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Previous: COLONIAL DATA TECHNOLOGIES CORP, 8-B12B/A, 1995-07-11 |
Next: TOPPS CO INC, 10-Q, 1995-07-11 |
CAPITAL INCOME BUILDER
Semi-Annual Report
For the six months ended
April 30, 1995
Capital Income Builder's goal is to provide a growing dividend - with higher
income distributions every quarter as far as possible - together with a current
yield which exceeds that paid by U.S. stocks generally.
[The American Funds Group(R)]
<PAGE>
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested for periods ended March 31, 1995 (the
most recent calendar quarter), assuming payment of the 5.75% maximum sales
charge at the beginning of the stated periods - Since inception on July 30,
1987: +104.87%, or +9.80% a year; 5 years: +61.97%, or +10.13% a year; 12
months: +0.53%. Sales charges are lower for accounts of $50,000 or more. The
fund's 30-day yield as of May 31, 1995, calculated in accordance with the
Securities and Exchange Commission formula, was 4.55%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY,
THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. All investments are subject
to certain risks. For example, those which include common stocks are affected
by fluctuating stock prices, and those which include bonds are affected by
interest rate fluctuations. Investments outside the U.S. are subject to
additional risks, including currency fluctuations, political and social
instability, differing securities regulations and accounting standards, limited
public information, possible changes in taxation, and periods of illiquidity.
Accordingly, investors should maintain a long-term perspective.
Capital Income Builder(R)
333 South Hope Street
Los Angeles, California 90071-1462
<PAGE>
FELLOW INVESTORS:
We are pleased to inform you that in June 1995 Capital Income Builder's
dividend is being raised for the 31st consecutive quarter, to 43.5 cents a
share.
CIB has therefore continued to achieve what it set out to do when the fund was
started in July 1987: to build income for its shareholders. It has also
continued to meet another important fund objective: to build income faster than
the rate of inflation, as measured by the Consumer Price Index.
CIB'S ABOVE-AVERAGE DIVIDEND YIELD
At the end of April 1995, the dividend yield of U.S. stocks, as measured by
the unmanaged Standard & Poor's 500 Composite Index, was at a record low of
2.6% on an annual basis, in marked contrast with CIB's dividend, which
continued at more than 5% as a percentage of net asset value.
CIB's regular dividend increases are backed by the broad-based dividend growth
of the common stocks in which we invest. Of 99 common stocks owned for the
entire six months ended April 30, 80 increased their dividends in the previous
12 months, 18 had no change, and one lowered its dividend. The median increase
among the 99 stocks was 7.7%.
LIFETIME RETURN
The fund's long-term investment approach is best revealed in its lifetime
results. As shown in the chart at right, since July 31, 1987, total return
(change in value with all dividends and distributions reinvested) was 128.21%
for CIB at April 30, 1995, compared with 97.78% for the average of 514 general
equity funds.
CIB's Results Compared with
General Equity Mutual Funds
for the period 7/31/87 to 4/30/95
CIB +128.21%
General Equity Funds +97.78%
*Average for 514 General Equity Mutual Funds.
Total return as calculated by Lipper Analytical Services
Similarly, over its lifetime the fund has generally outpaced the S&P 500 in
total return. However, at times of sharp appreciation in the equity markets,
with attention focused heavily on growth and less on yield, it is not
surprising that the lifetime gap will narrow and that CIB will lag in shorter
periods. Conversely, when market trends have been weaker, CIB has tended to do
better than stocks in general. The fund's total return was 4.61% for the six
months ended April 30, compared with 10.48% for the S&P 500. Over its lifetime,
the fund's compound annual return of 10.89% compares with 9.84% for the S&P
index.
We are committed to investing in common stocks selected for long-term
ownership to obtain above-average and growing dividends (which are relatively
predictable), rather than those that focus on shorter-term market moves (which
are not).
BANKING
Representing 14.8% of CIB's assets at April 30, banking was the largest
industry sector in the CIB portfolio, with a wide range of price changes over
the six-month period. Strong appreciation was seen by some holdings, like
CoreStates Financial (up 26.1%), as the market responded to earnings gains
helped by consolidations and associated cost-cutting.
Not every stock did as well, however. Central Fidelity (down 11.3%) reported a
fourth-quarter loss stemming from the sale of securities affected by the
earlier rise in interest rates. CIB's diversified portfolio of more than 20
banking stocks helps to mitigate the impact of declines in individual holdings
while still enabling us to benefit from the sector overall. We continue to like
the banking industry, which meets our investment criteria with an average yield
of 4.3% at April 30, and estimated dividend growth averaging 10% a year.
