NEW ECONOMY FUND, 485BPOS, 2000-03-10

NEW ECONOMY FUND
485BPOS, 2000-03-10

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SEC. File Nos. 2-83848
811-3735

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 24
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 21

THE NEW ECONOMY FUND
(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

Chad L. Norton
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)

Copies to:
MICHAEL J. FAIRCLOUGH, ESQ.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(Counsel for the Registrant)

Approximate date of proposed public offering:
It is proposed that this filing become effective on March 15, 2000, pursuant to
paragraph(b) of rule 485.

<PAGE>

The New Economy Fund/(R)/

Prospectus
MARCH 15, 2000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<PAGE>

---------------------------------------------------------
THE NEW ECONOMY FUND

333 South Hope Street
Los Angeles, California 90071

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------
<S> <C>
Risk/Return Summary 2
-------------------------------------------------------
Fees and Expenses of the Fund 5
-------------------------------------------------------
Investment Objective, Strategies and Risks 6
-------------------------------------------------------
Management and Organization 9
-------------------------------------------------------
Shareholder Information 11
-------------------------------------------------------
Choosing a Share Class 12
-------------------------------------------------------
Purchase and Exchange of Shares 13
-------------------------------------------------------
Sales Charges 14
-------------------------------------------------------
Sales Charge Reductions and Waivers 16
-------------------------------------------------------
Plans of Distribution 17
-------------------------------------------------------
How to Sell Shares 18
-------------------------------------------------------
Distributions and Taxes 19
-------------------------------------------------------
Financial Highlights 20
-------------------------------------------------------
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS
NEF-010-0300/RRD

<PAGE>

---------------------------------------------------------
RISK/RETURN SUMMARY

The fund seeks to make your investment grow over time by investing primarily in
stocks of companies in the services and information area of the global economy.

The fund is designed for investors seeking greater capital appreciation through
investments in stocks of issuers based around the world. Investors in the fund
should have a long-term perspective and be able to tolerate potentially wide
price fluctuations. An investment in the fund is subject to risks, including
the possibility that the fund may decline in value in response to economic,
political or social events in the U.S. or abroad. The prices of equity
securities owned by the fund may be affected by events specifically involving
the companies issuing those securities.

Although all securities in the fund's portfolio may be adversely affected by
currency fluctuations or world political, social and economic instability,
investments outside the U.S. may be affected to a greater extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

INVESTMENT RESULTS

The following information provides some indication of the risks of investing in
the fund by showing changes in the fund's investment results from year to year
and by showing how the fund's average annual returns for various periods
compare with those of a broad measure of market performance. Past results are
not an indication of future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if one were included, results would
be lower.)

------------------------------------------------------------------------------
[bar chart]
1990 -10.10%
1991 29.17%
1992 16.82%
1993 30.95%
1994 -8.11%
1995 24.37%
1996 12.89%
1997 28.85%
1998 28.84%
1999 45.88%
[end bar chart]

The fund's highest/lowest quarterly results during this time period were:

<TABLE>
<CAPTION>
<S> <C> <C>
HIGHEST 27.15% (quarter ended December 31, 1999)
LOWEST -20.04% (quarter ended September 30, 1990)
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/1/
(with the maximum sales charge 37.49% 26.23% 17.99% 17.82%
deducted)
------------------------------------------------------------------------------
Class B/2/ N/A N/A N/A N/A
------------------------------------------------------------------------------
S&P 500/3/ 21.01% 28.49% 18.17% 17.94%
------------------------------------------------------------------------------
Lipper Growth Funds Index/4/ 27.96% 26.27% 17.25% 15.77%
------------------------------------------------------------------------------
MSCI EAFE Index/5/ 27.30% 13.15% 7.33% 15.95%
------------------------------------------------------------------------------
Russell 2500 Index/6/ 24.14% 19.43% 15.06% 13.63%
------------------------------------------------------------------------------
</TABLE>

1 The fund began investment operations for Class A shares on December 1, 1983.

2 The fund is beginning investment operations for Class B shares on March 15,
2000.

3 The Standard & Poor's 500 Composite Index is an asset-weighted, broad-based
measurement of changes in stock market conditions based on the average
performance of 500 widely held common stocks. This index is unmanaged and does
not reflect sales charges, commissions or expenses. The lifetime figure is
from the date the fund's Class A shares began investment operations.

