Capital Income Builder

SEC. File Nos. 033-12967

811-05085

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

Registration Statement

Under

the Securities Act of 1933

Post-Effective Amendment No. 25

and

Registration Statement

Under

The Investment Company Act of 1940

Amendment No. 27

CAPITAL INCOME BUILDER, INC.

(Exact Name of Registrant as Specified in Charter)

333 South Hope Street

Los Angeles, California 90071-1447

(Address of Principal Executive Offices)

Registrant's telephone number, including area code:

(213) 486-9200

Vincent P. Corti, Secretary

Capital Income Builder, Inc.

333 South Hope Street

Los Angeles, California 90071-1447

(Name and Address of Agent for Service)

Copies to:

Kathryn A. Sanders

O'Melveny & Myers LLP

400 South Hope Street

Los Angeles, California 90071-2889

(Counsel for the Registrant)

Approximate date of proposed public offering:

It is proposed that this filing become effective on January 1, 2007, pursuant to paragraph (b) of rule 485.

<PAGE>

[logo - American Funds (R)] The right choice for the long term/(R)/

Capital Income
Builder/(R)/

PROSPECTUS

January 1, 2007

TABLE OF CONTENTS

1 Risk/Return summary
5 Fees and expenses of the fund
7 Investment objectives, strategies and risks
11 Management and organization
15 Shareholder information
16 Choosing a share class
18 Purchase and exchange of shares
22 Sales charges
25 Sales charge reductions and waivers
28 Rollovers from retirement plans to IRAs
28 Plans of distribution
29 Other compensation to dealers
29 How to sell shares
31 Distributions and taxes
32 Financial highlights

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<PAGE>

[This page was intentionally left blank.]

<PAGE>

Risk/Return summary

The fund primarily seeks to provide you with a level of current income that
exceeds the average yield on U.S. stocks generally and a growing stream of
income over the years. Secondarily, the fund strives to make your investment
grow over time. The fund invests primarily in a broad range of income-producing
securities, including stocks with a history of, or potential for, increasing
dividends. The fund may also invest significantly in non-U.S. securities.

The fund is designed for investors seeking current income and capital
appreciation through a mix of investments that provide above-average price
stability. Your investment in the fund is subject to risks, including the
possibility that the fund's income and the value of its portfolio holdings may
fluctuate in response to economic, political or social events in the United
States or abroad.

The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments as well
as by events specifically involving the issuers of those securities. Although
all securities in the fund's portfolio may be adversely affected by currency
fluctuations or global economic, political or social instability, securities
issued by entities based outside the United States may be affected to a greater
extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.

Capital Income Builder / Prospectus
<PAGE>

HISTORICAL INVESTMENT RESULTS

The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 4 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results (before and after taxes) are not predictive
of future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]
1996 17.64
1997 23.32
1998 11.75
1999 -2.78
2000 12.52
2001 4.75
2002 0.66
2003 21.57
2004 17.40
2005 4.94
[end bar chart]

Highest/Lowest quarterly results during this time period were:

HIGHEST 10.48% (quarter ended June 30, 2003)
LOWEST -8.58% (quarter ended September 30, 2002)

The fund's total return for the nine months ended September 30, 2006, was
12.99%.

Capital Income Builder / Prospectus

<PAGE>

Unlike the bar chart on the previous page, the Investment Results table on the
following page reflects, as required by Securities and Exchange Commission
rules, the fund's investment results with the following maximum initial or
contingent deferred sales charges imposed:

. Class A share results reflect the maximum initial sales charge of 5.75%. This
charge is reduced for purchases of $25,000 or more and eliminated for
purchases of $1 million or more.

. Class B share results reflect the applicable contingent deferred sales
charge. For example, results for the one-year period shown reflect a
contingent deferred sales charge of 5%. These charges begin to decline one
year after purchase and are eliminated six years after purchase.

. Class C share results for the one-year period shown reflect a contingent
deferred sales charge of 1%, which only applies if shares are sold within one
year of purchase.

. Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.

Results would be higher if calculated without sales charges. The references
above to Class A, B, C or F sales charges also refer to the corresponding Class
529-A, 529-B, 529-C or 529-F sales charges.

The Investment Results table shows the fund's results on both a pretax and
after-tax basis, as required by Securities and Exchange Commission rules.
After-tax returns are shown only for Class A shares; after-tax returns for other
share classes will vary. Total returns shown "after taxes on distributions"
reflect the effect of taxes on distributions (for example, dividends or capital
gain distributions) by the fund. Total returns shown "after taxes on
distributions and sale of fund shares" assume that you sold your fund shares at
the end of the particular time period and, as a result, reflect the effect of
both taxes on distributions by the fund and taxes on any gain or loss realized
upon the sale of the shares. After-tax returns are calculated using the highest
individual federal income tax rates in effect during each year of the periods
shown and do not reflect the impact of state and local taxes.

YOUR ACTUAL AFTER-TAX RETURNS DEPEND ON YOUR INDIVIDUAL TAX SITUATION AND LIKELY
WILL DIFFER FROM THE RESULTS SHOWN BELOW. IN ADDITION, AFTER-TAX RETURNS MAY NOT
BE RELEVANT IF YOU HOLD YOUR FUND SHARES THROUGH A TAX-DEFERRED ARRANGEMENT,
SUCH AS A 401(K) PLAN, INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR 529 COLLEGE
SAVINGS PLAN.

Unlike the Investment Results table on page 4, the Additional Investment Results
table on page 9 reflects the fund's results calculated without sales charges.

Capital Income Builder / Prospectus
<PAGE>

INVESTMENT RESULTS (WITH MAXIMUM SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/
-------------------------------------------------------------------------------

CLASS A -- FIRST SOLD 7/30/87
Before taxes -1.09% 8.28% 10.19% 11.05%
After taxes on distributions -2.08 6.66 8.04 N/A
After taxes on distributions and 0.07 6.32 7.69 N/A
sale of fund shares

1 YEAR 5 YEARS LIFETIME/1/
------------------------------------------------------------------

CLASS B -- FIRST SOLD 3/15/00
Before taxes -0.87% 8.43% 10.30%
------------------------------------------------------------------
CLASS C -- FIRST SOLD 3/15/01
Before taxes 3.05 N/A 9.12
------------------------------------------------------------------
CLASS F -- FIRST SOLD 3/15/01
Before taxes 4.86 N/A 9.91
------------------------------------------------------------------
CLASS 529-A -- FIRST SOLD 2/19/02
Before taxes -1.20 N/A 9.53
------------------------------------------------------------------
CLASS 529-B -- FIRST SOLD 2/15/02
Before taxes -1.04 N/A 9.52
------------------------------------------------------------------
CLASS 529-C -- FIRST SOLD 2/20/02
Before taxes 2.96 N/A 10.28
------------------------------------------------------------------
CLASS 529-E -- FIRST SOLD 3/1/02
Before taxes 4.49 N/A 10.46
------------------------------------------------------------------
CLASS 529-F -- FIRST SOLD 9/17/02
Before taxes 4.91 N/A 13.44

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
-------------------------------------------------------------------------------

INDEXES (BEFORE TAXES)
S&P 500/3/ 4.91% 0.54% 9.07% 10.23%
Lipper Income Funds Average/4/ 3.44 4.06 6.49 9.52
-------------------------------------------------------------------------------
Class A annualized 30-day yield at October 31, 2006: 3.42%/5/
(For current yield information, please call American FundsLine at 800/325-3590.)

/1/ Lifetime results for each share class are measured from the date the share
class was first sold.
/2/ Lifetime results for the index(es) shown are measured from the date Class A
shares were first sold. In prior years, each index may have included different
funds or securities from those that constitute the current year's index.
/3/ Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and includes reinvested dividends and/or
distributions, but does not reflect sales charges, commissions, expenses or
taxes.
/4/ Lipper Income Funds Average is comprised of funds that normally seek a high
level of current income through investing in income-producing stocks, bonds and
money market instruments. The results of the underlying funds in the average
include the reinvestment of dividends and capital gain distributions, as well
as brokerage commissions paid by the funds for portfolio transactions, but do
not reflect sales charges or taxes.
/5/ Reflects a fee waiver (3.40% without the waiver) as described in the Annual
Fund Operating Expenses table under "Fees and expenses of the fund."

Capital Income Builder / Prospectus

<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A/1/ CLASS B/1/ CLASS C/1/ CLASS 529-E/2/ CLASS F/1/,/3/
------------------------------------------------------------------------------------------

Maximum initial sales
charge on purchases 5.75%/4/ none none none none
(as a percentage of
offering price)
------------------------------------------------------------------------------------------
Maximum sales charge none none none none none
on reinvested
dividends
------------------------------------------------------------------------------------------
Maximum contingent none/5/ 5.00%/6/ 1.00%/7/ none none
deferred sales charge
------------------------------------------------------------------------------------------
Redemption or none none none none none
exchange fees

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS F
-------------------------------------------------------------------------------

Management fees/8/ 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or service 0.23 1.00 1.00 0.25
(12b-1) fees/9/
-------------------------------------------------------------------------------
Other expenses/10/ 0.10 0.12 0.16 0.12
-------------------------------------------------------------------------------
Total annual fund operating 0.58 1.37 1.41 0.62
expenses/8/
CLASS CLASS CLASS CLASS CLASS
529-A 529-B 529-C 529-E 529-F
-------------------------------------------------------------------------------
Management fees/8/ 0.25% 0.25% 0.25% 0.25% 0.25%
-------------------------------------------------------------------------------
Distribution and/or service 0.18 1.00 1.00 0.50 --
(12b-1) fees/11/
-------------------------------------------------------------------------------
Other expenses/10/,/12/ 0.21 0.24 0.22 0.21 0.21
-------------------------------------------------------------------------------
Total annual fund operating 0.64 1.49 1.47 0.96 0.46
expenses/8/

/1/ Includes corresponding 529 share class. Accounts holding these 529 shares are
subject to a $10 account setup fee and an annual $10 account maintenance fee,
which are not reflected in this table.
/2/ Available only to employer-sponsored 529 plans. Accounts holding these shares
are subject to a $10 account setup fee and an annual $10 account maintenance
fee, which are not reflected in this table.
/3/ Class F and 529-F shares are generally available only to fee-based programs of
investment dealers that have special agreements with the fund's distributor and
to certain registered investment advisers.
/4/ The initial sales charge is reduced for purchases of $25,000 or more and
eliminated for purchases of $1 million or more.
/5/ A contingent deferred sales charge of 1.00% applies on certain redemptions
made within one year following purchases of $1 million or more made without an
initial sales charge.
/6/ The contingent deferred sales charge is reduced one year after purchase and
eliminated six years after purchase.
/7/ The contingent deferred sales charge is eliminated one year after purchase.
/8/ The fund's investment adviser is currently waiving 10% of its management fee.
The waiver may be discontinued at any time in consultation with the fund's
board, but it is expected to continue at this level until further review. The
fund's investment adviser and board intend to review the waiver as
circumstances warrant. Expenses shown above do not reflect any waiver.
Information regarding the effect of any waiver on total annual fund operating
expenses can be found in the Financial Highlights table in this prospectus and
in the fund's annual report.
/9/ Class A and F 12b-1 fees may not exceed .30% and .50%, respectively, of each
class' average net assets annually. Class B and C 12b-1 fees may not exceed
1.00% of each class' average net assets annually.
/10/ Includes custodial, legal, transfer agent and subtransfer agent/recordkeeping
payments and various other expenses. Subtransfer agent/recordkeeping payments
may be made to third parties (including affiliates of the fund's investment
adviser) that provide subtransfer agent, recordkeeping and/or shareholder
services with respect to certain shareholder accounts in lieu of the transfer
agent providing such services. The amount paid for subtransfer
agent/recordkeeping services will vary depending on the share class and
services provided, and typically ranges from $3 to $19 per account.
/11 Class 529-A and 529-F 12b-1 fees may not exceed .50% of each class' average
net assets annually. Class 529-B and 529-C 12b-1 fees may not exceed 1.00% of
each class' average net assets annually. Class 529-E 12b-1 fees may not exceed
.75% of the class' average net assets annually.
/12/ Includes .10% paid to a state or states for oversight and administrative
services.

Capital Income Builder / Prospectus
<PAGE>

EXAMPLES

The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements. The examples assuming redemption do not reflect the
effect of any taxable gain or loss at the time of the redemption.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------

Class A/1/ $631 $750 $ 880 $1,259
-------------------------------------------------------------------------------
Class B -- assuming redemption/2/ 639 834 950 1,430
-------------------------------------------------------------------------------
Class B -- assuming no redemption/3/ 139 434 750 1,430
-------------------------------------------------------------------------------
Class C -- assuming redemption/4/ 244 446 771 1,691
-------------------------------------------------------------------------------
Class C -- assuming no redemption 144 446 771 1,691
-------------------------------------------------------------------------------
Class F -- excluding intermediary 63 199 346 774
fees/5/
-------------------------------------------------------------------------------
Class 529-A/1/,/6/ 657 808 970 1,433
-------------------------------------------------------------------------------
Class 529-B -- assuming redemption/2/,/6/ 671 910 1,070 1,651
-------------------------------------------------------------------------------
Class 529-B -- assuming no 171 510 870 1,651
redemption/3/,/6/
-------------------------------------------------------------------------------
Class 529-C -- assuming redemption/4/,/6/ 269 504 860 1,857
-------------------------------------------------------------------------------
Class 529-C -- assuming no redemption/6/ 169 504 860 1,857
-------------------------------------------------------------------------------
Class 529-E/6/ 118 345 589 1,281
-------------------------------------------------------------------------------
Class 529-F -- excluding intermediary 67 187 317 686
fees/5/,/6/

/1/ Reflects the maximum initial sales charge in the first year.
/2/ Reflects applicable contingent deferred sales charges through year six and
Class A or 529-A expenses for years nine and 10 because Class B and 529-B
shares automatically convert to Class A and 529-A shares, respectively, after
eight years.
/3/ Reflects Class A or 529-A expenses for years nine and 10 because Class B and
529-B shares automatically convert to Class A and 529-A shares, respectively,
after eight years.
/4/ Reflects a contingent deferred sales charge in the first year.
/5/ Does not include fees charged by financial intermediaries, which are
independent of fund expenses and will increase the overall cost of your
investment. Intermediary fees typically range from .75% to 1.50% of assets
annually depending on the services offered.
/6/ Reflects an initial $10 account setup fee and an annual $10 account
maintenance fee.

Capital Income Builder / Prospectus

<PAGE>

Investment objectives, strategies and risks

The fund has two primary investment objectives. It seeks (1) to provide you with
a level of current income that exceeds the average yield on U.S. stocks
generally and (2) to provide you with a growing stream of income over the years.
The fund's secondary objective is to provide you with growth of capital. The
fund invests primarily in a broad range of income-producing securities,
including stocks and bonds. The fund may also invest significantly in securities
of issuers domiciled outside the United States.

The fund normally will invest at least 90% of its assets in income-producing
securities (with at least 50% of its assets in equity securities). The prices of
common stocks and other equity-type securities held by the fund may decline in
response to certain events, including those directly involving issuers of these
securities; adverse conditions affecting the general economy; overall market
declines; world political, social and economic instability; and currency
fluctuations.
The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities.

Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency controls; different accounting, auditing, financial
reporting, and legal standards and practices in some countries; 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. These risks may be heightened in connection with
investments in developing countries.
The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.

A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in the event of falling market prices and provide
liquidity to make additional investments or to meet redemptions.

Capital Income Builder / Prospectus
<PAGE>

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
securities that, in its opinion, represent above-average long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

Capital Income Builder / Prospectus

<PAGE>

ADDITIONAL INVESTMENT RESULTS

Unlike the Investment Results table on page 4, the table below reflects the
fund's results calculated without sales charges.

ADDITIONAL INVESTMENT RESULTS (WITHOUT SALES CHARGES)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:
1 YEAR 5 YEARS 10 YEARS LIFETIME/1/

CLASS A -- FIRST SOLD 7/30/87
Before taxes 4.94% 9.57% 10.85% 11.40%
After taxes on distributions 3.89 7.93 8.68 N/A
After taxes on distributions and 4.04 7.45 8.28 N/A
sale of fund shares

1 YEAR 5 YEARS LIFETIME/1/
------------------------------------------------------------------

CLASS B -- FIRST SOLD 3/15/00
Before taxes 4.11% 8.72% 10.41%
------------------------------------------------------------------
CLASS C -- FIRST SOLD 3/15/01
Before taxes 4.04 N/A 9.12
------------------------------------------------------------------
CLASS F -- FIRST SOLD 3/15/01
Before taxes 4.86 N/A 9.91
------------------------------------------------------------------
CLASS 529-A -- FIRST SOLD 2/19/02
Before taxes 4.82 N/A 11.23
------------------------------------------------------------------
CLASS 529-B -- FIRST SOLD 2/15/02
Before taxes 3.94 N/A 10.11
------------------------------------------------------------------
CLASS 529-C -- FIRST SOLD 2/20/02
Before taxes 3.95 N/A 10.28
------------------------------------------------------------------
CLASS 529-E -- FIRST SOLD 3/1/02
Before taxes 4.49 N/A 10.46
------------------------------------------------------------------
CLASS 529-F -- FIRST SOLD 9/17/02
Before taxes 4.91 N/A 13.44

1 YEAR 5 YEARS 10 YEARS LIFETIME/2/
----------------------------------------------------------------------------

INDEXES (BEFORE TAXES)
S&P 500/3/ 4.91% 0.54% 9.07% 10.23%
Lipper Income Funds 3.44 4.06 6.49 9.52
Average/4/
----------------------------------------------------------------------------
Class A distribution rate at December 31, 2005: 4.06%/5/
(For current distribution rate information, please call American FundsLine
at 800/325-3590.)

/1/ Lifetime results for each share class are measured from the date the share
class was first sold.
/2/ Lifetime results for the index(es) shown are measured from the date Class A
shares were first sold. In prior years, each index may have included different
funds or securities from those that constitute the current year's index.
/3/ Standard & Poor's 500 Composite Index is a market capitalization-weighted
index based on the average weighted performance of 500 widely held common
stocks. This index is unmanaged and includes reinvested dividends and/or
distributions, but does not reflect sales charges, commissions, expenses or
taxes.
/4/ Lipper Income Funds Average is comprised of funds that normally seek a high
level of current income through investing in income-producing stocks, bonds
and money market instruments. The results of the underlying funds in the
average include the reinvestment of dividends and capital gain distributions,
as well as brokerage commissions paid by the funds for portfolio transactions,
but do not reflect sales charges or taxes.
/5/ The distribution rate represents actual distributions paid by the fund. It was
calculated at net asset value by annualizing the dividends paid by the fund
over one quarter and dividing that number by the fund's average net asset value
for the three months.

Capital Income Builder / Prospectus
<PAGE>

INDUSTRY SECTOR DIVERSIFICATION AS OF OCTOBER 31, 2006 (percent of net assets)

[begin pie chart]

Financials 19.09%
Utilities 9.77%
Telecommunication services 7.64%
Consumer staples 5.64%
Industrials 5.41%
Convertible securities & preferred stocks 0.85%
Bonds & notes 19.28%
Other industries 19.99%
Short-term securities & other assets less liabilities 12.33%

[end pie chart]

LARGEST EQUITY HOLDINGS AS OF OCTOBER 31, 2006
PERCENT OF NET ASSETS
--------------------------------------------------------------------

E.ON 1.6%
--------------------------------------------------------------------
BellSouth 1.5
--------------------------------------------------------------------
AT&T 1.5
--------------------------------------------------------------------
Altria Group 1.4
--------------------------------------------------------------------
Royal Dutch Shell 1.2
--------------------------------------------------------------------
Fannie Mae 1.2
--------------------------------------------------------------------
Exelon 1.1
--------------------------------------------------------------------
National Grid 1.0
--------------------------------------------------------------------
Koninklijke KPN 1.0
--------------------------------------------------------------------
Veolia Environnement 1.0
--------------------------------------------------------------------

Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.

Capital Income Builder / Prospectus

<PAGE>

Management and organization

INVESTMENT ADVISER

Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
total management fee paid by the fund, as a percentage of average net assets,
for the previous fiscal year appears in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." As described more fully in the fund's
statement of additional information, the management fee is based on the daily
net assets of the fund and monthly gross investment income. A discussion
regarding the basis for the approval of the fund's investment advisory and
service agreement by the fund's board of directors is contained in the fund's
annual report to shareholders for the fiscal year ended October 31, 2006.

EXECUTION OF PORTFOLIO TRANSACTIONS

The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. For example, with respect to equity transactions, the fund does
not consider the investment adviser as having an obligation to obtain the lowest
available commission rate to the exclusion of price, service and qualitative
considerations. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.

Capital Income Builder / Prospectus
<PAGE>

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A list of the fund's top 10
equity holdings, updated as of each month-end, is generally posted to this page
within 14 days after the end of the applicable month. A link to the fund's
complete list of publicly disclosed portfolio holdings, updated as of each
calendar quarter-end, is generally posted to this page within 45 days after the
end of the applicable quarter. Both lists remain available on the website until
new information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of the appropriate investment-related committees of Capital Research
and Management Company.

Capital Income Builder / Prospectus

<PAGE>

The primary individual portfolio counselors for Capital Income Builder are:

PRIMARY TITLE WITH PORTFOLIO
PORTFOLIO INVESTMENT ADVISER COUNSELOR'S
PORTFOLIO COUNSELOR/ COUNSELOR (OR AFFILIATE) ROLE IN
FUND TITLE EXPERIENCE AND INVESTMENT MANAGEMENT
(IF APPLICABLE) IN THIS FUND EXPERIENCE OF THE FUND
------------------------------------------------------------------------------------------------------

JAMES B. LOVELACE 15 years Senior Vice President and Serves as an
Vice Chairman and (plus 3 years of Director, Capital Research income-producing
Director prior experience and Management Company equity portfolio
as an counselor
investment analyst Investment professional for
for the fund) 25 years, all with Capital
Research and Management
Company or affiliate
------------------------------------------------------------------------------------------------------
JOYCE E. GORDON 7 years Senior Vice President and Serves as an
President (plus 11 years of Director, Capital Research income-producing
prior experience and Management Company equity portfolio
as an counselor
investment analyst Investment professional for
for the fund) 27 years, all with Capital
Research and Management
Company or affiliate
------------------------------------------------------------------------------------------------------
MARK R. MACDONALD 7 years Senior Vice President and Serves as a fixed-
Executive Vice President Director, Capital Research income portfolio
and Management Company counselor

Investment professional for
21 years in total; 13 years
with Capital Research and
Management Company or
affiliate
------------------------------------------------------------------------------------------------------
MICHAEL COHEN 3 years Vice President and Director, Serves as an
Vice President (plus 3 years of Capital Research Company income-producing
prior experience equity portfolio
as an Investment professional for counselor
investment analyst 16 years in total; 7 years
for the fund) with Capital Research and
Management Company or
affiliate
------------------------------------------------------------------------------------------------------
DAVID A. HOAG 3 years Senior Vice President, Serves as a fixed-
Vice President Capital Research Company income portfolio
counselor
Investment professional for
19 years in total; 15 years
with Capital Research and
Management Company or
affiliate
------------------------------------------------------------------------------------------------------

Capital Income Builder / Prospectus

<PAGE>

DAVID M. RILEY 3 years Senior Vice President, Serves as an
Vice President (plus 8 years of Capital Research Company income-producing
prior experience equity portfolio
as an Investment professional for counselor
investment analyst 12 years, all with Capital
for the fund) Research and Management
Company or affiliate
------------------------------------------------------------------------------------------------------
TIMOTHY D. ARMOUR 1 year President and Director, Serves as an
Capital Research and income-producing
Management Company equity portfolio
counselor
Investment professional for
24 years, all with Capital
Research and Management
Company or affiliate
------------------------------------------------------------------------------------------------------
STEVEN T. WATSON 9 years Senior Vice President and Serves as an
(plus 5 years of Director, Capital Research income-producing
prior experience Company equity portfolio
as an counselor
investment analyst Investment professional for
for the fund) 19 years in total;
17 years with Capital
Research and Management
Company or affiliate
------------------------------------------------------------------------------------------------------

Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.

Capital Income Builder / Prospectus

<PAGE>

Shareholder information

SHAREHOLDER SERVICES

American Funds Service Company, the fund's transfer agent, offers a wide range
of services that you can use to alter your investment program should your needs
and circumstances change. These services may be terminated or modified at any
time upon 60 days' written notice. For your convenience, American Funds Service
Company has four service centers across the country.

AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
Call toll-free from anywhere in the United States
(8 a.m. to 8 p.m. ET): 800/421-0180
Access the American Funds website : americanfunds.com

[map of the United States]

Western Western Central Eastern Central Eastern
service center service center service center service center
American Funds American Funds American Funds American Funds
Service Company Service Company Service Company Service Company
P.O. Box 25065 P.O. Box 659522 P.O. Box 6007 P.O. Box 2280
Santa Ana, San Antonio, Texas Indianapolis, Indiana Norfolk, Virginia
California 78265-9522 46206-6007 23501-2280
92799-5065 Fax: 210/474-4352 Fax: 317/735-6636 Fax: 757/670-4761
Fax: 714/671-7133

A MORE DETAILED DESCRIPTION OF POLICIES AND SERVICES IS INCLUDED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION AND THE OWNER'S GUIDE SENT TO NEW AMERICAN
FUNDS SHAREHOLDERS ENTITLED WELCOME. CLASS 529 SHAREHOLDERS SHOULD ALSO REFER TO
THE APPLICABLE PROGRAM DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES
SPECIFICALLY RELATING TO THEIR ACCOUNT(S). These documents are available by
writing or calling American Funds Service Company. Certain privileges and/or
services described on the following pages of this prospectus and in the
statement of additional information may not be available to you depending on
your investment dealer. Please see your financial adviser or investment dealer
for more information.

Capital Income Builder / Prospectus
<PAGE>

Choosing a share class
The fund offers different classes of shares through this prospectus. Class A, B,
C and F shares are available through various investment programs or accounts,
including certain types of retirement plans (see limitations below). The
services or share classes available to you may vary depending upon how you wish
to purchase shares of the fund.

Investors residing in any state may purchase Class 529 shares through an account
established with a 529 college savings plan managed by the American Funds
organization. Class 529-A, 529-B, 529-C and 529-F shares are structured
similarly to the corresponding Class A, B, C and F shares. For example, the same
initial sales charges apply to Class 529-A shares as to Class A shares. Class
529-E shares are available only to investors participating through an eligible
employer plan.

Each share class represents investment in the same portfolio of securities, but
each class has its own sales charge and expense structure, allowing you to
choose the class that best fits your situation. WHEN YOU PURCHASE SHARES OF THE
FUND, YOU SHOULD CHOOSE A SHARE CLASS. IF NONE IS CHOSEN, YOUR INVESTMENT WILL
BE MADE IN CLASS A SHARES OR, IN THE CASE OF A 529 PLAN INVESTMENT, CLASS 529-A
SHARES.

Factors you should consider in choosing a class of shares include:

. how long you expect to own the shares;

. how much you intend to invest;

. total expenses associated with owning shares of each class;

. whether you qualify for any reduction or waiver of sales charges (for
example, Class A or 529-A shares may be a less expensive option over time,
particularly if you qualify for a sales charge reduction or waiver);

. whether you plan to take any distributions in the near future (for example,
the contingent deferred sales charge will not be waived if you sell your Class
529-B or 529-C shares to cover higher education expenses);

. availability of share classes:
-- Class B and C shares are not available to retirement plans that do not
currently invest in such shares and that are eligible to invest in Class R
shares, including employer-sponsored retirement plans such as defined benefit
plans, 401(k) plans, 457 plans, employer-sponsored 403(b) plans, and money
purchase pension and profit-sharing plans; and

-- Class F and 529-F shares are generally available only to fee-based programs
of investment dealers that have special agreements with the fund's
distributor and to certain registered investment advisers.

EACH INVESTOR'S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH
YOUR FINANCIAL ADVISER TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU.

UNLESS OTHERWISE NOTED, 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.

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SUMMARY OF THE PRIMARY DIFFERENCES AMONG SHARE CLASSES
CLASS A SHARES

Initial sales charge up to 5.75% (reduced for purchases of $25,000 or more
and eliminated for purchases of $1 million or more)
Contingent deferred none (except that a charge of 1.00% applies to certain
sales charge redemptions made within one year following purchases
of $1 million or more without an initial sales charge)
12b-1 fees up to .30% annually (for 529-A shares, may not exceed
.50% annually)
Dividends generally higher than other classes due to lower
annual expenses
Purchase maximum none
Conversion none
CLASS B SHARES
Initial sales charge none
Contingent deferred starts at 5.00%, declining to 0% six years after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than A and F shares due to higher
12b-1 fees and other expenses, but higher than C
shares due to lower other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to A or 529-A shares after eight
years, reducing future annual expenses
CLASS C SHARES
Initial sales charge none
Contingent deferred 1.00% if shares are sold within one year after
sales charge purchase
12b-1 fees up to 1.00% annually
Dividends generally lower than other classes due to higher 12b-1
fees and other expenses
Purchase maximum see the discussion regarding purchase minimums and
maximums in "Purchase and exchange of shares"
Conversion automatic conversion to F shares after 10 years,
reducing future annual expenses (529-C shares will not
convert to 529-F shares)
CLASS 529-E SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .50% annually (may not exceed .75%
annually)
Dividends generally higher than 529-B and 529-C shares due to
lower 12b-1 fees, but lower than 529-A and 529-F
shares due to higher 12b-1 fees
Purchase maximum none
Conversion none
CLASS F SHARES
Initial sales charge none
Contingent deferred none
sales charge
12b-1 fees currently up to .25% annually (may not exceed .50%
annually)
Dividends generally higher than B and C shares due to lower
12b-1 fees, but lower than A shares due to higher
other expenses
Purchase maximum none
Conversion none

Capital Income Builder / Prospectus
<PAGE>

Purchase and exchange of shares

THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND AND AMERICAN FUNDS
DISTRIBUTORS, THE FUND'S DISTRIBUTOR, IS REQUIRED BY LAW TO OBTAIN CERTAIN
PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S) ACTING ON YOUR BEHALF IN
ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU DO NOT PROVIDE THE
INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR ACCOUNT. IF THE
TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY OTHER PERSON(S)
AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED POTENTIALLY
CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE OR REQUIRED BY
LAW.

PURCHASE OF CLASS A, B AND C SHARES
You may generally open an account and purchase Class A, B and C shares by
contacting any financial adviser (who may impose transaction charges in addition
to those described in this prospectus) authorized to sell the fund's shares. You
may purchase additional shares in various ways, including through your financial
adviser and by mail, telephone, the Internet and bank wire.

PURCHASE OF CLASS F SHARES

You may generally open an account and purchase Class F shares only through
fee-based programs of investment dealers that have special agreements with the
fund's distributor and through certain registered investment advisers. These
dealers and advisers typically charge ongoing fees for services they provide.

PURCHASE OF CLASS 529 SHARES
Class 529 shares may be purchased only through an account established with a 529
college savings plan managed by the American Funds organization. You may open
this type of account and purchase 529 shares by contacting any financial adviser
(who may impose transaction charges in addition to those described in this
prospectus) authorized to sell such an account. You may purchase additional
shares in various ways, including through your financial adviser and by mail,
telephone, the Internet and bank wire.

Class 529-E shares may be purchased only by employees participating through an
eligible employer plan.

EXCHANGE
Generally, you may exchange your shares into shares of the same class of other
American Funds without a sales charge. Class A, C or F shares may generally be
exchanged into the corresponding 529 share class without a sales charge. Class B
shares may not be exchanged into Class 529-B shares. EXCHANGES FROM CLASS A, C
OR F SHARES TO THE CORRESPONDING 529 SHARE CLASS, PARTICULARLY IN THE CASE OF
UNIFORM GIFTS TO MINORS ACT OR

Capital Income Builder / Prospectus

<PAGE>

UNIFORM TRANSFERS TO MINORS ACT CUSTODIAL ACCOUNTS, MAY RESULT IN SIGNIFICANT
LEGAL AND TAX CONSEQUENCES AS DESCRIBED IN THE APPLICABLE PROGRAM DESCRIPTION.
PLEASE CONSULT YOUR FINANCIAL ADVISER BEFORE MAKING SUCH AN EXCHANGE.

