SEC File Nos. 2-10811
811-116
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 105
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 29
THE INVESTMENT COMPANY OF AMERICA
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
Vincent P. Corti
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
ERIC A.S. RICHARDS, ESQ.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)
Approximate date of proposed public offering:
It is proposed that this filing become effective on March 15, 2000, pursuant
to paragraph (b) of rule 485.
<PAGE>
The Investment Company of America/(R)/
Prospectus
MARCH 15, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
THE INVESTMENT COMPANY OF AMERICA
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
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Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objectives, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 12
-------------------------------------------------------
Choosing a Share Class 13
-------------------------------------------------------
Purchase and Exchange of Shares 14
-------------------------------------------------------
Sales Charges 15
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Sales Charge Reductions and Waivers 17
-------------------------------------------------------
Plans of Distribution 18
-------------------------------------------------------
How to Sell Shares 19
-------------------------------------------------------
Distributions and Taxes 20
-------------------------------------------------------
Financial Highlights 21
-------------------------------------------------------
</TABLE>
1
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
ICA-010-0300/B
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks that offer growth and dividend
potential.
The fund is designed for investors seeking both capital appreciation and
income. An investment in the fund is subject to risks, including the
possibility that the fund may decline in value in response to economic,
political or social events in the U.S. or abroad. The prices of equity
securities owned by the fund may be affected by events specifically involving
the companies issuing those securities. The fund's equity investments are
limited to securities included on its eligible list, which consists of
securities that are deemed suitable by the fund's board of directors in light
of the fund's investment objectives and policies.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)
------------------------------------------------------------------------------
[bar chart]
1990 0.68%
1991 26.54%
1992 6.99%
1993 11.62%
1994 0.16%
1995 30.63%
1996 19.35%
1997 29.81%
1998 23.94%
1999 16.56%
[end bar chart]
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 17.34% (quarter ended December 31, 1998)
LOWEST -10.84% (quarter ended September 30, 1990)
</TABLE>
3
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge 9.84% 22.27% 15.33% 13.62%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
S&P 500/3/ 21.01% 28.49% 18.17% 12.43%
------------------------------------------------------------------------------
Lipper Growth and Income Index/4/ 11.86% 20.60% 14.38% N/A
------------------------------------------------------------------------------
Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% N/A
------------------------------------------------------------------------------
</TABLE>
Class A yield: 1.45%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)
1 The fund began investment operations for Class A shares on January 1, 1934
(its first full month of investment operations).
2 The fund is beginning investment operations for Class B shares on March 15,
2000.
3 The Standard & Poor's 500 Composite Index is an asset-weighted, broad-based
measurement of changes in stock market conditions based on the average
performance of 500 widely held common stocks. This index is unmanaged and does
not reflect sales charges, commissions or expenses. The lifetime figure is
from the date the fund's Class A shares began investment operations.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund began investment operations
in 1934, therefore, lifetime results are not available.
5 The Lipper Large-Cap Value Funds Index is an equally weighted performance
index that represents funds which, by practice, invest at least 75% of their
equity assets in companies with large market capitalizations. Large-cap value
funds seek long-term growth of capital by investing in companies that are
considered to be undervalued relative to a major unmanaged stock index based
on price-to-current earnings or other factors. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
contributions, but do not reflect sales charges and commissions. This index
was not in existence as of the date the fund began investment operations in
1934, therefore, lifetime results are not available.
Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 5.75% deducted. Sales
charges are reduced for purchases of $25,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.
Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the fund's Class B
shares begin investment operations on March 15, 2000, no results are available
as of the date of this prospectus.
4
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $25,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.24% 0.24%
Distribution and/or Service (12b-1) Fees 0.23%/2/ 1.00%/3/
Other Expenses 0.08% 0.08%
Total Annual Fund Operating Expenses 0.55% 1.32%
</TABLE>
1 Based on estimated amounts for the current fiscal year.
2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $628 $741 $865 $1,225
----------------------------------------------------------------------------
Class B - assuming redemption $634 $818 $923 $1,378
Class B - assuming no redemption $134 $418 $723 $1,378
</TABLE>
5
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
The fund's investment objectives are to achieve long-term growth of capital and
income. The fund strives to accomplish these objectives through extensive
global research, careful selection, and broad diversification. In the
selection of securities for investment, potential for capital appreciation and
future dividends are given more weight than current yield. The fund invests
primarily in common stocks. The fund's investments are limited to securities
included on its eligible list, which consists of securities deemed suitable in
light of the fund's investment objectives and policies. Securities are added
to, or deleted from, the eligible list by the board of directors, reviewing and
acting upon the recommendations of the investment adviser.
The values of equity securities held by the fund may decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objectives, but it also would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund
has other investment practices that are described here and in the statement of
additional information.
The fund may invest in securities of issuers domiciled outside the U.S. and not
included in the Standard & Poor's 500 Composite Index. Investments outside the
U.S. may be subject to certain risks. For example, the prices of non-U.S.
securities can decline in response to currency fluctuations or political,
social and economic instability.
6
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 16.56% 23.73% 16.02% 13.72%
(with no sales charge deducted)
------------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
------------------------------------------------------------------------------
Lipper Growth and Income Index/4/ 11.86% 20.60% 14.38% N/A
------------------------------------------------------------------------------
Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% N/A
------------------------------------------------------------------------------
</TABLE>
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The fund began investment operations for Class A shares on January 1, 1934
(its first full month of investment operations).
3 The fund is beginning investment operations for Class B shares on March 15,
2000.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund began investment operations
in 1934, therefore, lifetime results are not available.
5 The Lipper Large-Cap Value Funds Index is an equally weighted performance
index that represents funds which, by practice, invest at least 75% of their
equity assets in companies with large market capitalizations. Large-cap value
funds seek long-term growth of capital by investing in companies that are
considered to be undervalued relative to a major unmanaged stock index based
on price-to-current earnings or other factors. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
contributions, but do not reflect sales charges and commissions. This index
was not in existence as of the date the fund began investment operations in
1934, therefore, lifetime results are not available.
7
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, December 31, 1999.
<TABLE>
<CAPTION>
PERCENT OF
LARGEST INVESTMENT CATEGORIES NET ASSETS
----------------------------------------------------------------------------------
<S> <C>
Services 26.25%
----------------------------------------------------------------------------------
Capital Equipment 21.02
----------------------------------------------------------------------------------
Consumer Goods 12.44
----------------------------------------------------------------------------------
LARGEST INDUSTRY HOLDINGS
----------------------------------------------------------------------------------
Data Processing & Reproduction 10.43%
----------------------------------------------------------------------------------
Broadcasting & Publishing 8.64
----------------------------------------------------------------------------------
Diversified Telecommunication Services 7.68
----------------------------------------------------------------------------------
Health & Personal Care 6.53
----------------------------------------------------------------------------------
Energy Sources 5.26
----------------------------------------------------------------------------------
LARGEST INDIVIDUAL HOLDINGS
----------------------------------------------------------------------------------
Viacom 2.94%
----------------------------------------------------------------------------------
Time Warner 2.40
----------------------------------------------------------------------------------
Oracle 2.15
----------------------------------------------------------------------------------
Fannie Mae 2.11
----------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group 2.07
----------------------------------------------------------------------------------
Microsoft 1.87
----------------------------------------------------------------------------------
Cendant 1.81
----------------------------------------------------------------------------------
AT&T 1.78
----------------------------------------------------------------------------------
Sprint FON Group 1.78
----------------------------------------------------------------------------------
Philip Morris 1.61
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The Investment Company of America are listed on the
following page.
9
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL
AS PORTFOLIO COUNSELOR (INCLUDING THE LAST FIVE YEARS)
PORTFOLIO COUNSELORS (AND RESEARCH PROFESSIONAL, -----------------------------------
FOR IF APPLICABLE) FOR WITH CAPITAL
THE INVESTMENT THE INVESTMENT COMPANY RESEARCH AND
COMPANY OF AMERICA MANAGEMENT
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
---------------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
JON B. Chairman of the Board of 42 years (plus 5 years as a 48 years 48 years
LOVELACE, JR. the fund. Chairman research professional prior
Emeritus, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
R. MICHAEL President and Director of 9 years (plus 13 years as a 35 years 35 years
SHANAHAN the fund. Chairman of the research professional prior
Board and Principal to becoming a portfolio
Executive Officer, Capital counselor for the fund)
Research and Management
Company
---------------------------------------------------------------------------------------------------------------------
WILLIAM C. Director of the fund. 38 years 41 years 47 years
NEWTON Senior Partner, The Capital
Group Partners L.P.*
-----------------------------------------------------------------
----------------------------------------------------
GREGG E. Senior Vice President of 8 years (plus 10 years as a 27 years 27 years
IRELAND the fund. Senior Vice research professional prior
President, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES B. Senior Vice President of 8 years (plus 4 years as a 18 years 18 years
LOVELACE the fund. Senior Vice research professional prior
President, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
DONALD D. Senior Vice President of 8 years (plus 4 years as a 15 years 15 years
O'NEAL the fund. Vice President, research professional prior
Capital Research and to becoming a portfolio
Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES E. Senior Vice President, 13 years (plus 9 years as a 23 years 28 years
DRASDO Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
- ---------------------------------------------------------------------------------------------------------------------------------
DINA N. Senior Vice President, 6 years (plus 2 years as a 8 years 22 years
PERRY Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES F. President and Director, 6 years (plus 9 years as a 30 years 30 years
ROTHENBERG Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
The fund began its first full month of investment operations on January 1, 1934.
* Company affiliated with Capital Research and Management Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
11
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
12
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
- How long you expect to own the shares
- How much you intend to invest
- The expenses associated with owning shares of each class
- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced
for purchases of $25,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
13
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
14
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 4:00 p.m. New York time, which is the normal close of trading on
the New York Stock Exchange, every day the Exchange is open. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced for larger purchases as indicated
below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than 5.00% 5.26% 4.25%
$50,000
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution--
15
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
type plans investing $1 million or more, or with 100 or more eligible
employees, and Individual Retirement Account rollovers involving retirement
plan assets invested in the American Funds, may invest with no sales charge and
are not subject to a contingent deferred sales charge. Investments made
through retirement plans, endowments or foundations with $50 million or more in
assets, or through certain qualified fee-based programs may also be made with
no sales charge and are not subject to a contingent deferred sales charge. The
fund may pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
16
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGES
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
17
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);
- to receive certain distributions, such as required minimum distributions,
from retirement accounts; or
- for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
18
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.
19
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, if any, usually in March,
June, September and December. Capital gains, if any, are usually distributed in
December. When a dividend or capital gain is distrib
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
20
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with the fund's
2000 fiscal year end. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, is included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $31.07 $28.25 $24.23 $21.61 $17.67
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .49 .48 .51 .49 .52
Net gains or losses on
securities (both 4.45 5.79 6.61 3.66 4.83
realized and unrealized)
------------------------------------------------------------------------------
Total from investment 4.94 6.27 7.12 4.15 5.35
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.51) (.51) (.50) (.50) (.50)
Distributions (from (3.04) (2.94) (2.60) (1.03) (.91)
capital gains)
------------------------------------------------------------------------------
Total distributions (3.55) (3.45) (3.10) (1.53) (1.41)
------------------------------------------------------------------------------
Net Asset Value, $32.46 $31.07 $28.25 $24.23 $21.61
End of Year
------------------------------------------------------------------------------
Total return* 16.56% 22.94% 29.81% 19.35% 30.63%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year $56,095 $48,498 $39,718 $30,875 $25,678
(in millions)
------------------------------------------------------------------------------
Ratio of expenses to .55% .55% .56% .59% .60%
average net assets
------------------------------------------------------------------------------
Ratio of net income 1.54% 1.65% 1.90% 2.17% 2.70%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 27.85% 24.28% 26.02% 19.56% 20.37%
* Excludes maximum sales charge.
</TABLE>
21
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
22
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
* * * * *
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 333 South Hope
Street, Los Angeles, California 90071.
Investment Company File No. 811-116
Printed on recycled paper
THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.
/s/ Vincent P. Corti
Vincent P. Corti
Secretary
<PAGE>
The Investment Company of America/(R)/
Prospectus
MARCH 15, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
---------------------------------------------------------
THE INVESTMENT COMPANY OF AMERICA
333 South Hope Street
Los Angeles, California 90071
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objectives, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 12
-------------------------------------------------------
Choosing a Share Class 13
-------------------------------------------------------
Purchase and Exchange of Shares 14
-------------------------------------------------------
Sales Charges 15
-------------------------------------------------------
Sales Charge Reductions and Waivers 17
-------------------------------------------------------
Plans of Distribution 18
-------------------------------------------------------
How to Sell Shares 19
-------------------------------------------------------
Distributions and Taxes 20
-------------------------------------------------------
Financial Highlights 21
-------------------------------------------------------
</TABLE>
1
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
ICA-010-0300/B
<PAGE>
---------------------------------------------------------
RISK/RETURN SUMMARY
The fund seeks to make your investment grow and provide you with income over
time by investing primarily in common stocks that offer growth and dividend
potential.
The fund is designed for investors seeking both capital appreciation and
income. An investment in the fund is subject to risks, including the
possibility that the fund may decline in value in response to economic,
political or social events in the U.S. or abroad. The prices of equity
securities owned by the fund may be affected by events specifically involving
the companies issuing those securities. The fund's equity investments are
limited to securities included on its eligible list, which consists of
securities that are deemed suitable by the fund's board of directors in light
of the fund's investment objectives and policies.
Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.
2
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
INVESTMENT RESULTS
The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.
CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)
------------------------------------------------------------------------------
[bar chart]
1990 0.68%
1991 26.54%
1992 6.99%
1993 11.62%
1994 0.16%
1995 30.63%
1996 19.35%
1997 29.81%
1998 23.94%
1999 16.56%
[end bar chart]
The fund's highest/lowest quarterly results during this time period were:
<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 17.34% (quarter ended December 31, 1998)
LOWEST -10.84% (quarter ended September 30, 1990)
</TABLE>
3
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge 9.84% 22.27% 15.33% 13.62%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
S&P 500/3/ 21.01% 28.49% 18.17% 12.43%
------------------------------------------------------------------------------
Lipper Growth and Income Index/4/ 11.86% 20.60% 14.38% N/A
------------------------------------------------------------------------------
Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% N/A
------------------------------------------------------------------------------
</TABLE>
Class A yield: 1.45%
(For current yield information, please call American FundsLine/r/ at
1-800-325-3590)
1 The fund began investment operations for Class A shares on January 1, 1934
(its first full month of investment operations).
2 The fund is beginning investment operations for Class B shares on March 15,
2000.
3 The Standard & Poor's 500 Composite Index is an asset-weighted, broad-based
measurement of changes in stock market conditions based on the average
performance of 500 widely held common stocks. This index is unmanaged and does
not reflect sales charges, commissions or expenses. The lifetime figure is
from the date the fund's Class A shares began investment operations.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund began investment operations
in 1934, therefore, lifetime results are not available.
5 The Lipper Large-Cap Value Funds Index is an equally weighted performance
index that represents funds which, by practice, invest at least 75% of their
equity assets in companies with large market capitalizations. Large-cap value
funds seek long-term growth of capital by investing in companies that are
considered to be undervalued relative to a major unmanaged stock index based
on price-to-current earnings or other factors. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
contributions, but do not reflect sales charges and commissions. This index
was not in existence as of the date the fund began investment operations in
1934, therefore, lifetime results are not available.
Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 5.75% deducted. Sales
charges are reduced for purchases of $25,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.
Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since the fund's Class B
shares begin investment operations on March 15, 2000, no results are available
as of the date of this prospectus.
4
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FEES AND EXPENSES OF THE FUND
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>
1 Sales charges are reduced or eliminated for purchases of $25,000 or more.
2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.
3 Deferred sales charges are reduced after 12 months and eliminated after six
years.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.24% 0.24%
Distribution and/or Service (12b-1) Fees 0.23%/2/ 1.00%/3/
Other Expenses 0.08% 0.08%
Total Annual Fund Operating Expenses 0.55% 1.32%
</TABLE>
1 Based on estimated amounts for the current fiscal year.
2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.
3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $628 $741 $865 $1,225
----------------------------------------------------------------------------
Class B - assuming redemption $634 $818 $923 $1,378
Class B - assuming no redemption $134 $418 $723 $1,378
</TABLE>
5
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
The fund's investment objectives are to achieve long-term growth of capital and
income. The fund strives to accomplish these objectives through extensive
global research, careful selection, and broad diversification. In the
selection of securities for investment, potential for capital appreciation and
future dividends are given more weight than current yield. The fund invests
primarily in common stocks. The fund's investments are limited to securities
included on its eligible list, which consists of securities deemed suitable in
light of the fund's investment objectives and policies. Securities are added
to, or deleted from, the eligible list by the board of directors, reviewing and
acting upon the recommendations of the investment adviser.
The values of equity securities held by the fund may decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations.
The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objectives, but it also would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.
OTHER IMPORTANT INVESTMENT PRACTICES
In addition to the principal investment strategies described above, the fund
has other investment practices that are described here and in the statement of
additional information.
The fund may invest in securities of issuers domiciled outside the U.S. and not
included in the Standard & Poor's 500 Composite Index. Investments outside the
U.S. may be subject to certain risks. For example, the prices of non-U.S.
securities can decline in response to currency fluctuations or political,
social and economic instability.
6
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
ADDITIONAL INVESTMENT RESULTS
For periods ended December 31, 1999:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 16.56% 23.73% 16.02% 13.72%
(with no sales charge deducted)
------------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
------------------------------------------------------------------------------
Lipper Growth and Income Index/4/ 11.86% 20.60% 14.38% N/A
------------------------------------------------------------------------------
Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% N/A
------------------------------------------------------------------------------
</TABLE>
1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.
2 The fund began investment operations for Class A shares on January 1, 1934
(its first full month of investment operations).
3 The fund is beginning investment operations for Class B shares on March 15,
2000.
4 The Lipper Growth and Income Funds Index is an equally weighted performance
index that represents funds that combine a growth-of-earnings orientation and
an income requirement for level and/or rising dividends. The results of the
underlying funds in the index include the reinvestment of dividend and capital
gain distributions but do not reflect sales charges and commissions. This
index was not in existence as of the date the fund began investment operations
in 1934, therefore, lifetime results are not available.
5 The Lipper Large-Cap Value Funds Index is an equally weighted performance
index that represents funds which, by practice, invest at least 75% of their
equity assets in companies with large market capitalizations. Large-cap value
funds seek long-term growth of capital by investing in companies that are
considered to be undervalued relative to a major unmanaged stock index based
on price-to-current earnings or other factors. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
contributions, but do not reflect sales charges and commissions. This index
was not in existence as of the date the fund began investment operations in
1934, therefore, lifetime results are not available.
7
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
The following chart illustrates the asset mix of the fund's investment
portfolio as of the end of the fund's fiscal year, December 31, 1999.
<TABLE>
<CAPTION>
PERCENT OF
LARGEST INVESTMENT CATEGORIES NET ASSETS
----------------------------------------------------------------------------------
<S> <C>
Services 26.25%
----------------------------------------------------------------------------------
Capital Equipment 21.02
----------------------------------------------------------------------------------
Consumer Goods 12.44
----------------------------------------------------------------------------------
LARGEST INDUSTRY HOLDINGS
----------------------------------------------------------------------------------
Data Processing & Reproduction 10.43%
----------------------------------------------------------------------------------
Broadcasting & Publishing 8.64
----------------------------------------------------------------------------------
Diversified Telecommunication Services 7.68
----------------------------------------------------------------------------------
Health & Personal Care 6.53
----------------------------------------------------------------------------------
Energy Sources 5.26
----------------------------------------------------------------------------------
LARGEST INDIVIDUAL HOLDINGS
----------------------------------------------------------------------------------
Viacom 2.94%
----------------------------------------------------------------------------------
Time Warner 2.40
----------------------------------------------------------------------------------
Oracle 2.15
----------------------------------------------------------------------------------
Fannie Mae 2.11
----------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group 2.07
----------------------------------------------------------------------------------
Microsoft 1.87
----------------------------------------------------------------------------------
Cendant 1.81
----------------------------------------------------------------------------------
AT&T 1.78
----------------------------------------------------------------------------------
Sprint FON Group 1.78
----------------------------------------------------------------------------------
Philip Morris 1.61
</TABLE>
Because the fund is actively managed, its holdings will change from time to
time.
8
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
MANAGEMENT AND ORGANIZATION
INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The Investment Company of America are listed on the
following page.
9
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL
AS PORTFOLIO COUNSELOR (INCLUDING THE LAST FIVE YEARS)
PORTFOLIO COUNSELORS (AND RESEARCH PROFESSIONAL, -----------------------------------
FOR IF APPLICABLE) FOR WITH CAPITAL
THE INVESTMENT THE INVESTMENT COMPANY RESEARCH AND
COMPANY OF AMERICA MANAGEMENT
OF AMERICA PRIMARY TITLE(S) (APPROXIMATE) COMPANY
---------------------------------------------------------------------------------- OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
JON B. Chairman of the Board of 42 years (plus 5 years as a 48 years 48 years
LOVELACE, JR. the fund. Chairman research professional prior
Emeritus, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
R. MICHAEL President and Director of 9 years (plus 13 years as a 35 years 35 years
SHANAHAN the fund. Chairman of the research professional prior
Board and Principal to becoming a portfolio
Executive Officer, Capital counselor for the fund)
Research and Management
Company
---------------------------------------------------------------------------------------------------------------------
WILLIAM C. Director of the fund. 38 years 41 years 47 years
NEWTON Senior Partner, The Capital
Group Partners L.P.*
-----------------------------------------------------------------
----------------------------------------------------
GREGG E. Senior Vice President of 8 years (plus 10 years as a 27 years 27 years
IRELAND the fund. Senior Vice research professional prior
President, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES B. Senior Vice President of 8 years (plus 4 years as a 18 years 18 years
LOVELACE the fund. Senior Vice research professional prior
President, Capital Research to becoming a portfolio
and Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
DONALD D. Senior Vice President of 8 years (plus 4 years as a 15 years 15 years
O'NEAL the fund. Vice President, research professional prior
Capital Research and to becoming a portfolio
Management Company counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES E. Senior Vice President, 13 years (plus 9 years as a 23 years 28 years
DRASDO Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
- ---------------------------------------------------------------------------------------------------------------------------------
DINA N. Senior Vice President, 6 years (plus 2 years as a 8 years 22 years
PERRY Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
-----------------------------------
----------------------------------------------------------------------------------
JAMES F. President and Director, 6 years (plus 9 years as a 30 years 30 years
ROTHENBERG Capital Research and research professional prior
Management Company to becoming a portfolio
counselor for the fund)
The fund began its first full month of investment operations on January 1, 1934.
* Company affiliated with Capital Research and Management Company
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
11
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SHAREHOLDER INFORMATION
SHAREHOLDER SERVICES
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
[map of the United States]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.
You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.
12
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
CHOOSING A SHARE CLASS
The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.
Factors you should consider in choosing a class of shares include:
- How long you expect to own the shares
- How much you intend to invest
- The expenses associated with owning shares of each class
- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)
EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.
Differences between Class A and Class B shares include:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced
for purchases of $25,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>
13
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES
PURCHASE
Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
EXCHANGE
You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>
14
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
SHARE PRICE
The fund calculates its share price, also called net asset value, as of
approximately 4:00 p.m. New York time, which is the normal close of trading on
the New York Stock Exchange, every day the Exchange is open. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.
Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.
---------------------------------------------------------
SALES CHARGES
CLASS A
The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced for larger purchases as indicated
below.
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than 5.00% 5.26% 4.25%
$50,000
------------------------------------------------------------------------------
$50,000 but less than 4.50% 4.71% 3.75%
$100,000
------------------------------------------------------------------------------
$100,000 but less than 3.50% 3.63% 2.75%
$250,000
------------------------------------------------------------------------------
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
------------------------------------------------------------------------------
$500,000 but less than 2.00% 2.04% 1.60%
$750,000
------------------------------------------------------------------------------
$750,000 but less than $1
million 1.50% 1.52% 1.20%
------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE
Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined contribution--
15
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
type plans investing $1 million or more, or with 100 or more eligible
employees, and Individual Retirement Account rollovers involving retirement
plan assets invested in the American Funds, may invest with no sales charge and
are not subject to a contingent deferred sales charge. Investments made
through retirement plans, endowments or foundations with $50 million or more in
assets, or through certain qualified fee-based programs may also be made with
no sales charge and are not subject to a contingent deferred sales charge. The
fund may pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.
CLASS B
Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.
<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.
CLASS B CONVERSION TO A SHARES
Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.
16
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."
REDUCING YOUR CLASS A SALES CHARGES
You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.
AGGREGATING ACCOUNTS
To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:
- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.
- solely controlled business accounts.
- single-participant retirement plans.
Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.
CONCURRENT PURCHASES
You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.
RIGHTS OF ACCUMULATION
You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.
STATEMENT OF INTENTION
You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to
17
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.
CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES
The contingent deferred sales charge on Class B shares may be waived in the
following cases:
- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);
- to receive certain distributions, such as required minimum distributions,
from retirement accounts; or
- for redemptions due to death or post-purchase disability of the
shareholder.
For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."
---------------------------------------------------------
PLANS OF DISTRIBUTION
The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.
OTHER COMPENSATION TO DEALERS
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.
18
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
HOW TO SELL SHARES
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
- Shares held for you in your dealer's name must be sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s).
- A signature guarantee is required if the redemption is:
-- Over $50,000;
-- Made payable to someone other than the registered shareholder(s); or
-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:
- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.
- Checks must be made payable to the registered shareholder.
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE
Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.
Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.
19
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund intends to distribute dividends to you, if any, usually in March,
June, September and December. Capital gains, if any, are usually distributed in
December. When a dividend or capital gain is distrib
You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.
TAXES ON DISTRIBUTIONS
Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.
For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.
TAXES ON TRANSACTIONS
Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.
Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.
20
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with the fund's
2000 fiscal year end. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, is included in the statement of additional information,
which is available upon request.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $31.07 $28.25 $24.23 $21.61 $17.67
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .49 .48 .51 .49 .52
Net gains or losses on
securities (both 4.45 5.79 6.61 3.66 4.83
realized and unrealized)
------------------------------------------------------------------------------
Total from investment 4.94 6.27 7.12 4.15 5.35
operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.51) (.51) (.50) (.50) (.50)
Distributions (from (3.04) (2.94) (2.60) (1.03) (.91)
capital gains)
------------------------------------------------------------------------------
Total distributions (3.55) (3.45) (3.10) (1.53) (1.41)
------------------------------------------------------------------------------
Net Asset Value, $32.46 $31.07 $28.25 $24.23 $21.61
End of Year
------------------------------------------------------------------------------
Total return* 16.56% 22.94% 29.81% 19.35% 30.63%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year $56,095 $48,498 $39,718 $30,875 $25,678
(in millions)
------------------------------------------------------------------------------
Ratio of expenses to .55% .55% .56% .59% .60%
average net assets
------------------------------------------------------------------------------
Ratio of net income 1.54% 1.65% 1.90% 2.17% 2.70%
to average net assets
------------------------------------------------------------------------------
Portfolio turnover rate 27.85% 24.28% 26.02% 19.56% 20.37%
* Excludes maximum sales charge.
</TABLE>
21
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
---------------------------------------------------------
NOTES
22
THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
* * * * *
MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.
The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.
If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 333 South Hope
Street, Los Angeles, California 90071.
Investment Company File No. 811-116
Printed on recycled paper
<PAGE>
THE INVESTMENT COMPANY OF AMERICA
Part B
Statement of Additional Information
March 15, 2000
This document is not a prospectus but should be read in conjunction with the
current prospectus of The Investment Company of America (the "fund" or "ICA")
dated March 15, 2000. The prospectus may be obtained from your investment dealer
or financial planner or by writing to the fund at the following address:
The Investment Company of America
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
(213) 486-9200
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page No.
- ---- --------
<S> <C>
Certain Investment Limitations and Guidelines . . . . . . . . . . . 2
Description of Certain Securities and Investment Techniques . . . . 2
Fundamental Policies and Investment Restrictions. . . . . . . . . . 4
Fund Organization and Voting Rights . . . . . . . . . . . . . . . . 6
Fund Directors and Officers . . . . . . . . . . . . . . . . . . . . 7
Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . 16
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 23
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . . 27
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . . 30
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Shareholder Account Services and Privileges . . . . . . . . . . . . 33
Execution of Portfolio Transactions . . . . . . . . . . . . . . . . 36
General Information . . . . . . . . . . . . . . . . . . . . . . . . 37
Class A Share Investment Results and Related Statistics . . . . . . 38
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Financial Statements
</TABLE>
The Investment Company of America - Page 1
<PAGE>
CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
The following limitations and guidelines are considered at the time of purchase,
under normal market conditions, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.
GENERAL GUIDELINE
. The fund may only invest in securities included on its eligible list (does
not apply to securities issued or guaranteed by the U.S. Government).
DEBT SECURITIES
. The fund's investments in straight debt securities must be rated A or above
by Moody's Investors Service, Inc. or Standard & Poor's Corporation or
unrated but determined to be of equivalent quality.
