March 2003 Investment Company of America

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-----BEGIN PRIVACY-ENHANCED MESSAGE----Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tx6ZlbGXFUKa/jxcQOTWFOzi/maG0XjRoA2d4DdKNJnU/0rGF1Tc2xG423ZR65Rp chnRtHD2L2DiOLy8zRtUgQ== <SEC-DOCUMENT>0000051931-00-000003.txt : 20000314 <SEC-HEADER>0000051931-00-000003.hdr.sgml : 20000314 ACCESSION NUMBER: 0000051931-00-000003 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20000313 EFFECTIVENESS DATE: 20000313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTMENT CO OF AMERICA CENTRAL INDEX KEY: 0000051931 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 951426645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 002-10811 FILM NUMBER: 567844 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-00116 FILM NUMBER: 567845 BUSINESS ADDRESS: STREET 1: 333 S HOPE ST - 52ND FLOOR CITY: LOS ANGELES
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file:///e|/mrogovin/ag%20edwards/March%202003%20Investment%20Company%20Of%20America.txt
STATE: CA ZIP: 90071 BUSINESS PHONE: </SEC-HEADER> <DOCUMENT> <TYPE>485BPOS <SEQUENCE>1 <TEXT>
2134869200
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 ------------------------------------------------------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> HIGHEST LOWEST </TABLE>
<C> <C> 17.34% (quarter ended December 31, 1998) -10.84% (quarter ended September 30, 1990)
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>
<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% -----------------------------------------------------------------------------Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% -----------------------------------------------------------------------------</TABLE>
N/A N/A
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.
<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.
<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>
<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>
<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--
<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 </TABLE>
1.00%
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
<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.
<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>
<PAGE> --------------------------------------------------------NOTES
<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 publicinfo@sec.gov 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> HIGHEST LOWEST </TABLE>
<C> <C> 17.34% (quarter ended December 31, 1998) -10.84% (quarter ended September 30, 1990)
<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>
<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/ <S> <C>
ONE YEAR FIVE YEARS TEN YEARS LIFETIME <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% -----------------------------------------------------------------------------Lipper Large-Cap Value Index/5/ 10.78% 22.11% 15.42% -----------------------------------------------------------------------------</TABLE>
N/A N/A
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.
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.
<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 ROTHENBERG Capital Research and research professional prior Management Company to becoming a portfolio counselor for the fund)
30 years
The fund began its first full month of investment operations on January 1, 1934. * Company affiliated with Capital Research and Management Company - --------------------------------------------------------------------------------------------------------------------------------</TABLE>
<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>
<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 </TABLE>
see below see below see below
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--
<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 2 3 4 5 6 </TABLE>
5.00% 4.00% 4.00% 3.00% 2.00% 1.00%
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
<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.
<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.
--------------------------------------------------------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>
