-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TnX/2/SyVDZ9B/d+Sl+tmIezHW6LC5MHnkaRBLXtterrWKb/3QHXNX9fYBeRL2y0 5Sk1MX5KBftgTnh1j4PXZw== 0000051931-96-000014.txt : 19960906 0000051931-96-000014.hdr.sgml : 19960906 ACCESSION NUMBER: 0000051931-96-000014 CONFORMED SUBMISSION TYPE: N-30D CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTMENT CO OF AMERICA CENTRAL INDEX KEY: 0000051931 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 951426645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-00116 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 333 S HOPE ST - 52ND FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 2134869200 N-30D 1 ICA THE INVESTMENT COMPANY OF AMERICA 1996 SEMI-ANNUAL REPORT For the six months ended June 30, 1996 [The American Funds Group(R)] THE INVESTMENT COMPANY OF AMERICA(R) ICA(SM) SEEKS LONG-TERM GROWTH OF CAPITAL AND INCOME, PLACING GREATER EMPHASIS ON FUTURE DIVIDENDS THAN ON CURRENT INCOME. Fund results in this report were computed without a sales charge unless otherwise indicated. Here are the total returns and average annual compound returns with all distributions reinvested for periods ended June 30, 1996, assuming payment of the 5.75% maximum sales charge at the beginning of the stated periods - 10 years: +215.05%, or +12.16% a year; 5 years: +80.59%, or +12.55% a year; 12 months: +14.32%. Sales charges are lower for accounts of $50,000 or more. The fund's 30-day yield as of July 31, 1996, calculated in accordance with the Securities and Exchange Commission formula, was 2.07%. THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. FELLOW SHAREHOLDERS ICA completed the first half of 1996 with a solid gain. In the six months ended June 30, the value of your investment in the fund rose 7.9% if, like most shareholders, you reinvested the two income dividends totaling 24 cents a share paid in March and June. Those of you who took your dividends in cash received an income return of 1.1% and saw the value of your investment increase 6.8%. Three-fourths of the 189 stocks the fund held throughout the fiscal period gained ground. Over the six months, the unmanaged Standard & Poor's 500 Composite Index, which measures the stocks of large U.S. companies, posted an increase of 10.1% with dividends reinvested. Amid sharp crosscurrents and volatility, which have continued since the end of the six-month period, the S&P 500 reached record highs in February, May and June. It is interesting to view these results against the backdrop of 1995, in which the S&P 500 reached a succession of record highs in each month from February through December. This consecutive 11-month record is the longest in more than 100 years. In light of these circumstances, it is especially important to remember that nearly six years have passed since the S&P 500 has declined 10% or more. Until now, the longest time between such corrections was 45 months. We would like to welcome the many new ICA shareholders and look forward to reporting to you in more detail in our annual report in six months. Cordially, Jon B. Lovelace, Jr. Chairman of the Board William C. Newton President August 14, 1996 INVESTMENT PORTFOLIO - June 30, 1996 - ------------------------------------------------ Percent of Largest Individual Holdings Net Assets - ------------------------------------------------ Philip Morris 3.85% Federal National Mortgage 2.82 Royal Dutch Petroleum 2.05 Wal-Mart Stores 1.85 Caterpillar 1.56 AT&T 1.53 DuPont 1.49 Time Warner 1.27 Walt Disney 1.23 Pfizer 1.22 - ------------------------------------------------ Percent of Largest Industry Holdings Net Assets - ------------------------------------------------ Banking 9.54% Health & Personal Care 7.08 Energy Sources 7.04 Beverages & Tobacco 6.06 Telecommunications 5.69 - ------------------------------------------------ Percent of Largest Investment Categories Net Assets - ------------------------------------------------ Services 20.60% Consumer Goods 18.06 Finance 16.66 Capital Equipment 13.80 Energy 8.07 Companies appearing in the portfolio since December 31, 1995 - ------------------------------------------ Alcatel Alsthom Amgen Baker Hughes Dow Jones General Public