NEF 497 Filing

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THE NEW ECONOMY FUND

Part B
Statement of Additional Information

February 1, 2006
(as supplemented April 1, 2006)

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of The New Economy Fund (the
"fund" or "NEF") dated February 1, 2006. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:

The New Economy Fund
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200

Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them. They should contact their employers for details.

TABLE OF CONTENTS

Item Page no.
---- --------

Certain investment limitations and guidelines . . . . . . . . . . . 2
Description of certain securities and investment techniques . . . . 2
Fundamental policies and investment restrictions. . . . . . . . . . 6
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 8
Execution of portfolio transactions . . . . . . . . . . . . . . . . 27
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 28
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 31
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 36
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 40
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Shareholder account services and privileges . . . . . . . . . . . . 45
General information . . . . . . . . . . . . . . . . . . . . . . . . 48
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Financial statements

The New Economy Fund -- Page 1
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CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES

The following limitations and guidelines are considered at the time of purchase,
under normal circumstances, and are based on a percentage of the fund's net
assets unless otherwise noted. This summary is not intended to reflect all of
the fund's investment limitations.

INVESTMENT STRATEGIES

. Generally, the fund invests primarily in equity securities of companies
that derive their revenues primarily from operations in the services and
information areas of the global economy. These could include, for example,
companies involved in the areas of telecommunications, computer systems and
software, the Internet, broadcasting and publishing, health care,
advertising, leisure, tourism, financial services, distribution and
transportation.

. Up to 25% of the fund's investments in equity securities may consist of
companies outside the services and information area.

DEBT SECURITIES

. The fund may invest up to 10% of its assets in nonconvertible securities
rated Baa or below by Moody's Investors Service ("Moody's") and BBB or
below by Standard & Poor's Corporation ("S&P") or unrated but determined to
be of equivalent quality.

NON-U.S. SECURITIES

. The fund may invest up to 40% of its assets in securities of issuers
domiciled outside the United States and not included in the S&P 500 Index,
including securities denominated in currencies other than the U.S. dollar.

* * * * * *

The fund may experience difficulty liquidating certain portfolio securities
during significant market declines or periods of heavy redemptions.

DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

The descriptions below are intended to supplement the material in the prospectus
under "Investment objective, strategies and risks."

EQUITY SECURITIES -- Equity securities represent an ownership position in a
company. Equity securities held by the fund typically consist of common stocks.
The prices of equity securities fluctuate based on, among other things, events
specific to their issuers and market, economic and other conditions.

There may be little trading in the secondary market for particular equity
securities, which may adversely affect the fund's ability to value accurately or
dispose of such equity securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and/or
liquidity of equity securities.

The New Economy Fund -- Page 2
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The growth-oriented, equity-type securities generally purchased by the fund may
involve large price swings and potential for loss, particularly in the case of
smaller capitalization stocks.

INVESTING IN SMALLER CAPITALIZATION STOCKS -- The fund may invest in the stocks
of smaller capitalization companies (typically companies with market
capitalizations of less than $2.0 billion at the time of purchase). The
investment adviser believes that the issuers of smaller capitalization stocks
often provide attractive investment opportunities. However, investing in smaller
capitalization stocks can involve greater risk than is customarily associated
with investing in stocks of larger, more established companies. For example,
smaller companies often have limited product lines, limited markets or financial
resources, may be dependent for management on one or a few key persons and can
be more susceptible to losses. Also, their securities may be thinly traded (and
therefore have to be sold at a discount from current prices or sold in small
lots over an extended period of time), may be followed by fewer investment
research analysts and may be subject to wider price swings, thus creating a
greater chance of loss than securities of larger capitalization companies.

INVESTING IN PRIVATE COMPANIES -- The fund may invest in companies that have not
publicly offered their securities. Investing in private companies can involve
greater risks than those associated with investing in publicly traded companies.
For example, the securities of a private company may be subject to the risk that
market conditions, developments within the company, investor perception, or
regulatory decisions may delay or prevent the company from ultimately offering
its securities to the public. Furthermore, these investments are generally
considered to be illiquid until a company's public offering and are often
subject to additional contractual restrictions on resale that would prevent the
fund from selling its company shares for a period of time following the public
offering.

Investments in private companies can offer the fund significant growth
opportunities at attractive prices. However these investments can pose greater
risk, and, consequently, there is no guarantee that positive results can be
achieved in the future.

INVESTING IN VARIOUS COUNTRIES -- Investing outside the United States may
involve additional risks caused by, among other things, currency controls and
fluctuating currency values; different accounting, auditing, financial reporting
and legal standards and practices in some countries; changing local, regional
and global economic, political and social conditions; expropriation; changes in
tax policy; greater market volatility; differing securities market structures;
higher transaction costs; and various administrative difficulties, such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends.

The risks described above may be heightened in connection with investments in
developing countries. Although there is no universally accepted definition, the
investment adviser generally considers a developing country as a country that is
in the earlier stages of its industrialization cycle with a low per capita gross
domestic product ("GDP") and a low market capitalization to GDP ratio relative
to those in the United States and the European Union. Historically, the markets
of developing countries have been more volatile than the markets of developed
countries.

Additional costs could be incurred in connection with the fund's investment
activities outside the United States. Brokerage commissions may be higher
outside the United States, and the fund will bear certain expenses in connection
with its currency transactions. Furthermore, increased custodian costs may be
associated with maintaining assets in certain jurisdictions.

The New Economy Fund -- Page 3
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CURRENCY TRANSACTIONS -- The fund may purchase and sell currencies to facilitate
securities transactions and enter into forward currency contracts to protect
against changes in currency exchange rates. A forward currency contract is an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. Forward currency contracts
entered into by the fund will involve the purchase or sale of one currency
against the U.S. dollar. While entering into forward currency transactions could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain that may result from an increase in the
value of the currency. The fund will not generally attempt to protect against
all potential changes in exchange rates. The fund will segregate liquid assets
that will be marked to market daily to meet its forward contract commitments to
the extent required by the Securities and Exchange Commission.

Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions also may affect the
character and timing of income, gain or loss recognized by the fund for U.S.
federal income tax purposes.

DEBT SECURITIES -- Although the fund will primarily invest in equity securities,
it may invest in debt securities as well. Debt securities are used by issuers to
borrow money. Generally, issuers pay investors periodic interest and repay the
amount borrowed either periodically during the life of the security and/or at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values and accrue
interest at the applicable coupon rate over a specified time period. The market
prices of debt securities fluctuate depending on such factors as interest rates,
credit quality and maturity. In general, market prices of debt securities
decline when interest rates rise and increase when interest rates fall.

Lower rated debt securities, rated Ba or below by Moody's and/or BB or below by
S&P or unrated but determined to be of equivalent quality, are described by the
rating agencies as speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness than higher rated debt
securities, or they may already be in default. The market prices of these
securities may fluctuate more than higher quality securities and may decline
significantly in periods of general economic difficulty. It may be more
difficult to dispose of, and to determine the value of, lower rated debt
securities.

SECURITIES WITH EQUITY AND DEBT CHARACTERISTICS -- The fund may invest in
securities that have a combination of equity and debt characteristics. These
securities may at times behave more like equity than debt and vice versa. Some
types of convertible bonds or preferred stocks automatically convert into common
stocks. The prices and yields of nonconvertible preferred stocks generally move
with changes in interest rates and the issuer's credit quality, similar to the
factors affecting debt securities. Certain of these securities will be treated
as debt for fund investment limit purposes.

Convertible bonds, convertible preferred stocks and other securities may
sometimes be converted, or may automatically convert, into common stocks or
other securities at a stated conversion ratio. These securities, prior to
conversion, may pay a fixed rate of interest or a dividend. Because convertible
securities have both debt and equity characteristics, their value varies in
response to many factors, including the value of the underlying assets, general
market and economic conditions, and convertible market valuations, as well as
changes in interest rates, credit spreads and the credit quality of the issuer.

The New Economy Fund -- Page 4
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U.S. GOVERNMENT OBLIGATIONS -- U.S. government obligations are securities backed
by the full faith and credit of the U.S. government. U.S. government obligations
include the following types of securities:

U.S. TREASURY SECURITIES -- U.S. Treasury securities include direct
obligations of the U.S. Treasury, such as Treasury bills, notes and bonds.
For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government, and thus they are of the
highest possible credit quality. Such securities are subject to variations
in market value due to fluctuations in interest rates, but, if held to
maturity, will be paid in full.

FEDERAL AGENCY SECURITIES BACKED BY "FULL FAITH AND CREDIT" -- The
securities of certain U.S. government agencies and government-sponsored
entities are guaranteed as to the timely payment of principal and interest
by the full faith and credit of the U.S. government. Such agencies and
entities include the Government National Mortgage Association (Ginnie Mae),
the Veterans Administration (VA), the Federal Housing Administration (FHA),
the Export-Import Bank (Exim Bank), the Overseas Private Investment
Corporation (OPIC), the Commodity Credit Corporation (CCC) and the Small
Business Administration (SBA).

OTHER FEDERAL AGENCY OBLIGATIONS -- Additional federal agency securities are
neither direct obligations of, nor guaranteed by, the U.S. government. These
obligations include securities issued by certain U.S. government agencies and
government-sponsored entities. However, they generally involve some form of
federal sponsorship: some operate under a government charter, some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; and others are supported only by the credit of the issuing
government agency or entity. These agencies and entities include, but are not
limited to: Federal Home Loan Bank, Federal Home Loan Mortgage Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), Tennessee
Valley Authority and Federal Farm Credit Bank System.

CASH AND CASH EQUIVALENTS -- These include (a) commercial paper (for example,
short-term notes with maturities typically up to 12 months in length issued by
corporations, governmental bodies or bank/corporation sponsored conduits
(asset-backed commercial paper)) (b) short-term bank obligations (for example,
certificates of deposit, bankers' acceptances (time drafts on a commercial bank
where the bank accepts an irrevocable obligation to pay at maturity)) or bank
notes, (c) savings association and savings bank obligations (for example, bank
notes and certificates of deposit issued by savings banks or savings
associations), (d) securities of the U.S. government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less, and (e)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements under
which the fund buys a security and obtains a simultaneous commitment from the
seller to repurchase the security at a specified time and price. Repurchase
agreements permit the fund to maintain liquidity and earn income over periods of
time as short as overnight. The seller must maintain with the fund's custodian
collateral equal to at least 100% of the repurchase price, including accrued
interest, as monitored daily by the investment adviser. The fund will only enter
into repurchase agreements involving securities in which it could otherwise
invest and with selected banks and securities dealers whose financial condition
is monitored by the investment adviser. If the seller under the repurchase
agreement defaults, the fund may incur a loss if the value of the collateral
securing the repurchase agreement has declined and may incur disposition costs
in

The New Economy Fund -- Page 5
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connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, realization of the collateral by the fund
may be delayed or limited.

RESTRICTED OR ILLIQUID SECURITIES -- The fund may purchase securities subject to
restrictions on resale. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration under the
Securities Act of 1933 (the "1933 Act"), or in a registered public offering.
Where registration is required, the holder of a registered security may be
obligated to pay all or part of the registration expense and a considerable
period may elapse between the time it decides to seek registration and the time
it may be permitted to sell a security under an effective registration
statement. Difficulty in selling such securities may result in a loss or be
costly to the fund.

Securities (including restricted securities) not actively traded will be
considered illiquid unless they have been specifically determined to be liquid
under procedures adopted by the fund's board of trustees, taking into account
factors such as the frequency and volume of trading, the commitment of dealers
to make markets and the availability of qualified investors, all of which can
change from time to time. The fund may incur certain additional costs in
disposing of illiquid securities.

* * * * * *

PORTFOLIO TURNOVER -- Portfolio changes will be made without regard to the
length of time particular investments may have been held. Short-term trading
profits are not the fund's objective, and changes in its investments are
generally accomplished gradually, though short-term transactions may
occasionally be made. High portfolio turnover involves correspondingly greater
transaction costs in the form of dealer spreads or brokerage commissions, and
may result in the realization of net capital gains, which are taxable when
distributed to shareholders.

A fund's portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. The fund's portfolio turnover rates for
the fiscal years ended November 30, 2005 and 2004 were 32% and 35%,
respectively. See "Financial highlights" in the prospectus for the fund's annual
portfolio turnover rate for each of the last five fiscal years.

FUNDAMENTAL POLICIES AND INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES -- The fund has adopted the following fundamental policies
and investment restrictions, which may not be changed without approval by
holders of a majority of its outstanding shares. Such majority is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), as the vote of the
lesser of (a) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (b) more than 50% of the outstanding
voting securities. All percentage limitations are considered at the time
securities are purchased and are based on the fund's net assets unless otherwise
indicated. None of the following investment restrictions involving a maximum
percentage of assets will be considered violated unless the excess occurs
immediately after, and is caused by, an acquisition by the fund.

The fund may not:

1. Invest in securities of another issuer (other than the U.S. or its agencies
or instrumentalities), if immediately after and as a result of such investment
more than 5% of the value of the

The New Economy Fund -- Page 6
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total assets of the fund would be invested in the securities of such other
issuer, or more than 10% of the outstanding voting securities of such issuer
would be owned by the fund;

2. Invest in companies for the purpose of exercising control or management;

3. Purchase the securities of companies in a particular industry (other than
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities) if thereafter 25% or more of the value of its total assets
would consist of securities issued by companies in that industry;

4. Buy or sell real estate in the ordinary course of its business; however,
the fund may invest in securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest in
real estate or interests therein;

5. Buy or sell commodities or commodity contracts in the ordinary course of
its business provided, however, that entering into a forward currency contract
shall not be prohibited by this restriction;

6. Lend any security or make any other loan if, as a result, more than 15% or
its total assets would be lent to third parties, but this limitation does not
apply to purchases of debt securities or to repurchase agreements;

7. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost, securities identical to
those sold short;

8. Purchase securities on margin;

9. Enter into any repurchase agreement if, as a result, more than 10% of the
fund's total assets would be subject to repurchase agreements maturing in more
than seven days (see above);

10. Borrow amounts in excess of 5% of the value of its total assets or issue
senior securities; in any event, the fund may borrow only as a temporary measure
for extraordinary or emergency purposes and not for investment in securities; or

11. Invest in puts, calls, straddles or spreads, or combinations thereof.

For purposes of investment restriction number 6, the fund does not currently
intend to lend portfolio securities.

NONFUNDAMENTAL POLICIES -- The following nonfundamental investment policies may
be changed without shareholder approval:

1. The fund may not invest in securities of other investment companies, except
as permitted by the 1940 Act.

2. The fund may not invest more than 15% of the value of its net assets in
illiquid securities.

The New Economy Fund -- Page 7
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MANAGEMENT OF THE FUND

BOARD OF TRUSTEES AND OFFICERS

YEAR FIRST NUMBER OF PORTFOLIOS
POSITION ELECTED WITHIN THE FUND
WITH THE A TRUSTEE PRINCIPAL OCCUPATION(S) DURING COMPLEX/2/ OVERSEEN
NAME AND AGE FUND OF THE FUND/1/ PAST FIVE YEARS BY TRUSTEE
---------------------------------------------------------------------------------------------------------------------
"NON-INTERESTED" TRUSTEES/4/
---------------------------------------------------------------------------------------------------------------------

Joseph C. Berenato Trustee 2000 Chairman of the Board and CEO, 6
Age: 59 Ducommun Incorporated (aerospace
components manufacturer)

---------------------------------------------------------------------------------------------------------------------
Richard G. Capen, Trustee 1993 Corporate director and author; 14
Jr. former U.S. Ambassador to Spain;
Age: 71 former Vice Chairman,
Knight-Ridder, Inc. (communications
company); former Chairman and
Publisher, The Miami Herald
---------------------------------------------------------------------------------------------------------------------
H. Frederick Trustee 1983 Private investor; former President 19
Christie and CEO, The Mission Group
Age: 72 (non-utility holding company,
subsidiary of Southern California
Edison Company)
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John G. Freund Trustee 2000 Founder and Managing Director, 2
Age: 52 Skyline Ventures (venture capital
investor in health care companies);
former Managing Director -
Alternative Asset Management Group,
Chancellor Capital Management

---------------------------------------------------------------------------------------------------------------------
Leonade D. Jones Trustee 1995 Co-founder, VentureThink LLC 6
Age: 58 (developed and managed e-commerce
businesses) and Versura, Inc.
(education loan exchange); former
Treasurer, The Washington Post
Company
---------------------------------------------------------------------------------------------------------------------
William H. Kling Chairman of 1987 President, American Public Media 8
Age: 63 the Board Group
(Independent
and
Non-Executive)
---------------------------------------------------------------------------------------------------------------------
Norman R. Weldon Trustee 1983 Managing Director, Partisan 3
Age: 71 Management Group, Inc. (venture
capital investor in medical device
companies); former Chairman of the
Board, Novoste Corporation; former
President and Director, Corvita
Corporation
---------------------------------------------------------------------------------------------------------------------
Patricia K. Woolf Trustee 1984 Private investor; corporate 6
Age: 71 director; former lecturer,
Department of Molecular Biology,
Princeton University
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OTHER DIRECTORSHIPS/3/ HELD
NAME AND AGE BY TRUSTEE
------------------------------------------------------
"NON-INTERESTED" TRUSTEES/4/
------------------------------------------------------

Joseph C. Berenato Ducommun Incorporated
Age: 59
------------------------------------------------------
Richard G. Capen, Carnival Corporation
Jr.
Age: 71
------------------------------------------------------
H. Frederick Ducommun Incorporated;
Christie IHOP Corporation;
Age: 72 Southwest Water Company
------------------------------------------------------
John G. Freund XenoPort, Inc.
Age: 52
------------------------------------------------------
Leonade D. Jones None
Age: 58
------------------------------------------------------
William H. Kling Irwin Financial Corporation
Age: 63
------------------------------------------------------
Norman R. Weldon AtriCure, Inc.
Age: 71
------------------------------------------------------
Patricia K. Woolf First Energy Corporation
Age: 71
------------------------------------------------------

The New Economy Fund -- Page 8

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PRINCIPAL OCCUPATION(S) DURING
YEAR FIRST PAST FIVE YEARS AND
ELECTED POSITIONS HELD NUMBER OF PORTFOLIOS
POSITION A TRUSTEE WITH AFFILIATED ENTITIES WITHIN THE FUND OTHER DIRECTORSHIPS/3/
WITH THE AND/OR OFFICER OR THE PRINCIPAL UNDERWRITER COMPLEX/2/ OVERSEEN HELD
NAME AND AGE FUND OF THE FUND/1/ OF THE FUND BY TRUSTEE BY TRUSTEE
-----------------------------------------------------------------------------------------------------------------------------------
"INTERESTED" TRUSTEES/5,6/
-----------------------------------------------------------------------------------------------------------------------------------

Gordon Crawford Vice 1999 Senior Vice President and 2 None
Age: 59 Chairman of Director, Capital Research
the Board and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Timothy D. Armour President 1991 Executive Vice President and 1 None
Age: 45 Director, Capital Research
and Management Company;
Director, The Capital Group
Companies, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------

The New Economy Fund -- Page 9

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PRINCIPAL OCCUPATION(S) DURING
POSITION YEAR FIRST ELECTED PAST FIVE YEARS AND POSITIONS HELD
WITH THE AN OFFICER WITH AFFILIATED ENTITIES
NAME AND AGE FUND OF THE FUND/1/ OR THE PRINCIPAL UNDERWRITER OF THE FUND
-----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS/6/
-----------------------------------------------------------------------------------------------------------------------------------

Claudia P. Senior Vice President 1996 Senior Vice President, Capital Research and Management
Huntington Company; Director, The Capital Group Companies, Inc.*
Age: 53
-----------------------------------------------------------------------------------------------------------------------------------
Alwyn W. Heong Vice President 2000 Senior Vice President, Capital Research Company*
Age: 45
-----------------------------------------------------------------------------------------------------------------------------------
David M. Riley Vice President 2004 Senior Vice President, Capital Research Company*
Age: 38
-----------------------------------------------------------------------------------------------------------------------------------
Chad L. Norton Secretary 1991 Vice President - Fund Business Management Group, Capital
Age: 45 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
David A. Pritchett Treasurer 1999 Vice President - Fund Business Management Group, Capital
Age: 39 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Steven I. Koszalka Assistant Secretary 2005 Assistant Vice President - Fund Business Management Group,
Age: 41 Capital Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------
Sheryl F. Johnson Assistant Treasurer 1998 Vice President - Fund Business Management Group, Capital
Age: 37 Research and Management Company
-----------------------------------------------------------------------------------------------------------------------------------

The New Economy Fund -- Page 10

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* Company affiliated with Capital Research and Management Company.
1 Trustees and officers of the fund serve until their resignation, removal or
retirement.
2 Capital Research and Management Company manages the American Funds, consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series,(R) which serves as the underlying investment vehicle
for certain variable insurance contracts, and Endowments, whose shareholders
are limited to certain nonprofit organizations.
3 This includes all directorships (other than those of the American Funds) that
are held by each trustee as a director of a public company or a registered
investment company.
4 A "non-interested" trustee refers to a trustee who is not an "interested
person" within the meaning of the 1940 Act, on the basis of his or her
affiliation with the fund's investment adviser, Capital Research and Management
Company, or affiliated entities (including the fund's principal underwriter).
5 "Interested persons," within the meaning of the 1940 Act, on the basis of
their affiliation with the fund's investment adviser, Capital Research and
Management Company, or affiliated entities (including the fund's principal
underwriter).
6 All of the officers listed are officers and/or directors/trustees of one or
more of the other funds for which Capital Research and Management Company
serves as investment adviser.

