-----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, K0Cj4pM2lYZWyPAel4xh+JW4hFzQNAcRt9L2r0U/MiNdBmj49iyD6TpxEaDikGkX Ow0MHn1W38qX2ku05dPTJQ== 0000051931-97-000018.txt : 19970912 0000051931-97-000018.hdr.sgml : 19970912 ACCESSION NUMBER: 0000051931-97-000018 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 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: SEC FILE NUMBER: 811-00116 FILM NUMBER: 97676358 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 1997 Semi-Annual Report For the six months ended June 30 [cover: sketch of hillside, lighthouse, seagull, tennis shoes, telescope,glasses, book, pen, and blanket] [The American Funds Group (r)] ICA (sm) THE INVESTMENT COMPANY OF AMERICA (R) SEEKS LONG-TERM GROWTH OF CAPITAL AND INCOME, PLACING GREATER EMPHASIS ON FUTURE DIVIDENDS THAN ON CURRENT INCOME. About Our Cover: An artist's sketch of a scene on Martha's Vineyard, Massachusetts. [sketch: Map of Martha's Vineyard] 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, 1997, assuming payment of the 5.75% maximum sales charge at the beginning of the stated periods - 10 years: +237.61%, or +12.94% a year; 5 years: +107.93%, or +15.77% a year; 12 months: +23.03%. Sales charges are lower for accounts of $50,000 or more. The fund's 30-day yield as of July 31, 1997, calculated in accordance with the Securities and Exchange Commission formula, was 1.69%. THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE 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's gain for the first half of 1997 was larger than that of most full years in its 63 1/2-year history. In the six months ended June 30, the value of your investment in the fund rose 18.05% if you reinvested the income dividends, as most did. The distributions were paid in March and June and totaled 24 cents a share. Those of you who took dividends in cash earned an income return of .99% while the value of your investment increased 17.00%. With the U.S. stock market setting repeated new highs, more than 85% of the 187 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 a gain of 20.6% with dividends reinvested. The U.S. stock market has now gone an unprecedented 6.7 years without a correction - generally defined as a decline of 10% or more. The current period did include the market's first decline of any significant size since 1990, stopping an eyelash short of the 10% mark. The drop turned out to be of little significance to the market overall, which recovered quickly. During the 1997 first half, the prices of a great number of individual stocks moved dramatically. This volatility led to moderately higher turnover for ICA, but still at a level well below the mutual fund industry average, and produced net-realized capital gains of roughly $1.68 per share. The fund's capital gains are particularly noteworthy in light of this year's new tax law. The change lowered the capital gains rate on sales of securities held for more than 18 months to 20% from 28% for assets sold on or after May 7, 1997. This change increases the importance of minimizing short-term gains, which will continue to be taxed as regular income, in favor of long-term gains. Unfortunately, the new law's midyear effective date and other details will make this an unusually complicated year for shareholder tax reporting. Though we are pleased to report a strong six-month gain for ICA, it is important not to set expectations based on such short-term results. Over the fund's 63 1/2 years, it has produced a total return of 307,492% which works out to an annualized compound return of 13.5%. Over the same period, the annualized return of the S&P 500 has been 12.0%. Sincerely, /s/Jon B. Lovelace, Jr. Jon