Investment Co of America – ‘N-CSR’ for 6/30/03

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Certified Annual Shareholder Report of a Management Investment Company   —   Form N-CSR
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSR       Certified Annual Shareholder Report of a              37±   160K 
                          Management Investment Company                          
 3: EX-99.906   Miscellaneous Exhibit                                  1      7K 
 2: EX-99.CERT  Miscellaneous Exhibit                                  2     17K 

N-CSR   —   Certified Annual Shareholder Report of a Management Investment Company
Document Table of Contents

N-CSR
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR
 Certified Shareholder Report of
Registered Management Investment Companies

 Investment Company Act File Number: 811-116

 The Investment Company of America
(Exact Name of Registrant as specified in charter)

 333 South Hope Street
 Los Angeles, California 90071
(Address of principal executive offices)

Registrant's telephone number, including area code: (213) 486-9200

Date of fiscal year end: December 31, 2003

 Date of reporting period: June 30, 2003

Vincent P. Corti
 Capital Research and Management Company
 333 South Hope Street
 Los Angeles, California 90071
 (name and address of agent for service)

Copies to:
Eric A.S. Richards, Esq.
 O'Melveny & Myers LLP
 400 South Hope Street
 Los Angeles, California 90071
(Counsel for the Registrant)

N-CSR
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ITEM 1 - Reports to Stockholders                                                

[logo] American Funds(R)                                                        

The right choice for the long term(R)                                           

ICA THE INVESTMENT COMPANY OF AMERICA                                           

[raised flags from different countries in front of office building]             

Semi-annual report for the six months ended June 30, 2003                       

ICA(SM) seeks long-term  growth of capital and income,  placing greater emphasis
on future dividends than on current income.                                     

The  Investment  Company of  America(R)  is one of the 29  American  Funds,  the
nation's third-largest mutual fund family. For more than seven decades,  Capital
Research and Management Company,SM the American Funds adviser, has invested with
a long-term focus based on thorough research and attention to risk.             

Fund  results in this  report  were  calculated  for Class A shares at net asset
value (without a sales charge) unless otherwise indicated.  Here are the returns
on a $1,000 investment with all distributions  reinvested for periods ended June
30, 2003:                                                                       

                                         1 YEAR      5 YEARS      10 YEARS
CLASS A SHARES                                                                  
Reflecting 5.75% maximum sales charge                                           
Cumulative total return                   -4.93%     +10.68%      +170.59%
Average annual total return                  --       +2.05%       +10.47%

The fund's 30-day yield for Class A shares as of July 31, 2003,  reflecting  the
5.75% maximum sales charge and calculated in accordance  with the Securities and
Exchange Commission formula, was 1.73%.                                         

Results for other share  classes can be found on page 28.  Please see the inside
back cover for important  information  about other share  classes.  For the most
current investment results, please refer to americanfunds.com.                  

FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE  RESULTS.  SHARE
PRICE AND RETURN WILL VARY,  SO YOU MAY LOSE MONEY.  INVESTING FOR SHORT PERIODS
MAKES  LOSSES  MORE  LIKELY.  INVESTMENTS  ARE NOT  FDIC-INSURED,  NOR ARE  THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.  INVESTING  OUTSIDE THE
UNITED STATES IS SUBJECT TO ADDITIONAL RISKS, SUCH AS CURRENCY  FLUCTUATIONS AND
POLITICAL INSTABILITY, WHICH ARE DETAILED IN THE FUND'S PROSPECTUS.             

FELLOW SHAREHOLDERS:                                                            

[raised flags from different countries in front of office building]             

A strong stock market rally lifted ICA's results for the first half of 2003. For
the six  months  ended June 30,  the fund had a total  return of 9.4%,  assuming
reinvestment of the 13-cents-a-share income dividends paid in March and June. By
contrast,  Standard  & Poor's 500  Composite  Index  produced a total  return of
11.8%. The 12-month comparison is more favorable,  with ICA gaining 0.9% and the
S&P 0.2%.                                                                       

The six-month  period was really a tale of two stock  markets.  During the first
quarter,  a sluggish  U.S.  economy,  the  pending war with Iraq and surging oil
prices pushed stock prices sharply lower. The second quarter was a far different
story.  Major fighting in Iraq was declared over and oil prices fell.  Many U.S.
companies  reported  an upturn in  corporate  profits.  Interest  rates  touched
45-year  lows and the biggest tax cut in two decades  sharply  lowered  taxes on
most types of dividends. The stock market reacted to this stream of good news by
posting its eighth-best quarterly gain since World War II.                      

BROAD-BASED RALLY                                                               

The breadth of the stock market's recent surge has been impressive, with all ten
industry  sectors  in  the  S&P  gaining  ground.   ICA's  rise  has  also  been
broad-based.  Of the 191  stocks  held in our  portfolio  throughout  the entire
six-month  period,  145 rose in value.  This  includes  nine of our ten  biggest
holdings,  led by J.P. Morgan Chase, which gained 42.4%, AOL Time Warner,  which
rose 22.8%,  and the home improvement  retailer Lowe's,  which jumped 14.5%. The
only stock in our top ten which fell was SBC Communications, which dropped 5.7%.
Generally,  stocks that lost ground were  companies that held up well during the
bear market, like consumer products giants Unilever (-12.5%),  Sara Lee (-16.4%)
and Kodak (-21.9%).                                                             

[Begin Sidebar]                                                                 
2003 RESULTS AT A GLANCE                                                        
For the six months ended June 30                                                
(with dividends and capital gain distributions reinvested)                      

                                 Standard &              Lipper Inc.
                                   Poor's 500            Growth & Income
                   ICA          Composite Index         Funds Average*

Income return          +1.11%            +0.91%                     n/a         
Capital return         +8.29%           +10.84%                     n/a         

Total return           +9.40%           +11.75%                   +10.80%       

*Average of 1,249 growth-and-income funds. Lipper averages do not reflect the   
effects of sales charges.                                                       
[End Side Bar]                                                                  

[Begin Sidebar]                                                                 
[bar chart]                                                                     
WEATHERING THE STORM: ICA VS. THE S&P 500                                       

March 24, 2000 - June 30, 2003                                                  
(with dividends reinvested)                                                     

ICA      S&P 500                                                            

-10.95%    33.05%                                                               

[end bar chart]                                                                 
[End Side Bar]                                                                  

MANAGING EXPECTATIONS                                                           

Despite the stock market's  robust gains in recent  months,  we think its longer
term outlook is more modest. In short, careful stock selection is more important
than ever. For this, we'll continue to rely on our intensive  research approach.
We  focus  on risk as well as  return  and  place  greater  emphasis  on  future
dividends than current income.  When the stock market is falling,  dividends act
as a cushion for  shareholders.  As the table above  shows,  this helps  explain
ICA's resilience over the last three,  difficult years. When the stock market is
rising,  those  dividends,  added to capital gains, can generate solid long term
returns for  shareholders.  This has certainly  been the case for ICA. Since its
inception  nearly 70 years ago, the fund has  generated an average  annual total
return of 12.9%. This compares quite favorably with the S&P 500's 11.2%.        

We will  continue  to scour  the  investment  landscape  in  search  of the best
opportunities  on your  behalf.  Thank  you for  your  commitment  to long  term
investing -- and your loyalty to ICA.                                           

Sincerely,                                                                      

/s/ R. Michael Shanahan                 /s/ James F. Rothenberg                 
R. Michael Shanahan                     James F. Rothenberg                     
Chairman                                President                               

August 7, 2003                                                                  

INVESTMENT PORTFOLIO  June 30, 2003                                  unaudited  

                                  PERCENT OF
LARGEST INVESTMENT CATEGORIES                       NET ASSETS                  

Food, beverage & tobacco                               7.39%                    
Capital goods                                          7.00                     
Energy                                                 6.54                     

                                  PERCENT OF
LARGEST INDUSTRY HOLDINGS                           NET ASSETS                  

Pharmaceuticals                                        6.46%                    
Oil & gas                                              5.60                     
Beverages & tobacco                                    5.52                     
Diversified telecommunication services                 4.99                     
Media                                                  4.57                     

                                  PERCENT OF
LARGEST EQUITY HOLDINGS                             NET ASSETS                  

Altria                                                 3.8 %                    
Eli Lilly                                              2.3                      
AOL Time Warner                                        1.7                      
Fannie Mae                                             1.6                      
J.P. Morgan Chase                                      1.5                      
SBC Communications                                     1.5                      
Lowe's                                                 1.5                      
Pfizer                                                 1.5                      
Dow Chemical                                           1.5                      
Viacom                                                 1.4                      

                                                        [Enlarge/Download Table]
                                                                                               
                                                                   Shares or            Market 
Equity securities                                                  principal            value  
  (common and preferred stocks and convertible debentures)          amount              (000)  

ENERGY                                                                                         
ENERGY EQUIPMENT & SERVICES  -  0.94%                                                          
Baker Hughes Inc.                                                  8,225,000           $276,113
Schlumberger Ltd.                                                  5,100,000            242,607

OIL & GAS  -  5.60%                                                                            
Burlington Resources Inc.                                          5,850,000            316,309
ChevronTexaco Corp.                                                9,595,500            692,795
ConocoPhillips                                                     2,200,000            120,560
ENI SpA                                                           25,500,000            385,597
Exxon Mobil Corp.                                                  3,500,000            125,685
Marathon Oil Corp.                                                12,550,000            330,692
Murphy Oil Corp.                                                   2,050,000            107,830
Royal Dutch Petroleum Co. (New York registered)                    7,620,000            355,244
"Shell" Transport and Trading Co., PLC (ADR) (New York registered) 4,500,000            179,325
"Shell" Transport and Trading Co., PLC                             2,900,000             19,167
TOTAL SA, Class B (formerly TOTAL FINA ELF SA)                       900,000            135,969
Unocal Corp.                                                      11,690,000            335,386
                                                                                      3,623,279

MATERIALS                                                                                      
CHEMICALS  -  1.67%                                                                            
Air Products and Chemicals, Inc.                                     200,000              8,320
Dow Chemical Co.                                                  26,200,000            811,152
Rohm and Haas Co.                                                  3,400,000            105,502

METALS & MINING  -  2.08%                                                                      
Alcoa Inc.                                                        10,646,400          $ 271,483
Alumina Ltd.                                                      19,804,346             54,061
Barrick Gold Corp.                                                 9,250,000            165,575
BHP Billiton Ltd.                                                  9,412,655             54,545
Newmont Mining Corp.                                               8,000,000            259,680
Phelps Dodge Corp.  (1)                                            1,345,000             51,567
Placer Dome Inc.                                                  10,000,000            122,700
Rio Tinto PLC                                                      9,000,000            169,526

PAPER & FOREST PRODUCTS  -  1.52%                                                              
Georgia-Pacific Corp., Georgia-Pacific Group                      10,599,298            200,857
International Paper Co.                                            7,097,235            253,584
MeadWestvaco Corp.                                                 3,800,000             93,860
Weyerhaeuser Co.                                                   5,475,000            295,650
                                                                                      2,918,062

