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<PAGE>
ICA
THE INVESTMENT COMPANY OF AMERICA
For the six months ended June 30, 1995
Semi-Annual Report
[The American Funds Group(R)]
<PAGE>
[Photo Caption]
About our cover: Jonathan Bell Lovelace (1895-1979), the founder of ICA's
investment advisory organization, and some mementos, including his briefcase,
from the fund's 61-year history.
[End Photo Caption]
THE INVESTMENT COMPANY OF AMERICA(R)
ICA(SM) is one of the nation's oldest and largest mutual funds. It 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, 1995,
assuming payment of the 5.75% maximum sales charge at the beginning of the
stated periods - 10 years: +260.68%, or +13.69% a year; 5 years: +61.20%, or
+10.02% a year; 12 months: +12.62%. Sales charges are lower for accounts of
$50,000 or more. The fund's 30-day yield as of July 31, 1995, calculated in
accordance with the Securities and Exchange Commission formula, was 2.49%. Fund
results through August 1988 do not reflect service and distribution expenses
now paid under its Plan of Distribution. Such expenses may not exceed 0.25% of
the fund's average net assets per year and currently amount to approximately
0.21%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
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. All investments are subject
to certain risks. For example, those which include common stocks are affected
by fluctuating stock prices. Accordingly, investors should maintain a long-term
perspective.
<PAGE>
FELLOW SHAREHOLDERS:
ICA RECORDED A SIZABLE GAIN IN THE FIRST HALF OF 1995. In the six months ended
June 30, the value of your investment in the fund rose 16.2% if, like most
shareholders, you reinvested the two income dividends paid in March and June.
If you took your dividends totaling 24 cents in cash, the value of your
investment increased 14.8%, and your income return for the six months was 1.4%.
By comparison, the unmanaged Standard & Poor's 500 Composite Index, which
measures the stocks of large U.S. companies, posted a gain of 20.2% with
dividends reinvested. Over the decades, in the course of seeking long-term
growth of capital and income, ICA has generally had less volatile results than
the overall market. That means it is not surprising for ICA to trail a very
strong market.
This was an exceptional period for U.S. stocks. Driven by strong corporate
earnings, healthy exports and declining interest rates, the first six months of
1995 saw a steady stream of recordbreaking sessions on all of the major U.S.
stock exchanges. ICA's portfolio reflected this broad strength. Of the 177
stocks the fund held throughout the fiscal period, 156 gained ground, with more
than 75% of those holdings posting double-digit returns.
Along with record market highs have also come historically low dividend yields
relative to stock prices. The yield on the S&P 500 was 2.5% as of June 30, the
lowest in this century. Nevertheless, during the first half of this year, your
dividend income from ICA increased. In the first quarter, the fund's dividend
was raised to 12 cents a share from 11 cents and continued at the higher rate
in the second quarter.
Though we are pleased to report this dividend growth and the fund's strong
results, we cannot help but note the unprecedented duration of the current bull
market. It has been 57 months since the S&P 500 experienced a correction of 10%
or more. Until now, the longest time between corrections was 45 months. The
average is 20 months.
We continue to believe ICA's investment mix is appropriate for such a time. As
of June 30, equity holdings accounted for 80.6% of the portfolio. The balance
of the portfolio is in short- and intermediate-term bonds and money market
instruments. This should help temper the effect of any stock market decline and
will give us the potential to purchase the securities of good companies at
attractive prices.
We appreciate your continued support and we welcome the fund's many new
shareholders.