Exchanges of shares from American Funds money market funds initially purchased
without a sales charge generally will be subject to the appropriate sales
charge. For purposes of computing the contingent deferred sales charge on Class
B and C shares, the length of time you have owned your shares will be measured
from the date of original purchase and will not be affected by any permitted
exchange.

Exchanges have the same tax consequences as ordinary sales and purchases. For
example, to the extent you exchange shares held in a taxable account that are
worth more now than what you paid for them, the gain will be subject to
taxation. See "Transactions by telephone, fax or the Internet" for information
regarding electronic exchanges.

FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
resulting in dilution of the value of the shares held by long-term shareholders.
Accordingly, purchases, including those that are part of exchange activity, that
the fund or American Funds Distributors has determined could involve actual or
potential harm to the fund may be rejected.

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the

Capital Income Builder / Prospectus
<PAGE>

transaction as a systematic redemption or purchase; purchases and redemptions of
shares having a value of less than $5,000; retirement plan contributions, loans
and distributions (including hardship withdrawals) identified as such on the
retirement plan recordkeeper's system; and purchase transactions involving
transfers of assets, rollovers, Roth IRA conversions and IRA
recharacterizations, where the entity maintaining the shareholder account is
able to identify the transaction as one of these types of transactions.

NOTWITHSTANDING THE FUND'S PURCHASE BLOCKING POLICY, ALL TRANSACTIONS IN FUND
SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS DISTRIBUTORS' RIGHT TO
RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING THE TYPES OF
TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER A PURCHASE
BLOCK UNDER THE POLICY). SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE
INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER
POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.

PURCHASE MINIMUMS AND MAXIMUMS

PURCHASE MINIMUMS FOR ALL CLASSES OF SHARES/1/
---------------------------------------------------------------------------------

To establish an account (including retirement plan and 529 $ 250/2/
accounts)
For a payroll deduction retirement plan account, payroll
deduction 25
savings plan account or employer-sponsored 529 account
To add to an account 50
For a payroll deduction retirement plan account, payroll 25
deduction
savings plan account or employer-sponsored 529 account
---------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS B SHARES 50,000
---------------------------------------------------------------------------------
PURCHASE MAXIMUM PER TRANSACTION FOR CLASS C SHARES 500,000

/1/ Purchase minimums may be waived in certain cases. Please see the statement of
additional information for details.
/2/ For accounts established with an automatic investment plan, the initial
purchase minimum of $250 may be waived if the purchases (including purchases
through exchanges from another fund) made under the plan are sufficient to
reach $250 within five months of account establishment.

The effective purchase maximums for Class 529-A, 529-C, 529-E and 529-F shares
will reflect the maximum applicable contribution limits under state law. See the
applicable program description for more information.

If you have significant American Funds or American Legacy/(R)/ holdings, you may
not be eligible to invest in Class B or C shares (or their corresponding 529
share classes). Specifically, you may not purchase Class B or 529-B shares if
you are eligible to purchase Class A or 529-A shares at the $100,000 or higher
sales charge discount rate, and you may not purchase Class C or 529-C shares if
you are eligible to purchase Class A or 529-A shares at the $1 million or more
sales charge discount rate (i.e., at net asset value). See "Sales charge
reductions and waivers" below and the statement of additional information for
more information regarding sales charge discounts.

Capital Income Builder / Prospectus

<PAGE>

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.

Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request. A contingent deferred sales charge may apply at the time you sell
certain Class A, B and C shares.
MOVING BETWEEN SHARE CLASSES

Please see the statement of additional information for details and limitations
on moving investments in certain share classes to different share classes.

Capital Income Builder / Prospectus
<PAGE>

Sales charges

CLASS A SHARES

The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.

SALES CHARGE AS A
PERCENTAGE OF:
DEALER
NET COMMISSION
OFFERING AMOUNT AS A PERCENTAGE
INVESTMENT PRICE INVESTED OF OFFERING PRICE
------------------------------------------------------------------------------

Less than $25,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------
$25,000 but less than $50,000 5.00 5.26 4.25
------------------------------------------------------------------------------
$50,000 but less than $100,000 4.50 4.71 3.75
------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50 3.63 2.75
------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.56 2.00
------------------------------------------------------------------------------
$500,000 but less than $750,000 2.00 2.04 1.60
------------------------------------------------------------------------------
$750,000 but less than $1 million 1.50 1.52 1.20
------------------------------------------------------------------------------
$1 million or more and certain other none none see below
investments described below
------------------------------------------------------------------------------

The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares. Similarly, any contingent
deferred sales charge paid by you on investments in Class A shares may be higher
or lower than the 1% charge described below due to rounding.

EXCEPT AS PROVIDED BELOW, INVESTMENTS IN CLASS A SHARES OF $1 MILLION OR MORE
MAY BE SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE IF THE SHARES ARE SOLD
WITHIN ONE YEAR OF PURCHASE. The contingent deferred sales charge is based on
the original purchase cost or the current market value of the shares being sold,
whichever is less.

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

Capital Income Builder / Prospectus

<PAGE>

. investments in Class A shares made by endowments or foundations with $50
million or more in assets;
. investments made by accounts that are part of certain qualified fee-based
programs and that purchased Class A shares before the discontinuation of your
investment dealer's load-waived A share program with the American Funds; and

. certain rollover investments from retirement plans to IRAs (see "Rollovers
from retirement plans to IRAs" below for more information).

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" below).
Transfers from certain 529 plans to plans managed by the American Funds
organization will be made with no sales charge. No commission will be paid to
the dealer on such a transfer. Please see the statement of additional
information for more information.

Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.

EMPLOYER-SPONSORED RETIREMENT PLANS
Many employer-sponsored retirement plans are eligible to purchase Class R
shares. Eligible plans and Class R shares are described in more detail in the
fund's retirement plan prospectus.

Employer-sponsored retirement plans that are eligible to purchase Class R
shares may instead purchase Class A shares and pay the applicable Class A sales
charge, provided their recordkeepers can properly apply a sales charge on plan
investments. These plans are not eligible to make initial purchases of $1
million or more in Class A shares and thereby invest in Class A shares without
a sales charge, nor are they eligible to establish a statement of intention
that qualifies them to purchase Class A shares without a sales charge. More
information about statements of intention can be found under "Sales charge
reductions and waivers." Plans investing in Class A shares with a sales charge
may purchase additional Class A shares in accordance with the sales charge
table above.

Employer-sponsored retirement plans that invested in Class A shares without any
sales charge on or before March 31, 2004, and that continue to meet the
eligibility requirements in effect as of that date for purchasing Class A
shares at net asset value, may continue to purchase Class A shares without any
initial or contingent deferred sales charge.

Capital Income Builder / Prospectus
<PAGE>

CLASS B AND C SHARES

Class B and C shares are sold without any initial sales charge. American Funds
Distributors pays 4% of the amount invested to dealers who sell Class B shares
and 1% to dealers who sell Class C shares.

For Class B shares, a contingent deferred sales charge may be applied to shares
you sell within six years of purchase, as shown in the table below.

CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES

YEAR OF REDEMPTION: 1 2 3 4 5 6 7+
----------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE: 5% 4% 4% 3% 2% 1% 0%

For Class C shares, a contingent deferred sales charge of 1% applies if shares
are sold within one year of purchase.

Any contingent deferred sales charge paid by you on investments in Class B or C
shares, expressed as a percentage of the applicable redemption amount, may be
higher or lower than the percentages described above due to rounding.

Shares acquired through reinvestment of dividends or capital gain distributions
are not subject to a contingent deferred sales charge. In addition, the
contingent deferred sales charge may be waived in certain circumstances. See
"Contingent deferred sales charge waivers" below. The contingent deferred sales
charge is based on the original purchase cost or the current market value of the
shares being sold, whichever is less. For purposes of determining the contingent
deferred sales charge, if you sell only some of your shares, shares that are not
subject to any contingent deferred sales charge will be sold first, followed by
shares that you have owned the longest.

See "Plans of distribution" below for ongoing compensation paid to your dealer
or financial adviser for all share classes.
AUTOMATIC CONVERSION OF CLASS B AND C SHARES

Class B shares automatically convert to Class A shares in the month of the
eight-year anniversary of the purchase date. Class C shares automatically
convert to Class F shares in the month of the 10-year anniversary of the
purchase date; however, Class 529-C shares will not convert to Class 529-F
shares. The Internal Revenue Service currently takes the position that these
automatic conversions are not taxable. Should its position change, the automatic
conversion feature may be suspended. If this happens, you would have the option
of converting your Class B, 529-B or C shares to the respective share classes at
the anniversary dates described above. This exchange would be based on the
relative net asset values of the two classes in question, without the imposition
of a sales charge or fee, but you might face certain tax consequences as a
result.

Capital Income Builder / Prospectus

<PAGE>

CLASS 529-E AND CLASS F SHARES

Class 529-E and Class F shares are sold without any initial or contingent
deferred sales charge.

Sales charge reductions and waivers

TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or American
Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds. To have
your Class A, B or C contingent deferred sales charge waived, you must let your
adviser or American Funds Service Company know at the time you redeem shares
that you qualify for such a waiver.
IN ADDITION TO THE INFORMATION BELOW, YOU MAY OBTAIN MORE INFORMATION ABOUT
SALES CHARGE REDUCTIONS AND WAIVERS THROUGH A LINK ON THE HOME PAGE OF THE
AMERICAN FUNDS WEBSITE AT AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL
INFORMATION OR FROM YOUR FINANCIAL ADVISER.

REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, you and your
"immediate family" (your spouse -- or equivalent if recognized under local law
-- and your children under the age of 21) may combine all of your American Funds
and American Legacy investments to reduce your Class A sales charge. However,
for this purpose, investments representing direct purchases of American Funds
money market funds are excluded. Following are different ways that you may
qualify for a reduced Class A sales charge:

AGGREGATING ACCOUNTS

To receive a reduced Class A sales charge, investments made by you and your
immediate family (see above) may be aggregated if made for your own account(s)
and/or certain other accounts, such as:
. trust accounts established by the above individuals (please see the statement
of additional information for details regarding aggregation of trust accounts
where the person(s) who established the trust is/are deceased);

. solely controlled business accounts; and

. single-participant retirement plans.

Capital Income Builder / Prospectus
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CONCURRENT PURCHASES

You may combine simultaneous purchases (including, upon your request, purchases
for gifts) of any class of shares of two or more American Funds, as well as
individual holdings in various American Legacy variable annuity contracts and
variable life insurance policies, to qualify for a reduced Class A sales
charge.

RIGHTS OF ACCUMULATION
You may take into account your accumulated holdings in all share classes of the
American Funds to determine the initial sales charge you pay on each purchase
of Class A shares. Subject to your investment dealer's capabilities, your
accumulated holdings will be calculated as the higher of (a) the current value
of your existing holdings or (b) the amount you invested (excluding capital
appreciation) less any withdrawals. Please see the statement of additional
information for details. You should retain any records necessary to
substantiate the historical amounts you have invested.

In addition, you may also take into account the current value of your
individual holdings in various American Legacy variable annuity contracts and
variable life insurance policies to determine your Class A sales charge. If you
make a gift of 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.

STATEMENT OF INTENTION
You may reduce your Class A sales charge by establishing a statement of
intention. A statement of intention allows you to combine all purchases of all
share classes of American Funds non-money market funds you intend to make over
a 13-month period (including purchases of various American Legacy individual
variable annuity contracts and variable life insurance policies) to determine
the applicable sales charge; however, purchases made under a right of
reinvestment, appreciation of your holdings, and reinvested dividends and
capital gains do not count as purchases made during the statement period. The
market value of your existing holdings eligible to be aggregated as of the day
immediately before the start of the statement period may be credited toward
satisfying the statement. A portion of your account may be held in escrow to
cover additional Class A sales charges that may be due if your total purchases
over the statement period do not qualify you for the applicable sales charge
reduction. Employer-sponsored retirement plans may be restricted from
establishing statements of intention. See "Sales charges" above for more
information.

RIGHT OF REINVESTMENT

Please see "How to sell shares" below for information on how to reinvest
proceeds from a redemption, dividend payment or capital gain distribution
without a sales charge.

Capital Income Builder / Prospectus

<PAGE>

CONTINGENT DEFERRED SALES CHARGE WAIVERS

The contingent deferred sales charge on Class A, B and C shares may be waived in
the following cases:

. permitted exchanges of shares, except if shares acquired by exchange are then
redeemed within the period during which a contingent deferred sales charge
would apply to the initial shares purchased;

. tax-free returns of excess contributions to IRAs;

. redemptions due to death or postpurchase disability of the shareholder (this
generally excludes accounts registered in the names of trusts and other
entities);

. for 529 share classes only, redemptions due to a beneficiary's death,
postpurchase disability or receipt of a scholarship (to the extent of the
scholarship award);

. redemptions due to the complete termination of a trust upon the death of the
trustor/ grantor or beneficiary, but only if such termination is specifically
provided for in the trust document;

. the following types of transactions, if together they do not exceed 12% of the
value of an account annually (see the statement of additional information for
more information about waivers regarding these types of transactions):

-- redemptions due to receiving required minimum distributions from retirement
accounts upon reaching 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); and

-- if you have established a systematic withdrawal plan, redemptions through
such a plan (including any dividends and/or capital gain distributions taken
in cash).

Capital Income Builder / Prospectus
<PAGE>

Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover. Rollovers invested in Class A shares from retirement
plans will be subject to applicable sales charges. The following rollovers to
Class A shares will be made without a sales charge:

. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
meet all of the following three requirements:

-- the retirement plan from which assets are being rolled over is part of an
American Funds proprietary retirement plan program (such as PlanPremier,/(R)/
Recordkeeper Direct/(R)/ or Recordkeeper Connect/(R)/) or is a plan whose
participant subaccounts are serviced by American Funds Service Company;

-- the plan's assets were invested in American Funds at the time of
distribution; and

-- the plan's assets are rolled over to an American Funds IRA with Capital Bank
and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.

Plans of distribution
The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares; up to .50% for Class 529-A shares; up
to 1.00% for Class B, 529-B, C and 529-C shares; up to .75% for Class 529-E
shares; and up to .50% for Class F and 529-F shares. For all share classes, up
to .25% of these expenses may be used to pay service fees to qualified dealers
for providing certain shareholder services. The amount remaining for each share
class may be used for distribution expenses.

Capital Income Builder / Prospectus

<PAGE>

The 12b-1 fees paid by the fund, as a percentage of average net assets, for the
previous fiscal year are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." Since these fees are paid out of the
fund's assets or income on an ongoing basis, over time they will increase the
cost and reduce the return of your investment. The higher fees for Class B and C
shares may cost you more over time than paying the initial sales charge for
Class A shares.

Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2006, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.

How to sell shares

You may sell (redeem) shares in any of the following ways:

THROUGH YOUR DEALER OR FINANCIAL ADVISER (CERTAIN CHARGES MAY APPLY)

. Shares held for you in your dealer's name must be sold through the dealer.

. Class F shares must be sold through your dealer or financial adviser.

WRITING TO AMERICAN FUNDS SERVICE COMPANY

. Requests must be signed by the registered shareholder(s).

. A signature guarantee is required if the redemption is:

-- over $75,000;

-- made payable to someone other than the registered shareholder(s); or
-- sent to an address other than the address of record or to an address of
record that has been changed within the last 10 days.

Capital Income Builder / Prospectus
<PAGE>

. American Funds Service Company reserves the right to require signature
guarantee(s) on any redemptions.

. Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.

TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY OR USING THE INTERNET

. Redemptions by telephone, fax or the Internet (including American
FundsLine/(R)/ and americanfunds.com) are limited to $75,000 per American
Funds shareholder each day.

. Checks must be made payable to the registered shareholder.

. Checks must be mailed to an address of record that has been used with the
account for at least 10 days.
If you recently purchased shares and subsequently request a redemption of those
shares, you will receive proceeds from the redemption once a sufficient period
of time has passed to reasonably assure that checks or drafts (including
certified or cashier's checks) for the shares purchased have cleared (normally
10 business days).

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds from a Class B share redemption made during
the contingent deferred sales charge period will be reinvested in Class A
shares. Proceeds from any other type of redemption and all dividend payments and
capital gain distributions will be reinvested in the same share class from which
the original redemption or distribution was made. Any contingent deferred sales
charge on Class A or C shares will be credited to your account. Redemption
proceeds of Class A shares representing direct purchases in American Funds money
market funds that are reinvested in non-money market American Funds will be
subject to a sales charge. Proceeds will be reinvested at the next calculated
net asset value after your request is received and accepted by American Funds
Service Company. You may not reinvest proceeds in the American Funds as
described in this paragraph if such proceeds are subject to a purchase block as
described under "Frequent trading of fund shares." This paragraph does not apply
to rollover investments as described under "Rollovers from retirement plans to
IRAs."

TRANSACTIONS BY TELEPHONE, FAX OR THE INTERNET
Generally, you are automatically eligible to redeem or exchange shares by
telephone, fax or the Internet, unless you notify us in writing that you do not
want any or all of these services. You may reinstate these services at any time.

Unless you decide not to have telephone, fax or Internet services on your
account(s), you agree to hold the fund, American Funds Service Company, 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 liabilities (including

Capital Income Builder / Prospectus

<PAGE>

attorney fees) that may be incurred in connection with the exercise of these
privileges, provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, American Funds Service Company and/or the fund may be liable for
losses due to unauthorized or fraudulent instructions.

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS
The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to you each quarter. Dividends begin
accruing one day after payment for shares is received by the fund or American
Funds Service Company.

Capital gains, if any, are usually distributed in December. When a capital gain
is distributed, the net asset value per share is reduced by the amount of the
payment.

You may elect to reinvest dividends and/or capital gain distributions to
purchase additional shares of this fund or other American Funds, or you may
elect to receive them in cash. Most shareholders do not elect to take capital
gain distributions in cash because these distributions reduce principal value.
Dividends and capital gain distributions for 529 share classes will be
automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gain distributions you receive from the fund will be
subject to federal income tax and may also be subject to state or local taxes --
unless you are exempt from taxation.

For federal tax purposes, dividends and distributions of short-term capital
gains are taxable as ordinary income. Some or all of your dividends may be
eligible for a reduced tax rate if you meet a holding period requirement. The
fund's distributions of net long-term capital gains are taxable as long-term
capital gains. Any dividends or capital gain distributions you receive from the
fund will normally be taxable to you when made, regardless of whether you
reinvest dividends or capital gain distributions or receive them in cash.

TAXES ON TRANSACTIONS

Your redemptions, including exchanges, may result in a capital gain or loss for
federal tax purposes. A capital gain or loss on your investment is the
difference between the cost of your shares, including any sales charges, and the
amount you receive when you sell them.
PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION. HOLDERS OF 529 SHARES SHOULD
REFER TO THE APPLICABLE PROGRAM DESCRIPTION FOR MORE INFORMATION REGARDING THE
TAX CONSEQUENCES OF SELLING 529 SHARES.

Capital Income Builder / Prospectus
<PAGE>

Financial highlights/1/

The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the fund's financial statements, is included in the
statement of additional information, which is available upon request.

INCOME (LOSS) FROM INVESTMENT OPERATIONS/2/,/3/
Net gains
(losses) on
securities
Net asset (both
value, Net realized Total from
beginning investment and investment
of period income unrealized) operations
-----------------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006 $52.58 $2.13 $ 8.06 $10.19
Year ended 10/31/2005 50.75 2.01 2.56 4.57
Year ended 10/31/2004 45.29 1.76 5.68 7.44
Year ended 10/31/2003 40.73 1.72 5.36 7.08
Year ended 10/31/2002 43.80 1.82 (1.67) .15
-----------------------------------------------------------------------------------------------------
CLASS B:
Year ended 10/31/2006 52.58 1.69 8.06 9.75
Year ended 10/31/2005 50.75 1.59 2.56 4.15
Year ended 10/31/2004 45.29 1.38 5.68 7.06
Year ended 10/31/2003 40.73 1.38 5.36 6.74
Year ended 10/31/2002 43.80 1.48 (1.67) (.19)
-----------------------------------------------------------------------------------------------------
CLASS C:
Year ended 10/31/2006 52.58 1.67 8.06 9.73
Year ended 10/31/2005 50.75 1.56 2.56 4.12
Year ended 10/31/2004 45.29 1.34 5.68 7.02
Year ended 10/31/2003 40.73 1.35 5.36 6.71
Year ended 10/31/2002 43.80 1.45 (1.67) (.22)
-----------------------------------------------------------------------------------------------------
CLASS F:
Year ended 10/31/2006 52.58 2.11 8.06 10.17
Year ended 10/31/2005 50.75 1.96 2.56 4.52
Year ended 10/31/2004 45.29 1.70 5.68 7.38
Year ended 10/31/2003 40.73 1.67 5.36 7.03
Year ended 10/31/2002 43.80 1.76 (1.67) .09
-----------------------------------------------------------------------------------------------------
CLASS 529-A:
Year ended 10/31/2006 $52.58 $2.10 $ 8.06 $10.16
Year ended 10/31/2005 50.75 1.95 2.56 4.51
Year ended 10/31/2004 45.29 1.70 5.68 7.38
Year ended 10/31/2003 40.73 1.70 5.36 7.06
Period from 2/19/2002 to 10/31/2002 43.06 1.19 (2.13) (.94)
-----------------------------------------------------------------------------------------------------
CLASS 529-B:
Year ended 10/31/2006 52.58 1.63 8.06 9.69
Year ended 10/31/2005 50.75 1.50 2.56 4.06
Year ended 10/31/2004 45.29 1.28 5.68 6.96
Year ended 10/31/2003 40.73 1.30 5.36 6.66
Period from 2/15/2002 to 10/31/2002 43.33 .98 (2.40) (1.42)
-----------------------------------------------------------------------------------------------------
CLASS 529-C:
Year ended 10/31/2006 52.58 1.63 8.06 9.69
Year ended 10/31/2005 50.75 1.51 2.56 4.07
Year ended 10/31/2004 45.29 1.29 5.68 6.97
Year ended 10/31/2003 40.73 1.31 5.36 6.67
Period from 2/20/2002 to 10/31/2002 43.12 .97 (2.20) (1.23)
-----------------------------------------------------------------------------------------------------
CLASS 529-E:
Year ended 10/31/2006 52.58 1.92 8.06 9.98
Year ended 10/31/2005 50.75 1.78 2.56 4.34
Year ended 10/31/2004 45.29 1.54 5.68 7.22
Year ended 10/31/2003 40.73 1.53 5.36 6.89
Period from 3/1/2002 to 10/31/2002 43.74 1.08 (2.83) (1.75)
-----------------------------------------------------------------------------------------------------
CLASS 529-F:
Year ended 10/31/2006 52.58 2.20 8.06 10.26
Year ended 10/31/2005 50.75 1.97 2.56 4.53
Year ended 10/31/2004 45.29 1.65 5.68 7.33
Year ended 10/31/2003 40.73 1.64 5.36 7.00
Period from 9/17/2002 to 10/31/2002 41.74 .14 (.89) (.75)
-----------------------------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS
Ratio of
expenses
Net to average
Dividends Total Net asset assets, net assets
(from net Distributions dividends value, end of before reim-
investment (from and end of Total period (in bursements/
income) capital gains) distributions period return/4/ millions) waivers
---------------------------------------------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006 $(2.17) $ (.69) $(2.86) $59.91 20.00% $58,439 .58%
Year ended 10/31/2005 (1.84) (.90) (2.74) 52.58 9.11 42,303 .59
Year ended 10/31/2004 (1.81) (.17) (1.98) 50.75 16.73 28,458 .60
Year ended 10/31/2003 (2.00) (.52) (2.52) 45.29 17.95 18,273 .65
Year ended 10/31/2002 (2.05) (1.17) (3.22) 40.73 .16 10,006 .67
---------------------------------------------------------------------------------------------------------------------------------
CLASS B:
Year ended 10/31/2006 (1.73) (.69) (2.42) 59.91 19.07 4,413 1.37
Year ended 10/31/2005 (1.42) (.90) (2.32) 52.58 8.26 3,371 1.38
Year ended 10/31/2004 (1.43) (.17) (1.60) 50.75 15.81 2,469 1.40
Year ended 10/31/2003 (1.66) (.52) (2.18) 45.29 17.03 1,532 1.44
Year ended 10/31/2002 (1.71) (1.17) (2.88) 40.73 (.61) 450 1.44
---------------------------------------------------------------------------------------------------------------------------------
CLASS C:
Year ended 10/31/2006 (1.71) (.69) (2.40) 59.91 19.02 8,616 1.41
Year ended 10/31/2005 (1.39) (.90) (2.29) 52.58 8.19 5,867 1.44
Year ended 10/31/2004 (1.39) (.17) (1.56) 50.75 15.72 3,476 1.47
Year ended 10/31/2003 (1.63) (.52) (2.15) 45.29 16.94 1,696 1.51
Year ended 10/31/2002 (1.68) (1.17) (2.85) 40.73 (.69) 424 1.52
---------------------------------------------------------------------------------------------------------------------------------
CLASS F:
Year ended 10/31/2006 (2.15) (.69) (2.84) 59.91 19.94 3,494 .62
Year ended 10/31/2005 (1.79) (.90) (2.69) 52.58 9.01 2,141 .68
Year ended 10/31/2004 (1.75) (.17) (1.92) 50.75 16.58 1,161 .72
Year ended 10/31/2003 (1.95) (.52) (2.47) 45.29 17.82 539 .76
Year ended 10/31/2002 (1.99) (1.17) (3.16) 40.73 .03 155 .79
---------------------------------------------------------------------------------------------------------------------------------
CLASS 529-A:
Year ended 10/31/2006 $(2.14) $ (.69) $(2.83) $59.91 19.92% $ 760 .64%
Year ended 10/31/2005 (1.78) (.90) (2.68) 52.58 8.99 458 .71
Year ended 10/31/2004 (1.75) (.17) (1.92) 50.75 16.59 244 .72
Year ended 10/31/2003 (1.98) (.52) (2.50) 45.29 17.89 121 .70
Period from 2/19/2002 to 10/31/2002 (1.39) -- (1.39) 40.73 (2.31) 32 .91/7/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 529-B:
Year ended 10/31/2006 (1.67) (.69) (2.36) 59.91 18.93 122 1.49
Year ended 10/31/2005 (1.33) (.90) (2.23) 52.58 8.08 83 1.55
Year ended 10/31/2004 (1.33) (.17) (1.50) 50.75 15.58 55 1.60
Year ended 10/31/2003 (1.58) (.52) (2.10) 45.29 16.82 31 1.64
Period from 2/15/2002 to 10/31/2002 (1.18) -- (1.18) 40.73 (3.37) 8 1.66/7/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 529-C:
Year ended 10/31/2006 (1.67) (.69) (2.36) 59.91 18.94 306 1.47
Year ended 10/31/2005 (1.34) (.90) (2.24) 52.58 8.10 192 1.54
Year ended 10/31/2004 (1.34) (.17) (1.51) 50.75 15.60 113 1.59
Year ended 10/31/2003 (1.59) (.52) (2.11) 45.29 16.83 54 1.63
Period from 2/20/2002 to 10/31/2002 (1.16) -- (1.16) 40.73 (2.96) 13 1.65/7/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 529-E:
Year ended 10/31/2006 (1.96) (.69) (2.65) 59.91 19.55 40 .96
Year ended 10/31/2005 (1.61) (.90) (2.51) 52.58 8.64 25 1.02
Year ended 10/31/2004 (1.59) (.17) (1.76) 50.75 16.19 15 1.07
Year ended 10/31/2003 (1.81) (.52) (2.33) 45.29 17.44 7 1.10
Period from 3/1/2002 to 10/31/2002 (1.26) -- (1.26) 40.73 (4.09) 2 1.11/7/
---------------------------------------------------------------------------------------------------------------------------------
CLASS 529-F:
Year ended 10/31/2006 (2.24) (.69) (2.93) 59.91 20.12 14 .46
Year ended 10/31/2005 (1.80) (.90) (2.70) 52.58 9.04 6 .63
Year ended 10/31/2004 (1.70) (.17) (1.87) 50.75 16.47 3 .82
Year ended 10/31/2003 (1.92) (.52) (2.44) 45.29 17.72 1 .85
Period from 9/17/2002 to 10/31/2002 (.26) -- (.26) 40.73 (1.79) --/8/ .10
---------------------------------------------------------------------------------------------------------------------------------

Ratio of
expenses Ratio of
to average net
net assets income
after reim- to average
bursements/ net
waivers/5/ assets/6/
---------------------------------------------------------------

CLASS A:
Year ended 10/31/2006 .55% 3.82%
Year ended 10/31/2005 .57 3.79
Year ended 10/31/2004 .59 3.65
Year ended 10/31/2003 .65 4.04
Year ended 10/31/2002 .67 4.19
---------------------------------------------------------------
CLASS B:
Year ended 10/31/2006 1.34 3.04
Year ended 10/31/2005 1.36 3.01
Year ended 10/31/2004 1.39 2.85
Year ended 10/31/2003 1.44 3.19
Year ended 10/31/2002 1.44 3.41
---------------------------------------------------------------
CLASS C:
Year ended 10/31/2006 1.38 2.99
Year ended 10/31/2005 1.42 2.94
Year ended 10/31/2004 1.47 2.76
Year ended 10/31/2003 1.51 3.08
Year ended 10/31/2002 1.52 3.31
---------------------------------------------------------------
CLASS F:
Year ended 10/31/2006 .60 3.76
Year ended 10/31/2005 .65 3.71
Year ended 10/31/2004 .71 3.51
Year ended 10/31/2003 .76 3.86
Year ended 10/31/2002 .79 4.04
---------------------------------------------------------------
CLASS 529-A:
Year ended 10/31/2006 .61% 3.77%
Year ended 10/31/2005 .68 3.70
Year ended 10/31/2004 .71 3.53
Year ended 10/31/2003 .70 3.99
Period from 2/19/2002 to 10/31/2002 .91/7/ 4.05/7/
---------------------------------------------------------------
CLASS 529-B:
Year ended 10/31/2006 1.46 2.93
Year ended 10/31/2005 1.53 2.85
Year ended 10/31/2004 1.60 2.66
Year ended 10/31/2003 1.64 3.04
Period from 2/15/2002 to 10/31/2002 1.66/7/ 3.32/7/
---------------------------------------------------------------
CLASS 529-C:
Year ended 10/31/2006 1.45 2.94
Year ended 10/31/2005 1.52 2.86
Year ended 10/31/2004 1.58 2.67
Year ended 10/31/2003 1.63 3.05
Period from 2/20/2002 to 10/31/2002 1.65/7/ 3.31/7/
---------------------------------------------------------------
CLASS 529-E:
Year ended 10/31/2006 .94 3.45
Year ended 10/31/2005 1.00 3.38
Year ended 10/31/2004 1.07 3.18
Year ended 10/31/2003 1.10 3.57
Period from 3/1/2002 to 10/31/2002 1.11/7/ 3.87/7/
---------------------------------------------------------------
CLASS 529-F:
Year ended 10/31/2006 .44 3.95
Year ended 10/31/2005 .60 3.78
Year ended 10/31/2004 .82 3.44
Year ended 10/31/2003 .85 3.78
Period from 9/17/2002 to 10/31/2002 .10 .35
---------------------------------------------------------------

Capital Income Builder / Prospectus

<PAGE>

(The Financial Highlights table continues on the following page.)

Capital Income Builder / Prospectus

<PAGE>

YEAR ENDED OCTOBER 31
2006 2005 2004 2003 2002
----------------------------------------------------------------------------------

PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 26% 20% 24% 27% 36%
OF SHARES

/1/ Based on operations for the periods shown (unless otherwise noted) and,
accordingly, may not be representative of a full year.
/2/ Based on average shares outstanding.
/3/ For the year ended October 31, 2002, net investment income was lower and net
gains (losses) on securities (both realized and unrealized) were higher by
approximately $.14 per share for Class A shares as a result of an accounting
change related to the amortization of bond premium. On an annualized basis, the
impact of the accounting change on other share classes would have been
approximately the same.
/4/ Total returns exclude all sales charges, including contingent deferred sales
charges.
/5/ The ratios in this column reflect the impact, if any, of certain
reimbursements/waivers from Capital Research and Management Company. See the
Annual Fund Operating Expenses table under "Fees and expenses of the fund" in
this prospectus and the fund's annual report for more information.
/6/ For the year ended October 31, 2002, the ratio of net income to average net
assets for Class A shares was lower by .34% as a result of an accounting change
related to the amortization of bond premium. On an annualized basis, the impact
of the accounting change on other share classes would have been approximately
the same.
/7/ Annualized.
/8/ Amount less than $1 million.