THE ADDRESS FOR ALL TRUSTEES AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: FUND SECRETARY.

The New Economy Fund -- Page 11

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FUND SHARES OWNED BY TRUSTEES AS OF DECEMBER 31, 2005:

AGGREGATE DOLLAR RANGE/1/
OF SHARES
OWNED IN ALL FUNDS
IN THE AMERICAN FUNDS
DOLLAR RANGE/1/ OF FUND FAMILY OVERSEEN
NAME SHARES OWNED BY TRUSTEE
-------------------------------------------------------------------------------

"NON-INTERESTED" TRUSTEES
-------------------------------------------------------------------------------
Joseph C. Berenato $1 - $10,000 Over $100,000
-------------------------------------------------------------------------------
Richard G. Capen, Jr. $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
H. Frederick Christie Over $100,000 Over $100,000
-------------------------------------------------------------------------------
John G. Freund Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Leonade D. Jones $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
William H. Kling Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Norman R. Weldon Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Patricia K. Woolf $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
"INTERESTED" TRUSTEES
-------------------------------------------------------------------------------
Timothy D. Armour Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Gordon Crawford Over $100,000 Over $100,000
-------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; and Over $100,000. The amounts listed
for "interested" trustees include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.

TRUSTEE COMPENSATION -- No compensation is paid by the fund to any officer or
trustee who is a director, officer or employee of the investment adviser or its
affiliates. The fund typically pays each non-interested trustee an annual fee of
$14,000. If the aggregate annual fees paid to a non-interested trustee by all
funds advised by the investment adviser is less than $50,000, that
non-interested trustee would be eligible for a $50,000 alternative fee. This
alternative fee is paid by those funds for which the non-interested trustee
serves as a trustee on a pro-rata basis according to each fund's relative share
of the annual fees that it would typically pay. The alternative fee reflects the
significant time and labor commitment required for a trustee to oversee even one
fund. A non-interested trustee who is chairman of the board board (an
"independent chair") also receives an additional annual fee of $25,000, paid in
equal portions by the fund and the funds whose boards and committees typically
meet jointly with those of the fund. The fund pays to its independent chair an
attendance fee (as described below) for each meeting of a committee of the board
of trustees attended as a non voting ex-officio member.

In addition, the fund generally pays to non-interested trustees fees of (a)
$2,500 for each board of trustees meeting attended and (b) $1,500 for each
meeting attended as a member of a committee of the board of trustees.

The New Economy Fund -- Page 12
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Non-interested trustees also receive attendance fees of (a) $2,500 for each
director seminar or information session organized by the investment adviser, (b)
$1,500 for each joint audit committee meeting with all other audit committees of
funds advised by the investment adviser and (c) $500 for each meeting of the
board or committee chairs of other funds advised by the investment adviser. The
fund and the other funds served by each non-interested trustee each pay an equal
portion of these attendance fees.

The committee on governance of the board of trustees, a committee comprised
exclusively of non-interested trustees, reviews trustee compensation
periodically, and typically recommends adjustments every other year. In making
its recommendations, the committee on governance considers a number of factors,
including operational, regulatory and other developments affecting the
complexity of the board's oversight obligations, as well as comparative industry
data.

No pension or retirement benefits are accrued as part of fund expenses.
Non-interested trustees may elect, on a voluntary basis, to defer all or a
portion of their fees through a deferred compensation plan in effect for the
fund. The fund also reimburses certain expenses of the non-interested trustees.

TRUSTEE COMPENSATION PAID DURING THE FISCAL YEAR ENDED NOVEMBER 30, 2005

TOTAL COMPENSATION (INCLUDING
VOLUNTARILY DEFERRED
COMPENSATION/1/)
AGGREGATE COMPENSATION FROM ALL FUNDS MANAGED BY
(INCLUDING VOLUNTARILY CAPITAL RESEARCH AND MANAGEMENT
DEFERRED COMPENSATION/1/) COMPANY OR ITS AFFILIATES/2/
NAME FROM THE FUND
-----------------------------------------------------------------------------------------------------------------------------------

Joseph C. Berenato/3/ $32,417 $156,834
-----------------------------------------------------------------------------------------------------------------------------------
Richard G. Capen, Jr. 31,142 132,180
-----------------------------------------------------------------------------------------------------------------------------------
H. Frederick Christie/3/ 31,418 325,180
-----------------------------------------------------------------------------------------------------------------------------------
John G. Freund/3/ 35,750 74,500
-----------------------------------------------------------------------------------------------------------------------------------
Leonade D. Jones/3/ 32,084 240,500
-----------------------------------------------------------------------------------------------------------------------------------
William H. Kling 26,900 154,000
-----------------------------------------------------------------------------------------------------------------------------------
Norman R. Weldon 36,750 86,500
-----------------------------------------------------------------------------------------------------------------------------------
Patricia K. Woolf/3/ 25,875 209,000
-----------------------------------------------------------------------------------------------------------------------------------

1 Amounts may be deferred by eligible trustees under a nonqualified deferred
compensation plan adopted by the fund in 1993. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more American Funds
as designated by the trustees. Compensation shown in this table for the fiscal
year ended November 30, 2005 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
2 Capital Research and Management Company manages the American Funds, consisting
of 29 funds. Capital Research and Management Company also manages American
Funds Insurance Series,(R) which serves as the underlying investment vehicle
for certain variable insurance contracts, and Endowments, whose shareholders
are limited to certain nonprofit organizations.
3 Since the deferred compensation plan's adoption, the total amount of deferred
compensation accrued by the fund (plus earnings thereon) through the 2005
fiscal year for participating trustees is as follows: Joseph C. Berenato
($167,346), H. Frederick Christie ($160,702), John G. Freund ($155,473),
Leonade D. Jones ($230,671) and Patricia K. Woolf ($108,509). Amounts deferred
and accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the trustees.

As of January 1, 2006, the officers and trustees of the fund and their families,
as a group, owned beneficially or of record less than 1% of the outstanding
shares of the fund.

The New Economy Fund -- Page 13
<PAGE>

FUND ORGANIZATION AND THE BOARD OF TRUSTEES -- The fund, an open-end,
diversified management investment company, was organized as a Massachusetts
business trust on May 17, 1983. Although the board of trustees has delegated
day-to-day oversight to the investment adviser, all fund operations are
supervised by the fund's board, which meets periodically and performs duties
required by applicable state and federal laws.

Massachusetts common law provides that a trustee of a Massachusetts business
trust owes a fiduciary duty to the trust and must carry out his or her
responsibilities as a trustee in accordance with that fiduciary duty. Generally,
a trustee will satisfy his or her duties if he or she acts in good faith and
uses ordinary prudence.

Members of the board who are not employed by the investment adviser or its
affiliates are paid certain fees for services rendered to the fund as described
above. They may elect to defer all or a portion of these fees through a deferred
compensation plan in effect for the fund.

The fund has several different classes of shares, including Class A, B, C, F,
529-A, 529-B, 529-C, 529-E, 529-F, R-1, R-2, R-3, R-4 and R-5 shares. Shares of
each class represent an interest in the same investment portfolio. Each class
has pro rata rights as to voting, redemption, dividends and liquidation, except
that each class bears different distribution expenses and may bear different
transfer agent fees and other expenses properly attributable to the particular
class as approved by the board of trustees and set forth in the fund's rule
18f-3 Plan. Each class' shareholders have exclusive voting rights with respect
to the respective class' rule 12b-1 plans adopted in connection with the
distribution of shares and on other matters in which the interests of one class
are different from interests in another class. Shares of all classes of the fund
vote together on matters that affect all classes in substantially the same
manner. Each class votes as a class on matters that affect that class alone.
Note that CollegeAmerica/(R)/ account owners invested in Class 529 shares are
not shareholders of the fund and, accordingly, do not have the rights of a
shareholder, such as the right to vote proxies relating to fund shares. As the
legal owner of the fund's shares, the Virginia College Savings Plan/SM/ will
vote any proxies relating to fund shares.

The fund does not hold annual meetings of shareholders. However, significant
matters that require shareholder approval, such as certain elections of board
members or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at least 10% of the shares,
the fund will hold a meeting at which any member of the board could be removed
by a majority vote.

COMMITTEES OF THE BOARD OF TRUSTEES -- The fund has an audit committee comprised
of Joseph C. Berenato; Richard G. Capen, Jr.; H. Frederick Christie; and Leonade
D. Jones, none of whom is an "interested person" of the fund within the meaning
of the 1940 Act. The committee provides oversight regarding the fund's
accounting and financial reporting policies and practices, its internal controls
and the internal controls of the fund's principal service providers. The
committee acts as a liaison between the fund's independent registered public
accounting firm and the full board of trustees. Six audit committee meetings
were held during the 2005 fiscal year.

The fund has a contracts committee comprised of Joseph C. Berenato; Richard G.
Capen, Jr.; H. Frederick Christie; John G. Freund; Leonade D. Jones; William H.
Kling; Norman R. Weldon; and Patricia K. Woolf, none of whom is an "interested
person" of the fund within the meaning of the 1940 Act. The committee's
principal function is to request, review and consider the information

The New Economy Fund -- Page 14
<PAGE>

deemed necessary to evaluate the terms of certain agreements between the fund
and its investment adviser or the investment adviser's affiliates, such as the
Investment Advisory and Service Agreement, Principal Underwriting Agreement,
Administrative Services Agreement and Plans of Distribution adopted pursuant to
rule 12b-1 under the 1940 Act, that the fund may enter into, renew or continue,
and to make its recommendations to the full board of trustees on these matters.
Two contracts committee meetings were held during the 2005 fiscal year.

The fund has a committee on governance comprised of Joseph C. Berenato; Richard
G. Capen, Jr.; H. Frederick Christie; John G. Freund; Leonade D. Jones; William
H. Kling; Norman R. Weldon; and Patricia K. Woolf, none of whom is considered an
"interested person" of the fund within the meaning of the 1940 Act. The
committee periodically reviews such issues as the board's composition,
responsibilities, committees and compensation and other relevant issues, and
recommends any appropriate changes to the full board of trustees. The committee
also evaluates, selects and nominates independent trustee candidates to the full
board of trustees. While the committee normally is able to identify from its own
resources an ample number of qualified candidates, it will consider shareholder
suggestions of persons to be considered as nominees to fill future vacancies on
the board. Such suggestions must be sent in writing to the committee on
governance, c/o the fund's secretary, and must be accompanied by complete
biographical and occupational data on the prospective nominee, along with a
written consent of the prospective nominee for consideration of his or her name
by the committee. Two committee on governance meetings were held during the 2005
fiscal year.

PROXY VOTING PROCEDURES AND GUIDELINES -- The fund and its investment adviser
have adopted Proxy Voting Guidelines (the "Guidelines") with respect to voting
proxies of securities held by the fund, other American Funds, Endowments and
American Funds Insurance Series. Certain American Funds have established
separate proxy committees that vote proxies or delegate to a voting officer the
authority to vote on behalf of those funds. Proxies for all other funds are
voted by a committee of the investment adviser under authority delegated by
those funds' boards. Therefore, if more than one fund invests in the same
company, they may vote differently on the same proposal.

All U.S. proxies are voted. Non-U.S. proxies also are voted, provided there is
sufficient time and information available. After a proxy is received, the
investment adviser prepares a summary of the proposals in the proxy. A
discussion of any potential conflicts of interest is also included in the
summary. After reviewing the summary, one or more research analysts familiar
with the company and industry make a voting recommendation on the proxy
proposals. A second recommendation is made by a proxy coordinator (a senior
investment professional) based on the individual's knowledge of the Guidelines
and familiarity with proxy-related issues. The proxy summary and voting
recommendations are then sent to the appropriate proxy voting committee for the
final voting decision.

The analyst and proxy coordinator making voting recommendations are responsible
for noting any potential material conflicts of interest. One example might be
where a director of one or more American Funds is also a director of a company
whose proxy is being voted. In such instances, proxy committee members are
alerted to the potential conflict. The proxy committee may then elect to vote
the proxy or seek a third-party recommendation or vote of an ad hoc group of
committee members.

The Guidelines, which have been in effect in substantially their current form
for many years, provide an important framework for analysis and decision-making
by all funds. However, they are

The New Economy Fund -- Page 15
<PAGE>

not exhaustive and do not address all potential issues. The Guidelines provide a
certain amount of flexibility so that all relevant facts and circumstances can
be considered in connection with every vote. As a result, each proxy received is
voted on a case-by-case basis considering the specific circumstances of each
proposal. The voting process reflects the funds' understanding of the company's
business, its management and its relationship with shareholders over time.

Information regarding how the fund voted proxies relating to portfolio
securities during the 12-month period ended June 30 of each year will be
available on or about September 1 of each year (a) without charge, upon request
by calling American Funds Service Company at 800/421-0180, (b) on the American
Funds website at www.americanfunds.com and (c) on the SEC's website at
www.sec.gov.

The following summary sets forth the general positions of the American Funds,
Endowments, American Funds Insurance Series and the investment adviser on
various proposals. A copy of the full Guidelines is available upon request, free
of charge, by calling American Funds Service Company at 800/421-0180 or visiting
the American Funds website.

DIRECTOR MATTERS -- The election of a company's slate of nominees for
director is generally supported. Votes may be withheld for some or all of
the nominees if this is determined to be in the best interest of
shareholders. Separation of the chairman and CEO positions may also be
supported. Typically, proposals to declassify the board (elect all
directors annually) are supported based on the belief that this increases
the directors' sense of accountability to shareholders.

SHAREHOLDER RIGHTS -- Proposals to repeal an existing poison pill, to
provide for confidential voting and to provide for cumulative voting are
usually supported. Proposals to eliminate the right of shareholders to act
by written consent or to take away a shareholder's right to call a special
meeting are not typically supported.

COMPENSATION AND BENEFIT PLANS -- Option plans are complicated, and many
factors are considered in evaluating a plan. Each plan is evaluated based
on protecting shareholder interests and a knowledge of the company and its
management. Considerations include the pricing (or repricing) of options
awarded under the plan and the impact of dilution on existing shareholders
from past and future equity awards. Compensation packages should be
structured to attract, motivate and retain existing employees and qualified
directors; however, they should not be excessive.

ROUTINE MATTERS -- The ratification of auditors, procedural matters
relating to the annual meeting and changes to company name are examples of
items considered routine. Such items are generally voted in favor of
management's recommendations unless circumstances indicate otherwise.

PRINCIPAL FUND SHAREHOLDERS -- The following table identifies those investors
who own of record or are known by the fund to own beneficially 5% or more of any
class of its shares as of the opening of business on January 1, 2006. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

The New Economy Fund -- Page 16
<PAGE>

NAME AND ADDRESS OWNERSHIP PERCENTAGE
----------------------------------------------------------------------------

Edward D. Jones & Co. Class A 11.09%
201 Progress Parkway Class B 5.21
Maryland Heights, MO 63043-3009
----------------------------------------------------------------------------
Citigroup Global Markets, Inc. Class C 9.24
333 W. 34th Street
New York, NY 10001-2402
----------------------------------------------------------------------------
MLPF&S Class C 5.32
4800 Deer Lake Drive E. Floor 2
Jacksonville, FL 32246-6484
----------------------------------------------------------------------------
VCSP/COLLEGEAMERICA Class 529-F 6.65%
1410 Prospect Street
Westfield, NJ 07090-4243
----------------------------------------------------------------------------
Hartford Life Insurance Co. Class R-1 17.31
P.O. Box 2999 Class R-3 7.82
Hartford, CT 06104-2999
----------------------------------------------------------------------------
Raymond James & Associates, Inc. Class R-1 11.61
880 Carillon Parkway
St. Petersburg, FL 33716-1100
----------------------------------------------------------------------------
Bisys Retirement Services Class R-1 7.94
700 17th Street, Suite 300
Denver, CO 80202-3531
----------------------------------------------------------------------------
CB&T Class R-3 7.10
8515 E. Orchard Road, #2T2
Greenwood Village, CO 80111-5002
----------------------------------------------------------------------------
State Street KC AS Class R-3 5.44
801 Pennsylvania Avenue
Kansas City, MO 64105-1307
----------------------------------------------------------------------------
CB&T Class R-4 10.16
8515 E. Orchard Road, #2T2
Greenwood Village, CO 80111-5002
----------------------------------------------------------------------------
CB&T Class R-4 8.14
8515 E. Orchard Road, #2T2
Greenwood Village, CO 80111-5002
----------------------------------------------------------------------------
CB&T Class R-4 6.88
8515 E. Orchard Road, #2T2
Greenwood Village, CO 80111-5002
----------------------------------------------------------------------------
CGTC TR Class R-5 57.49
333 S. Hope Street, Floor 49
Los Angeles, CA 90071-1406
----------------------------------------------------------------------------
Saxon & Co. Class R-5 16.38
P.O. Box 7780-1888
Philadelphia, PA 19182-0001
----------------------------------------------------------------------------
The Northern Trust Class R-5 5.74
P.O. Box 92994
Chicago, IL 60675-2994
----------------------------------------------------------------------------

The New Economy Fund -- Page 17
<PAGE>

INVESTMENT ADVISER -- Capital Research and Management Company, the investment
adviser, founded in 1931, maintains research facilities in the United States and
abroad (Los Angeles, San Francisco, New York, Washington, DC, London, Geneva,
Hong Kong, Singapore and Tokyo). These facilities are staffed with experienced
investment professionals. The investment adviser is located at 333 South Hope
Street, Los Angeles, CA 90071 and 135 South State College Boulevard, Brea, CA
92821. It is a wholly owned subsidiary of The Capital Group Companies, Inc., a
holding company for several investment management subsidiaries. The investment
adviser manages equity assets for the American Funds through two divisions.
These divisions generally function separately from each other with respect to
investment research activities and they make investment decisions for the funds
on a separate basis.

POTENTIAL CONFLICTS OF INTEREST -- The investment adviser has adopted policies
and procedures that address conflicts of interest that may arise between a
portfolio counselor's management of the fund and his or her management of other
funds and accounts. Potential areas of conflict could involve allocation of
investment opportunities and trades among funds and accounts, use of information
regarding the timing of fund trades, personal investing activities, portfolio
counselor compensation and proxy voting of portfolio securities. The investment
adviser has adopted policies and procedures that it believes are reasonably
designed to address these conflicts. However, there is no guarantee that such
policies and procedures will be effective or that the investment adviser will
anticipate all potential conflicts of interest.

COMPENSATION OF INVESTMENT PROFESSIONALS -- As described in the prospectus, the
investment adviser uses a system of multiple portfolio counselors in managing
fund assets. In addition, Capital Research and Management Company's investment
analysts may make investment decisions with respect to a portion of a fund's
portfolio within their research coverage. Portfolio counselors and investment
analysts may also manage assets in other mutual funds advised by Capital
Research and Management Company.

Portfolio counselors and investment analysts are paid competitive salaries by
Capital Research and Management Company. In addition, they may receive bonuses
based on their individual portfolio results. Investment professionals also may
participate in profit-sharing plans. The relative mix of compensation
represented by bonuses, salary and profit-sharing will vary depending on the
individual's portfolio results, contributions to the organization and other
factors. In order to encourage a long-term focus, bonuses based on investment
results are calculated by comparing pretax total returns to relevant benchmarks
over both the most recent year and a four-year rolling average, with the greater
weight placed on the four-year rolling average. For portfolio counselors,
benchmarks may include measures of the marketplaces in which the relevant fund
invests and measures of the results of comparable mutual funds. For investment
analysts, benchmarks may include relevant market measures and appropriate
industry or sector indexes reflecting their areas of expertise. Capital Research
and Management Company also separately compensates analysts for the quality of
their research efforts. The benchmarks against which The New Economy Fund
portfolio counselors are measured include: Lipper Multi-Cap Growth Funds Index
and Global Services and Information Index.

