THE INVESTMENT COMPANY OF AMERICA

                                     Part B
                      Statement of Additional Information

                             February 15, 2002


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 February 15, 2002. 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. 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
Management of the Fund  . . . . . . . . . . . . . . . . . . . . . .        7
Taxes and Distributions . . . . . . . . . . . . . . . . . . . . . .       24
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . .       29
Sales Charges . . . . . . . . . . . . . . . . . . . . . . . . . . .       32
Sales Charge Reductions and Waivers . . . . . . . . . . . . . . . .       35
Individual Retirement Account (IRA) Rollovers . . . . . . . . . . .       39
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .       39
Selling Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .       41
Shareholder Account Services and Privileges . . . . . . . . . . . .       43
Execution of Portfolio Transactions . . . . . . . . . . . . . . . .       46
General Information . . . . . . . . . . . . . . . . . . . . . . . .       46
Class A Share Investment Results and Related Statistics . . . . . .       48
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       50
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 circumstances, 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 debt securities will generally consist of
     investment grade securities. The fund may, however, invest up to 5% of its
     assets in straight debt securities rated Ba and BB or below 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.


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 increase when interest rates fall.


SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS - The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt and vice versa. Some
types of convertible bonds or preferred stock automatically convert into common
stock. 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.


                   The Investment Company of America - Page 2

<PAGE>



Convertible 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, and
convertible market valuations, as well as changes in interest rates, credit
spreads, and the credit quality of the issuer.


U.S. TREASURY AND AGENCY SECURITIES - U.S. Treasury securities 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.


U.S. agency securities include those issued by certain U.S. government
instrumentalities and certain federal agencies. These securities 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: 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 and 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 invest in securities of issuers in developing
countries only 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


                   The Investment Company of America - Page 3

<PAGE>


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 the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.


RESTRICTED SECURITIES AND LIQUIDITY - The fund may purchase securities subject
to restrictions on resale. Securities not actively traded will be considered
illiquid unless they have been specifically determined to be liquid under
procedures 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;


                   The Investment Company of America - Page 4

<PAGE>


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 policies 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.


                   The Investment Company of America - Page 5

<PAGE>


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.


                   The Investment Company of America - Page 6

<PAGE>



                             MANAGEMENT OF THE FUND




BOARD OF DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
                                     YEAR FIRST                                    NUMBER OF BOARDS
                        POSITION      ELECTED         PRINCIPAL OCCUPATION(S)       WITHIN THE FUND
                        WITH THE     A DIRECTOR               DURING              COMPLEX/2/ ON WHICH  OTHER DIRECTORSHIPS/3/ HELD
    NAME AND AGE          FUND     OF THE FUND/1/          PAST 5 YEARS             DIRECTOR SERVES            BY DIRECTOR
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>         <C>             <C>                            <C>                  <C>
 "NON-INTERESTED" DIRECTORS
-----------------------------------------------------------------------------------------------------------------------------------
 Louise H. Bryson       Director        1999        Executive Vice President,              1            None
 Age: 57                                            Distribution and Business
                                                    Development Lifetime
                                                    Television; Director and
                                                    former Chairman of the
                                                    Board, KCET - Los Angeles
                                                    Public Television Station;
                                                    former Senior Vice
                                                    President, fx Networks,
                                                    Inc: Fox Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 Malcolm R. Currie      Director        1992        Chairman of the Board and              1            Enova Systems; Inamed
 Age: 74                                            Chief Executive Officer,                            Corp.; LSI Logic
                                                    Currie Technologies, Inc.;                          Corporation
                                                    Chairman Emeritus, Hughes
                                                    Aircraft Company; former
                                                    Chairman of the Board of
                                                    Trustees, University of
                                                    Southern California
-----------------------------------------------------------------------------------------------------------------------------------
 Mary Anne Dolan        Director        2000        Founder and President,                 3            None
 Age: 54                                            M.A.D., Inc.
                                                    (communications company);
                                                    Former Editor-in-Chief Los
                                                                           ---
                                                    Angeles Herald Examiner
                                                    -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
 Martin Fenton          Director        2000        Managing Director, Senior             16            None
 Age: 66                                            Resource Group LLC
                                                    (development and management
                                                    of senior living
                                                    communities)
-----------------------------------------------------------------------------------------------------------------------------------
 Claudio X. Gonzalez    Director        2001        Chairman and Chief                     2            American Movil, SA;
 Laporte                                            Executive Officer, Kimberly                         Grupo Carso; Grupo Alfa;
 Age: 67                                            Clark de Mexico, SA                                 Kimberly Clark Corp.;
                                                                                                        Kellogg Company;
                                                                                                        General Electric Company;
                                                                                                        The Home Depot; The Mexico
                                                                                                        Fund
-----------------------------------------------------------------------------------------------------------------------------------
 John G. McDonald       Director        1976        Irwin Financial                        8            Plum Creek Timber Co.;
 Age: 64                                            Corporation; St. Paul                               Scholastic Corporation;
                                                    Companies                                           iStar Financial, Inc.;
                                                                                                        Varian, Inc.; Capstone
                                                                                                        Turbine Corp.
-----------------------------------------------------------------------------------------------------------------------------------
 Bailey Morris-Eck       Director       1993        Senior Associate, Reuters              3            None
 Age: 57                                            Foundation; Senior Fellow,
                                                    Institute for International
                                                    Economics; Consultant, The
                                                                           ---
                                                    Independent of London
                                                    ---------------------
-----------------------------------------------------------------------------------------------------------------------------------
 Richard G. Newman      Director        1996        Chairman and CEO, AECOM               13            Southwest Water Company
 Age: 67                                            Technology Corporation
                                                    (engineering, consulting
                                                    and professional services)
-----------------------------------------------------------------------------------------------------------------------------------
 Olin C. Robison        Director        1987        President of the Salzburg              3            None
 Age: 65                                            Seminar; President
                                                    Emeritus, Middlebury
                                                    College
-----------------------------------------------------------------------------------------------------------------------------------
 William J. Spencer     Director        1997        Chairman and Chief                     1            None
 Age: 71                                            Executive Officer, SEMATECH
                                                    (research and development
                                                    consortium); Trustee,
                                                    William Jewell College;
                                                    Associated Universities,
                                                    Inc.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                   The Investment Company of America - Page 7


<PAGE>


 [This page is intentionally left blank for this filing.]

                   The Investment Company of America - Page 8


<PAGE>





<TABLE>
<CAPTION>
                                                          PRINCIPAL OCCUPATION(S)
                                         YEAR FIRST               DURING               NUMBER OF BOARDS
                                          ELECTED            PAST 5 YEARS AND           WITHIN THE FUND
                          POSITION       A DIRECTOR           POSITIONS HELD          COMPLEX/2/ ON WHICH   OTHER DIRECTORSHIPS/3/
                          WITH THE     AND/OR OFFICER    WITH AFFILIATED ENTITIES          DIRECTOR                  HELD
     NAME AND AGE           FUND       OF THE FUND/1/  OR THE PRINCIPAL UNDERWRITER    OR OFFICER SERVES    BY DIRECTOR OR OFFICER
-------------------------------------------------------         OF THE FUND
                                                       ----------------------------------------------------------------------------
<S>                     <C>            <C>             <C>                            <C>                  <C>
 "INTERESTED" DIRECTORS/4//,//5/
-----------------------------------------------------------------------------------------------------------------------------------
 James B. Lovelace/6/    Senior Vice        1994        Senior Vice President and              2            None
 Age: 45                 President                      Director, Capital Research
                         and                            and Management Company
                         Director
-----------------------------------------------------------------------------------------------------------------------------------
 Jon B. Lovelace,        Chairman of        1953        Chairman Emeritus, Capital             3            None
 Jr./6/                  the Board                      Research and Management
 Age: 75                                                Company
-----------------------------------------------------------------------------------------------------------------------------------
 Donald D. O'Neal        Senior Vice        1994        Senior Vice President,                 2            None
 Age: 41                 President                      Capital Research and
                         and                            Management Company
                         Director
-----------------------------------------------------------------------------------------------------------------------------------
 James F. Rothenberg     Executive          2000        President and Director,                4            None
 Age: 55                 Vice                           Capital Research and
                         President                      Management Company;
                         and                            Director, American Funds
                         Director                       Distributors, Inc.*;
                                                        Director, American Funds
                                                        Service Company*; Director,
                                                        The Capital Group
                                                        Companies, Inc.*; Director
                                                        Capital Guardian Trust
                                                        Company*; Director, Captial
                                                        Group Research, Inc.*;
                                                        Director, Capital
                                                        Management Services, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
 R. Michael Shanahan     President          1994        Chairman of the Board and              2            None
 Age: 63                 and                            Principal Executive
                         Director                       Officer, Capital Research
                                                        and Management Company;
                                                        Director, American Funds
                                                        Distributors, Inc.*;
                                                        Director, The Capital Group
                                                        Companies, Inc.*; Chairman
                                                        of the Board, Capital
                                                        Management Services, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>





                   The Investment Company of America - Page 9


<PAGE>






<TABLE>
<CAPTION>
                                                                                    PRINCIPAL OCCUPATION(S) DURING
                               POSITION         YEAR FIRST ELECTED                  PAST 5 YEARS AND POSITIONS HELD
                               WITH THE             AN OFFICER                         WITH AFFILIATED ENTITIES
     NAME AND AGE                FUND             OF THE FUND/1/               OR THE PRINCIPAL UNDERWRITER OF THE FUND
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                     <C>                 <C>
 OTHER OFFICERS/5/
-----------------------------------------------------------------------------------------------------------------------------------
 Gregg E. Ireland       Senior Vice President          1994         Senior Vice President, Capital Research and Management Company
 Age: 52
-----------------------------------------------------------------------------------------------------------------------------------
 Joyce E. Gordon            Vice President             1998         Senior Vice President, Capital Research Company*
 Age: 45
-----------------------------------------------------------------------------------------------------------------------------------
 Anne M. Llewellyn          Vice President             1984         Associate, Capital Research and Management Company
 Age: 54
-----------------------------------------------------------------------------------------------------------------------------------
 Vincent P. Corti             Secretary                1994         Vice President - Fund Business Management Group, Capital
 Age: 45                                                            Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Thomas M. Rowland            Treasurer                1998         Senior Vice President, Capital Research and Management Company;
 Age: 60                                                            Director, American Funds Service Company*
-----------------------------------------------------------------------------------------------------------------------------------
 R. Marcia Gould         Assistant Treasurer           1993         Vice President - Fund Business Management Group, Capital
 Age: 47                                                            Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
 Anthony W. Hynes,       Assistant Treasurer           1998         Vice President - Fund Business Management Group, Capital
 Jr.                                                                Research and Management Company
 Age: 39
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>





                  The Investment Company of America - Page 10


<PAGE>

* Company affiliated with Capital Research and Management Company.
1 Directors and officers of the fund are elected annually.

2 Capital Research and Management Company manages the American Funds consisting
  of 29 funds. Capital Research and Management Company also manages American
  Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
  investment vehicles for certain variable insurance contracts, and Endowments,
  whose shareholders are limited to certain non-profit organizations.
3 This includes all directorships (other than those in the American Funds Group)
  that are held by each director as a director of a public company or a
  registered investment company.
4 "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 its affiliated entities (including the fund's principal
  underwriter).
5 All of the officers listed, with the exception of Anne M. Llewellyn and Thomas
  M. Rowland, 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.

6 James B. Lovelace is the son of Jon B. Lovelace, Jr.

THE ADDRESS FOR ALL DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET
- 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY.


                  The Investment Company of America - Page 11


<PAGE>




FUND SHARES OWNED BY DIRECTORS AS OF DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                     AGGREGATE DOLLAR RANGE/1/
                                                             OF SHARES
                                                         OWNED IN ALL FUNDS
                                                       WITHIN AMERICAN FUNDS
                            DOLLAR RANGE/1/ OF FUND       FAMILY OVERSEEN
           NAME                  SHARES OWNED               BY DIRECTOR
-------------------------------------------------------------------------------
<S>                         <C>                      <C>
 "NON-INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
 Louise H. Bryson              $10,001 - $50,000         $10,001 - $50,000
-------------------------------------------------------------------------------
 Malcolm R. Currie               Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Mary Anne Dolan                 Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Martin Fenton                   Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Claudio X. Gonzalez          $50,001 - $100,000         $50,001 - $100,000
 Laporte
-------------------------------------------------------------------------------
 John G. McDonald                Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Bailey Morris-Eck            $50,001 - $100,000         $50,001 - $100,000
-------------------------------------------------------------------------------
 Richard G. Newman               Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Olin C. Robison                 Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 William J. Spencer              Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 "INTERESTED" DIRECTORS/2/
-------------------------------------------------------------------------------
 James B. Lovelace             $10,001 - $50,000           Over $100,000
-------------------------------------------------------------------------------
 Jon B. Lovelace, Jr.            Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 Donald D. O'Neal                Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 James F. Rothenberg             Over $100,000             Over $100,000
-------------------------------------------------------------------------------
 R. Michael Shanahan             Over $100,000             Over $100,000
-------------------------------------------------------------------------------
</TABLE>



1 Ownership disclosure is made using the following ranges:  None; $1 - $10,000;
  $10,001 - $50,000; $50,001 - $100,000 and Over $100,000. The amounts listed
  for "interested" directors include shares owned through The Capital Group
  Companies, Inc. retirement plan and 401(k) plan.
2 "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 its affiliated entities (including the fund's principal
  underwriter).

DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED DECEMBER 31, 2001

No compensation is paid by the fund to any officer or Director who is a
director, officer or employee of the Investment Adviser or its affiliates. The
fund pays annual fees of $46,000 to Directors who are not affiliated with the
Investment Adviser, plus $2,000 for each Board of Directors meeting attended,
and $1,000 for each meeting attended as a member of a committee of the Board of
Directors.


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


                  The Investment Company of America - Page 12

<PAGE>



in effect for the fund. The fund also reimburses certain expenses of the
Directors who are not affiliated with the Investment Adviser.