4 The Lipper Growth Funds Index is an equally weighted performance index with
30 of the largest growth funds (representing about 51% of all growth fund
assets). These funds normally invest in companies with long-term earnings
expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged indices. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
distributions, but do not reflect sales charges and commissions. The lifetime
figure is from the date the fund's Class A shares began investment operations.

5 The Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index measures all major stock markets outside North America. This index is
unmanaged and does not reflect sales charges, commissions or expenses. The
lifetime figure is from the date the fund's Class A shares began investment
operations.

6 The Russell 2500 Index tracks small- and medium-size U.S. stocks. This index
is unmanaged and does not reflect sales charges, commissions or expenses. The
lifetime figure is from the date the fund's Class A shares began investment
operations.

Unlike the bar chart on the previous page, this table reflects the fund's
investment results with the maximum initial or deferred sales charge deducted,
as required by Securities and Exchange Commission rules. Class A share results
are shown with the maximum initial sales charge of 5.75% deducted. Sales
charges are reduced for purchases of $25,000 or more. Results would be higher
if they were calculated at net asset value. All fund results reflect the
reinvestment of dividend and capital gain distributions.

Class B shares are subject to a maximum deferred sales charge of 5.00% if
shares are redeemed within the first year of purchasing them. The deferred
sales charge declines thereafter until it reaches 0% after six years. Class B
shares convert to Class A shares after eight years. Since fund's Class B shares
begin investment operations on March 15, 2000, no results are available as of
the date of this prospectus.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FEES AND EXPENSES OF THE FUND

<TABLE>
<CAPTION>
SHAREHOLDER FEES
(fees paid directly from your investment) CLASS A CLASS B
--------------------------------------------------------------------------
<S> <C> <C>
Maximum sales charge imposed on purchases 5.75%/1/ 0.00%
(as a percentage of offering price)
--------------------------------------------------------------------------
Maximum sales charge imposed on reinvested dividends 0.00% 0.00%
--------------------------------------------------------------------------
Maximum deferred sales charge 0.00%/2/ 5.00%/3/
--------------------------------------------------------------------------
Redemption or exchange fees 0.00% 0.00%
</TABLE>

1 Sales charges are reduced or eliminated for purchases of $25,000 or more.

2 A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases of $1 million or more made without a
sales charge.

3 Deferred sales charges are reduced after 12 months and eliminated after six
years.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets) CLASS A CLASS B/1/
-----------------------------------------------
<S> <C> <C>
Management Fees 0.41% 0.41%
Distribution and/or Service (12b-1) Fees 0.24%/2/ 1.00%/3/
Other Expenses 0.13% 0.13%
Total Annual Fund Operating Expenses 0.78% 1.54%
</TABLE>

1 Based on estimated amounts for the current fiscal year.

2 Class A 12b-1 expenses may not exceed 0.25% of the fund's average net assets
annually.

3 Class B 12b-1 expenses may not exceed 1.00% of the fund's average net assets
annually.

EXAMPLE

This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the fund for the time periods indicated, that your investment
has a 5% return each year and that the fund's operating expenses remain the
same as shown above. The Class A example reflects the maximum initial sales
charge in Year One. The Class B-assuming redemption example reflects applicable
contingent deferred sales charges through Year Six (after which time they are
eliminated). Both Class B examples reflect Class A expenses for Years 9 and 10
since Class B shares automatically convert to Class A after eight years.
Although your actual costs may be higher or lower, based on these assumptions
your cumulative expenses would be:

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ONE THREE FIVE TEN
<S> <C> <C> <C> <C>
Class A $650 $810 $ 983 $1,486
------------------------------------------------------------------------------
Class B - assuming redemption $657 $886 $1,039 $1,630
Class B - assuming no redemption $157 $486 $ 839 $1,630
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

The fund seeks to provide you with long-term growth of capital. It invests
primarily in stocks of companies in the services and information area of the
global economy, although a portion of its assets may be outside these areas.
Companies in the services and information area include, for example, those
involved in the fields of telecommunications, computer systems and software,
the internet, broadcasting and publishing, health care, advertising, leisure,
tourism, financial services, distribution and transportation. Providing you
with current income is a secondary consideration.

