTING Companies appearing in the portfolio listing since December 31, 1998 - ------------------------------------------ Albertson's American Home Products Baker Hughes BankBoston CBS Colgate-Palmolive GTE Hasbro Honda Motor LifePoint Hospitals NIKE Nissan Motor "Shell" Transport and Trading Toronto-Dominion Bank Triad Hospitals Tribune - ------------------------------------------ Companies eliminated from the portfolio listing since December 31, 1998 - ------------------------------------------ American Stores AMP Ascend Communications Bankers Trust Elf Aquitaine Exxon Goodyear Tire & Rubber Perkin-Elmer Rio Tinto Sundstrand Tele-Communications - TCI Group Tele-Communications - TCI Ventures Group Texas Utilities Union Camp USX - U.S. Steel Group Venator Group Walt Disney
The Investment Company of America Investment Portfolio - June 30, 1999 Unaudited Number of Market Percent Shares Value Of Net Equity Securities (millions Assets - -------------------------------------------- -------- -------- ------- ENERGY ENERGY SOURCES - 4.68% Atlantic Richfield Co. 1,199,100 $100.200 .18% BP Amoco PLC (formerly British Petroleum and Amoco) (ADR) 1,500,000 162.750 .30 Broken Hill Proprietary Co. Ltd. 3,993,455 46.124 .08 Chevron Corp. 2,355,000 224.167 .41 Kerr-McGee Corp. 860,600 43.191 .08 Mobil Corp. 1,700,000 168.300 .31 Murphy Oil Corp. 2,175,000 106.167 .19 Phillips Petroleum Co. 5,600,000 281.750 .52 Royal Dutch Petroleum Co. (New York Registered Shares) 9,300,000 560.325 "Shell" Transport and Trading Co., PLC (New York 1,000,000 46.375 1.12 Registered Shares) Texaco Inc. 3,250,000 203.125 .37 TOTAL FINA SA, Class B 1,273,469 164.154 TOTAL FINA SA, Class B (ADR) 2,200,000 141.762 .56 Unocal Corp. 5,324,700 210.991 .39 USX-Marathon Group 2,800,000 91.175 .17 UTILITIES: ELECTRIC & GAS - 0.94% Ameren Corp. 600,000 23.025 .04 American Electric Power Co., Inc. 3,000,000 112.688 .21 Duke Energy Corp. 1,400,000 76.125 .14 Florida Progress Corp. 400,000 16.525 .03 GPU, Inc. 3,100,600 130.807 .24 KeySpan Corp. 2,816,000 74.272 .14 Southern Co. 2,900,000 76.850 .14 ---------------- 3,060.848 5.62 ---------------- MATERIALS CHEMICALS - 2.95% Air Products and Chemicals, Inc. 1,700,000 68.425 .13 Bayer AG 700,000 29.140 .05 E.I. du Pont de Nemours and Co. 6,750,000 461.109 .85 Imperial Chemical Industries PLC (ADR) 4,550,000 180.862 .33 International Flavors & Fragrances Inc. 2,034,000 90.259 .17 Monsanto Co. 18,223,100 718.674 1.32 Praxair, Inc. 1,200,000 58.725 .10 FOREST PRODUCTS & PAPER - 2.60% Champion International Corp. 1,950,000 93.356 .17 Fort James Corp. 10,600,000 401.475 .74 Georgia-Pacific Corp., Georgia-Pacific Group 6,000,000 284.250 .52 Georgia-Pacific Corp., Timber Group 3,250,000 82.062 .15 International Paper Co. 2,881,236 145.502 .27 Louisiana-Pacific Corp. 4,675,000 111.031 .20 Weyerhaeuser Co. 4,350,000 299.063 .55 METALS: NONFERROUS - 0.91% Alcoa Inc. (formerly Aluminum Co. of America) 5,235,400 323.940 .59 Freeport-McMoRan Copper & Gold Inc., Class B 2,200,000 39.463 .07 Phelps Dodge Corp. 1,696,300 105.065 .19 WMC Ltd. 7,966,500 34.124 .06 ---------------- 3,526.525 6.46 ---------------- CAPITAL EQUIPMENT AEROSPACE & MILITARY TECHNOLOGY - 1.36% Boeing Co. 4,520,000 199.727 .37 Northrop Grumman Corp. 985,000 65.318 .12 Raytheon Co., Class A 2,310,305 159.122 Raytheon Co., Class B 3,027,900 213.088 .68 United Technologies Corp. 1,440,000 103.230 .19 DATA PROCESSING & REPRODUCTION - 7.87% Cisco Systems, Inc. (1) 5,600,000 360.850 .66 Compaq Computer Corp. 4,800,000 113.700 .21 Computer Associates International, Inc. 12,295,000 676.225 1.24 Fujitsu Ltd. 7,223,000 145.391 .27 Hewlett-Packard Co. 4,100,000 412.050 .76 International Business Machines Corp. 8,200,0001,059.850 1.94 Microsoft Corp. (1) 7,200,000 649.350 1.19 Oracle Corp. (1) 16,500,000 612.562 1.12 3Com Corp. (1) 3,900,000 