ica_ncsr.htm

ICA The Investment Company of America®

[photo of trees in a forest]

Special feature

The importance of experience

u See page 8

Annual report for the year ended December 31, 2010

ICA seeks long-term growth of capital and income, placing greater emphasis on the potential for capital appreciation and future dividends than on current yield.

The Investment Company of America is one of the 33 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.

Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 5.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For current information and month-end results, visit americanfunds.com.

See page 5 for Class A share results with relevant sales charges deducted. Results for other share classes can be found on page 3.

Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Applicable fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 28 and 29 for details.

The fund’s 30-day yield for Class A shares as of January 31, 2011, reflecting the 5.75% maximum sales charge and calculated in accordance with the Securities and Exchange Commission formula, was 1.79%.

Equity investments are subject to market fluctuations. Investing outside the United States may be subject to additional risks such as currency fluctuations, political instability, differing securities regulations and periods of illiquidity. Global diversification can help reduce these risks. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.

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2010 results at a glance
Year ended December 31, 2010 (with dividends reinvested)

				Standard &
	ICA			Poor’s 500
	(Class A shares)			Composite Index*
Income return		2.18	%		2.06	%
Capital return		8.68			13.02
Total return		10.86	%		15.08	%

*The index is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes.

Dividends paid in 2010

	Per share			Payment date
Income dividends	$	0.13		March 5
		0.13		June 11
		0.13		Sept. 17
		0.17		Dec. 23
	$	0.56

Expense ratios and portfolio turnover rates1
Year ended December 31, 2010

	Expense			Portfolio
	ratio			turnover rate
ICA		0.61	%		23	%
Industry average2		1.20	%		60	%

1 The expense ratio is the annual percentage of net assets used to pay fund expenses. The portfolio turnover rate is a measure of how often securities are bought and sold by a fund.
2 Lipper Growth & Income Funds Average (with an initial sales charge and excluding funds of funds).

[End Sidebar]

Fellow shareholders:

Stock markets delivered solid returns for the year, reaching highs not seen since before the beginnings of the financial crisis, encouraged by signs of recovery as well as by the Federal Reserve’s continued strong efforts to spur economic growth. The Investment Company of America returned 10.9% for its fiscal year ended December 31, 2010, with reinvested dividends of $0.56 per share. ICA’s gain for the year fell short of the 15.1% return for the unmanaged Standard & Poor’s 500 Composite Index, a broad measure of the U.S. stock market, for the same period. Over longer time periods, ICA has posted stronger returns than the S&P 500. The significance to shareholders of ICA’s greater returns over time is shown in the mountain chart on pages 4 to 7.

U.S. stocks rallied in the first part of the year on hopeful economic news, then suffered setbacks in the late spring and summer as concerns about the financial stability of several European countries spread around the world. Stocks rebounded later in the year on upbeat corporate earnings and improved consumer sentiment. In December, markets were particularly strong, helped by an extension of tax breaks.

Changing perceptions about the strength of the U.S. economy drove much of the stock market volatility. The economic recovery has been slow, beset by some persistent difficulties. U.S. unemployment remained high by historic standards, hovering near 10% during the year. Housing remained soft. State and local governments worried about hefty debt loads. In Europe, the sovereign debt crisis continued to simmer, and many worried that Chinese policymakers as well as those from other fast-growing economies could put the brakes on growth to contain inflationary pressures. Positive economic signals for the U.S. included a rising rate of gross domestic product and a strengthening manufacturing sector. The Institute for Supply Management’s index of manufacturing activity improved in December, marking the 17th consecutive month of expansion in the sector.

The portfolio

U.S. companies’ exposure to developing markets proved to be helpful during the year. Companies such as the fund’s third-largest holding, tobacco giant Philip Morris International (+21.5%), and fourth-largest, software maker Oracle (+27.6%), benefited from fast growth in developing markets such as China, India and Latin America. Energy was also a bright spot, with oil and gas companies Royal Dutch Shell, the sixth-largest holding, up 11.8% and ConocoPhillips, the seventh-largest, up 33.4%.

[photo of trees in a forest] 

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In this report

	Special feature
8	The importance of experience

	Contents

1	Letter to shareholders

4	The value of a long-term perspective

14	Summary investment
	portfolio

18	Financial statements

34	Board of trustees and
	other officers

[End Sidebar]

Information technology remained the largest industry sector. This hurt the fund during the time period, as some of the larger holdings detracted from returns including the fund’s second-largest holding, software giant Microsoft (–8.4%); eighth-largest, Internet search engine Google (–4.2%); and ninth-largest, chipmaker Intel (+3.1%). Computer maker Hewlett-Packard, the 10th-largest holding, fell 18.3%.

As always, ICA’s investment professionals look for blue-chip companies that they believe can thrive over longer periods of time. The multiple portfolio counselor system provides a dimension of diversification: differences of perspective, of focus, and of style. Managing the lineup of portfolio counselors to maintain diversification is a way the fund manages risk without diluting conviction. We believe this is of great benefit to shareholders over the long run.

A look ahead

A recovery is underway but the progress could be slow and uneven. Investors will look for more confirmation of an improving economy, such as increased hiring, stronger GDP growth and an improved housing market. Reports are showing a delicate mix of good news. However, the Fed’s economic stimulus has brought its own concerns about the repercussions of low interest rates and staggering debt levels. The injection of money into the economy has helped stabilize or increase asset prices around the world. As the government eases back on fiscal or monetary stimulus in the period ahead, the onus will be greater than ever on a global recovery to help companies grow profits. We remain in an uncertain period and the market is expected to remain volatile.

As always, we focus on the long term, looking past short-term movements in market direction, and we view volatility as a potential opportunity to invest in great companies at prices lower than what we believe is their fundamental value. This investment philosophy is passed down from generation to generation of investment professionals on ICA. (For more on the value of knowledge gained over time, see the special feature, “The importance of experience,” beginning on page 8.)

We thank you for your trust in us and your commitment to long-term investing.

Sincerely,

/s/ James B. Lovelace

James B. Lovelace

Vice Chairman

/s/ Donald D. O’Neal

Donald D. O’Neal

President

February 9, 2011

For current information about the fund, visit americanfunds.com.

[photo of trees in a forest]

[Begin Sidebar]

We take this opportunity to thank Mike Shanahan for his many years of leadership and service as a portfolio counselor of The Investment Company of America.

[End Sidebar]

[Begin Sidebar]

We wish to announce the retirement of The Investment Company of America’s advisory board. The board, which was established at the fund’s inception, has included executives, scholars, diplomats and journalists who contributed a remarkable range of expertise about businesses, politics and cultures around the world. Their guidance has been invaluable and we are indebted to them for their many years of service to the fund.

[End Sidebar]

Other share class results

Classes B, C, F and 529

Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.

Average annual total returns for periods ended December 31, 2010:
							10 years1/
	1 year			5 years			Life of class

Class B shares2
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares
are sold within six years of purchase		5.03	%		1.35	%		2.53	%
Not reflecting CDSC		10.03			1.69			2.53

Class C shares — first sold 3/15/01
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		8.95			1.65			2.92
Not reflecting CDSC		9.95			1.65			2.92

Class F-1 shares3 — first sold 3/15/01
Not reflecting annual asset-based fee charged
by sponsoring firm		10.78			2.45			3.73

Class F-2 shares3 — first sold 8/1/08
Not reflecting annual asset-based fee charged
by sponsoring firm		11.07			—			2.30

Class 529-A shares4 — first sold 2/15/02
Reflecting 5.75% maximum sales charge		4.41			1.19			3.62
Not reflecting maximum sales charge		10.77			2.40			4.31

Class 529-B shares2,4 — first sold 2/15/02
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase		4.87			1.23			3.52
Not reflecting CDSC		9.87			1.57			3.52

Class 529-C shares4 — first sold 2/19/02
Reflecting CDSC, maximum of 1%, payable only
if shares are sold within one year of purchase		8.91			1.59			3.63
Not reflecting CDSC		9.91			1.59			3.63

Class 529-E shares3,4 — first sold 3/1/02		10.46			2.10			3.74

Class 529-F-1 shares3,4 — first sold 9/16/02
Not reflecting annual asset-based fee charged
by sponsoring firm		11.00			2.61			6.43

1Applicable to Class B shares only. All other share classes reflect results for the life of the class.

2These shares are not available for purchase.

3These shares are sold without any initial or contingent deferred sales charge.

4Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee.

For information regarding the differences among the various share classes, refer to the fund’s prospectus.

The value of a long-term perspective (1934 to 2010)

Fund results shown are for Class A shares and reflect deduction of the maximum sales charge of 5.75% on a $10,000 investment.* Thus, the net amount invested was $9,425.† Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.

This chart illustrates a hypothetical $10,000 investment in The Investment Company of America over the past 77 years, from January 1, 1934, through December 31, 2010, showing the high, low and closing values for each year.

The figures in the table below the chart include the fund’s total return for each of those years. As you look through the table, you will see that the fund’s total return can fluctuate greatly from year to year. In some years, it was well into double digits. In other years, the fund had a negative return. Over the entire period, a $10,000 investment in the fund, with all dividends reinvested, would have grown to $64,830,603, compared with $24,464,161 in Standard & Poor’s 500 Composite Index.

You can use this table to estimate how the value of your own holdings has grown. Let’s say, for example, that you have been reinvesting all of your dividends and want to know how your investment has done since the end of 2000. At that time, the value of the investment illustrated here was $47.4 million. Since then, it has increased to $64.8 million. Thus, in the same period, the value of your 2000 investment — regardless of size — has also increased.

*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.

†The maximum initial sales charge was 8.5% prior to July 1, 1988.

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Average annual total returns based on a $1,000 investment (for periods ended December 31, 2010)*

	1 year			5 years			10 years
Class A shares		4.50	%		1.27	%		2.57	%

*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge.

The total annual fund operating expense ratio was 0.61% for Class A shares as of the most recent fiscal year-end.

[End Sidebar]

[Begin Sidebar]

Average annual returns for 77 years (1/1/34–12/31/10)*

Income return	3.1	%
Capital return	9.0	%
Total return	12.1	%

*Assumes reinvestment of all distributions and payment of the maximum 5.75% sales charge.

[End Sidebar]

Value added by reinvestment of dividends

[begin mountain chart]

