[The American Funds Group(r)]
ICA
The Investment Company of America
2000 Semi-Annual Report
For the six months ended June 30
Backstage at Your Mutual Fund
[cover: various photographs of people conducting business]
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.
ICA is one of the 29 American Funds, the nation's third-largest mutual fund
family. For nearly seven decades, Capital Research and Management Company, the
American Funds adviser, has invested with a long-term focus based on thorough
research and attention to risk.
2000 RESULTS AT A GLANCE
For the six months ended June 30
(with dividends and capital gain distributions reinvested)
<TABLE>
<CAPTION>
Standard & Lipper, Inc.
Poor's 500 Growth & Income
ICA Composite Index Funds Average*
<S> <C> <C> <C>
Income Return 0.75% 0.56% n.a.
Capital Return 1.74% -1.01% n.a.
Total Return 2.49% -0.45% -0.47%
</TABLE>
*Average of 1,007 growth-and-income funds. Lipper averages do not reflect the
effects of sales charges.
Fund results in this report were calculated for Class A shares at net asset
value (without a sales charge) unless otherwise indicated. Here are the returns
on a $1,000 investment for periods ended June 30, 2000, with all distributions
reinvested:
<TABLE>
<CAPTION>
10 years 5 years 1 year
<S> <C> <C> <C>
Class A Shares
reflecting 5.75% maximum sales charge
Total return +312.20% +140.98% +0.27%
Average annual compound return +15.22% +19.23% -
</TABLE>
Results for Class B shares are not shown because of the brief time between
their introduction on March 15 and the end of the fund's fiscal period.
The fund's 30-day yield for Class A shares as of July 31, 2000, calculated in
accordance with the Securities and Exchange Commission formula, was 1.78%.
Please see the back cover for important information about Class A and B shares.
Figures shown are past results and are not predictive of future results. Share
price and return will vary, so you may lose money. Investing for short periods
makes losses more likely. Investments are not FDIC-insured, nor are they
deposits of or guaranteed by a bank or any other entity.
Fellow Shareholders
So far in the new century, stock market prices have behaved overall like a
classic roller coaster, beginning with a tantalizingly long climb followed by a
steep, gut-wrenching ride down. ICA, as it often has in such environments,
provided a less exciting but more gratifying experience.
For the six months ended June 30, the value of an ICA share rose 2.5%,
including reinvestment of the 40-cents-a-share capital gain distribution paid
in March and 12-cents-a-share income dividends in March and June. Standard &
Poor's 500 Composite Index, which measures mostly large U.S. companies,
finished down 0.4%. That number doesn't reflect much of what happened during
the period, with many stocks down sharply at the low point and many of the hot
Internet stocks suffering the biggest declines.
ICA escaped much of the ride down thanks to its traditional reliance on
intensive research to find long-term values. For some time now, that has led
the fund into technology companies providing the infrastructure for
telecommunications and information technology, many of which have retained
investor confidence. Texas Instruments, which makes digital signal processors,
gained 42%. Micron Technology rode its memory products to a 127% increase. The
fund also had winners in pharmaceuticals, including Pfizer (+55%*) and
Pharmacia (+37%*). On the other hand, rising interest rates took their toll on
basic industrial stocks as investors worried about a possible slowing in the
economy. Alcoa, for instance, dropped 30%. Bank stocks also continued to be
weak.
*Adjusted for mergers.
We consider it a hopeful sign that the stock market gained a broader footing
for a time, with many over-priced stocks taking a hit and more stable,
dividend-paying stocks regaining favor. Toward mid-year, however, some of that
change was reversed. Whatever comes next, the investment professionals at
Capital Research and Management Company, advisers to ICA and the 28 other funds
in the American Funds Group, will continue to focus on values rather than fads.
Just as it did so far this year, that approach has enabled the fund to produce
positive returns for 22 straight calendar years, which Lipper Inc. records show
to be the longest such string in the mutual fund industry.