B. Lovelace, Jr. Chairman of the Board /s/William C. Newton William C. Newton President August 14, 1997 INVESTMENT PORTFOLIO - June 30, 1997 - ------------------------------------- ---------- Percent of Largest Individual Equity Holdings Net Assets - ------------------------------------- ---------- Philip Morris 3.63% Federal National Mortgage 2.73 Royal Dutch Petroleum 2.02 Time Warner 1.64 DuPont 1.62 Pfizer 1.58 Caterpillar 1.50 BankAmerica 1.45 Warner-Lambert 1.37 Oracle 1.37 - ------------------------------------- ---------- Percent of Largest Industry Holdings Net Assets - ------------------------------------- ---------- Banking 8.81% Energy Sources 7.71 Health & Personal Care 7.54 Telecommunications 5.27 Beverages & Tobacco 5.19 - ------------------------------------- ---------- Percent of Largest Investment Categories Net Assets - ------------------------------------- ---------- Consumer Goods 17.46% Finance 17.04 Services 16.51 Capital Equipment 14.14 Energy 8.72 - ------------------------------------- ----------
THE INVESTMENT COMPANY OF AMERICA INVESTMENT PORTFOLIO, June 30, 1997 - ------------------------------------------ Unaudited Equity-Type Securities Market Percent - ------------------------------------------ Number of Value of Net Energy Shares (millions) Assets - ------------------------------------------ --------- --------- ------ Energy Sources-7.71% Amoco Corp. 2,339,700 $ 203.408 .56 Atlantic Richfield Co. 2,350,000 165.675 .46 British Petroleum Co. PLC (American Depositary Receipts) 1,036,482 77.607 .21 Broken Hill Proprietary Co. Ltd. 1,590,999 23.388 .06 Chevron Corp. 3,062,200 226.411 .62 Exxon Corp. 1,000,000 61.500 .17 Mobil Corp. 1,300,000 90.837 .25 Murphy Oil Corp. 2,175,000 106.031 .29 Pennzoil Co. 265,900 20.408 .06 Phillips Petroleum Co. 3,800,000 166.250 .46 Royal Dutch Petroleum Co. (New York Registered Shares) 13,480,000 732.975 2.02 Elf Aquitaine (American Depositary Receipts) 3,000,000 163.312 .45 Texaco Inc. 1,500,000 163.125 .45 TOTAL, Class B 1,359,340 137.450 .00 TOTAL, Class B (American Depositary Receipts) 2,033,520 102.947 .66 Union Pacific Resources Group, Inc. 2,100,000 52.238 .14 Unocal Corp. 3,400,000 131.962 .37 USX-Marathon Group 6,000,000 173.250 .48 Utilities: Electric & Gas-1.01% American Electric Power Co., Inc. 1,100,000 46.200 .13 Duke Energy Corp. 1,123,230 53.845 .15 El Paso Natural Gas Co. 119,605 6.578 .02 Florida Progress Corp. 400,000 12.525 .03 GPU, Inc. 1,500,000 53.813 .15 Houston Industries Inc. 2,000,000 42.875 .12 Long Island Lighting Co. 4,100,000 94.300 .26 Southern Co. 1,600,000 35.000 .10 Union Electric Co. 550,000 20.728 .05 --------- --------- 3,164.638 8.72 --------- --------- - ------------------------------------------ Materials - ------------------------------------------ Chemicals-2.43% Air Products and Chemicals, Inc. 1,935,000 157.219 .43 E.I. du Pont de Nemours and Co. 9,350,000 587.881 1.62 Eastman Chemical Co. 550,000 34.925 .10 Hoechst AG 350,000 14.855 .04 Imperial Chemical Industries PLC (American Depositary Receipts) 1,200,000 68.250 .19 Monsanto Co. 450,000 19.378 .05 Forest Products & Paper-2.61% Champion International Corp. 1,950,000 107.738 .30 Georgia-Pacific Corp. 4,118,900 351.651 .97 International Paper Co. 1,500,000 72.844 .20 Louisiana-Pacific Corp. 2,900,000 61.262 .17 Union Camp Corp. 1,530,000 76.500 .21 Weyerhaeuser Co. 5300000 275.600 .76 Metals: Nonferrous-1.53% Alcan Aluminium Ltd. 1,000,000 34.688 .10 Aluminum Co. of America 4,200,000 316.575 .87 Freeport-McMoRan Copper & Gold Inc., Class B 1,200,000 37.350 .10 Inco Ltd. 1,700,000 51.106 .14 Phelps Dodge Corp. 750,000 63.891 .18 WMC Ltd. 8,495,372 53.521 .14 Metals: Steel-0.28% USX-U.S. Steel Group 2,900,000 101.681 .28 --------- ------ 2,486.915 6.85 --------- ------ - ------------------------------------------ Capital Equipment - ------------------------------------------ Aerospace & Military Technology-1.53% Boeing Co. 1,320,000 70.042 .19 General Motors Corp., Class H 3,882,800 224.232 .62 McDonnell Douglas Corp. 700,000 47.950 .13 Raytheon Co. 1,700,000 86.700 .24 Sundstrand Corp. 1,250,000 67.500 .19 United Technologies Corp. 720,000 59.760 .16 Data Processing & Reproduction-4.28% Cisco Systems, Inc. /1/ 1,200,000 80.550 .22 Computer Associates International, Inc. 2,115,100 117.785 .32 Digital Equipment Corp. /1/ 1,750,000 62.016 .17 Hewlett-Packard Co. 2,750,000 154.000 .42 International Business Machines Corp. 4,384,600 395.436 1.09 Oracle Corp. /1/ 9,862,500 496.823 1.37 Tandem Computers Inc. /1/ 1,225,000 24.806 .07 3Com Corp. /1/ 2,600,000 117.000 .32 Xerox Corp. 1,300,000 102.538 .30 Electrical & Electronic-0.87% General Electric Co. 1,600,000 104.600 .29 Lucent Technologies Inc. 1,938,000 139.657 .38 Siemens AG 1,250,000 74.257 .20 Electronic Components-1.18% Intel Corp. 750,000 106.359 .29 Texas Instruments Inc. 3,822,500 321.329 .89 Energy Equipment-2.19% Baker Hughes Inc. 1,200,000 46.425 .13 Dresser Industries, Inc. 1,100,000 40.975 .11 Halliburton Co. 1,450,000 114.913 .32 Schlumberger Ltd. 3,500,000 437.500 1.21 Western Atlas Inc. /1/ 2,100,000 153.825 .42 Industrial Components-0.38% Dana Corp. 1,821,500 69.217 .19 Goodyear Tire & Rubber Co. 650,000 41.153 .11 Rockwell International Corp. 467,600 27.588 .08 Machinery & Engineering-3.71% Caterpillar Inc. 5,080,000 545.465 1.50 Cummins Engine Co., Inc. 1,041,800 73.512 Cummins Engine Co., Inc. /2/ 958,200 67.613 .39 Deere & Co. 7,250,000 397.844 1.10 Ingersoll-Rand Co. 1,600,000 98.800 .27 Mannesmann AG 150,000 66.864 .18 Parker Hannifin Corp. 1,590,000 96.493 .27 --------- ------ 5,131.527 14.14 --------- ------ - ------------------------------------------ Consumer Goods - ------------------------------------------ Automobiles-2.21% Chrysler Corp. 7,800,000 255.938 .71 Ford Motor Co., Class A 4,000,000 151.000 .42 General Motors Corp. 3,125,000 174.023 .48 Honda Motor Co., Ltd. 843,000 25.423 Honda Motor Co., Ltd. (American Depositary Receipts) 2,610,000 157.089 .50 Toyota Motor Corp. 1,279,000 37.789 .10 Beverages & Tobacco-5.19% Anheuser-Busch Companies, Inc. 1,563,000 65.548 .18 PepsiCo, Inc. 3,700,000 138.981 .38 Philip Morris Companies Inc. 29,700,000 1,317.938 3.63 RJR Nabisco Holdings Corp. 6,100,000 201.300 .55 Seagram Co. Ltd. 4,000,000 161.000 .45 Food & Household Products-2.32% Archer Daniels Midland Co. 3,000,000 70.500 .19 ConAgra, Inc. 586,000 37.577 .10 CPC International Inc. 1,441,100 133.032 .37 General Mills, Inc. 2,525,000 164.441 .45 Kellogg Co. 1,033,300 88.476 .24 Nestle SA 140,000 184.685 .51 Procter & Gamble Co. 450,000 63.562 .18 Unilever NV (New York Registered Shares) 450,000 98.100 .28 Health & Personal Care-7.54% Abbott Laboratories 1,500,000 100.125 .28 American Home Products Corp. 1,500,000 114.750 .31 Avon Products, Inc. 861,600 60.797 .17 Bristol-Myers Squibb Co. 1,600,000 129.600 .36 Gillette Co. 952,000 90.202 .25 Johnson & Johnson 1,331,800 85.735 .24 Kimberly-Clark Corp. 450,000 22.387 .06 Eli Lilly and Co. 3,076,300 336.278 .93 Merck & Co., Inc. 3,200,000 331.200 .91 Pharmacia & Upjohn, Inc. 4,847,500 168.451 .46 Pfizer Inc 4,800,000 573.600 1.58 Schering-Plough Corp. 3,767,600 180.374 .50 SmithKline Beecham PLC (American Depositary Receipts) 500,000 45.812 .12 Warner-Lambert Co. 4,004,000 497.497 1.37 Recreation & Other Consumer Products-0.20% Eastman Kodak Co. 600,000 46.050 .13 Mattel, Inc. 800,000 