104.081 .19 Xerox Corp. 2,700,000 159.469 .29 ELECTRICAL & ELECTRONIC - 1.14% Lucent Technologies Inc. 2,260,000 152.409 .28 Nortel Networks Corp. (formerly Northern Telecom) 650,000 56.428 .10 Siemens AG 3,200,000 246.637 .46 Telefonaktiebolaget LM Ericsson, Class B (ADR) 5,000,000 164.687 .30 ELECTRONIC COMPONENTS - 3.28% Corning Inc. 4,750,000 333.094 .61 Intel Corp. 5,250,000 312.375 .57 Micron Technology, Inc. (1) 5,000,000 201.562 .37 Motorola, Inc. 3,393,900 321.572 .59 Texas Instruments Inc. 4,290,000 622.050 1.14 ENERGY EQUIPMENT - 1.34% Baker Hughes Inc. 8,275,000 277.213 .51 Schlumberger Ltd. 7,104,000 452.436 .83 INDUSTRIAL COMPONENTS - 0.35% Dana Corp. 1,821,500 83.903 .15 Genuine Parts Co. 750,000 26.250 .05 Illinois Tool Works Inc. 1,000,000 82.000 .15 MACHINERY & ENGINEERING - 1.44% Caterpillar Inc. 2,600,000 156.000 .29 Cummins Engine Co., Inc. 2,000,000 114.250 .21 Deere & Co. 5,500,000 217.938 .40 Ingersoll-Rand Co. 1,750,000 113.094 .21 Parker Hannifin Corp. 1,900,000 86.925 .16 Thermo Electron Corp. (1) 5,000,000 100.313 .17 ---------------- 9,155.149 16.78 ---------------- CONSUMER GOODS APPLIANCES & HOUSEHOLD DURABLES - 0.21% Newell Rubbermaid Inc. 2,500,000 116.250 .21 AUTOMOBILES - 1.00% DaimlerChrysler AG (New York Registered Shares) 748,200 66.496 .12 Ford Motor Co. 1,650,000 93.122 .17 General Motors Corp. 3,550,000 234.300 .43 Honda Motor Co., Ltd. 860,000 36.470 .07 Nissan Motor Co., Ltd. (1) 24,186,000 115.562 .21 BEVERAGES & TOBACCO - 3.95% Nabisco Group Holdings Corp. 13,385,000 261.844 .48 PepsiCo, Inc. 12,200,000 471.988 .87 Philip Morris Companies Inc. 35,300,0001,418.619 2.60 FOOD & HOUSEHOLD PRODUCTS - 1.81% Archer Daniels Midland Co. 3,600,000 55.575 .10 Bestfoods 1,200,000 59.400 .11 Colgate-Palmolive Co. 600,000 59.250 .11 General Mills, Inc. 4,656,900 374.298 .69 Nestle SA 30,000 54.108 .10 Procter & Gamble Co. 600,000 53.550 .10 Sara Lee Corp. 11,500,000 260.906 .48 Unilever NV (New York Registered Shares) 1,000,000 69.750 .12 HEALTH & PERSONAL CARE - 6.02% Abbott Laboratories 3,000,000 136.500 .25 American Home Products Corp. 2,000,000 115.000 .21 AstraZeneca PLC 9,400,900 365.148 AstraZeneca PLC (ADR) 99,000 3.880 .67 Avon Products, Inc. 3,680,000 204.240 .37 Baxter International Inc. 2,200,000 133.375 .24 Bristol-Myers Squibb Co. 3,200,000 225.400 .41 Cardinal Health, Inc., Class A 1,302,650 83.532 .15 Eli Lilly and Co. 3,800,000 272.175 .50 Kimberly-Clark Corp. 2,480,500 141.389 .26 Merck & Co., Inc. 5,000,000 370.000 .68 Pfizer Inc 4,400,000 482.900 .89 Pharmacia & Upjohn, Inc. 2,947,500 167.455 .31 Schering-Plough Corp. 4,400,000 233.200 .43 Warner-Lambert Co. 5,000,000 346.875 .65 RECREATION & OTHER CONSUMER PRODUCTS - 0.17% Eastman Kodak Co. 1,100,000 74.525 .14 Hasbro, Inc. 600,000 16.763 .03 TEXTILES & APPAREL - 0.16% NIKE, Inc., Class B 1,300,000 82.306 .16 ---------------- 7,256.151 13.32 ---------------- SERVICES BROADCASTING & PUBLISHING - 7.92% AT&T Corp. - Liberty Media Group (1) 30,566,1581,123.306 2.06 CBS Corp. (1) 2,000,000 86.875 .16 Comcast Corp., Class A, special stock 700,000 26.906 .05 Dow Jones & Co., Inc. 2,000,000 106.125 .19 Houston Industries, Inc. (converting to Time Warner Inc.) 7.00% ACES convertible preferred 2000 500,000 59.625 .11 Time Warner Inc. 21,000,0001,543.500 2.83 Tribune Co. 1,995,500 173.858 .32 Viacom Inc., Class A (1) 2,392,800 105.582 Viacom Inc., Class B (1) 24,900,0001,095.600 2.20 BUSINESS & PUBLIC SERVICES - 3.37% Browning-Ferris Industries, Inc. 1,450,000 62.350 .11 Cendant Corp. (1) 38,300,000 785.150 1.44 Columbia/HCA Healthcare Corp. 4,600,000 104.938 .19 Electronic Data Systems Corp. 1,900,000 107.469 .20 FDX Corp. (1) 2,870,000 155.698 .29 Interpublic Group of Companies, Inc. 2,794,750 242.095 .44 LifePoint Hospitals, Inc. (1) 242,105 3.253 .01 Triad Hospitals, Inc. (1) 242,105 3.268 .01 