<PAGE> --------------------------------------------------------NOTES
<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 publicinfo@sec.gov 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
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.
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:
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:
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.
FUND DIRECTORS AND OFFICERS Directors and Director Compensation
<TABLE>
<CAPTION> AGGREGATE COMPENSATION (INCLUDING VOLUNTARILY DEFERRED COMPENSATION/1/) FROM THE FUND DURING FISCAL YEAR PRINCIPAL OCCUPATION(S) DURING ENDED REGISTRANT PAST 5 YEARS DECEMBER
POSITION WITH NAME, ADDRESS AND AGE 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 - -------------------------------------------------------------------------<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
SERVES/2/
- -------------------------------------------------------------------------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
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+ "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,
<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.
<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
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/) 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 OR ITS AFFILIATES/2/ OF FUND
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>
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<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.
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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.
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.
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.
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
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
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
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.
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--
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 The Tax-Exempt Money Fund of America/SM/ . . . . . . . 39 The U.S. Treasury Money Fund of America/SM/ . . . . . . 49 ___________ *Available only in certain states. </TABLE>
209 N/A N/A
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
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.
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.
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:
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).
(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).
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
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).
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
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
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.
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.
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:
<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) . . . . . . . . . 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>
$32.46
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 fiveand 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 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).
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."
"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."
<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."
<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>
Equity Securities - -------------------------------------------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
<C> <C> Market Number of Value Percent of Shares (millions) Net Assets -------- -------- --------
<C>
American Electric Power Co., Inc. Duke Energy Corp. Florida Progress Corp. GPU, Inc. Pinnacle West Capital Corp. Southern Co. Williams Companies, Inc.
3,000,000 96.375 .17 1,375,000 68.922 .12 400,000 16.925 .03 2,579,900 77.236 .14 2,900,000 88.631 .16 3,400,000 79.900 .14 4,250,000 129.891 .23 ---------- ---------3,529.502 6.29 ---------- ----------