NON-U.S. SECURITIES
. The fund may invest up to 10% of its securities in issuers domiciled
outside the U.S. and not included in the Standard & Poor's 500 Composite
Index.
The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.
DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the prospectus
under "Investment Objectives, Strategies and Risks."
EQUITY SECURITIES - Equity securities represent an ownership position in a
company. These securities may include common stocks and securities with equity
conversion or purchase rights. The prices of equity securities fluctuate based
on changes in the financial condition of their issuers and on market and
economic conditions. The fund's results will be related to the overall markets
for these securities.
DEBT SECURITIES - Bonds and other debt securities are used by issuers to borrow
money. Issuers pay investors interest and generally must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.
SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in
securities that have a combination of equity and debt characteristics such as
non-convertible preferred stocks and convertible securities. These securities
may at times resemble equity more than debt and vice versa. The risks of
convertible preferred stock may be similar to those of equity securities. Some
types of convertible preferred stock automatically convert into common stock.
Non-convertible preferred stock with stated redemption rates are similar to debt
in that they have a stated dividend rate akin to the coupon of a bond or note
even though they are often classified as equity
The Investment Company of America - Page 2
<PAGE>
securities. The prices and yields of non-convertible preferred stock generally
move with changes in interest rates and the issuer's credit quality, similar to
the factors affecting debt securities.
Bonds, convertible preferred stock, and other securities may sometimes be
converted into common stock or other securities at a stated conversion ratio.
These securities prior to conversion pay a fixed rate of interest or a dividend.
Because convertible securities have both debt and equity characteristics, their
value varies in response to many factors, including the value of the underlying
equity, general market and economic conditions, convertible market valuations,
as well as changes in interest rates, credit spreads, and the credit quality of
the issuer.
U.S. GOVERNMENT SECURITIES - Securities guaranteed by the U.S. Government
include direct obligations of the U.S. Treasury (such as Treasury bills, notes
and bonds). For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. Government, and thus they are of the
highest possible credit quality. Such securities are subject to variations in
market value due to fluctuations in interest rates, but, if held to maturity,
will be paid in full.
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Farmers Home Administration, Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Tennessee
Valley Authority, and Federal Farm Credit Bank System.
INVESTING IN VARIOUS COUNTRIES - Investing outside the U.S. involves special
risks, caused by, among other things: currency controls, fluctuating currency
values; different accounting, auditing, and financial reporting regulations and
practices in some countries; changing local and regional economic, political,
and social conditions; expropriation or confiscatory taxation; greater market
volatility; differing securities market structures; and various administrative
difficulties such as delays in clearing and settling portfolio transactions or
in receiving payment of dividends. However, in the opinion of Capital Research
and Management Company, investing outside the U.S. also can reduce certain
portfolio risks due to greater diversification opportunities.
The risks described above are potentially heightened in connection with
investments in developing countries. Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capita
gross national product. For example, political and/or economic structures in
these countries may be in their infancy and developing rapidly. Historically,
the markets of developing countries have been more volatile than the markets of
developed countries. The fund may only invest in securities of issuers in
developing countries to a limited extent.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.
The Investment Company of America - Page 3
<PAGE>
CURRENCY TRANSACTIONS - The fund can purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency. The fund will not generally attempt to protect
against all potential changes in exchange rates. The fund will segregate liquid
assets which will be marked to market daily to meet its forward contract
commitments to the extent required by the Securities and Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. All such securities not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures which may be adopted by the fund's board of directors, taking
into account factors such as the frequency and volume of trading, the commitment
of dealers to make markets and the availability of qualified investors, all of
which can change from time to time. The fund may incur certain additional costs
in disposing of illiquid securities.
CASH AND CASH EQUIVALENTS - These securities include (i) commercial paper (e.g.,
short-term notes up to 9 months in maturity issued by corporations, governmental
bodies or bank/ corporation sponsored conduits (asset backed commercial paper)),
(ii) commercial bank obligations (e.g., certificates of deposit, bankers'
acceptances (time drafts on a commercial bank where the bank accepts an
irrevocable obligation to pay at maturity)), (iii) savings association and
savings bank obligations (e.g., bank notes and certificates of deposit issued by
savings banks or savings associations), (iv) securities of the U.S. Government,
its agencies or instrumentalities that mature, or may be redeemed, in one year
or less, and (v) corporate bonds and notes that mature, or that may be redeemed,
in one year or less.
FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES - The fund has adopted the following fundamental policies
and investment restrictions which may not be changed without approval by holders
of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940 ("1940 Act") as the vote of the lesser of (i) 67%
or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or by proxy, or (ii) more than 50% of the outstanding voting securities.
All percentage limitations are considered at the time securities are purchased
and are based on the fund's net assets unless otherwise indicated. None of the
following investment restrictions involving a maximum percentage of assets will
be considered violated unless the excess occurs immediately after, and is caused
by, an acquisition by the fund.
These restrictions (which do not apply to the purchase of securities issued or
guaranteed by the U.S. Government) provide that the fund shall make no
investment:
The Investment Company of America - Page 4
<PAGE>
Which involves promotion or business management by the fund;
In any security about which reliable information is not available with respect
to the history, management, assets, earnings, and income of the issuer;
If the investment would cause more than 5% of the value of the total assets of
the fund, as they exist at the time of investment, to be invested in the
securities of any one issuer;
If the investment would cause more than 20% of the value of the total assets of
the fund to be invested in the securities in any one industry;
If the investment would cause the fund to own more than 10% of the outstanding
voting securities of any one issuer, provided that this restriction shall apply
as to 75% of the fund's total assets; or
In any security which has not been placed on the fund's Eligible List. (See the
prospectus).
The fund is not permitted to buy securities on margin, sell securities short,
borrow money, or to invest in real estate. (Although it has not been the
practice of the fund to make such investments (and it has no current intention
of doing so at least for the next 12 months), the fund may invest in the
securities of real estate investment trusts.)
The fund has also adopted other fundamental policies which cannot be changed
without shareholder approval. These policies require the fund not to:
Concentrate its investment in any particular industry or group of industries.
Some degree of concentration may occur from time to time (within the 20%
limitation of the Certificate of Incorporation) as certain industries appear to
present desirable fields for investment.
Engage generally in the making of loans. Although the fund has reserved the
right to make loans to unaffiliated persons subject to certain restrictions,
including requirements concerning collateral and amount of any loan, no loans
have been made since adoption of this fundamental policy more than 50 years ago.
Act as underwriter of securities issued by others, engage in distribution of
securities for others, engage in the purchase and sale of commodities or
commodity contracts, borrow money, invest in real estate, or make investments in
other companies for the purpose of exercising control or management.
Pledge, encumber or assign all or any part of its property and assets as
security for a debt.
Invest in the securities of other investment companies.
Notwithstanding the restriction on investing in the securities of other
investment companies, the fund may invest in securities of other investment
companies if deemed advisable by its officers in connection with the
administration of a deferred compensation plan adopted by Directors pursuant to
an exemptive order granted by the Securities and Exchange Commission.
NON-FUNDAMENTAL POLICIES - The following non-fundamental policy(ies) may be
changed without shareholder approval:
The Investment Company of America - Page 5
<PAGE>
Purchase and sell securities for short-term profits; however, securities will be
sold without regard to the time that they have been held whenever investment
judgement makes such action seem advisable.
Purchase or retain the securities of any issuer if those officers and directors
of the fund or the Investment Adviser who own beneficially more than one half of
1% of such issuer together own more than 5% of the securities of such issuer.
Invest in securities of companies which, with their predecessors, have a record
of less than three years' continuous operations.
Invest in puts, calls, straddles, spreads or any combination thereof.
Purchase partnership interests in oil, gas or mineral exploration, drilling or
mining ventures.
Invest in excess of 10% of the market value of its total assets in securities
which may require registration under the Securities Act of 1933 prior to sale by
the fund (restricted securities), or other securities that are not readily
marketable.
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation on August 28, 1933.
All fund operations are supervised by the fund's Board of Directors which meets
periodically and performs duties required by applicable state and federal laws.
Members of the board who are not employed by Capital Research and Management
Company or its affiliates are paid certain fees for services rendered to the
fund as described in "Directors and Director Compensation" below. They may elect
to defer all or a portion of these fees through a deferred compensation plan in
effect for the fund.
The fund has two classes of shares - Class A and Class B. The shares of each
class represent an interest in the same investment portfolio. Each class has
equal rights as to voting, redemption, dividends and liquidation, except that
each class bears different distribution expenses and may bear different transfer
agent fees and other expenses properly attributable to the particular class as
approved by the Board of Directors. Class A and Class B shareholders have
exclusive voting rights with respect to the rule 12b-1 Plans adopted in
connection with the distribution of shares and on other matters in which the
interests of one class are different from interests in another class. Shares of
all classes of the fund vote together on matters that affect all classes in
substantially the same manner. Each class votes as a class on matters that
affect that class alone.
The fund does not hold annual meetings of shareholders. However, significant
matters which require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.
The Investment Company of America - Page 6
<PAGE>
FUND DIRECTORS AND OFFICERS
Directors and Director Compensation
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/)
FROM THE FUND
POSITION DURING FISCAL YEAR
WITH PRINCIPAL OCCUPATION(S) DURING ENDED
NAME, ADDRESS AND AGE REGISTRANT PAST 5 YEARS DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles H. Black Director Private investor and consultant; $ 65,500
525 Alma Real Drive former Executive Vice President and
Pacific Palisades, CA Director, KaiserSteel Corporation
90272
Age: 73
- -----------------------------------------------------------------------------------------------------------------
Ann S. Bowers Director Senior Trustee, The Noyce Foundation $ 65,500
The Noyce Foundation
450 Sheridan Avenue
Palo Alto, CA 94306
Age: 62
- -----------------------------------------------------------------------------------------------------------------
Louise H. Bryson Director Director and former Chairman of the $51,000/3/
17877 Von Karman Ave. Board, KCET - Los Angeles Public
Suite 500 Television Station; former Senior Vice
Irvine, CA 92615 President, fx Networks, Inc: Fox Inc.
Age: 55
- -----------------------------------------------------------------------------------------------------------------
Malcolm R. Currie Director Chairman Emeritus, Hughes Aircraft $51,000/3/
28780 Wagon Road Company
Agoura, CA 91301
Age: 73
- -----------------------------------------------------------------------------------------------------------------
+ Jon B. Lovelace, Jr. Chairman of Chairman Emeritus, Capital Research None/4/
333 South Hope Street the Board and Management Company
Los Angeles, CA 90071
Age: 73
- -----------------------------------------------------------------------------------------------------------------
John G. McDonald Director The IBJ Professor of Finance, Graduate $69,500/3/
Graduate School of School of Business, Stanford
Business University
Stanford University
Stanford, CA 94305
Age: 62
- -----------------------------------------------------------------------------------------------------------------
Bailey Morris-Eck Director Senior Associate, Reuters Foundation; $ 53,000
1333 H Street, NW Senior Fellow, Institute for
Washington, D.C. 20005 International Economics; former Vice
Age: 55 President, Brookings Institution;
Consultant, The Independent of London
------------------------
- -----------------------------------------------------------------------------------------
Richard G. Newman Director Chairman, President and CEO, AECOM $53,000/3/
3250 Wilshire Blvd. Technology Corporation (architectural
Los Angeles, CA 90010 engineering)
Age: 65
- -----------------------------------------------------------------------------------------------------------------
+ William C. Newton Director Senior Partner, The Capital Group None/4/
333 South Hope Street Partners L.P.*
Los Angeles, CA 90071
Age: 69
- -----------------------------------------------------------------------------------------------------------------
+ James W. Ratzlaff Vice Chairman Senior Partner, The Capital Group None/4/
P.O. Box 7650 of the Board Partners L.P.
San Francisco, CA 94120 and Director
Age: 63
- -----------------------------------------------------------------------------------------------------------------
Olin C. Robison Director President of the Salzburg Seminar; $57,000/3/
The Marble Works President Emeritus, Middlebury College
2 Maple Street
Middlebury, VT 05753
Age: 63
- -----------------------------------------------------------------------------------------------------------------
+ R. Michael Shanahan President and Chairman of the Board and Principal None/4/
333 South Hope Street Director Executive Officer, Capital Research
Los Angeles, CA 90071 and Management Company
Age: 61
- -----------------------------------------------------------------------------------------------------------------
William J. Spencer Director Chairman and Chief Executive Officer, $65,500/3/
2706 Montopolis Drive SEMATECH (research and development
Austin, TX 78741 consortium)
Age: 69
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
COMPENSATION/1/) FROM TOTAL NUMBER
ALL FUNDS MANAGED BY OF FUND
CAPITAL RESEARCH AND BOARDS
MANAGEMENT COMPANY ON WHICH
OR ITS AFFILIATES/2/ FOR THE DIRECTOR
NAME, ADDRESS AND AGE YEAR ENDED DECEMBER 31, 1999 SERVES/2/
- --------------------------------------------------------------------------
<S> <C> <C>
Charles H. Black $ 95,333 1
525 Alma Real Drive
Pacific Palisades, CA
90272
Age: 73
- --------------------------------------------------------------------------
Ann S. Bowers $ 65,500 1
The Noyce Foundation
450 Sheridan Avenue
Palo Alto, CA 94306
Age: 62
- --------------------------------------------------------------------------
Louise H. Bryson $51,000/3/ 1
17877 Von Karman Ave.
Suite 500
Irvine, CA 92615
Age: 55
- --------------------------------------------------------------------------
Malcolm R. Currie $51,000/3/ 1
28780 Wagon Road
Agoura, CA 91301 --------------
Age: 73
- ------------------------------------------------------------
+ Jon B. Lovelace, Jr. None/4/ 3
333 South Hope Street
Los Angeles, CA 90071
Age: 73
- --------------------------------------------------------------------------
John G. McDonald $229,500/3/ 8
Graduate School of
Business
Stanford University
Stanford, CA 94305
Age: 62
- --------------------------------------------------------------------------
Bailey Morris-Eck $ 64,000 3
1333 H Street, NW
Washington, D.C. 20005
Age: 55
- --------------------------------------------------------------------------
Richard G. Newman $99,800/3/ 13
3250 Wilshire Blvd.
Los Angeles, CA 90010
Age: 65
- --------------------------------------------------------------------------
+ William C. Newton None/4/ 1
333 South Hope Street
Los Angeles, CA 90071
Age: 69
- --------------------------------------------------------------------------
+ James W. Ratzlaff None/4/ 7
P.O. Box 7650
San Francisco, CA 94120
Age: 63
- --------------------------------------------------------------------------
Olin C. Robison $96,000/3/ 3
The Marble Works
2 Maple Street
Middlebury, VT 05753
Age: 63
- --------------------------------------------------------------------------
+ R. Michael Shanahan None/4/ 2
333 South Hope Street
Los Angeles, CA 90071
Age: 61
- --------------------------------------------------------------------------
William J. Spencer $65,500/3/ 1
2706 Montopolis Drive
Austin, TX 78741 --------------
Age: 69
- ------------------------------------------------------------
</TABLE>
The Investment Company of America - Page 7
<PAGE>
The Investment Company of America - Page 8
<PAGE>
+ "Interested persons" within the meaning of the 1940 Act on the basis of their
affiliation with the fund's Investment Adviser, Capital Research and
Management Company, or the parent company of the Investment Adviser, The
Capital Group Companies, Inc.
1 Amounts may be deferred by eligible Directors under a non-qualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Directors.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia,
The Investment Company of America - Page 9
<PAGE>
The Tax-Exempt Money Fund of America, The U. S. Treasury Money Fund of
America, U.S. Government Securities Fund and Washington Mutual Investors Fund,
Inc. Capital Research and Management Company also manages American Variable
Insurance Series and Anchor Pathway Fund, which serve as the underlying
investment vehicle for certain variable insurance contracts; and Endowments,
whose shareholders are limited to (i) any entity exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended ("501(c)(3)
organization"); (ii) any trust, the present or future beneficiary of
which is a 501(c)(3) organization, and (iii) any other entity formed for the
primary purpose of benefiting a 501(c)(3) organization. An affiliate of
Capital Research and Management Company, Capital International, Inc., manages
Emerging Markets Growth Fund, Inc.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) during the 1999
fiscal year for participating Directors is as follows: Louise H. Bryson
($7,817), Malcolm R. Currie ($264,411), John G. McDonald ($490,066), Richard
G. Newman ($232,544), Olin C. Robison ($46,357) and William J. Spencer
($231,504). Amounts deferred and accumulated earnings thereon are not funded
and are general unsecured liabilities of the fund until paid to the Directors.
4 Jon B. Lovelace, Jr., William C. Newton, James W. Ratzlaff, and R. Michael
Shanahan are affiliated with the Investment Adviser and, accordingly, receive
no compensation from the fund.
The Investment Company of America - Page 10
<PAGE>
OFFICERS
<TABLE>
<CAPTION>
POSITION(S) PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AGE WITH REGISTRANT PAST 5 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Gregg E. Ireland 50 Senior Vice Senior Vice President, Capital
3000 K Street, N.W. President Research and Management Company
Washington, DC 20007
- -------------------------------------------------------------------------------
James B. Lovelace 43 Senior Vice Senior Vice President, Capital
333 South Hope Street President Research and Management Company
Los Angeles, CA 90071
- -------------------------------------------------------------------------------
Donald D. O'Neal 39 Senior Vice Vice President, Capital Research
P.O. Box 7650 President and Management Company
San Francisco, CA
94120
- -------------------------------------------------------------------------------
Joyce E. Gordon 43 Vice President Senior Vice President and
333 South Hope Street Director,
Los Angeles, CA 90071 Capital Research Company*
- -------------------------------------------------------------------------------
Anne M. Llewellyn 52 Vice President Associate, Capital Research and
333 South Hope Street Management Company
Los Angeles, CA 90071
- -------------------------------------------------------------------------------
Patricia L. Pinney 43 Vice President Vice President, Capital Research
333 South Hope Street Company*
Los Angeles, CA 90071
- -------------------------------------------------------------------------------
Vincent P. Corti 43 Secretary Vice President - Fund Business
333 South Hope Street Management Group, Capital
Los Angeles, CA 90071 Research and Management Company
- -------------------------------------------------------------------------------
Thomas M. Rowland 58 Treasurer Senior Vice President - Fund
135 South State Business Management Group,
College Blvd. Capital Research and Management
Brea, CA 92821 Company
- -------------------------------------------------------------------------------
R. Marcia Gould 45 Assistant Vice President - Fund Business
135 South State Treasurer Management Group, Capital
College Blvd. Research and Management Company
Brea, CA 92821
- -------------------------------------------------------------------------------
Anthony W. Hynes, Jr. 37 Assistant Vice President - Fund Business
135 South State Treasurer Management Group, Capital
College Blvd. Research and Management Company
Brea, CA 92821
- -------------------------------------------------------------------------------
</TABLE>
* Company affiliated with Capital Research and Management Company.
All of the officers listed are officers, and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company serves
as Investment Adviser.
No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or affiliated companies.
The fund pays annual fees of $40,000 to Directors who are not affiliated with
the Investment Adviser, plus $2,000 for each Board of Directors meeting
attended, plus $1,000 for each meeting attended as a member of a
The Investment Company of America - Page 11
<PAGE>
committee of the Board of Directors. In addition, members of the Proxy Committee
receive an annual retainer fee of $12,500.
No pension or retirement benefits are accrued as part of fund expenses. The
Directors may elect, on a voluntary basis, to defer all or a portion of their
fees through a deferred compensation plan in effect for the fund. The fund also
reimburses certain expenses of the Directors who are not affiliated with the
Investment Adviser. As of February 15, 2000 the officers and Directors of the
fund and their families, as a group, owned beneficially or of record less than
1% of the outstanding shares of the fund.
The Investment Company of America - Page 12
<PAGE>
ADVISORY BOARD MEMBERS
ADVISORY BOARD MEMBER COMPENSATION
The Board of Directors has established an Advisory Board whose members are, in
the judgment of the Directors, highly knowledgeable about world political and
economic matters. In addition to holding meetings with the Board of Directors,
members of the Advisory Board, while not participating in specific investment
decisions, consult from time to time with the Investment Adviser, primarily with
respect to world trade and business conditions. Members of the Advisory Board,
however, possess no authority or responsibility with respect to the fund's
investments or management. The fund pays fees of $5,000 per annum to Advisory
Board members who are not affiliated with the Investment Adviser, plus $1,500
for each meeting attended in conjunction with meetings with the Board of
Directors. The members of the Advisory Board and their current or former
principal occupations are as follows:
<TABLE>
<CAPTION>
TOTAL COMPENSATION
(INCLUDING VOLUNTARILY
DEFERRED
AGGREGATE COMPENSATION/1/)
COMPENSATION FROM ALL FUNDS
(INCLUDING MANAGED BY CAPITAL
VOLUNTARILY RESEARCH AND
DEFERRED MANAGEMENTCOMPANY TOTAL NUMBER
COMPENSATION/1/) OR ITS AFFILIATES/2/ OF FUND BOARDS
POSITION PRINCIPAL FROM THE FUND FOR THE FISCAL ON WHICH
WITH OCCUPATION(S) DURING FISCAL YEAR YEAR ENDED ADVISORY BOARD
NAME, ADDRESS AND AGE REGISTRANT DURING PAST 5 YEARS ENDED DECEMBER 31, 1999 DECEMBER 31, 1999 MEMBER SERVES/2/
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Thomas M. Crosby, Advisory Partner, Faegre & $ 8,250 $ 8,250 1
Jr. Board Benson (law firm)
2200 Norwest Center Member
90 South Seventh
Street
Minneapolis, MN
55402
Age: 61
- -----------------------------------------------------------------------------------------------------------------------------------
Ellen H. Goldberg Advisory President, Santa Fe $ 8,250 $ 8,250 1
1399 Hyde Park Road Board Institute; Research
Santa Fe, NM 87501 Member Professor, University
Age: 54 of New Mexico
- -----------------------------------------------------------------------------------------------------------------------------------
Allan E. Gotlieb Advisory Former Canadian $ 4,750 $ 4,750 1
P.O. Box 85 Board Ambassador to the
Toronto, Ontario M5L Member United States
1B9
Canada
Age: 72
- -----------------------------------------------------------------------------------------------------------------------------------
William H. Kling Advisory President, Minnesota $8,250/3/ $105,750/3/ 6
45 East Seventh Board Public Radio;
Street Member President,
St. Paul, MN 55101 Greenspring Co.;
Age: 57 former President,
American Public Radio
(now Public Radio
International)
- -----------------------------------------------------------------------------------------------------------------------------------
Robert J. O'Neill Advisory Chichele Professor of $ 8,250 $ 51,250 3
Witney, OXON Board the History of War
United Kingdom Member and Fellow of All
Age: 63 Souls College
- -----------------------------------------------------------------------------------------------------------------------------------
Norman R. Weldon Advisory Managing Director, $ 8,250 $ 43,250 3
15600 N.W. 67th Board Partisan Management
Avenue Member Group; former
Miami Lakes, FL Chairman of the
33014 Board, Novoste
Age: 65 Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Investment Company of America - Page 13
<PAGE>
The Investment Company of America - Page 14
<PAGE>
1 Amounts may be deferred by eligible advisory board members under a
non-qualified deferred compensation plan adopted by the fund in 1993. Deferred
amounts accumulate at an earnings rate determined by the total return of one
or more funds in The American Funds Group as designed by the Advisory Board
member.
2 Capital Research and Management Company manages The American Funds Group
consisting of 29 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash
Management Trust of America, Capital Income Builder, Inc., Capital World
Growth and Income Fund, Inc., Capital World Bond Fund, Inc., EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc.,
The Income Fund of America, Inc., Intermediate Bond Fund of America, The
Investment Company of America, Limited Term Tax-Exempt Bond Fund of America,
The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc.,
SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The
Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland, The Tax-Exempt
Fund of Virginia, The Tax-Exempt Money Fund of America, The U. S. Treasury
Money Fund of America, U.S. Government Securities Fund and Washington Mutual
Investors Fund, Inc. Capital Research and Management Company also manages
American Variable Insurance Series and Anchor Pathway Fund, which serve as the
underlying investment vehicle for certain variable insurance contracts; and
Endowments, whose shareholders are limited to (i) any entity exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended ("501(c)(3) organization"); (ii) any trust, the present or future
beneficiary of which is a 501(c)(3) organization, and (iii) any other entity
formed for the primary purpose of benefiting a 501(c)(3) organization. An
affiliate of Capital Research and Management Company, Capital International,
Inc., manages Emerging Markets Growth Fund, Inc.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) as of the fiscal year
ended December 31, 1999 for participating Advisory Board members is as
follows: William H. Kling ($46,742). Amounts deferred and accumulated earnings
thereon are not funded and are general unsecured liabilities of the fund until
paid to the Advisory Board member.
The Investment Company of America - Page 15
<PAGE>
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains research
facilities in the U.S. and abroad (Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Hong Kong, Singapore and Tokyo), with a staff
of professionals, many of whom have a number of years of investment experience.
The Investment Adviser is located at 333 South Hope Street, Los Angeles, CA
90071, and at 135 South State College Boulevard, Brea, CA 92821. The Investment
Adviser's research professionals travel several million miles a year, making
more than 5,000 research visits in more than 50 countries around the world. The
Investment Adviser believes that it is able to attract and retain quality
personnel. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
The Investment Adviser is responsible for managing more than $300 billion of
stocks, bonds and money market instruments and serves over 11 million
shareholder accounts of all types throughout the world. These investors include
privately owned businesses and large corporations as well as schools, colleges,
foundations and other non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the Investment Adviser will
continue in effect until April 30, 2001, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (i) the Board of Directors, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (ii) the vote of a majority of Directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the Investment Adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space, necessary small office equipment
and utilities, general purpose accounting forms, supplies, and postage used at
the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer and
dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of the
fund (including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's Plans of Distribution (described
below); legal and auditing expenses; compensation, fees, and expenses paid to
directors and members of the advisory board unaffiliated with the Investment
Adviser; association dues; costs of stationery and forms prepared exclusively
for the fund; and costs of assembling and storing shareholder account data.
The Investment Company of America - Page 16
<PAGE>
As compensation for its services, the Investment Adviser receives a monthly fee
which is based on prior month-end net assets, calculated at the annual rate of
0.39% on the first $1.0 billion of net assets, plus 0.336% on net assets over
$1.0 billion to $2.0 billion, plus 0.30% on net assets over $2.0 billion to $3.0
billion, plus 0.276% on net assets over $3.0 billion to $5.0 billion, plus
0.258% on net assets over $5.0 billion to $8.0 billion, plus 0.246% on net
assets over $8.0 billion to $13.0 billion, plus 0.24% on net assets over $13.0
billion to $21.0 billion, plus 0.235% on net assets over $21.0 billion to $34.0
billion, plus 0.231% on net assets in excess of $34.0 billion.
The Agreement provides for a management fee reduction to the extent that the
annual ordinary operating expenses of the fund's Class A shares exceed 1-1/2% of
the first $30 million of the net assets of the fund and 1% of the average net
assets in excess thereof. Expenses which are not subject to these limitations
are interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies are accounted for as capital items and not as
expenses. To the extent the fund's management fee must be waived due to Class A
share expense ratios exceeding this limit, management fees will be reduced
similarly for all classes of shares of the fund or other Class A fees will be
waived in lieu of management fees.
For the fiscal years ended December 31, 1999, 1998, and 1997, the Investment
Adviser received advisory fees of $127,846,000, $108,430,000, and $90,386,000,
respectively.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The Principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513. The fund has adopted Plans of
Distribution (the Plans), pursuant to rule 12b-1 under the 1940 Act. The
Principal Underwriter receives amounts payable pursuant to the Plans (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of Class A shares during the 1999 fiscal year
amounted to $23,548,000 after allowance of $118,979,000 to dealers.
During the fiscal years ended 1998 and 1997 the Principal Underwriter retained
$18,078,000 and $16,839,000, respectively on sales of Class A shares after an
allowance of $93,515,000 and $88,584,000 to dealers, respectively.
As required by rule 12b-1 and the 1940 Act, the Plans (together with the
Principal Underwriting Agreement) have been approved by the full Board of
Directors and separately by a majority of the directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plans or the Principal Underwriting Agreement. The officers
and directors who are "interested persons" of the fund may be considered to have
a direct or indirect financial interest in the operation of the Plans due to
present or past affiliations with the Investment Adviser and related companies.
Potential benefits of the Plans to the fund include shareholder services,
savings to the fund in transfer agency costs, savings to the fund in advisory
fees and other expenses, benefits to the investment process from growth or
stability of assets and maintenance of a financially healthy management
organization. The selection and nomination of directors who are not "interested
persons" of the fund are committed to the discretion of the directors who are
not "interested persons" during the existence of the Plans.
The Investment Company of America - Page 17
<PAGE>
Plan expenses are reviewed quarterly and the Plans must be renewed annually by
the Board of Directors.
Under the Plans the fund may expend up to 0.25% of its net assets annually for
Class A shares and up to 1.00% of its net assets annually for Class B shares to
finance any activity which is primarily intended to result in the sale of fund
shares, provided the fund's Board of Directors has approved the category of
expenses for which payment is being made.