Utilities Gillette Hilton Hotels Hoechst KeyCorp Limited Lucent Technologies Northern Telecom Philips Electronics Placer Dome Sears, Roebuck SmithKline Beecham Unilever Union Camp - ------------------------------------------ Companies eliminated from the portfolio since December 31, 1995 - ------------------------------------------ Apple Computer Burlington Northern Darden Restaurants Gap Melville Mobil Ralston Purina Sprint Times Mirror Unisys THE INVESTMENT COMPANY OF AMERICA INVESTMENT PORTFOLIO, June 30, 1996 - ------------------------------------------ Unaudited Equity-Type Securities Market Percent - ------------------------------------------ Number of Value of Net Energy Shares (millions) Assets - ------------------------------------------ --------- --------- ------ Energy Sources - 7.04% Amoco Corp. 3,050,000 $ 220.744 .78 Atlantic Richfield Co. 575,000 68.137 .24 British Petroleum Co. PLC (American Depositary Receipts) 500,000 53.438 .19 Chevron Corp. 2,600,000 153.400 .55 Murphy Oil Corp. 2,075,000 94.153 .33 Phillips Petroleum Co. 4,834,000 202.424 .72 Royal Dutch Petroleum Co. (New York Registered Shares) 3,755,000 577.331 2.05 Societe Nationale Elf Aquitaine (American Depositary Receipts) 1,600,000 58.800 .21 Texaco Inc. 1,150,000 96.456 .34 TOTAL, Class B 1,359,340 100.992 .00 TOTAL, Class B (American Depositary Receipts) 1,810,800 67.226 .60 Unocal Corp. 4,800,000 162.000 Unocal Corp., $3.50 convertible preferred 415,000 23.240 .67 USX-Marathon Group 5,100,000 102.637 .36 Utilities: Electric & Gas - 1.03% Utilities: Electric & Gas-1.03% American Electric Power Company, Inc. 700,000 29.838 .11 Entergy Corp. 1,000,000 28.375 .10 General Public Utilities Corp. 1,475,000 51.994 .18 Houston Industries Inc. 3,500,000 86.187 .31 Long Island Lighting Co. 5,240,000 87.770 .31 Pacific Gas and Electric Co. 239,100 5.559 .02 --------- --------- 2,270.701 8.07 --------- --------- - ------------------------------------------ Materials - ------------------------------------------ Chemicals-2.09% E.I. du Pont de Nemours and Co. 5,300,000 419.363 1.49 Eastman Chemical Co. 550,000 33.481 .12 Great Lakes Chemical Corp. 250,000 15.563 .06 Hoechst AG 700,000 23.761 .08 Imperial Chemical Industries PLC (American Depositary Receipts) 100,000 4.913 .02 Monsanto Co. 2,719,000 88.367 .32 Forest Products & Paper-2.12% Georgia-Pacific Corp. 3,398,900 241.322 .86 International Paper Co. 1,400,000 51.625 .18 Louisiana-Pacific Corp. 2,650,000 58.631 .21 Union Camp Corp. 705,000 34.369 .12 Weyerhaeuser Co. 4900000 208.250 .75 Metals: Nonferrous-1.50% Alcan Aluminium Ltd. 1,000,000 30.500 .11 Aluminum Co. of America 3,500,000 200.812 .71 Freeport-McMoRan Copper & Gold Inc., Class B 1,200,000 38.250 .14 Inco Ltd. 1,700,000 54.825 .19 Phelps Dodge Corp. 600,000 37.425 .13 WMC Ltd. (formerly Western Mining Corp. Holdings Ltd.) 8,305,894 59.424 .22 Metals: Steel-0.45% Bethlehem Steel Corp. /1/ 4,100,000 48.687 .17 USX-U.S. Steel Group 2,900,000 82.288 .28 --------- ------ 1,731.856 6.16 --------- ------ - ------------------------------------------ Capital Equipment - ------------------------------------------ Aerospace & Military Technology - 2.03% Boeing Co. 1,750,000 152.469 .54 General Motors Corp., Class H 2,753,600 165.560 .59 Litton Industries, Inc. /1/ 650,000 28.275 .10 Northrop Grumman Corp. 470,000 32.019 .11 Raytheon Co. 1,600,000 82.600 .29 Sundstrand Corp. 1,250,000 45.781 .16 United Technologies Corp. 560,000 64.400 .24 Data Processing & Reproduction-3.10% Cisco Systems, Inc. /1/ 1,200,000 67.950 .24 Hewlett-Packard Co. 1,896,000 188.889 .67 International Business Machines Corp. 1,469,000 145.431 .52 Oracle Corp. /1/ 7,198,950 283.909 1.01 Tandem Computers Inc. /1/ 1,225,000 15.159 .05 Xerox Corp. 3,210,000 171.735 .61 Electrical & Electronic-0.79% Alcatel Alsthom 500,000 43.685 .16 General Electric Co. 800,000 69.200 .25 Lucent Technologies Inc. 2,015,000 76.318 .27 Northern Telecom Ltd. 600,000 32.625 .11 Electronic Components-1.65% Intel Corp. 3,400,000 249.688 .89 Motorola, Inc. 500,000 31.437 .11 Texas Instruments Inc. 3,670,000 183.041 .65 Energy Equipment-1.53% Baker Hughes Inc. 2,638,000 86.724 .31 Schlumberger Ltd. 3,450,000 