CAPITAL INCOME BUILDER
FIRST-QUARTER REPORT
for the three months ended
January 31, 1995
[The American Funds Group (R) LOGO]
Fellow Investors:
Capital Income Builder emphasizes investments that provide above-average
income and/or growing income, with the goal of regularly increasing dividends
every quarter if possible.
Continuing its record of steady increases since inception, the dividend is
being raised to 43 cents a share for the second quarter of fiscal 1995. The
dividend will be paid in late March.
Shareholders who have been with Capital Income Builder since the beginning
have seen their income from the fund grow by more than 50%. Of course, there
can be no guarantee that this pattern will continue, but maintaining regular
increases is among our foremost goals.
We believe Capital Income Builder's focus on rising income should continue to
enable the fund to do better than the stock market during market declines and
hold its own at other times. The graph above right shows that the fund's
results generally have proved this concept to be correct.
[SIDEBAR]
CAPITAL INCOME BUILDER (R) SEEKS 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.
[END SIDEBAR]
<TABLE>
<CAPTION>
Average Annual Compound Returns*
For periods ended December 31, 1994
(the end of the most recent calendar
quarter)
<S> <C>
One year -7.87%
Five years +8.81%
Lifetime (since 7/30/87) +9.55%
</TABLE>
*As required by the Securities and Exchange Commission, these
calculations reflect payment of the maximum sales charge of
5.75%. Sales charges are lower for accounts of $50,000 or more.
The graph compares the total return of a $10,000 investment in CIB at the
fund's inception (assuming payment of the maximum sales charge) with that of
the Standard & Poor's 500 Composite Index. Total return, of course, is a
combination of dividend payments and changes in share value - a comprehensive
measure of what you receive from your investment if you reinvest all dividends
and capital gain distributions.
Our 1994 annual report included a similar graph of total return since
inception, as well as graphs illustrating each of the components of that return
- - Capital Income Builder's consistent dividend growth and its capital growth
compared with that of the stock market. This last graph actually understated
the fund's capital growth through October 31, 1994, because the final figure on
the graph erroneously reflected deduction of the maximum sales charge. The
fund's actual capital results relative to the market through the fourth quarter
of fiscal 1994 were, therefore, better than we had indicated. We regret any
confusion this may have caused.
Capital Income Builder's net assets totaled $3,684 million as of January 31,
1995, reflecting a 14% increase over a year earlier.
Cordially,
Jon B. Lovelace Paul G. Haaga, Jr.
CHAIRMAN OF THE BOARD PRESIDENT OF THE FUND
March 2, 1995
Portfolio Summary January 31, 1995
Five Largest Industry Holdings in Equities
<TABLE>
<CAPTION>
Percent of Net Assets
No. of U.S. Outside Total
Companies Equities U.S. Equities
<S> <C> <C> <C> <C>
Banking 26 13.59% .73% 14.32%
Utilities: 22 6.60 6.70 13.30
Electric & Gas
Telecommunications 8 4.32 3.15 7.47
Business & 9 .75 4.77 5.52
Public Services
Health & 5 5.31 - 5.31
Personal Care
----- ----- ----- -----
5 Largest Industries 70 30.57 15.35 45.92
All Other Industries 41 10.94 6.23 17.17
----- ----- ----- -----
111 41.51% 21.58% 63.09%
===== ===== ===== =====
</TABLE>
- ---------
Ten Largest Individual Equity Holdings
<TABLE>
<CAPTION>
Percent of
Net Assets
<S> <C>
American Home Products 2.51%
Telecom Corp. of New Zealand 2.26
Entergy 1.94
Hanson 1.65
Banc One 1.62
Bristol-Myers Squibb 1.53
Ameritech 1.49
Southern Electric 1.47
GTE 1.33
B-A-T Industries 1.31
</TABLE>
Fund results in this report were computed without a sales charge unless
otherwise indicated. Sales charges are lower for accounts of $50,000 or more.
There is no sales charge on dividends or capital gain distributions that are
reinvested in additional shares. The fund's 30-day yield as of February 28,
1995, calculated in accordance with the Securities and Exchange Commission
formula, was 4.75%.
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.
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.
Litho in USA TAG/AL
(c) 1995 American Funds Distributors, Inc.
Lit No. CIB-012-0395
