Capital Income Builder
Annual Report 1995
For the year ended October 31
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)]
[CIB (R)] (logo)
While the fund can be fully invested in stocks, it has responded to current
conditions in which stock prices are at record highs and dividend yields are
abnormally low by holding a relatively low portion in stocks.
In seeking values others seem to have overlooked, the fund in recent years has
invested heavily in U.S. banks, electric utilities particularly in the U.K.,
and U.S. telecommunications.
The fund has the ability to search selectively for above-average and growing
dividends. It can invest as much as 40% of assets outside U.S. markets, but it
can also be 100% invested in U.S. securities.
CIB'S EQUITY HOLDINGS SHOWING LARGEST INDUSTRIES BY COUNTRY
<TABLE>
<CAPTION>
U.S. U.K. New Hong Nether-l Australia Spain Total
Zealand Kong ands
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Banking 14.58% - - - - .76% - 15.34%
Utilities: 5.17 4.72% - .58% - .03 - 10.50
Electric & Gas
Telecommunications 4.70 - 2.23% .27 .63% - - 7.83
Business & Public .84 4.02 - .26 - - .37% 5.49
Services
Health & Personal 4.89 - - - - - - 4.89
Care
---- ---- ---- ---- ---- ---- ---- ----
Five Largest 30.18 8.74 2.23 1.11 .63 .79 .37 44.05
Industries
---- ---- ---- ---- ---- ---- ---- ----
Other Industries 11.86 3.68 - 1.06 .70 .11 - 17.41
Total Equities 42.04% 12.42% 2.23% 2.17% 1.33% .90% .37% 61.46%
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the fund's average annual compound returns with
all distributions reinvested as of September 30, 1995, assuming payment of the
5.75% maximum sales charge at the beginning of the stated periods: Since
inception on July 30, 1987: +10.95% a year; 5 years: +14.13% a year; 12 months:
+11.75%. The fund's 30-day SEC yield as of November 30, 1995 was 4.14%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. 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.
FELLOW INVESTORS:
When we started Capital Income Builder(R) in July 1987, we set ourselves
deliberately specific objectives. Primary among these is one pursued by no
other mutual fund as far as we know: to provide above-average and growing
income for shareholders. We have been doing this by raising the fund's dividend
at regular intervals, every quarter as far as possible.
We are pleased to inform you that we have continued to meet this goal: In
December 1995, Capital Income Builder's dividend was raised for the 33rd
consecutive quarter to 44.5 cents a share. You also received a 50-cent-a-share
distribution from net realized capital gains, a distribution made necessary by
portfolio changes resulting from the past year's substantial rise in equity and
bond prices.
If you reinvest the capital gain distribution, it will mean that even if the
per-share dividend on income were not increased in the March quarter, the
income you would receive would rise by more than the amount of the past
quarterly increases because of the greater number of shares you would hold.
Another part of this important CIB goal is to build income faster than the rate
of inflation. Your December 1995 payment on income of 44.5 cents is 59% higher
than the first full-quarter payment of 28 cents in December 1987, far outpacing
the more than 30% rise in the Consumer Price Index during that period.
Since beginning operations, CIB has provided a dividend yield ranging around 5%
of net asset value, in marked contrast to the general market. In November 1995
yields on stocks generally, as measured by the unmanaged Standard & Poor's 500
Composite Index, reached the lowest point since 1926, the date from which
detailed S&P 500 Index records are available. The latest new low of 2.2%
compares with an August 1987 low of 2.6%, just before that year's steep market
correction.
DIVIDENDS AND OVERALL RETURN
Because of its gradual nature, the cumulative contribution of reinvested
dividends to total return is often overlooked by investors. That contribution
amounts to 46% of the annualized total return for the S&P 500 Index since 1926.
(The S&P's average annual compound return with dividends reinvested has been
10.5% since that date, while its capital return excluding dividends has been
5.7%.) During the most recent 12 months ended October 31, dividends accounted
for only 12.6% of total return for stocks generally. In contrast to the general
market, dividends contributed 30.1% of CIB's total return for the same period.
A little later in the report, we examine how CIB has managed to pay increasing
dividends in the face of historically low dividend yields and slower dividend
growth in the overall market.
RESULTS FOR THE LATEST YEAR
In the 12 months ended October 31, stocks generally have risen in price because
of earnings growth and declining interest rates. Total return for the S&P 500
for the period was 26.4%. Total return for CIB was 17.0%.
It is not surprising that the fund's return was lower than that of the broad
market. A relative shortage of above-average dividend-growth opportunities
meeting the fund's investment criteria led CIB's investment manager to maintain
large holdings of cash-equivalent securities, helping us provide above-average
income at a time of historic lows in dividend yields on equities. The rise in
the broad market was importantly impacted by the popularity of technology
stocks, few of which are appropriate for CIB's objectives in light of their
dividend policies.
Nevertheless, the fund's 11.7% lifetime average annual compound return at
October 31 continued to outpace the unmanaged S&P 500, which had an 11.0%
return for the same period.
IMPORTANCE OF DIVIDENDS
Most investors think of dividends only as a source of current income. However,
over time dividends from common stocks also contribute to total return in a
number of other ways. First, when reinvested they can increase substantially
the rate of compound growth of the portfolio. Second, the yield they provide
can act as a support for stock prices in weak stock market periods.