The values of equity securities held by the fund may decline in response to
certain events, including those directly involving the companies whose
securities are owned in the fund, adverse conditions affecting the general
economy, overall market declines, world political, social and economic
instability, and currency fluctuations. Investments outside the U.S. may be
affected by these events to a greater extent and may also be affected by
differing securities regulations, higher transaction costs, and administrative
difficulties such as delays in clearing and settling portfolio transactions.
The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks.

The fund may also hold cash or money market instruments. The size of the fund's
cash position will vary and will depend on various factors, including market
conditions and purchases and redemptions of fund shares. A larger cash position
could detract from the achievement of the fund's objective, but it also would
reduce the fund's exposure in the event of a market downturn and provide
liquidity to make additional investments or to meet redemptions.

The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company, to make decisions about the fund's portfolio
securities. The basic investment philosophy of the investment adviser is to
seek undervalued securities that represent good long-term investment
opportunities. Securities may be sold when the investment adviser believes they
no longer represent good long-term value.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

ADDITIONAL INVESTMENT RESULTS

For periods ended December 31, 1999:

<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN/1/ ONE YEAR FIVE YEARS TEN YEARS LIFETIME
<S> <C> <C> <C> <C>
Class A/2/ 45.88% 27.73% 18.70% 18.26%
(with no sales charge deducted)
----------------------------------------------------------------------------
Class B/3/ N/A N/A N/A N/A
----------------------------------------------------------------------------
S&P 500/4/ 21.01% 28.49% 18.17% 17.94%
----------------------------------------------------------------------------
Lipper Growth Funds Index/5/ 27.96% 26.27% 17.25% 15.77%
----------------------------------------------------------------------------
MSCI EAFE Index/6/ 27.30% 13.15% 7.33% 15.95%
----------------------------------------------------------------------------
Russell 2500 Index/7/ 24.14% 19.43% 15.06% 13.63%
----------------------------------------------------------------------------
</TABLE>

1 These fund results were calculated at net asset value according to a formula
that is required for all stock and bond funds and include the reinvestment of
dividend and capital gain distributions.

2 The fund began investment operations for Class A shares on December 1, 1983.

3 The fund is beginning investment operations for Class B shares on March 15,
2000.

4 The Standard & Poor's 500 Composite Index is an asset-weighted, broad-based
measurement of changes in stock market conditions based on the average
performance of 500 widely held common stocks. This index is unmanaged and does
not reflect sales charges, commissions or expenses. The lifetime figure is
from the date the fund's Class A shares began investment operations.

5 The Lipper Growth Funds Index is an equally weighted performance index with
30 of the largest growth funds (representing about 51% of all growth fund
assets). These funds normally invest in companies with long-term earnings
expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged indices. The results of the underlying
funds in the index include the reinvestment of dividend and capital gain
distributions, but do not reflect sales charges and commissions. The lifetime
figure is from the date the fund's Class A shares began investment operations.

6 The Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index measures all major stock markets outside North America. This index is
unmanaged and does not reflect sales charges, commissions or expenses. The
lifetime figure is from the date the fund's Class A shares began investment
operations.

7 The Russell 2500 Index tracks small- and medium-size U.S. stocks. This index
is unmanaged and does not reflect sales charges, commissions or expenses. The
lifetime figure is from the date the fund's Class A shares began investment
operations.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

The following chart illustrates the industry mix of the fund's investment
portfolio as of the end of the fund's fiscal year, November 30, 1999.