UNITED KINGDOM ELECTRIC UTILITIES
The recently privatized U.K. electric utilities have seen sharp price changes
over the last year and a half, reflecting first a strong outlook and more
recently an unexpected decision of the regulator appointed by the government to
reopen the five-year price review announced last summer. The announcement
precipitated a decline of share prices by about 20%. Nevertheless, our
holdings, of which Southern Electric and Eastern Group are the largest,
continue to offer attractive current yield and good dividend growth prospects
as we remain hopeful that the regulatory issues can be resolved reasonably.
CIB'S LARGEST EQUITIES BY COUNTRY
<TABLE>
<CAPTION>
(percentages are based U.S. U.K. New Hong Netherlands Other Total
on total assets) Zealand Kong
<S> <C> <C> <C> <C> <C> <C> <C>
Banking 14.05% - - - - .73% 14.78%
Utilities:Electric & Gas 5.91 4.79% - .52% - .57 A,B 11.79
Telecommunications 3.78 - 2.58% .35 .54% - 7.25
Business & Public Services .70 4.29 - .29 - .39 S 5.67
Health & Personal Care 5.05 - - - - - 5.05
---- ---- ---- ---- ---- ---- ----
Five Largest Industries 29.49 9.08 2.58 1.16 .54 1.69 44.54
Other Industries 12.24 4.12 - .79 .81 .13 A 18.09
---- ---- ---- ---- ---- ---- ----
Total Equities 41.73% 13.20% 2.58% 1.95% 1.35% 1.82% 62.63%
==== ==== ==== ==== ==== ==== ====
</TABLE>
A=Austrailia B=Belgium S=Spain
OTHER EQUITY INVESTMENTS
Among CIB's holdings that did particularly well in the period were the fund's
two largest, Telecom Corp. of New Zealand and American Home Products(see
table). Both stocks rose in value by roughly 20% in the six months. Earnings
statements by Telecom Corp. of New Zealand reflected renewed revenue growth and
the benefits of continued cost reduction. American Home Products surprised
investors positively over the six months by acquiring American Cyanamid and by
cost-cutting measures, enhancing their combined profitability.
Additions to equity holdings during the period were concentrated in the
financial area (banking, insurance and real estate).
CIB'S FIXED-INCOME HOLDINGS
At April 30, the bulk of CIB's fixed-income investments (15.1% of fund assets)
remained in U.S. government bonds with maturities of three years or less.
In present market conditions, shorter-maturity U.S. government bonds enable us
to obtain a reasonable return while we await growth opportunities in
dividend-paying common stocks. During the last six months however, the
shorter-term bonds have not appreciated as much as those with longer
maturities, or U.S. equities as a whole.
On the other hand, our higher-yielding, higher-risk corporate bonds have
provided increasingly favorable returns relative to the overall fixed-income
market and sometimes also to equities. We continue to look for situations where
improving earnings will lead to credit upgrades and price appreciation over
time, while providing underlying 9% to 11% coupons. In selecting corporate
issues, we benefit substantially from this strategy of evaluating the
longer-term fundamentals of the issuer, not just the outlook for near-term
interest rates.
Of international bonds held during the period, our investment in a New Zealand
government bond maturing in 1998 was unusually attractive, with price
appreciation of 12% in U.S. dollar terms.
<TABLE>
<CAPTION>
LARGEST INDIVIDUAL HOLDINGS Percent of
Net Assets
<S> <C>
Telecom Corp. of New Zealand 2.58%
American Home Products 2.57
Entergy 1.61
Hanson 1.58
Banc One 1.56
Bristol-Myers Squibb 1.51
Ameritech 1.42
B-A-T Industries 1.30
Lincoln National 1.27
Ford Motor 1.26
</TABLE>
GROWTH IN NET ASSETS
At April 30, CIB's net assets stood at $3.96 billion, up from $3.63 billion at
the beginning of the fiscal year. The net asset total passed the $4 billion
mark in early May.
THE GROWTH-OF-INCOME CONCEPT
As well as achieving above-average income and growth of income for its
shareholders, CIB seeks growth of capital as a secondary objective. The
equities that interest us because they provide growth potential of this kind
are generally issued by companies which have fundamentals permitting steady
increases in cash flow and earnings per share from which larger dividends can
be paid. Over time, we find companies with these desirable characteristics tend
to be more highly valued by the market. Inevitably there will be shorter
periods when market appreciation is focused elsewhere.
We remain confident in Capital Income Builder's long-term investment approach
and thank you, our fellow shareholders, for your support in all kinds of
markets.
Jon B. Lovelace
CHAIRMAN OF THE BOARD
Paul G. Haaga, Jr.