Sincerely,
/s/ R. Michael Shanahan
R. Michael Shanahan
President
August 14, 2000
[The American Funds Group(r)]
<TABLE>
INVESTMENT PORTFOLIO - June 30, 2000
Market
Value Percent of
Investment Mix (Millions) Net Assets
Equity Securities $46,946.719 83.39%
U.S. Treasury and Notes 0.000 0.00
Cash and Equivalents 9,347.843 16.61
Total $56,294.562 100.00%
<S> <C> <C> <C>
Acquisition Market
Cost Value Percent of
Largest Individual Holdings (Millions) (Millions) Net Assets
Viacom $619.004 $1,927.619 3.42%
Pfizer 387.229 1,650.851 2.93
Time Warner 169.161 1,328.586 2.36
Pharmacia 853.170 1,225.759 2.18
Texas Instruments 47.809 1,044.050 1.85
Philip Morris Co 594.975 1,035.938 1.84
Federal National Mortgage 58.609 991.396 1.76
Corning 157.275 958.056 1.70
Micron Tech 265.343 871.819 1.55
Royal Dutch Petroleum/"Shell" Transport and Trading 405.616 826.313 1.47
Market
Value Percent of
Largest Industry Holdings (Millions) Net Assets
Health & Personal Care $5,817.921 10.33%
Broadcasting & Publishing 4,427.217 7.86
Data Processing Reproduction 3,796.479 6.76
Electronic Components 3,448.200 6.12
Energy Sources 3,242.944 5.76
Diversified Telecommunication Services 3,188.160 5.67
Banking 2,476.701 4.41
Financial Services 2,125.673 3.77
Beverages & Tobacco 1,871.950 3.32
Merchandising 1,716.637 3.05
Market
Value Percent of
Largest Investment Categories (Millions) Net Assets
Services $12,795.599 22.73%
Capital Equipment 10,662.101 18.94
Consumer Goods 9,801.674 17.41
Finance 6,009.404 10.67
Energy 4,070.976 7.23
</TABLE>
<TABLE>
The Investment Company of America
Investment Portfolio, June 30, 2000
<S> <C> <C> <C>
Market
Number of Value Percent of
Equity Securitites Shares (millions) Net Assets
ENERGY
ENERGY SOURCES - 5.76%
BP Amoco PLC (ADR) 2,500,000 141.406 .25
Broken Hill Proprietary Co. Ltd. 5,057,166 59.658 .11
Chevron Corp. 3,920,000 332.465 .59
Conoco Inc., Class A 6,650,000 146.300
Conoco Inc., Class B 10,181,845 250.092 .70
Exxon Mobil Corp. 1,250,000 98.125 .17
Kerr-McGee Corp. 1,001,200 59.008 .11
Murphy Oil Corp. 2,175,000 129.277 .23
Phillips Petroleum Co. 7,400,000 375.087 .67
Royal Dutch Petroleum Co. (New York registered) 11,800,000 726.437
"Shell" Transport and Trading Co., PLC (New York registered) 2,000,000 99.875 1.47
Texaco Inc. 2,100,000 111.825 .20
TOTAL FINA SA, Class B 1,273,469 195.316
TOTAL FINA SA, Class B (ADR) 3,053,833 234.573 .76
Unocal Corp. 6,440,000 213.325 .38
USX-Marathon Group 2,800,000 70.175 .12
UTILITIES: ELECTRIC & GAS - 1.47%
American Electric Power Co., Inc. 3,000,000 88.875 .16
Dominion Resources, Inc. 3,631,912 155.718 .28
Duke Energy Corp. 1,375,000 77.516 .14
Florida Progress Corp. 400,000 18.750 .03
GPU, Inc. 2,579,900 69.819 .12
Pinnacle West Capital Corp. 3,229,800 109.409 .19
Southern Co. 3,821,400 89.086 .16
Williams Companies, Inc. 5,250,000 218.859 .39
4,070.976 7.23
MATERIALS
CHEMICALS - 1.17%
Air Products and Chemicals, Inc. 1,200,000 36.975 .06
Dow Chemical Co. 14,350,000 433.191 .77
E.I. du Pont de Nemours and Co. 600,000 26.250 .05
Imperial Chemical Industries PLC (ADR) 5,300,000 163.306 .29
FOREST PRODUCTS & PAPER - 1.49%
Fort James Corp. 10,700,000 247.437 .44
Georgia-Pacific Corp., Georgia-Pacific Group 8,300,000 217.875 .39
International Paper Co. 3,762,473 112.169 .20
Louisiana-Pacific Corp. 4,675,000 50.841 .09
Weyerhaeuser Co. 4,850,000 208.550 .37
METALS: NONFERROUS - 1.26%
Alcoa Inc. 20,953,400 607.649 1.08
Freeport-McMoRan Copper & Gold Inc., Class B (1) 394,600 3.650 .01
Phelps Dodge Corp. 1,696,300 63.081 .11
WMC Ltd. 7,500,000 33.477 .06
2,204.451 3.92
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY - .93%