27.100 .07 --------- ------ 6,336.360 17.46 --------- ------ - ------------------------------------------ Services - ------------------------------------------ Broadcasting & Publishing-4.22% New York Times Co., Class A 2,449,100 121.230 .33 Tele-Communications, Inc., Series A, Liberty Media Group /1/ 8,278,125 196.605 .54 Tele-Communications, Inc., Series A, TCI Group /1/ 12,599,700 187.421 .52 Time Warner Inc. 12,350,000 595.888 1.64 Tribune Co. 1,128,100 54.219 .15 U S WEST Media Groupc /1/ 5,185,000 104.996 .29 Viacom Inc., Class B /1/ 8,950,000 268.500 .75 Business & Public Services-2.70% Browning-Ferris Industries, Inc. 2,500,000 83.125 .23 Columbia/HCA Healthcare Corp. 3,503,600 137.735 .38 Electronic Data Systems Corp. 1,915,000 78.515 .22 Federal Express Corp. /1/ 1,435,000 82.871 .23 First Data Corp. 3,000,000 131.813 .36 Humana Inc. /1/ 2,100,000 48.563 .13 Interpublic Group of Companies, Inc. 1,746,500 107.082 .30 United HealthCare Corp. 1,000,000 52.000 .14 Waste Management, Inc. (Formerly WMX Technologies, Inc.) 8,054,233 258.742 .71 Leisure & Tourism-1.28% Walt Disney Co. 4,623,412 371.029 1.02 McDonald's Corp. 2,000,000 96.625 .26 Merchandising-2.18% AutoZone, Inc. /1/ 2,640,000 62.205 .17 Limited Inc. 6,539,300 132.421 .36 May Department Stores Co. 1,300,000 61.425 .17 J.C. Penney Co., Inc. 1,000,000 52.188 .14 Wal-Mart Stores, Inc. 14,350,000 485.209 1.34 Telecommunications-5.27% AirTouch Communications /1/ 5,560,600 152.221 .42 Ameritech Corp. 4,147,300 281.757 .78 AT&T Corp. 10,735,000 376.396 1.04 MCI Communications Corp. 6,325,000 242.129 .67 SBC Communications Inc. 1,500,000 92.813 .26 Sprint Corp. 2,065,000 108.671 .30 Telefonica de Espana, SA (American Depositary Receipts) 1,610,000 138.863 .38 Telefonos de Mexico, SA de CV, Class L (American Depositary Receipts) 3,057,400 145.991 .40 U S WEST Communications Group 5,000,000 188.437 .52 Vodafone Group PLC (American Depositary Receipts) 3,848,000 186.387 .50 Transportation: Airlines-0.43% AMR Corp. /1/ 1,250,000 115.625 .32 Delta Air Lines, Inc. 471,050 38.626 .11 Transportation: Rail & Road-0.43% Union Pacific Corp. 2,175,000 153.338 .43 --------- ------ 5,991.661 16.51 --------- ------ - ------------------------------------------ Finance - ------------------------------------------ Banking-8.81% H.F. Ahmanson & Co. 2,400,000 103.200 .28 Banc One Corp. 3,200,000 155.000 .43 Bank of New York Co., Inc. 2,800,000 121.800 .34 BankAmerica Corp. 8,144,000 525.797 1.45 Bankers Trust New York Corp. 1,477,400 128.533 .35 Chase Manhattan Corp. 2,450,000 237.803 .66 Citicorp 500,000 60.281 .17 Comerica Inc. 1,800,000 122.400 .34 CoreStates Financial Corp 2,750,000 147.813 .41 First Chicago NBD Corp. 4,250,000 257.125 .71 First Union Corp. 545,800 50.487 .14 Fleet Financial Group, Inc. 3,723,900 235.537 .65 Great Western Financial Corp. 2,500,000 134.375 .37 KeyCorp 2,150,000 120.131 .33 J.P. Morgan & Co. Inc. 2,400,000 250.500 .69 National City Corp. 1,500,000 78.750 .22 Norwest Corp. 1,800,000 101.250 .28 PNC Bank Corp. 2,250,000 93.656 .26 Toronto-Dominion Bank 3,420,000 101.339 .28 U.S. Bancorp 1,250,000 80.156 .22 Wachovia Corp. 900,000 52.481 .14 Wells Fargo & Co. 148,400 39.994 .09 Financial Services-4.94% Federal Home Loan Mortgage Corp. 12,621,600 433.867 1.20 Federal National Mortgage Assn. 22,700,000 990.288 2.73 Household International, Inc. 876,400 102.922 .28 Student Loan Marketing Assn. 2,102,000 266.954 .73 Insurance-3.29% Aetna Inc. 780,900 79.945 .22 Allstate Corp. 2,313,000 168.849 .47 American General Corp. 1,591,400 75.989 .21 American International Group, Inc. 1,822,500 272.236 .75 CIGNA Corp. 200,000 35.500 .10 General Re Corp. 1,217,800 221.640 .61 Lincoln National Corp. 1,050,000 67.594 .19 SAFECO Corp. 2,098,900 97.992 .27 St. Paul Companies, Inc. 2,240,000 170.800 .47 --------- ------ 6,182.984 17.04 --------- ------ - ------------------------------------------ Other - ------------------------------------------ Multi-Industry-1.39% AlliedSignal Inc. 1,300,000 109.200 .30 Canadian Pacific Ltd. 2,000,000 56.875 .16 Minnesota Mining and Manufacturing Co. 520,000 53.040 .15 Tenneco Inc. 3,550,000 160.415 .44 Textron Inc. 1,897,400 125.940 .34 Gold Mines -0.63% Barrick Gold Corp. 3,000,000 66.000 .18 Newmont Mining Corp. 2,500,000 97.500 .27 Placer Dome Inc. 4,000,000 65.500 .18 Miscellaneous-2.14% Equity-type securities in initial period of 0 acquisition 774.906 2.14 --------- ------ 1,509.376 4.16 --------- ------ Total Equity-Type Securities (cost: $17,070.931 million) 30,803.461 84.88 --------- ------ Principal - ------------------------------------------ Amount Bonds & Notes (millions) - ------------------------------------------ --------- U.S. Treasuries-3.80% 4.75% August 1998 $300.000 296.157 .82 5.125% November 1998 300.000 296.625 .82 8.875% November 1998 25.000 25.945 .07 5.75% December 1998 250.000 249.258 .68 6.00% August 1999 250.000 249.375 .69 5.875% November 1999 250.000 248.398 .68 11.625% November 2004 10.000 12.956 .04 --------- ------ Total Bonds & Notes (cost: $1,381.084 million) 1,378.714 3.80 --------- ------ Total Investment Securities (cost: $18,452.015 million) 32,182.175 88.68 --------- ------ - ------------------------------------------ Short-Term Securities - ------------------------------------------ U.S. Treasuries and Other Federal Agencies-4.80% Treasury Notes 5.75%-8.875% due 10/31-11/15/97 $325.000 325.523 .90 Treasury Bills 5.085%-5.21% due 7/24-10/9/97 599.800 593.362 1.64 Federal Home Loan Banks 5.42%-5.50% due 7/25-8/28/97 231.900 230.308 .64 Federal Home Loan Mortgage Corp. 5.42%-5.57% due 7/14-9/10/97 342.529 340.536 .94 Federal National Mortgage Assn. 5.44%-5.54% due 7/2-9/8/97 252.030 250.751 .68 Corporate Short-Term Notes-6.04% Abbott Laboratories 5.47%-5.48% due 7/18-7/28/97 97.542 97.206 .28 American Express Credit Corp. 5.54% due 7/1-9/3/97 80.000 79.508 .22 Ameritech Corp. 5.50%-5.555% due 7/7-9/17/97 109.200 108.461 .30 AT&T Corp. 5.50%-5.52% due 7/15-9/4/97 90.000 89.710 .25 CPC International Inc. 5.55%-5.62% due 8/6-9/25/97 /2/ 89.900 85.111 .23 Coca-Cola Co. 5.52% due 8/7-9/12/97 93.700 92.829 .26 Walt Disney Co. 5.52% due 8/25-8/29/97 99.300 98.418 .28 E.I. du Pont De Nemours and Co. 5.50%-5.54% due 7/11-9/16/97 74.600 74.100 .21 Ford Motor Credit Co. 5.53%-5.60% due 7/8-9/2/97 85.700 85.231 .23 Gannett Co., Inc. 5.50% due 7/10-8/15/97 /2/ 90.000 89.606 .25 General Electric Capital Corp. 5.53%-5.62% due 7/9-9/15/97 107.500 106.737 .29 H.J. Heinz Co. 5.50%-5.58% due 7/1-7/25/97 94.000 93.767 .26 IBM Credit Corp. 5.54%-5.56% due 7/1-9/2/97 73.300 72.944 .20 Lucent Technologies Inc. 5.50%-5.57% due 7/14-9/22/97 85.400 84.758 .22 Minnesota Mining and Manufacturing Co. 5.50%-5.53% due 7/17-8/27/97 68.500 68.208 .18 Monsanto Co. 5.57%-5.63% due 7/14-8/14/97 92.400 91.890 .26 Motorola, Inc. 5.49%-5.53% due 7/29-9/11/97 88.800 88.131 .24 PepsiCo, Inc. 5.48%-5.50% due 7/3-7/30/97 91.300 91.011 .26 Pfizer Inc 5.47%-5.50% due 7/28-7/31/97 /2/ 106.500 106.041 .30 Procter & Gamble Co. 5.52%-5.57% due 7/25-9/10/97 101.100 100.300 .28 Rockwell International Corp. 5.63% due 7/16/97 20.000 19.951 .05 Shell Oil Co. 5.46%-5.52% due 7/3-7/15/97 39.800 39.727 .11 Southwestern Bell Telephone Co. 5.49%-5.50% due 7/7-8/12/97 103.000 102.643 .29 Warner-Lambert Co. 5.50%-5.52% due 7/11-9/22/97 /2/ 87.000 86.547 .24 Weyerhaeuser Co. 5.52%-5.57% due 