For Class A shares these include up to 0.25% in service fees for qualified
dealers and dealer commissions and wholesaler compensation on sales of shares
exceeding $1 million purchased without a sales charge (including purchases by
employer-sponsored defined contribution-type retirement plans investing $1
million or more or with 100 or more eligible employees, rollover IRA accounts as
described in "Individual Retirement Account (IRA) Rollovers" below, and
retirement plans, endowments or foundations with $50 million or more in assets).
For Class B shares these include 0.25% in service fees for qualified dealers and
0.75% in payments to the Principal Underwriter for financing commissions paid to
qualified dealers selling Class B shares.
Commissions on sales of Class A shares exceeding $1 million (including purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Class A Plan
limitation not reimbursed during the most recent fiscal quarter are recoverable
for five quarters, provided that such commissions do not exceed the annual
expense limit. After five quarters, these commissions are not recoverable.
During the 1999 fiscal year, the fund paid or accrued $118,280,000 for
compensation to dealers or the Principal Underwriter under the Plan for Class A
shares. As of December 31, 1999, accrued and unpaid distribution expenses were
$8,873,000.
OTHER COMPENSATION TO DEALERS - The Principal Underwriter, at its expense (from
a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group. These payments will be based principally on a pro rata share of a
qualifying dealer's sales. The Principal Underwriter will, on an annual basis,
determine the advisability of continuing these payments.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS - The fund intends to follow the practice of distributing
substantially all of its investment company taxable income which includes any
excess of net realized short-term gains over net realized long-term capital
losses. Additional distributions may be made, if necessary. The fund also
intends to follow the practice of distributing the entire excess of net realized
long-term capital gains over net realized short-term capital losses. However,
the fund may retain all or part of such gain for reinvestment, after paying the
related federal taxes for which shareholders may then be able to claim a credit
against their federal tax liability. If the fund does not distribute the amount
of capital gain and/or net investment income required to be distributed by an
excise tax provision of the Code, the fund may be subject to that excise tax. In
certain circumstances, the fund may determine that it is in the interest of
shareholders to distribute less than the required amount. In this case, the fund
will pay any income or excise taxes due.
The Investment Company of America - Page 18
<PAGE>
Dividends will be reinvested in shares of the fund unless shareholders indicate
in writing that they wish to receive them in cash or in shares of other American
Funds, as provided in the prospectus.
TAXES - The fund has elected to be treated as a regulated investment company
under Subchapter M of the Code. A regulated investment company qualifying under
Subchapter M of the Code is required to distribute to its shareholders at least
90% of its investment company taxable income (including the excess of net
short-term capital gain over net long-term capital losses) and generally is not
subject to federal income tax to the extent that it distributes annually 100% of
its investment company taxable income and net realized capital gains in the
manner required under the Code. The fund intends to distribute annually all of
its investment company taxable income and net realized capital gains and
therefore does not expect to pay federal income tax, although in certain
circumstances the fund may determine that it is in the interest of shareholders
to distribute less than that amount.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (ii) any amount on which the fund pays income tax during the periods
described above. The fund intends to distribute net investment income and net
capital gains so as to minimize or avoid the excise tax liability.
Investment company taxable income generally includes dividends, interest, net
short-term capital gains in excess of net long-term capital losses, and certain
foreign currency gains, if any, less expenses and certain foreign currency
losses, if any. Net capital gains for a fiscal year are computed by taking into
account any capital loss carry-forward of the fund.
If any net long-term capital gains in excess of net short-term capital losses
are retained by the fund for reinvestment, requiring federal income taxes to be
paid thereon by the fund, the fund intends to elect to treat such capital gains
as having been distributed to shareholders. As a result, each shareholder will
report such capital gains as long-term capital gains taxable to individual
shareholders at a maximum 20% capital gains rate, will be able to claim a pro
rata share of federal income taxes paid by the fund on such gains as a credit
against personal federal income tax liability, and will be entitled to increase
the adjusted tax basis on fund shares by the difference between a pro rata share
of the retained gains and their related tax credit.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income.
Distributions of the excess of net long-term capital gains over net short-term
capital losses which the fund properly designates as "capital gain dividends"
generally will be taxable to individual shareholders at a maximum 20% capital
gains rate, regardless of the length of time the shares of the fund have been
held by such shareholders. Such distributions are not eligible for the
The Investment Company of America - Page 19
<PAGE>
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less from the date of their
purchase will be treated as a long-term capital loss to the extent of any
amounts treated as distributions of long-term capital gain during such six-month
period.
Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable as described above, whether
received in shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share on
the reinvestment date.
All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder subject to tax on his or her federal income tax return. Dividends
and capital gains distributions declared in October, November or December and
payable to shareholders of record in such a month will be deemed to have been
received by shareholders on December 31 if paid during January of the following
year. Redemptions of shares, including exchanges for shares of another American
Fund, may result in tax consequences (gain or loss) to the shareholder and must
also be reported on the shareholder's federal income tax return.
Dividends from domestic corporations are expected to comprise some portion of
the fund's gross income. To the extent that such dividends constitute any of the
fund's gross income, a portion of the income distributions of the fund will be
eligible for the deduction for dividends received by corporations. Shareholders
will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent that either the fund
shares, or the underlying shares of stock held by the fund, with respect to
which dividends are received, are treated as debt-financed under federal income
tax law and is eliminated if the shares are deemed to have been held by the
shareholder or the fund, as the case may be, for less than 46 days.
Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of investment
capital. For this reason, investors should consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will then receive a partial return of investment
capital upon the distribution, which will nevertheless be taxable to them.
A portion of the difference between the issue price of zero coupon securities
and their face value ("original issue discount") is considered to be income to
the fund each year, even though the fund will not receive cash interest payments
from these securities. This original issue discount (imputed income) will
comprise a part of the investment company taxable income of the fund which must
be distributed to shareholders in order to maintain the qualification of the
fund as a regulated investment company and to avoid federal income tax at the
level of the fund. Shareholders will be subject to income tax on such original
issue discount, whether or not they elect to receive their distributions in
cash.
The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund
The Investment Company of America - Page 20
<PAGE>
shares, except in the case of certain exempt shareholders. Under the backup
withholding provisions of Section 3406 of the Code, distributions of investment
company taxable income and capital gains and proceeds from the redemption or
exchange of the shares of a regulated investment company may be subject to
withholding of federal income tax at the rate of 31% in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
Shareholders of the fund may be subject to state and local taxes on
distributions received from the fund and on redemptions of the fund's shares.
Each distribution is accompanied by a brief explanation of the form and
character of the distribution. In January of each year fund shareholders will
receive a statement of the federal income tax status of all distributions.
Dividend and interest income received by the fund from sources outside the U.S.
may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however. Most foreign countries do not impose
taxes on capital gains in respect of investments by foreign investors.
The fund may make the election permitted under Section 853 of the Code so that
shareholders may (subject to limitations) be able to claim a credit or deduction
on their federal income tax returns for, and will be required to treat as part
of the amounts distributed to them, their pro rata portion of qualified taxes
paid by the Fund to foreign countries (which taxes relate primarily to
investment income). The fund may make an election under Section 853 of the Code,
provided that more than 50% of the value of the total assets of the fund at the
close of the taxable year consists of securities in foreign corporations. The
foreign tax credit available to shareholders is subject to certain limitations
imposed by the Code.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the fund accrues receivables or liabilities
denominated in a foreign currency and the time the fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain futures contracts, forward
contracts and options, gains or losses attributable to fluctuations in the value
of foreign currency between the date of acquisition of the security or contract
and the date of disposition are also treated as ordinary gain or loss. These
gains or losses, referred to under the Code as "Section 988" gains or losses,
may increase or decrease the amount of the fund's investment company taxable
income to be distributed to its shareholders as ordinary income.
If the fund invests in stock of certain passive foreign investment companies,
the fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the fund, other than the taxable
year of the excess
The Investment Company of America - Page 21
<PAGE>
distribution or disposition, would be taxed to the fund at the highest ordinary
income rate in effect for such year, and the tax would be further increased by
an interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the fund's investment company taxable income
and, accordingly, would not be taxable to the fund to the extent distributed by
the fund as a dividend to its shareholders.
To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any gains
for tax purposes at that time. Under this election, deductions for losses are
allowable only to the extent of any prior recognized gains, and both gains and
losses will be treated as ordinary income or loss. The fund will be required to
distribute any resulting income, even though it has not sold the security and
received cash to pay such distributions.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on dividend income received by him or her.
Shareholders should consult their tax advisers about the application of the
provisions of tax law described in this statement of additional information in
light of their particular tax situations.
The Investment Company of America - Page 22
<PAGE>
PURCHASE OF SHARES
<TABLE>
<CAPTION>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- -------------------------------------------------------------------------------
<S> <C> <C>
See "Purchase $50 minimum (except where a
Minimums" for initial lower minimum is noted under
investment minimums. "Purchase Minimums").
- -------------------------------------------------------------------------------
By contacting Visit any investment Mail directly to your
your investment dealer dealer who is investment dealer's address
registered in the printed on your account
state where the statement.
purchase is made and
who has a sales
agreement with
American Funds
Distributors.
- -------------------------------------------------------------------------------
By mail Make your check Fill out the account additions
payable to the fund form at the bottom of a recent
and mail to the account statement, make your
address indicated on check payable to the fund,
the account write your account number on
application. Please your check, and mail the check
indicate an investment and form in the envelope
dealer on the account provided with your account
application. statement.
- -------------------------------------------------------------------------------
By telephone Please contact your Complete the "Investments by
investment dealer to Phone" section on the account
open account, then application or American
follow the procedures FundsLink Authorization Form.
for additional Once you establish the
investments. privilege, you, your financial
advisor or any person with your
account information can call
American FundsLine(R) and make
investments by telephone
(subject to conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By computer Please contact your Complete the American FundsLink
investment dealer to Authorization Form. Once you
open account, then established the privilege, you,
follow the procedures your financial advisor or any
for additional person with your account
investments. information may access American
FundsLine OnLine(R) on the
Internet and make investments
by computer (subject to
conditions noted in
"Shareholder Account Services
and Privileges - Telephone and
Computer Purchases, Redemptions
and Exchanges" below).
- -------------------------------------------------------------------------------
By wire Call 800/421-0180 to Your bank should wire your
obtain your account additional investments in the
number(s), if same manner as described under
necessary. Please "Initial Investment."
indicate an investment
dealer on the account.
Instruct your bank to
wire funds to:
Wells Fargo Bank
155 Fifth Street,
Sixth Floor
San Francisco, CA
94106
(ABA#121000248)
For credit to the
account of:
American Funds Service
Company a/c#
4600-076178
(fund name)
(your fund acct. no.)
- -------------------------------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY
PURCHASE ORDER.
- -------------------------------------------------------------------------------
</TABLE>
PURCHASE MINIMUMS - The minimum initial investment for all funds in The American
Funds Group, except the money market funds and the state tax-exempt funds, is
$250. The minimum initial investment for the money market funds (The Cash
Management Trust of America, The Tax--
The Investment Company of America - Page 23
<PAGE>
Exempt Money Fund of America, and The U.S. Treasury Money Fund of America) and
the state tax-exempt funds (The Tax-Exempt Fund of California, The Tax-Exempt
Fund of Maryland, and The Tax-Exempt Fund of Virginia) is $1,000. Purchase
minimums are reduced to $50 for purchases through "Automatic Investment Plans"
(except for the money market funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived for shareholders of
other funds in The American Funds Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS
RETIREMENT PLAN INVESTMENTS. The minimum is $50 for additional investments
(except as noted above).
PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. For investments above $100,000 Class
A shares are generally a less expensive option over time due to sales charge
reductions or waivers.
FUND NUMBERS - Here are the fund numbers for use with our automated phone line,
American FundsLine/(R)/ (see description below):
<TABLE>
<CAPTION>
FUND FUND
NUMBER NUMBER
FUND CLASS A CLASS B
---- ------- -------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . 02 202
American Balanced Fund/(R)/ . . . . . . . . . . . . . . 11 211
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . 03 203
Capital Income Builder/(R)/ . . . . . . . . . . . . . . 12 212
Capital World Growth and Income Fund/SM/ . . . . . . . 33 233
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . 16 216
Fundamental Investors/SM/ . . . . . . . . . . . . . . . 10 210
The Growth Fund of America/(R)/ . . . . . . . . . . . . 05 205
The Income Fund of America/(R)/ . . . . . . . . . . . . 06 206
The Investment Company of America/(R)/ . . . . . . . . 04 204
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . 14 214
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . 07 207
New World Fund/SM/ . . . . . . . . . . . . . . . . . . 36 236
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . 35 235
Washington Mutual Investors Fund/SM/ . . . . . . . . . 01 201
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . 40 240
American High-Income Trust/SM/ . . . . . . . . . . . . 21 221
The Bond Fund of America/SM/ . . . . . . . . . . . . . 08 208
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . 31 231
Intermediate Bond Fund of America/SM/ . . . . . . . . . 23 223
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . 43 243
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . 19 219
The Tax-Exempt Fund of California/(R)/* . . . . . . . . 20 220
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . 24 224
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . 25 225
U.S. Government Securities Fund/SM/ . . . . . . . . . . 22 222
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . 09 209
The Tax-Exempt Money Fund of America/SM/ . . . . . . . 39 N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . 49 N/A
___________
*Available only in certain states.
</TABLE>
The Investment Company of America - Page 24
<PAGE>
SALES CHARGES
CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares
of stock, stock/bond, and bond funds of The American Funds Group are set forth
below. The money market funds of The American Funds Group are offered at net
asset value. (See "Fund Numbers" for a listing of the funds.)
<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE
AT THE OFFERING PRICE NET AMOUNT OFFERING OFFERING
-INVESTED- PRICE PRICE
- ------------------------------------------ -------- ----- -----
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $25,000 . . . . . . . . . 6.10% 5.75% 5.00%
$25,000 but less than $50,000 . . . 5.26 5.00 4.25
$50,000 but less than $100,000. . 4.71 4.50 3.75
BOND FUNDS
Less than $100,000 . . . . . . . . 3.90 3.75 3.00
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000 . 3.63 3.50 2.75
$250,000 but less than $500,000 . 2.56 2.50 2.00
$500,000 but less than $750,000 . 2.04 2.00 1.60
$750,000 but less than $1 million 1.52 1.50 1.20
$1 million or more . . . . . . . . . . none none (see below)
- -----------------------------------------------------------------------------
</TABLE>
CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES - Investments of $1 million or
more are sold with no initial sales charge. HOWEVER, A 1% CONTINGENT DEFERRED
SALES CHARGE (CDSC) MAY BE IMPOSED IF REDEMPTIONS ARE MADE WITHIN ONE YEAR OF
PURCHASE. Employer-sponsored defined contribution-type plans investing $1
million or more, or with 100 or more eligible employees, and Individual
Retirement Account rollovers from retirement plan assets invested in the
American Funds (see "Individual Retirement Account (IRA) Rollovers" below) may
invest with no sales charge and are not subject to a contingent deferred sales
charge. Investments made by
The Investment Company of America - Page 25
<PAGE>
investors in certain qualified fee-based programs, and retirement plans,
endowments or foundations with $50 million or more in assets may also be made
with no sales charge and are not subject to a CDSC. A dealer concession of up
to 1% may be paid by the fund under its Plan of Distribution on investments made
with no initial sales charge.
In addition, Class A shares of the stock, stock/bond and bond funds may be sold
at net asset value to:
(1) current or retired directors, trustees, officers and advisory board members
of, and certain lawyers who provide services to, the funds managed by Capital
Research and Management Company, current or retired employees of Washington
Management Corporation, current or retired employees and partners of The Capital
Group Companies, Inc. and its affiliated companies, certain family members and
employees of the above persons, and trusts or plans primarily for such persons;
(2) current registered representatives, retired registered representatives with
respect to accounts established while active, or full-time employees (and their
spouses, parents, and children) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such dealers) and plans
for such persons or the dealers;
(3) companies exchanging securities with the fund through a merger, acquisition
or exchange offer;
(4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;
(5) insurance company separate accounts;
(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
(7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES - A contingent deferred
sales charge of 1% applies to redemptions made from funds, other than the money
market funds, within 12 months following Class A share purchases of $1 million
or more made without an initial sales charge. The charge is 1% of the lesser of
the value of the shares redeemed (exclusive of reinvested dividends and capital
gain distributions) or the total cost of such shares. Shares held the longest
are assumed to be redeemed first for purposes of calculating this CDSC. The CDSC
may be waived in certain circumstances. See "CDSC Waivers for Class A Shares"
below.
DEALER COMMISSIONS ON CLASS A SHARES - The following commissions (up to 1%) will
be paid to dealers who initiate and are responsible for purchases of $1 million
or more, for purchases by any employer-sponsored defined contribution plan
investing $1 million or more, or with 100 or more eligible employees, IRA
rollover accounts (as described in "Individual Retirement Account (IRA)
Rollovers" below), and for purchases made at net asset value by certain
retirement plans, endowments and foundations with collective assets of $50
million or more: 1.00% on amounts of $1 million to $4 million, 0.50% on amounts
over $4 million to $10 million, and 0.25% on amounts over $10 million.
The Investment Company of America - Page 26
<PAGE>
CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge. However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
ON SHARES SOLD WITHIN YEAR AS A % OF SHARES BEING SOLD
------------------------------------------------------------------------------
<S> <C>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>
There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions. In addition, the CDSC may be waived in certain circumstances.
See "CDSC Waivers for Class B shares" below. The CDSC is based on the original
purchase cost or the current market value of the shares being sold, whichever is
less. In processing redemptions of Class B shares, shares that are not subject
to any CDSC will be redeemed first and then shares that you have owned the
longest during the six-year period. CLASS B SHARES ARE NOT AVAILABLE TO CERTAIN
RETIREMENT PLANS, INCLUDING GROUP RETIREMENT PLANS SUCH AS 401(K) PLANS,
EMPLOYER-SPONSORED 403(B) PLANS, AND MONEY PURCHASE PENSION AND PROFIT SHARING
PLANS.
Compensation equal to 4% of the amount invested is paid by the Principal
Underwriter to dealers who sell Class B shares.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES - Class B shares automatically
convert to Class A shares in the month of the eight-year anniversary of the
purchase date. The conversion of Class B shares to Class A shares after eight
years is subject to the Internal Revenue Service's continued position that the
conversion of Class B shares is not subject to federal income tax. In the event
the Internal Revenue Service no longer takes this position, the automatic
conversion feature may be suspended, in which event no further conversions of
Class B shares would occur while such suspension remained in effect. At your
option, Class B shares may still be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a sales
charge or fee; HOWEVER, SUCH AN EXCHANGE COULD CONSTITUTE A TAXABLE EVENT FOR
YOU, AND ABSENT SUCH AN EXCHANGE, CLASS B SHARES WOULD CONTINUE TO BE SUBJECT TO
HIGHER EXPENSES FOR LONGER THAN EIGHT YEARS.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCING YOUR CLASS A SALES CHARGE - You and your "immediate family" (your
spouse and your children under age 21) may combine investments to reduce your
costs. You must let your investment dealer or American Funds Service Company
(the "Transfer Agent") know if you qualify for a reduction in your sales charge
using one or any combination of the methods described below.
The Investment Company of America - Page 27
<PAGE>
STATEMENT OF INTENTION - You may enter into a non-binding commitment to
purchase shares of a fund(s) over a 13-month period and receive the same
sales charge as if all shares had been purchased at once. This includes
purchases made during the previous 90 days, but does not include
appreciation of your investment or reinvested distributions. The reduced
sales charges and offering prices set forth in the Prospectus apply to
purchases of $25,000 or more made within a 13-month period subject to the
following statement of intention (the "Statement"). The Statement is not a
binding obligation to purchase the indicated amount. When a shareholder
elects to use a Statement in order to qualify for a reduced sales charge,
shares equal to 5% of the dollar amount specified in the Statement will be
held in escrow in the shareholder's account out of the initial purchase (or
subsequent purchases, if necessary) by the Transfer Agent. All dividends
and any capital gain distributions on shares held in escrow will be
credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the
sales charge which would have been paid if the total of such purchases had
been made at a single time. If the difference is not paid by the close of
the period, the appropriate number of shares held in escrow will be
redeemed to pay such difference. If the proceeds from this redemption are
inadequate, the purchaser will be liable to the Principal Underwriter for
the balance still outstanding. The Statement may be revised upward at any
time during the 13-month period, and such a revision will be treated as a
new Statement, except that the 13-month period during which the purchase
must be made will remain unchanged. Existing holdings eligible for rights
of accumulation (see below), as well as purchases of Class B shares, and
any individual investments in American Legacy variable annuities and
variable life insurance policies (American Legacy, American Legacy II and
American Legacy III variable annuities, American Legacy Life, American
Legacy Variable Life, and American Legacy Estate Builder) may be credited
toward satisfying the Statement. During the Statement period reinvested
dividends and capital gain distributions, investments in money market
funds, and investments made under a right of reinstatement will not be
credited toward satisfying the Statement.
When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the 13-month
period will be handled as follows: The regular monthly payroll deduction
investment will be multiplied by 13 and then multiplied by 1.5. The current
value of existing American Funds investments (other than money market fund
investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period, and
any individual investments in American Legacy variable annuities and
variable life insurance policies are added to the figure determined above.
The sum is the Statement amount and applicable breakpoint level. On the
first investment and all other investments made pursuant to the Statement,
a sales charge will be assessed according to the sales charge breakpoint
thus determined. There will be no retroactive adjustments in sales charges
on investments made during the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and
your children under the age of 21, if all parties are purchasing shares for
their own accounts and/or:
The Investment Company of America - Page 28
<PAGE>
. employee benefit plan(s), such as an IRA, individual-type 403(b) plan,
or single-participant Keogh-type plan;
. business accounts solely controlled by these individuals (for example,
the individuals own the entire business);
. trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may
be aggregated with accounts of the person who is the primary
beneficiary of the trust.
Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:
. for a single trust estate or fiduciary account, including an employee
benefit plan other than those described above;
. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, again excluding
employee benefit plans described above; or
. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares.
Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
CONCURRENT PURCHASES - You may combine purchases of Class A and/or B shares
of two or more funds in The American Funds Group, as well as individual
holdings in American Legacy variable annuities and variable life insurance
policies. Direct purchases of the money market funds are excluded. Shares
of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.
RIGHTS OF ACCUMULATION - You may take into account the current value of
your existing Class A and B holdings in The American Funds Group, as well
as your holdings in Endowments (shares of which may be owned only by
tax-exempt organizations), to determine your sales charge on investments in
accounts eligible to be aggregated, or when making a gift to an individual
or charity. When determining your sales charge, you may also take into
account the value of your individual holdings, as of the end of the week
prior to your investment, in various American Legacy variable annuities and
variable life insurance policies. Direct purchases of the money market
funds are excluded.
CDSC WAIVERS FOR CLASS A SHARES - Any CDSC on Class A shares may be waived in
the following cases:
(1) Exchanges (except if shares acquired by exchange are then redeemed within
12 months of the initial purchase).
The Investment Company of America - Page 29
<PAGE>
(2) Distributions from 403(b) plans or IRAs due to death, post-purchase
disability or attainment of age 59-1/2.
(3) Tax-free returns of excess contributions to IRAs.
(4) Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% of the net asset value of the account
each year.
CDSC WAIVERS FOR CLASS B SHARES - Any CDSC on Class B shares may be waived in
the following cases:
(1) Systematic withdrawal plans (SWPs) - investors who set up a SWP (see
"Automatic Withdrawals" below) may withdraw up to 12% of the net asset value of
their account each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions) will be
redeemed first and will count toward the 12% limitation. If there are
insufficient shares not subject to a CDSC, shares subject to the lowest CDSC
will be redeemed next until the 12% limit is reached.
The 12% fee from CDSC limit is calculated on a pro rata basis at the time the
first payment is made and is recalculated thereafter on a pro rata basis at the
time of each SWP payment. Shareholders who establish a SWP should be aware that
the amount of that payment not subject to a CDSC may vary over time depending on
fluctuations in net asset value of their account. This privilege may be revised
or terminated at any time.
(2) Required minimum distributions taken from retirement accounts upon the
attainment of age 70-1/2.
(3) Distributions due to death or post-purchase disability of a shareholder. In
the case of joint tenant accounts, if one joint tenant dies, the surviving joint
tenant(s), at the time they notify the Transfer Agent of the decedent's death
and remove his/her name from the account, may redeem shares from the account
without incurring a CDSC. Redemptions subsequent to the notification to the
Transfer Agent of the death of one of the joint owners will be subject to a
CDSC.
INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS
Assets from an employer-sponsored retirement plan (plan assets) may be invested
in any class of shares of the American Funds (except as described below) through
an IRA rollover plan. All such rollover investments will be subject to the terms
and conditions for Class A and B shares contained in the fund's current
prospectus and statement of additional information. In the case of an IRA
rollover involving plan assets from a plan that offered the American Funds, the
assets may only be invested in Class A shares of the American Funds. Such
investments will be at net asset value and will not be subject to a contingent
deferred sales charge. Dealers who initiate and are responsible for such
investments will be compensated pursuant to the schedule applicable to
investments of $1 million or more (see "Dealer Commissions on Class A Shares"
above).
The Investment Company of America - Page 30
<PAGE>
PRICE OF SHARES
Shares are purchased at the offering price next determined after the purchase
order is received and accepted by the fund or the Transfer Agent; this offering
price is effective for orders received prior to the time of determination of the
net asset value and, in the case of orders placed with dealers, accepted by the
Principal Underwriter prior to its close of business. In the case of orders sent
directly to the fund or the Transfer Agent, an investment dealer MUST be
indicated. The dealer is responsible for promptly transmitting purchase orders
to the Principal Underwriter. Orders received by the investment dealer, the
Transfer Agent, or the fund after the time of the determination of the net asset
value will be entered at the next calculated offering price. Prices which appear
in the newspaper do not always indicate prices at which you will be purchasing
and redeeming shares of the fund, since such prices generally reflect the
previous day's closing price whereas purchases and redemptions are made at the
next calculated price.
The price you pay for shares, the offering price, is based on the net asset
value per share which is calculated once daily as of approximately 4:00 p.m. New
York time, which is the normal close of trading on the New York Stock Exchange
each day the Exchange is open. If, for example, the Exchange closes at 1:00
p.m., the fund's share price would still be determined as of 4:00 p.m. New York
time. The New York Stock Exchange is currently closed on weekends and on the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined as follows:
1. 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.
Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.
Securities and assets for which representative market quotations are not readily
available are valued at fair value as determined in good faith under policies
approved by the fund's Board. The fair value of all other assets is added to the
value of securities to arrive at the total assets;
2. Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
The Investment Company of America - Page 31
<PAGE>
3. Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share
Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 3.0% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Directors.
SELLING SHARES
Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent. Sales of certain Class A and B
shares may be subject to deferred sales charges. You may sell (redeem) shares
in your account in any of the following ways:
THROUGH YOUR DEALER (certain charges may apply)
- Shares held for you in your dealer's street name must be
sold through the dealer.
WRITING TO AMERICAN FUNDS SERVICE COMPANY
- Requests must be signed by the registered shareholder(s)
- A signature guarantee is required if the redemption is:
- Over $50,000;
- Made payable to someone other than the registered
shareholder(s); or
- Sent to an address other than the address of record,
or an address of record which has been changed within
the last 10 days.
Your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution.
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
- You must include any shares you wish to sell that are in
certificate form.
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/
- Redemptions by telephone or fax (including American FundsLine/(R)/ and
American FundsLine OnLine/(R)/) are limited to $50,000 per shareholder each
day.
- Checks must be made payable to the registered shareholder(s).
The Investment Company of America - Page 32
<PAGE>
- Checks must be mailed to an address of record that has been
used with the account for at least 10 days.
MONEY MARKET FUNDS
- You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
- You may establish check writing privileges (use the money market funds
application).
- If you request check writing privileges, you will be provided with
checks that you may use to draw against your account. These checks may
be made payable to anyone you designate and must be signed by the
authorized number or registered shareholders exactly as indicated on
your checking account signature card.
- Check writing is not available for Class B shares of The Cash
Management Trust.
If you sell Class B shares and request a specific dollar amount to be sold, we
will sell sufficient shares so that the sale proceeds, after deducting any
contingent deferred sales charge, equals the dollar amount requested.
Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution of Class A or Class B shares without a sales charge in the Class A
shares of any fund in The American Funds Group within 90 days after the date of
the redemption or distribution (any contingent deferred sales charge on Class A
shares will be credited to your account). Redemption proceeds of shares
representing direct purchases in the money market funds are excluded. Proceeds
will be reinvested at the next calculated net asset value after your request is
received and accepted by the Transfer Agent.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments into The American Funds through automatic
debits from your bank account. To set up a plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received. Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. For
example, if the date you specified falls on a
The Investment Company of America - Page 33
<PAGE>
weekend or holiday, your money will be invested on the next business day. If
your bank account cannot be debited due to insufficient funds, a stop-payment or
the closing of the account, the plan may be terminated and the related
investment reversed. You may change the amount of the investment or discontinue
the plan at any time by writing to the Transfer Agent.
AUTOMATIC REINVESTMENT - Dividends and capital gain distributions are reinvested
in additional shares of the same class at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, the
Transfer Agent or your investment dealer.