MATERIALS CHEMICALS - 2.80% Air Products and Chemicals, Inc. Dow Chemical Co. E.I. du Pont de Nemours and Co. Imperial Chemical Industries PLC (ADR) International Flavors & Fragrances Inc. Monsanto Co. FOREST PRODUCTS & PAPER - 2.29% Champion International Corp. Fort James Corp. Georgia-Pacific Corp., Georgia-Pacific Group International Paper Co. Louisiana-Pacific Corp. Weyerhaeuser Co. METALS: NONFERROUS - 1.65% Alcoa Inc. Freeport-McMoRan Copper & Gold Inc., Class B (1) 46.475 .08 Phelps Dodge Corp. WMC Ltd.
1,700,000 57.056 .10 3,400,000 454.325 .81 1,899,500 125.129 .22 5,300,000 225.581 .40 1,527,000 57.644 .10 18,243,500 649.925 1.17 1,950,000 120.778 .22 10,700,000 292.912 .52 8,225,000 417.419 2,881,236 162.610 .29 4,675,000 66.619 .12 3,100,000 222.619 .40 8,776,700 728.466 1.30 2,200,000
.74
1,696,300 113.864 .20 7,500,000 41.360 .07 ---------- ---------3,782.782 6.74 ---------- ----------
CAPITAL EQUIPMENT AEROSPACE & MILITARY TECHNOLOGY - 0.64% Boeing Co. Northrop Grumman Corp. Raytheon Co., Class A Raytheon Co., Class B United Technologies Corp. DATA PROCESSING & REPRODUCTION - 10.43%
2,500,000 103.906 .19 985,000 53.252 .09 2,536,335 62.933 1,700,000 45.156 .19 1,440,000 93.600 .17
Cisco Systems, Inc. (1) Compaq Computer Corp. Computer Associates International, Inc. Fujitsu Ltd. Hewlett-Packard Co. International Business Machines Corp. Microsoft Corp. (1) Oracle Corp. (1) 3Com Corp. (1) Xerox Corp. ELECTRICAL & ELECTRONIC - 2.12% Hitachi, Ltd. Lucent Technologies Inc. NEC Corp. Nortel Networks Corp. Siemens AG Telefonaktiebolaget LM Ericsson, Class B (ADR) ELECTRONIC COMPONENTS - 4.55% Corning Inc. Intel Corp. Micron Technology, Inc. (1) Motorola, Inc. Texas Instruments Inc. ELECTRONIC INSTRUMENTS - 0.67% PE Corp. ENERGY EQUIPMENT - 0.81% Baker Hughes Inc. Schlumberger Ltd. INDUSTRIAL COMPONENTS - 0.40% Dana Corp. Delphi Automotive Systems Corp. Illinois Tool Works Inc. MACHINERY & ENGINEERING - 1.40% Caterpillar Inc. Cummins Engine Co., Inc. Deere & Co. Fluor Corp. Ingersoll-Rand Co. Parker Hannifin Corp. Thermo Electron Corp. (1)
5,300,000 567.762 1.01 5,046,100 136.560 .24 12,295,000 859.882 1.53 13,173,000 600.765 1.07 3,800,000 432.963 .77 6,000,000 648.000 1.16 9,000,000 1,050.750 1.87 10,750,000 1,204.672 2.15 5,100,000 239.700 .43 5,000,000 113.438 .20 8,500,000 136.426 .24 1,600,000 119.700 .21 5,000,000 119.152 .21 800,000 80.800 .14 3,200,000 406.585 .73 5,000,000 328.437 4,775,000 615.677 1.10 4,850,000 399.216 .71 5,333,700 414.695 .74 1,960,000 288.610 .51 8,580,000 831.188 1.49 3,111,900 374.400 .67 .24 .57
.59
6,505,600 137.024 5,650,000 317.813
2,121,500 63.512 .11 5,764,088 90.784 1,000,000 67.563 .13 2,600,000 122.362 .22 1,700,000 82.131 .15 5,700,000 247.238 .44 1,400,000 64.225 .11 1,894,800 104.332 .19 1,900,000 97.494 .17 5,000,000 75.000 .12 ---------- ---------11,797.703 21.02 ---------- ----------
.16
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. BANK ONE CORP. Comerica Inc. First Union Corp. Fleet Boston Financial Corp. (formerly BankBoston Corp.) 107.203 .19 KeyCorp National City Corp. Toronto-Dominion Bank U.S. Bancorp Wachovia Corp. Washington Mutual, Inc. Wells Fargo & Co. FINANCIAL SERVICES - 4.14% Associates First Capital Corp., Class A Fannie Mae Freddie Mac Household International, Inc. MBNA Corp. Providian Financial Corp. SLM Holding Corp. INSURANCE - 2.42% Aetna Inc. Allstate Corp. American General Corp. American International Group, Inc. Aon Corp.
13,477,100 676.382 1.21 6,935,000 222.353 .40 750,000 35.016 .06 9,500,000 311.719 .56 3,079,440 5,200,000 115.050 .21 2,000,000 47.375 .08 4,848,900 129.941 .23 2,831,250 67.419 .12 900,000 61.200 .11 18,250,000 474.500 .85 10,483,200 423.914 .74 2,000,000 54.875 .10 18,996,800 1,186.113 2.11 2,400,000 112.950 .20 13,000,000 484.250 .86 3,080,000 83.930 .15 1,000,000 91.063 .16 7,357,000 310.833 .56 1,000,000 55.813 .10 7,150,000 171.600 .31 2,010,000 152.509 .27 3,375,000 364.922 .65 4,000,000 160.000 .29
Chubb Corp. Jefferson-Pilot Corp. Lincoln National Corp. SAFECO Corp. St. Paul Companies, Inc.
1,842,600 103.761 .18 2,200,000 150.150 .27 1,800,000 72.000 .13 1,781,800 44.322 .08 2,400,000 80.850 .14 ---------- ---------6,352.013 11.32 ---------- ----------