PRESIDENT OF THE FUND
June 14, 1995
CAPITAL INCOME BUILDER Unaudited
Investment Portfolio April 30, 1995
<TABLE>
<CAPTION>
Equity-Type
Securities Shares or Market
Principal Value Percent of
Energy Amount (Millions) Net Assets
- ---------------------------------------------- ------------- ----------- ----------
<S> <C> <C> <C>
Energy Sources - 1.92%
Amoco Corp. 430,000 $28.219 .71%
Burmah Castrol PLC 639,405 9.001 .23
Royal Dutch Petroleum Co. (N.Y. Registered Shares) 260,000 32.240 .82
Williams Companies, Inc., pref. shares 238,158 6.133 .16
- ---------------------------------------------- ------------- ----------- ----------
Utilities: Electric & Gas - 11.79%
Australian Gas Light Co. 351,517 1.150 .03
British Gas PLC 900,000 4.368
British Gas PLC (ADR)/1/ 60,000 2.925 .18
Brooklyn Union Gas Co. 200,000 4.850 .12
Central and South West Corp. 1,400,000 34.475 .87
China Light & Power Co., Ltd. 2,184,500 10.300 .26
Detroit Edison Co. 450,000 12.712 .32
East Midlands Electricity PLC 1,450,000 15.408 .39
Eastern Group PLC 3,950,000 40.509 1.02
Electrabel SA 100,000 21.536 .54
Entergy Corp. 2,925,000 63.619 1.61
General Public Utilities Corp. 900,000 25.650 .65
Hongkong Electric Holdings Ltd. 3,381,500 10.375 .26
Houston Industries Inc. 125,000 4.938 .12
Long Island Lighting Co. 2,125,000 31.609 .80
National Power PLC 2,610,000 19.086 .48
NORWEB PLC 890,000 9.371 .24
Pacific Gas and Electric Co. 1,495,000 40.178 1.01
PECO Energy Co. 100,000 2.575 .07
SEEBOARD PLC 4,000,000 24.059 .61
South Wales Electricity PLC 2,210,000 24.518 .62
Southern Electric PLC 4,645,000 49.509 1.25
Texas Utilities Co. 409,167 13.349 .34
----------- ----------
542.662 13.71
----------- ----------
Materials
- ---------------------------------------------- ------------- ----------- ----------
Chemicals - 0.30%
E.I. du Pont de Nemours and Co. 100,000 6.588 .17
RPM, Inc. 270,000 5.333 .13
- ---------------------------------------------- ------------- ----------- ----------
Forest Products & Paper - 0.14%
James River Corp. of Virginia, DECS conv. pref.
shares 225,000 5.512 .14
----------- ----------
17.433 .44
----------- ----------
Capital Equipment
- ---------------------------------------------- ------------- ----------- ----------
Data Processing & Reproduction - 0.43%
MacNeal-Schwendler Corp. 615,000 8.994 .23
Unisys Corp., conv. pref. shares, Series A 200,000 8.000 .20
----------- ----------
16.994 .43
----------- ----------
Consumer Goods
- ---------------------------------------------- ------------- ----------- ----------
Automobiles - 1.26%
Ford Motor Co., Class A 1,850,000 49.950 1.26
- ---------------------------------------------- ------------- ----------- ----------
Beverages & Tobacco - 2.52%
American Brands, Inc. 650,000 26.325 .67
Philip Morris Companies Inc. 660,000 44.715 1.13
UST Inc. 1,010,000 28.406 .72
- ---------------------------------------------- ------------- ----------- ----------
Food & Household Products - 0.12%
Clorox Co. 82,000 4.818 .12
- ---------------------------------------------- ------------- ----------- ----------
Health & Personal Care - 5.05%
American Home Products Corp. 1,320,000 101.805 2.57
Bristol-Myers Squibb Co. 915,000 59.589 1.51
Merck & Co., Inc. 250,000 10.719 .27
Upjohn Co. 250,000 9.063 .23
Warner-Lambert Co. 235,000 18.741 .47
----------- ----------
354.131 8.95
----------- ----------
Services
- ---------------------------------------------- ------------- ----------- ----------
Broadcasting & Publishing - 0.05%
South China Morning Post (Holdings) Ltd. 3,600,000 2.139 .05
- ---------------------------------------------- ------------- ----------- ----------
Business & Public Services - 5.67%
American Water Works Co., Inc. 425,000 12.272 .31
Autopistas, Concesionaria Espanola, SA 1,669,500 15.335 .39
Consumers Water Co. 229,000 3.549 .09
Dun & Bradstreet Corp. 230,000 11.989 .30
Hutchison Delta Finance Ltd., 7.00% conv.