Capital Income Builder / Prospectus

<PAGE>

NOTES

Capital Income Builder / Prospectus

<PAGE>

[logo - American Funds(R)] The right choice for the long term/(R)/

FOR SHAREHOLDER SERVICES American Funds Service Company
800/421-0180
FOR RETIREMENT PLAN SERVICES Call your employer or plan administrator
FOR DEALER SERVICES American Funds Distributors
800/421-9900
FOR 529 PLANS American Funds Service Company
800 /421-0180, ext. 529
FOR 24-HOUR INFORMATION American FundsLine
800/325-3590
americanfunds.com

Telephone calls you have with the American Funds organization may be
monitored or recorded for quality assurance, verification and/or
recordkeeping purposes. By speaking with us on the telephone, you are
giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------

MULTIPLE TRANSLATIONS This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies, and the independent registered public
accounting firm's report (in the annual report).
PROGRAM DESCRIPTIONS Program descriptions for 529 programs managed by the
American Funds organization contain additional information about the policies
and services related to 529 plan accounts.

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com.

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics, annual/semi-annual
report to shareholders or applicable program description, please call American
Funds Service Company at 800/421-0180 or write to the Secretary of the fund at
333 South Hope Street, Los Angeles, California, 90071.

[logo - recycle bug]
Printed on recycled paper
MFGEPR-912-0107P Litho in USA CGD/RRD/8006 Investment Company File No. 811-05085
-----------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds Capital Research and Management Capital International
Capital Guardian Capital Bank and Trust

<PAGE>

[logo-American Funds(R)] The right choice for the long term/(R)/

Capital Income
Builder/(R)/

PROSPECTUS
ADDENDUM

January 1, 2007

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Class R-5 shares of Capital Income Builder are available to certain clients of
the Personal Investment Management group of Capital Guardian Trust Company./SM/
Accordingly, for these shareholders, the following information should be read
in conjunction with the prospectus for this fund.

Fees and expenses of the fund -- pages 5-6

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.

SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS R-5
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Maximum initial sales charge on purchases (as a percentage of none
offering price)
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Maximum sales charge on reinvested dividends none
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Maximum contingent deferred sales charge none
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Redemption or exchange fees none

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS R-5
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Management fees/1/ 0.25%
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Distribution and/or service (12b-1) fees none
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Other expenses/2/ 0.13
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Total annual fund operating expenses/1/ 0.38

/1/ The fund's investment adviser is currently waiving 10% of its management fee.
The waiver may be discontinued at any time in consultation with the fund's
board, but it is expected to continue at this level until further review. The
fund's investment adviser and board intend to review the waiver as
circumstances warrant. Expenses shown above do not reflect any waiver.
Information regarding the effect of any waiver on total annual fund operating
expenses can be found in the Financial Highlights table in this prospectus
addendum and in the fund's annual report.
/2/ A portion of the fund's expenses may be used to pay third parties (including
affiliates of the fund's investment adviser) that provide recordkeeping
services to retirement plans invested in the fund.

EXAMPLE

The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The example does not reflect the impact of any fee waivers
or expense reimbursements.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Class R-5 $39 $122 $213 $480
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Purchase and exchange of shares -- pages 18-21

PURCHASE OF CLASS R-5 SHARES

Class R-5 shares of the fund are available to certain clients of the Personal
Investment Management group of Capital Guardian Trust Company. Please contact
Capital Guardian Trust Company if you wish to purchase Class R-5 shares of the
fund.

Sales charges -- pages 22-24

CLASS R-5 SHARES

Class R-5 shares are sold without any initial or contingent deferred sales
charge. In addition, no compensation is paid to investment dealers on sales of
Class R-5 shares.

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Financial highlights/1/ -- pages 32-34

The Financial Highlights table is intended to help you understand the fund's
results. Certain information reflects financial results for a single share. The
total returns in the table represent the rate that an investor would have earned
or lost on an investment in the fund (assuming reinvestment of all dividends and
capital gain distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the fund's financial
statements, is included in the statement of additional information, which is
available upon request.

INCOME (LOSS) FROM INVESTMENT OPERATIONS/2/,/3/
Net
gains
(losses) on
securities
Net asset (both Total
value, Net realized from
beginning investment and investment
of period income unrealized) operations
--------------------------------------------------------------------------------------------------------

CLASS R-5:
Year ended 10/31/2006 $52.58 $2.24 $ 8.06 $10.30
Year ended 10/31/2005 50.75 2.11 2.56 4.67
Year ended 10/31/2004 45.29 1.85 5.68 7.53
Year ended 10/31/2003 40.73 1.81 5.36 7.17
Period from 5/15/2002 to 10/31/2002 45.87 .89 (5.02) (4.13)

DIVIDENDS AND DISTRIBUTIONS

Dividends Distributions Total
(from net (from dividends
investment capital and
income) gains) distributions
--------------------------------------------------------------------------------

CLASS R-5:
Year ended 10/31/2006 $(2.28) $(.69) $(2.97)
Year ended 10/31/2005 (1.94) (.90) (2.84)
Year ended 10/31/2004 (1.90) (.17) (2.07)
Year ended 10/31/2003 (2.09) (.52) (2.61)
Period from 5/15/2002 to 10/31/2002 (1.01) -- (1.01)

Ratio of Ratio of
expenses expenses
to average to average
Net net assets net assets Ratio
Net asset assets, before after of net
value, end of reim- reim- income
end of Total period bursements/ bursements/ to average
period return (in millions) waivers waivers/4/ net assets/5/
-----------------------------------------------------------------------------------------------------------------

CLASS R-5:
Year ended 10/31/2006 $59.91 20.23% $467 .38% .36% 4.03%
Year ended 10/31/2005 52.58 9.33 292 .39 .37 4.00
Year ended 10/31/2004 50.75 16.95 194 .41 .40 3.85
Year ended 10/31/2003 45.29 18.20 121 .44 .44 4.28
Period from 5/15/2002 to 10/31/2002 40.73 (9.04) 75 .21 .21 2.10

YEAR ENDED OCTOBER 31
2006 2005 2004 2003 2002
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PORTFOLIO TURNOVER
RATE FOR ALL CLASSES 26% 20% 24% 27% 36%
OF SHARES

/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/ For the year ended October 31, 2002, net investment income was lower and net
gains (losses) on securities (both realized and unrealized) were higher by
approximately $0.14 per share for Class A as a result of an accounting change
related to the amortization of bond premium. On an annualized basis, the impact
of the accounting change on the other share classes would have been
approximately the same.
/4/ The ratios in this column reflect the impact, if any, of certain
reimbursements/waivers from Capital Research and Management Company. See the
Annual Fund Operating Expenses table under "Fees and expenses of the fund" in
this prospectus addendum and the fund's annual report for more information.
/5/ For the year ended October 31, 2002, the ratio of net income to average net
assets for Class A was lower by .34 percent points as a result of an accounting
change related to the amortization of bond premium. On an annualized basis, the
impact of the accounting change on the other share classes would have been
approximately the same.

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CAPITAL INCOME BUILDER, INC.

Part B
Statement of Additional Information
January 1, 2007

This document is not a prospectus but should be read in conjunction with the
current prospectus or retirement plan prospectus of Capital Income Builder (the
"fund" or "CIB") dated January 1, 2007. You may obtain a prospectus from your
financial adviser or by writing to the fund at the following address:

Capital Income Builder, Inc.
Attention: Secretary
333 South Hope Street
Los Angeles, California 90071
213/486-9200
Certain privileges and/or services described below may not be available to all
shareholders (including shareholders who purchase shares at net asset value
through eligible retirement plans) depending on the shareholder's investment
dealer or retirement plan recordkeeper. Please see your financial adviser,
investment dealer, plan recordkeeper or employer for more information.

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. . . . . . . . . . 9
Management of the fund . . . . . . . . . . . . . . . . . . . . . . 12
Execution of portfolio transactions . . . . . . . . . . . . . . . . 32
Disclosure of portfolio holdings. . . . . . . . . . . . . . . . . . 33
Price of shares . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Taxes and distributions . . . . . . . . . . . . . . . . . . . . . . 36
Purchase and exchange of shares . . . . . . . . . . . . . . . . . . 41
Sales charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Sales charge reductions and waivers . . . . . . . . . . . . . . . . 46
Selling shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Shareholder account services and privileges . . . . . . . . . . . . 51
General information . . . . . . . . . . . . . . . . . . . . . . . . 53
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Financial statements

Capital Income Builder -- 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.

INCOME PRODUCING SECURITIES

. The fund will invest at least 90% of its assets in income-producing
securities.

EQUITY SECURITIES

. The fund will invest at least 50% of its assets in equity securities.

DEBT SECURITIES

. The fund may invest up to 5% of its assets in nonconvertible debt
securities rated Ba or below by Moody's Investors Service ("Moody's") and
BB 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 45% of its assets in equity securities of issuers
domiciled outside the United States.

. The fund may invest up to 5% of its assets in debt securities of issuers
domiciled outside the United States.

* * * * * *

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 objectives, 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. The prices
of these securities can also be adversely affected by the outcome of financial
contracts (such as derivatives) held by third parties relating to various assets
or indices.

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.

Capital Income Builder -- Page 2
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INVESTING IN SMALLER CAPITALIZATION STOCKS -- The fund may invest in the stocks
of smaller capitalization companies (typically companies with market
capitalizations of less than $3.5 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.

DEBT SECURITIES -- 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.

Certain additional risk factors relating to debt securities are discussed below:

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- Debt securities may be
sensitive to economic changes, political and corporate developments, and
interest rate changes. In addition, during an economic downturn or
substantial period of rising interest rates, issuers that are highly
leveraged may experience increased financial stress that would adversely
affect their ability to meet projected business goals, to obtain additional
financing and to service their principal and interest payment obligations.
Periods of economic change and uncertainty also can be expected to result
in increased volatility of market prices and yields of certain debt
securities. The prices of these securities can be adversely affected by the
outcome of financial contracts (such as derivatives) held by third parties
relating to various assets or indices.

PAYMENT EXPECTATIONS -- Debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a lower interest
rate market, the fund would have to replace the security with a lower
yielding security, resulting in decreased income to investors. If the
issuer of a debt security defaults on its obligations to pay interest or
principal or is the subject of bankruptcy proceedings, the fund may incur
losses or expenses in seeking recovery of amounts owed to it.

Capital Income Builder -- Page 3
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LIQUIDITY AND VALUATION -- There may be little trading in the secondary
market for particular debt securities, which may affect adversely the
fund's ability to value accurately or dispose of such debt securities.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and/or liquidity of debt
securities.

The investment adviser attempts to reduce the risks described above through
diversification of the fund's portfolio and by credit analysis of each issuer,
as well as by monitoring broad economic trends and corporate and legislative
developments, but there can be no assurance that it will be successful in doing
so.

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 and some may be subject to redemption at the option of the issuer at a
predetermined price. 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. These securities may 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.

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. However, in the opinion of the investment adviser, investing
outside the United States also can reduce certain portfolio risks due to greater
diversification opportunities.

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. The fund may invest in securities of issuers in developing countries
only to a limited extent.

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.

Capital Income Builder -- Page 4
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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.

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.

PASS-THROUGH SECURITIES -- The fund may invest in various debt obligations
backed by pools of mortgages or other assets including, but not limited to,
loans on single family residences, home equity loans, mortgages on commercial
buildings, credit card receivables and leases on airplanes or other equipment.
Principal and interest payments made on the underlying asset

Capital Income Builder -- Page 5
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pools backing these obligations are typically passed through to investors, net
of any fees paid to any guarantor of the securities. Pass-through securities may
have either fixed or adjustable coupons. These securities include:

MORTGAGE-BACKED SECURITIES -- These securities may be issued by U.S.
government agencies and government-sponsored entities, such as Ginnie Mae,
Fannie Mae and Freddie Mac, and by private entities. The payment of
interest and principal on mortgage-backed obligations issued by U.S.
government agencies may be guaranteed by the full faith and credit of the
U.S. government (in the case of Ginnie Mae), or may be guaranteed by the
issuer (in the case of Fannie Mae and Freddie Mac). However, these
guarantees do not apply to the market prices and yields of these
securities, which vary with changes in interest rates.
Mortgage-backed securities issued by private entities are structured
similarly to those issued by U.S. government agencies. However, these
securities and the underlying mortgages are not guaranteed by any
government agencies. These securities generally are structured with one or
more types of credit enhancement such as insurance or letters of credit
issued by private companies. Mortgage-backed securities generally permit
borrowers to prepay their underlying mortgages. Prepayments can alter the
effective maturity of these instruments.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) -- CMOs are also backed by a
pool of mortgages or mortgage loans, which are divided into two or more
separate bond issues. CMOs issued by U.S. government agencies are backed by
agency mortgages. Payments of principal and interest are passed through to
each bond issue at varying schedules resulting in bonds with different
coupons, effective maturities and sensitivities to interest rates. Some
CMOs may be structured in a way that when interest rates change, the impact
of changing prepayment rates on the effective maturities of certain issues
of these securities is magnified. CMOs may be less liquid or may exhibit
greater price volatility than other types of mortgage or asset-backed
securities.

COMMERCIAL MORTGAGE-BACKED SECURITIES -- These securities are backed by
mortgages on commercial property, such as hotels, office buildings, retail
stores, hospitals and other commercial buildings. These securities may have
a lower prepayment uncertainty than other mortgage-related securities
because commercial mortgage loans generally prohibit or impose penalties on
prepayments of principal. In addition, commercial mortgage-related
securities often are structured with some form of credit enhancement to
protect against potential losses on the underlying mortgage loans. Many of
the risks of investing in commercial mortgage-backed securities reflect the
risks of investing in the real estate securing the underlying mortgage
loans, including the effects of local and other economic conditions on real
estate markets, the ability of tenants to make rental payments and the
ability of a property to attract and retain tenants. Commercial
mortgage-backed securities may be less liquid or exhibit greater price
volatility than other types of mortgage or asset-backed securities.

ASSET-BACKED SECURITIES -- These securities are backed by other assets such
as credit card, automobile or consumer loan receivables, retail installment
loans or participations in pools of leases. Credit support for these
securities may be based on the underlying assets and/or provided through
credit enhancements by a third party. The values of these securities are
sensitive to changes in the credit quality of the underlying collateral,
the

Capital Income Builder -- Page 6
<PAGE>

credit strength of the credit enhancement, changes in interest rates and at
times the financial condition of the issuer. Some asset-backed securities
also may receive prepayments that can change their effective maturities.

REAL ESTATE INVESTMENT TRUSTS -- The fund may invest in securities issued by
real estate investment trusts (REITs), which primarily invest in real estate or
real estate-related loans. Equity REITs own real estate properties, while
mortgage REITs hold construction, development and/or long-term mortgage loans.
The values of REITs may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property taxes,
interest rates, tax laws and regulatory requirements, such as those relating to
the environment. Both types of REITs are dependent upon management skill and the
cash flows generated by their holdings, the real estate market in general and
the possibility of failing to qualify for any applicable pass-through tax
treatment or failing to maintain any applicable exemptive status afforded under
relevant laws.

VARIABLE AND FLOATING RATE OBLIGATIONS -- The interest rates payable on certain
securities in which the fund may invest may not be fixed but may fluctuate based
upon changes in market rates or credit ratings. Variable and floating rate
obligations bear coupon rates that are adjusted at designated intervals, based
on the then current market rates of interest or credit ratings. The rate
adjustment features tend to limit the extent to which the market value of the
obligations will fluctuate.

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.

LOANS OF PORTFOLIO SECURITIES -- The fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors whose
financial condition is monitored by the investment adviser. The borrower must
maintain with the fund's custodian collateral consisting of cash, cash
equivalents or U.S. government securities equal to at least 100% of the value of
the borrowed securities, plus any accrued interest. The investment adviser will
monitor the adequacy of the collateral on a daily basis. The fund may at any
time call a loan of its portfolio securities and obtain the return of the loaned
securities. The fund will receive any interest paid on the loaned securities and
a fee or a portion of the interest earned on the collateral. The fund will limit
its loans of portfolio securities to an aggregate of 33-1/3% of the value of its
total assets, measured at the time any such loan is made.

FORWARD COMMITMENT, WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The fund
may enter into commitments to purchase or sell securities at a future date. When
the fund agrees to purchase such securities, it assumes the risk of any decline
in value of the security from the date of the agreement. If the other party to
such a transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could experience a loss.

Capital Income Builder -- Page 7
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The fund will not use these transactions for the purpose of leveraging and will
segregate liquid assets that will be marked to market daily in an amount
sufficient to meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent the
fund's aggregate commitments in connection with these transactions exceed its
segregated assets, the fund temporarily could be in a leveraged position
(because it may have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while the
fund is in a leveraged position, greater depreciation of its net assets would
likely occur than if it were not in such a position. The fund will not borrow
money to settle these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations. After a transaction is entered into,
the fund may still dispose of or renegotiate the transaction. Additionally,
prior to receiving delivery of securities as part of a transaction, the fund may
sell such securities.

The fund may also enter into reverse repurchase agreements and "roll"
transactions. A reverse repurchase agreement involves the sale of a security by
a fund and its agreement to repurchase the security at a specified time and
price. A "roll" transaction involves the sale of mortgage-backed or other
securities together with a commitment to purchase similar, but not identical,
securities at a later date. The fund assumes the risk of price and yield
fluctuations during the time of the commitment. The fund will segregate liquid
assets that will be marked to market daily in an amount sufficient to meet its
payment obligations under "roll" transactions and reverse repurchase agreements
with broker-dealers (no collateral is required for reverse repurchase agreements
with banks).

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 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 may only be sold 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 to the fund or cause it to incur additional administrative
costs.

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 directors, 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

Capital Income Builder -- Page 8
<PAGE>

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.

Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. Transaction costs are
usually reflected in the spread between the bid and asked price.

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 October 31, 2006 and 2005 were 26% and 20%, 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
shareholder 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.

These restrictions provide that the fund may not:

1. Purchase any security (other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities) if immediately after and
as a result of such investment, more than 5% of the fund's total assets would be
invested in securities of the issuer; except that, as to 25% of the fund's total
assets, up to 10% of its total assets may be invested in securities issued or
guaranteed as to payment of interest and principal by a foreign government or
its agencies or instrumentalities or by a multinational agency;

2. Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry;

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

4. Knowingly purchase securities of other management investment companies,
except in connection with a merger, consolidation, acquisition, or
reorganization;

Capital Income Builder -- Page 9
<PAGE>

5. Buy or sell real estate or commodities or commodity contracts; however, the
fund may invest in debt securities secured by real estate or interests therein
or issued by companies which invest in real estate or interests therein,
including real estate investment trusts, and may purchase or sell currencies
(including forward currency contracts);

6. Acquire securities subject to restrictions on disposition or securities for
which there is no readily available market, or enter into repurchase agreements
or purchase time deposits maturing in more than seven days, if, immediately
after and as a result, the value of such securities would exceed, in the
aggregate, 10% of the fund's total assets;

7. Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically cause
it to be considered an underwriter as that term is defined under the Securities
Act of 1933;

8. Make loans, except that the fund may purchase debt securities, enter into
repurchase agreements and make loans of portfolio securities;

9. 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;

10. Purchase securities on margin, except that the fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities;

11. Borrow money, except from banks for temporary or emergency purposes not in
excess of 5% of the value of the fund's total assets (in the event that the
asset coverage for such borrowings falls below 300%, the fund will reduce,
within three days, the amount of its borrowings in order to provide for 300%
asset coverage), and except that the fund may enter into reverse repurchase
agreements and engage in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the fund may not exceed one-third of the fund's total assets;

12. Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with any
permissible borrowing;

13. Purchase or retain the securities of any issuer, if those individual
officers and directors of the fund, its investment adviser, or distributor, each
owning beneficially more than 1/2 of 1% of the securities of such issuer,
together own more than 5% of the securities of such issuer;

14. Invest in interests in oil, gas, or other mineral exploration or
development programs;

15. Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;

16. Write, purchase or sell put options, call options or combinations thereof;

With respect to investment restriction number 6, investments in 144A securities
and 4(2) commercial paper are excluded for the purposes of calculating the 10%
limitation.

With respect to investment restriction number 2, in determining industry
classifications for issuers domiciled outside the United States, the fund will
use reasonable classifications that are not so

Capital Income Builder -- Page 10
<PAGE>

broad that the primary economic characteristic of the companies in a single
class is materially different. The fund will determine such classifications of
issuers domiciled outside the United States based on the issuer's principal or
major business activities.

Notwithstanding investment restriction number 4, the fund may invest in
securities of other investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
its directors pursuant to an exemptive order granted by the Securities and
Exchange Commission.

NONFUNDAMENTAL POLICIES -- The following policies may be changed without
shareholder approval.

1. The fund may not issue senior securities, except as permitted by the 1940
Act.

2. The fund will not invest in securities of an issuer if the investment would
cause the fund to own more than 10% of any class of securities of any one
issuer.

Capital Income Builder -- Page 11
<PAGE>

MANAGEMENT OF THE FUND
BOARD OF DIRECTORS AND OFFICERS

"INDEPENDENT" DIRECTORS/1/

NAME, AGE AND NUMBER OF
POSITION WITH FUND PORTFOLIOS/3/
(YEAR FIRST ELECTED PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/2/) DURING PAST FIVE YEARS BY DIRECTOR BY DIRECTOR
------------------------------------------------------------------------------------------------------------

Joseph C. Berenato, 60 Chairman of the Board, 6 Ducommun Incorporated
Director (2005) President and CEO, Ducommun
Incorporated (aerospace
components manufacturer)
------------------------------------------------------------------------------------------------------------
H. Frederick Christie, 73 Private investor; former 20 Ducommun Incorporated;
Director (1987) President and CEO, The Mission IHOP Corporation;
Group (non-utility holding Southwest Water Company
company, subsidiary of
Southern California Edison
Company)
------------------------------------------------------------------------------------------------------------
Robert J. Denison, 65 Chair, First Security 5 None
Director (2005) Management (private
investments)
------------------------------------------------------------------------------------------------------------
Koichi Itoh, 66 Executive Chairman of the 5 None
Director (2005) Board, Itoh Building Co., Ltd.
(building management); former
President, Autosplice KK
(electronics)
------------------------------------------------------------------------------------------------------------
Merit E. Janow, 48 Professor, Columbia 2 The NASDAQ Stock Market,
Director (2001) University, School of Inc.
International and Public
Affairs
------------------------------------------------------------------------------------------------------------
Mary Myers Kauppila, 52 Private investor; Chairman of 5 None
Chairman of the Board the Board and CEO, Ladera
(Independent and Management Company (venture
Non-Executive) (1992) capital and agriculture);
former owner and President,
Energy Investment, Inc.
------------------------------------------------------------------------------------------------------------
Gail L. Neale, 71 President, The Lovejoy 5 None
Director (1987) Consulting Group, Inc. (a pro
bono consulting group advising
nonprofit organizations)
------------------------------------------------------------------------------------------------------------
Robert J. O'Neill, 70 Planning Director and acting 3 None
Director (1992) CEO of the United States
Studies Centre, University of
Sydney; former Deputy Chairman
of the Council and Chairman of
the International Advisory
Panel, Graduate School of
Government, University of
Sydney, Australia; Member of
the Board of Directors, The
Lowy Institute for
International Policy Studies,
Sydney, Australia; former
Chairman of the Council,
Australian Strategic Policy
Institute; former Chichele
Professor of the History of
War and Fellow, All Souls
College, University of Oxford;
former Chairman of the
Council, International
Institute for Strategic
Studies
------------------------------------------------------------------------------------------------------------
Donald E. Petersen, 80 Retired; former Chairman of 2 None
Director (1992) the Board and CEO, Ford Motor
Company
------------------------------------------------------------------------------------------------------------
Stefanie Powers, 64 Actor, Producer; Co-founder 2 None
Director (1989 - 1996; and President, The William
1997) Holden Wildlife Foundation;
conservation consultant to
Land Rover and Jaguar North
America; author of The Jaguar
Conservation Trust
------------------------------------------------------------------------------------------------------------
Steadman Upham, 57 President and Professor of 2 None
Director (2001) Anthropology, The University
of Tulsa; former President and
Professor of Archaeology,
Claremont Graduate University
------------------------------------------------------------------------------------------------------------
Charles Wolf, Jr., 82 Senior Economic Adviser and 2 None
Director (1987) Corporate Fellow in
International Economics, The
RAND Corporation; former Dean,
The RAND Graduate School
------------------------------------------------------------------------------------------------------------

Capital Income Builder -- Page 12
<PAGE>

"INTERESTED" DIRECTORS/5/

PRINCIPAL OCCUPATION(S)
DURING PAST FIVE YEARS
NAME, AGE AND AND POSITIONS NUMBER OF
POSITION WITH FUND HELD WITH AFFILIATED ENTITIES PORTFOLIOS/3/
(YEAR FIRST ELECTED OR THE PRINCIPAL UNDERWRITER OVERSEEN OTHER DIRECTORSHIPS/4/ HELD
AS A DIRECTOR/OFFICER/2/) OF THE FUND BY DIRECTOR BY DIRECTOR OR OFFICER
-----------------------------------------------------------------------------------------------------------

James B. Lovelace,/6/ 50 Senior Vice President and 2 None
Vice Chairman of the Director, Capital Research and
Board (1992) Management Company
-----------------------------------------------------------------------------------------------------------
Catherine M. Ward, 59 Senior Vice President and 1 None
Director (1987) Director, Capital Research and
Management Company; Director,
American Funds Service
Company*; Director, Capital
Group Research, Inc.*
-----------------------------------------------------------------------------------------------------------

Capital Income Builder -- Page 13
<PAGE>

OTHER OFFICERS/7/

NAME, AGE AND
POSITION WITH FUND PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
(YEAR FIRST ELECTED AND POSITIONS HELD WITH AFFILIATED ENTITIES
AS AN OFFICER/2/) OR THE PRINCIPAL UNDERWRITER OF THE FUND
-------------------------------------------------------------------------------

Joyce E. Gordon, 50 Senior Vice President and Director, Capital Research
President (1996) and Management Company
-------------------------------------------------------------------------------
Mark R. Macdonald, 47 Senior Vice President and Director, Capital Research
Executive Vice and Management Company
President (2001)
-------------------------------------------------------------------------------
Darcy B. Kopcho, 53 Senior Vice President and Director, Capital Research
Senior Vice and Management Company
President (2006)
-------------------------------------------------------------------------------
Michael Cohen, 45 Vice President and Director, Capital Research
Vice President Company*
(2006)
-------------------------------------------------------------------------------
David A. Hoag, 41 Senior Vice President, Capital Research Company*
Vice President
(2006)
-------------------------------------------------------------------------------
David M. Riley, 39 Senior Vice President, Capital Research Company*
Vice President
(2006)
-------------------------------------------------------------------------------
Vincent P. Corti, 50 Vice President - Fund Business Management Group,
Secretary (1987) Capital Research and Management Company
-------------------------------------------------------------------------------
Sheryl F. Johnson, 38 Vice President - Fund Business Management Group,
Treasurer (2003) Capital Research and Management Company
-------------------------------------------------------------------------------
Jeffrey P. Regal, 35 Vice President - Fund Business Management Group,
Assistant Treasurer Capital Research and Management Company
(2001)
-------------------------------------------------------------------------------

Capital Income Builder -- Page 14
<PAGE>

* Company affiliated with Capital Research and Management Company.
/1/ An "independent" director refers to a director who is not an "interested
person" within the meaning of the 1940 Act.
/2/ Directors and officers of the fund serve until their resignation, removal or
retirement.
/3/ Funds managed by Capital Research and Management Company, including the
American Funds, American Funds Insurance Series,(R) which is comprised of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts, and Endowments, which is comprised of two portfolios and
whose shareholders are limited to certain nonprofit organizations.
/4/ This includes all directorships (other than those in the American Funds) that
are held by each director as a director of a public company or a registered
investment company.
/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/ James B. Lovelace is the son of Jon B. Lovelace, Jr.
/7/ 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 DIRECTORS AND OFFICERS OF THE FUND IS 333 SOUTH HOPE STREET,
55TH FLOOR, LOS ANGELES, CALIFORNIA 90071, ATTENTION: SECRETARY.

Capital Income Builder -- Page 15
<PAGE>

FUND SHARES OWNED BY DIRECTOR 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 DIRECTOR
-------------------------------------------------------------------------------

"INDEPENDENT" DIRECTORS
-------------------------------------------------------------------------------
Joseph C. Berenato $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
H. Frederick Christie Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Robert J. Denison $10,001 - $50,000 Over $100,000
-------------------------------------------------------------------------------
Koichi Itoh Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Merit E. Janow $10,001 - $50,000 $50,001 - $100,000
-------------------------------------------------------------------------------
Mary Myers Kauppila Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Gail L. Neale Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Robert J. O'Neill None None
-------------------------------------------------------------------------------
Donald E. Petersen Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Stefanie Powers Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Steadman Upham $50,001 - $100,000 Over $100,000
-------------------------------------------------------------------------------
Charles Wolf, Jr. Over $100,000 Over $100,000
-------------------------------------------------------------------------------
"INTERESTED" DIRECTORS
-------------------------------------------------------------------------------
James B. Lovelace Over $100,000 Over $100,000
-------------------------------------------------------------------------------
Catherine M. Ward/2/ 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" directors include shares owned through The Capital Group
Companies, Inc. retirement plan and 401(k) plan.
/2/ Ms. Ward was elected director on September 19, 2006.

DIRECTOR COMPENSATION -- No compensation is paid by the fund to any officer or
director who is a director, officer or employee of the investment adviser or its
affiliates. The boards of funds advised by the investment adviser typically meet
either individually or jointly with the boards of other funds (in each case
referred to as a "board cluster"). The fund typically pays each independent
director an annual fee, which ranges from $15,000 to $34,000, based primarily on
the total number of board clusters on which that independent director serves.

In addition, the fund generally pays independent directors attendance fees for
meetings of the board and its committees. Board chairs receive additional
fees for their services.

Independent directors also receive attendance fees for certain joint meetings
and information sessions with directors and trustees of other funds advised by
the investment adviser. The fund

Capital Income Builder -- Page 16
<PAGE>

and the other funds served by each independent director each pay an equal
portion of these attendance fees.

No pension or retirement benefits are accrued as part of fund expenses.
Independent directors 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 independent directors.

DIRECTOR COMPENSATION PAID DURING THE FISCAL YEAR ENDED OCTOBER 31, 2006

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

Joseph C. Berenato/3/ $28,332 $214,500
------------------------------------------------------------------------------------------
H. Frederick Christie/3/ 31,989 379,750
------------------------------------------------------------------------------------------
Robert J. Denison 30,375 152,500
------------------------------------------------------------------------------------------
Koichi Itoh/3/ 28,750 147,500
------------------------------------------------------------------------------------------
Merit E. Janow 45,200 93,500
------------------------------------------------------------------------------------------
Mary Myers Kauppila/3/ 45,100 218,500
------------------------------------------------------------------------------------------
Gail L. Neale 29,625 147,000
------------------------------------------------------------------------------------------
Robert J. O'Neill 44,700 101,000
------------------------------------------------------------------------------------------
Donald E. Petersen/3/ 38,950 79,500
------------------------------------------------------------------------------------------
Stefanie Powers 38,950 79,500
------------------------------------------------------------------------------------------
Steadman Upham/3/ 43,700 90,500
------------------------------------------------------------------------------------------
Charles Wolf, Jr. 44,700 92,500
------------------------------------------------------------------------------------------

/1/ Amounts may be deferred by eligible directors 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 directors. Compensation shown in this table for the fiscal
year ended October 31, 2006 does not include earnings on amounts deferred in
previous fiscal years. See footnote 3 to this table for more information.
/2/ Funds managed by Capital Research and Management Company, including the
American Funds, American Funds Insurance Series,(R) which is comprised of 15
funds and serves as the underlying investment vehicle for certain variable
insurance contracts, and Endowments, which is comprised of two portfolios and
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 2006
fiscal year for participating directors is as follows: Joseph C. Berenato
($3,531), H. Frederick Christie ($226,522), Koichi Itoh ($36,582), Mary Myers
Kauppila ($556,564), Donald E. Petersen ($112,349) and Steadman Upham
($215,783). Amounts deferred and accumulated earnings thereon are not funded
and are general unsecured liabilities of the fund until paid to the directors.

