[THE AMERICAN FUNDS GROUP(R)]
CAPITAL INCOME BUILDER
SEMI-ANNUAL REPORT 1999
FOR THE SIX MONTHS ENDED APRIL 30
[cover photos: Margaret Starr, shareholder; Slipper Rock University, PA]
[cover graphic: Capital Income Builder logo]
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.
CAPITAL INCOME BUILDER(r) was created in 1987 expressly for investors seeking
above-average and growing income, along with reduced risk in declining markets
and reasonable participation in rising markets.
CIB is one of the 29 mutual funds in The American Funds Group,(r) the nation's
third-largest mutual fund family. For more than six decades, Capital Research
and Management Company, the American Funds adviser, has invested with a
long-term focus based on thorough research and attention to risk.
About the cover: Two very different shareholders - Margaret Starr, of Midland,
Texas and the Slippery Rock University Foundation in Pennsylvania - have used
the rising income from CIB to meet their goals.
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, 1999 (the
most recent calendar quarter), assuming payment of the 5.75% maximum sales
charge at the beginning of the stated periods - 10 years: +253.07%, or +13.45%
a year; 5 years: +93.36%, or +14.10% a year; 12 months: -3.50%. Sales charges
are lower for accounts of $50,000 or more. The fund's 30-day yield as of May
31, 1999, calculated in accordance with the Securities and Exchange Commission
formula, was 3.52%.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY.
INVESTING FOR SHORT PERIODS MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT
FDIC-INSURED, NOR ARE THEY DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER
ENTITY.
FELLOW INVESTORS:
The "stair-step" chart across the next two pages is familiar to most of you. We
have presented it in almost every report since the fund began nearly 12 years
ago because it so graphically illustrates Capital Income Builder's central
objective: steady dividend growth for investors who want or need above-average
income. We are pleased to report that CIB's dividend increased in June by 0.5
cents to 48.5 cents a share.
If you reinvest your capital gain distributions, as do 96% of our shareholders,
your June dividend income from the fund is 6.1% more than in the same period a
year ago. It is 99.6% higher than CIB's first full-quarter dividend payment in
December 1987, an average compound growth rate for income of 6.2%. Even without
counting the price appreciation of CIB's portfolio, this far outpaces the 3.3%
average inflation rate of the Consumer Price Index from December 31, 1987
through April 30, 1999.
The fund's April dividend rate was 4.1% at net asset value, significantly above
the record-low 1.2% yield of the unmanaged Standard & Poor's 500 Stock
Composite Index. It also exceeds the 1.5% average of 234 equity-income funds as
well as the 0.5% average of more than 3,000 general equity funds. Both averages
are tracked by Lipper, Inc.
RECENT RESULTS
To achieve its objective of above-average and growing income, CIB invests in
both stocks and bonds. With dividend yields so unusually low in the United
States, a growing proportion of our stocks are issued by companies based
outside this country, where dividend yields currently are on average a bit
higher.
Because of Capital Income Builder's unique objective and variety of assets, a
single benchmark for results doesn't exist. For the six months ended April 30,
CIB had a total return of 6.9%. The S&P 500, an index of mostly large U.S.
company stocks that does not reflect the income goals of CIB, returned 22.3%,
while the MSCI World Index, which measures 22 major stock markets worldwide
including the U.S., had a total return of 19.8% for the period. The rise in the
S&P 500 has been led by the stocks of a small group of low dividend-paying
companies. The Lehman Brothers Aggregate Bond Index, a broad measure of the
U.S. bond market, had a total return of 0.7%.
[Begin bar chart]
CIB'S QUARTERLY DIVIDENDS COMPARED WITH INFLATION
Dividends as declared and as adjusted for reinvested capital gains
(cents per share)
(Index: December 1987 = 100)
<TABLE>