Cordially,
Jon B. Lovelace, Jr. William C. Newton
Chairman of the Board President
July 19, 1995
***
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The Investment Company of America
Investment Portfolio - June 30, 1995
June 30, 1995 Unaudited
------------------------------------------ ----------
Percent of
Largest Investment Categories Net Assets
------------------------------------------ ----------
Services 19.76%
Capital Equipment 15.02
Finance 14.22
------------------------------------------ ----------
Percent of
Largest Individual Holdings Net Assets
------------------------------------------ ----------
Philip Morris 2.87%
Federal National Mortgage 2.41
Intel 1.95
Royal Dutch Petroleum 1.90
Caterpillar 1.82
Time Warner 1.66
International Business Machines 1.65
Wal-Mart Stores 1.32
Tele-Communications 1.27
Banc One 1.26
------------------------------------------ ----------
Percent of
Largest Industry Holdings Net Assets
------------------------------------------ ----------
Banking 8.47%
Energy Sources 6.06
Telecommunications 6.02
Health & Personal Care 5.54
Broadcasting & Publishing 4.72
Companies Whose Equity-Type Securities Were Added to
or Eliminated from the Portfolio
------------------------------------------
Companies appearing in the portfolio
since December 31, 1994
------------------------------------------
Avon Products
Cisco Systems
Columbia/HCA Healthcare
Fleet Financial Group
General Mills
Goodyear Tire & Rubber
H.J. Heinz
Kimberly-Clark
Oracle
Ralston Purina
Wal-Mart Stores
Weyerhaeuser
------------------------------------------
Companies eliminated from the portfolio
since December 31, 1994
------------------------------------------
American Brands
American Stores
Bausch & Lomb
CK AG Colonia Konzern
Compaq Computer
CS Holding Group
Honeywell
NBD Bancorp
Novell
Unicom
</TABLE>
*******************************
**************
<TABLE>
<CAPTION>
<S> <C> <C> <C>
THE INVESTMENT COMPANY OF AMERICA
------------------------------------------
Equity-Type Securities Market Percent
------------------------------------------ Number of Value of Net
Energy Shares (millions) Assets
------------------------------------------ --------- --------- ---------
Energy Sources-6.06%
Amoco Corp. 3,050,000 $ 203.206 .90
Atlantic Richfield Co. 775,000 85.056 .38
British Petroleum Co. PLC (American Depositary
Receipts) 250,000 21.406 .10
Chevron Corp. 650,000 30.306 .13
Mobil Corp. 400,000 38.400 .17
Murphy Oil Corp. 1,150,000 47.150 .21
Phillips Petroleum Co. 4,923,700 164.329 .73
Royal Dutch Petroleum Co.
(New York Registered Shares) 3,505,000 427.172 1.90
Societe Nationale Elf Aquitaine (American
Depositary Receipts) 500,000 18.625 .08
Texaco Inc. 1,050,000 68.906 .31
TOTAL, Class B 1,200,000 72.307 .32
Unocal Corp. 2,650,000 73.206
Unocal Corp., $3.50 convertible preferred/1/ 415,000 21.788 .42
USX-Marathon Group 4,700,000 92.825 .41
Utilities: Electric & Gas-1.34%
Entergy Corp. 5,500,000 132.688 .59
Houston Industries Inc. 950,000 40.019 .18
Long Island Lighting Co. 5,240,000 81.220 .36
Pacific Gas and Electric Co. 1,339,100 38.834 .17