Additionally, a record of steady dividend increases is generally a sign to
investors of a well-run, owner-oriented company and a sign of its confidence in
the future, which also can result in a higher share price.
DIVIDEND CUSHION
A market that is going up based on shorter term earnings momentum but little
dividend cushion is generally at greater risk when earnings slow or decline
than one supported by good dividend yields. In CIB's case, we believe a number
of our equity holdings are in a position to continue to grow dividends because
of the strength of their balance sheets, even if their earnings growth slows
over the next several years.
We also expect that the portion of CIB assets held in fixed-income securities
(which have an average life of 2.5 years) will benefit our long-term results.
They will enable us to take advantage of opportunities created by stock market
corrections when they come, while providing above-average income in the
meantime.
The value of this strategy has shown itself after previous strong markets, and
we expect it to be shown again after the present one.
ABOVE-AVERAGE YIELD IN A LOW-YIELD MARKET
When common stocks overall are yielding less than 2.5%, for CIB to provide a
yield close to double that requires a disciplined effort. Part of that
discipline involves very careful selection of our holdings. The few sectors
with stocks meeting our criteria have involved the energy category, as well as
the banking, health care and telecommunications industries.
Above-average yield is only part of CIB's goal. We also are looking for
above-average dividend growth. Since 1926, dividend growth has been slightly
under 4.5% for stocks generally. In the most recent five years, however, the
growth of dividends in the broad market as measured by the S&P 500 has fallen
to 2.8% per year - less than the increase in the Consumer Price Index for the
same period. Once again, therefore, we have to exercise great selectivity.
In choosing our investments, we generally favor companies with growing
dividends as well as strong earnings with balance sheets that show the dividend
to be well covered and increases in the dividend to be sustained and
consistent. As the dividend is raised, the stock price is similarly likely to
show upward movement, though exactly when and how much depends on the varying
moods of investors.
THE GROWTH-OF-DIVIDENDS FUND
While CIB has been categorized at various times by some analysts of the mutual
fund industry as a "general equity mutual fund," an "equity-income fund," and a
"global asset allocation fund," we believe CIB is unique in having its own
concept - growth of dividends - which sets it apart from other funds.
Capital Income Builder is a U.S. mutual fund with the flexibility to invest
from zero to 40% internationally, and to vary the amount it invests in
equities, up to 95% or more. (By contrast, global funds can invest far more
internationally.) The composition of the portfolio is determined by where we
can best pursue our objectives at any given time. Therefore, it can be
misleading to categorize the fund based on only its most recent investment mix.
Few holdings satisfy to the same degree our investment criteria both for
above-average current dividend yield and for above-average dividend growth. To
achieve our objectives we therefore frequently pair stocks offering higher
current yield and lower dividend growth with others offering the opposite. As
far as possible, CIB buys for the long term to benefit from growing dividends;
our average holding period for stocks is more than five years.
A LOOK AT CIB'S LARGEST CURRENT SECTORS
In fiscal 1995, the fund benefited in particular from a number of its equity
holdings in U.S. banks and U.K. electric utilities.
[begin sidebar]
THE HISTORY OF DIVIDEND YIELDS 1926-1995
For over a generation following the 1929-1932 market crash, investors felt it
was axiomatic that stocks in general should pay in dividends close to double
what bonds paid in interest. Stocks were demonstrably riskier, and therefore
their return should be higher. This view was reinforced by an S&P composite
dividend yield of over 10% at the end of 1931 (compared with a low yield of
slightly under 3% in 1929), and for the entire 1929-1957 period, an average
5.5% yield on equities against an average 2.7% yield on bonds.
In the mid-1950s a new phase emerged: Bond yields increased to exceed those
from equities as investors, with less concern about a repeat of the 1930s,
gained confidence in stocks. Many looked to stocks to have the growth
potential to offset increased inflation. In subsequent down markets, dividend
returns resurged from time to time, but in the generally strong markets of the
late 1980s and 1990s (CIB's lifetime), yields have continued to decline.
Lacking the daily drama of stock market prices, dividends nevertheless clearly
have been a central factor in successful long-term investing. Stock prices are
inherently volatile. In contrast, dividend payments, as the primary payments
made by a company to its shareowners, are rooted in the company's cash flow.
They are not directly affected by the gyrations of the stock market and, while
not guaranteed, are generally much more predictable.[end sidebar]
BANKING
The fund's long-term holdings in U.S. banks are an excellent example of the CIB
approach at work. Banking became CIB's biggest industry holding in early fiscal
1995, moving up from second behind utilities as a result of price appreciation
and added purchases. Most of the holdings are in U.S. banks, but CIB's current
portfolio also includes a trust company, an S&L and two Australian banks.
The table below shows how banks have been ideal holdings for CIB, with their
above-average yield (the median for the list is 4.6%) and mostly strong
dividend growth (15 of the 17 raised the dividend during the fiscal year, with
a median increase of 9.7%). Those characteristics have helped to boost their
market prices. The fund has found banking stocks attractive since the early
1990s, when they were depressed by a bad-loan, high-expense crisis.
Of the current list, Wachovia is among the longest to be in the portfolio. The
stock was first purchased in August 1989 for around $21 a share. In 1990, it
fell to $16.50 and we bought more. Even as the banking industry emerged from
its crisis and stock prices rebounded, CIB's fund managers continued to
perceive long-term value, while receiving above-average yield in the near term.