<TABLE>
<CAPTION>
                                                        TOTAL COMPENSATION (INCLUDING
                         AGGREGATE COMPENSATION     VOLUNTARILY DEFERRED COMPENSATION/1/)
                         (INCLUDING VOLUNTARILY           FROM ALL FUNDS MANAGED BY
                        DEFERRED COMPENSATION/1/)      CAPITAL RESEARCH AND MANAGEMENT
         NAME                 FROM THE FUND             COMPANY OR ITS AFFILIATES/2/
------------------------------------------------------------------------------------------
<S>                     <C>                        <C>
 Louise H. Bryson               $61,000/3/                        $ 61,000/3/
------------------------------------------------------------------------------------------
 Malcolm R. Currie              $57,000/3/                        $ 57,000/3/
------------------------------------------------------------------------------------------
 Mary Anne Dolan                $61,000                           $ 99,500
------------------------------------------------------------------------------------------
 Martin Fenton                  $59,000                           $183,620
------------------------------------------------------------------------------------------
 Claudio X. Gonzalez            $14,500/3/                        $ 24,500/3/
 Laporte
------------------------------------------------------------------------------------------
 John G. McDonald               $80,000/3/                        $256,500/3/
------------------------------------------------------------------------------------------
 Bailey Morris-Eck              $58,000                           $ 98,500
------------------------------------------------------------------------------------------
 Richard G. Newman              $64,500/3/                        $118,620/3/
------------------------------------------------------------------------------------------
 Olin C. Robison                $66,000/3/                        $107,500/3/
------------------------------------------------------------------------------------------
 William J. Spencer             $75,000/3/                        $ 75,000/3/
------------------------------------------------------------------------------------------
</TABLE>




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 consisting
  of 29 funds. Capital Research and Management Company also manages American
  Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
  investment vehicles for certain variable insurance contracts, and Endowments,
  whose shareholders are limited to certain non-profit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
  compensation accrued by the fund (plus earnings thereon) through the 2001
  fiscal year for participating Directors is as follows: Louise H. Bryson
  ($119,823), Malcolm R. Currie ($295,137), Claudio X. Gonzalez Laporte
  ($15,133), John G. McDonald ($679,137), Richard G. Newman ($0), Olin C.
  Robison ($122,312) and William J. Spencer ($372,017). Amounts deferred and
  accumulated earnings thereon are not funded and are general unsecured
  liabilities of the fund until paid to the Directors.

                      FUND ORGANIZATION AND VOTING RIGHTS

The fund, an open-end, diversified management investment company, was organized
as a Delaware corporation on 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 above. 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 several different classes of shares, including classes A, B, C, F,
529-A, 529-B, 529-C, 529-E and 529-F. The 529 share classes are available only
through CollegeAmerica to investors establishing qualified higher education
savings accounts. The shares of each class represent an
interest in the same investment portfolio.  Each class has pro rata 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 and set forth in the fund's rule 18f-3 Plan. Each class'
shareholders have exclusive voting rights with respect to the respective class'
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. Note, CollegeAmerica account
owners are technically not shareholders of the fund and accordingly, do not have
the rights of a shareholder, including the right to vote any proxies relating to
fund shares.


                  The Investment Company of America - Page 13

<PAGE>
The fund holds annual meetings of shareholders for the purpose of electing
directors. Significant matters which require shareholder approval, such as 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.


COMMITTEES OF THE BOARD OF DIRECTORS

The fund has an Audit Committee comprised of Louise H. Bryson, Mary Anne Dolan,
Martin Fenton, John G. McDonald, Bailey Morris-Eck, Richard G. Newman, Olin C.
Robison and William J. Spencer, none of whom is considered an "interested
person" of the fund within the meaning of the 1940 Act. The Committee oversees
the fund's accounting and financial reporting policies and practices, its
internal controls and the internal controls of the fund's principal service
providers.  The Committee acts as a liaison between the fund's independent
accountants and the full Board of Directors. There were two Audit Committee
meetings held during the 2001 fiscal year.


The fund has a Contracts Committee comprised of Louise H. Bryson, Malcom R.
Currie, Mary Anne Dolan, Martin Fenton, Claudio X. Gonzalez Laporte, John G.
McDonald, Bailey Morris-Eck, Richard G. Newman, Olin C. Robison and William J.
Spencer, none of whom is considered an "interested person" of the fund within
the meaning of the 1940 Act. The Committee's function is to request, review and
consider the information deemed necessary to evaluate the terms of certain
agreements between the fund and its Investment Adviser or the Investment
Adviser's affiliates, such as the investment advisory and service agreement,
principal underwriting agreement, and plans of distribution under rule 12b-1,
that the fund may enter into, renew or continue, and to make its recommendations
to the full Board of Directors on these matters. There was one Contracts
Committee meeting during the 2001 fiscal year.


                  The Investment Company of America - Page 14

<PAGE>



The fund has a Nominating Committee comprised of Louise H. Bryson, John G.
McDonald and Olin C. Robison, none of whom is considered an "interested person"
of the fund within the meaning of the 1940 Act. The Committee periodically
reviews such issues as the Board's composition, responsibilities, committees,
compensation and other relevant issues, and recommends any appropriate changes
to the full Board of Directors. The Committee also evaluates, selects and
nominates candidates for independent directors and Advisory Board members to the
full Board of Directors. While the Committee normally is able to identify from
its own resources an ample number of qualified candidates, it will consider
shareholder suggestions of persons to be considered as nominees to fill future
vacancies on the Board.  Such suggestions must be sent in writing to the
Nominating Committee of the fund, c/o the fund's
Secretary, and must be accompanied by complete biographical and occupational
data on the prospective nominee, along with a written consent of the prospective
nominee for consideration of his or her name by the Committee. There were four
Nominating Committee meetings during the 2001 fiscal year.


The fund has a Proxy Committee comprised of John G. McDonald, Richard G. Newman
and William J. Spencer, none of whom is considered an "interested person" of the
fund within the meaning of the 1940 Act. Donald D. O'Neal is also a member of
the Committee and may technically be deemed an "interested person" of the fund
due to his affiliation with the Investment Adviser. The Committee's functions
include establishing and reviewing procedures and policies for voting of proxies
of companies held in the fund's portfolio, making determinations with regard to
certain contested proxy voting issues, and discussing related current issues.
There were five Proxy Committee meetings during the 2001 fiscal year.


                  The Investment Company of America - Page 15

<PAGE>



                             ADVISORY BOARD MEMBERS

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 chart below sets out additional information about
the Advisory Board Members.





<TABLE>
<CAPTION>
                           YEAR FIRST                                             NUMBER OF BOARDS
                           ELECTED AN                                              WITHIN THE FUND
                     ADVISORY BOARD MEMBER     PRINCIPAL OCCUPATION(S) DURING    COMPLEX/1/ ON WHICH
   NAME AND AGE           OF THE FUND                   PAST 5 YEARS                MEMBER SERVES      OTHER DIRECTORSHIPS/2/ HELD
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                     <C>                                 <C>                  <C>
 Thomas M. Crosby,            1995            Partner, Faegre & Benson (law               1            None
 Jr.                                          firm)
 Age: 63
-----------------------------------------------------------------------------------------------------------------------------------
 Ellen H. Goldberg            1998            President, Santa Fe Institute;              1            None
 Age: 56                                      Research Professor, University
                                              of New Mexico
-----------------------------------------------------------------------------------------------------------------------------------
 William H. Kling             1985            President, Minnesota Public                 6            Irwin Financial Corporation;
 Age: 59                                      Radio; President, Greenspring                            St. Paul Companies
                                              Co.; President, American Public
                                              Media Group
-----------------------------------------------------------------------------------------------------------------------------------
 Farzad Nazem                 2000            Chief Technology Officer, Yahoo!            1            None
 Age: 40                                      Inc.
-----------------------------------------------------------------------------------------------------------------------------------
 Robert J. O'Neill            1988            Chairman of the Council;                    3            The "Shell" Transport and
 Age: 65                                      Australian Strategic Policy                              Trading Company, plc
                                              Institute; Adjunct Professor in
                                              Strategic and Defense Studies
                                              Center, Australian National
                                              University; former Chichele
                                              Professor of the History of War;
                                              and former Fellow, All Souls
                                              College, University of Oxford
-----------------------------------------------------------------------------------------------------------------------------------
 Norman R. Weldon             1977            Managing Director, Partisan                 3            Novoste Corporation
 Age: 66                                      Management Group, Inc.; former
                                              Chairman of the Board, Novoste
                                              Corporation
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>





                  The Investment Company of America - Page 16


<PAGE>




1 Capital Research and Management Company manages the American Funds consisting
  of 29 funds. Capital Research and Management Company also manages American
  Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
  investment vehicles for certain variable insurance contracts, and Endowments,
  whose shareholders are limited to certain non-profit organizations.
2 This includes all directorships (other than those in the American Funds Group)
  that are held by each Advisory Board member as a director of a public company
  or a registered investment company.

THE ADDRESS FOR ALL ADVISORY BOARD MEMBERS IS THE OFFICE OF THE FUND, 333 SOUTH
HOPE STREET - 55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND
SECRETARY.


                  The Investment Company of America - Page 17


<PAGE>




ADVISORY BOARD MEMBER COMPENSATION PAID DURING THE FISCAL YEAR ENDED DECEMBER
31, 2001

The fund pays fees of $5,500 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.


No pension or retirement benefits are accrued as part of fund expenses. The
Advisory Board Members 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 Advisory Board Members
who are not affiliated with the fund.





<TABLE>
<CAPTION>
                                                        TOTAL COMPENSATION (INCLUDING
                         AGGREGATE COMPENSATION     VOLUNTARILY DEFERRED COMPENSATION/1/)
                         (INCLUDING VOLUNTARILY           FROM ALL FUNDS MANAGED BY
                        DEFERRED COMPENSATION/1/)      CAPITAL RESEARCH AND MANAGEMENT
         NAME                 FROM THE FUND             COMPANY OR ITS AFFILIATES/2/
------------------------------------------------------------------------------------------
<S>                     <C>                        <C>
 Thomas M. Crosby,              $ 8,500                           $  8,500
 Jr.
------------------------------------------------------------------------------------------
 Ellen H. Goldberg              $10,000                           $ 10,000
------------------------------------------------------------------------------------------
 William H. Kling               $10,000/3/                        $117,500/3/
------------------------------------------------------------------------------------------
 Farzad Nazem                   $ 8,500                           $  8,500
------------------------------------------------------------------------------------------
 Robert J. O'Neill              $ 8,500                           $ 46,500
------------------------------------------------------------------------------------------
 Norman R. Weldon               $10,000/3/                        $ 47,000/3/
------------------------------------------------------------------------------------------
</TABLE>



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 consisting
  of 29 funds. Capital Research and Management Company also manages American
  Funds Insurance Series and Anchor Pathway Fund, which serve as the underlying
  investment vehicles for certain variable insurance contracts, and Endowments,
  whose shareholders are limited to certain non-profit organizations.
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, 2001 for participating Advisory Board members is as
  follows: William H. Kling ($63,661). Amounts deferred and accumulated earnings
  thereon are not funded and are general unsecured liabilities of the fund until
  paid to the Advisory Board member.

As of January 15, 2002, 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 18

<PAGE>




INVESTMENT ADVISER - The Investment Adviser, Capital Research and Management
Company, 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
significant 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 $350 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, 2002, 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).


In determining whether to renew the Agreement each year, the Contracts Committee
of the Board of Directors evaluates information provided by the Investment
Adviser in accordance with Section 15(c) of the 1940 Act, and presents its
recommendations to the full Board of Directors. At its most recent meeting, the
Committee considered a number of factors in recommending renewal of the existing
Agreement, including the quality of services provided to the fund, fees and
expenses borne by the fund, and financial results of the Investment Adviser.


Members of the Committee discussed the quality of services provided to the fund
and noted that while absolute results were negative during the first ten months
of 2001, its results versus its peers were favorable during that period as well
as for longer periods of time.  The Committee recognized that the fund's
research-based long-term approach enabled it to resist the overall stock market
weakness during the year and that the fund had not had a negative return since
1977.  The Committee considered the quality and depth of the Investment
Adviser's organization in general and of the investment professionals currently
providing services to the fund.


The Committee observed the fund's expenses for the most recent fiscal year and
earlier periods compared favorably to its peer group. The Committee also
considered steps taken in recent years by the Investment Adviser to help control
transfer agent expenses borne by the fund.


                  The Investment Company of America - Page 19

<PAGE>


Based on their review, the Committee and the Board concluded that the advisory
fees and other expenses of the fund are fair, both absolutely and in comparison
with those of other funds in the industry, and that shareholders have received
reasonable value in return for paying such fees and expenses.


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; shareholder recordkeeping and
administrative 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 billion of net assets, plus 0.336% on net assets over $1
billion to $2 billion, plus 0.30% on net assets over $2 billion to $3 billion,
plus 0.276% on net assets over $3 billion to $5 billion, plus 0.258% on net
assets over $5 billion to $8 billion, plus 0.246% on net assets over $8 billion
to $13 billion, plus 0.24% on net assets over $13 billion to $21 billion, plus
0.234% on net assets over $21 billion to $34 billion, plus 0.231% on net assets
over $34 billion to $44 billion, plus 0.228% on net assets over $44 billion to
$55 billion, plus 0.225% on net assets over $55 billion to $71 billion, plus
0.222% on net assets in excess of $71 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 2001, 2000, and 1999, the Investment Adviser received
from the fund advisory fees of $134,899,000, $135,760,000, and $127,846,000,
respectively.


ADMINISTRATIVE SERVICES AGREEMENT - The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the Investment Adviser relating
to the fund's Class C, F and 529 shares will continue in effect until April 30,
2002, 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 the vote of a majority of Directors who are not parties to


                  The Investment Company of America - Page 20

<PAGE>



the Administrative 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 Administrative Agreement provides that the fund may
terminate the agreement at any time by vote of a majority of Directors who are
not interested persons of the fund.  The Investment Adviser has the right to
terminate the Administrative Agreement upon 60 days' written notice to the fund.
The Administrative Agreement automatically terminates in the event of its
assignment (as defined in the 1940 Act).


Under the Administrative Agreement, the Investment Adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and all Class 529 shares.  The Investment Adviser contracts with
third parties, including American Funds Service Company, the fund's Transfer
Agent, to provide these services.  Services include, but are not limited to,
shareholder account maintenance, transaction processing, tax information
reporting, and shareholder and fund communications. In addition, the Investment
Adviser monitors, coordinates and oversees the activities performed by third
parties providing such services.


As compensation for its services, the Investment Adviser receives transfer agent
fees for transfer agent services provided to the fund's applicable share
classes.  Transfer agent fees are paid monthly according to a fee schedule
contained in a Shareholder Services Agreement between the fund and American
Funds Service Company. The Investment Adviser also receives an administrative
services fee for administrative services provided to the fund's applicable share
classes.  Administrative services fees are paid monthly, accrued daily and
calculated at the annual rate of 0.15% of the average daily net assets of each
respective applicable share class.


Administrative service fees paid for Class C and F shares for the fiscal period
ended 2001 were $444,000 and $127,000, respectively.


PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION - 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 Principal Underwriter receives revenues from sales of the fund's shares. For
Class A and 529-A shares, the Principal Underwriter receives commission revenue
consisting of that portion of the Class A and 529A sales charge remaining after
the allowances by the Principal Underwriter to investment dealers. For Class B
and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees
paid by the fund for distribution expenses to a third party and receives the
revenue remaining after compensating investment dealers for sales of Class B and
529-B shares. The fund also pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers of Class B and 529-B shares.
For Class C and 529-C shares, the Principal Underwriter receives any contingent
deferred sales charges that apply during the first year after purchase. The fund
pays the Principal Underwriter for advancing the immediate service fees and
commissions paid to qualified dealers of Class C and 529-C shares. For Class
529-E shares, the fund pays the Principal Underwriter for advancing the
immediate service fees and commissions paid to qualified dealers. For Class F
and 529-F shares, the fund pays the Principal Underwriter for advancing the
immediate service fees paid to qualified dealers and advisers who sell Class F
and 529-F shares.


                  The Investment Company of America - Page 21

<PAGE>



Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:


<TABLE>
<CAPTION>
                                                                     COMMISSIONS,        ALLOWANCE OR

                                               FISCAL YEAR/PERIOD       REVENUE          COMPENSATION
-------------------------------------------------------------------
                                                                   OR FEES RETAINED       TO DEALERS
                                                                   --------------------------------------
<S>                                            <C>                 <C>                <C>
                   CLASS A                            2001            $25,295,000        $123,707,000
                                                      2000            $19,507,000        $ 94,128,000
                                                      1999            $23,548,000        $118,979,000
---------------------------------------------------------------------------------------------------------
                   CLASS B                            2001            $ 7,031,000        $ 37,823,000
                                                      2000            $ 2,854,000        $ 17,424,000
---------------------------------------------------------------------------------------------------------
</TABLE>



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). 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. Potential benefits of the Plans to the fund include: shareholder
services; savings to the fund in transfer agency costs; savings to the fund in
advisory fees and other expenses; benefits to the investment process from growth
or stability of assets; and maintenance of a financially healthy management
organization. The selection and nomination of directors who are not "interested
persons" of the fund are committed to the discretion of the directors who are
not "interested persons" during the existence of the Plans. The Plans may not be
amended to increase materially the amount spent for distribution without
shareholder approval. Plan expenses are reviewed quarterly and the Plans must be
renewed annually by the Board of Directors.


Under the Plans, the fund may annually expend the following amounts to finance
any activity 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: (i) for Class A shares, up to 0.25% of its average daily
net assets attributable to Class A shares; (ii) for Class 529-A shares, up to
0.50% of its average daily net assets attributable to Class 529-A shares; (iii)
for Class B and 529-B shares, 1.00% of its average daily net assets attributable
to Class B and 529-B shares, respectively; (iv) for Class C and 529-C shares,
1.00% of its average daily net assets attributable to Class C and 529-C shares,
respectively; (v) for Class 529-E shares, up to 0.75% of its average daily net
assets attributable to Class 529-E shares; and (vi) for Class F and 529-F
shares, up to 0.50% of its average daily net assets attributable to Class F and
529-F shares, respectively.


For Class A and 529-A shares, (i) up to 0.25% is reimbursed to the Principal
Underwriter for paying service-related expenses, including service fees paid to
qualified dealers, and (ii) up to the amount allowable under the fund's Class A
and 529-A 12b-1 limit is reimbursed to the Principal Underwriter for paying
distribution-related expenses, including for Class A and 529-A shares dealer
commissions and wholesaler compensation paid on sales of shares of $1 million or
more purchased without a sales charge (including purchases by employer-sponsored
defined


                  The Investment Company of America - Page 22

<PAGE>



contribution-type retirement plans investing $1 million or more or with 100 or
more eligible employees, and retirement plans, endowments and foundations with
$50 million or more in assets) ("no load purchases"). Commissions on no load
purchases of Class A shares, in excess of the Class A and 529-A Plan limitations
not reimbursed to the Principal Underwriter 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.


For Class B and 529-B shares, (i) 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including service fees paid to qualified
dealers, and (ii) 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including the financing of commissions paid to
qualified dealers.


For Class C and 529-C shares, (i) 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including service fees paid to qualified
dealers, and (ii) 0.75% is paid to the Principal Underwriter for paying
distribution-related expenses, including commissions paid to qualified dealers.


For Class 529-E shares, (i) 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including service fees paid to qualified
dealers, and (ii) 0.25% is paid to the Principal Underwriter for paying
distribution-related expenses, including commissions paid to qualified dealers.


For Class F and 529-F shares, 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including service fees paid to qualified
dealers or advisers.  Currently, no compensation is paid under the fund's Class
F and 529-F Plans for distribution-related expenses.


During the 2001 fiscal year, 12b-1 expenses accrued and paid, and if applicable,
unpaid, were:


<TABLE>
<CAPTION>
                               12B-1 EXPENSES            12B-1 LIABILITY

--------------------------        ACCRUED                  OUTSTANDING
                          ----------------------------------------------------
<S>                       <C>                       <C>
        CLASS A                 $126,552,000                $9,221,000
------------------------------------------------------------------------------
        CLASS B                 $  8,451,000                $1,063,000
------------------------------------------------------------------------------
        CLASS C                 $  1,752,000                $  377,000
------------------------------------------------------------------------------
        CLASS F                 $    156,000                $   36,000
------------------------------------------------------------------------------
</TABLE>



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. Additional compensation may be paid to certain dealer firms to reimburse
certain expenses associated with providing educational meetings to shareholders
or prospective American Funds investors. 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.


                  The Investment Company of America - Page 23

<PAGE>


                            TAXES AND DISTRIBUTIONS

FUND TAXATION - The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code ("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.


To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to the business of investing in such securities
or currencies, and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, U.S. government securities and securities of other
regulated investment companies, and other securities (for purposes of this
calculation, generally limited in respect of any one issuer, to an amount not
greater than 5% of the market value of the fund's assets and 10% of the
outstanding voting securities of such issuer) and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. government securities or the securities of other regulated investment
companies), or two or more issuers which the fund controls and which are
determined to be engaged in the same or similar trades or businesses.


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. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is the interest of shareholders to distribute a lesser amount.


DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS - Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus.


Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable whether received in shares or
in cash. Shareholders electing to


                  The Investment Company of America - Page 24

<PAGE>



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 that share on the reinvestment date. Dividend and capital gain
distributions by 529 share classes will be automatically reinvested.


     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.  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.

     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.  Upon
     disposition of these securities, any gain recognized is treated as ordinary
     income and loss is treated as ordinary loss to the extent of any prior
     recognized gain.


     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


                  The Investment Company of America - Page 25

<PAGE>



     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 during the 90-day period beginning on
     the date which is 45 days before the date on which the shares become
     ex-dividend. Capital gain distributions are not eligible for the
     dividends-received deduction.


     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 taxation at the level of the fund.


     In addition, some of the bonds may be purchased by a fund at a discount
     that exceeds the original issue discount on such bonds, if any.  This
     additional discount represents market discount for federal income tax
     purposes.  The gain realized on the disposition of any bond having a market
     discount may be treated as taxable ordinary income to the extent it does
     not exceed the accrued market discount on such bond or a fund may elect to
     include the market discount in income in tax years to which it is
     attributable.  Generally, accrued market discount may be figured under
     either the ratable accrual method or constant interest method.  If the fund
     has paid a premium over the face amount of a bond, the fund has the option
     of either amortizing the premium until bond maturity and reducing the
     fund's basis in the bond by the amortized amount, or not amortizing and
     treating the premium as part of the bond's basis. In the case of any debt
     security having a fixed maturity date of not more than one year from its
     date of issue, the gain realized on disposition generally will be treated
     as short-term capital gain. In general, any gain realized on disposition of
     a security held less than one year is treated as short-term capital gain.


     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.


     CAPITAL GAIN DISTRIBUTIONS - 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. 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


                  The Investment Company of America - Page 26

<PAGE>



     adjusted tax basis on fund shares by the difference between a pro rata
     share of the retained gains and such shareholder's related tax credit.


SHAREHOLDER TAXATION - In January of each year, individual shareholders of the
fund will receive a statement of the federal income tax status of all
distributions. Shareholders of the fund also may be subject to state and local
taxes on distributions received from the fund. 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. 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 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.


Redemptions of shares, including exchanges for shares of another American Fund,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder.  However, conversion from one class to another class in the same
fund should not be a taxable event.


If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other funds. Also,
any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of.


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 a regulated investment company may
be subject to withholding of federal income tax 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


                  The Investment Company of America - Page 27

<PAGE>



distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld.


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 a lower rate under an
applicable income tax treaty) on dividend income received by the shareholder.


Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.


UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F
SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM
DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO
COLLEGEAMERICA ACCOUNTS.


                  The Investment Company of America - Page 28

<PAGE>



                               PURCHASE OF SHARES




<TABLE>
<CAPTION>
        METHOD            INITIAL INVESTMENT        ADDITIONAL INVESTMENTS
-------------------------------------------------------------------------------
<S>                     <C>                     <C>
                        See "Purchase           $50 minimum (except where a
                        Minimums" for initial   lower minimum is noted under
                        investment minimums.    "Purchase Minimums").
-------------------------------------------------------------------------------
By contacting           Visit any investment    Mail directly to your
your investment dealer  dealer who is           investment dealer's address
                        registered in the       printed on your account
                        state where the         statement.
                        purchase is made, has
                        a sales agreement with
                        American Funds
                        Distributors and is
                        authorized to sell a
                        CollegeAmerica account
                        in the case of 529
                        shares.
-------------------------------------------------------------------------------
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
                                                Internet Purchases, Redemptions
                                                and Exchanges" below).
-------------------------------------------------------------------------------
By Internet             Please contact your     Complete the American FundsLink
                        investment dealer to    Authorization Form. Once you
                        open account, then      establish 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
                                                Internet 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.)
-------------------------------------------------------------------------------
</TABLE>




The fund and the Principal Underwriter reserve the right to reject any purchase
order.  Generally, Class F shares are generally only available to fee-based
programs of investment firms that have special agreements with the fund's
distributor and certain registered investment advisers.  Class B and C shares
are generally not available to certain employer-sponsored retirement plans, such
as 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money purchase
pension and


                  The Investment Company of America - Page 29

<PAGE>



profit sharing plans. Class 529 shares may be purchased by investors only
through CollegeAmerica accounts. Class 529-E shares may only be purchased by
investors participating in CollegeAmerica through an eligible employer plan. In
addition, the state tax-exempt funds are only offered in certain states, and
tax-exempt funds in general should not serve as retirement plan investments.


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. The minimum
is $50 for additional investments (except for retirement plan payroll deductions
as noted above).


PURCHASE MAXIMUM FOR CLASS B SHARES - The maximum purchase order for Class B
shares for all American Funds is $100,000. Direct purchases of Class B shares of
The Cash Management Trust of America are not permitted; shares may be acquired
only by exchanging from Class B shares of other American Funds. For investments
above $100,000, Class A shares are generally a less expensive option over time
due to sales charge reductions or waivers.


PURCHASE MAXIMUM FOR CLASS C SHARES - The maximum purchase order for Class C
shares for all American Funds is $500,000. Direct purchases of Class C shares of
The Cash Management Trust of America are not permitted; shares may be acquired
only by exchanging from Class C shares of other American Funds.


FUND NUMBERS - Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/ (see description below):


<TABLE>
<CAPTION>
                                                                       FUND NUMBERS
                                                          ----------------------------------------
FUND                                                      CLASS A   CLASS B   CLASS C    CLASS F
--------------------------------------------------------------------------------------------------
<S>                                                       <C>       <C>       <C>       <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . .     002       202       302        402
American Balanced Fund/(R)/ . . . . . . . . . . . . . .     011       211       311        411
American Mutual Fund/(R)/ . . . . . . . . . . . . . . .     003       203       303        403
Capital Income Builder/(R)/ . . . . . . . . . . . . . .     012       212       312        412
Capital World Growth and Income Fund/SM/  . . . . . . .     033       233       333        433
EuroPacific Growth Fund/(R)/  . . . . . . . . . . . . .     016       216       316        416
Fundamental Investors/SM/ . . . . . . . . . . . . . . .     010       210       310        410
The Growth Fund of America/(R)/ . . . . . . . . . . . .     005       205       305        405
The Income Fund of America/(R)/ . . . . . . . . . . . .     006       206       306        406
The Investment Company of America/(R)/  . . . . . . . .     004       204       304        404
The New Economy Fund/(R)/ . . . . . . . . . . . . . . .     014       214       314        414
New Perspective Fund/(R)/ . . . . . . . . . . . . . . .     007       207       307        407
New World Fund/SM/  . . . . . . . . . . . . . . . . . .     036       236       336        436
SMALLCAP World Fund/(R)/  . . . . . . . . . . . . . . .     035       235       335        435
Washington Mutual Investors Fund/SM/  . . . . . . . . .     001       201       301        401
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . .     040       240       340        440
American High-Income Trust/SM/  . . . . . . . . . . . .     021       221       321        421
The Bond Fund of America/SM/  . . . . . . . . . . . . .     008       208       308        408
Capital World Bond Fund/(R)/  . . . . . . . . . . . . .     031       231       331        431
Intermediate Bond Fund of America/SM/ . . . . . . . . .     023       223       323        423
Limited Term Tax-Exempt Bond Fund of America/SM/  . . .     043       243       343        443
The Tax-Exempt Bond Fund of America/(R)/  . . . . . . .     019       219       319        419
The Tax-Exempt Fund of California/(R)/* . . . . . . . .     020       220       320        420
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . .     024       224       324        424
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . .     025       225       325        425
U.S. Government Securities Fund/SM/ . . . . . . . . . .     022       222       322        422
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . .     009       209       309        409
The Tax-Exempt Money Fund of America/SM/  . . . . . . .     039       N/A       N/A        N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . .     049       N/A       N/A        N/A
___________
*Available only in certain states.
</TABLE>




                  The Investment Company of America - Page 30

<PAGE>




<TABLE>
<CAPTION>
                                                 FUND NUMBERS
                                  ---------------------------------------------
                                   CLASS    CLASS    CLASS    CLASS     CLASS
FUND                               529-A    529-B    529-C    529-E     529-F
-------------------------------------------------------------------------------
<S>                               <C>      <C>      <C>      <C>      <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . .    1002     1202     1302     1502      1402
American Balanced Fund/(R)/ . .    1011     1211     1311     1511      1411
American Mutual Fund/(R)/ . . .    1003     1203     1303     1503      1403
Capital Income Builder/(R)/ . .    1012     1212     1312     1512      1412
Capital World Growth and Income
Fund/SM/  . . . . . . . . . . .    1033     1233     1333     1533      1433
EuroPacific Growth Fund/(R)/  .    1016     1216     1316     1516      1416
Fundamental Investors/SM/ . . .    1010     1210     1310     1510      1410
The Growth Fund of America/(R)/    1005     1205     1305     1505      1405
The Income Fund of America/(R)/    1006     1206     1306     1506      1406
The Investment Company of
America/(R)/. . . . . . . . . .    1004     1204     1304     1504      1404
The New Economy Fund/(R)/ . . .    1014     1214     1314     1514      1414
New Perspective Fund/(R)/ . . .    1007     1207     1307     1507      1407
New World Fund/SM/  . . . . . .    1036     1236     1336     1536      1436
SMALLCAP World Fund/(R)/  . . .    1035     1235     1335     1535      1435
Washington Mutual Investors
Fund/SM/  . . . . . . . . . . .    1001     1201     1301     1501      1401
BOND FUNDS
American High-Income Trust/SM/     1021     1221     1321     1521      1421
The Bond Fund of America/SM/  .    1008     1208     1308     1508      1408
Capital World Bond Fund/(R)/  .    1031     1231     1331     1531      1431
Intermediate Bond Fund of
America/SM/ . . . . . . . . . .    1023     1223     1323     1523      1423
U.S. Government Securities
Fund/SM/. . . . . . . . . . . .    1022     1222     1322     1522      1422
MONEY MARKET FUND
The Cash Management Trust of
America/(R)/. . . . . . . . . .    1009     1209     1309     1509      1409
</TABLE>





                  The Investment Company of America - Page 31

<PAGE>


                                 SALES CHARGES

CLASS A SALES CHARGES - The sales charges you pay when purchasing Class A shares
of stock, stock/bond, and bond funds of The American Funds Group are set forth
below. The money market funds of The American Funds Group are offered at net
asset value. (See "Fund Numbers" above for a listing of the funds.)