OTHER MULTI-INDUSTRY - 0.59% Berkshire Hathaway Inc., Class A (1) Canadian Pacific Ltd. Honeywell International Inc. (formerly AlliedSignal Inc.) Minnesota Mining and Manufacturing Co. Textron Inc. GOLD MINES - 0.62% Barrick Gold Corp. Newmont Mining Corp. Placer Dome Inc. MISCELLANEOUS - 1.88% Equity securities in initial period of acquisition
1,488 83.477 .15 2,375,000 51.211 .09 2,700,000 155.756 .28 120,000 11.745 .02 400,000 30.675 .05 7,000,000 123.813 .22 5,600,000 137.200 .25 8,000,000 86.000 .15 1,046.967 1.88 ---------- ---------1,726.844 3.09 ---------- ---------48,886.568 87.15 ---------- ----------
Total Equity Securities (cost: $27,721.177 million)
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 Federal Farm Credit Bank Notes 5.42% due 2/4/2000 20.800 20.686 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 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
1.39 .04
1.49
CORPORATE SHORT-TERM NOTES - 6.48% AIG Funding Inc. 5.84% due 1/20/2000 Albertson's Inc. 5.85% due 1/20/2000 (2) American Express Credit Corp. 5.35%-6.38% due 1/4-2/1/2000 92.911 .17 American General Corp. 5.88% due 2/2/2000 American General Finance Corp. 5.69%-5.76% due 2/18/2000 49.592 .13 Anheuser-Busch Companies, Inc. 5.86% due 2/3/2000 Archer Daniels Midland Co. 5.33%-5.80% due 1/26-4/3/2000 84.154 .15 Associates First Capital Corp. 4.00%-6.03% due 1/3-2/28/2000 123.976 .22 Bell Atlantic Network Funding Corp 5.82%-5.95% due 1/11-1/13/2000 102.797 .18 BellSouth Telecommunications, Inc. 5.50%-5.87% due 2/14-2/25/2000 146.783 .26 Campbell Soup Co. 5.92%-6.01% due 2/18-2/28/2000 47.968 .09 Chevron USA Inc. 5.80%-6.05% due 1/11-2/3/2000 Coca-Cola Co. 5.30%-5.83% due 1/31-2/29/2000 Colgate-Palmolive Co. 5.83% due 1/31/2000 (2) Walt Disney Co. 5.74%-5.88% due 2/18-4/7/2000 Duke Energy Corp. 5.60%-5.66% due 2/4/2000 E.I. du Pont de Nemours and Co. 5.30%-5.82% due 1/19-3/9/2000 136.541 .23 Eastman Kodak Co. 5.70%-5.71% due 2/8-2/15/2000 82.428 .15 Emerson Electric Co. 5.31%-5.60% due 1/18-2/23/2000 64.569 .11 Ford Motor Credit Co. 5.35%-5.81% due 1/5-2/4/2000 121.857 .22 Fortune Brands Inc. 5.40%-6.05% due 1/21-2/16/2000 (2) 63.663 .12 Gannett Co., Inc. 5.80%-5.85% due 1/14-1/20/2000 (2) General Electric Capital Corp. 5.71%-5.96% due 2/3-3/20/2000 170.687 .32 General Motors Acceptance Corp. 5.74%-6.12% due 1/24-3/6/2000 126.732 .23 Gillette Co. 5.90%-5.92% due 1/19/2000 (2) H.J. Heinz Co. 5.34%-5.95% due 1/19-1/28/2000 Household Finance Corp. 5.69%-5.94% due 1/13-3/8/2000 142.830 .25 IBM Credit Corp. 5.70%-5.91% due 1/28-3/7/2000
50.000 49.838 63.000 62.798 93.200 25.000 24.866 50.000
.09 .11
30.000 29.834 85.000 124.800 103.000 148.000 48.400
.05
91.700 91.472 .16 139.900 138.980 .24 25.000 24.874 .04 55.130 54.368 .09 100.000 99.434 .18 137.400 83.000 65.000 122.400 64.000 100.000 99.724 172.500 127.500 80.000 79.751 .14 76.000 75.724 .13 144.050 125.000 123.974 .21 .18
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 forSales of investments $.000 Sales of fund's shares $51.324 Dividends and accrued interest 62.770 114.094 ------------------------56,158.430 Liabilities: Payables forPurchases 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, 1999Equivalent 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 1999 1998 -------------------------
Statement of Changes in Net Assets - ----------------------------------------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 -------------------------------------------------------Income From Investment Operations: Net investment income .49 .48 .51 .49 .52
$17.67
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 of Record
Payment Date
From Net
From Net
From Net Realized
Investment Income
Realized Short-
Term Gains <C> $0.12 0.12 0.12 0.15 -
Long-Term Gains <C> $0.30 2.74
<S> March 5, 1999 June 4, 1999
<C> <C> March 8, 1999 June 7, 1999
September 3, 1999 December 13, 1999 </TABLE>
September 7, 1999 December 14, 1999
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> Percent of Shares
<C>
<C> Percent of Shares Withheld
Votes Director For
Votes
Voting For
Withheld
Charles H. Black
1,006,699,251
99%
13,692,694
1%