290.663 1.03 Western Atlas Inc. /1/ 900,000 52.425 .19 Industrial Components-0.69% Dana Corp. 1,621,500 50.267 .18 Goodyear Tire & Rubber Co. 830,000 40.047 .14 Rockwell International Corp. 1,815,000 103.909 .37 Machinery & Engineering-4.01% Caterpillar Inc. 6,495,500 440.070 1.56 Cummins Engine Co., Inc. 1,041,800 42.063 Cummins Engine Co., Inc. /1/ 958,200 38.687 .29 Deere & Co. 8,000,000 320.000 1.14 Ingersoll-Rand Co. 1,600,000 70.000 .25 Mannesmann AG 420,000 145.333 .52 Parker Hannifin Corp. 1,640,000 69.495 .25 --------- ------ 3,879.854 13.80 --------- ------ - ------------------------------------------ Consumer Goods - ------------------------------------------ Appliances & Household Durables-0.11% Philips Electronics NV 1,000,000 32.625 .11 Automobiles - 1.99% Chrysler Corp. 1,000,000 62.000 .22 Daimler-Benz AG 110,000 58.940 Daimler-Benz AG, warrants, expire 7/3/96 /1/ 110,000 .015 .21 Ford Motor Co., Class A 7,893,316 255.546 .91 General Motors Corp. 2,675,000 140.103 .50 Toyota Motor Corp. 1,760,000 44.089 .15 Beverages & Tobacco-6.06% Anheuser-Busch Companies, Inc. 1,031,500 77.363 .28 PepsiCo, Inc. 4,900,000 173.337 .62 Philip Morris Companies Inc. 10,400,000 1,081.600 3.85 RJR Nabisco Holdings Corp. 5,100,000 158.100 .56 Seagram Co. Ltd. 6,350,000 213.519 .75 Food & Household Products-2.30% Archer Daniels Midland Co. 3,500,000 66.937 .24 ConAgra, Inc. 1,900,000 86.213 .31 CPC International Inc. 1,278,900 92.081 .33 General Mills, Inc. 1,605,000 87.472 .31 H.J. Heinz Co. 1,000,000 30.375 .11 Nestle SA 140,000 160.048 .57 Procter & Gamble Co. 550,000 49.844 .18 Unilever NV (New York Registered Shares) 505,000 73.288 .25 Health & Personal Care - 7.08% Abbott Laboratories 1,500,000 65.250 .23 American Home Products Corp. 2,500,000 150.313 .53 Amgen Inc. /1/ 2,000,000 108.000 .38 Avon Products, Inc. 1,900,000 85.738 .30 Bristol-Myers Squibb Co. 1,500,000 135.000 .48 Gillette Co. 725,000 45.222 .16 Johnson & Johnson 2,080,000 102.960 .37 Kimberly-Clark Corp. 950,000 73.387 .26 Eli Lilly and Co. 2,762,600 179.569 .64 Merck & Co., Inc. 4,735,000 305.999 1.09 Pharmacia & Upjohn, Inc. 2,247,500 99.733 .35 Pfizer Inc 4,800,000 342.600 1.22 Schering-Plough Corp. 1,846,000 115.836 .41 SmithKline Beecham PLC (American Depositary Receipts) 500,000 27.188 .10 Warner-Lambert Co. 2,800,000 154.000 .56 Recreation & Other Consumer Products-0.45% Duracell International Inc. 1,800,000 77.625 .28 Eastman Kodak Co. 600,000 46.650 .17 Textiles & Apparel-0.07% VF Corp. 300,000 17.887 .07 --------- ------ 5,076.452 18.06 --------- ------ - ------------------------------------------ Services - ------------------------------------------ Broadcasting & Publishing - 4.58% Dow Jones & Co., Inc. 250,000 10.437 .04 Gannett Co., Inc. 480,200 33.974 .12 New York Times Co., Class A 3,100,000 101.138 .36 Tele-Communications, Inc., Series A, Liberty Media Group /1/ 4,555,225 120.713 .43 Tele-Communications, Inc., Series A, TCI Group /1/ 13,140,900 238.179 .85 Time Warner Inc. 9,081,000 356.429 1.27 Tribune Co. 350,000 25.419 .09 U S WEST Media Group /1/ 5,685,000 103.751 .37 Viacom Inc., Class B /1/ 7,650,000 297.394 1.05 Business & Public Services-3.65% Browning-Ferris Industries, Inc. 1,800,000 52.200 .19 Columbia/HCA Healthcare Corp. 1,000,000 53.375 .19 Dun & Bradstreet Corp. 1,350,000 84.375 .30 Electronic Data Systems Holding Corp. (formerly General Motors Class E) 1,000,000 53.750 .19 Federal Express Corp. /1/ 1,250,000 102.500 .36 Interpublic Group of Companies, Inc. 3,250,000 152.344 .54 Pitney Bowes Inc. 2,020,000 96.455 .34 United HealthCare Corp. 3,000,000 151.500 .54 WMX Technologies, Inc. 8,550,000 280.012 1.00 Leisure & Tourism-1.64% Walt Disney Co. 5,504,600 346.102 1.23 Hilton Hotels Corp. 400,000 45.000 .16 McDonald's Corp. 1,500,000 70.125 .25 Merchandising-3.05% Limited Inc. 3,890,900 83.654 .30 May Department Stores Co. 1,000,000 43.750 .16 J.C. Penney Co., Inc. 683,000 35.858 .13 Sears, Roebuck and Co. 800,000 38.900 .14 Tandy Corp. 416,532 19.733 .07 Toys 'R' Us, Inc. /1/ 3,950,000 112.575 .40 Wal-Mart Stores, Inc. 20,482,000 519.731 1.85 Telecommunications - 5.69% AirTouch Communications /1/ 3,650,000 103.112 .37 Ameritech