United HealthCare Corp. 1,000,000 62.625 .11 Waste Management, Inc. 5,780,000 310.675 .57 LEISURE & TOURISM - 1.05% McDonald's Corp. 2,400,000 99.150 .18 Seagram Co. Ltd. 9,385,000 472.769 .87 MERCHANDISING - 3.12% Albertson's, Inc. 5,229,000 269.620 .49 AutoZone, Inc. (1) 4,140,000 124.718 .23 Dillard's Inc. 2,000,000 70.250 .13 J.C. Penney Co., Inc. 4,600,000 223.387 .41 Limited Inc. 7,516,411 341.057 .63 Lowe's Companies, Inc. 5,000,000 283.438 .52 May Department Stores Co. 2,718,450 111.117 .20 Wal-Mart Stores, Inc. 5,800,000 279.850 .51 TELECOMMUNICATIONS - 8.22% Ameritech Corp. 4,134,500 303.886 .56 AT&T Corp. 17,982,2501,003.634 1.84 Deutsche Telekom AG 10,450,000 438.245 .80 GTE Corp. 2,800,000 212.100 .39 MCI WorldCom, Inc. (1) 3,750,000 322.734 .59 SBC Communications Inc. 2,550,000 147.900 .27 Sprint FON Group 17,236,000 910.276 1.67 Telefonica, SA (ADR) (1) 783,433 115.263 .21 Telefonos de Mexico, SA de CV, Class L (ADR) 3,057,400 247.076 .45 U S WEST, Inc. 4,200,000 246.750 .45 Vodafone AirTouch PLC (ADR) 2,723,000 536.431 .99 TRANSPORTATION: AIRLINES - 0.88% AMR Corp. (1) 5,550,000 378.788 .69 Delta Air Lines, Inc. 1,742,100 100.389 .19 ---------------- 13,397.72 24.56 ---------------- FINANCE BANKING - 7.34% BankBoston Corp. 2,500,000 127.812 .23 Bank of America Corp. 12,927,100 947.718 1.74 BANK ONE CORP. 4,435,000 264.160 .48 Chase Manhattan Corp. 2,945,000 255.111 .47 Comerica Inc. 750,000 44.578 .08 First Union Corp. 9,761,000 458.767 .84 KeyCorp 5,200,000 167.050 .31 National City Corp. 1,000,000 65.500 .12 SunTrust Banks, Inc. 3,600,000 249.975 .46 Toronto-Dominion Bank 1,872,600 84.864 .16 U.S. Bancorp 2,831,250 96.262 .18 Wachovia Corp. 900,000 77.006 .14 Washington Mutual, Inc. 17,500,000 619.063 1.13 Wells Fargo & Co. 12,750,000 545.063 1.00 FINANCIAL SERVICES - 4.55% Associates First Capital Corp., Class A 2,000,000 88.625 .16 Fannie Mae 18,996,8001,298.906 2.38 Freddie Mac 2,400,000 139.200 .26 Household International, Inc. 13,000,000 615.875 1.13 SLM Holding Corp. 7,357,000 337.043 .62 INSURANCE - 2.54% Aetna Inc. 1,895,000 169.484 .31 Allstate Corp. 3,700,000 132.737 .24 American General Corp. 2,010,000 151.504 .28 American International Group, Inc. 2,700,000 316.069 .58 Aon Corp. 3,600,000 148.500 .27 Jefferson-Pilot Corp. 2,200,000 145.613 .27 Lincoln National Corp. 2,100,000 109.856 .20 SAFECO Corp. 3,100,000 136.787 .25 St. Paul Companies, Inc. 2,500,000 79.531 .14 ---------------- 7,872.659 14.43 ---------------- OTHER MULTI-INDUSTRY - 0.55% AlliedSignal Inc. 2,700,000 170.100 .31 Canadian Pacific Ltd. 2,500,000 59.531 .11 Minnesota Mining and Manufacturing Co. 120,000 10.433 .02 Textron Inc. 754,200 62.080 .11 GOLD MINES - 0.58% Barrick Gold Corp. 6,000,000 116.250 .21 Newmont Mining Corp. 5,600,000 111.300 .20 Placer Dome Inc. 8,000,000 94.500 .17 MISCELLANEOUS - 2.86% Equity securities in initial period of acquisition 1,568.599 2.86 ---------------- 2,192.793 3.99 ---------------- Total Equity Securities (cost: $25,015.903 million) 46,461.85 85.16 ---------------- Principal Short-Term Securities Amount - -------------------------------------------- (millions) ---------- U.S. TREASURIES AND OTHER FEDERAL AGENCIES - 8.57% Treasury Bill 4.36% due 07/08/1999 $ 100.00 99.906 .18 Treasury Notes 5.625%-6.00% due 7/31-11/15/1999 1,000.0001,001.757 1.83 Fannie Mae 4.70%-5.00% due 7/28-12/03/1999 742.296 734.482 1.35 Federal Farm Credit Bank 4.61%-4.77% due 7/12-9/23/1999 110.317 109.491 .20 Federal Farm Credit Bank Notes 4.750% due 7/01/1999 50.000 50.000 .09 Federal Home Loan Bank 4.61%-4.91% due 7/7-11/19/1999 830.674 822.594 1.51 Freddie Mac 4.69%-5.02% due 7/2-12/27/1999 1,602.2391,585.941 2.91 Student Loan Marketing Assn. 4.705%-4.967% due 7/15-10/21/1999 275.000 275.137 .50 CORPORATE SHORT-TERM NOTES - 6.07% A.I. Credit Corp. 4.78%-4.97% due 7/9-7/16/1999 