LARGEST INDUSTRY HOLDING

[pie chart]
Broadcasting & Publishing 16.23%
Telecommunications 13.26%
Electronic Data Products 12.76%
Computer Services & Software 8.55%
Banking 5.14%
All Other Industries 31.69%
Cash & Cash Equivalents 12.37%
[end pie chart]

<TABLE>
<CAPTION>
Percent of Percent of
Percent Invested by Country Net Assets Ten Largest Equity Holdings Net Assets
----------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C>
United States 49.3% Viacom 3.21%
-----------------------------------------------
Europe NTT Mobile Communications
Germany 2.6 Network 3.16
-----------------------------------------------
United Kingdom 2.4 AT&T Liberty Media Group 2.70
-----------------------------------------------
Italy 1.2 Sakura Bank 2.31
-----------------------------------------------
Sweden 1.1 Computer Associates International 1.74
-----------------------------------------------
Switzerland .9 Fannie Mae 1.62
-----------------------------------------------
Denmark .8 Telefonos de Mexico 1.41
-----------------------------------------------
Netherlands .7 Nippon Television Network 1.41
-----------------------------------------------
France .2 Oracle 1.35
-----------------------------------------------
Luxembourg .1 Time Warner 1.33
----------------------------------------- -----------------------------------------------
Asia/Pacific
Japan 14.5
South Korea 2.0
Australia 1.5
Taiwan 1.4
Hong Kong .8
Philippines .7
China .5
Malaysia .4
Thailand .3
Singapore .2
-----------------------------------------
Latin America & Canada
Mexico 2.0
Canada 1.1
Brazil .3
-----------------------------------------
Supranational 2.6
-----------------------------------------
Total Non-U.S. 38.3%
</TABLE>

Because the fund is actively managed, its holdings will change from time to
time.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
MANAGEMENT AND ORGANIZATION

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and
other funds, including those in The American Funds Group. Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA 90071. Capital
Research and Management Company manages the investment portfolio and business
affairs of the fund. The total management fee paid by the fund, as a percentage
of average net assets, for the previous fiscal year is discussed earlier under
"Fees and Expenses of the Fund."

Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM

Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach the portfolio of
a fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested, within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee. In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for The New Economy Fund are listed on the following page.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE YEARS OF EXPERIENCE
AS AN INVESTMENT PROFESSIONAL
YEARS OF EXPERIENCE (INCLUDING THE LAST FIVE YEARS)
AS PORTFOLIO COUNSELOR -----------------------------------
PORTFOLIO (AND RESEARCH PROFESSIONAL, WITH CAPITAL
COUNSELORS FOR IF APPLICABLE) FOR RESEARCH AND
THE NEW ECONOMY THE NEW ECONOMY FUND MANAGEMENT
FUND PRIMARY TITLE(S) (APPROXIMATE) COMPANY
------------------------------------------------------------------------------ OR AFFILIATES TOTAL YEARS
-----------------------------------
<S> <C> <C> <C> <C>
GORDON Chairman of the Board of the 5 years (plus 5 years as a 28 years 28 years
CRAWFORD fund. Senior Vice President research professional prior
and Director, Capital to becoming a portfolio
Research and Management counselor for the fund)
Company
-----------------------------------------------------------------------------------------------------------------
TIMOTHY D. President, Principal 9 years (plus 5 years as a 17 years 17 years
ARMOUR Executive Officer and Trustee research professional prior
of the fund. Chairman and to becoming a portfolio
Chief Executive Officer, counselor for the fund)
Capital Research Company*
-----------------------------------------------------------------------------------------------------------------
ALWYN W. Vice President, Capital Less than 1 year (plus 2 8 years 12 years
HEONG Research Company* years as a research
professional prior to
becoming a portfolio
counselor for the fund)
-----------------------------------------------------------------------------------------------------------------
CLAUDIA P. Senior Vice President of the 5 years (plus 11 years as a 25 years 27 years
HUNTINGTON fund. Senior Vice President, research professional prior
Capital Research and to becoming a portfolio
Management Company counselor for the fund)
-----------------------------------
------------------------------------------------------------------------------
WILLIAM C. Senior Partner, The Capital 15 years (since the fund 41 years 47 years
NEWTON Group Partners L.P.* began operations)
The fund began investment operations on December 1, 1983.
* Company affiliated with Capital Research and Management Company
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
SHAREHOLDER INFORMATION

SHAREHOLDER SERVICES

American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change. These services may be terminated or modified at
any time upon 60 days' written notice. For your convenience, American Funds
Service Company has four service centers across the country.