If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond to mailings from American Funds
Service Company with regard to uncashed distribution checks, your distribution
option will automatically be converted to having all dividends and other
distributions reinvested in additional shares.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - You may cross-reinvest
dividends and capital gains ("distributions") of the same share class into any
other fund in The American Funds Group at net asset value, subject to the
following conditions:
(a) The aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement),
(b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,
(c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.
EXCHANGE PRIVILEGE - You may only exchange shares into other funds in The
American Funds Group within the same class. However, exchanges from Class A
shares of The Cash Management Trust of America may be made to Class B shares of
any other American Fund for dollar cost averaging purposes. Exchange purchases
are subject to the minimum investment requirements of the fund purchased and no
sales charge generally applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on the fund being
purchased, unless the money market fund shares were acquired by an exchange from
a fund having a sales charge, or by reinvestment or cross-reinvestment of
dividends or capital gain distributions.
You may exchange shares by writing to the Transfer Agent (see "Redeeming
Shares"), by contacting your investment dealer, by using American FundsLine and
American FundsLine OnLine (see "American FundsLine and American FundsLine
OnLine" below), or by telephoning 800/421-0180 toll-free, faxing (see "Principal
Underwriter and Transfer Agent" in the prospectus for the appropriate fax
numbers) or telegraphing the Transfer Agent. (See "Telephone and Computer
Purchases, Redemptions and Exchanges" below.) Shares held in corporate-type
retirement plans for which Capital Guardian Trust Company serves as trustee may
not be exchanged by telephone, computer, fax or telegraph. Exchange redemptions
and purchases are
The Investment Company of America - Page 34
<PAGE>
processed simultaneously at the share prices next determined after the exchange
order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES - You may automatically exchange shares of the same class in
amounts of $50 or more among any of the funds in The American Funds Group on any
day (or preceding business day if the day falls on a non-business day of each
month you designate.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
ACCOUNT STATEMENTS - Your account is opened in accordance with your registration
instructions. Transactions in the account, such as additional investments will
be reflected on regular confirmation statements from the Transfer Agent.
Dividend and capital gain reinvestments and purchases through automatic
investment plans and certain retirement plans will be confirmed at least
quarterly.
AMERICAN FUNDSLINE AND AMERICAN FUNDSLINE ONLINE - You may check your share
balance, the price of your shares, or your most recent account transaction,
redeem shares (up to $50,000 per shareholder each day), or exchange shares
around the clock with American FundsLine and American FundsLine OnLine. To use
these services, call 800/325-3590 from a TouchTone(TM) telephone or access the
American Funds Web site on the Internet at www.americanfunds.com. Redemptions
and exchanges through American FundsLine and American FundsLine OnLine are
subject to the conditions noted above and in "Shareholder Account Services and
Privileges - Telephone and Computer Purchases, Redemptions and Exchanges" below.
You will need your fund number (see the list of funds in The American Funds
Group under "Purchase of Shares - Purchase Minimums" and "Purchase of Shares -
Fund Numbers"), personal identification number (generally the last four digits
of your Social Security number or other tax identification number associated
with your account) and account number.
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or computer (including American
FundsLine OnLine), fax or telegraph purchase, redemption and/or exchange
options, you agree to hold the fund, the Transfer Agent, any of its affiliates
or mutual funds managed by such affiliates, and each of their respective
directors, trustees, officers, employees and agents harmless from any losses,
expenses, costs or liability (including attorney fees) which may be incurred in
connection with the exercise of these privileges. Generally, all shareholders
are automatically eligible to use these options. However, you may elect to opt
out of these options by writing the Transfer Agent (you may also reinstate them
at any time by writing the Transfer Agent). If the Transfer Agent does not
employ reasonable procedures to confirm that the instructions received from any
person with appropriate account information are genuine, the fund may be liable
for losses due to unauthorized or fraudulent instructions. In the event that
shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions, or a natural disaster, redemption and exchange
requests may be made in writing only.
The Investment Company of America - Page 35
<PAGE>
REDEMPTION OF SHARES - The fund's Articles of Incorporation permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder owns of record
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the Board of Directors of the fund may from time to time
adopt.
While payment of redemptions normally will be in cash, the fund's articles of
incorporatoin permit payment of the redemption price wholly or partly in
securities or other property included in the assets belonging to the fund when
in the opinion of the fund's Board of Directors, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable.
SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Investment Adviser places orders for the fund's portfolio securities
transactions. The Investment Adviser strives to obtain the best available prices
in its portfolio transactions taking into account the costs and quality of
executions. When, in the opinion of the Investment Adviser, two or more brokers
(either directly or through their correspondent clearing agents) are in a
position to obtain the best price and execution, preference may be given to
brokers who have sold shares of the fund or who have provided investment
research, statistical, or other related services to the Investment Adviser. The
fund does not consider that it has an obligation to obtain the lowest available
commission rate to the exclusion of price, service and qualitative
considerations.
There are occasions on which portfolio transactions for the fund may be executed
as part of concurrent authorizations to purchase or sell the same security for
other funds served by the Investment Adviser, or for trusts or other accounts
served by affiliated companies of the Investment Adviser. Although such
concurrent authorizations potentially could be either advantageous or
disadvantageous to the fund, they are effected only when the Investment Adviser
believes that to do so is in the interest of the fund. When such concurrent
authorizations occur, the objective is to allocate the executions in an
equitable manner. The fund will not pay a mark-up for research in principal
transactions.
Brokerage commissions paid on portfolio transactions for the fiscal years ended
December 31, 1999, 1998 and 1997, amounted to $22,412,000, $18,546,000 and
$16,553,000, respectively.
The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parents of broker-dealers that derive more than
15% of their revenue from broker-dealer activities) which have certain
relationships with the fund. During the last fiscal year, Lincoln National Life
Insurance Company was among the top 10 dealers that received the largest amount
of brokerage commissions and that acted as principals in portfolio transactions.
The fund held equity securities of Lincoln National Life Insurance Company in
the amount of $72,000,000 as of the close of its most recent fiscal year.
The Investment Company of America - Page 36
<PAGE>
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to sub-custodial arrangements in non-U.S. banks
or non-U.S. branches of U.S. banks.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee of
$29,652,000 for the 1999 fiscal year.
INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as the fund's independent accountants providing audit
services, preparation of tax returns and review of certain documents to be filed
with the Securities and Exchange Commission. The financial statements included
in this Statement of Additional Information from the Annual Report have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing. The selection of the fund's independent accountants is reviewed and
determined annually by the Board of Directors.
PROSPECTUSES AND REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on
December 31. Shareholders are provided updated prospectuses annually. In
addition, shareholders are provided at least semiannually with reports showing
the investment portfolio, financial statements and other information. The fund's
annual financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP. In an effort to reduce the volume of mail
shareholders receive from the fund when a household owns more than one account,
the Transfer Agent has taken steps to eliminate duplicate mailings of
prospectuses and shareholder reports. To receive additional copies of a
prospectus or report, shareholders should contact the Transfer Agent.
PERSONAL INVESTING POLICY - The fund, Capital Research and Management Company
and its affiliated companies, including the fund's principal underwriter, have
adopted codes of ethics which allow for personal investments. The personal
investing policy is consistent with Investment Company Institute guidelines.
This policy includes: a ban on acquisitions of securities pursuant to an initial
public offering; restrictions on acquisitions of private placement securities;
pre-clearance and reporting requirements; review of duplicate confirmation
statements; annual recertification of compliance with codes of ethics; blackout
periods on personal investing for certain investment personnel; ban on
short-term trading profits for investment personnel; limitations on service as a
director of publicly traded companies; and disclosure of personal securities
transactions.
OTHER INFORMATION - The financial statements including the investment portfolio
and the report of Independent Accountants contained in the Annual Report are
included in this Statement of Additional Information. The following information
is not included in the Annual Report:
The Investment Company of America - Page 37
<PAGE>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) . . . . . . . . . $32.46
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . . . . . . . . . $34.44
</TABLE>
CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS
The fund's yield was 1.45% based on a 30-day (or one month) period ended
December 31, 1999, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b =
expenses accrued for the period (net of reimbursements).
c =
the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d =
the maximum offering price per share on the last day of the
period.
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis. The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months. The
distribution rate may differ from the yield.
The fund's one year total return and average annual total return for the five-
and ten-year periods ended December 31, 1999 were 9.84%, 22.27% and 15.33%,
respectively. The fund's average annual total return at net asset value for the
one-, five- and ten-year periods ended on December 31, 1999 were 16.56%, 23.73%
and 16.02%, respectively.
The average total return ("T") is computed by equating the value at the end of
the period ("ERV") with a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following formula as required by the
Securities and Exchange Commission: P(1+T)/n/ = ERV.
In calculating average annual total return, the fund assumes: (1) deduction of
the maximum sales load of 5.75% from the $1,000 initial investment; (2)
reinvestment of dividends and distributions at net asset value on the
reinvestment date determined by the Board; and (3) a complete redemption at the
end of any period illustrated. In addition, the fund will provide lifetime
average total return figures. From time to time, the fund may calculate
investment results for Class B shares.
The Investment Company of America - Page 38
<PAGE>
The fund may also, at times, calculate total return based on net asset value per
share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation. Consequently,
total return calculated in this manner will be higher. These total returns may
be calculated over periods in addition to those described above. Total return
for the unmanaged indices will be calculated assuming reinvestment of dividends
and interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
The fund may include information on its investment results and/or comparisons of
its investment results to various unmanaged indices (such as the Dow Jones
Average of 30 Industrial Stocks and the Standard and Poor's 500 Composite Stock
Index) or results of other mutual funds or investment or savings vehicles in
advertisements or in reports furnished to present or prospective shareholders.
The fund may also, from time to time, combine its results with those of other
funds in The American Funds Group for purposes of illustrating investment
strategies involving multiple funds.
The fund may refer to results and surveys compiled by organizations such as CDA/
Wiesenberger, Ibbotson Associates, Lipper Analytical Services, Morningstar,
Inc., and by the U.S. Department of Commerce. Additionally, the fund may refer
to results published in various newspapers and periodicals, including Barron's,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine,
Money, U.S. News and World Report and The Wall Street Journal.
The fund may illustrate the benefits of tax-deferral by comparing taxable
investments to investments made through tax-deferred retirement plans.
The fund may compare its investment results with the Consumer Price Index, which
is a measure of the average change in prices over time in a fixed market basket
of goods and services (e.g. food, clothing, and fuels, transportation, and other
goods and services that people buy for day-to-day living).
The Investment Company of America - Page 39
<PAGE>
APPENDIX
Description of Bond Ratings
BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.
Moody's rates the long-term debt securities issued by various entities from
- -------
"Aaa" to "C." Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category. Ratings are described as follows:
"Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."
"Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."
"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."
"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."
"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class."
"Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."
The Investment Company of America - Page 40
<PAGE>
"Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."
"Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings."
"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
S & P rates the long-term securities debt of various entities in categories
- -----
ranging from "AAA" to "D" according to quality. The ratings from "AA" to "CCC"
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. Ratings are described as follows:
"Debt rated 'AAA' has the highest rating assigned by S & P. Capacity to pay
interest and repay principal is extremely strong."
"Debt rated 'AA' has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree."
"Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories."
"Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories."
"Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or impled 'BBB-' rating.
"Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating."
"The rating 'CC' is typically applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC' rating."
"The rating 'C' is typically applied to debt subordinated to senior debt which
is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued."
"The rating 'C1' is reserved for income bonds on which no interest is being
paid."
The Investment Company of America - Page 41
<PAGE>
"Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized."
The Investment Company of America - Page 42
<TABLE>
INVESTMENT PORTFOLIO - December 31, 1999
- ------------------------------------------ ----------
<S> <C>
Percent of
Largest Individual Equity Holdings Net Assets
- ------------------------------------------ ----------
Viacom 2.94%
Time Warner 2.40
Oracle 2.15
Fannie Mae 2.11
AT&T Corp.-Liberty Media Group 2.07
Microsoft 1.87
Cendant 1.81
AT&T 1.78
Sprint FON Group 1.78
Philip Morris 1.61
- ------------------------------------------ ----------
Percent of
Largest Industry Holdings Net Assets
- ------------------------------------------ ----------
Data Processing & Reproduction 10.43%
Broadcasting & Publishing 8.64
Diversified Telecommunication Services 7.68
Health & Personal Care 6.53
Energy Sources 5.26
- ------------------------------------------ ----------
Percent of
Largest Investment Categories Net Assets
- ------------------------------------------ ----------
Services 26.25%
Capital Equipment 21.02
Consumer Goods 12.44
- ------------------------------------------ ----------
</TABLE>
Companies appearing in the portfolio listing
since June 30, 1999
- ------------------------------------------
Becton, Dickinson
Berkshire Hathaway
Chubb
Conoco
Delphi Automotive Systems
Dollar General
Dow Chemical
Fluor
Hitachi
Infinity Broadcasting
Knight-Ridder
MBNA
MediaOne Group
NEC
New York Times
PE
Pinnacle West Capital
Providian Financial
Qwest Communications International
R.J. Reynolds Tobacco Holdings
Williams Companies
- ------------------------------------------
Companies eliminated from the portfolio listing
since June 30, 1999
- ------------------------------------------
Ameritech
Atlantic Richfield
Baxter International
Bayer AG
Browning-Ferris Industries
Chase Manhattan
Comcast
DaimlerChrysler
Genuine Parts
Georgia-Pacific Timber Group
KeySpan
LifePoint Hospitals
Nestle
Nissan Motor
Praxair
SunTrust Banks
Triad Hospitals
Tribune
<TABLE>
The Investment Company of America
Investment Portfolio, December 31, 1999
<S> <C> <C> <C>
Market
Number of Value Percent of
Equity Securities Shares (millions) Net Assets
- -------------------------------------------- -------- -------- --------
ENERGY
ENERGY SOURCES - 5.26%
BP Amoco PLC (ADR) 2,500,000 $148.281 .26
Broken Hill Proprietary Co. Ltd. 4,057,166 53.273 .09
Chevron Corp. 3,170,000 274.601 .49
Conoco Inc., Class A 6,650,000 164.587
Conoco Inc., Class B 9,681,845 240.836 .72
Exxon Mobil Corp. 1,056,120 85.084 .15
Kerr-McGee Corp. 860,600 53.357 .10
Murphy Oil Corp. 2,175,000 124.790 .22
Phillips Petroleum Co. 7,400,000 347.800 .62
Royal Dutch Petroleum Co. (New York Registered Shares) 9,300,000 562.069
"Shell" Transport and Trading Co., PLC (New York Registered Shares) 1,000,000 49.250 1.09
Texaco Inc. 3,250,000 176.516 .31
TOTAL FINA SA, Class B 1,273,469 169.747
TOTAL FINA SA, Class B (ADR) 3,453,833 239.178 .73
Unocal Corp. 5,764,700 193.478 .36
USX-Marathon Group 2,800,000 69.125 .12
UTILITIES: ELECTRIC & GAS - 1.03%
Ameren Corp. 600,000 19.650 .04
American Electric Power Co., Inc. 3,000,000 96.375 .17
Duke Energy Corp. 1,375,000 68.922 .12
Florida Progress Corp. 400,000 16.925 .03
GPU, Inc. 2,579,900 77.236 .14
Pinnacle West Capital Corp. 2,900,000 88.631 .16
Southern Co. 3,400,000 79.900 .14
Williams Companies, Inc. 4,250,000 129.891 .23
---------- ----------
3,529.502 6.29
---------- ----------
MATERIALS
CHEMICALS - 2.80%
Air Products and Chemicals, Inc. 1,700,000 57.056 .10
Dow Chemical Co. 3,400,000 454.325 .81
E.I. du Pont de Nemours and Co. 1,899,500 125.129 .22
Imperial Chemical Industries PLC (ADR) 5,300,000 225.581 .40
International Flavors & Fragrances Inc. 1,527,000 57.644 .10
Monsanto Co. 18,243,500 649.925 1.17
FOREST PRODUCTS & PAPER - 2.29%
Champion International Corp. 1,950,000 120.778 .22
Fort James Corp. 10,700,000 292.912 .52
Georgia-Pacific Corp., Georgia-Pacific Group 8,225,000 417.419 .74
International Paper Co. 2,881,236 162.610 .29
Louisiana-Pacific Corp. 4,675,000 66.619 .12
Weyerhaeuser Co. 3,100,000 222.619 .40
METALS: NONFERROUS - 1.65%
Alcoa Inc. 8,776,700 728.466 1.30
Freeport-McMoRan Copper & Gold Inc., Class B (1) 2,200,000 46.475 .08
Phelps Dodge Corp. 1,696,300 113.864 .20
WMC Ltd. 7,500,000 41.360 .07
---------- ----------
3,782.782 6.74
---------- ----------
CAPITAL EQUIPMENT
AEROSPACE & MILITARY TECHNOLOGY - 0.64%
Boeing Co. 2,500,000 103.906 .19
Northrop Grumman Corp. 985,000 53.252 .09
Raytheon Co., Class A 2,536,335 62.933
Raytheon Co., Class B 1,700,000 45.156 .19
United Technologies Corp. 1,440,000 93.600 .17
DATA PROCESSING & REPRODUCTION - 10.43%
Cisco Systems, Inc. (1) 5,300,000 567.762 1.01
Compaq Computer Corp. 5,046,100 136.560 .24
Computer Associates International, Inc. 12,295,000 859.882 1.53
Fujitsu Ltd. 13,173,000 600.765 1.07
Hewlett-Packard Co. 3,800,000 432.963 .77
International Business Machines Corp. 6,000,000 648.000 1.16
Microsoft Corp. (1) 9,000,000 1,050.750 1.87
Oracle Corp. (1) 10,750,000 1,204.672 2.15
3Com Corp. (1) 5,100,000 239.700 .43
Xerox Corp. 5,000,000 113.438 .20
ELECTRICAL & ELECTRONIC - 2.12%
Hitachi, Ltd. 8,500,000 136.426 .24
Lucent Technologies Inc. 1,600,000 119.700 .21
NEC Corp. 5,000,000 119.152 .21
Nortel Networks Corp. 800,000 80.800 .14
Siemens AG 3,200,000 406.585 .73
Telefonaktiebolaget LM Ericsson, Class B (ADR) 5,000,000 328.437 .59
ELECTRONIC COMPONENTS - 4.55%
Corning Inc. 4,775,000 615.677 1.10
Intel Corp. 4,850,000 399.216 .71
Micron Technology, Inc. (1) 5,333,700 414.695 .74
Motorola, Inc. 1,960,000 288.610 .51
Texas Instruments Inc. 8,580,000 831.188 1.49
ELECTRONIC INSTRUMENTS - 0.67%
PE Corp. 3,111,900 374.400 .67
ENERGY EQUIPMENT - 0.81%
Baker Hughes Inc. 6,505,600 137.024 .24
Schlumberger Ltd. 5,650,000 317.813 .57
INDUSTRIAL COMPONENTS - 0.40%
Dana Corp. 2,121,500 63.512 .11
Delphi Automotive Systems Corp. 5,764,088 90.784 .16
Illinois Tool Works Inc. 1,000,000 67.563 .13
MACHINERY & ENGINEERING - 1.40%
Caterpillar Inc. 2,600,000 122.362 .22
Cummins Engine Co., Inc. 1,700,000 82.131 .15
Deere & Co. 5,700,000 247.238 .44
Fluor Corp. 1,400,000 64.225 .11
Ingersoll-Rand Co. 1,894,800 104.332 .19
Parker Hannifin Corp. 1,900,000 97.494 .17
Thermo Electron Corp. (1) 5,000,000 75.000 .12
---------- ----------
11,797.703 21.02
---------- ----------
CONSUMER GOODS
APPLIANCES & HOUSEHOLD DURABLES - 0.16%
Newell Rubbermaid Inc. 3,000,000 87.000 .16
AUTOMOBILES - 0.69%
Ford Motor Co. 3,250,000 173.672 .31
General Motors Corp. 800,000 58.150 .10
Honda Motor Co., Ltd. 4,246,000 157.906 .28
BEVERAGES & TOBACCO - 2.55%
PepsiCo, Inc. 12,600,000 444.150 .79
Philip Morris Companies Inc. 39,000,000 904.313 1.61
R.J. Reynolds Tobacco Holdings, Inc. 4,461,666 78.637 .15
FOOD & HOUSEHOLD PRODUCTS - 2.01%
Archer Daniels Midland Co. 8,280,000 100.912 .18
Bestfoods 1,200,000 63.075 .11
Colgate-Palmolive Co. 1,300,000 84.500 .15
General Mills, Inc. 8,300,000 296.725 .53
Nabisco Group Holdings Corp. 16,000,000 170.000 .30
Procter & Gamble Co. 850,000 93.128 .17
Sara Lee Corp. 11,500,000 253.719 .45
Unilever NV (New York Registered Shares) 1,200,000 65.325 .12
HEALTH & PERSONAL CARE - 6.53%
Abbott Laboratories 3,000,000 108.937 .19
American Home Products Corp. 1,000,000 39.438 .07
AstraZeneca PLC 13,350,900 560.574
AstraZeneca PLC (ADR) 199,000 8.308 1.01
Avon Products, Inc. 5,939,800 196.013 .35
Becton, Dickinson and Co. 3,100,000 82.925 .15
Bristol-Myers Squibb Co. 6,530,000 419.144 .75
Cardinal Health, Inc., Class A 4,225,000 202.272 .36
Eli Lilly and Co. 4,793,200 318.748 .57
Kimberly-Clark Corp. 2,975,000 194.119 .35
Merck & Co., Inc. 5,000,000 335.313 .60
Pfizer Inc 12,800,000 415.200 .74
Pharmacia & Upjohn, Inc. 3,000,000 135.000 .24
Schering-Plough Corp. 4,400,000 185.625 .33
Warner-Lambert Co. 5,625,000 460.898 .82
RECREATION & OTHER CONSUMER PRODUCTS - 0.19%
Eastman Kodak Co. 1,100,000 72.875 .13
Hasbro, Inc. 1,700,000 32.406 .06
TEXTILES & APPAREL - 0.31%
NIKE, Inc., Class B 3,487,200 172.834 .31
---------- ----------
6,971.841 12.44
---------- ----------
SERVICES
BROADCASTING & PUBLISHING - 8.64%
AT&T Corp. - Liberty Media Group (1) 20,503,806 1,163.591 2.07
CBS Corp. (1) 2,000,000 127.875 .23
Dow Jones & Co., Inc. 1,800,000 122.400 .22
Houston Industries, Inc. (converting to Time Warner Inc.) 7.00% ACES
convertible preferred 500,000 60.250 .11
Infinity Broadcasting Corp. (1) 1,424,100 51.535 .09
Knight-Ridder, Inc. 3,880,000 230.860 .41
MediaOne Group, Inc. (1) 600,000 46.087 .08
New York Times Co., Class A 1,000,000 49.125 .09
Time Warner Inc. 18,576,900 1,345.664 2.40
Viacom Inc., Class A (1) 2,392,800 144.615
Viacom Inc., Class B (1) 24,900,000 1,504.894 2.94
BUSINESS SERVICES - 3.04%
Cendant Corp. (1) 38,300,000 1,017.344 1.81
FDX Corp. (1) 2,870,000 117.491 .21
Interpublic Group of Companies, Inc. 5,349,700 308.611 .55
Waste Management, Inc. 15,030,000 258.328 .47
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.68%
AT&T Corp. 19,697,650 999.656 1.78
Deutsche Telekom AG 9,900,000 704.129 1.26
GTE Corp. 2,000,000 141.125 .25
MCI WorlCom, Inc. (1) 6,075,000 322.355 .57
Qwest Communications International Inc. (1) 1,250,000 53.750 .10
SBC Communications Inc. 6,503,600 317.050 .57
Sprint FON Group 14,840,000 998.918 1.78
Telefonica, SA (ADR) (1) 2,397,305 188.938 .34
Telefonos de Mexico, SA de CV, Class L (ADR) 2,057,400 231.457 .41
U S WEST, Inc. 4,870,000 350.640 .62
HEALTH CARE PROVIDERS & SERVICES - 0.54%
Columbia/HCA Healthcare Corp. 7,600,000 222.775 .40
United HealthCare Corp. 1,550,000 82.344 .14
INFORMATION TECHNOLOGY CONSULTING & SERVICES - 0.14%
Electronic Data Systems Corp. 1,200,000 80.325 .14
LEISURE & TOURISM - 0.99%
McDonald's Corp. 2,400,000 96.750 .17
Seagram Co. Ltd. 9,385,000 421.738
Seagram Co. Ltd. 7.50% ACES convertible preferred 900,000 40.500 .82
MERCHANDISING - 3.40%
Albertson's, Inc. 11,740,800 378.641 .67
AutoZone, Inc. (1) 4,140,000 133.774 .24
Dillard's Inc., Class A 1,995,000 40.274 .07
Dollar General Corp. 1,000,000 22.750 .04
J.C. Penney Co., Inc. 4,200,000 83.737 .15
Limited Inc. 7,900,000 342.169 .61
Lowe's Companies, Inc. 8,368,500 500.018 .89
May Department Stores Co. 2,718,450 87.670 .16
Wal-Mart Stores, Inc. 4,600,000 317.975 .57
TRANSPORTATION: AIRLINES - 0.82%
AMR Corp. (1) 5,550,000 371.850 .66
Delta Air Lines, Inc. 1,742,100 86.778 .16
WIRELESS TELECOMMUNICATION SERVICES - 1.00%
Vodafone AirTouch PLC (ADR) 11,295,500 559.127 1.00
---------- ----------
14,725.883 26.25
---------- ----------
FINANCE
BANKING - 4.76%
Bank of America Corp. 13,477,100 676.382 1.21
BANK ONE CORP. 6,935,000 222.353 .40
Comerica Inc. 750,000 35.016 .06
First Union Corp. 9,500,000 311.719 .56
Fleet Boston Financial Corp. (formerly BankBoston Corp.) 3,079,440 107.203 .19
KeyCorp 5,200,000 115.050 .21
National City Corp. 2,000,000 47.375 .08
Toronto-Dominion Bank 4,848,900 129.941 .23
U.S. Bancorp 2,831,250 67.419 .12
Wachovia Corp. 900,000 61.200 .11
Washington Mutual, Inc. 18,250,000 474.500 .85
Wells Fargo & Co. 10,483,200 423.914 .74
FINANCIAL SERVICES - 4.14%
Associates First Capital Corp., Class A 2,000,000 54.875 .10
Fannie Mae 18,996,800 1,186.113 2.11
Freddie Mac 2,400,000 112.950 .20
Household International, Inc. 13,000,000 484.250 .86
MBNA Corp. 3,080,000 83.930 .15
Providian Financial Corp. 1,000,000 91.063 .16
SLM Holding Corp. 7,357,000 310.833 .56
INSURANCE - 2.42%
Aetna Inc. 1,000,000 55.813 .10
Allstate Corp. 7,150,000 171.600 .31
American General Corp. 2,010,000 152.509 .27
American International Group, Inc. 3,375,000 364.922 .65
Aon Corp. 4,000,000 160.000 .29
Chubb Corp. 1,842,600 103.761 .18
Jefferson-Pilot Corp. 2,200,000 150.150 .27
Lincoln National Corp. 1,800,000 72.000 .13
SAFECO Corp. 1,781,800 44.322 .08
St. Paul Companies, Inc. 2,400,000 80.850 .14
---------- ----------
6,352.013 11.32
---------- ----------
OTHER
MULTI-INDUSTRY - 0.59%
Berkshire Hathaway Inc., Class A (1) 1,488 83.477 .15
Canadian Pacific Ltd. 2,375,000 51.211 .09
Honeywell International Inc. (formerly AlliedSignal Inc.) 2,700,000 155.756 .28
Minnesota Mining and Manufacturing Co. 120,000 11.745 .02
Textron Inc. 400,000 30.675 .05
GOLD MINES - 0.62%
Barrick Gold Corp. 7,000,000 123.813 .22
Newmont Mining Corp. 5,600,000 137.200 .25
Placer Dome Inc. 8,000,000 86.000 .15
MISCELLANEOUS - 1.88%
Equity securities in initial period of acquisition 1,046.967 1.88
---------- ----------
1,726.844 3.09
---------- ----------
Total Equity Securities (cost: $27,721.177 million) 48,886.568 87.15
---------- ----------
Principal
Amount
Short Term Securities (millions)
- -------------------------------------------- -------- -------- --------
U.S. TREASURIES AND OTHER FEDERAL AGENCIES - 6.20%
Fannie Mae 5.20%-5.80% due 1/18-6/22/2000 $793.167 778.036 1.39
Federal Farm Credit Bank Notes 5.42% due 2/4/2000 20.800 20.686 .04
Federal Home Loan Banks 5.22%-5.63% due 1/21-5/24/2000 1,453.240 1,431.552 2.55
Freddie Mac 5.202%-5.54% due 1/10-3/30/2000 847.090 839.906 1.49
Student Loan Marketing Assn. 5.796%-5.869% due 4/20-5/18/2000 155.000 155.009 .28
Tennessee Valley Authority Discount Notes 5.51% due 3/3-3/13/2000 100.000 98.943 .18
World Bank Discount Notes 5.49%-5.55% due 1/24-1/25/2000 150.000 149.436 .27
CORPORATE SHORT-TERM NOTES - 6.48%
AIG Funding Inc. 5.84% due 1/20/2000 50.000 49.838 .09
Albertson's Inc. 5.85% due 1/20/2000 (2) 63.000 62.798 .11
American Express Credit Corp. 5.35%-6.38% due 1/4-2/1/2000 93.200 92.911 .17
American General Corp. 5.88% due 2/2/2000 25.000 24.866
American General Finance Corp. 5.69%-5.76% due 2/18/2000 50.000 49.592 .13
Anheuser-Busch Companies, Inc. 5.86% due 2/3/2000 30.000 29.834 .05
Archer Daniels Midland Co. 5.33%-5.80% due 1/26-4/3/2000 85.000 84.154 .15
Associates First Capital Corp. 4.00%-6.03% due 1/3-2/28/2000 124.800 123.976 .22
Bell Atlantic Network Funding Corp 5.82%-5.95% due 1/11-1/13/2000 103.000 102.797 .18
BellSouth Telecommunications, Inc. 5.50%-5.87% due 2/14-2/25/2000 148.000 146.783 .26
Campbell Soup Co. 5.92%-6.01% due 2/18-2/28/2000 48.400 47.968 .09
Chevron USA Inc. 5.80%-6.05% due 1/11-2/3/2000 91.700 91.472 .16
Coca-Cola Co. 5.30%-5.83% due 1/31-2/29/2000 139.900 138.980 .24
Colgate-Palmolive Co. 5.83% due 1/31/2000 (2) 25.000 24.874 .04
Walt Disney Co. 5.74%-5.88% due 2/18-4/7/2000 55.130 54.368 .09
Duke Energy Corp. 5.60%-5.66% due 2/4/2000 100.000 99.434 .18
E.I. du Pont de Nemours and Co. 5.30%-5.82% due 1/19-3/9/2000 137.400 136.541 .23
Eastman Kodak Co. 5.70%-5.71% due 2/8-2/15/2000 83.000 82.428 .15
Emerson Electric Co. 5.31%-5.60% due 1/18-2/23/2000 65.000 64.569 .11
Ford Motor Credit Co. 5.35%-5.81% due 1/5-2/4/2000 122.400 121.857 .22
Fortune Brands Inc. 5.40%-6.05% due 1/21-2/16/2000 (2) 64.000 63.663 .12
Gannett Co., Inc. 5.80%-5.85% due 1/14-1/20/2000 (2) 100.000 99.724 .18
General Electric Capital Corp. 5.71%-5.96% due 2/3-3/20/2000 172.500 170.687 .32
General Motors Acceptance Corp. 5.74%-6.12% due 1/24-3/6/2000 127.500 126.732 .23
Gillette Co. 5.90%-5.92% due 1/19/2000 (2) 80.000 79.751 .14
H.J. Heinz Co. 5.34%-5.95% due 1/19-1/28/2000 76.000 75.724 .13
Household Finance Corp. 5.69%-5.94% due 1/13-3/8/2000 144.050 142.830 .25
IBM Credit Corp. 5.70%-5.91% due 1/28-3/7/2000 125.000 123.974 .21
Johnson & Johnson 5.60%-5.81% due 1/25-4/14/2000 (2) 80.000 79.262 .14
Kellogg Co. 5.80% due 3/8/2000 (2) 35.000 34.630 .06
Lucent Technologies Inc. 5.33%-5.83% due 1/28-4/19/2000 135.000 133.258 .23
Merck & Co. Inc. 5.29%-5.72% due 2/1-2/11/2000 108.300 107.653 .20
Minnesota Mining and Manufacturing Co. 5.60% due 2/23/2000 50.000 49.552 .09
Mobil Corp. 5.90% due 1/26/2000 (2) 37.300 37.141 .07
Monsanto Co. 5.40%-5.87% due 1/31-2/28/2000 58.800 58.369 .10
Motorola Inc. 5.15%-5.81% due 1/21-1/27/2000 36.100 35.975 .06
Nordstrom, Inc. 5.85% due 2/14/2000 18.200 18.061 .03
Pfizer Inc. 5.60%-5.80% due 2/2-3/17/2000 (2) 155.800 154.376 .28
Procter & Gamble Co. 5.82%-5.90% due 1/10-1/26/2000 151.500 151.093 .27
Sara Lee Corp. 5.80%-5.87% due 1/18-1/27/2000 75.000 74.746 .13
SBC Communications Inc. 5.63%-5.90% due 1/19-3/24/2000 (2) 123.000 122.174 .22
Texaco Inc. 5.70%-5.83% due 1/26-2/11/2000 65.000 64.619 .15
CERTIFICATES OF DEPOSIT - 0.08%
Morgan Guaranty Trust Co. of New York 6.08% due 3/21/2000 50.000 50.018 .08
---------- ----------
Total Short-Term Securities (cost: $7,158.776 million) 7,157.620 12.76
---------- ----------
Excess of cash and receivables over payables 51.041 .09
---------- ----------
Total Short-Term Securities, Cash and Receivables, Net of Payables 7,208.661 12.85
---------- ----------
Net Assets 56,095.229 100.00
---------- ----------
(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.