Date	ICA with dividends reinvested1		ICA with dividends taken in cash2

1/1/1934		9,426		9,426
3/31/1934		12,022		12,022
9/30/1934		9,735		9,735
12/31/1934		11,822		11,822
3/31/1935		11,109		11,109
12/31/1935		21,643		21,643
4/30/1936		21,738		21,738
12/31/1936		31,560		31,042
3/31/1937		34,870		34,173
12/31/1937		19,424		18,339
3/31/1938		16,450		15,458
12/31/1938		24,776		23,174
5/17/1939		19,196		17,954
10/26/1939		26,380		24,439
12/31/1939		24,986		22,860
4/9/1940		26,104		23,788
5/22/1940		18,337		16,710
12/31/1940		24,384		21,460
4/22/1941		20,228		17,599
7/28/1941		25,516		21,886
12/31/1941		22,590		18,816
4/28/1942		20,675		17,070
11/7/1942		26,389		21,198
12/31/1942		26,376		20,893
7/14/1943		35,104		27,393
12/31/1943		35,019		26,861
1/3/1944		34,911		26,778
12/11/1944		42,785		32,140
12/31/1944		43,193		32,130
12/21/1945		62,861		45,706
12/31/1945		59,091		42,949
5/28/1946		69,344		50,213
10/9/1946		51,668		37,011
12/31/1946		57,692		40,687
2/8/1947		59,739		42,131
5/19/1947		47,608		33,318
12/31/1947		58,217		39,332
3/16/1948		51,685		34,577
6/14/1948		64,466		43,169
12/31/1948		58,430		37,714
5/16/1949		61,325		39,171
12/31/1949		63,941		39,436
7/13/1950		61,544		37,284
11/24/1950		75,452		45,291
12/31/1950		76,618		45,185
1/3/1951		77,522		45,718
9/13/1951		90,575		52,493
12/31/1951		90,274		51,159
5/1/1952		87,738		49,312
11/26/1952		98,358		54,208
12/31/1952		101,293		55,306
1/5/1953		101,540		55,440
9/14/1953		90,546		47,981
12/31/1953		101,747		53,362
1/11/1954		102,187		53,593
11/26/1954		150,963		77,300
12/31/1954		158,859		80,780
1/6/1955		153,710		78,162
12/5/1955		197,380		98,416
12/31/1955		199,216		98,531
1/23/1956		188,642		93,301
8/2/1956		228,301		111,574
12/31/1956		220,648		106,303
7/10/1957		234,719		111,636
12/23/1957		191,223		89,401
12/31/1957		194,433		90,912
1/2/1958		196,485		91,871
12/31/1958		281,479		128,040
2/9/1959		276,271		125,672
8/3/1959		317,753		142,951
12/31/1959		321,419		142,883
1/5/1960		322,622		143,418
3/8/1960		294,359		130,051
12/31/1960		335,999		145,598
1/3/1961		333,381		144,463
11/29/1961		416,623		177,692
12/31/1961		413,553		175,370
1/3/1962		412,847		175,071
6/25/1962		302,234		126,569
12/31/1962		358,801		148,179
3/1/1963		362,959		148,959
11/13/1963		435,346		176,692
12/31/1963		440,900		177,834
1/2/1964		443,327		178,813
11/18/1964		524,007		208,216
12/31/1964		512,592		202,347
6/28/1965		515,302		201,387
11/30/1965		636,844		247,766
12/31/1965		650,691		251,554
2/11/1966		695,632		268,929
10/7/1966		554,914		211,085
12/31/1966		657,094		248,035
1/4/1967		653,924		246,838
9/25/1967		848,270		315,022
12/31/1967		846,942		312,474
3/5/1968		767,364		281,436
11/29/1968		1,016,106		368,877
12/31/1968		990,641		356,574
2/6/1969		997,966		359,210
12/17/1969		861,534		301,409
12/31/1969		884,825		309,612
1/5/1970		900,901		315,237
5/26/1970		671,567		232,836
12/31/1970		908,020		307,422
1/4/1971		899,324		304,478
4/28/1971		1,041,783		349,622
12/31/1971		1,062,653		349,729
1/3/1972		1,061,134		349,229
12/11/1972		1,236,416		399,226
12/31/1972		1,231,089		394,703
1/5/1973		1,240,738		397,797
12/13/1973		969,368		300,861
12/31/1973		1,024,069		317,912
3/13/1974		1,078,732		331,700
10/3/1974		753,595		227,497
12/31/1974		840,311		245,527
1/2/1975		860,275		251,360
7/15/1975		1,192,557		342,306
12/31/1975		1,137,662		317,656
1/2/1976		1,146,259		320,057
12/15/1976		1,445,050		393,403
12/31/1976		1,474,372		398,100
1/3/1977		1,468,350		396,474
10/25/1977		1,332,040		350,404
12/31/1977		1,436,404		374,309
3/1/1978		1,346,165		347,473
9/11/1978		1,868,543		475,286
12/31/1978		1,647,486		414,423
2/27/1979		1,616,223		406,559
9/21/1979		1,993,884		489,102
12/31/1979		1,963,313		475,671
4/21/1980		1,749,599		419,477
11/18/1980		2,440,065		573,991
12/31/1980		2,380,191		552,244
9/25/1981		2,250,820		505,060
12/31/1981		2,401,095		530,866
8/12/1982		2,283,451		486,986
12/7/1982		3,273,730		683,755
12/31/1982		3,212,002		670,593
1/24/1983		3,149,704		657,586
10/10/1983		3,954,414		800,660
12/31/1983		3,859,718		774,521
1/5/1984		3,938,558		790,342
7/24/1984		3,487,720		684,698
12/31/1984		4,117,193		791,975
1/8/1985		4,042,335		777,575
12/31/1985		5,491,899		1,017,909
1/10/1986		5,378,077		996,812
8/26/1986		6,822,055		1,244,530
12/31/1986		6,685,668		1,200,523
8/25/1987		8,964,992		1,587,087
12/4/1987		6,490,173		1,124,110
12/31/1987		7,049,189		1,220,933
1/20/1988		6,898,255		1,194,791
10/20/1988		8,057,725		1,361,557
12/31/1988		7,989,297		1,327,380
1/3/1989		7,952,253		1,321,225
10/9/1989		10,570,716		1,717,619
12/31/1989		10,338,606		1,652,758
7/16/1990		11,034,382		1,738,645
9/24/1990		9,349,249		1,461,722
12/31/1990		10,409,044		1,598,827
1/9/1991		9,964,580		1,530,558
12/31/1991		13,171,913		1,969,884
4/8/1992		12,725,819		1,890,999
12/8/1992		14,053,663		2,062,293
12/31/1992		14,092,259		2,052,171
10/15/1993		15,613,223		2,233,724
12/31/1993		15,729,390		2,234,162
2/2/1994		16,250,342		2,308,157
12/31/1994		15,753,859		2,180,619
12/13/1995		20,601,536		2,800,127
12/31/1995		20,578,729		2,779,669
1/10/1996		20,131,158		2,719,214
11/29/1996		24,948,962		3,317,338
12/31/1996		24,560,579		3,247,865
1/2/1997		24,449,079		3,233,121
10/7/1997		32,201,069		4,203,593
12/31/1997		31,881,159		4,142,665
1/9/1998		30,538,200		3,968,160
11/27/1998		38,263,637		4,911,956
12/31/1998		39,193,520		5,008,240
7/16/1999		44,986,534		5,706,524
12/14/1999		43,402,315		5,461,630
12/31/1999		45,682,203		5,748,525
6/2/2000		48,297,061		6,033,245
12/20/2000		45,816,353		5,674,950
12/31/2000		47,435,198		5,875,465
2/1/2001		48,641,695		6,024,905
9/21/2001		39,682,272		4,850,856
12/31/2001		45,258,581		5,507,475
3/19/2002		46,842,670		5,674,249
10/9/2002		34,116,968		4,090,963
12/31/2002		38,709,050		4,616,859
3/11/2003		35,518,986		4,211,803
12/31/2003		48,891,609		5,713,492
8/12/2004		47,651,727		5,519,344
12/1/2004		53,072,477		6,119,617
12/31/2004		53,674,543		6,162,997
4/20/2005		51,443,944		5,882,406
12/14/2005		57,922,995		6,565,847
12/31/2005		57,361,396		6,446,513
6/13/2006		58,037,711		6,462,958
12/15/2006		66,714,106		7,396,222
12/31/2006		66,504,440		7,313,239
10/9/2007		74,714,184		8,101,087
12/19/2007		69,537,328		7,502,672
12/31/2007		70,456,795		7,601,877
11/20/2008		39,078,899		4,143,542
12/31/2008		45,983,835		4,835,670
3/9/2009		36,699,911		3,820,549
12/28/2009		59,112,111		6,051,509
12/31/2009		58,481,101		5,986,910
7/2/2010		53,254,350		5,396,294
12/22/2010		64,807,304		6,533,692
12/31/2010		64,830,603		6,496,778

Date	S&P 500 with dividends reinvested

1/1/1934		10,000
2/6/1934		11,741
7/26/1934		8,454
12/31/1934		9,851
3/14/1935		8,427
11/19/1935		14,477
12/31/1935		14,555
11/9/1936		19,849
12/31/1936		19,479
3/6/1937		21,235
11/24/1937		11,991
12/31/1937		12,670
3/31/1938		10,259
11/9/1938		17,200
12/31/1938		16,604
4/8/1939		12,860
12/31/1939		16,542
1/3/1940		16,913
6/10/1940		12,166
12/31/1940		14,918
1/10/1941		15,313
12/31/1941		13,193
4/28/1942		11,422
12/31/1942		15,880
7/14/1943		21,055
12/31/1943		19,980
2/7/1944		19,830
12/31/1944		23,920
12/10/1945		33,103
12/31/1945		32,629
5/29/1946		36,538
10/9/1946		27,277
12/31/1946		29,994
2/8/1947		31,833
5/17/1947		27,243
12/31/1947		31,703
2/14/1948		28,756
6/15/1948		36,057
12/31/1948		33,420
6/13/1949		30,578
12/31/1949		39,688
1/14/1950		39,428
12/31/1950		52,266
10/15/1951		63,758
12/31/1951		64,813
2/20/1952		63,185
12/31/1952		76,702
9/14/1953		67,974
12/31/1953		75,955
12/31/1954		115,881
1/17/1955		111,372
11/14/1955		154,321
12/31/1955		152,428
1/23/1956		144,485
8/2/1956		170,376
12/31/1956		162,378
7/15/1957		174,227
10/22/1957		139,617
12/31/1957		144,887
12/31/1958		207,642
2/9/1959		201,972
8/3/1959		232,356
12/31/1959		232,467
10/25/1960		208,328
12/31/1960		233,601
12/12/1961		300,180
12/31/1961		296,461
6/26/1962		219,517
12/31/1962		270,656
1/2/1963		268,898
12/31/1963		332,369
11/20/1964		391,802
12/31/1964		387,133
6/28/1965		377,268
11/15/1965		433,749
12/31/1965		435,356
2/9/1966		444,115
10/7/1966		353,265
12/31/1966		391,500
9/25/1967		485,648
12/31/1967		485,272
3/5/1968		443,658
11/29/1968		560,886
12/31/1968		538,975
5/14/1969		556,520
12/31/1969		493,481
5/26/1970		375,967
12/31/1970		512,963
4/28/1971		587,707
11/23/1971		515,114
12/31/1971		586,320
12/11/1972		702,350
12/31/1972		697,692
1/11/1973		710,635
12/5/1973		560,537
12/31/1973		595,206
1/3/1974		608,935
10/3/1974		392,237
12/31/1974		437,674
7/15/1975		623,524
12/31/1975		600,610
9/21/1976		736,520
12/31/1976		744,318
11/2/1977		653,147
12/31/1977		691,044
3/6/1978		637,133
9/12/1978		804,939
12/31/1978		736,452
10/5/1979		887,816
12/31/1979		873,499
3/27/1980		801,694
11/28/1980		1,192,966
12/31/1980		1,156,970
1/6/1981		1,177,082
9/25/1981		993,719
12/31/1981		1,100,011
8/12/1982		952,442
11/9/1982		1,348,614
12/31/1982		1,337,025
1/3/1983		1,315,159
10/10/1983		1,696,711
12/31/1983		1,638,595
7/24/1984		1,503,740
11/6/1984		1,760,537
12/31/1984		1,741,395
1/4/1985		1,704,326
12/31/1985		2,293,883
1/22/1986		2,209,306
12/2/1986		2,846,898
12/31/1986		2,722,038
8/25/1987		3,851,956
12/4/1987		2,588,662
12/31/1987		2,864,962
1/20/1988		2,813,363
10/21/1988		3,379,672
12/31/1988		3,339,470
10/9/1989		4,438,664
12/31/1989		4,395,793
7/16/1990		4,669,466
10/11/1990		3,773,954
12/31/1990		4,259,140
1/9/1991		4,017,563
12/31/1991		5,553,915
4/8/1992		5,290,606
12/18/1992		6,039,956
12/31/1992		5,976,474
1/8/1993		5,885,121
12/31/1993		6,577,517
2/2/1994		6,806,430
4/4/1994		6,231,341
12/31/1994		6,664,017
12/13/1995		9,234,475
12/31/1995		9,165,271
1/10/1996		8,905,609
11/25/1996		11,473,195
12/31/1996		11,268,247
12/5/1997		15,211,783
12/31/1997		15,026,327
1/9/1998		14,364,532
12/29/1998		19,495,529
12/31/1998		19,320,168
1/14/1999		19,052,345
12/31/1999		23,384,822
3/24/2000		24,358,139
12/20/2000		20,344,921
12/31/2000		21,256,384
1/30/2001		22,116,924
9/21/2001		15,685,356
12/31/2001		18,731,955
1/4/2002		19,130,553
10/9/2002		12,823,508
12/31/2002		14,593,631
3/11/2003		13,325,833
12/31/2003		18,777,238
8/12/2004		18,124,599
12/30/2004		20,815,662
12/31/2004		20,819,110
4/20/2005		19,628,447
12/14/2005		22,239,332
12/31/2005		21,840,638
6/13/2006		21,583,322
12/15/2006		25,408,641
12/31/2006		25,287,374
3/5/2007		24,583,839
10/9/2007		28,289,193
12/31/2007		26,675,637
11/20/2008		13,917,931
12/31/2008		16,808,104
3/9/2009		12,663,226
12/28/2009		21,466,832
12/31/2009		21,257,508
7/2/2010		19,689,626
12/29/2010		24,470,979
12/31/2010		24,464,161

[end mountain chart]

Year ended
December 31	1934			1935		1936			1937			1938			1939			1940			1941

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		—			—	$	0.4			1.0			0.2			0.5			0.9			1.3
Value at year-end	$	11.8			21.6		31.6			19.4			24.8			25.0			24.4			22.6
Dividends in cash		—			—	$	0.4			1.0			0.2			0.5			0.8			1.1
Value at year-end	$	11.8			21.6		31.0			18.3			23.2			22.9			21.5			18.8
Annual percentage returns assuming dividends reinvested
Income return		0.0	%		0.0		1.8			3.2			0.9			2.2			3.6			5.2
Capital return		18.2	%		83.1		44.0			(41.7	)		26.7			(1.4	)		(6.0	)		(12.6	)
ICA total return		18.2	%		83.1		45.8			(38.5	)		27.6			0.8			(2.4	)		(7.4	)
Fund expenses3		0.94	%		1.13		1.19			1.53			1.89			2.02			1.88			1.95


Year ended
December 31		1942			1943		1944			1945			1946			1947			1948			1949

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		1.2			1.1		1.2			1.2			1.8			2.4			2.7			2.7
Value at year-end		26.4			35.0		43.2			59.1			57.7			58.2			58.4			63.9
Dividends in cash		1.0			0.9		0.9			0.9			1.3			1.7			1.8			1.7
Value at year-end		20.9			26.9		32.1			42.9			40.7			39.3			37.7			39.4
Annual percentage returns assuming dividends reinvested
Income return		5.3			4.2		3.5			2.8			3.0			4.2			4.6			4.6
Capital return		11.5			28.6		19.8			34.0			(5.4	)		(3.3	)		(4.2	)		4.8
ICA total return		16.8			32.8		23.3			36.8			(2.4	)		0.9			0.4			9.4
Fund expenses3		2.13			1.72		1.45			1.06			0.98			1.10			1.08			0.96


Year ended
December 31		1950			1951		1952			1953			1954			1955			1956			1957

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		3.2			3.4		3.5			3.9			4.1			5.1			5.6			6.2
Value at year-end		76.6			90.3		101.3			101.7			158.9			199.2			220.6			194.4
Dividends in cash		1.9			2.0		2.0			2.1			2.1			2.6			2.7			3.0
Value at year-end		45.2			51.2		55.3			53.4			80.8			98.5			106.3			90.9
Annual percentage returns assuming dividends reinvested
Income return		4.9			4.4		3.9			3.9			4.0			3.2			2.8			2.8
Capital return		14.9			13.4		8.3			(3.5	)		52.1			22.2			8.0			(14.7	)
ICA total return		19.8			17.8		12.2			0.4			56.1			25.4			10.8			(11.9	)
Fund expenses3		1.01			0.93		0.81			0.85			0.88			0.86			0.80			0.76


Year ended
December 31		1958			1959		1960			1961			1962			1963			1964			1965

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		6.5			7.0		8.1			8.4			9.1			9.6			10.7			12.1
Value at year-end		281.5			321.4		336.0			413.6			358.8			440.9			512.6			650.7
Dividends in cash		3.0			3.2		3.6			3.6			3.8			3.9			4.3			4.7
Value at year-end		128.0			142.9		145.6			175.4			148.2			177.8			202.3			251.6
Annual percentage returns assuming dividends reinvested
Income return		3.4			2.5		2.5			2.5			2.2			2.7			2.4			2.4
Capital return		41.4			11.7		2.0			20.6			(15.4	)		20.2			13.9			24.5
ICA total return		44.8			14.2		4.5			23.1			(13.2	)		22.9			16.3			26.9
Fund expenses3		0.68			0.64		0.62			0.59			0.61			0.59			0.58			0.57