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS

Call toll-Free from anywhere in the U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180

[map of the United States]

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Western Western Central Eastern Central Eastern
Service Center Service Center Service Center Service Center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 2205 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Brea, California San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
92822-2205 78265-9522 46206-6007 23501-2280
Fax: 714/671-7080 Fax: 210/474-4050 Fax: 317/735-6620 Fax: 757/670-4773
</TABLE>

A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company.

You may invest in the fund through various retirement plans. However, Class B
shares generally are not available to certain retirement plans (for example,
group retirement plans such as 401(k) plans, employer-sponsored 403(b) plans,
and money purchase pension and profit sharing plans). Some retirement plans or
accounts held by investment dealers may not offer certain services. If you
have any questions, please contact American Funds Service Company, your plan
administrator/trustee or dealer.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
CHOOSING A SHARE CLASS

The fund offers both Class A and Class B shares. Each share class has its own
sales charge and expense structure, allowing you to choose the class that best
meets your situation.

Factors you should consider in choosing a class of shares include:

- How long you expect to own the shares

- How much you intend to invest

- The expenses associated with owning shares of each class

- Whether you qualify for any reduction or waiver of sales charges (for
example, Class A shares may be a less expensive option over time if you
qualify for a sales charge reduction or waiver)

EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.

Differences between Class A and Class B shares include:

<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------
<S> <S>
Initial sales charge of up to No initial sales charge.
5.75%. Sales charges are reduced
for purchases of $25,000 or more
(see "Sales Charges - Class A").
------------------------------------------------------------------------------
Distribution and service (12b-1) Distribution and service (12b-1) fees
fees of up to 0.25% annually. of up to 1.00% annually.
------------------------------------------------------------------------------
Higher dividends than Class B Lower dividends than Class A shares due
shares due to lower annual to higher distribution fees and other
expenses. expenses.
------------------------------------------------------------------------------
No contingent deferred sales charge A contingent deferred sales charge if
(except on certain redemptions on you sell shares within six years of
purchases of $1 million or more buying them. The charge starts at 5%
bought without an initial sales and declines thereafter until it
charge). reaches 0% after six years. (see "Sales
Charges - Class B").
------------------------------------------------------------------------------
No purchase maximum. Maximum purchase of $100,000.
------------------------------------------------------------------------------
Automatic conversion to Class A shares
after eight years, reducing future
annual expenses.
------------------------------------------------------------------------------
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
PURCHASE AND EXCHANGE OF SHARES

PURCHASE

Generally, you may open an account by contacting any investment dealer (who may
impose transaction charges in addition to those described in this prospectus)
authorized to sell the fund's shares. You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."

EXCHANGE

You may exchange your shares into shares of the same class of other funds in
The American Funds Group generally without a sales charge. For purposes of
computing the contingent deferred sales charge on Class B shares, the length of
time you have owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.

Exchanges of shares from the money market funds initially purchased without a
sales charge generally will be subject to the appropriate sales charge.
Exchanges have the same tax consequences as ordinary sales and purchases. See
"Transactions by Telephone..." for information regarding electronic exchanges.

THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON. ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.

<TABLE>
<CAPTION>
PURCHASE MINIMUMS FOR CLASS A AND B SHARES
<S> <C>
To establish an account (including retirement plan accounts) $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account through payroll deduction $ 25
PURCHASE MAXIMUM FOR CLASS B SHARES $100,000
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

SHARE PRICE

The fund calculates its share price, also called net asset value, as of
approximately 4:00 p.m. New York time, which is the normal close of trading on
the New York Stock Exchange, every day the Exchange is open. In calculating net
asset value, market prices are used when available. If a market price for a
particular security is not available, the fund will determine the appropriate
price for the security.