7/10-8/14/97 30.900 30.794 .09 Xerox Corp. 5.53%-5.57% due 7/14-9/12/97 109.600 108.902 .26 Total Short-Term Securities (cost: $3,944.773 million) 3,933.011 10.84 Excess of cash and receivables over payables 175.191 .48 --------- ------ Total Short-Term Securities, Cash and Receivables, Net of Payables 4,108.202 11.32 ----------- --------- Net Assets $36,290.377 100.00% ============ ========= /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 Financial Statements - ----------------------------------------- ------------- ------------- Statement of Assets and Liabilities (dollars in at June 30, 1997 millions) - ---------------------------------------- ------------- ------------- Assets: Investment securities at market (cost: $18,452.015) $32,182.175 Short-term securities at market (cost: $3,944.773) 3,933.011 Cash .046 Receivables for- Sales of investments $175.151 Sales of fund's shares 35.897 Dividends and accrued interest 80.898 291.946 ------------- ------------- 36,407.178 Liabilities: Payables for- Purchases of investments 55.201 Repurchases of fund's shares 45.390 Management services 7.572 Accrued expenses 8.638 116.801 ------------- ------------- Net Assets at June 30, 1997- Equivalent to $28.35 per share on 1,279,986,846 shares of $1 par value capital stock outstanding (authorized capital stock--2,000,000,000 shares) $36,290.377 ============= Unaudited Statement of Operations (dollars in for the six months ended June 30, 1997 millions) - ----------------------------------------- ------------- ------------- Investment Income: Income: Dividends $304.742 Interest 120.827 $ 425.569 ------------- Expenses: Management services fee 42.092 Distribution expenses 37.648 Transfer agent fee 10.229 Reports to shareholders 1.494 Registration statement and prospectus .787 Postage, stationery and supplies 3.755 Directors' fees .215 Auditing and legal fees .090 Custodian fee .375 Taxes (other than federal income tax) .328 Other expenses .150 97.163 ------------- ------------- Net investment income 328.406 ------------- Realized Gain and Unrealized Appreciation on Investments: Net realized gain 2,153.681 Net increase in unrealized appreciation on investments 3,073.145 ------------- Net realized gain and increase in unrealized appreciation on investments 5,226.826 ------------- Net Increase in Net Assets Resulting from Operations $ 5,555.232 ============= - ---------------------------------------- ------------- ------------- (dollars in millions) Six months ended Year ended Statement of Changes in Net Assets 6/30/97 /1/ 12/31/96 - ----------------------------------------- ------------- ------------- Operations: Net investment income $ 328.406 $ 611.069 Net realized gain on investments 2,153.681 1,256.875 Net increase in unrealized appreciation on investments 3,073.145 3,151.153 ------------- ------------- Net increase in net assets resulting from operations 5,555.232 5,019.097 ------------- ------------- Dividends and Distributions Paid to Shareholders: Dividends from net investment income (305.784) (606.665) Distributions from net realized gain on investments - (1,256.817) ------------- ------------- Total dividends and distributions (305.784) (1,863.482) ------------- ------------- Capital Share Transactions: Proceeds from shares sold: 76,173,754 and 154,894,329 shares, respectively 1,978.328 3,568.101 Proceeds from shares issued in reinvestment of net investment income dividends and distributions of net realized gain on investments: 10,222,362 and 70,957,086 shares, respectively 274.712 1,707.735 Cost of shares repurchased: 80,838,564 and 139,431,152 shares, respectively (2,087.583) (3,234.297) ------------- ------------- Net increase in