ADR=American Depositary Receipts
See Notes to Financial Statements
</TABLE>
<TABLE>
The Investment Company of America
Financial Statements
- ----------------------------------------- ------------- -------------
Statement of Assets and Liabilities (dollars in
at December 31, 1999 millions)
- ---------------------------------------- ------------- -------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $27,721.177) $48,886.568
Short-term securities at market
(cost: $7,158.776) 7,157.620
Cash .148
Receivables for-
Sales of investments $.000
Sales of fund's shares $51.324
Dividends and accrued interest 62.770 114.094
------------- -------------
56,158.430
Liabilities:
Payables for-
Purchases of investments .000
Repurchases of fund's shares 41.484
Management services 11.383
Accrued expenses 10.334 63.201
------------- -------------
Net Assets at December 31, 1999-
Equivalent to $32.46 per share on
1,728,032,586 shares of $1 par value
capital stock outstanding (authorized
capital stock--2,000,000,000 shares) $56,095.229
=============
Statement of Operations (dollars in
for the year ended December 31, 1999 millions)
- ----------------------------------------- ------------- -------------
Investment Income:
Income:
Dividends $680.619
Interest 406.393 $ 1,087.012
-------------
Expenses:
Management services fee 127.846
Distribution expenses 118.280
Transfer agent fee 29.652
Reports to shareholders .785
Registration statement and
prospectus 2.278
Postage, stationery and supplies 6.414
Directors' fees .577
Auditing and legal fees .112
Custodian fee 1.030
Taxes other than federal income tax .443
Other expenses .288 287.705
------------- -------------
Net investment income 799.307
-------------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 5,292.279
Net increase in unrealized
appreciation on investments 1,931.502
-------------
Net realized gain and increase in
unrealized appreciation on investments 7,223.781
-------------
Net Increase in Net Assets Resulting
from Operations $ 8,023.088
=============
- ---------------------------------------- ------------- -------------
(dollars in
millions)
Year ended December 31
Statement of Changes in Net Assets 1999 1998
- ----------------------------------------- ------------- -------------
Operations:
Net investment income $ 799.307 $ 716.799
Net realized gain on investments 5,292.279 4,437.555
Net increase in unrealized
appreciation on investments 1,931.502 3,902.006
------------- -------------
Net increase in net assets
resulting from operations 8,023.088 9,056.360
------------- -------------
Dividends and Distributions Paid
to Shareholders:
Dividends from net investment income (807.510) (729.026)
Distributions from net realized
gain on investments (4,829.809) (4,219.066)
------------- -------------
Total dividends and distributions (5,637.319) (4,948.092)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold: 174,371,241
and 175,861,192 shares, respectively 5,697.501 5,363.712
Proceeds from shares issued in reinvestment
of net investment income dividends and
distributions of net realized gain on
investments: 166,620,357 and 152,955,982
shares, respectively 5,204.804 4,569.218
Cost of shares repurchased: 174,052,877
and 173,627,274 shares, respectively (5,690.428) (5,261.288)
------------- -------------
Net increase in net assets resulting from
capital share transactions 5,211.877 4,671.642
------------- -------------
Total Increase in Net Assets 7,597.646 8,779.910
Net Assets:
Beginning of year 48,497.583 39,717.673
------------- -------------
End of year (including undistributed
net investment income: $299.609
and $307.707, respectively) $56,095.229 $48,497.583
============= =============
See Notes to Financial Statements
</TABLE>
Notes to Financial Statements
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.
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. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic developments in a specific
industry, state or region. 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.
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 securities purchased.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.
2. NON-U.S. INVESTMENT TAXATION
Dividend income is recorded net of non-U.S. taxes paid. For the year ended
December 31, 1999, such non-U.S. taxes were $10,762,000. Net realized currency
gains on dividends, withholding taxes reclaimable, and other receivables and
payables, on a book basis, were $105,000 for the year ended December 31, 1999.
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 December 31, 1999, net unrealized appreciation on investments for federal
income tax purposes aggregated $21,173,557,000, of which $22,759,715,000
related to appreciated securities and $1,586,158,000 related to depreciated
securities. During the year ended December 31, 1999, the fund realized, on a
tax basis, a net capital gain of $5,292,174,000 on securities transactions. Net
gains related to non-U.S. currency transactions of $105,000 were treated as an
increase to ordinary income for federal income tax purposes. The cost of
portfolio securities for federal income tax purposes was $34,870,631,000 at
December 31, 1999.
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $127,846,000 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 Investment Advisory and Service Agreement in effect through December 31,
1999, 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.
DISTRIBUTION EXPENSES - 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 year ended December 31, 1999,
distribution expenses under the Plan were $118,280,000. As of December 31,
1999, accrued and unpaid distribution expenses were $8,873,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $23,548,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $29,652,000.
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 December 31, 1999, aggregate
deferred amounts and earnings thereon since the deferred compensation plan's
adoption (1993), net of any payments to Directors, were $1,319,000.
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.
5. WARRANTS
Option warrants are outstanding, which may be exercised at any time for the
purchase of 822,245 shares of the fund at approximately $5.242 per share. If
all warrants had been exercised on December 31, 1999, the net assets of the
fund would have been $56,099,539,000; the shares outstanding would have been
1,728,855,000; and the net asset value would have been equivalent to $32.45 per
share. During the year ended December 31, 1999, 591 warrants were exercised for
the purchase of 12,966 shares.
6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $12,518,060,000 and $13,244,773,000, respectively,
during the year ended December 31, 1999.
As of December 31, 1999, accumulated undistributed net realized gain on
investments was $685,747,000 and additional paid-in capital was
$32,217,640,000. The fund reclassified $105,000 from undistributed net realized
currency gains to undistributed net investment income and $271,056,000 from
undistributed net realized gains to additional paid-in capital for the year
ended December 31, 1999 as a result of permanent differences between book and
tax.
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 $1,030,000 includes $91,000 that was paid by these credits
rather than in cash.
<TABLE>
Per-Share Data and Ratios Year ended
December 31
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $31.07 $28.25 $24.23 $21.61 $17.67
--------------------------------------------------------
Income From Investment Operations:
Net investment income .49 .48 .51 .49 .52
Net gains or losses on securities (both
realized and unrealized) 4.45 5.79 6.61 3.66 4.83
--------------------------------------------------------
Total from investment operations 4.94 6.27 7.12 4.15 5.35
----------- ----------- ----------- --------- -----------
Less Distributions:
Dividends (from net investment income) (.51) (.51) (.50) (.50) (.50)
Distributions (from capital gains) (3.04) (2.94) (2.60) (1.03) (.91)
----------- ----------- ----------- --------- -----------
Total distributions (3.55) (3.45) (3.10) (1.53) (1.41)
----------- ----------- ----------- --------- ----------
Net Asset Value, End of Year $32.46 $31.07 $28.25 $24.23 $21.61
========== ========== ========== ======== ========
Total Return (1) 16.56% 22.94% 29.81% 19.35% 30.63%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $56,095 $48,498 $39,718 $30,875 $25,678
Ratio of expenses to average net assets .55% .55% .56% .59% .60%
Ratio of net income to average net assets 1.54% 1.65% 1.90% 2.17% 2.70%
Portfolio turnover rate - common stocks 27.72% 25.43% 24.08% 17.46% 20.91%
Portfolio turnover rate - investment securi 27.85% 24.28% 26.02% 19.56% 20.37%
(1) Excludes maximum sales charge of 5.75%.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of The Investment Company of America
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of The Investment Company of America
(the "Fund") at December 31, 1999, the results of its operations, the changes
in its net assets and the per-share data and ratios for the years indicated, in
conformity with accounting principles generally accepted in the United States.
These financial statements and per-share data and ratios (hereafter referred to
as "financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999, by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
January 28, 2000
1999 Tax Information (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
<TABLE>
<CAPTION>
Dividends and Distributions per Share
To Shareholders Payment Date From Net From Net From
of Record Investment Realized Short- Net Realized
Income Term Gains Long-Term Gains
<S> <C> <C> <C> <C>
March 5, 1999 March 8, 1999 $0.12 - $0.30
June 4, 1999 June 7, 1999 0.12 - -
September 3, 1999 September 7, 1999 0.12 - -
December 13, 1999 December 14, 1999 0.15 - 2.74
</TABLE>
The fund also designates as a capital gain distribution a portion of earnings
and profits paid to shareholders in redemption of their shares.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 75% of the dividends
paid by the fund from net investment income represent qualifying dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 4% of the dividends paid
by the fund from net investment income were derived from interest on direct
U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans and 403(b) plans need not be reported as taxable income.
However, many retirement plan trusts may need this information for their annual
information reporting.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
RESULT OF MEETING OF SHAREHOLDERS HELD OCTOBER 19, 1999
(adjourned session November 16, 1999)
Shares Outstanding on August 20, 1999 1,591,374,904
Shares Voting on October 19, 1999 (proposals 1 and 4) 1,020,391,945 (64.1%)
Shares Voting on November 16, 1999
(adjourned session - proposals 2 and 3) 1,185,412,382 (74.5%)
PROPOSAL 1:
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percent of Percent of
Votes Shares Votes Shares
Director For Voting For Withheld Withheld
Charles H. Black 1,006,699,251 99% 13,692,694 1%
Ann S. Bowers 1,007,367,857 99 13,024,088 1
Louise H. Bryson 1,006,706,402 99 13,685,543 1
Malcolm R. Currie 1,006,807,629 99 13,584,316 1
Jon B. Lovelace, Jr. 1,006,738,908 99 13,653,037 1
John G. McDonald 1,007,179,556 99 13,212,389 1
Bailey Morris-Eck 1,006,923,342 99 13,468,603 1
Richard G. Newman 1,007,145,218 99 13,246,727 1
William C. Newton 1,007,273,416 99 13,118,529 1
James W. Ratzlaff 1,007,337,706 99 13,054,239 1
Olin C. Robison 1,006,852,752 99 13,539,193 1
R. Michael Shanahan 1,007,557,258 99 12,834,687 1
William J. Spencer 1,007,254,338 99 13,137,607 1
</TABLE>
PROPOSAL 2:
Amendments to Certificate of Incorporation (i) increasing the authorized shares
of capital stock, (ii) establishing a new class of common stock and (iii)
authorizing the Board to create additional series of shares within the new
class of common stock
PROPOSAL 3:
Amendment to Certificate of Incorporation reducing the par value per share of
capital stock
PROPOSAL 4:
Ratification of Accountants
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Percent of Percent of
Shares Shares Percent of
Votes Voting Votes Voting Shares
For For Against Against Abstentions Abstaining
Proposal 2 827,588,205 91% 38,273,476 4% 47,835,925 5%
(Broker nonvotes = 271,714,776)
Proposal 3 800,229,624 88% 54,877,058 6% 58,590,924 6%
(Broker nonvotes = 271,714,776)
Proposal 4 990,514,162 97% 5,750,141 1% 24,127,642 2%
</TABLE>
PART C
OTHER INFORMATION
THE INVESTMENT COMPANY OF AMERICA
ITEM 23. EXHIBITS
(a) Certificate of Amendment of Certificate of Incorporation dated 12/26/99;
Certificate of Designation, Series B Alternative Common Stock dated 1/6/2000
(b) Previously filed (see Post-Effective Amendment No. 101 filed 2/27/97)
(c) Share Certificate
(d) Form of Investment Advisory and Service Agreement
(e) Form of Amended and Restated Principal Underwriting Agreement
(f) None
(g) Foreign Custody Manager Agreement
(h) None
(i) Legal Opinion for Class B Shares
(j) Consent of Independent Accountants
(k) None
(l) None
(m) Form of Plan of Distribution relating to Class B Shares
(n) Form of Multiple Class Plan
(o) None
(p) Codes of Ethics
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 25. INDEMNIFICATION
Registrant is a joint-insured under Investment Advisor/Mutual Fund Errors and
Omissions Policies written by American International Surplus Lines Insurance
Company, Chubb Custom Insurance Company and ICI Mutual Insurance Company.
These policies insure its officers and directors against certain liabilities.
However, in no event will Registrant maintain insurance to indemnify any such
person for any act for which Registrant itself is not permitted to indemnify
the individual.
ITEM 25. INDEMNIFICATION (CONTINUED)
The following are certain provisions of the Delaware Corporation Law applicable
to the Registrant:
Subsection (a) of Section 145 of the Delaware Corporation Law empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that a court of equity
or the court in which such action or suit was brought shall determine upon
application that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of
any action, suit or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 145 shall
not be deemed exclusive of any other rights to which the indemnified party may
be entitled; that the scope of indemnification extends to directors, officers,
employees or agents of a constituent corporation absorbed in a consolidation or
merger and persons serving in that capacity at the request of the constituent
corporation for another; and empowers the corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.
ITEM 25. INDEMNIFICATION (CONTINUED)
The By-Laws of the Registrant state:
37A. (a) The corporation shall indemnify its directors and officers, and may
indemnify its employees and agents, against any liability or cost arising out
of their service to the corporation, to the fullest extent permitted by the law
of the State of Delaware, except as set forth in paragraph (b) and except as
conditioned by paragraph (c).
(b) The corporation may not indemnify any of its directors or officers against
any liability to the corporation or to its stockholders to which he or she is
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
as described in Section 17(h) of the Investment Company Act of 1940 ("disabling
conduct").
(c) Indemnification by the corporation of any director or officer against any
liability to the corporation or to its stockholders is conditioned on either:
(1) a final decision on the merits by a court or other body before which a
proceeding relating to the liability of that director or officer is brought
finding that he or she is not liable by reason of disabling conduct; or
(2) in the absence of such a decision, a determination, based upon a review of
the facts, that the director or officer is not liable by reason of disabling
conduct, by either:
a. the vote of a majority of a quorum of directors, who are neither
"interested persons" of the corporation as defined in Section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding; or
b. independent legal counsel in a written opinion; or
(3) the dismissal of either a court or an administrative proceeding against
the director or officer for insufficiency of evidence of any disabling conduct
with which he or she has been charged.
(d) Under the conditions set forth in paragraph (e), the corporation shall
advance funds to its officers and directors, and may advance funds to its
employees and agents, to cover expenses, including attorneys' fees, they incur
in defending any civil, criminal, administrative or investigative action, suit
or proceeding, arising out of their service as directors or officers, to the
fullest extent permitted by Delaware law.
(e) The corporation shall advance funds to cover expenses, including
attorneys' fees, incurred by any director or officer in connection with the
defense of any proceeding described in paragraph (d) only if an undertaking is
provided by or on behalf of the director or officer to repay the advance unless
it is ultimately determined using the procedure described in clause (c) (1) or
(c) (2) or (c) (3) that he or she is entitled to indemnification. It shall be
a condition to any such advance that either:
ITEM 25. INDEMNIFICATION (CONTINUED)
(1) the director or officer shall provide security for his or her
undertaking; or
(2) the corporation shall be insured against losses arising by reason of any
unlawful advance; or
(3) either (aa) a majority of a quorum of the directors, who are neither
"interested persons" of the corporation as defined in Section 2(a) (19) of
the Investment Company Act of 1940 nor parties to the proceeding, or (bb)
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts, that there is reason to believe that the
director or officer will be found entitled to indemnification.
(f) Provisions in this Section for indemnification of, and advancement of
expenses to, officers, directors, employees and agents shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his or her heirs, executors and administrators.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
None
ITEM 27. PRINCIPAL UNDERWRITERS
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific
Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The
Income Fund of America, Inc., Intermediate Bond Fund of America, Limited Term
Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund,
Inc., New World Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund
of America, Inc., The Tax-Exempt Money Fund of America, U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
David L. Abzug Regional Vice President None
27304 Park Vista Road
Agoura Hills, CA 91301
John A. Agar Vice President None
#61 Point West Circle
Little Rock, AR 72211
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
5400 Mount Meeker Road
Suite 1
Boulder, CO 80301-3508
B Carl R. Bauer Assistant Vice President None
Michelle A. Bergeron Senior Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
J. Walter Best, Jr. Regional Vice President None
9013 Brentmeade Blvd.
Brentwood, TN 37027
Joseph T. Blair Senior Vice President None
148 E. Shore Ave.
Groton Long Point, CT 06340
John A. Blanchard Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior Vice President None
P.O. Box 1665
Brentwood, TN 37024-1665
Mick L. Brethower Senior Vice President None
29003 Colonial Drive
Georgetown, TX 78628
Alan Brown Regional Vice President None
4129 Laclede Avenue
St. Louis, MO 63108
B J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
8002 Greentree Road
Bethesda, MD 20817
Victor C. Cassato Senior Vice President None
609 W. Littleton Blvd., Suite 310
Greenwood Village, CO 80120
Christopher J. Cassin Senior Vice President None
19 North Grant Street
Hinsdale, IL 60521
Denise M. Cassin Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director None
L Kevin G. Clifford Director, President and None
Co-Chief
Executive Officer
Ruth M. Collier Senior Vice President None
29 Landsdowne Drive
Larchmont, NY 10538
S David Coolbaugh Assistant Vice President None
H Carlo O. Cordasco Assistant Vice President None
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Senior Vice President None
3521 Rittenhouse Street, N.W.
Washington, D.C. 20015
L Carl D. Cutting Vice President None
William Daugherty Regional Vice President None
1216 Highlander Way
Mechanicsburg, PA 17055
Daniel J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Senior Vice President None
633 Menlo Avenue, Suite 210
Menlo Park, CA 94025
Peter J. Doran Director, Executive Vice None
President
100 Merrick Road, Suite 216W
Rockville Centre, NY 11570
L Michael J. Downer Secretary None
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Senior Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Vice President None
15 Latisquama Road
Southborough, MA 01772
Daniel B. Frick Regional Vice President None
845 Western Avenue
Glen Ellyn, IL 60137
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Vice President None
12210 Taylor Road
Plain City, OH 43064
L Paul G. Haaga, Jr. Director None
B Mariellen Hamann Assistant Vice President None
David E. Harper Senior Vice President None
150 Old Franklin School Road
Pittstown, NJ 08867
H Mary Pat Harris Assistant Vice President None
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
Michael J. Johnston Director None
630 Fifth Avenue, 36th Floor
New York, NY 10111
B Damien M. Jordan Vice President None
Arthur J. Levine Senior Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
5506 East Mineral Lane
Littleton, CO 80122
Mark J. Lien Regional Vice President None
5570 Beechwood Terrace
West Des Moines, IA 50266
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - None
Institutional
Investment Services
LW Robert W. Lovelace Director None
Stephen A. Malbasa Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Senior Vice President None
5241 South Race Street
Littleton, CO 80121
L J. Clifton Massar Director, Senior Vice None
President
L E. Lee McClennahan Senior Vice President None
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - None
Institutional
Investment Services
David R. Murray Vice President None
60 Briant Drive
Sudbury, MA 01776
Stephen S. Nelson Vice President None
P.O. Box 470528
Charlotte, NC 28247-0528
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
Peter A. Nyhus Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Vice President None
62 Park Drive
Glenview, IL 60025
Gary A. Peace Regional Vice President None
291 Kaanapali Drive
Napa, CA 94558
Samuel W. Perry Regional Vice President None
6133 Calle del Paisano
Scottsdale, AZ 85251
Fredric Phillips Senior Vice President None
175 Highland Avenue, 4th Floor
Needham, MA 02494
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Vice President None
7455 80th Place, S.E.
Mercer Island, WA 98040
L John O. Post Senior Vice President None
S Richard P. Prior Vice President None
Steven J. Reitman Senior Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Vice President None
244 Lambeau Lane
Glenville, NC 28736
George S. Ross Senior Vice President None
55 Madison Avenue
Morristown, NJ 07960
L Julie D. Roth Vice President None
L James F. Rothenberg Director None
Douglas F. Rowe Vice President None
414 Logan Ranch Road
Georgetown, TX 78628
Christopher S. Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
Dean B. Rydquist Senior Vice President None
1080 Bay Pointe Crossing
Alpharetta, GA 30005
Richard R. Samson Senior Vice President None
4604 Glencoe Avenue, #4
Marina del Rey, CA 90292
Joseph D. Scarpitti Vice President None
31465 St. Andrews
Westlake, OH 44145
L R. Michael Shanahan Director President and Director
Brad W. Short Regional Vice President None
306 15th Street
Seal Beach, CA 90740
David W. Short Chairman of the Board and None
1000 RIDC Plaza, Suite 212 Co-Chief Executive
Officer
Pittsburgh, PA 15238
William P. Simon Senior Vice President None
912 Castlehill Lane
Devon, PA 19333
L John C. Smith Assistant Vice President None
-
Institutional Investment
Services
Rodney G. Smith Vice President None
100 N. Central Expressway
Suite 1214
Richardson, TX 75080
S Sherrie L. Snyder-Senft Assistant Vice President None
Anthony L. Soave Regional Vice President None
8831 Morning Mist Drive
Clarkston, MI 48348
Therese L. Souiller Assistant Vice President None
2652 Excaliber Court
Virginia Beach, VA 23454
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
L Kristen J. Spazafumo Assistant Vice President None
Daniel S. Spradling Senior Vice President None
181 Second Avenue
Suite 228
San Mateo, CA 94401
LW Eric H. Stern Director None
B Max D. Stites Vice President None
Thomas A. Stout Regional Vice President None
1004 Ditchley Road
Virginia Beach, VA 23451
Craig R. Strauser Vice President None
3 Dover Way
Lake Oswego, OR 97034
Francis N. Strazzeri Senior Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
L Drew W. Taylor Assistant Vice President None
S James P. Toomey Vice President None
I Christopher E. Trede Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Vice President None
60 Reedland Woods Way
Tiburon, CA 94920
J. David Viale Regional Vice President None
7 Gladstone Lane
Laguna Niguel, CA 92677
Thomas E. Warren Regional Vice President None
119 Faubel Street
Sarasota, FL 34242
L J. Kelly Webb Senior Vice President, None
Treasurer and Controller
Gregory J. Weimer Vice President None
206 Hardwood Drive
Venetia, PA 15367
B Timothy W. Weiss Director None
George J. Wenzel Regional Vice President None
3406 Shakespeare Drive
Troy, MI 48084
J. D. Wiedmaier Assistant Vice President None
3513 Riverstone Way
Chesapeake, VA 23325
Timothy J. Wilson Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Vice President None
H Marshall D. Wingo Director, Senior Vice None
President
L Robert L. Winston Director, Senior Vice None
President
William R. Yost Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
Scott D. Zambon Regional Vice President None
2887 Player Lane
Tustin Ranch, CA 92782
</TABLE>
__________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and held in the
offices of its investment adviser, Capital Research and Management Company, 333
South Hope Street, Los Angeles, California 90071, and/or 135 South State
College Boulevard, Brea, California 92821.
Registrant's records covering shareholder accounts are maintained and kept by
its transfer agent, American Funds Service Company, 135 South State College
Boulevard, Brea, California 92821, 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240, 3500 Wiseman Boulevard, San Antonio, Texas 78251 and
5300 Robin Hood Road, Norfolk, VA 23513.
Registrant's records covering portfolio transactions are maintained and kept
by the fund's custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza,
New York, New York 10081.
ITEM 29. MANAGEMENT SERVICES
None
ITEM 30. UNDERTAKINGS
n/a
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, and State of California, on the
10th day of March, 2000.
THE INVESTMENT COMPANY OF AMERICA
By /s/ JON B. LOVELACE, JR.
(Jon B. Lovelace, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its Registration Statement has been signed below on March 10, 2000, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ JON B. LOVELACE, JR. Chairman of the Board
(Jon B. Lovelace, Jr.)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ THOMAS M. ROWLAND Treasurer
(Thomas M. Rowland)
(3) Directors:
Charles H. Black* Director
Ann S. Bowers* Director
Louise H. Bryson Director
Malcolm R. Currie* Director
</TABLE>
/s/ JON B. LOVELACE, JR.
(Jon B. Lovelace, Jr.) Chairman of the Board
John G. McDonald* Director
Bailey Morris-Eck* Director
Richard G. Newman Director
William C. Newton* Director
James W. Ratzlaff* Vice Chairman of the Board
(3) continued - Directors:
Olin C. Robison* Director
R. Michael Shanahan President & Director
William J. Spencer Director
*By /s/ VINCENT P. CORTI
(Vincent P. Corti, Attorney-in-Fact)
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of rule
485(b).