Texas Utilities Co. 283,692 9.752 .04
--------- ---------
1,667.195 7.40
--------- ---------
------------------------------------------
Materials
------------------------------------------
Chemicals-1.61%
E.I. du Pont de Nemours and Co. 4,000,000 275.000 1.22
Eastman Chemical Co. 400,000 23.800 .11
Imperial Chemical Industries PLC
(American Depositary Receipts) 100,000 4.875 .02
Monsanto Co. 658,800 59.374 .26
Forest Products & Paper-1.24%
Georgia-Pacific Corp. 1,250,000 108.438 .48
International Paper Co. 400,000 34.300 .15
Weyerhaeuser Co. 2,900,000 136.662 .61
Metals: Nonferrous-1.50%
Alcan Aluminium Ltd. 1,000,000 30.250 .13
Aluminum Co. of America 3,240,000 162.405 .72
Inco Ltd. 2,300,000 64.975 .29
Phelps Dodge Corp. 600,000 35.400 .16
Western Mining Corp. Holdings Ltd. 8,305,894 45.644 .20
Metals: Steel-0.70%
Bethlehem Steel Corp./2/ 4,100,000 66.625 .30
USX-U.S. Steel Group 2,600,000 89.375 .40
Miscellaneous Materials-0.12%
Freeport-McMoRan Inc./2/ 1,570,000 27.671 .12
--------- ------
1,164.794 5.17
--------- ------
------------------------------------------
Capital Equipment
------------------------------------------
Aerospace & Military Technology-2.16%
Boeing Co. 2,050,000 128.381 .57
General Motors Corp., Class H 2,654,200 104.841 .47
Litton Industries, Inc./2/ 650,000 23.969 .11
Northrop Grumman Corp. 1,000,000 52.125 .23
Raytheon Co. 1,100,000 85.387 .38
United Technologies Corp. 1,160,000 90.625 .40
Data Processing & Reproduction-4.04%
Apple Computer, Inc. 500,000 23.219 .10
Cisco Systems, Inc./2/ 600,000 30.337 .13
Hewlett-Packard Co. 1,996,000 148.702 .66
International Business Machines Corp. 3,880,000 372.480 1.65
Microsoft Corp./2/ 375,000 33.891 .15
Oracle Corp./2/ 3,075,000 118.772 .53
Tandem Computers Inc./2/ 1,225,000 19.753 .09
Unisys Corp., $3.75 convertible preferred,
Series A 350,000 15.050 .07
Xerox Corp. 1,270,000 148.907 .66
Electrical & Electronic-0.46%
General Electric Co. 1,832,500 103.307 .46
Electronic Components-3.01%
Intel Corp. 6,950,000 440.022 1.95
Motorola, Inc. 700,000 46.988 .21
Texas Instruments Inc. 1,435,000 192.111 .85
Energy Equipment-1.10%
Schlumberger Ltd. 3,450,000 214.331 .95
Western Atlas Inc./2/ 750,000 33.281 .15
Industrial Components-0.53%
Dana Corp. 1,421,500 40.690 .18
Goodyear Tire & Rubber Co. 830,000 34.238 .15
Rockwell International Corp. 1,000,000 45.750 .20
Machinery & Engineering-3.72%
Caterpillar Inc. 6,390,000 410.557 1.82
Cummins Engine Co., Inc. 1,041,800 45.449 .20
Deere & Co. 1,550,000 132.719 .59
Ingersoll-Rand Co. 650,000 24.863 .11
Mannesmann AG 420,000 128.354 .57
Parker Hannifin Corp. 600,000 21.750 .10
Sundstrand Corp. 1,219,900 72.889 .33
--------- ------
3,383.738 15.02
--------- ------
------------------------------------------
Consumer Goods
------------------------------------------
Automobiles-2.46%
Chrysler Corp. 1,000,000 47.875 .21
Daimler-Benz AG 110,000 50.524 .22
Ford Motor Co., Class A 5,980,000 177.905
Ford Motor Co., $4.20 cumulative convertible
preferred, Series A 900,000 87.412 1.18
General Motors Corp. 3,300,000 154.688 .69