net assets resulting from capital share transactions 165.457 2,041.539 ------------- ------------- Total Increase in Net Assets 5,414.905 5,197.154 Net Assets: Beginning of period 30,875.472 25,678.318 ------------- ------------- End of period (including undistributed net investment income: $304.451 and $281.829, respectively) $36,290.377 $30,875.472 ============= ============= /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. Long-term and short-term securities with original or remaining maturities in excess of 60 days are valued at the mean of their representative quoted bid and asked prices or, if such prices are not available, at prices for securities of comparable maturity, quality and type. Securities denominated in non-U.S. currencies are generally valued on the basis of bid quotations. 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 by the Board of Directors or a committee thereof. As is customary in the mutual fund industry, securities transactions are accounted for on the date the securities are purchased or sold. In the event the fund purchases securities on a delayed delivery or "when-issued" basis, it will segregate with its custodian liquid assets in an amount sufficient to meet its payment obligations in these transactions. 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 year. Purchases and sales of investment securities, income and expenses are calculated using the prevailing exchange rate as accrued. The effects of the changes in foreign currency exchange rates on investment securities are included with the net realized and unrealized gain or loss on investment securities. 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 $375,000 includes $25,000 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, 1997, net unrealized appreciation on investments for federal income tax purposes aggregated $13,727,816,000, of which $13,972,201,000 related to appreciated securities and $244,385,000 related to depreciated securities. During the six months ended June 30, 1997, the fund realized, on a tax basis, a net capital gain of $2,153,701,000 on securities transactions. The cost of portfolio securities for federal income tax purposes was $22,387,370,000 at June 30, 1997. 3. The fee of $42,092,000 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 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, 1997, distribution expenses under the Plan were $37,648,000. As of June 30, 1997, accrued and unpaid distribution expenses were $6,398,000. American Funds Service Company (AFS), the transfer agent for the fund, was paid a fee of $10,229,000. American Funds Distributors, Inc. (AFD), the principal underwriter of the fund's shares, received $8,291,000 (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, 1997, aggregate amounts deferred and earnings thereon were $417,000. 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 837,954 shares of the fund at approximately $5.242 per share. If all warrants had been exercised on June 30, 1997, the net assets of the fund would have been $36,294,770,000; the shares outstanding would have been 1,280,825,000; and the net asset value would have been equivalent to $28.34 per share. During the six months ended June 30, 1997, 15 warrants were exercised for the purchase of 329 shares. 