PORTFOLIO COUNSELOR FUND HOLDINGS AND OTHER MANAGED ACCOUNTS -- As described
below, portfolio counselors may personally own shares of the fund. In addition,
portfolio counselors may manage a portion of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

The New Economy Fund -- Page 18
<PAGE>

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF NOVEMBER 30, 2005:

NUMBER NUMBER
OF OTHER OF OTHER NUMBER
REGISTERED POOLED OF OTHER
INVESTMENT INVESTMENT ACCOUNTS
COMPANIES (RICS) VEHICLES (PIVS) THAT
THAT THAT PORTFOLIO
PORTFOLIO PORTFOLIO COUNSELOR
DOLLAR RANGE COUNSELOR COUNSELOR MANAGES
OF FUND MANAGES MANAGES (ASSETS OF
PORTFOLIO SHARES (ASSETS OF RICS (ASSETS OF PIVS OTHER ACCOUNTS
COUNSELOR OWNED/1/ IN BILLIONS)/2/ IN BILLIONS)/3/ IN BILLIONS)/4/
-------------------------------------------------------------------------------------------------

Gordon Crawford Over 3 $207.1 1 $0.01 None
$1,000,000
--------------------------------------------------------------------------------------------------
Timothy D. Armour $500,001 - 3 $155.7 None None
$1,000,000
--------------------------------------------------------------------------------------------------
Claudia P. $100,001 - 4 $105.6 1 $0.01 None
Huntington $500,000
--------------------------------------------------------------------------------------------------
Mark E. Denning None/5/ 6 $250.2 2 $0.05 None
--------------------------------------------------------------------------------------------------

1 Ownership disclosure is made using the following ranges: None; $1 - $10,000;
$10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 -
$1,000,000; and Over $1,000,000. The amounts listed include shares owned
through The Capital Group Companies, Inc. retirement plan and 401(k) plan.
2 Indicates fund(s) where the portfolio counselor also has significant
responsibilities for the day to day management of the fund(s). Assets noted are
the total net assets of the registered investment companies and are not
indicative of the total assets managed by the individual, which is a
substantially lower amount.
3 Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States. Assets noted are the total net
assets of the fund and are not indicative of the total assets managed by the
individual, which is a substantially lower amount.
4 Reflects other professionally managed accounts held at companies affiliated
with Capital Research and Management Company. Personal brokerage accounts of
portfolio counselors and their families are not reflected.
5 Portfolio counselor resides outside the United States. As such, tax
considerations may adversely influence his or her ability to own shares of the
fund.

INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and Service
Agreement (the "Agreement") between the fund and the investment adviser will
continue in effect until November 30, 2006, unless sooner terminated, and may be
renewed from year to year thereafter, provided that any such renewal has been
specifically approved at least annually by (a) the board of trustees, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the fund, and (b) the vote of a majority of trustees who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement provides that the investment adviser has no
liability to the fund for its acts or omissions in the performance of its
obligations to the fund not involving willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement. The
Agreement also provides that either party has the right to terminate it, without
penalty, upon 60 days' written notice to the other party, and that the Agreement
automatically terminates in the event of its assignment (as defined in the 1940
Act).

In addition to providing investment advisory services, the investment adviser
furnishes the services and pays the compensation and travel expenses of persons
to perform the fund's

The New Economy Fund -- Page 19
<PAGE>

executive, administrative, clerical and bookkeeping functions, and provides
suitable office space, necessary small office equipment and utilities, general
purpose accounting forms, supplies and postage used at the fund's offices. The
fund pays all expenses not assumed by the investment adviser, including, but not
limited to, custodian, stock transfer and dividend disbursing fees and expenses;
shareholder recordkeeping and administrative expenses; costs of the designing,
printing and mailing of reports, prospectuses, proxy statements and notices to
its shareholders; taxes; expenses of the issuance and redemption of fund shares
(including stock certificates, registration and qualification fees and
expenses); expenses pursuant to the fund's plans of distribution (described
below); legal and auditing expenses; compensation, fees and expenses paid to
non-interested trustees; association dues; costs of stationery and forms
prepared exclusively for the fund; and costs of assembling and storing
shareholder account data.

As compensation for its services, the investment adviser receives a monthly fee
that is accrued daily, calculated at the annualized rates of:

Net asset level

RATE IN EXCESS OF UP TO
------------------------------------------------------------------------------

0.580% $ 0 $ 500,000,000
------------------------------------------------------------------------------
0.480 500,000,000 1,000,000,000
------------------------------------------------------------------------------
0.440 1,000,000,000 1,500,000,000
------------------------------------------------------------------------------
0.410 1,500,000,000 2,500,000,000
------------------------------------------------------------------------------
0.390 2,500,000,000 4,000,000,000
------------------------------------------------------------------------------
0.380 4,000,000,000 6,500,000,000
------------------------------------------------------------------------------
0.370 6,500,000,000 10,500,000,000
------------------------------------------------------------------------------
0.365 10,500,000,000 13,000,000,000
------------------------------------------------------------------------------
0.360 13,000,000,000 17,000,000,000
------------------------------------------------------------------------------
0.355 17,000,000,000 21,000,000,000
------------------------------------------------------------------------------
0.350 21,000,000,000 27,000,000,000
------------------------------------------------------------------------------
0.345 27,000,000,000
------------------------------------------------------------------------------

If net assets fall below $3 billion, the Agreement provides for lower fees
calculated at the annual rates of 0.60% on the first $300 million of the fund's
net assets, 0.48% on assets over $300 million to $750 million, 0.45% on assets
over $750 million to $1.25 billion, and 0.42% on assets over $1.25 billion.

The investment adviser has agreed that in the event the Class A expenses of the
fund (with the exclusion of interest, taxes, brokerage costs, distribution
expenses pursuant to a plan under rule 12b-1 and extraordinary expenses such as
litigation and acquisitions or other expenses excludable under applicable state
securities laws or regulations) for any fiscal year ending on a date on which
the Agreement is in effect, exceed the expense limitations, if any, applicable
to the fund pursuant to state securities laws or any related regulations, it
will reduce its fee by the extent of such excess and, if required pursuant to
any such laws or any regulations thereunder, will reimburse the fund in the
amount of such excess. To the extent the fund's management fee must

The New Economy Fund -- Page 20
<PAGE>

be waived due to Class A share expense ratios exceeding the above limit,
management fees will be reduced similarly for all classes of shares of the fund,
or other Class A fees will be waived in lieu of management fees.

Expenses which are not subject to these limitations are interest, taxes and
extraordinary expenses. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses. To
the extent the fund's management fee must be waived due to Class A share expense
ratios exceeding the expense limitations described above, management fees will
be reduced similarly for all classes of shares of the fund, or other Class A
fees will be waived in lieu of management fees.

For the fiscal years ended November 30, 2005 and 2004, the investment adviser
was entitled to receive from the fund management fees of $30,080,000 and
$29,763,000, respectively. After giving effect to the management fee
waivers/expense reimbursements described below, the fund paid the investment
adviser management fees of $27,575,000 (a reduction of $2,505,000) and
$29,398,000 (a reduction of $365,000) for the fiscal years ended November 30,
2005 and 2004, respectively. For the fiscal year ended November 30, 2003, the
fund paid the investment adviser management fees of $25,076,000.

For the period from September 1, 2004 through March 31, 2005, the investment
adviser agreed to waive 5% of the management fees that it was otherwise entitled
to receive under the Agreement. Beginning April 1, 2005, this waiver increased
to 10% of the management fees that the investment adviser is otherwise entitled
to receive and is expected to continue at this level until further review. As a
result of this waiver, management fees will be reduced similarly for all classes
of shares of the fund.

ADMINISTRATIVE SERVICES AGREEMENT -- The Administrative Services Agreement (the
"Administrative Agreement") between the fund and the investment adviser relating
to the fund's Class C, F, R and 529 shares will continue in effect until
November 30, 2006, unless sooner terminated, and may be renewed from year to
year thereafter, provided that any such renewal has been specifically approved
at least annually by the vote of a majority of trustees who are not parties to
the Administrative Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. The fund may terminate the Administrative Agreement at any
time by vote of a majority of non-interested trustees. The investment adviser
has the right to terminate the Administrative Agreement upon 60 days' written
notice to the fund. The Administrative Agreement automatically terminates in the
event of its assignment (as defined in the 1940 Act).

Under the Administrative Agreement, the investment adviser provides certain
transfer agent and administrative services for shareholders of the fund's Class
C and F shares, and all Class R and 529 shares. The investment adviser contracts
with third parties, including American Funds Service Company, the fund's
Transfer Agent, to provide these services. Services include, but are not limited
to, shareholder account maintenance, transaction processing, tax information
reporting and shareholder and fund communications. In addition, the investment
adviser monitors, coordinates and oversees the activities performed by third
parties providing such services. For Class R-1, R-2 and R-3 shares, the
investment adviser has agreed to pay a portion of the fees payable under the
Administrative Agreement that would otherwise have been paid by the fund. For
the year ended November 30, 2005, the total fees paid by the investment adviser
were $152,000.

The New Economy Fund -- Page 21
<PAGE>

As compensation for its services, the investment adviser receives transfer agent
fees for transfer agent services provided to the fund's Class C, F, R and 529
shares. Transfer agent fees are paid monthly according to a fee schedule
contained in a Shareholder Services Agreement between the fund and American
Funds Service Company. The investment adviser also receives an administrative
services fee at the annual rate of up to 0.15% of the average daily net assets
for each applicable share class (excluding Class R-5 shares) for administrative
services provided to these share classes. Administrative services fees are paid
monthly and accrued daily. The investment adviser uses a portion of this fee to
compensate third parties for administrative services provided to the fund. Of
the remainder, the investment adviser will not retain more than 0.05% of the
average daily net assets for each applicable share class. For Class R-5 shares,
the administrative services fee is calculated at the annual rate of up to 0.10%
of the average daily net assets. This fee is subject to the same uses and
limitations described above.

During the 2005 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

ADMINISTRATIVE SERVICES FEE
------------------------------------------------------------------------------

CLASS C $159,000
------------------------------------------------------------------------------
CLASS F 145,000
------------------------------------------------------------------------------
CLASS 529-A 65,000
------------------------------------------------------------------------------
CLASS 529-B 17,000
------------------------------------------------------------------------------
CLASS 529-C 23,000
------------------------------------------------------------------------------
CLASS 529-E 4,000
------------------------------------------------------------------------------
CLASS 529-F 1,000
------------------------------------------------------------------------------
CLASS R-1 7,000
------------------------------------------------------------------------------
CLASS R-2 359,000
------------------------------------------------------------------------------
CLASS R-3 116,000
------------------------------------------------------------------------------
CLASS R-4 36,000
------------------------------------------------------------------------------
CLASS R-5 56,000
------------------------------------------------------------------------------

PRINCIPAL UNDERWRITER AND PLANS OF DISTRIBUTION -- American Funds Distributors,
Inc. (the "Principal Underwriter") is the principal underwriter of the fund's
shares. The Principal Underwriter is located at 333 South Hope Street, Los
Angeles, CA 90071; 135 South State College Boulevard, Brea, CA 92821; 3500
Wiseman Boulevard, San Antonio, TX 78251; 8332 Woodfield Crossing Boulevard,
Indianapolis, IN 46240; and 5300 Robin Hood Road, Norfolk, VA 23513.

The Principal Underwriter receives revenues from sales of the fund's shares. For
Class A and 529-A shares, the Principal Underwriter receives commission revenue
consisting of that portion of the Class A and 529-A sales charge remaining after
the allowances by the Principal Underwriter to investment dealers. For Class B
and 529-B shares, the Principal Underwriter sells the rights to the 12b-1 fees
paid by the fund for distribution expenses to a third party and receives the
revenue remaining after compensating investment dealers for sales of Class B and
529-B shares. The fund also pays the Principal Underwriter for advancing the
immediate service fees

The New Economy Fund -- Page 22
<PAGE>

paid to qualified dealers of Class B and 529-B shares. For Class C and 529-C
shares, the Principal Underwriter receives any contingent deferred sales charges
that apply during the first year after purchase. The fund pays the Principal
Underwriter for advancing the immediate service fees and commissions paid to
qualified dealers of Class C and 529-C shares. For Class 529-E shares, the fund
pays the Principal Underwriter for advancing the immediate service fees and
commissions paid to qualified dealers. For Class F and 529-F shares, the fund
pays the Principal Underwriter for advancing the immediate service fees paid to
qualified dealers and advisers who sell Class F and 529-F shares. For Class R-1,
R-2, R-3 and R-4 shares, the fund pays the Principal Underwriter for advancing
the immediate service fees paid to qualified dealers and advisers who sell Class
R-1, R-2, R-3 and R-4 shares.

Commissions, revenue or service fees retained by the Principal Underwriter after
allowances or compensation to dealers were:

COMMISSIONS, ALLOWANCE OR
REVENUE COMPENSATION
FISCAL YEAR/PERIOD OR FEES RETAINED TO DEALERS
-----------------------------------------------------------------------------------------------------

CLASS A 2005 $1,420,000 $6,387,000
2004 1,730,000 7,885,000
2003 1,490,000 7,068,000
-----------------------------------------------------------------------------------------------------
CLASS B 2005 104,000 483,000
2004 142,000 1,021,000
2003 165,000 1,015,000
-----------------------------------------------------------------------------------------------------
CLASS C 2005 5,000 212,000
2004 48,000 257,000
2003 0 193,000
-----------------------------------------------------------------------------------------------------
CLASS 529-A 2005 73,000 340,000
2004 72,000 346,000
2003 46,000 229,000
-----------------------------------------------------------------------------------------------------
CLASS 529-B 2005 12,000 111,000
2004 20,000 113,000
2003 13,000 80,000
-----------------------------------------------------------------------------------------------------
CLASS 529-C 2005 2,000 37,000
2004 0 43,000
2003 0 26,000
-----------------------------------------------------------------------------------------------------

The New Economy Fund -- Page 23
<PAGE>

The fund has adopted plans of distribution (the "Plans") pursuant to rule 12b-1
under the 1940 Act. The Principal Underwriter receives amounts payable pursuant
to the Plans (see below). As required by rule 12b-1 and the 1940 Act, the Plans
(together with the Principal Underwriting Agreement) have been approved by the
full board of trustees and separately by a majority of the non-interested
trustees of the fund and who have no direct or indirect financial interest in
the operation of the Plans or the Principal Underwriting Agreement. Potential
benefits of the Plans to the fund include quality shareholder services; savings
to the fund in transfer agency costs; and benefits to the investment process
from growth or stability of assets. The selection and nomination of
non-interested trustees are committed to the discretion of the non-interested
trustees during the existence of the Plans. The Plans may not be amended to
increase materially the amount spent for distribution without shareholder
approval. Plan expenses are reviewed quarterly and the Plans must be renewed
annually by the board of trustees.

Under the Plans, the fund may annually expend the following amounts to finance
any activity primarily intended to result in the sale of fund shares, provided
the fund's board of trustees has approved the category of expenses for which
payment is being made: (a) for Class A shares, up to 0.25% of the average daily
net assets attributable to Class A shares; (b) for Class 529-A shares, up to
0.50% of the average daily net assets attributable to Class 529-A shares; (c)
for Class B and 529-B shares, up to 1.00% of the average daily net assets
attributable to Class B and 529-B shares, respectively; (d) for Class C and
529-C shares, up to 1.00% of the average daily net assets attributable to Class
C and 529-C shares, respectively; (e) for Class 529-E shares, up to 0.75% of the
average daily net assets attributable to Class 529-E shares; (f) for Class F and
529-F shares, up to 0.50% of the average daily net assets attributable to Class
F and 529-F shares; (g) for Class R-1 shares, up to 1.00% of the average daily
net assets attributable to Class R-1 shares; (h) for Class R-2 shares, up to
1.00% of the average daily net assets attributable to Class R-2 shares; (i) for
Class R-3 shares, up to 0.75% of the average daily net assets attributable to
Class R-3 shares; and (j) for Class R-4 shares, up to 0.50% of the average daily
net assets attributable to Class R-4 shares. The fund has not adopted a Plan for
Class R-5 shares; accordingly, no 12b-1 fees are paid from Class R-5 share
assets.

For Class A and 529-A shares: (a) up to 0.25% is reimbursed to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to the amount allowable under the fund's Class
A and 529-A 12b-1 limit is reimbursed to the Principal Underwriter for paying
distribution-related expenses, including for Class A and 529-A shares dealer
commissions and wholesaler compensation paid on sales of shares of $1 million or
more purchased without a sales charge (including purchases by employer-sponsored
defined contribution-type retirement plans investing $1 million or more or with
100 or more eligible employees, and retirement plans, endowments and foundations
with $50 million or more in assets -- "no load purchases"). Commissions on no
load purchases of Class A and 529-A shares, in excess of the Class A and 529-A
plan limitations not reimbursed to the Principal Underwriter during the most
recent fiscal quarter are recoverable for five quarters, provided that such
commissions do not exceed the annual expense limit. After five quarters, these
commissions are not recoverable.

For Class B and 529-B shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including the financing of commissions paid to
qualified dealers.

The New Economy Fund -- Page 24
<PAGE>

For Class C and 529-C shares: (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.75% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class 529-E shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class F and 529-F shares: currently up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers or advisers.

For Class R-1 shares: (a) up to 0.25% is paid to the Principal Underwriter for
paying service-related expenses, including paying service fees to qualified
dealers, and (b) up to 0.75% is paid to the Principal Underwriter for
distribution-related expenses, including commissions paid to qualified dealers.

For Class R-2 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.50% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-3 shares: currently (a) up to 0.25% is paid to the Principal
Underwriter for paying service-related expenses, including paying service fees
to qualified dealers, and (b) up to 0.25% is paid to the Principal Underwriter
for paying distribution-related expenses, including commissions paid to
qualified dealers.

For Class R-4 shares: currently up to 0.25% is paid to the Principal Underwriter
for paying service-related expenses, including paying service fees to qualified
dealers or advisers.

As of the end of the 2005 fiscal year, total 12b-1 expenses, and the portion of
the expense that remained unpaid, were:

12B-1 UNPAID LIABILITY
12B-1 EXPENSES OUTSTANDING
-------------------------------------------------------------------------------------------

CLASS A $16,118,000 $3,180,000
-------------------------------------------------------------------------------------------
CLASS B 1,726,000 211,000
-------------------------------------------------------------------------------------------
CLASS C 821,000 191,000
-------------------------------------------------------------------------------------------
CLASS F 220,000 63,000
-------------------------------------------------------------------------------------------
CLASS 529-A 67,000 17,000
-------------------------------------------------------------------------------------------
CLASS 529-B 83,000 11,000
-------------------------------------------------------------------------------------------
CLASS 529-C 125,000 29,000
-------------------------------------------------------------------------------------------
CLASS 529-E 11,000 3,000
-------------------------------------------------------------------------------------------
CLASS 529-F 1,000 --
-------------------------------------------------------------------------------------------
CLASS R-1 29,000 9,000
-------------------------------------------------------------------------------------------
CLASS R-2 378,000 102,000
-------------------------------------------------------------------------------------------
CLASS R-3 204,000 55,000
-------------------------------------------------------------------------------------------
CLASS R-4 56,000 17,000
-------------------------------------------------------------------------------------------

The New Economy Fund -- Page 25
<PAGE>

OTHER COMPENSATION TO DEALERS -- As of January 2006, the top dealers that
American Funds Distributors anticipates will receive additional compensation (as
described in the prospectus) include:

A. G. Edwards & Sons, Inc.
AIG Advisors Group
American General Securities Inc.
Ameritas Investment Corp.
AXA Advisors, LLC
Cadaret, Grant & Co., Inc.
Cambridge Investment Research, Inc.
Capital Analysts, Inc.
Commonwealth Financial Network
Cuna Brokerage Services, Inc.
Deutsche Bank Securities Inc.
Edward Jones
Ferris, Baker Watts, Inc.
Genworth Financial Securities Corp.
Hefren-Tillotson, Inc.
Hornor, Townsend & Kent, Inc.
ING Advisors Network Inc.
InterSecurities, Inc./Transamerica Financial Advisors, Inc.
Investacorp, Inc.
Janney Montgomery Scott LLC
Jefferson Pilot Securities Corporation
JJB Hilliard, WL Lyons, Inc./PNC Bank
Legg Mason Wood Walker, Inc.
Lincoln Financial Advisors Corporation
McDonald Investments Inc./Society National Bank
Merrill Lynch, Pierce, Fenner & Smith Inc.
Metlife Enterprises
MML Investors Services, Inc.
Morgan Keegan & Company, Inc.
Morgan Stanley DW
NatCity Investment, Inc.
National Planning Holdings Inc.
NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC.
Pacific Select Distributors Inc.
Park Avenue Securities LLC

The New Economy Fund -- Page 26
<PAGE>

Piper Jaffray & Co.
Princor Financial Services
ProEquities, Inc.
Raymond James Financial Services/Raymond James & Associates
RBC Dain Rauscher Inc.
Robert W. Baird & Co. Inc.
Securian Financial Services/C.R.I. Securities Inc.
Securities Service Network Inc.
Signator Investors, Inc.
Smith Barney
Stifel, Nicolaus & Company, Inc.
The O.N. Equity Sales Company
UBS Financial Services Inc.
US Bancorp Investments, Inc.
Wachovia Securities

EXECUTION OF PORTFOLIO TRANSACTIONS

As described in the prospectus, the investment adviser places orders with
broker-dealers for the fund's portfolio transactions. Portfolio transactions for
the fund may be executed as part of concurrent authorizations to purchase or
sell the same security for other funds served by the investment adviser, or for
trusts or other accounts served by affiliated companies of the investment
adviser. When such concurrent authorizations occur, the objective is to allocate
the executions in an equitable manner.