Your shares will be purchased at the net asset value plus any applicable sales
charge in the case of Class A shares, or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. Sales of certain Class A and B shares may be subject to contingent
deferred sales charges.

---------------------------------------------------------
SALES CHARGES

CLASS A

The initial sales charge you pay when you buy Class A shares differs depending
upon the amount you invest and may be reduced for larger purchases as indicated
below.

<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
----------------------------------
DEALER
NET COMMISSION
OFFERING AMOUNT AS % OF
INVESTMENT PRICE INVESTED OFFERING PRICE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 5.00%
---------------------------------------------------------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00% 5.26% 4.25%
---------------------------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50% 4.71% 3.75%
---------------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50% 3.63% 2.75%
---------------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
---------------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00% 2.04% 1.60%
---------------------------------------------------------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50% 1.52% 1.20%
---------------------------------------------------------------------------------------------------------------------------------
$1 million or more and certain other
investments described below see below see below see below
</TABLE>

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGE

Investments of $1 million or more are sold with no initial sales charge.
HOWEVER, A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED IF REDEMPTIONS
ARE MADE WITHIN ONE YEAR OF PURCHASE. Employer-sponsored defined
contribution-type plans investing $1 million or more, or with 100 or more
eligible employees,

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

and Individual Retirement Account rollovers involving retirement plan assets
invested in the American Funds, may invest with no sales charge and are not
subject to a contingent deferred sales charge. Investments made through
retirement plans, endowments or foundations with $50 million or more in assets,
or through certain qualified fee-based programs may also be made with no sales
charge and are not subject to a contingent deferred sales charge. The fund may
pay a dealer concession of up to 1% under its Plan of Distribution on
investments made with no initial sales charge.

CLASS B

Class B shares are sold without any initial sales charge. However, a
contingent deferred sales charge may be applied to shares you redeem within six
years of purchase, as shown in the table below.

<TABLE>
<CAPTION>
Contingent deferred sales charge
on shares sold within year as a % of shares being sold
---------------------------------------------------------------
<S> <S>
1 5.00%
2 4.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
</TABLE>

Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent Deferred Sales Charge Waivers for Class B Shares" below. The
contingent deferred sales charge is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. For purposes
of determining the contingent deferred sales charge, if you sell only some of
your shares, shares that are not subject to any contingent deferred sales
charge will be sold first and then shares that you have owned the longest.

CLASS B CONVERSION TO A SHARES

Class B shares automatically convert to Class A shares in the first month of
the eight-year anniversary of the purchase date. The Internal Revenue Service
currently takes the position that this automatic conversion is not taxable.
Should their position change, shareholders would still have the option of
converting but may face certain tax consequences. Please see the statement of
additional information for more information.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS

You must let your investment dealer or American Funds Service Company know if
you qualify for a reduction in your Class A sales charge or waiver of your
Class B contingent deferred sales charge using one or any combination of the
methods described below, in the statement of additional information and
"Welcome to the Family."

REDUCING YOUR CLASS A SALES CHARGES

You and your "immediate family" (your spouse and your children under the age of
21) may combine investments to reduce your Class A sales charge.

AGGREGATING ACCOUNTS

To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for their own account(s)
and/or:

- trust accounts established by the above individuals. However, if the
person(s) who established the trust is deceased, the trust account may be
aggregated with accounts of the person who is the primary beneficiary of
the trust.

- solely controlled business accounts.

- single-participant retirement plans.

Other types of accounts may also be aggregated. You should check with your
financial adviser or consult the statement of additional information or
"Welcome to the Family" for more information.

CONCURRENT PURCHASES

You may combine simultaneous purchases of Class A and/or B shares of two or
more American Funds, as well as individual holdings in various American Legacy
variable annuities or variable life insurance policies, to qualify for a
reduced Class A sales charge. Direct purchases of money market funds are
excluded.

RIGHTS OF ACCUMULATION

You may take into account the current value of your existing Class A and B
holdings in the American Funds, as well as individual holdings in various
American Legacy variable annuities or variable life insurance policies, to
determine your Class A sales charge. Direct purchases of money market funds are
excluded.