Purchases of shares in Wachovia and other banks continued as the fundamentals
improved with announcements of dividend increases, share repurchases and
banking mergers, propelling bank stock prices higher. At the end of October,
Wachovia was valued at more than $44 a share. Its five-year dividend growth
rate was more than 11% per year.
As a group, the fund's bank stocks still provide above-average yields and we
believe they have prospects for further dividend growth.
U.S. BANK STOCKS HELD BY CIB THROUGHOUT FISCAL 1995
<TABLE>
<CAPTION>
Fiscal Year Ended 10/31/95
U.S. Bank First Purchased Price Dividend Combined Per-Share
by CIB Change Income Return Dividend
Increase
During Year
<S> <C> <C> <C> <C> <C>
AmSouth 8/94 34.0% 5.1% 39.1% 8.6%
Banc One 3/94 16.9 4.6 21.5 9.7
BankAmerica 11/92 32.2 4.1 36.3 15.0
Central Fidelity 6/90 9.6 4.0 13.6 7.1
Comerica 6/90 21.7 4.9 26.6 9.4
CoreStates 2/94 40.6 5.2 45.8 13.3
First Chicago 9/93 38.5 4.6 43.1 20.0
First Hawaiian 3/93 6.4 4.3 10.7 none
First Interstate 12/93 61.3 3.8 65.1 6.7
First Security 6/93 27.2 4.3 31.5 7.7
(Utah)
First Union 11/93 10.3 4.2 14.5 13.0
Huntington 10/94 43.3 4.8 48.1 5.0
Bancshares
J.P. Morgan 4/88 24.6 4.9 29.5 10.3
National City 3/94 13.8 4.8 18.6 10.0
Old Kent 2/93 25.5 4.1 29.6 12.2
PNC Bank 10/94 11.7 6.0 17.7 none
Wachovia 8/89 31.7 4.0 35.7 20.0
</TABLE>
U.K. ELECTRIC UTILITIES
U.K. electric utilities are another group which in recent years have provided
above-average yields, with dividends growing at a substantial rate, and which
have offered good potential for price appreciation. The stocks have been quite
volatile as the companies encountered regulatory pressures affecting confidence
in their ability to increase dividends but nonetheless have confirmed our
assessment of their inherent value.
Southern Electric and Eastern Group, for instance, were among our ten largest
holdings at the end of 1994. By mid-year in fiscal 1995, both stocks had
dropped sharply in price, but they strengthened greatly later in the year as
they became candidates for acquisition by other companies.
Our nearly five million shares of Southern remain among our largest holdings.
Our purchases began in 1992, reached the midpoint in June 1993 and continued
into early 1994, with a small addition in mid-1995. At fiscal year-end, they
had a market value of $75.3 million, 94% above our cost. Eastern shares were
purchased over roughly the same period and grew to $63.8 million in value,
giving us a profit of more than $34 million when the company was acquired in
October.
In addition to Southern, we continued at fiscal year-end to have several other
holdings in the U.K. group - including NORWEB, SEEBOARD and South Wales
Electricity - which have produced roughly comparable results. Certain of these
holdings have been reduced or eliminated since fiscal year-end.
INVESTOR SAFEGUARDS AND THE CIB APPROACH
In a period of new highs in stock prices and new lows in dividend yields,
preserving existing capital is an increasing concern. In planning our
investments, we place great importance on protecting the assets under our
management, and we believe that the growth-of-dividends approach inherently
provides some safeguards.
At the same time, CIB provided a total lifetime return distinctly higher than
the average for mutual funds, as measured by Lipper Analytical Services. As
shown in the chart below, CIB's total lifetime return is 155.1%, compared with
the 126.9% average of 511 general equity funds.
CIB'S RESULTS COMPARED WITH GENERAL EQUITY MUTUAL FUNDS
For the period 7/31/87 to 10/31/95
General Equity Funds +126.86%*
CIB +155.07%
*Average for 511 General Equity Mutual Funds
Total return as calculated by Lipper Analytical Services
Results do not reflect the effect of sales charges.
GROWING INVESTOR INTEREST IN CIB
It is gratifying to us that although the fund has not provided the more extreme
gains of the last 12 months, investor interest in CIB has continued to grow
during the period. On October 31, CIB had more than 290,000 shareholder
accounts and over $4.5 billion in net assets, increases of 11% and 25%,
respectively, from a year earlier.
We thank you, our shareholders, for your confidence and encouragement. It is
our aim to continue to provide dividend income which is above average both in
current yield and in growth. We believe that if we focus more on fundamentals
than on day-to-day price fluctuations, overall long-term results can be
rewarding.
Jon B. Lovelace
Chairman of the Board
Paul G. Haaga, Jr.
President of the Fund
December 18, 1995
Total Return Results*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Based on a $1,000 investment for
periods ended October 31, 1995
(with all dividends and distributions Ending Total Annualized
reinvested) Balance Return Return
One year from 11/1/94 $1,103 10.26% 10.26%
Two years from 11/1/93 1,108 10.79 5.26
Three years from 11/1/92 1,303 30.26 9.21
Four years from 11/1/91 1,478 47.78 10.26
Five years from 11/1/90 1,910 91.00 13.82
Six years from 11/1/89 1,878 87.82 11.08
Seven years from 11/1/88 2,192 119.25 11.87
Eight years from 11/1/87 2,462 146.20 11.92
Lifetime from 7/30/87 2,348 134.80 10.89
</TABLE>
*Reflect payment of the maximum sales charge of 5.75%.