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

Capital Income Builder -- Page 17
<PAGE>

FUND ORGANIZATION AND THE BOARD OF DIRECTORS -- The fund, an open-end,
diversified management investment company, was organized as a Maryland
corporation on June 8, 1987. Although the board of directors 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.

Under Maryland law, the business affairs of a fund are managed under the
direction of the board of directors, and all powers of the fund are exercised by
or under the authority of the board except as reserved to the shareholders by
law or the fund's charter or by-laws. Maryland law requires each director to
perform his/her duties as a director, including his/her duties as a member of
any board committee on which he/she serves, in good faith, in a manner he/she
reasonably believes to be in the best interest of the fund, and with the care
that an ordinarily prudent person in a like position would use under similar
circumstances.

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. 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 directors 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 Class 529
shares, the Virginia College Savings Plan/SM/ will vote any proxies relating to
such 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.

The fund's articles of incorporation and by-laws as well as separate
indemnification agreements that the fund has entered into with independent
directors provide in effect that, subject to certain conditions, the fund will
indemnify its officers and directors against liabilities or expenses actually
and reasonably incurred by them relating to their service to the fund. However,
directors are not protected from liability by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

REMOVAL OF DIRECTORS BY SHAREHOLDERS -- At any meeting of shareholders, duly
called and at which a quorum is present, shareholders may, by the affirmative
vote of the holders of a majority of the votes entitled to be cast, remove any
director from office and may elect a successor or

Capital Income Builder -- Page 18
<PAGE>

successors to fill any resulting vacancies for the unexpired terms of removed
directors. The fund has agreed, at the request of the staff of the Securities
and Exchange Commission, to apply the provisions of section 16(c) of the 1940
Act with respect to the removal of directors, as though the fund were a
common-law trust. Accordingly, the directors of the fund will promptly call a
meeting of shareholders for the purpose of voting upon the removal of any
directors when requested in writing to do so by the record holders of at least
10% of the outstanding shares.

COMMITTEES OF THE BOARD OF DIRECTORS -- The fund has an audit committee
comprised of H. Frederick Christie, Robert J. Denison, Merit E. Janow, Robert J.
O'Neill, Steadman Upham and Charles Wolf, Jr., 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 directors.
Five audit committee meetings were held during the 2006 fiscal year.

The fund has a nominating committee comprised of Koichi Itoh, Gail L. Neale,
Donald E. Petersen, Stefanie Powers and Steadman Upham, none of whom is 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, compensation and other relevant issues, and
recommends any appropriate changes to the full board of directors. The committee
also evaluates, selects and nominates independent director candidates to the
full board of directors. While the committee normally is able to identify from
its own and other 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
nominating committee of the fund, addressed to 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. One nominating committee
meeting was held during the 2006 fiscal year.

The fund has a contracts committee comprised of Joseph C. Berenato, H. Frederick
Christie, Robert J. Denison, Koichi Itoh, Merit E. Janow, Mary Myers Kauppila,
Gail L. Neale, Robert J. O'Neill, Donald E. Petersen, Stefanie Powers, Steadman
Upham and Charles Wolf, Jr., 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 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 directors on these matters. One contracts committee meeting
was held during the 2006 fiscal year.

The fund has a proxy committee comprised of Joseph C. Berenato, H. Frederick
Christie, Robert J. Denison, Koichi Itoh, Merit E. Janow, Mary Myers Kauppila,
Gail L. Neale, Robert J. O'Neill, Donald E. Petersen, Stephanie Powers, Steadman
Upham and Charles Wolf, Jr., none of whom is an "interested person" of the fund
within the meaning of the 1940 Act. The committee's functions include reviewing
procedures and policies for voting proxies of companies held in the fund's
portfolio, monitoring certain contested proxy voting issues, and

Capital Income Builder -- Page 19
<PAGE>

discussing related current issues. One proxy committee meeting was held during
the 2006 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, including the fund,
have established separate proxy voting 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 voting committee members
are alerted to the potential conflict. The proxy voting 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 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 americanfunds.com and (c) on the SEC's website at 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.

Capital Income Builder -- Page 20
<PAGE>

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 December 1, 2006. Unless
otherwise indicated, the ownership percentages below represent ownership of
record rather than beneficial ownership.

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

Edward D. Jones & Co. Class A 33.65%
201 Progress Parkway Class B 19.72
Maryland Heights, MO 63043-3009
----------------------------------------------------------------------------
Citigroup Global Markets, Inc. Class A 5.26
333 W. 34th Street Class B 8.88
New York, NY 10001-2402 Class C 19.15
Class F 5.37
----------------------------------------------------------------------------
MLPF&S Class B 6.96
4800 Deer Lake Drive East, Floor 2 Class C 15.88
Jacksonville, FL 32246-6484
----------------------------------------------------------------------------
Hartford Life Insurance Co. Class R-1 32.76
P.O. Box 2999 Class R-3 22.97
Hartford, CT 06104-2999
----------------------------------------------------------------------------
Nationwide Trust Company Class R-3 6.86
P.O. Box 182029
Columbus, OH 43218-2029
----------------------------------------------------------------------------
MG Trust Co. Class R-4 8.72
700 - 17th Street, Suite 300
Denver, CO 80202-3531
----------------------------------------------------------------------------
CGTC Class R-5 15.83
400 S. Hope Street, Floor 22
Los Angeles, CA 90071-2801
----------------------------------------------------------------------------

Capital Income Builder -- Page 21
<PAGE>

INVESTMENT ADVISER -- Capital Research and Management Company, the fund's
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 voting relating to 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 make investment decisions for 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

Capital Income Builder -- Page 22
<PAGE>

Capital Income Builder portfolio counselors are measured include: Lipper Income
Funds Index; Citigroup Broad Investment-Grade 1-10 Year Bond Index; MSCI World
Value Index; Lehman Aggregate Bond Index; and the total return of the Cash
Management Trust of America.

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 portions of other mutual funds or accounts
advised by Capital Research and Management Company or its affiliates.

THE FOLLOWING TABLE REFLECTS INFORMATION AS OF OCTOBER 31, 2006:

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/
--------------------------------------------------------------------------------------------

James B. Lovelace Over 2 $106.6 1 $0.05 None
$1,000,000
---------------------------------------------------------------------------------------------
Joyce E. Gordon Over 2 $106.6 None None
$1,000,000
---------------------------------------------------------------------------------------------
Mark R. Macdonald Over 5 $189.5 None None
$1,000,000
---------------------------------------------------------------------------------------------
Michael Cohen $10,001 - None None None
$50,000
---------------------------------------------------------------------------------------------
David A. Hoag Over 2 $ 5.1 None None
$1,000,000
---------------------------------------------------------------------------------------------
David M. Riley Over None None None
$1,000,000
---------------------------------------------------------------------------------------------
Timothy D. Armour $500,001 - 3 $116.0 None None
$1,000,000
---------------------------------------------------------------------------------------------
Steven T. Watson $50,001 - 3 $211.5 None None
$100,000
---------------------------------------------------------------------------------------------

/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. No fund has an advisory fee that is based on the
performance of the fund.
/3/ Represents funds advised or sub-advised by Capital Research and Management
Company and sold outside the United States and/ or fixed-income assets in
institutional accounts managed by investment adviser subsidiaries of Capital
Group International, Inc., an affiliate of Capital Research and Management
Company. Assets noted are the total net assets of the funds or accounts and are
not indicative of the total assets managed by the individual, which is a
substantially lower amount. No fund or account has an advisory fee that is
based on the performance of the fund or account.
/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.

Capital Income Builder -- Page 23
<PAGE>

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 October 31, 2007, 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 directors, 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 directors 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 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 independent directors; association dues;
costs of stationery and forms prepared exclusively for the fund; and costs of
assembling and storing shareholder account data.

The management fee is based upon the daily net assets of the fund and monthly
gross investment income. Gross investment income is determined in accordance
with generally accepted accounting principles.

The management fee is based on the following annualized rates and daily net
asset levels:

Net asset level

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

0.240% $ 0 $ 1,000,000,000
-----------------------------------------------------------------------------
0.200 1,000,000,000 2,000,000,000
-----------------------------------------------------------------------------
0.180 2,000,000,000 3,000,000,000
-----------------------------------------------------------------------------
0.165 3,000,000,000 5,000,000,000
-----------------------------------------------------------------------------
0.155 5,000,000,000 8,000,000,000
-----------------------------------------------------------------------------
0.150 8,000,000,000 13,000,000,000
-----------------------------------------------------------------------------
0.145 13,000,000,000 17,000,000,000
-----------------------------------------------------------------------------
0.140 17,000,000,000 21,000,000,000
-----------------------------------------------------------------------------
0.135 21,000,000,000 27,000,000,000
-----------------------------------------------------------------------------
0.130 27,000,000,000 34,000,000,000
-----------------------------------------------------------------------------
0.125 34,000,000,000 44,000,000,000
-----------------------------------------------------------------------------
0.120 44,000,000,000 55,000,000,000
-----------------------------------------------------------------------------
0.117 55,000,000,000 71,000,000,000
-----------------------------------------------------------------------------
0.114 71,000,000,000 89,000,000,000
-----------------------------------------------------------------------------
0.112 89,000,000,000
-----------------------------------------------------------------------------

Capital Income Builder -- Page 24
<PAGE>

The Agreement also provides for fees based on monthly gross investment income at
the following annualized rates:

Monthly gross income

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

3.00% $ 0 $100,000,000
----------------------------------------------------------------------------
2.50 100,000,000
----------------------------------------------------------------------------

Assuming net assets of $30 billion and gross investment income levels of 3%, 4%,
5%, 6% and 7%, management fees would be 0.24%, 0.27%, 0.30%, 0.32% and 0.35%,
respectively.

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) 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 regulations thereunder, it
will reduce its fee by the extent of such excess and, if required pursuant to
any such laws or regulations thereunder, will reimburse the fund in the amount
of such excess. To the extent the investment adviser is required to reduce its
management fee due to Class A share expense ratios exceeding the above limit,
the investment adviser will either: (i) reduce its management fee similarly for
other classes of shares, or (ii) reimburse the fund for other expenses to the
extent necessary to result in an expense reduction only for Class A shares of
the fund.

For the fiscal years ended October 31, 2006, 2005 and 2004, the investment
adviser was entitled to receive from the fund management fees of $164,654,000,
$124,219,000 and $80,589,000, respectively. After giving effect to the
management fee waivers described below, the fund paid the investment adviser
management fees of $148,174,000 (a reduction of $16,480,000), $114,050,000 (a
reduction of $10,169,000) and $79,841,000 (a reduction of $748,000) for the
fiscal years ended October 31, 2006, 2005 and 2004, respectively.

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

Capital Income Builder -- Page 25
<PAGE>

Agreement. Beginning April 1, 2005, this waiver increased to 10% of the
management fees that the investment adviser is otherwise entitled to receive. As
a result of this waiver, management fees are reduced similarly for all classes
of shares of the fund.

In addition, during the year ended October 31, 2006, the investment adviser
waived the fees in excess of the rates provided in the November 1, 2006 amended
investment advisory and service agreement.

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 October
31, 2007, 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 directors 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 independent directors. 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 and R-2 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
October 31, 2006, the total fees paid by the investment adviser were $326,000.

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 Class C, F, R (excluding Class R-5 shares) and 529 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 does 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.

Capital Income Builder -- Page 26
<PAGE>

During the 2006 fiscal year, administrative services fees, gross of any payments
made by the investment adviser, were:

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

CLASS C $8,764,000
--------------------------------------------------------------------------------
CLASS F 2,414,000
--------------------------------------------------------------------------------
CLASS 529-A 473,000
--------------------------------------------------------------------------------
CLASS 529-B 104,000
--------------------------------------------------------------------------------
CLASS 529-C 229,000
--------------------------------------------------------------------------------
CLASS 529-E 26,000
--------------------------------------------------------------------------------
CLASS 529-F 8,000
--------------------------------------------------------------------------------
CLASS R-1 80,000
--------------------------------------------------------------------------------
CLASS R-2 1,616,000
--------------------------------------------------------------------------------
CLASS R-3 716,000
--------------------------------------------------------------------------------
CLASS R-4 136,000
--------------------------------------------------------------------------------
CLASS R-5 377,000
--------------------------------------------------------------------------------

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; 15370
Barranca Parkway, Irvine, CA 92618; 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 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.

Capital Income Builder -- Page 27
<PAGE>

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 2006 $51,399,000 $226,129,000
2005 62,521,000 278,645,000
2004 39,449,000 176,000,000
-------------------------------------------------------------------------------------------
CLASS B 2006 3,409,000 22,689,000
2005 3,982,000 30,029,000
2004 4,241,000 28,435,000
-------------------------------------------------------------------------------------------
CLASS C 2006 1,012,000 21,456,000
2005 -- 23,732,000
2004 -- 15,511,000
-------------------------------------------------------------------------------------------
CLASS 529-A 2006 1,165,000 5,433,000
2005 1,102,000 5,196,000
2004 583,000 2,772,000
-------------------------------------------------------------------------------------------
CLASS 529-B 2006 109,000 691,000
2005 120,000 734,000
2004 132,000 709,000
-------------------------------------------------------------------------------------------
CLASS 529-C 2006 -- 796,000
2005 -- 691,000
2004 -- 477,000
-------------------------------------------------------------------------------------------

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 directors and separately by a majority of the independent
directors of the fund 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

Capital Income Builder -- Page 28
<PAGE>

the investment process from growth or stability of assets. The selection and
nomination of independent directors are committed to the discretion of the
independent directors 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 directors.

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 directors has approved the category of expenses for which
payment is being made: (a) for Class A shares, up to 0.30% 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, respectively; (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.

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%

Capital Income Builder -- Page 29
<PAGE>

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 2006 fiscal year, total 12b-1 expenses, and the portion of
the expenses that remained unpaid, were:

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

CLASS A $111,629,000 $16,097,000
--------------------------------------------------------------------------------------
CLASS B 38,228,000 4,212,000
--------------------------------------------------------------------------------------
CLASS C 69,974,000 11,034,000
--------------------------------------------------------------------------------------
CLASS F 6,551,000 1,331,000
--------------------------------------------------------------------------------------
CLASS 529-A 1,064,000 169,000
--------------------------------------------------------------------------------------
CLASS 529-B 1,013,000 118,000
--------------------------------------------------------------------------------------
CLASS 529-C 2,432,000 398,000
--------------------------------------------------------------------------------------
CLASS 529-E 162,000 30,000
--------------------------------------------------------------------------------------
CLASS 529-F 0 0
--------------------------------------------------------------------------------------
CLASS R-1 492,000 105,000
--------------------------------------------------------------------------------------
CLASS R-2 2,334,000 443,000
--------------------------------------------------------------------------------------
CLASS R-3 1,745,000 327,000
--------------------------------------------------------------------------------------
CLASS R-4 222,000 45,000
--------------------------------------------------------------------------------------

Capital Income Builder -- Page 30
<PAGE>

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

A. G. Edwards & Sons, Inc.
AIG Advisors Group:
Advantage Capital
AIG Financial Advisors
FSC
Royal Alliance
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.:
Bancnorth Investment Group
Financial Network
ING Financial Advisors
ING Financial Partners
Multi - Financial
Primevest
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.:
Invest
Investment Centers of America
National Planning Corp
SII Investments

Capital Income Builder -- Page 31
<PAGE>

NFP Securities, Inc.
Northwestern Mutual Investment Services, LLC.
Pacific Select Group, LLC:
Associated Securities
Contemporary Financial
Mutual Service Corporation
United Planners
Waterstone
Park Avenue Securities LLC
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
October 31, 2006, 2005 and 2004 amounted to $42,768,000, $34,660,000 and
$25,365,000, 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 volume of trading activity increased during the year, resulting in an
increase in brokerage commissions and concessions paid 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

Capital Income Builder -- Page 32
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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 Citigroup Global Markets Inc., Credit Suisse Group,
Deutsche Bank AG, First Clearing LLC, Goldman Sachs & Co., J.P. Morgan
Securities Inc., Lehman Brothers and UBS AG. As of the fund's most recent fiscal
year-end, the fund held equity securities of Citigroup Inc. in the amount of
$710,767,000, Credit Suisse Group in the amount of $100,507,000, J.P. Morgan
Chase & Co. in the amount of $237,200,000 and UBS AG in the amount of
$180,289,000. The fund held debt securities of Citigroup Inc. in the amount of
$30,459,000, Deutsche Bank AG in the amount of $8,187,000, Goldman Sachs Group
Inc. in the amount of $8,140,000, J.P. Morgan Chase & Co. in the amount of
$43,108,000, Lehman Brothers Holdings Inc. in the amount of $8,009,000 and
Wachovia Corporation in the amount of $21,239,000.

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 directors 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.
The fund's custodian, outside counsel and auditor, each of which 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 appropriate investment-related

Capital Income Builder -- Page 33
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committees of the fund's investment adviser. In exercising their authority, the
committees determine 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
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 should 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 indicated below. The fund follows
standard industry practice by typically reflecting changes in its holdings of
portfolio securities on the first business day following a portfolio trade.

Capital Income Builder -- Page 34
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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 calculation of the fund's net asset
value.

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 by the investment adviser, 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

Capital Income Builder -- Page 35
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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 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.

Capital Income Builder -- Page 36
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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 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 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. 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,

Capital Income Builder -- Page 37
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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 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.

Capital Income Builder -- Page 38
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The price of a bond purchased after its original issuance may reflect
market discount which, depending on the particular circumstances, may
affect the tax character and amount of income required to be recognized by
a fund holding the bond. In determining whether a bond is purchased with
market discount, certain de minimis rules apply.

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. Some
foreign countries 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.
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.

Capital Income Builder -- Page 39
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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.

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.

Capital Income Builder -- Page 40
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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 APPLICABLE PROGRAM
DESCRIPTION FOR INFORMATION ON POLICIES AND SERVICES SPECIFICALLY RELATING TO
THESE ACCOUNTS. SHAREHOLDERS HOLDING SHARES THROUGH AN ELIGIBLE RETIREMENT PLAN
SHOULD CONTACT THEIR PLAN'S ADMINISTRATOR OR RECORDKEEPER FOR INFORMATION
REGARDING PURCHASES, SALES AND EXCHANGES.

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.
The amount of time it takes for us to receive regular U.S. postal mail may
vary and there is no assurance that we will receive such mail on the day
you expect. Mailing addresses for regular U.S. postal mail can be found in
the prospectus. To send investments or correspondence to us via overnight
mail or courier service, use any of the following addresses:

American Funds
8332 Woodfield Crossing Blvd.
Indianapolis, IN 46240-2482

American Funds
3500 Wiseman Blvd.
San Antonio, TX 78251-4321

American Funds
5300 Robin Hood Rd.
Norfolk, VA 23513-2407

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

Capital Income Builder -- Page 41
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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. Class R-5 shares are also 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.

In the case of American Funds non-tax-exempt funds, 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:

Capital Income Builder -- Page 42
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. 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.

Certain accounts held on the fund's books, known as omnibus accounts, contain
multiple underlying accounts that are invested in shares of the fund. These
underlying accounts are maintained by entities such as financial intermediaries
and are subject to the applicable initial purchase minimums as described in the
prospectus and statement of additional information. However, in the case where
the entity maintaining these accounts aggregates the accounts' purchase orders
for fund shares, such accounts are not required to meet the minimum amount for
subsequent purchases.

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. Exchanges from Class A shares of The Cash
Management Trust of America to Class B or C shares of Intermediate Bond Fund of
America, Limited Term Tax-Exempt Bond Fund of America and Short-Term Bond Fund
of America are not permitted. 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.

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.

Capital Income Builder -- Page 43
<PAGE>

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, you may either reinvest the
proceeds in Class B shares or purchase Class A shares. If you purchase
Class A shares, you are 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 contingent 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

Capital Income Builder -- Page 44
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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, 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;

Capital Income Builder -- Page 45
<PAGE>

(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.
TRANSFERS TO COLLEGEAMERICA -- A transfer from the Virginia Prepaid
Education Program/SM/ or the Virginia Education Savings Trust/SM/ to a
CollegeAmerica account will be made with no sales charge. No commission
will be paid to the dealer on such a transfer.

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.

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 (expressed as a percentage of your purchases) as if
all shares had been purchased at once.

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.

Capital Income Builder -- Page 46
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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 purchases must be made will remain
unchanged. Purchases made from the date of revision will receive the
reduced sales charge, if any, resulting from the revised Statement.

The Statement will be considered completed if the shareholder dies within
the 13-month 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 a shareholder elects to use a Statement, shares equal to 5% of the
dollar amount specified in the Statement may 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 may be required to 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. Any dealers assigned to the shareholder's account at the
time a purchase was made during the Statement period will receive a
corresponding commission adjustment if appropriate. 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 may be liable
to the Principal Underwriter for the balance still outstanding.

Certain payroll deduction retirement plans purchasing Class A shares under
a Statement on or before November 12, 2006, may continue to purchase Class
A shares at the sales charge determined by that particular Statement until
the plans' values reach the amounts specified in their Statements. Upon
reaching such amounts, the Statements for these plans will be deemed
completed and will terminate at that time. After such termination, these
plans are eligible for additional sales charge reductions by meeting the
criteria under the fund's rights of accumulation policy.

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.

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 plans, 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

Capital Income Builder -- Page 47
<PAGE>

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

. 529 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, in each case 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.

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

Capital Income Builder -- Page 48
<PAGE>

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, 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 your
investment is not in 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"):

. 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

Capital Income Builder -- Page 49
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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 elimination of the fund by
the Virginia College Savings Plan 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. To contact American Funds Service Company via overnight mail or
courier service, see "Purchase and exchange of shares."

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.

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.

Capital Income Builder -- Page 50
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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 10
business 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
per fund; $25 minimum per fund in the case of employer-sponsored 529 accounts)
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 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:

Capital Income Builder -- Page 51
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(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. 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 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.

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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 Articles of Incorporation 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 directors of the fund may from time to time
adopt.

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.

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 JPMorgan Chase Bank, 270 Park Avenue, New York, NY 10017-2070, 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

Capital Income Builder -- Page 53
<PAGE>

Service Company is located at 135 South State College Boulevard, Brea, CA
92821-5823. American Funds Service Company was paid a fee of $34,302,000 for
Class A shares and $3,159,000 for Class B shares for the 2006 fiscal year.
American Funds Service Company is also compensated for certain transfer agency
services provided to all other share classes from the administrative services
fees paid to Capital Research and Management Company, as described under
"Administrative services agreement."

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 -- PricewaterhouseCoopers LLP, 350
South Grand Avenue, Los Angeles, CA 90071, 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 PricewaterhouseCoopers 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 directors.

INDEPENDENT LEGAL COUNSEL -- O'Melveny & Myers LLP, 400 South Hope Street, Los
Angeles, CA 90071, serves as counsel for the fund and for independent directors
in their capacities as such. Certain legal matters in connection with the
capital shares offered by the prospectus have been passed upon for the fund by
O'Melveny & Myers 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 independent directors 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 October 31. Shareholders are provided updated prospectuses annually
and at least semiannually with reports showing the fund's investment portfolio
or 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, PricewaterhouseCoopers 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 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

Capital Income Builder -- Page 54
<PAGE>

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
August 30, 2006, the NASD Hearing Panel ruled against the Principal Underwriter
and imposed a $5 million fine. The Principal Underwriter has appealed this
decision to the NASD's National Adjudicatory Council.

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. The Attorney General
is appealing 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, two class
action lawsuits have been filed in the U.S. District Court, Central District of
California, relating to these matters. The investment adviser believes that
these suits are 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:

DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE
PER SHARE FOR CLASS A SHARES -- OCTOBER 31, 2006

Net asset value and redemption price per share
(Net assets divided by shares outstanding). . . . . . . . . . . $59.91
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). . . . . . . . . . . . . . . . . . . . . . . . . $63.56

Capital Income Builder -- Page 55
<PAGE>

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
Short-Term Bond Fund of America/SM/ . . . . . . . . . . . . . 048 248 348 448
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.

Capital Income Builder -- Page 56
<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
Short-Term Bond Fund of America 1048 1248 1348 1548 1448
U.S. Government Securities Fund 1022 1222 1322 1522 1422
MONEY MARKET FUND
The Cash Management Trust of
America . . . . . . . . . . . . 1009 1209 1309 1509 1409

Capital Income Builder -- Page 57
<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
Short-Term Bond Fund of America. . . 2148 2248 2348 2448 2548
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.

Capital Income Builder -- Page 58
<PAGE>

APPENDIX

DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to
repay short-term debt obligations.

P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to
repay short-term debt obligations.

P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to
repay short-term obligations.

STANDARD & POOR'S
COMMERCIAL PAPER RATINGS (HIGHEST THREE RATINGS)

A-1
A short-term obligation rated A-1 is rated in the highest category by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.

A-2
A short-term obligation rated A-2 is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

A-3
A short-term obligation rated A-3 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.

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

Capital Income Builder -- Page 59
<PAGE>

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.

Capital Income Builder -- Page 60
<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.

Capital Income Builder -- Page 61
<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.

Capital Income Builder -- Page 62

[logo - American Funds^©]

Capital Income Builder^®

Investment portfolio

October 31, 2006


Common stocks — 67.54%	Shares	Market value (000)

FINANCIALS — 19.09%
Fannie Mae	12,900,000	$764,454
Société Générale	4,398,870	730,807
HSBC Holdings PLC (Hong Kong)	23,870,097	450,397
HSBC Holdings PLC (United Kingdom)	14,158,402	268,381
Citigroup Inc.	14,170,000	710,767
Bank of America Corp.	11,867,340	639,294
BNP Paribas	5,320,270	584,843
Banco Santander Central Hispano, SA	33,432,614	578,470
Freddie Mac	7,900,000	545,021
Washington Mutual, Inc.	12,000,000	507,600
ING Groep NV	9,866,216	436,974
National City Corp.	11,619,800	432,838
iStar Financial, Inc.¹	7,065,500	327,345
Danske Bank A/S	7,641,000	320,611
Fortis	7,420,000	311,210
Lloyds TSB Group PLC	25,235,000	269,249
AXA SA	6,983,333	265,985
Banco Itaú Holding Financeira SA, preferred nominative	7,696,200	253,425
Bank of Nova Scotia	5,647,200	247,936
Westpac Banking Corp.	13,256,437	245,802
J.P. Morgan Chase & Co.	5,000,000	237,200
St. George Bank Ltd.	9,034,601	226,695
Wells Fargo & Co.	6,070,000	220,280
Sun Hung Kai Properties Ltd.	19,622,000	214,503
Regions Financial Corp.	5,650,000	214,417
Equity Residential	3,750,500	204,815
Irish Life & Permanent PLC	7,713,949	189,478
UniCredito Italiano SpA	22,480,000	186,334
Royal Bank of Canada	4,180,000	185,381
UBS AG	3,016,620	180,289
Archstone-Smith Trust	2,915,000	175,512
DnB NOR ASA	12,870,000	168,614
CapitaMall Trust Management Ltd.¹	100,628,470	167,155
Westfield Group	11,506,447	165,961
Hang Lung Properties Ltd.	71,649,100	156,189
Swire Pacific Ltd., Class A	12,950,000	136,739
Commerzbank U.S. Finance, Inc.	3,750,000	133,071
Weingarten Realty Investors	2,634,750	122,516
Banco Bilbao Vizcaya Argentaria, SA	5,000,000	120,710
Chinatrust Financial Holding Co., Ltd.	165,157,759	119,957
Siam Commercial Bank PCL	65,552,400	117,026
Health Care Property Investors, Inc.	3,670,000	115,238
Brandywine Realty Trust	3,400,000	113,424
ProLogis	1,750,000	110,722
CapitaCommercial Trust Management Ltd.¹	77,882,700	107,893
Marsh & McLennan Companies, Inc.	3,600,000	105,984
Cathay Financial Holding Co., Ltd.	52,833,344	102,489
United Overseas Bank Ltd.	8,885,000	100,862
Credit Suisse Group	1,666,000	100,507
Ascendas Real Estate Investment Trust¹	72,142,600	100,404
Suntec Real Estate Investment Trust¹	92,244,000	91,700
Bank of New York Co., Inc.	2,040,000	70,115
KeyCorp	1,860,000	69,080
GuangZhou R&F Properties Co., Ltd., Class H	42,284,000	69,023
AMB Property Corp.	1,175,000	68,632
ABN AMRO Holding NV	2,350,000	68,518
United Bankshares, Inc.	1,775,000	67,787
Kimco Realty Corp.	1,500,000	66,645
Hongkong Land Holdings Ltd.	17,107,600	64,325
KBC Groupe SA	525,000	57,343
FirstMerit Corp.	2,444,493	56,761
St. Paul Travelers Companies, Inc.	1,075,000	54,965
Macquarie International Infrastructure Fund Ltd.¹	83,170,000	52,008
XL Capital Ltd., Class A	642,800	45,350
Hospitality Properties Trust	930,000	45,068
SunTrust Banks, Inc.	550,000	43,444
Developers Diversified Realty Corp.	670,000	40,803
Fortune Real Estate Investment Trust¹	52,262,500	39,297
Lincoln National Corp.	541,500	34,282
Fidelity National Financial, Inc.	1,300,000	28,990
Shanghai Forte Land Co., Ltd., Class H	57,180,000	25,209
AmSouth Bancorporation	750,000	22,665
Mercury General Corp.	400,000	20,708
Wing Lung Bank Ltd.	2,095,900	19,935
Public Financial Holdings Ltd.	26,009,000	19,924
Allco Commercial REIT¹	32,100,000	19,764
Prosperity REIT¹	81,325,000	18,815
Mapletree Logistics Trust	26,730,000	17,143
Wharf (Holdings) Ltd.	4,680,000	15,880
Arthur J. Gallagher & Co.	550,000	15,317
Colonial Properties Trust	244,200	12,305
		14,833,575

UTILITIES — 9.77%
E.ON AG	10,460,000	1,254,614
Exelon Corp.	13,485,000	835,800
National Grid PLC	61,137,551	781,148
Veolia Environnement	12,546,100	767,944
Gas Natural SDG, SA	10,120,000	401,856
Electricité de France SA	5,381,000	326,211
FirstEnergy Corp.	5,010,500	294,868
Dominion Resources, Inc.	3,462,190	280,403
Southern Co.	6,800,000	247,520
Scottish Power PLC	18,813,396	234,457
PPL Corp.	5,840,000	201,597
Hongkong Electric Holdings Ltd.	35,750,000	168,179
Public Service Enterprise Group Inc.	2,386,300	145,684
Edison International	3,000,000	133,320
DTE Energy Co.	2,750,000	124,933
Xcel Energy Inc.	5,516,000	121,738
Northeast Utilities	4,645,000	116,171
Ameren Corp.	2,076,020	112,313
SP AusNet¹	107,253,698	107,947
Cheung Kong Infrastructure Holdings Ltd.	36,022,000	107,879
FPL Group, Inc.	2,000,000	102,000
Energy East Corp.	3,880,000	94,323
Duke Energy Corp.	2,677,640	84,721
Consolidated Edison, Inc.	1,650,000	79,777
Equitable Resources, Inc.	1,780,000	72,126
Entergy Corp.	752,500	64,587
Scottish and Southern Energy PLC	2,400,000	60,139
KeySpan Corp.	1,390,000	56,406
Progress Energy, Inc.	1,200,000	55,200
NiSource Inc.	2,289,307	53,272
Pinnacle West Capital Corp.	738,200	35,293
American Electric Power Co., Inc.	684,600	28,363
United Utilities PLC	1,666,666	22,677
Hong Kong and China Gas Co. Ltd.	7,800,000	17,866
		7,591,332

TELECOMMUNICATION SERVICES — 7.64%
BellSouth Corp.	26,003,000	1,172,735
AT&T Inc.	33,519,452	1,148,041
Koninklijke KPN NV	58,237,900	778,042
Verizon Communications Inc.	19,410,000	718,170
Chunghwa Telecom Co., Ltd. (ADR)	11,590,952	211,999
Chunghwa Telecom Co., Ltd.	79,914,960	136,997
France Télécom, SA	12,593,000	326,997
Embarq Corp.	6,500,000	314,275
Telekomunikacja Polska SA	33,779,800	248,668
Telefónica, SA	8,683,763	167,315
Singapore Telecommunications Ltd.	74,337,500	126,344
Telecom Corp. of New Zealand Ltd.	39,363,919	123,203
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk, Class B	118,300,000	109,380
Belgacom SA	2,030,800	83,077
Advanced Info Service PCL	27,980,000	68,635
BT Group PLC	10,000,000	53,062
Vodafone Group PLC	17,500,000	45,053
Far EasTone Telecommunications Co., Ltd.	32,178,000	36,775
Philippine Long Distance Telephone Co.	730,190	34,603
SK Telecom Co., Ltd. (ADR)	1,400,000	33,712
		5,937,083