STATEMENT OF INTENTION

You can reduce the sales charge you pay on your Class A share purchases by
establishing a Statement of Intention. A Statement of Intention allows you to

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

combine all Class A and B share non-money market fund purchases, as well as
individual American Legacy variable annuity and life insurance policies you
intend to make over a 13-month period, to determine the applicable sales
charge. At your request purchases made during the previous 90 days may be
included; however, capital appreciation and reinvested dividends and capital
gains do not apply toward these combined purchases. A portion of your account
may be held in escrow to cover additional Class A sales charges which may be
due if your total investments over the 13-month period do not qualify for the
applicable sales charge reduction.

CONTINGENT DEFERRED SALES CHARGE WAIVERS FOR CLASS B SHARES

The contingent deferred sales charge on Class B shares may be waived in the
following cases:

- to receive payments through systematic withdrawal plans (up to 12% of the
value of your account);

- to receive certain distributions, such as required minimum distributions,
from retirement accounts; or

- for redemptions due to death or post-purchase disability of the
shareholder.

For more information, please consult your financial adviser, the statement of
additional information or "Welcome to the Family."

---------------------------------------------------------
PLANS OF DISTRIBUTION

The fund has Plans of Distribution or "12b-1 Plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of trustees. The plans
provide for annual expenses of up to 0.25% for Class A shares and up to 1.00%
for Class B shares. Up to 0.25% of these payments are used to pay service fees
to qualified dealers for providing certain shareholder services. The remaining
0.75% expense for Class B shares is used for financing commissions paid to your
dealer. The 12b-1 fees paid by the fund, as a percentage of average net assets,
for the previous fiscal year is indicated above under "Fees and Expenses of the
Fund." Since these fees are paid out of the fund's assets or income on an
ongoing basis, over time they will increase the cost and reduce the return of
an investment. The higher fees for Class B shares may cost you more over time
than paying the initial sales charge for Class A shares.

OTHER COMPENSATION TO DEALERS

American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for, dealers as described in the statement of additional
information.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
HOW TO SELL SHARES

Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:

THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)

- Shares held for you in your dealer's name must be sold through the dealer.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

- Requests must be signed by the registered shareholder(s).

- A signature guarantee is required if the redemption is:

-- Over $50,000;

-- Made payable to someone other than the registered shareholder(s); or

-- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.

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

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE/(R)/ OR AMERICAN FUNDSLINE ONLINE/(R)/:

- Redemptions by telephone or fax (including American FundsLine and American
FundsLine OnLine) are limited to $50,000 per shareholder each day.

- Checks must be made payable to the registered shareholder.

- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.

TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE OR FUNDSLINE ONLINE

Generally, you are automatically eligible to use these services for redemptions
and exchanges unless you notify us in writing that you do not want any or all
of these services. You may reinstate these services at any time.

Unless you decide not to have telephone, fax, or computer services on your
account(s), you agree to hold the fund, American Funds Service Company, any of
its affiliates or mutual funds managed by such affiliates, and each of their
respective directors, trustees, officers, employees and agents harmless from
any losses, expenses, costs or liabilities (including attorney fees) which may
be incurred in connection with the exercise of these privileges, provided
American Funds Service Company employs reasonable procedures to confirm that
the instructions received from any person with appropriate account information
are genuine. If reasonable procedures are not employed, the fund may be liable
for losses due to unauthorized or fraudulent instructions.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The fund intends to distribute dividends to you, if any, usually in December.
Capital gains, if any, are usually distributed in December. When a dividend or
capital gain is distributed, the net asset value per share is reduced by the
amount of the payment.

You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or any other fund in The American Funds
Group or you may elect to receive them in cash. Most shareholders do not elect
to take capital gain distributions in cash because these distributions reduce
principal value.

TAXES ON DISTRIBUTIONS

Distributions you receive from the fund may be subject to income tax and may
also be subject to state or local taxes - unless you are exempt from taxation.