Boeing Co. 1,800,000 75.263 .13
General Motors Corp., Class H (1) 402,614 35.329 .06
Northrop Grumman Corp. 1,000,000 66.250 .12
Raytheon Co., Class A 2,536,335 49.300
Raytheon Co., Class B 4,228,100 81.391 .23
United Technologies Corp. 3,700,000 217.837 .39
DATA PROCESSING & REPRODUCTION - 6.76%
Cisco Systems, Inc. (1) 10,200,000 648.337 1.15
Compaq Computer Corp. 5,800,000 148.263 .26
Computer Associates International, Inc. 7,295,000 373.413 .66
Dell Computer Corp. (1) 2,000,000 98.625 .18
Fujitsu Ltd. 7,623,000 263.456 .47
Hewlett-Packard Co. 3,666,600 457.867 .82
International Business Machines Corp. 6,000,000 657.375 1.17
Microsoft Corp. (1) 3,000,000 240.000 .43
Oracle Corp. (1) 7,600,000 638.875 1.14
3Com Corp. (1) 2,529,600 145.768 .26
Xerox Corp. 6,000,000 124.500 .22
ELECTRICAL & ELECTRONIC - 2.21%
Emerson Electric Co. 1,900,000 114.712 .20
Hitachi, Ltd. 8,500,000 122.469 .22
Lucent Technologies Inc. 1,150,000 68.138 .12
Nokia Corp., Class A (ADR) 4,720,000 235.705 .42
Nortel Networks Corp. 500,000 34.125 .06
Siemens AG 1,800,000 270.743 .48
Telefonaktiebolaget LM Ericsson, Class B (ADR) 20,000,000 400.000 .71
ELECTRONIC COMPONENTS - 6.12%
Corning Inc. 3,550,000 958.056 1.70
Intel Corp. 2,600,000 347.587 .62
Micron Technology, Inc. (1) 9,900,000 871.819 1.55
Motorola, Inc. 7,800,000 226.688 .40
Texas Instruments Inc. 15,200,000 1,044.050 1.85
ELECTRONIC INSTRUMENTS - 0.34%
PE Biosystems Group (formerly PE Corp.) 2,893,800 190.629 .34
ENERGY EQUIPMENT - 1.05%
Baker Hughes Inc. 5,325,000 170.400 .30
Schlumberger Ltd. 5,650,000 421.631 .75
INDUSTRIAL COMPONENTS - 0.43%
Dana Corp. 2,121,500 44.949 .08
Delphi Automotive Systems Corp. 5,764,088 83.940 .15
Illinois Tool Works Inc. 2,000,000 114.000 .20
MACHINERY & ENGINEERING - 1.10%
Caterpillar Inc. 2,500,000 84.687 .15
Cummins Engine Co., Inc. 1,700,000 46.325 .08
Deere & Co. 5,652,000 209.124 .37
Fluor Corp. 1,400,000 44.275 .08
Ingersoll-Rand Co. 1,550,000 62.387 .11
Parker Hannifin Corp. 2,000,000 68.500 .12
Thermo Electron Corp. (1) 5,000,000 105.313 .19
10,662.101 18.94
CONSUMER GOODS
APPLIANCES & HOUSEHOLD DURABLES - 0.14%
Newell Rubbermaid Inc. 3,000,000 77.250 .14
AUTOMOBILES - 0.65%
Ford Motor Co. 3,540,600 152.246 .27
General Motors Corp. 1,146,958 66.595 .12
Honda Motor Co., Ltd. 4,360,000 148.221 .26
BEVERAGES & TOBACCO - 3.32%
Coca-Cola Co. 2,250,000 129.234 .23
PepsiCo, Inc. 13,100,000 582.131 1.03
Philip Morris Companies Inc. 39,000,000 1,035.937 1.84
R.J. Reynolds Tobacco Holdings, Inc. 4,461,666 124.648 .22
FOOD & HOUSEHOLD PRODUCTS - 2.30%
Archer Daniels Midland Co. 9,555,000 93.758 .17
Bestfoods 1,200,000 83.100 .15
Colgate-Palmolive Co. 250,000 14.969 .03
General Mills, Inc. 7,600,000 290.700 .52
H.J. Heinz Co. 1,700,000 74.375 .13
Nabisco Group Holdings Corp. 16,000,000 415.000 .74
Procter & Gamble Co. 600,000 34.350 .06
Sara Lee Corp. 11,400,000 220.162 .39
Unilever NV (New York registered) 1,400,000 60.200 .11
HEALTH & PERSONAL CARE - 10.33%
Abbott Laboratories 3,000,000 133.687 .24
American Home Products Corp. 3,250,000 190.938 .34
AstraZeneca PLC 15,110,900 704.806
AstraZeneca PLC (ADR) 199,000 9.254 1.27
Avon Products, Inc. 6,139,800 273.221 .48
Becton, Dickinson and Co. 3,700,000 106.144 .19
Bristol-Myers Squibb Co. 9,707,600 565.468 1.00
Cardinal Health, Inc., Class A 5,026,200 371.939 .66
Kimberly-Clark Corp. 2,975,000 170.691 .30
Merck & Co., Inc. 4,100,000 314.163 .56
Pfizer Inc (merged with Warner-Lambert) 34,392,725 1,650.851 2.93
Pharmacia Corp. (formerly Monsanto Co. and 23,714,800 1,225.759 2.18
Pharmacia & Upjohn, Inc.)