Toyota Motor Corp. 1,760,000 34.930 .16
Beverages & Tobacco-3.73%
PepsiCo, Inc. 2,450,000 111.781 .50
Philip Morris Companies Inc. 8,700,000 647.063 2.87
RJR Nabisco Holdings Corp. 2,900,000 80.838 .36
Food & Household Products-1.52%
Archer Daniels Midland Co. 400,000 7.450 .03
ConAgra, Inc. 1,900,000 66.262 .29
CPC International Inc. 980,000 60.515 .27
General Mills, Inc. 450,000 23.119 .10
H.J. Heinz Co. 400,000 17.750 .08
Nestle SA 90,000 93.835 .42
Procter & Gamble Co. 550,000 39.531 .18
Ralston Purina Co. 652,800 33.293 .15
Health & Personal Care-5.54%
Abbott Laboratories 1,750,000 70.875 .32
American Home Products Corp. 1,275,000 98.653 .44
Avon Products, Inc. 629,000 42.143 .19
Baxter International Inc. 500,000 18.187 .08
Bristol-Myers Squibb Co. 1,755,000 119.559 .53
Johnson & Johnson 1,040,000 70.330 .31
Kimberly-Clark Corp. 11,500 .689 .00
Eli Lilly and Co. 1,530,000 120.105 .53
Merck & Co., Inc. 5,335,000 261.415 1.16
Pfizer Inc. 1,645,000 151.957 .67
Schering-Plough Corp. 1,846,000 81.455 .36
Upjohn Co. 1,550,000 58.706 .26
Warner-Lambert Co. 1,800,000 155.475 .69
Recreation & Other Consumer Products-0.41%
Duracell International Inc. 1,554,300 67.224 .30
Eastman Kodak Co. 400,000 24.250 .11
Textiles & Apparel-0.12%
VF Corp. 500,000 26.875 .12
--------- ------
3,102.669 13.78
--------- ------
------------------------------------------
Services
------------------------------------------
Broadcasting & Publishing-4.72%
Capital Cities/ABC, Inc. 1,400,000 146.825 .65
CBS Inc. 1,145,000 76.715 .34
Gannett Co., Inc. 930,200 50.463 .22
New York Times Co., Class A 2,250,000 52.875 .23
Tele-Communications, Inc., Class A/2/ 12,240,900 286.896 1.27
Time Warner Inc. 9,081,000 373.456 1.66
Times Mirror Co., Series A 1,051,034 25.093
Times Mirror Co., $1.374 preferred equity
redemption cumulative stock, Series B 448,966 10.719 .16
Tribune Co. 690,000 42.349 .19
Business & Public Services-3.40%
Browning-Ferris Industries, Inc. 500,000 18.063 .08
Columbia/HCA Healthcare Corp. 1,000,000 43.250 .19
Dun & Bradstreet Corp. 1,350,000 70.875 .32
Federal Express Corp./2/ 1,350,000 82.012 .36
Interpublic Group of Companies, Inc. 2,950,000 110.625 .49
Pitney Bowes Inc. 2,020,000 77.517 .35
United HealthCare Corp. 3,000,000 124.125 .55
WMX Technologies, Inc. 8,450,000 239.769 1.06
Leisure & Tourism-1.47%
Walt Disney Co. 4,254,600 236.662 1.05
McDonald's Corp. 2,400,000 93.900 .42
Merchandising-2.36%
Limited Inc. 2,400,000 52.800 .23
May Department Stores Co. 1,000,000 41.625 .19
Melville Corp. 600,700 20.574 .09
Tandy Corp. 416,532 21.608 .10
Toys 'R' Us, Inc./2/ 3,350,000 97.988 .43
Wal-Mart Stores, Inc. 11,082,000 296.443 1.32
Telecommunications-6.02%
AirTouch Communications/2/ 3,150,000 89.775 .40
Ameritech Corp. 1,900,000 83.600 .37
AT&T Corp. 4,895,000 260.047 1.15
GTE Corp. 2,350,000 80.194 .36
Hong Kong Telecommunications Ltd. (American
Depositary Receipts) 1,500,000 29.813 .13
LIN Broadcasting Corp./2/ 412,600 52.194 .23
MCI Communications Corp. 9,325,000 205.150 .91
Pacific Telesis Group 3,800,000 101.650 .45
SBC Communications Inc.