For federal tax purposes, any taxable dividends and distributions of short-term
capital gains are treated as ordinary income. The fund's distributions of net
long-term capital gains are taxable to you as long-term capital gains. Any
taxable distributions you receive from the fund will normally be taxable to you
when made, regardless of whether you reinvest distributions or receive them in
cash.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment in the fund is
the difference between the cost of your shares, including any sales charges,
and the price you receive when you sell them.

Please see the statement of additional information, the "Welcome to the Family"
guide, and your tax adviser for further information.

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the fund's
results for the past five years and is currently only shown for Class A shares.
A similar table will be shown for Class B shares beginning with the fund's
2000 fiscal year end. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
---------------------------
1999 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $23.65 $20.92 $18.50 $16.98 $14.65
Beginning of Year
------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income .10 .13 .12 .14 .20
Net Gains or Losses on
Securities (both 8.83 4.44 3.57 2.26 2.99
realized and unrealized)
------------------------------------------------------------------------------
Total From Investment 8.93 4.57 3.69 2.40 3.19
Operations
------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends (from net
investment income) (.14) (.12) (.14) (.19) (.18)
Distributions (from capital (2.54) (1.72) (1.13) (.69) (.68)
gains)
------------------------------------------------------------------------------
Total Distributions (2.68) (1.84) (1.27) (.88) (.86)
------------------------------------------------------------------------------
Net Asset Value, $29.90 $23.65 $20.92 $18.50 $16.98
End of Year
------------------------------------------------------------------------------
Total Return* 41.71% 23.73% 21.64% 15.00% 23.22%
------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in $9,522 $6,039 $4,804 $4,223 $3,523
millions)
------------------------------------------------------------------------------
Ratio of Expenses to .78% .79% .81% .84% .88%
Average Net Assets
------------------------------------------------------------------------------
Ratio of Net Income .42% .60% .66% .85% 1.33%
to Average Net Assets
------------------------------------------------------------------------------
Portfolio Turnover Rate 47.93% 38.55% 31.62% 29.54% 27.03%
* Excludes maximum sales charge.
</TABLE>

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

---------------------------------------------------------
NOTES

THE NEW ECONOMY FUND / PROSPECTUS
THE NEW ECONOMY FUND / PROSPECTUS

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900 Ext. 11
FOR 24-HOUR INFORMATION American FundsLine(R)
800/325-3590
American FundsLine OnLine(R)
http://www.americanfunds.com

</TABLE>

Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.

* * * * *

MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS Contains additional information
about the fund including financial statements, investment results, portfolio
holdings, a statement from portfolio management discussing market conditions
and the fund's investment strategies, and the independent accountants' report
(in the annual report).

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The SAI contains
more detailed information on all aspects of the fund, including the fund's
financial statements and is incorporated by reference into this prospectus.
The codes of ethics describe the personal investing policies adopted by the
fund and the fund's investment adviser and its affiliated companies.

The codes of ethics and current SAI have been filed with the Securities and
Exchange Commission ("SEC"). These and other related materials about the fund
are available for review or to be copied at the SEC's Public Reference Room in
Washington, D.C. (202/942-8090) or on the EDGAR database on the SEC's Internet
Web site at http://www.sec.gov, or, after payment of a duplicating fee, via
e-mail request to [email protected] or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

HOUSEHOLD MAILINGS Each year you are automatically sent an updated
prospectus, annual and semi-annual report for the fund. In order to reduce the
volume of mail you receive, when possible, only one copy of these documents
will be sent to shareholders that are part of the same family and share the
same residential address.

If you would like to receive individual copies of these documents, or a free
copy of the SAI or Codes of Ethics, please call American Funds Service Company
at 800/421-0180 or write to the Secretary of the fund at 333 South Hope
Street, Los Angeles, California 90071.
Investment Company File No. 811-3735
Printed on recycled paper

THE FUND PROVIDES SPANISH TRANSLATIONS IN CONNECTION WITH THE PUBLIC OFFERING
AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR AND ACCURATE ENGLISH
TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS FOR THE FUND.

/s/ Chad L. Norton
Chad L. Norton
Secretary