Corp. 2,917,900 173.250 .62 AT&T Corp. 6,935,000 429.970 1.53 GTE Corp. 150,000 6.713 .02 MCI Communications Corp. 9,425,000 241.516 .86 Pacific Telesis Group 5,000,000 168.750 .60 SBC Communications Inc. 300,000 14.775 .05 Telefonos de Mexico, SA de CV, Class L (American Depositary Receipts) 3,057,400 102.423 .36 U S WEST Communications Group 4,550,000 145.031 .52 Vodafone Group PLC (American Depositary Receipts) 5,848,000 215.645 .76 Transportation: Airlines-0.49% AMR Corp. /1/ 1,100,000 100.100 .36 Delta Air Lines, Inc. 395,000 32.785 Delta Air Lines, Inc., $3.50 convertible preferred, Class C 100,000 6.300 .13 Transportation: Rail & Road-1.50% Conrail, Inc. 950,000 63.056 .22 CSX Corp. 2,500,000 120.625 .43 Norfolk Southern Corp. 300,000 25.425 .09 Union Pacific Corp. 3,025,000 211.372 .76 --------- ------ 5,790.221 20.60 --------- ------ - ------------------------------------------ Finance - ------------------------------------------ Bankinig - 9.54% H.F. Ahmanson & Co. 2,500,000 67.500 .24 Banc One Corp. 9,649,750 328.091 1.17 BankAmerica Corp. 3,850,000 291.637 1.04 Bankers Trust New York Corp. 1,541,600 113.886 .40 Chase Manhattan Corp. (New) 3,540,000 250.012 .89 Citicorp 1,800,000 148.725 .53 Comerica Inc. 1,800,000 80.325 .29 Deutsche Bank AG 2,340,000 110.835 .39 First Chicago NBD Corp. 3,354,000 131.225 .47 First Union Corp. 4,530,000 275.764 .98 Fleet Financial Group, Inc. 2,400,000 104.400 .37 Great Western Financial Corp. 2,500,000 59.687 .21 KeyCorp 1,825,000 70.719 .25 J.P. Morgan & Co. Inc. 2,000,000 169.250 .60 National City Corp. 1,500,000 52.688 .19 NationsBank Corp. 1,200,000 99.150 .35 PNC Bank Corp. 3,642,000 108.350 .39 SunTrust Banks, Inc. 1,200,000 44.400 .16 U.S. Bancorp 2,500,000 90.313 .32 Wachovia Corp. 900,000 39.375 .14 Wells Fargo & Co. (formerly First Interstate Bancorp) 200,000 47.775 .16 Financial Services-4.32% American Express Co. 380,000 16.958 .06 Federal Home Loan Mortgage Corp. 3,032,800 259.304 .92 Federal National Mortgage Assn. 23,700,000 793.950 2.82 Student Loan Marketing Assn. 1,950,000 144.300 .52 Insurance-2.80% Aetna Life and Casualty Co. 550,000 39.325 .14 Allstate Corp. 2,513,000 114.656 .41 American General Corp. 910,000 33.101 .12 American International Group, Inc. 1,822,500 179.744 .64 CIGNA Corp. 200,000 23.575 .08 General Re Corp. 846,000 128.803 .46 Lincoln National Corp. 1,050,000 48.562 .17 SAFECO Corp. 2,850,000 100.819 .36 St. Paul Companies, Inc. 2,240,000 119.840 .42 --------- ------ 4,687.044 16.66 --------- ------ - ------------------------------------------ Other - ------------------------------------------ Multi-Industry-2.63% AlliedSignal Inc. 1,600,000 91.400 .32 Canadian Pacific Ltd. 2,000,000 44.000 .16 Hanson PLC (American Depositary Receipts) 7,400,000 105.450 .37 Minnesota Mining and Manufacturing Co. 3,470,000 239.430 .85 Tenneco Inc. 3,725,000 190.440 .68 Textron Inc. 875,000 69.891 .25 Gold Mines -0.78% Barrick Gold Corp. 3,000,000 81.375 .29 Newmont Mining Corp. 2,200,000 108.625 .39 Placer Dome Inc. 1,200,000 28.650 .10 Miscellaneous-2.12% Equity-type securities in initial period of acquisition 605.411 2.12 --------- ------ 1,564.672 5.53 --------- ------ Total Equity-Type Securities (cost: $16,399.275 million) 25,000.800 88.88 --------- ------ Principal - ------------------------------------------ Amount Bonds & Notes (millions) - ------------------------------------------ --------- U.S. Treasuries - 3.46% 5.75% October 1997 $300.000 299.250 1.06 8.875% November 1997 25.000 25.934 .09 4.75% August 1998 300.000 291.516 1.04 5.125% November 1998 300.000 292.734 1.04 8.875% November 1998 25.000 26.433 .09 11.625% November 2004 30.000 39.342 .14 --------- ------ Total Bonds & Notes (cost: $985.670 million) 975.209 3.46 --------- ------ Total Investment Securities (cost: $17,384.945 million) 25,976.009 92.34 --------- ------ - ------------------------------------------ Short-Term Securities - ------------------------------------------ U.S. Treasury Short-Term Securities-4.91% 4.375%-8.00% due 8/15/96-6/30/97 $1,375.000 1,377.981 4.91 --------- ------ Corporate Short-Term Notes-2.20% American Express Credit Corp. 5.28%-5.34% due 7/16-8/1/96 56.600 