<CAPTION>
Additional income earned
on initial shares if the
capital gain distributions Inflation=
paid in December 1991, 1992, Consumer Price
1993, 1994, 1995, 1996, 1997 Index (through
Fiscal Quarters Dividend and 1998 were reinvested March 1999)
<S> <C> <C> <C>
4 Aug-Oct 1987 22* - -
1 Nov-Jan 1988 28 - 100
2 Feb-Apr 1988 28.5 - 101
3 May-Jul 1988 29 - 102.3
4 Aug-Oct 1988 29.5 - 103.8
1 Nov-Jan 1989 30 - 104.4
2 Feb-Apr 1989 30.5 - 106
3 May-Jul 1989 31 - 107.5
4 Aug-Oct 1989 31.5 - 108.3
1 Nov-Jan 1990 32.5 - 109.3
2 Feb-Apr 1990 33 - 111.5
3 May-Jul 1990 33.5 - 112.6
4 Aug-Oct 1990 34 - 115
1 Nov-Jan 1991 34.5 - 115.9
2 Feb-Apr 1991 35 - 117
3 May-Jul 1991 35.5 - 117.9
4 Aug-Oct 1991 36 - 118.9
1 Nov-Jan 1992 36.5 - 119.5
2 Feb-Apr 1992 37 .3 120.7
3 May-Jul 1992 37.5 .3 121.5
4 Aug-Oct 1992 38 .3 122.4
1 Nov-Jan 1993 38.5 .3 123
2 Feb-Apr 1993 39 .5 124.4
3 May-Jul 1993 39.5 .5 125.1
4 Aug-Oct 1993 40 .5 125.7
1 Nov-Jan 1994 40.5 .5 126.3
2 Feb-Apr 1994 41 .6 127.6
3 May-Jul 1994 41.5 .6 128.2
4 Aug-Oct 1994 42 .6 129.5
1 Nov-Jan 1995 42.5 .6 129.7
2 Feb-Apr 1995 43 .8 131.2
3 May-Jul 1995 43.5 .8 132.1
4 Aug-Oct 1995 44 .8 132.8
1 Nov-Jan 1996 44.5 .8 133
2 Feb-Apr 1996 45 1.4 134.9
3 May-Jul 1996 45.5 1.5 135.8
4 Aug-Oct 1996 46 1.5 136.7
1 Nov-Jan 1997 46.5 1.5 137.4
2 Feb-Apr 1997 46.5 1.6 138.6
3 May-Jul 1997 47.0 2.4 138.9
4 Aug-Oct 1997 47.5 2.4 139.7
1 Nov-Jan 1998 48.0 2.4 139.8
2 Feb-Apr 1998 48 4.2 140.6
3 May-Jul 1998 48.5 4.2 141.2
4 Aug-Oct 1998 49.0 4.3 141.8
1 Nov-Jan 1999 49.5 4.3 142.0
2 Feb-Apr 1999 48.0 7.3 143.0
3 May-Jul 1999 48.5 7.4
</TABLE>
* After less than a full quarter of operations
[end chart]
Fiscal Quarters: 1 Nov-Jan 2 Feb-Apr 3 May-Jul 4 Aug-Oct
*After less than a full quarter of operations
When equity markets are in a mode of rapid appreciation, as the U.S. market has
for the past five years with only a few brief pauses, the slow and steady
approach of investing for dividend income can seem somewhat out of step. It has
not always been so. Depending on the period being measured, CIB has provided a
total return sometimes above, sometimes below that of indexes such as the S&P
500. But during the sharp downturns that stock markets are subject to from time
to time, CIB has shown the stability that one seeks with a dividend income
strategy. Last summer, when the market briefly lost nearly 20% of its value,
CIB declined only 11%. Over its lifetime, CIB has provided an average annual
total return of 13.3%, below the 16.1% of the S&P 500, but equal to the 13.3%
average of all general equity funds.
LARGEST HOLDINGS
CIB's largest industry concentrations, banking and telecommunications, have
been excellent sources of income and dividend growth during the past 12 months.
Bank stocks, which represent 19.0% of the fund's net assets, had an average
yield of 2.9%. During the past six months, First Union, the fund's largest
holding, increased its dividend 11.9% and BANK ONE, our second-largest holding,
raised its dividend 10.5%. Notable among our other bank holdings, AmSouth
Bancorporation declared a 25% increase in its dividend rate. Even though bank
stocks have generally been weak in recent months, we believe CIB's bank
holdings remain attractive long-term investments.
Telecommunications companies, accounting for 10.2% of net assets at April 30,
also yielded an average 2.9% over the past 12 months. Telecom Argentina
STET-France Telecom increased its dividend 9.6%, SBC Communications raised its
dividend 4.3% and Ameritech's dividend rose 5.8%. The fund's telecommunications
holdings offer significant opportunities from growth in wireless telephones and
the Internet, as well as cost cutting in the industry.
We continue to believe that Capital Income Builder's focus on identifying
companies with strong dividend prospects is a solid long-term investment
strategy. Especially in a period when stock market prices have been so strong,
driven in large part by Internet and other technology stocks, it is important
to look beyond short-term market movements and keep basic objectives in mind.
Thank you for your interest in Capital Income Builder.