/s/ Michael J. Downer
(Michael J. Downer)
THE INVESTMENT COMPANY OF AMERICA
Certificate of Designation
Pursuant to Section 151
of the General Corporation Law
of the State of Delaware
_______________
Certificate of Designation
Series B Alternative Common Stock
We, Anne M. Llewellyn and Vincent P. Corti, being, respectively, a Vice
President and the Secretary of The Investment Company of America, a corporation
organized and existing under the General Corporation Law of Delaware (the
"Corporation"), do hereby certify:
FIRST: That, pursuant to authority expressly vested in the Board of Directors
of the Corporation by provisions of its Certificate of Incorporation, the Board
of Directors has duly adopted the following resolution:
RESOLVED, that this Board of Directors, pursuant to authority expressly vested
in it by the provisions of the Certificate of Incorporation of the Corporation,
hereby authorizes the issuance of one series of Alternative Common Stock of the
Corporation and hereby fixes the voting powers, designation, preferences and
relative, participating, optional, conversion or other special rights, and
qualifications, limitations or restrictions thereof, limitations as to
dividends, or terms or conditions of redemptions, as follows:
(1) Designation and Number of Shares. One billion, two hundred fifty million
(1,250,000,000) shares of Alternative Common Stock of the Corporation shall
constitute a series of Alternative Common Stock designated as Series B
Alternative Common Stock, par value $0.001 per share (hereinafter, "Series B
Stock").
(2) Voting and Other Rights; Limitations, Terms and Conditions, etc. Except
to the extent provided otherwise by the Certificate of Incorporation of the
Corporation, the shares of Common Stock, par value $0.001 per share, of the
Corporation and the shares of Series B Stock shall represent an equal
proportionate interest in the assets of the Corporation (subject to the
liabilities of the Corporation) and each share shall have identical voting,
dividend, liquidation and other rights; PROVIDED, HOWEVER, that notwithstanding
anything in the Certificate of Incorporation of the Corporation to the
contrary:
(i) Shares of Common Stock and Series B Stock may be issued and sold subject
to different sales loads or charges, whether initial, deferred or contingent,
or any combination thereof, as may be established from time to time by the
Board of Directors in accordance with the Investment Company Act of 1940 (the
"Investment Company Act") and applicable rules and regulations of
self-regulatory organizations and as shall be set forth in the applicable
prospectus for the shares;
(ii) Liabilities and expenses that should be properly allocated to the shares
of a particular class and series of capital stock may, pursuant to a plan
adopted by the Board of Directors of the Corporation to conform with rule 18f-3
under the Investment Company Act, or a similar rule, provision, interpretation
or order under the Investment Company Act, be charged to and borne solely by
that class and series and the bearing of expenses solely by shares of a class
and series may be appropriately reflected and cause differences in net asset
value attributable to, and the dividend, redemption and liquidation rights of,
the shares of different classes and series of capital stock;
(iii) Except as otherwise provided hereinafter, on the first Friday of the
first calendar month following the expiration of a 96-month period commencing
on the first day of the calendar month during which shares of Series B Stock
were purchased by a holder thereof (if such Friday is not a business day, on
the next succeeding business day), such shares (as well as a pro rata portion
of any shares of Series B Stock purchased through the reinvestment of dividends
or other distributions paid on all shares of Series B Stock held by such
holder) shall automatically convert to shares of Common Stock on the basis of
the respective net asset values of the shares of Series B Stock and the shares
of Common Stock on the conversion date; PROVIDED, HOWEVER, that the Board of
Directors, in its sole discretion, may suspend the conversion of shares of
Series B Stock if any conversion of such shares would constitute a taxable
event under federal income tax law (in which case the holder of such shares of
Series B Stock shall have the right to exchange from time to time any or all of
such shares of Series B Stock held by such holder for shares of Common Stock on
the basis of the respective net asset values of the shares of Series B Stock
and Common Stock on the applicable exchange date and without the imposition of
a sales charge or fee); and PROVIDED, FURTHER, that conversion (or exchange) of
shares of Series B Stock represented by stock certificates shall be subject to
tender of such certificates; and
(iv) Subject to the foregoing paragraph, Series B Stock shall have such other
exchange rights as the Board of Directors shall provide in compliance with the
Investment Company Act.
SECOND: That such determination of the voting rights, designation, preferences
and relative rights, and qualifications, limitations or restrictions thereof
relating to said Series B Stock was duly made by the Board of Directors of the
Corporation pursuant to provisions of the Certificate of Incorporation of the
Corporation and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Designation has been signed by a Vice
President and the Secretary of the Corporation and said Corporation has caused
its corporate seal to be hereunto affixed, all as of the 6th day of January,
2000.
THE INVESTMENT COMPANY OF AMERICA
(seal)
By: _________________________________
Anne M. Llewellyn
Vice President
ATTEST:
By: _________________________________
Vincent P. Corti
Secretary
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
THE INVESTMENT COMPANY OF AMERICA
We, the undersigned, being a duly elected Vice President and Secretary of the
Investment Company of America (the "Company"), a corporation organized and
existing under the laws of the State of Delaware, do hereby certify:
FIRST: That at a meeting duly held on August 11, 1999, the Board of Directors
of the Company approved proposed amendments of the Certificate of Incorporation
of the Company, declaring said amendments to be advisable and authorizing the
proposed amendments to be presented to the shareholders of the Company at the
next Annual Meeting of Shareholders for their consideration. The proposed
amendments are as follows:
Article VI. to be amended to read:
ARTICLE VI
The total number of shares of all classes of stock which the Corporation shall
have authority to issue is five billion (5,000,000,000) shares, of which two
billion five hundred million (2,500,000,000) shares shall be Common shares of
capital stock of the par value of $0.001 per share, (hereinafter, "Common
Stock"), and two billion five hundred million (2,500,000,000) shares shall be
Alternative Common shares of capital stock of the par value of $0.001 per share
(hereinafter, "Alternative Common Stock").
Article VII. to be amended to read:
ARTICLE VII
1. The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of each class of capital
stock shall be governed by the following provisions:
(a) All shares of Common Stock and Alternative Common Stock shall represent the
same interest in the Corporation and have the same voting powers, preferences
and relative, participating, optional, conversion or other special rights, and
qualifications, limitations or restrictions thereof, limitations as to
dividends, and terms and conditions of redemption, except to the extent
expressed otherwise in this Certificate of Incorporation, any amendment
thereof, or as provided for in a resolution or resolutions adopted by the Board
of Directors pursuant to authority vested in it by this Certificate, or as
otherwise provided by law.
(b) The Board of Directors is expressly authorized at any time, and from time
to time, to provide for the issuance of shares of Alternative Common Stock in
one or more series, with such voting powers, full or limited, and with such
designations, preferences and relative, participating, optional, conversion or
other special rights, and qualifications, limitations or restrictions thereof,
limitations as to dividends, or terms or conditions of redemption, as shall be
stated and expressed in any resolution or resolutions providing for the issue
thereof adopted by the Board of Directors, and as are not stated and expressed
in this Certificate of Incorporation, including (but without limiting the
generality thereof) the following:
(i) The designation of such series.
(ii) The dividends payable on the shares of such series, the relation which
such dividends shall bear to the dividends payable on the shares of any other
class or classes of stock, or series thereof.
(iii) Whether the shares of such series shall be subject to redemption by the
Corporation (or at the option of the holder thereof), and, if made subject to
redemption by the Corporation (or at the option of the holder thereof), the
times, prices and other terms and conditions of such redemption (in either
case).
(iv) Whether or not the shares of such series shall be convertible into or
exchangeable for shares of any other class or classes (or series thereof) of
stock of the Corporation, and, if provision be made for conversion or exchange,
the times, prices, rates, adjustments, and other terms and conditions of such
conversion or exchange.
(v) Whether the shares of such series shall be subject to any
distribution-related fees or expenses chargeable against the income or
redemption price of shares of such series.
(c) Dividends. Dividends on shares of the Corporation's capital stock may be
paid with such frequency, in such form and in such amount as the Board of
Directors may determine by resolution adopted from time to time. Such
dividends may vary between or among classes of stock (or series thereof) to
reflect differing allocations of liabilities and expenses allocable to such
class (or series) to such extent as may be provided in or determined pursuant
to this Certificate, any amendment thereof, or in any resolution or resolutions
providing for the issue of such shares of capital stock adopted by the Board of
Directors. All dividends and distributions on shares of a particular class (or
series thereof) shall be distributed pro rata to the holders of that class (or
series thereof) in proportion to the number of shares of that class (or series
thereof) held by such holders at the date and time of record established for
the payment of such dividends or distributions.
Dividends may be paid in cash, property or additional shares of the same or
another class or series or a combination thereof, as determined by the Board of
Directors or pursuant to any program that the Board of Directors may have in
effect at the time for the election by stockholders of the form in which
dividends are to be paid. Any such dividend paid in shares shall be paid at
the current net asset value thereof.
(d) Voting. On each matter submitted to a vote of the stockholders, each
holder of shares shall be entitled to one vote for each share standing in his
name on the books of the Corporation, irrespective of the class or series
thereof, and all shares of all classes and series shall vote as a single class
("Single Class Voting"); provided, however, that (i) as to any matter with
respect to which a separate vote of any class or series is required by the
Investment Company Act or by the General Corporation Law of the State of
Delaware, such requirement as to a separate vote by that class or series shall
apply in lieu of Single Class Voting; (ii) in the event that the separate vote
requirements referred to in clause (i) above apply with respect to one or more
(but less than all) classes or series, then, subject to clause (iii) below, the
shares of all other classes and series shall vote as a single class; and (iii)
as to any matter which does not affect the interest of a particular class (or
series thereof), only the holders of shares of the one or more affected classes
(or series thereof) shall be entitled to vote.
(e) Redemption by Stockholders. Each holder of shares of Common Stock or
Alternative Common Stock (or series of such Alternative Common Stock) shall
have the right at such times as may be permitted by the Corporation to require
the Corporation to redeem all or any part of his or her shares of that class
and series, at a redemption price per share equal to the net asset value per
share of that class and series next determined after the shares are properly
tendered for redemption, less such redemption fee or sales charge, if any, as
may be established by the Board of Directors in its sole discretion. Payment
of the redemption price shall be in cash; provided, however, that if the Board
of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may, to the extent and in the manner permitted by the Investment
Company Act, make payment wholly or partly in securities or other assets, at
the value of such securities or assets used in such determination of net asset
value.
Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of the holders of shares of any
class and series to require the Corporation to redeem shares of that class and
series during any period or at any time when and to the extent permissible
under the Investment Company Act.
(f) Redemption by Corporation. The Board of Directors may cause the
Corporation to redeem at their net asset value the shares of any class (or
series thereof) held in an account having, because of redemptions or exchanges,
a net asset value on the date of the notice of redemption less than the minimum
initial investment in that class (or series thereof) specified by the Board of
Directors from time to time in its sole discretion, provided that at least 60
days' prior written notice of the proposed redemption has been given to the
holder of any such account by mail, postage prepaid, at the address contained
in the books and records of the Corporation and such holder has been given an
opportunity to purchase the required value of additional shares.
(g) Net Asset Value Per Share. For the purposes referred to in this
Certificate of Incorporation, the net asset value of shares of the capital
stock of the Corporation of each class (or series thereof) as of any particular
time (a "determination time") shall be determined by or pursuant to the
direction of the Board of Directors as follows:
(i) The net asset value of each share of capital stock, as of a determination
time, shall be the quotient obtained by dividing the net value of the assets of
the Corporation (determined as hereinafter provided) as of such determination
time by the total number of shares of capital stock then outstanding.
The net value of the assets of the Corporation shall be determined in
accordance with sound accounting practice by deducting from the gross value of
the assets of the Corporation (determined as hereinafter provided) the amount
of all liabilities as of such determination time.
The gross value of the assets of the Corporation as of such determination time
shall be an amount equal to all cash, receivables, the market value of all
securities for which market quotations are readily available and the fair value
of other assets of the Corporation at such determination time, all determined
in accordance with sound accounting practice and giving effect to the
following:
(ii) At times when a class is classified into multiple series, the net asset
value of each share of stock of a series of such class shall be determined in
accordance with subsections (i) and (iii) of this Section (g) with appropriate
adjustments to reflect differing allocations of liabilities and expenses
between or among series of such class to such extent as may be provided in or
determined pursuant to this Certificate, any amendment thereof, or as stated
and expressed in any resolution or resolutions adopted by the Board of
Directors providing for the issue of such shares of such series.
(iii) The Board of Directors is empowered, in its discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by it to be necessary or desirable, including, without limiting the
generality of the foregoing, any method deemed necessary or desirable in order
to enable the Corporation to comply with any provision of the Investment
Company Act or any rule or regulation thereunder. Subject to the applicable
provisions of the Investment Company Act, the Board of Directors, in its sole
discretion, may prescribe and shall set forth in the By-Laws of the Corporation
or in a duly adopted resolution of the Board of Directors such bases and times
for determining the value of the Corporation's assets, and the net asset value
per share of outstanding shares of the Corporation's capital stock, as the
Board of Directors deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the General
Corporation Law of the State of Delaware and the Investment Company Act, to
determine which items shall be treated as income and which items as capital and
whether any item of expense shall be charged to income or capital.
(h) Conversion or Exchange Rights. (i) Subject to compliance with the
requirements of the Investment Company Act, the Board of Directors shall have
the authority to provide that holders of shares of any series or class shall
have the right to exchange said shares into shares of one or more other series
or class of shares in accordance with such requirements and procedures as may
be established by the Board of Directors.
(ii) At such times (which may vary among shares of a class) as may be
determined by the Board of Directors, shares of a particular series of a class
may be automatically converted into another series of such class or other class
based on the relative net asset value of such shares at the time of conversion,
subject, however, to any conditions of the conversion that may be imposed by
the Board of Directors.
2. (a) Shares of the various series of each class of capital stock shall
represent the same interest in the Corporation and have, except as provided to
the contrary in any subsequently filed certificate of designations, identical
voting, dividend, liquidation, and other rights, terms and conditions with any
other shares of capital stock of that class; provided however, that
notwithstanding anything in this Certificate to the contrary, shares of the
various series of a class and various classes shall be subject to such
differing front-end sales loads, contingent deferred sales charges, fees or
expenses under a plan of distribution or other arrangement related to
distribution of shares issued by the Corporation, and administrative,
recordkeeping, or service fees, each as may be established from time to time by
the Board of Directors in accordance with the Investment Company Act and any
rules or regulations promulgated thereunder and applicable rules and
regulations of self-regulatory organizations and as shall be set forth in the
applicable prospectus for the shares; and provided further that expenses
related solely to a particular series of a particular class of capital stock
(including, without limitation, fees or expenses under a plan of distribution
and administrative expenses under an administration or service agreement, plan
or other arrangement, however designated) shall be borne solely by such series
and shall be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution, redemption and
liquidation rights of the shares of the series in question.
(b) As to any matter with respect to which a separate vote of any series of a
class is required by the Investment Company Act or by the General Corporation
Law of the State of Delaware (including, without limitation, approval of any
plan, agreement or other arrangement referred to in subsection (a) above), such
requirement as to a separate vote by that series shall apply in lieu of Single
Class Voting, and if permitted by the Investment Company Act or the General
Corporation Law of the State of Delaware, the series of more than one class
shall vote together as a single class on any such matter which shall have the
same effect on each such series. As to any matter which does not affect the
interest of a particular series of a class, only the holders of shares of the
affected series of that class shall be entitled to vote.
3. The Corporation may issue and sell fractions of shares of capital stock
having pro rata all the rights of full shares, including, without limitation,
the right to vote and to receive dividends, and wherever the words "share" or
"shares" are used in the Certificate of Incorporation or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
SECOND: That at the Annual Meeting of Shareholders held on October 19, 1999 as
adjourned to November 16, 1999, pursuant to notice duly given, the holders of a
majority of the outstanding Common shares of the Company's Capital Stock voted
in favor of the above referenced amendments.
THIRD: That the above-referenced amendments were duly adopted in accordance
with the provisions of Section 242 of the Delaware General Corporation Law, as
amended.
IN WITNESS WHEREOF, this Certificate of Amendment of Certificate of
Incorporation has been executed on behalf of The Investment Company of America
by its duly authorized officers this 27th day of December, 1999.
IN WITNESS WHEREOF, we, Anne M. Llewellyn, Vice President of The Investment
Company of America, and Vincent P. Corti, Secretary of The Investment Company
of America, have signed this certificate and caused the Corporation to be
hereunto fixed this 27h day of December, 1999.
THE INVESTMENT COMPANY OF AMERICA
(seal)
By
Anne M. Llewellyn
Vice President
ATTEST
Vincent P. Corti
Secretary
NUMBER (certificate number)
SHARES (number of shares)
CUSIP (cusip number)
CLASS (class/series of shares)
THE INVESTMENT COMPANY OF AMERICA
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This Certifies that (shareholder name and address) is the owner of (number of
shares) fully paid and nonassessable Shares of Capital Stock, of the
Class/Series and number indicated above, of The Investment Company of America,
each of the par value of One Tenth of One Cent, transferable on the books of
the Corporation by the holder thereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned by the Transfer Agent. (See reverse for certain
abbreviations.)
Witness, the facsimile signatures of duly authorized officers of the
Corporation.
Dated: (date issued)
S/Vincent P. Corti
Secretary
S/R. Michael Shanahan
President
Countersigned
AMERICAN FUNDS SERVICE COMPANY
TRANSFER AGENT
BY ___________________
AUTHORIZED SIGNATURE
THE ISSUER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL FURNISH TO ANY
SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF
EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, THE VARIATIONS IN THE RELATIVE
RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH CLASS AND SERIES INSOFAR AS
THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF
DIRECTORS OR TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES
OF CLASSES AND SERIES OF SHARES OF THE ISSUER. IF YOU WOULD LIKE A COPY OF THE
FULL STATEMENT, PLEASE WRITE TO THE SECRETARY OF THE ISSUER OR ITS TRANSFER
AGENT.
CLASS B AND SERIES B SHARES REDEEMED WITHIN SIX YEARS OF THEIR PURCHASE ARE
SUBJECT TO A DEFERRED SALES CHARGE OF UP TO 5%. IN ADDITION, DURING THE MONTH
FOLLOWING THE 96-MONTH PERIOD THAT BEGINS ON THE FIRST DAY OF THE MONTH IN
WHICH SUCH SHARES ARE PURCHASED, CLASS B AND SERIES B SHARES (ALONG WITH SHARES
OF THE SAME CLASS AND SERIES PURCHASED THROUGH REINVESTMENT OF DIVIDENDS AND
OTHER DISTRIBUTIONS ON SUCH SHARES) WILL AUTOMATICALLY CONVERT TO CLASS A
SHARES (OR COMMON SHARES) ON THE BASIS OF THEN CURRENT RELATIVE NET ASSET
VALUES PER SHARE. THE ISSUER MAY SUSPEND SUCH CONVERSION IN CERTAIN LIMITED
CIRCUMSTANCES, IN WHICH CASE AN EXCHANGE PRIVILEGE WILL APPLY. THE ISSUER MAY
REQUIRE TENDER OF THIS CERTIFICATE PRIOR TO ANY CONVERSION OR EXCHANGE. IF
SUCH TENDER IS NOT REQUIRED, THE NUMBER OF SHARES REPRESENTED BY THIS
CERTIFICATE AFTER SUCH CONVERSION OR EXCHANGE WILL BE DIFFERENT THAN THE NUMBER
INDICATED ON THE FACE OF THIS CERTIFICATE. SHAREHOLDERS MAY RETURN THIS
CERTIFICATE AFTER ANY CONVERSION OR EXCHANGE AND OBTAIN A NEW CERTIFICATE (OR
CERTIFICATES) REPRESENTING THE ACTUAL NUMBER AND TYPE OF SHARES OWNED.
NOTE: SHARES REPRESENTED BY THIS CERTIFICATE MAY BE REDEEMED WITHOUT THE
CONSENT OR APPROVAL OF THE SHAREHOLDER FOR THE THEN CURRENT NET ASSET VALUE PER
SHARE IF AT SUCH TIME THE SHAREHOLDER OWNS OF RECORD SHARES HAVING AN AGGREGATE
NET ASSET VALUE OF LESS THAN THE MINIMUM INITIAL INVESTMENT AMOUNT.
EXPLANATION OF ABBREVIATIONS
The following abbreviations, when used in the registration on the face of this
certificate, shall have the meanings assigned below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADM - Administratrix FBO - For the TTEE - Trustee
benefit
of
Administrator GDN - Guardian U/A - Under
agreement
COM - Community JT TEN - Joint UGMA/ - Uniform
PROP property tenants (State) Gift
with to Minors
right Act
of in
CUST - Custodian survivorship effect in
the
state
indicated
DTD - Dated LIFE TEN - Life UTMA/ - Uniform
tenant (State) Transfers
to
Minors Act
EST - Estate (State)/TOD - Uniform in effect
Transfer in
on the state
Death indicated
Of the estate Act in U/W - Last will
of effect and
in testament
the
state
ET - And others indicated Under last
AL will and
testament
of
EXEC - Executor TR - Trust Under the
will of
Executrix TEN COM - Tenants
in common
TEN ENT - Tenants
by the
entireties
Note: Abbreviations refer where appropriate to the
singular or plural, male
or female. Other abbreviations may also be used,
including U.S. Postal
Service two-letter state abbreviations.
</TABLE>
REQUIREMENTS: THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CORRESPOND EXACTLY WITH
THE NAME(S) WRITTEN ON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR.
SIGNATURE(S) MUST BE GUARANTEED BY AN "ELIGIBLE GUARANTOR," SUCH AS A BANK,
SAVINGS ASSOCIATION OR CREDIT UNION THAT IS FEDERALLY INSURED OR A MEMBER FIRM
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. A NOTARY PUBLIC IS NOT
AN ACCEPTABLE GUARANTOR.
FOR VALUE RECEIVED, THE UNDERSIGNED HEREBY SELL, ASSIGN, AND TRANSFER
SHARES OF THE ISSUER REPRESENTED BY THIS
CERTIFICATE TO:
_______________________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE)
AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
_____________________________________________________ ATTORNEY TO TRANSFER
THESE SHARES ON THE BOOKS OF THE ISSUER WITH FULL POWER OF
SUBSTITUTION._________________________________________________________________
__________________________ _______________________________
Signature of owner Date
______________________________________________________________________________
_____________ _______________________________ Signature of
co-owner, if any Date
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH THE REQUIREMENTS
PRINTED ABOVE.
SIGNATURE(S) GUARANTEED BY:
______________________________________________________________________
AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 8th day of December,
1999 is made and entered into by and between THE INVESTMENT COMPANY OF AMERICA,
a Delaware corporation (hereinafter called the "Company"), and CAPITAL
RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation (hereinafter called the
"Investment Adviser").
WITNESSETH:
A. The Company is an open-end diversified investment company of the management
type, registered under the Investment Company Act of 1940. The Investment
Adviser is registered under the Investment Advisers Act of 1940 and is engaged
in the business of providing investment advisory and administrative services to
investment companies and others.
B. The Investment Adviser has provided investment advisory services to the
Company under a series of agreements and is currently providing such services
under a written agreement dated
May 1, 1996, as renewed.
NOW THEREFORE, in consideration of the premises and the mutual undertakings of
the parties, it is covenanted and agreed as follows:
1. The Company hereby employs the Investment Adviser to provide investment
advisory and administrative services to the Company. The Investment Adviser
hereby accepts such employment and agrees to render the services and to assume
the obligation to the extent herein set forth, for the compensation herein
provided. The Investment Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Company.
2. The Investment Adviser agrees to provide supervision of the portfolio of
the Company and to determine what securities or other property shall be
purchased or sold by the Company, giving due consideration to the policies of
the Company as expressed in the Company's Certificate of Incorporation,
By-Laws, Registration Statement under the Investment Company Act of 1940 (the
"1940 Act"), Registration Statement under the Securities Act of 1933 (the "1933
Act"), and prospectus as in use from time to time, as well as to the factors
affecting the Company's status as a regulated investment company under the
Internal Revenue Code of 1954.
The Investment Adviser shall provide adequate facilities and qualified
personnel for the placement of orders for the purchase, or other acquisition,
and sale, or other disposition, of portfolio securities for the Company. With
respect to such transactions, the Investment Adviser, subject to such
directions as may be furnished from time to time by the Directors, shall
endeavor as the primary objective to obtain the most favorable prices and
execution of orders. Subject to such primary objective, the Investment Adviser
may place orders with broker-dealer firms which sell shares of the Company or
which furnish statistical and other information to the Investment Adviser,
taking into account the value and quality of the brokerage services of such
broker-dealers, including the availability and quality of such statistical and
other information. Receipt by the Investment Adviser of any such statistical
and other information and services shall not be deemed to give rise to any
requirement for abatement of the advisory fee payable pursuant to Section 5
hereof.
3. In addition to managing the portfolio of the Company, the Investment
Adviser shall (a) furnish the services of qualified personnel to (i) perform
the executive and related administrative functions of the Company and (ii) if
desired by the Company, serve as Directors of the Company, in all cases without
additional compensation of such persons by the Company; (b) pay the expenses of
all persons whose services are to be furnished by the Investment Adviser under
this Section; (c) provide office space, furniture, small office equipment, and
telephone facilities and utilities, all of which may be the same as occupied or
used by the Investment Adviser; and (d) provide general purpose forms,
supplies, stationery, and postage used at the offices of the Company relating
to the services to be furnished by the Investment Adviser hereunder.
4. Except to the extent expressly assumed by the Investment Adviser herein,
and subject to an expense limitation agreement described in Section 6 below,
the Company shall pay all costs and expenses in connection with its operations.
Without limiting the generality of the foregoing, such costs and expenses shall
include the following: compensation paid to the Directors and members of the
Advisory Board who are not affiliated persons of the Investment Adviser and
reimbursement of travel expenses incurred by such Directors and members of the
Advisory Board in connection with attendance at meetings of the Directors or of
the Advisory Board or committees of the Board of Directors; fees and expenses
of the custodian, transfer agent, dividend disbursing agent, independent public
accountants, and legal counsel; distribution expenses pursuant to a plan under
rule 12b-1 of the 1940 Act; costs of designing, printing, and mailing reports,
prospectuses, proxy statements and notices to shareholders; fees and expenses
of registration and qualification of the shares of the Company for sale, the
cost of any share certificates, and the redemption of shares; association dues;
interest; and taxes.
5. The Company shall pay to the Investment Adviser on or before the tenth
(10th) day of each month, as compensation for the services rendered by the
Investment Adviser during the preceding month, an amount to be computed by
applying to the net asset value of the Company on the last business day of such
month, the applicable annual rates set forth below:
0.39% per annum on first $1 billion of net assets
0.336% per annum on net assets over $1 billion to $2 billion
0.30% per annum on net assets over $2 billion to $3 billion
0.276% per annum on net assets over $3 billion to $5 billion
0.258% per annum on net assets over $5 billion to $8 billion
0.246% per annum on net assets over $8 billion to $13 billion
0.24% per annum on net assets over $13 billion to $21 billion
0.235% per annum on net assets over $21 billion to $34 billion
0.231% per annum on net assets over $34 billion
For the purposes hereof, the net assets of the Company shall be determined in
the manner set forth in the Certificate of Incorporation and Prospectus of the
Company. The advisory fee shall be payable for the period commencing on May 1,
1996 and ending on the date of termination hereof and shall be prorated for any
fraction of a month at the termination of such period.
6. The Investment Adviser agrees that in the event the normal operating
expenses of the Company, including the compensation paid to the Investment
Adviser pursuant to Section 5 above, and the expenses of the Company referred
to in Section 4 above but excluding interest, taxes, brokerage costs,
distribution expenses pursuant to a plan under rule 12b-1 and extraordinary
expenses such as litigation and acquisitions, for any fiscal year during which
this Agreement is in effect, exceed the expense limitations applicable to the
Company imposed by state securities laws or any regulations thereunder, the
Investment Adviser will reduce its fee by the extent of such excess and, if
required pursuant to any such laws or regulations, will reimburse the Company
in the amount of such excess. Under the most restrictive State regulations, as
of the effective date of this Agreement, the Investment Adviser would be
required to reimburse the Company if the normal operating expenses exceed the
lesser of (i) 1 1/2% of the average value of the Company's net assets for the
fiscal year up to $30 million, plus 1% of the average value of the Company's
net assets for the fiscal year in excess of $30 million, or (ii) 25% of the
gross investment income of the Company.
7. The expense limitation described in Section 6 shall apply only to Class A
shares issued by the Company and shall not apply to any other class(es) of
shares the Company may issue in the future. Any new class(es) of shares issued
by the Company will not be subject to an expense limitation. However,
notwithstanding the foregoing, to the extent the Investment Adviser is required
to reduce its management fee pursuant to provisions contained in Section 6 due
to the expenses of the Class A shares exceeding the stated limit, the
Investment Adviser will either (i) reduce its management fee similarly for
other classes of shares, or (ii) reimburse the Company for other expenses to
the extent necessary to result in an expense reduction only for Class A shares
of the Company.