Year ended
December 31		1966			1967		1968			1969			1970			1971			1972			1973

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		15.5			18.4		22.6			25.3			27.3			28.6			29.9			33.4
Value at year-end		657.1			846.9		990.6			884.8			908.0			1,062.7			1,231.1			1,024.1
Dividends in cash		5.9			6.9		8.3			9.0			9.4			9.6			9.7			10.6
Value at year-end		248.0			312.5		356.6			309.6			307.4			349.7			394.7			317.9
Annual percentage returns assuming dividends reinvested
Income return		2.4			2.8		2.7			2.6			3.1			3.1			2.8			2.7
Capital return		(1.4	)		26.1		14.3			(13.3	)		(0.5	)		13.9			13.1			(19.5	)
ICA total return		1.0			28.9		17.0			(10.7	)		2.6			17.0			15.9			(16.8	)
Fund expenses3		0.52			0.50		0.49			0.48			0.55			0.51			0.49			0.47


Year ended
December 31		1974			1975		1976			1977			1978			1979			1980			1981

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		52.2			49.8		46.4			49.8			56.0			70.0			91.3			115.9
Value at year-end		840.3			1,137.7		1,474.4			1,436.4			1,647.5			1,963.3			2,380.2			2,401.1
Dividends in cash		15.9			14.3		12.8			13.3			14.4			17.3			21.7			26.4
Value at year-end		245.5			317.7		398.1			374.3			414.4			475.7			552.2			530.9
Annual percentage returns assuming dividends reinvested
Income return		5.1			5.9		4.1			3.4			3.9			4.2			4.7			4.9
Capital return		(23.0	)		29.5		25.5			(6.0	)		10.8			15.0			16.5			(4.0	)
ICA total return		(17.9	)		35.4		29.6			(2.6	)		14.7			19.2			21.2			0.9
Fund expenses3		0.49			0.48		0.46			0.49			0.49			0.47			0.46			0.45


Year ended
December 31		1982			1983		1984			1985			1986			1987			1988			1989

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		146.1			147.2		160.4			174.9			203.8			267.5			318.7			370.8
Value at year-end		3,212.0			3,859.7		4,117.2			5,491.9			6,685.7			7,049.2			7,989.3			10,338.6
Dividends in cash		31.6			30.3		31.7			33.2			37.3			47.5			54.4			60.7
Value at year-end		670.6			774.5		792.0			1,017.9			1,200.5			1,220.9			1,327.4			1,652.8
Annual percentage returns assuming dividends reinvested
Income return		6.1			4.6		4.2			4.2			3.7			4.0			4.5			4.6
Capital return		27.7			15.6		2.5			29.2			18.0			1.4			8.8			24.8
ICA total return		33.8			20.2		6.7			33.4			21.7			5.4			13.3			29.4
Fund expenses3		0.46			0.44		0.47			0.43			0.41			0.42			0.48			0.52


Year ended
December 31		1990			1991		1992			1993			1994			1995			1996			1997

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		406.3			320.4		357.8			374.4			407.2			450.1			480.1			510.3
Value at year-end		10,409.0			13,171.9		14,092.3			15,729.4			15,753.9			20,578.7			24,560.6			31,881.2
Dividends in cash		64.1			48.7		53.0			54.0			57.3			61.7			64.3			67.0
Value at year-end		1,598.8			1,969.9		2,052.2			2,234.2			2,180.6			2,779.7			3,247.9			4,142.7
Annual percentage returns assuming dividends reinvested
Income return		3.9			3.1		2.7			2.7			2.6			2.9			2.3			2.1
Capital return		(3.2	)		23.4		4.3			8.9			(2.4	)		27.7			17.0			27.7
ICA total return		0.7			26.5		7.0			11.6			0.2			30.6			19.3			29.8
Fund expenses3		0.55			0.59		0.58			0.59			0.60			0.60			0.59			0.56


Year ended
December 31		1998			1999		2000			2001			2002			2003			2004			2005

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		584.1			651.8		743.4			804.1			833.3			864.3			887.4			1,196.3
Value at year-end		39,193.5			45,682.2		47,435.2			45,258.6			38,709.1			48,891.6			53,674.5			57,361.4
Dividends in cash		75.4			82.8		93.0			99.0			100.7			102.2			103.0			136.3
Value at year-end		5,008.2			5,748.5		5,875.5			5,507.5			4,616.9			5,713.5			6,163.0			6,446.5
Annual percentage returns assuming dividends reinvested
Income return		1.8			1.7		1.6			1.7			1.8			2.2			1.8			2.2
Capital return		21.1			14.9		2.2			(6.3	)		(16.3	)		24.1			8.0			4.7
ICA total return		22.9			16.6		3.8			(4.6	)		(14.5	)		26.3			9.8			6.9
Fund expenses3		0.55			0.55		0.56			0.57			0.59			0.59			0.57			0.57


Year ended
December 31		2006			2007		2008			2009			2010

Year-by-year summary of results (dollars in thousands)
Dividends reinvested		1,364.6			1,319.3		1,466.7			1,264.7			1,272.4
Value at year-end		66,504.4			70,456.8		45,983.8			58,481.1			64,830.6	1
Dividends in cash		152.1			144.0		156.9			131.5			129.2
Value at year-end		7,313.2			7,601.9		4,835.7			5,986.9			6,496.8	2
Annual percentage returns assuming dividends reinvested
Income return		2.4			2.0		2.1			2.8			2.2
Capital return		13.5			3.9		(36.8	)		24.4			8.7
ICA total return		15.9			5.9		(34.7	)		27.2			10.9
Fund expenses3		0.57			0.56		0.59			0.66			0.61

The results shown are before taxes on fund distributions and sale of fund shares.

The S&P 500 is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes.

1Includes dividends of $19,206,133 and capital gain distributions of $32,095,643 reinvested in the years 1936 to 2010.

2Includes reinvested capital gain distributions of $4,317,598, but does not reflect income dividends of $2,571,006 taken in cash.

3Fund expense percentages do not reflect a fee waiver and are provided as additional information. They should not be subtracted from any other figure on the table because all fund results already reflect their effect.

[photo of trees]

The importance of experience

[close-up photo of the bark of a tree]

[photo of a tree branch]

It’s an old saying: There’s no substitute for experience. For nearly 80 years, The Investment Company of America has emphasized investment professionals’ depth of experience and longevity on the fund. Most of the portfolio counselors have been with Capital Research and Management Company, the fund’s investment advisor, for decades. In fact, ICA’s seven portfolio counselors collectively bring 158 years of experience. That sounds like an impressive number, so we ask ourselves: Why does experience matter in investing and what is its value for the fund’s shareholders?

“This is a business where cumulative experience — the knowledge that comes with time — helps us, and ultimately the fund’s shareholders,” says Don O’Neal, a portfolio counselor and president of the fund who has been with Capital for 26 years. “It enables us to recognize patterns from the past, to understand cycles and swings, and to have more courage in the face of adversity.”

In investing, that courage can allow for action when others are paralyzed. Alternatively, courage is sometimes better reflected in restraint — the ability to hold a steady course when others are reacting blindly.

Don recalls his first market crisis, known as Black Monday, when stock markets around the world dropped with an unprecedented swiftness and severity in one day in October 1987. “When I think about the big moments early in my career, it was very important that we had so many people in the room who had been through other crises,” he says. “I was able to learn from Mike Shanahan and others who had been investing for decades already.”

Now Don has decades of his own experience to share with his younger peers. “When we had the ‘flash crash’ in May 2010, I could take a moment and reflect back on what I experienced in 1987, and help other analysts think about that,” he says.

Passing down the culture

Capital’s culture naturally fosters such longevity. “It’s a bit like osmosis. It’s subtle but so beneficial,” says Jim Lovelace, a portfolio counselor and vice chairman of ICA. “This is due to the way we pass culture down, and it only works because investment professionals stay here for such a long time.” Jim began at the Capital organization in 1982, Don in 1985. Jim and Don, as well as most of the other portfolio counselors, started their investment careers as research analysts.

[Begin Sidebar]

Speaking of

experience:

Some observations

about ICA’s most senior

portfolio counselor

[photo of Mike Shanahan]

Mike Shanahan joined Capital in 1965 as an investment analyst after receiving his MBA from Stanford Business School. He has been a portfolio counselor for The Investment Company of America, as well as several other funds. He was president of the The Capital Group Companies from 1981 to 1991, and has been chairman emeritus of Capital Research and Management Company. He stepped down as portfolio counselor in 2010.

“Mike has been one of the real leaders of the Capital organization,” says Don O’Neal, a portfolio counselor and president of ICA, adding that Mike has contributed through his investment prowess, and also through his influence over the years on how Capital was managed. “He is one of those rare people who is extraordinarily good at everything he does. Not everyone who is a good investor is good at the organizational details as well. He’s one of the true giants in the history of the organization.”

Mike passed down the lessons he learned in the 46 years he has spent investing at Capital, including the importance of dividends. He says he learned about that from the organization’s founder, Jonathan Bell Lovelace, known as “JBL.” Mike recalls, “JBL stressed how important dividends were, and as young people, we just nodded. But he taught me how important dividends are to the total return for shareholders.”

Jim Lovelace, a portfolio counselor and vice chairman of ICA, says Mike in turn passed this along as well as other lessons from his experience, including keeping some cash in a heady market for good opportunities at good prices. “I remember Mike saying, ‘It’s all well and good to wait for low prices, but if you don’t have any cash at the bottom, then you lose that benefit.”

In Mike’s words, “At Capital, it all comes down to this: We focus on the fundamentals, looking for good companies at reasonable prices relative to their prospects. And keeping your head during periods of volatility.”

[End Sidebar]

“The intergenerational aspect of how we manage money, called the multiple portfolio counselor system (see the sidebar on page 13 for more information), allows us to learn from those who came before us, and we pass that knowledge on to the next person, who passes it on to the next,” Don says.

This is important when managing portfolio counselor changes as well, as the system helps keep the fund from losing a step when a portfolio counselor steps down. “The system is very modular. When a portfolio counselor retires, it has very little impact on the overall portfolio and turnover is low because the assets seamlessly move to other portfolio counselors,” Jim says. “The multiple portfolio counselor system is what gives the fund consistency, making the ICA of the past the same fund it is now and the same one it will be in the future.”

Culture is often difficult to describe, but at Capital longevity and experience are key to understanding the culture. “Most of our investment professionals have spent their whole careers here. It is a testimony to the attractiveness of this company. Even those who worked at other firms, once they land here, they tend to stay here. We have a very attractive culture and investment approach for long-term investors,” Don says.

[photo of the trunk of a large tree]

Lessons from history

Mike Shanahan has been with Capital since 1965 and has invested through bear markets and recessions, as well as several periods of great prosperity. (See the sidebar on page 10 recognizing Mike for his years of contributions to ICA and the company.) Mike, who is stepping down as a portfolio counselor in ICA, believes the benefits of sharing experience are vast. “That’s why I stuck around for so long — 46 years — to help the younger people deal with the tough times. I’ve been through it.”

Joyce Gordon, a portfolio counselor for ICA, agrees. She started as an investment analyst covering the banking industry in 1987 and was an economist before that. She has lived through many ups and downs, both in her industry and in the overall markets. She points to the early 1990s as an influential period in her development. In 1990, bank stocks were hit hard because of the large loan losses and write-downs.

“If you believed the market’s opinion, it looked like many banks would go under,” she says of that time. “What helped me was my experience communicating with bank managements and analyzing their financials.”

But most important during that time was what she learned from the outlook of portfolio counselors. “They told me to be steady and look through to the other side. That enabled me to carefully research the stocks and see that many banks were viable and undervalued and would see a likely recovery, which they did.”

Since arriving at Capital in 1995, investment research director and portfolio counselor Chris Buchbinder has had the opportunity to learn from many experienced portfolio counselors with a variety of styles, each with their own unique investment approach. “This highlights one of the unique benefits of our approach to investing — the opportunity for younger analysts to learn from experienced portfolio counselors,” he says. “On the one hand, analysts are sharing their research and insights, while on the other hand the portfolio counselors are sharing their wisdom and perspective.

[close-up photo of tree rings]

[photo of trees]

I now have had the opportunity in turn to pass along some of what I have learned. There is a virtuous cycle here in which everyone has an incentive to help others improve, and I see it in action every day.”

A long-term approach

According to Morningstar, the average tenure for stock fund portfolio managers is about five years. At American Funds, the average tenure is more than 20 years. ICA’s long-term success can be traced in part to the continuity of the investment process that serves the fund’s objective.

One of the benefits of experience and longevity is that it helps investment professionals keep an eye on the long term. “We always try to maintain a long-term orientation as investors. Sometimes under stress newer folks might have a tendency to revert to shorter term thinking. Having experienced hands around helps keep the ship steady and focused on the long run,” Jim says.

Don agrees, saying: “We try not to get distracted by the noise that’s going on in a crisis, but continue to focus on what we do best: thorough research of companies, attention to valuation and a long-term perspective.”

“Many of our analysts and portfolio counselors have experienced numerous market cycles and witnessed many different challenges,” says Ross Sappenfield, an ICA portfolio counselor who has been investing at Capital for 19 years. “We often have three or four generations of analysts who have covered the same industry, ranging from those just starting out to those who have been researching companies for decades. This experience and intergenerational perspective helps give us unique insight into a company’s or industry’s long-term prospects.”

Chris remembers lessons he gained when he began at Capital in 1995. “This was shortly before the ‘tech bubble,’ a period when many of our experienced portfolio counselors appeared to be wrong for a while as they sold tech stocks, raised cash and invested in some of the unloved industries like machinery, metals and energy. The market told them they were wrong, but they stuck with their convictions and were ultimately vindicated as the tech bubble popped and many of the more traditional companies began to benefit from the surge in global demand.” He recalls that it took a great deal of confidence and perspective to stand against the crowd.

“I learned a tremendous amount by watching this unfold, and it helped me learn to stick with my convictions and follow the fundamentals even when markets appear to believe the opposite. This made me a better investor,” Chris says. “The direct benefit to our shareholders in that period was clear.”

The wisdom that comes from experience has helped ICA at many junctures over the decades, and will continue with each generation of investors. “Learning from people who’ve been around awhile helps the younger people become better investment professionals,” Don says. “Living through these things is very helpful, and so is passing along our perspectives.”

[Begin Photo Caption]

[photo of Joyce E. Gordon]

Joyce E. Gordon

31 years

[End Photo Caption]

[Begin Photo Caption]

[photo of James B. Lovelace]

James B. Lovelace

29 years

[End Photo Caption]

[Begin Photo Caption]

[photo of Donald D. O’Neal]

Donald D. O’Neal

26 years

[End Photo Caption]

[Begin Photo Caption]

[photo of C. Ross Sappenfield]

C. Ross Sappenfield

19 years

[End Photo Caption]

[Begin Photo Caption]

[photo of William L. Robbins]

William L. Robbins

17 years

[End Photo Caption]

[Begin Photo Caption]

[photo of Chris Buchbinder]

Chris Buchbinder

15 years

[End Photo Caption]

[Begin Photo Caption]

[photo of Eric Richter]

Eric Richter

12 years

[End Photo Caption]

[Begin Sidebar]

The multiple portfolio counselor system

The Investment Company of America has an innovative approach to managing investor assets. Called the multiple portfolio counselor system, it blends individual decision-making with cooperation.