/s/Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Chairman of the Board
/s/James B. Lovelace
James B. Lovelace
President
June 11, 1999
<TABLE>
<S> <C> <C> <C>
Capital Income Builder, Inc. Unaudited
Investment Portfolio, April 30, 1999
Shares or Market Percent
Principal Value Of Net
Equity Securitites Amount (Millions) Assets
- -------------------------------------------- ------- ------- -------
ENERGY
ENERGY SOURCES - 3.74%
BP Amoco PLC (ADR) 750,000 $84.891 0.90%
CalEnergy Capital Trust II 6.25% convertible preferred 2012 (1) 130,000 6.240 .07
Chevron Corp. 800,000 79.800 .84
Fortum Oyj 2,365,000 12.638 .13
Kerr-McGee Corp. 200,000 8.475 .09
Phillips Petroleum Co. 1,125,000 56.953 .60
Royal Dutch Petroleum Co. (New York Registered Shares) 880,000 51.645
"Shell" Transport and Trading Co., PLC (New York Registered Shares) 850,000 38.622 .96
Ultramar Diamond Shamrock Corp. 650,000 14.991 .15
UTILITIES: ELECTRIC & GAS - 6.90%
Australian Gas Light Co. 1,137,575 8.043 .08
Central and South West Corp. 1,450,000 35.978 .38
Dominion Resources, Inc. 250,000 10.281 .11
DPL Inc. 2,684,200 47.980 .51
DTE Energy Co. 350,000 14.284 .15
GPU, Inc. 1,150,000 43.844 .46
KeySpan Energy Corp. 2,428,800 64.970 .69
National Power PLC 10,600,000 85.001 .90
Nevada Power Co. 920,000 23.748 .25
NiSource Inc. (formerly NIPSCO Industries, Inc.) 900,000 24.975 .26
PowerGen PLC 1,600,000 17.473 .18
Scottish and Southern Energy PLC 12,500,000 117.225 1.24
Williams Companies, Inc. 3,383,250 159.858 1.69
------- -------
1,007.915 10.64
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MATERIALS
CHEMICALS - 0.09%
E.I. du Pont de Nemours and Co. 120,000 8.475 .09
FOREST PRODUCTS & PAPER - 1.20%
Chesapeake Corp. 300,000 9.750 .10
Potlatch Corp. 936,000 38.785 .41
Rayonier Inc. 465,600 21.243 .22
Stora Enso Oyj, Class A 223,647 2.556
Stora Enso Oyj, Class R 800,000 9.354 .13
Union Camp Corp. 400,000 31.750 .34
METALS: NONFERROUS - 0.46%
Billiton PLC 11,000,000 37.347 .39
USX Corp. 6.75% DECS convertible preferred 2000 500,000 6.562 .07
MISCELLANEOUS MATERIALS & COMMODITIES - 0.18%
De Beers Consolidated Mines Ltd. 700,000 17.522 .18
------- -------
183.344 1.93
------- -------
CAPITAL EQUIPMENT
ELECTRONIC INSTRUMENTS - 0.03%
Thermo Instrument Systems Inc. 4.50% convertible debentures 2003 (1) $3,000,000 2.610 .03
INDUSTRIAL COMPONENTS - 0.41%
Tomkins PLC 9,250,000 39.285 .41
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41.895 .44
------- -------
CONSUMER GOODS
AUTOMOBILES - 1.01%
Ford Motor Co. 1,500,000 95.906 1.01
BEVERAGES & TOBACCO - 3.13%
Foster's Brewing Group Ltd. 16,000,000 46.605 .49
Gallaher Group PLC 8,800,000 49.926 .53
Philip Morris Companies Inc. 2,715,000 95.195 1.00
RJR Nabisco Holdings Corp. 1,275,000 32.831 .35
Societe Nationale d'Exploitation Industrielle des Tabacs 575,000 34.679 .37
et Allumettes "SEITA"
UST Inc. 1,350,000 37.632 .39
HEALTH & PERSONAL CARE - 0.54%
Bristol-Myers Squibb Co. 800,000 50.850 .54
------- -------
443.624 4.68
------- -------
SERVICES
BROADCASTING & PUBLISHING - 0.38%
Golden Books Family Entertainment, Inc. 8.75% convertible 100,000 .350 .00
TOPrS 2016 (2,3)
Houston Industries Inc. 7.00% ACES convertible preferred 2000 170,000 20.060 .21
West Australian Newspapers Holdings Ltd. 4,165,000 15.275 .17
BUSINESS & PUBLIC SERVICES - 4.34%
American Water Works Co., Inc. 1,850,000 52.609 .56
Autopistas del Mare Nostrum, SA Concesionaria del Estado 750,000 16.824 .18
Cendant Corp. 7.50% PRIDES convertible preferred 400,000 12.675 .13
Hutchison Delta Finance Ltd. 7.00% convertible debentures 2002 (1,3) $11,000,000 11.000 .12
Hyder PLC 6,080,000 75.634 .80
Philadelphia Suburban Corp. 429,600 9.693 .10
Thames Water PLC 6,427,083 89.041 .94
United Utilities PLC 12,696,023 143.447 1.51
LEISURE & TOURISM - 0.25%
Host Marriott Financial Trust 6.75% QUIPS convertible preferred 2026 400,000 18.250 .19
Sky City Ltd., installment receipts 2,215,750 5.519 .06