Brokerage commissions paid on portfolio transactions, including investment
dealer concessions on underwritings, if applicable, for the fiscal years ended
November 30, 2005, 2004 and 2003 amounted to $7,322,000, $11,176,000 and
$9,427,000, respectively. With respect to fixed-income securities, brokerage
commissions include explicit investment dealer concessions and may exclude other
transaction costs which may be reflected in the spread between the bid and asked
price. The decrease in broker commissions/concessions paid in the 2005 fiscal
year, as compared to the 2004 fiscal year, is primarily due to decreases in
commission rates charged on portfolio transactions.

The fund is required to disclose information regarding investments in the
securities of its "regular" broker-dealers (or parent companies of its regular
broker-dealers) that derive more than 15% of their revenue from broker-dealer,
underwriter or investment adviser activities. A regular broker-dealer is (a) one
of the 10 broker-dealers that received from the fund the largest amount of
brokerage commissions by participating, directly or indirectly, in the fund's
portfolio transactions during the fund's most recent fiscal year; (b) one of the
10 broker-dealers that engaged as principal in the largest dollar amount of
portfolio transactions of the fund during the fund's most recent fiscal year; or
(c) one of the 10 broker-dealers that sold the largest amount of securities of
the fund during the fund's most recent fiscal year.

At the end of the fund's most recent fiscal year, the fund's regular
broker-dealers included J.P. Morgan Securities Inc., Banc of America Securities,
LLC and Citigroup Global Markets Inc. As of the fund's most recent fiscal
year-end, the fund held equity securities of Citigroup Inc. in the amount of
$43,695,000 and J.P. Morgan Chase & Co. in the amount of $21,037,000. The fund
held debt securities of Bank of America Corp. in the amount of $40,636,000 and
J.P. Morgan Chase & Co. in the amount of $14,988,000.

The New Economy Fund -- Page 27
<PAGE>

DISCLOSURE OF PORTFOLIO HOLDINGS

The fund's investment adviser, on behalf of the fund, has adopted policies and
procedures with respect to the disclosure of information about fund portfolio
securities. These policies and procedures have been reviewed by the fund's board
of trustees and compliance will be periodically assessed by the board in
connection with reporting from the fund's Chief Compliance Officer.

Under these policies and procedures, the fund's complete list of portfolio
holdings available for public disclosure, dated as of the end of each calendar
quarter, is permitted to be posted on the American Funds website no earlier than
the tenth day after such calendar quarter. In practice, the public portfolio
typically is posted on the website approximately 45 days after the end of the
calendar quarter. In addition, the fund's list of top 10 equity portfolio
holdings measured by percentage of net assets invested, dated as of the end of
each calendar month, is permitted to be posted on the American Funds website no
earlier than the tenth day after such month. Such portfolio holdings information
may then be disclosed to any person pursuant to an ongoing arrangement to
disclose portfolio holdings information to such person no earlier than one day
after the day on which the information is posted on the American Funds website.
Affiliates of the fund (including the fund's board members and officers, and
certain personnel of the fund's investment adviser and its affiliates) and
certain service providers (such as the fund's custodian and outside counsel) who
require portfolio holdings information for legitimate business and fund
oversight purposes may receive the information earlier.

Affiliated persons of the fund as described above who receive portfolio holdings
information are subject to restrictions and limitations on the use and handling
of such information pursuant to applicable codes of ethics, including
requirements to maintain the confidentiality of such information, preclear
securities trades and report securities transactions activity, as applicable.
Third party service providers of the fund receiving such information are subject
to confidentiality obligations. When portfolio holdings information is disclosed
other than through the American Funds website to persons not affiliated with the
fund (which, as described above, would typically occur no earlier than one day
after the day on which the information is posted on the American Funds website),
such persons may be bound by agreements (including confidentiality agreements)
that restrict and limit their use of the information to legitimate business uses
only. Neither the fund nor its investment adviser or any affiliate thereof
receives compensation or other consideration in connection with the disclosure
of information about portfolio securities.

Subject to board policies, the authority to disclose a fund's portfolio
holdings, and to establish policies with respect to such disclosure, resides
with the investment committee of the fund's investment adviser. In exercising
its authority, the investment committee determines whether disclosure of
information about the fund's portfolio securities is appropriate and in the best
interest of fund shareholders. The investment adviser has implemented policies
and procedures to address conflicts of interest that may arise from the
disclosure of fund holdings. For example, the investment adviser's code of
ethics specifically requires, among other things, the safeguarding of
information about fund holdings and contains prohibitions designed to prevent
the personal use of confidential, proprietary investment information in a way
that would conflict with fund transactions. In addition, the investment adviser
believes that its current policy of not selling portfolio holdings information
and not disclosing such information to unaffiliated third parties until such
holdings have been made public on the American Funds website (other than to
certain fund service providers for legitimate business and fund oversight
purposes) helps reduce

The New Economy Fund -- Page 28
<PAGE>

potential conflicts of interest between fund shareholders and the investment
adviser and its affiliates.

PRICE OF SHARES

Shares are purchased at the offering price or sold at the net asset value price
next determined after the purchase or sell order is received and accepted by the
fund or the Transfer Agent; the offering or net asset value price is effective
for orders received prior to the time of determination of the net asset value
and, in the case of orders placed with dealers or their authorized designees,
accepted by the Principal Underwriter, the Transfer Agent, a dealer or any of
their designees. In the case of orders sent directly to the fund or the Transfer
Agent, an investment dealer MUST be indicated. The dealer is responsible for
promptly transmitting purchase and sell orders to the Principal Underwriter.

Orders received by the investment dealer or authorized designee, the Transfer
Agent or the fund after the time of the determination of the net asset value
will be entered at the next calculated offering price. Note that investment
dealers or other intermediaries may have their own rules about share
transactions and may have earlier cut-off times than those of the fund. For more
information about how to purchase through your intermediary, contact your
intermediary directly.

Prices that appear in the newspaper do not always indicate prices at which you
will be purchasing and redeeming shares of the fund, since such prices generally
reflect the previous day's closing price, while purchases and redemptions are
made at the next calculated price. The price you pay for shares, the offering
price, is based on the net asset value per share, which is calculated once daily
as of approximately 4:00 p.m. New York time, which is the normal close of
trading on the New York Stock Exchange, each day the Exchange is open. If, for
example, the Exchange closes at 1:00 p.m., the fund's share price would still be
determined as of 4:00 p.m. New York time. The New York Stock Exchange is
currently closed on weekends and on the following holidays: New Year's Day;
Martin Luther King, Jr. Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving; and Christmas Day. Each share class
of the fund has a separately calculated net asset value (and share price).

All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset values per
share for each share class are determined, as follows:

1. Equity securities, including depositary receipts, are valued at the
official closing price of, or 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. Prices for each security are taken from the principal exchange or
market in which the security trades. Fixed-income securities are valued at
prices obtained from an independent 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 bid prices, if asked prices are not available) or at prices for
securities of comparable maturity, quality and type. The pricing services base
bond prices on, among other things, an evaluation of the yield curve as of
approximately 3:00 p.m. New York time. The fund's investment adviser performs
certain checks on these prices prior to the fund's net asset value being
calculated.

The New Economy Fund -- Page 29
<PAGE>

Securities with both fixed-income and equity characteristics (e.g., convertible
bonds, preferred stocks, units comprised of more than one type of security,
etc.), or equity securities traded principally among fixed-income dealers, are
valued in the manner described above for either equity or fixed-income
securities, depending on which method is deemed most appropriate by the
investment adviser.

Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity, or if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean of
representative quoted bid and asked prices.

Assets or liabilities initially expressed in terms of non-U.S. currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates.

Securities and assets for which market quotations are not readily available or
are considered unreliable are valued at fair value as determined in good faith
under policies approved by the fund's board. Subject to board oversight, the
fund's board has delegated the obligation to make fair valuation determinations
to a valuation committee established by the fund's investment adviser. The board
receives regular reports describing fair-valued securities and the valuation
methods used.

The valuation committee has adopted guidelines and procedures (consistent with
SEC rules and guidance) to ensure that certain basic principles and factors are
considered when making all fair value determinations. As a general principle,
securities lacking readily available market quotations, or that have quotations
that are considered unreliable, are valued in good faith by the valuation
committee based upon what the fund might reasonably expect to receive upon their
current sale. The valuation committee considers all indications of value
available to it in determining the fair value to be assigned to a particular
security, including, without limitation, the type and cost of the security,
contractual or legal restrictions on resale of the security, relevant financial
or business developments of the issuer, actively traded similar or related
securities, conversion or exchange rights on the security, related corporate
actions, significant events occurring after the close of trading in the security
and changes in overall market conditions. The valuation committee employs
additional fair value procedures to address issues related to investing
substantial portions of applicable fund portfolios outside the United States.
Securities owned by these funds trade in markets that open and close at
different times, reflecting time zone differences. If significant events occur
after the close of a market (and before these fund's net asset values are next
determined) which affect the value of portfolio securities, appropriate
adjustments from closing market prices may be made to reflect these events.
Events of this type could include, for example, earthquakes and other natural
disasters or significant price changes in other markets (e.g., U.S. stock
markets);

2. Each class of shares represents interests in the same portfolio of
investments and is identical in all respects to each other class, except for
differences relating to distribution, service and other charges and expenses,
certain voting rights, differences relating to eligible investors, the
designation of each class of shares, conversion features and exchange
privileges. Expenses attributable to the fund, but not to a particular class of
shares, are borne by each class pro rata based on relative aggregate net assets
of the classes. Expenses directly attributable to a class of shares are borne by
that class of shares. Liabilities, including accruals of taxes and other

The New Economy Fund -- Page 30
<PAGE>

expense items attributable to particular share classes, are deducted from total
assets attributable to such share classes.

3. Net assets so obtained for each share class are then divided by the total
number of shares outstanding of that share class, and the result, rounded to the
nearer cent, is the net asset value per share for that share class.

TAXES AND DISTRIBUTIONS

FUND TAXATION -- The fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including the excess of net short-term capital gain over
net long-term capital losses) and generally is not subject to federal income tax
to the extent that it distributes annually 100% of its investment company
taxable income and net realized capital gains in the manner required under the
Code. The fund intends to distribute annually all of its investment company
taxable income and net realized capital gains and therefore does not expect to
pay federal income tax, although in certain circumstances, the fund may
determine that it is in the interest of shareholders to distribute less than
that amount.

To be treated as a regulated investment company under Subchapter M of the Code,
the fund must also (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, net income from certain
publicly traded partnerships and gains from the sale or other disposition of
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures or forward contracts) derived with respect to
the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the fund's assets is represented by cash, U.S. government
securities and securities of other regulated investment companies, and other
securities (for purposes of this calculation, generally limited in respect of
any one issuer, to an amount not greater than 5% of the market value of the
fund's assets and 10% of the outstanding voting securities of such issuer) and
(ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated
investment companies) any one issuer; two or more issuers which the fund
controls and which are determined to be engaged in the same or similar trades or
businesses; or the securities of certain publicly traded partnerships.

Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (a) 98% of ordinary income (generally net investment income)
for the calendar year, (b) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year) and
(c) the sum of any untaxed, undistributed net investment income and net capital
gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (a) amounts actually distributed
by the fund from its current year's ordinary income and capital gain net income
and (b) any amount on which the fund pays income tax during the periods
described above. Although the fund intends to distribute its net investment
income and net capital gains so as to avoid excise tax liability, the fund may
determine that it is in the interest of shareholders to distribute a lesser
amount.

The New Economy Fund -- Page 31
<PAGE>

The following information may not apply to you if you hold fund shares in a
tax-deferred account, such as a retirement plan or education savings account.
Please see your tax adviser for more information.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and capital gain
distributions on fund shares will be reinvested in shares of the fund of the
same class, unless shareholders indicate in writing that they wish to receive
them in cash or in shares of the same class of other American Funds, as provided
in the prospectus. Dividends and capital gain distributions by 529 share classes
will be automatically reinvested.

Distributions of investment company taxable income and net realized capital
gains to individual shareholders will be taxable whether received in shares or
in cash, unless such shareholders are exempt from taxation. Shareholders
electing to receive distributions in the form of additional shares will have a
cost basis for federal income tax purposes in each share so received equal to
the net asset value of that share on the reinvestment date. Dividends and
capital gain distributions by the fund to a tax-deferred retirement plan account
are not taxable currently.

DIVIDENDS -- The fund intends to follow the practice of distributing
substantially all of its investment company taxable income, which includes
any excess of net realized short-term gains over net realized long-term
capital losses. Investment company taxable income generally includes
dividends, interest, net short-term capital gains in excess of net
long-term capital losses, and certain foreign currency gains, if any, less
expenses and certain foreign currency losses. To the extent the fund
invests in stock of domestic and certain foreign corporations and meets the
applicable holding period requirement, it may receive "qualified
dividends". The fund will designate the amount of "qualified dividends" to
its shareholders in a notice sent within 60 days of the close of its fiscal
year and will report "qualified dividends" to shareholders on Form
1099-DIV.

Under the Code, gains or losses attributable to fluctuations in exchange
rates that occur between the time the fund accrues receivables or
liabilities denominated in a foreign currency and the time the fund
actually collects such receivables, or pays such liabilities, generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of
debt securities denominated in a foreign currency and on disposition of
certain futures contracts, forward contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition
are also treated as ordinary gain or loss. These gains or losses, referred
to under the Code as Section 988 gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

If the fund invests in stock of certain passive foreign investment
companies, the fund may be subject to U.S. federal income taxation on a
portion of any "excess distribution" with respect to, or gain from the
disposition of, such stock. The tax would be determined by allocating such
distribution or gain ratably to each day of the fund's holding period for
the stock. The distribution or gain so allocated to any taxable year of the
fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the fund at the highest ordinary income rate
in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have
resulted from the ownership of the foreign company's stock. Any amount of
distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the

The New Economy Fund -- Page 32
<PAGE>

fund's investment company taxable income and, accordingly, would not be
taxable to the fund to the extent distributed by the fund as a dividend to
its shareholders.

To avoid such tax and interest, the fund intends to elect to treat these
securities as sold on the last day of its fiscal year and recognize any
gains for tax purposes at that time. Under this election, deductions for
losses are allowable only to the extent of any prior recognized gains, and
both gains and losses will be treated as ordinary income or loss. The fund
will be required to distribute any resulting income, even though it has not
sold the security and received cash to pay such distributions. Upon
disposition of these securities, any gain recognized is treated as ordinary
income and loss is treated as ordinary loss to the extent of any prior
recognized gain.

Dividends from domestic corporations are expected to comprise some portion
of the fund's gross income. To the extent that such dividends constitute
any of the fund's gross income, a portion of the income distributions of
the fund may be eligible for the deduction for dividends received by
corporations. Corporate shareholders will be informed of the portion of
dividends that so qualifies. The dividends-received deduction is reduced to
the extent that either the fund shares, or the underlying shares of stock
held by the fund, with respect to which dividends are received, are treated
as debt-financed under federal income tax law, and is eliminated if the
shares are deemed to have been held by the shareholder or the fund, as the
case may be, for less than 46 days during the 90-day period beginning on
the date that is 45 days before the date on which the shares become
ex-dividend. Capital gain distributions are not eligible for the
dividends-received deduction.

A portion of the difference between the issue price of zero coupon
securities and their face value (original issue discount) is considered to
be income to the fund each year, even though the fund will not receive cash
interest payments from these securities. This original issue discount
(imputed income) will comprise a part of the investment company taxable
income of the fund that must be distributed to shareholders in order to
maintain the qualification of the fund as a regulated investment company
and to avoid federal income taxation at the level of the fund.

In addition, some of the bonds may be purchased by the fund at a discount
that exceeds the original issue discount on such bonds, if any. This
additional discount represents market discount for federal income tax
purposes. The gain realized on the disposition of any bond having a market
discount may be treated as taxable ordinary income to the extent it does
not exceed the accrued market discount on such bond or a fund may elect to
include the market discount in income in tax years to which it is
attributable. Generally, accrued market discount may be figured under
either the ratable accrual method or constant interest method. If the fund
has paid a premium over the face amount of a bond, the fund has the option
of either amortizing the premium until bond maturity and reducing the
fund's basis in the bond by the amortized amount, or not amortizing and
treating the premium as part of the bond's basis. In the case of any debt
security having a fixed maturity date of not more than one year from its
date of issue, the gain realized on disposition generally will be treated
as a short-term capital gain. In general, any gain realized on disposition
of a security held less than one year is treated as a short-term capital
gain.

The New Economy Fund -- Page 33
<PAGE>

Dividend and interest income received by the fund from sources outside the
United States may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the
United States, however, may reduce or eliminate these foreign taxes. Most
foreign countries do not impose taxes on capital gains with respect to
investments by foreign investors.

CAPITAL GAIN DISTRIBUTIONS -- The fund also intends to follow the practice
of distributing the entire excess of net realized long-term capital gains
over net realized short-term capital losses. Net capital gains for a fiscal
year are computed by taking into account any capital loss carry forward of
the fund.

If any net long-term capital gains in excess of net short-term capital
losses are retained by the fund for reinvestment, requiring federal income
taxes to be paid thereon by the fund, the fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
each shareholder will report such capital gains as long-term capital gains
taxable to individual shareholders at a maximum 15% capital gains rate,
will be able to claim a pro rata share of federal income taxes paid by the
fund on such gains as a credit against personal federal income tax
liability, and will be entitled to increase the adjusted tax basis on fund
shares by the difference between a pro rata share of the retained gains and
such shareholder's related tax credit.

SHAREHOLDER TAXATION -- In January of each year, individual shareholders holding
fund shares in taxable accounts will receive a statement of the federal income
tax status of all distributions. Shareholders of the fund also may be subject to
state and local taxes on distributions received from the fund.

DIVIDENDS -- Fund dividends are taxable to shareholders as ordinary income.
Under the 2003 Tax Act, all or a portion of a fund's dividend distribution
may be a "qualified dividend." If the fund meets the applicable holding
period requirement, it will distribute dividends derived from qualified
corporation dividends to shareholders as qualified dividends. Interest
income from bonds and money market instruments and nonqualified foreign
dividends will be distributed to shareholders as nonqualified fund
dividends. The fund will report on Form 1099-DIV the amount of each
shareholder's dividend that may be treated as a qualified dividend. If a
shareholder meets the requisite holding period requirement, qualified
dividends are taxable at a maximum rate of 15%.

CAPITAL GAINS -- Distributions of the excess of net long-term capital gains
over net short-term capital losses that the fund properly designates as
"capital gain dividends" generally will be taxable as long-term capital
gain. Regardless of the length of time the shares of the fund have been
held by a shareholder, a capital gain distribution by the fund is subject
to a maximum tax rate of 15%. Any loss realized upon the redemption of
shares held at the time of redemption for six months or less from the date
of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gains during
such six-month period.

Distributions by the fund result in a reduction in the net asset value of the
fund's shares. Investors should consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a distribution will subsequently receive a partial return of their investment
capital upon payment of the distribution, which will be taxable to them.

The New Economy Fund -- Page 34
<PAGE>

Redemptions of shares, including exchanges for shares of other American Funds,
may result in federal, state and local tax consequences (gain or loss) to the
shareholder. However, conversion from one class to another class in the same
fund should not be a taxable event.

If a shareholder exchanges or otherwise disposes of shares of the fund within 90
days of having acquired such shares, and if, as a result of having acquired
those shares, the shareholder subsequently pays a reduced sales charge for
shares of the fund, or of a different fund, the sales charge previously incurred
in acquiring the fund's shares will not be taken into account (to the extent
such previous sales charges do not exceed the reduction in sales charges) for
the purposes of determining the amount of gain or loss on the exchange, but will
be treated as having been incurred in the acquisition of such other fund(s).

Any loss realized on a redemption or exchange of shares of the fund will be
disallowed to the extent substantially identical shares are reacquired within
the 61-day period beginning 30 days before and ending 30 days after the shares
are disposed of. Any loss disallowed under this rule will be added to the
shareholder's tax basis in the new shares purchased.

The fund will be required to report to the IRS all distributions of investment
company taxable income and capital gains as well as gross proceeds from the
redemption or exchange of fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of investment company taxable income and capital gains and
proceeds from the redemption or exchange of a regulated investment company may
be subject to backup withholding of federal income tax in the case of non-exempt
U.S. shareholders who fail to furnish the investment company with their taxpayer
identification numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the fund
is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.

The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons (i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates). Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or a
lower rate under an applicable income tax treaty) on dividend income received by
the shareholder.

Shareholders should consult their tax advisers about the application of federal,
state and local tax law in light of their particular situation.

UNLESS OTHERWISE NOTED, ALL REFERENCES IN THE FOLLOWING PAGES TO CLASS A, B, C
OR F SHARES ALSO REFER TO THE CORRESPONDING CLASS 529-A, 529-B, 529-C OR 529-F
SHARES. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO THE COLLEGEAMERICA PROGRAM
DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO
COLLEGEAMERICA ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE
RETIREMENT PLAN SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR
INFORMATION REGARDING PURCHASES, SALES AND EXCHANGES.