56.411 .20 Walt Disney Co. 5.25%-5.26% due 8/16-8/30/96 79.600 78.955 .28 Ford Motor Credit Corp. 5.29%-5.35% due 7/8-8/12/96 69.200 68.889 .24 General Electric Capital Corp. 5.28%-5.53% due 7/1-8/13/96 68.000 67.742 .24 H.J. Heinz Co. 5.33%-5.35% due 7/12-7/18/96 33.400 33.320 .12 IBM Credit Corp. 5.28%-5.38% due 7/16-8/2/96 47.600 47.430 .17 Kimberly-Clark Corp. 5.27% due 7/12/96 11.000 10.980 .04 J.C. Penney Funding Corp. 5.28%-5.36% due 7/29-8/19/96 50.400 50.154 .18 PepsiCo, Inc. 5.25%-5.36% due 7/9-9/4/96 48.300 48.040 .17 U S WEST Communications, Inc. 5.28%-5.30% due 7/11-8/22/96 43.820 43.621 .16 Weyerhaeuser Co. 5.29%-5.30% due 7/8-8/20/96 49.000 48.788 .17 Xerox Corp. 5.27%-5.35% due 7/19-8/9/96 64.800 64.479 .23 Federal Agency Discount Notes-0.44% Federal Home Loan Mortgage Corp. 5.21%-5.26% due 8/5-8/29/96 66.950 66.501 .24 Federal National Mortgage Assn. 5.25%-5.31% due 7/30-8/8/96 58.530 58.207 .20 Total Short-Term Securities (cost: $2,134.857 million) 2,121.498 7.55 Excess of cash and receivables over payables 29.994 .11 --------- ------ Total Short-Term Securities, Cash and Receivables, Net of Payables 2,151.492 7.66 ----------- --------- Net Assets $28,127.501 100.00% ===================== /1/ Non-income-producing securities. /2/ Purchased in a private placement transaction; resale to the public may require registration or sale only to qualified institutional buyers. See Notes to Financial Statements
The Investment Company of America Unaudited - ----------------------------------------- -------------------------- Statement of Assets and Liabilities (dollars in at June 30, 1996 millions) - ---------------------------------------- -------------------------- Assets: Investment securities at market (cost: $17,384.945) $25,976.009 Short-term securities at market (cost: $2,134.857) 2,121.498 Cash .139 Receivables for- Sales of investments $25.007 Sales of fund's shares 33.169 Dividends and accrued interest 87.668 145.844 -------------------------- 28,243.490 Liabilities: Payables for- Purchases of investments 42.739 Repurchases of fund's shares 62.559 Management services 5.981 Accrued expenses 4.710 115.989 -------------------------- Net Assets at June 30, 1996- Equivalent to $23.08 per share on 1,218,853,881 shares of $1 par value capital stock outstanding (authorized capital stock--2,000,000,000 shares) $28,127.501 ============= Statement of Operations (dollars in for the six months ended June 30, 1996 millions) - ----------------------------------------- -------------------------- Investment Income: Income: Dividends $284.590 Interest 106.893 $ 391.483 ------------- Expenses: Management services fee 35.129 Distribution expenses 28.163 Transfer agent fee 11.014 Reports to shareholders 1.528 Registration statement and prospectus 1.144 Postage, stationery and supplies 3.465 Directors' fees .183 Auditing and legal fees .103 Custodian fee .369 Taxes (other than federal income tax) .289 Other expenses .158 81.545 -------------------------- Net investment income 309.938 ------------- Realized Gain and Unrealized Appreciation on Investments: Net realized gain 650.633 Net increase in unrealized appreciation on investments 1,083.864 ------------- Net realized gain and increase in unrealized appreciation on investments 1,734.497 ------------- Net Increase in Net Assets Resulting from Operations $ 2,044.435 ============= - ---------------------------------------- -------------------------- (dollars in millions) Six months ended Year ended Statement of Changes in Net Assets 6/30/96 /1/ 12/31/95 - ----------------------------------------- -------------------------- Operations: Net investment income $ 309.938 $ 606.095 Net realized gain on investments 650.633 1,026.204 Net increase in unrealized appreciation on investments 1,083.864 4,320.176 -------------------------- Net increase in net assets resulting from operations 2,044.435 5,952.475 -------------------------- Dividends and Distributions Paid to Shareholders: Dividends from net investment income (289.444) (556.505) Distributions from net realized gain on investments - (1,033.686) -------------------------- Total dividends and distributions (289.444) (1,590.191) -------------------------- Capital