debentures 2001/2/ $11,000,000 11.318 .29
North West Water Group PLC 4,420,000 40.340 1.02
Southern Water PLC 4,085,533 38.803 .98
Thames Water PLC 6,000,000 47.020 1.19
Welsh Water PLC 4,357,000 43.489 1.10
- ---------------------------------------------- ------------- ----------- ----------
Telecommunications - 7.25%
Ameritech Corp. 1,250,000 56.250 1.42
GTE Corp. 1,300,000 44.362 1.12
Hong Kong Telecommunications Ltd. (ADR)/1/ 720,000 14.040 .35
Koninklijke PTT Nederland NV 609,700 21.226 .54
Pacific Telesis Group 1,250,000 38.594 .97
Telecom Corp. of New Zealand Ltd. 15,784,160 66.293
Telecom Corp. of New Zealand Ltd./2/ 8,380,000 35.196
Telecom Corp. of New Zealand Ltd. (ADR)/1/ 12,500 .834 2.58
U S WEST, Inc. 254,707 10.539 .27
- ---------------------------------------------- ------------- ----------- ----------
Transportation: Airlines - 0.56%
British Airways PLC (ADR)/1/ 340,000 21.973 .56
- ---------------------------------------------- ------------- ----------- ----------
Transportation: Shipping - 0.26%
Shun Tak Holdings Ltd. 17,120,184 10.395 .26
----------- ----------
545.956 13.79
----------- ----------
Finance
- ---------------------------------------------- ------------- ----------- ----------
Banking - 14.78%
AmSouth Bancorporation 960,000 30.000 .76
Banc One Corp. 2,100,000 61.950 1.56
BankAmerica Corp. 454,000 22.473 .57
Central Fidelity Banks, Inc. 660,000 16.830 .42
Chemical Banking Corp. 1,050,000 43.837 1.11
Comerica Inc. 1,510,000 43.412 1.10
CoreStates Financial Corp. 1,500,000 48.937 1.24
First Chicago Corp. 555,000 30.664 .77
First Hawaiian Bank 510,000 12.878 .32
First Interstate Bancorp 135,000 10.378 .26
First Security Corp. (Utah) 925,000 21.969 .55
First Union Corp. 900,000 40.725 1.03
Great Western Financial Corp. 247,000 5.218 .13
Huntington Bancshares Inc. 1,950,000 36.562 .92
J.P Morgan & Co. Inc. 180,000 11.813 .30
National Australia Bank Ltd. 2,407,694 20.792 .52
National City Corp. 900,000 24.638 .62
Old Kent Financial Corp. 500,000 15.375 .39
PNC Bank Corp. 650,000 16.331 .41
Signet Banking Corp. 800,000 17.000 .43
Wachovia Corp. 660,000 23.183 .58
Washington Federal Savings and Loan Assn. 500,000 10.125 .26
Washington Mutual Savings Bank 620,875 12.728 .32
Westpac Banking Corp. 2,250,000 8.276 .21
- ---------------------------------------------- ------------- ----------- ----------
Financial Services - 0.35%
Beneficial Corp. 340,000 13.855 .35
- ---------------------------------------------- ------------- ----------- ----------
Insurance - 2.46%
American General Corp. 160,000 5.280 .13
Lincoln National Corp. 1,230,000 50.122 1.27
Ohio Casualty Corp. 717,500 20.897 .53
Prudential Corp. PLC 3,557,546 18.013 .46
SAFECO Corp. 50,000 2.812 .07
- ---------------------------------------------- ------------- ----------- ----------
Real Estate - 3.81%
Camden Property Trust 400,000 8.400 .21
Hysan Development Co. Ltd. 950,000 2.025 .05
Kimco Realty Corp. 520,300 19.641 .50
Security Capital Industrial Trust 151,996 2.375 .06
Security Capital Pacific Trust
(Formerly Property Trust of America) 1,900,000 33.250
Security Capital Pacific Trust, conv. pref. 1.01
shares, Series A 300,000 6.750
Security Capital Realty Inc./2/ 24,900 23.414
Security Capital Realty Inc. 12.00% 1.02
conv. debentures 2014/2/ $18,862,000 16.957
Sun Hung Kai Properties Ltd. 1,486,000 9.483 .24
Tucker Properties Corp. 248,000 3.007 .08
Washington Real Estate Investment Trust 145,500 2.255 .06
Weingarten Realty Investors 504,000 17.640 .45
Western Investment Real Estate Trust 412,500 4.950 .13
----------- ----------
847.220 21.40
----------- ----------
Multi-Industry & Miscellaneous
- ---------------------------------------------- ------------- ----------- ----------
Multi-Industry - 3.19%
B A T Industries PLC 6,495,597 49.124
B A T Industries PLC (ADR)/1/ 150,000 2.250 1.30
Hanson PLC (ADR)/1/ 3,300,000 62.700 1.58
Hutchison Whampoa Ltd. 1,680,000 7.292 .18
Lend Lease Corp. Ltd. 399,598 5.101 .13
- ---------------------------------------------- ------------- ----------- ----------
Miscellaneous - 0.72%
Equity-type securities in initial period of
acquisition 28.299 .72
----------- ----------
154.766 3.91
----------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost:
$2,213.553 million) 2,479.162 62.63