90.000 89.839 .16 Abbott Laboratories 4.76%-4.81% due 7/7-7/12/1999 81.135 81.015 .15 American Express Credit Corp. 4.94% due 7/21-8/30/1999 83.500 83.061 .15 American General Finance Corp. 4.80%-4.93% due 8/16-9/21/1999 115.000 113.841 .21 American Home Products Corp. 4.78%-4.86% due 8/3/-8/26/1999 (2) 113.000 112.341 .21 Ameritech Capital Funding Corp. 4.75% due 7/23/1999 (2) 50.000 49.846 .09 Ameritech Corp. 4.785%-4.80% due 7/16-8/16/1999 60.000 59.762 .11 Archer Daniels Midland Co. 4.78%-4.83% due 8/12-8/20/1999 36.000 35.769 .07 Associates First Capital Corp. 4.80%-4.84% due 8/18-9/20/1999 100.000 99.149 .18 AT&T Corp. 4.79% due 8/6/1999 50.000 49.749 .09 BellSouth Telecommunications, Inc. 4.77%-5.00% due 7/6-8/3/1999 80.000 79.814 .15 Campbell Soup Co. 4.77% due 7/30/1999 30.000 29.879 .05 Chevron USA Inc. 4.77%-5.70% due 7/1-7/28/1999 91.000 90.850 .17 Coca-Cola Co. 4.75%-4.99% due 7/13-9/16/1999 120.000 119.150 .22 Deere & Co. 4.80% due 7/27/1999 50.000 49.819 .09 Walt Disney Co. 4.74%-4.77% due 7/12-11/04/1999 98.000 96.910 .18 Duke Energy Corp. 4.76%-4.77% due 7/9-7/20/1999 93.620 93.422 .17 E.I. du Pont de Nemours and Co. 4.87%-4.99% due 8/17-9/9/1999 50.000 49.579 .09 Eastman Kodak Co. 4.78%-5.00% due 7/15-9/7/1999 90.000 89.367 .16 Electronic Data Systems Corp. 4.76%-4.98% due 7/13-7/29/1999 (2) 79.700 79.444 .15 Emerson Electric Co. 4.80%-4.97% due 7/16-7/27/1999 90.000 89.733 .16 Ford Motor Credit Co. 4.79%-4.87% due 7/9-7/20/1999 150.000 149.685 .27 Fortune Brands Inc. 4.80%-4.83% due 7/7-7/29/1999 (2) 56.000 55.878 .10 General Electric Capital Corp. 4.79%-5.19% due 8/2-9/20/1999 125.000 123.879 .23 General Motors Acceptance Corp. 4.87%-4.94% due 8/31-9/22/1999 100.000 98.938 .18 H.J. Heinz Co. 4.79%-5.23% due 7/13-8/25/1999 100.000 99.478 .18 Household Finance Corp. 4.86%-4.90% due 8/27-9/14/1999 100.000 99.032 .18 IBM Credit Corp. 4.80%-4.92% due 8/17-9/9/1999 150.000 148.665 .27 Johnson & Johnson 4.76%-4.93% due 7/19-10/19/1999 (2) 130.250 128.838 .24 Lucent Technologies Inc. 4.79%-4.87% due 7/20-8/9/1999 125.000 124.535 .23 Minnesota Mining and Manufacturing Co. 4.85%-4.94% 92.000 91.334 .17 due 8/20-8/24/1999 Monsanto Co. 4.80% due 8/10/1999 30.000 29.832 .05 Monsanto Co. 4.82% due 7/13/1999 (2) 14.300 14.275 .03 Pfizer Inc. 4.80%-5.07% due 7/6-7/26/1999 (2) 82.000 81.794 .15 Procter & Gamble Co. 4.85%-4.86% due 7/22-8/3/1999 90.000 89.672 .16 Sara Lee Corp. 4.81% due 7/1/1999 80.000 79.979 .15 SBC Communications Inc. 4.79%-4.84% due 7/6-7/23/1999 (2) 100.000 99.805 .18 Shell Oil Co. 4.77%-4.97% due 7/26-8/19/1999 103.000 102.450 .19 Xerox Corp. 4.78% due 8/13/1999 50.000 49.699 .10 ---------------- Total Short-Term Securities 7,989.415 14.64 (cost: $7,990.638 million) ---------------- Excess of cash and receivables over payables 105.067 .20 ---------------- Total Short-Term Securities,Cash and Receivables, Net of Payables 8,094.482 14.84 ---------------- Net Assets $54,556.3 100.00% ========= ====== (1) Non-income-producing security. (2) Purchased in a private placement transaction; resale to the public may require registration or sale only to qualified institutional buyers. ADR = American Depositary Receipts See Notes to Financial Statements
The Investment Company of America Unaudited Financial Statements - ----------------------------------------- ------------- ------------- Statement of Assets and Liabilities (dollars in at June 30, 1999 millions) - ---------------------------------------- ------------- ------------- Assets: Investment securities at market (cost: $25,015.903) $46,461.851 Short-term securities at market (cost: $7,990.638) 7,989.415 Cash 29.752 Receivables for- Sales of investments $187.466 Sales of fund's shares 44.942 Dividends and accrued interest 70.520 302.928 ------------- ------------- 54,783.946 Liabilities: Payables for- Purchases of