Schering-Plough Corp. 2,000,000 101.000 .18
RECREATION & OTHER CONSUMER PRODUCTS - 0.17%
Eastman Kodak Co. 1,200,000 71.400 .13
Hasbro, Inc. 1,700,000 25.606 .04
TEXTILES & APPAREL - 0.50%
NIKE, Inc., Class B 7,130,200 283.871 .50
9,801.674 17.41
SERVICES
BROADCASTING & PUBLISHING - 7.86%
AT&T Corp. - Liberty Media Group (1) 24,000,000 582.000 1.03
Dow Jones & Co., Inc. 1,275,100 93.401 .17
Infinity Broadcasting Corp. (1) 7,000,000 255.062 .45
Knight-Ridder, Inc. 3,780,000 201.049 .36
New York Times Co., Class A 1,000,000 39.500 .07
Time Warner Inc. 17,481,400 1,328.586 2.36
Viacom Inc., Class A (1) 2,392,800 163.608
Viacom Inc., Class B (merged with CBS) (1) 25,870,000 1,764.011 3.42
BUSINESS SERVICES - 2.49%
Cendant Corp. (1) 36,550,000 511.700 .91
Dun & Bradstreet Corp. 1,748,700 50.057 .09
FedEx Corp. (formerly FDX Corp.) (1) 2,870,000 109.060 .19
Interpublic Group of Companies, Inc. 5,349,700 230.037 .41
Pitney Bowes Inc. 3,000,000 120.000 .21
Sabre Group Holdings, Inc., Class A (1) 2,475,580 70.554 .12
Waste Management, Inc. 16,530,000 314.070 .56
DIVERSIFIED TELECOMMUNICATION SERVICES - 5.67%
AT&T Corp. 25,655,000 811.339 1.44
Deutsche Telekom AG 7,000,000 398.426 .71
GTE Corp. 3,510,000 218.497 .39
Qwest Communications International Inc. (1) 1,250,000 62.109 .11
SBC Communications Inc. 5,977,200 258.514 .46
Sprint FON Group 13,560,000 691.560 1.23
Telefonica, SA (ADR) (1) 941,994 60.346 .11
Telefonos de Mexico, SA de CV, Class L (ADR) 2,764,800 157.939 .28
U S WEST, Inc. 3,550,000 304.413 .54
Worldcom Inc. (formerly MCI WorldCom, Inc.) (1) 4,905,000 225.017 .40
HEALTH CARE PROVIDERS & SERVICES - 0.52%
HCA Healthcare Corp. (formerly Columbia/HCA Healthcare Corp.) 9,600,000 291.600 .52
INFORMATION TECHNOLOGY CONSULTING & SERVICES - 0.35%
Computer Sciences Corp. (1) 1,032,700 77.130 .14
Electronic Data Systems Corp. 2,900,000 119.625 .21
LEISURE & TOURISM - 1.66%
McDonald's Corp. 3,000,000 98.812 .18
Seagram Co. Ltd. 7,799,000 452.342
Seagram Co. Ltd. 7.50% ACES convertible preferred 900,000 48.375 .89
Walt Disney Co. 8,600,000 333.788 .59
MERCHANDISING - 3.05%
Albertson's, Inc. 12,114,000 402.791 .72
AutoZone, Inc. (1) 4,140,000 91.080 .16
Dillard's Inc., Class A 1,995,000 24.439 .04
Dollar General Corp. 3,750,000 73.125 .13
Gap, Inc. 2,000,000 62.500 .11
J.C. Penney Co., Inc. 3,000,000 55.312 .10
Limited Inc. 15,800,000 341.675 .61
Lowe's Companies, Inc. 10,150,000 416.784 .74
May Department Stores Co. 1,968,450 47.243 .08
Wal-Mart Stores, Inc. 3,500,000 201.688 .36
TRANSPORTATION: AIRLINES - 0.31%
AMR Corp. (1) 4,850,000 128.222 .23
Delta Air Lines, Inc. 942,100 47.635 .08
WIRELESS TELECOMMUNICATION SERVICES - 0.82%
Vodafone AirTouch PLC (ADR) 11,115,000 460.578 .82
12,795.599 22.73
FINANCE
BANKING - 4.41%
Bank of America Corp. 13,577,100 583.815 1.04
BANK ONE CORP. 7,785,000 206.789 .37
Comerica Inc. 750,000 33.656 .06
First Union Corp. 10,801,900 268.022 .48
Fleet Boston Financial Corp. 6,125,000 208.250 .37
KeyCorp 500,000 8.812 .02
Lloyds TSB Group PLC 7,400,000 69.975 .12
National City Corp. 2,000,000 34.125 .06
Toronto-Dominion Bank 4,848,900 117.922 .21
U.S. Bancorp 2,500,000 48.125 .09
Wachovia Corp. 1,250,000 67.813 .12
Washington Mutual, Inc. 12,846,600 370.946 .66
Wells Fargo & Co. 11,831,000 458.451 .81
FINANCIAL SERVICES - 3.77%
Associates First Capital Corp., Class A 2,500,000 55.781 .10
Fannie Mae 18,996,800 991.395 1.76
Freddie Mac 2,400,000 97.200 .17
Household International, Inc. 13,000,000 540.313 .96
MBNA Corp. 3,080,000 83.545 .15
Providian Financial Corp. 1,400,000 126.000 .22
SLM Holding Corp. 6,182,000 231.439 .41
INSURANCE - 2.49%
Aetna Inc. 1,685,300 108.175 .19
Allstate Corp. 8,550,000 190.238 .34
American General Corp. 2,710,000 165.310 .29
American International Group, Inc. 3,375,000 396.563 .70
Aon Corp. 2,500,000 77.656 .14
Berkshire Hathaway Inc., Class A (1) 1,488 80.054 .14
Chubb Corp. 1,400,000 86.100 .15
Jefferson-Pilot Corp. 2,200,000 124.163 .22
Lincoln National Corp. 1,800,000 65.025 .12
SAFECO Corp. 1,602,300 31.846 .06
St. Paul Companies, Inc. 2,400,000 81.900 .14
6,009.404 10.67
OTHER
MULTI-INDUSTRY - 0.29%
Canadian Pacific Ltd. 2,450,000 64.159 .11
Honeywell International Inc. 2,700,000 90.956 .16
Minnesota Mining and Manufacturing Co. 120,000 9.900 .02
GOLD MINES - 0.62%
Barrick Gold Corp. 8,000,000 145.500 .26
Newmont Mining Corp. 5,600,000 121.100 .22