CAPITAL GOODS                                                                                  
AEROSPACE & DEFENSE  -  2.06%                                                                  
Boeing Co.                                                         8,500,000            291,720
Honeywell International Inc.                                       4,000,000            107,400
Northrop Grumman Corp.                                             2,020,000            174,306
Raytheon Co.                                                      14,282,535            469,038
United Technologies Corp.                                          1,400,000             99,162

CONSTRUCTION & ENGINEERING  -  0.05%                                                           
Fluor Corp.                                                          824,300             27,729

INDUSTRIAL CONGLOMERATES  -  2.45%                                                             
3M Co.                                                               600,000             77,388
General Electric Co.                                              22,500,000            645,300
Siemens AG                                                         2,476,800            121,270
Tyco International Ltd.                                           27,129,300            514,914

MACHINERY  -  2.44%                                                                            
Caterpillar Inc.                                                  12,300,000            684,618
Cummins Inc.                                                       1,700,000             61,013
Deere & Co.                                                        8,000,000            365,600
Illinois Tool Works Inc.                                           2,200,000            144,870
Parker Hannifin Corp.                                              2,200,000             92,378
                                                                                      3,876,706

COMMERCIAL SERVICES & SUPPLIES                                                                 
COMMERCIAL SERVICES & SUPPLIES  -  0.24%                                                       
Cendant Corp.  (1)                                                 3,500,000             64,120
Pitney Bowes Inc.                                                  1,000,000             38,410
Waste Management, Inc.                                             1,152,600             27,766
                                                                                        130,296

TRANSPORTATION                                                                                 
AIR FREIGHT & LOGISTICS  -  0.27%                                                              
FedEx Corp.                                                        2,370,000            147,011

AIRLINES  -  0.27%                                                                             
Delta Air Lines, Inc.                                                942,100             13,830
Southwest Airlines Co.                                             8,000,000            137,600

ROAD & RAIL  -  0.19%                                                                          
Burlington Northern Santa Fe Corp.                                 3,000,000             85,320
Norfolk Southern Corp.                                             1,200,000             23,040
                                                                                        406,801

AUTOMOBILES & COMPONENTS                                                                       
AUTOMOBILES  -  1.50%                                                                          
Ford Motor Co.                                                     2,500,000             27,475
Ford Motor Co. Capital Trust II 6.50% cumulative                   1,750,000             76,037
  convertible trust preferred 2032                                                             
General Motors Corp.                                              16,800,000            604,800
General Motors Corp., Series B, 5.25%                             $2,441,000             54,678
  convertible debentures 2032                                                                  
Honda Motor Co., Ltd.                                              1,825,000             69,146
                                                                                        832,136

CONSUMER DURABLES & APPAREL                                                                    
HOUSEHOLD DURABLES  -  0.10%                                                                   
Newell Rubbermaid Inc.                                             2,000,000             56,000

LEISURE EQUIPMENT & PRODUCTS  -  0.04%                                                         
Eastman Kodak Co.                                                    750,000             20,512

TEXTILES, APPAREL & LUXURY GOODS  -  0.09%                                                     
NIKE, Inc., Class B                                                  900,000             48,141
                                                                                        124,653

HOTELS, RESTAURANTS & LEISURE                                                                  
HOTELS, RESTAURANTS & LEISURE  -  0.59%                                                        
Carnival Corp., units                                              8,997,100            292,496
McDonald's Corp.                                                   1,600,000             35,296
                                                                                        327,792

MEDIA                                                                                          
MEDIA  -  4.57%                                                                                
AOL Time Warner Inc.  (1)                                         59,250,000            953,332
Comcast Corp., Class A  (1)                                       11,345,800            342,416
Comcast Corp., Class A, special nonvoting stock (1)                3,000,000             86,490
Dow Jones & Co., Inc.                                              1,887,000             81,198
General Motors Corp., Class H  (1)                                 2,200,000             28,182
Interpublic Group of Companies, Inc.                               9,600,000          $ 128,448
Knight-Ridder, Inc.                                                  550,500             37,946
Liberty Media Corp., Class A  (1)                                  9,280,000            107,277
Viacom Inc., Class A  (1)                                          2,392,800            104,565
Viacom Inc., Class B, nonvoting  (1)                              15,150,000            661,449
                                                                                      2,531,303

RETAILING                                                                                      
INTERNET & CATALOG RETAIL  -  0.14%                                                            
eBay Inc.  (1)                                                       750,000             78,135

MULTILINE RETAIL  -  2.01%                                                                     
Dollar General Corp.                                               5,000,000             91,300
Kohl's Corp.  (1)                                                  3,000,000            154,140
May Department Stores Co.                                          4,800,000            106,848
Target Corp.                                                      20,100,000            760,584

SPECIALTY RETAIL  -  2.08%                                                                     
Limited Brands, Inc.                                              20,749,400            321,616
Lowe's Companies, Inc.                                            19,380,000            832,371
                                                                                      2,344,994

FOOD & STAPLES RETAILING                                                                       
FOOD & STAPLES RETAILING  -  0.49%                                                             
Albertson's, Inc.                                                  2,726,500             52,349
Walgreen Co.                                                       7,220,000            217,322
                                                                                        269,671

FOOD, BEVERAGE & TOBACCO                                                                       
BEVERAGES & TOBACCO -  5.52%                                                                   
Altria Group, Inc.                                                45,750,000          2,078,880
Anheuser-Busch Companies, Inc.                                     3,000,000            153,150
Coca-Cola Co.                                                      3,750,000            174,038
PepsiCo, Inc.                                                      9,400,000            418,300
R.J. Reynolds Tobacco Holdings, Inc. (2)                           4,461,666            166,019
UST Inc.                                                           2,000,000             70,060
FOOD PRODUCTS  -  1.87%                                                                        
General Mills, Inc.                                                6,035,000            286,119
H.J. Heinz Co.                                                     4,200,000            138,516
Sara Lee Corp.                                                     9,316,100            175,236
Unilever NV (New York registered)                                  8,000,000            432,000
                                                                                      4,092,318

HOUSEHOLD & PERSONAL PRODUCTS                                                                  
HOUSEHOLD PRODUCTS  -  0.05%                                                                   
Kimberly-Clark Corp.                                                 500,000          $  26,070

PERSONAL PRODUCTS  -  0.55%                                                                    
Avon Products, Inc.                                                4,935,000            306,957
                                                                                        333,027

HEALTH CARE EQUIPMENT & SERVICES                                                               
HEALTH CARE EQUIPMENT & SUPPLIES  -  0.28%                                                     
Applera Corp. - Applied Biosystems Group                           5,170,500             98,395
Becton, Dickinson and Co.                                          1,500,000             58,275

HEALTH CARE PROVIDERS & SERVICES  -  0.81%                                                     
Aetna Inc.                                                         2,000,000            120,400
CIGNA Corp.                                                        1,700,000             79,798
HCA Inc.                                                           7,720,000            247,349
                                                                                        604,217

PHARMACEUTICALS & BIOTECHNOLOGY                                                                
PHARMACEUTICALS  -  6.46%                                                                      
Abbott Laboratories                                                1,500,000             65,640
AstraZeneca PLC (United Kingdom)                                   5,800,900            232,911
AstraZeneca PLC (Sweden)                                           5,485,000            222,374
AstraZeneca PLC (ADR)                                              1,650,000             67,271
Bristol-Myers Squibb Co.                                          19,457,600            528,274
Eli Lilly and Co.                                                 18,755,000          1,293,532
Merck & Co., Inc.                                                  1,300,000             78,715
Novartis AG                                                        1,000,000             39,604
Novartis AG (ADR)                                                    256,556             10,213
Pfizer Inc (acquired Pharmacia Corp.)                             23,962,480            818,319
Schering-Plough Corp.                                              3,900,000             72,540
Wyeth                                                              3,197,800            145,660
                                                                                      3,575,053

BANKS                                                                                          
COMMERCIAL BANKS  -  3.04%                                                                     
Bank of America Corp.                                              6,484,240            512,449

BANK ONE CORP.                                                     3,035,000            112,841
FleetBoston Financial Corp.                                       18,746,300            556,953
HSBC Holdings PLC (acquired Household International, Inc.)        23,078,750            273,032
Wachovia Corp.                                                     2,010,000             80,320
Wells Fargo & Co.                                                  3,080,000            155,232

THRIFTS & MORTGAGE FINANCE  -  1.94%                                                           
Fannie Mae                                                        13,100,000            883,464
Washington Mutual, Inc.                                            4,500,000            185,850
                                                                                      2,760,141

DIVERSIFIED FINANCIALS                                                                         
CAPITAL MARKETS  -  1.51%                                                                      
J.P. Morgan Chase & Co.                                           24,450,000          $ 835,701

CONSUMER FINANCE  -  0.60%                                                                     
Capital One Financial Corp.                                        3,000,000            147,540
Capital One Financial Corp. 6.25% Upper DECS 2005                  1,450,000 units       59,276
MBNA Corp.                                                         4,800,000            100,032
SLM Corp.                                                            600,000             23,502
                                                                                      1,166,051

INSURANCE                                                                                      
INSURANCE  -  3.11%                                                                            
Allstate Corp.                                                    11,750,000            418,888
American International Group, Inc.                                10,663,900            588,434
Aon Corp.                                                          2,183,800             52,586
Hartford Financial Services Group, Inc.                            2,700,000            135,972
Lincoln National Corp.                                             2,200,000             78,386
SAFECO Corp.                                                       3,950,000            139,356
St. Paul Companies, Inc.                                           3,300,000            120,483
XL Capital Ltd., Class A                                           2,247,300            186,526
                                                                                      1,720,631

SOFTWARE & SERVICES                                                                            
IT SERVICES  -  1.19%                                                                          
Automatic Data Processing, Inc.                                    4,975,000            168,454
Computer Sciences Corp.  (1)                                       2,178,300             83,037
Concord EFS, Inc.  (1)                                             5,000,000             73,600
Electronic Data Systems Corp., Class E                             8,600,000            184,470
Sabre Holdings Corp., Class A                                      6,009,680            148,139
SOFTWARE  -  0.69%                                                                             
Microsoft Corp.                                                   14,880,000            381,077
                                                                                      1,038,777

TECHNOLOGY HARDWARE & EQUIPMENT                                                                
COMMUNICATIONS EQUIPMENT  -  1.18%                                                             
Cisco Systems, Inc.  (1)                                          29,550,000            493,190
Motorola, Inc. 7.00% convertible preferred 2004                    2,400,000 units       78,240
Motorola, Inc.                                                     4,500,000             42,435
Nokia Corp. (ADR)                                                  2,500,000             41,075

COMPUTERS & PERIPHERALS  -  2.15%                                                              
Dell Computer Corp.  (1)                                           1,000,000             31,960
EMC Corp.  (1)                                                     3,500,000             36,645
Hewlett-Packard Co.                                               17,900,000            381,270
International Business Machines Corp.                              7,095,000            585,338
Sun Microsystems, Inc.  (1)                                       32,500,000            149,500