CONSUMER STAPLES — 5.64%
Altria Group, Inc.	13,575,500	1,104,095
UST Inc.¹	8,178,000	438,014
Nestlé SA	1,150,000	393,139
Diageo PLC	18,793,272	347,636
H.J. Heinz Co.	8,145,000	343,393
Reynolds American Inc.	5,380,000	339,801
Foster’s Group Ltd.	47,374,500	236,569
Imperial Tobacco Group PLC	5,790,000	205,041
Gallaher Group PLC	11,980,292	203,333
Kellogg Co.	3,880,000	195,203
ConAgra Foods, Inc.	7,170,000	187,496
Coca-Cola Co.	2,625,000	122,640
Unilever NV	3,280,800	80,879
Sara Lee Corp.	4,500,000	76,950
Unilever PLC	2,025,000	$ 50,240
Wolverhampton & Dudley Breweries, PLC	1,066,255	29,626
Lion Nathan Ltd.	4,431,066	28,439
		4,382,494

INDUSTRIALS — 5.41%
General Electric Co.	21,075,000	739,943
Macquarie Infrastructure Group¹	139,581,612	365,257
Siemens AG	3,525,000	317,102
Macquarie Airports¹	107,363,105	266,817
Brisa Auto-Estradas de Portugal SA	20,777,613	229,596
GS Engineering & Construction Co. Ltd.¹	2,550,000	198,445
Volvo AB, Class B	2,908,400	181,863
Singapore Technologies Engineering Ltd.	80,098,000	152,059
SembCorp Marine Ltd.	67,499,000	148,055
Abertis Infraestructuras SA, Class A	5,262,100	142,413
Sandvik AB	10,875,000	132,916
Koninklijke BAM Groep NV	6,100,695	127,120
Stagecoach Group PLC	46,814,168	124,538
Emerson Electric Co.	1,470,000	124,068
Geberit AG	88,850	115,851
Uponor Oyj	3,480,000	105,461
Waste Management, Inc.	2,600,000	97,448
Leighton Holdings Ltd.	5,347,000	88,050
Transport International Holdings Ltd.	15,922,800	82,376
ComfortDelGro Corp. Ltd.	67,824,451	70,904
Singapore Post Private Ltd.	95,685,000	61,368
Spirax-Sarco Engineering PLC	3,336,391	59,299
Sydney Roads Group^1,3	60,682,071	53,558
SMRT Corp. Ltd.	73,763,000	52,985
Qantas Airways Ltd.	15,052,744	49,412
Transurban Group³	6,256,552	34,972
Seco Tools AB, Class B	2,525,000	34,970
Fong’s Industries Co. Ltd.¹	36,590,000	24,879
Hong Kong Aircraft Engineering Co. Ltd.	1,232,400	15,595
Macquarie Infrastructure Company Trust	339,100	10,115
		4,207,435

ENERGY — 4.54%
Royal Dutch Shell PLC, Class A (ADR)	6,828,000	475,365
Royal Dutch Shell PLC, Class B	6,997,187	250,593
Royal Dutch Shell PLC, Class B (ADR)	1,866,228	134,368
Royal Dutch Shell PLC, Class A	3,055,000	105,836
Husky Energy Inc.	8,065,000	513,678
Chevron Corp.	5,640,000	379,008
ENI SpA	11,060,000	333,480
ConocoPhillips	4,676,000	281,682
Norsk Hydro ASA	11,470,000	263,766
SBM Offshore NV¹	8,335,188	246,642
Repsol YPF, SA	6,856,000	227,455
Enbridge Inc.	3,531,116	118,742
Marathon Oil Corp.	1,250,000	108,000
TOTAL SA	694,000	46,978
TOTAL SA (ADR)	600,000	40,884
		3,526,477

CONSUMER DISCRETIONARY — 3.86%
Renault SA	3,496,000	$ 408,841
Greek Organization of Football Prognostics SA	10,207,040	364,417
DSG International PLC	54,809,561	227,335
Esprit Holdings Ltd.	22,418,000	216,973
Mediaset SpA	17,700,000	198,524
Kingfisher PLC	37,845,000	189,989
General Motors Corp.	4,665,600	162,923
Kesa Electricals PLC	21,750,000	145,481
Shangri-La Asia Ltd.	60,472,000	131,202
Macquarie Communications Infrastructure Group¹	25,667,933	121,617
Vivendi SA	3,000,000	113,577
Harrah’s Entertainment, Inc.	1,450,000	107,779
Clear Channel Communications, Inc.	2,631,700	91,715
Greene King PLC	3,927,110	71,782
SanomaWSOY OYJ, Class B	2,250,000	58,022
Schibsted ASA	1,907,400	57,803
Intercontinental Hotels Group PLC	2,874,292	55,306
Hyundai Motor Co., nonvoting preferred, Series 2	1,130,000	53,387
British Sky Broadcasting Group PLC	4,665,000	48,262
ServiceMaster Co.	3,504,500	39,706
Ekornes ASA	1,830,425	39,641
Hilton Group PLC	4,200,000	32,718
Fisher & Paykel Appliances Holdings Ltd.	10,600,000	26,996
Gestevisión Telecinco SA	650,000	17,077
KangwonLand Inc.	875,000	16,954
		2,998,027

MATERIALS — 3.22%
Bayer AG	7,267,000	365,808
China Steel Corp.	402,931,115	356,276
POSCO	825,000	229,045
UPM-Kymmene Corp.	6,600,000	167,506
Gujarat Ambuja Cements Ltd.	56,000,000	146,548
Fletcher Building Ltd.	21,176,596	134,829
Norske Skogindustrier ASA	6,582,142	103,764
Taiwan Fertilizer Co., Ltd.¹	63,700,000	103,453
Dow Chemical Co.	2,500,000	101,975
Lyondell Chemical Co.	3,600,000	92,412
Aracruz Celulose SA, Class B, preferred nominative (ADR)	1,673,000	92,048
Packaging Corp. of America	3,763,000	86,436
Stora Enso Oyj, Class R	5,000,000	80,898
PaperlinX Ltd.¹	22,547,000	71,918
RPM International, Inc.	3,325,000	63,674
Worthington Industries, Inc.	3,639,800	62,896
Compass Minerals International, Inc.	1,550,000	47,972
LG Petrochemical Co., Ltd.	1,843,750	43,945
AngloGold Ashanti Ltd.	987,000	41,878
E.I. du Pont de Nemours and Co.	900,000	41,220
Boral Ltd.	6,013,024	33,844
Temple-Inland Inc.	472,860	18,649
Hung Hing Printing Group Ltd.	29,024,000	15,855
		2,502,849

HEALTH CARE — 2.94%
Merck & Co., Inc.	15,319,600	695,816
Bristol-Myers Squibb Co.	19,000,000	470,250
Abbott Laboratories	8,098,700	384,769
Pfizer Inc	10,450,000	278,493
AstraZeneca PLC (ADR)	2,445,000	143,522
Sonic Healthcare Ltd.	10,995,549	111,943
Cochlear Ltd.	2,480,600	106,913
Fisher & Paykel Healthcare Corp. Ltd.¹	33,211,000	93,038
		2,284,744

INFORMATION TECHNOLOGY — 0.98%
Microsoft Corp.	15,185,000	435,961
Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)	12,267,593	118,996
Taiwan Semiconductor Manufacturing Co. Ltd.	24,415,649	44,793
Delta Electronics, Inc.	35,000,000	98,947
Rotork PLC	2,400,000	35,928
Electrocomponents PLC	5,192,100	28,565
		763,190

MISCELLANEOUS — 4.45%
Other common stocks in initial period of acquisition		3,460,109


Total common stocks (cost: $38,338,196,000)		52,487,315


Preferred stocks — 0.38%

FINANCIALS — 0.38%
MUFG Capital Finance 1 Ltd. 6.346% noncumulative preferred⁴	45,829,000	46,147
BNP Paribas 5.186% noncumulative^4,5	43,050,000	41,126
Fannie Mae, Series E, 5.10%	550,000	25,450
Fannie Mae, Series L, 5.125%	273,350	12,547
Wachovia Capital Trust III 5.80%⁴	35,000,000	35,342
Banco Santander Central Hispano, SA 6.80%^3,5	1,014,800	25,370
Bank of America Corp., Series E, 0% preferred depositary shares³	1,000,000	25,050
Public Storage, Inc., Series F, 6.45% preferred	1,000,000	24,700
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative preferred^4,5	20,000,000	20,375
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%^4,5	14,520,000	13,972
iStar Financial, Inc., Series F, 7.80% cumulative redeemable preferred¹	400,000	10,432
HSBC Holdings PLC 4.61% (undated)^4,5	8,000,000	7,500
Deutsche Bank Capital Funding Trust I, 7.872%^4,5	3,950,000	4,191

Total preferred stocks (cost: $286,139,000)		292,202


Convertible securities — 0.47%	Shares or principal amount

FINANCIALS — 0.12%
Fannie Mae 5.375% convertible preferred	965	93,967


UTILITIES — 0.11%
PG&E Corp. 9.50% convertible notes 2010	$28,000,000	87,780



Convertible securities	Shares or principal amount	Market value (000)

CONSUMER DISCRETIONARY — 0.11%
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust preferred 2032	1,949,300	$ 67,153
General Motors Corp., Series B, 5.25% convertible debentures 2032	$17,500,000	14,469
		81,622

HEALTH CARE — 0.07%
Schering-Plough Corp. 6.00% convertible preferred 2007	1,000,000	55,060


MATERIALS — 0.06%
Freeport-McMoRan Copper & Gold Inc. 5.50% convertible preferred	32,900	45,081


Total convertible securities (cost: $331,832,000)		363,510



Bonds & notes — 19.28%	Principal amount (000)

MORTGAGE-BACKED OBLIGATIONS⁶— 6.31%
Fannie Mae 4.89% 2012	$25,000	24,659
Fannie Mae, Series 2002-T11, Class B, 5.341% 2012	20,000	20,336
Fannie Mae 4.00% 2015	61,641	58,998
Fannie Mae 11.00% 2015	628	706
Fannie Mae 7.00% 2016	106	108
Fannie Mae 11.00% 2016	335	379
Fannie Mae 5.00% 2017	216	213
Fannie Mae, Series 2002-15, Class PG, 6.00% 2017	16,837	17,066
Fannie Mae 5.00% 2018	36,107	35,684
Fannie Mae 5.00% 2018	2,280	2,253
Fannie Mae 11.00% 2018	646	736
Fannie Mae 5.50% 2019	30,010	30,120
Fannie Mae 11.00% 2020	247	272
Fannie Mae 6.00% 2021	11,304	11,481
Fannie Mae 6.00% 2021	8,865	9,004
Fannie Mae 10.50% 2022	510	564
Fannie Mae, Series 2002-W3, Class A-5, 7.50% 2028	442	459
Fannie Mae 7.50% 2029	96	100
Fannie Mae 7.00% 2030	345	356
Fannie Mae, Series 2001-25, Class ZA, 6.50% 2031	4,000	4,130
Fannie Mae 7.00% 2031	298	307
Fannie Mae 7.50% 2031	313	325
Fannie Mae 7.50% 2031	63	65
Fannie Mae 7.00% 2032	448	461
Fannie Mae 3.742% 2033⁴	13,034	12,809
Fannie Mae 4.056% 2033⁴	2,577	2,527
Fannie Mae 4.184% 2033⁴	2,857	2,827
Fannie Mae 5.50% 2034	22,323	22,100
Fannie Mae 5.50% 2034	21,288	21,085
Fannie Mae 5.50% 2034	11,253	11,141
Fannie Mae 4.50% 2035⁴	10,528	10,364
Fannie Mae 5.00% 2035	13,227	12,784
Fannie Mae 5.00% 2035	5,752	5,560
Fannie Mae 5.50% 2035	51,767	51,249
Fannie Mae, Series 2005-68, Class PG, 5.50% 2035	15,000	14,954
Fannie Mae 5.50% 2035	14,609	14,463
Fannie Mae, Series 2006-32, Class OA, principal only, 0% 2036	15,103	11,043
Fannie Mae, Series 2006-51, Class PO, principal only, 0% 2036	11,278	8,527
Fannie Mae, Series 2006-56, Class OG, principal only, 0% 2036	2,855	2,183
Fannie Mae, Series 2006-96, Class OP, principal only, 0% 2036	2,279	1,674
Fannie Mae 5.50% 2036	16,102	15,914
Fannie Mae, Series 2006-106, Class HG, 6.00% 2036	85,000	86,441
Fannie Mae, Series 2006-43, Class PX, 6.00% 2036	75,083	76,329
Fannie Mae 6.00% 2036	62,010	62,495
Fannie Mae, Series 2006-49, Class PA, 6.00% 2036	57,217	58,613
Fannie Mae 6.00% 2036	35,000	35,241
Fannie Mae 6.00% 2036	5,787	5,823
Fannie Mae 6.50% 2036	11,580	11,800
Fannie Mae, Series 2001-50, Class BA, 7.00% 2041	537	559
Freddie Mac 4.00% 2015	72,238	68,722
Freddie Mac 6.00% 2017	518	526
Freddie Mac 4.50% 2018	6,253	6,060
Freddie Mac 5.00% 2018	12,461	12,307
Freddie Mac 6.00% 2021	43,157	43,802
Freddie Mac, Series 1617, Class PM, 6.50% 2023	5,000	5,166
Freddie Mac, Series 3135, Class OP, principal only, 0% 2026	6,682	5,202
Freddie Mac 6.50% 2032	5,509	5,641
Freddie Mac 7.50% 2032	2,432	2,525
Freddie Mac 4.646% 2035⁴	26,080	25,658
Freddie Mac 4.789% 2035⁴	27,729	27,364
Freddie Mac, Series 3061, Class PN, 5.50% 2035	27,947	28,130
Freddie Mac, Series 3136, Class OP, principal only, 0% 2036	26,618	19,821
Freddie Mac, Series 3155, Class FO, principal only, 0% 2036	16,146	12,219
Freddie Mac, Series 3149, Class AO, principal only, 0% 2036	6,355	4,794
Freddie Mac, Series 3147, Class OD, principal only, 0% 2036	6,309	4,677
Freddie Mac, Series 3149, Class MO, principal only, 0% 2036	6,309	4,667
Freddie Mac, Series 3117, Class OG, principal only, 0% 2036	3,651	2,714
Freddie Mac 5.00% 2036	17,333	16,743
Freddie Mac 5.50% 2036	14,655	14,498
Freddie Mac 6.00% 2036	351,505	353,934
Freddie Mac, Series 3156, Class NG, 6.00% 2036	68,510	70,300
Freddie Mac 6.00% 2036	20,000	20,138
Freddie Mac 6.50% 2036	805	822
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 7-A-1, 5.00% 2020	7,710	7,504
Countrywide Alternative Loan Trust, Series 2005-9CB, Class 2-A-1, 6.00% 2020	7,318	7,329
Countrywide Alternative Loan Trust, Series 2005-46CB, Class A-8, 5.50% 2035	70,810	70,755
Countrywide Alternative Loan Trust, Series 2005-49CB, Class A-1, 5.50% 2035	35,959	35,723
Countrywide Alternative Loan Trust, Series 2005-23CB, Class A-15, 5.50% 2035	29,654	29,369
Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 2035	15,949	15,894
Countrywide Alternative Loan Trust, Series 2005-30CB, Class 2-A-1, 5.50% 2035	14,195	13,917
Countrywide Alternative Loan Trust, Series 2005-40CB, Class A-1, 5.50% 2035	8,671	8,519
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-9, 5.50% 2035	7,782	7,771
Countrywide Alternative Loan Trust, Series 2005-54CB, Class 1-A-7, 5.50% 2035	2,890	2,887
Countrywide Alternative Loan Trust, Series 2005-62, Class 2-A-1, 5.563% 2035⁴	44,802	44,851
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 5-A-1, 5.75% 2035	5,942	5,879
Countrywide Alternative Loan Trust, Series 2005-21CB, Class A-17, 6.00% 2035	35,297	35,270
Countrywide Alternative Loan Trust, Series 2004-36CB, Class 1-A-1, 6.00% 2035	24,504	24,721
Countrywide Alternative Loan Trust, Series 2004-28CB, Class 6-A-1, 6.00% 2035	2,468	2,464
Countrywide Alternative Loan Trust, Series 2006-6CB, Class 1-A-1, 5.50% 2036	15,282	15,269
Countrywide Alternative Loan Trust, Series 2006-31CB, Class A-3, 6.00% 2036	87,644	87,315
Countrywide Alternative Loan Trust, Series 2006-24CB, Class A-1, 6.00% 2036	23,725	23,673
Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 2036	22,563	22,597
CS First Boston Mortgage Securities Corp., Series 2002-30, Class I-A-1, 7.50% 2032	2,445	2,456
CS First Boston Mortgage Securities Corp., Series 2002-34, Class I-A-1, 7.50% 2032	1,236	1,245
CS First Boston Mortgage Securities Corp., Series 2003-21, Class V-A-1, 6.50% 2033	1,438	1,453
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 2033	3,682	3,731
CS First Boston Mortgage Securities Corp., Series 2004-AR8, Class 2-A-1, 4.61% 2034⁴	8,688	8,567
CS First Boston Mortgage Securities Corp., Series 2004-AR1, Class II-A-1, 4.668% 2034⁴	8,677	8,596
CS First Boston Mortgage Securities Corp., Series 2003-AR30, Class II-A-1, 4.693% 2034⁴	20,653	20,594
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 2034	8,203	8,266
CS First Boston Mortgage Securities Corp., Series 2001-CK3, Class A-4, 6.53% 2034	2,790	2,934
CS First Boston Mortgage Securities Corp., Series 2005-6, Class VI-A-1, 6.00% 2035	7,307	7,328
CS First Boston Mortgage Securities Corp., Series 2001-CK1, Class A-3, 6.38% 2035	48,000	49,905
CS First Boston Mortgage Securities Corp., Series 2002-CKP1, Class G, 7.165% 2035⁵	1,435	1,549
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 2036⁵	78,140	54,811
CS First Boston Mortgage Securities Corp., Series 2002-CKS4, 4.485% 2036	4,952	4,874
CS First Boston Mortgage Securities Corp., Series 2006-3, Class 1-A-4A, 5.896% 2036	10,000	10,095
CS First Boston Mortgage Securities Corp., Series 2006-2, Class 5-A-6, 6.00% 2036	44,320	44,263
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-2, 4.183% 2037	22,840	22,204
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 2037	11,000	10,668
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-1, 3.466% 2039	9,559	9,365
CS First Boston Mortgage Securities Corp., Series 2006-C1, Class A-AB, 5.681% 2039	18,000	18,304
CS First Boston Mortgage Securities Corp., Series 2005-C6, Class A-3, 5.23% 2040	37,500	37,339
CS First Boston Mortgage Securities Corp., Series 1998-C1, Class C, 6.78% 2040	6,550	6,759
Government National Mortgage Assn. 4.00% 2035⁴	24,237	23,843
Government National Mortgage Assn. 4.00% 2035⁴	7,901	7,754
Government National Mortgage Assn. 4.00% 2035⁴	7,575	7,434
Government National Mortgage Assn. 6.00% 2035	6,187	6,257
Government National Mortgage Assn. 6.00% 2036	172,869	174,807
Government National Mortgage Assn. 6.00% 2036	70,944	71,739
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 2018	29,581	28,895
Residential Accredit Loans, Inc., Series 2004-QS6, Class A-1, 5.00% 2019	13,140	12,850
Residential Accredit Loans, Inc., Series 2005-QS3, Class II-A-1, 5.00% 2020	39,225	38,357
Residential Accredit Loans, Inc., Series 2004-QS16, Class 1-A-1, 5.50% 2034	56,331	55,994
Residential Accredit Loans, Inc., Series 2005-QR1, Class A, 6.00% 2034	15,347	15,251
Residential Accredit Loans, Inc., Series 2004-QS12, Class M-1, 6.00% 2034	1,460	1,440
Residential Accredit Loans, Inc., Series 2005-QS13, Class I-A-5, 5.50% 2035	14,589	14,392
Residential Accredit Loans, Inc., Series 2005-QS12, Class A-7, 5.50% 2035	12,475	12,477
Residential Accredit Loans, Inc., Series 2005-QS9, Class A-6, 5.50% 2035	2,000	1,938
Residential Accredit Loans, Inc., Series 2006-QS10, Class I-A, 6.00% 2035	16,925	16,886
Residential Accredit Loans, Inc., Series 2005-QS14, Class 2-A-1, 6.00% 2035	10,505	10,481
Residential Accredit Loans, Inc., Series 2006-QS1, Class A-3, 5.75% 2036	6,092	6,108
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-22, Class 5-A1, 6.029% 2035⁴	12,895	12,952
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.971% 2036⁴	74,334	74,613
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 4-A-1, 5.98% 2036⁴	33,894	34,022
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-2, Class 5-A-1, 6.00% 2036⁴	73,633	73,863
CHL Mortgage Pass-Through Trust, Series 2003-56, Class 6-A-1, 4.832% 2033⁴	9,105	9,041
CHL Mortgage Pass-Through Trust, Series 2004-7, Class 3-A-1, 4.057% 2034⁴	6,708	6,503
CHL Mortgage Pass-Through Trust, Series 2004-12, Class 12-A-1, 4.743% 2034⁴	4,841	4,789
CHL Mortgage Pass-Through Trust, Series 2004-HYB6, Class A-3, 5.139% 2034⁴	4,304	4,296
CHL Mortgage Pass-Through Trust, Series 2005-12, Class 2-A-5, 5.50% 2035	13,083	13,011
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.687% 2035⁴	67,486	67,056
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 4-A, 5.691% 2034⁴	25,917	25,424
Morgan Stanley Mortgage Loan Trust, Series 2004-3, Class 3-A, 6.00% 2034	6,551	6,541
Morgan Stanley Mortgage Loan Trust, Series 2005-10, Class 5-A-1, 6.00% 2035	25,025	25,181
Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 3-A-1, 6.069% 2036⁴	38,234	38,614
Bear Stearns ALT-A Trust, Series 2005-9, Class II-6A-1, 5.83% 2035⁴	45,194	45,309
Bear Stearns ALT-A Trust, Series 2006-6, Class II-A-1, 6.00% 2036⁴	48,652	49,102
Wells Fargo Mortgage-backed Securities Trust, Series 2003-6, Class I-A-1, 5.00% 2018	11,886	11,647
Wells Fargo Mortgage-backed Securities Trust, Series 2003-3, Class II-A-1, 5.25% 2033	27,217	26,788
Wells Fargo Mortgage-backed Securities Trust, Series 2005-AR10, Class II-A-6, 4.109% 2035⁴	10,000	9,722
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR15, Class A-1, 5.697% 2036	39,472	39,449
Bear Stearns ARM Trust, Series 2003-6, Class I-A-2, 3.984% 2033⁴	4,935	4,850
Bear Stearns ARM Trust, Series 2004-1, Class I-2-A-5, 4.375% 2034⁴	6,877	6,770
Bear Stearns ARM Trust, Series 2003-9, Class III-A-2, 4.977% 2034⁴	9,732	9,619
Bear Stearns ARM Trust, Series 2003-8, Class III-A, 5.129% 2034⁴	12,099	12,023
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 2035⁴	50,000	48,861
Bear Stearns Commercial Mortgage Securities Inc., Series 1999-WF2, Class A-1, 6.80% 2031	1,863	1,867
Bear Stearns Commercial Mortgage Securities Inc., Series 2002-PBW1, Class A-1, 3.97% 2035	53,207	52,054
Bear Stearns Commercial Mortgage Securities Inc., Series 2005-PWR9, Class A-AB, 4.804% 2042	27,210	26,639
IndyMac INDX Mortgage Loan Trust, Series 2006-AR5, Class 2-A-1, 5.879% 2036⁴	74,912	74,746
Banc of America Commercial Mortgage Inc., Series 2002-PB2, Class A-2, 5.676% 2035	8,689	8,708
Banc of America Commercial Mortgage Inc., Series 2001-PB1, Class A-2, 5.787% 2035	22,040	22,535
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-1, 3.812% 2041	1,620	1,611
Banc of America Commercial Mortgage Inc., Series 2004-5, Class A-2, 4.176% 2041	9,117	8,886
Banc of America Commercial Mortgage Inc., Series 2005-1, Class A-3, 4.877% 2042	28,622	28,374
Banc of America Commercial Mortgage Inc., Series 2002-2, Class A-1, 3.366% 2043	2,702	2,681
GMAC Commercial Mortgage Securities, Inc., Series 1998-C1, Class D, 6.974% 2030	15,595	15,950
GMAC Commercial Mortgage Securities, Inc., Series 2001-C2, Class A-1, 6.25% 2034	9,834	10,031
GMAC Commercial Mortgage Securities, Inc., Series 2001-C1, Class A-2, 6.465% 2034	25,000	26,140
GMAC Commercial Mortgage Securities, Inc., Series 2001-C2, Class A-2, 6.70% 2034	4,614	4,884
GMAC Commercial Mortgage Securities, Inc., Series 2004-C3, Class A-3, 4.207% 2041	15,648	15,280
Tower Ventures, LLC, Series 2006-1, Class A1-FX, 5.361% 2036⁵	32,500	32,608
Tower Ventures, LLC, Series 2006-1, Class D, 6.052% 2036⁵	33,000	33,339
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2001-C1, Class F, 6.854% 2035^4,5	2,000	2,129
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1, Class A-1, 3.972% 2039	17,394	16,922
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP3, Class A-2, 4.851% 2042	26,685	26,387
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP1, Class A-2, 4.625% 2046	20,000	19,734
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class I-A-14, 5.50% 2035	12,838	12,835
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA11, Class I-A-5, 5.75% 2036	35,047	34,851
First Horizon Alternative Mortgage Securities Trust, Series 2006-FA3, Class A-6, 6.00% 2036	17,147	17,354
GE Commercial Mortgage Corp., Series 2005-C2, Class A-2, 4.706% 2043	40,928	40,352
GE Commercial Mortgage Corp., Series 2005-C4, Class A-3A, 5.333% 2045	20,000	20,205
Crown Castle Towers LLC, Series 2005-1, Class A-FX, 4.643% 2035⁵	26,000	25,463
Crown Castle Towers LLC, Series 2005-1, Class C, 5.074% 2035⁵	13,620	13,423
Crown Castle Towers LLC, Series 2005-1, Class D, 5.612% 2035⁵	20,000	19,942
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-CB2, Class VII-A, 5.50% 2019	10,076	10,083
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR7, Class A-7, 3.842% 2033⁴	4,767	4,719
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR8, Class A, 4.03% 2033⁴	4,237	4,179
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-AR6, Class A-1, 4.338% 2033⁴	3,662	3,615
WaMu Mortgage Pass-Through Certificates Trust, Series 2004-AR11, Class A, 4.563% 2034⁴	4,847	4,785
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR15, Class A-1-A, 5.58% 2045⁴	29,607	29,725
SBA CMBS Trust, Series 2005-1, Class A, 5.369% 2035^4,5	22,000	22,101
SBA CMBS Trust, Series 2005-1, Class C, 5.731% 2035^4,5	17,320	17,455
SBA CMBS Trust, Series 2006-1A, Class A, 5.314% 2036⁵	16,500	16,562
SBA CMBS Trust, Series 2006-1A, Class C, 5.559% 2036⁵	2,000	2,008
Washington Mutual Securities Corp., Series 2005-AR1, Class A-1-A, 5.58% 2035⁴	33,245	33,294
Washington Mutual Securities Corp., WMALT Series 2005-1, Class 5-A-1, 6.00% 2035	13,786	13,822
Washington Mutual Securities Corp., WMALT Series 2005-1, Class 6-A-1, 6.50% 2035	1,547	1,563
Merrill Lynch Mortgage Investors, Inc., Series 2006-A1, Class II-A-1, 6.203% 2036⁴	44,890	45,589
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 2033	7,209	7,333
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-2, 6.531% 2033	22,230	23,381
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-2, 6.07% 2038	13,250	13,787
Residential Asset Securitization Trust, Series 2005-A8CB, Class A-11, 6.00% 2035	36,661	36,604
Residential Asset Securitization Trust, Series 2005-A6CB, Class A-7, 6.00% 2035	3,963	3,977
J.P. Morgan Mortgage Trust, Series 2005-A4, Class 3-A-1, 5.192% 2035⁴	39,251	38,891
MASTR Alternative Loan Trust, Series 2003-2, Class 6-A-1, 6.00% 2033	945	944
MASTR Alternative Loan Trust, Series 2004-2, Class 2-A-1, 6.00% 2034	2,012	2,009
MASTR Alternative Loan Trust, Series 2005-3, Class 1-A-1, 5.50% 2035	9,076	8,971
MASTR Alternative Loan Trust, Series 2005-1, Class 1-A-1, 5.50% 2035	4,612	4,521
MASTR Alternative Loan Trust, Series 2005-3, Class 2-A-1, 6.00% 2035	9,627	9,655
MASTR Alternative Loan Trust, Series 2005-3, Class 3-A-1, 6.50% 2035	9,848	9,978
Morgan Stanley Capital I Trust, Series 2003-TOP11, Class A-2, 4.34% 2041	16,600	16,247
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.205% 2042⁴	19,500	19,531
American General Mortgage Loan Trust, Series 2006-1, Class A-5, 5.75% 2035⁵	35,315	35,228
CSAB Mortgage-backed Trust, Series 2006-2, Class A-6-A, 5.72% 2036⁴	30,000	30,054
PNC Mortgage Acceptance Corp., Series 2001-C1, Class A-2, 6.36% 2034	28,625	29,907
Citigroup Mortgage Loan Trust, Inc., Series 2004-HYB1, Class A-3-1, 4.55% 2034⁴	26,688	26,376
Meristar Commercial Mortgage Trust, Series 1999-C1, Class B, 7.90% 2016⁵	7,750	8,313
Meristar Commercial Mortgage Trust, Series 1999-C1, Class C, 8.29% 2016⁵	13,900	15,192
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.529% 2027^4,5	1,852	1,862
Structured Asset Securities Corp., Series 2005-6, Class 5-A-4, 5.00% 2035	14,398	13,567
Structured Asset Securities Corp., Series 2005-6, Class 5-A-9, 5.00% 2035	7,183	7,090
Greenwich Capital Commercial Funding Corp., Series 2005-GG5, Class A-4-1, 5.243% 2037	20,000	20,032
Merrill Lynch Mortgage Trust, Series 2005-MKB2, Class A-2, 4.806% 2042	19,500	19,295
Bank of America, NA and First Union National Bank Commercial Mortgage Trust, Series 2001-3, Class A-1, 4.89% 2037	17,664	17,575
Banc of America Funding Corp., Series 2005-H, Class 9-A-1, 5.966% 2035⁴	16,334	16,390
Bear Stearns Asset-backed Securities I Trust, Series 2005-AC8, Class A-4, 5.50% 2035	16,120	16,082
Wachovia Bank Commercial Mortgage Trust, Series 2005-C17, Class A-4, 5.083% 2042	15,000	14,793
Residential Asset Mortgage Products Trust, Series 2004-RS12, Class A-I-6, 4.547% 2034	9,000	8,613
Residential Asset Mortgage Products Trust, Series 2004-RS12, Class M-I-1, 5.186% 2034	6,000	5,939
Chase Commercial Mortgage Securities Corp., Series 2000-2, Class A-1, 7.543% 2032	8,024	8,227
Chase Commercial Mortgage Securities Corp., Series 2000-1, Class A-2, 7.757% 2032	5,933	6,314
Hilton Hotel Pool Trust, Series 2000-HLTA, Class C, 7.458% 2015⁵	10,000	10,804
Banc of America Alternative Loan Trust, Series 2005-6, Class 2-CB-2, 6.00% 2035	10,368	10,406
Morgan Stanley Dean Witter Capital I Trust, Series 2003-TOP9, Class A-1, 3.98% 2036	10,389	10,108
LB-UBS Commercial Mortgage Trust, Series 2002-C1, Class A-3, 6.226% 2026	9,765	9,996
GSR Mortgage Loan Trust, Series 2005-AR1, Class 2-A-1, 4.949% 2035⁴	9,772	9,702
Banc of America Mortgage Securities Trust, Series 2003-G, Class 2-A-1, 4.088% 2033⁴	6,092	6,012
Banc of America Mortgage Securities Trust, Series 2004-B, Class 1-A-1, 3.457% 2034⁴	2,207	2,193
Salomon Brothers Commercial Mortgage Trust, Series 2000-C1, Class A-1, 7.46% 2008	3,870	3,913
Salomon Brothers Commercial Mortgage Trust, Series 2001-C1, Class A-2, 6.226% 2035	2,383	2,395
Host Marriott Pool Trust, Series 1999-HMTA, Class A, 6.98% 2015⁵	5,986	6,131
RAAC Mortgage Loan Asset-backed Trust, Series 2004-SP3, Class A-I-5, 4.89% 2032	5,000	4,830
Residential Funding Mortgage Securities I, Inc., Series 2003-S20, Class II-A-1, 4.75% 2018	3,083	2,986
First Union National Bank Commercial Mortgage Trust, Series 2002-C1, Class G, 7.196% 2034^4,5	2,000	2,139
Commercial Mortgage Trust, Series 2000-C1, Class A-1, 7.206% 2033	568	568
		4,901,970