<TABLE>
<CAPTION>
                                                                                                 DEALER
                                                                         SALES CHARGE AS       COMMISSION
                                                                        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 plans with 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 CDSC.  403(b) plans may be
treated as employer-sponsored plans for sales charge purposes if: (i) the
American Funds are principal investment options; (ii) the employer facilitates
the enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (iii) there is only one dealer firm
assigned to the plans.  403(b) plans meeting these criteria may invest with no
sales charge and are not subject to a CDSC if investing $1 million or more or
having 100 or more eligible employees.


Investments made through accounts that purchased Class A shares of the fund
before March 15, 2001 and are part of 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 Class A Plan of
Distribution on investments made with no initial sales charge.


                  The Investment Company of America - Page 32

<PAGE>


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)  insurance company separate accounts;

(5)  accounts managed by subsidiaries of The Capital Group Companies, Inc.;

(6)  The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation;

(7)  an individual or entity with a substantial business relationship with The
Capital Group Companies, Inc. or its affiliates, as determined by a Vice
President or more senior officer of the Capital Research and Management Company
Fund Administration and Compliance Unit; and

(8)  wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts whose
underlying investments are managed by any affiliate of The Capital Group
Companies, Inc.

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 AND C SHARES -  Except as described
above, a CDSC of 1% applies to redemptions of Class A shares of the American
Funds, other than the money market funds, made within 12 months following the
purchase of Class A shares of $1 million or more made without an initial sales
charge.  A CDSC of 1% also applies to redemptions of Class C shares of the
American Funds made within 12 months following the purchase of the Class C
shares. 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" and "CDSC Waivers for
Class B and C Shares" below.


                  The Investment Company of America - Page 33

<PAGE>


CLASS B SALES CHARGES - Class B shares are sold without any initial sales
charge.  However, a CDSC may be applied to shares you sell within six years of
purchase, as shown in the table below:




<TABLE>
<CAPTION>
   CONTINGENT DEFERRED SALES CHARGE ON
         SHARES SOLD WITHIN YEAR             AS A % OF SHARES BEING SOLD
 --------------------------------------------------------------------------
 <S>                                      <C>
                    1                                   5.00%
                    2                                   4.00
                    3                                   4.00
                    4                                   3.00
                    5                                   2.00
                    6                                   1.00
</TABLE>




There is no CDSC on appreciation in share value above the initial purchase price
or on shares acquired through reinvestment of dividends or capital gain
distributions.  In addition, the CDSC may be waived in certain circumstances.
 See "CDSC Waivers for Class B and C 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 followed by shares that you have
owned the longest during the six-year period.


CLASS F AND CLASS 529-E SALES CHARGE - Class F and 529-E shares are sold with no
initial or contingent deferred sales charge.


DEALER COMMISSIONS AND COMPENSATION - For Class A shares, commissions (up to 1%)
are paid to dealers who initiate and are responsible for purchases of $1 million
or more, for purchases by any employer-sponsored defined contribution-type 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 assets of $50 million or more.
 Commissions on investments in Class A shares are paid at the following rates:
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. Commissions are based on
cumulative investments and are not annually reset.


For Class B shares, compensation equal to 4.00% of the amount invested is paid
by the Principal Underwriter to dealers who sell Class B shares.


For Class C shares, compensation equal to 1.00% of the amount invested is paid
by the Principal Underwriter to dealers who sell Class C shares.


CONVERSION OF CLASS B AND C SHARES - Class B shares automatically convert to
Class A shares in the month of the eight-year anniversary of the purchase date.
 Class C shares automatically convert to Class F shares in the month of the
ten-year anniversary of the purchase date. Class 529-C shares will not convert
to Class 529-F shares. The conversion of shares is subject to the Internal
Revenue Service's continued position that the conversions are not subject to
federal income tax.  In the event the Internal Revenue Service no longer takes
this position, the


                  The Investment Company of America - Page 34

<PAGE>



automatic conversion feature may be suspended, in which event no further
conversions of Class B or C shares would occur while such suspension remained in
effect.  In that event, at your option, Class B shares could be exchanged for
Class A shares and Class C shares for Class F shares on the basis of the
relative net asset values of the two classes, without the imposition of a sales
charge or fee; however, such an exchange could constitute a taxable event for
you. Absent such an exchange, Class B and C shares would continue to be subject
to higher expenses for longer than eight years and ten years, respectively.


                      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 at the time you purchase shares 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 future
     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 for equity funds and $100,000 or more for bond
     funds 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. The dealer assigned to the
     account at the end of the period will receive an appropriate commission
     adjustment. If the difference is not paid by the close of the Statement
     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. Accordingly, upon your request, the sales charge paid on
     investments made 90 days prior to the Statement revision will be adjusted
     to reflect the revised Statement.

     Existing holdings eligible for rights of accumulation (see below),
     including Class A shares held in a fee-based arrangement, other classes of
     shares of the American Funds, and any individual investments in American
     Legacy variable annuities and variable life insurance policies (American
     Legacy, American Legacy II and American Legacy III variable


                  The Investment Company of America - Page 35

<PAGE>


     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. The Statement will be considered completed if the shareholder
     dies within the 13-month Statement period. Commissions will not be adjusted
     or paid on the difference between the Statement amount and the amount
     actually invested before the shareholder's death.

     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 total monthly 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 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 made by you and your
     immediate family (your spouse and your children under the age of 21), if
     all parties are purchasing shares for their own accounts and/or:

     .individual-type employee benefit plan(s), such as an IRA, 403(b) plan
      (see exception below), or single-participant Keogh-type plan;

     .business accounts solely controlled by you or your immediate family
     (for example, you own the entire business);

     .trust accounts established by you or your immediate family.  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;

     .endowments or foundations established and controlled by you or your
      immediate family; or

     .CollegeAmerica accounts. Accounts will be aggregated at the account
      owner level. Class 529-E accounts may only be aggregated with an
      eligible employer plan.

     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 employee
      benefit plans other than the individual-type employee benefit plans
      described above;


                  The Investment Company of America - Page 36

<PAGE>


     .made for two or more employee benefit plans of a single employer or of
      affiliated employers as defined in the 1940 Act, again excluding
      individual-type employee benefit plans described above;

     .for a diversified common trust fund or other diversified pooled
      account not specifically formed for the purpose of accumulating fund
      shares;

     .for non-profit, charitable or educational organizations (or any
      employer-sponsored retirement plan for such an endowment or
      foundation) or any endowments or foundations established and
      controlled by the organization; or

     .for participant accounts of a 403(b) plan that is treated as an
      employer-sponsored plan (see "Class A Purchases Not Subject to Sales
      Charges" above), or made for two or more 403(b) plans that are treated
      as employer-sponsored plans of a single employer or affiliated
      employers as defined in the 1940 Act.

     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 all classes of 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.  Shares of money market funds purchased through an exchange,
     reinvestment or cross-reinvestment from a fund having a sales charge also
     qualify. However, direct purchases of the money market funds are excluded.

     RIGHTS OF ACCUMULATION - Subject to the limitations described under the
     aggregation policy, you may take into account the current value (or if
     greater, the amount you invested less any withdrawals) of your existing
     holdings in all share classes of 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 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.


                  The Investment Company of America - Page 37

<PAGE>



(3)  Distributions from 403(b) plans or IRAs due to attainment of age 59-1/2,
and required minimum distributions from retirement accounts upon the attainment
of age 70-1/2. Such distributions may not exceed 12% of the value of the account
annually.

(4)  Tax-free returns of excess contributions to IRAs.

(5)  Redemptions through systematic withdrawal plans (see "Automatic
Withdrawals" below), not exceeding 12% each year of the lesser of the original
purchase cost or the current market value of the shares being sold that would
otherwise be subject to a CDSC.

(6)  For Class 529-A shareholders only, redemptions due to a beneficiary's
death, post-purchase disability or receipt of a scholarship.

CDSC WAIVERS FOR CLASS B AND C SHARES - Any CDSC on Class B and C shares may be
waived in the following cases:


(1)  Redemptions through systematic withdrawal plans ("SWPs") (see "Automatic
Withdrawals" below) not exceeding 12% each year of the lesser of the original
purchase cost or the current market value of the shares being sold that would
otherwise be subject to a 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% SWP 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. Such distributions may not exceed 12% of the value of
the account annually.

(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.

(4)  For Class 529-B and 529-C shareholders only, redemptions due to a
beneficiary's death, post-purchase disability or receipt of a scholarship.

CDSC waivers on Class A, B and C shares are allowed only in the cases listed
above.  For example, CDSC waivers will not be allowed for:

     .Redemptions of dividend and capital gain distributions, redemptions of
      appreciated shares, redemptions through SWPs, and required minimum
      distributions, to the extent in aggregate they exceed 12% of an
      account value; or

     .Redemptions of Class 529-B and 529-C shares due to: termination of
      CollegeAmerica; a determination by the Internal Revenue Service that



                  The Investment Company of America - Page 38

<PAGE>



      CollegeAmerica does not qualify as a qualified tuition program under
      the Code; proposal or enactment of law that eliminates or limits the
      tax-favored status of CollegeAmerica; or the Virginia College Savings
      Plan eliminating the fund as an option for additional investment
      within CollegeAmerica.

                 INDIVIDUAL RETIREMENT ACCOUNT (IRA) ROLLOVERS

EFFECTIVE THROUGH MAY 14, 2002

Assets from a retirement plan (plan assets) may be invested in any class of
shares of the American Funds through an IRA rollover plan. All such rollover
investments will be subject to the terms and conditions for Class A, B, C and F
shares contained in the fund's current prospectus and statement of additional
information. An IRA rollover involving plan assets that offered an investment
option managed by any affiliate of The Capital Group Companies, Inc., including
any of the American Funds, may be invested in Class A shares 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 Class A share investments of $1 million or more
(see "Dealer Commissions and Compensation" above).


EFFECTIVE MAY 15, 2002

Assets from a retirement plan (plan assets) may be invested in any class of
shares of the American Funds through an IRA rollover plan. All such rollover
investments will be subject to the terms and conditions for Class A, B, C and F
shares contained in the fund's current prospectus and statement of additional
information.


An IRA rollover involving plan assets that offered an investment option managed
by any affiliate of The Capital Group Companies, Inc., including any of the
American Funds, may be invested in: 1) Class A shares at net asset value; 2)
Class A shares subject to the applicable initial sales charge; 3) Class B
shares; 4) Class C shares; or 5) Class F shares.  Plan assets invested in Class
A shares with a sales charge, B, C or F shares are subject to the terms and
conditions contained in the fund's current prospectus and statement of
additional information.  Advisers will be compensated according to the policies
associated with each share class and described in the fund's current prospectus
and statement of additional information.


Plan assets invested in Class A shares at net asset value will not be subject to
a contingent deferred sales charge and will immediately begin to accrue service
fees (i.e., shares do not have to age).  Dealer commissions will be paid only on
IRA rollovers of $1 million or more according to the schedule applicable to
Class A share investments of $1 million or more (see "Dealer Commissions and
Compensation" above).


IRA rollovers that do not indicate which share class plan assets should be
invested in and which do not have an adviser associated with the account will be
invested in Class F shares. Additional plan assets may be rolled into the
account holding F shares; however, subsequent contributions will not be allowed
to be invested in F shares.

                                PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the


                  The Investment Company of America - Page 39

<PAGE>



offering or net asset value 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 or their authorized designees, accepted by the Principal
Underwriter, the Transfer Agent, a dealer or any of their designees. 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
and sell orders to the Principal Underwriter.


Orders received by the investment dealer or authorized designee, 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 procedures
adopted by authority of the fund's Board. The fair value of all other assets is
added to the value of securities to arrive at the total assets;


2.   Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and


                  The Investment Company of America - Page 40

<PAGE>



3.   Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.

Any purchase order may be rejected by the Principal Underwriter or by the fund.
The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 3.0% of the outstanding
shares of the fund without the consent of a majority of the fund's Board of
Directors.


                                 SELLING SHARES

Shares are sold at the net asset value next determined after your request is
received in good order by the Transfer Agent, dealer or any of their designees.
 Sales of certain Class A, B and C shares may be subject to a CDSC.  Generally,
Class F shares may only be sold through fee-based programs of investment firms
and registered investment advisers with special agreements with the fund's
distributor.


You may sell (redeem) other classes of 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 $75,000;

          -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.
          The Transfer Agent reserves the right to require a signature guarantee
          on any redemptions.


     - Additional documentation may be required for sales of shares held in
          corporate, partnership or fiduciary accounts.

     - You must include with your written request any shares you wish to sell
          that are in certificate form.