The New Economy Fund -- Page 35
<PAGE>

PURCHASE AND EXCHANGE OF SHARES

PURCHASES BY INDIVIDUALS -- As described in the prospectus, you may generally
open an account and purchase fund shares by contacting a financial adviser or
investment dealer authorized to sell the fund's shares. You may make investments
by any of the following means:

CONTACTING YOUR FINANCIAL ADVISER -- Deliver or mail a check to your
financial adviser.

BY MAIL -- for initial investments, you may mail a check, made payable to
the fund, directly to the address indicated on the account application.
Please indicate an investment dealer on the account application. You may
make additional investments by filling out the "Account Additions" form at
the bottom of a recent account statement and mailing the form, along with a
check made payable to the fund, using the envelope provided with your
account statement.

BY TELEPHONE -- using the American FundsLine. Please see the "Shareholder
account services and privileges" section of this document for more
information regarding this service.

BY INTERNET -- using americanfunds.com. Please see the "Shareholder account
services and privileges" section of this document for more information
regarding this service.

BY WIRE -- If you are making a wire transfer, instruct your bank to wire
funds to:

Wells Fargo Bank
ABA Routing No. 121000248
Account No. 4600-076178

Your bank should include the following information when
wiring funds:

For credit to the account of:
American Funds Service Company
(fund's name)

For further credit to:
(shareholder's fund account number)
(shareholder's name)

You may contact American Funds Service Company at 800/421-0180 if you have
questions about making wire transfers.

The Principal Underwriter will not knowingly sell shares of the fund directly or
indirectly to any person or entity, where, after the sale, such person or entity
would own beneficially directly or indirectly more than 4.5% of the outstanding
shares of the fund without the consent of a majority of the fund's board.

Class 529 shares may be purchased only through CollegeAmerica by investors
establishing qualified higher education savings accounts. Class 529-E shares may
be purchased only by investors participating in CollegeAmerica through an
eligible employer plan. The R share classes are generally available only to
employer-sponsored retirement plans. Class R-5 shares are also

The New Economy Fund -- Page 36
<PAGE>

available to clients of the Personal Investment Management group of Capital
Guardian Trust Company who do not have an intermediary associated with their
accounts and without regard to the $1 million purchase minimum. In addition, the
American Funds state tax-exempt funds are qualified for sale only in certain
jurisdictions, and tax-exempt funds in general should not serve as retirement
plan investments. The fund and the Principal Underwriter reserve the right to
reject any purchase order.

PURCHASE MINIMUMS AND MAXIMUMS -- All investments are subject to the purchase
minimums and maximums described in the prospectus. As noted in the prospectus,
purchase minimums may be waived or reduced in certain cases. The initial
purchase minimum of $25 may be waived for the following account types:

. Payroll deduction retirement plan accounts (such as, but not limited
to, 403(b), 401(k), SIMPLE IRA, SARSEP and deferred compensation plan
accounts); and

. Employer-sponsored CollegeAmerica accounts.

The following account types may be established without meeting the initial
purchase minimum:

. Retirement accounts that are funded with employer contributions; and

. Accounts that are funded with monies set by court decree.

The following account types may be established without meeting the initial
purchase minimum, but shareholders wishing to invest in two or more funds must
meet the normal initial purchase minimum of each fund:

. Accounts that are funded with (a) transfers of assets, (b) rollovers
from retirement plans, (c) rollovers from 529 college savings plans or
(d) required minimum distribution automatic exchanges; and

. American Funds money market fund accounts registered in the name of
clients of Capital Guardian Trust Company's Personal Investment
Management group.

EXCHANGES -- You may only exchange shares into other American Funds within the
same share class. However, exchanges from Class A shares of The Cash Management
Trust of America may be made to Class B or C shares of other American Funds for
dollar cost averaging purposes. Exchange purchases are subject to the minimum
investment requirements of the fund purchased and no sales charge generally
applies. However, exchanges of shares from American Funds money market funds are
subject to applicable sales charges on the fund being purchased, unless the
money market fund shares were acquired by an exchange from a fund having a sales
charge, or by reinvestment or cross-reinvestment of dividends or capital gain
distributions. Exchanges of Class F shares generally may only be made through
fee-based programs of investment firms that have special agreements with the
fund's distributor and certain registered investment advisers.

You may exchange shares of other classes by contacting the Transfer Agent, by
contacting your investment dealer or financial adviser, by using American
FundsLine or americanfunds.com, or by telephoning 800/421-0180 toll-free, or
faxing (see "American Funds Service Company service areas" in the prospectus for
the appropriate fax numbers) the Transfer Agent. For more information, see
"Shareholder account services and privileges" below. THESE TRANSACTIONS HAVE THE
SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.

The New Economy Fund -- Page 37
<PAGE>

Shares held in employer-sponsored retirement plans may be exchanged into other
American Funds by contacting your plan administrator or recordkeeper. Exchange
redemptions and purchases are processed simultaneously at the share prices next
determined after the exchange order is received (see "Price of shares" above).

FREQUENT TRADING OF FUND SHARES -- As noted in the prospectus, certain
redemptions may trigger a purchase block lasting 30 calendar days under the
fund's "purchase blocking policy." Under this policy, systematic redemptions
will not trigger a purchase block and systematic purchases will not be
prevented. For purposes of this policy, systematic redemptions include, for
example, regular periodic automatic redemptions and statement of intention
escrow share redemptions. Systematic purchases include, for example, regular
periodic automatic purchases and automatic reinvestments of dividends and
capital gain distributions.

OTHER POTENTIALLY ABUSIVE ACTIVITY -- In addition to implementing purchase
blocks, American Funds Service Company will monitor for other types of activity
that could potentially be harmful to the American Funds - for example,
short-term trading activity in multiple funds. When identified, American Funds
Service Company will request that the shareholder discontinue the activity. If
the activity continues, American Funds Service Company will freeze the
shareholder account to prevent all activity other than redemptions of fund
shares.

MOVING BETWEEN SHARE CLASSES

AUTOMATIC CONVERSIONS -- As described more fully in the prospectus, Class
B, 529-B and C shares automatically convert to Class A, 529-A and F shares,
respectively, after a certain period from the purchase date.

MOVING FROM CLASS B TO CLASS A SHARES -- Under the right of reinvestment
policy as described in the prospectus, if you redeem Class B shares during
the contingent deferred sales charge period, you may reinvest the proceeds
in Class A shares without paying a Class A sales charge if you notify
American Funds Service Company and the reinvestment occurs within 90 days
after the date of redemption. If you redeem your Class B shares after the
contingent deferred sales charge period and with the redemption proceeds
you purchase Class A shares, you are still responsible for paying any
applicable Class A sales charges.

MOVING FROM CLASS C TO CLASS A SHARES -- If you redeem Class C shares and
with the redemption proceeds purchase Class A shares, you are still
responsible for paying any Class C contingent deferred sales charges and
applicable Class A sales charges.

MOVING FROM CLASS F TO CLASS A SHARES -- You can redeem Class F shares held
in a qualified fee-based program and with the redemption proceeds purchase
Class A shares without paying an initial Class A sales charge if all of the
following are met: (a) you are leaving or have left the fee-based program,
(b) you have held the Class F shares in the program for at least one year,
and (c) you notify American Funds Service Company and purchase the Class A
shares within 90 days after redeeming the Class F shares.

MOVING FROM CLASS A TO CLASS F SHARES -- If you are part of a qualified
fee-based program and you wish to redeem your Class A shares and with the
redemption proceeds purchase Class F shares for the program, any Class A
sales charges (including con-

The New Economy Fund -- Page 38
<PAGE>

tingent deferred sales charges) that you paid or are payable will not be
credited back to your account.

SALES CHARGES

CLASS A PURCHASES

PURCHASES BY CERTAIN 403(B) PLANS

Individual 403(b) plans may be treated similarly to employer-sponsored
plans for Class A sales charge purposes (i.e., individual participant
accounts are eligible to be aggregated together) if: (a) the American Funds
are principal investment options; (b) the employer facilitates the
enrollment process by, for example, allowing for onsite group enrollment
meetings held during working hours; and (c) there is only one dealer firm
assigned to the plans.

OTHER PURCHASES

Pursuant to a determination of eligibility by a vice president or more
senior officer of the Capital Research and Management Company Fund
Administration Unit, or by his or her designee, Class A shares of the
American Funds stock, stock/bond and bond funds may be sold at net asset
value to:

(1) current or retired directors, trustees, officers and advisory board
members of, and certain lawyers who provide services to, the funds
managed by Capital Research and Management Company, current or retired
employees of Washington Management Corporation, current or retired
employees and partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members and employees of the
above persons, and trusts or plans primarily for such persons;

(2) currently registered representatives and assistants directly employed
by such representatives, retired registered representatives with
respect to accounts established while active, or full-time employees
(collectively, "Eligible Persons") (and their (a) spouses or
equivalents if recognized under local law, (b) parents and children,
including parents and children in step and adoptive relationships,
sons-in-law and daughters-in-law, and (c) parents-in-law, if the
Eligible Persons or the spouses, children or parents of the Eligible
Persons are listed in the account registration with the
parents-in-law) of dealers who have sales agreements with the
Principal Underwriter (or who clear transactions through such
dealers), plans for the dealers, and plans that include as
participants only the Eligible Persons, their spouses, parents and/or
children;

(3) currently registered investment advisers ("RIAs") and assistants
directly employed by such RIAs, retired RIAs with respect to accounts
established while active, or full-time employees (collectively,
"Eligible Persons") (and their (a) spouses or equivalents if
recognized under local law, (b) parents and children, including
parents and children in step and adoptive relationships, sons-in-law
and daughters-in-law and (c) parents-in-law, if the Eligible Persons
or the spouses, children or parents of the Eligible Persons are listed
in the account registration with the parents-in-law) of RIA firms that
are authorized to sell shares of the funds,

The New Economy Fund -- Page 39
<PAGE>

plans for the RIA firms, and plans that include as participants only
the Eligible Persons, their spouses, parents and/or children;

(4) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;

(5) insurance company separate accounts;

(6) accounts managed by subsidiaries of The Capital Group Companies, Inc.;

(7) The Capital Group Companies, Inc., its affiliated companies and
Washington Management Corporation;

(8) an individual or entity with a substantial business relationship with
The Capital Group Companies, Inc. or its affiliates, or an individual
or entity related or relating to such individual or entity;

(9) wholesalers and full-time employees directly supporting wholesalers
involved in the distribution of insurance company separate accounts
whose underlying investments are managed by any affiliate of The
Capital Group Companies, Inc.; and

(10) full-time employees of banks that have sales agreements with the
Principal Underwriter, who are solely dedicated to directly supporting
the sale of mutual funds.

Shares are offered at net asset value to these persons and organizations
due to anticipated economies in sales effort and expense. Once an account
is established under this net asset value privilege, additional investments
can be made at net asset value for the life of the account.

DEALER COMMISSIONS AND COMPENSATION -- Commissions (up to 1.00%) are paid to
dealers who initiate and are responsible for certain Class A share purchases not
subject to sales charges. These purchases consist of purchases of $1 million or
more, purchases by employer-sponsored defined contribution-type retirement plans
investing $1 million or more or with 100 or more eligible employees, and
purchases made at net asset value by certain retirement plans, endowments and
foundations with assets of $50 million or more. Commissions on such investments
(other than IRA rollover assets that roll over at no sales charge under the
fund's IRA rollover policy as described in the prospectus) are paid to dealers
at the following rates: 1.00% on amounts to $4 million, 0.50% on amounts over $4
million to $10 million and 0.25% on amounts over $10 million. Commissions are
based on cumulative investments and are not annually reset.

A dealer concession of up to 1% may be paid by the fund under its Class A plan
of distribution to reimburse the Principal Underwriter in connection with dealer
and wholesaler compensation paid by it with respect to investments made with no
initial sales charge.

SALES CHARGE REDUCTIONS AND WAIVERS

REDUCING YOUR CLASS A SALES CHARGE -- As described in the prospectus, there are
various ways to reduce your sales charge when purchasing Class A shares.
Additional information about Class A sales charge reductions is provided below.

The New Economy Fund -- Page 40
<PAGE>

STATEMENT OF INTENTION -- By establishing a statement of intention (the
"Statement"), you enter into a nonbinding commitment to purchase shares of
American Funds non-money market funds over a 13-month period and receive
the same sales charge as if all shares had been purchased at once.

When a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement will be held in escrow in the
shareholder's account out of the initial purchase (or subsequent purchases,
if necessary) by the Transfer Agent. All dividends and any capital gain
distributions on shares held in escrow will be credited to the
shareholder's account in shares (or paid in cash, if requested). If the
intended investment is not completed within the specified Statement period,
the purchaser will remit to the Principal Underwriter the difference
between the sales charge actually paid and the sales charge which would
have been paid if the total of such purchases had been made at a single
time. The dealer assigned to an account at the time of each purchase made
during the Statement period will receive an appropriate commission
adjustment. If the difference is not paid by the close of the Statement
period, the appropriate number of shares held in escrow will be redeemed to
pay such difference. If the proceeds from this redemption are inadequate,
the purchaser will be liable to the Principal Underwriter for the balance
still outstanding.

The Statement may be revised upward at any time during the Statement
period, and such a revision will be treated as a new Statement, except that
the Statement period during which the purchase must be made will remain
unchanged. Accordingly, upon your request, the sales charge paid on
investments made 90 days prior to the Statement revision will be adjusted
to reflect the revised Statement.

The market value of your existing holdings eligible to be aggregated (see
below) as of the day immediately before the start of the Statement period,
may be credited toward satisfying the Statement.

The Statement will be considered completed if the shareholder dies within
the Statement period. Commissions to dealers will not be adjusted or paid
on the difference between the Statement amount and the amount actually
invested before the shareholder's death.

When the trustees of certain retirement plans purchase shares by payroll
deduction, the sales charge for the investments made during the Statement
period will be handled as follows: the total monthly investment will be
multiplied by 13 and then multiplied by 1.5. The market value of existing
American Funds investments (other than shares representing direct purchases
of money market funds) as of the day immediately before the start of the
Statement period, and any rollovers or transfers reasonably anticipated to
be invested in non-money market American Funds during the Statement period,
are added to the figure determined above. The sum is the Statement amount
and applicable breakpoint level. On the first investment and all other
investments made pursuant to the Statement, a sales charge will be assessed
according to the sales charge breakpoint thus determined. There will be no
retroactive adjustments in sales charges on investments made during the
Statement period.

Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms and those in the prospectus with
their first purchase.

The New Economy Fund -- Page 41
<PAGE>

AGGREGATION -- Qualifying investments for aggregation include those made by
you and your "immediate family" as defined in the prospectus, if all
parties are purchasing shares for their own accounts and/or:

. individual-type employee benefit plan(s), such as an IRA, individual
403(b) plan (see exception in "Purchases by certain 403(b) plans"
under "Sales charges") or single-participant Keogh-type plan;

. business accounts solely controlled by you or your immediate family
(for example, you own the entire business);

. trust accounts established by you or your immediate family (For trusts
with only one primary beneficiary, upon the trustor's death the trust
account may be aggregated with such beneficiary's own accounts; for
trusts with multiple primary beneficiaries, upon the trustor's death
the trustees of the trust may instruct American Funds Service Company
to establish separate trust accounts for each primary beneficiary;
each primary beneficiary's separate trust account may then be
aggregated with such beneficiary's own accounts);

. endowments or foundations established and controlled by you or your
immediate family; or

. CollegeAmerica accounts, which will be aggregated at the account owner
level (Class 529-E accounts may only be aggregated with an eligible
employer plan).

Individual purchases by a trustee(s) or other fiduciary(ies) may also be
aggregated if the investments are:

. for a single trust estate or fiduciary account, including employee
benefit plans other than the individual-type employee benefit plans
described above;

. made for two or more employee benefit plans of a single employer or of
affiliated employers as defined in the 1940 Act, excluding the
individual-type employee benefit plans described above;

. for a diversified common trust fund or other diversified pooled
account not specifically formed for the purpose of accumulating fund
shares;

. for nonprofit, charitable or educational organizations, or any
endowments or foundations established and controlled by such
organizations, or any employer-sponsored retirement plans established
for the benefit of the employees of such organizations, their
endowments, or their foundations; or

. for individually established participant accounts of a 403(b) plan
that is treated similarly to an employer-sponsored plan for sales
charge purposes (see "Purchases by certain 403(b) plans" under "Sales
charges" above), or made for two or more such 403(b) plans that are
treated similarly to employer-sponsored plans for sales charge
purposes of a single employer or affiliated employers as defined in
the 1940 Act.

Purchases made for nominee or street name accounts (securities held in the
name of an investment dealer or another nominee such as a bank trust
department instead of the customer) may not be aggregated with those made
for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.

The New Economy Fund -- Page 42
<PAGE>

CONCURRENT PURCHASES -- As described in the prospectus, you may reduce your
Class A sales charge by combining purchases of all classes of shares in the
American Funds, as well as individual holdings in Endowments, American
Legacy variable annuity contracts and variable life insurance policies.
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge also qualify. However,
direct purchases of American Funds money market funds are excluded.

RIGHTS OF ACCUMULATION -- Subject to the limitations described in the
aggregation policy, you may take into account your accumulated holdings in
all share classes of the American Funds, as well as your holdings in
Endowments, to determine your sales charge on investments in accounts
eligible to be aggregated. Subject to your investment dealer's or
recordkeeper's capabilities, your accumulated holdings will be calculated
as the higher of (a) the current value of your existing holdings (the
"market value") or (b) the amount you invested (including reinvested
dividends and capital gains, but excluding capital appreciation) less any
withdrawals (the "cost value"). Depending on the entity on whose books your
account is held, the value of your holdings in that account may not be
eligible for calculation at cost value. For example, the value of accounts
held in nominee or street name are not eligible for calculation at cost
value and instead will be calculated at market value for purposes of rights
of accumulation.

The value of all of your holdings in accounts established in calendar year
2005 or earlier will be assigned an initial cost value equal to the market
value of those holdings as of the last business day of 2005. Thereafter,
the cost value of such accounts will increase or decrease according to
actual investments or withdrawals. You must contact your financial adviser
or American Funds Service Company if you have additional information that
is relevant to the calculation of the value of your holdings.

When determining your American Funds Class A sales charge, if you are not
an employer-sponsored retirement plan, you may also take into account the
market value (as of the end of the week prior to your American Funds
investment) of your individual holdings in various American Legacy variable
annuity contracts and variable life insurance policies. An
employer-sponsored retirement plan may also take into account the market
value of its investments in American Legacy Retirement Investment Plans.
Direct purchases of American Funds money market funds are excluded. If you
make a gift of American Funds Class A shares, upon your request, you may
purchase the shares at the sales charge discount allowed under rights of
accumulation of all of your American Funds and American Legacy accounts.

CDSC WAIVERS FOR CLASS A, B AND C SHARES -- As noted in the prospectus, a
contingent deferred sales charge ("CDSC") may be waived for redemptions due to
death or postpurchase disability of a shareholder (this generally excludes
accounts registered in the names of trusts and other entities). In the case of
joint tenant accounts, if one joint tenant dies, a surviving joint tenant, at
the time he or she notifies the Transfer Agent of the other joint tenant's death
and removes the decedent's name from the account, may redeem shares from the
account without incurring a CDSC. Redemptions made after the Transfer Agent is
notified of the death of a joint tenant will be subject to a CDSC.

In addition, a CDSC may be waived for the following types of transactions, if
together they do not exceed 12% of the value of an "account" (defined below)
annually (the "12% limit"):

The New Economy Fund -- Page 43
<PAGE>

. Required minimum distributions taken from retirement accounts upon the
shareholder's attainment of age 70-1/2 (required minimum distributions
that continue to be taken by the beneficiary(ies) after the account
owner is deceased also qualify for a waiver).

. Redemptions through a systematic withdrawal plan (SWP) (see "Automatic
withdrawals" under "Shareholder account services and privileges"
below). For each SWP payment, assets that are not subject to a CDSC,
such as appreciation on shares and shares acquired through
reinvestment of dividends and/or capital gain distributions, will be
redeemed first and will count toward the 12% limit. If there is an
insufficient amount of assets not subject to a CDSC to cover a
particular SWP payment, shares subject to the lowest CDSC will be
redeemed next until the 12% limit is reached. Any dividends and/or
capital gain distributions taken in cash by a shareholder who receives
payments through a SWP will also count toward the 12% limit. In the
case of a SWP, the 12% limit is calculated at the time a systematic
redemption is first made, and is recalculated at the time each
additional systematic redemption is made. Shareholders who establish a
SWP should be aware that the amount of a payment not subject to a CDSC
may vary over time depending on fluctuations in the value of their
accounts. This privilege may be revised or terminated at any time.

For purposes of this paragraph, "account" means:

. in the case of Class A shares, your investment in Class A shares of
all American Funds (investments representing direct purchases of
American Funds money market funds are excluded);

. in the case of Class B shares, your investment in Class B shares of
the particular fund from which you are making the redemption; and

. in the case of Class C shares, your investment in Class C shares of
the particular fund from which you are making the redemption.