----------- ----------
Principal
Bonds and Notes Amount
- ---------------------------------------------- ------------- ----------- ----------
Corporate
- ---------------------------------------------- ------------- ----------- ----------
Ann Taylor, Inc. 8.75% 2000 $5,600,000 5.404 .14
California Energy Co., Inc. 0%/10.25% 2004/3/ 4,300,000 3.354 .08
Century Communications Corp. 9.75% 2002 1,000,000 .998 .03
Consumers Power Co. 6.375% 2003 5,000,000 4.481 .11
Container Corp. of America 9.75% 2003 3,500,000 3.517 .09
Continental Cablevision, Inc. 9.50% 2013 1,000,000 .993
Continental Cablevision, Inc. 9.00% 2008 1,000,000 .993 .11
Continental Cablevision, Inc. 8.875% 2005 2,000,000 1.985
Embassy Suites, Inc. 10.875% 2002 3,000,000 3.225 .08
Fort Howard Paper Co. 10.00% 2003 1,000,000 .980 .09
Fort Howard Paper Co. 8.25% 2002 3,000,000 2.790
Host Marriott Corp. 10.375% 2011 1,376,000 1.376 .03
Hyster-Yale Materials Handling, Inc. 12.375%
1999 891,000 .953 .02
Infinity Broadcasting Corp. 10.375% 2002 4,500,000 4.657 .12
Long Island Lighting Co. 9.75% 2021 4,000,000 3.903 .10
MagneTek, Inc. 10.75% 1998 2,500,000 2.625 .07
McDermott Inc. 9.375% 2002 4,000,000 4.275 .11
Midland Cogeneration Venture LP, secured lease
obligation bonds, 10.33% 2002 8,083,411 8.184
Midland Cogeneration Venture LP 10.33% 2002 2,290,549 2.319 .27
News America Holdings Inc. 9.25% 2013 2,000,000 2.089
News America Holdings Inc. 9.125% 1999 5,000,000 5.268 .18
Occidental Petroleum Corp. 8.50% 2004 8,000,000 8.140 .21
Riggs National Corp. 8.50% 2006 2,600,000 2.496 .06
Rogers Cantel Mobile Communications Inc.
10.75% 2001 2,000,000 2.075 .05
Rykoff-Sexton, Inc. 8.875% 2003 4,500,000 4.387 .11
Smith's Food & Drug Centers, Inc.,
pass-through certificates, Series 1994-A2,
0%/8.64% 2012/34/ 5,000,000 4.813 .12
Time Warner Inc. 10.15% 2012 5,000,000 5.451
Time Warner Inc. 7.45% 1998 4,000,000 3.981 .24
TKR Cable I, Inc. 10.50% 2007 7,000,000 7.555 .19
Vons Companies, Inc. 9.625% 2002 16,300,000 16.993 .43
WestPoint Stevens Inc. 8.75% 2001 2,000,000 1.930 .05
----------- ----------
122.190 3.09
----------- ----------
Governments and Governmental
Authorities
- ---------------------------------------------- ------------- ----------- ----------
Canada 10.75% 1998 C$10,000,000 7.894 .20
New Zealand 8.00% 1998 NZ$50,000,000 33.509 .85
----------- ----------
41.403 1.05
----------- ----------
U.S. Treasury Notes
- ---------------------------------------------- ------------- ----------- ----------
6.00% 1997 $60,000,000 59.015 1.49
6.375% 1997 50,000,000 49.758 1.25
8.50% 1997 90,000,000 93.235 2.35
6.875% 1997 50,000,000 50.265 1.27
6.75% 1997 80,000,000 80.250 2.03
8.00% 1997 90,000,000 92.123 2.33
6.875% 1996 80,000,000 80.413 2.03
7.875% 1996 90,000,000 91.477 2.31
----------- ----------
596.536 15.06
----------- ----------
TOTAL BONDS AND NOTES (cost: $770.503
million) 760.129 19.20
----------- ----------
TOTAL INVESTMENT SECURITIES (cost:
$2,984.056 million) 3,239.291 81.83
----------- ----------
SHORT-TERM SECURITIES
- ---------------------------------------------- ------------- ----------- ----------
Corporate Short-Term Notes
- ---------------------------------------------- ------------- ----------- ----------
Abbott Laboratories 5.98%-6.00% due 5/8-5/10/95 30,900,000 30.856 .78
American Express Credit Corp. 5.97%-6.00% due
5/15-6/7/95 24,400,000 24.276 .61
American General Corp. 5.95% due 5/31/95 5,000,000 4.974 .13
American General Finance Corp. 6.00% due 5/5/95 12,700,000 12.690 .32
American General Investment Corp. 5.97% due
5/12/95 15,800,000 15.769 .40
Central and South West Corp. 5.98% due
5/11-6/6/95 46,700,000 46.489 1.18
CPC International Inc. 6.02% due 5/16/95 14,000,000 13.962 .35
Ford Motor Credit Co. 6.00%-6.04% due
5/9-6/2/95 87,200,000 86.821 2.19
General Electric Capital Corp. 5.96%-6.02% due
5/9-6/27/95 42,000,000 41.754 1.06
H.J. Heinz Co. 5.95%-6.00% due 5/1-5/23/95 33,900,000 33.829 .86
Hewlett-Packard Co. 5.92%-5.975% due
5/9-5/25/95 17,500,000 17.450 .44
Eli Lilly & Co. 6.02%-6.10% due 5/9-5/12/95 27,700,000 27.648 .70
National Rural Utilities Cooperative Finance
Corp. 5.97%-5.98% due 5/19-6/16/95 25,500,000 25.335 .64
J.C. Penney Funding Corp. 5.95%-6.00% due
5/8-5/31/95 71,600,000 71.361 1.80