ELECTRONIC EQUIPMENT & INSTRUMENTS  -  0.58%                                                   
Agilent Technologies, Inc.  (1)                                    5,500,000            107,525
Agilent Technologies, Inc. 3.00%                                  $6,655,000              6,505
  convertible debentures 2021 (3)                                                              
Agilent Technologies, Inc. 3.00%                                  $4,445,000              4,345
  convertible debentures 2021 (3)  (4)                                                         
Sanmina-SCI Corp.  (1)                                            11,850,000             74,774
Solectron Corp.  (1)                                              23,500,000             87,890
Solectron Corp. 7.25% ACES convertible preferred 2004              4,000,000 units       46,960
                                                                                      2,167,652

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT                                                       
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT  -  3.00%                                             
Altera Corp.  (1)                                                  2,500,000             41,000
Applied Materials, Inc.  (1)                                      12,020,000            190,637
Intel Corp.                                                        2,140,000             44,478
KLA-Tencor Corp.  (1)                                              1,425,000             66,248
Linear Technology Corp.                                            5,400,000            173,934
LSI Logic Corp.  (1)                                               1,831,000             12,963
Maxim Integrated Products, Inc.                                    3,200,000            109,408
Micron Technology, Inc.  (1)                                       9,500,000            110,485
Samsung Electronics Co., Ltd.                                        460,000            136,882
Taiwan Semiconductor Manufacturing Co. Ltd.  (1)                  82,600,000            136,430
Texas Instruments Inc.                                            30,710,000            540,496
Xilinx, Inc.  (1)                                                  3,787,500             95,862
                                                                                      1,658,823

TELECOMMUNICATION SERVICES                                                                     
DIVERSIFIED TELECOMMUNICATION SERVICES  -  4.99%                                               
ALLTEL Corp.                                                       4,854,500            234,084
ALLTEL Corp. 7.75% 2005                                            1,144,000 units       56,914
AT&T Corp.                                                        22,544,600            433,984
Deutsche Telekom AG (1)                                           13,896,000            211,532
SBC Communications Inc.                                           32,658,300            834,420
Sprint Corp. - FON Group                                          29,635,000            426,744
Telefonos de Mexico, SA de CV, Class L (ADR)                       3,000,000             94,260
Verizon Communications Inc.                                       12,100,000            477,345

WIRELESS TELECOMMUNICATION SERVICES  -  0.97%                                                  
AT&T Wireless Services, Inc.  (1)                                 35,482,700            291,313
Sprint Corp. 7.125% convertible preferred 2004                     6,900,000 units       54,855
Vodafone Group PLC (ADR)                                           9,500,000            186,675
                                                                                      3,302,126

UTILITIES                                                                                      
ELECTRIC UTILITIES  -  1.77%                                                                   
Ameren Corp.                                                       2,000,000             88,200
American Electric Power Co., Inc.                                  5,544,200            165,383
Consolidated Edison, Inc.                                            166,900              7,223
Dominion Resources, Inc.                                           7,131,912         $  458,368
FPL Group, Inc.                                                    1,000,000             66,850
Southern Co.                                                       4,386,500            136,683
TXU Corp.                                                          2,400,000             53,880

MULTI-UTILITIES & UNREGULATED POWER  -  1.19%                                                  
Duke Energy Corp.                                                 25,000,000            498,750
El Paso Corp.                                                     17,155,900            138,620
Williams Companies, Inc. 9.00% FELINE PACS                         2,000,000 units       24,700
  convertible preferred 2005                                                                   
                                                                                      1,638,657

MISCELLANEOUS                                                                                  
Miscellaneous  -  1.24%                                                                        
Other equity securities in initial period of acquisition                                684,524

TOTAL EQUITY SECURITIES (cost: $34,988,524,000)                                      42,127,690

                                                                   PRINCIPAL                   
                                                                      AMOUNT                   
CORPORATE BONDS & notes                                                (000)                   

AUTOMOBILES & COMPONENTS                                                                       
AUTOMOBILES  -  0.30%                                                                          
Ford Motor Credit Co. 6.875% 2006                                    $30,000             31,837
General Motors Acceptance Corp.:                                                               
!6.15% 2007                                                           30,000             31,299
!6.875% 2011                                                          50,000             50,245
!7.25% 2011                                                           50,000             51,380
                                                                                        164,761

MEDIA                                                                                          
MEDIA  -  0.04%                                                                                
AOL Time Warner Inc. 5.625% 2005                                      21,045             22,354

HEALTH CARE EQUIPMENT & SERVICES                                                               
HEALTH CARE PROVIDERS & SERVICES  -  0.06%                                                     
Columbia/HCA Healthcare Corp. 6.91% 2005                              15,000             15,921
HCA Inc. 7.125% 2006                                                  15,000             16,318
                                                                                         32,239

BANKS                                                                                          
COMMERCIAL BANKS  -  0.10%                                                                     
Household Finance Corp. 5.75% 2007                                    50,000           $ 55,227

DIVERSIFIED FINANCIALS                                                                         
CONSUMER FINANCE  -  0.03%                                                                     
Capital One Financial Corp. 7.25% 2006                                17,385             18,456

TELECOMMUNICATION SERVICES                                                                     
TELECOMMUNICATION SERVICES  -  1.70%                                                           
AT&T Corp.:                                                                                    
 6.50% 2006 (4)                                           Euro         9,815             12,000
 7.00% 2006                                                          $80,065             89,130
 7.80% 2011                                                          247,575            283,539
Deutsche Telekom International Finance BV 8.125% 2012     Euro        30,000             42,448
Sprint Capital Corp.:                                                                          
 7.90% 2005                                                         $202,710            219,970
 7.125% 2006                                                           9,500             10,404
 6.00% 2007                                                            2,000              2,151
 6.125% 2008                                                          23,050             25,051
 7.625% 2011                                                          15,500             17,724
 8.375% 2012                                                         197,500            236,925

WIRELESS TELECOMMUNICATION SERVICES - 0.52%                                                    
AT&T Wireless Services, Inc.:                                                                  
 6.875% 2005                                                          15,500             16,775
 7.35% 2006                                                           49,690             55,800
 7.50% 2007                                                          134,530            155,232
 7.875% 2011                                                          22,000             26,029
 8.125% 2012                                                          30,000             36,217
                                                                                      1,229,395

UTILITIES                                                                                      
MULTI-UTILITIES & UNREGULATED POWER -  0.05%                                                   
Williams Companies, Inc.:                                                                      
 6.625% 2004                                                           3,550              3,568
 9.25% 2004                                                           12,500             12,875
Williams Holdings of Delaware, Inc. 6.50% 2008                        11,000             10,780
                                                                                         27,223

TOTAL CORPORATE BONDS & notes (cost: $1,295,625,000)                                  1,549,655

U.S. TREASURY & AGENCY OBLIGATIONS                                                             

                                                                   PRINCIPAL             MARKET
                                                                      AMOUNT             VALUE 
FEDERAL AGENCY                                                         (000)             (000) 

PASS-THROUGH OBLIGATIONS  -  3.87%                                                             
Fannie Mae: (5)                                                                                
 6.00% 2017                                                       $  881,963          $ 926,229
 6.50% 2017                                                        1,145,182          1,214,469

NON-PASS-THROUGH OBLIGATIONS -  0.77%                                                          
Fannie Mae:                                                                                    
 5.25% 2007                                                           99,000            109,917
 6.00% 2011                                                           97,000            113,286
Freddie Mac 7.00% 2005                                               183,000            203,269
                                                                                      2,567,170

U.S. Treasury notes & bonds                                                                    
U.S. Treasury notes & bonds  -  4.19%                                                          
5.25% August 2003                                                    580,000            583,080
3.00% February 2004                                                  600,000            607,968
1.875% September 2004                                                565,000            570,560
1.50% February 2005                                                  555,000            557,686
                                                                                      2,319,294

TOTAL U.S. TREASURY & AGENCY OBLIGATIONS (cost: $4,736,423,000)                       4,886,464

SHORT TERM SECURITIES                                                                          
                                                                   PRINCIPAL             MARKET
                                                                      AMOUNT              VALUE
SHORT-TERM SECURITIES                                                  (000)              (000)

FEDERAL AGENCY DISCOUNT NOTES  -  7.20%                                                        
Fannie Mae 0.91%-1.20% due 7/7-11/19/2003                         $1,259,570         $1,257,518
Federal Farm Credit Banks 0.91%-1.20% due 7/11-9/17/2003             127,200            127,015
Federal Home Loan Bank 0.87%-1.18% due 7/2-10/23/2003                745,553            744,655
Freddie Mac 1.06%-1.205% due 7/1-11/21/2003                        1,822,000          1,819,369
Tenessee Valley Authority 1.14% due 8/14/2003                         36,700             36,648

CORPORATE SHORT-TERM NOTES  -  2.47%                                                           
Abbott Laboratories Inc. 0.89% due 7/22/2003  (4)                     15,000             14,992
AIG Funding Inc. 1.22% due 7/8/2003                                   20,000             19,995
American Express Credit Corp. 0.94%-1.02% due 7/28-8/8/2003          112,900            112,805
American General Finance Corp. 1.02%-1.22% due 7/15-8/19/2003         50,000             49,952
Bank of America Corp. 0.92%-1.20% due 8/5-8/22/2003                   78,000             77,902
Citicorp 1.04%-1.22% due 7/8-8/4/2003                                 70,400             70,354
Clorox Co. 0.97% due 8/14/2003                                        17,500             17,479
Coca-Cola Co. 1.00%-1.19% due 7/17-9/9/2003                          125,000            124,883
E.I. DuPont de Nemours & Co. 1.19%-1.20% due 7/14-7/18/2003       $   80,000         $   79,959
Emerson Electric Co. 0.93% due 7/24/2003 (4)                          22,000             21,986
Gannett Co. 1.02%-1.06% due 7/11-7/18/2003 (4)                        50,000             49,979
General Electric Capital Corp. 1.23%-1.32% due 7/1-8/12/2003         108,900            108,803
Johnson & Johnson 0.88%-1.22% due 7/15-10/15/2003 (4)                109,000            108,837
Merck & Co. Inc. 1.00% due 9/10/2003                                 125,000            124,745
Minnesota Mining and Manufacturing Co. 1.10% due 7/29/2003            25,000             24,978
Pfizer Inc 0.91%-1.13% due 7/29-8/18/2003 (4)                        123,200            123,066
Procter & Gamble Co. 0.89%-1.00% due 7/28-7/29/2003 (4)               90,800             90,732
Schering-Plough Corp. 1.20%-1.22% due 7/2-7/16/2003                   65,000             64,976
Verizon Network Funding Co. 1.00%-1.21% due 7/14-8/26/2003            76,500             76,425

U.S. TREASURIES  -  1.98%                                                                      
U.S. Treasury Bills 0.785%-1.175% due 7/3-12/26/2003               1,100,700          1,098,462

CERTIFICATES OF DEPOSIT  -  0.24%                                                              
Wells Fargo & Co. 1.03%-1.20% 7/25-8/25/2003                         134,800            134,800

TOTAL SHORT-TERM SECURITIES (cost: $6,581,009,000)                                    6,581,315

TOTAL INVESTMENT SECURITIES (cost: $47,601,581,000)                                  55,145,124

NEW TAIWANESE DOLLAR (cost: $7,666,000)                           NT$263,696              7,641

Other assets less liabilities                                                           219,137

NET ASSETS                                                                          $55,371,902


(1)  Security did not produce income during the last 12 months.                 
(2)  The fund owns 5.29% of the outstanding  voting  securities of R.J. Reynolds
     Tobacco  Holdings,  Inc.  and thus is is  considered  an  affiliate of this
company under the Investment Company Act of 1940.                     
(3)  Coupon rate may change periodically.                                       
(4)  Purchased  in a private  placement  transaction;  resale  may be limited to
     qualified   institutional   buyers;   resale  to  the  public  may  require
registration.                                                         
(5)  Pass-through  securities  backed by a pool of  mortgages  or other loans on
     which principal  payments are periodically made.  Therefore,  the effective
maturities are shorter than the stated maturities.                    