MERCHANDISING - 0.76%
J.C. Penney Co., Inc. 950,000 43.344 .46
Safeway PLC 6,750,000 28.098 .30
TELECOMMUNICATIONS - 10.21%
Ameritech Corp. 1,950,000 133.453 1.41
BCT. TELUS Communications Inc. 1,010,489 25.072 .26
Deutsche Telekom AG 4,607,300 181.837 1.92
France Telecom SA 200,000 16.178 .17
Hong Kong Telecommunications Ltd. (ADR) 2,454,377 65.655 .69
Koninklijke PTT Nederland NV 1,800,593 75.256 .79
SBC Communications Inc. 1,000,000 56.000 .59
Swisscom AG (2) 273,181 100.447 1.06
Telecom Argentina STET-France Telecom SA, Class B (ADR) 359,200 12.392 .13
Telecom Corp. of New Zealand Ltd. 15,784,160 81.984
Telecom Corp. of New Zealand Ltd. (1) 8,380,000 43.526 1.34
Telecom Corp. of New Zealand Ltd. (ADR) 25,000 1.030
Telecom Italia SpA 23,221,200 124.842 1.32
Telefonica, SA 230,600 10.821
Telefonica, SA, rights, expire 5/20/1999 (2) 230,600 .215 .12
U S WEST, Inc. 750,000 39.234 .41
TRANSPORTATION: AIRLINES - 0.51%
Qantas Airways Ltd. 17,495,065 47.977 .51
------- -------
1,557.738 16.45
------- -------
FINANCE
BANKING - 19.01%
AmSouth Bancorporation 2,100,000 99.881 1.05
Australia and New Zealand Banking Group Ltd. 2,400,000 18.983 .20
BancWest Corp. 400,000 15.925 .17
Bank of America Corp. 1,000,000 72.000 .76
Bank of Nova Scotia 4,241,600 100.734 1.06
BANK ONE CORP. 3,238,000 191.042 2.02
Barclays PLC 3,500,000 111.041 1.17
Chase Manhattan Corp. 800,000 66.200 .70
Comerica Inc. 600,000 39.038 .41
Commonwealth Bank of Australia 1,676,000 30.473 .32
First Security Corp. 1,933,600 36.738 .39
First Union Corp. 4,949,406 274.073 2.89
ForeningsSparbanken AB 755,700 16.626 .18
HSBC Holdings PLC 1,016,583 37.776 .40
Huntington Bancshares Inc. 2,100,000 74.419 .79
KeyCorp 2,190,000 67.753 .72
Keystone Financial, Inc. 1,127,550 36.223 .38
J.P. Morgan & Co. Inc. 120,000 16.170 .17
National Australia Bank Ltd. 3,162,569 61.483 .65
National City Corp. 800,000 57.400 .61
Royal Bank of Canada 1,515,000 73.829 .78
United Bankshares, Inc. 1,274,500 34.412 .36
Wachovia Corp. 1,237,875 108.778 1.15
Washington Mutual, Inc. 1,100,000 45.238 .48
Westpac Banking Corp. 7,252,895 55.289 .58
Wilmington Trust Corp. 950,000 58.366 .62
FINANCIAL SERVICES - 0.59%
Health Care Property Investors, Inc. 1,545,000 47.509 .50
Imperial Credit Commercial Mortgage Investment Corp. 900,000 8.831 .09
INSURANCE - 2.83%
American General Corp. 160,000 11.840 .12
Lincoln National Corp. 1,049,000 100.769 1.06
Ohio Casualty Corp. 717,500 26.660 .28
Royal & Sun Alliance Insurance Group PLC 4,465,329 38.467 .41
XL Capital Ltd. (formerly EXEL Ltd.) 1,500,800 91.080 .96
REAL ESTATE - 4.55%
AMB Property Corp. 900,000 19.800 .21
Apartment Investment and Management Co., Class A 1,125,000 45.070 .48
Archstone Communities Trust 4,784,585 108.550 1.15
Bradley Real Estate, Inc. 1,045,000 20.835 .22
Cabot Industrial Trust 695,000 14.161 .15
CarrAmerica Realty Corp. 1,620,000 40.095 .42
CCA Prison Realty Trust 429,400 8.373 .09
Correctional Properties Trust 110,000 1.904 .02
Equity Residential Properties Trust 195,000 9.019 .10
Glenborough Realty Trust Inc., Series A, 7.75% convertible 400,000 7.225 .08
preferred 2049
Kimco Realty Corp. 510,000 20.018 .21
Meditrust Corp., paired stock 2,460,000 30.596 .32
ProLogis Trust 1,191,114 25.013 .26
Spieker Properties, Inc. 250,000 9.813 .10
Washington Real Estate Investment Trust 145,500 2.464 .03
Weeks Corp. 485,000 15.065 .16
Weingarten Realty Investors 1,260,000 52.211 .55
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2,555.258 26.98
------- -------
MULTI-INDUSTRY, GOLD MINES & MISCELLANEOUS
MULTI-INDUSTRY - 0.20%
Hunting PLC 4,260,000 10.749 .11
Lend Lease Corp. Ltd. 621,354 8.365 .09
GOLD MINES - 0.36%
Anglogold Ltd. 729,000 34.334 .36
MISCELLANEOUS - 2.82%
Equity securities in initial period of acquisition 29,776,922 267.119 2.82
------- -------
320.567 3.38
------- -------
TOTAL EQUITY SECURITIES (cost: $4,028.054 million) 6,110.341 64.50