PepsiCo, Inc. 5.94%-5.96% due 5/1-6/5/95 52,910,000 52.700 1.33
Pitney Bowes Inc. 5.95% due 5/23-6/6/95 22,200,000 22.092 .56
Shell Oil Co. 5.93%-5.98% due 5/8-6/1/95 29,200,000 29.093 .73
Southwestern Bell Telephone Co. 5.94%-5.97% due
5/11-5/26/95 35,400,000 35.274 .89
U S WEST Communications, Inc. 5.95%-6.00% due
5/11-6/22/95 54,000,000 53.600 1.35
Weyerhaeuser Co. 5.96% due 5/10/95 25,000,000 24.959 .63
Xerox Corp. 6.02%-6.07% due 5/16-6/1/95 32,510,000 32.356 .82
----------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $703.288
million) 703.288 17.77
EXCESS OF CASH AND RECEIVABLES OVER PAYABLES 15.953 .40
----------- ----------
TOTAL SHORT-TERM SECURITIES, CASH AND
RECEIVABLES, NET OF PAYABLES 719.241 18.17
----------- ----------
NET ASSETS $3,958.532 100.00%
=========== ==========
</TABLE>
/1/ American Depositary Receipts
/2/ Purchased in a private placement transaction;
resale to the public may require registration
or may extend only to qualified institutional
buyers.
/3/ Represents a zero coupon bond which will
convert to an interest-bearing security at a
later date.
/4/ Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity of these securities
is shorter than the stated maturity.
See Notes to Financial Statements
Capital Income Builder
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
at April 30, 1995 (dollars in millions) (unaudited)
<S> <C> <C>
Assets:
Investment securities at market (cost: $2,984.056) $3,239.29
Short-term securities (cost: $703.288) 703.288
Cash 0.501
Receivables for-
Sales of investments $4.55
Sales of fund's shares 10.386
Dividends and accrued interest 29.221 44.154
----------- ------------
3,987.23
Liabilities:
Payables for-
Purchases of investments 5.566
Repurchases of fund's shares 3.65
Management services 1.052
Dividends payable 17.131
Accrued expenses 1.303 28.702
----------- ------------
Net Assets at April 30, 1995 - Equivalent to
$33.26 per share on 119,010,006 shares of $0.01
par value capital stock outstanding
(authorized capital stock - 200,000,000 shares) $3,958.53
============
Statement of Operations
for the six months ended April 30, 1995
(dollars in millions)
Investment Income:
Income:
Dividends $53.72
Interest 49.375 $103.09
-----------
Expenses:
Management services fee 6.73
Distribution expenses 3.935
Transfer agent fee 1.391
Reports to shareholders 0.3
Registration statement and prospectus 0.37
Postage, stationery and supplies 0.33
Directors' fees 0.052
Auditing and legal fees 0.037
Custodian fee 0.306
Taxes other than federal income tax 0.052
Other expenses 0.027 13.53
----------- ------------
Net investment income 89.56
------------
Realized Gain and Unrealized Appreciation on
Investments:
Net realized gain 13.452
Net increase in unrealized appreciation on investments
Beginnning of period 183.513
End of period 255.339 71.826
----------- ------------
Net realized gain and increase in unrealized
appreciation on investments 85.278
------------
Net Increase in Net Assets Resulting from Operations $174.84
============
See Notes to Financial Statements
Statement of Changes in Net Assets
(dollars in millions) Six months Year
ended ended
4/30/95* 10/31/94
----------- ------------
Operations:
Net investment income $89.56 $173.75
Net realized gain on investments 13.452 3.96
Net change in unrealized appreciation on investments 71.826 -152.225
----------- ------------
Net increase in net assets resulting from
operations 174.838 25.487
----------- ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income -90.115 -172.829
Distributions from net realized gain on investments -11.162 -10.434
----------- ------------
Total dividends and distributions -101.277 -183.263
----------- ------------
Capital Share Transactions:
Proceeds from shares sold: 12,594,991 and
36,309,395 shares, respectively 406.03 1,203.13
Proceeds from shares issued in reinvestment of net
investment income dividends and distributions of
net realized gain on investments: 2,806,225 and
4,271,454 shares, respectively 89.105 139.279
Cost of shares repurchased: 7,425,091 and 11,660,048
shares, respectively -238.7 -382.19
----------- ------------
Net increase in net assets resulting from capital
share transactions 256.435 960.215
----------- ------------
Total Increase in Net Assets 329.996 802.439