Instead of one portfolio manager making all the decisions for an entire fund, there are seven in charge of The Investment Company of America. However, this does not mean it is managed by a committee or team — each manager has sole responsibility for a slice of the fund’s assets. Each one manages his or her portion independently, as if it were an entire fund, within the parameters of ICA’s overall objectives. Another portion, which we call the research portfolio, is managed collectively by the investment analysts on the fund, who invest only within their area of research coverage.

The basic concept is simple: Over the long term, the combined — yet independent — ideas of several experienced portfolio counselors and dozens of analysts are better than those of one manager or a team that makes decisions based on the committee method. Portfolio counselors have the ability to pursue investment ideas and to act without having to gain consensus; this system differentiates American Funds from its competitors.

The portfolio counselors and analysts have every incentive to work together and compete against the external world, not against each other. “Dividing the fund’s management among seven portfolio counselors and a research portfolio allows each of us to invest in our highest convictions and to focus on those investments we know best,” says Jim Lovelace, portfolio counselor and vice chairman of ICA.

The benefits of the multiple portfolio counselor system are that it gives the fund’s portfolio counselors the freedom to make independent decisions and capitalize on their strongest investment ideas. It has added depth and frankness to debates about valuation and investment, and it has smoothed the results of the fund overall. It brings together the collective wisdom of many points of view without sacrificing accountability.

At left, we show ICA’s portfolio counselors and their years of investment experience with American Funds and its affiliates (as of March 1, 2011).

Our organization manages equity assets through separate divisions that make independent investment decisions.

[End Sidebar]

Summary investment portfolio, December 31, 2010

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.

[begin pie chart]

	Percent
	of net
Industry sector diversification	assets

Information technology		22.07	%
Energy		11.30
Consumer discretionary		10.99
Consumer staples		10.57
Industrials		10.18
Other industries		27.48
Other securities		2.11
Short-term securities & other assets less liabilities		5.30

[end pie chart]

						Percent
			Value			of net
Common stocks - 92.59%	Shares			(000	)	assets

Energy - 11.30%
Baker Hughes Inc.		10,030,000	$	573,415			.92	%
Chevron Corp.		6,480,000		591,300			.95
ConocoPhillips		19,779,140		1,346,959			2.17
Royal Dutch Shell PLC, Class A (ADR)		16,470,000		1,099,867
Royal Dutch Shell PLC, Class B		10,843,265		357,556
Royal Dutch Shell PLC, Class B (ADR)		2,925,498		195,043			2.66
Schlumberger Ltd.		12,724,999		1,062,537			1.71
Other securities				1,792,033			2.89
				7,018,710			11.30

Materials - 3.26%
Dow Chemical Co.		25,979,088		886,926			1.43
Other securities				1,134,560			1.83
				2,021,486			3.26

Industrials - 10.18%
3M Co.		4,834,265		417,197			.67
CSX Corp.		11,681,000		754,709			1.21
General Dynamics Corp.		11,438,300		811,662			1.31
Siemens AG		3,465,000		429,227			.69
Union Pacific Corp.		11,104,800		1,028,971			1.66
United Technologies Corp.		10,340,000		813,965			1.31
Other securities				2,065,707			3.33
				6,321,438			10.18

Consumer discretionary - 10.99%
Comcast Corp., Class A		22,550,271		495,429			.80
Home Depot, Inc.		24,020,000		842,141			1.36
Johnson Controls, Inc.		10,000,000		382,000			.61
McDonald's Corp.		7,150,000		548,834			.88
Staples, Inc.		20,625,000		469,631			.76
Target Corp.		12,797,000		769,484			1.24
Time Warner Inc.		13,399,000		431,046			.69
Other securities				2,885,556			4.65
				6,824,121			10.99

Consumer staples - 10.57%
Altria Group, Inc.		19,134,200		471,084			.76
Avon Products, Inc.		14,082,000		409,223			.66
CVS/Caremark Corp.		13,500,000		469,395			.75
Kraft Foods Inc., Class A		20,874,168		657,745			1.06
PepsiCo, Inc.		12,821,500		837,629			1.35
Philip Morris International Inc.		38,151,000		2,232,978			3.60
Other securities				1,483,088			2.39
				6,561,142			10.57

Health care - 6.67%
Abbott Laboratories		14,335,000		686,790			1.11
Boston Scientific Corp. (1)		69,340,000		524,904			.85
Merck & Co., Inc.		46,731,429		1,684,201			2.71
Other securities				1,242,943			2.00
				4,138,838			6.67

Financials - 7.45%
Banco Santander, SA		50,733,040		537,475
Banco Santander, SA (ADR)		5,047,435		53,755			.95
Bank of America Corp.		64,140,935		855,640			1.38
JPMorgan Chase & Co.		16,290,000		691,022			1.12
Wells Fargo & Co.		17,235,000		534,113			.86
Other securities				1,951,240			3.14
				4,623,245			7.45

Information technology - 22.07%
Corning Inc.		26,669,820		515,261			.83
Google Inc., Class A (1)		1,830,530		1,087,280			1.75
Hewlett-Packard Co.		25,540,000		1,075,234			1.73
Intel Corp.		51,164,700		1,075,994			1.73
International Business Machines Corp.		4,335,000		636,205			1.02
Microsoft Corp.		88,265,800		2,464,381			3.97
Oracle Corp.		55,165,100		1,726,668			2.78
QUALCOMM Inc.		10,157,000		502,670			.81
Texas Instruments Inc.		22,825,000		741,813			1.19
Yahoo! Inc. (1)		29,583,220		491,969			.80
Other securities				3,387,455			5.46
				13,704,930			22.07

Telecommunication services - 5.40%
AT&T Inc.		85,701,900		2,517,922			4.06
Qwest Communications International Inc.		80,980,000		616,258			.99
Other securities				219,072			.35
				3,353,252			5.40

Utilities - 3.26%
Dominion Resources, Inc.		10,623,824		453,850			.73
GDF SUEZ		16,595,324		595,435			.96
Other securities				975,808			1.57
				2,025,093			3.26

Miscellaneous - 1.44%
Other common stocks in initial period of acquisition				893,526			1.44


Total common stocks (cost: $45,333,418,000)				57,485,781			92.59





Preferred stocks - 0.29%

Financials - 0.29%
JPMorgan Chase & Co., Series I, 7.90% (2)		84,861,000		90,510			.15
Wells Fargo & Co., Series K, 7.98% (2)		23,667,000		25,087			.04
Other securities				63,196			.10


Total preferred stocks (cost: $141,167,000)				178,793			.29





Warrants - 0.00%

Financials - 0.00%
Other securities				-			.00

Total warrants (cost: $11,770,000)				-			.00





Convertible securities - 0.62%

Other - 0.10%
Other securities				58,255			.10

Miscellaneous - 0.52%
Other convertible securities in initial period of acquisition				324,069			.52


Total convertible securities (cost: $772,508,000)				382,324			.62



	Principal
	amount (000)
Bonds & notes - 1.20%

Materials - 0.05%
Dow Chemical Co. 8.55% 2019	$	15,000		18,828			.03
Other securities				11,580			.02
				30,408			.05

Industrials - 0.09%
CSX Corp. 6.25% 2015		5,000		5,688			.01
Union Pacific Corp. 5.125%-6.125% 2014-2010		10,000		11,159			.02
United Technologies Corp. 4.50% 2020		5,475		5,758			.01
Other securities				31,026			.05
				53,631			.09

Consumer staples - 0.04%
Kraft Foods Inc. 2.625% 2013		5,110		5,258			.01
Other securities				21,789			.03
				27,047			.04

Health care - 0.05%
Abbott Laboratories 5.125% 2019		2,500		2,757			.00
Other securities				29,448			.05
				32,205			.05

Financials - 0.17%
Bank of America Corp. 5.875% 2021		7,500		7,774			.01
Wachovia Capital Trust III 5.80% (undated) (2)		5,525		4,814			.01
Other securities				91,882			.15
				104,470			.17

Telecommunication services - 0.03%
AT&T Inc. 4.85% 2014		5,000		5,411			.01
Other securities				13,829			.02
				19,240			.03

Bonds & notes of U.S. government & government agencies - 0.35%
Freddie Mac 2.125% 2012		10,000		10,243			.01
Other securities				210,130			.34
				220,373			.35

Other - 0.42%
Other securities				260,300			.42


Total bonds & notes (cost: $698,024,000)				747,674			1.20




Short-term securities - 5.19%


Bank of America Corp. 0.28% due 1/3/2011		75,000		74,998			.12
Federal Home Loan Bank 0.16%-0.45% due 1/5-12/6/2011		541,750		540,811			.87
Freddie Mac 0.142%-0.42% due 1/3-12/1/2011		1,181,947		1,180,686			1.90
Google Inc. 0.20% due 1/19/2011 (3)		25,000		24,997			.04
Jupiter Securitization Co., LLC 0.25%-0.26% due 1/7-2/16/2011 (3)		181,400		181,370			.29
U.S. Treasury Bills 0.134%-0.278% due 3/10-11/17/2011		417,100		416,818			.67
Variable Funding Capital Company LLC 0.26%-0.27% due 1/7-1/14/2011 (3)		77,600		77,594			.13
Other securities				725,076			1.17


Total short-term securities (cost: $3,222,058,000)				3,222,350			5.19


Total investment securities (cost: $50,178,945,000)				62,016,922			99.89
Other assets less liabilities				70,920			.11

Net assets			$	62,087,842			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, including securities which were valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $19,804,000, which represented .03% of the net assets of the fund.

The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.

(1) Security did not produce income during the last 12 months.
(2) Coupon rate may change periodically.
(3) Acquired in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $759,349,000, which represented 1.22% of the net assets of the fund.


Key to abbreviation
ADR = American Depositary Receipts


See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at December 31, 2010	(dollars in thousands)

Assets:
Investment securities, at value (cost: $50,178,945)			$	62,016,922
Cash				519
Receivables for:
Sales of investments	$	54,289
Sales of fund's shares		219,763
Dividends and interest		107,469		381,521
				62,398,962
Liabilities:
Payables for:
Purchases of investments		12,451
Repurchases of fund's shares		257,402
Investment advisory services		12,584
Services provided by related parties		21,464
Trustees' and advisory board's deferred compensation		6,645
Other		574		311,120
Net assets at December 31, 2010			$	62,087,842

Net assets consist of:
Capital paid in on shares of beneficial interest			$	51,786,748
Undistributed net investment income				150,245
Accumulated net realized loss				(1,687,746	)
Net unrealized appreciation				11,838,595
Net assets at December 31, 2010			$	62,087,842

	(dollars and shares in thousands, except per-share amounts)
Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized (2,206,123 total shares outstanding)
	Net assets		Shares outstanding		Net asset value per share
Class A	$	48,788,660		1,732,646	$	28.16
Class B		1,430,498		51,001		28.05
Class C		2,212,075		79,087		27.97
Class F-1		1,558,162		55,415		28.12
Class F-2		669,186		23,769		28.15
Class 529-A		1,361,473		48,414		28.12
Class 529-B		165,057		5,882		28.06
Class 529-C		352,292		12,555		28.06
Class 529-E		56,950		2,029		28.07
Class 529-F-1		27,465		977		28.10
Class R-1		78,218		2,791		28.02
Class R-2		654,231		23,325		28.05
Class R-3		826,897		29,430		28.10
Class R-4		680,788		24,214		28.12
Class R-5		895,438		31,810		28.15
Class R-6		2,330,452		82,778		28.15


See Notes to Financial Statements

Statement of operations
for the year ended December 31, 2010	(dollars in thousands)

Investment income:
Income:
Dividends (net of non-U.S. taxes of $37,220)	$	1,548,139
Interest		79,123		$	1,627,262

Fees and expenses*:
Investment advisory services		143,719
Distribution services		168,379
Transfer agent services		59,609
Administrative services		17,601
Reports to shareholders		2,868
Registration statement and prospectus		937
Trustees' and advisory board's compensation		1,193
Auditing and legal		210
Custodian		1,308
State and local taxes		507
Other		2,802			399,133
Net investment income					1,228,129


Net realized gain and unrealized appreciation
on investments and currency:
Net realized gain on:
Investments		1,760,328
Currency transactions		1,868			1,762,196
Net unrealized appreciation (depreciation) on:
Investments		3,079,669
Currency translations		(113	)		3,079,556
Net realized gain and unrealized appreciation
on investments and currency					4,841,752
Net increase in net assets resulting
from operations				$	6,069,881

*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 December 31
		2010			2009
Operations:
Net investment income	$	1,228,129		$	1,224,302
Net realized gain (loss) on investments and currency transactions		1,762,196			(1,814,229	)
Net unrealized appreciation on investments and currency translations		3,079,556			13,859,597
Net increase in net assets resulting from operations		6,069,881			13,269,670

Dividends paid to shareholders from net investment income		(1,235,556	)		(1,346,554	)

Net capital share transactions		(4,388,099	)		(3,397,226	)

Total increase in net assets		446,226			8,525,890

Net assets:
Beginning of year		61,641,616			53,115,726
End of year (including undistributed
net investment income: $150,245 and $153,405, respectively)	$	62,087,842		$	61,641,616


See Notes to Financial Statements

Notes to financial statements

1.	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 the potential for capital appreciation and future dividends than on current yield. Effective March 1, 2010, the fund reorganized from a Delaware corporation to a Delaware statutory trust in accordance with a proposal approved by shareholders on November 24, 2009.

The fund has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Classes A and 529-A	Up to 5.75%	None (except 1% for certain redemptions within one year of purchase without an initial sales charge)	None
Classes B and 529-B*	None	Declines from 5% to 0% for redemptions within six years of purchase	Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years
Class C	None	1% for redemptions within one year of purchase	Class C converts to Class F-1 after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Classes F-1, F-2 and 529-F-1	None	None	None
Classes R-1, R-2, R-3, R-4, R-5 and R-6	None	None	None

*Class B and 529-B shares of the fund are not available for purchase.