CAPITAL INCOME BUILDER
Investment Portfolio October 31, 1995
<TABLE>
<CAPTION>
PERCENT OF
LARGEST INDIVIDUAL HOLDINGS NET ASSETS
- --------------------------------- ----------
<S> <C> <C> <C>
American Home Products 2.58%
Telecom Corp. of New Zealand 2.23
Southern Electric 1.66
Entergy 1.63
Banc One 1.56
Ameritech 1.55
Bristol-Myers Squibb 1.54
Phillip Morris 1.32
Chemical Banking 1.32
Pacific Telesis Group 1.31
EQUITY-TYPE
SECURITIES Shares or Market Percent
Principal Value of Net
ENERGY Amount (Millions) Assets
- ---------------------------------- ---------- ----------- ----------
ENERGY SOURCES - 1.52%
Amoco Corp. 430,000 $27.466 .60%
Burmah Castrol PLC 646,839 10.079 .22
Royal Dutch Petroleum Co. (New York Registered
Shares) 260,000 31.948 .70
- ---------------------------------- ---------- ----------- ----------
UTILITIES: ELECTRIC & GAS - 10.50%
Australian Gas Light Co. 363,069 1.258 .03
British Gas PLC 900,000 3.431
British Gas PLC (American Depositary Receipts) 60,000 2.280 .13
Brooklyn Union Gas Co. 200,000 5.025 .11
Central and South West Corp. 1,400,000 37.450 .83
China Light & Power Co., Ltd. 2,184,500 11.642 .26
Detroit Edison Co. 450,000 15.188 .34
East Midlands Electricity PLC 1,450,000 19.923 .44
Entergy Corp. 2,600,000 74.100 1.63
General Public Utilities Corp. 950,000 29.688 .65
Hongkong Electric Holdings Ltd. 4,231,500 14.395 .32
Houston Industries Inc. 100,000 4.638 .10
Long Island Lighting Co. 2,125,000 36.125 .80
National Power PLC 3,410,000 26.595 .59
NORWEB PLC 1,190,000 21.650 .48
Pacific Gas and Electric Co. 1,000,000 29.375 .65
PECO Energy Co. 100,000 2.925 .06
SEEBOARD PLC 4,000,000 32.811 .72
South Wales Electricity PLC 2,210,000 31.807 .70
Southern Electric PLC 4,995,000 75.267 1.66
----------- ----------
545.066 12.02
----------- ----------
MATERIALS
- ---------------------------------- ---------- ----------- ----------
CHEMICALS - 0.14%
E.I. du Pont de Nemours and Co. 100,000 6.238 .14
- ---------------------------------- ---------- ----------- ----------
FOREST PRODUCTS & PAPER - 0.38%
Federal Paper Board Co., Inc. 175,000 7.350 .16
James River Corp. of Virginia, DECS convertible
preferred shares 225,000 6.862 .15
Potlatch Corp. 76,800 3.235 .07
----------- ----------
23.685 .52
----------- ----------
CAPITAL EQUIPMENT
- ---------------------------------------------- ---------- ----------- ----------
DATA PROCESSING & REPRODUCTION - 0.33%
MacNeal-Schwendler Corp. 615,000 9.379 .21
Unisys Corp., convertible preferred shares,
Series A 200,000 5.500 .12
----------- ----------
14.879 .33
----------- ----------
CONSUMER GOODS
- ---------------------------------------------- ---------- ----------- ----------
AUTOMOBILES - 1.24%
Ford Motor Co., Class A 1,950,000 56.062 1.24
- ---------------------------------------------- ---------- ----------- ----------
BEVERAGES & TOBACCO - 2.76%
American Brands, Inc. 650,000 27.869 .61
Philip Morris Companies Inc. 710,000 59.995 1.32
UST Inc. 1,250,000 37.500 .83
- ---------------------------------------------- ---------- ----------- ----------
HEALTH & PERSONAL CARE - 4.89%
American Home Products Corp. 1,320,000 116.985 2.58
Bristol-Myers Squibb Co. 915,000 69.769 1.54
Merck & Co., Inc. 250,000 14.375 .32
Schering-Plough Corp. 130,000 6.971 .15
Upjohn Co. 100,000 5.075 .11
Warner-Lambert Co. 100,000 8.513 .19
----------- ----------
403.114 8.89
----------- ----------
SERVICES
- ---------------------------------------------- ---------- ----------- ----------
BROADCASTING & PUBLISHING - 0.05%
South China Morning Post (Holdings) Ltd. 3,600,000 2.096 .05
- ---------------------------------------------- ---------- ----------- ----------
BUSINESS & PUBLIC SERVICES - 5.49%
American Water Works Co., Inc. 480,600 15.319 .34
Autopistas, Concesionaria Espanola, SA 1,780,800 16.635 .37
Consumers Water Co. 229,000 4.065 .09
Dun & Bradstreet Corp. 310,000 18.523 .41
Hutchison Delta Finance Ltd., 7.00% convertible
debentures 2001 /1/ $11,000,000 11.990 .26
North West Water Group PLC 4,420,000 41.570 1.00
North West Water Group PLC Units 1,262,857 3.596
Southern Water PLC 4,085,533 43.983 .97
Thames Water PLC 6,000,000 49.975 1.10
Welsh Water PLC 3,630,833 43.223 .95
- ---------------------------------------------- ---------- ----------- ----------
TELECOMMUNICATIONS - 7.83%
ALLTEL Corp. 350,000 10.719 .23
Ameritech Corp. 1,300,000 70.200 1.55
GTE Corp. 1,300,000 53.625 1.18