Ann S. Bowers Louise H. Bryson Malcolm R. Currie Jon B. Lovelace, Jr. John G. McDonald Bailey Morris-Eck Richard G. Newman William C. Newton James W. Ratzlaff Olin C. Robison R. Michael Shanahan William J. Spencer
1,007,367,857 1,006,706,402 1,006,807,629 1,006,738,908 1,007,179,556 1,006,923,342 1,007,145,218 1,007,273,416 1,007,337,706 1,006,852,752 1,007,557,258 1,007,254,338
99 99 99 99 99 99 99 99 99 99 99 99
13,024,088 13,685,543 13,584,316 13,653,037 13,212,389 13,468,603 13,246,727 13,118,529 13,054,239 13,539,193 12,834,687 13,137,607
1 1 1 1 1 1 1 1 1 1 1 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>
Percent of Shares Abstentions Abstaining
Votes For
Voting For
Votes Against
Voting Against
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 OFFICES BUSINESS ADDRESS
POSITIONS AND OFFICES
POSITIONS AND
WITH UNDERWRITER
WITH REGISTRANT
<S>
<C> David L. Abzug 27304 Park Vista Road Agoura Hills, CA 91301
<C> <C> Regional Vice President
None
John A. Agar #61 Point West Circle Little Rock, AR 72211
Vice President
None
Robert B. Aprison 2983 Bryn Wood Drive Madison, WI 53711
Vice President
None
William W. Bagnard
Vice President
None
Steven L. Barnes 5400 Mount Meeker Road Suite 1
Senior Vice President
None
Boulder, CO 80301-3508
Carl R. Bauer
Assistant Vice President
None
Michelle A. Bergeron 4160 Gateswalk Drive Smyrna, GA 30080
None
J. Walter Best, Jr. 9013 Brentmeade Blvd. Brentwood, TN 37027
Regional Vice President
None
Joseph T. Blair 148 E. Shore Ave. Groton Long Point, CT 06340
None
John A. Blanchard 6421 Aberdeen Road Mission Hills, KS 66208
Vice President
None
Ian B. Bodell P.O. Box 1665
None
Brentwood, TN 37024-1665
Mick L. Brethower 29003 Colonial Drive Georgetown, TX 78628
None
Alan Brown 4129 Laclede Avenue St. Louis, MO 63108 B J. Peter Burns
None
Vice President
None
Brian C. Casey 8002 Greentree Road Bethesda, MD 20817
None
Victor C. Cassato
None
609 W. Littleton Blvd., Suite 310 Greenwood Village, CO 80120
Christopher J. Cassin 19 North Grant Street Hinsdale, IL 60521
None
Denise M. Cassin 1301 Stoney Creek Drive San Ramon, CA 94538
Vice President
None
Larry P. Clemmensen
Director
None
Kevin G. Clifford
Director, President and Co-Chief Executive Officer
None
Ruth M. Collier 29 Landsdowne Drive Larchmont, NY 10538
None
David Coolbaugh
None
Carlo O. Cordasco
None
Thomas E. Cournoyer 2333 Granada Boulevard Coral Gables, FL 33134
Vice President
None
Douglas A. Critchell 3521 Rittenhouse Street, N.W. Washington, D.C. 20015
None
Carl D. Cutting
Vice President
None
William Daugherty 1216 Highlander Way Mechanicsburg, PA 17055 Daniel J. Delianedis 8689 Braxton Drive Eden Prairie, MN 55347
None
None
Michael A. Dilella P. O. Box 661 Ramsey, NJ 07446
Vice President
None
G. Michael Dill 505 E. Main Street Jenks, OK 74037
None
Kirk D. Dodge
None
633 Menlo Avenue, Suite 210 Menlo Park, CA 94025
Peter J. Doran
Director, Executive Vice President
None
100 Merrick Road, Suite 216W Rockville Centre, NY 11570
Michael J. Downer
Secretary
None
Robert W. Durbin 74 Sunny Lane Tiffin, OH 44883
Vice President
None
Lloyd G. Edwards
None
Paul H. Fieberg
None
John Fodor 15 Latisquama Road Southborough, MA 01772
Vice President
None
Daniel B. Frick 845 Western Avenue Glen Ellyn, IL 60137
None
Clyde E. Gardner Route 2, Box 3162 Osage Beach, MO 65065
None
Evelyn K. Glassford
Vice President
None
Jeffrey J. Greiner 12210 Taylor Road Plain City, OH 43064
Vice President
None
Paul G. Haaga, Jr.
Director
None
Mariellen Hamann
None
David E. Harper 150 Old Franklin School Road Pittstown, NJ 08867
None
Mary Pat Harris
None
Ronald R. Hulsey 6744 Avalon Dallas, TX 75214
Vice President
None
Robert S. Irish 1225 Vista Del Mar Drive Delray Beach, FL 33483
None
Michael J. Johnston 630 Fifth Avenue, 36th Floor New York, NY 10111
Director
None
Damien M. Jordan
Vice President
None
Arthur J. Levine 12558 Highlands Place Fishers, IN 46038
None
Karl A. Lewis
None
T. Blake Liberty 5506 East Mineral Lane Littleton, CO 80122
None
Mark J. Lien 5570 Beechwood Terrace West Des Moines, IA 50266
None
Lorin E. Liesy
None
Susan G. Lindgren
Vice President Institutional Investment Services
None
LW
Robert W. Lovelace
Director
None
Stephen A. Malbasa 13405 Lake Shore Blvd. Cleveland, OH 44110
Vice President
None