                  The Investment Company of America - Page 41

<PAGE>



     TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR USING THE INTERNET

     -  Redemptions by telephone, fax or the Internet (including American
          FundsLine/(R)/ and American FundsLine OnLine/(R)/) are limited to
          $75,000 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 of registered shareholders exactly as
            indicated on your checking account signature card.

          -  Check writing is not available for any of the 529 share classes or
            B, C or F share classes of The Cash Management Trust of America.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, 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 without a sales charge in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution. Proceeds from a
Class B share redemption where a CDSC was charged will be reinvested in Class A
shares. Proceeds from any other type of redemption and all dividend and capital
gain distributions will be reinvested in the same share class from which the
original redemption or distribution was made. Any CDSC on Class B or C shares
will be credited to your account. Redemption proceeds of Class A shares
representing direct purchases in the money market funds that are reinvested in
non-money market funds will be subject to a sales charge. Proceeds will be
reinvested at the next calculated net asset value after your request is received
and accepted by the Transfer Agent.


                  The Investment Company of America - Page 42

<PAGE>


                  SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders.  However, certain services and privileges may not be available for
Class 529 shareholders or if your account is held with an investment dealer.


AUTOMATIC INVESTMENT PLAN - An automatic investment plan enables you to make
monthly or quarterly investments in 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. If the
date you specified falls on a weekend or holiday, your money will be invested on
the following business day. However, if the following business day falls in the
next month, your money will be invested on the business day immediately
preceding the weekend or holiday. 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 and fund at net asset value 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. Dividend and capital gain
distributions paid by the 529 share classes will automatically be reinvested.



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 - For all share classes,
except the 529 classes of shares, 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.


                  The Investment Company of America - Page 43

<PAGE>



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 or C
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. Exchanges of
Class F shares generally may only be done through fee-based programs of
investment firms that have special agreements with the fund's distributor and
certain registered investment advisers.


Exchanges from Class A, C or F shares to the corresponding 529 share class,
particularly in the case of Uniform Gifts to Minors Act or Uniform Transfer to
Minors Act custodial accounts, may result in significant legal and tax
consequences as described in the CollegeAmerica Program Description.  Please
consult your financial adviser prior to making such an exchange.


You may exchange shares of other classes by writing to the Transfer Agent (see
"Selling 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
"American Funds Service Company Service Areas" in the prospectus for the
appropriate fax numbers) or telegraphing the Transfer Agent. (See "Telephone and
Internet Purchases, Redemptions and Exchanges" below.) Shares held in
corporate-type retirement plans for which Capital Bank and Trust Company serves
as trustee may not be exchanged by telephone, Internet, fax or telegraph.
Exchange redemptions and purchases are processed simultaneously at the share
prices next determined after the exchange order is received. (See "Price of
Shares" above.) THESE TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY
SALES AND PURCHASES.


AUTOMATIC EXCHANGES - For all share classes, except the 529 classes of shares,
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 - For all share classes, except the 529 classes of shares,
you may automatically withdraw shares from any of the funds in The American
Funds Group. You can make automatic withdrawals of $50 or more as often as you
wish if your account is worth at least $10,000, or up to four times a year for
an account worth at least $5,000. You can designate the day of each period for
withdrawals and request that checks be sent to you or someone else. Withdrawals
may also be electronically deposited to your bank account. The Transfer Agent
will withdraw your money from the fund you specify on or around the date you
specify. If the date you specified falls on a weekend or holiday, the redemption
will take place on the previous business day.  However, if the previous business
day falls in the preceding month, the redemption will take place on the
following business day after the weekend or holiday.


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


                  The Investment Company of America - Page 44

<PAGE>


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, purchases through automatic investment
plans and certain retirement plans, as well as automatic exchanges and
withdrawals 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 $75,000 per American Funds shareholder each day) from
non-retirement plan accounts, 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 website
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 "Telephone and Internet 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 - 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 INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES - By using the
telephone (including American FundsLine) or the Internet (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, it and/or 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 permit 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 of record owns
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
Incorporation permits 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.


                  The Investment Company of America - Page 45

<PAGE>



SHARE CERTIFICATES - Shares are credited to your account and certificates are
not issued unless you request them by writing to the Transfer Agent.
Certificates are not available for the 529 share classes.


                      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
2001, 2000 and 1999, amounted to $33,426,000, $25,958,000, and $22,412,000.


The fund is required to disclose information regarding investments in the
securities of broker-dealers (or parent companies 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, Wachovia Corp., J.P.
Morgan Chase & Co. and Bank of America Securities LLC and Citigroup, Inc., J.P.
Morgan Chase & Co. and Bank of America Securities LLC were 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
Wachovia Corp., J.P. Morgan Chase & Co. and Bank of America Securities LLC in
the amount of $1,336,670,000 and debt securities of Citigroup, Inc., J.P. Morgan
Chase & Co. and Bank of America Securities LLC in the amount of $299,526,000 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 JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, 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


                  The Investment Company of America - Page 46

<PAGE>



agent, and performs other related shareholder service functions. American Funds
Service Company was paid a fee of $38,077,000 for Class A shares and $690,000
for Class B shares for the 2001 fiscal year.


INDEPENDENT ACCOUNTANTS - PricewaterhouseCoopers LLP, 350 South Grand Avenue,
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, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS - The fund's fiscal
year ends on December 31. Shareholders are provided updated prospectuses
annually and 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 addition, shareholders may also receive proxy
statements for the fund. 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,
shareholder reports and proxy statements. To receive additional copies of a
prospectus, report or proxy statement, 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, including
securities in which the fund may invest from time to time. 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:


             DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND

  MAXIMUM OFFERING PRICE PER SHARE FOR CLASS A SHARES -- DECEMBER 31, 2001

<TABLE>
<CAPTION>
<S>                                                               <C>
Net asset value and redemption price per share
  (Net assets divided by shares outstanding) . . . . . . . . .      $28.53
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). . . . . . . . . . . . . . . . . . . . . . . .      $30.27
</TABLE>



                  The Investment Company of America - Page 47

<PAGE>


            CLASS A SHARE INVESTMENT RESULTS AND RELATED STATISTICS

The fund's yield was 1.07% based on a 30-day (or one month) period ended
December 31, 2001, 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 as required by the Securities
and Exchange Commission:


     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 five- and ten-year average annual total
returns at the maximum offering price for the periods ended December 31, 2001
were -10.06%, 11.67%, and 12.47%, respectively.  The fund's one-year total
return and five- and ten-year average annual total returns at net asset value
for the periods ended December 31, 2001 were -4.59%, 13.00%, and 13.14%,
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 at the maximum offering price, 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, C, and F shares, as well as the 529
share classes.


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


                  The Investment Company of America - Page 48

<PAGE>


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, fuels, transportation, and other
goods and services that people buy for day-to-day living).


                  The Investment Company of America - Page 49

<PAGE>




                                    APPENDIX
                          Description of Bond Ratings

BOND RATINGS - The ratings of Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) represent their opinions as to the quality
of the municipal bonds which they undertake to rate.  It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
 Consequently, municipal bonds with the same maturity, coupon and rating may
have different yields, while municipal bonds of the same maturity and coupon
with different ratings may have the same yield.


Moody's rates the long-term debt securities issued by various entities from
-------
"Aaa" to "C."  Moody's applies the numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system.  The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.  Ratings are described as follows:


"Bonds which are rated Aaa are judged to be of the best quality.  They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
 Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure.  While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues."


"Bonds which are rated Aa are judged to be of high quality by all standards.
 Together with the Aaa group, they comprise what are generally known as
high-grade bonds.  They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities."


"Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations.  Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future."


"Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured.  Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time.  Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well."


"Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured.  Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future.  Uncertainty of position characterizes
bonds in this class."


"Bonds which are rated B generally lack characteristics of the desirable
investment.  Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small."


                  The Investment Company of America - Page 50

<PAGE>


"Bonds which are rated Caa are of poor standing.  Such issues may be in default
or there may be present elements of danger with respect to principal or
interest."


"Bonds which are rated Ca represent obligations which are speculative in a high
degree.  Such issues are often in default or have other marked shortcomings."


"Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."


S&P rates the long-term debt securities 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:


AAA
"An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong."


AA
"An obligation rated 'AA' differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong."


A
"An obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions that obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong."


BBB
"An obligation rated 'BBB' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation. Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as
having significant speculative characteristics. 'BB' indicates the least degree
of speculation and 'C' the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions."


BB
"An obligation rated 'BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation."

B
"An obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB' but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation."


                  The Investment Company of America - Page 51

<PAGE>



CCC
"An obligation rated 'CCC' is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation."

CC
"An obligation rated 'CC' is currently highly vulnerable to nonpayment."

C
"A subordinated debt or preferred stock obligation rated 'C' is CURRENTLY HIGHLY
VULNERABLE to nonpayment. The 'C' rating may be used to cover a situation where
a bankruptcy petition has been filed or similar action taken but payments on
this obligation are being continued. A 'C' also will be assigned to a preferred
stock issue in arrears on dividends or sinking fund payments but that is
currently paying."

D
"An obligation rated 'D' is in payment default. The 'D' rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's 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 or the taking of a similar action
if payments on an obligation are jeopardized."


                  The Investment Company of America - Page 52

<TABLE>

                                                 <c>       <c>
The Investment Company of America
Investment Portfolio, December 31, 2001



                                                      Percent
                                                       of Net
Largest Industry Holdings                              Assets

Pharmaceuticals                                         8.94%
Media                                                     6.61
Oil & Gas                                                 5.36
Diversified Financials                                    5.26
Insurance                                                 4.01

Largest Investment Categories
Technology Hardware & Equipment                           8.99
Pharmaceuticals & Biotechnology                           8.94
Food, Beverage & Tobacco                                  6.69



</TABLE>

<TABLE>

                                                                 <c>
The Investment Company of America
Investment Portfolio, December 31, 2001



                                                                     Percent
                                                                     of Net
Ten Largest Equity Holdings                                          Assets

Philip Morris                                                          2.77%
Viacom                                                                   2.49
Fannie Mae                                                               2.47
Eli Lilly                                                                1.90
Pharmacia                                                                1.80
Lowe's Companies                                                         1.76
Pfizer                                                                   1.71
Royal Dutch Petroleum/"Shell" Transport and Trading                      1.60
AOL Time Warner                                                          1.55
AT&T                                                                     1.47
</TABLE>

<TABLE>

                                                             <c>              <c>           <c>
The Investment Company of America
Investment Portfolio, December 31, 2001



                                                                          Shares        Market  Percent
                                                                    or Principal         Value   of Net
Equity Securities                                                         Amount    (Millions)   Assets

ENERGY
ENERGY EQUIPMENT & SERVICES  -  1.27%
Baker Hughes Inc.                                                      10,225,000   $   372.906     .66%
Halliburton Co.                                                         2,000,000        26.200      .05
Schlumberger Ltd.                                                       5,800,000       318.710      .56
OIL & GAS  -  5.36%
BP PLC (ADR)                                                            2,000,000        93.020      .17
ChevronTexaco Corp. (formed by the merger of                            7,882,142       706.319     1.25
 Chevron Corp. and Texaco Inc.)
Conoco Inc. (formerly Conoco Inc., Class A                              3,000,000        84.900      .15
 and Conoco Inc., Class B)
ENI SpA                                                                10,000,000       125.082      .22
Exxon Mobil Corp.                                                       3,250,000       127.725      .23
Murphy Oil Corp.                                                        2,075,000       174.383      .31
PanCanadian Energy Corp.                                                1,573,200        40.903      .07
Phillips Petroleum Co.                                                  3,050,000       183.793      .33
Royal Dutch Petroleum Co. (New York registered)                        16,300,000       799.026
"Shell" Transport and Trading Co., PLC                                  2,500,000       103.625     1.60
 (New York registered)
TOTAL FINA ELF SA, Class B                                                900,000       128.509      .23
Unocal Corp.                                                            8,190,000       295.413      .53
USX-Marathon Group                                                      5,121,800       153.654      .27
                                                                                      3,734.168     6.63

MATERIALS
CHEMICALS  -  1.28%
Air Products and Chemicals, Inc.                                          200,000         9.382      .02
Dow Chemical Co.                                                       18,303,800       618.302     1.10
Rohm and Haas Co.                                                       2,600,000        90.038      .16
METALS & MINING  -  1.75%
Alcoa Inc.                                                             13,929,700       495.201      .88
Barrick Gold Corp.                                                      9,250,000       147.537      .26
BHP Billiton Ltd.                                                       9,412,655        50.444      .09
Newmont Mining Corp.                                                    5,500,000       105.105      .19
Phelps Dodge Corp.                                                      1,000,000        32.400      .06
Placer Dome Inc.                                                        5,600,000        61.096      .11
WMC Ltd.                                                               18,831,246        92.011      .16
PAPER & FOREST PRODUCTS  -  1.33%
Georgia-Pacific Corp., Georgia-Pacific Group                            9,333,858       257.708      .46
International Paper Co.                                                 4,497,235       181.463      .32
Weyerhaeuser Co.                                                        5,750,000       310.960      .55
                                                                                      2,451.647     4.36

CAPITAL GOODS
AEROSPACE & DEFENSE  -  1.84%
Boeing Co.                                                              2,000,000        77.560      .14
Honeywell International Inc.                                            4,950,000       167.409      .30
Lockheed Martin Corp.                                                   3,200,000       149.344      .27
Raytheon Co.                                                           11,322,935       367.656      .65
United Technologies Corp.                                               4,184,000       270.412      .48
CONSTRUCTION & ENGINEERING  -  0.06%
Fluor Corp.                                                               931,000        34.819      .06
INDUSTRIAL CONGLOMERATES  -  1.31%
Minnesota Mining and Manufacturing Co.                                  1,920,000       226.963      .40
Siemens AG                                                              4,600,000       306.505      .54
Tyco International Ltd.                                                 3,500,000       206.150      .37
MACHINERY  -  1.57%
Caterpillar Inc.                                                        2,500,000         8.000      .23
Cummins Inc.                                                            1,700,000        65.518      .12
Deere & Co.                                                             6,400,000       279.424      .50
Illinois Tool Works Inc.                                                3,400,000       230.248      .41
Ingersoll-Rand Co.                                                      1,800,000        75.258      .13
Parker Hannifin Corp.                                                   2,200,000       101.002      .18
                                                                                      2,688.893     4.78