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

2.	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 fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

Valuation

The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.

Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

Equity securities are generally 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 generally valued at prices obtained as of approximately 3:00 p.m. New York time from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.

Fixed-income class	Examples of standard inputs
All	Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”)
Corporate bonds & notes; convertible securities	Standard inputs and underlying equity of the issuer
Bonds & notes of governments & government agencies	Standard inputs and interest rate volatilities
Mortgage-backed; asset-backed obligations	Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information

Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type.

Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally 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 fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted by authority of the fund's board of trustees. Market quotations may be considered unreliable if events occur that materially affect the value of securities (particularly equity securities trading outside the U.S.) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.

Classifications - The fund classifies its assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of December 31, 2010 (dollars in thousands):

Investment securities:	Level 1		Level 2		Level 3		Total
Common stocks:
Energy	$	7,018,710	$	-	$	-	$	7,018,710
Materials		2,021,486		-		-		2,021,486
Industrials		6,321,438		-		-		6,321,438
Consumer discretionary		6,824,121		-		-		6,824,121
Consumer staples		6,561,142		-		-		6,561,142
Health care		4,138,838		-		-		4,138,838
Financials		4,623,245		-		-		4,623,245
Information technology		13,704,930		-		-		13,704,930
Telecommunication services		3,353,252		-		-		3,353,252
Utilities		2,025,093		-		-		2,025,093
Miscellaneous		893,526		-		-		893,526
Preferred stocks		-		178,793		-		178,793
Convertible securities		291,201		91,123		-		382,324
Bonds & notes		-		747,674		-		747,674
Short-term securities		-		3,222,350		-		3,222,350
Total	$	57,776,982	$	4,239,940	$	-	$	62,016,922

4.	Risk factors

Investing in the fund may involve certain risks including, but not limited to, those described below.

Market conditions — The prices of, and the income generated by, the common stocks and other securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.

Investing in income-oriented stocks — Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests.

Investing in growth-oriented stocks — Growth-oriented stocks may involve larger price swings and greater potential for loss than other types of investments.

Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards than those in the U.S.

Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.

5.	Taxation and distributions

Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended December 31, 2010, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2007 and by state tax authorities for tax years before 2006.

Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; deferred expenses; cost of investments sold; and net capital losses. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.

During the year ended December 31, 2010, the fund reclassified $4,472,000 from accumulated net realized loss to undistributed net investment income; $205,000 from undistributed net investment income to capital paid in on shares of beneficial interest; and $2,086,000 from capital paid in on shares of beneficial interest to accumulated net realized loss to align financial reporting with tax reporting.

As of December 31, 2010, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:

(dollars in thousands)
Undistributed ordinary income	$	307,318
Post-October currency loss deferrals (realized during the period November 1, 2010, through December 31, 2010)*		(378	)
Capital loss carryforward expiring 2017†		(1,855,257	)
Gross unrealized appreciation on investment securities		15,624,332
Gross unrealized depreciation on investment securities		(3,770,912	)
Net unrealized appreciation on investment securities		11,853,420
Cost of investment securities		50,163,502
*These deferrals are considered incurred in the subsequent year.
†Reflects the utilization of capital loss carryforwards of $1,759,245,000. The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains.

Under the Regulated Investment Company Modernization Act of 2010, (the “Act”), net capital losses recognized after December 31, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Under the law in effect prior to the Act, pre-enactment net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

Tax-basis distributions paid to shareholders from ordinary income were as follows (dollars in thousands):

	Year ended December 31
Share class	2010		2009
Class A	$	1,005,853	$	1,112,521
Class B		21,001		35,814
Class C		28,562		35,279
Class F-1		28,517		26,295
Class F-2		13,921		6,735
Class 529-A		25,697		24,270
Class 529-B		2,163		3,003
Class 529-C		4,217		4,644
Class 529-E		934		934
Class 529-F-1		554		471
Class R-1		982		956
Class R-2		8,218		8,796
Class R-3		13,829		14,242
Class R-4		13,162		12,685
Class R-5		20,363		51,696
Class R-6*		47,583		8,213
Total	$	1,235,556	$	1,346,554

*Class R-6 was offered beginning May 1, 2009.

6.	Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.390% on the first $1 billion of daily net assets and decreasing to 0.219% on such assets in excess of $89 billion. For the year ended December 31, 2010, the investment advisory services fee was $143,719,000, which was equivalent to an annualized rate of 0.242% of average daily net assets.

Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of trustees 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 on the following page. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Classes A and 529-A, the board of trustees 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 December 31, 2010, there were no unreimbursed expenses subject to reimbursement for Classes A or 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.25%	0.25%
Class 529-A	0.25	0.50
Classes B and 529-B	1.00	1.00
Classes C, 529-C and R-1	1.00	1.00
Class R-2	0.75	1.00
Classes 529-E and R-3	0.50	0.75
Classes F-1, 529-F-1 and R-4	0.25	0.50

Transfer agent services – The fund has a transfer agent agreement with AFS for Classes A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC as described below.

Administrative services – The fund has an administrative services agreement with CRMC for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services.

Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described above for the year ended December 31, 2010, were as follows (dollars in thousands):

					Administrative services
Share class	Distribution services		Transfer agent services		CRMC administrative services		Transfer agent services		Commonwealth of Virginia administrative services
Class A	$	108,893	$	57,634	Not applicable		Not applicable		Not applicable
Class B		16,174		1,975	Not applicable		Not applicable		Not applicable
Class C		21,455	Included in administrative services		$	3,222	$	465	Not applicable
Class F-1		3,295				1,947		127	Not applicable
Class F-2	Not applicable					763		20	Not applicable
Class 529-A		2,608				1,174		186	$	1,216
Class 529-B		1,777				171		54		178
Class 529-C		3,212				312		84		324
Class 529-E		258				50		8		51
Class 529-F-1		-				23		4		24
Class R-1		708				94		22	Not applicable
Class R-2		4,613				916		1,759	Not applicable
Class R-3		3,816				1,123		511	Not applicable
Class R-4		1,570				926		22	Not applicable
Class R-5	Not applicable					871		8	Not applicable
Class R-6	Not applicable					944		2	Not applicable
Total	$	168,379	$	59,609	$	12,536	$	3,272	$	1,793

Trustees’ and advisory board’s deferred compensation – Trustees and advisory board members 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. Trustees’ and advisory board’s compensation of $1,193,000, shown on the accompanying financial statements, includes $714,000 in current fees (either paid in cash or deferred) and a net increase of $479,000 in the value of the deferred amounts.

Affiliated officers and trustees – Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the fund.

Warrants

As of December 31, 2010, the fund had warrants outstanding which may be exercised at any time for the purchase of 818,780 Class A shares at approximately $5.24 per share. If these warrants had been exercised as of December 31, 2010, the net asset value of each share class would have been reduced by less than $0.01 per share. No warrants were exercised during the years ended December 31, 2010, or December 31, 2009.

8.	Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

	Sales*				Reinvestments of dividends and distributions				Repurchases*						Net (decrease) increase
Share class	Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares
Year ended December 31, 2010
Class A	$	3,024,163		115,953	$	950,500		36,358	$	(8,132,665	)		(313,061	)	$	(4,158,002	)		(160,750	)
Class B		20,991		810		20,489		787		(742,985	)		(28,631	)		(701,505	)		(27,034	)
Class C		194,001		7,500		27,267		1,047		(423,553	)		(16,460	)		(202,285	)		(7,913	)
Class F-1		645,213		24,850		26,422		1,009		(440,996	)		(17,109	)		230,639			8,750
Class F-2		188,724		7,288		8,483		324		(114,003	)		(4,373	)		83,204			3,239
Class 529-A		190,625		7,307		25,691		982		(133,020	)		(5,132	)		83,296			3,157
Class 529-B		3,130		121		2,162		83		(54,629	)		(2,101	)		(49,337	)		(1,897	)
Class 529-C		43,489		1,673		4,216		162		(43,434	)		(1,681	)		4,271			154
Class 529-E		6,922		267		934		36		(6,078	)		(235	)		1,778			68
Class 529-F-1		6,732		259		553		21		(3,786	)		(144	)		3,499			136
Class R-1		21,944		847		980		37		(16,667	)		(645	)		6,257			239
Class R-2		151,069		5,829		8,213		314		(176,798	)		(6,843	)		(17,516	)		(700	)
Class R-3		204,939		7,917		13,825		529		(224,863	)		(8,682	)		(6,099	)		(236	)
Class R-4		179,309		7,037		13,153		503		(190,929	)		(7,405	)		1,533			135
Class R-5		135,775		5,217		20,244		775		(1,463,855	)		(56,008	)		(1,307,836	)		(50,016	)
Class R-6		1,764,498		67,113		47,582		1,820		(172,076	)		(6,723	)		1,640,004			62,210
Total net increase
(decrease)	$	6,781,524		259,988	$	1,170,714		44,787	$	(12,340,337	)		(475,233	)	$	(4,388,099	)		(170,458	)

Year ended December 31, 2009
Class A	$	3,518,129		160,970	$	1,039,709		49,310	$	(8,226,013	)		(380,131	)	$	(3,668,175	)		(169,851	)
Class B		61,574		3,016		34,638		1,696		(687,861	)		(31,673	)		(591,649	)		(26,961	)
Class C		225,665		10,369		33,440		1,623		(421,934	)		(19,789	)		(162,829	)		(7,797	)
Class F-1		373,135		16,530		23,244		1,103		(419,203	)		(19,146	)		(22,824	)		(1,513	)
Class F-2		436,097		19,106		4,659		206		(61,811	)		(2,749	)		378,945			16,563
Class 529-A		147,182		6,639		24,250		1,147		(119,449	)		(5,425	)		51,983			2,361
Class 529-B		7,435		361		3,001		145		(17,814	)		(813	)		(7,378	)		(307	)
Class 529-C		46,212		2,105		4,640		224		(41,148	)		(1,861	)		9,704			468
Class 529-E		7,228		329		933		44		(5,476	)		(248	)		2,685			125
Class 529-F-1		6,264		284		470		22		(3,669	)		(164	)		3,065			142
Class R-1		19,533		891		954		46		(11,671	)		(526	)		8,816			411
Class R-2		159,857		7,330		8,788		421		(133,396	)		(6,118	)		35,249			1,633
Class R-3		219,289		9,963		14,229		675		(179,973	)		(8,112	)		53,545			2,526
Class R-4		495,247		22,370		12,679		580		(317,249	)		(13,410	)		190,677			9,540
Class R-5		603,306		26,788		51,354		2,450		(777,329	)		(36,239	)		(122,669	)		(7,001	)
Class R-6†		457,079		21,079		8,212		342		(21,662	)		(853	)		443,629			20,568
Total net increase
(decrease)	$	6,783,232		308,130	$	1,265,200		60,034	$	(11,445,658	)		(527,257	)	$	(3,397,226	)		(159,093	)

*Includes exchanges between share classes of the fund.
†Class R-6 was offered beginning May 1, 2009.

9.	Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $12,777,617,000 and $16,528,687,000, respectively, during the year ended December 31, 2010.

Financial highlights(1)