(formerly Southwestern Bell Corp.) 300,000 14.288 .06
Sprint Corp. 650,000 21.856 .10
Telefonos de Mexico, SA de CV, Class L
(American Depositary Receipts) 3,457,400 102.425 .46
U S WEST, Inc. 2,600,000 108.225 .48
Vodafone Group PLC (American Depositary Receipts) 5,472,000 207.252 .92
Transportation: Airlines-0.49%
AMR Corp./2/ 900,000 67.163 .30
Delta Air Lines, Inc. 395,000 29.131
Delta Air Lines, Inc., $3.50 convertible .19
preferred, Class C 250,000 14.625
Transportation: Rail & Road-1.30%
Burlington Northern Inc. 550,000 34.856 .16
Conrail, Inc. 773,400 43.020 .19
CSX Corp. 1,150,000 86.394 .39
Norfolk Southern Corp. 300,000 20.213 .09
Union Pacific Corp. 1,925,000 106.597 .47
--------- ------
4,451.695 19.76
--------- ------
------------------------------------------
Finance
------------------------------------------
Banking-8.47%
H.F. Ahmanson & Co. 3,000,000 66.000 .29
Banc One Corp. 8,772,500 282.913 1.26
BankAmerica Corp. 4,150,000 218.394 .97
Bankers Trust New York Corp. 1,385,000 85.870 .38
Chemical Banking Corp. 2,500,000 118.125 .52
Citicorp 1,200,000 69.450
Citicorp, $5.375 convertible preferred,
Series 13 420,000 67.567 .61
Comerica Inc. 1,800,000 57.825 .26
Deutsche Bank AG 497,650 24.190 .11
First Chicago Corp. 1,300,000 77.838 .35
First Fidelity Bancorporation 1,650,000 97.350 .43
First Interstate Bancorp 2,175,000 174.544 .77
First Union Corp. 2,150,000 97.287 .43
Fleet Financial Group, Inc. 900,000 33.412 .15
Great Western Financial Corp. 2,500,000 51.562 .23
J.P. Morgan & Co. Inc. 2,100,000 147.263 .65
National City Corp. 1,000,000 29.375 .13
PNC Bank Corp. 4,592,000 121.114 .54
SunTrust Banks, Inc. 800,000 46.600 .21
U.S. Bancorp 400,000 9.625 .04
Wachovia Corp. 900,000 32.175 .14
Financial Services-2.98%
American Express Co. 380,000 13.347 .06
Federal National Mortgage Assn. 5,760,000 543.600 2.41
Student Loan Marketing Assn. 2,450,000 114.844 .51
Insurance-2.77%
Allstate Corp. 3,233,000 95.778 .43
American General Corp. 910,000 30.713 .14
American International Group, Inc. 1,215,000 138.510 .61
CIGNA Corp. 495,800 38.486 .17
General Re Corp. 617,800 82.708 .37
Lincoln National Corp. 1,050,000 45.938 .20
SAFECO Corp. 1,425,000 81.848 .36
St. Paul Companies, Inc. 2,240,000 110.320 .49
--------- ------
3,204.571 14.22
--------- ------
------------------------------------------
Multi-Industry, Gold Mines & Miscellaneous
------------------------------------------
Multi-Industry-2.28%
Canadian Pacific Ltd. 1,400,000 24.325 .11
Hanson PLC 3,525,477 12.356
Hanson PLC (American Depositary Receipts) 9,000,000 158.625 .76
Minnesota Mining and Manufacturing Co. 2,745,000 157.151 .70
Tenneco Inc. 2,325,000 106.950 .47
Textron Inc. 925,000 53.765 .24
Gold Mines -0.33%
Newmont Mining Corp. 1,800,000 75.375 .33
Miscellaneous-2.60%
Equity-type securities in initial period of
acquisition 585.758 2.60