COMMERCIAL SERVICES & SUPPLIES
COMMERCIAL SERVICES & SUPPLIES  -  1.16%
Cendant Corp.  /1/                                                      4,850,000        95.108      .17
IMS Health Inc.                                                         2,500,000        48.775      .09
Pitney Bowes Inc.                                                       3,515,100       132.203      .23
Sabre Holdings Corp., Class A /1/                                       5,259,680       222.747      .39
Waste Management, Inc.                                                  4,900,000       156.359      .28
                                                                                        655.192     1.16

TRANSPORTATION
AIR FREIGHT & COURIERS  -  0.26%
FedEx Corp.  /1/                                                        2,870,000       148.896      .26
AIRLINES  -  0.49%
AMR Corp.  /1/                                                          3,350,000        74.269      .13
British Airways PLC                                                    10,000,000        28.355      .05
Delta Air Lines, Inc.                                                   2,154,500        63.041      .12
Southwest Airlines Co.                                                  5,800,900       107.201      .19
ROAD & RAIL  -  0.19%
Burlington Northern Santa Fe Corp.                                      2,900,000        82.737      .15
Canadian Pacific Railway Ltd.                                           1,150,000        22.425      .04
                                                                                        526.924      .94

AUTOMOBILES & COMPONENTS
AUTO COMPONENTS  -  0.14%
Delphi Automotive Systems Corp.                                         5,764,088        78.737      .14
AUTOMOBILES  -  1.15%
Ford Motor Co.                                                          2,500,000        39.300      .07
General Motors Corp.                                                    8,750,000       425.250      .75
Honda Motor Co., Ltd.                                                   4,649,100       184.946      .33
                                                                                        728.233     1.29

CONSUMER DURABLES & APPAREL
HOUSEHOLD DURABLES - 0.26%
Newell Rubbermaid Inc.                                                  5,300,000       146.121      .26
LEISURE EQUIPMENT & PRODUCTS - 0.09%
Fuji Photo Film Co., Ltd.                                               1,354,000        48.199      .09
TEXTILES & APPAREL - 0.45%
NIKE, Inc., Class B                                                     4,535,900       255.099      .45
                                                                                        449.419      .80

HOTELS, RESTAURANTS & LEISURE
HOTELS, RESTAURANTS & LEISURE - 0.75%
Carnival Corp.                                                          7,447,100       209.115      .37
McDonald's Corp.                                                        8,000,000       211.760      .38
                                                                                        420.875      .75

MEDIA
MEDIA  -  6.61%
AOL Time Warner Inc. /1/                                               27,250,000       874.725     1.55
Clear Channel Communications, Inc. /1/                                  9,491,900       483.233      .86
Comcast Corp., Class A, non-voting stock /1/                            3,000,000       108.000      .19
Dow Jones & Co., Inc.                                                   1,400,100        76.627      .14
General Motors Corp., Class H  /1/                                      2,000,000        30.900      .05
Interpublic Group of Companies, Inc.                                   13,364,600       394.790      .70
Knight-Ridder, Inc.                                                     2,050,500       133.139      .24
Liberty Media Corp. (formerly AT&T Corp.                               15,500,000       217.000      .39
 Liberty Media Group), Class A /1/
Viacom Inc., Class A /1/                                                2,392,800       105.881
Viacom Inc., Class B  /1/                                              29,414,000     1,298.628     2.49
                                                                                      3,722.923     6.61

RETAILING
MULTILINE RETAIL  -  1.04%
Dollar General Corp.                                                    7,530,900       112.210      .20
Kohl's Corp.  /1/                                                       2,500,000       176.100      .31
May Department Stores Co.                                               3,000,000       110.940      .20
Wal-Mart Stores, Inc.                                                   3,200,000       184.160      .33
SPECIALTY RETAIL  -  2.94%
AutoZone, Inc.  /1/                                                     4,140,000       297.252      .53
Gap, Inc.                                                               7,000,000        97.580      .17
Limited Inc.                                                           15,800,000       232.576      .41
Lowe's Companies, Inc.                                                 21,362,000       991.410     1.76
Staples, Inc.  /1/                                                      2,000,000        37.400      .07
                                                                                      2,239.628     3.98

FOOD & DRUG RETAILING
FOOD & DRUG RETAILING - 0.84%
Albertson's, Inc.                                                       6,666,500       209.928      .37
Walgreen Co.                                                            7,833,400       263.672      .47
                                                                                        473.600      .84

FOOD, BEVERAGE & TOBACCO
BEVERAGES - 1.64%
Anheuser-Busch Companies, Inc.                                          3,000,000       135.630      .24
Coca-Cola Co.                                                           4,750,000       223.962      .40
PepsiCo, Inc.                                                          11,600,000       564.804     1.00
FOOD PRODUCTS - 1.83%
ConAgra Foods, Inc.                                                       750,000        17.827      .03
General Mills, Inc.                                                     4,800,000       249.648      .44
H.J. Heinz Co.                                                          5,900,000       242.608      .43
Sara Lee Corp.                                                         14,616,100       324.916      .58
Unilever NV (New York Registered)                                       3,375,000       194.434      .35
TOBACCO - 3.22%
Philip Morris Companies Inc.                                           34,000,000     1,558.900     2.77
R.J. Reynolds Tobacco Holdings, Inc.                                    4,461,666       251.192      .45
                                                                                      3,763.921     6.69

HOUSEHOLD & PERSONAL PRODUCTS
HOUSEHOLD PRODUCTS - 0.41%
Kimberly-Clark Corp.                                                    3,022,000       180.716      .32
Procter & Gamble Co.                                                      600,000        47.478      .09
PERSONAL PRODUCTS - 0.60%
Avon Products, Inc.                                                     5,400,000       251.100      .45
Gillette Co.                                                            2,600,000        86.840      .15
                                                                                        566.134     1.01

HEALTH CARE EQUIPMENT & SERVICES
HEALTH CARE EQUIPMENT & SUPPLIES - 0.68%
Applera Corp. - Applied Biosystems Group                                5,170,500       203.046      .36
Becton, Dickinson and Co.                                               1,500,000        49.725      .09
Guidant Corp. /1/                                                       2,658,200       132.378      .23
HEALTH CARE PROVIDERS & SERVICES - 0.76%
Aetna Inc.                                                              5,000,000       164.950      .30
Cardinal Health, Inc.                                                   1,050,000        67.893      .12
HCA Inc. (formerly HCA - The Healthcare Co.)                            5,000,000       192.700      .34
                                                                                        810.692     1.44

PHARMACEUTICALS & BIOTECHNOLOGY
PHARMACEUTICALS - 8.94%
Abbott Laboratories                                                     3,000,000       167.250      .30
American Home Products Corp.                                            3,200,000       196.352      .35
AstraZeneca PLC                                                        13,910,900       634.430
AstraZeneca PLC (ADR)                                                     199,000         9.273     1.14
AstraZeneca PLC                                                                            .000
Bristol-Myers Squibb Co.                                                5,557,600       283.438      .50
Eli Lilly and Co.                                                      13,647,300     1,071.859     1.90
Johnson & Johnson                                                       3,420,200       202.134      .36
Merck & Co., Inc.                                                       4,100,000       241.080      .43
Novartis AG                                                             1,366,000        49.388
Novartis AG (ADR)                                                       1,121,556        40.937      .16
Pfizer Inc                                                             24,150,000       962.377     1.71
Pharmacia Corp.                                                        23,800,000     1,015.070     1.80
Schering-Plough Corp.                                                   4,500,000       161.145      .29
                                                                                      5,034.733     8.94

BANKS
BANKS - 3.64%
Bank of America Corp.                                                  11,484,240       722.933     1.28
BANK ONE CORP.                                                          7,235,000       282.527      .50
Comerica Inc.                                                             750,000        42.975      .08
National City Corp.                                                     3,455,200       101.030      .18
Sumitomo Mitsui Banking Corp.                                           7,500,000        31.661      .06
Toronto-Dominion Bank                                                   4,848,900       125.074      .22
Wachovia Corp. (formed by the merger of                                 2,010,000        63.034      .11
 Wachovia Corp. and First Union Corp.)
Washington Mutual, Inc.                                                 9,010,200       294.634      .52
Wells Fargo & Co.                                                       8,908,200       387.061      .69
                                                                                      2,050.929     3.64

DIVERSIFIED FINANCIALS
DIVERSIFIED FINANCIALS - 5.26%
Fannie Mae                                                             17,500,000     1,391.250     2.47
Freddie Mac                                                             2,400,000       156.960      .28
Household International, Inc.                                           8,000,000       463.520      .82
J.P. Morgan Chase & Co.                                                15,150,000       550.703      .98
Moody's Corp.                                                           1,748,700        69.703      .12
Providian Financial Corp.                                               1,400,000         4.970      .01
USA Education Inc.                                                      3,882,000       326.166      .58
                                                                                      2,963.272     5.26

INSURANCE
INSURANCE - 4.01%
Allstate Corp.                                                         12,250,000       412.825      .73
American International Group, Inc.                                      9,163,900       727.614     1.29
 (merged with American General Corp.)
Aon Corp.                                                               1,050,000        37.296      .07
Berkshire Hathaway Inc., Class A  /1/                                       2,900       219.240      .39
Chubb Corp.                                                               648,200        44.726      .08
Hartford Financial Services Group, Inc.                                 3,400,000       213.622      .38
Jefferson-Pilot Corp.                                                   3,300,000       152.691      .27
Lincoln National Corp.                                                  1,800,000        87.426      .16
Marsh & McLennan Companies, Inc.                                          882,200        94.792      .17
SAFECO Corp.                                                            3,000,000        93.450      .17
St. Paul Companies, Inc.                                                3,900,000       171.483      .30
                                                                                      2,255.165     4.01

SOFTWARE & SERVICES
IT CONSULTING & SERVICES - 0.60%
Computer Sciences Corp.  /1/                                            4,180,000       204.736      .36
Electronic Data Systems Corp.                                           1,950,000       133.673      .24
SOFTWARE - 0.94%
Microsoft Corp.  /1/                                                    7,597,300       503.321      .90
Oracle Corp.  /1/                                                       1,600,000        22.096      .04
                                                                                        863.826     1.54

TECHNOLOGY HARDWARE & EQUIPMENT
COMMUNICATIONS EQUIPMENT - 1.91%
Cisco Systems, Inc.  /1/                                               16,622,400       301.032      .54
Corning Inc.                                                           13,376,000       119.314      .21
Lucent Technologies Inc.  /1/                                           4,300,000        27.047      .05
Motorola, Inc.                                                          5,500,000        82.610
Motorola, Inc., 7.00% convertible preferred                               300,000        14.022      .17
 2004, units
Nokia Corp., Class A (ADR)                                             15,170,000       372.120      .66
Telefonaktiebolaget LM Ericsson, Class B (ADR)                         30,000,000       156.600      .28
COMPUTERS & PERIPHERALS - 2.63%
Compaq Computer Corp.                                                  13,000,000       126.880      .22
Dell Computer Corp.  /1/                                                2,716,450        73.833      .13
EMC Corp.  /1/                                                          6,267,300        84.233      .15
Fujitsu Ltd.                                                            2,250,000        16.327      .03
Hewlett-Packard Co.                                                    17,381,400       357.014      .63
International Business Machines Corp.                                   5,900,000       713.664     1.27
Sun Microsystems, Inc.  /1/                                             8,990,000       110.577      .20
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.11%
Agilent Technologies, Inc.  /1/                                         2,939,080        83.793
Agilent Technologies, Inc. 3.00% convertible                            4,445,000         4.984      .16
 debentures 2021 /2/ /3/
Hitachi, Ltd.                                                           8,500,000        62.067      .11
Sanmina-SCI Corp.  /1/                                                  4,600,000        91.540      .16
Solectron Corp.  /1/                                                   14,868,800       167.720
Solectron Corp. 7.25% convertible preferred                             3,240,000        92.826      .47
 2004, units  /1/
Thermo Electron Corp.  /1/                                              5,000,000       119.300      .21
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 3.34%
Altera Corp. /1/                                                       10,300,000       218.566      .39
Intel Corp.                                                             5,640,000       177.378      .32
Linear Technology Corp.                                                 3,350,000       130.784      .23
LSI Logic Corp.  /1/                                                    2,300,000        36.294      .06
Maxim Integrated Products, Inc.  /1/                                    3,580,900       188.033      .33
Micron Technology, Inc.  /1/                                            3,900,000       120.900      .22
PMC-Sierra, Inc.  /1/                                                   2,600,000        55.276      .10
Taiwan Semiconductor Manufacturing Co. Ltd. /1/                        67,000,000       167.980      .30
Texas Instruments Inc.                                                 22,360,000       626.080     1.11
Xilinx, Inc.  /1/                                                       4,100,000       160.105      .28
                                                                                      5,058.899     8.99

TELECOMMUNICATION SERVICES
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.72%
ALLTEL Corp.                                                            5,740,400       354.355      .63
AT&T Corp.                                                             45,608,600       827.340     1.47
Deutsche Telekom AG                                                     3,100,000        53.537      .09
SBC Communications Inc.                                                 8,591,100       336.513      .60
Sprint FON Group                                                        9,859,300       197.975      .35
Telefonos de Mexico, SA de CV, Class L (ADR)                            3,000,000       105.060      .19
Verizon Communications Inc.                                             2,000,000        94.920      .17
WorldCom, Inc. - WorldCom Group  /1/                                    9,005,000       126.790      .22
WIRELESS TELECOMMUNICATION SERVICES - 0.62%
America Movil SA de CV, Series L (ADR)                                  1,800,000        35.064      .06
AT&T Wireless Services, Inc. /1/                                        4,769,700        68.541      .12
Vodafone Group PLC (ADR)                                                9,500,000       243.960      .44
                                                                                      2,444.055     4.34

UTILITIES
ELECTRIC UTILITIES - 1.95%
American Electric Power Co., Inc.                                       3,350,000       145.826      .26
Consolidated Edison, Inc.                                                 166,900         6.736      .01
Dominion Resources, Inc.                                                3,381,912       203.253      .36
Duke Energy Corp.                                                       2,986,500       117.250      .21
Edison International  /1/                                              11,000,000       166.100      .29
FPL Group, Inc.                                                         1,000,000        56.400      .10
Pinnacle West Capital Corp.                                             2,000,000        83.700      .15
Southern Co.                                                            4,386,500       111.198      .20
TXU Corp.                                                               4,400,000       207.460      .37
MULTI-UTILITIES - 0.37%
Williams Companies, Inc.                                                8,041,900       205.229      .37
                                                                                      1,303.152     2.32

MISCELLANEOUS - 1.11%
Other equity securities in initial period                                               626.010     1.11
 of acquisition


TOTAL EQUITY SECURITIES:                                                             45,832.290    81.43
 (cost: $31,704.360 million)