ADR = American Depositary Receipts                                              

See Notes to Financial Statements                                               

EQUITY SECURITIES APPEARING IN THE PORTFOLIO SINCE DECEMBER 31, 2002            

Automatic Data Processing                                                       
Burlington Resources                                                            
CIGNA                                                                           
HSBC Holdings                                                                   
MBNA                                                                            
Samsung Electronics                                                             
Target                                                                          
United Technologies                                                             
UST                                                                             
Williams Companies                                                              
XL Capital                                                                      

EQUITY SECURITIES ELIMINATED FROM THE PORTFOLIO SINCE DECEMBER 31, 2002         

AMR                                                                             
Berkshire Hathaway                                                              
Calpine                                                                         
Canadian Pacific Railway                                                        
Clear Channel Communications                                                    
Freddie Mac                                                                     
Genentech                                                                       
Gillette                                                                        
Guidant                                                                         
IMS Health                                                                      
Lockheed Martin                                                                 
Marsh & McLennan                                                                
National City                                                                   
Oracle                                                                          
WMC Resources                                                                   

FINANCIAL STATEMENTS                                                            

STATEMENT OF ASSETS AND LIABILITIES at June 30, 2003                 unaudited  
                   (dollars and shares in thousands, except per-share amounts)
ASSETS:                                                                         
Investment securities at market:                                            
Unaffiliated issuers (cost: $47,464,930)    $54,979,105                 
  Affiliated issuers (cost: $136,651)             166,019        $55,145,124
Cash denominated in non-U.S. currencies                                     
  (cost: $7,666)                                                       7,641
Cash                                                                   7,881
Receivables for:                                                            
Sales of investments                            100,874                 
Sales of fund's shares                           89,163                 
  Dividends and interest                          151,043            341,080
                                                                  55,501,726
LIABILITIES:                                                                    
Payables for:                                                               
Purchases of investments                         58,499                 
Repurchases of fund's shares                     39,919                 
Investment advisory services                     11,135                 
Services provided by affiliates                  17,811                 
Deferred Directors' and Advisory                  2,238                 
Board compensation                                                  
  Other fees and expenses                             222            129,824
NET ASSETS AT JUNE 30, 2003                                        $55,371,902  

NET ASSETS CONSIST OF:                                                          
Capital paid in on shares of capital stock                       $47,354,856
Undistributed net investment income                                  211,912
Undistributed net realized gain                                      261,344
Net unrealized appreciation                                        7,543,790
NET ASSETS AT JUNE 30, 2003                                        $55,371,902  

          AUTHORIZED SHARES                                    NET
               OF CAPITAL STOCK-                    SHARES       ASSET VALUE
                  $.001 PAR VALUE     NET ASSETS   OUTSTANDING   PER SHARE (1)

Class A                  2,500,000    $50,329,211     1,980,674    $ 25.41      
Class B                    250,000      2,294,302        90,565      25.33      
Class C                    250,000      1,357,879        53,673      25.30      
Class F                    250,000        598,816        23,584      25.39      
Class 529-A                325,000        238,913         9,403      25.41      
Class 529-B                 75,000         65,207         2,570      25.37      
Class 529-C                150,000         71,236         2,808      25.37      
Class 529-E                 75,000         10,211           402      25.37      
Class 529-F                 75,000          1,142            45      25.39      
Class R-1                   75,000          8,655           341      25.36      
Class R-2                  100,000         95,902         3,780      25.37      
Class R-3                  300,000        104,994         4,135      25.39      
Class R-4                   75,000         23,868           940      25.40      
Class R-5                  150,000        171,566         6,753      25.41      

(1)  Maximum offering price and redemption price per share were equal to the net
     asset  value  per share for all share  classes,  except  for  classes A and
     529-A,  for which the  maximum  offering  prices per share were  $26.96 for
each.                                                                 

See Notes to Financial Statements                                               

STATEMENT OF OPERATIONS for the six months ended June 30, 2003       unaudited  
                                                        (dollars in thousands)
INVESTMENT INCOME:                                                              
Income:                                                                     
Dividends (net of non-U.S. withholding tax                              
of $6,708; also includes $8,477 from                                
affiliates)                                      $522,620           
Interest (net of non-U.S. withholding                                   
    tax of $4)                                        235,837       $758,457

Fees and expenses:                                                          
Investment advisory services                         61,867             
Distribution services                                70,778             
Transfer agent services                              23,929             
Administrative services                               2,313             
Reports to shareholders                                 903             
Registration statement and prospectus                 1,092             
Postage, stationery and supplies                      3,410             
Directors' and Advisory Board compensation              516             
Auditing and legal                                      124             
Custodian                                               742             
State and local taxes                                   506             
Other                                                   102             
Total expenses before reimbursement                 166,282             
    Reimbursement of expenses                             143        166,139
Net investment income                                                592,318

NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS                    
AND NON-U.S. CURRENCY:                                                      
Net realized gain (loss) on:                                                
Investments                                         265,806             
  Non-U.S. currency transactions                       (2,705)       263,101
Net unrealized appreciation on:                                             
Investments                                       3,822,164             
  Non-U.S. currency translations                          103      3,822,267
Net realized gain and                                               
unrealized appreciation                                         
      on investments and non-U.S. currency                         4,085,368
NET INCREASE IN NET ASSETS RESULTING                                            
  FROM OPERATIONS                                                 $4,677,686

See Notes to Financial Statements                                               

STATEMENT OF CHANGES IN NET ASSETS                       (dollars in thousands) 

                                                     SIX MONTHS     YEAR ENDED
                                                   ENDED JUNE 30,   DECEMBER 31,
                                                    2003*         2002
OPERATIONS:                                                                     
Net investment income                                  $592,318     $991,657
Net realized gain on investments and                                        
  non-U.S. currency transactions                        263,101      836,731
Net unrealized appreciation (depreciation)                                  
   on investments and non-U.S. currency translations   3,822,267  (10,409,465)
Net increase (decrease) in net assets                                   
     resulting from operations                         4,677,686   (8,581,077)

DIVIDENDS AND DISTRIBUTIONS PAID TO SHAREHOLDERS:                               
 Dividends from net investment income                   (542,354)  (1,050,322)
Distributions from net realized gain                                        
   on investments                                            -       (948,702)
Total dividends and distributions paid                              
       to shareholders                                  (542,354)  (1,999,024)

CAPITAL SHARE TRANSACTIONS                              1,475,944    4,053,315  

TOTAL INCREASE (DECREASE) IN NET ASSETS                 5,611,276   (6,526,786) 

NET ASSETS:                                                                     
Beginning of period                                  49,760,626   56,287,412
End of period (including undistributed                                      
net investment income: $211,912 and $161,948,                           
  respectively)                                     $55,371,902  $49,760,626

*Unaudited                                                                      

See Notes to Financial Statements                                               

NOTES TO FINANCIAL STATEMENTS                                         unaudited 

1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                            

ORGANIZATION  - The  Investment  Company of America (the  "fund") is  registered
under the Investment Company Act of 1940 as an open-end,  diversified management
investment  company.  The fund seeks  long-term  growth of capital  and  income,
placing greater emphasis on future dividends than on current income.            

The fund offers 14 share classes  consisting of four retail share classes,  five
CollegeAmerica  savings  plan  share  classes  and five  retirement  plan  share
classes.  The CollegeAmerica  savings plan share classes (529-A,  529-B,  529-C,
529-E and  529-F) are  sponsored  by the  Commonwealth  of  Virginia  and can be
utilized to save for college  education.  The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:            

                                                        [Enlarge/Download Table]
                                                                                                          

--------------------------------------------------------------------------------------------------------- 
  SHARE CLASS           INITIAL SALES        CONTINGENT DEFERRED SALES            CONVERSION FEATURE      
                           CHARGE            CHARGE UPON REDEMPTION                                       
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Classes A and 529-A    Up to 5.75%         None (except 1% for certain          None                    
                                             redemptions within one year of                               
                                             purchase without an initial sales                            
                                             charge)                                                      
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Classes B and 529-B    None                Declines from 5% to zero for         Classes B and 529-B     
                                             redemptions within six years         convert to classes A    
                                             of purchase                          and 529-A, respectively,
                                                                                  after eight years       
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Class C                None                1% for redemptions within one        Class C converts to     
                                             year of purchase                     Class F after 10 years  
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Class 529-C            None                1% for redemptions within one        None                    
                                             year of purchase                                             
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Class 529-E            None                None                                 None                    
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
  Classes F and 529-F    None                None                                 None                    
--------------------------------------------------------------------------------------------------------- 
--------------------------------------------------------------------------------------------------------- 
Classes R-1, R-2, R-3,   None                None                                 None                    
   R-4 and R-5                                                                                            
--------------------------------------------------------------------------------------------------------- 

Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation.  Each  share  class has  identical  voting  rights,  except for the
exclusive right to vote on matters affecting only its class.  Share classes have
different fees and expenses ("class-specific fees and expenses"),  primarily due
to different  arrangements  for  distribution,  administrative  and  shareholder
services.  Differences  in  class-specific  fees and  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 to
comply with  accounting  principles  generally  accepted in the United States of
America.  These principles  require management to make estimates and assumptions
that affect reported amounts and  disclosures.  Actual results could differ from
those  estimates.  The  following  is a summary  of the  significant  accounting
policies followed by the fund:                                                  

     SECURITY  VALUATION - Equity  securities are valued at the official closing
     price of, or 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.  Prices for each security are taken from the principal
     exchange or market in which the security  trades.  Fixed-income  securities
     are valued at prices  obtained from an independent  pricing  service,  when
     such prices are available.  However,  where the investment adviser deems it
     appropriate,  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  other  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.                                                            

     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  security   transactions  are
     determined based on the specific identified cost of the securities.  In the
     event a security is purchased  with a delayed  payment date,  the fund will
     segregate  liquid  assets  sufficient  to  meet  its  payment  obligations.
     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.                                        

     CLASS  ALLOCATIONS - Income,  fees and expenses (other than  class-specific
     fees and  expenses)  and  realized  and  unrealized  gains and  losses  are
     allocated daily among the various share classes based on their relative net
     assets.   Class-specific   fees  and   expenses,   such  as   distribution,
     administrative  and  shareholder  services,  are  charged  directly  to the
respective share class.                                               

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

     NON-U.S.   CURRENCY   TRANSLATION  -  Assets  and  liabilities,   including
     investment  securities,  denominated in non-U.S.  currencies are translated
     into  U.S.  dollars  at the  exchange  rates  in  effect  at the end of the
     reporting period.  Purchases and sales of investment  securities and income
     and expenses are translated into U.S.  dollars at the exchange rates on the
     dates of such transactions.  In the accompanying financial statements,  the
     effects of changes in non-U.S.  exchange rates on investment securities are
     included with the net realized gain or loss and net unrealized appreciation
     or depreciation  on  investments.  The realized gain or loss and unrealized
     appreciation  or  depreciation   resulting  from  all  other   transactions
denominated in non-U.S. currencies are disclosed separately.          