8. Nothing contained in this Agreement shall be construed to prohibit the
Investment Adviser from performing investment advisory or administrative
services for other investment companies and other persons or companies, nor to
prohibit affiliates of the Investment Adviser from engaging in such business or
other related or unrelated businesses.
9. The Investment Adviser shall have no liability to the Company, or its
shareholders or creditors, for any error of judgment, mistake of law, or for
any loss arising out of any investment, or for any other act or omission in the
performance of its obligations to the Company not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties hereunder.
10. This Agreement shall continue in effect until the close of business on
April 30, 2000. It may be renewed from year to year thereafter by mutual
consent, provided that such renewal shall be specifically approved at least
annually by (i) the Directors or by the vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of the Company, and (ii) a
majority of those Directors who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval. Such mutual consent
to renewal shall not be deemed to have been given unless evidenced by a writing
signed by both par ties hereto.
11. This Agreement may be terminated at any time, without payment of any
penalty, by the Directors or by the vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of the Company, on sixty (60) days'
written notice to the Investment Adviser, or by the Investment Adviser on like
notice to the Company. This Agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date shown above.
THE INVESTMENT COMPANY CAPITAL RESEARCH AND
OF AMERICA MANAGEMENT COMPANY
By By
R. Michael Shanahan, Paul G. Haaga, Jr.,
President Executive Vice President
By By
Vincent P. Corti, Michael J. Downer,
Secretary Secretary
THE INVESTMENT COMPANY OF AMERICA
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, between THE INVESTMENT COMPANY OF
AMERICA, a Delaware corporation (the "Fund"), and AMERICAN FUNDS DISTRIBUTORS,
INC., a California corporation ("the Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end diversified investment company which
offers shares of capital stock ("Class A shares") and Alternative Common shares
of capital stock, Series B ("Class B shares"), and it is a part of the business
of the Fund, and affirmatively in the interest of the Fund, to offer shares of
the Fund either from time to time or continuously as determined by the Fund's
officers subject to authorization by its Board of Directors; and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of shares of investment companies through securities
broker-dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other to promote the distribution of the shares of the Fund and of all
series or classes of the Fund which may be established in the future;
NOW, THEREFORE, the parties agree as follows:
1. (a) The Distributor shall be the exclusive principal underwriter for the
sale of the shares of the Fund and of each series or class of the Fund which
may be established in the future, except as otherwise provided pursuant to the
following subsection (b). The terms "shares of Fund" or "shares" as used
herein shall mean shares of capital stock of the Fund and each series or class
which may be established in the future and become covered by this Agreement in
accordance with Section 23 of this Agreement.
(b) The Fund may, upon 60 days' written notice to the Distributor, from time
to time designate other principal underwriters of its shares with respect to
areas other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Fund may have expressly waived
in writing its right to make such designation. In the event of such
designation, the right of the Distributor under this Agreement to sell shares
in the areas so designated shall terminate, but this Agreement shall remain
otherwise in full force and effect until terminated in accordance with the
other provisions hereof.
2. In the sale of shares of the Fund, the Distributor shall act as agent of
the Fund except in any transaction in which the Distributor sells such shares
as a dealer to the public, in which event the Distributor shall act as
principal for its own account.
3. The Fund shall sell shares only through the Distributor, except that the
Fund may, to the extent permitted by the 1940 Act and the rules and regulations
promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership or other
organization, or its, or their, security holders, beneficiaries or members, in
connection with a merger, consolidation or reorganization to which the Fund is
a party, or in connection with the acquisition of all or substantially all the
property and assets of such corporation, association, trust, partnership or
other organization;
(b) issue shares at net asset value to the holders of shares of capital stock
or beneficial interest of other investment companies served as investment
adviser by any affiliated company or companies of The Capital Group Companies,
Inc., to the extent of all or any portion of amounts received by such
shareholders upon redemption or repurchase of their shares by the other
investment companies;
(c) issue shares at net asset value to its shareholders in connection with the
reinvestment of dividends paid and other distributions made by the Fund;
(d) issue shares at net asset value to persons entitled to purchase shares at
net asset value without sales charge or contingent deferred sales charge as
described in the current prospectus which is part of the Fund's Registration
Statement in effect under the Securities Act of 1933, as amended, for each
series issued by the Fund at the time of such offer or sale (the "Prospectus").
4. The Distributor shall devote its best efforts to the sale of shares of the
Fund and shares of any other mutual funds served as investment adviser by
affiliated companies of The Capital Group Companies, Inc., and insurance
contracts funded by shares of such mutual funds, for which the Distributor has
been authorized to act as a principal underwriter for the sale of shares. The
Distributor shall maintain a sales organization suited to the sale of shares of
the Fund and shall use its best efforts to effect such sales in jurisdictions
as to which the Fund shall have expressly waived in writing its right to
designate another principal underwriter pursuant to subsection 1(b) hereof, and
shall effect and maintain appropriate qualification to do so in all those
jurisdictions in which it sells or offers shares for sale and in which
qualification is required.
5. Within the United States of America, all dealers to whom the Distributor
shall offer and sell shares must be duly licensed and qualified to sell shares
of the Fund. Shares sold to dealers shall be for resale by such dealers only
at the public offering price set forth in the current Prospectus. The
Distributor shall not, without the consent of the Fund, sell or offer for sale
any shares of a series or class issued by the Fund other than as principal
underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of the Distributor
to insure that such dealers are appropriately qualified to transact business in
the shares under applicable laws, rules and regulations promulgated by such
national, state, local or other governmental or quasi-governmental authorities
as may in a particular instance have jurisdiction.
7. The applicable public offering price of shares shall be the price which is
equal to the net asset value per share, as shall be determined by the Fund in
the manner and at the time or times set forth in and subject to the provisions
of the Prospectus of the Fund.
8. All orders for shares received by the Distributor shall, unless rejected by
the Distributor or the Fund, be accepted by the Distributor immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. The Distributor shall not hold orders subject to acceptance nor
otherwise delay their execution. The provisions of this Section shall not be
construed to restrict the right of the Fund to withhold shares from sale under
Section 18 hereof.
9. The Fund or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. The Distributor shall adopt and follow procedures as approved by the
officers of the Fund for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Securities and Exchange Commission or the National Association of Securities
Dealers, Inc. ("NASD"), as such requirements may from time to time exist.
11. The Distributor, as a principal underwriter under this Agreement for Class
A shares, shall receive (i) that part of the sales charge which is retained by
the Distributor after allowance of discounts to dealers, unless waived by the
Distributor for certain qualified fee-based programs, as set forth in the
Prospectus of the Fund, and (ii) amounts payable to the Distributor pursuant to
the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act relating to
its Class A shares.
12. The Distributor, as principal underwriter under this agreement for Class B
shares shall receive (i) distribution fees as commissions for the sale of Class
B shares and contingent deferred sales charges ("CDSC") (as defined below), as
set forth in the Fund's Prospectus, and (ii) shareholder service fees at the
rate of 0.25% per annum of the average net asset value of Class B shares
pursuant to the Fund's Plan of Distribution under Rule 12b-1 under the 1940 Act
relating to its Class B shares (the "Plan").
13. (a) In accordance with the Plan, and subject to the limit on asset-based
sales charges set forth in NASD Conduct Rule 2830 (and any successor provision
thereto), the Fund shall pay to the Distributor or, at the Distributor's
direction, to a third-party, monthly in arrears on or prior to the 10/th/
business day of the following calendar month, the Distributor's Allocable
Portion (as defined below) of a fee (the "Distribution Fee") which shall accrue
daily in an amount equal to the product of (A) the daily equivalent of 0.75%
per annum multiplied by (B) the net asset value of the Class B shares of the
Fund outstanding on such day. The Fund agrees to withhold from redemption
proceeds of the Class B shares, the Distributor's Allocable Portion of any
CDSCs payable with respect to the Class B shares, as provided in the Fund's
Prospectus, and to pay the same over to the Distributor or, at the
Distributor's direction to a third-party, at the time the redemption proceeds
are payable to the holder of such shares redeemed. Payment of these CDSC
amounts to the Distributor is not contingent upon the adoption or continuation
of any Plan.
(b) For purposes of this Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable with respect to Class B shares shall mean
the portion of such Distribution Fees and CDSC allocated to the Distributor in
accordance with the Allocation Schedule attached hereto as Schedule A.
(c) The Distributor shall be considered to have completely earned the right to
the payment of its Allocable Portion of the Distribution Fees and the right to
payment of its Allocable Portion of the CDSCs with respect to each "Commission
Share" (as defined in the Allocation Schedule attached hereto as Schedule A)
upon the settlement date of such Commission Share taken into account in
determining the Distributor's Allocable Portion of Distribution Fees.
(d) The provisions set forth in Section 1 of the Plan (in effect on the date
hereof) relating to Class B shares, together with the related definitions are
hereby incorporated into this Section 13 by reference with the same force and
effect as if set forth herein in their entirety.
14. The Fund agrees to use its best efforts to maintain its registration as a
diversified open-end management investment company under the 1940 Act.
15. The Fund agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part becomes effective, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading (excluding any information provided by the Distributor in writing
for inclusion in the Prospectus). The Distributor agrees and warrants that it
will not in the sale of shares use any Prospectus, advertising or sales
literature not approved by the Fund or its officers nor make any untrue
statement of a material fact nor omit the stating of a material fact necessary
in order to make the statements made, in the light of the circumstances under
which they are made, not misleading. The Distributor agrees to indemnify and
hold the Fund harmless from any and all loss, expense, damage and liability
resulting from a breach of the agreements and warranties contained in this
Section, or from the use of any sales literature, information, statistics or
other aid or device employed in connection with the sale of shares.
16. The expense of each printing of each Prospectus and each revision thereof
or addition thereto deemed necessary by the Fund's officers to meet the
requirements of applicable laws shall be divided between the Fund, the
Distributor and any other principal underwriter of the shares of the Fund as
follows:
(a) the Fund shall pay the typesetting and make-ready charges;
(b) the printing charges shall be prorated between the Fund, the Distributor,
and any other principal underwriter(s) in accordance with the number of copies
each receives; and
(c) expenses incurred in connection with the foregoing, other than to meet the
requirements of the Securities Act of 1933, as amended, or other applicable
laws, shall be borne by the Distributor, except in the event such incremental
expenses are incurred at the request of any other principal underwriter(s), in
which case such incremental expenses shall be borne by the principal
underwriter(s) making the request.
17. The Fund agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series or class it
offers for sale under the securities laws of such states as the Distributor and
the Fund may approve. Any such qualification for any series or class may be
withheld, terminated or withdrawn by the Fund at any time in its discretion.
The expense of qualification and maintenance of qualification shall be borne by
the Fund, but the Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Fund or its
counsel in connection with such qualifications.
18. The Fund may withhold shares of any series or class from sale to any
person or persons or in any jurisdiction temporarily or permanently if, in the
opinion of its counsel, such offer or sale would be contrary to law or if the
Directors or the President or any Vice President of the Fund determines that
such offer or sale is not in the best interest of the Fund. The Fund will give
prompt notice to the Distributor of any withholding and will indemnify it
against any loss suffered by the Distributor as a result of such withholding by
reason of nondelivery of shares of any series or class after a good faith
confirmation by the Distributor of sales thereof prior to receipt of notice of
such withholding.
19. (a) This Agreement may be terminated at any time, without payment of any
penalty, as to the Fund or any series or class on sixty (60) days' written
notice by the Distributor to the Fund.
(b) This Agreement may be terminated as to the Fund or any series or class by
either party upon five (5) days' written notice to the other party in the event
that the Securities and Exchange Commission has issued an order or obtained an
injunction or other court order suspending effectiveness of the Registration
Statement covering the shares of the Fund or such series or class.
(c) This Agreement may be terminated as to the Fund or any series or class by
the Fund upon five (5) days' written notice to the Distributor provided either
of the following events has occurred:
(i) The NASD has expelled the Distributor or suspended its membership in that
organization; or
(ii) the qualification, registration, license or right of the Distributor to
sell shares of any series in a particular state has been suspended or canceled
by the State of California or any other state in which sales of the shares of
the Fund or such series during the most recent 12-month period exceeded 10% of
all shares of such series sold by the Distributor during such period.
(d) This Agreement may be terminated as to the Fund or any series or class at
any time on sixty (60) days' written notice to the Distributor without the
payment of any penalty, by vote of a majority of the Independent Directors or
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund or such series or class.
20. This Agreement shall not be assignable by either party hereto and in the
event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act. Notwithstanding
this Section, this Agreement, with respect to the Fund's Class B shares, has
been approved in accordance with Section 22 in anticipation of the
Distributor's transfer of its Allocable Portion (but not its obligations under
this Agreement) to a third-party pursuant to a "Purchase and Sale Agreement" in
order to raise funds to cover distribution expenditures, and such transfer will
not cause of a termination of this Agreement.
21. No provision of this Agreement shall protect or purport to protect the
Distributor against any liability to the Fund or holders of its shares for
which the Distributor would otherwise be liable by reason of willful
misfeasance, bad faith, or gross negligence.
22. This Agreement shall become effective on January 1, 2000. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until April 30, 2000, and shall continue in effect from year
to year thereafter but only so long as such continuance is specifically
approved at least annually by (i) the vote of a majority of the Independent
Directors of the Fund cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the vote of either a majority of the entire
Board of Directors of the Fund or a majority (within the meaning of the 1940
Act) of the outstanding voting securities of the Fund.
23. If the Fund shall at any time issue shares in more than one series or
class, this Agreement shall take effect with respect to such series or class of
the Fund which may be established in the future at such time as it has been
approved as to such series or class by vote of the Board of Directors and the
Independent Directors in accordance with Section 22. The Agreement as approved
with respect to any series or class shall specify the compensation payable to
the Distributor pursuant to Sections 11 and 12, as well as any provisions which
may differ from those herein with respect to such series, subject to approval
in writing by the Distributor.
This Agreement may be approved, amended, continued or renewed with respect to
a series or class as provided herein notwithstanding such approval, amendment,
continuance or renewal has not been effected with respect to any one or more
other series or class of the Fund.
This Agreement shall be construed under and shall be governed by the laws of
the State of California, and the parties hereto agree that proper venue of any
action with respect hereto shall be Los Angeles County, California.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunto duly authorized, as
of December 8, 1999.
AMERICAN FUNDS DISTRIBUTORS, INC. THE INVESTMENT COMPANY OF AMERICA
By By
Kevin G. Clifford, President R. Michael Shanahan, President
By By
Michael J. Downer, Secretary Vincent P. Corti, Secretary
SCHEDULE A
to the
Amended and Restated Principal Underwriting Agreement
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class B shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class B shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class B shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall
have the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule
is a part. As used herein the following terms shall have the meanings
indicated:
"Commission Share" means each B share issued under circumstances which would
normally give rise to an obligation of the holder of such share to pay a CDSC
upon redemption of such share (including, without limitation, any B share
issued in connection with a permitted free exchange), and any such share shall
continue to be a Commission Share of the applicable Fund prior to the
redemption (including a redemption in connection with a permitted free
exchange) or conversion of such share, even though the obligation to pay the
CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date
with reference to which the amount of the CDSC payable on redemption thereof,
if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund, other than
a Commission Share (including, without limitation, any B share issued in
connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund
issued shares.
"Net Asset Value" means the net asset value determined as set forth in the
Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share
sold by one of the selling agents listed on Exhibit I. If, subsequent to the
Successor Distributor becoming exclusive distributor of the Class B shares, the
Distributor reasonably determines that the transfer agent is able to track all
Commission Shares and Free Shares sold by any of the selling agents listed on
Exhibit I in the same manner as Commission Shares and Free Shares are currently
tracked in respect of selling agents not listed on Exhibit I, then Exhibit I
shall be amended to delete such selling agent from Exhibit I so that Commission
Shares and Free Shares sold by such selling agent will no longer be treated as
Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that are outstanding from time to time, shall be attributed to
the Distributor and each Successor Distributor in accordance with the following
rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission
Shares") attributed to the Distributor shall be those Non-Omnibus Commission
Shares the date of Original Issuance of which occurred on or after the
Inception Date of the applicable Fund and on or prior to the date the
Distributor ceased to be exclusive distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor
shall be those Non-Omnibus Commission Shares the Date of Original Issuance of
which occurs after the date such Successor Distributor became the exclusive
distributor of Class B shares of the Fund and on or prior to the date such
Successor Distributor ceased to be the exclusive distributor of Class B shares
of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the
investment of proceeds of the redemption of a Non-Omnibus Commission Share of
another Fund (the "Redeeming Fund") in connection with a permitted free
exchange, is deemed to have a Date of Original Issuance identical to the Date
of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund,
and any such Commission Share will be attributed to the Distributor or
Successor Distributor based upon such Date of Original Issuance in accordance
with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Commission Shares are allocated to each thereof;
provided, that if the Distributor reasonably determines that the transfer agent
is able to produce monthly reports which track the Date of Original Issuance
for the Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus
Shares shall be allocated among the Distributor and any Successor Distributor
depending on whether the related redeemed Omnibus Share is attributable to the
Distributor or a Successor Distributor, as the case may be, in accordance with
Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV
hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class B shares of a Fund during any calendar month allocable to the Distributor
or a Successor Distributor is determined by multiplying the total of such
Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class B shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class B shares of a Fund at the end of
such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able
to produce automated monthly reports that allocate the average Net Asset Value
of the Commission Shares (or all Class B shares if available) of a Fund among
the Distributor and any Successor Distributor in a manner consistent with the
methodology detailed in Part I and Part III(1) above, the portion of the
Distribution Fee accrued in respect of all such Class B shares of a Fund during
a particular calendar month will be allocated to the Distributor or a Successor
Distributor by multiplying the total of such Distribution Fee by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund for such
calendar month attributed to the Distributor or a Successor Distributor, as the
case may be
B= Total average Net Asset Value of all such Class B shares of a Fund for such
calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class B shares relating to a Fund shall be adjusted
by agreement among the relevant parties; provided, however, if the Distributor,
the Successor Distributor and the Fund cannot agree within thirty (30) days
after the date of any such change in applicable laws or in any distributor's
contract, distribution plan, prospectus or the Conduct Rules, they shall submit
the question to arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association and the decision reached by the
arbitrator shall be final and binding on each of them.
January 15, 1999
Capital Research and Management Company
333 South Hope Street, 55/th/ Floor
Los Angeles, CA 90071
RE: DELEGATION OF RESPONSIBILITIES UNDER RULE 17F-5
Dear Mesdames/Sirs:
This Agreement confirms, and sets forth the responsibilities of the parties in
connection with, the appointment of Capital Research and Management Company
("CRMC") as the Foreign Custody Manager of The Investment Company of America
(the "Company"), in accordance with rule 17f-5, as amended, under the
Investment Company Act of 1940 (the "1940 Act"). CRMC hereby accepts such
appointment as of the date first written above. All capitalized terms used
herein and not otherwise defined have the meanings assigned in rule 17f-5.
The Company may, from time to time and in accordance with this Agreement,
place or maintain in the care of an Eligible Foreign Custodian, any of the
Company's investments (including non-U.S. currencies) for which the primary
market is outside the United States, and such cash and cash equivalents as are
reasonably necessary to effect the Company's transactions in such investments,
PROVIDED THAT:
(a) CRMC, as Foreign Custody Manager, determines that the Company's assets will
be subject to reasonable care, based on the standards applicable to custodians
in the relevant market, if maintained with the custodian, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation:
(1) the custodian's practices, procedures, and internal controls, including,
but not limited to, the physical protections available for certificated
securities (if applicable), the method of keeping custodial records, and the
security and data protection practices;
(2) whether the custodian has the requisite financial strength to provide
reasonable care for the Company's assets;
Capital Research and Management Company
January 15, 1999
Page
(3) the custodian's general reputation and standing and, in the case of a
securities depository, the depository's operating history and number of
participants; and
(4) whether the Company will have jurisdiction over and be able to enforce
judgments against the custodian, such as by virtue of the existence of any
offices of the custodian in the U.S. or the custodian's consent to service of
process in the U.S.
(b) Each of the Company's non-U.S. custody arrangements are governed by a
written contract (or, in the case of a Securities Depository, by such a
contract, by the rules or established practices or procedures of the
depository, or by any combination of the foregoing) that CRMC, as Foreign
Custody Manager, has determined will provide reasonable care for the Company's
assets based on the standards set forth in paragraph (a) above.
(1) Such contract shall include provisions that provide:
(i) for indemnification or insurance arrangements (or any combination of the
foregoing) such that the Company will be adequately protected against the risk
of loss of assets held in accordance with such contract;
(ii) that the Company's assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the custodian or its
creditors except a claim of payment for their safe custody or administration
or, in the case of cash deposits, liens or rights in favor of creditors of the
custodian arising under bankruptcy, insolvency, or similar laws;
(iii) that beneficial ownership for the Company's assets will be freely
transferable without the payment of money or value other than for safe custody
or administration;
Capital Research and Management Company
January 15, 1999
Page
(iv) that adequate records will be maintained identifying the assets as
belonging to the Company or as being held by a third party for the benefit of
the Company;
(v) that the Company's independent public accountants will be given access to
those records or confirmation of the contents of those records; and
(vi) that the Company will receive periodic reports with respect to the
safekeeping of the Company's assets, including, but not limited to,
notification of any transfer to or from the Company's account or a third party
account containing assets held for the benefit of the Company.
(2) Such contract may contain, in lieu of any or all of the provisions
specified in subparagraph (1) above, such other provisions that CRMC, as
Foreign Custody Manager, determines will provide, in their entirety, the same
or a greater level of care and protection for Company assets as the specified
provisions, in their entirety.
(c) (1) CRMC, as Foreign Custody Manager, will have established a system to
monitor the appropriateness of maintaining the Company's assets with a
particular custodian under paragraph (a) above, and the contract governing the
Company's arrangements under paragraph (b) above.
(2) If an arrangement no longer meets the requirements of paragraph (c), the
Company must withdraw its assets from the custodian as soon as reasonably
practicable.
CRMC, as Foreign Custody Manager, will provide written reports notifying the
Company's Board of Directors of the placement of the Company's assets with a
particular custodian and of any material change in the Company's arrangements,
with the reports to be provided to the Board at such times as the Board deems
reasonable and appropriate based on the circumstances of the Company's non-U.S.
custody arrangements.
CRMC, in performing the responsibilities delegated to it as the Company's
Foreign Custody Manager, will exercise reasonable care, prudence and diligence
such as a person having responsibility for the safekeeping of the Company's
assets would exercise.
Capital Research and Management Company
January 15, 1999
Page
This Agreement (and the appointment of CRMC as the Company's Foreign Custody
Manager) may be terminated at any time, without payment or any penalty, by the
Board of Directors of the Company or by vote of a majority (within the meaning
of the 1940 Act) of the outstanding voting securities of the Company, on sixty
(60) days' written notice to CRMC, or by CRMC on like notice to the Company.
The obligations of the Company under this Agreement are not binding upon any
of the Directors, officers, employees, agents or shareholders of the Company
individually, but bind only the Company's estate. CRMC agrees to look solely
to the assets of the Company for the satisfaction of any liability in respect
of the Company under this Agreement and will not seek recourse against such
Directors, officers, employees, agents or shareholders, or any of them, or any
of their personal assets for such satisfaction.
Very truly yours,
THE INVESTMENT COMPANY
OF AMERICA
By: /s/ Vincent P. Corti
Vincent P. Corti, Secretary
ACCEPTED AND AGREED as of the date first written above:
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By: /s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Executive Vice President
March 3, 2000
O'MELVENY & MYERS LLP
<TABLE>
<CAPTION>
<S> <C> <C>
Century City 400 South Hope Street Hong Kong
Newport Beach Los Angeles, California 90071-2899 London
New York Telephone (213) 430-6000 Shanghai
San Francisco Facsimile (213) 430-6407 Tokyo
Washington, D.C. Internet: www.omm.com
</TABLE>
THE INVESTMENT COMPANY OF AMERICA
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
DEAR LADIES AND GENTLEMEN:
AT YOUR REQUEST WE HAVE EXAMINED YOUR REGISTRATION STATEMENT ON FORM N-1A AND
THE RELATED POST-EFFECTIVE AMENDMENT NO. 105 FILED BY YOU WITH THE SECURITIES
AND EXCHANGE COMMISSION IN CONNECTION WITH THE REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OF AN INDEFINITE NUMBER OF CLASS B SHARES
OF YOUR COMMON STOCK, $0.001 PAR VALUE PER SHARE (THE "CLASS B SHARES"). WE
ARE FAMILIAR WITH THE PROCEEDINGS YOU HAVE TAKEN IN CONNECTION WITH THE
AUTHORIZATION, ISSUANCE AND SALE OF THE CLASS B SHARES.
BASED UPON OUR EXAMINATION AND UPON OUR KNOWLEDGE OF YOUR ACTIVITIES, IT IS OUR
OPINION THAT, PROVIDED THAT AN APPROPRIATE AMENDMENT TO YOUR ARTICLES OF
INCORPORATION IS DULY EFFECTED BEFORE THE ISSUED AND OUTSTANDING CLASS B SHARES
EXCEED THE AUTHORIZED NUMBER SPECIFIED IN THE ARTICLES OF INCORPORATION, THE
CLASS B SHARES UPON ISSUANCE AND SALE IN THE MANNER DESCRIBED IN THE
REGISTRATION STATEMENT WILL CONSTITUTE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE CLASS B SHARES OF YOUR COMMON STOCK.
WE CONSENT TO THE FILING OF THIS OPINION AS AN EXHIBIT TO THE REGISTRATION
STATEMENT.
RESPECTFULLY SUBMITTED,
O'MELVENY & MYERS LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A of our
report dated January 28, 2000, relating to the financial statements and
per-share data and ratios of The Investment Company of America, which appears
in such Registration Statement. We also consent to the references to us under
the headings "Financial Highlights", "Independent Accountants", and
"Prospectuses and Reports to Shareholders" in such Registration Statement.
PricewaterhouseCoopers LLP
Los Angeles, California
March 8, 2000
PLAN OF DISTRIBUTION
of
THE INVESTMENT COMPANY OF AMERICA
relating to its
CLASS B SHARES
WHEREAS, The Investment Company of America (the "Fund") is a Delaware
Corporation that offers shares of capital stock ("Class A shares") and
Alternative Common shares of capital stock, Series B ("Class B shares");
WHEREAS, American Funds Distributors, Inc. ("AFD") or any successor entity
designated by the Fund (AFD and any such successor collectively are referred to
as "Distributor") will serve as distributor of the shares of common stock of
the Fund, and the Fund and Distributor are parties to a principal underwriting
agreement (the "Agreement");
WHEREAS, the purpose of this Plan of Distribution (the "Plan") is to authorize
the Fund to bear expenses of distribution of its Class B shares; and
WHEREAS, the Board of Directors of the Fund has determined that there is a
reasonable likelihood that this Plan will benefit the Fund and its
shareholders;
NOW, THEREFORE, the Fund adopts this Plan as follows:
1. PAYMENTS TO DISTRIBUTOR. The Fund may expend pursuant to this Plan and as
set forth below an aggregate amount not to exceed 1.00% per annum of the
average net assets of the Fund's Class B shares.
A. SERVICE FEES. The Fund shall pay to the Distributor monthly in arrears a
shareholder servicing fee (the "Shareholder Servicing Fee") at the rate of
0.25% per annum on the Fund's Class B shares outstanding for less than one
year. The Fund shall also pay to the Distributor quarterly a Shareholder
Servicing Fee at the rate of 0.25% per annum on Class B shares that are
outstanding for one year or more. The Shareholder Servicing Fee is designed to
compensate Distributor for paying Service Fees to broker-dealers with whom
Distributor has an agreement.
B. DISTRIBUTION FEES. The Fund shall pay to the Distributor monthly in
arrears its "Allocable Portion" (as described in Schedule A to this Plan
"Allocation Schedule", and until such time as the Fund designates a successor
to AFD as distributor, the Allocable Portion shall equal 100%) of a fee (the
"Distribution Fee"), which shall accrue each day in an amount equal to the
product of (A) the daily equivalent of 0.75% per annum multiplied by (B) the
net asset value of the Fund's Class B shares outstanding on each day.
The Distributor may sell and assign its right to its Allocable Portion (but
not its obligations to the Fund under the Agreement) of the Distribution Fee to
a third party, and such transfer shall be free and clear of offsets or claims
the Fund may have against the Distributor, it being understood that the Fund is
not releasing the Distributor from any of its obligations to the Fund under the
Agreement or any of the assets the Distributor continues to own. The Fund may
agree, at the request of the Distributor, to pay the Allocable Portion of the
Distribution Fee directly to the third party transferee.