                                                                       Principal        Market  Percent
                                                                          Amount         Value   of Net
Short-Term Securities                                                 (Millions)    (Millions)   Assets

U.S. Treasuries & Other Federal Agencies - 3.93%
Fannie Mae 1.70%-3.455% due 1/3-6/6/2002                            2,157,515,000     2,148.584     3.82
Federal Farm Credit Bank 1.70%-2.21%                                  209,000,000       207.883      .37
 due 3/18-5/13/2002
Federal Home Loan Banks 1.66%-2.33% due                             1,474,260,000     1,468.009     2.61
  1/11-6/13/2002
Freddie Mac 1.68%-3.60% due 1/2-6/5/2002                            2,380,834,000     2,371.672     4.21
Sallie Mae 1.882%-1.902% due 2/21-4/18/2002 /3/                        75,000,000        75.000      .13
U.S. Treasury Bills 1.745%-3.09% due                                1,575,000,000     1,567.898     2.79
 1/17-5/30/2002

Corporate Short-Term Notes - 4.42%
AIG Funding, Inc. 1.75%-1.98% due 1/11-2/1/2002                       100,000,000        99.866      .18
American Express Credit Corp. 1.80%-2.00%                             100,000,000        99.836      .18
 due 1/18-2/25/2002
Anheuser-Busch Cos., Inc. 1.72% due                                    40,000,000        39.966      .07
 1/18/2002  /2/
Archer Daniels Midland Co. 1.79% due                                   50,000,000        49.844      .09
 3/5/2002  /2/
Bank of America Corp. 1.75%-1.76% due                                 100,000,000        99.859      .18
 1/28-1/30/2002
BellSouth Corp. 2.00%-2.22% due                                       125,000,000       124.688      .22
 1/22-2/19/2002  /2/
ChevronTexaco Corp. 1.78%-1.81% due                                   100,000,000        99.737      .18
 2/4-3/12/2002
Citicorp 1.85% due 1/22/2002                                           50,000,000        49.943      .09
Coca-Cola Co. 1.875%-1.90% due 1/14-2/1/2002                          125,000,000       124.882      .22
Colgate-Palmolive Co. 1.72% due 1/25/2002 /2/                          50,000,000        49.940      .09
Electronic Data Systems Corp. 2.00% due                                25,000,000        24.929      .04
 2/20/2002  /2/
Gannett Co., Inc. 1.75% due 1/16-1/23/2002 /2/                        125,000,000       124.890      .22
General Electric Capital Corp. 1.91%-2.06%                            150,000,000       149.550      .26
 due 2/4-3/11/2002
Gillette Co. 1.96% due 1/22/2002 /2/                                   50,000,000        49.940      .09
Household Finance Corp. 2.07%-2.09% due                               100,000,000        99.765      .18
 2/7-2/12/2002
J.P. Morgan Chase & Co. 1.87%-2.02% due                               150,000,000       149.724      .27
 1/15-2/20/2002
Kimberly-Clark Corp. 2.02% due                                         50,000,000        49.956      .09
 1/14-1/17/2002 /2/
Knight-Ridder Inc. 1.87% due 2/5/2002  /2/                             50,000,000        49.906      .09
Kraft Foods Inc. 1.72%-1.78% due 1/29-2/6/2002                        100,000,000        99.840      .18
Merck & Co., Inc. 1.85%-2.25% due 1/31-4/9/2002                       150,000,000       149.377      .26
Minnesota Mining and Manufacturing Co.                                 55,000,000        54.840      .10
 1.76%-1.98% due 1/23-3/20/2002
Pfizer Inc 2.00%-2.10% due 1/22-1/25/2002 /2/                         125,000,000       124.835      .22
Procter & Gamble Co. 2.15% due 1/8-1/18/2002                           75,000,000        74.949      .13
SBC Communications Inc. 2.07%-2.38% due                               125,000,000       124.752      .22
 1/7-2/28/2002  /2/
Tribune Co. 2.07%-2.12% due 1/23-1/29/2002 /2/                         50,000,000        49.922      .09
Verizon Global Funding Corp. 1.78%-2.32%                              124,500,000       124.371      .22
 due 1/9-2/7/2002  /2/
Wells Fargo & Co. 1.79%-2.08% due                                     150,000,000       149.707      .26
 1/25-3/22/2002

Non-U.S. Currency - 0.01%
Taiwanese Dollar                                                      275,100,000         7.883      .01



TOTAL SHORT-TERM SECURITIES:                                                         10,336.743    18.36
 (cost: $10,333.603 million)


TOTAL INVESTMENT SECURITIES:                                                         56,169.033    99.79
 (cost: $42,037.963 million)
Excess of cash and receivables over payables                                            118.379      .21

NET ASSETS                                                                          $56,287.412  100.00%

/1/ Non-income-producing security.
/2/ Purchased in a private placement
 transaction; resale may be limited to
 qualified institutional buyers; resale to
 public may require registration.
/3/ Coupon rate may change periodically.

ADR = American Depositary Receipts

See Notes to Financial Statements
</TABLE>

Equity securities appearing in the portfolio since June 30, 2001

AT&T Wireless Services
British Airways
Canadian Pacific Railway
Carnival
Comcast
ConAgra Foods
Edison International
EMC
Fuji Photo Film
Johnson & Johnson
J.P. Morgan Chase
Kohl's
LSI Logic
Maxim Intergrated Products
PanCanadian Energy
PMC-Sierra
Rohm and Haas
Sanmina-SCI
Solectron
Southwest Airlines
Sumitomo Mitsui Banking
Sun Microsystems
Taiwan Semiconductor Manufacturing
Telefonos de Mexico
Tyco International
Xilinx


Equity securities eliminated from the portfolio since June 30, 2001

Canadian Pacific
Computer Associates International
Dana
First Data
FleetBoston Financial
General Electric
Lloyds TSB Group
MBNA
Qwest Communications International
Sprint PCS
U.S. Bancorp
Walt Disney


<TABLE>

                                                                   <c>             <c>
THE INVESTMENT COMPANY OF AMERICA
Financial statements

Statement of assets and liabilities
at December 31, 2001                                                      (dollars in  millions)

Assets:
 Investment securities at market
  (cost: $31,704.360)                                                                         $45,832.290
 Short-term securites at market
  (cost: $10,333.603)                                                                          10,336.743
 Cash                                                                                                .620
 Receivables for -
  Sales of investments                                                        $37.504
  Sales of fund's shares                                                      124.267
  Dividends and interest                                                       68.259
  Other                                                                          .007             230.037
                                                                                               56,399.690
Liabilities:
 Payables for -
  Purchases of investments                                                     18.569
  Repurchases of fund's shares                                                 66.354
  Management services                                                          11.375
  Other expenses                                                               15.980             112.278
Net assets at December 31, 2001                                                               $56,287.412

 Class A shares, $.001 par value
(authorized capital stock - 2,500,000,000 shares):
  Net assets                                                                                  $54,315.348
  Shares outstanding                                                                        1,903,527,880
  Net asset value per share                                                                        $28.53
 Class B shares, $.001 par value
(authorized capital stock - 1,250,000,000 shares):
  Net assets                                                                                   $1,301.988
  Shares outstanding                                                                           45,738,160
  Net asset value per share                                                                        $28.47
 Class C shares, $.001 par value
(authorized capital stock - 250,000,000 shares):
  Net assets                                                                                     $480.197
  Shares outstanding                                                                           16,887,430
  Net asset value per share                                                                        $28.44
 Class F shares, $.001 par value
(authorized capital stock - 250,000,000 shares):
  Net assets                                                                                     $189.879
  Shares outstanding                                                                            6,658,110
  Net asset value per share                                                                        $28.52




Statement of operations
for the year ended December 31, 2001                                      (dollars in  millions)
Investment income:
 Income:
  Dividends                                                                  $701.201
  Interest                                                                    442.960          $1,144.161

 Expenses:
  Management services fee                                                     134.899
  Distribution expenses - Class A                                             126.552
  Distribution expenses - Class B                                               8.451
  Distribution expenses - Class C                                               1.752
  Distribution expenses - Class F                                                .156
  Transfer agent fee - Class A                                                 38.077
  Transfer agent fee - Class B                                                   .690
  Administrative services fees - Class C                                         .444
  Administrative services fees - Class F                                         .127
  Reports to shareholders                                                       1.291
  Registration statement and prospectus                                         1.638
  Postage, stationery and supplies                                              7.578
  Directors' and Advisory Board fees                                             .622
  Auditing and legal fees                                                        .126
  Custodian fee                                                                 1.299
  Taxes other than federal income tax                                            .606
  Other expenses                                                                 .289             324.597
 Net investment income                                                                            819.564

Realized gain and unrealized
 depreciation on investments:
 Net realized gain                                                                                972.412
 Net unrealized depreciation on investments                                                    (4,453.803)
  Net realized gain and
   unrealized depreciation
   on investments                                                                              (3,481.391)
 Net decrease in net assets resulting
  from operations                                                                             $(2,661.827)









Statement of changes in net assets                                        (dollars in  millions)


                                                                           Year ended         December 31
                                                                                  2001                2000
Operations:
 Net investment income                                                       $819.564            $974.541
 Net realized gain on investments                                             972.412           3,698.090
 Net unrealized depreciation
  on investments                                                           (4,453.803)         (2,579.409)
  Net (decrease) increase in net assets
   resulting from operations                                               (2,661.827)          2,093.222

Dividends and distributions paid to
 shareholders:
 Dividends from net investment income:
  Class A                                                                    (959.826)           (892.064)
  Class B                                                                      (9.501)             (2.107)
  Class C                                                                      (2.076)                  -
  Class F                                                                      (1.230)                  -
 Distributions from net realized gain on investments:
  Class A                                                                  (1,089.756)         (3,563.960)
  Class B                                                                     (19.552)            (21.064)
  Class C                                                                      (5.375)                  -
  Class F                                                                      (2.044)                  -
   Total dividends and distributions                                       (2,089.360)         (4,479.195)

Capital share transactions:
 Proceeds from shares sold                                                  8,211.709           6,216.625
 Proceeds from shares issued in reinvestment
  of net investment income dividends and
  distributions of net realized gain on investments                         1,922.084            4,130.694
 Cost of shares repurchased                                                (5,746.063)         (7,405.706)
  Net increase in net assets resulting
   from capital share transactions                                          4,387.730           2,941.613
 Total (decrease) increase in net assets                                     (363.457)            555.640

Net assets:
 Beginning of year                                                         56,650.869          56,095.229
 End of year (including
  undistributed net investment
  income: $224.805 and $377.915,
  respectively)                                                           $56,287.412         $56,650.869



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 ("mutual fund").  The fund seeks long-term growth of capital
and income, placing greater emphasis on future dividends than on current
income.

The fund offers four classes of shares as described below:

Class A shares are sold with an initial sales charge of up to 5.75%.

Class B shares are sold without an initial sales charge but are subject to a
contingent deferred sales charge paid upon redemption.  This charge declines
from 5% to zero over a period of six years.  Class B shares automatically
convert to Class A shares after eight years.

Class C shares are sold without an initial sales charge but are subject to a
contingent deferred sales charge of 1% for redemptions within one year of
purchase.  Class C shares automatically convert to Class F shares after ten
years.

Class F shares, which are sold exclusively through fee-based programs, are sold
without an initial sales charge or a contingent deferred sales charge.

Holders of all classes of shares have equal pro rata rights to assets,
dividends, liquidation and other rights.  Each class has identical voting
rights, except for exclusive rights to vote on matters affecting only its
class.  Each class of shares may have different distribution, administrative
services and transfer agent fees and certain other expenses ("class-specific
expenses").  Differences in class-specific expenses will result in differences
in net investment income and, therefore, the payment of different per-share
dividends by each class.

SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States of America.  These principles 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 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 broadest and most representative
exchange or market on which such securities are traded (as determined by the
investment adviser), as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price.
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.  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.
Forward currency contracts are valued at the mean of their representative
quoted bid and asked prices.  Securities and assets for which representative
market quotations are not readily available are valued at fair value as
determined in good faith by authority of the fund's Board of Directors.

NON-U.S. CURRENCY TRANSLATION - Assets and liabilities denominated in non-U.S.
currencies are translated daily into U.S. dollars at the current exchange
rates.  Purchases and sales of securities and income and expenses are
translated into U.S. dollars at the exchange rates on the dates of such
transactions. The increase or decrease in the U.S. dollar value of assets and
liabilities resulting from changes in currency exchange rates is combined with
the net realized and unrealized gain or loss on investment securities for
financial reporting purposes.

SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
recorded by the fund as of the date the trades are executed with brokers.
Realized gains and losses from securities transactions are determined based on
the specific identified cost of the securities.  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, premiums and original issue discounts on fixed-income securities are
amortized daily over the expected life of the security.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions paid
to shareholders are recorded on the ex-dividend date.

CLASS ALLOCATIONS - Income, expenses (other than class-specific expenses) and
realized and unrealized gains and losses are allocated daily among the various
share classes based on their relative net asset values.  Distribution expenses,
administrative services fees, certain transfer agent fees and other applicable
class-specific expenses are accrued daily and charged to the respective share
class.

2. NON-U.S. INVESTMENTS

INVESTMENT RISK - Investments in securities of non-U.S. issuers in certain
countries involve special investment risks.  These risks may include, but are
not limited to, investment and repatriation restrictions, revaluation of
currencies, adverse political, social and economic developments, government
involvement in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law considerations, and
limited regulation of the securities markets.

TAXATION - Dividend and interest income is recorded net of any non-U.S. taxes
paid.  For the year ended December 31, 2001, non-U.S. taxes paid were
$11,088,000.

3. FEDERAL INCOME TAXATION

The fund complies with the requirements of the Internal Revenue Code applicable
to mutual funds and intends to distribute all of its net taxable income and net
capital gains each year.  A mutual fund is not subject to income taxes if such
distributions are made.  Required distributions are based on net investment
income and net realized gains determined on a tax basis.  Income and gains
computed on a tax basis may differ from amounts reported in the accompanying
financial statements. In addition, the year in which amounts are distributed
may differ from the year in which the net investment income is earned and the
net gains are realized by the fund.

As of December 31, 2001, the cost of investment securities for federal income
tax reporting purposes was $42,031,519,000, or $6,444,000 less than the cost
reported in the accompanying financial statements.  Net unrealized appreciation
on investments aggregated $14,137,514,000; $15,844,283,000 related to
appreciated securities and $1,706,769,000 related to depreciated securities.
The net taxable gains for the year ended December 31, 2001 of $975,331,000
exceed the amount recorded for financial reporting purposes by $2,919,000,
primarily due to a lower tax basis than book basis for certain securities sold
during the year.