------- -------
Principal
Bonds and Notes Amount
- ---------------------------------------------- ------- ------- -------
Corporate
- ---------------------------------------------- ------- ------- -------
Airplanes Pass Through Trust, pass-through certificates,
Series 1, Class C, 8.15% 2019 (4) $ 5,400,135 5.390 .06
Allegiance Corp. 7.80% 2016 3,000,000 3.257 .03
Atlas Air, Inc., 1998-1 Pass Through Trust, Class A, 7.38% 2018 (4) 8,925,652 9.053
Atlas Air, Inc., 1998-1 Pass Through Trust, Class B, 7.68% 2014 (4) 4,968,234 4.991 .15
Cable & Wireless Communications PLC 6.625%-6.75% 2005-2008 9,625,000 9.662 .10
Cablevision Systems Corp. 7.875%-8.125% 2007-2009 5,500,000 5.831 .06
CarrAmerica Realty Corp. 6.625% 2000 10,000,000 9.946 .11
Century Communications Corp. 8.75% 2007 2,000,000 2.080 .02
Charter Communications Holdings, LLC 8.25% 2007 (1) 6,000,000 6.135 .06
Columbia Gas System, Inc., Series G, 7.62% 2025 3,000,000 2.996
Columbia Gas System, Inc., Series C, 6.80% 2005 2,000,000 2.051 .05
Columbia/HCA Healthcare Corp. 6.125%-6.91% 2000-2045 52,830,000 50.814 .54
Conoco Inc. 5.90% 2004 43,000,000 42.629 .45
Container Corp. of America 9.75% 2003 8,485,000 8.909 .09
Continental Airlines, Inc., pass-through certificates,
Series 1997-1, Class A, 7.461% 2016 (4) 1,900,980 1.982
Continental Airlines, Inc., pass-through certificates,
Series 1997-4, Class A, 6.90% 2018 (4) 5,000,000 5.073 .10
Continental Airlines, Inc., pass-through certificates,
Series 1997-1, Class C, 7.42% 2007 (4,5) 2,825,890 2.845
Cox Radio, Inc. 6.375% 2005 3,500,000 3.480 .04
Delphi Automotive Systems Corp. 6.50% 2009 6,250,000 6.238 .07
Delta Air Lines, Inc., 1991 Equipment Certificates Trust,
Series K, 10.00% 2014 (1) 2,000,000 2.329 .02
DLJ Mortgage Acceptance Corp., Series 1996-CF1, Class A-1A, 7.28% 2028 1,983,963 2.031 .02
EOP Operating LP 6.625%-6.75% 2005-2008 3,250,000 3.183 .03
Federal-Mogul Corp. 7.50% 2009 (1) 5,000,000 4.872 .05
FIRSTPLUS Home Loan Owner Trust, Series 1997-1,
Class A-6, 6.95% 2015 (4) 4,250,000 4.286 .05
Fred Meyer, Inc. 7.375%-7.45% 2005-2008 5,000,000 5.231 .06
Freeport-McMoRan Copper & Gold Inc. 7.20% 2026 2,000,000 1.361 .01
Hearst-Argyle Television, Inc. 7.00% 2007-2018 3,000,000 2.946 .03
Highwoods/Forsyth LP 6.835% MOPPRS 2003 2,500,000 2.448 .03
Irvine Apartment Communities, LP 7.00% 2007 7,000,000 6.208 .07
Jet Equipment Trust, Series 1995-B, Class C, 9.71% 2015 (1) 5,000,000 5.782 .06
McDermott Inc. 9.375% 2002 6,000,000 6.333 .07
McKesson Corp. 6.40% 2008 4,000,000 3.948 .04
Merrill Lynch Mortgage Investors, Inc., Seller Manufactured Housing
Contracts, Series 1995-C2, Class A-1, 7.222% 2021 (5) 1,488,635 1.494 .02
Midland Cogeneration Venture LP, Secured Lease
Obligation Bonds, Series C-91, 10.33% 2002 2,491,853 2.641 .03
Omega Healthcare Investors, Inc. 6.95% 2002-2007 15,500,000 14.498 .15
Owens-Illinois, Inc. 7.85%-8.10% 2004-2007 2,000,000 2.059 .02
Paperboard Industries International Inc. 8.375% 2007 4,750,000 4.821 .05
Price REIT, Inc. 7.50% 2006 11,000,000 11.250 .12
ProLogis Trust 7.05% 2006 3,000,000 2.982 .03
Qwest Communications International Inc. 0%/9.47% 2007 (6) 2,000,000 1.631 .02
Riggs National Corp. 8.50% 2006 2,600,000 2.707 .03
Rite Aid Corp. 7.125% 2007 5,000,000 5.059 .05
Rykoff-Sexton, Inc. 8.875% 2003 1,005,000 1.035 .01
Security Capital Group Inc. 7.15% 2007 7,500,000 7.105 .08
Security Capital Pacific Trust 7.25% 2004 5,000,000 5.048 .05
Spieker Properties, LP 6.75%-6.875% 2005-2008 15,000,000 14.791 .16
Tenet Healthcare Corp. 8.125% 2008 (1) 10,000,000 9.800 .10
Time Warner Inc. 10.15% 2012 5,000,000 6.458 .07
Wellsford Residential Property Trust 7.75% 2005 2,500,000 2.604 .03
WestPoint Stevens Inc. 7.875% 2005 5,000,000 5.113 .05
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335.416 3.54
------- -------
GOVERNMENTS AND GOVERNMENTAL AUTHORITIES