Placer Dome Inc. 8,000,000 76.500 .14
MISCELLANEOUS - 1.58%
Equity securities in initial period of acquisition 894.399 1.58
1,402.514 2.49
Total Equity Securities (cost: $28,562.556 million) 46,946.719 83.39
Principal Market
Amount Value Percent of
(millions) (millions) Net Assets
FEDERAL AGENCY OBLIGATIONS - 8.31%
Federal Farm Credit Bank Notes 6.42%-6.48% due 7/17-8/31/2000 111.353 110.223 .20
Federal Home Loan Banks 5.99%-6.52% due 7/5-9/27/2000 1,892.704 1,877.723 3.33
Federal Home Loan Mortgage Corp. 6.02%-6.545% due 7/5-9/28/2000 1,592.835 1,579.859 2.81
Federal National Mortgage Assn. 5.83%-6.52% due 7/6-9/28/2000 921.979 913.614 1.62
Student Loan Marketing Assn. 6.094%-6.374% due 7/20-12/21/2000 (3) 200.000 199.877 .35
CORPORATE SHORT-TERM NOTES - 8.14%
AIG Funding Inc. 6.53%-6.60% due 8/16-8/21/2000 30.000 29.726 .05
Alcoa Inc. 6.32%-6.65% due 7/11-9/21/2000 147.700 146.342 .26
American Express Credit Corp. 6.52%-6.88% due 7/3-8/28/2000 105.000 104.234 .18
American General Corp. 6.10%-6.56% due 7/10-9/11/2000 45.000 44.628
American General Finance Corp. 6.33%-6.59% due 7/12-9/21/2000 94.000 93.050 .24
Anheuser-Busch Companies, Inc. 6.12%-6.57% due 7/10-8/16/2000 107.900 107.452 .19
Archer Daniels Midland Co. 6.53%-6.64% due 8/21-9/15/2000 100.000 98.897 .18
Associates First Capital Corp. 6.08%-6.85% due 7/3-9/12/2000 163.900 163.167 .29
AT&T Corp. 6.53%-6.60% due 8/2-8/22/2000 130.323 129.331 .23
Avon Capital Corp. 6.59% due 9/5/2000 (2) 40.600 40.100 .07
Bell Atlantic Financial Services Inc. 6.50%-6.61% due 7/17-9/1/2000 144.800 143.877 .25
BellSouth Capital Funding Corp. 6.55% due 9/13/2000 (2) 50.000 49.315
BellSouth Telecommunications, Inc. 6.30%-6.53% due 7/10-8/29/2000 49.100 48.820 .18
Bestfoods 6.11%-6.57% due 7/11-7/21/2000 (2) 50.000 49.846 .09
Campbell Soup Co. 6.30%-6.55% due 7/5-9/8/2000 139.700 138.523 .25
Chevron USA Inc. 6.55% due 8/1-8/2/2000 100.000 99.403 .18
Coca-Cola Co. 6.12%-6.55% due 7/10-8/29/2000 151.000 150.345 .27
Colgate-Palmolive Co. 6.51%-6.52% due 7/16-8/15/2000 (2) 68.000 67.629 .12
Duke Energy Corp. 6.05%-6.54% due 7/5-8/11/2000 88.000 87.657 .16
Eastman Kodak Co. 6.07%-6.62% due 7/10-8/16/2000 127.900 127.235 .23
E.I. du Pont de Nemours and Co. 6.52%-6.55% due 7/25-9/27/2000 110.000 108.690 .19
Emerson Electric Co. 6.30%-6.45% due 7/5-7/25/2000 (2) 110.000 109.707 .19
Ford Motor Credit Co. 6.54%-6.57% due 9/1-10/11/2000 130.000 127.927 .23
Fortune Brands Inc. 6.13%-6.55% due 7/24-8/1/2000 (2) 50.000 49.751 .09
Gannett Co., Inc. 6.46%-6.52% due 7/11-7/19/2000 (2) 150.000 149.615 .27
General Electric Capital Corp. 6.50%-6.95% due 7/3-10/13/2000 196.300 195.242 .35
General Mills Inc. 6.56%-6.57% due 7/17-7/20/2000 33.000 32.891 .06
General Motors Acceptance Corp. 6.54%-6.59% due 7/24-9/18/2000 150.000 148.468 .26
Gillette Co. 6.52% due 7/26-7/31/2000 (2) 105.400 104.858 .19
H.J. Heinz Co. 6.50%-6.58% due 7/24-8/14/2000 115.750 115.128 .20
Household Finance Corp. 6.30%-6.57% due 7/12-8/15/2000 145.000 144.136 .26
IBM Credit Corp. 6.52%-6.56% due 7/18-7/31/2000 81.600 81.215 .14
Johnson & Johnson 6.51% due 8/14/2000 (2) 35.000 34.715 .06
Lucent Technologies Inc. 6.56%-6.60% due 7/31-8/30/2000 90.000 89.277 .16
Marsh USA Inc. 6.54%-6.65% due 8/14-9/1/2000 (2) 148.750 147.234 .26
Minnesota Mining and Manufacturing Co. 6.20%-6.54% due 7/11-9/19/2000 94.550 93.628 .17
Motorola Credit Corp. 6.10%-6.52% due 7/24-7/28/2000 76.695 76.342
Motorola Inc. 6.58%-6.59% due 9/25-9/26/2000 60.000 59.042 .24
Pepsico Inc. 6.50% due 7/27-7/31/2000 61.600 61.292 .11
Pfizer Inc. 6.49% due 7/11-7/12/2000 (2) 86.100 85.920 .15
Pharmacia Corp. 6.52%-6.55% due 7/21-8/11/2000 131.000 130.283 .23
Procter & Gamble Co. 6.53%-6.55% due 7/24-7/31/2000 75.000 74.640 .13
Sara Lee Corp. 6.49%-6.80% due 7/3-7/6/2000 64.200 64.138 .11
SBC Communications Inc. 6.09%-6.64% due 7/11-9/1/2000 (2) 147.700 146.467 .26
Texaco Inc. 6.50%-6.61% due 7/13-9/5/2000 90.000 89.041 .16
Wal-Mart Stores Inc. 6.51%-6.55% due 7/25-9/19/2000 (2) 142.700 141.057 .25
CERTIFICATES OF DEPOSIT - 0.18%
Morgan Guaranty Trust Co. of New York 6.61% due 7/19/2000 100.000 99.999 .18
Total Short Term Securities (cost: $9,361.896 million) 9,361.576 16.63
Excess of cash and receivables over payables -13.733 -.02
Total Short-Term Securities, Cash and Receivables, Net of Payables 9,347.843 16.61
NET ASSETS 56,294.562 100.00
(1) Non-income-producing security.