FINANCIALS — 3.49%
USA Education, Inc. 5.625% 2007	40,000	40,050
SLM Corp., Series A, 3.625% 2008	10,000	9,770
SLM Corp., Series A, 4.00% 2009	10,000	9,756
SLM Corp., Series A, 5.35% 2009⁴	10,000	9,626
SLM Corp., Series A, 4.50% 2010	31,000	30,262
SLM Corp., Series A, 5.40% 2011	40,000	40,217
SLM Corp., Series A, 5.45% 2011	20,000	20,147
SLM Corp., Series A, 5.375% 2014	10,000	9,993
International Lease Finance Corp., Series P, 3.125% 2007	5,000	4,945
ASIF Global Financing XXIII 3.90% 2008⁵	13,605	13,290
International Lease Finance Corp. 4.35% 2008	28,500	28,058
International Lease Finance Corp. 4.50% 2008	5,000	4,940
AIG SunAmerica Global Financing VII 5.85% 2008⁵	5,000	5,057
International Lease Finance Corp. 6.375% 2009	15,000	15,385
American International Group, Inc. 4.70% 2010	5,000	4,934
International Lease Finance Corp. 5.00% 2010	6,560	6,514
International Lease Finance Corp., Series Q, 5.45% 2011	35,000	35,337
American General Finance Corp., Series J, 5.706% 2011⁴	2,500	2,508
International Lease Finance Corp. 5.00% 2012	10,000	9,857
American General Finance Corp., Series J, 5.75% 2016	2,500	2,539
ILFC E-Capital Trust I 5.90% 2065^4,5	7,000	7,116
ILFC E-Capital Trust II 6.25% 2065^4,5	17,000	17,255
Bank of America Corp. 5.25% 2007	20,000	19,990
MBNA Corp. 5.625% 2007	26,000	26,086
BankBoston NA 7.00% 2007	7,500	7,576
Bank of America Corp. 3.875% 2008	4,400	4,330
MBNA America Bank, National Assn. 5.375% 2008	15,500	15,509
BankAmerica Corp. 5.875% 2009	7,500	7,634
Bank of America Corp. 4.50% 2010	18,000	17,668
BankAmerica Corp. 7.125% 2011	1,750	1,894
Bank of America Corp. 4.875% 2012	2,000	1,972
Residential Capital Corp. 6.693% 2008⁴	13,750	13,914
Residential Capital Corp. 6.375% 2010	28,990	29,445
Residential Capital Corp. 6.00% 2011	2,000	2,008
General Motors Acceptance Corp. 6.875% 2011	17,000	17,134
General Motors Acceptance Corp. 7.25% 2011	30,000	30,594
General Motors Acceptance Corp. 7.00% 2012	5,000	5,039
Household Finance Corp. 5.75% 2007	11,000	11,010
Household Finance Corp. 4.125% 2008	6,000	5,885
Household Finance Corp. 6.40% 2008	60,000	61,146
HSBC Bank USA 4.625% 2014⁵	16,000	15,362
HSBC Finance Corp. 5.00% 2015	4,535	4,412
Bank One, National Assn. 5.50% 2007	20,000	20,006
J.P. Morgan Chase & Co. 3.50% 2009	10,000	9,655
J.P. Morgan Chase & Co. 6.75% 2011	13,000	13,764
J.P. Morgan Chase & Co. 4.891% 2015	20,000	19,689
J.P. Morgan Chase Capital XX, Series T, 6.55% 2036	25,000	25,985
EOP Operating LP 7.75% 2007	45,000	46,006
EOP Operating LP 6.75% 2008	9,195	9,342
Spieker Properties, LP 6.75% 2008	3,500	3,534
Spieker Properties, LP 7.125% 2009	2,000	2,092
EOP Operating LP 4.65% 2010	19,500	18,988
EOP Operating LP 7.00% 2011	4,000	4,258
American Express Credit Corp. 3.00% 2008	10,000	9,686
American Express Co. 4.75% 2009	15,000	14,918
American Express Credit Corp., Series B, 5.00% 2010	9,000	8,995
American Express Co. 6.80% 2066⁴	44,000	46,873
CIT Group Inc. 3.65% 2007	11,000	10,815
CIT Group Inc. 3.375% 2009	5,000	4,802
CIT Group Inc. 6.875% 2009	16,000	16,732
CIT Group Inc. 4.25% 2010	10,000	9,715
CIT Group Inc. 5.20% 2010	20,000	19,989
CIT Group Inc. 5.60% 2011	15,000	15,190
CNA Financial Corp. 6.75% 2006	2,500	2,501
CNA Financial Corp. 6.60% 2008	4,000	4,098
CNA Financial Corp. 6.00% 2011	20,000	20,430
CNA Financial Corp. 5.85% 2014	42,000	42,304
Allstate Corp. 5.375% 2006	20,000	19,998
Allstate Financial Global Funding LLC 5.25% 2007⁵	15,000	14,996
Allstate Life Global Funding Trust, Series 2004-1, 4.50% 2009	15,000	14,777
Allstate Financing II 7.83% 2045	18,537	19,282
Washington Mutual, Inc. 5.55% 2010	10,000	10,114
Washington Mutual, Inc. 5.50% 2011	10,000	10,073
Washington Mutual, Inc. 5.79% 2012⁴	10,000	10,042
Washington Mutual, Inc. 5.95% 2013	10,000	10,238
Washington Mutual Preferred Funding I Ltd. 6.534% (undated)^4,5	24,700	24,669
Ford Motor Credit Co. 7.20% 2007	5,000	5,002
Ford Motor Credit Co. 5.80% 2009	12,000	11,468
Ford Motor Credit Co. 7.875% 2010	30,500	29,785
Ford Motor Credit Co. 7.375% 2011	15,000	14,345
Liberty Mutual Group Inc. 5.75% 2014⁵	20,000	20,218
Liberty Mutual Group Inc. 6.50% 2035⁵	13,000	12,874
Liberty Mutual Group Inc. 7.50% 2036⁵	24,550	27,393
Prudential Financial, Inc. 4.104% 2006	15,000	14,994
PRICOA Global Funding I 5.491% 2007^4,5	2,000	2,001
PRICOA Global Funding I, Series 2003-2, 3.90% 2008⁵	6,000	5,837
Prudential Funding, LLC, Series B, 6.60% 2008⁵	12,412	12,663
Prudential Financial, Inc., Series D, 5.50% 2016	3,000	3,009
Prudential Holdings, LLC, Series C, 8.695% 2023^5,6	15,000	18,549
Developers Diversified Realty Corp. 3.875% 2009	15,000	14,525
Developers Diversified Realty Corp. 4.625% 2010	19,750	19,262
Developers Diversified Realty Corp. 5.00% 2010	22,500	22,235
Monumental Global Funding Trust II, Series 2003-F, 3.45% 2007⁵	10,000	9,789
Monumental Global Funding II, Series 2002-A, 5.20% 2007⁵	42,000	41,976
Monumental Global Funding II, Series 2004-E, 5.457% 2007^4,5	2,000	2,002
Monumental Global Funding II, Series 2006-A, 5.43% 2009^4,5	2,000	2,003
Capital One Financial Corp. 7.125% 2008	5,750	5,914
Capital One Bank 5.75% 2010	3,000	3,052
Capital One Financial Corp. 5.70% 2011	15,000	15,224
Capital One Financial Corp. 6.25% 2013	5,000	5,215
Capital One Bank 6.50% 2013	13,477	14,215
Capital One Financial Corp. 5.50% 2015	12,000	11,938
XL Capital Ltd. 5.25% 2014	13,000	12,803
XL Capital Ltd. 6.375% 2024	2,125	2,223
Mangrove Bay Pass Through Trust 6.102% 2033^4,5	33,020	32,050
Twin Reefs Asset Trust (XLFA), Series B, 6.32% (undated)^4,5	4,000	4,007
Santander Issuances, SA Unipersonal 5.75% 2016^4,5	7,600	7,613
Santander Issuances, SA Unipersonal 5.805% 2016^4,5	38,600	39,194
Abbey National PLC 6.70% (undated)⁴	2,412	2,459
United Dominion Realty Trust, Inc., Series E, 4.50% 2008	19,500	19,181
United Dominion Realty Trust, Inc. 6.50% 2009	28,925	29,933
Plum Creek Timberlands, LP 5.875% 2015	48,500	48,064
Simon Property Group, LP 6.375% 2007	5,000	5,044
Simon Property Group, LP 5.375% 2008	2,000	1,997
Simon Property Group, LP 3.75% 2009	3,000	2,905
Simon Property Group, LP 4.875% 2010	5,000	4,945
Simon Property Group, LP 4.875% 2010	2,500	2,464
Simon Property Group, LP 5.375% 2011	2,000	2,004
Simon Property Group, LP 5.60% 2011	14,750	14,929
Simon Property Group, LP 5.75% 2012	12,650	12,885
Westfield Capital Corp. Ltd., WT Finance Pty Ltd. and WEA Finance LLC 4.375% 2010⁵	38,500	37,204
Westfield Group 5.40% 2012⁵	5,000	5,003
Westfield Capital Corp. Ltd., WT Finance Pty Ltd. and WEA Finance LLC 5.125% 2014⁵	5,000	4,869
Sumitomo Mitsui Banking Corp. 5.625% (undated)^4,5	47,500	46,558
Lincoln National Corp. 5.25% 2007	6,145	6,128
Lincoln National Corp. 7.00% 2066⁴	37,075	39,095
HBOS PLC 5.375% (undated)^4,5	25,780	25,487
HBOS PLC, Series B, 5.92% (undated)^4,5	20,000	19,618
iStar Financial, Inc., Series B, 4.875% 2009¹	2,000	1,976
iStar Financial, Inc. 5.375% 2010¹	25,675	25,576
iStar Financial, Inc., Series B, 5.125% 2011¹	10,000	9,836
iStar Financial, Inc. 5.80% 2011¹	7,600	7,665
Wells Fargo & Co. 5.125% 2007	27,500	27,477
Wells Fargo & Co. 4.125% 2008	15,000	14,774
UniCredito Italiano SpA 5.584% 2017^4,5	29,400	29,673
UniCredito Italiano Capital Trust II 9.20% (undated)⁵	10,000	11,310
Commercial Credit Co. 6.625% 2006	1,975	1,976
Citigroup Inc. 4.125% 2010	11,000	10,702
Citigroup Inc. 4.625% 2010	10,000	9,849
Citigroup Inc. 5.125% 2014	10,000	9,908
National Westminster Bank PLC 7.375% 2009	3,000	3,188
Royal Bank of Scotland Group PLC 5.512% noncumulative trust preferred (undated)⁴	22,800	22,468
National Westminster Bank PLC 7.75% (undated)⁴	4,588	4,677
Hospitality Properties Trust 7.00% 2008	5,500	5,611
Hospitality Properties Trust 6.75% 2013	18,925	19,948
Hospitality Properties Trust 5.125% 2015	3,000	2,866
Hospitality Properties Trust 6.30% 2016	1,150	1,179
Lazard Group LLC 7.125% 2015	28,000	29,253
Nationwide Life Insurance Co. 5.35% 2007⁵	27,500	27,500
North Front Pass Through Trust 5.81% 2024^4,5	1,165	1,160
Realogy Corp. 6.15% 2011⁵	27,000	27,465
ACE INA Holdings Inc. 5.875% 2014	7,500	7,677
ACE Capital Trust II 9.70% 2030	12,210	16,717
ACE INA Holdings Inc. 6.70% 2036	2,500	2,724
ProLogis 5.25% 2010	22,000	21,919
ProLogis 5.50% 2013	4,350	4,342
Resona Bank, Ltd. 5.85% (undated)^4,5	25,000	24,532
Metropolitan Life Global Funding I, Series 2004-10, 3.375% 2007⁵	20,000	19,490
Met Life Global Funding I 2.60% 2008⁵	2,500	2,390
MetLife, Inc. 5.00% 2015	2,500	2,429
ERP Operating LP 4.75% 2009	6,360	6,276
ERP Operating LP 6.95% 2011	8,200	8,732
ERP Operating LP 6.625% 2012	8,000	8,488
Willis North America Inc. 5.125% 2010	20,950	20,378
Willis North America Inc. 5.625% 2015	3,000	2,872
Wachovia Corp. 5.625% 2016	21,000	21,240
Société Générale 5.75% 2016⁵	2,500	2,564
SocGen Real Estate Co. LLC, Series A, 7.64% (undated)^4,5	17,749	18,108
ING Security Life Institutional Funding 2.70% 2007⁵	15,000	14,866
ING Security Life Institutional Funding 5.564% 2010^4,5	4,000	4,010
PNC Funding Corp. 4.20% 2008	10,000	9,826
PNC Funding Corp. 5.125% 2010	9,000	8,992
Rouse Co. 3.625% 2009	5,000	4,750
Rouse Co. 7.20% 2012	9,446	9,779
Rouse Co. 5.375% 2013	4,000	3,754
Hartford Financial Services Group, Inc. 5.55% 2008	11,585	11,653
Hartford Financial Services Group, Inc. 5.25% 2011	6,250	6,265
Price REIT, Inc. 7.50% 2006	4,900	4,900
Kimco Realty Corp., Series C, 3.95% 2008	5,000	4,885
Kimco Realty Corp. 6.00% 2012	2,000	2,072
Kimco Realty Corp., Series C, 5.783% 2016	5,450	5,527
Genworth Financial, Inc. 4.75% 2009	13,795	13,694
Genworth Global Funding Trust, Series 2005-A, 5.55% 2010⁴	3,000	3,011
Berkshire Hathaway Finance Corp. 4.75% 2012	15,000	14,743
Principal Life Global Funding I 4.40% 2010⁵	10,000	9,691
Principal Life Income Fundings Trust, Series 2005-34, 5.20% 2010	4,000	4,007
Brandywine Operating Partnership, LP 5.75% 2012	13,000	13,146
World Savings Bank, FSB, Bank Notes, Series 2008-FXR, 4.125% 2008	13,000	12,781
Zions Bancorporation 6.00% 2015	11,585	11,902
Union Bank of California, NA 5.95% 2016	10,000	10,345
Skandinaviska Enskilda Banken AB 4.958% (undated)^4,5	10,400	9,788
Popular North America, Inc., Series E, 3.875% 2008	10,000	9,738
St. Paul Travelers Companies, Inc. 6.25% 2016	8,000	8,474
Goldman Sachs Group, Inc. 5.75% 2016	8,000	8,140
Lehman Brothers Holdings Inc., Series I, 5.493% 2009⁴	8,000	8,009
Boston Properties LP 6.25% 2013	6,500	6,772
BOI Capital Funding (No. 2) LP 5.571% (undated)^4,5	6,000	5,868
Federal Realty Investment Trust 6.125% 2007	4,500	4,520
Federal Realty Investment Trust 8.75% 2009	1,000	1,094
Protective Life Insurance Co., Series 2005-C, 4.85% 2010	5,000	4,959
New York Life Global Funding 4.625% 2010⁵	5,000	4,922
ZFS Finance Trust I 6.15% 2065^4,5	4,500	4,530
Deutsche Bank Financial LLC 5.375% 2015	4,000	3,996
Independence Community Bank 3.75% 2014⁴	4,000	3,856
Assurant, Inc. 5.625% 2014	3,000	3,014
Downey Financial Corp. 6.50% 2014	2,840	2,859
Principal Financial Group, Inc. 6.05% 2036	2,000	2,072
Jackson National Life Global Funding, Series 2002-1, 5.25% 2007⁵	2,000	2,002
		2,710,997

U.S. GOVERNMENT & GOVERNMENT AGENCY BONDS & NOTES — 2.59%
U.S. Treasury 6.125% 2007	140,000	141,193
U.S. Treasury 3.625% 2009	100,000	97,500
U.S. Treasury 6.00% 2009	200,000	207,094
U.S. Treasury 6.50% 2010	56,000	59,224
U.S. Treasury 10.375% 2012	50,000	52,773
U.S. Treasury 12.00% 2013	64,000	71,950
U.S. Treasury 11.75% 2014	95,000	113,911
U.S. Treasury 12.50% 2014	40,000	48,138
U.S. Treasury 13.25% 2014	60,000	72,319
U.S. Treasury 9.25% 2016	50,000	67,336
U.S. Treasury Principal Strip 0% 2018	11,460	6,658
U.S. Treasury 6.50% 2026	34,250	41,635
U.S. Treasury Principal Strip 0% 2029	8,200	2,850
U.S. Treasury 5.375% 2031	84,000	91,206
Freddie Mac 5.125% 2008	75,000	75,271
Freddie Mac 5.75% 2009	75,000	76,447
Freddie Mac 6.625% 2009	75,000	78,463
Freddie Mac 4.125% 2010	35,000	34,142
Freddie Mac 7.00% 2010	20,000	21,313
Freddie Mac 5.50% 2011	50,000	51,377
Freddie Mac 5.875% 2011	100,000	103,348
Fannie Mae 6.34% 2007	20,000	20,203
Fannie Mae 7.125% 2007	50,000	50,316
Fannie Mae 7.125% 2010	40,000	42,976
Fannie Mae 7.25% 2010	30,000	32,086
Fannie Mae 5.25% 2012	100,000	100,765
Federal Home Loan Bank 3.375% 2007	93,295	91,730
Federal Home Loan Bank 5.625% 2016	49,375	50,997
Federal Agricultural Mortgage Corp. 4.25% 2008	45,000	44,461
Federal Agricultural Mortgage Corp. 4.875% 2011⁵	55,000	54,883
Federal Agricultural Mortgage Corp. 5.50% 2011⁵	10,000	10,174
		2,012,739

ASSET-BACKED OBLIGATIONS⁶— 1.83%
CPS Auto Receivables Trust, Series 2003-A, Class A-2, XLCA insured, 2.89% 2009⁵	889	876
CPS Auto Receivables Trust, Series 2002-B, Class A-2, XLCA insured, 3.50% 2009⁵	1,411	1,399
CPS Auto Receivables Trust, Series 2002-C, Class A-2, XLCA insured, 3.52% 2009⁵	498	493
CPS Auto Receivables Trust, Series 2003-D, Class A-2, FSA insured, 3.56% 2010⁵	3,059	3,012
CPS Auto Receivables Trust, Series 2004-A, Class A-2, FSA insured, 3.87% 2010⁵	10,000	9,866
CPS Auto Receivables Trust, Series 2004-B, Class A-2, XLCA insured, 3.56% 2011⁵	13,715	13,488
CPS Auto Receivables Trust, Series 2004-D, Class A-2, XLCA insured, 3.86% 2011⁵	16,735	16,494
CPS Auto Receivables Trust, Series 2005-B, Class A-2, FSA insured, 4.36% 2012⁵	12,000	11,846
CPS Auto Receivables Trust, Series 2005-C, Class A-2, FSA insured, 4.79% 2012⁵	12,500	12,379
CPS Auto Receivables Trust, Series 2005-D, Class A-2, FSA insured, 5.06% 2012⁵	20,000	20,031
CPS Auto Receivables Trust, Series 2006-B, Class A-4, MBIA insured, 5.81% 2012⁵	12,000	12,247
Drive Auto Receivables Trust, Series 2005-2, Class A-2, MBIA insured, 4.12% 2010⁵	14,525	14,420
Drive Auto Receivables Trust, Series 2004-1, Class A-4, MBIA insured, 4.14% 2010⁵	14,000	13,875
Drive Auto Receivables Trust, Series 2005-1, Class A-4, MBIA insured, 4.01% 2012	18,750	18,440
Drive Auto Receivables Trust, Series 2005-3, Class A-4, FSA insured, 5.09% 2013⁵	30,000	30,028
Drive Auto Receivables Trust, Series 2006-2, Class A-3, MBIA insured, 5.33% 2014	25,000	25,076
Triad Automobile Receivables Trust, Series 2006-C, Class A-2, AMBAC insured, 5.40% 2010	40,000	39,962
Triad Automobile Receivables Trust, Series 2005-A, Class A-4, AMBAC insured, 4.22% 2012	33,475	32,943
Triad Automobile Receivables Trust, Series 2006-C, Class A-4, AMBAC insured, 5.31% 2013	25,000	25,144
Bank of America Credit Card Trust, Series 2006-A10, Class A-10, 5.31% 2012⁴	67,200	67,200
PG&E Energy Recovery Funding LLC, Series 2005-1, Class A-2, 3.87% 2011	11,104	10,932
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-2, 5.03% 2014	28,800	28,874
PG&E Energy Recovery Funding LLC, Series 2005-2, Class A-3, 5.12% 2014	20,095	20,192
Residential Funding Mortgage Securities II, Inc., Series 2005-HI1, Class A-5, FGIC insured, 5.45% 2034	16,000	15,743
Residential Funding Mortgage Securities II, Inc., Series 2005-HS1, Class A-1-5, FGIC insured, 4.91% 2035	27,500	26,641
Residential Funding Mortgage Securities II, Inc., Series 2005-HSA1, Class A-I-5, FGIC insured, 5.48% 2035	5,790	5,747
Residential Funding Mortgage Securities II, Inc., Series 2006-HSA2, Class A-I-5, FGIC insured, 5.63% 2036	5,000	4,996
UPFC Auto Receivables Trust, Series 2004-A, Class A-3, AMBAC insured, 3.27% 2010	25,279	24,932
UPFC Auto Receivables Trust, Series 2005-A, Class A-3, AMBAC insured, 4.34% 2010	13,681	13,577
UPFC Auto Receivables Trust, Series 2005-B, Class A-3, XLCA insured, 4.98% 2011	12,625	12,586
Vega ContainerVessel PLC, Series 2006-1, Class A, XLCA insured, 5.562% 2021⁵	50,000	50,755
Rental Car Finance Corp., Series 2005-1, Class A-2, XLCA insured, 4.59% 2011⁵	48,860	47,938
Advanta Business Card Master Trust, Series 2005-A1, Class A-1, 5.39% 2011⁴	17,000	16,987
Advanta Business Card Master Trust, Series 2005-A2, Class A-2, 5.45% 2013⁴	29,000	28,982
Citigroup Mortgage Loan Trust, Inc., Series 2006-WFHE2, Class A-3, 5.54% 2036⁴	23,749	23,776
Citigroup Mortgage Loan Trust, Inc., Series 2006-HE2, Class A-2D, 5.56% 2036⁴	17,545	17,582
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-1, Class A-5, MBIA insured, 5.08% 2011⁵	25,150	25,060
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 2011⁵	15,000	14,947
AmeriCredit Automobile Receivables Trust, Series 2003-C-F, Class A-4, FSA insured, 3.48% 2010	13,026	12,930
AmeriCredit Automobile Receivables Trust, Series 2004-B-M, Class A-4, MBIA insured, 2.67% 2011	5,275	5,170
AmeriCredit Automobile Receivables Trust, Series 2006-A-F, Class A-4, FSA insured, 5.64% 2013	20,000	20,325
Consumer Credit Reference Index Securities Program Trust, Series 2002-1A, Class A, 7.387% 2007^4,5	35,000	35,224
Discover Card Master Trust I, Series 2004-1, Class A, 5.35% 2010⁴	32,800	32,820
Drivetime Auto Owner Trust, Series 2004-A, Class A-3, XLCA insured, 2.419% 2008⁵	2,250	2,231
Drivetime Auto Owner Trust, Series 2005-A, Class A-2, MBIA insured, 3.799% 2008⁵	1,686	1,684
Drivetime Auto Owner Trust, Series 2004-B, Class A-3, MBIA insured, 3.475% 2009⁵	9,374	9,304
Drivetime Auto Owner Trust, Series 2005-A, Class A-3, MBIA insured, 4.302% 2009⁵	18,579	18,448
Prestige Auto Receivables Trust, Series 2004-1, Class A-2, FSA insured, 3.69% 2011⁵	6,408	6,346
Prestige Auto Receivables Trust, Series 2006-1A, Class A-2, FSA insured, 5.25% 2013⁵	25,000	25,113
DT Auto Owner Trust, Series 2005-B, Class A-3, XLCA insured, 4.429% 2010⁵	31,488	31,207
Long Beach Acceptance Auto Receivables Trust, Series 2004-C, Class A-4, FSA insured, 3.777% 2011	8,500	8,333
Long Beach Acceptance Auto Receivables Trust, Series 2005-B, Class A-4, FSA insured, 4.522% 2012	22,000	21,730
ARG Funding Corp., Series 2005-1, Class A-3, MBIA insured, 4.29% 2011⁵	15,000	14,637
ARG Funding Corp., Series 2005-2, Class A-4, AMBAC insured, 4.84% 2011⁵	15,000	14,898
First Investors Auto Owner Trust, Series 2003-A, Class A, MBIA insured, 2.58% 2011⁵	1,712	1,679
First Investors Auto Owner Trust, Series 2005-A, Class A-2, MBIA insured, 4.23% 2012⁵	14,904	14,748
First Investors Auto Owner Trust, Series 2006-A, Class A-4, MBIA insured, 5.00% 2013⁵	11,060	11,050
BMW Vehicle Owner Trust, Series 2006-A, Class A-4, 5.07% 2011	25,000	25,058
Capital One Multi-asset Execution Trust, Series 2006-10, Class A, 5.15% 2014	23,700	23,885
PP&L Transition Bond Co. LLC, Series 1999-1, Class A-7, 7.05% 2009	4,820	4,853
PP&L Transition Bond Co. LLC, Series 1999-1, Class A-8, 7.15% 2009	16,190	16,682
Home Equity Asset Trust, Series 2004-7, Class M-2, 5.98% 2035⁴	20,000	20,201
Providian Master Note Trust, Series 2005-A1A, Class A, 5.38% 2012^4,5	20,000	20,022
New Century Home Equity Loan Trust, Series 2004-A, Class A-II-3, FGIC insured, 4.45% 2034	18,574	18,437
CWABS, Inc., Series 2004-10, Class 2-AV-2, 5.67% 2033⁴	2,440	2,440
CWABS, Inc., Series 2004-15, Class AF-6, 4.613% 2035	15,000	14,489
Bear Stearns Asset-backed Securities I Trust, Series 2005-CL1, Class A-1, 5.82% 2034⁴	16,717	16,783
AEP Texas Central Transitioning Funding II LLC, Senior Secured Transition Bonds, Series A, Class A-3, 5.094% 2015	16,545	16,473
Residential Asset Securities Corp. Trust, Series 2004-KS10, Class A-I-2, 5.64% 2034⁴	7,005	7,012
Residential Asset Securities Corp. Trust, Series 2004-KS12, Class A-1-2, 5.55% 2035⁴	9,336	9,355
CWHEQ Home Equity Loan Trust, Series 2006-S2, Class A-5, FGIC insured, 5.753% 2027	15,975	16,085
World Financial Network Credit Card Master Note Trust, Series 2004-A, Class C, 6.32% 2013⁴	15,000	15,134
Irwin Home Equity, Series 2006-1, Class 2-A2, 5.39% 2035⁵	15,000	14,903
Cendant Timeshare Receivables Funding, LLC, Series 2005-1, Class A-1, FGIC insured, 4.67% 2017⁵	14,981	14,846
Providian Gateway Master Trust, Series 2004-DA, Class A, 3.35% 2011⁵	15,000	14,742
MBNA Credit Card Master Note Trust, Series 2006-1, Class A, 4.90% 2011	12,500	12,490
Chase Auto Owner Trust, Series 2006-B, Class A-4, 5.11% 2014	12,000	12,049
Vanderbilt Mortgage and Finance, Inc., Series 2000-D, Class A-4, 7.715% 2027	7,721	8,070
Vanderbilt Mortgage and Finance, Inc., Series 2001-A, Class B-2, 9.14% 2031	3,000	3,357
PSE&G Transition Funding II LLC, Series 2005-1, Class A-3, 4.49% 2015	10,250	9,880
Credit-Based Asset Servicing and Securitization LLC, Series 2005-CB4, Class AF-4, 5.028% 2035⁴	8,653	8,511
Structured Asset Investment Loan Trust, Series 2004-BNC2, Class A-4, 5.64% 2034⁴	7,608	7,617
Impac CMB Grantor Trust, Series 2004-6, Class 1-A-1, 5.72% 2034⁴	4,231	4,254
Impac CMB Grantor Trust, Series 2004-6, Class M-2, 5.92% 2034⁴	2,915	2,922
GE SeaCo Finance SRL, Series 2004-1, Class A, AMBAC insured, 5.62% 2019^4,5	6,263	6,263
Popular ABS Mortgage Pass-Through Trust, Series 2004-5, Class AF-6, 4.747% 2034	5,800	5,621
USAA Auto Owner Trust, Series 2004-3, Class A-3, 3.16% 2009	5,271	5,231
MBNA Master Credit Card Trust II, Series 2000-H, Class B, 5.92% 2013⁴	5,000	5,089
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A-3, 5.70% 2023	4,999	5,010
Navistar Financial Owner Trust, Series 2004-A, Class B, 2.46% 2011	2,272	2,200
Long Beach Mortgage Loan Trust, Series 2000-1, Class AF-3, 7.434% 2031⁴	1,252	1,249
Capital One Prime Auto Receivables Trust, Series 2004-2, Class A-3, 3.06% 2008	1,107	1,106
New South Motor Vehicle Trust, Series 2002-A, Class A-3, AMBAC insured, 3.03% 2010	656	649
MMCA Auto Owner Trust, Series 2002-4, Class A-4, 3.05% 2009	247	247
NPF XII, Inc., Series 2001-3, Class A, 5.52% 2007^5,7	5,000	137
NPF XII, Inc., Series 2001-1A, Class A, 2.30% 2004^4,5,7	3,000	82
ACE Securities Corp. Home Equity Loan Trust, Series 2003-NC1, Class A-2A, 5.74% 2033⁴	130	131
		1,420,908