     SECURITIES  LENDING - The fund may lend portfolio  securities  from time to
     time in order to earn  additional  income;  however,  it does not currently
     intend to engage in an ongoing or regular securities lending program.  When
     the fund lends  securities,  it receives  collateral  in an amount not less
     than 100% of the  market  value of the  loaned  securities  throughout  the
     period of the loan. The market value of the loaned securities is determined
     at the close of business of the fund and any additional required collateral
     is delivered  on the next  business  day. If the  borrower  defaults on its
     obligation  to return the  securities  loaned,  the fund  could  experience
     delays and costs in recovering the  securities  loaned or in gaining access
to the collateral.                                                    

2.  NON-U.S. INVESTMENTS                                                        

INVESTMENT  RISK - The risks of investing in securities of non-U.S.  issuers 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 non-U.S. taxes paid. 

3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS                                    

The fund  complies  with the  requirements  under  Subchapter  M of the Internal
Revenue Code applicable to mutual funds and intends to distribute  substantially
all of its net taxable  income and net capital gains each year.  The fund is not
subject to income taxes to the extent such distributions are made.              

DISTRIBUTIONS - Distributions  paid to shareholders  are based on net investment
income and net realized gains  determined on a tax basis,  which may differ from
net investment income and net realized gains for financial  reporting  purposes.
These  differences  are due  primarily to differing  treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses  related  to sales of  securities  within 30 days of  purchase;  expenses
deferred for tax  purposes;  and cost of  investments  sold.  The fiscal year in
which  amounts  are  distributed  may  differ  from the  year in  which  the net
investment  income and net realized  gains are recorded by the fund.  As of June
30, 2003,  the cost of investment  securities  and cash  denominated in non-U.S.
currencies for federal income tax purposes was $47,606,599,000.                 

As of June 30, 2003,  the  components of  distributable  earnings on a tax basis
were as follows:                                                                
                                                        (DOLLARS IN THOUSANDS)

Undistributed net investment income and currency gains           $211,445       
Accumulated short-term capital losses                             (57,677)      
Undistributed long-term capital gains                             323,420       
Gross unrealized appreciation on investment securities          9,950,304       
Gross unrealized depreciation on investment securities         (2,404,138)      

The tax character of distributions  paid to shareholders was as follows (dollars
in thousands):                                                                  

                                                        [Enlarge/Download Table]
                                                                                                     

                                DISTRIBUTIONS FROM ORDINARY INCOME                                   

                                   NET INVESTMENT                       DISTRIBUTIONS        TOTAL   
                                     INCOME AND      SHORT-TERM        FROM LONG-TERM   DISTRIBUTIONS
SHARE CLASS(1)                     CURRENCY GAINS   CAPITAL GAINS       CAPITAL GAINS        PAID    

SIX MONTHS ENDED JUNE 30, 2003                                                                       
Class A                             $ 509,615            -                  -            $ 509,615   
Class B                                14,273            -                  -               14,273   
Class C                                 7,916            -                  -                7,916   
Class F                                 5,127            -                  -                5,127   
Class 529-A                             2,082            -                  -                2,082   
Class 529-B                               333            -                  -                  333   
Class 529-C                               366            -                  -                  366   
Class 529-E                                73            -                  -                   73   
Class 529-F                                 9            -                  -                    9   
Class R-1                                  40            -                  -                   40   
Class R-2                                 481            -                  -                  481   
Class R-3                                 656            -                  -                  656   
Class R-4                                 192            -                  -                  192   
Class R-5                               1,191            -                  -                1,191   
Total                               $ 542,354            -                  -            $ 542,354   

YEAR ENDED DECEMBER 31, 2002                                                                         
Class A                           $ 1,008,396            -          $ 887,548          $ 1,895,944   
Class B                                21,641            -             32,496               54,137   
Class C                                10,712            -             17,283               27,995   
Class F                                 6,321            -              6,593               12,914   
Class 529-A                             1,613            -              2,082                3,695   
Class 529-B                               269            -                555                  824   
Class 529-C                               303            -                611                  914   
Class 529-E                                47            -                 74                  121   
Class 529-F                                 2            -                  4                    6   
Class R-1                                   5            -                 15                   20   
Class R-2                                 114            -                321                  435   
Class R-3                                 112            -                309                  421   
Class R-4                                  46            -                112                  158   
Class R-5                                 741            -                699                1,440   
Total                             $ 1,050,322            -          $ 948,702          $ 1,999,024   


(1)  Class 529-A,  529-B,  529-C,  529-E and 529-F shares were offered beginning
     February 15,  2002.  Class R-1,  R-2,  R-3, R-4 and R-5 shares were offered
beginning May 15, 2002.                                               

4. FEES AND TRANSACTIONS WITH RELATED PARTIES                                   

Capital Research and Management Company ("CRMC"), the fund's investment adviser,
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.                                               

INVESTMENT ADVISORY SERVICES -The Investment Advisory and Service Agreement with
CRMC  provides  for  monthly  fees  accrued  daily.  These  fees are  based on a
declining  series of annual rates  beginning with 0.390% on the first $1 billion
of month-end net assets and decreasing to 0.222% on such assets in excess of $71
billion.  For the six  months  ended  June 30,  2003,  the  investment  advisory
services fee was equivalent to an annualized rate of 0.247% of average month-end
net assets.                                                                     

CLASS-SPECIFIC  FEES AND  EXPENSES - Expenses  that are  specific to  individual
share classes are accrued  directly to the respective share class. The principal
class-specific fees and expenses are described below:                           

          DISTRIBUTION SERVICES - The fund has adopted plans of distribution for
          all share  classes,  except Class R-5.  Under the plans,  the Board of
          Directors  approves  certain  categories  of expenses that are used to
          finance  activities  primarily intended to sell fund shares. The plans
          provide for annual  expenses,  based on a percentage  of average daily
          net assets, ranging from 0.25% to 1.00% as noted below. In some cases,
          the Board of Directors  has approved  expense  amounts lower than plan
limits.                                                     

        ----------------------------------------------------------------------
        SHARE CLASS                  CURRENTLY APPROVED LIMITS     PLAN LIMITS
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Class A                                0.25%                  0.25%
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Class 529-A                             0.25                   0.50
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Classes B and 529-B                     1.00                   1.00
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Classes C, 529-C and R-1                1.00                   1.00
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Class R-2                               0.75                   1.00
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Classes 529-E and R-3                   0.50                   0.75
        ----------------------------------------------------------------------
        ----------------------------------------------------------------------
     Classes F, 529-F and R-4                0.25                   0.50
        ----------------------------------------------------------------------

          All share  classes may use up to 0.25% of average  daily net assets 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.  Expenses  in  excess of these  amounts,  up to
          approved limits, may be used to compensate dealers and wholesalers for
shares sold.                                                

          For classes A and 529-A,  the Board of Directors has also approved the
          reimbursement  of dealer and  wholesaler  commissions  paid by AFD for
          certain shares sold without a sales charge.  Each class reimburses AFD
          for amounts  billed  within the prior 15 months but only to the extent
          that the overall annual expense limit of 0.25% is not exceeded.  As of
          June  30,  2003  there  were  no  unreimbursed   expenses  subject  to
reimbursement for classes A or 529-A.                       

          TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with
          AFS for classes A and B. Under this  agreement,  these  share  classes
          compensate  AFS for  transfer  agent  services  including  shareholder
          recordkeeping,  communications and transaction processing. AFS is also
          compensated for certain transfer agent services  provided to all other
          share  classes  from the  administrative  services  fees  paid to CRMC
described below.                                            

          ADMINISTRATIVE  SERVICES  - The  fund has an  administrative  services
          agreement  with CRMC to  provide  transfer  agent  and  other  related
          shareholder  services  for all classes of shares  other than classes A
          and B. Each  relevant  class pays CRMC annual fees of 0.15% (0.10% for
          Class R-5) based on its  respective  average  daily net  assets.  Each
          relevant class also pays AFS additional  amounts for certain  transfer
          agent  services.  CRMC and AFS may use these fees to compensate  third
          parties for performing these services.  During the start-up period for
          classes R-1,  R-2, R-3 and R-4, CRMC has  voluntarily  agreed to pay a
          portion  of  these  fees.  Each  529  share  class  is  subject  to an
          additional  annual  administrative   services  fee  of  0.10%  of  its
          respective  average  daily  net  assets;  this fee is  payable  to the
          Commonwealth  of Virginia for the  maintenance  of the  CollegeAmerica
          plan. Although these amounts are included with administrative services
          fees in the  accompanying  financial  statements,  the Commonwealth of
          Virginia is not  considered a related party.  Administrative  services
fees are presented gross of any payments made by CRMC.      

          Expenses under the agreements described above for the six months ended
June 30, 2003, were as follows (dollars in thousands):      

                                                        [Enlarge/Download Table]
                                                                                                               

---------------------------------------------------------------------------------------------------------------
                                                                      ADMINISTRATIVE SERVICES                  
                                                  -------------------------------------------------------------
                                                         CRMC                               COMMONWEALTH OF    
                DISTRIBUTION    TRANSFER AGENT      ADMINISTRATIVE      TRANSFER AGENT          VIRGINIA       
  SHARE CLASS     SERVICES         SERVICES             SERVICES           SERVICES          ADMINISTRATIVE    
---------------------------------------------------------------------------------------------------------------
    Class A         $53,714          $22,678        Not applicable      Not applicable       Not applicable    
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
    Class B           9,825            1,251        Not applicable      Not applicable       Not applicable    
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
    Class C           5,630          Included             $844               $214            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
    Class F            576           Included              346                 56            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
  Class 529-A          55            Included              141                 15                 $ 94         
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
  Class 529-B          254           Included               38                 17                   25         
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
  Class 529-C          278           Included               42                 14                   28         
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
  Class 529-E          19            Included               6                   1                    4         
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
  Class 529-F           1            Included               1                   - *                 - *        
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
   Class R-1           23            Included               3                   3            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
   Class R-2           220           Included               44                212            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
   Class R-3           162           Included               49                 51            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
   Class R-4           21            Included               13                  2            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
   Class R-5     Not applicable      Included               48                  2            Not applicable    
                                        in                                                                     
                                  administrative                                                               
                                     services                                                                  
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
     Total          $70,778          $23,929            $1,575               $587                $151          
===============================================================================================================
* Amount less than one thousand.                                                                               


DEFERRED  DIRECTORS' AND ADVISORY BOARD COMPENSATION - 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 cash  payment  of part or all of
their compensation.  These deferred amounts,  which remain as liabilities of 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.  Directors'  and Advisory
Board fees in the  accompanying  financial  statements  include the current fees
(either paid in cash or deferred)  and the net increase or decrease in the value
of the deferred amounts.                                                        

AFFILIATED  OFFICERS AND DIRECTORS - Officers and certain  Directors of the fund
are or may be considered to be affiliated  with CRMC, AFS and AFD. No affiliated
officers or Directors received any compensation directly from the fund.         