Canadian Government 7.00% September 2001 C$ 40,000,000 28.715 .30
------- -------
28.715 .30
------- -------
U.S. TREASURIES
6.375% May 2000 100,000,000 101.406 1.07
8.75% August 2000 150,000,000 156.821 1.66
6.125% September 2000 30,000,000 30.427 .32
8.00% May 2001 6,000,000 6.330 .07
6.50% May 2001 3,000,000 3.081 .03
14.25% February 2002 75,000,000 92.296 .97
11.125% August 2003 75,000,000 91.441 .97
6.50% May 2005 7,500,000 7.941 .08
6.125% August 2007 2,200,000 2.301 .02
6.375% August 2027 9,000,000 9.612 .10
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501.656 5.29
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TOTAL BONDS AND NOTES (cost: $875.646 million) 865.787 9.13
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TOTAL INVESTMENT SECURITIES (cost: $4,903.700 million) 6,976.128 73.63
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Corporate Short-Term Notes
A.I. Credit Corp. 4.75%-4.80% due 5/26-7/7/1999 76,400,000 75.933 .80
American Express Credit Corp. 4.80%-4.82% due 5/25-6/14/1999 73,800,000 73.452 .78
American General Finance Corp. 4.84% due 5/21/1999 41,000,000 40.884 .43
American Home Products Corp. 4.79%-4.85% due 5/18-7/6/1999 (1) 77,300,000 76.726 .81
Archer Daniels Midland Co. 4.76%-4.83% due 5/20-8/2/1999 95,400,000 94.703 1.00
Associates First Capital Corp. 4.81%-4.86% due 5/19-6/14/1999 65,400,000 65.145 .69
AT&T Corp. 4.75%-4.81% due 5/17/1999 70,000,000 69.841 .74
BellSouth Capital Funding Corp. 4.79%-4.81% due 5/7-5/19/1999 (1) 72,800,000 72.692 .77
Ciesco LP 4.81%-4.82% due 5/19-6/4/1999 87,300,000 86.957 .92
Coca-Cola Co. 4.76%-4.80% due 5/4-6/24/1999 66,400,000 66.177 .70
Commercial Credit Co. 4.81%-4.84% due 5/3-6/11/1999 82,500,000 82.199 .87
Deere & Co. 4.83% due 5/3-5/6/1999 35,000,000 34.975 .37
E.I. du Pont de Nemours and Co. 4.84% due 6/16/1999 25,000,000 24.843 .26
Eastman Kodak Co. 4.78%-4.82% due 6/16-8/19/1999 105,415,000 104.361 1.10
Emerson Electric Co. 4.75%-4.81% due 5/6-5/27/1999 75,000,000 74.797 .79
Ford Motor Credit Co. 4.77%-4.83% due 5/14-7/9/1999 101,100,000 100.581 1.06
General Electric Capital Corp. 4.79%-4.81% due 7/9-7/21/1999 75,000,000 74.240 .78
H.J. Heinz Co. 4.77%-4.81% due 5/24-6/25/1999 89,500,000 89.066 .94
Hershey Foods Corp. 4.81% due 6/7/1999 25,000,000 24.874 .26
Household Finance Corp. 4.78%-4.79% due 6/8-6/15/1999 81,700,000 81.227 .86
Lucent Technologies Inc. 4.79%-4.82% due 5/18-6/2/1999 78,200,000 77.974 .83
National Rural Utilities Cooperative Finance Corp. 4.78%-4.81% 72,900,000 72.622 .77
due 5/4-7/13/1999
Procter & Gamble Co. 4.75%-4.82% due 5/7-6/28/1999 88,300,000 88.050 .93
Schering Corp. 4.74%-4.82% due 5/26-7/21/1999 72,500,000 71.966 .76
Warner-Lambert Co. 4.77%-4.81% due 5/24-6/10/1999 (1) 74,300,000 73.929 .76
------- -------
1,798.214 18.98
------- -------
Federal Agency Discount Notes
Fannie Mae 4.72%-4.75% due 5/10-10/21/1999 128,695,000 127.627 1.35
Federal Home Loan Banks 4.69%-4.70% due 5/5-6/18/1999 70,000,000 69.668 .73
Freddie Mac 4.70%-4.77% due 5/13-7/15/1999 129,815,000 128.992 1.37
------- -------
326.287 3.45
------- -------
U.S. Treasury Short-Term Notes
6.875% -8.50% due 7/31/1999-2/15/2000 400,000,000 405.984 4.29
TOTAL SHORT-TERM SECURITIES (cost: $2,539.555 million) 2,530.485 26.72
EXCESS OF PAYABLES OVER CASH AND RECEIVABLES 33.801 .35
------- -------
TOTAL SHORT-TERM SECURITIES, CASH AND RECEIVABLES,
NET OF PAYABLES 2,496.684 26.37
------- -------
NET ASSETS $9,472.812 100.00%
======= =======
(1) Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
(2) Non-income-producing security.
(3) Valued under procedures approved by the Board of
Directors.
(4) Pass-through securities backed by a pool of
mortgages or other loans on which principal
payments are periodically made. Therefore,
the effective maturity is shorter than the stated
maturity.
(5) Coupon rate changes periodically.
(6) Step bond; coupon rate will increase at a later date.