(2) Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
(3) Coupon rate may change periodically.
ADR = American Depositary Receipts
See Notes to Financial Statements
</TABLE>
Companies appearing in the portfolio listing
since December 31, 1999
Coca-Cola
Computer Sciences
Dell Computer
Dominion Resources
Dun & Bradstreet
Emerson Electric
Gap
H.J. Heinz
Lloyds TSB Group
Nokia
Pitney-Bowes
Sabre Holdings
Walt Disney
Companies eliminated from the portfolio listing
since December 31, 1999
Ameren
CBS
Champion International
Eli Lilly
International Flavors & Fragrances
MediaOne Group
NEC
Textron
United HealthCare<TABLE>
The Investment Company of America
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES Unaudited
at June 30, 2000 (dollars in millions)
<S> <C> <C>
Assets:
Investment securities at market
(cost: $28,562.556) $46,946.719
Short-term securities at market
(cost: $9,361.896) 9,361.576
Cash 0.710
Receivables for--
Sales of investments $ 4.198
Sales of fund's shares 56.753
Forward currency contracts - net 0.000
Dividends and accrued interest 77.917 138.868
56,447.873
Liabilities:
Payables for--
Purchases of investments 22.003
Repurchases of fund's shares 106.098
Forward currency contracts - net 0.000
Dividends on fund's shares 0.000
Management services 11.378
Chase Manhattan Bank 0.000
Other expenses 13.832 153.311
Net Assets at June 30, 2000--
(authorized capital stock--2,000,000,000 shares) $56,294.562
Class A shares, $.001 par value
Net assets $56,134.373
Shares outstanding 1,721,544,100
Net asset value per share $ 32.61
Class B shares, $.001 par value
Net assets $ 160.189
Shares outstanding 4,917,480
Net asset value per share $ 32.58
STATEMENT OF OPERATIONS Unaudited
for the six months ended June 30, 2000 (dollars in millions)
Investment Income:
Income:
Dividends $ 385.727
Interest 238.938 $ 624.665
Expenses:
Management services fee 67.431
Distribution expenses - Class A 64.467
Distribution expenses - Class B 0.227
Transfer agent fee - Class A 18.890
Transfer agent fee - Class B 0.011
Reports to shareholders 0.732
Registration statement and prospectus 2.277
Postage, stationery and supplies 3.548
Directors' fees 0.295
Auditing and legal fees 0.109
Custodian fee 0.684
Taxes other than federal income tax 0.534
Other expenses 0.247 159.452
Net investment income 465.213
Realized Gain and Change in Unrealized
Appreciation on Investments:
Net realized gain 3,657.246
Net change in unrealized appreciation
on investments: (2,780.434)
Open forward currency contracts 0.000
Net realized gain and change in
unrealized appreciation
on investments 876.812
Net Increase in Net Assets Resulting
from Operations $ 1,342.025
STATEMENT OF CHANGES IN NET ASSETS (dollars in millions)
Six months Year
ended ended
June 30, December 31,
2000* 1999
Operations:
Net investment income $ 465.213 $ 799.307
Net realized gain on investments 3,657.246 5,292.279
Net change in unrealized appreciation
on investments (2,780.434) 1,931.502
Net increase in net assets
resulting from operations 1,342.025 8,023.088
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income:
Class A (411.623) (807.510)
Class B (0.289) -
Distributions from net realized gains on investments:
Class A (684.405) (4,829.809)
Class B - -
Total Dividends and Distributions (1,096.317) (5,637.319)
Capital Share Transactions:
Proceeds from shares sold 3,343.157 5,697.501
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on investments 1,011.575 5,204.804
Cost of shares repurchased (4,401.107) (5,690.428)
Net (decrease) increase in net assets resulting from
capital share transactions (46.375) 5,211.877
Total Increase in Net Assets 199.333 7,597.646
Net Assets:
Beginning of period 56,095.229 48,497.583
End of period (including
undistributed net investment
income of: $352.643 and $299.609,
respectively) $56,294.562 $56,095.229
* Unaudited
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
Unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - The Investment Company of America (the "fund") is registered
under the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks long-term growth of capital and income,
placing greater emphasis on future dividends than on current income. Effective
January 3, 2000, the fund's par value changed from $1 to $0.001. The fund
offers Class A and Class B shares. Class A shares are sold with an initial
sales charge of up to 5.75%. Class B shares are sold without an initial sales
charge but subject to a contingent deferred sales charge paid upon redemption.