--------- ------
1,174.305 5.21
--------- ------
Total Equity-Type Securities (cost: $12,475.584
million) 18,148.967 80.56
--------- ------
Principal
------------------------------------------ Amount
Bonds & Notes (millions)
------------------------------------------ ---------
U.S. Treasuries-10.90%
4.375% August 1996 $400.000 393.876 1.75
4.375% November 1996 400.000 392.564 1.74
8.00% January 1997 175.000 180.469 .80
6.875% April 1997 170.000 173.028 .77
6.375% June 1997 230.000 232.371 1.03
5.75% October 1997 300.000 299.157 1.33
8.875% November 1997 25.000 26.633 .12
4.75% August 1998 300.000 289.686 1.28
5.125% November 1998 300.000 292.311 1.30
8.875% November 1998 25.000 27.180 .12
11.625% November 2004 30.000 41.241 .18
7.125% February 2023 102.000 107.466 .48
--------- ------
Total Bonds & Notes (cost: $2,465.510 million) 2,455.982 10.90
--------- ------
Total Investment Securities (cost: $14.941.094
million) 20,604.949 91.46
--------- ------
------------------------------------------
Short-Term Securities
------------------------------------------
U.S. Treasury Short-Term Securities-1.53%
4.25%-8.50% due 7/31/95-1/31/96 345.000 344.974 1.53
--------- ------
Corporate Short-Term Notes-6.68%
American Express Credit Corp. 5.95% due 8/1-8/2/95 80.000 79.572 .35
American General Corp. 5.86%-5.97% due 7/26-8/25/95 68.500 68.021 .30
AT&T Corp. 5.92%-5.99% due 7/17-8/9/95 55.000 54.770 .24
Central and South West Corp. 5.88%-6.00%
due 8/8-8/18/95 85.200 84.572 .38
Chevron Oil Finance Co. 5.92% due 8/7-8/10/95 86.300 85.741 .38
Coca-Cola Co. 5.84%-5.95% due 7/6-8/30/95 91.300 90.779 .40
E.I. du Pont De Nemours and Co. 5.84%-5.92%
due 7/21-8/25/95 60.000 59.589 .27
Ford Motor Credit Co. 5.95%-5.98% due 7/5-8/10/95 51.000 50.717 .23
General Electric Capital Corp. 5.86%-6.15%
due 7/3-8/30/95 108.260 107.483 .48
H.J. Heinz Co. 5.91%-6.00% due 7/14-8/9/95 59.700 59.380 .26
Eli Lilly and Co. 5.95% due 7/13/95 26.200 26.143 .12
J.C. Penney Funding Corp. 5.91%-5.95%
due 7/5-8/11/95 92.300 91.908 .41
PepsiCo., Inc. 5.91%-5.95% due 7/21-8/25/95 111.200 110.455 .49
Pfizer Inc.5.91%-5.94% due 7/26-8/8/95 112.000 111.379 .49
Procter & Gamble Co. 5.90%-5.93% due 7/10-7/31/95 109.000 108.620 .48
Raytheon Co. 5.92%-6.01% due 7/7-7/24/95 103.800 103.561 .46
US WEST Communications, Inc. 5.85%-5.97%
due 7/6-8/30/95 118.500 117.576 .52
Xerox Corp. 5.93%-5.95% due 7/10-8/3/95 95.600 95.181 .42
Total Short-Term Securities
(cost: $1,854.101 million) 1,850.421 8.21
Excess of cash and receivables over payables 72.771 .33
--------- ------
Total Short-Term Securities, Cash and Receivables,
Net of Payables 1,923.192 8.54
----------- ---------
Net Assets $22,528.141 100.00%
============ =========
/1/ Purchased in a private placement transaction;
resale to the public may require registration or
may extend only to qualified institutional buyers.