4. FEES AND TRANSACTIONS WITH RELATED PARTIES

AFFILIATED COMPANIES, OFFICERS AND DIRECTORS - The Capital Group Companies,
Inc. is the parent company of Capital Research and Management Company ("CRMC"),
the fund's investment adviser.  CRMC is the parent company of American Funds
Service Company ("AFS"), the fund's transfer agent, and American Funds
Distributors, Inc. ("AFD"), the principal underwriter of the fund's shares.
Officers and certain Directors of the fund are affiliated with CRMC, AFS and
AFD.  No such persons received any remuneration directly from the fund.

INVESTMENT ADVISORY FEE - The fee of $134,899,000 for management services was
incurred pursuant to an agreement with CRMC.

The Investment Advisory and Service Agreement provides for monthly fees accrued
daily, based on a series of rates beginning with 0.390% per annum of the first
$1 billion of month-end net assets decreasing to 0.222% of such assets in
excess of $71 billion.  For the year ended December 31, 2001, the management
services fee was equivalent to an annualized rate of 0.242% of average
month-end net assets.

DISTRIBUTION EXPENSES - The fund has adopted plans of distribution under which
it may finance activities primarily intended to sell fund shares, provided the
categories of expenses are approved in advance by the fund's Board of
Directors.  The plans provide for annual expenses, based on average daily net
assets, of up to 0.25% for Class A shares, 1.00% for Class B and Class C
shares, and up to 0.50% for Class F shares.

All share classes may use up to 0.25% of these expenses to pay service fees, or
to compensate AFD for paying service fees to firms that have entered into
agreements with AFD for providing certain shareholder services.  The balance
may be used for approved distribution expenses as follows:

CLASS A SHARES - Approved categories of expense include reimbursements to AFD
for commissions paid to dealers and wholesalers in respect of certain shares
sold without a sales charge.  Those reimbursements are permitted for amounts
billed to the fund but only to the extent that the overall 0.25% annual expense
limit for Class A shares is not exceeded.  For the year ended December 31,
2001, total distribution expenses were $126,552,000, equivalent to an
annualized rate of 0.23% of average daily net assets attributable to Class A
shares.

CLASS B SHARES - In addition to service fees of 0.25%, approved categories of
expense include fees of 0.75% per annum of average daily net assets
attributable to Class B shares payable to AFD. AFD sells the rights to receive
such payments (as well as any deferred sales charges applicable to the shares
sold) in order to finance the payment of dealer commissions.  For the year
ended December 31, 2001, total distribution expenses were $8,451,000,
equivalent to an annualized rate of 1.00% of average daily net assets
attributable to Class B shares.

CLASS C SHARES - In addition to service fees of 0.25%, the Board of Directors
has approved the payment of 0.75% per annum of average daily net assets
attributable to Class C shares to AFD to compensate firms selling Class C
shares of the fund.  For the year ended December 31, 2001, total distribution
expenses were $1,752,000, equivalent to an annualized rate of 1.00% of average
daily net assets attributable to Class C shares.

CLASS F SHARES - The plan has an expense limit of 0.50%.  However, the Board of
Directors has presently approved expenses under the plan of 0.25% per annum of
average daily net assets attributable to Class F shares.  For the year ended
December 31, 2001, total distribution expenses were $156,000, equivalent to an
annualized rate of 0.25% of average daily net assets attributable to Class F
shares.

As of December 31, 2001, total distribution expenses payable to AFD for all
share classes were $10,697,000.

AFD received $25,295,000 (after allowances to dealers) as its portion of the
sales charges paid by purchasers of the fund's Class A shares for the year
ended December 31, 2001.  Such sales charges are not an expense of the fund
and, hence, are not reflected in the accompanying financial statements.

TRANSFER AGENT FEE - A fee of $38,767,000 was incurred during the year ended
December 31, 2001, pursuant to an agreement with AFS. As of December 31, 2001,
total transfer agent fees payable to AFS for Class A and Class B shares were
$3,375,000.

ADMINISTRATIVE SERVICES FEES - The fund has an administrative services
agreement with CRMC for Class C and Class F shares. Pursuant to this agreement,
CRMC provides transfer agency and other related shareholder services.  CRMC may
contract with third parties to perform these services.  Under the agreement,
the fund pays CRMC a fee equal to 0.15% per annum of average daily net assets
of Class C and Class F shares, plus amounts payable for certain transfer agency
services according to a specified schedule.  For the year ended December 31,
2001, total fees under the agreement were $571,000.  As of December 31, 2001,
total administrative services fees payable to CRMC for Class C and Class F
shares were $133,000.

DEFERRED DIRECTORS' AND ADVISORY BOARD FEES - Since the adoption of the
deferred compensation plan in 1993, Directors and Advisory Board members who
are unaffiliated with CRMC may elect to defer the receipt of part or all of
their compensation.  Deferred compensation amounts, which remain in the fund,
are treated as if invested in shares of the fund or other American Funds.
These amounts represent general, unsecured liabilities of the fund and vary
according to the total returns of the selected funds.  As of December 31, 2001,
the cumulative amount of these liabilities was $1,667,000. Directors' and
Advisory Board fees on the Statement of Operations include the current fees
(either paid in cash or deferred) and the net increase or decrease in the value
of deferred compensation.

5. WARRANTS

As of December 31, 2001, the fund had warrants outstanding which may be
exercised at any time for the purchase of 822,026 Class A shares at
approximately $5.24 per share.  If such warrants had been exercised as of
December 31, 2001, the net asset value of Class A shares would have been
reduced by $0.01 per share.

6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $13,517,116,000 and $10,012,190,000, respectively,
during the year ended December 31, 2001.

The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held with the custodian bank.  For
the year ended December 31, 2001, the custodian fee of $1,299,000 includes
interest calculated in the amount of $177,000.

As of December 31, 2001, reclassifications of certain amounts reported in the
accompanying financial statements were made to conform to tax accounting
methods as follows: undistributed net investment income of $41,000 was
reclassified to undistributed net realized gains; undistributed net realized
gains of $92,162,000 were reclassified to additional paid-in capital.

As of December 31, 2001, net assets consisted of the following:
<TABLE>

                                                             <c>
Net Assets

                                                                   (dollars in millions)
Capital paid in on shares of capital stock                                      $41,709.555
Undistributed net investment income                                                 224.805
Undistributed net realized gain                                                     222.064
Net unrealized appreciation                                                      14,130.988
Net assets                                                                      $56,287.412
</TABLE>

Capital share transactions in the fund were as follows:
<TABLE>

                                                             <c>                   <c>

                                                                           Year ended        Year ended
                                                                         December 31,      December 31,
                                                                                  2001              2001
                                                                    Amount (millions)            Shares
Class A Shares:
  Sold                                                                     $6,534.080       221,910,009
  Reinvestment of dividends and distributions                               1,884.217        64,924,874
  Repurchased                                                              (5,639.751)     (192,783,453)
   Net increase in Class A                                                  2,778.546        94,051,430
Class B Shares: /1/
  Sold                                                                        976.698        33,294,441
  Reinvestment of dividends and distributions                                  28.010           977,859
  Repurchased                                                                 (76.876)       (2,684,670)
   Net increase in Class B                                                    927.832        31,587,630
Class C Shares: /2/
  Sold                                                                        501.953        17,316,730
  Reinvestment of dividends and distributions                                   7.161           253,884
  Repurchased                                                                 (19.333)         (683,184)
   Net increase in Class C                                                    489.781        16,887,430
Class F Shares: /2/
  Sold                                                                        198.978         6,922,247
  Reinvestment of dividends and distributions                                   2.696            95,329
  Repurchased                                                                 (10.103)         (359,466)
   Net increase in Class F                                                    191.571         6,658,110
Total net increase in fund                                                 $4,387.730       149,184,600





                                                                           Year ended        Year ended
                                                                         December 31,      December 31,
                                                                                  2000
                                                                    Amount (millions)            Shares
Class A Shares:
  Sold                                                                     $5,769.801       178,847,762
  Reinvestment of dividends and distributions                               4,108.241       132,121,263
  Repurchased                                                              (7,394.906)     (229,525,161)
   Net increase in Class A                                                  2,483.136        81,443,864
Class B Shares: /1/
  Sold                                                                        446.824        13,755,990
  Reinvestment of dividends and distributions                                  22.453           730,425
  Repurchased                                                                 (10.800)         (335,885)
   Net increase in Class B                                                    458.477        14,150,530
Class C Shares: /2/
  Sold                                                                            -                 -
  Reinvestment of dividends and distributions                                     -                 -
  Repurchased                                                                     -                 -
   Net increase in Class C                                                        -                 -
Class F Shares: /2/
  Sold                                                                            -                 -
  Reinvestment of dividends and distributions                                     -                 -
  Repurchased                                                                     -                 -
   Net increase in Class F                                                        -                 -
Total net increase in fund                                                 $2,941.613        95,594,394


/1/ Class B shares were not offered
 before March 15, 2000.
/2/ Class C and Class F shares were not
 offered before March 15, 2001.
</TABLE>

<TABLE>

                                                         <c>             <c>             <c>
Per-share data and ratios

                                                                    Class A         Class A         Class A

                                                                 Year ended      Year ended      Year ended
                                                               December 31,    December 31,    December 31,
                                                                        2001            2000            1999
Net asset value, beginning of year                                   $31.07          $32.46          $31.07

 Income from investment operations:
  Net investment income                                             .44 /1/         .56 /1/             .49

  Net (losses) gains on securities (both                         (1.87) /1/         .65 /1/             4.45
 realized and unrealized)

   Total from investment operations                                   (1.43)           1.21            4.94

 Less distributions:
  Dividends (from net investment income)                               (.52)           (.52)           (.51)

  Distributions (from capital gains)                                   (.59)          (2.08)          (3.04)

   Total distributions                                                (1.11)          (2.60)          (3.55)

Net asset value, end of year                                         $28.53          $31.07          $32.46

Total return /2/                                                     (4.59)%           3.84%          16.55%

Ratios/supplemental data:

 Net assets, end of year (in millions)                              $54,315         $56,212         $56,095

 Ratio of expenses to average net assets                                .57%            .56%            .55%

 Ratio of net income to average net assets                             1.49%           1.74%           1.54%




                                                                    Class A         Class A

                                                                 Year ended      Year ended
                                                               December 31,    December 31,
                                                                        1998            1997
Net asset value, beginning of year                                   $28.25          $24.23

 Income from investment operations:
  Net investment income                                                 0.48            0.51

  Net (losses) gains on securities (both                                5.79            6.61
 realized and unrealized)

   Total from investment operations                                    6.27            7.12

 Less distributions:
  Dividends (from net investment income)                               (.51)           (.50)

  Distributions (from capital gains)                                  (2.94)          (2.60)

   Total distributions                                                (3.45)          (3.10)

Net asset value, end of year                                         $31.07          $28.25

Total return /2/                                                      22.93%          29.81%

Ratios/supplemental data:

 Net assets, end of year (in millions)                              $48,498         $39,718

 Ratio of expenses to average net assets                                .55%            .56%

 Ratio of net income to average net assets                             1.65%           1.90%



                                                                    Class B         Class B

                                                                 Year ended     March 15 to
                                                               December 31,    December 31,
                                                                       2001        2000 /3/
Net asset value, beginning of period                                 $31.01          $31.13

 Income from investment operations: /1/
  Net investment income                                                 .19             .26

  Net (losses) gains on securities (both                              (1.83)           1.55
realized and unrealized)

   Total from investment operations                                   (1.64)           1.81

 Less distributions:
  Dividends (from net investment income)                               (.31)           (.25)

  Distributions (from capital gains)                                   (.59)          (1.68)

   Total distributions                                                 (.90)          (1.93)

Net asset value, end of period                                       $28.47          $31.01

Total return /2/                                                     (5.30)%           5.87%

Ratios/supplemental data:

 Net assets, end of period (in millions)                             $1,302            $439

 Ratio of expenses to average net assets                               1.35%       1.34%/4/

 Ratio of net income to average net assets                              .66%       1.06%/4/



                                                                    Class C         Class F

                                                                March 15 to     March 15 to
                                                               December 31,    December 31,
                                                                   2001 /3/        2001 /3/
Net asset value, beginning of period                                 $29.05          $29.10

 Income from investment operations: /1/
  Net investment income                                                 .09             .27

  Net (losses) gains on securities (both                               (.14)           (.13)
realized and unrealized)

   Total from investment operations                                    (.05)            .14

 Less distributions:
  Dividends (from net investment income)                               (.21)           (.37)

  Distributions (from capital gains)                                   (.35)           (.35)

   Total distributions                                                 (.56)           (.72)

Net asset value, end of period                                       $28.44          $28.52

Total return /2/                                                      (.19)%            .48%

Ratios/supplemental data:

 Net assets, end of period (in millions)                               $480            $190

 Ratio of expenses to average net assets                           1.52%/4/         .72%/4/

 Ratio of net income to average net assets                          .38%/4/        1.17%/4/



Supplemental data - all classes

                                                                 Year ended      Year ended      Year ended
                                                               December 31,    December 31,    December 31,
                                                                        2001            2000            1999
Portfolio turnover rate                                               22.06%          25.36%          27.85%




Supplemental data - all classes

                                                                 Year ended      Year ended
                                                               December 31,    December 31,
                                                                        1998            1997
Portfolio turnover rate                                               24.28%          26.02%


/1/ Based on average shares outstanding.
/2/ Total returns exclude all sales charges,
               including contingent deferred sales charges.
/3/ Based on operations for the period shown
 and, accordingly, not representative of a
 full year (unless otherwise noted).
/4/ Annualized.
</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, 2001, the results of its operations, the changes
in its net assets and the per-share data and ratios for each of the periods
presented in conformity with accounting principles generally accepted in the
United States of America.  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 of America, 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, 2001, by correspondence with the custodian, provide a reasonable basis for
our opinion.

PRICEWATERHOUSECOOPERS LLP

Los Angeles, California

January 31, 2002


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 certain distributions received by
shareholders during such fiscal year.

During the fiscal year ended December 31, 2001, the fund paid a long-term
capital gain distribution of $1,116,727,000.  The fund also designated 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, 76% 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, 3% 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 REFER TO THEIR FORM 1099-DIV OR OTHER TAX INFORMATION WHICH
WAS MAILED IN JANUARY 2002 TO DETERMINE THE AMOUNTS TO BE INCLUDED ON THEIR
2001 TAX RETURNS.  SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.