investments 156.363 Repurchases of fund's shares 49.352 Management services 11.091 Accrued expenses 10.807 227.613 ------------- ------------- Net Assets at June 30, 1999- Equivalent to $34.31 per share on 1,590,014,193 shares of $1 par value capital stock outstanding (authorized capital stock--2,000,000,000 shares) $54,556.333 ============= Unaudited Statement of Operations (dollars in for the six months ended June 30, 1999 millions) - ----------------------------------------- ------------- ------------- Investment Income: Income: Dividends $335.088 Interest 203.051 $ 538.139 ------------- Expenses: Management services fee 62.810 Distribution expenses 58.961 Transfer agent fee 14.313 Reports to shareholders .612 Registration statement and prospectus 1.819 Postage, stationery and supplies 2.610 Directors' fees .272 Auditing and legal fees .089 Custodian fee .416 Taxes other than federal income tax .417 Other expenses .216 142.535 ------------- ------------- Net investment income 395.604 ------------- Realized Gain and Unrealized Appreciation on Investments: Net realized gain 3,369.302 Net increase in unrealized appreciation on investments 2,211.999 ------------- Net realized gain and increase in unrealized appreciation on investments 5,581.301 ------------- Net Increase in Net Assets Resulting from Operations $ 5,976.905 ============= See Notes to Financial Statements - ---------------------------------------- ------------- ------------- (dollars in millions) Six months ended Year ended Statement of Changes in Net Assets June 30,1999* December 31,1998 - ----------------------------------------- ------------- ------------- Operations: Net investment income $ 395.604 $ 716.799 Net realized gain on investments 3,369.302 4,437.555 Net increase in unrealized appreciation on investments 2,211.999 3,902.006 ------------- ------------- Net increase in net assets resulting from operations 5,976.905 9,056.360 ------------- ------------- Dividends and Distributions Paid to Shareholders: Dividends from net investment income (377.737) (729.026) Distributions from net realized gain on investments (468.890) (4,219.066) ------------- ------------- Total dividends and distributions (846.627) (4,948.092) ------------- ------------- Capital Share Transactions: Proceeds from shares sold: 92,538,714 and 175,861,192 shares, respectively 2,995.801 5,363.712 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments: 24,364,606 and 152,955,982 shares, respectively 781.000 4,569.218 Cost of shares repurchased: 87,982,992 and 173,627,274 shares, respectively (2,848.329) (5,261.288) ------------- ------------- Net increase in net assets resulting from capital share transactions 928.472 4,671.642 ------------- ------------- Total Increase in Net Assets 6,058.750 8,779.910 Net Assets: Beginning of period 48,497.583 39,717.673 ------------- ------------- End of period (including undistributed net investment income: $325.574 and $307.707, respectively) $54,556.333 $48,497.583 ============= ============= * Unaudited See Notes to Financial Statements
THE INVESTMENT COMPANY OF AMERICA Notes to Financial Statements Unaudited 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - The Investment Company of America (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks long-term growth of capital and income, placing greater emphasis on future dividends than on current income. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by the fund in the preparation of its financial statements: SECURITY VALUATION - Equity securities, including depositary receipts, are valued at the last reported sale price on the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. In cases where equity securities are traded on more than one exchange, the securities are valued on the exchange or market determined by the investment adviser to be the broadest and most representative market, which may be either a securities exchange or the over-the-counter market. Fixed-income securities are valued at prices obtained from a pricing service, when such prices are available; however, in circumstances where the investment adviser deems it appropriate to do so, such securities will be valued at the mean quoted bid and asked prices or at prices for securities of comparable maturity, quality and type. Short-term securities maturing within 60 days are valued at amortized cost, which approximates market value. Securities and assets for which representative market quotations are not readily available are valued at fair value as determined in good faith by a committee appointed by the Board of Directors. NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in terms of non-U.S. currencies are translated into U.S. dollars at the prevailing market rates at the end of the reporting period. Purchases and sales of securities and income and expenses are translated into U.S. dollars at the prevailing market rates on the dates of such transactions. The effects of changes in non-U.S. currency exchange rates on investment securities and other assets and liabilities are included with the net realized and unrealized gain or loss on investment securities. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are accounted for as of the trade date. Realized gains and losses from securities transactions are determined based on specific identified cost. In the event securities are purchased on a delayed delivery or "when-issued" basis, the fund will instruct the custodian to segregate liquid assets in an amount sufficient to meet its payment obligations in these transactions. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. Market discounts and original issue discounts on securities purchased are amortized daily over the expected life of the security. The fund does not amortize premiums on securities purchased. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid to shareholders are recorded on the ex-dividend date 2. NON U.S. INVESTMENT TAXATION Dividend income is recorded net of non-U.S. taxes paid. For the six months ended June 30, 1999, such non-U.S. taxes were $6,485,000. Net realized currency losses on dividends, withholding taxes reclaimable, and other receivables and payables, on a book basis, were $80,000 for the six months ended June 30, 1999. 3. FEDERAL INCOME TAXATION The fund complies with the requirements of the Internal Revenue Code applicable to regulated investment companies and intends to distribute all of its net taxable income and net capital gains for the fiscal year. As a regulated investment company, the fund is not subject to income taxes if such distributions are made. Required distributions are determined on a tax basis and may differ from net investment income and net realized gains for financial reporting purposes. In addition, the fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund. As of June 30, 1999, net unrealized appreciation on investments for federal income tax purposes aggregated $21,454,047,000, of which $21,916,651,000 related to appreciated securities and $462,604,000 related to depreciated securities. During the six months ended June 30, 1999, the fund realized, on a tax basis, a net capital gain of $3,369,382,000 on securities transactions. Net losses related to non-U.S. currency transactions of $80,000 were treated as an adjustment to ordinary income for federal income tax purposes. The cost of portfolio securities for federal income tax purposes was $32,997,219,000 at June 30, 1999. 