5. WARRANTS                                                                     

As of June 30, 2003, 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 these  warrants had been exercised as of June 30, 2003, the net asset
value of Class A shares would have been reduced by $0.01 per share.             

6. CAPITAL SHARE TRANSACTIONS                                                   

Capital share  transactions  in the fund were as follows  (dollars and shares in
thousands):                                                                     

                                                          REINVESTMENTS OF
                                     SALES(2)              DIVIDENDS AND
                                                           DISTRIBUTIONS
SHARE CLASS(1)                      AMOUNT      SHARES       AMOUNT     SHARES  

SIX MONTHS ENDED JUNE 30, 2003                                                  
Class A                         $ 2,836,708     119,646     $ 470,582   19,749  
Class B                             389,477      16,479        13,783      579  
Class C                             314,696      13,291         7,555      317  
Class F                             218,253       9,154         4,557      189  
Class 529-A                          69,477       2,934         2,082       87  
Class 529-B                          20,334         861           333       14  
Class 529-C                          21,701         918           366       15  
Class 529-E                           3,757         159            73        3  
Class 529-F                             667          29             9        -* 
Class R-1                             7,485         317            40        1  
Class R-2                            79,708       3,395           481       20  
Class R-3                            87,549       3,708           645       27  
Class R-4                            18,453         785           192        8  
Class R-5                           114,370       4,977         1,090       44  
Total net increase                                                              
 (decrease)                   $ 4,182,635     176,653     $ 501,788   21,053

YEAR ENDED DECEMBER 31, 2002                                                    
Class A                         $ 6,693,985     255,431   $ 1,756,908   69,477  
Class B                           1,057,376      40,132        52,386    2,107  
Class C                             837,810      31,926        26,931    1,092  
Class F                             381,789      14,772        11,110      448  
Class 529-A                         168,803       6,496         3,695      152  
Class 529-B                          44,496       1,722           824       34  
Class 529-C                          50,297       1,938           913       38  
Class 529-E                           6,158         243           121        5  
Class 529-F                             385          16             6        -* 
Class R-1                             1,100          46            20        1  
Class R-2                            28,401       1,199           434       18  
Class R-3                            27,920       1,172           419       17  
Class R-4                             9,005         390           157        7  
Class R-5                            57,752       2,155         1,273       52  
Total net increase                                                              
 (decrease)                   $ 9,365,277     357,638   $ 1,855,197   73,448

                                REPURCHASES(2)            NET INCREASE
SHARE CLASS(1)                    AMOUNT        SHARES      AMOUNT      SHARES  

SIX MONTHS ENDED JUNE 30, 2003                                                  
Class A                        $ (2,872,378)  (123,140)    $ 434,912    16,255  
Class B                            (118,958)    (5,128)      284,302    11,930  
Class C                             (87,347)    (3,765)      234,904     9,843  
Class F                             (81,053)    (3,444)      141,757     5,899  
Class 529-A                          (3,406)      (144)       68,153     2,877  
Class 529-B                            (688)       (30)       19,979       845  
Class 529-C                          (1,097)       (47)       20,970       886  
Class 529-E                             (58)        (3)        3,772       159  
Class 529-F                              (4)         -*          672        29  
Class R-1                              (496)       (21)        7,029       297  
Class R-2                           (15,323)      (653)       64,866     2,762  
Class R-3                           (14,978)      (639)       73,216     3,096  
Class R-4                            (5,393)      (230)       13,252       563  
Class R-5                            (7,300)      (305)      108,160     4,716  
Total net increase                                                              
 (decrease)                  $ (3,208,479)  (137,549)  $ 1,475,944    60,157

YEAR ENDED DECEMBER 31, 2002                                                    
Class A                        $ (6,665,696)  (264,017)  $ 1,785,197    60,891  
Class B                            (230,619)    (9,342)      879,143    32,897  
Class C                            (148,918)    (6,075)      715,823    26,943  
Class F                            (103,788)    (4,193)      289,111    11,027  
Class 529-A                          (2,983)      (122)      169,515     6,526  
Class 529-B                            (737)       (31)       44,583     1,725  
Class 529-C                          (1,301)       (54)       49,909     1,922  
Class 529-E                            (112)        (5)        6,167       243  
Class 529-F                              (1)         -*          390        16  
Class R-1                               (77)        (3)        1,043        44  
Class R-2                            (4,693)      (199)       24,142     1,018  
Class R-3                            (3,568)      (150)       24,771     1,039  
Class R-4                              (451)       (20)        8,711       377  
Class R-5                            (4,215)      (170)       54,810     2,037  
Total net increase                                                              
 (decrease)                  $ (7,167,159)  (284,381)  $ 4,053,315   146,705

* Amount less than one thousand.                                                

(1)  Class 529-A,  529-B,  529-C,  529-E and 529-F shares were offered beginning
     February 15,  2002.  Class R-1,  R-2,  R-3, R-4 and R-5 shares were offered
beginning May 15, 2002.                                               

(2)  Includes exchanges between share classes of the fund.                      

7. RESTRICTED SECURITIES                                                        

The fund has invested in certain  securities  for which resale may be limited to
qualified  buyers  or which  are  otherwise  restricted.  These  securities  are
identified in the investment portfolio.  As of June 30, 2003, the total value of
restricted securities was $425,937,000, which represents 0.77% of the net assets
of the fund.                                                                    

8. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES                                

The fund made purchases and sales of investment securities, excluding short-term
securities, of $5,828,254,000 and $6,435,270,000,  respectively,  during the six
months ended June 30, 2003.                                                     

The fund  receives  a  reduction  in its  custodian  fee equal to the  amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended June 30, 2003, the custodian fee of $742,000  includes  $52,000
that was offset by this reduction, rather than paid in cash.                    

FINANCIAL HIGHLIGHTS (1)                                                        

                                                        [Enlarge/Download Table]
                                                                                             

                                                  INCOME (LOSS) FROM INVESTMENT OPERATIONS(3)
                                                                   NET                       
                                      NET ASSET                GAINS(LOSSES)                 
                                      VALUE,        NET       ON SECURITIES        TOTAL FROM
                                      BEGINNING  INVESTMENT   (BOTH REALIZED       INVESTMENT
                                      OF PERIOD    INCOME     AND UNREALIZED)      OPERATIONS
CLASS A:                                                                                     
 Six months ended 6/30/2003 (2)       $23.48      $.28          $1.91                $2.19   
 Year ended 12/31/2002                 28.53       .49          (4.56)               (4.07)  
 Year ended 12/31/2001                 31.07       .44          (1.87)               (1.43)  
 Year ended 12/31/2000                 32.46       .56            .65                 1.21   
 Year ended 12/31/1999                 31.07       .49           4.45                 4.94   
 Year ended 12/31/1998                 28.25       .48           5.79                 6.27   
CLASS B:                                                                                     
 Six months ended 6/30/2003 (2)        23.41       .19           1.90                 2.09   
 Year ended 12/31/2002                 28.47       .30          (4.57)               (4.27)  
 Year ended 12/31/2001                 31.01       .19          (1.83)               (1.64)  
 Period from 3/15/2000 to 12/31/2000   31.13       .26           1.55                 1.81   
CLASS C:                                                                                     
 Six months ended 6/30/2003 (2)        23.38       .18           1.90                 2.08   
 Year ended 12/31/2002                 28.44       .30          (4.58)               (4.28)  
 Period from 3/15/2001 to 12/31/2001   29.05       .09           (.14)                (.05)  
CLASS F:                                                                                     
 Six months ended 6/30/2003 (2)       23.46       .28           1.90                 2.18    
 Year ended 12/31/2002                 28.52       .49          (4.59)               (4.10)  
 Period from 3/15/2001 to 12/31/2001   29.10       .27           (.13)                 .14   
CLASS 529-A:                                                                                 
 Six months ended 6/30/2003 (2)        23.48       .29           1.89                 2.18   
 Period from 2/15/2002 to 12/31/2002   27.88       .46          (3.91)               (3.45)  
CLASS 529-B:                                                                                 
 Six months ended 6/30/2003 (2)        23.45       .17           1.90                 2.07   
 Period from 2/15/2002 to 12/31/2002   27.88       .28          (3.92)               (3.64)  
CLASS 529-C:                                                                                 
 Six months ended 6/30/2003 (2)        23.45       .17           1.90                 2.07   
 Period from 2/19/2002 to 12/31/2002   27.47       .28          (3.50)               (3.22)  
CLASS 529-E:                                                                                 
 Six months ended 6/30/2003 (2)        23.45       .24           1.89                 2.13   
 Period from 3/1/2002 to 12/31/2002    28.27       .38          (4.52)               (4.14)  
CLASS 529-F:                                                                                 
 Six months ended 6/30/2003 (2)        23.47       .27           1.89                 2.16   
 Period from 9/16/2002 to 12/31/2002   23.98       .16           (.19)                (.03)  
CLASS R-1:                                                                                   
 Six months ended 6/30/2003 (2)        23.46       .19           1.89                 2.08   
 Period from 6/6/2002 to 12/31/2002    27.27       .20          (3.36)               (3.16)  
CLASS R-2:                                                                                   
 Six months ended 6/30/2003 (2)        23.46       .19           1.90                 2.09   
 Period from 5/21/2002 to 12/31/2002   28.23       .23          (4.34)               (4.11)  
CLASS R-3:                                                                                   
 Six months ended 6/30/2003 (2)        23.47       .24           1.90                 2.14   
 Period from 6/4/2002 to 12/31/2002    27.58       .27          (3.69)               (3.42)  
CLASS R-4:                                                                                   
 Six months ended 6/30/2003 (2)        23.47       .28           1.90                 2.18   
 Period from 5/28/2002 to 12/31/2002   28.22       .32          (4.33)               (4.01)  
CLASS R-5:                                                                                   
 Six months ended 6/30/2003 (2)        23.48       .32           1.90                 2.22   
 Period from 5/15/2002 to 12/31/2002   28.37       .39          (4.50)               (4.11)  


                                                                [Download Table]
                                                                                  