Hong Kong Telecommunications Ltd. (American
Depositary Receipts) 720,000 12.510 .27
Koninklijke PTT Nederland NV 809,700 28.478 .63
Pacific Telesis Group 1,950,000 59.231 1.31
Telecom Corp. of New Zealand Ltd. 15,784,160 65.546
Telecom Corp. of New Zealand Ltd. /1/ 8,380,000 34.799 2.23
Telecom Corp. of New Zealand Ltd. (American
Depositary Receipts) 12,500 .830
U S WEST, Inc. 404,707 19.274 .43
- ---------------------------------------------- ---------- ----------- ----------
TRANSPORTATION: AIRLINES - 0.54%
British Airways PLC (American Depositary Receipts) 340,000 24.310 .54
- ---------------------------------------------- ---------- ----------- ----------
TRANSPORTATION: SHIPPING - 0.16%
Shun Tak Holdings Ltd. 9,078,184 7.163 .16
----------- ----------
637.660 14.07
----------- ----------
FINANCE
- ---------------------------------------------- ---------- ----------- ----------
BANKING - 15.34%
AmSouth Bancorporation 800,000 31.900 .70
Banc One Corp. 2,100,000 70.875 1.56
BankAmerica Corp. 404,000 23.230 .51
Central Fidelity Banks, Inc. 1,025,000 32.287 .71
Chemical Banking Corp. 1,050,000 59.719 1.32
Comerica Inc. 1,510,000 50.774 1.12
CoreStates Financial Corp. 1,300,000 47.287 1.04
First Chicago Corp. 555,000 37.671 .83
First Fidelity Bancorporation 50,000 3.269 .07
First Hawaiian Bank 510,000 14.790 .33
First Interstate Bancorp 135,000 17.415 .39
First Security Corp. (Utah) 925,000 30.294 .67
First Union Corp. 900,000 44.662 .99
Huntington Bancshares Inc. 2,047,500 48.884 1.08
J.P Morgan & Co. Inc. 180,000 13.882 .31
National Australia Bank Ltd. 2,407,694 20.616 .46
National City Corp. 900,000 27.787 .61
Old Kent Financial Corp. 525,000 20.081 .44
PNC Bank Corp. 800,000 21.000 .46
Wachovia Corp. 660,000 29.122 .64
Washington Federal Savings and Loan Assn. 500,000 11.437 .25
Westpac Banking Corp. 3,250,000 13.345 .30
Wilmington Trust Corp. 850,000 25.079 .55
- ---------------------------------------------- ---------- ----------- ----------
FINANCIAL SERVICES - 0.55%
Beneficial Corp. 340,000 16.660 .37
Manhattan Card Co. Ltd. 18,800,000 8.025 .18
- ---------------------------------------------- ---------- ----------- ----------
INSURANCE - 2.45%
American General Corp. 160,000 5.260 .12
Lincoln National Corp. 1,230,000 54.889 1.21
Ohio Casualty Corp. 717,500 25.471 .56
Prudential Corp. PLC 3,557,546 22.259 .49
SAFECO Corp. 50,000 3.209 .07
- ---------------------------------------------- ---------- ----------- ----------
REAL ESTATE - 3.63%
Camden Property Trust 400,000 8.300 .18
Hysan Development Co. Ltd. 950,000 2.421 .05
Kimco Realty Corp. 520,300 19.186 .42
Security Capital Industrial Trust 702,328 11.501 .25
Security Capital Pacific Trust 1,900,000 33.962
Security Capital Pacific Trust, convertible .91
preferred shares, Series A 300,000 7.125
Security Capital Realty Inc. /1/ /2/ 24,900 23.887
Security Capital Realty Inc. 12.00% .91
convertible debentures 2014 /1/ /2/ $18,862,000 17.298
Sun Hung Kai Properties Ltd. 1,486,000 11.869 .26
Tucker Properties Corp. 532,800 4.928 .11
Washington Real Estate Investment Trust 145,500 2.164 .05
Weingarten Realty Investors 504,000 17.388 .39
Western Investment Real Estate Trust 412,500 4.589 .10
----------- ----------
995.797 21.97
----------- ----------
MULTI-INDUSTRY & MISCELLANEOUS
- ---------------------------------------------- ---------- ----------- ----------
MULTI-INDUSTRY - 2.91%
B A T Industries PLC 6,495,597 53.332
B A T Industries PLC (American Depositary Receipts) 150,000 2.494 1.23
Hanson PLC (American Depositary Receipts) 3,500,000 54.250 1.20
Hutchison Whampoa Ltd. 2,960,000 16.311 .36
Lend Lease Corp. Ltd. 402,208 5.595 .12
- ---------------------------------------------- ---------- ----------- ----------
MISCELLANEOUS - 0.75%
Equity-type securities in initial period of
acquisition 33.737 .75
----------- ----------
165.719 3.66
----------- ----------
TOTAL EQUITY-TYPE SECURITIES (cost:
$2,215.585 million) 2,785.920 61.46
----------- ----------
Principal
BONDS AND NOTES Amount
- ---------------------------------------------- ---------- ----------- ----------
CORPORATE
- ---------------------------------------------- ---------- ----------- ----------
ADT Operations 9.25% 2003 $2,000,000 2.115 .05
Ann Taylor, Inc. 8.75% 2000 4,802,000 3.890 .09
California Energy Co., Inc. 0%/10.25% 2004 /3/ 4,300,000 3.827 .08
Century Communications Corp. 9.75% 2002 1,000,000 1.020 .02
Consumers Power Co. 6.375% 2003 5,000,000 4.794 .10