Steven M. Markel 5241 South Race Street Littleton, CO 80121
None
J. Clifton Massar
Director, Senior Vice President
None
E. Lee McClennahan
None
John V. McLaughlin
None
Terry W. McNabb 2002 Barrett Station Road St. Louis, MO 63131
Vice President
None
R. William Melinat
Vice President Institutional Investment Services
None
David R. Murray 60 Briant Drive Sudbury, MA 01776
Vice President
None
Stephen S. Nelson P.O. Box 470528 Charlotte, NC 28247-0528
Vice President
None
William E. Noe 304 River Oaks Road Brentwood, TN 37027
None
Peter A. Nyhus 3084 Wilds Ridge Court Prior Lake, MN 55372
Vice President
None
Eric P. Olson 62 Park Drive Glenview, IL 60025
Vice President
None
Gary A. Peace 291 Kaanapali Drive Napa, CA 94558
None
Samuel W. Perry 6133 Calle del Paisano Scottsdale, AZ 85251
None
Fredric Phillips
None
175 Highland Avenue, 4th Floor Needham, MA 02494
Candance D. Pilgrim
None
Carl S. Platou 7455 80th Place, S.E. Mercer Island, WA 98040
Vice President
None
John O. Post
None
Richard P. Prior
Vice President
None
Steven J. Reitman 212 The Lane Hinsdale, IL 60521
None
Brian A. Roberts 244 Lambeau Lane Glenville, NC 28736
Vice President
None
George S. Ross
None
55 Madison Avenue Morristown, NJ 07960
Julie D. Roth
Vice President
None
James F. Rothenberg
Director
None
Douglas F. Rowe 414 Logan Ranch Road Georgetown, TX 78628
Vice President
None
Christopher S. Rowey 9417 Beverlywood Street Los Angeles, CA 90034
None
Dean B. Rydquist 1080 Bay Pointe Crossing Alpharetta, GA 30005
None
Richard R. Samson 4604 Glencoe Avenue, #4 Marina del Rey, CA 90292
None
Joseph D. Scarpitti 31465 St. Andrews Westlake, OH 44145
Vice President
None
R. Michael Shanahan
Director
President and Director
Brad W. Short 306 15th Street Seal Beach, CA 90740
None
David W. Short
Chairman of the Board and Co-Chief Executive
None
1000 RIDC Plaza, Suite 212 Officer Pittsburgh, PA 15238
William P. Simon 912 Castlehill Lane Devon, PA 19333
None
John C. Smith -
None
Institutional Investment
Services
Rodney G. Smith 100 N. Central Expressway Suite 1214 Richardson, TX 75080
Vice President
None
Sherrie L. Snyder-Senft
None
Anthony L. Soave 8831 Morning Mist Drive Clarkston, MI 48348
None
Therese L. Souiller 2652 Excaliber Court Virginia Beach, VA 23454
None
Nicholas D. Spadaccini 855 Markley Woods Way Cincinnati, OH 45230
None
Kristen J. Spazafumo
None
Daniel S. Spradling 181 Second Avenue Suite 228 San Mateo, CA 94401
None
LW
Eric H. Stern
Director
None
Max D. Stites
Vice President
None
Thomas A. Stout 1004 Ditchley Road Virginia Beach, VA 23451
None
Craig R. Strauser 3 Dover Way Lake Oswego, OR 97034
Vice President
None
Francis N. Strazzeri 31641 Saddletree Drive Westlake Village, CA 91361
None
Drew W. Taylor
None
James P. Toomey
Vice President
None
Christopher E. Trede
Vice President
None
George F. Truesdail 400 Abbotsford Court Charlotte, NC 28270
Vice President
None
Scott W. Ursin-Smith 60 Reedland Woods Way Tiburon, CA 94920
Vice President
None
J. David Viale 7 Gladstone Lane Laguna Niguel, CA 92677
None
Thomas E. Warren 119 Faubel Street Sarasota, FL 34242
None
J. Kelly Webb
Senior Vice President, Treasurer and Controller
None
Gregory J. Weimer 206 Hardwood Drive Venetia, PA 15367
Vice President
None
Timothy W. Weiss
Director
None
George J. Wenzel 3406 Shakespeare Drive Troy, MI 48084
None
J. D. Wiedmaier 3513 Riverstone Way Chesapeake, VA 23325
None
Timothy J. Wilson 113 Farmview Place Venetia, PA 15367
Vice President
None
Laura L. Wimberly
Vice President
None
Marshall D. Wingo President
Director, Senior Vice
None
Robert L. Winston
Director, Senior Vice President
None
William R. Yost 9320 Overlook Trail Eden Prairie, MN 55347
Vice President
None
Janet M. Young 1616 Vermont Houston, TX 77006
None
Scott D. Zambon 2887 Player Lane Tustin Ranch, CA 92782 </TABLE>
None
__________ 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 <S> (1)
TITLE
<C> <C> Principal Executive Officer: /s/ JON B. LOVELACE, JR. (Jon B. Lovelace, Jr.) Chairman of the Board
(2)
Principal Financial Officer and Principal Accounting Officer: /s/ THOMAS M. ROWLAND (Thomas M. Rowland) Treasurer
(3)