			Income (loss) from investment operations(2)								Dividends and distributions
	Net asset value, beginning of period		Net investment income		Net gains (losses) on securities (both realized and unrealized)			Total from investment operations			Dividends (from net investment income)			Distributions (from capital gains)			Total dividends and distributions			Net asset value, end of period		Total return(3) (4)			Net assets, end of period (in millions)		Ratio of expenses to average net assets before reimbursements/ waivers			Ratio of expenses to average net assets after reimbursements/ waivers(4)			Ratio of net income to average net assets(4)
Class A:
Year ended 12/31/2010	$	25.95	$	.55	$	2.22		$	2.77		$	(.56	)	$	-		$	(.56	)	$	28.16		10.86	%	$	48,789		.61	%		.61	%		2.12	%
Year ended 12/31/2009		20.96		.52		5.04			5.56			(.57	)		-			(.57	)		25.95		27.18			49,136		.66			.66			2.32
Year ended 12/31/2008		32.95		.63		(11.94	)		(11.31	)		(.68	)		-			(.68	)		20.96		(34.74	)		43,244		.59			.57			2.25
Year ended 12/31/2007		33.51		.72		1.24			1.96			(.66	)		(1.86	)		(2.52	)		32.95		5.94			73,480		.56			.54			2.05
Year ended 12/31/2006		31.36		.72		4.23			4.95			(.74	)		(2.06	)		(2.80	)		33.51		15.94			74,181		.57			.54			2.16
Class B:
Year ended 12/31/2010		25.84		.35		2.21			2.56			(.35	)		-			(.35	)		28.05		10.03			1,431		1.38			1.38			1.36
Year ended 12/31/2009		20.87		.35		5.02			5.37			(.40	)		-			(.40	)		25.84		26.19			2,017		1.43			1.43			1.57
Year ended 12/31/2008		32.81		.41		(11.89	)		(11.48	)		(.46	)		-			(.46	)		20.87		(35.25	)		2,191		1.36			1.34			1.48
Year ended 12/31/2007		33.37		.45		1.24			1.69			(.39	)		(1.86	)		(2.25	)		32.81		5.15			4,138		1.33			1.31			1.28
Year ended 12/31/2006		31.24		.46		4.21			4.67			(.48	)		(2.06	)		(2.54	)		33.37		15.04			4,222		1.34			1.32			1.38
Class C:
Year ended 12/31/2010		25.78		.34		2.20			2.54			(.35	)		-			(.35	)		27.97		9.95			2,212		1.43			1.43			1.31
Year ended 12/31/2009		20.82		.34		5.01			5.35			(.39	)		-			(.39	)		25.78		26.20			2,243		1.46			1.46			1.53
Year ended 12/31/2008		32.74		.40		(11.86	)		(11.46	)		(.46	)		-			(.46	)		20.82		(35.29	)		1,974		1.41			1.38			1.44
Year ended 12/31/2007		33.31		.43		1.23			1.66			(.37	)		(1.86	)		(2.23	)		32.74		5.08			3,409		1.38			1.36			1.23
Year ended 12/31/2006		31.18		.44		4.21			4.65			(.46	)		(2.06	)		(2.52	)		33.31		15.00			3,350		1.41			1.38			1.32
Class F-1:
Year ended 12/31/2010		25.92		.54		2.21			2.75			(.55	)		-			(.55	)		28.12		10.78			1,558		.66			.66			2.07
Year ended 12/31/2009		20.93		.51		5.05			5.56			(.57	)		-			(.57	)		25.92		27.21			1,209		.68			.68			2.31
Year ended 12/31/2008		32.91		.62		(11.93	)		(11.31	)		(.67	)		-			(.67	)		20.93		(34.77	)		1,009		.62			.60			2.23
Year ended 12/31/2007		33.48		.70		1.24			1.94			(.65	)		(1.86	)		(2.51	)		32.91		5.87			1,642		.60			.58			2.01
Year ended 12/31/2006		31.32		.71		4.24			4.95			(.73	)		(2.06	)		(2.79	)		33.48		15.95			1,673		.60			.58			2.12
Class F-2:
Year ended 12/31/2010		25.95		.61		2.21			2.82			(.62	)		-			(.62	)		28.15		11.07			669		.39			.39			2.34
Year ended 12/31/2009		20.96		.56		5.06			5.62			(.63	)		-			(.63	)		25.95		27.50			533		.42			.42			2.37
Period from 8/1/2008 to 12/31/2008		28.53		.26		(7.47	)		(7.21	)		(.36	)		-			(.36	)		20.96		(25.39	)		83		.17			.16			1.24
Class 529-A:
Year ended 12/31/2010		25.92		.53		2.22			2.75			(.55	)		-			(.55	)		28.12		10.77			1,362		.68			.68			2.05
Year ended 12/31/2009		20.93		.50		5.04			5.54			(.55	)		-			(.55	)		25.92		27.12			1,173		.73			.73			2.24
Year ended 12/31/2008		32.91		.60		(11.92	)		(11.32	)		(.66	)		-			(.66	)		20.93		(34.79	)		898		.67			.65			2.19
Year ended 12/31/2007		33.48		.68		1.24			1.92			(.63	)		(1.86	)		(2.49	)		32.91		5.83			1,311		.65			.63			1.95
Year ended 12/31/2006		31.33		.69		4.24			4.93			(.72	)		(2.06	)		(2.78	)		33.48		15.87			1,118		.64			.62			2.08
Class 529-B:
Year ended 12/31/2010		25.86		.33		2.20			2.53			(.33	)		-			(.33	)		28.06		9.87			165		1.48			1.48			1.26
Year ended 12/31/2009		20.89		.32		5.03			5.35			(.38	)		-			(.38	)		25.86		26.07			201		1.53			1.53			1.45
Year ended 12/31/2008		32.83		.38		(11.88	)		(11.50	)		(.44	)		-			(.44	)		20.89		(35.29	)		169		1.47			1.45			1.38
Year ended 12/31/2007		33.40		.40		1.24			1.64			(.35	)		(1.86	)		(2.21	)		32.83		4.99			261		1.46			1.43			1.15
Year ended 12/31/2006		31.27		.42		4.21			4.63			(.44	)		(2.06	)		(2.50	)		33.40		14.90			238		1.47			1.45			1.25
Class 529-C:
Year ended 12/31/2010		25.86		.33		2.21			2.54			(.34	)		-			(.34	)		28.06		9.91			352		1.47			1.47			1.26
Year ended 12/31/2009		20.89		.32		5.03			5.35			(.38	)		-			(.38	)		25.86		26.09			321		1.52			1.52			1.45
Year ended 12/31/2008		32.84		.38		(11.89	)		(11.51	)		(.44	)		-			(.44	)		20.89		(35.31	)		249		1.46			1.44			1.39
Year ended 12/31/2007		33.41		.40		1.24			1.64			(.35	)		(1.86	)		(2.21	)		32.84		4.99			374		1.45			1.43			1.15
Year ended 12/31/2006		31.27		.42		4.23			4.65			(.45	)		(2.06	)		(2.51	)		33.41		14.94			325		1.46			1.44			1.26
Class 529-E:
Year ended 12/31/2010		25.87		.46		2.21			2.67			(.47	)		-			(.47	)		28.07		10.46			57		.97			.97			1.76
Year ended 12/31/2009		20.89		.43		5.04			5.47			(.49	)		-			(.49	)		25.87		26.77			51		1.02			1.02			1.96
Year ended 12/31/2008		32.85		.52		(11.90	)		(11.38	)		(.58	)		-			(.58	)		20.89		(34.98	)		38		.96			.94			1.90
Year ended 12/31/2007		33.42		.58		1.24			1.82			(.53	)		(1.86	)		(2.39	)		32.85		5.52			56		.95			.92			1.66
Year ended 12/31/2006		31.28		.59		4.23			4.82			(.62	)		(2.06	)		(2.68	)		33.42		15.52			48		.95			.92			1.78

Class 529-F-1:
Year ended 12/31/2010	$	25.90	$	.59	$	2.21		$	2.80		$	(.60	)	$	-		$	(.60	)	$	28.10		11.00	%	$	28		.47	%		.47	%		2.26	%
Year ended 12/31/2009		20.92		.55		5.03			5.58			(.60	)		-			(.60	)		25.90		27.37			22		.52			.52			2.44
Year ended 12/31/2008		32.90		.66		(11.92	)		(11.26	)		(.72	)		-			(.72	)		20.92		(34.66	)		15		.46			.44			2.40
Year ended 12/31/2007		33.47		.75		1.24			1.99			(.70	)		(1.86	)		(2.56	)		32.90		6.05			19		.45			.42			2.15
Year ended 12/31/2006		31.32		.76		4.23			4.99			(.78	)		(2.06	)		(2.84	)		33.47		16.10			13		.45			.42			2.27
Class R-1:
Year ended 12/31/2010		25.83		.35		2.20			2.55			(.36	)		-			(.36	)		28.02		9.96			78		1.41			1.41			1.32
Year ended 12/31/2009		20.87		.34		5.02			5.36			(.40	)		-			(.40	)		25.83		26.18			66		1.44			1.44			1.52
Year ended 12/31/2008		32.81		.40		(11.88	)		(11.48	)		(.46	)		-			(.46	)		20.87		(35.25	)		45		1.39			1.36			1.48
Year ended 12/31/2007		33.39		.42		1.23			1.65			(.37	)		(1.86	)		(2.23	)		32.81		5.06			61		1.40			1.38			1.20
Year ended 12/31/2006		31.25		.44		4.22			4.66			(.46	)		(2.06	)		(2.52	)		33.39		14.96			49		1.42			1.39			1.31
Class R-2:
Year ended 12/31/2010		25.85		.34		2.21			2.55			(.35	)		-			(.35	)		28.05		9.96			654		1.44			1.44			1.30
Year ended 12/31/2009		20.88		.32		5.03			5.35			(.38	)		-			(.38	)		25.85		26.08			621		1.52			1.52			1.45
Year ended 12/31/2008		32.83		.38		(11.89	)		(11.51	)		(.44	)		-			(.44	)		20.88		(35.33	)		468		1.48			1.46			1.37
Year ended 12/31/2007		33.40		.42		1.23			1.65			(.36	)		(1.86	)		(2.22	)		32.83		5.04			694		1.44			1.39			1.19
Year ended 12/31/2006		31.26		.43		4.23			4.66			(.46	)		(2.06	)		(2.52	)		33.40		14.99			625		1.50			1.39			1.31
Class R-3:
Year ended 12/31/2010		25.90		.46		2.21			2.67			(.47	)		-			(.47	)		28.10		10.45			827		.97			.97			1.77
Year ended 12/31/2009		20.92		.44		5.04			5.48			(.50	)		-			(.50	)		25.90		26.76			768		1.00			1.00			1.97
Year ended 12/31/2008		32.88		.53		(11.90	)		(11.37	)		(.59	)		-			(.59	)		20.92		(34.94	)		568		.92			.90			1.91
Year ended 12/31/2007		33.45		.58		1.24			1.82			(.53	)		(1.86	)		(2.39	)		32.88		5.52			1,032		.94			.92			1.66
Year ended 12/31/2006		31.30		.59		4.24			4.83			(.62	)		(2.06	)		(2.68	)		33.45		15.54			909		.94			.92			1.78
Class R-4:
Year ended 12/31/2010		25.91		.54		2.22			2.76			(.55	)		-			(.55	)		28.12		10.82			681		.65			.65			2.08
Year ended 12/31/2009		20.93		.50		5.05			5.55			(.57	)		-			(.57	)		25.91		27.16			624		.68			.68			2.21
Year ended 12/31/2008		32.90		.61		(11.91	)		(11.30	)		(.67	)		-			(.67	)		20.93		(34.78	)		304		.65			.62			2.21
Year ended 12/31/2007		33.48		.68		1.23			1.91			(.63	)		(1.86	)		(2.49	)		32.90		5.85			419		.65			.63			1.95
Year ended 12/31/2006		31.32		.69		4.24			4.93			(.71	)		(2.06	)		(2.77	)		33.48		15.90			323		.65			.62			2.07
Class R-5:
Year ended 12/31/2010		25.94		.61		2.23			2.84			(.63	)		-			(.63	)		28.15		11.14			895		.35			.35			2.33
Year ended 12/31/2009		20.95		.58		5.04			5.62			(.63	)		-			(.63	)		25.94		27.57			2,123		.38			.38			2.62
Year ended 12/31/2008		32.95		.69		(11.94	)		(11.25	)		(.75	)		-			(.75	)		20.95		(34.60	)		1,861		.35			.33			2.52
Year ended 12/31/2007		33.51		.79		1.25			2.04			(.74	)		(1.86	)		(2.60	)		32.95		6.18			2,307		.35			.33			2.25
Year ended 12/31/2006		31.35		.79		4.24			5.03			(.81	)		(2.06	)		(2.87	)		33.51		16.22			1,980		.35			.33			2.37
Class R-6:
Year ended 12/31/2010		25.95		.63		2.21			2.84			(.64	)		-			(.64	)		28.15		11.16			2,330		.30			.30			2.45
Period from 5/1/2009 to 12/31/2009		20.70		.40		5.30			5.70			(.45	)		-			(.45	)		25.95		27.76			534		.33	(5)		.33	(5)		2.52	(5)

	Year ended December 31
	2010			2009			2008			2007			2006
Portfolio turnover rate for all share classes		23	%		28	%		31	%		22	%		20	%

(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.

(2)Based on average shares outstanding.

(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges.

(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.

(5)Annualized.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of The Investment Company of America:

We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of The Investment Company of America (the “Fund”), as of December 31, 2010, and the related statement of operations, the statement of changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets of the Fund for the year ended December 31, 2009, and financial highlights for each of the four years in the period then ended were audited by other auditors whose report, dated February 8, 2010, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the 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 audit 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 December 31, 2010, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides 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 Investment Company of America as of December 31, 2010, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Costa Mesa, California

February 9, 2011

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 fund hereby designates the following amounts for the fund’s fiscal year ended December 31, 2010:

Qualified dividend income		100	%
Corporate dividends received deduction		100	%
U.S. government income that may be exempt from state taxation	$	5,482,000

Individual shareholders should refer to their Form 1099 or other tax information, which was mailed in January 2011, to determine the calendar year amounts to be included on their 2010 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 (July 1, 2010, through December 31, 2010).

Actual expenses:

The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.

Notes:

There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.

Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning account value 7/1/2010		Ending account value 12/31/2010		Expenses paid during period*		Annualized expense ratio

Class A -- actual return	$	1,000.00	$	1,214.26	$	3.40		.61	%
Class A -- assumed 5% return		1,000.00		1,022.13		3.11		.61
Class B -- actual return		1,000.00		1,209.96		7.63		1.37
Class B -- assumed 5% return		1,000.00		1,018.30		6.97		1.37
Class C -- actual return		1,000.00		1,209.56		7.96		1.43
Class C -- assumed 5% return		1,000.00		1,018.00		7.27		1.43
Class F-1 -- actual return		1,000.00		1,214.36		3.68		.66
Class F-1 -- assumed 5% return		1,000.00		1,021.88		3.36		.66
Class F-2 -- actual return		1,000.00		1,215.66		2.18		.39
Class F-2 -- assumed 5% return		1,000.00		1,023.24		1.99		.39
Class 529-A -- actual return		1,000.00		1,213.69		3.85		.69
Class 529-A -- assumed 5% return		1,000.00		1,021.73		3.52		.69
Class 529-B -- actual return		1,000.00		1,208.68		8.24		1.48
Class 529-B -- assumed 5% return		1,000.00		1,017.74		7.53		1.48
Class 529-C -- actual return		1,000.00		1,208.99		8.18		1.47
Class 529-C -- assumed 5% return		1,000.00		1,017.80		7.48		1.47
Class 529-E -- actual return		1,000.00		1,212.43		5.41		.97
Class 529-E -- assumed 5% return		1,000.00		1,020.32		4.94		.97
Class 529-F-1 -- actual return		1,000.00		1,215.16		2.62		.47
Class 529-F-1 -- assumed 5% return		1,000.00		1,022.84		2.40		.47
Class R-1 -- actual return		1,000.00		1,209.23		7.85		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		1,209.38		7.91		1.42
Class R-2 -- assumed 5% return		1,000.00		1,018.05		7.22		1.42
Class R-3 -- actual return		1,000.00		1,212.21		5.35		.96
Class R-3 -- assumed 5% return		1,000.00		1,020.37		4.89		.96
Class R-4 -- actual return		1,000.00		1,214.33		3.63		.65
Class R-4 -- assumed 5% return		1,000.00		1,021.93		3.31		.65
Class R-5 -- actual return		1,000.00		1,215.91		1.95		.35
Class R-5 -- assumed 5% return		1,000.00		1,023.44		1.79		.35
Class R-6 -- actual return		1,000.00		1,216.19		1.68		.30
Class R-6 -- assumed 5% return		1,000.00		1,023.69		1.53		.30

*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period).