ADR = American Depositary Receipts
See Notes to Financial Statements
CAPITAL INCOME BUILDER
Equity Securities Appearing
in the Portfolio since October 31, 1998
Anglogold
Bank of America
Billiton
Cabot Industrial Trust
Cendant
De Beers Consolidated Mines
Dominion Resources
Equity Residential Properties Trust
Fortum
Glenborough Realty Trust
Kerr-McGee
"Shell" Transport and Trading
Sky City
Stora Enso
Swisscom
Ultramar Diamond Shamrock
Equity Securities Eliminated
from the Portfolio since October 31, 1998
Atlantic Richfield
British American Tobacco
Chrysler
Guardian Royal Exchange
HIH Winterthur International Holdings
Redwood Trust
Telefonica de Argentina
TNT Post Groep
</TABLE>
<TABLE>
<S> <C> <C>
Capital Income Builder Unaudited
Financial Statements
Statement of Assets and Liabilities
at April 30, 1999 (dollars in
millions)
Assets:
Investment securities at market (cost:$4,903.700) $6,976.128
Short-term securities (cost:$2,539.555) 2,530.485
Cash .123
Receivables for-
Sales of investments $40.513
Sales of fund's shares 15.920
Forward currency contracts .000
Dividends and accrued interest 43.468 99.901
------- -------
9,606.637
Liabilities:
Payables for-
Purchases of investments 66.600
Repurchases of fund's shares 8.966
Management services 2.216
Dividends payable 52.272
Accrued expenses 3.771 133.825
------- -------
Net Assets at April 30, 1999 - Equivalent to
$47.86 per share on 197,931,209 shares of $0.01
par value capital stock outstanding
(authorized capital stock - 400,000,000 shares) $9,472.812
=======
Statement of Operations
for the six months ended April 30, 1999
(dollars in millions)
Investment Income:
Income:
Dividends $ 94.379
Interest 104.303 $198.682
-------
Expenses:
Management services fee 13.842
Distribution expenses 11.021
Transfer agent fee 2.478
Reports to shareholders .000
Registration statement and prospectus .408
Postage, stationery and supplies .371
Directors' fees .074
Auditing and legal fees .046
Custodian fee .472
Taxes other than federal income tax .099
Other expenses .099 28.910
------- -------
Net investment income 169.772
-------
Realized Gain and Unrealized Appreciation on
Investments:
Net realized gain 261.318
Net increase in unrealized appreciation on investments 176.232
-------
Net realized gain and increase in unrealized
appreciation on investments 437.550
-------
Net Increase in Net Assets Resulting from Operations $607.322
=======
See Notes to Financial Statements
Statement of Changes in Net Assets Six months Year
(dollars in millions) ended ended
4/30/1999* 10/31/1998
------- -------
Operations:
Net investment income $ 169.772 $ 357.940
Net realized gain on investments 261.318 519.943
Net increase in unrealized appreciation on investments 176.232 108.040
------- -------
Net increase in net assets resulting from
operations 607.322 985.923
------- -------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (171.842) (360.241)
Distributions from net realized gain on investments (510.675) (256.425)
------- -------
Total dividends and distributions (682.517) (616.666)
------- -------
Capital Share Transactions:
Proceeds from shares sold: 16,064,687 and
30,081,411 shares, respectively 762.241 1,451.894
Proceeds from shares issued in reinvestment of net
investment income dividends and distributions of
net realized gain on investments: 13,738,051 and
10,721,248 shares, respectively 636.196 505.404
Cost of shares repurchased: 12,607,251 and 18,311,478
shares, respectively (597.234) (881.077)
------- -------
Net increase in net assets resulting from capital
share transactions 801.203 1,076.221
------- -------
Total Increase in Net Assets 726.008 1,445.478
Net Assets:
Beginning of period 8,746.804 7,301.326
------- -------
End of period (including undistributed net investment
income: $1.410 and $3.480, respectively) $9,472.812 $8,746.804
======= =======
* Unaudited
See Notes to Financial Statements
</TABLE>
CAPITAL INCOME BUILDER
Notes to Financial Statements Unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Capital Income Builder, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks to provide a growing dividend together with
a current yield which exceeds that paid by U.S. stocks generally.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Equity securities, including depositary receipts, are
valued at the last reported sale price on the exchange or market on which such
securities are traded, as of the close of business on the day the securities
are being valued or, lacking any sales, at the last available bid price. In
cases where equity securities are traded on more than one exchange, the
securities are valued on the exchange or market determined by the investment
adviser to be the broadest and most representative market, which may be either
a securities exchange or the over-the-counter market. Fixed-income securities
are valued at prices obtained from a pricing service, 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 quoted bid and
asked prices or at prices for securities of comparable maturity, quality and
type. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic developments in a specific
industry, state or region. Short-term securities maturing within 60 days are
valued at amortized cost, which approximates market value. Securities and
assets for which representative market quotations are not readily available are
valued at fair value as determined in good faith by a committee appointed by
the Board of Directors.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities initially expressed in
terms of non-U.S. currencies are translated into U.S. dollars at the prevailing
market rates at the end of the reporting period. Purchases and sales of
securities and income and expenses are translated into U.S. dollars at the
prevailing market rates on the dates of such transactions. The effects of
changes in non-U.S. currency exchange rates on investment securities and other
assets and liabilities are included with the net realized and unrealized gain
or loss on investment securities.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. Dividend income
is recognized on the ex-dividend date, and interest income is recognized on an
accrual basis. Amortization of market discounts on securities is recognized
upon disposition. Original issue discounts on securities are amortized daily
over the expected life of the security. The fund does not amortize premiums on
securities purchased.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are
declared daily from net investment income. Distributions paid to shareholders
are recorded on the ex-dividend date.