Container Corp. of America 9.75% 2003 3,500,000 3.526 .08
Continental Cablevision, Inc. 9.50% 2013 1,000,000 1.047
Continental Cablevision, Inc. 9.00% 2008 1,000,000 1.035 .09
Continental Cablevision, Inc. 8.875% 2005 2,000,000 2.090
Delta Air Lines, Inc. 10.00% 2014 /1/ 2,000,000 2.318
Delta Air Lines, Inc., pass-through certificates,
Series 1993-B2, 10.06% 2016 /4/ 3,000,000 3.477 .13
Fort Howard Paper Co. 10.00% 2003 1,000,000 1.002
Fort Howard Paper Co. 8.25% 2002 3,000,000 2.880 .08
Harrah's Operating Co. Inc. 10.875% 2002 3,000,000 3.277 .07
Infinity Broadcasting Corp. 10.375% 2002 4,500,000 4.837 .11
Jet Equipment Trust, Series 1995-B, Class C 9.71%
2015 /1/ /4/ 5,000,000 5.225 .11
Long Island Lighting Co. 8.90% 2019 10,000,000 9.850
Long Island Lighting Co. 7.30% 1999 12,500,000 12.433 .49
McDermott Inc. 9.375% 2002 4,000,000 4.440 .10
Midland Cogeneration Venture LP, secured lease
obligation bonds, 10.33% 2002 7,638,865 7.983
Midland Cogeneration Venture LP 10.33% 2002 2,164,579 2.262 .23
News America Holdings Inc. 9.25% 2013 2,000,000 2.279
News America Holdings Inc. 9.125% 1999 5,000,000 5.467 .17
NorAm Energy Corp. 7.50% 2000 6,000,000 6.067 .13
Occidental Petroleum Corp. 8.50% 2004 8,000,000 8.622 .19
Riggs National Corp. 8.50% 2006 2,600,000 2.704 .06
Rogers Cantel Mobile Communications Inc.
10.75% 2001 2,000,000 2.090 .05
Rykoff-Sexton, Inc. 8.875% 2003 4,500,000 4.500 .10
Smith's Food & Drug Centers, Inc.,
pass-through certificates, Series 1994-A2,
8.64% 2012 /4/ 6,000,000 6.203 .14
Time Warner Inc. 10.15% 2012 5,000,000 5.962
Time Warner Inc. 7.45% 1998 4,000,000 4.082 .22
TKR Cable I, Inc. 10.50% 2007 7,000,000 8.133 .18
TransTexas Gas Corp. 11.50% 2002 8,500,000 8.883 .20
Vons Companies, Inc. 9.625% 2002 5,000,000 5.300 .12
WestPoint Stevens Inc. 8.75% 2001 2,000,000 2.020 .04
----------- ----------
155.640 3.43
----------- ----------
GOVERNMENTS AND GOVERNMENTAL AUTHORITIES
- ---------------------------------------------- ---------- ----------- ----------
Canada 10.75% March 1998 8.124 .18
C$10,000,000
New Zealand 8.00% July 1998 NZ$50,000,00 33.594 .74
0
----------- ----------
41.718 .92
----------- ----------
U.S. TREASURY NOTES
- ---------------------------------------------- ---------- ----------- ----------
6.00% November 1997 $60,000,000 60.441 1.33
6.375% June 1997 50,000,000 50.617 1.12
8.50% May 1997 90,000,000 93.768 2.07
6.875% April 1997 50,000,000 50.906 1.12
6.75% February 1997 80,000,000 81.162 1.79
8.00% January 1997 90,000,000 92.475 2.04
----------- ----------
429.369 9.47
----------- ----------
TOTAL BONDS AND NOTES (cost: $622.760 million) 626.727 13.82
----------- ----------
TOTAL INVESTMENT SECURITIES (cost: $2,838.345
million) 3,412.647 75.28
----------- ----------
SHORT-TERM SECURITIES
- ---------------------------------------------- ---------- ----------- ----------
CORPORATE SHORT-TERM NOTES
- ---------------------------------------------- ---------- ----------- ----------
American Express Credit Corp. 5.67%-5.70% due
12/7/95-1/9/96 67,100,000 66.611 1.46
American Telephone and Telegraph Co. 5.65%-5.72%
due 11/16-12/19/95 73,150,000 72.889 1.61
Beneficial Corp. 5.68%-5.73% due 11/29-12/14/95 44,500,000 44.240 .98
Central and South West Corp. 5.68%-5.70% due
11/2-11/21/95 56,500,000 56.372 1.24
Commercial Credit Co. 5.72%-5.73% due
11/15-11/17/95 36,400,000 36.310 .80
Emerson Electric Co. 5.70% due 11/16/95 20,000,000 19.949 .44
Ford Motor Credit Co. 5.64%-5.70% due
11/27-12/15/95 75,000,000 74.620 1.65
General Electric Capital Corp. 5.70%-5.88% due
11/1-12/11/95 77,950,000 77.769 1.72
Hewlett-Packard Co. 5.58%-5.66% due
12/13/95-1/23/96 70,000,000 69.393 1.53
J.C. Penney Funding Corp. 5.70%-5.74% due
11/14-12/8/95 85,600,000 85.273 1.88
PepsiCo, Inc. 5.68%-5.72% due 11/3/95-1/11/96 81,470,000 81.065 1.79
Procter & Gamble Co. 5.65%-5.70% due 11/9-12/21/95 71,200,000 70.844 1.56
U S WEST Communications, Inc. 5.70%-5.72% due
11/3-11/15/95 54,900,000 54.804 1.21
Xerox Corp. 5.68%-5.71% due 11/2-12/12/95 73,650,000 73.388 1.62
----------- ----------
883.527 19.49
----------- ----------
FEDERAL AGENCY DISCOUNT NOTES
- ---------------------------------------------- ---------- ----------- ----------
Federal Home Loan Mortgage Corp. 5.62% due
11/10/95 43,000,000 42.933 .95
Federal National Mortgage Corp. 5.62% due 11/2/95 13,300,000 13.296 .29
----------- ----------
56.229 1.24
----------- ----------