                                            DIVIDENDS AND DISTRIBUTIONS           
                                       DIVIDENDS                                  
                                      (FROM NET      DISTRIBUTIONS      TOTAL     
                                      INVESTMENT     (FROM CAPITAL   DIVIDENDS AND
                                       INCOME)          GAINS)       DISTRIBUTIONS
CLASS A:                                                                          
 Six months ended 6/30/2003 (2)        $(.26)       $   -             $  (.26)    
 Year ended 12/31/2002                  (.52)        (.46)               (.98)    
 Year ended 12/31/2001                  (.52)        (.59)              (1.11)    
 Year ended 12/31/2000                  (.52)       (2.08)              (2.60)    
 Year ended 12/31/1999                  (.51)       (3.04)              (3.55)    
 Year ended 12/31/1998                  (.51)       (2.94)              (3.45)    
CLASS B:                                                                          
 Six months ended 6/30/2003 (2)         (.17)          -                 (.17)    
 Year ended 12/31/2002                  (.33)        (.46)               (.79)    
 Year ended 12/31/2001                  (.31)        (.59)               (.90)    
 Period from 3/15/2000 to 12/31/2000    (.25)       (1.68)              (1.93)    
CLASS C:                                                                          
 Six months ended 6/30/2003 (2)         (.16)          -                 (.16)    
 Year ended 12/31/2002                  (.32)        (.46)               (.78)    
 Period from 3/15/2001 to 12/31/2001    (.21)        (.35)               (.56)    
CLASS F:                                                                          
 Six months ended 6/30/2003 (2)         (.25)          -                 (.25)    
 Year ended 12/31/2002                  (.50)        (.46)               (.96)    
 Period from 3/15/2001 to 12/31/2001    (.37)        (.35)               (.72)    
CLASS 529-A:                                                                      
 Six months ended 6/30/2003 (2)         (.25)          -                 (.25)    
 Period from 2/15/2002 to 12/31/2002    (.49)        (.46)               (.95)    
CLASS 529-B:                                                                      
 Six months ended 6/30/2003 (2)         (.15)          -                 (.15)    
 Period from 2/15/2002 to 12/31/2002    (.33)        (.46)               (.79)    
CLASS 529-C:                                                                      
 Six months ended 6/30/2003 (2)         (.15)          -                 (.15)    
 Period from 2/19/2002 to 12/31/2002    (.34)        (.46)               (.80)    
CLASS 529-E:                                                                      
 Six months ended 6/30/2003 (2)         (.21)          -                 (.21)    
 Period from 3/1/2002 to 12/31/2002     (.33)        (.35)               (.68)    
CLASS 529-F:                                                                      
 Six months ended 6/30/2003 (2)         (.24)          -                 (.24)    
 Period from 9/16/2002 to 12/31/2002    (.13)        (.35)               (.48)    
CLASS R-1:                                                                        
 Six months ended 6/30/2003 (2)         (.18)          -                 (.18)    
 Period from 6/6/2002 to 12/31/2002     (.30)        (.35)               (.65)    
CLASS R-2:                                                                        
 Six months ended 6/30/2003 (2)         (.18)          -                 (.18)    
 Period from 5/21/2002 to 12/31/2002    (.31)        (.35)               (.66)    
CLASS R-3:                                                                        
 Six months ended 6/30/2003 (2)         (.22)          -                 (.22)    
 Period from 6/4/2002 to 12/31/2002     (.34)        (.35)               (.69)    
CLASS R-4:                                                                        
 Six months ended 6/30/2003 (2)         (.25)          -                 (.25)    
 Period from 5/28/2002 to 12/31/2002    (.39)        (.35)               (.74)    
CLASS R-5:                                                                        
 Six months ended 6/30/2003 (2)         (.29)          -                 (.29)    
 Period from 5/15/2002 to 12/31/2002    (.43)        (.35)               (.78)    


                                                        [Enlarge/Download Table]
                                                                                                       

                                                                            RATIO OF       RATIO OF    
                                       NET ASSET              NET ASSETS,   EXPENSES      NET INCOME   
                                      VALUE, END    TOTAL    END OF PERIOD  TO AVERAGE    TO AVERAGE   
                                       OF PERIOD  RETURN(4)  (IN MILLIONS)  NET ASSETS    NET ASSETS   
CLASS A:                                                                                               
 Six months ended 6/30/2003 (2)         $25.41       9.40%    $50,329         .61% (6)         2.42%(6)
 Year ended 12/31/2002                   23.48     (14.47)     46,129         .59              1.89    
 Year ended 12/31/2001                   28.53      (4.59)     54,315         .57              1.49    
 Year ended 12/31/2000                   31.07       3.84      56,212         .56              1.74    
 Year ended 12/31/1999                   32.46      16.55      56,095         .55              1.54    
 Year ended 12/31/1998                   31.07      22.93      48,498         .55              1.65    
CLASS B:                                                                                               
 Six months ended 6/30/2003 (2)          25.33       8.97       2,294        1.40  (6)         1.63 (6)
 Year ended 12/31/2002                   23.41     (15.18)      1,841        1.39              1.18    
 Year ended 12/31/2001                   28.47      (5.30)      1,302        1.35               .66    
 Period from 3/15/2000 to 12/31/2000     31.01       5.87         439        1.34  (6)         1.06 (6)
CLASS C:                                                                                               
 Six months ended 6/30/2003 (2)          25.30       8.95       1,358        1.46  (6)         1.57 (6)
 Year ended 12/31/2002                   23.38     (15.20)      1,025        1.45              1.17    
 Period from 3/15/2001 to 12/31/2001     28.44       (.19)        480        1.52  (6)          .38 (6)
CLASS F:                                                                                               
 Six months ended 6/30/2003 (2)          25.39       9.37         599         .69  (6)         2.35 (6)
 Year ended 12/31/2002                   23.46     (14.59)        415         .70              1.92    
 Period from 3/15/2001 to 12/31/2001     28.52        .48         190         .72  (6)         1.17 (6)
CLASS 529-A:                                                                                           
 Six months ended 6/30/2003 (2)          25.41       9.37         239         .60  (6)         2.44 (6)
 Period from 2/15/2002 to 12/31/2002     23.48     (12.57)        153         .71  (6)         2.17 (6)
CLASS 529-B:                                                                                           
 Six months ended 6/30/2003 (2)          25.37       8.87          65         1.59 (6)         1.45 (6)
 Period from 2/15/2002 to 12/31/2002     23.45     (13.22)         41         1.58 (6)         1.30 (6)
CLASS 529-C:                                                                                           
 Six months ended 6/30/2003 (2)          25.37       8.87          71         1.58 (6)         1.46 (6)
 Period from 2/19/2002 to 12/31/2002     23.45     (11.91)         45         1.57 (6)         1.32 (6)
CLASS 529-E:                                                                                           
 Six months ended 6/30/2003 (2)          25.37       9.15          10         1.04 (6)         2.00 (6)
 Period from 3/1/2002 to 12/31/2002      23.45     (14.72)          6         1.03 (6)         1.90 (6)
CLASS 529-F:                                                                                           
 Six months ended 6/30/2003 (2)          25.39       9.29           1          .79 (6)         2.27 (6)
 Period from 9/16/2002 to 12/31/2002     23.47       (.14)          - (5)      .23              .68    
CLASS R-1:                                                                                             
 Six months ended 6/30/2003 (2)          25.36       8.92           9         1.47 (6) (7)     1.62 (6)
 Period from 6/6/2002 to 12/31/2002      23.46     (11.68)          1         1.47 (6) (7)     1.49 (6)
CLASS R-2:                                                                                             
 Six months ended 6/30/2003 (2)          25.37       8.94          96         1.44 (6) (7)     1.63 (6)
 Period from 5/21/2002 to 12/31/2002     23.46     (14.64)         24         1.43 (6) (7)     1.61 (6)
CLASS R-3:                                                                                             
 Six months ended 6/30/2003 (2)          25.39       9.17         105         1.05 (6) (7)     2.02 (6)
 Period from 6/4/2002 to 12/31/2002      23.47     (12.49)         24         1.05 (6) (7)     2.00 (6)
CLASS R-4:                                                                                             
 Six months ended 6/30/2003 (2)          25.40       9.37          24          .70 (6) (7)     2.35 (6)
 Period from 5/28/2002 to 12/31/2002     23.47     (14.31)          9          .69 (6) (7)     2.25 (6)
CLASS R-5:                                                                                             
 Six months ended 6/30/2003 (2)          25.41       9.53         172          .37 (6)         2.67 (6)
 Period from 5/15/2002 to 12/31/2002     23.48     (14.59)         48          .37 (6)         2.56 (6)


                                                        [Enlarge/Download Table]
                                                                                       

                             Six months ended           Year ended December 31         
                             June 30, 2003 (2)  2002  2001       2000        1999  1998

Portfolio turnover rate for                                                            
   all classes of share              13%         27%   22%        25%         28%   24%


(1)  Based on  operations  for the period shown  (unless  otherwise  noted) and,
accordingly, may not be representative of a full year.                
(2)  Unaudited.                                                                 
(3)  Years ended 1999 and 1998 are based on shares  outstanding  on the last day
 of the year; all other periods are based on average shares outstanding.
(4)  Total returns  exclude all sales  charges,  including  contingent  deferred
sales charges.                                                        
(5)  Amount less than 1 million.                                                
(6)  Annualized.                                                                
(7)  During the start-up period for this class, CRMC voluntarily agreed to pay a
     portion of the fees relating to transfer agent services.  Had CRMC not paid
     such  fees,  expense  ratios  would  have been  1.57%,  1.89% and 1.07% for
     classes  R-1, R-2 and R-3,  respectively,  during the six months ended June
     30, 2003,  and 2.43%,  1.57%,  1.11% and .73% for classes R-1, R-2, R-3 and
     R-4,  respectively,  during the period ended December 31, 2002. The expense
     ratio for Class R-4 was not  affected by any  payments  made by CRMC during
the six months ended June 30, 2003.                                   

OTHER SHARE CLASS RESULTS                                            unaudited  

CLASS B, CLASS C, CLASS F AND CLASS 529                                         
Returns for periods ended June 30, 2003:                    1 YEAR   LIFE OF    
                                                                 CLASS
CLASS B SHARES                                                                  
Reflecting applicable contingent deferred sales                                 
charge (CDSC), maximum of 5%, payable only                                
  if shares are sold within six years of purchase          -4.84%   -3.08% (1)
Not reflecting CDSC                                         +0.02%   -2.29% (1) 

CLASS C SHARES                                                                  
Reflecting CDSC, maximum of 1%, payable only                                    
  if shares are sold within one year of purchase           -0.96%   -3.47% (2)
Not reflecting CDSC                                         +0.01%   -3.47% (2) 

CLASS F SHARES (3)                                                              
Not reflecting annual asset-based fee                                           
  charged by sponsoring firm                               +0.75%   -2.72% (2)

CLASS 529-A SHARES                                                              
Reflecting 5.75% maximum sales charge                       -4.98%   -7.31% (4) 
Not reflecting maximum sales charge                         +0.81%   -3.21% (4) 

CLASS 529-B SHARES                                                              
Reflecting applicable CDSC, maximum of 5%, payable                              
  only if shares are sold within six years of purchase     -5.00%   -6.78% (4)
Not reflecting CDSC                                         -0.14%   -4.07% (4) 

CLASS 529-C SHARES                                                              
Reflecting CDSC, maximum of 1%, payable only if                                 
 shares are sold within one year of purchase               -1.11%   -3.03% (5)
Not reflecting CDSC                                         -0.14%   -3.03% (5) 

CLASS 529-E SHARES (3)                                      +0.38%   -5.24% (6) 