Directors: Charles H. Black* Ann S. Bowers* Louise H. Bryson Malcolm R. Currie* Director Director Director 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) </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.ACHARTER <SEQUENCE>2 <TEXT>
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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.CHOLDERSRTS <SEQUENCE>3 <TEXT>
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> ADM - Administratrix FBO - For the benefit
<C> TTEE
<C> -
<C> Trustee
of Administrator GDN Guardian U/A agreement Under
COM PROP
Community property
JT TEN with right of
- Joint UGMA/ tenants (State) Gift to Minors Act in survivorship the state indicated
Uniform
CUST
Custodian
effect in
DTD
Dated
LIFE TEN - Life tenant (State)
UTMA/ Transfers to Minors Act
Uniform
EST
Estate
(State)/TOD Transfer on Death Act in effect in the state
Uniform in the state indicated U/W
in effect
Of the estate of
Last will and testament
ET AL
And others
indicated will and testament of
Under last
EXEC
Executor
TR
Trust will of
Under the
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: ______________________________________________________________________ </TEXT> </DOCUMENT> <DOCUMENT>
<TYPE>EX-99.DADVSRCONTR <SEQUENCE>4 <TEXT>
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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.EUNDRCONTR <SEQUENCE>5 <TEXT>
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. </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.GCUSTAGREEMT <SEQUENCE>6 <TEXT>
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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.ILEGALOPININ <SEQUENCE>7 <TEXT>
March 3, 2000 O'MELVENY & MYERS LLP
<TABLE> <CAPTION> <S> Century City Newport Beach New York San Francisco Washington, D.C. </TABLE>
<C> <C> 400 South Hope Street
Hong Kong
Los Angeles, California 90071-2899 London Telephone (213) 430-6000 Shanghai Facsimile (213) 430-6407 Tokyo Internet: www.omm.com
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 N1A 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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.JOTHEROPININ
<SEQUENCE>8 <TEXT>
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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.M12B-1PLAN <SEQUENCE>9 <TEXT>
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. </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.N18F-3PLAN <SEQUENCE>10 <TEXT>
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 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.PCODEETH <SEQUENCE>11 <TEXT>
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. </TEXT> </DOCUMENT> </SEC-DOCUMENT> -----END PRIVACY-ENHANCED MESSAGE-----

March 2003 Investment Company of America

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March 2003 Investment Company of America

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file:///e|/mrogovin/ag%20edwards/March%202003%20Investment%20Company%20Of%20America.

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The Investment Company of America/(R)/ Prospectus MARCH 15, 2000

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1998 23.94% 1999 16.56% [end bar chart]

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10 THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS <PAGE>

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after eight years, reducing future annual expenses. -----------------------------------------------------------------------------</TABLE>

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<PAGE> --------------------------------------------------------DISTRIBUTIONS AND TAXES DIVIDENDS AND DISTRIBUTIONS

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22 THE INVESTMENT COMPANY OF AMERICA / PROSPECTUS <PAGE>

<TABLE> <CAPTION> <S> <C> FOR SHAREHOLDER SERVICES

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The Investment Company of America/(R)/ Prospectus MARCH 15, 2000

<TABLE> <CAPTION> TABLE OF CONTENTS ------------------------------------------------------<S> <C> Risk/Return Summary 2 -------------------------------------------------------

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<TABLE> <CAPTION> AVERAGE ANNUAL TOTAL RETURN/1/ <S> <C>

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