4. FEES AND TRANSACTIONS WITH RELATED PARTIES INVESTMENT ADVISORY FEE - The fee of $62,810,000 for management services was incurred pursuant to an agreement with Capital Research and Management Company (CRMC), with which certain officers and Directors of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees, accrued daily, based on an annual rate of 0.39% of the first $1 billion of net assets; 0.336% of such assets in excess of $1 billion but not exceeding $2 billion; 0.30% of such assets in excess of $2 billion but not exceeding $3 billion; 0.276% of such assets in excess of $3 billion but not exceeding $5 billion; 0.258% of such assets in excess of $5 billion but not exceeding $8 billion; 0.246% of such assets in excess of $8 billion but not exceeding $13 billion; 0.24% of such assets in excess of $13 billion but not exceeding $21 billion; 0.235% of such assets in excess of $21 billion but not exceeding $34 billion; and 0.231% of such assets in excess of $34 billion. DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its average net assets annually for any activities primarily intended to result in sales of fund shares, provided the categories of expenses for which reimbursement is made are approved by the fund's Board of Directors. Fund expenses under the Plan include payments to dealers to compensate them for their selling and servicing efforts. During the six months ended June 30, 1999, distribution expenses under the Plan were $58,961,000. As of June 30, 1999, accrued and unpaid distribution expenses were $9,594,000. American Funds Distributors, Inc. (AFD), the principal underwriter of the fund's shares, received $12,635,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's shares. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying statement of operations. TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent for the fund, was paid a fee of $14,313,000. DEFERRED DIRECTORS' FEES - Directors and Advisory Board members who are unaffiliated with CRMC may elect to defer part or all of the fees earned for services as members of the Board. Amounts deferred are not funded and are general unsecured liabilities of the fund. As of June 30, 1999, aggregate deferred amounts and earnings thereon since the deferred compensation plan's adoption (1993), net of any payments to Directors, were $1,109,000. CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No such persons received any remuneration directly from the fund. 5. WARRANTS Option warrants are outstanding, which may be exercised at any time for the purchase of 822,991 shares of the fund at approximately $5.242 per share. If all warrants had been exercised on June 30, 1999, the net assets of the fund would have been $54,560,648,000; the shares outstanding would have been 1,590,837,000; and the net asset value would have been equivalent to $34.30 per share. During the six months ended June 30, 1999, 557 warrants were exercised for the purchase of 12,221 shares. 6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $6,025,168,000 and $6,533,531,000 respectively, during the six months ended June 30, 1999. As of June 30, 1999, accumulated undistributed net realized gain on investments was $3,369,331,000 and additional paid-in capital was $27,801,197,000. Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. The custodian fee of $416,000 includes $21,000 that was paid by these credits rather than in cash. Six months Per-Share Data and Ratios ended June 30, Year ended December 31 1999 (1) 1998 1997 Net Asset Value, Beginning of Period $31.07 $28.25 $24.23 -------------------------------- Income From Investment Operations: Net investment income .25 .48 .51 Net gains or losses on securities (both realized and unrealized) 3.53 5.79 6.61 -------------------------------- Total income from investment operations 3.78 6.27 7.12 ------------------------------- Less Distributions: Dividends (from net investment income) (.24) (.51) (.50) Distributions (from capital gains) (.30) (2.94) (2.60) ------------------------------- Total distributions (.54) (3.45) (3.10) ------------------------------- Net Asset Value, End of Period $34.31 $31.07 $28.25 ============================== Total Return (2) 12.29%(3) 22.94% 29.81% Ratios/Supplemental Data: Net assets, end of period (in millions) $54,556 $48,498 $39,718 Ratio of expenses to average net assets .28%(3) .55% .56% Ratio of net income to average net assets .78%(3) 1.65% 1.90% Portfolio turnover rate - common stocks 13.98%(3) 25.43% 24.08% Portfolio turnover rate - investment securit13.74%(3) 24.28% 26.02% Year ended December 31 1996 1995 1994 Net Asset Value, Beginning of Period $21.61 $17.67 $18.72 -------------------- --------- Income From Investment Operations: Net investment income .49 .52 .51 Net gains or losses on securities (both realized and unrealized) 3.66 4.83 (.48) -------------------- --------- Total income from investment operations 4.15 5.35 .03 --------- ---------- --------- Less Distributions: Dividends (from net investment income) (.50) (.50) (.48) Distributions (from capital gains) (1.03) (.91) (.60) --------- ---------- --------- Total distributions (1.53) (1.41) (1.08) --------- ---------- --------- Net Asset Value, End of Period $24.23 $21.61 $17.67 ======== ======== ======= Total Return (2) 19.35% 30.63% .16% Ratios/Supplemental Data: Net assets, end of period (in millions) $30,875 $25,678 $19,280 Ratio of expenses to average net assets .59% .60% .60% Ratio of net income to average net assets 2.17% 2.70% 2.83% Portfolio turnover rate - common stocks 17.46% 20.91% 17.94% Portfolio turnover rate - investment securit 19.56% 20.37% 31.08% (1) Unaudited (2) Excludes maximum sales charge of 5.75%. (3) Based on operations for the period shown, and accordingly, not representative of a full year.
[THE AMERICAN FUNDS GROUP(R)] PREPARING FOR THE YEAR 2000 The fund's key service providers - Capital Research and Management Company, the investment adviser, and American Funds Service Company, the transfer agent - have updated all significant computer systems to process date-related information properly following the turn of the century. Testing of these and other systems with business partners, vendors and other service providers will continue through much of 1999. We will continue to keep you up to date in our regular publications. If you'd like more detailed information, call Shareholder Services at 800/421-0180, ext. 21, or visit our Web site at www.americanfunds.com. OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER, CAPITAL RESEARCH AND MANAGEMENT COMPANY 333 South Hope Street Los Angeles, California 90071-1443 135 South State College Boulevard Brea, California 92821-5823 TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS AMERICAN FUNDS SERVICE COMPANY (Please write to the address nearest you.) P.O. Box 2205 Brea, California 92822-2205 P.O. Box 659522 San Antonio, Texas 78265-9522 P.O. Box 6007 Indianapolis, Indiana 46206-6007 P.O. Box 2280 Norfolk, Virginia 23501-2280 CUSTODIAN OF ASSETS The Chase Manhattan Bank One Chase Manhattan Plaza New York, New York 10081-0001 COUNSEL O'Melveny & Myers LLP 400 South Hope Street Los Angeles, California 90071-2899 PRINCIPAL UNDERWRITER American Funds Distributors, Inc. 333 South Hope Street Los Angeles, California 90071-1462 For information about your account or any of the fund's services, please contact your financial adviser. You may also call American Funds Service Company, toll-free, at 800/421-0180 or visit www.americanfunds.com on the World Wide Web. This report is for the information of shareholders of The Investment Company 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 September 30, 1999, this report must be accompanied by an American Funds Group Statistical Update for the most recently completed calendar quarter. Printed on recycled paper Litho in USA BDC/GRS/4243 Lit. No. ICA-013-0899 -----END PRIVACY-ENHANCED MESSAGE-----