/2/ Non-income-producing securities
See Notes to Financial Statements
</TABLE>
*********
****
<TABLE>
<CAPTION>
<S> <C> <C>
The Investment Company of America Unaudited
----------------------------------------- ------------- -------------
Statement of Assets and Liabilities (dollars in
at June 30, 1995 millions)
---------------------------------------- ------------- -------------
Assets:
Investment securities at market
(cost: $14,941.094) $20,604.949
Short-term securities at market
(cost: $1,854.101) 1,850.421
Cash 2.191
Receivables for-
Sales of investments $ 28.442
Sales of fund's shares 29.155
Dividends and accrued interest 77.411 135.008
------------- -------------
22,592.569
Liabilities:
Payables for-
Purchases of investments 40.933
Repurchases of fund's shares 14.971
Management services 4.891
Accrued expenses 3.633 64.428
------------- -------------
Net Assets at June 30, 1995-
Equivalent to $20.28 per share on
1,110,848,796 shares of $1 par value
capital stock outstanding (authorized
capital stock--2,000,000,000 shares) $22,528.141
=============
Statement of Operations (dollars in
for the six months ended June 30, 1995 millions)
----------------------------------------- ------------- -------------
Investment Income:
Income:
Dividends $ 227.151
Interest 128.997 $ 356.148
-------------
Expenses:
Management services fee 27.520
Distribution expenses 21.965
Transfer agent fee 9.558
Reports to shareholders .898
Registration statement and
prospectus .699
Postage, stationery and supplies 3.701
Directors' fees .195
Auditing and legal fees .105
Custodian fee .291
Taxes (other than federal income tax) .267
Other expenses .163 65.362
------------- -------------
Net investment income 290.786
-------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 352.664
Net increase in unrealized
appreciation on investments 2,486.676
-------------
Net realized gain and increase in
unrealized appreciation on investments 2,839.340
-------------
Net Increase in Net Assets Resulting
from Operations $ 3,130.126
=============
---------------------------------------- ------------- -------------
Statement of Changes in Net Assets (dollars in
millions)
Six months
ended Year ended
6/30/95/1/ 12/31/94
----------------------------------------- ------------- -------------
Operations:
Net investment income $ 290.786 $ 542.887
Net realized gain on investments 352.664 628.471
Net increase (decrease) in unrealized
appreciation on investments 2,486.676 (1,140.883)
------------- -------------
Net increase in net assets
resulting from operations 3,130.126 30.475
------------- -------------
Dividends and Distributions Paid
to Shareholders:
Dividends from net investment income (263.401) (496.411)
Distributions from net realized
gain on investments - (628.912)
------------- -------------
Total dividends and distributions (263.401) (1,125.323)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold: 79,434,005
and 149,158,039 shares, respectively 1,498.419 2,761.027
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 12,302,406 and 56,628,397
shares, respectively 234.844 1,014.931
Cost of shares repurchased: 71,744,553
and 130,005,029 shares, respectively (1,351.440) (2,406.547)
------------- -------------
Net increase in net assets resulting from
capital share transactions 381.823 1,369.411
------------- -------------
Total Increase in Net Assets 3,248.548 274.563
Net Assets:
Beginning of period 19,279.593 19,005.030
------------- -------------
End of period (including undistributed
net investment income: $255.148
and $227.698, respectively) $22,528.141 $19,279.593
============= =============
/1/Unaudited
See Notes to Financial Statements
</TABLE>
****
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 following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Equity-type securities are stated at market value based upon closing sales
prices reported on recognized securities exchanges on the last business day of
the period or, for listed securities having no sales reported, upon
last-reported bid prices on that date. Securities traded in the
over-the-counter market are valued at the last available sale price prior to
the time of valuation or, lacking any sales, at the last reported 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 $291,000 includes $79,000 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, 1995, net unrealized appreciation on investments for federal
income tax purposes aggregated $5,671,206,000, of which $5,932,560,000 related
to appreciated securities and $261,354,000 related to depreciated securities.
During the six months ended June 30, 1995, the fund realized, on a tax basis, a
net capital gain of $358,555,000 on securities transactions. The cost of
portfolio securities for federal income tax purposes was $16,784,164,000 at
June 30, 1995.
3. The fee of $27,520,000 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;
and 0.24% of such assets in excess of $13 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, 1995,
distribution expenses under the Plan were $21,965,000. As of June 30, 1995,
accrued and unpaid distribution expenses were $3,440,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $9,558,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $7,076,000 (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 of the fund 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, 1995, aggregate amounts deferred were
$90,000.
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 842,013 shares of the fund at approximately $5.242 per share. If
all warrants had been exercised on June 30, 1995, the net assets of the fund
would have been $22,532,555,000; the shares outstanding would have been
1,111,691,000; and the net asset value would have been equivalent to $20.27 per
share. During the six months ended June 30, 1995, no warrants were exercised
for the purchase of fund shares.
5. As of June 30, 1995, accumulated undistributed net realized gain on
investments was $352,692,000 and additional paid-in capital was
$15,149,075,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $2,453,505,000 and $1,962,813,000, respectively,
during the six months ended June 30, 1995.