CDSC waivers are allowed only in the cases listed here and in the prospectus.
For example, CDSC waivers will not be allowed on redemptions of Class 529-B and
529-C shares due to termination of CollegeAmerica; a determination by the
Internal Revenue Service that CollegeAmerica does not qualify as a qualified
tuition program under the Code; proposal or enactment of law that eliminates or
limits the tax-favored status of CollegeAmerica; or the Virginia College Savings
Plan eliminating the fund as an option for additional investment within
CollegeAmerica.

SELLING SHARES

The methods for selling (redeeming) shares are described more fully in the
prospectus. If you wish to sell your shares by contacting American Funds Service
Company directly, any such request must be signed by the registered
shareholders.

A signature guarantee may be required for certain redemptions. In such an event,
your signature may be guaranteed by a domestic stock exchange or the National
Association of Securities Dealers, Inc., bank, savings association or credit
union that is an eligible guarantor institution. The Transfer Agent reserves the
right to require a signature guarantee on any redemptions.

The New Economy Fund -- Page 44
<PAGE>

Additional documentation may be required for sales of shares held in corporate,
partnership or fiduciary accounts. You must include with your written request
any shares you wish to sell that are in certificate form.

If you sell Class A, B or C shares and request a specific dollar amount to be
sold, we will sell sufficient shares so that the sale proceeds, after deducting
any applicable CDSC, equals the dollar amount requested.

Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date). Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the 1940 Act), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. Interest will not
accrue or be paid on amounts that represent uncashed distribution or redemption
checks.

You may request that redemption proceeds of $1,000 or more from money market
funds be wired to your bank by writing American Funds Service Company. A
signature guarantee is required on all requests to wire funds.

SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES

The following services and privileges are generally available to all
shareholders. However, certain services and privileges may not be available for
Class 529 shareholders or if your account is held with an investment dealer or
through an employer-sponsored retirement plan.

AUTOMATIC INVESTMENT PLAN -- An automatic investment plan enables you to make
monthly or quarterly investments in the American Funds through automatic debits
from your bank account. To set up a plan, you must fill out an account
application and specify the amount that you would like to invest ($50 minimum)
and the date on which you would like your investments to occur. The plan will
begin within 30 days after your account application is received. Your bank
account will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities. The Transfer Agent will then invest your
money into the fund you specified on or around the date you specified. If the
date you specified falls on a weekend or holiday, your money will be invested on
the following business day. However, if the following business day falls in the
next month, your money will be invested on the business day immediately
preceding the weekend or holiday. If your bank account cannot be debited due to
insufficient funds, a stop-payment or the closing of the account, the plan may
be terminated and the related investment reversed. You may change the amount of
the investment or discontinue the plan at any time by contacting the Transfer
Agent.

AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares of the same class and fund at net asset value
unless you indicate otherwise on the account application. You also may elect to
have dividends and/or capital gain distributions paid in cash by informing the
fund, the Transfer Agent or your investment dealer. Dividends and capital gain
distributions paid to retirement plan shareholders or shareholders of the 529
share classes will be automatically reinvested.

If you have elected to receive dividends and/or capital gain distributions in
cash, and the postal or other delivery service is unable to deliver checks to
your address of record, or you do not respond

The New Economy Fund -- Page 45
<PAGE>

to mailings from American Funds Service Company with regard to uncashed
distribution checks, your distribution option will automatically be converted to
having all dividends and other distributions reinvested in additional shares.

CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -- For all share classes,
except the 529 classes of shares, you may cross-reinvest dividends and capital
gains (distributions) into other American Funds in the same share class at net
asset value, subject to the following conditions:

(1) the aggregate value of your account(s) in the fund(s) paying distributions
equals or exceeds $5,000 (this is waived if the value of the account in the fund
receiving the distributions equals or exceeds that fund's minimum initial
investment requirement);

(2) if the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested; and

(3) if you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distributions must equal or exceed the minimum
initial investment requirement. If you do not meet this requirement within 90
days of notification, the fund has the right to automatically redeem the
account.

AUTOMATIC EXCHANGES -- For all share classes, you may automatically exchange
shares of the same class in amounts of $50 or more among any of the American
Funds on any day (or preceding business day if the day falls on a nonbusiness
day) of each month you designate.

AUTOMATIC WITHDRAWALS -- For all share classes, except the R and 529 classes of
shares, you may automatically withdraw shares from any of the American Funds.
You can make automatic withdrawals of $50 or more as often as you wish if your
account is worth at least $10,000, or up to four times a year for an account
worth at least $5,000. You can designate the day of each period for withdrawals
and request that checks be sent to you or someone else. Withdrawals may also be
electronically deposited to your bank account. The Transfer Agent will withdraw
your money from the fund you specify on or around the date you specify. If the
date you specified falls on a weekend or holiday, the redemption will take place
on the previous business day. However, if the previous business day falls in the
preceding month, the redemption will take place on the following business day
after the weekend or holiday.

Withdrawal payments are not to be considered as dividends, yield or income.
Automatic investments may not be made into a shareholder account from which
there are automatic withdrawals. Withdrawals of amounts exceeding reinvested
dividends and distributions and increases in share value would reduce the
aggregate value of the shareholder's account. The Transfer Agent arranges for
the redemption by the fund of sufficient shares, deposited by the shareholder
with the Transfer Agent, to provide the withdrawal payment specified.

ACCOUNT STATEMENTS -- Your account is opened in accordance with your
registration instructions. Transactions in the account, such as additional
investments, will be reflected on regular confirmation statements from the
Transfer Agent. Dividend and capital gain reinvestments, purchases through
automatic investment plans and certain retirement plans, as well as automatic
exchanges and withdrawals will be confirmed at least quarterly.

AMERICAN FUNDSLINE AND AMERICANFUNDS.COM -- You may check your share balance,
the price of your shares or your most recent account transaction; redeem shares
(up to $75,000 per

The New Economy Fund -- Page 46
<PAGE>

American Funds shareholder each day) from nonretirement plan accounts; or
exchange shares around the clock with American FundsLine or using
americanfunds.com. To use American FundsLine, call 800/325-3590 from a
TouchTone(TM) telephone. Redemptions and exchanges through American FundsLine
and americanfunds.com are subject to the conditions noted above and in
"Telephone and Internet purchases, redemptions and exchanges" below. You will
need your fund number (see the list of the American Funds under "General
information -- fund numbers"), personal identification number (generally the
last four digits of your Social Security number or other tax identification
number associated with your account) and account number.

Generally, all shareholders are automatically eligible to use these services.
However, if you are not currently authorized to do so, you may complete an
American FundsLink Authorization Form. Once you establish this privilege, you,
your financial adviser or any person with your account information may use these
services.

TELEPHONE AND INTERNET PURCHASES, REDEMPTIONS AND EXCHANGES -- By using the
telephone (including American FundsLine) or the Internet (including
americanfunds.com), or fax purchase, redemption and/or exchange options, you
agree to hold the fund, the Transfer Agent, any of its affiliates or mutual
funds managed by such affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from any losses, expenses,
costs or liability (including attorney fees) that may be incurred in connection
with the exercise of these privileges. Generally, all shareholders are
automatically eligible to use these services. However, you may elect to opt out
of these services by writing the Transfer Agent (you may also reinstate them at
any time by writing the Transfer Agent). If the Transfer Agent does not employ
reasonable procedures to confirm that the instructions received from any person
with appropriate account information are genuine, it and/or the fund may be
liable for losses due to unauthorized or fraudulent instructions. In the event
that shareholders are unable to reach the fund by telephone because of technical
difficulties, market conditions or a natural disaster, redemption and exchange
requests may be made in writing only.

CHECKWRITING -- You may establish check writing privileges for Class A shares
(but not Class 529-A shares) of American Funds money market funds. This can be
done by using an account application. If you request check writing privileges,
you will be provided with checks that you may use to draw against your account.
These checks may be made payable to anyone you designate and must be signed by
the authorized number of registered shareholders exactly as indicated on your
account application.

REDEMPTION OF SHARES -- The fund's Declaration of Trust permits the fund to
direct the Transfer Agent to redeem the shares of any shareholder for their then
current net asset value per share if at such time the shareholder of record owns
shares having an aggregate net asset value of less than the minimum initial
investment amount required of new shareholders as set forth in the fund's
current registration statement under the 1940 Act, and subject to such further
terms and conditions as the board of trustees of the fund may from time to time
adopt.

While payment of redemptions normally will be in cash, the fund's Declaration of
Trust permits payment of the redemption price wholly or partly in securities or
other property included in the assets belonging to the fund when in the opinion
of the fund's board of trustees, which shall be conclusive, conditions exist
which make payment wholly in cash unwise or undesirable.

SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by contacting the Transfer Agent.
Certificates are not available for the 529 or R share classes.

The New Economy Fund -- Page 47
<PAGE>

GENERAL INFORMATION

CUSTODIAN OF ASSETS -- Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, as Custodian. If the fund holds non-U.S. securities, the Custodian may
hold these securities pursuant to subcustodial arrangements in non-U.S. banks or
non-U.S. branches of U.S. banks.

TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the investment adviser, maintains the records of shareholder accounts, processes
purchases and redemptions of the fund's shares, acts as dividend and capital
gain distribution disbursing agent, and performs other related shareholder
service functions. The principal office of American Funds Service Company is
located at 135 South State College Boulevard, Brea, CA 92821-5823. American
Funds Service Company was paid a fee of $8,687,000 for Class A shares and
$251,000 for Class B shares for the 2005 fiscal year.

In the case of certain shareholder accounts, third parties who may be
unaffiliated with the investment adviser provide transfer agency and shareholder
services in place of American Funds Service Company. These services are rendered
under agreements with American Funds Service Company or its affiliates and the
third parties receive compensation according to such agreements. Compensation
for transfer agency and shareholder services, whether paid to American Funds
Service Company or such third parties, is ultimately paid from fund assets and
is reflected in the expenses of the fund as disclosed in the prospectus.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -- Deloitte & Touche LLP, 695 Town
Center Drive, Costa Mesa, California 92626, serves as the fund's independent
registered public accounting firm, providing audit services, preparation of tax
returns and review of certain documents to be filed with the Securities and
Exchange Commission. The financial statements included in this statement of
additional information from the annual report have been so included in reliance
on the report of Deloitte & Touche LLP, independent registered public accounting
firm, given on the authority of said firm as experts in accounting and auditing.
The selection of the fund's independent registered public accounting firm is
reviewed and determined annually by the board of trustees.

INDEPENDENT LEGAL COUNSEL -- Paul, Hastings, Janofsky & Walker LLP, 55 Second
Street, San Francisco, CA 94105, serves as counsel for the fund and for
non-interested trustees in their capacities as such. Certain legal matters in
connection with the shares of beneficial interest offered by the prospectus have
been passed upon for the fund by Paul, Hastings, Janofsky & Walker LLP. Counsel
does not provide legal services to the fund's investment adviser or any of its
affiliated companies or control persons. A determination with respect to the
independence of the fund's "independent legal counsel" will be made at least
annually by the non-interested trustees of the fund, as prescribed by the 1940
Act and related rules.

PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS -- The fund's fiscal
year ends on November 30. Shareholders are provided updated prospectuses
annually and at least semiannually with reports showing the summary investment
portfolio, financial statements and other information. The fund's annual
financial statements are audited by the fund's independent registered public
accounting firm, Deloitte & Touche LLP. In addition, shareholders may also
receive proxy statements for the fund. In an effort to reduce the volume of mail
shareholders receive from the fund when a household owns more than one account,
the Transfer Agent has

The New Economy Fund -- Page 48
<PAGE>

taken steps to eliminate duplicate mailings of prospectuses, shareholder reports
and proxy statements. To receive additional copies of a prospectus, report or
proxy statement, shareholders should contact the Transfer Agent.

CODES OF ETHICS -- The fund and Capital Research and Management Company and its
affiliated companies, including the fund's Principal Underwriter, have adopted
codes of ethics that allow for personal investments, including securities in
which the fund may invest from time to time. These codes include a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; preclearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; blackout periods on personal
investing for certain investment personnel; ban on short-term trading profits
for investment personnel; limitations on service as a director of publicly
traded companies; and disclosure of personal securities transactions.

LEGAL PROCEEDINGS -- On February 16, 2005, the NASD filed an administrative
complaint against the Principal Underwriter. The complaint alleges violations of
certain NASD rules by the Principal Underwriter with respect to the selection of
broker-dealer firms that buy and sell securities for mutual fund investment
portfolios. The complaint seeks sanctions, restitution and disgorgement.

On March 24, 2005, the investment adviser and Principal Underwriter filed a
complaint against the Attorney General of the State of California in Los Angeles
County Superior Court. The complaint alleged that the Attorney General
threatened to take enforcement actions against the investment adviser and
Principal Underwriter that are without merit and preempted by federal law. On
the same day, following the filing of the investment adviser's and Principal
Underwriter's complaint, the Attorney General of the State of California filed a
complaint against the Principal Underwriter and investment adviser. Filed in Los
Angeles County Superior Court, the Attorney General's complaint alleged
violations of certain sections of the California Corporations Code with respect
to so-called "revenue sharing" disclosures in mutual fund prospectuses and
statements of additional information. On November 22, 2005, the Los Angeles
Superior Court dismissed the Attorney General's complaint. On February 7, 2006,
the Attorney General filed a notice that he intends to appeal the Superior
Court's decision to California's Court of Appeal for the Second Appellate
District.

The investment adviser and Principal Underwriter believe that the likelihood
that these matters could have a material adverse effect on the fund or on the
ability of the investment adviser or Principal Underwriter to perform their
contracts with the fund is remote. The SEC is conducting a related investigation
as of the date of this statement of additional information. The investment
adviser and Principal Underwriter are cooperating fully. In addition, a class
action lawsuit has been filed in the U.S. District Court, Central District of
California, relating to these matters. Although the suit was dismissed in its
entirety, an amended complaint relating to management fees has been filed. The
investment adviser believes that this suit is without merit and will defend
itself vigorously. Further updates on these issues will be available on the
American Funds website (americanfunds.com) under "American Funds regulatory
matters."

OTHER INFORMATION -- The financial statements including the investment portfolio
and the report of the fund's independent registered public accounting firm
contained in the annual report are included in this statement of additional
information. The following information is not included in the annual report:

The New Economy Fund -- Page 49
<PAGE>

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- NOVEMBER 30, 2005

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . $22.98
Maximum offering price per share
(100/94.25 of net asset value per share,
which takes into account the fund's current maximum
sales charge). . . . . . . . . . . . . . . . $24.38

FUND NUMBERS -- Here are the fund numbers for use with our automated telephone
line, American FundsLine/(R)/, or when making share transactions:

FUND NUMBERS
------------------------------------
FUND CLASS A CLASS B CLASS C CLASS F
-----------------------------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund/(R)/ . . . . . . . . . . . . . . . . . . . . . . . 002 202 302 402
American Balanced Fund/(R)/ . . . . . . . . . . . . . . . . . 011 211 311 411
American Mutual Fund/(R)/ . . . . . . . . . . . . . . . . . . 003 203 303 403
Capital Income Builder/(R)/ . . . . . . . . . . . . . . . . . 012 212 312 412
Capital World Growth and Income Fund/SM/ . . . . . . . . . . . 033 233 333 433
EuroPacific Growth Fund/(R)/ . . . . . . . . . . . . . . . . . 016 216 316 416
Fundamental Investors/SM/ . . . . . . . . . . . . . . . . . . 010 210 310 410
The Growth Fund of America/(R)/ . . . . . . . . . . . . . . . 005 205 305 405
The Income Fund of America/(R)/ . . . . . . . . . . . . . . . 006 206 306 406
The Investment Company of America/(R)/ . . . . . . . . . . . . 004 204 304 404
The New Economy Fund/(R)/ . . . . . . . . . . . . . . . . . . 014 214 314 414
New Perspective Fund/(R)/ . . . . . . . . . . . . . . . . . . 007 207 307 407
New World Fund/SM/ . . . . . . . . . . . . . . . . . . . . . . 036 236 336 436
SMALLCAP World Fund/(R)/ . . . . . . . . . . . . . . . . . . . 035 235 335 435
Washington Mutual Investors Fund/SM/ . . . . . . . . . . . . . 001 201 301 401
BOND FUNDS
American High-Income Municipal Bond Fund/(R)/ . . . . . . . . 040 240 340 440
American High-Income Trust/SM/ . . . . . . . . . . . . . . . . 021 221 321 421
The Bond Fund of America/SM/ . . . . . . . . . . . . . . . . . 008 208 308 408
Capital World Bond Fund/(R)/ . . . . . . . . . . . . . . . . . 031 231 331 431
Intermediate Bond Fund of America/SM/ . . . . . . . . . . . . 023 223 323 423
Limited Term Tax-Exempt Bond Fund of America/SM/ . . . . . . . 043 243 343 443
The Tax-Exempt Bond Fund of America/(R)/ . . . . . . . . . . . 019 219 319 419
The Tax-Exempt Fund of California/(R)/* . . . . . . . . . . . 020 220 320 420
The Tax-Exempt Fund of Maryland/(R)/* . . . . . . . . . . . . 024 224 324 424
The Tax-Exempt Fund of Virginia/(R)/* . . . . . . . . . . . . 025 225 325 425
U.S. Government Securities Fund/SM/ . . . . . . . . . . . . . 022 222 322 422
MONEY MARKET FUNDS
The Cash Management Trust of America/(R)/ . . . . . . . . . . 009 209 309 409
The Tax-Exempt Money Fund of America/SM/ . . . . . . . . . . . 039 N/A N/A N/A
The U.S. Treasury Money Fund of America/SM/ . . . . . . . . . 049 N/A N/A N/A
___________
*Qualified for sale only in certain jurisdictions.

The New Economy Fund -- Page 50
<PAGE>

FUND NUMBERS
---------------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND 529-A 529-B 529-C 529-E 529-F
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . 1002 1202 1302 1502 1402
American Balanced Fund . . . . 1011 1211 1311 1511 1411
American Mutual Fund . . . . . 1003 1203 1303 1503 1403
Capital Income Builder . . . . 1012 1212 1312 1512 1412
Capital World Growth and Income
Fund . . . . . . . . . . . . . 1033 1233 1333 1533 1433
EuroPacific Growth Fund . . . . 1016 1216 1316 1516 1416
Fundamental Investors . . . . . 1010 1210 1310 1510 1410
The Growth Fund of America . . 1005 1205 1305 1505 1405
The Income Fund of America . . 1006 1206 1306 1506 1406
The Investment Company of
America . . . . . . . . . . . . 1004 1204 1304 1504 1404
The New Economy Fund . . . . . 1014 1214 1314 1514 1414
New Perspective Fund . . . . . 1007 1207 1307 1507 1407
New World Fund . . . . . . . . 1036 1236 1336 1536 1436
SMALLCAP World Fund . . . . . . 1035 1235 1335 1535 1435
Washington Mutual Investors Fund
. . . . . . . . . . . . . . . 1001 1201 1301 1501 1401
BOND FUNDS
American High-Income Trust . . 1021 1221 1321 1521 1421
The Bond Fund of America . . . 1008 1208 1308 1508 1408
Capital World Bond Fund . . . . 1031 1231 1331 1531 1431
Intermediate Bond Fund of
America . . . . . . . . . . . . 1023 1223 1323 1523 1423
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America . . . . . . . . . . . . 1009 1209 1309 1509 1409

The New Economy Fund -- Page 51
<PAGE>

FUND NUMBERS
----------------------------------------
CLASS CLASS CLASS CLASS CLASS
FUND R-1 R-2 R-3 R-4 R-5
-------------------------------------------------------------------------------

STOCK AND STOCK/BOND FUNDS
AMCAP Fund . . . . . . . . . . . . . 2102 2202 2302 2402 2502
American Balanced Fund . . . . . . . 2111 2211 2311 2411 2511
American Mutual Fund . . . . . . . . 2103 2203 2303 2403 2503
Capital Income Builder . . . . . . . 2112 2212 2312 2412 2512
Capital World Growth and Income Fund 2133 2233 2333 2433 2533
EuroPacific Growth Fund . . . . . . 2116 2216 2316 2416 2516
Fundamental Investors . . . . . . . 2110 2210 2310 2410 2510
The Growth Fund of America . . . . . 2105 2205 2305 2405 2505
The Income Fund of America . . . . . 2106 2206 2306 2406 2506
The Investment Company of America . 2104 2204 2304 2404 2504
The New Economy Fund . . . . . . . . 2114 2214 2314 2414 2514
New Perspective Fund . . . . . . . . 2107 2207 2307 2407 2507
New World Fund . . . . . . . . . . . 2136 2236 2336 2436 2536
SMALLCAP World Fund . . . . . . . . 2135 2235 2335 2435 2535
Washington Mutual Investors Fund . . 2101 2201 2301 2401 2501
BOND FUNDS
American High-Income Municipal Bond
Fund . . . . . . . . . . . . . . . . N/A N/A N/A N/A 2540
American High-Income Trust . . . . . 2121 2221 2321 2421 2521
The Bond Fund of America . . . . . . 2108 2208 2308 2408 2508
Capital World Bond Fund . . . . . . 2131 2231 2331 2431 2531
Intermediate Bond Fund of America . 2123 2223 2323 2423 2523
Limited Term Tax-Exempt Bond Fund of
America. . . . . . . . . . . . . . . N/A N/A N/A N/A 2543
The Tax-Exempt Bond Fund of America N/A N/A N/A N/A 2519
The Tax-Exempt Fund of California* . N/A N/A N/A N/A 2520
The Tax-Exempt Fund of Maryland* . . N/A N/A N/A N/A 2524
The Tax-Exempt Fund of Virginia* . . N/A N/A N/A N/A 2525
U.S. Government Securities Fund . . 2122 2222 2322 2422 2522
MONEY MARKET FUNDS
The Cash Management Trust of America 2109 2209 2309 2409 2509
The Tax-Exempt Money Fund of America N/A N/A N/A N/A 2539
The U.S. Treasury Money Fund of
America . . . . . . . . . . . . . . 2149 2249 2349 2449 2549
___________
*Qualified for sale only in certain
jurisdictions.