Net Assets:
Beginning of period 3,628.54 2,826.10
----------- ------------
End of period (including undistributed net investment
income: $.850 and $1.405, respectively) $3,958.53 $3,628.54
=========== ============
</TABLE>
* Unaudited
See Notes to Financial Statements
Notes to Financial Statements
1. Capital Income Builder, Inc. ("the fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Equity-type securities are stated at market value based upon closing sales
prices reported on recognized securities exchanges on the last business day of
the period or, for listed securities having no sales reported and for unlisted
securities, upon last-reported bid prices on that date. Bonds and notes are
valued at prices obtained from a bond-pricing service provided by a major
dealer in bonds, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean of their representative quoted bid and asked prices
or, if such prices are not available, at the mean of such prices for securities
of comparable maturity, quality, and type. Securities denominated in non-U.S.
currencies are generally valued on the basis of bid quotations. Short-term
securities with original or remaining maturities in excess of 60 days are
valued at the mean of their quoted bid and asked prices. Short-term securities
with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Directors.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis. The fund
does not amortize premiums on securities purchased. Dividends to shareholders
are declared daily from net investment income.
Investment securities and other assets and liabilities denominated in
non-U.S. currencies are recorded in the financial statements after translation
into U.S. dollars utilizing rates of exchange on the last business day of the
period. Purchases and sales of investment securities, income, and expenses are
calculated using the prevailing exchange rate as accrued. The fund does not
identify the portion of each amount shown in the fund's Statement of operations
under the caption "Realized Gain and Unrealized Appreciation on Investments"
that arises from changes in non-U.S. currency exchange rates.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $306,000 includes $34,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of April 30, 1995, net unrealized appreciation on investments for book and
federal income tax purposes aggregated $255,235,000, of which $351,940,000
related to appreciated securities and $96,705,000 related to depreciated
securities. During the six months ended April 30, 1995, the fund realized, on
a tax basis, a net capital gain of $13,444,000 on securities transactions. The
cost of portfolio securities for book and federal income tax purposes was
$3,687,344,000 at April 30, 1995.
3. The fee of $6,730,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.24% of the first $1 billion of average net assets; 0.20%
of such assets in excess $1 billion but not exceeding $2 billion; 0.18% of such
assets in excess of $2 billion but not exceeding $3 billion; 0.165% of such
assets in excess of $3 billion but not exceeding $5 billion; 0.155% of such
assets in excess of $5 billion but not exceeding $8 billion; and 0.15% of such
assets in excess of $8 billion; plus 3.0% of the fund's gross investment
income. For purposes of the advisory agreement, gross investment income means
gross income, computed without taking account of gains or losses from sales of
capital assets.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended April 30,
1995, distribution expenses under the plan were $3,935,000. As of April 30,
1995, accrued and unpaid distribution expenses were $1,161,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $1,391,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $1,753,000 (after
allowances to dealers) as its portion of the sales charges paid by purchasers
of the fund's shares. Such sales charges are not an expense of the fund and,
hence, are not reflected in the accompanying statement of operations.
Directors of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of April 30, 1995, aggregate amounts deferred were $42,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS, and AFD. No such
persons received any remuneration directly from the fund.