U.S. TREASURY SHORT-TERM NOTES
- ---------------------------------------------- ---------- ----------- ----------
6.875% due 10/31/96 80,000,000 80.962 1.78
7.875% due 7/15/96 90,000,000 91.364 2.02
----------- ----------
172.326 3.80
----------- ----------
TOTAL SHORT-TERM SECURITIES (cost: $1,115.604
million) 1,112.082 24.53
EXCESS OF CASH AND RECEIVABLES OVER PAYABLES 8.627 .19
----------- ----------
TOTAL SHORT-TERM SECURITIES, CASH AND
RECEIVABLES, NET OF PAYABLES 1,120.709 24.72
----------- ----------
NET ASSETS $4,533.356 100.00%
=========== ==========
</TABLE>
/1/ Purchased in a private placement transaction; resale to the public may
require registration or may extend only to qualified institutional buyers.
/2/ Valued under procedures established by the Board of Directors.
/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>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AT OCTOBER 31, 1995 (DOLLARS IN
MILLIONS)
ASSETS:
Investment securities at market (cost:$2,838.345) $3,412.647
Short-term securities (cost:$1,115.604) 1,112.082
Cash 5.001
Receivables for-
Sales of fund's shares $ 6.624
Dividends and accrued interest 24.852 31.476
--------- ------------
4,561.206
LIABILITIES:
Payables for-
Purchases of investments .258
Repurchases of fund's shares 3.400
Management services 1.227
Dividends payable 21.216
Accrued expenses 1.749 27.850
--------- ------------
NET ASSETS AT OCTOBER 31, 1995 - Equivalent to
$36.27 per share on 124,993,949 shares of $0.01
par value capital stock outstanding
(authorized capital stock - 200,000,000 shares) $4,533.356
============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
(DOLLARS IN MILLIONS)
INVESTMENT INCOME:
Income:
Dividends $122.301
Interest 104.181 $226.482
---------
Expenses:
Management services fee 14.623
Distribution expenses 8.647
Transfer agent fee 2.942
Reports to shareholders .549
Registration statement and prospectus .467
Postage, stationery and supplies .575
Directors' fees .127
Auditing and legal fees .047
Custodian fee .642
Taxes other than federal income tax .052
Other expenses .047 28.718
--------- ------------
Net investment income 197.764
------------
REALIZED GAIN AND UNREALIZED APPRECIATION ON
INVESTMENTS:
Net realized gain 64.236
Net increase in unrealized appreciation on investments: 387.255
--------- ------------
Net realized gain and increase in unrealized
appreciation on investments 451.491
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $649.255
============
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS
(DOLLARS IN MILLIONS) Year ended
October 31
1995 1994
--------- ------------
OPERATIONS:
Net investment income $197.764 $173.752
Net realized gain on investments 64.236 3.960
Net change in unrealized appreciation on investments 387.255 (152.225)
--------- ------------
Net increase in net assets resulting from
operations 649.255 25.487
--------- ------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net investment income (199.581) (172.829)
Distributions from net realized gain on investments (11.162) (10.434)
--------- ------------
Total dividends and distributions (210.743) (183.263)
--------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold: 23,777,252 and
36,309,395 shares, respectively 796.496 1,203.126
Proceeds from shares issued in reinvestment of net
investment income dividends and distributions of
net realized gain on investments: 5,248,005 and
4,271,454 shares, respectively 174.909 139.279
Cost of shares repurchased: 15,065,188 and 11,660,048
shares, respectively (505.097) (382.190)
--------- ------------
Net increase in net assets resulting from capital
share transactions 466.308 960.215
--------- ------------
TOTAL INCREASE IN NET ASSETS 904.820 802.439
NET ASSETS:
Beginning of year 3,628.536 2,826.097
--------- ------------
End of year (including undistributed net investment
income: $1.403 and $1.405, respectively) $4,533.356 $3,628.536
========= ============
</TABLE>
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 traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities, and securities for which no sale was reported
on that date, are stated at the last quoted bid price. 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. 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. Discounts
on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends to shareholders are declared daily from net investment income.