The New Economy Fund -- Page 52
<PAGE>

APPENDIX

The following descriptions of debt security ratings are based on information
provided by Moody's Investors Service and Standard & Poor's Corporation.

DESCRIPTION OF BOND RATINGS

MOODY'S
LONG-TERM RATING DEFINITIONS

Aaa
Obligations rated Aaa are judged to be of the highest quality, with minimal
credit risk.

Aa
Obligations rated Aa are judged to be of high quality and are subject to very
low credit risk.

A
Obligations rated A are considered upper-medium grade and are subject to low
credit risk.

Baa
Obligations rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative characteristics.

Ba
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.

B
Obligations rated B are considered speculative and are subject to high credit
risk.

Caa
Obligations rated Caa are judged to be of poor standing and are subject to very
high credit risk.

Ca
Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.

C
Obligations rated C are the lowest rated class of bonds and are typically in
default, with little prospect for recovery of principal or interest.

NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.

The New Economy Fund -- Page 53
<PAGE>

STANDARD & POOR'S
LONG-TERM ISSUE CREDIT RATINGS

AAA
An obligation rated AAA has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA
An obligation rated AA differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A
An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB
An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC, AND C
Obligations rated BB, B, CCC, CC, and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and C
the highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions.

BB
An obligation rated BB is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.

B
An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.

CCC
An obligation rated CCC is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial, or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.

CC
An obligation rated CC is currently highly vulnerable to nonpayment.

The New Economy Fund -- Page 54
<PAGE>

C
The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D
An obligation rated D is in payment default. The D rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-)

The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.

The New Economy Fund -- Page 55

[Logo - American Funds ®]

The New Economy Fund^®

Investment portfolio

November 30, 2005

		Market value
Common stocks — 89.83%	Shares	(000)

SOFTWARE & SERVICES — 16.16%
Google Inc., Class A¹	594,000	$ 240,564
Microsoft Corp.	6,380,000	176,790
Yahoo! Inc.¹	3,666,000	147,483
SOFTBANK CORP.	1,100,000	88,618
Affiliated Computer Services, Inc., Class A¹	1,263,000	70,450
First Data Corp.	1,484,000	64,213
Akamai Technologies, Inc.¹	3,173,990	63,353
Oracle Corp.¹	4,870,000	61,216
CNET Networks, Inc.¹	4,080,000	61,159
Novell, Inc.¹	6,276,900	48,834
Paychex, Inc.	1,125,000	47,711
Intuit Inc.¹	800,000	42,856
Adobe Systems Inc.	1,200,000	39,132
NAVTEQ Corp.¹	885,200	37,178
Ceridian Corp.¹	1,065,150	25,564
Automatic Data Processing, Inc.	465,000	21,855
Iron Mountain Inc.¹	400,000	16,500
		1,253,476

BANKS — 12.29%
Freddie Mac	1,830,000	114,284
HDFC Bank Ltd.	6,196,000	92,785
Société Générale	675,500	80,490
Wells Fargo & Co.	1,100,000	69,135
ICICI Bank Ltd.	4,660,000	54,661
ICICI Bank Ltd. (ADR)	400,000	10,188
Pusan Bank	5,160,000	63,230
City National Corp.	799,800	58,409
UniCredito Italiano SpA (Germany)	6,750,000	42,005
UniCredito Italiano SpA (Italy)	1,700,000	10,529
Mitsui Trust Holdings, Inc.	4,050,000	49,923
Erste Bank der oesterreichischen Sparkassen AG	900,000	47,945
ABN AMRO Holding NV	1,414,988	34,938
Banco Bradesco SA, preferred nominative	1,076,000	32,952
Royal Bank of Scotland Group PLC	1,004,586	28,659
Daegu Bank, Ltd.	1,615,800	23,464
Mizuho Financial Group, Inc.	3,300	23,304
Grupo Financiero Banorte, SA de CV	8,800,000	19,055
Kookmin Bank	279,500	18,339
HSBC Holdings PLC	930,624	14,900
Hypo Real Estate Holding AG	285,000	14,847
Woori Finance Holdings Co., Ltd.	806,960	14,755
South Financial Group, Inc.	425,000	12,610
Banco Itaú Holding Financeira SA, preferred nominative	340,000	8,619
Banco Santander Central Hispano, SA	659,523	8,395
Bayerische Hypo-und Vereinsbank AG¹	175,000	5,117
		953,538

RETAILING — 9.91%
Target Corp.	3,150,000	168,556
Lowe’s Companies, Inc.	1,680,000	113,366
IAC/InterActiveCorp¹	3,772,500	104,159
Expedia, Inc.¹	3,290,000	81,559
Limited Brands, Inc.	2,670,000	59,407
Yamada Denki Co., Ltd.	577,000	59,166
Amazon.com, Inc.¹	850,000	41,191
Best Buy Co., Inc.	750,000	36,180
CarMax, Inc.¹	1,150,000	31,533
Gap, Inc.	1,487,000	25,844
Kingfisher PLC	5,025,000	19,548
Williams-Sonoma, Inc.¹	269,800	11,707
DSG International PLC	3,556,600	9,409
eBay Inc.¹	160,000	7,170
		768,795

SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 6.78%
Texas Instruments Inc.	3,350,000	108,808
Taiwan Semiconductor Manufacturing Co. Ltd.	47,475,820	84,398
Maxim Integrated Products, Inc.	1,800,000	65,790
Analog Devices, Inc.	1,300,000	49,296
Applied Materials, Inc.	2,275,000	41,200
Novellus Systems, Inc.¹	1,400,000	34,538
Altera Corp.¹	1,750,000	31,955
Advanced Micro Devices, Inc.¹	1,000,000	26,180
KLA-Tencor Corp.	500,000	25,595
Rohm Co., Ltd.	250,500	22,693
Microchip Technology Inc.	500,000	16,680
Integrated Device Technology, Inc.¹	1,300,000	15,574
Sunplus Technology Co., Ltd.	3,259,000	3,282
		525,989

TELECOMMUNICATION SERVICES — 6.19%
Qwest Communications International Inc.¹	16,100,000	84,364
Telephone and Data Systems, Inc.	931,100	34,032
Telephone and Data Systems, Inc., Special Common Shares	931,100	32,635
Sprint Nextel Corp.	2,650,000	66,356
Koninklijke KPN NV	6,026,500	59,735
Telefónica, SA	3,120,000	46,186
Bharti Tele-Ventures Ltd.¹	5,000,000	38,909
Telekom Austria AG	1,684,023	38,148
France Télécom, SA	1,238,500	31,033
Vodafone Group PLC	11,900,000	25,667
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B	28,559,000	15,685
KDDI Corp.	1,427	7,489
		480,239

MEDIA — 5.77%
Liberty Global, Inc., Class A¹	2,338,998	52,183
Liberty Global, Inc., Class C¹	2,460,194	51,098
Liberty Media Corp., Class A¹	11,260,000	86,477
News Corp. Inc., Class A	3,502,815	51,877
Time Warner Inc.	2,750,000	49,445
Walt Disney Co.	1,300,000	32,409
Reader’s Digest Assn., Inc., Class A	2,000,000	31,060
Grupo Televisa, SA, ordinary participation certificates (ADR)	345,000	27,393
Arbitron Inc.	670,520	25,882
Discovery Holding Co., Class A¹	1,328,000	20,730
Schibsted ASA	525,000	14,873
SET Satellite (Singapore) Pte. Ltd.^1,2,3	775,461	3,012
SET India Ltd.^1,2,3	31,400	1,532
		447,971

ENERGY — 4.06%
Schlumberger Ltd.	1,475,000	141,202
BJ Services Co.	1,500,000	54,975
Baker Hughes Inc.	900,000	51,615
Weatherford International Ltd.¹	700,000	48,657
Smith International, Inc.	500,000	18,895
		315,344

COMMERCIAL SERVICES & SUPPLIES — 3.67%
United Stationers Inc.¹	1,231,300	60,334
Rentokil Initial PLC	21,500,000	60,035
Monster Worldwide Inc.¹	1,410,000	54,849
Robert Half International Inc.	1,000,000	38,260
Vedior NV	2,251,852	31,875
Buhrmann NV	2,000,000	26,495
SIRVA, Inc.¹	1,671,200	12,935
		284,783

TECHNOLOGY HARDWARE & EQUIPMENT — 3.48%
Cisco Systems, Inc.¹	4,329,200	75,934
Corning Inc.¹	3,050,000	61,762
Nidec Corp.	550,000	39,529
Nokia Corp., Class A	1,900,000	32,470
Symbol Technologies, Inc.	2,000,000	22,860
Lexmark International, Inc., Class A¹	350,000	16,667
International Business Machines Corp.	135,000	12,002
Flextronics International Ltd.¹	850,000	8,772
		269,996

DIVERSIFIED FINANCIALS — 2.86%
Capital One Financial Corp.	750,000	62,295
Citigroup Inc.	900,000	43,695
Nasdaq Stock Market, Inc¹	700,000	27,391
CapitalSource Inc.¹	1,051,000	25,119
Bank of New York Co., Inc.	775,000	25,110
J.P. Morgan Chase & Co.	550,000	21,037
ING Groep NV	531,910	17,253
		221,900

HEALTH CARE EQUIPMENT & SERVICES — 2.75%
Express Scripts, Inc.¹	650,000	54,899
Medtronic, Inc.	650,000	36,120
Kyphon Inc.¹	800,000	33,992
Aetna Inc.	340,000	31,447
Cardinal Health, Inc.	260,000	16,627
Caremark Rx, Inc.¹	300,000	15,417
Henry Schein, Inc.¹	326,650	13,932
Alfresa Holdings Corp.	240,000	10,610
		213,044

INSURANCE — 2.00%
American International Group, Inc.	1,363,985	91,578
W.R. Berkley Corp.	800,000	37,296
XL Capital Ltd., Class A	250,000	16,595
PartnerRe Holdings Ltd.	140,000	9,559
		155,028

CONSUMER SERVICES — 1.96%
Carnival Corp., units	1,800,000	98,082
Outback Steakhouse, Inc.	700,000	28,196
Shangri-La Asia Ltd.	18,000,000	25,998
		152,276

TRANSPORTATION — 1.67%
Singapore Post Private Ltd.	59,065,000	41,219
United Parcel Service, Inc., Class B	375,000	29,212
Qantas Airways Ltd.	8,034,484	22,405
Southwest Airlines Co.	1,000,000	16,500
Transurban Group¹	2,917,991	14,613
SembCorp Logistics Ltd.	5,706,560	5,670
		129,619

UTILITIES — 1.51%
Reliance Energy Ltd.	4,410,003	56,488
Veolia Environnement	658,200	28,199
Hong Kong and China Gas Co. Ltd.	10,042,000	21,303
E.ON AG	113,000	10,762
		116,752

FOOD & STAPLES RETAILING — 1.40%
Costco Wholesale Corp.	700,000	34,986
Wal-Mart de México, SA de CV, Series V	6,200,000	33,600
Koninklijke Ahold NV¹	2,200,000	16,569
Walgreen Co.	350,000	15,988
Tesco PLC	1,350,000	7,073
		108,216

PHARMACEUTICALS & BIOTECHNOLOGY — 0.70%
Roche Holding AG	360,000	54,092


MATERIALS — 0.63%
Nitto Denko Corp.	718,000	49,323


CAPITAL GOODS — 0.57%
MSC Industrial Direct Co., Inc., Class A	929,100	36,318
Hi-P International Ltd.	7,770,000	7,812
		44,130

CONSUMER DURABLES & APPAREL — 0.50%
Garmin Ltd.	700,000	38,570


FOOD, BEVERAGE & TOBACCO — 0.10%
Coca-Cola West Japan Co. Ltd.	365,000	7,976


MISCELLANEOUS — 4.87%
Other common stocks in initial period of acquisition		378,100


Total common stocks (cost: $5,646,246,000)		6,969,157


	Shares or
Convertible securities — 0.46%	Principal amount

TECHNOLOGY HARDWARE & EQUIPMENT — 0.46%
Lucent Technologies Inc. 8.00% convertible subordinated notes 2031	$35,000,000	35,700

SOFTWARE & SERVICES — 0.00%
ProAct Technologies Corp., Series C, convertible preferred^1,2,3	3,500,000	14


Total convertible securities (cost: $36,546,000)		35,714


	Principal amount
Short-term securities — 9.91%	(000)

Wal-Mart Stores Inc. 3.84%-4.08% due 12/5/2005-1/31/2006²	$95,600	95,132
Federal Home Loan Bank 3.72%-4.05% due 12/9/2005-1/13/2006	70,050	69,908
Preferred Receivables Funding Corp. 4.14%-4.16% due 1/5-1/13/2006²	52,800	52,534
J.P. Morgan Chase & Co. 4.01% due 12/7/2005	15,000	14,988
Pfizer Inc 3.975%-4.105% due 12/8/2005-1/4/2006²	64,700	64,558
Variable Funding Capital Corp. 4.04%-4.16% due 12/19/2005-1/18/2006²	60,000	59,802
Procter & Gamble Co. 3.80%-3.91% due 12/1-12/20/2005²	59,000	58,902
Clipper Receivables Co., LLC 4.01%-4.02% due 12/2-12/15/2005²	51,800	51,764
Bank of America Corp. 3.96% due 12/15/2005	40,700	40,636
International Lease Finance Corp. 4.005% due 12/15/2005	36,400	36,339
Freddie Mac 3.80%-4.14% due 12/21/2005-1/24/2006	35,900	35,779
Medtronic Inc. 4.07% due 12/20/2005²	25,000	24,944
HSBC Finance Corp. 4.06% due 1/18/2006	25,000	24,865
Edison Asset Securitization LLC 4.18% due 1/17/2006²	12,000	11,933
General Electric Capital Corp. 4.09% due 1/11/2006	10,800	10,750
Hershey Co. 3.99% due 12/21/2005²	20,000	19,953
Private Export Funding Corp. 4.12% due 1/26/2006²	20,000	19,873
U.S. Treasury Bills 3.925% due 12/15/2005	18,000	17,971
Kimberly-Clark Worldwide Inc. 4.06%-4.14% due 1/6-1/20/2006²	16,700	16,623
FCAR Owner Trust I 3.94% due 12/12/2005	14,400	14,381
CAFCO, LLC 3.96%-4.21% due 12/16/2005-1/27/2006²	12,000	11,950
Gannett Co. 4.07% due 1/6/2006²	5,300	5,278
Tennessee Valley Authority 3.72% due 12/1/2005	5,200	5,200
Estée Lauder Companies Inc. 4.04% due 12/29/2005²	5,000	4,984

Total short-term securities (cost: $769,049,000)		769,047


Total investment securities (cost: $6,451,841,000)		7,773,918
Other assets less liabilities		(15,709)

Net assets		$7,758,209

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

¹ Security did not produce income during the last 12 months.

² Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to the public may require registration. The total value of all such restricted securities was $502,788,000, which represented 6.48% of the net assets of the fund.

³ Valued under fair value procedures adopted by authority of the Board of Trustees.

ADR = American Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilitiesat November 30, 2005
	(dollars and shares in thousands, except per-share amounts)

Assets:
Investment securities at market (cost: $6,451,841)				$	7,773,918
Cash denominated in non-U.S. currencies
(cost: $3,986)					3,835
Cash					132
Receivables for:
Sales of investments		$	19,181
Sales of fund's shares			7,226
Dividends and interest			9,528		35,935
					7,813,820
Liabilities:
Payables for:
Purchases of investments			38,899
Repurchases of fund's shares			6,248
Investment advisory services			2,301
Services provided by affiliates			4,786
Deferred Trustees' compensation			782
Other fees and expenses			2,595		55,611
Net assets at November 30, 2005				$	7,758,209

Net assets consist of:
Capital paid in on shares of beneficial interest				$	7,025,641
Undistributed net investment income					41,784
Accumulated net realized loss					(628,729	)
Net unrealized appreciation					1,319,513
Net assets at November 30, 2005				$	7,758,209

Shares of beneficial interest issued and outstanding - unlimited shares authorized (338,262 total shares outstanding)
		Net assets	Shares outstanding		Net asset value per share (1	)

Class A	$	7,060,844	307,248	$	22.98
Class B		185,232	8,402		22.05
Class C		96,344	4,386		21.96
Class F		114,025	4,983		22.88
Class 529-A		51,190	2,233		22.93
Class 529-B		9,742	437		22.28
Class 529-C		15,296	686		22.30
Class 529-E		2,924	129		22.75
Class 529-F		927	40		22.92
Class R-1		3,974	177		22.47
Class R-2		60,797	2,706		22.47
Class R-3		49,693	2,184		22.75
Class R-4		30,838	1,344		22.94
Class R-5		76,383	3,307		23.10
(1) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $24.38 and $24.33, respectively.

See Notes to Financial Statements

Statement of operations
for the year ended November 30, 2005		(dollars in thousands)
Investment income:
Income:
Dividends (net of non-U.S. withholding
tax of $5,073)	$	91,447
Interest		20,227		$	111,674

Fees and expenses:(1)
Investment advisory services		30,080
Distribution services		19,839
Transfer agent services		8,938
Administrative services		1,054
Reports to shareholders		395
Registration statement and prospectus		227
Postage, stationery and supplies		1,133
Trustees' compensation		345
Auditing and legal		163
Custodian		1,321
State and local taxes		108
Other		92
Total fees and expenses before reimbursements/waivers		63,695
Less reimbursement/waiver of fees and expenses:
Investment advisory services		2,505
Administrative services		152
Total fees and expenses after reimbursements/waivers					61,038
Net investment income					50,636

Net realized gain and change in unrealized appreciation on investments and non-U.S. currency:
Net realized gain (loss) on:
Investments		218,366
Non-U.S. currency transactions		(1,724	)		216,642
Net change in unrealized appreciation on:
Investments		689,277
Non-U.S. currency translations		(5	)		689,272
Net realized gain and
change in unrealized appreciation
on investments and non-U.S. currency					905,914
Net increase in net assets resulting
from operations				$	956,550

(1) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.

See Notes to Financial Statements


Statements of changes in net assets		(dollars in thousands)

		Year ended November 30

		2005			2004
Operations:
Net investment income	$	50,636		$	21,370
Net realized gain on investments and
non-U.S. currency transactions		216,642			510,406
Net change in unrealized appreciation
on investments and non-U.S. currency translations		689,272			278,605
Net increase in net assets
resulting from operations		956,550			810,381

Dividends paid to shareholders from net investment income and non-U.S. currency gains		(26,323	)		(4,277	)

Capital share transactions		(634,052	)		(373,095	)

Total increase in net assets		296,175			433,009

Net assets:
Beginning of year		7,462,034			7,029,025
End of year (including undistributed
net investment income: $41,784 and $20,028, respectively)	$	7,758,209		$	7,462,034

See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization - The New Economy Fund (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks long-term growth of capital.

The fund offers 14 share classes consisting of four retail share classes, five CollegeAmerica^Ò savings plan share classes and five retirement plan share classes. CollegeAmerica is sponsored by the Virginia College Savings Plan. SM The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:

Share class	Initial sales charge	Contingent deferred sales charge upon redemption	Conversion feature
Class A and 529-A	Up to 5.75%	None (except 1% for certain redemptions within one year of purchase without an initial sales charge)	None
Class B and 529-B	None	Declines from 5% to 0% for redemptions within six years of purchase	Class B and 529-B convert to Class A and 529-A, respectively, after eight years
Class C	None	1% for redemptions within one year of purchase	Class C converts to Class F after 10 years
Class 529-C	None	1% for redemptions within one year of purchase	None
Class 529-E	None	None	None
Class F and 529-F	None	None	None
Class R-1, R-2, R-3, R-4 and R-5	None	None	None

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation - Equity securities are valued at the official closing price of, or 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. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. 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. Forward currency contracts are valued at the mean of representative quoted bid and asked prices. Securities and other assets for which representative market quotations are not readily available are fair valued as determined in good faith under procedures adopted by authority of the fund's board of trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-U.S. securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued.