Board of trustees and other officers

“Independent” trustees1

	Year first
	elected a
	trustee of
Name and age	the fund2	Principal occupation(s) during past five years

Louise H. Bryson, 66	1999	Chair Emerita of the Board of Trustees, J. Paul Getty
		Trust; former President, Distribution, Lifetime
		Entertainment Network; former Executive Vice
		President and General Manager, Lifetime Movie
		Network

Mary Anne Dolan, 63	2000	Founder and President, MAD Ink
Chairman of the Board		(communications company)
(Independent and Non-Executive)

James G. Ellis, 64	2008	Dean and Professor of Marketing, Marshall School of
		Business, University of Southern California

Leonard R. Fuller, 64	2002	President and CEO, Fuller Consulting (financial
		management consulting firm)

William D. Jones, 55	2010	Real estate developer/owner, President and CEO,
		CityLink Investment Corporation (acquires, develops
		and manages real estate ventures in selected urban
		communities) and City Scene Management Company
		(provides commercial asset and property
		management services)

L. Daniel Jorndt, 69	2006	Retired

William H. Kling, 68	2010	President and CEO, American Public Media Group

John C. Mazziotta, M.D.,	2011	Physician; Chair, Department of Neurology, University
Ph.D., 61		of California at Los Angeles; Associate Director,
		Semel Institute, UCLA; Director, Brain Mapping
		Center, UCLA

John G. McDonald, 73	1976	Stanford Investors Professor, Graduate School of
		Business, Stanford University

Bailey Morris-Eck, 66	1993	Director and Programming Chair, WYPR Baltimore/
		Washington (public radio station); Senior Adviser,
		Financial News (London); Senior Fellow, Institute for
		International Economics

Steven B. Sample, Ph.D., 70	2010	President Emeritus, University of Southern California


“Independent” trustees1
	Number of
	portfolios
	in fund
	complex3
	overseen by
Name and age	trustee	Other directorships4 held by trustee

Louise H. Bryson, 66	7	None

Mary Anne Dolan, 63	10	None
Chairman of the Board
(Independent and Non-Executive)

James G. Ellis, 64	44	Quiksilver, Inc.

Leonard R. Fuller, 64	44	None

William D. Jones, 55	7	Sempra Energy

L. Daniel Jorndt, 69	4	None

William H. Kling, 68	10	None

John C. Mazziotta, M.D.,	4	None
Ph.D., 61

John G. McDonald, 73	13	iStar Financial, Inc.; Plum Creek Timber Co.;
		QuinStreet, Inc.; Scholastic Corporation

Bailey Morris-Eck, 66	4	None

Steven B. Sample, Ph.D., 70	4	Intermec, Inc.

Martin Fenton, a trustee since 2000; Richard G. Newman, a trustee since 1996; and Olin C. Robison, a trustee since 1987 (and an advisory board member from 1977 to 1987), retired from the board in December 2010. The trustees thank Messrs. Fenton and Newman and Dr. Robison for their dedication and service to the fund.

“Interested” trustees5
	Year first
	elected a
	trustee or	Principal occupation(s) during past five years and
Name, age and	officer of	positions held with affiliated entities or the
position with fund	the fund2	principal underwriter of the fund

James B. Lovelace,6 54	1994	Senior Vice President — Capital Research Global
Vice Chairman of the Board		Investors, Capital Research and Management
		Company; Director, The Capital Group Companies,
		Inc.7

Donald D. O’Neal, 50	1994	Senior Vice President — Capital Research Global
President		Investors, Capital Research and Management
		Company; Director, The Capital Group Companies,
		Inc.7


“Interested” trustees5
	Number of
	portfolios
	in fund
	complex3
Name, age and	overseen by
position with fund	trustee	Other directorships4 held by trustee

James B. Lovelace,6 54	12	None
Vice Chairman of the Board

Donald D. O’Neal, 50	18	None
President

Chairman emeritus
Jon B. Lovelace, Jr.,6 84		Chairman Emeritus, Capital Research and
		Management Company

The fund’s statement of additional information includes further details about fund trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180 or by visiting the American Funds website at americanfunds.com. The address for all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.

Other officers

	Year first
	elected	Principal occupation(s) during past five years
Name, age and	an officer	and positions held with affiliated entities or the
position with fund	of the fund2	principal underwriter of the fund

Paul G. Haaga, Jr., 62	2007	Chairman of the Board, Capital Research and
Executive Vice President		Management Company; Senior Vice President —
		Fixed Income, Capital Research and Management
		Company

Joyce E. Gordon, 54	1998	Senior Vice President — Capital Research Global
Senior Vice President		Investors, Capital Research and Management
		Company; Director, The Capital Group Companies,
		Inc.7

Christopher D. Buchbinder, 39	2010	Senior Vice President — Capital Research Global
Vice President		Investors, Capital Research Company;7 Director,
		Capital Research Company7

Anne M. Llewellyn, 63	1984	Senior Vice President — Fund Business Management
Vice President		Group, Capital Research and Management Company

William L. Robbins, 42	2010	Senior Vice President — Capital Research Global
Vice President		Investors, Capital Research Company;7 Director and
		Co-President, Capital Research Company7

Paul F. Roye, 57	2008	Senior Vice President — Fund Business Management
Vice President		Group, Capital Research and Management Company;
		Director, American Funds Service Company;7 former
		Director, Division of Investment Management, United
		States Securities and Exchange Commission

Jessica Chase Spaly, 34	2010	Vice President — Capital Research Global Investors,
Vice President		Capital Research Company7

Vincent P. Corti, 54	1994	Vice President — Fund Business Management
Secretary		Group, Capital Research and Management Company

Brian D. Bullard, 41	2008	Senior Vice President — Fund Business Management
Treasurer		Group, Capital Research and Management Company;
		former Chief Accountant — Division of Investment
		Management, United States Securities and Exchange
		Commission

Raymond F. Sullivan, Jr., 53	2008	Vice President — Fund Business Management
Assistant Secretary		Group, Capital Research and Management Company

Ari M. Vinocor, 36	2010	Vice President — Fund Business Management
Assistant Treasurer		Group, Capital Research and Management Company

1The term “independent” trustee refers to a trustee who is not an “interested person” of the fund within the meaning of the Investment Company Act of 1940.

2Trustees and officers of the fund are elected on an annual basis.

3Capital Research and Management Company manages the American Funds, consisting of 33 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; and Endowments,SM which is available to certain nonprofit organizations.

4This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each trustee as a director of a public company or a registered investment company.

5“Interested persons” within the meaning of the Investment Company Act of 1940, 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).

6James B. Lovelace is the son of Jon B. Lovelace, Jr.

7Company affiliated with Capital Research and Management Company.

Offices

Offices of the fund and of the investment adviser

Capital Research and Management Company

333 South Hope Street

Los Angeles, CA 90071-1406

6455 Irvine Center Drive

Irvine, CA 92618

Transfer agent for shareholder accounts

American Funds Service Company

(Write to the address near you.)

P.O. Box 6007

Indianapolis, IN 46206-6007

P.O. Box 2280

Norfolk, VA 23501-2280

Custodian of assets

JPMorgan Chase Bank

270 Park Avenue

New York, NY 10017-2070

Counsel

O’Melveny & Myers LLP

400 South Hope Street

Los Angeles, CA 90071-2899

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. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.

A complete December 31, 2010, portfolio of The Investment Company of America’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

The Investment Company of America files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.

This report is for the information of shareholders of The Investment Company of America, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after March 31, 2011, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.

What makes American Funds different?

For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 33 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.

Our unique combination of strengths includes these five factors:

•A long-term, value-oriented approach

We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term.

•An extensive global research effort

Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets.

•The multiple portfolio counselor system

Our unique approach to portfolio management, developed more than 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives.

•Experienced investment professionals

American Funds portfolio counselors have an average of 26 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have.

•A commitment to low management fees

The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry.

American Funds span a range of investment objectives

•Growth funds

Emphasis on long-term growth through stocks

AMCAP Fund®

EuroPacific Growth Fund®

The Growth Fund of America®

The New Economy Fund®

New Perspective Fund®

New World Fund®

SMALLCAP World Fund®

•Growth-and-income funds

Emphasis on long-term growth and dividends through stocks

American Mutual Fund®

Capital World Growth and Income FundSM

Fundamental InvestorsSM

International Growth and Income FundSM

>The Investment Company of America®

Washington Mutual Investors FundSM

•Equity-income funds

Emphasis on above-average income and growth through stocks and/or bonds

Capital Income Builder®

The Income Fund of America®

•Balanced funds

Emphasis on long-term growth and current income through stocks and bonds

American Balanced Fund®

American Funds Global Balanced FundSM

•Bond funds

Emphasis on current income through bonds

American Funds Mortgage FundSM

American High-Income TrustSM

The Bond Fund of AmericaSM

Capital World Bond Fund®

Intermediate Bond Fund of America®

Short-Term Bond Fund of AmericaSM

U.S. Government Securities FundSM

•Tax-exempt bond funds

Emphasis on tax-exempt current income through municipal bonds

American Funds Short-Term Tax-Exempt Bond FundSM

American High-Income Municipal Bond Fund®

Limited Term Tax-Exempt Bond Fund of AmericaSM

The Tax-Exempt Bond Fund of America®

State-specific tax-exempt funds

American Funds Tax-Exempt Fund of New YorkSM

The Tax-Exempt Fund of California®

The Tax-Exempt Fund of Maryland®

The Tax-Exempt Fund of Virginia®

•Money market fund

American Funds Money Market Fund®

•American Funds Target Date Retirement Series®

The Capital Group Companies

American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust

Lit. No. MFGEAR-904-0211P

Litho in USA BBC/Q/8060-S26188

Printed on paper containing 10% post-consumer waste

Printed with inks containing soy and/or vegetable oil

ITEM 2 – Code of Ethics

Registrant:
	a) Audit Fees:
		2009	None
		2010	$85,000

	b) Audit-Related Fees:
		2009	None
		2010	19,000
	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:
		2009	None
		2010	$7,000
		The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns.

	d) All Other Fees:
		2009	None
		2010	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) Audit Fees:
		Not Applicable

	b) Audit-Related Fees:
		2009	1,029,000
		2010	1,092,000
	The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter 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:
		2009	None
		2010	$15,000
		The tax fees consist of consulting services relating to the Registrant’s investments.

	d) All Other Fees:
		2009	$2,000
		2010	$2,000
		The other fees consist of subscription services related to an accounting research tool.

(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.

(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 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.

	THE INVESTMENT COMPANY OF AMERICA

	By /s/ James B. Lovelace
	James B. Lovelace, Vice Chairman and Principal Executive Officer

	Date: February 28, 2011

Common stocks — 92.59%	Shares			Value (000)

ENERGY — 11.30%
Apache Corp.		2,240,000		$	267,075
Baker Hughes Inc.		10,030,000			573,415
BP PLC		34,380,000			249,544
BP PLC (ADR)		2,800,000			123,676
Canadian Natural Resources, Ltd.		1,296,400			57,825
Chevron Corp.		6,480,000			591,300
ConocoPhillips		19,779,140			1,346,959
Devon Energy Corp.		2,690,000			211,192
Diamond Offshore Drilling, Inc.		2,025,000			135,412
Eni SpA		4,640,000			101,315
Eni SpA (ADR)		770,000			33,680
EOG Resources, Inc.		3,732,200			341,160
Marathon Oil Corp.		3,030,000			112,201
Royal Dutch Shell PLC, Class A (ADR)		16,470,000			1,099,867
Royal Dutch Shell PLC, Class B		10,843,265			357,556
Royal Dutch Shell PLC, Class B (ADR)		2,925,498			195,043
Schlumberger Ltd.		12,724,999			1,062,537
TOTAL SA		3,000,000			158,953
					7,018,710

MATERIALS — 3.26%
Air Products and Chemicals, Inc.		768,800			69,922
Akzo Nobel NV		425,000			26,400
ArcelorMittal		7,540,000			285,949
Barrick Gold Corp.		4,675,000			248,617
Dow Chemical Co.		25,979,088			886,926
MeadWestvaco Corp.		4,085,000			106,864
POSCO		136,000			58,359
Praxair, Inc.		999,500			95,422
United States Steel Corp.		4,160,000			243,027
					2,021,486

INDUSTRIALS — 10.18%
3M Co.		4,834,265			417,197
CSX Corp.		11,681,000			754,709
Deere & Co.		2,800,000			232,540
General Dynamics Corp.		11,438,300			811,662
General Electric Co.		13,875,000			253,774
Illinois Tool Works Inc.		6,400,000			341,760
Lockheed Martin Corp.		1,913,820			133,795
Norfolk Southern Corp.		3,414,999			214,530
Pitney Bowes Inc.		350,551			8,476
R.R. Donnelley & Sons Co.		6,100,000			106,567
Raytheon Co.		2,399,800			111,207
Siemens AG		3,465,000			429,227
Southwest Airlines Co.		13,000,000			168,740
Tyco International Ltd.		2,115,000			87,645
Union Pacific Corp.		11,104,800			1,028,971
United Parcel Service, Inc., Class B		2,250,000			163,305
United Technologies Corp.		10,340,000			813,965
Waste Management, Inc.		6,600,700			243,368
					6,321,438

CONSUMER DISCRETIONARY — 10.99%
Best Buy Co., Inc.		4,500,000			154,305
Carnival Corp., units		7,450,000			343,520
CBS Corp., Class B		5,750,000			109,538
Comcast Corp., Class A		22,550,271			495,429
Comcast Corp., Class A, special nonvoting shares		3,000,000			62,430
Daimler AG1		960,000			65,079
DIRECTV, Class A1		6,500,000			259,545
H&R Block, Inc.		2,315,000			27,572
Harley-Davidson, Inc.		3,500,000			121,345
Home Depot, Inc.		24,020,000			842,141
Honda Motor Co., Ltd.		6,650,000			263,330
Johnson Controls, Inc.		10,000,000			382,000
Kohl’s Corp.1		4,200,000			228,228
Limited Brands, Inc.		5,042,743			154,964
Lowe’s Companies, Inc.		10,500,000			263,340
McDonald’s Corp.		7,150,000			548,834
News Corp., Class A		5,890,000			85,758
Nissan Motor Co., Ltd.		12,800,000			121,867
Staples, Inc.		20,625,000			469,631
Target Corp.		12,797,000			769,484
Time Warner Cable Inc.		4,812,727			317,784
Time Warner Inc.		13,399,000			431,046
Toyota Motor Corp.		6,550,000			259,773
Toyota Motor Corp. (ADR)		600,000			47,178
					6,824,121

CONSUMER STAPLES — 10.57%
Altria Group, Inc.		19,134,200			471,084
Avon Products, Inc.		14,082,000			409,223
Coca-Cola Co.		2,303,300			151,488
Colgate-Palmolive Co.		1,500,000			120,555
ConAgra Foods, Inc.		5,521,100			124,666
CVS/Caremark Corp.		13,500,000			469,395
General Mills, Inc.		3,920,000			139,513
H.J. Heinz Co.		2,750,000			136,015
Kellogg Co.		1,000,000			51,080
Kimberly-Clark Corp.		1,500,000			94,560
Kraft Foods Inc., Class A		20,874,168			657,745
Lorillard, Inc.		2,885,600			236,792
Molson Coors Brewing Co., Class B		5,925,000			297,376
PepsiCo, Inc.		12,821,500			837,629
Philip Morris International Inc.		38,151,000			2,232,978
Reynolds American Inc.		1,333,332			43,493
Sara Lee Corp.		5,000,000			87,550
					6,561,142