Share Transactions: Proceeds from shares sold: 89,165,153 and 155,130,380 shares, respectively 2,012.054 3,118.719 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments: 11,355,292 and 69,096,019 shares, respectively 259.550 1,453.606 Cost of shares repurchased: 69,675,595 and 127,074,306 shares, respectively (1,577.412) (2,535.884) -------------------------- Net increase in net assets resulting from capital share transactions 694.192 2,036.441 -------------------------- Total Increase in Net Assets 2,449.183 6,398.725 Net Assets: Beginning of period 25,678.318 19,279.593 -------------------------- End of period (including undistributed net investment income: $297.919 and $277.425, respectively) $28,127.501 $25,678.318 ========================== /1/ Unaudited See Notes to Financial Statements
Unaudited NOTES TO FINANCIAL STATEMENTS 1. The Investment Company of America, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks long-term growth of capital and income, placing greater emphasis on future dividends than on current income. The following paragraphs summarize the significant accounting policies consistently followed by the fund in the preparation of its financial statements: Equity-type securities traded on a national securities exchange (or reported on the NASDAQ national market) and securities traded in the over-the-counter market are stated at the last-reported sales price on the day of valuation; other securities, and securities for which no sale was reported on that date, are stated at the last- quoted bid price. Nonconvertible bonds and other long-term debt securities are valued at prices obtained from a bond-pricing service provided by a major dealer in bonds, when such prices are available; however, in circumstances where the investment adviser deems it appropriate to do so, such securities will be valued at the mean of their representative quoted bid and asked prices or, if such prices are not available, at the mean of such prices for securities of comparable maturity, quality and type. Short-term securities with original or remaining maturities in excess of 60 days are valued at the mean of their quoted bid and asked prices. Short-term securities with 60 days or less to maturity are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Valuation Committee of the Board of Directors. As is customary in the mutual fund industry, securities transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses from securities transactions are reported on an identified cost basis. Dividend and interest income is reported on the accrual basis. Discounts on securities purchased are amortized over the life of the respective securities. The fund does not amortize premiums on securities purchased. Dividends and distributions paid to shareholders are recorded on the ex-dividend date. Investment securities and other assets and liabilities denominated in non-U.S. currencies are recorded in the financial statements after translation into U.S. dollars utilizing rates of exchange on the last business day of the period. Purchases and sales of investment securities, income, and expenses are calculated using the prevailing exchange rate as accrued. The fund does not identify the portion of each amount shown in the fund's statement of operations under the caption "Realized Gain and Unrealized Appreciation on Investments" that arises from changes in non-U.S. currency exchange rates. Pursuant to the custodian agreement, the fund receives credits against its custodian fee for imputed interest on certain balances with the custodian bank. The custodian fee of $369,000 includes $185,000 that was paid by these credits rather than in cash. 2. It is the fund's policy to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income, including any net realized gain on investments, to its shareholders. Therefore, no federal income tax provision is required. As of June 30, 1996, net unrealized appreciation on investments for federal income tax purposes aggregated $8,587,206,000, of which $8,846,910,000 related to appreciated securities and $259,704,000 related to depreciated securities. During the six months ended June 30, 1996, the fund realized, on a tax basis, a net capital gain of $650,790,000 on securities transactions. The cost of portfolio securities for federal income tax purposes was $19,510,301,000 at June 30, 1996. 