CONSUMER DISCRETIONARY — 0.98%
Comcast Cable Communications, Inc. 6.875% 2009	18,000	18,724
Comcast Corp. 5.45% 2010	9,500	9,557
Tele-Communications, Inc. 7.875% 2013	10,000	11,199
Comcast Corp. 5.85% 2015	36,000	36,268
Viacom Inc. 5.75% 2011	13,500	13,530
Viacom Inc. 6.25% 2016	39,705	39,837
Viacom Inc. 6.875% 2036	10,000	10,101
Harrah’s Operating Co., Inc. 7.125% 2007	6,000	6,029
Harrah’s Operating Co., Inc. 5.50% 2010	4,325	4,157
Harrah’s Operating Co., Inc. 5.625% 2015	18,600	15,705
Harrah’s Operating Co., Inc. 6.50% 2016	39,000	34,385
Clear Channel Communications, Inc. 6.00% 2006	7,000	7,000
Clear Channel Communications, Inc. 6.625% 2008	8,245	8,339
Chancellor Media Corp. of Los Angeles 8.00% 2008	34,000	35,522
J.C. Penney Co., Inc. 8.00% 2010	27,750	29,826
J.C. Penney Co., Inc. 9.00% 2012	12,480	14,485
Pulte Homes, Inc. 4.875% 2009	15,000	14,782
Pulte Homes, Inc. 7.875% 2011	14,000	15,188
Pulte Homes, Inc. 8.125% 2011	7,500	8,157
Centex Corp. 4.55% 2010	2,000	1,927
Centex Corp. 7.875% 2011	2,000	2,168
Centex Corp. 5.70% 2014	10,000	9,861
Centex Corp. 5.25% 2015	12,000	11,366
Centex Corp. 6.50% 2016	10,000	10,267
DaimlerChrysler North America Holding Corp. 4.05% 2008	6,480	6,338
DaimlerChrysler North America Holding Corp. 4.75% 2008	6,520	6,460
DaimlerChrysler North America Holding Corp. 7.20% 2009	3,000	3,129
DaimlerChrysler North America Holding Corp. 8.00% 2010	17,500	18,856
Kohl’s Corp. 6.30% 2011	27,690	28,751
Kohl’s Corp. 7.375% 2011	2,800	3,023
Marriott International, Inc., Series F, 4.625% 2012	7,000	6,662
Marriott International, Inc., Series G, 5.81% 2015	21,323	21,065
AOL Time Warner Inc. 6.15% 2007	5,000	5,019
Time Warner Inc. 8.18% 2007	10,000	10,216
Time Warner Companies, Inc. 9.125% 2013	10,000	11,691
Viacom Inc. 5.625% 2007	25,000	25,021
Toll Brothers, Inc. 6.875% 2012	4,000	4,098
Toll Brothers, Inc. 5.15% 2015	22,500	20,485
Ryland Group, Inc. 5.375% 2012	12,000	11,508
Ryland Group, Inc. 5.375% 2015	12,000	11,127
Carnival Corp. 3.75% 2007	6,000	5,893
Carnival Corp. 6.15% 2008	15,725	15,865
Target Corp. 7.50% 2010	20,000	21,607
Gap, Inc. 9.55% 2008⁴	19,460	20,949
May Department Stores Co. 8.00% 2012	9,520	10,383
May Department Stores Co. 5.75% 2014	3,785	3,746
Federated Department Stores, Inc. 7.45% 2017	5,412	5,941
D.R. Horton, Inc. 6.00% 2011	16,500	16,547
D.R. Horton, Inc. 6.50% 2016	3,000	2,995
Hyatt Equities, LLC 6.875% 2007⁵	17,040	17,140
MDC Holdings, Inc. 7.00% 2012	2,000	2,067
MDC Holdings, Inc. 5.375% 2014	15,000	13,979
Thomson Corp. 6.20% 2012	14,000	14,484
News America Holdings Inc. 9.25% 2013	5,200	6,163
News America Inc. 5.30% 2014	5,000	4,939
News America Holdings Inc. 8.00% 2016	2,000	2,324
Lowe’s Companies, Inc., Series B, 6.70% 2007	5,455	5,509
Lowe’s Companies, Inc. 8.25% 2010	5,455	6,009
Walt Disney Co., Series B, 5.375% 2007	5,000	5,004
Walt Disney Co. 5.625% 2016	3,000	3,040
NVR, Inc. 5.00% 2010	8,000	7,806
Hilton Hotels Corp. 7.625% 2008	4,000	4,105
Starwood Hotels & Resorts Worldwide, Inc. 7.375% 2007	1,500	1,517
Delphi Automotive Systems Corp. 6.50% 2009⁷	1,200	1,242
		761,083

TELECOMMUNICATION SERVICES — 0.93%
Sprint Capital Corp. 6.00% 2007	15,000	15,008
US Unwired Inc., Series B, 10.00% 2012	33,305	36,802
Nextel Communications, Inc., Series E, 6.875% 2013	47,300	48,382
Nextel Communications, Inc., Series D, 7.375% 2015	54,340	56,173
Verizon Wireless Capital LLC and Cellco Partnership 5.375% 2006	108,200	108,180
AT&T Wireless Services, Inc. 7.50% 2007	33,575	33,920
AT&T Wireless Services, Inc. 7.875% 2011	61,700	67,708
SBC Communications Inc. 4.125% 2009	10,000	9,712
SBC Communications Inc. 6.25% 2011	35,000	36,288
SBC Communications Inc. 5.875% 2012	27,000	27,610
AT&T Inc. 6.80% 2036	15,000	16,223
Telecom Italia Capital SA 4.00% 2010	9,800	9,341
Telecom Italia Capital SA, Series B, 5.25% 2013	59,500	56,992
Telecom Italia Capital SA 4.95% 2014	19,900	18,488
PCCW-HKT Capital Ltd. 8.00% 2011^4,5	22,450	24,745
PCCW-HKT Capital Ltd. 8.00% 2011	1,800	1,984
PCCW-HKT Capital No. 3 Ltd. 5.25% 2015⁵	9,900	9,415
Telefónica Emisiones, SAU 5.984% 2011	20,000	20,453
Telefónica Emisiones, SAU 7.045% 2036	14,500	15,663
Koninklijke KPN NV 8.00% 2010	23,750	25,775
Koninklijke KPN NV 8.375% 2030	4,600	5,362
Singapore Telecommunications Ltd. 6.375% 2011⁵	17,925	18,847
Singapore Telecommunications Ltd. 6.375% 2011	9,825	10,330
British Telecommunications PLC 8.375% 2010⁴	4,200	4,721
British Telecommunications PLC 8.875% 2030	11,400	15,490
Verizon Global Funding Corp. 4.90% 2015	14,250	13,624
Deutsche Telekom International Finance BV 8.00% 2010⁴	5,100	5,571
Deutsche Telekom International Finance BV 8.25% 2030⁴	6,000	7,475
		720,282

UTILITIES — 0.65%
Dominion Resources, Inc., Series G, 3.66% 2006	6,000	5,996
Virginia Electric and Power Co., Series 2002-A, 5.375% 2007	6,000	5,998
Dominion Resources, Inc., Series B, 4.125% 2008	10,000	9,853
Dominion Resources, Inc., Series 2002-D, 5.125% 2009	18,561	18,469
Dominion Resources, Inc., Series 2000-A, 8.125% 2010	35,000	38,161
Dominion Resources, Inc., Series 2002-C, 5.70% 2012⁴	4,250	4,310
American Electric Power Co., Inc. 4.709% 2007⁴	12,500	12,432
Appalachian Power Co., Series J, 4.40% 2010	10,000	9,680
Ohio Power Co., Series J, 5.30% 2010	18,000	17,992
Appalachian Power Co., Series M, 5.55% 2011	10,000	10,064
Appalachian Power Co., Series I, 4.95% 2015	15,000	14,283
Indiana Michigan Power Co. 5.65% 2015	11,000	10,982
Scottish Power PLC 4.91% 2010	30,000	29,603
Scottish Power PLC 5.375% 2015	25,000	24,589
Commonwealth Edison Co., Series 99, 3.70% 2008	2,750	2,690
Exelon Corp. 4.45% 2010	15,000	14,588
Exelon Corp. 6.75% 2011	2,000	2,100
Exelon Generation Co., LLC 6.95% 2011	21,600	22,911
Exelon Corp. 4.90% 2015	5,000	4,736
Commonwealth Edison Co., First Mortgage Bonds, Series 104, 5.95% 2016	5,000	5,069
Ameren Corp. 4.263% 2007	2,500	2,484
Cilcorp Inc. 8.70% 2009	17,025	18,043
AmerenEnergy Generating Co., Series D, 8.35% 2010	5,000	5,478
Union Electric Co. 4.65% 2013	4,250	4,053
Cilcorp Inc. 9.375% 2029	5,000	5,347
Constellation Energy Group, Inc. 6.125% 2009	11,000	11,250
Constellation Energy Group, Inc. 7.00% 2012	15,000	16,139
Constellation Energy Group, Inc. 4.55% 2015	5,000	4,660
National Grid PLC 6.30% 2016	28,225	29,447
NiSource Finance Corp. 6.15% 2013	3,000	3,070
NiSource Finance Corp. 5.40% 2014	24,500	23,910
PSEG Power LLC 3.75% 2009	10,000	9,649
PSEG Power LLC 7.75% 2011	15,000	16,320
Centerpoint Energy Resources Corp., Series B, 7.875% 2013	18,000	20,125
Centerpoint Energy, Inc., Series B, 6.85% 2015	5,000	5,339
Duke Energy Corp., First and Refunding Mortgage Bonds, Series A, 3.75% 2008	10,000	9,811
Duke Capital Corp. 7.50% 2009	10,000	10,554
Alabama Power Co., Series Y, 2.80% 2006	5,000	4,990
Alabama Power Co., Series X, 3.125% 2008	1,800	1,745
Alabama Power Co., Series R, 4.70% 2010	1,750	1,719
Southern Power Co., Series B, 6.25% 2012	6,000	6,243
Alabama Power Co., Series Q, 5.50% 2017	4,000	4,038
Progress Energy Florida, Inc., First Mortgage Bonds, 4.80% 2013	5,000	4,871
Carolina Power & Light Co. d/b/a Progress Energy Carolinas, Inc., First Mortgage Bonds, 5.15% 2015	5,000	4,922
Southern California Gas Co., First Mortgage Bonds, Series II, 4.375% 2011	5,500	5,338
Public Service Co. of Colorado, First Collateral Trust Bonds, Series No. 12, 4.875% 2013	5,000	4,902
Oncor Electric Delivery Co. 6.375% 2012	3,725	3,870
MidAmerican Energy Co. 5.125% 2013	1,500	1,487
Pacific Gas and Electric Co., First Mortgage Bonds, 4.20% 2011	1,000	962
		505,272

HEALTH CARE — 0.59%
Cardinal Health, Inc. 6.25% 2008	13,155	13,324
Cardinal Health, Inc. 5.64% 2009^4,5	12,500	12,509
Cardinal Health, Inc. 6.75% 2011	100,250	105,139
Cardinal Health, Inc. 5.85% 2017	10,000	10,044
Humana Inc. 6.45% 2016	40,875	42,606
Humana Inc. 6.30% 2018	16,335	16,570
Hospira, Inc. 4.95% 2009	48,950	48,136
Hospira, Inc. 5.90% 2014	3,000	2,977
Wyeth 4.375% 2008⁴	45,250	44,716
UnitedHealth Group Inc. 3.30% 2008	7,500	7,315
UnitedHealth Group Inc. 4.125% 2009	25,165	24,471
UnitedHealth Group Inc. 5.25% 2011	1,585	1,584
UnitedHealth Group Inc. 5.375% 2016	5,250	5,242
WellPoint, Inc. 5.00% 2011	37,000	36,646
Boston Scientific Corp. 6.00% 2011	21,360	21,594
Boston Scientific Corp. 6.40% 2016	10,325	10,506
Universal Health Services, Inc. 7.125% 2016	22,820	24,274
Aetna Inc. 5.75% 2011	12,500	12,734
Schering-Plough Corp. 5.55% 2013⁴	10,000	10,073
Amgen Inc. 4.00% 2009	10,000	9,711
		460,171

INDUSTRIALS — 0.53%
Continental Airlines, Inc., Series 1998-1, Class A, 6.648% 2019⁶	11,664	11,905
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 2019⁶	5,499	5,715
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 2022⁶	11,159	11,333
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 2022⁶	12,676	13,698
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 2022⁶	14,029	15,336
General Electric Capital Corp., Series A, 5.00% 2007	47,500	47,415
General Electric Capital Corp. 4.25% 2008	10,000	9,895
General Electric Co. 4.50% PINES 2035	1,843	1,692
American Airlines, Inc., Series 2001-2, Class B, 8.608% 2012	10,000	10,444
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 2013⁶	35,450	38,308
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 2014⁶	39,770	40,192
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 2024⁶	3,870	3,940
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 2011^5,6	42,106	43,686
Waste Management, Inc. 6.50% 2008	6,180	6,327
Waste Management, Inc. 7.375% 2010	20,000	21,443
Waste Management, Inc. 5.00% 2014	890	862
Caterpillar Financial Services Corp., Series F, 5.446% 2008⁴	3,500	3,507
Caterpillar Inc. 4.50% 2009	17,785	17,537
Caterpillar Financial Services Corp. 4.30% 2010	4,300	4,186
Caterpillar Inc. 6.05% 2036	500	526
Tyco International Group SA 6.125% 2008	$13,000	$ 13,192
Tyco International Group SA 6.125% 2009	7,000	7,124
Bombardier Inc. 6.30% 2014⁵	19,000	17,527
Raytheon Co. 4.85% 2011	16,000	15,764
Hutchison Whampoa International Ltd. 6.50% 2013⁵	11,800	12,381
Southwest Airlines Co., Series 2001-1, Class B, 6.126% 2006⁶	8,500	8,504
Southwest Airlines Co., Series 2001-1, Class A-2, 5.496% 2008⁶	1,400	1,401
John Deere Capital Corp. 3.90% 2008	3,000	2,953
John Deere Capital Corp. 4.875% 2009	6,000	5,969
American Standard Inc. 7.625% 2010	7,000	7,385
United Air Lines, Inc., Series 2001-1, Class A-2, 6.201% 2010⁶	1,648	1,649
United Air Lines, Inc., Series 2001-1, Class A-3, 6.602% 2015⁶	4,380	4,421
Northrop Grumman Systems Corp. 7.125% 2011	5,000	5,359
		411,576

ENERGY — 0.49%
Devon Financing Corp., ULC 6.875% 2011	75,500	80,559
Apache Corp. 6.25% 2012	55,000	57,481
Enterprise Products Operating LP 4.95% 2010	18,000	17,709
Enterprise Products Operating LP 7.50% 2011	5,000	5,363
Enterprise Products Partners LP 5.60% 2014	15,100	14,925
Enterprise Products Operating LP, Series B, 5.00% 2015	1,900	1,799
Enterprise Products Operating LP 6.875% 2033	10,000	10,553
Energy Transfer Partners, LP 5.65% 2012	14,385	14,425
Energy Transfer Partners, LP 5.95% 2015	30,615	30,939
Williams Companies, Inc. 7.125% 2011	10,000	10,375
Williams Companies, Inc. 8.125% 2012	16,300	17,563
Transcontinental Gas Pipe Line Corp., Series B, 8.875% 2012	8,000	9,020
Pemex Finance Ltd. 8.875% 2010⁶	12,427	13,380
Pemex Project Funding Master Trust 5.75% 2015⁵	21,000	20,764
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 2009^5,6	5,082	4,935
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 2009⁶	801	778
Ras Laffan Liquefied Natural Gas II 5.298% 2020^5,6	27,650	26,745
Sunoco, Inc. 6.75% 2011	7,500	7,915
Sunoco, Inc. 4.875% 2014	9,250	8,828
XTO Energy Inc. 5.65% 2016	15,000	14,940
Kinder Morgan Energy Partners LP 5.00% 2013	2,190	2,095
Kinder Morgan Energy Partners LP 5.125% 2014	7,810	7,468
		378,559

MATERIALS — 0.41%
International Paper Co. 4.00% 2010	10,915	10,509
International Paper Co. 6.75% 2011	10,000	10,656
International Paper Co. 5.85% 2012	21,585	22,204
International Paper Co. 5.50% 2014	16,000	15,848
Norske Skogindustrier ASA 7.625% 2011⁵	55,130	57,521
Lafarge 6.15% 2011	25,000	25,691
Lafarge 6.50% 2016	17,060	17,802
UPM-Kymmene Corp. 5.625% 2014⁵	41,490	40,547
Stora Enso Oyj 6.404% 2016⁵	34,000	34,897
Dow Chemical Co. 5.00% 2007	10,500	10,455
Dow Chemical Co. 5.75% 2008	10,500	10,625
Dow Chemical Co. 6.00% 2012	4,000	4,145
Packaging Corp. of America 4.375% 2008	14,000	13,756
Weyerhaeuser Co. 6.75% 2012	11,330	11,878
Teck Cominco Ltd. 5.375% 2015	11,000	10,765
Alcan Inc. 6.45% 2011	1,000	1,041
Alcan Inc. 5.20% 2014	8,000	7,820
Praxair, Inc. 2.75% 2008	6,350	6,119
Arbermarle Corp. 5.10% 2015	6,000	5,733
ICI Wilmington, Inc. 4.375% 2008	4,000	3,915
ICI Wilmington, Inc. 5.625% 2013	500	496
		322,423

NON-U.S. GOVERNMENT BONDS & NOTES — 0.15%
Russian Federation 5.00%/7.50% 2030^6,8	62,600	70,269
United Mexican States Government Global 5.625% 2017	35,000	35,070
Corporación Andina de Fomento 6.875% 2012	10,000	10,665
		116,004

INFORMATION TECHNOLOGY — 0.15%
Electronic Data Systems Corp., Series B, 6.50% 2013⁴	54,980	55,969
Sabre Holdings Corp. 6.35% 2016	22,650	22,561
Motorola, Inc. 4.608% 2007	12,500	12,419
Motorola, Inc. 7.625% 2010	1,590	1,727
Cisco Systems, Inc. 5.25% 2011	14,000	14,098
Jabil Circuit, Inc. 5.875% 2010	7,975	8,021
		114,795

CONSUMER STAPLES — 0.12%
Wal-Mart Stores, Inc. 6.875% 2009	13,650	14,292
Wal-Mart Stores, Inc., Series 1994-A2, 8.85% 2015	18,000	21,173
Tyson Foods, Inc. 6.85% 2016⁴	20,000	20,673
Diageo Capital PLC 4.375% 2010	12,000	11,689
Diageo Finance BV 5.30% 2015	2,300	2,267
CVS Corp. 4.00% 2009	1,940	1,876
CVS Corp. 6.117% 2013^5,6	10,989	11,137
Kellogg Co. 6.60% 2011	5,250	5,542
Kellogg Co. 7.45% 2031	500	608
Cadbury Schweppes US Finance LLC 5.125% 2013⁵	5,500	5,351
Kraft Foods Inc. 4.625% 2006	1,000	1,000
Nabisco, Inc. 7.05% 2007	1,000	1,008
		96,616

MUNICIPALS — 0.06%
State of California, Golden State Tobacco Securitization Corp., Tobacco Settlement Asset-backed Bonds,
Series 2003-A-1, 6.25% 2033	15,580	17,277
State of Wisconsin, Badger Tobacco Asset Securitization Corp., Tobacco Settlement Asset-backed Bonds, 6.125% 2027	13,990	15,126
State of South Dakota, Educational Enhancement Funding Corp., Tobacco Settlement Asset-backed Bonds,
Series 2002-A, Class A, 6.72% 2025	9,842	9,847
State of Louisiana, Tobacco Settlement Financing Corp., Tobacco Settlement Asset-backed Bonds,
Series 2001-A, Class A, 6.36% 2025	5,211	5,210
		47,460


Total bonds & notes (cost: $14,979,536,000)		14,980,855




Short-term securities — 12.48%	Principal amount (000)	Market value (000)

Federal Home Loan Bank 5.07%-5.25% due 11/1/2006-1/24/2007	$1,057,397	$1,053,492
Freddie Mac 5.08%-5.23% due 11/14/2006-4/3/2007	887,780	880,547
Fannie Mae 5.07%-5.18% due 11/8/2006-3/21/2007	513,360	509,446
Bank of America Corp. 5.22%-5.275% due 11/20/2006-1/31/2007	421,000	418,261
Ranger Funding Co. LLC 5.25%-5.32% due 11/2-12/12/2006⁵	61,000	60,834
Wal-Mart Stores Inc. 5.20%-5.23% due 11/7-12/19/2006⁵	459,400	457,199
U.S. Treasury Bills 4.805%-4.966% due 11/9-12/21/2006	432,900	431,180
CAFCO, LLC 5.23%-5.26% due 12/12/2006-1/18/2007⁵	200,000	198,291
Ciesco LLC 5.25%-5.26% due 11/6-12/7/2006⁵	195,415	194,766
Citigroup Funding Inc. 5.25%-5.27% due 11/16/2006	32,000	31,929
Federal Farm Credit Banks 5.05%-5.14% due 11/3-12/27/2006	409,800	408,027
Variable Funding Capital Corp. 5.22%-5.25% due 11/6/2006-1/5/2007⁵	391,600	389,839
Jupiter Securitization Co., LLC 5.24%-5.25% due 11/8-12/1/2006⁵	159,193	158,533
Preferred Receivables Funding Corp. 5.26% due 11/15/2006⁵	80,000	79,831
Park Avenue Receivables Co., LLC 5.24%-5.26% due 11/3-12/5/2006⁵	151,500	151,060
Clipper Receivables Co., LLC 5.25%-5.28% due 11/3-12/4/2006⁵	257,000	256,496
State Street Corp. 5.23%-5.24% due 11/27-12/5/2006	105,000	104,495
General Electric Co. 5.23%-5.24% due 12/20-12/28/2006	140,000	138,921
Edison Asset Securitization LLC 5.23%-5.24% due 12/22/2006-1/12/2007⁵	135,000	133,689
General Electric Capital Services, Inc. 5.23%-5.25% due 11/2-12/6/2006	80,000	79,730
International Lease Finance Corp. 5.225%-5.235% due 11/1-12/18/2006	189,500	188,951
American General Finance Corp. 5.225% due 12/13/2006	50,000	49,701
AIG Funding Inc. 5.22%-5.24% due 11/1-12/21/2006	110,000	109,634
Gannett Co. 5.18%-5.20% due 11/2-11/22/2006⁵	236,700	236,186
International Bank for Reconstruction and Development 5.06%-5.13% due 11/13-11/29/2006	217,200	216,701
HSBC Finance Corp. 5.20%-5.23% due 11/10-12/12/2006	200,000	199,092
HSBC Finance Corp. 5.25% due 12/1/2006⁹	15,000	14,934
UnionBanCal Commercial Funding Corp. 5.24% due 11/10-11/20/2006	111,600	111,350
Union Bank of California, N.A. 5.27% due 11/28-12/11/2006	93,200	93,200
Tennessee Valley Authority 5.06%-5.135% due 11/9-12/21/2006	193,500	192,443
Procter & Gamble Co. 5.21% due 12/1-12/11/2006⁵	182,000	181,057
Three Pillars Funding, LLC 5.26%-5.27% due 11/17-12/19/2006⁵	176,282	175,481
E.I. duPont de Nemours and Co. 5.19%-5.20% due 11/17-11/28/2006⁵	165,000	164,373
Private Export Funding Corp. 5.18%-5.34% due 11/1/2006-2/7/2007⁵	151,300	149,949
FCAR Owner Trust I 5.25%-5.28% due 11/16-12/15/2006	147,500	146,784
CIT Group, Inc. 5.25% due 1/8-2/5/2007⁵	114,800	113,412
CIT Group, Inc. 5.25% due 1/23/2007	20,000	19,757
Coco-Cola Co. 5.19%-5.20% due 11/2-12/8/2006⁵	130,000	129,569
IBM Capital Inc. 5.205%-5.21% due 12/6/2006⁵	65,800	65,476
IBM Corp. 5.16% due 12/4/2006⁵	50,000	49,756
American Express Credit Corp. 5.23% due 11/28-12/13/2006	70,000	69,660
American Express Credit Corp. 5.24%-5.25% due 12/4/2006⁹	30,000	29,852
3M Co. 5.19%-5.21% due 11/27-12/18/2006	100,000	99,413
Kimberly-Clark Worldwide Inc. 5.19%-5.195% due 11/27-12/4/2006⁵	95,500	95,089
Abbott Laboratories 5.18% due 11/7/2006⁵	75,275	75,199
Illinois Tool Works Inc. 5.21%-5.22% due 11/14-12/14/2006	71,000	70,713
NetJets Inc. 5.18%-5.20% due 11/9-11/16/2006⁵	65,000	64,887
Hershey Co. 5.19% due 11/13-12/8/2006⁵	55,000	54,807
Wells Fargo Bank, N.A. 5.27% due 11/3/2006	50,000	50,000
Emerson Electric Co. 5.18% due 11/14/2006⁵	50,000	49,899
Colgate-Palmolive Co. 5.19% due 11/7/2006⁵	43,100	43,056
Triple-A One Funding Corp. 5.25% due 11/9/2006⁵	30,730	30,690
Becton, Dickinson and Co. 5.21% due 11/6/2006	25,000	24,978
McCormick & Co., Inc. 5.20% due 11/7/2006⁵	25,000	24,975
Bank of New York Co., Inc. 5.21% due 11/10/2006	25,000	24,964
Eli Lilly and Co. 5.17% due 11/13/2006⁵	25,000	24,953
USAA Capital Corp. 5.23% due 11/15/2006	25,000	24,948
Target Corp. 5.20% due 11/20/2006	25,000	24,928
Chevron Funding Corp. 5.22% due 11/27/2006	25,000	24,902
Medtronic Inc. 5.19% due 12/15/2006⁵	21,700	21,559
Wm. Wrigley Jr. Co. 5.21% due 12/5/2006⁵	15,000	14,924
Caterpillar Financial Services Corp. 5.19% due 11/14/2006	9,800	9,780

Total short-term securities (cost: $9,698,380,000)		9,698,548


Total investment securities (cost: $63,634,083,000)		77,822,430
Other assets less liabilities		(114,307)

Net assets		$77,708,123

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

¹ Represents an affiliated company as defined under the Investment Company Act of 1940.

² Valued under fair value procedures adopted by authority of the board of directors. None at 10/31/06.

³ Security did not produce income during the last 12 months.

⁴ Coupon rate may change periodically.

⁵ 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 $5,953,872,000, which represented 7.66% of the net assets of the fund.

⁶ Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.

⁷ Scheduled interest and/or principal payment was not received.

⁸ Step bond; coupon rate will increase at a later date.

⁹ This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

ADR = American Depositary Receipts

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from a financial adviser and should be read carefully before investing.

MFGEFP-912-1206-S6880

Summary investment portfolio,

October 31, 2006

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.

[begin pie chart]

Industry sector diversification
Financials	19.09	%
Utilities	9.77
Telecommunication services	7.64
Consumer staples	5.64
Industrials	5.41
Convertible securities & preferred stocks	0.85
Bonds & notes	19.28
Other industries	19.99
Short-term securities & other assets less liabilities	12.33

[end pie chart]

Common stocks - 67.54%	Shares			Market value (000)			Percent of net assets

Financials - 19.09%
Fannie Mae		12,900,000		$	764,454			.98
Société Générale		4,398,870			730,807			.94
HSBC Holdings PLC (Hong Kong)		23,870,097			450,397
HSBC Holdings PLC (United Kingdom)		14,158,402			268,381			.93
Citigroup Inc.		14,170,000			710,767			.92
Bank of America Corp.		11,867,340			639,294			.82
BNP Paribas		5,320,270			584,843			.75
Banco Santander Central Hispano, SA		33,432,614			578,470			.75
Freddie Mac		7,900,000			545,021			.70
Washington Mutual, Inc.		12,000,000			507,600			.65
ING Groep NV		9,866,216			436,974			.56
National City Corp.		11,619,800			432,838			.56
Other securities					8,183,729			10.53
					14,833,575			19.09

Utilities - 9.77%
E.ON AG		10,460,000			1,254,614			1.61
Exelon Corp.		13,485,000			835,800			1.08
National Grid PLC		61,137,551			781,148			1.00
Veolia Environnement		12,546,100			767,944
								.99
Gas Natural SDG, SA		10,120,000			401,856			.52
Other securities					3,549,970			4.57
					7,591,332			9.77

Telecommunication services - 7.64%
BellSouth Corp.		26,003,000			1,172,735			1.51
AT&T Inc.		33,519,452			1,148,041			1.48
Koninklijke KPN NV		58,237,900			778,042			1.00
Verizon Communications Inc.		19,410,000			718,170			.92
Chunghwa Telecom Co., Ltd. (ADR)		11,590,952			211,999
Chunghwa Telecom Co., Ltd.		79,914,960			136,997			.45
Other securities					1,771,099			2.28
					5,937,083			7.64

Consumer staples - 5.64%
Altria Group, Inc.		13,575,500			1,104,095			1.42
UST Inc.		8,178,000			438,014			.56
Nestlé SA		1,150,000			393,139			.51
Other securities					2,447,246			3.15
					4,382,494			5.64

Industrials - 5.41%
General Electric Co.		21,075,000			739,943			.95
Other securities					3,467,492			4.46

					4,207,435			5.41
Energy - 4.54%
Royal Dutch Shell PLC, Class A (ADR)		6,828,000			475,365
Royal Dutch Shell PLC, Class B		6,997,187			250,593
Royal Dutch Shell PLC, Class B (ADR)		1,866,228			134,368
Royal Dutch Shell PLC, Class A		3,055,000			105,836			1.24
Husky Energy Inc.		8,065,000			513,678			.66
Chevron Corp.		5,640,000			379,008			.49
Other securities					1,667,629			2.15
					3,526,477			4.54

Consumer discretionary - 3.86%
Renault SA		3,496,000			408,841			.53
Greek Organization of Football Prognostics SA		10,207,040			364,417			.47

Other securities					2,224,769			2.86
					2,998,027			3.86

Materials - 3.22%
Bayer AG		7,267,000			365,808			.47
China Steel Corp.		402,931,115			356,276			.46
Other securities					1,780,765			2.29
					2,502,849			3.22

Health care - 2.94%
Merck & Co., Inc.		15,319,600			695,816			.90
Bristol-Myers Squibb Co.		19,000,000			470,250			.61
Abbott Laboratories		8,098,700			384,769			.49
Other securities					733,909			.94
					2,284,744			2.94

Information technology - 0.98%
Microsoft Corp.		15,185,000			435,961			.56
Other securities					327,229			.42
					763,190			.98


Miscellaneous - 4.45%
Other common stocks in initial period of acquisition					3,460,109			4.45


Total common stocks (cost: $38,338,196,000)					52,487,315			67.54



Preferred stocks - 0.38%		Shares			Market value (000	)	Percent of net assets

Financials - 0.38%
Fannie Mae, Series E, 5.10%		550,000		$	25,450
Fannie Mae, Series L, 5.125%		273,350			12,547			.05
Bank of America Corp., Series E, 0% preferred depositary shares (1)		1,000,000			25,050			.03
HSBC Holdings PLC 4.61% (undated) (2)(3)		8,000,000			7,500			.01
Other securities					221,655			.29
					292,202			.38


Total preferred stocks (cost: $286,139,000)					292,202			.38



Convertible securities - 0.47%		Shares			Market value (000	)	Percent of net assets

Financials - 0.12%
Fannie Mae 5.375% convertible preferred		965		$	93,967			.12

Other - 0.35%
Other securities					269,543			.35



Total convertible securities (cost: $331,832,000)					363,510			.47



Bonds & notes - 19.28%		Principal amount (000	)		Market value (000	)		Percent of net assets

Mortgage-backed obligations (4) - 6.31%
Fannie Mae 0%-11.00% 2012-2041 (2)	$	784,783		$	777,287			1.00
Freddie Mac 6.00% 2036		351,505			353,934			.46
Freddie Mac 0%-7.50% 2015-2036 (2)		422,697			402,496			.52
Other securities					3,368,253			4.33
					4,901,970			6.31

Financials - 3.49%
Bank of America Corp. 3.875%-5.25% 2008-2012		44,400			43,960
MBNA Corp. 5.625% 2007		26,000			26,086
MBNA America Bank, National Assn. 5.375% 2008		15,500			15,509
BankAmerica Corp. 5.875%-7.125% 2009-2011		9,250			9,528
BankBoston NA 7.00% 2007		7,500			7,576			.13
Household Finance Corp. 4.125%-6.40% 2007-2008		77,000			78,041
HSBC Bank USA 4.625% 2014 (3)		16,000			15,362
HSBC Finance Corp. 5.00% 2015		4,535			4,412			.13
Citigroup Inc. 4.125%-5.125% 2010-2014		31,000			30,459
Commercial Credit Co. 6.625% 2006		1,975			1,976			.04
Other securities					2,478,088			3.19
					2,710,997			3.49

U.S. government & government agency bonds & notes - 2.59%
U.S. Treasury 0%-13.25% 2007-2031		992,910			1,073,787			1.38
Freddie Mac 4.125%-7.00% 2008-2011		430,000			440,361			.57
Fannie Mae 5.25%-7.25% 2007-2012		240,000			246,346			.32
Federal Home Loan Bank 3.375%-5.625% 2007-2016		142,670			142,727			.18
Other securities					109,518			.14
					2,012,739			2.59

Asset-backed obligations - 1.83%
Other securities					1,420,908			1.83


Telecommunication services - 0.93%
SBC Communications Inc. 4.125%-6.25% 2009-2012		72,000			73,610
AT&T Inc. 6.80% 2036		15,000			16,223			.12
Koninklijke KPN NV 8.00%-8.375% 2010-2030		28,350			31,137			.04
Other securities					599,312			.77
					720,282			.93

Utilities - 0.65%
Exelon Corp. 4.45%-6.75% 2010-2015		22,000			21,424
Exelon Generation Co., LLC 6.95% 2011		21,600			22,911
Commonwealth Edison Co. 3.70%-5.95% 2008-2016		7,750			7,759			.07
National Grid PLC 6.30% 2016		28,225			29,447			.04
Other securities					423,731			.54
					505,272			.65

Industrials - 0.53%
General Electric Capital Corp. 4.25%-5.00% 2007-2008		57,500			57,310
General Electric Co. 4.50% PINES 2035		1,843			1,692			.08
Other securities					352,574			.45
					411,576			.53

Other - 2.95%
Other securities					2,297,111			2.95



Total bonds & notes (cost: $14,979,536,000)					14,980,855			19.28



Short-term securities - 12.48%		Principal amount (000	)		Market value (000	)		Percent of net assets


Federal Home Loan Bank 5.07%-5.25% due 11/1/2006-1/24/2007	$	1,057,397		$	1,053,492			1.36
Freddie Mac 5.08%-5.23% due 11/14/2006-4/3/2007		887,780			880,547			1.13
Fannie Mae 5.07%-5.18% due 11/8/2006-3/21/2007		513,360			509,446			.66
Bank of America Corp. 5.22%-5.275% due 11/20/2006-1/31/2007		421,000			418,261
Ranger Funding Co. LLC 5.25%-5.32% due 11/2-12/12/2006 (3)		61,000			60,834			.62
Wal-Mart Stores Inc. 5.20%-5.23% due 11/7-12/19/2006 (3)		459,400			457,199			.59
U.S. Treasury Bills 4.805%-4.966% due 11/9-12/21/2006		432,900			431,180			.55
CAFCO, LLC 5.23%-5.26% due 12/12/2006-1/18/2007 (3)		200,000			198,291
Ciesco LLC 5.25%-5.26% due 11/6-12/7/2006 (3)		195,415			194,766
Citigroup Funding Inc. 5.25%-5.27% due 11/16/2006		32,000			31,929			.55
Federal Farm Credit Banks 5.05%-5.14% due 11/3-12/27/2006		409,800			408,027			.52
Variable Funding Capital Corp. 5.22%-5.25% due 11/6/2006-1/5/2007 (3)		391,600			389,839			.50
Jupiter Securitization Co., LLC 5.24%-5.25% due 11/8-12/1/2006 (3)		159,193			158,533
Park Avenue Receivables Co., LLC 5.24%-5.26% due 11/3-12/5/2006 (3)		151,500			151,060
Preferred Receivables Funding Corp. 5.26% due 11/15/2006 (3)		80,000			79,831			.50
Clipper Receivables Co., LLC 5.25%-5.28% due 11/3-12/4/2006 (3)		257,000			256,496
State Street Corp. 5.23%-5.24% due 11/27-12/5/2006		105,000			104,495			.46
General Electric Co. 5.23%-5.24% due 12/20-12/28/2006		140,000			138,921
Edison Asset Securitization LLC 5.23%-5.24% due 12/22/2006-1/12/2007 (3)		135,000			133,689
General Electric Capital Services, Inc. 5.23%-5.25% due 11/2-12/6/2006		80,000			79,730			.45
International Lease Finance Corp. 5.225%-5.235% due 11/1-12/18/2006		189,500			188,951
AIG Funding Inc. 5.22%-5.24% due 11/1-12/21/2006		110,000			109,634
American General Finance Corp. 5.225% due 12/13/2006		50,000			49,701			.45
HSBC Finance Corp. 5.20%-5.25% due 11/10-12/12/2006 (5)		215,000			214,026			.28
Other securities					2,999,670			3.86

Total short-term securities (cost: $9,698,380,000)					9,698,548			12.48


Total investment securities (cost: $63,634,083,000)					77,822,430			100.15
Other assets less liabilities					(114,307	)		(0.15	)

Net assets				$	77,708,123			100.00	%


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

"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.