This charge declines from 5% to zero over a period of six years. Class B shares
have higher distribution expenses and transfer agent fees than Class A shares.
Class B shares are automatically converted to Class A shares eight years after
the date of purchase. Holders of both classes of shares have equal pro rata
rights to assets and identical voting, dividend, liquidation and other rights,
except that each class bears different distribution and transfer agent
expenses, and each class shall have exclusive rights to vote on matters
affecting only that class.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, 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 quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. Short-term securities maturing within 60 days are valued at amortized
cost, which approximates market value. Securities and assets for which
representative market quotations are not readily available are valued at fair
value as determined in good faith by a committee appointed by the Board of
Directors. The ability of the issuers of the fixed income securities held by
the fund to meet their obligations may be affected by economic developments in
a specific industry, state or region.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or $when-issued' basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual basis. Market
discounts and original issue discounts on securities purchased are amortized
daily over the expected life of the security. The fund does not amortize
premiums on fixed income securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
ALLOCATIONS - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily between the share
classes based on their relative net asset values. Distribution expenses,
transfer agent fees and any other class-specific expenses are accrued daily and
charged to the applicable share class.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks. These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social, and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.
TAXATION - Dividend income is recorded net of non-U.S. taxes paid. For the six
months ended June 30, 2000, such non-U.S. taxes were $7,675,000.
CURRENCY GAINS AND LOSSES - Net realized currency losses on dividends and other
receivables and payables, on a book basis, were $175,000 for the six months
ended June 30, 2000.
3. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of June 30, 2000, net unrealized appreciation on investments for federal
income tax purposes aggregated $18,393,165,000; $20,227,180,000 related to
appreciated securities and $1,834,015,000 related to depreciated securities.
During the six months ended June 30, 2000, the fund realized, on a tax basis, a
net capital gain of $3,657,421,000 on securities transactions. Net losses
incurred during the period related to non-U.S. currency transactions of
$175,000 are treated as an adjustment to ordinary income for federal income tax
purposes. The cost of portfolio securities for federal income tax purposes was
$37,915,130,000 at June 30, 2000.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $67,431,000 for management services was
incurred pursuant to an agreement with Capital Research and Management Company
(CRMC), with which certain officers and Directors of the fund are affiliated.
The Board of Directors approved an amended agreement effective January 1, 2000.
Additional breakpoints were added for net assets in excess of $34 billion, and
annual rates were reduced for net assets in excess of $21 billion. The amended
Investment Advisory and Service Agreement provides for monthly fees based on
the following rates and month-end net asset levels:
<TABLE>
<CAPTION>
Month-End Net Asset Level
(in billions)
Rate In Excess of Up to
<S> <C> <C>
0.390% $ 0 $ 1.0
0.336 1.0 2.0
0.300 2.0 3.0
0.276 3.0 5.0
0.258 5.0 8.0
0.246 8.0 13.0
0.240 13.0 21.0
0.234 21.0 34.0
0.231 34.0 44.0
0.228 44.0 55.0
0.225 55.0 71.0
0.222 71.0
</TABLE>
DISTRIBUTION EXPENSES - Pursuant to a Plan of Distribution for Class A shares,
the fund may expend up to 0.25% of Class A daily 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 in advance
by the fund's Board of Directors. Pursuant to a Plan of Distribution for Class
B shares, the fund may expend 1.00% of Class B daily net assets annually to
compensate dealers for their selling and servicing efforts. During the six
months ended June 30,2000, distribution expenses under the Plans of
Distribution for Class A and Class B shares were $64,467,000 and $227,000,
respectively. As of June 30, 2000, accrued and unpaid distribution expenses for
Class A and Class B shares were $10,102,000 and $112,000, respectively.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $12,374,000 (after allowances to dealers) during the
six months ended June 30, 2000 as its portion of the sales charges paid by
purchasers of the fund's Class A shares. Such sales charges are not an expense
of the fund and, hence, are not reflected in the accompanying statement of
operations.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $18,901,000 during the six months ended June
30, 2000.
DEFERRED DIRECTORS' FEES - 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, 2000, aggregate
deferred amounts and earnings thereon since the deferred compensation plan's
adoption (1993), net of any payments to Directors, were $1,481,000.
AFFILIATED DIRECTORS' AND OFFICERS - 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.
