ICA
THE INVESTMENT COMPANY OF AMERICA
Quarterly Report
For the three months ended March 31, 1996
[The American Funds Group (R)]
FELLOW SHAREHOLDERS:
ICA continued to produce strong results as it opened its 1996 fiscal year. In
the three months ended March 31, the value of your investment in the fund rose
5.2% if, like most shareholders, you reinvested the income dividend paid on
March 4. Those who took the dividend in cash had a return of 4.6% in addition
to the dividend. Over the same period, the unmanaged Standard & Poor's 500
Composite Index returned 5.4% with dividends reinvested and 4.8% with
dividends taken in cash.
Though it finished the quarter with a positive return, the U.S. market, as
represented by the S&P 500, experienced significant volatility during the
period, with three overall price swings of more than 3%. We took advantage of
these moderate market declines, as well as greater declines in individual
stocks, to make selective purchases. This resulted in nearly a four percentage
point increase in the proportion of the portfolio invested in stocks. (See the
Investment Mix table at right.)
In the face of such volatility, as well as market valuations that appear high
by many measures, we remain cautious. By maintaining a less-than-fully invested
portfolio, we should be well positioned in a more substantial decline. As we
noted in our last annual report, it is now well over five years since the
market has seen as much as a 10% correction, far past the 21-month average for
such setbacks.
We look forward to reporting to you again three months from now in the fund's
semi-annual report.
Cordially,
William C. Newton
President
May 15, 1996
PORTFOLIO SUMMARY - MARCH 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Percent of
INVESTMENT MIX Net Assets
Stocks 85.68%
U.S. Treasury Bonds and Notes 5.31
Cash & Equivalents 9.01
Total 100.00%
FIVE LARGEST INDUSTRY Number of Percent of
HOLDINGS IN EQUITIES Companies Net Assets
Banking 23 10.04%
Energy Sources 13 7.00
Health & Personal Care 15 6.90
Telecommunications 11 5.53
Beverages & Tobacco 5 5.33
Percent of
TEN LARGEST STOCKS Net Assets
Philip Morris 3.34%
Federal National Mortgage Assn. 2.74
Royal Dutch Petroleum 1.94
Wal-Mart Stores 1.73
Caterpillar 1.62
DuPont 1.60
Time Warner 1.36
Walt Disney 1.29
AT&T 1.27
Deere 1.26
</TABLE>
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.
Fund results in this report were computed without a sales charge unless
otherwise indicated.
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.
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.
Litho in USA SG/ALI/2791
(C)1996 American Funds Distributors, Inc.
Lit. No. ICA-012-0596
Printed on recycled paper