Distributions from capital gains paid tp shareholders are recoded on the
ex-dividend date.
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 $642,000 includes $59,000 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 October 31, 1995, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $570,780,000, of which
$618,986,000 related to appreciated securities and $48,206,000 related to
depreciated securities. During the year ended October 31, 1995, the fund
realized, on a tax basis, a net capital gain of $62,592,000 on securities
transactions. Net losses related to non-U.S. currency transactions of $170,000
and other tax adjustments of $1,985,000 were treated as adjustments to ordinary
income for federal income purposes. The cost of portfolio securities for book
and federal income tax purposes was $3,953,949,000 at October 31, 1995.
3. The fee of $14,623,000 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 Investment Advisory and Service 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 year ended October 31, 1995,
distribution expenses under the plan were $8,647,000. As of October 31, 1995,
accrued and unpaid distribution expenses were $1,553,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $2,942,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $3,768,000 (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 October 31, 1995, aggregate amounts deferred were $80,000.
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 October 31, 1995, accumulated undistributed net realized gain on
investments was $53,822,000 and additional paid-in capital was $3,906,284,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $610,884,000 and $594,787,000, respectively, during
the year ended October 31, 1995.
Dividend and interest income is recorded net of non-U.S. taxes paid. For
the year ended October 31, 1995, such non-U.S. taxes were $6,385,000. Net
realized currency gains on dividends, interest, withholding taxes reclaimable,
and sales of non-U.S. bonds and notes were $115,000 for the year ended October
31, 1995.
The fund reclassified $1,815,000 to undistributed net investment income
from undistributed net realized gains for the year ended October 31,1995.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Year
ended
October
31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $32.68 $34.42 $30.77 $28.67 $23.37
------- ------ ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.69 1.73 1.53 1.44 1.37
Net realized and unrealized gain
(loss) on investments 3.69 (1.62) 3.76 2.33 5.39
------- ------ ------ ------- -------
Total income (loss) from investment 5.38 .11 5.29 3.77 6.76
operations
------- ------ ------ ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.69) (1.73) (1.53) (1.44) (1.46)
Distributions from net realized gains (.10) (.12) (.11) (.23) -
------- ------ ------ ------- -------
Total distributions (1.79) (1.85) (1.64) (1.67) (1.46)
------- ------ ------ ------- -------
Net Asset Value, End of Year $36.27 $32.68 $34.42 $30.77 $28.67
======= ====== ====== ======= =======
Total Return * 16.98% .47% 17.58% 13.46% 29.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in millions) $4,533 $3,629 $2,826 $1,203 $563
Ratio of expenses to average net assets .72% .73% .72% .81% .98%
Ratio of net income to average net assets 4.96% 5.29% 4.69% 4.71% 5.09%
Portfolio turnover rate 18.06% 36.19% 11.22% 16.57% 13.99%
</TABLE>
* This was calculated without deducting a sales charge. The maximum sales
charge is 5.75% of the fund's offering price.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Capital Income Builder, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the per-share data and ratios present fairly, in all
material respects, the financial position of Capital Income Builder, Inc. (the
"Fund") at October 31, 1995, the results of its operations, the changes in its
net assets and the per-share data and ratios for the years indicated in
conformity with generally accepted accounting principles. These financial
statements and per-share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at October 31, 1995 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Los Angeles, California
November 30, 1995
U. S. TAX INFORMATION (UNAUDITED)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year. The distributions made during the fiscal year by the
fund were earned from the following sources:
Dividends and Distributions per Share
<TABLE>
<CAPTION>
To Payment Date Dividends From Net From Net
Shareholders From Net Realized Realized
of Record Investment Short- Long-term
Income term Gains
Gains
<S> <C> <C> <C> <C>
December 9, 1994 December 12, 1994 $0.425 - $0.10
March 24, 1995 March 27, 1995 0.430 - -
June 21, 1995 June 22, 1995 0.435 - -
September 15, 1995 September 18, 1995 0.440 - -
</TABLE>
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 39% of the
dividends paid by the fund from net investment income represents qualifying
dividends.
Certain states may exempt from income taxation that portion of the dividends
paid from net investment income that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 22% of the dividends
paid by the fund from net investment income was derived from interest on direct
U.S. Treasury obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
SINCE THE AMOUNTS ABOVE ARE REPORTED FOR THE FUND'S FISCAL YEAR AND NOT THE
CALENDAR YEAR, SHAREHOLDERS SHOULD REFER TO THEIR FORM 1099 DIV OR OTHER
INFORMATION WHICH WILL BE MAILED IN JANUARY 1996 TO DETERMINE THE CALENDAR YEAR
AMOUNTS TO BE INCLUDED ON THEIR RESPECTIVE 1995 TAX RETURNS. SHAREHOLDERS
SHOULD CONSULT THEIR TAX ADVISORS.
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.
CHARLES WOLF, JR., PH.D., Santa Monica, California
Dean, The RAND Graduate School;
Senior Economic Adviser, 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, Brea, California
Assistant Treasurer of the fund
Senior Vice President - Fund Business Management
Group, Capital Research and Management Company
R. MARCIA GOULD, Brea, 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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
400 South Hope Street
Los Angeles, California 90071-2889
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
December 31, 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/2834
Lit. No. CIB-011-1295
[The American Funds Group(R)]