CLASS 529-F SHARES (3)                                                          
Not reflecting annual asset-based fee charged by                                
 sponsoring firm                                              --    +9.13% (7)

(1)  Average  annual total return from March 15, 2000,  when Class B shares were
first sold.                                                           
(2)  Average  annual total return from March 15, 2001,  when Class C and Class F
shares were first sold.                                               
(3)  These  shares are sold  without any initial or  contingent  deferred  sales
charge.                                                               
(4)  Average  annual total return from  February 15, 2002,  when Class 529-A and
Class 529-B shares were first sold.                                   
(5)  Average annual total return from February 19, 2002, when Class 529-C shares
were first sold.                                                      
(6)  Average  annual  total  return from March 1, 2002,  when Class 529-E shares
were first sold.                                                      
(7)  Cumulative  total return from  September 16, 2002,  when Class 529-F shares
were first sold.                                                      

OFFICES                                                                         

OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER                               
Capital Research and Management Company                                         
333 South Hope Street                                                           
Los Angeles, CA 90071-1406                                                      

135 South State College Boulevard                                               
Brea, CA 92821-5823                                                             

TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS                                         
American Funds Service Company                                                  
(Please write to the address nearest you.)                                      

P.O. Box 25065                                                                  
Santa Ana, CA 92799-5065                                                        

P.O. Box 659522                                                                 
San Antonio, TX 78265-9522                                                      

P.O. Box 6007                                                                   
Indianapolis, IN 46206-6007                                                     

P.O. Box 2280                                                                   
Norfolk, VA 23501-2280                                                          

CUSTODIAN OF ASSETS                                                             
JPMorgan Chase Bank                                                             
270 Park Avenue                                                                 
New York, NY 10017-2070                                                         

COUNSEL                                                                         
O'Melveny & Myers LLP                                                           
400 South Hope Street                                                           
Los Angeles, CA 90071-2899                                                      

INDEPENDENT ACCOUNTANTS                                                         
PricewaterhouseCoopers LLP                                                      
350 South Grand Avenue                                                          
Los Angeles, CA 90071-3405                                                      

PRINCIPAL UNDERWRITER                                                           
American Funds Distributors, Inc.                                               
333 South Hope Street                                                           
Los Angeles, CA 90071-1406                                                      

There are several ways to invest in The Investment  Company of America.  Class A
shares are subject to a 5.75%  maximum  up-front  sales charge that declines for
accounts  of $25,000 or more.  Other  share  classes,  which are  generally  not
available  for certain  employer-sponsored  retirement  plans,  have no up-front
sales charges but are subject to additional annual expenses and fees. Annualized
expenses for Class B shares were 0.79 percentage  points higher than for Class A
shares; Class B shares convert to Class A shares after eight years of ownership.
If redeemed within six years, Class B shares may also be subject to a contingent
deferred  sales charge  ("CDSC") of up to 5% that  declines  over time.  Class C
shares were subject to annualized  expenses 0.85  percentage  points higher than
those for Class A shares and a 1% CDSC if  redeemed  within the first year after
purchase.  Class C shares  convert  to Class F shares  after 10  years.  Class F
shares,  which are available only through certain fee-based  programs offered by
broker-dealer firms and registered  investment  advisers,  had higher annualized
expenses  (by 0.08  percentage  points)  than did Class A shares,  and an annual
asset-based  fee charged by the  sponsoring  firm.  Expenses are  deducted  from
income earned by the fund. As a result,  dividends and  investment  results will
differ for each share class.                                                    

FOR  INFORMATION  ABOUT YOUR  ACCOUNT OR ANY OF THE  FUND'S  SERVICES,  OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISER.
YOU MAY ALSO CALL AMERICAN FUNDS SERVICE  COMPANY AT 800/421-0180 OR VISIT US AT
AMERICANFUNDS.COM.  PLEASE READ THE  PROSPECTUS  CAREFULLY  BEFORE YOU INVEST OR
SEND MONEY.                                                                     

This report is for the information of shareholders of The Investment  Company of
America,  but it  may  also  be  used  as  sales  literature  when  preceded  or
accompanied  by the current  prospectus,  which  gives  details  about  charges,
expenses,  investment  objectives and operating policies of the fund. If used as
sales material after  September 30, 2003,  this report must be accompanied by an
American  Funds  statistical  update for the most  recently  completed  calendar
quarter.                                                                        

[logo] American Funds(R)                                                        

The right choice for the long term(R)                                           

WHAT MAKES AMERICAN FUNDS DIFFERENT?                                            

For more than 70 years, we have followed a consistent  philosophy that we firmly
believe is in our investors' best interests.  The range of opportunities offered
by our family of just 29  carefully  conceived,  broadly  diversified  funds has
attracted over 20 million shareholder accounts.                                 

OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:                

o  A LONG-TERM, VALUE-ORIENTED APPROACH                                         
 Rather than follow fads, we pursue a consistent strategy,  focusing on each
investment's long-term potential.                                         

o  AN UNPARALLELED GLOBAL RESEARCH EFFORT                                       
 American  Funds draws on one of the  industry's  most  globally  integrated
research networks.                                                        

o  THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM                                      
 Every American Fund is divided among a number of portfolio counselors. Each
 takes  responsibility  for a  portion  independently,  within  each  fund's
 objectives; in most cases, research analysts manage a portion as well. Over
 time this method has contributed to a consistency of results and continuity
of management.                                                            

o  EXPERIENCED INVESTMENT PROFESSIONALS                                         
 The  recent  market  decline  was not the first  for most of the  portfolio
 counselors  who serve the  American  Funds.  Nearly 70% of them were in the
investment business before the sharp market decline of 1987.              

o  A COMMITMENT TO LOW OPERATING EXPENSES                                       
 American Funds' operating  expenses are among the lowest in the mutual fund
 industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.                                     

29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS                      

GROWTH FUNDS                                                                    
AMCAP Fund(R)                                                                   
EuroPacific Growth Fund(R)                                                      
The Growth Fund of America(R)                                                   
The New Economy Fund(R)                                                         
New Perspective Fund(R)                                                         
New World FundSM                                                                
SMALLCAP World Fund(R)                                                          

GROWTH-AND-INCOME FUNDS                                                         
American Mutual Fund(R)                                                         
Capital World Growth and Income FundSM                                          
Fundamental InvestorsSM                                                         
The Investment Company of America(R)                                            
Washington Mutual Investors FundSM                                              

EQUITY-INCOME FUNDS                                                             
Capital Income Builder(R)                                                       
The Income Fund of America(R)                                                   

BALANCED FUND                                                                   
American Balanced Fund(R)                                                       

BOND FUNDS                                                                      
American High-Income TrustSM                                                    
The Bond Fund of AmericaSM                                                      
Capital World Bond Fund(R)                                                      
Intermediate Bond Fund of America(R)                                            
U.S. Government Securities FundSM                                               

TAX-EXEMPT BOND FUNDS                                                           
American High-Income Municipal Bond Fund(R)                                     
Limited Term Tax-Exempt Bond Fund of AmericaSM                                  
The Tax-Exempt Bond Fund of America(R)                                          

STATE-SPECIFIC TAX-EXEMPT FUNDS                                                 
The Tax-Exempt Fund of California(R)                                            
The Tax-Exempt Fund of Maryland(R)                                              
The Tax-Exempt Fund of Virginia(R)                                              

MONEY MARKET FUNDS                                                              
The Cash Management Trust of America(R)                                         
The Tax-Exempt Money Fund of AmericaSM                                          
The U.S. Treasury Money Fund of AmericaSM                                       

THE CAPITAL GROUP COMPANIES                                                     

American Funds                                                                  
Capital Research and Management                                                 
Capital International                                                           
Capital Guardian                                                                
Capital Bank and Trust                                                          

Lit. No. ICA-013-0803                                                           

Litho in USA BDC/GRS/8087                                                       

Printed on recycled paper                                                       

ITEM 2 - Code of Ethics                                                         

Not applicable for filing of Semiannual Reports to Shareholders.                

ITEM 3 - Audit Committee Financial Expert                                       

Not applicable for filing of Semiannual Reports to Shareholders.                

ITEM 4 - Principal Accountant Fees and Services                                 

Form N-CSR disclosure requirement not yet effective with respect to Registrant. 

ITEM 5 - Audit Committee of Listed Registrants                                  

Not applicable.                                                                 

ITEM 6 - Reserved                                                               

ITEM 7 - Disclosure  of Proxy  Voting  Policies and  Procedures  for  Closed-End
Management Investment Companies                                                 

Not applicable to this Registrant, insofar as the Registrant is not a closed-end
management investment company.                                                  

ITEM 8 - Reserved                                                               

ITEM 9 - Controls and Procedures                                                

(a)  The officers providing the certifications in this report in accordance with
   rule 30a-2 under the Investment Company Act of 1940 have concluded, based
    on their evaluation of the Registrant's disclosure controls and procedures
   (as such term is defined in such rule), that such controls and procedures
   are adequate and reasonably designed to achieve the purposes described in
paragraph (c) of such rule.                                           

(b)  There were no changes in the Registrant's internal controls over financial 
    reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the Registrant's last fiscal half-year (the
    Registrant's second fiscal half-year in the case of an annual report) that
    has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.               

N-CSR
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ITEM 10 - Exhibits                                                              

(a)  Code of  Ethics - not  applicable  for  filing  of  Semiannual  Reports  to
Shareholders.                                                         

(b)  The certifications  required by Rule 30a-2 of the Investment Company Act of
     1940,  as amended,  and Sections 302 and 906 of the  Sarbanes-Oxley  Act of
2002 are attached as exhibits hereto.                                 

N-CSR
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the     
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.             

 THE INVESTMENT COMPANY OF AMERICA

By /s/ R. Michael Shanahan                                                      
-------------------------------------------------------                         
R. Michael Shanahan, Chairman and CEO                                           

Date: September 5, 2003                                                         

Pursuant to the requirements of the Securities Exchange Act of 1934 and the     
Investment Company Act of 1940, this report has been signed below by the        
following persons on behalf of the registrant and in the capacities and on the  
dates indicated.                                                                

By /s/ R. Michael Shanahan                                                      
--------------------------------------------------                        
R. Michael Shanahan, Chairman and CEO                                 

Date: September 5, 2003                                                         

By  /s/ Thomas M. Rowland                                                     
-------------------------------------------------                       
Thomas M. Rowland, Treasurer                                    

Date: September 5, 2003                                                         

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘N-CSR’ Filing		Date		First		Last			Other Filings
		12/31/03		1		2			24F-2NT,  N-CSR,  NSAR-B
		9/30/03		2
Filed on / Effective on:		9/8/03
		9/5/03		4
		8/7/03		2
		7/31/03		2
For Period End:		6/30/03		1		2			NSAR-A
		12/31/02		2					24F-2NT,  N-30D,  NSAR-B
		9/16/02		2
		5/15/02		2					485BPOS
		3/1/02		2
		2/19/02		2
		2/15/02		2					485BPOS
		3/15/01		2					485BPOS
		3/24/00		2
		3/15/00		2
									List all Filings