Dividend income is recorded net of non-U.S. taxes paid. For the six months
ended June 30, 1995, such non-U.S. taxes were $4,026,000. Net realized
currency losses on dividends, interest, withholding taxes reclaimable, and
sales of non-U.S. bonds and notes were $223,000 for the six months ended June
30, 1995.
*****
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year
Per-Share Data and Ratios Six months ended
ended December
June 30, 31
1995/1/ 1994 1993 1992 1991 1990
---------- --------- -------- --------- -------- --------
-
Net Asset Value, Beginning of
Period $17.67 $18.72 $17.89 $17.48 $14.52 $15.24
---------- --------- -------- --------- -------- --------
-
Income from Investment
Operations:
Net investment income .26 .51 .54 .49 .51 .57
Net realized and unrealized
gain (loss) on investments 2.59 (.48) 1.51 .71 3.27 (.48)
---------- ---------- -------- --------- -------- --------
-
Total income from
investment operations 2.85 .03 2.05 1.20 3.78 .09
---------- ---------- -------- --------- -------- --------
-
Less Distributions:
Dividends from net investment
income (.24) (.48) (.47) (.47) (.44) (.59)
Distributions from net
realized gains - (.60) (.75) (.32) (.38) (.22)
---------- ---------- -------- --------- -------- --------
-
Total distributions (.24) (1.08) (1.22) (.79) (.82) (.81)
---------- ------- ------- --------- -------- --------
-
Net Asset Value, End of Period $20.28 $17.67 $18.72 $17.89 $17.48 $14.52
========== ======= ======= ========= ======== ========
=
Total Return/2/ 16.22%/3/ .16% 11.62% 6.99% 26.54% .68%
Ratios/Supplemental Data:
Net assets, end of period (in
millions) $22.528 $19,280 $19,005 $15,428 $10,526 $5,923
Ratio of expenses to average
net assets .31% .60% .59% .58% .59% .55%
Ratio of net income to average
net assets 1.40%/3/ 2.83% 3.03% 3.06% 3.29% 3.95%
Portfolio turnover -
common stocks 11.68%/3/ 17.94% 19.57% 7.23% 5.79% 7.48%
Portfolio turnover -
investment securities 10.26%/3/ 31.08% 17.57% 9.73% 6.21% 10.94%
/1/Unaudited
/2/This was 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.
</TABLE>
<PAGE>
****
The Investment Company of America
Results of Annual Meeting of Shareholders held April 25, 1995
Shares Outstanding on February 17, 1995 (record date) 1,089,427,760
Shares Voting on April 25, 1995 718,253,450 (65.9%)
Election of Directors:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
VOTES SHARES VOTES SHARES
DIRECTOR FOR VOTING FOR WITHHELD WITHHELD
<S> <C> <C> <C> <C>
Charles H. Black 696,570,540 97% 21,682,910 3%
John F. Bookout 695,832,169 97 22,421,281 3
Ann S. Bowers 696,986,676 97 21,266,774 3
Malcolm R. Currie 697,003,569 97 21,249,881 3
Jon B. Lovelace, Jr. 696,961,780 97 21,291,670 3
John G. McDonald 696,753,735 97 21,499,715 3
Bailey U. Morris 696,215,419 97 22,038,031 3
William C. Newton 697,324,330 97 20,929,120 3
James W. Ratzlaff 697,158,864 97 21,094,586 3
Olin C. Robison 696,615,569 97 21,637,881 3
</TABLE>
Ratification of Auditors:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF PERCENT OF
VOTES SHARES VOTES SHARES SHARES
FOR VOTING FOR AGAINST VOTING ABSTENTIONS ABSTAINING
AGAINST
<S> <C> <C> <C> <C> <C> <C>
Price Waterhouse 688,577,493 95.9% 4,714,782 0.6% 24,961,175 3.5%
LLP
</TABLE>
<PAGE>
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 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
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
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 SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, 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, 1995, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA BDA/GRS/2683
(C)1995 American Funds Distributors, Inc.
Lit. No. ICA-013-0895
[The American Funds Group(R)]
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