HEALTH CARE — 6.67%
Abbott Laboratories		14,335,000			686,790
Aetna Inc.		1,516,239			46,260
Amgen Inc.1		1,840,792			101,059
Bayer AG		950,000			70,202
Boston Scientific Corp.1		69,340,000			524,904
Eli Lilly and Co.		6,295,000			220,577
Johnson & Johnson		3,100,000			191,735
Medtronic, Inc.		9,112,500			337,983
Merck & Co., Inc.		46,731,429			1,684,201
Novartis AG		663,000			38,965
Novartis AG (ADR)		921,556			54,326
Pfizer Inc		4,025,000			70,478
Roche Holding AG		760,000			111,358
					4,138,838

FINANCIALS — 7.45%
American International Group, Inc.1		141,955			8,179
AXA SA		3,250,000			54,070
Banco Santander, SA		50,733,040			537,475
Banco Santander, SA (ADR)		5,047,435			53,755
Bank of America Corp.		64,140,935			855,640
Bank of New York Mellon Corp.		10,533,812			318,121
BB&T Corp.		4,825,000			126,849
Capital One Financial Corp.		7,500,000			319,200
Citigroup Inc.1		62,500,000			295,625
Discover Financial Services		7,177,053			132,991
Genworth Financial, Inc., Class A1		1,221,600			16,052
HSBC Holdings PLC (ADR)		1,529,416			78,061
HSBC Holdings PLC (United Kingdom)		4,869,240			49,429
JPMorgan Chase & Co.		16,290,000			691,022
Moody’s Corp.		2,675,800			71,016
Northern Trust Corp.		1,085,000			60,120
Société Générale		2,514,523			135,146
State Street Corp.		2,359,100			109,321
SunTrust Banks, Inc.		6,000,000			177,060
Wells Fargo & Co.		17,235,000			534,113
					4,623,245

INFORMATION TECHNOLOGY — 22.07%
Accenture PLC, Class A		6,400,000			310,336
Altera Corp.		661,900			23,550
Analog Devices, Inc.		5,726,900			215,732
Apple Inc.1		505,000			162,893
Applied Materials, Inc.		10,525,000			147,876
Automatic Data Processing, Inc.		4,023,043			186,186
Canon, Inc.		770,000			39,927
Cisco Systems, Inc.1		14,420,400			291,725
Corning Inc.		26,669,820			515,261
Flextronics International Ltd.1		16,000,000			125,600
Google Inc., Class A1		1,830,530			1,087,280
Hewlett-Packard Co.		25,540,000			1,075,234
Intel Corp.		51,164,700			1,075,994
International Business Machines Corp.		4,335,000			636,205
KLA-Tencor Corp.		6,726,900			259,927
Linear Technology Corp.		8,320,000			287,789
MasterCard Inc., Class A		1,293,901			289,976
Maxim Integrated Products, Inc.		4,297,700			101,512
Microsoft Corp.		88,265,800			2,464,381
Nokia Corp.		24,200,000			250,300
Nokia Corp. (ADR)		5,652,400			58,333
Oracle Corp.		55,165,100			1,726,668
QUALCOMM Inc.		10,157,000			502,670
SAP AG		1,070,000			54,477
Taiwan Semiconductor Manufacturing Co. Ltd.		37,914,325			92,326
Telefonaktiebolaget LM Ericsson, Class B		19,750,000			229,489
Texas Instruments Inc.		22,825,000			741,813
Xilinx, Inc.		8,954,500			259,501
Yahoo! Inc.1		29,583,220			491,969
					13,704,930

TELECOMMUNICATION SERVICES — 5.40%
AT&T Inc.		85,701,900			2,517,922
France Télécom SA		6,220,000			129,622
Qwest Communications International Inc.		80,980,000			616,258
Verizon Communications Inc.		2,500,000			89,450
					3,353,252

UTILITIES — 3.26%
Dominion Resources, Inc.		10,623,824			453,850
Exelon Corp.		7,610,600			316,905
FirstEnergy Corp.		6,443,500			238,538
GDF SUEZ		16,595,324			595,435
NextEra Energy, Inc.		300,000			15,597
Public Service Enterprise Group Inc.		10,000,000			318,100
RWE AG		1,300,000			86,668
					2,025,093

MISCELLANEOUS — 1.44%
Other common stocks in initial period of acquisition					893,526


Total common stocks (cost: $45,333,418,000)					57,485,781



Preferred stocks — 0.29%

FINANCIALS — 0.29%
JPMorgan Chase & Co., Series I, 7.90%2		84,861,000			90,510
PNC Funding Corp., Series II, 6.113%2,3		5,000,000			3,727
PNC Preferred Funding Trust I 6.517%2,3		14,900,000			11,840
PNC Preferred Funding Trust III 8.70%2,3		24,000,000			25,560
Société Générale 5.922%2,3		24,955,000			22,069
Wells Fargo & Co., Series K, 7.98%2		23,667,000			25,087

Total preferred stocks (cost: $141,167,000)					178,793



				Value
Warrants — 0.00%	Shares				(000	)

FINANCIALS — 0.00%
Washington Mutual, Inc., warrants, expire 20131,4		3,071,428		$	—


Total warrants (cost: $11,770,000)					—




Convertible securities — 0.62%

CONSUMER DISCRETIONARY — 0.04%
Johnson Controls, Inc. 11.50% convertible preferred 2012, units4		106,720			19,804


FINANCIALS — 0.06%
American International Group, Inc. 8.50% convertible preferred 2011, units		4,211,826			37,022
Fannie Mae 5.375% convertible preferred 20321		820			820
Fannie Mae, Series 2008-1, 8.75% noncumulative convertible preferred1		1,218,000			609
					38,451

MISCELLANEOUS — 0.52%
Other convertible securities in initial period of acquisition					324,069


Total convertible securities (cost: $772,508,000)					382,324




	Principal amount
Bonds & notes — 1.20%		(000	)

ENERGY — 0.02%
Apache Corp. 6.90% 2018	$	5,000			6,115
Chevron Corp. 4.95% 2019		5,000			5,614
					11,729

MATERIALS — 0.05%
BHP Billiton Finance (USA) Ltd. 5.50% 2014		5,865			6,495
Dow Chemical Co. 8.55% 2019		15,000			18,828
Rio Tinto Finance (USA) Ltd. 9.00% 2019		3,780			5,085
					30,408

INDUSTRIALS — 0.09%
Burlington Northern Santa Fe Corp. 5.75% 2018		5,000			5,642
CSX Corp. 6.25% 2015		5,000			5,688
Honeywell International Inc. 5.00% 2019		4,090			4,482
Lockheed Martin Corp. 4.25% 2019		3,445			3,509
Norfolk Southern Corp. 5.75% 2018		2,500			2,827
PACCAR Inc, Series A, 6.875% 2014		5,000			5,739
Raytheon Co. 4.40% 2020		3,055			3,130
Union Pacific Corp. 5.125% 2014		5,000			5,421
Union Pacific Corp. 6.125% 2020		5,000			5,738
United Technologies Corp. 4.50% 2020		5,475			5,758
Waste Management, Inc. 6.375% 2015		5,000			5,697
					53,631

CONSUMER DISCRETIONARY — 0.09%
Comcast Corp. 6.30% 2017		12,620			14,470
Kohl’s Corp. 6.25% 2017		3,500			4,044
News America Inc. 6.90% 2019		5,000			6,000
Staples, Inc. 9.75% 2014		7,500			9,095
Time Warner Cable Inc. 6.20% 2013		2,845			3,162
Time Warner Cable Inc. 8.25% 2019		5,745			7,147
Time Warner Inc. 5.875% 2016		10,000			11,301
					55,219

CONSUMER STAPLES — 0.04%
Altria Group, Inc. 9.25% 2019		5,000			6,535
British American Tobacco International Finance PLC 9.50% 20183		5,000			6,590
CVS Caremark Corp. 6.60% 2019		5,000			5,864
Kraft Foods Inc. 2.625% 2013		5,110			5,258
Tesco PLC 5.50% 20173		2,506			2,800
					27,047

HEALTH CARE — 0.05%
Abbott Laboratories 5.125% 2019		2,500			2,757
Aetna Inc. 5.75% 2011		1,961			2,005
Aetna Inc. 7.875% 2011		865			875
Boston Scientific Corp. 5.125% 2017		4,265			4,263
Cardinal Health, Inc. 5.80% 2016		2,905			3,263
Novartis Securities Investment Ltd. 5.125% 2019		2,500			2,770
Pfizer Inc 6.20% 2019		2,500			2,933
Roche Holdings Inc. 5.00% 20143		5,000			5,479
Roche Holdings Inc. 6.00% 20193		2,500			2,908
WellPoint, Inc. 7.00% 2019		4,200			4,952
					32,205

FINANCIALS — 0.17%
Allstate Life Global Funding Trust, Series 2008-4, 5.375% 2013		5,000			5,448
Bank of America Corp. 5.875% 2021		7,500			7,774
Boston Properties, Inc. 5.875% 2019		5,000			5,432
Citigroup Inc. 4.587% 2015		1,387			1,448
Citigroup Inc. 6.125% 2017		7,500			8,231
MetLife Global Funding I 5.125% 20143		7,000			7,620
National City Corp. 5.80% 2017		1,350			1,458
National City Corp. 6.875% 2019		3,050			3,430
Northern Trust Corp. 4.625% 2014		2,650			2,867
Regions Bank 7.50% 2018		4,350			4,487
Regions Financial Corp. 6.375% 2012		23,540			23,989
Regions Financial Corp. 7.75% 2014		13,082			13,616
Simon Property Group, LP 4.20% 2015		2,600			2,721
Simon Property Group, LP 5.25% 2016		5,875			6,346
Simon Property Group, LP 6.10% 2016		1,625			1,824
SLM Corp., Series A, 5.125% 2012		1,000			1,021
SLM Corp., Series A, 5.375% 2013		1,905			1,944
Wachovia Capital Trust III 5.80% (undated)2		5,525			4,814
					104,470

INFORMATION TECHNOLOGY — 0.01%
Cisco Systems, Inc. 4.95% 2019		5,000			5,458


TELECOMMUNICATION SERVICES — 0.03%
AT&T Inc. 4.85% 2014		5,000			5,411
Verizon Communications Inc. 5.55% 2014		10,000			11,035
Vodafone Group PLC 5.625% 2017		2,500			2,794
					19,240

UTILITIES — 0.02%
Jersey Central Power & Light Co. 4.80% 2018		4,000			4,068
PG&E Corp. 5.75% 2014		8,000			8,763
					12,831

MORTGAGE-BACKED OBLIGATIONS5 — 0.28%
Fannie Mae 3.00% 2026		15,000			14,709
Fannie Mae 3.50% 2025		5,914			5,971
Fannie Mae 3.50% 2025		29,662			29,944
Fannie Mae 4.00% 2025		12,514			12,940
Fannie Mae 4.50% 2040		13,309			13,680
Fannie Mae 6.00% 2037		57,732			62,707
Fannie Mae 6.00% 2038		6,282			6,817
Government National Mortgage Assn. 3.50% 2039		1,629			1,574
Government National Mortgage Assn. 3.50% 2039		11,160			10,767
Government National Mortgage Assn. 4.00% 2039		3,886			3,922
Government National Mortgage Assn. 4.00% 2040		3,967			4,005
Government National Mortgage Assn. 4.00% 2040		3,976			4,013
Government National Mortgage Assn. 4.00% 2040		3,977			4,014
					175,063

BONDS & NOTES OF U.S. GOVERNMENT & GOVERNMENT AGENCIES — 0.35%
Fannie Mae 1.00% 2013		10,000			9,985
Federal Home Loan Bank 0.50% 2011		23,140			23,163
Federal Home Loan Bank 3.625% 2013		50,000			53,467
Freddie Mac 2.125% 2012		10,000			10,243
U.S. Treasury 1.125% 2011		10,000			10,076
U.S. Treasury 1.50% 2013		10,000			10,145
U.S. Treasury 1.875% 2014		10,000			10,242
U.S. Treasury 2.25% 2014		5,000			5,173
U.S. Treasury 2.625% 2020		2,000			1,897
U.S. Treasury 3.25% 2017		7,500			7,835
U.S. Treasury 3.50% 2039		7,500			6,465
U.S. Treasury 3.625% 2020		5,000			5,190
U.S. Treasury 4.00% 2018		10,000			10,839
U.S. Treasury 4.125% 2015		10,000			11,014
U.S. Treasury 4.25% 2013		15,000			16,335
U.S. Treasury 8.00% 2021		20,000			28,304
					220,373


Total bonds & notes (cost: $698,024,000)					747,674




Short-term securities — 5.19%

Bank of America Corp. 0.28% due 1/3/2011		75,000			74,998
Coca-Cola Co. 0.19%–0.22% due 1/12–2/9/20113		99,100			99,086
Fannie Mae 0.18%–0.49% due 2/14–8/1/2011		201,900			201,774
Federal Farm Credit Banks 0.19%–0.24% due 6/3–11/8/2011		136,700			136,507
Federal Home Loan Bank 0.16%–0.45% due 1/5–12/6/2011		541,750			540,811
Freddie Mac 0.142%–0.42% due 1/3–12/1/2011		1,181,947			1,180,686
Google, Inc. 0.20% due 1/19/20113		25,000			24,997
John Deere Credit Ltd. 0.23% due 1/12/20113		24,875			24,873
Jupiter Securitization Co., LLC 0.25%–0.26% due 1/7–2/16/20113		181,400			181,370
Procter & Gamble Co. 0.22%–0.24% due 2/8–3/16/20113		122,300			122,259
Straight-A Funding LLC 0.25% due 1/6–2/2/20113		140,600			140,577
U.S. Treasury Bills 0.134%–0.278% due 3/10–11/17/2011		417,100			416,818
Variable Funding Capital Company LLC 0.26%–0.27% due 1/7–1/14/20113		77,600			77,594

Total short-term securities (cost: $3,222,058,000)					3,222,350

Total investment securities (cost: $50,178,945,000)					62,016,922
Other assets less liabilities					70,920

Net assets				$	62,087,842