5. As of June 30, 1997, accumulated undistributed net realized gain on investments was $2,153,648,000 and additional paid-in capital was $18,834,055,000. The fund made purchases and sales of investment securities, excluding short-term securities, of $4,078,156,000 and $5,934,454,000, respectively, during the six months ended June 30, 1997. Dividend and interest income is recorded net of non-U.S. taxes paid. For the six months ended June 30, 1997, such non-U.S. taxes were $6,043,000. Net realized currency losses on dividends, interest, withholding taxes reclaimable, and sales of non-U.S. bonds and notes were $20,000 for the six months ended June 30, 1997. Year Per-Share Data and Ratios Six months ended ended December June 30, 31 1997 /1/ 1996 1995 1994 1993 1992 ----------- ------- ------- ------- ------- ------- Net Asset Value, Beginning of Period $24.23 $21.61 $17.67 $18.72 $17.89 $17.48 ----------- ------- ------- ------- ------- ------- Income from Investment Operations: Net investment income .26 .49 .52 .51 .54 .49 Net realized and unrealized gain (loss) on investments 4.10 3.66 4.83 (.48) 1.51 .71 ----------- ------- ------- ------- ------- ------- Total income from investment operations 4.36 4.15 5.35 .03 2.05 1.20 ----------- ------- ------- ------- ------- ------- Less Distributions: Dividends from net investment income (.24) (.50) (.50) (.48) (.47) (.47) Distributions from net realized gains - (1.03) (.91) (.60) (.75) (.32) ----------- ------- ------- ------- ------- ------- Total distributions (.24) (1.53) (1.41) (1.08) (1.22) (.79) ----------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $28.35 $24.23 $21.61 $17.67 $18.72 $17.89 =========== ======= ======= ======= ======= ======= Total Return /2/ 18.05% /3/ 19.35% 30.63% .16% 11.62% 6.99% Ratios/Supplemental Data: Net assets, end of period (in millions) $36,290 $30,875 $25,678 $19,280 $19,005 $15,428 Ratio of expenses to average net assets .29% .59% .60% .60% .59% .58% Ratio of net income to average net assets .99% /3/ 2.17% 2.70% 2.83% 3.03% 3.06% Average commissions paid per share /4/ 5.07 c 5.79 c 6.16 c 5.11 c 6.20 c 7.43 c Portfolio turnover - common stocks 12.50% /3/ 17.46% 20.91% 17.94% 19.57% 7.23% Portfolio turnover - investment securities 13.48% /3/ 19.56% 20.37% 31.08% 17.57% 9.73% /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 the period shown 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 separately reflected in the fund's statement of operations. Shares traded on a principal basis (without commissions), such as most over-the-counter and fixed-income transactions, are excluded. Generally, non-U.S. commissions are lower than U.S. commissions when expressed as cents per share but higher when expressed as a percentage of transactions because of the lower per-share prices of many non-U.S. securities.
[illustration: pathway] 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 (PLEASE WRITE TO THE ADDRESS NEAREST YOU.) American Funds Service Company P.O. Box 2205 Brea, California 92822-2205 P.O. Box 659522 San Antonio, Texas 78265-9522 P.O. Box 6007 Indianapolis, Indiana 46206-6007 P.O. Box 2280 Norfolk, Virginia 23501-2280 CUSTODIAN OF ASSETS The Chase Manhattan Bank One Chase Manhattan Plaza New York, New York 10081-0001 COUNSEL O'Melveny & Myers LLP 400 South Hope Street Los Angeles, California 90071-2899 PRINCIPAL UNDERWRITER American Funds Distributors, Inc. 333 South Hope Street Los Angeles, California 90071-1462 FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE COMPANY, TOLL-FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD WIDE WEB. This report is for the information of shareholders of The Investment Company of America, but it may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after September 30, 1997, this report must be accompanied by an American Funds Group Statistical Update for the most recently completed calendar quarter. Printed on recycled paper Litho in USA WG/FS/3480 (c)1997 American Funds Distributors, Inc. Lit. No. ICA-013-0897 [The American Funds Group (r)] -----END PRIVACY-ENHANCED MESSAGE-----