CollegeAmerica^® is a registered trademark of the Virginia College Savings Plan.^SM

Security transactions and related investment income - Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations - Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders - Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Non-U.S. currency translation - Assets and liabilities, including investment securities, denominated in non-U.S. currencies are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. In the accompanying financial statements, the effects of changes in non-U.S. exchange rates on investment securities are included with the net realized gain or loss and net change in unrealized appreciation or depreciation on investments. The realized gain or loss and change in unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

Forward currency contracts - The fund may enter into forward currency contracts, which represent agreements to exchange non-U.S. currencies on specific future dates at predetermined rates. The fund enters into these contracts to manage its exposure to changes in non-U.S. exchange rates arising from investments denominated in non-U.S. currencies. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in non-U.S. exchange rates. Due to these risks, the fund could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the fund values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The fund records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

2.	Non-U.S. investments

Investment risk - The risks of investing in securities of non-U.S. issuers may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation - Dividend and interest income is recorded net of non-U.S. withholding taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities. For the year ended November 30, 2005, non-U.S. withholding taxes paid on realized gains were $810,000. As of November 30, 2005, non-U.S. taxes provided on unrealized gains were $2,472,000.

3. Federal income taxation and distributions

The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made.

Distributions - Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses; short-term capital gains and losses; deferred expenses; cost of investments sold and net capital losses. 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 for financial reporting purposes. As of November 30, 2005, the cost of investment securities for federal income tax purposes was $6,451,922,000.

During the year ended November 30, 2005, the fund reclassified $2,534,000 from undistributed net investment income to accumulated net realized loss; and reclassified $23,000 from undistributed net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.

As of November 30, 2005, the components of distributable earnings on a tax basis were as follows (dollars in thousands):

Undistributed net investment income and non-U.S. currency gains	$42,668
Loss deferrals related to non-U.S. currency that were realized during the period November 1, 2005 through November 30, 2005	(102)
Short-term and long-term capital loss deferrals	(628,648)
Gross unrealized appreciation on investment securities	1,726,583
Gross unrealized depreciation on investment securities	(404,587)
Net unrealized appreciation on investment securities	1,321,996

Short-term and long-term capital loss deferrals above include a capital loss carryforwards of $214,957,000 and $399,829,000 expiring in 2010 and 2011, respectively. These numbers reflect the utilization of a capital loss carryforward of $192,252,000 . The remaining capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain. During the year ended November 30, 2005, the fund realized, on a tax basis, a net capital gain of $192,252,000 after the deferral of capital losses of $13,862,000.

Ordinary income distributions paid to shareholders from net investment income and non-U.S. currency gains were as follows (dollars in thousands):

Share class	Year ended November 30, 2005		Year ended November 30, 2004
Class A	$	25,438	$	4,011
Class B		-		-
Class C		-		-
Class F		288		58
Class 529-A		141		37
Class 529-B		-		-
Class 529-C		-		-
Class 529-E		2		-
Class 529-F		2		- *
Class R-1		-		-
Class R-2		-		-
Class R-3		52		-
Class R-4		69		15
Class R-5		331		156
Total	$	26,323	$	4,277

* Amount less than one thousand.

4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company ("AFS"), the fund’s transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services -The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.580% on the first $500 million of daily net assets and decreasing to 0.345% on such assets in excess of $27 billion. CRMC is currently waiving a portion of investment advisory services fees. At the beginning of the year, CRMC waived 5% of these fees and increased the waiver to 10% on April 1, 2005. During the year ended November 30, 2005, total investment advisory services fees waived by CRMC were $2,505,000. As a result, the fee shown on the accompanying financial statements of $30,080,000, which was equivalent to an annualized rate of 0.409%, was reduced to $27,575,000, or 0.375% of average daily net assets.

Class-specific fees and expenses - Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services - The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.25% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD for providing certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Class A and 529-A, the board of trustees has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.25% is not exceeded. As of November 30, 2005, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.25%	0.25%
Class 529-A	0.25	0.50
Class B and 529-B	1.00	1.00
Class C, 529-C and R-1	1.00	1.00
Class R-2	0.75	1.00
Class 529-E and R-3	0.50	0.75
Class F, 529-F and R-4	0.25	0.50

Transfer agent services - The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services - The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the year ended November 30, 2005, the total administrative services fees paid by CRMC were $1,000, $148,000 and $3,000 for Class R-1, R-2 and R-3, respectively. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the CollegeAmerica plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.

Expenses under the agreements described on the previous page for the year ended November 30, 2005, were as follows (dollars in thousands):

Share class	Distribution services	Transfer agent services	Administrative services
Share class	Distribution services	Transfer agent services	CRMC administrative services	Transfer agent services	Commonwealth of Virginia administrative services
Class A	$16,118	$8,687	Not applicable	Not applicable	Not applicable
Class B	1,726	251	Not applicable	Not applicable	Not applicable
Class C	821	Included in administrative services	$124	$35	Not applicable
Class F	220		111	34	Not applicable
Class 529-A	67		55	10	$ 42
Class 529-B	83		11	6	8
Class 529-C	125		16	7	13
Class 529-E	11		3	1	2
Class 529-F	1		1	-*	1
Class R-1	29		4	3	Not applicable
Class R-2	378		76	283	Not applicable
Class R-3	204		61	55	Not applicable
Class R-4	56		34	2	Not applicable
Class R-5	Not applicable		55	1	Not applicable
Total	$19,839	$8,938	$551	$437	$66

* Amount less than one thousand.

Deferred trustees’ compensation - Since the adoption of the deferred compensation plan in 1993, trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $345,000, shown on the accompanying financial statements, includes $260,000 in current fees (either paid in cash or deferred) and a net increase of $85,000 in the value of the deferred amounts.

Affiliated officers and trustees - Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or trustees received any compensation directly from the fund.

5. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):

Share class		Sales(1)			Reinvestments of dividends			Repurchases(1)					Net (decrease) increase
		Amount	Shares		Amount	Shares		Amount		Shares			Amount		Shares
Year ended November 30, 2005
Class A	$	489,359	23,401	$	24,304	1,194	$	(1,244,541	)	(59,702	)	$	(730,878	)	(35,107	)
Class B		17,024	844		-	-		(24,991	)	(1,246	)		(7,967	)	(402	)
Class C		25,476	1,267		-	-		(15,776	)	(792	)		9,700		475
Class F		47,144	2,253		271	14		(17,771	)	(855	)		29,644		1,412
Class 529-A		13,163	632		141	7		(3,061	)	(146	)		10,243		493
Class 529-B		1,832	90		-	-		(442	)	(22	)		1,390		68
Class 529-C		4,134	202		-	-		(855	)	(41	)		3,279		161
Class 529-E		789	38		2	-*		(108	)	(4	)		683		34
Class 529-F		366	17		2	-*		(30	)	(1	)		338		16
Class R-1		2,343	114		-	-		(634	)	(31	)		1,709		83
Class R-2		22,858	1,114		-	-		(12,217	)	(597	)		10,641		517
Class R-3		18,462	892		52	2		(9,781	)	(474	)		8,733		420
Class R-4		14,696	703		69	3		(3,761	)	(179	)		11,004		527
Class R-5		24,754	1,155		319	16		(7,644	)	(364	)		17,429		807
Total net increase
(decrease)	$	682,400	32,722	$	25,160	1,236	$	(1,341,612	)	(64,454	)	$	(634,052	)	(30,496	)

Year ended November 30, 2004
Class A	$	582,339	30,516	$	3,832	214	$	(1,078,019	)	(56,682	)	$	(491,848	)	(25,952	)
Class B		31,350	1,702		-	-		(20,010	)	(1,088	)		11,340		614
Class C		30,088	1,634		-	-		(11,150	)	(609	)		18,938		1,025
Class F		42,379	2,224		55	3		(16,427	)	(864	)		26,007		1,363
Class 529-A		13,171	694		37	2		(1,323	)	(70	)		11,885		626
Class 529-B		2,984	160		-	-		(140	)	(8	)		2,844		152
Class 529-C		4,657	250		-	-		(467	)	(25	)		4,190		225
Class 529-E		713	37		-	-		(39	)	(2	)		674		35
Class 529-F		259	13		-*	-*		(41	)	(2	)		218		11
Class R-1		1,175	63		-	-		(266	)	(14	)		909		49
Class R-2		27,557	1,461		-	-		(8,233	)	(438	)		19,324		1,023
Class R-3		22,350	1,181		-	-		(6,693	)	(354	)		15,657		827
Class R-4		7,357	389		15	1		(2,621	)	(138	)		4,751		252
Class R-5		7,036	366		148	8		(5,168	)	(272	)		2,016		102
Total net increase
(decrease)	$	773,415	40,690	$	4,087	228	$	(1,150,597	)	(60,566	)	$	(373,095	)	(19,648	)

* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.

6. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $2,180,839,000 and $2,971,718,000, respectively, during the year ended November 30, 2005.

Financial highlights

				Income (loss) from investment operations(2)											Dividends and distributions

		Net asset value, beginning of period		Net investment income (loss	)				Net gains (losses) on securities (both realized and unrealized	)		Total from investment operations			Dividends (from net investment income	)		Distributions (from capital gains	)		Total dividends and distributions			Net asset value, end of period	Total return(3	)		Net assets, end of period (in millions	)			Ratio of expenses to average net assets before reimbursements / waivers				Ratio of expenses to average net assets after reimbursements / waivers		(4	)	Ratio of net income (loss) to average net assets
Class A:
Year ended 11/30/2005	$	20.27	$	.15				$	2.63		$	2.78		$	(.07	)	$	-		$	(.07	)	$	22.98	13.79	%	$	7,061				.83	%			.79	%			.73	%
Year ended 11/30/2004		18.11		.06					2.11			2.17			(.01	)		-			(.01	)		20.27	12.00			6,938				.84				.84				.32
Year ended 11/30/2003		14.94		.01					3.16			3.17			-			-			-			18.11	21.22			6,671				.89				.89				.09
Year ended 11/30/2002		18.01		-		(5	)		(3.07	)		(3.07	)		-			-			-			14.94	(17.05	)		5,883				.89				.89				(.01	)
Year ended 11/30/2001		24.69		.01					(3.76	)		(3.75	)		-			(2.93	)		(2.93	)		18.01	(17.67	)		8,086				.82				.82				.02
Class B:
Year ended 11/30/2005		19.52		(.01	)				2.54			2.53			-			-			-			22.05	12.96			185				1.60				1.57				(.05	)
Year ended 11/30/2004		17.57		(.08	)				2.03			1.95			-			-			-			19.52	11.10			172				1.62				1.62				(.45	)
Year ended 11/30/2003		14.61		(.11	)				3.07			2.96			-			-			-			17.57	20.26			144				1.68				1.68				(.70	)
Year ended 11/30/2002		17.75		(.12	)				(3.02	)		(3.14	)		-			-			-			14.61	(17.69	)		104				1.69				1.69				(.79	)
Year ended 11/30/2001		24.56		(.16	)				(3.72	)		(3.88	)		-			(2.93	)		(2.93	)		17.75	(18.36	)		111				1.63				1.63				(.81	)
Class C:
Year ended 11/30/2005		19.46		(.02	)				2.52			2.50			-			-			-			21.96	12.85			96				1.65				1.61				(.09	)
Year ended 11/30/2004		17.52		(.09	)				2.03			1.94			-			-			-			19.46	11.07			76				1.66				1.65				(.47	)
Year ended 11/30/2003		14.57		(.11	)				3.06			2.95			-			-			-			17.52	20.25			51				1.69				1.69				(.73	)
Year ended 11/30/2002		17.70		(.12	)				(3.01	)		(3.13	)		-			-			-			14.57	(17.68	)		26				1.70				1.70				(.77	)
Period from 3/15/2001 to 11/30/2001		19.75		(.16	)				(1.89	)		(2.05	)		-			-			-			17.70	(10.38	)		15				1.86		(6	)	1.86		(6	)	(1.19	)	(6	)
Class F:
Year ended 11/30/2005		20.19		.15					2.62			2.77			(.08	)		-			(.08	)		22.88	13.77			114				.86				.83				.70
Year ended 11/30/2004		18.07		.06					2.09			2.15			(.03	)		-			(.03	)		20.19	11.89			72				.89				.88				.32
Year ended 11/30/2003		14.91		.01					3.15			3.16			-			-			-			18.07	21.19			40				.91				.91				.04
Year ended 11/30/2002		17.98		-		(5	)		(3.07	)		(3.07	)		-			-			-			14.91	(17.08	)		15				.95				.95				(.02	)
Period from 3/15/2001 to 11/30/2001		19.92		(.04	)				(1.90	)		(1.94	)		-			-			-			17.98	(9.74	)		7				1.00		(6	)	1.00		(6	)	(.34	)	(6	)
Class 529-A:
Year ended 11/30/2005		20.24		.14					2.63			2.77			(.08	)		-			(.08	)		22.93	13.74			51				.87				.84				.69
Year ended 11/30/2004		18.11		.06					2.10			2.16			(.03	)		-			(.03	)		20.24	11.96			35				.87				.86				.33
Year ended 11/30/2003		14.93		.02					3.16			3.18			-			-			-			18.11	21.30			20				.85				.85				.11
Period from 2/15/2002 to 11/30/2002		17.14		-		(5	)		(2.21	)		(2.21	)		-			-			-			14.93	(12.89	)		8				1.00		(6	)	1.00		(6	)	.02		(6	)
Class 529-B:
Year ended 11/30/2005		19.76		(.04	)				2.56			2.52			-			-			-			22.28	12.75			10				1.76				1.72				(.20	)
Year ended 11/30/2004		17.82		(.11	)				2.05			1.94			-			-			-			19.76	10.89			7				1.78				1.78				(.58	)
Year ended 11/30/2003		14.83		(.13	)				3.12			2.99			-			-			-			17.82	20.16			4				1.81				1.81				(.86	)
Period from 2/19/2002 to 11/30/2002		16.76		(.09	)				(1.84	)		(1.93	)		-			-			-			14.83	(11.52	)		1				1.84		(6	)	1.84		(6	)	(.82	)	(6	)
Class 529-C:
Year ended 11/30/2005		19.77		(.04	)				2.57			2.53			-			-			-			22.30	12.80			15				1.75				1.71				(.18	)
Year ended 11/30/2004		17.83		(.11	)				2.05			1.94			-			-			-			19.77	10.88			10				1.77				1.76				(.57	)
Year ended 11/30/2003		14.84		(.13	)				3.12			2.99			-			-			-			17.83	20.15			5				1.80				1.80				(.84	)
Period from 2/21/2002 to 11/30/2002		16.55		(.09	)				(1.62	)		(1.71	)		-			-			-			14.84	(10.33	)		2				1.80		(6	)	1.80		(6	)	(.78	)	(6	)
Class 529-E:
Year ended 11/30/2005		20.09		.07					2.61			2.68			(.02	)		-			(.02	)		22.75	13.37			3				1.22				1.18				.35
Year ended 11/30/2004		18.01		(.01	)				2.09			2.08			-			-			-			20.09	11.55			2				1.23				1.23				(.03	)
Year ended 11/30/2003		14.91		(.05	)				3.15			3.10			-			-			-			18.01	20.79			1				1.25				1.25				(.30	)
Period from 3/15/2002 to 11/30/2002		18.26		(.02	)				(3.33	)		(3.35	)		-			-			-			14.91	(18.35	)		-		(7	)	1.25		(6	)	1.25		(6	)	(.23	)	(6	)
Class 529-F:
Year ended 11/30/2005		20.20		.16					2.63			2.79			(.07	)		-			(.07	)		22.92	13.84			1				.81				.77				.76
Year ended 11/30/2004		18.09		.04					2.09			2.13			(.02	)		-			(.02	)		20.20	11.79			1				.98				.98				.23
Year ended 11/30/2003		14.94		(.01	)				3.16			3.15			-			-			-			18.09	21.08			-		(7	)	1.00				1.00				(.04	)
Period from 10/11/2002 to 11/30/2002		12.30		-		(5	)		2.64			2.64			-			-			-			14.94	21.46			-		(7	)	.14				.14				(.03	)

Class R-1:
Year ended 11/30/2005	$	19.90	$	(.02	)			$	2.59		$	2.57		$	-		$	-		$	-		$	22.47	12.91	%	$	4				1.70	%			1.61	%			(.09	)%
Year ended 11/30/2004		17.92		(.08	)				2.06			1.98			-			-			-			19.90	11.05			2				1.76				1.65				(.44	)
Year ended 11/30/2003		14.90		(.11	)				3.13			3.02			-			-			-			17.92	20.27			1				1.96				1.66				(.69	)
Period from 6/21/2002 to 11/30/2002		15.45		(.04	)				(.51	)		(.55	)		-			-			-			14.90	(3.56	)		-		(7	)	1.43				.73				(.28	)
Class R-2:															-			-
Year ended 11/30/2005		19.90		(.01	)				2.58			2.57			-			-			-			22.47	12.91			61				1.91				1.58				(.05	)
Year ended 11/30/2004		17.92		(.08	)				2.06			1.98			-			-			-			19.90	11.05			44				2.03				1.61				(.40	)
Year ended 11/30/2003		14.88		(.11	)				3.15			3.04			-			-			-			17.92	20.43			21				2.35				1.62				(.68	)
Period from 5/31/2002 to 11/30/2002		17.02		(.05	)				(2.09	)		(2.14	)		-			-			-			14.88	(12.57	)		3				2.00		(6	)	1.63		(6	)	(.78	)	(6	)
Class R-3:
Year ended 11/30/2005		20.10		.07					2.61			2.68			(.03	)		-			(.03	)		22.75	13.35			50				1.24				1.19				.33
Year ended 11/30/2004		18.03		-		(5	)		2.07			2.07			-			-			-			20.10	11.48			35				1.26				1.23				(.02	)
Year ended 11/30/2003		14.92		(.05	)				3.16			3.11			-			-			-			18.03	20.84			17				1.37				1.24				(.29	)
Period from 6/25/2002 to 11/30/2002		15.26		(.02	)				(.32	)		(.34	)		-			-			-			14.92	(2.23	)		2				.61				.54				(.12	)
Class R-4:
Year ended 11/30/2005		20.25		.15					2.63			2.78			(.09	)		-			(.09	)		22.94	13.76			31				.86				.82				.70
Year ended 11/30/2004		18.12		.07					2.09			2.16			(.03	)		-			(.03	)		20.25	11.92			17				.86				.85				.34
Year ended 11/30/2003		14.94		.01					3.17			3.18			-			-			-			18.12	21.28			10				.88				.88				.09
Period from 7/25/2002 to 11/30/2002		12.85		(.01	)				2.10			2.09			-			-			-			14.94	16.26			4				.33				.31				(.03	)
Class R-5:
Year ended 11/30/2005		20.37		.21					2.65			2.86			(.13	)		-			(.13	)		23.10	14.14			76				.55				.52				1.02
Year ended 11/30/2004		18.21		.12					2.10			2.22			(.06	)		-			(.06	)		20.37	12.26			51				.55				.55				.62
Year ended 11/30/2003		14.97		.06					3.18			3.24			-			-			-			18.21	21.64			44				.56				.56				.41
Period from 5/15/2002 to 11/30/2002		17.58		.03					(2.64	)		(2.61	)		-			-			-			14.97	(14.85	)		31				.56		(6	)	.56		(6	)	.44		(6	)

	Year ended November 30
	2005		2004		2003		2002		2001
Portfolio turnover rate for all classes of shares	32	%	35	%	38	%	37	%	41	%

(1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.

(2) Based on average shares outstanding.

(3) Total returns exclude all sales charges, including contingent deferred sales charges.

(4) The ratios in this column reflect the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for

investment advisory services for all share classes. In addition, during the start-up period for the retirement plan share classes (except Class R-5), CRMC agreed to pay a

portion of the fees related to transfer agent services.

(5) Amount less than one cent.

(6) Annualized.

(7) Amount less than $1 million.

See Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of The New Economy Fund:

We have audited the accompanying statement of assets and liabilities of The New Economy Fund (the “Fund”), including the investment portfolio, as of November 30, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The New Economy Fund as of November 30, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California

January 10, 2006

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

certain distributions received by shareholders during such fiscal year. The information below is provided for

the fund’s fiscal year ended November 30, 2005.

Individual shareholders are eligible for reduced tax rates on qualified dividend income. The fund designates all of the

dividends received as qualified dividend income.

Corporate shareholders may exclude up to 70% of qualifying dividends. The fund designates $34,810,000 of

dividends received as qualified dividend income.

For state tax purposes, certain states may exempt from income taxation that portion of the income dividends

paid by the fund that were derived from direct U.S. government obligations. The fund designates $785,000 as

interest derived on direct U.S. government obligations.

Individual shareholders should refer to their Form 1099-DIV or other tax information which will be mailed

in January 2006 to determine the calendar year amounts to be included on their 2005 tax returns. Shareholders

should consult their tax advisers.