5. WARRANTS
Option warrants are outstanding, which may be exercised at any time for the
purchase of 822,245 Class A shares at approximately $5.242 per share. If all
warrants had been exercised on June 30, 2000, the net assets of Class A shares
would have been $56,138,683,000; the Class A shares outstanding would have been
1,722,366,000; and the Class A net asset value would have been equivalent to
$32.59 per share. During the six months ended June 30, 2000, no warrants were
exercised.
6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $5,474,616,000 and $8,439,008,000, respectively,
during the six months ended June 30, 2000.
As of June 30, 2000, net assets consisted of the following:
(dollars in millions)
<TABLE>
<CAPTION>
<S> <C>
Capital paid in on shares of beneficial $33,942.297
interest
Undistributed net investment income 352.643
Accumulated net realized gain 3,615.856
Net unrealized appreciation 18,383.766
Net assets $56,294.562
</TABLE>
Capital share transations in the fund were as follows:
(dollars in millions)
<TABLE>
(dollars in millions)
Six months
ended June 30,
2000
Amount Shares
<S> <C> <C>
Class A Shares:
Sold $ 3,181.710 98,981,445
Reinvested dividends and distributions 1,011.295 31,742,113
Repurchased (4,400.152) (137,212,044)
Net (decrease) increase in Class A (207.147) (6,488,486)
Class B Shares:*
Sold 161.447 4,938,285
Reinvested dividends and distributions 0.280 8,328
Repurchased (0.955) (29,133)
Net (decrease) increase in Class B 160.772 4,917,480
Total net (decrease) increase in fund $ (46.375) (1,571,006)
Year ended
December 31,
1999
Amount Shares
<C> <C>
Class A Shares:
Sold $ 5,697.501 174,371,241
Reinvested dividends and distributions 5,204.804 166,620,357
Repurchased (5,690.428) (174,052,877)
Net (decrease) increase in Class A 5,211.877 166,938,721
Class B Shares:*
Sold - -
Reinvested dividends and distributions - -
Repurchased - -
Net (decrease) increase in Class B - -
Total net (decrease) increase in fund $ 5,211.877 166,938,721
* Class B shares not offered before March 15, 2000.
</TABLE>
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 $684,000 includes $85,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS (1)
<S> <C> <C> <C>
Net
Net asset gains/(losses)
value, Net on securities
beginning investment (both realized
Period ended of period income and unrealized)
Class A:
2000 $32.46 $.27(2) $.52(2)
1999 31.07 .49 4.45
1998 28.25 .48 5.79
1997 24.23 .51 6.61
1996 21.61 .49 3.66
1995 17.67 .52 4.83
Class B:
2000 32.35 .10(2) .21(2)
Dividends
Total from (from net Distributions
investment investment (from capital
Period ended operations income) gains)
Class A:
2000 $.79 $(.24) $(.40)
1999 4.94 (.51) (3.04)
1998 6.27 (.51) (2.94)
1997 7.12 (.50) (2.60)
1996 4.15 (.50) (1.03)
1995 5.35 (.50) (0.91)
Class B:
2000 .31 (.08) -
Net asset
Total value, end Total
Period ended distributions of period return
Class A:
2000 $(.64) $32.61 2.49%
1999 (3.55) 32.46 16.56
1998 (3.45) 31.07 22.94
1997 (3.10) 28.25 29.81
1996 (1.53) 24.23 19.35
1995 (1.41) 21.61 30.63
Class B:
2000 .08 32.58 2.49
Ratio of Ratio of
Net assets, expenses net income
end of period to average to average
Period ended (in millions) net assets net assets
Class A:
2000 $56,135 .29%(3) .84%(3)
1999 56,095 .55 1.54
1998 48,498 .55 1.65
1997 39,718 .56 1.90
1996 $30,875 .59 2.17
1995 $25,678 .60 2.70
Class B:
2000 $160 .33(3) .31(3)
Portfolio
turnover
Period ended rate
Class A:
2000 11.50%(4)
1999 27.72%
1998 25.43%
1997 24.08%
1996 17.46%
1995 20.91%
Class B:
2000 11.50%(4)
(1) The periods 1995 through 1999 represent
fiscal years ended December 31. The periods ended
2000 represent, for Class A shares, the six month
period ended June 30, 2000, and, for
Class B shares, the 107 day period ended June 30,
2000. Class B shares were not offered before
March 15, 2000. Total returns for such periods
are based on activity during the period and
thus are not representative of a full year.
Total returns exclude all sales charges,
including contingent deferred sales charges.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Represents portfolio turnover rate
(equivalent for all share classes) for the six months
ended June 30, 2000.
</TABLE>
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 92821-5823
Transfer agent for
shareholder accounts
American Funds Service Company
(Please write to the address nearest 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
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, any of the fund's services, or for a
prospectus for any of the American Funds, 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. Please read
the prospectus carefully before you invest or send money.
Class A and Class B Shares
There are two ways to invest in this fund. Class A shares are subject to a
5.75% maximum up-front sales charge that declines for accounts of $25,000 or
more. Class B shares, which are not available for certain employer-sponsored
retirement plans, have no up-front charge. They are, however, subject to
additional expenses of approximately 0.75% a year over the first eight years of
ownership. If redeemed within six years, they may also be subject to a
contingent deferred sales charge (5% maximum) that declines over time.
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, 2000, 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 BDC/GRS/4677
Lit. No. ICA-013-0800