Any Agreement between the Fund and the Distributor relating to the Fund's
Class B shares shall provide that:
(i) the Distributor will be deemed to have performed all services required to
be performed in order to be entitled to receive its Allocable Portion of the
Distribution Fee payable in respect of each "Commission Share" (as defined in
the Allocation Schedule) upon the settlement date of each sale of such
Commission Share taken into account in determining such Distributor's Allocable
Portion of the Distribution Fee;
(ii) notwithstanding anything to the contrary in this Plan or the Agreement,
the Fund's obligation to pay the Distributor its Allocable Portion of the
Distribution Fee shall not be terminated or modified (including without
limitation, by change in the rules applicable to the conversion of the Class B
shares into shares of another class) for any reason (including a termination of
this Plan or the Agreement between such Distributor and the Fund) except:
(a) to the extent required by a change in the Investment Company Act of 1940
(the "1940 Act"), the rules and regulations under the 1940 Act, the Conduct
Rules of the National Association of Securities Dealers, Inc. (the "NASD"), or
any judicial decisions or interpretive pronouncements by the Securities and
Exchange Commission, which is either binding upon the Distributor or generally
complied with by similarly situated distributors of mutual fund shares, in each
case enacted, promulgated, or made after March 15, 2000,
(b) on a basis which does not alter the Distributor's Allocable Portion of
the Distribution Fee computed with reference to Commission Shares of the Fund,
the Date of Original Issuance (as defined in the Allocation Schedule) of which
occurs on or prior to the adoption of such termination or modification and with
respect to Free Shares (as defined in the Allocation Schedule) which would be
attributed to the Distributor under the Allocation Schedule with reference to
such Commission Shares, or
(c) in connection with a Complete Termination (as defined below) of this Plan
by the Fund;
(iii) the Fund will not take any action to waive or change any contingent
deferred sales charge ("CDSC") in respect to the Class B shares, the Date of
Original Issuance of which occurs on or prior to the taking of such action
except as provided in the Fund's prospectus or statement of additional
information on the date such Commission Share was issued, without the consent
of the Distributor or its assigns;
(iv) notwithstanding anything to the contrary in this Plan or the Agreement,
none of the termination of the Distributor's role as principal underwriter of
the Class B shares of the Fund, the termination of the Agreement or the
termination of this Plan will terminate the Distributor's right to its
Allocable Portion of the CDSCs in respect of Class B shares of the Fund;
(v) except as provided in (ii) above and notwithstanding anything to the
contrary in this Plan or the Agreement, the Fund's obligation to pay the
Distributor's Allocable Portion of the Distribution Fees and CDSCs payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever, at law or equity, including, without limitation, any of the
foregoing based on the insolvency or bankruptcy of the Distributor; and
(vi) until the Distributor has been paid its Allocable Portion of the
Distribution Fees in respect of the Class B shares of the Fund, the Fund will
not adopt a plan of liquidation in respect of the Class B shares without the
consent of the Distributor and its assigns. For purposes of this Plan, the
term Allocable Portion of the Distribution Fees or CDSCs payable in respect of
the Class B shares as applied to any Distributor shall mean the portion of such
Distribution Fees or CDSCs payable in respect of such Class B shares of the
Fund allocated to the Distributor in accordance with the Allocation Schedule as
it relates to the Class B shares of the Fund, and until such time as the Fund
designates a successor to AFD as distributor, the Allocable Portion shall equal
100% of the Distribution Fees and CDSCs. For purposes of this Plan, the term
"Complete Termination" in respect of this Plan as it relates to the Class B
shares means a termination of this Plan involving the complete cessation of the
payment of Distribution Fees in respect of all Class B shares, the termination
of the distribution plans and principal underwriting agreements, and the
complete cessation of the payment of any asset based sales charge (within the
meaning of the Conduct Rules of the NASD) or similar fees in respect of the
Fund and any successor mutual fund or any mutual fund acquiring a substantial
portion of the assets of the Fund (the Fund and such other mutual funds
hereinafter referred to as the "Affected Funds") and in respect of the Class B
shares and every future class of shares (other than future classes of shares
established more than eight years after the date of such termination) which has
substantially similar characteristics to the Class B shares (all such classes
of shares the "Affected Classes of Shares") of such Affected Funds taking into
account the manner of payment and amount of asset based sales charge, CDSC or
other similar charges borne directly or indirectly by the holders of such
shares; provided that
(a) the Board of Directors of such Affected Funds, including the Independent
Directors (as defined below) of the Affected Funds, shall have determined that
such termination is in the best interest of such Affected Funds and the
shareholders of such Affected Funds, and
(b) such termination does not alter the CDSC as in effect at the time of such
termination applicable to Commission Shares of the Fund, the Date of Original
Issuance of which occurs on or prior to such termination.
2. APPROVAL BY THE BOARD. This Plan shall not take effect until it has been
approved, together with any related agreement, by votes of the majority of both
(i) the Board of Directors of the Fund and (ii) those Directors of the Fund who
are not "interested persons" of the Fund (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of this Plan or any
agreement related to it (the "Independent Directors"), cast in person at a
meeting called for the purpose of voting on this Plan and/or such agreement.
3. REVIEW OF EXPENDITURES. At least quarterly, the Board of Directors shall
be provided by any person authorized to direct the disposition of monies paid
or payable by the Fund pursuant to this Plan or any related agreement, and the
Board shall review, a written report of the amounts expended pursuant to this
Plan and the purposes for which such expenditures were made.
4. TERMINATION OF PLAN. This Plan may be terminated as to the Fund's Class B
shares at any time by vote of a majority of the Independent Directors, or by
vote of a majority of the outstanding Class B shares of the Fund. Unless
sooner terminated in accordance with this provision, this Plan shall continue
in effect until April 30, 2000. It may thereafter be continued from year to
year in the manner provided for in paragraph 2 hereof.
Notwithstanding the foregoing or paragraph 6, below, any amendment or
termination of this Plan shall not affect the rights of the Distributor to
receive its Allocable Portion of the Distribution Fee, unless the termination
constitutes a Complete Termination of this Plan as described in paragraph 1
above.
5. REQUIREMENTS OF AGREEMENT. Any Agreement related to this Plan shall be in
writing, and shall provide:
0. that such agreement may be terminated as to the Fund at any time, without
payment of any penalty by the vote of a majority of the Independent Directors
or by a vote of a majority of the outstanding Class B shares of the Fund, on
not more than sixty (60) days' written notice to any other party to the
agreement; and
b. that such agreement shall terminate automatically in the event of its
assignment.
6. AMENDMENT. This Plan may not be amended to increase materially the maximum
amount of fee or other distribution expenses provided for in paragraph 1 hereof
with respect to the Class B shares of the Fund unless such amendment is
approved by vote of a majority of the outstanding voting securities of the
Class B shares of the Fund and as provided in paragraph 2 hereof, and no other
material amendment to this Plan shall be made unless approved in the manner
provided for in paragraph 2 hereof.
7. NOMINATION OF DIRECTORS. While this Plan is in effect, the selection and
nomination of Independent Directors shall be committed to the discretion of the
Independent Directors of the Fund.
8. ISSUANCE OF SERIES OF SHARES. If the Fund shall at any time issue shares
in more than one series, this Plan may be adopted, amended, continued or
renewed with respect to a series as provided herein, notwithstanding that such
adoption, amendment, continuance or renewal has not been effected with respect
to any one or more other series of the Fund.
9. RECORD RETENTION. The Fund shall preserve copies of this Plan and any
related agreement and all reports made pursuant to paragraph 3 hereof for not
less than six (6) years from the date of this Plan, or such agreement or
reports, as the case may be, the first two (2) years of which such records
shall be stored in an easily accessible place.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of December 8, 1999.
THE INVESTMENT COMPANY OF AMERICA
By
R. Michael Shanahan, President
By
Vincent P. Corti, Secretary
SCHEDULE A
to the
Plan of Distribution of
The Investment Company of America
relating to its Class B shares
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in respect
of Class B shares shall be 100% until such time as the Distributor shall cease
to serve as exclusive distributor of Class B shares; thereafter, collections
that constitute CDSCs and Distribution Fees relating to Class B shares shall be
allocated among the Distributor and any successor distributor ("Successor
Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall
have the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule
is a part. As used herein the following terms shall have the meanings
indicated:
"Commission Share" means each B share issued under circumstances which would
normally give rise to an obligation of the holder of such share to pay a CDSC
upon redemption of such share (including, without limitation, any B share
issued in connection with a permitted free exchange), and any such share shall
continue to be a Commission Share of the applicable Fund prior to the
redemption (including a redemption in connection with a permitted free
exchange) or conversion of such share, even though the obligation to pay the
CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the date
with reference to which the amount of the CDSC payable on redemption thereof,
if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund, other than
a Commission Share (including, without limitation, any B share issued in
connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which the Fund
issued shares.
"Net Asset Value" means the net asset value determined as set forth in the
Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or Free Share
sold by one of the selling agents listed on Exhibit I. If, subsequent to the
Successor Distributor becoming exclusive distributor of the Class B shares, the
Distributor reasonably determines that the transfer agent is able to track all
Commission Shares and Free Shares sold by any of the selling agents listed on
Exhibit I in the same manner as Commission Shares and Free Shares are currently
tracked in respect of selling agents not listed on Exhibit I, then Exhibit I
shall be amended to delete such selling agent from Exhibit I so that Commission
Shares and Free Shares sold by such selling agent will no longer be treated as
Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that are outstanding from time to time, shall be attributed to
the Distributor and each Successor Distributor in accordance with the following
rules;
(1) Commission Shares other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus Commission
Shares") attributed to the Distributor shall be those Non-Omnibus Commission
Shares the date of Original Issuance of which occurred on or after the
Inception Date of the applicable Fund and on or prior to the date the
Distributor ceased to be exclusive distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor Distributor
shall be those Non-Omnibus Commission Shares the Date of Original Issuance of
which occurs after the date such Successor Distributor became the exclusive
distributor of Class B shares of the Fund and on or prior to the date such
Successor Distributor ceased to be the exclusive distributor of Class B shares
of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in consideration of the
investment of proceeds of the redemption of a Non-Omnibus Commission Share of
another Fund (the "Redeeming Fund") in connection with a permitted free
exchange, is deemed to have a Date of Original Issuance identical to the Date
of Original Issuance of the Non-Omnibus Commission Share of the Redeeming Fund,
and any such Commission Share will be attributed to the Distributor or
Successor Distributor based upon such Date of Original Issuance in accordance
with rules (a) and (b) above.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of a Fund
outstanding on any date shall be attributed to the Distributor or a Successor
Distributor, as the case may be, in the same proportion that the Non-Omnibus
Commission Shares of a Fund outstanding on such date are attributed to each on
such date; provided that if the Distributor and its transferees reasonably
determines that the transfer agent is able to produce monthly reports that
track the Date of Original Issuance for such Non-Omnibus Free Shares, then such
Free Shares shall be allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed to the
Distributor or a Successor Distributor, as the case may be, in the same
proportion that the Non-Omnibus Commission Shares of the applicable Fund
outstanding on such date are attributed to it on such date; provided that if
the Distributor reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for the
Omnibus Shares, then the Omnibus Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission Shares shall be
allocated to the Distributor or a Successor Distributor depending upon whether
the related redeemed Commission Share is attributable to the Distributor or
such Successor Distributor, as the case may be, in accordance with Part I
above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to the
Distributor or a Successor Distributor in the same proportion that CDSCs
related to the redemption of Commission Shares are allocated to each thereof;
provided, that if the Distributor reasonably determines that the transfer agent
is able to produce monthly reports which track the Date of Original Issuance
for the Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus
Shares shall be allocated among the Distributor and any Successor Distributor
depending on whether the related redeemed Omnibus Share is attributable to the
Distributor or a Successor Distributor, as the case may be, in accordance with
Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part IV
hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of all
Class B shares of a Fund during any calendar month allocable to the Distributor
or a Successor Distributor is determined by multiplying the total of such
Distribution Fee by the following fraction:
(A + C)/2
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Class B shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Class B shares of a Fund at the end of
such calendar month
(2) If the Distributor reasonably determines that the transfer agent is able
to produce automated monthly reports that allocate the average Net Asset Value
of the Commission Shares (or all Class B shares if available) of a Fund among
the Distributor and any Successor Distributor in a manner consistent with the
methodology detailed in Part I and Part III(1) above, the portion of the
Distribution Fee accrued in respect of all such Class B shares of a Fund during
a particular calendar month will be allocated to the Distributor or a Successor
Distributor by multiplying the total of such Distribution Fee by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund for such
calendar month attributed to the Distributor or a Successor Distributor, as the
case may be
B= Total average Net Asset Value of all such Class B shares of a Fund for such
calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms of any
distributor's contract, any distribution plan, any prospectus, the Conduct
Rules or any other applicable law change so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the
amount of the Distributor's Allocable Portion or any Successor Distributor's
Allocable Portion had no such change occurred, the definitions of the
Distributor's Allocable Portion and/or the Successor Distributor's Allocable
Portion in respect of the Class B shares relating to a Fund shall be adjusted
by agreement among the relevant parties; provided, however, if the Distributor,
the Successor Distributor and the Fund cannot agree within thirty (30) days
after the date of any such change in applicable laws or in any distributor's
contract, distribution plan, prospectus or the Conduct Rules, they shall submit
the question to arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association and the decision reached by the
arbitrator shall be final and binding on each of them.
THE INVESTMENT COMPANY OF AMERICA
MULTIPLE CLASS PLAN
WHEREAS, The Investment Company of America (the "Fund"), a Delaware
corporation, is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company that offers
shares of capital stock;
WHEREAS, American Funds Distributors, Inc. ("the Distributor") serves as the
principal underwriter for the Fund;
WHEREAS, the Fund has adopted Plans of Distribution (each a "12b-1 Plan")
under which the Fund may bear expenses of distribution of its shares, including
payment and/or reimbursement to the Distributor for certain of its expenses
incurred in connection with the Fund;
WHEREAS, the Fund is authorized to issue shares of capital stock ("Class A
shares"), and Alternative Common shares of capital stock, Series B ("Class B
shares");
WHEREAS, Rule 18f-3 under the 1940 Act permits open-end management investment
companies to issue multiple classes of voting stock representing interests in
the same portfolio if, among other things, an investment company adopts a
written Multiple Class Plan (the "Plan") setting forth the separate
arrangement and expense allocation of each class and any related conversion
features or exchange privileges; and
WHEREAS, the Board of Directors of the Fund has determined, that it is in the
best interest of each class of shares of the Fund individually, and the Fund as
a whole, to adopt this Plan;
NOW THEREFORE, the Fund adopts this Plan as follows:
1. Each class of shares will represent interests in the same portfolio of
investments of the Fund, and be identical in all respects to each other class,
except as set forth below. The differences among the various classes of shares
of the Fund will relate to: (i) distribution, service and other charges and
expenses as provided for in paragraph 3 of this Plan; (ii) the exclusive right
of each class of shares to vote on matters submitted to shareholders that
relate solely to that class or the separate voting right of each class on
matters for which the interests of one class differ from the interests of
another class; (iii) such differences relating to eligible investors as may be
set forth in the Fund's prospectus and statement of additional information
("SAI"), as the same may be amended or supplemented from time to time; (iv) the
designation of each class of shares; (v) conversion features; and (vi) exchange
privileges.
2. (a) Certain expenses may be attributable to the Fund, but not a particular
class of shares thereof. All such expenses will be borne by each class on the
basis of the relative aggregate net assets of the classes. Notwithstanding the
foregoing, the Distributor, the investment adviser or other provider of
services to the Fund may waive or reimburse the expenses of a specific class or
classes to the extent permitted by Rule 18f-3 under the 1940 Act and any other
applicable law.
(b) A class of shares may be permitted to bear expenses that are directly
attributable to that class, including: (i) any distribution fees associated
with any rule 12b-1 Plan for a particular class and any other costs relating to
implementing or amending such rule 12b-1 Plan; (ii) any service fees associated
with any rule 12b-1 Plan attributable to such class; and (iii) any shareholder
servicing fees attributable to such class.
(c) Any additional incremental expenses not specifically identified above
that are subsequently identified and determined to be applied properly to one
class of shares of the Fund shall be so applied upon approval by votes of the
majority of both (i) the Board of Directors of the Fund; and (ii) those
Directors of the Fund who are not "interested persons" of the Fund (as defined
in the 1940 Act) ("Independent Directors").
3. Each class of the Fund shall differ in the amount of, and the manner in
which distribution costs are borne by shareholders and in the costs associated
with transfer agency services as follows:
(a) Class A shares
(i) Class A shares are sold at net asset value plus a front-end sales
charge, at net asset value without a front-end sales charge but subject to a
contingent deferred sales charge ("CDSC"), and at net asset value without any
sales charge, as set forth in the Fund's prospectus and SAI.
(ii) Class A shares are subject to an annual distribution expense under the
Fund's Class A Plan of Distribution of up to 0.25% of average net assets, as
set forth in the Fund's prospectus, SAI, and Plan of Distribution. This
expense consists of a service fee of up to 0.25% plus certain other
distribution costs.
(b) Class B shares
(i) Class B shares shall be sold at net asset value without a front-end
sales charge, but are subject to a CDSC and maximum purchase limits as set
forth in the Fund's prospectus and SAI.
(ii) Class B shares shall be subject to an annual distribution expense under
the Fund's Class B Plan of Distribution of up to 1.00% of average net assets,
as set forth in the Fund's prospectus, SAI, and Class B Plan of Distribution.
This expense shall consist of a distribution fee of approximately 0.75% and a
service fee of approximately 0.25% of such net assets.
(iii) Class B shares will automatically convert to Class A shares of the
Fund approximately eight years after purchase, subject to the limitations
described in the Fund's prospectus and SAI. All conversions shall be effected
on the basis of the relative net asset values of the two classes of shares
without the imposition of any sales load or other charge.
(iv) Class B shares shall be subject to a fee (included within the transfer
agency expense) for additional costs associated with tracking the age of each
Class B share.
All other rights and privileges of Fund shareholders are identical regardless
of which class of shares are held.
4. This Plan shall not take effect until it has been approved by votes of the
majority of both (i) the Board of Directors of the Fund; and (ii) the
Independent Directors.
5. This Plan shall become effective with respect to any class of shares of the
Fund, other than Class A or Class B shares, upon the commencement of the
initial public offering thereof (provided that the Plan has previously been
approved with respect to such additional class by votes of the majority of both
(i) the Board of Directors of the Fund; and (ii) Independent Directors prior to
the offering of such additional class of shares), and shall continue in effect
with respect to such additional class or classes until terminated in accordance
with paragraph 7. An addendum setting forth such specific and different terms
of such additional class or classes shall be attached to and made part of this
Plan.
6. No material amendment to the Plan shall be effective unless it is approved
by the votes of the majority of both (i) the Board of Directors of the Fund;
and (ii) Independent Directors.
7. This Plan may be terminated at any time with respect to the Fund as a whole
or any class of shares individually, by the votes of the majority of both (i)
the Board of Directors of the Fund; and (ii) Independent Directors. This Plan
may remain in effect with respect to a particular class or classes of shares of
the Fund even if it has been terminated in accordance with this paragraph with
respect to any other class of shares.
IN WITNESS WHEREOF, the Fund has caused this Plan to be executed by its
officers thereunto duly authorized, as of December 8, 1999.
THE INVESTMENT COMPANY OF AMERICA
By
R. Michael Shanahan, President
By
Vincent P. Corti, Secretary
CODE OF CONDUCT
All of us within the Capital organization are responsible for maintaining the
very highest ethical standards when conducting business. In keeping with these
standards, we must never allow our own interests to be placed ahead of our
shareholders' and clients' interests.
Over the years we have earned a reputation for the highest integrity.
Regardless of lesser standards that may be followed through business or
community custom, we must observe exemplary standards of honesty and integrity.
REPORTING VIOLATIONS
If you know of any violation of our Code of Conduct, you have a responsibility
to report it. Deviations from controls or procedures that safeguard the
company, including the assets of shareholders and clients, should also be
reported.
You can report confidentially to:
- - Your manager or department head
- - CGC Audit Committee:
Wally Stern -- Chairman
Donnalisa Barnum
David Beevers
Jim Brown
Larry P. Clemmensen
Roberta Conroy
Bill Hurt -- (emeritus)
Sonny Kamm
Mike Kerr
Victor Kohn
John McLaughlin
Don O'Neal
Tom Rowland
John Smet
Antonio Vegezzi
Shaw Wagener
Kelly Webb
- Mike Downer or any other lawyer in the CGC Legal Group
- Don Wolfe of Deloitte & Touche LLP (CGC's auditors).
CGC GIFTS POLICY -- CONFLICTS OF INTEREST
A conflict of interest occurs when the private interests of associates
interfere or could potentially interfere with their responsibilities at work.
Associates must not place themselves or the company in a position of actual or
potential conflict. Associates may not accept gifts worth more than $100,
excessive business entertainment, loans, or anything else involving personal
gain from those who conduct business with the company. In addition, a business
entertainment event exceeding $200 in value should not be accepted unless the
associate receives permission from the Gifts Policy Committee.
REPORTING -- Although the limitations on accepting gifts applies to ALL
associates as described above, some associates will be asked to fill out
quarterly reports. If you receive a reporting form, you must report any gift
exceeding $50 (although it is recommended that you report ALL gifts received)
and business entertainment in which an event exceeds $75.
GIFTS POLICY COMMITTEE
The Gifts Policy Committee oversees administration of and compliance with the
Policy.
INSIDER TRADING
Antifraud provisions of the federal securities laws generally prohibit persons
while in possession of material nonpublic information from trading on or
communicating the information to others. Sanctions for violations can include
civil injunctions, permanent bars from the securities industry, civil penalties
up to three times the profits made or losses avoided, criminal fines and jail
sentences.
While investment research analysts are most likely to come in contact with
material nonpublic information, the rules (and sanctions) in this area apply to
all CGC associates and extend to activities both within and outside each
associate's duties.
PERSONAL INVESTING POLICY
As an associate of the Capital Group companies, you may have access to
confidential information. This places you in a position of special trust.
You are associated with a group of companies that is responsible for the
management of many billions of dollars belonging to mutual fund shareholders
and other clients. The law, ethics and our own policy place a heavy burden on
all of us to ensure that the highest standards of honesty and integrity are
maintained at all times.
There are several rules that must be followed to avoid possible conflicts of
interest in personal securities transactions.
ALL ASSOCIATES
Information regarding proposed or partially completed plans by CGC companies to
buy or sell specific securities must not be divulged to outsiders.
Favors or preferential treatment from stockbrokers may not be accepted.
Associates may not subscribe to ANY initial public offering (IPO). Generally,
this prohibition applies to spouses of associates and any family member
residing in the same household. However, an associate may request that the
Personal Investing Committee consider granting an exception under special
circumstances.
COVERED PERSONS
Associates who have access to investment information in connection with their
regular duties are generally considered "covered persons." If you receive a
quarterly personal securities transactions report form, you are a covered
person. You should take the time to review this policy, as ongoing
interpretations of the policy will be explained therein.
Covered persons must conduct their personal securities transactions in such a
way that they do not conflict with the interests of the funds and client
accounts. This policy also includes securities transactions of family members
living in the covered person's household and any trust or custodianship for
which the associate is trustee or custodian. A conflict may occur if you, a
family member in the same household, a trust or custodianship for which you are
trustee or custodian have a transaction in a security when the funds or client
accounts are considering or concluding a transaction in the same security.
Additional rules apply to "investment personnel" including portfolio
counselors/managers, research analysts, traders, portfolio control associates,
and investment administration personnel (see below).
PRE-CLEARANCE OF SECURITIES TRANSACTIONS
Before buying or selling securities, covered persons must check with the CGC
Legal Group based in LAO. (You will generally receive a response within one
business day.) Unless a shorter period is specified, clearance is good for two
trading days (including the day you check). If you have not executed your
transaction within this period, you must again pre-clear your transaction.
Covered persons must PROMPTLY submit quarterly reports of certain transactions.
Transactions of securities (including fixed-income securities) or options (see
below) must be pre-cleared as described above and reported except for: open-end
investment companies (mutual funds); money market instruments with maturities
of one year or less; direct obligations of the U.S. Government, bankers'
acceptances, CDs or other commercial paper; commodities; and options or futures
on broad-based indices. Covered persons must also report transactions made by
family members in their household and by those for which they are a trustee or
custodian.. NOTE THAT INVESTMENTS IN PRIVATE PLACEMENTS AND VENTURE CAPITAL
PARTNERSHIPS ARE ALSO SUBJECT TO PRECLEARANCE AND REPORTING. Reporting forms
will be supplied at the appropriate times AND MUST BE SUBMITTED BY THE DATE
INDICATED ON THE FORM
In addition, the following transactions must be reported but need not have been
pre-cleared: gifts or bequests (either receiving or giving) of securities MUST
be reported (sales of securities received as a gift MUST be both precleared and
reported); transactions in debt instruments rated "A" or above by at least one
national rating service; sales pursuant to tender offers; and dividend
reinvestment plan purchases (provided the purchase pursuant to such plan is
made with dividend proceeds only).
PERSONAL INVESTING SHOULD BE VIEWED AS A PRIVILEGE, NOT A RIGHT. AS SUCH,
LIMITATIONS MAY BE PLACED ON THE NUMBER OF PRE-CLEARANCES AND/OR TRANSACTIONS
AS DEEMED APPROPRIATE BY THE PERSONAL INVESTING COMMITTEE.
BROKERAGE ACCOUNTS
Covered persons should inform their stockbrokers that they are employed by an
investment adviser, trust company or affiliate of either. U.S. brokers are
subject to certain rules designed to prevent favoritism toward such accounts.
Associates may not accept negotiated commission rates which they believe may be
more favorable than the broker grants to accounts with similar characteristics.
In addition, covered persons must direct their brokers to send duplicate
confirmations and copies of all periodic statements on a timely basis to The
Legal Group of The Capital Group Companies, Inc. ALL DOCUMENTS RECEIVED ARE
KEPT STRICTLY CONFIDENTIAL.
[If extraneous information is included on an associate's statements (E.G.,
checking account information or other information that is not subject to the
policy), the associate might want to establish a separate account solely for
transactions subject to the policy.]
ANNUAL DISCLOSURE OF PERSONAL SECURITIES HOLDINGS
Covered persons will be required to disclose all personal securities holdings
upon commencement of employment (or upon becoming a covered person) and
thereafter on an annual basis. Reporting forms will be supplied for this
purpose.
ANNUAL RECERTIFICATION
All access persons will be required to certify annually that they have read and
understood the Personal Investing Policy and recognize that they are subject
thereto.
ADDITIONAL RULES FOR INVESTMENT PERSONNEL
DISCLOSURE OF OWNERSHIP OF RECOMMENDED SECURITIES -- Ownership of securities
that are held professionally as well as personally will be reviewed on a
periodic basis by the Legal Group and may also be reviewed by the applicable
Management Committee and/or Investment Committee or Subcommittee. In addition,
to the extent that disclosure has not already been made by the Legal Group to
the applicable Management Committee and/or Investment Committee or
Subcommittee, any associate who is in a position to recommend the purchase or
sale of securities by the fund or client accounts that s/he personally owns
should FIRST disclose such ownership either in writing (in a company write-up)
or orally (when discussing the company at investment meetings) prior to making
a recommendation.
BLACKOUT PERIOD <UNDEF> Investment personnel may not buy or sell a security
within at least seven calendar days before and after A FUND OR CLIENT ACCOUNT
THAT HIS OR HER COMPANY MANAGES transacts in that security. Profits resulting
from transactions occurring within this time period are subject to special
review and may be subject to disgorgement.
BAN ON SHORT-TERM TRADING PROFITS -- Investment personnel are prohibited from
profiting from the purchase and sale or sale and purchase of the same (or
equivalent) securities within 60 days. THIS RESTRICTION APPLIES TO THE
PURCHASE OF AN OPTION AND THE EXERCISE OF THE OPTION WITHIN 60 DAYS.
SERVICE AS A DIRECTOR -- Investment personnel must obtain prior authorization
of the investment committee of the appropriate management company or CGC
Management Committee BEFORE SERVING ON THE BOARD OF DIRECTORS OF PUBLICLY
TRADED COMPANIES. This can be arranged by calling the LAO Legal Group.
PERSONAL INVESTING COMMITTEE
Any questions or hardships that result from these policies or requests for
exceptions should be referred to CGC's Personal Investing Committee by calling
the LAO Legal Group.
/1/Note that this disclosure requirement is consistent with both AIMR standards
as well as the ICI Advisory Group Guidelines.
FORM OF
FUND CODE OF ETHICS
(as adopted by the Fund's Board of Directors/Trustees)
1. No Director/Trustee shall use his or her position or the knowledge gained
therefrom as to create a conflict between his or her personal interest and that
of the Fund. No Director/Trustee shall seek or accept gifts, favors,
preferential treatment, or valuable consideration of any kind offered because
of his or her association with the Fund.
2. Each non-affiliated Director/Trustee shall report to the Secretary of the
Fund not later than ten (10) days after the end of each calendar quarter any
transaction in securities which such Director/Trustee has effected during the
quarter which the Director/Trustee then knows to have been effected within
fifteen (15) days before or after a date on which the Fund purchased or sold,
or considered the purchase or sale of, the same security.
3. For purposes of this Code of Ethics, transactions involving United States
Government securities as defined in the Investment Company Act of 1940,
bankers' acceptances, bank certificates of deposit, commercial paper, or shares
of registered open-end investment companies are exempt from reporting as are
non-volitional transactions such as dividend reimbursement programs and
transactions over which the Director/Trustee exercises no control.