4. As of April 30, 1995, accumulated undistributed net realized gain on
investments was $4,683,000 and additional paid-in capital was $3,696,470,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $362,403,000 and $327,271,000, respectively, during
the six months ended April 30, 1995.
Dividend and interest income is recorded net of non-U.S. taxes paid. For the
six months ended April 30, 1995, such non-U.S. taxes were $2,143,000. Net
realized currency gains on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $293,000 for the six months ended
April 30, 1995.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year
Six ended
Months October
31
ended 31
4/30/95 /1/ 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 32.68 34.42 $30.77 $28.67 $23.37 $25.05
--------- ------- ------- ------- ------ -------
-
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .78 1.73 1.53 1.44 1.37 1.39
Net realized and unrealized gain
(loss) on investments .69 (1.62) 3.76 2.33 5.39 (1.76)
------- ------- ------- ------- ------ -------
-
Total income (loss) from investment 1.47 .11 5.29 3.77 6.76 (.37)
operations
------- ------- ------- ------- ------ -------
-
LESS DISTRIBUTIONS:
Dividends from net investment income (.79) (1.73) (1.53) (1.44) (1.46) (1.31)
Distributions from net realized gains (.10) (.12) (.11) (.23) - -
------- ------- ------- ------- ------ -------
-
Total distributions (.89) (1.85) (1.64) (1.67) (1.46) (1.31)
------- ------- ------- ------- ------ -------
-
Net Asset Value, End of Period 33.26 32.68 $34.42 $30.77 $28.67 $23.37
======= ======= ======= ======= ====== =======
=
Total Return /2/ 4.61% /3/ .47% 17.58% 13.46% 29.27% (1.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $3,959 $3,629 $2,826 $1,203 $563 $206
Ratio of expenses to average net assets .36% /3/ .73% .72% .81% .98% 1.01%
Ratio of net income to average net assets 2.41% /3/ 5.29% 4.69% 4.71% 5.09% 5.70%
Portfolio turnover rate 10.50% /3/ 36.19% 11.22% 16.57% 13.99% 24.68%
</TABLE>
/1/ Unaudited
/2/ This was calculated without deducting a sales
charge. The maximum sales charge is 5.75% of the
fund's offering price.
/3/ Based on operations for the period indicated,
and, accordingly, not representative of a full
year's operations.
CAPITAL INCOME BUILDER
BOARD OF DIRECTORS
H. Frederick Christie
Palos Verdes Estates, California
Private investor; former President and
Chief Executive Officer, The Mission Group;
former President, Southern California
Edison Company
Paul G. Haaga, Jr., Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
Mary Myers Kauppila, Boston, Massachusetts
Founder and President,
Energy Investment, Inc.
Jon B. Lovelace, Los Angeles, California
Chairman of the Board of the fund
Vice Chairman of the Board and
Chairman of the Executive Committee,
Capital Research and Management Company
Gail L. Neale, Middlebury, Vermont
Executive Vice President of the Salzburg
Seminar; former Director of Development and
of the Capital Campaign, Hampshire College
Robert J. O'Neill, Ph.D., Oxford, England
Professor and Fellow,
All Souls College, University of Oxford
Donald E. Petersen, Birmingham, Michigan
Retired; former Chairman of the Board and
Chief Executive Officer, Ford Motor Company
Stefanie Powers, Beverly Hills, California
Actor; Founder and President,
The William Holden Wildlife Foundation
Frank Stanton, New York, New York
President Emeritus, CBS Inc.
Dr. Charles Wolf, Jr., Santa Monica, California
Dean, The RAND Graduate School;
Director, International Economic Studies,
The RAND Corporation
Officers
Larry P. Clemmensen, Los Angeles, California
Senior Vice President and Treasurer of the fund
Senior Vice President and Director,
Capital Research and Management Company
James B. Lovelace, Los Angeles, California
Vice President of the fund
Vice President,
Capital Research and Management Company
Janet A. McKinley, New York, New York
Vice President of the fund
Senior Vice President,
Capital Research Company
Catherine M. Ward, Los Angeles, California
Vice President of the fund
Vice President and Director,
Capital Research and Management Company
Vincent P. Corti, Los Angeles, California
Secretary of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
Mary C. Cremin, Los Angeles, California
Assistant Treasurer of the fund
Senior Vice President -
Fund Business Management Group,
Capital Research and Management Company
R. Marcia Gould, Los Angeles, California
Assistant Treasurer of the fund
Vice President -
Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
AMERICAN FUNDS SERVICE COMPANY
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers
400 South Hope Street
Los Angeles, California 90071-2899
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of Capital Income Builder,
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
June 30, 1995, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
Litho in USA TAG/GRS/2643
Lit. No. CIB-013-0695
[The American Funds Group(R)]
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