NON-U.S. TAXATION - Dividend and interest income is recorded net of non-U.S.
taxes paid. For the six months ended April 30, 1999, such non-U.S. taxes were
$2,811,000. Net realized currency losses on dividends, interest, and other
receivables and payables, on a book basis, were $585,000 for the six months
ended April 30, 1999.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code
applicable to regulated investment companies and intends to distribute all of
its net taxable income and net capital gains for the fiscal year. As a
regulated investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of April 30, 1999, net unrealized appreciation on investments for book
and federal income tax purposes aggregated $2,063,358,000, of which
$2,220,007,000 related to appreciated securities and $156,649,000 related to
depreciated securities. During the six months ended April 30, 1999, the fund
realized, on a tax basis, a net capital gain of $261,903,000. Net losses
related to non-U.S. currency transactions of $585,000 were treated as an
adjustment to ordinary income for federal income tax purposes. The cost of
portfolio securities for book and federal income tax purposes was
$7,443,255,000 at April 30, 1999.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $13,842,000 for management services was
incurred 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 of $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 monthly 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.
DISTRIBUTION EXPENSES - 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, 1999, distribution expenses under the Plan were $11,021,000. As
of April 30, 1999, accrued and unpaid distribution expenses were $3,280,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $3,286,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer
agent for the fund, was paid a fee of $2,478,000.
DEFERRED DIRECTORS' FEES - Directors 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, 1999, aggregate deferred compensation and earnings
thereon since the deferred compensation plan's adoption (1993), net of any
payments to Directors were $337,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $818,548,000 and $955,579,000, respectively, during
the six months ended April 30, 1999.
As of April 30, 1999, accumulated undistributed net realized gain on
investments was $243,229,000 and additional paid-in capital was $7,163,464,000.
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 $472,000 includes $30,000 that was paid by these credits
rather than in cash.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Six months
Per-Share Data and Ratios ended Year ended
April 30, October 31
1999 (1) 1998 1997 1996 1995 1994
Net Asset Value, Beginning of Period $48.40 $46.14 $39.70 $36.27 $32.68 $34.42
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income .88 2.09 1.74 1.95 1.69 1.73
Net gains or losses on securities (both
realized and unrealized) 2.28 3.87 7.20 3.92 3.69 (1.62)
----- ----- ----- ----- ----- -----
Total from investment operations 3.16 5.96 8.94 5.87 5.38 .11
----- ----- ----- ----- ----- -----
Less Distributions:
Dividends (from net investment income) (.89) (2.09) (1.77) (1.94) (1.69) (1.73)
Distributions (from capital gains) (2.81) (1.61) (.73) (.50) (.10) (.12)
----- ----- ----- ----- ----- -----
Total distributions (3.70) (3.70) (2.50) (2.44) (1.79) (1.85)
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $47.86 $48.40 $46.14 $39.70 $36.27 $32.68
===== ===== ===== ===== ===== =====
Total Return (2) 6.86 (3) 13.33% 23.16% 16.76% 16.98% .47%
Ratios/Supplemental Data:
Net assets, end of period (in millions) $9,473 $8,747 $7,301 $5,418 $4,533 $3,629
Ratio of expenses to average net assets .32% (3) .64% .65% .71% .72% .73%
Ratio of net income to average net assets 1.86% (3) 4.35% 4.04% 5.19% 4.96% 5.29%
Portfolio turnover rate 11.38% (3) 24.38% 27.65% 27.56% 18.06% 36.19%
(1) Unaudited
(2) Excludes maximum sales charge of 5.75%.
(3) Based on operations for the period shown and,
accordingly, not representative of a full year.
</TABLE>
[THE AMERICAN FUNDS GROUP(R)]
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 92821-5823
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
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
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
O'Melveny & Myers LLP
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 financial adviser. You may also call American Funds Service
Company, toll-free, at 800/421-0180, or visit www.americanfunds.com on the
World Wide Web.
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, 1999, this report must be accompanied by an American Funds Group
Statistical Update for the most recently completed calendar quarter.
PREPARING FOR THE YEAR 2000
The fund's key service providers - Capital Research and Management Company, the
investment adviser, and American Funds Service Company, the transfer agent -
have updated all significant computer systems to process date-related
information properly following the turn of the century. Testing of these and
other systems with business partners, vendors and other service providers will
continue through much of 1999. We will continue to keep you up to date in our
regular publications. If you would like more detailed information, call
Shareholder Services at 800/421-0180, ext. 21, or visit our Web site at
www.americanfunds.com.
Printed on recycled paper
Litho in USA TAG/AL/3977
Lit. No. CIB-013-0699