3. The fee of $35,129,000 for management services was paid pursuant to an agreement with Capital Research and Management Company (CRMC), with which certain officers and Directors of the fund are affiliated. The Investment Advisory and Service Agreement provides for monthly fees, accrued daily, based on an annual rate of 0.39% of the first $1 billion of average net assets; 0.336% of such assets in excess of $1 billion but not exceeding $2 billion; 0.30% of such assets in excess of $2 billion but not exceeding $3 billion; 0.276% of such assets in excess of $3 billion but not exceeding $5 billion; 0.258% of such assets in excess of $5 billion but not exceeding $8 billion; 0.246% of such assets in excess of $8 billion but not exceeding $13 billion; 0.24% of such assets in excess of $13 billion but not exceeding $21 billion; 0.235% of such assets in excess of $21 billion but not exceeding $34 billion; and 0.231% of such assets in excess of $34 billion. Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its average net assets annually for any activities primarily intended to result in sales of fund shares, provided the categories of expenses for which reimbursement is made are approved by the fund's Board of Directors. Fund expenses under the Plan include payments to dealers to compensate them for their selling and servicing efforts. During the six months ended June 30, 1996, distribution expenses under the Plan were $28,163,000. As of June 30, 1996, accrued and unpaid distribution expenses were $4,394,000. American Funds Service Company (AFS), the transfer agent for the fund, was paid a fee of $11,014,000. American Funds Distributors, Inc. (AFD), the principal underwriter of the fund's shares, received $9,642,000 (after allowances to dealers) as its portion of the sales charges paid by purchasers of the fund's shares. Such sales charges are not an expense of the fund and, hence, are not reflected in the accompanying statement of operations. Directors and Advisory Board members who are unaffiliated with CRMC may elect to defer part or all of the fees earned for services as members of the Board. Amounts deferred are not funded and are general unsecured liabilities of the fund. As of June 30, 1996, aggregate amounts deferred and earnings thereon were $191,000. CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund are or may be considered to be affiliated with CRMC, AFS, and AFD. No such persons received any remuneration directly from the fund. 4. Option warrants are outstanding, which may be exercised at any time for the purchase of 839,161 shares of the fund at approximately $5.242 per share. If all warrants had been exercised on June 30, 1996, the net assets of the fund would have been $28,131,899,000; the shares outstanding would have been 1,219,693,000; and the net asset value would have been equivalent to $23.06 per share. During the six months ended June 30, 1996, 130 warrants were exercised for the purchase of 2,852 shares. 5. As of June 30, 1996, accumulated undistributed net realized gain on investments was $650,370,000 and additional paid-in capital was $17,382,546,000. The fund made purchases and sales of investment securities, excluding short-term securities, of $3,805,358,000 and $1,748,496,000, respectively, during the six months ended June 30, 1996. Dividend and interest income is recorded net of non-U.S. taxes paid. For the six months ended June 30, 1996, such non-U.S. taxes were $5,371,000. Net realized currency losses on dividends, interest, withholding taxes reclaimable, and sales of non-U.S. bonds and notes were $82,000 for the six months ended June 30, 1996. Year Per-Share Data and Ratios Six months ended ended December June 30, 31 1996 /1/ 1995 1994 1993 1992 1991 ---------- ------- ------- ------- ------- ------- Net Asset Value, Beginning of Period $21.61 $17.67 $18.72 $17.89 $17.48 $14.52 ---------- ------- ------- ------- ------- ------- Income from Investment Operations: Net investment income .25 .52 .51 .54 .49 .51 Net realized and unrealized gain (loss) on investments 1.46 4.83 (.48) 1.51 .71 3.27 ---------- ------- ------- ------- ------- ------- Total income from investment operations 1.71 5.35 .03 2.05 1.20 3.78 ---------- ------- ------- ------- ------- ------- Less Distributions: Dividends from net investment income (.24) (.50) (.48) (.47) (.47) (.44) Distributions from net realized gains - (.91) (.60) (.75) (.32) (.38) ---------- ------- ------- ------- ------- ------- Total distributions (.24) (1.41) (1.08) (1.22) (.79) (.82) ---------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $23.08 $21.61 $17.67 $18.72 $17.89 $17.48 ========== ======= ======= ======= ======= ======= Total Return /2/ 7.93% /3/ 30.63% .16% 11.62% 6.99% 26.54% Ratios/Supplemental Data: Net assets, end of period (in millions) $28,128 $25,678 $19,280 $19,005 $15,428 $10,526 Ratio of expenses to average net assets .30% .60% .60% .59% .58% .59% Ratio of net income to average net assets 1.14% /3/ 2.70% 2.83% 3.03% 3.06% 3.29% Average commissions paid per share /1/ /4/ 6.10 cents 6.16 cent 5.11 cent 6.20 cent 7.43 cent 6.99 cents Portfolio turnover - common stocks 7.17% /3/ 20.91% 17.94% 19.57% 7.23% 5.79% Portfolio turnover - investment securities 6.77% /3/ 20.37% 31.08% 17.57% 9.73% 6.21% /1/ Unaudited /2/Calculated without deducting a sales charge. The maximum sales charge is 5.75% of the fund's offering price. /3/ Based on operations for six months and, accordingly, not representative of a full year's operations. /4/ Brokerage commissions paid on portfolio transactions increase the cost of securities purchased or reduce the proceeds of securities sold, and are not reflected in the fund's statement of operations. Shares traded on a principal basis, such as most over- the-counter and fixed-income transactions, are excluded.
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS HELD APRIL 2, 1996 Shares Outstanding on February 26, 1996 (record date) 1,195,907,213 Shares Voting on April 23, 1996 783,839,722 (65.5%) ELECTION OF DIRECTORS
Director Votes Percent of Votes Percent of For Shares Withheld Shares Voting For Withheld Charles H. Black 762,696,812 97% 21,142,910 3% Ann S. Bowers 762,987,656 97 20,852,066 3 Malcolm R. Currie 762,927,086 97 20,912,636 3 Jon B. Lovelace, Jr. 762,898,479 97 20,941,243 3 John G. McDonald 762,770,647 97 21,069,075 3 Bailey Morris-Eck 761,640,957 97 22,198,765 3 Richard G. Newman 762,463,189 97 21,376,533 3 William C. Newton 763,190,073 97 20,649,649 3 James W. Ratzlaff 763,147,554 97 20,692,168 3 Olin C. Robison 762,621,001 97 21,218,721 3
RATIFICATION OF AUDITORS
Votes Percent of Votes Percent of Abstentions Percent of For Shares Against Shares Shares Voting For Voting Abstaining Against Price 753,501,297 96% 4,417,191 1% 25,921,234 3% Waterhouse LLP
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER, CAPITAL RESEARCH AND MANAGEMENT COMPANY 333 South Hope Street Los Angeles, California 90071-1443 135 South State College Boulevard Brea, California 92821-5804 TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS AMERICAN FUNDS SERVICE COMPANY (Please write to address closest to you) P.O. Box 2205 Brea, California 92822-2205 P.O. Box 659522 San Antonio, Texas 78265-9522 P.O. Box 6007 Indianapolis, Indiana 46206-6007 P.O. Box 2280 Norfolk, Virginia 23501-2280 CUSTODIAN OF ASSETS The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza New York, New York 10081-0001 COUNSEL O'Melveny & Myers LLP 400 South Hope Street Los Angeles, California 90071-2899 PRINCIPAL UNDERWRITER American Funds Distributors, Inc. 333 South Hope Street Los Angeles, California 90071-1462 FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL AMERICAN FUNDS SERVICE COMPANY, TOLL-FREE, AT 800/421-0180. This report is for the information of shareholders of The Investment Company of America, but it may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 1996, this report must be accompanied by an American Funds Group Statistical Update for the most recently completed calendar quarter. Litho in USA BDA/FS/3029 (C)1996 American Funds Distributors, Inc. Lit. No. ICA-013-0896 [The American Funds Group(R)] -----END PRIVACY-ENHANCED MESSAGE-----