Investments in affiliates

A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. Some of the fund's affiliated holdings listed below are also among the fund's largest holdings and are shown in the preceding summary investment portfolio. Affiliated companies not among the fund's largest holdings are included in the market value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the year ended October 31, 2006, appear below:

Company	Beginning shares or principal amount		Purchases		Sales		Ending shares or principal amount		Dividend and interest income (000)		Market value of affiliates at 10/31/06 (000)

UST Inc.		6,575,000		1,603,000		-		8,178,000	$	17,345	$	438,014
iStar Financial, Inc.		7,065,500		-		-		7,065,500		14,258		327,345
iStar Financial, Inc. 5.375% 2010	$	25,675,000		-		-	$	25,675,000		1,393		25,576
iStar Financial, Inc., Series F, 7.80% cumulative redeemable preferred		400,000		-		-		400,000		780		10,432
iStar Financial, Inc., Series B, 5.125% 2011	$	10,000,000		-		-	$	10,000,000		501		9,836
iStar Financial, Inc. 5.80% 2011		-		7,600,000		-	$	7,600,000		388		7,665
iStar Financial, Inc., Series B, 4.875% 2009	$	2,000,000		-		-	$	2,000,000		99		1,976
Macquarie Infrastructure Group		-		139,581,612		-		139,581,612		13,305		365,257
Macquarie Airports		59,516,626		47,846,479		-		107,363,105		10,836		266,817
SBM Offshore NV		2,083,797		6,251,391		-		8,335,188		5,180		246,642
GS Engineering & Construction Co. Ltd.		2,550,000		-		-		2,550,000		2,943		198,445
CapitaMall Trust Management Ltd.		89,200,470		11,428,000		-		100,628,470		5,250		167,155
Macquarie Communications Infrastructure Group		-		25,667,933		-		25,667,933		4,026		121,617
SP AusNet		-		107,253,698		-		107,253,698		2,340		107,947
CapitaCommercial Trust Management Ltd.		58,257,000		19,625,700		-		77,882,700		2,689		107,893
Taiwan Fertilizer Co., Ltd.		49,000,000		14,700,000		-		63,700,000		3,427		103,453
Ascendas Real Estate Investment Trust		70,189,600		1,953,000		-		72,142,600		4,828		100,404
Fisher & Paykel Healthcare Corp. Ltd.		33,061,000		150,000		-		33,211,000		2,685		93,038
Suntec Real Estate Investment Trust		64,221,000		28,023,000		-		92,244,000		3,107		91,700
PaperlinX Ltd.		28,987,000		-		6,440,000		22,547,000		1,641		71,918
Sydney Roads Group		-		60,682,071		-		60,682,071				53,557
Macquarie International Infrastructure Fund Ltd.		52,959,000		30,211,000		-		83,170,000		3,670		52,008
Fortune Real Estate Investment Trust		51,199,500		1,063,000		-		52,262,500		2,316		39,297
Fong's Industries Co. Ltd.		36,590,000		-		-		36,590,000		1,083		24,879
Allco Commercial REIT		-		32,100,000		-		32,100,000		290		19,764
Prosperity REIT		-		81,325,000		-		81,325,000		812		18,815
Arthur J. Gallagher & Co.(6)		5,069,200		-		4,519,200		550,000		5,086		-
Mapletree Logistics Trust (6)		35,510,000		17,221,000		26,001,000		26,730,000		1,037		-
Transurban Group (6)		16,230,502		-		9,973,950		6,256,552		-		-

									$	111,315	$	3,071,450



The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.


(1) Security did not produce income during the last 12 months.
(2) Coupon rate may change periodically.
(3) 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, including those in "Other securities" in the summary investment portfolio, was $5,953,872,000, which represented 7.66% of the net assets of the fund.
(4) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
(5) This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.
(6) Unaffiliated issuer at 10/31/2006.

ADR = American Depositary Receipts

See Notes to Financial Statements

Financial statements

Statement of assets and liabilities
at October 31, 2006	(dollars and shares in thousands, except per-share amounts)

Assets:
Investment securities at market:
Unaffiliated issuers (cost: $61,520,115)			$	74,750,980
Affiliated issuers (cost: $2,113,968)				3,071,450		$	77,822,430
Cash denominated in non-U.S. currencies
(cost: $7,893)							7,816
Cash							17,735
Receivables for:
Sales of investments				83,685
Sales of fund's shares				250,486
Dividends and interest				248,533			582,704
							78,430,685
Liabilities:
Payables for:
Purchases of investments				345,420
Repurchases of fund's shares				49,890
Dividends on fund's shares				269,065
Investment advisory services				12,616
Services provided by affiliates				38,783
Deferred directors' compensation				1,118
Other fees and expenses				5,670			722,562
Net assets at October 31, 2006						$	77,708,123

Net assets consist of:
Capital paid in on shares of capital stock						$	62,010,243
Undistributed net investment income							436,907
Undistributed net realized gain							1,077,328
Net unrealized appreciation							14,183,645
Net assets at October 31, 2006						$	77,708,123

Total authorized capital stock - 2,000,000 shares, $.01 par value (1,297,110 total shares outstanding)
		Net Assets		Shares outstanding			Net asset value per share*

Class A	$	58,439,506		975,476		$	59.91
Class B		4,413,039		73,663			59.91
Class C		8,615,984		143,819			59.91
Class F		3,493,864		58,320			59.91
Class 529-A		760,012		12,686			59.91
Class 529-B		122,534		2,045			59.91
Class 529-C		305,897		5,106			59.91
Class 529-E		40,055		669			59.91
Class 529-F		13,583		227			59.91
Class R-1		68,914		1,150			59.91
Class R-2		394,864		6,591			59.91
Class R-3		453,802		7,575			59.91
Class R-4		119,520		1,995			59.91
Class R-5		466,549		7,788			59.91
* 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 $63.56 each.


See Notes to Financial Statements

Statement of operations
for the year ended October 31, 2006
Investment income:
Income:							(dollars in thousands	)
Dividends (net of non-U.S. tax of $119,402; also includes
$108,934 from affiliates)			$	1,814,740
Interest (includes $2,381 from affiliates)				1,026,033		$	2,840,773

Fees and expenses*:
Investment advisory services				164,654
Distribution services				235,846
Transfer agent services				37,461
Administrative services				15,929
Reports to shareholders				3,068
Registration statement and prospectus				3,457
Postage, stationery and supplies				3,064
Directors' compensation				588
Auditing and legal				212
Custodian				8,001
State and local taxes				443
Other				194
Total fees and expenses before reimbursements/waivers				472,917
Less reimbursements/waivers of fees and expenses:
Investment advisory services				16,480
Administrative services				326
Total fees and expenses after reimbursements/waivers							456,111
Net investment income							2,384,662

Net realized gain and unrealized
appreciation on investments and non-U.S. currency:
Net realized gain on:
Investments (including $10,654 net gain from affiliates)				1,602,655
Non-U.S. currency transactions				1,919			1,604,574
Net unrealized appreciation on:
Investments				7,905,435
Non-U.S. currency translations				245			7,905,680
Net realized gain and unrealized appreciation
on investments and non-U.S. currency							9,510,254
Net increase in net assets resulting
from operations						$	11,894,916

* 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 October 31
				2006			2005
Operations:
Net investment income			$	2,384,662		$	1,724,849
Net realized gain on investments and
non-U.S. currency transactions				1,604,574			799,961
Net unrealized appreciation
on investments and non-U.S. currency translations				7,905,680			1,043,786
Net increase in net assets
resulting from operations				11,894,916			3,568,596

Dividends and distributions paid or accrued to
shareholders:
Dividends from net investment income and non-U.S. currency gain				(2,412,497	)		(1,578,505	)
Distributions from net realized gain
on investments				(740,369	)		(675,038	)
Total dividends and distributions paid or accrued
to shareholders				(3,152,866	)		(2,253,543	)

Capital share transactions				13,615,480			17,572,318

Total increase in net assets				22,357,530			18,887,371

Net assets:
Beginning of year				55,350,593			36,463,222
End of year (including undistributed net investment
income: $436,907 and $317,444, respectively)			$	77,708,123		$	55,350,593



See Notes to Financial Statements

Notes to financial statements

1.	Organization and significant accounting policies

Organization - Capital Income Builder, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks to provide a growing dividend - with higher income distributions every quarter to the extent possible - together with a current yield exceeding that of U.S. stocks generally.

The fund offers 14 share classes consisting of four retail share classes, five CollegeAmerica® savings plan share classes and five retirement plan share classes. 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. Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. 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; significant events occurring after the close of trading in the security; and changes in overall market conditions.

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. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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) are allocated daily among the various share classes based on the relative value of their settled shares. 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 paid to shareholders are declared daily from net investment income and are paid to shareholders quarterly. 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 unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in non-U.S. currencies are disclosed separately.

Mortgage dollar rolls - The fund may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

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. 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. As of October 31, 2006, non-U.S. taxes provided on unrealized gains were $4,585,000.

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. Therefore, no federal income tax provision is required.

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 unrealized appreciation of certain investments in non-U.S. securities and amortization of premiums or discounts. 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. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

During the year ended October 31, 2006, the fund reclassified $147,420,000 from undistributed net realized gains to undistributed net investment income and $122,000 from undistributed net investment income to capital paid in on shares of capital stock to align financial reporting with tax reporting.

As of October 31, 2006, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investments were as follows:

Undistributed ordinary income			$1,101,511
Undistributed long-term capital gain			1,090,666
Gross unrealized appreciation on investment securities			14,099,565
Gross unrealized depreciation on investment securities			<318,977>
Net unrealized appreciation on investment securities			13,780,588
Cost of investment securities			64,041,842

The tax character of distributions paid or accrued to shareholders was as follows (dollars in thousands):

	Year ended October 31, 2006						Year ended October 31, 2005
Share class	Ordinary income		Long-term capital gains		Total distributions paid or accrued		Ordinary income		Long-term capital gains		Total distributions paid or accrued

Class A	$	1,907,778	$	565,399	$	2,473,177		1,269,069		524,577	$	1,793,646
Class B		118,215		44,775		162,990		81,617		45,419		127,036
Class C		211,780		78,754		290,534		127,857		65,805		193,662
Class F		99,428		28,534		127,962		58,914		22,306		81,220
Class 529-A		22,604		6,326		28,930		12,159		4,587		16,746
Class 529-B		2,995		1,128		4,123		1,802		1,013		2,815
Class 529-C		7,190		2,616		9,806		3,993		2,113		6,106
Class 529-E		1,123		343		1,466		632		274		906
Class 529-F		386		93		479		157		52		209
Class R-1		1,459		493		1,952		582		222		804
Class R-2		9,250		3,281		12,531		4,972		2,421		7,393
Class R-3		11,998		3,731		15,729		6,057		2,337		8,394
Class R-4		3,357		966		4,323		1,588		353		1,941
Class R-5		14,934		3,930		18,864		9,106		3,559		12,665
Total	$	2,412,497	$	740,369	$	3,152,866	$	1,578,505	$	675,038	$	2,253,543

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 ^SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, Inc.^SM ("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 0.240% on the first $1 billion of daily net assets and decreasing to 0.117% on such assets in excess of $55 billion. The board of directors approved an amended agreement effective November 1, 2006, continuing the series of rates to include additional annual rates of 0.114% on daily net assets in excess of $71 billion but not exceeding $89 billion; and 0.112% on such assets in excess of $89 billion. During the year ended October 31, 2006, CRMC reduced investment advisory service rates to those provided by the amended agreement. The agreement also provides for monthly fees, accrued daily, based on a declining series of rates beginning with 3.00% on the first $100,000,000 of the fund's monthly gross income and decreasing to 2.50% on such income in excess of $100,000,000. CRMC is currently waiving 10% of investment advisory services fees. During the year ended October 31, 2006, total investment advisory services fees waived by CRMC were $16,480,000. As a result, the fee shown on the accompanying financial statements of $164,654,000, which was equivalent to an annualized rate of 0.254%, was reduced to $148,174,000, or 0.228% 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 directors 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 0.30% to 1.00% as noted below. In some cases, the board of directors 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 to provide 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 directors 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 0.30% is not exceeded. As of October 31, 2006, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class	Currently approved limits	Plan limits
Class A	0.30%	0.30%
Class 529-A	0.30	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 on the following page.

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 October 31, 2006, the total administrative services fees paid by CRMC were $818 and $325,000 for Class R-1 and R-2, 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 above for the year ended October 31, 2006, 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	$111,629	$34,302	Not applicable	Not applicable	Not applicable
Class B	38,228	3,159	Not applicable	Not applicable	Not applicable
Class C	69,974	Included in administrative services	$7,636	$1,128	Not applicable
Class F	6,551		2,061	352	Not applicable
Class 529-A	1,064		406	68	$598
Class 529-B	1,013		69	36	101
Class 529-C	2,432		165	64	244
Class 529-E	162		22	4	33
Class 529-F	-		7	1	10
Class R-1	492		58	21	Not applicable
Class R-2	2,334		459	1,157	Not applicable
Class R-3	1,745		477	239	Not applicable
Class R-4	222		127	9	Not applicable
Class R-5	Not applicable		369	8	Not applicable
Total	$235,846	$37,461	$11,856	$3,087	$986

Deferred directors’compensation - Since the adoption of the deferred compensation plan in 1993, directors 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. Directors’ compensation of $588,000, shown on the accompanying financial statements, includes $451,000 in current fees (either paid in cash or deferred) and a net increase of $137,000 in the value of the deferred amounts.

Affiliated officers and directors - Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors 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^*				Reinvestments of dividends and distributions				Repurchases^*						Net increase
	Amount		Shares		Amount		Shares		Amount			Shares			Amount		Shares
Year ended October 31, 2006
Class A	$	12,051,851		216,172	$	2,227,691		40,899	$	(4,774,295	)		(86,126	)	$	9,505,247		170,945
Class B		745,843		13,369		147,793		2,721		(363,419	)		(6,539	)		530,217		9,551
Class C		2,360,565		42,203		255,760		4,707		(813,512	)		(14,674	)		1,802,813		32,236
Class F		1,325,582		23,593		100,515		1,844		(432,593	)		(7,826	)		993,504		17,611
Class 529-A		230,263		4,143		27,938		512		(37,240	)		(671	)		220,961		3,984
Class 529-B		26,559		478		4,035		74		(4,859	)		(88	)		25,735		464
Class 529-C		92,893		1,669		9,534		175		(21,396	)		(385	)		81,031		1,459
Class 529-E		11,986		217		1,420		26		(2,834	)		(51	)		10,572		192
Class 529-F		6,492		117		450		8		(1,074	)		(19	)		5,868		106
Class R-1		36,332		653		1,821		33		(9,694	)		(177	)		28,459		509
Class R-2		170,976		3,073		12,055		222		(71,208	)		(1,282	)		111,823		2,013
Class R-3		204,823		3,681		15,117		277		(81,900	)		(1,481	)		138,040		2,477
Class R-4		67,367		1,212		4,132		76		(34,482	)		(625	)		37,017		663
Class R-5		141,763		2,547		14,781		271		(32,351	)		(582	)		124,193		2,236

Total net increase (decrease)	$	17,473,295		313,127	$	2,823,042		51,845	$	(6,680,857	)		(120,526	)	$	13,615,480		244,446

Year ended October 31, 2005
Class A	$	14,031,892		266,731	$	1,602,608		30,537	$	(2,814,883	)		(53,447	)	$	12,819,617		243,821
Class B		910,319		17,321		115,182		2,198		(213,844	)		(4,062	)		811,657		15,457
Class C		2,549,781		48,482		167,793		3,200		(452,488	)		(8,592	)		2,265,086		43,090
Class F		1,145,278		21,767		62,859		1,197		(270,418	)		(5,128	)		937,719		17,836
Class 529-A		205,690		3,908		15,977		304		(16,390	)		(310	)		205,277		3,902
Class 529-B		25,394		482		2,750		53		(2,141	)		(40	)		26,003		495
Class 529-C		78,964		1,500		5,904		112		(10,111	)		(191	)		74,757		1,421
Class 529-E		9,902		188		873		17		(960	)		(18	)		9,815		187
Class 529-F		3,531		67		194		4		(159	)		(3	)		3,566		68
Class R-1		25,005		476		733		14		(3,283	)		(62	)		22,455		428
Class R-2		137,881		2,619		7,062		134		(38,144	)		(723	)		106,799		2,030
Class R-3		166,923		3,171		7,897		150		(30,507	)		(578	)		144,313		2,743
Class R-4		61,900		1,173		1,723		32		(9,195	)		(174	)		54,428		1,031
Class R-5		107,386		2,038		9,538		182		(26,098	)		(496	)		90,826		1,724

Total net increase (decrease)	$	19,459,846		369,923	$	2,001,093		38,134	$	(3,888,621	)		(73,824	)	$	17,572,318		334,233

* 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 $24,372,209,000 and $15,150,774,000, respectively, during the year ended October 31, 2006.

Financial highlights (1)

			Income (loss) from investment operations⁽²⁾⁽³⁾								Dividends and distributions
	Net asset value, beginning of period		Net investment income		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 (4)			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 (5)					Ratio of net income to average net assets (6)
Class A:
Year ended 10/31/2006	$	52.58	$	2.13	$	8.06		$	10.19		$	(2.17	)	$	(.69	)	$	(2.86	)	$	59.91		20.00	%	$	58,439				.58	%				.55	%				3.82	%
Year ended 10/31/2005		50.75		2.01		2.56			4.57			(1.84	)		(.90	)		(2.74	)		52.58		9.11			42,303				.59					.57					3.79
Year ended 10/31/2004		45.29		1.76		5.68			7.44			(1.81	)		(.17	)		(1.98	)		50.75		16.73			28,458				.60					.59					3.65
Year ended 10/31/2003		40.73		1.72		5.36			7.08			(2.00	)		(.52	)		(2.52	)		45.29		17.95			18,273				.65					.65					4.04
Year ended 10/31/2002		43.80		1.82		(1.67	)		.15			(2.05	)		(1.17	)		(3.22	)		40.73		.16			10,006				.67					.67					4.19
Class B:
Year ended 10/31/2006		52.58		1.69		8.06			9.75			(1.73	)		(.69	)		(2.42	)		59.91		19.07			4,413				1.37					1.34					3.04
Year ended 10/31/2005		50.75		1.59		2.56			4.15			(1.42	)		(.90	)		(2.32	)		52.58		8.26			3,371				1.38					1.36					3.01
Year ended 10/31/2004		45.29		1.38		5.68			7.06			(1.43	)		(.17	)		(1.60	)		50.75		15.81			2,469				1.40					1.39					2.85
Year ended 10/31/2003		40.73		1.38		5.36			6.74			(1.66	)		(.52	)		(2.18	)		45.29		17.03			1,532				1.44					1.44					3.19
Year ended 10/31/2002		43.80		1.48		(1.67	)		(.19	)		(1.71	)		(1.17	)		(2.88	)		40.73		(.61	)		450				1.44					1.44					3.41
Class C:
Year ended 10/31/2006		52.58		1.67		8.06			9.73			(1.71	)		(.69	)		(2.40	)		59.91		19.02			8,616				1.41					1.38					2.99
Year ended 10/31/2005		50.75		1.56		2.56			4.12			(1.39	)		(.90	)		(2.29	)		52.58		8.19			5,867				1.44					1.42					2.94
Year ended 10/31/2004		45.29		1.34		5.68			7.02			(1.39	)		(.17	)		(1.56	)		50.75		15.72			3,476				1.47					1.47					2.76
Year ended 10/31/2003		40.73		1.35		5.36			6.71			(1.63	)		(.52	)		(2.15	)		45.29		16.94			1,696				1.51					1.51					3.08
Year ended 10/31/2002		43.80		1.45		(1.67	)		(.22	)		(1.68	)		(1.17	)		(2.85	)		40.73		(.69	)		424				1.52					1.52					3.31
Class F:
Year ended 10/31/2006		52.58		2.11		8.06			10.17			(2.15	)		(.69	)		(2.84	)		59.91		19.94			3,494				.62					.60					3.76
Year ended 10/31/2005		50.75		1.96		2.56			4.52			(1.79	)		(.90	)		(2.69	)		52.58		9.01			2,141				.68					.65					3.71
Year ended 10/31/2004		45.29		1.70		5.68			7.38			(1.75	)		(.17	)		(1.92	)		50.75		16.58			1,161				.72					.71					3.51
Year ended 10/31/2003		40.73		1.67		5.36			7.03			(1.95	)		(.52	)		(2.47	)		45.29		17.82			539				.76					.76					3.86
Year ended 10/31/2002		43.80		1.76		(1.67	)		.09			(1.99	)		(1.17	)		(3.16	)		40.73		.03			155				.79					.79					4.04
Class 529-A:
Year ended 10/31/2006		52.58		2.10		8.06			10.16			(2.14	)		(.69	)		(2.83	)		59.91		19.92			760				.64					.61					3.77
Year ended 10/31/2005		50.75		1.95		2.56			4.51			(1.78	)		(.90	)		(2.68	)		52.58		8.99			458				.71					.68					3.70
Year ended 10/31/2004		45.29		1.70		5.68			7.38			(1.75	)		(.17	)		(1.92	)		50.75		16.59			244				.72					.71					3.53
Year ended 10/31/2003		40.73		1.70		5.36			7.06			(1.98	)		(.52	)		(2.50	)		45.29		17.89			121				.70					.70					3.99
Period from 2/19/2002 to 10/31/2002		43.06		1.19		(2.13	)		(.94	)		(1.39	)		-			(1.39	)		40.73		(2.31	)		32				.91		(7	)		.91		(7	)		4.05
Class 529-B:
Year ended 10/31/2006		52.58		1.63		8.06			9.69			(1.67	)		(.69	)		(2.36	)		59.91		18.93			122				1.49					1.46					2.93
Year ended 10/31/2005		50.75		1.50		2.56			4.06			(1.33	)		(.90	)		(2.23	)		52.58		8.08			83				1.55					1.53					2.85
Year ended 10/31/2004		45.29		1.28		5.68			6.96			(1.33	)		(.17	)		(1.50	)		50.75		15.58			55				1.60					1.60					2.66
Year ended 10/31/2003		40.73		1.30		5.36			6.66			(1.58	)		(.52	)		(2.10	)		45.29		16.82			31				1.64					1.64					3.04
Period from 2/15/2002 to 10/31/2002		43.33		.98		(2.40	)		(1.42	)		(1.18	)		-			(1.18	)		40.73		(3.37	)		8				1.66		(7	)		1.66		(7	)		3.32
Class 529-C:
Year ended 10/31/2006		52.58		1.63		8.06			9.69			(1.67	)		(.69	)		(2.36	)		59.91		18.94			306				1.47					1.45					2.94
Year ended 10/31/2005		50.75		1.51		2.56			4.07			(1.34	)		(.90	)		(2.24	)		52.58		8.10			192				1.54					1.52					2.86
Year ended 10/31/2004		45.29		1.29		5.68			6.97			(1.34	)		(.17	)		(1.51	)		50.75		15.60			113				1.59					1.58					2.67
Year ended 10/31/2003		40.73		1.31		5.36			6.67			(1.59	)		(.52	)		(2.11	)		45.29		16.83			54				1.63					1.63					3.05
Period from 2/20/2002 to 10/31/2002		43.12		.97		(2.20	)		(1.23	)		(1.16	)		-			(1.16	)		40.73		(2.96	)		13				1.65		(7	)		1.65		(7	)		3.31
Class 529-E:
Year ended 10/31/2006		52.58		1.92		8.06			9.98			(1.96	)		(.69	)		(2.65	)		59.91		19.55			40				.96					.94					3.45
Year ended 10/31/2005		50.75		1.78		2.56			4.34			(1.61	)		(.90	)		(2.51	)		52.58		8.64			25				1.02					1.00					3.38
Year ended 10/31/2004		45.29		1.54		5.68			7.22			(1.59	)		(.17	)		(1.76	)		50.75		16.19			15				1.07					1.07					3.18
Year ended 10/31/2003		40.73		1.53		5.36			6.89			(1.81	)		(.52	)		(2.33	)		45.29		17.44			7				1.10					1.10					3.57
Period from 3/1/2002 to 10/31/2002		43.74		1.08		(2.83	)		(1.75	)		(1.26	)		-			(1.26	)		40.73		(4.09	)		2				1.11		(7	)		1.11		(7	)		3.87
Class 529-F:
Year ended 10/31/2006		52.58		2.20		8.06			10.26			(2.24	)		(.69	)		(2.93	)		59.91		20.12			14				.46					.44					3.95
Year ended 10/31/2005		50.75		1.97		2.56			4.53			(1.80	)		(.90	)		(2.70	)		52.58		9.04			6				.63					.60					3.78
Year ended 10/31/2004		45.29		1.65		5.68			7.33			(1.70	)		(.17	)		(1.87	)		50.75		16.47			3				.82					.82					3.44
Year ended 10/31/2003		40.73		1.64		5.36			7.00			(1.92	)		(.52	)		(2.44	)		45.29		17.72			1				.85					.85					3.78
Period from 9/17/2002 to 10/31/2002		41.74		.14		(.89	)		(.75	)		(.26	)		-			(.26	)		40.73		(1.79	)		-	(8	)		.10					.10					.35
Class R-1:
Year ended 10/31/2006	$	52.58	$	1.65	$	8.06		$	9.71		$	(1.69	)	$	(.69	)	$	(2.38	)	$	59.91		18.98	%	$	69				1.44	%				1.41	%				2.96	%
Year ended 10/31/2005		50.75		1.54		2.56			4.10			(1.37	)		(.90	)		(2.27	)		52.58		8.15			34				1.50					1.46					2.91
Year ended 10/31/2004		45.29		1.32		5.68			7.00			(1.37	)		(.17	)		(1.54	)		50.75		15.69			11				1.53					1.50					2.74
Year ended 10/31/2003		40.73		1.35		5.36			6.71			(1.63	)		(.52	)		(2.15	)		45.29		16.94			5				1.66					1.53					3.12
Period from 6/11/2002 to 10/31/2002		45.41		.52		(4.53	)		(4.01	)		(.67	)		-			(.67	)		40.73		(8.84	)		-	(8	)		.87					.60					1.27
Class R-2:
Year ended 10/31/2006		52.58		1.65		8.06			9.71			(1.69	)		(.69	)		(2.38	)		59.91		18.98			395				1.55					1.42					2.97
Year ended 10/31/2005		50.75		1.55		2.56			4.11			(1.38	)		(.90	)		(2.28	)		52.58		8.18			241				1.61					1.44					2.95
Year ended 10/31/2004		45.29		1.34		5.68			7.02			(1.39	)		(.17	)		(1.56	)		50.75		15.73			129				1.75					1.47					2.78
Year ended 10/31/2003		40.73		1.36		5.36			6.72			(1.64	)		(.52	)		(2.16	)		45.29		16.99			57				1.85					1.49					3.11
Period from 5/31/2002 to 10/31/2002		46.10		.51		(5.16	)		(4.65	)		(.72	)		-			(.72	)		40.73		(10.10	)		4				.77					.63					1.29
Class R-3:
Year ended 10/31/2006		52.58		1.91		8.06			9.97			(1.95	)		(.69	)		(2.64	)		59.91		19.51			454				.98					.96					3.42
Year ended 10/31/2005		50.75		1.80		2.56			4.36			(1.63	)		(.90	)		(2.53	)		52.58		8.68			268				1.00					.98					3.41
Year ended 10/31/2004		45.29		1.53		5.68			7.21			(1.58	)		(.17	)		(1.75	)		50.75		16.17			120				1.09					1.08					3.15
Year ended 10/31/2003		40.73		1.52		5.36			6.88			(1.80	)		(.52	)		(2.32	)		45.29		17.42			46				1.15					1.11					3.46
Period from 6/4/2002 to 10/31/2002		45.74		.56		(4.80	)		(4.24	)		(.77	)		-			(.77	)		40.73		(9.27	)		2				.62					.46					1.40
Class R-4:
Year ended 10/31/2006		52.58		2.07		8.06			10.13			(2.11	)		(.69	)		(2.80	)		59.91		19.88			119				.68					.66					3.68
Year ended 10/31/2005		50.75		1.95		2.56			4.51			(1.78	)		(.90	)		(2.68	)		52.58		9.01			70				.70					.68					3.71
Year ended 10/31/2004		45.29		1.70		5.68			7.38			(1.75	)		(.17	)		(1.92	)		50.75		16.57			15				.74					.73					3.49
Year ended 10/31/2003		40.73		1.68		5.36			7.04			(1.96	)		(.52	)		(2.48	)		45.29		17.84			6				.79					.76					3.79
Period from 5/20/2002 to 10/31/2002		45.84		.65		(4.85	)		(4.20	)		(.91	)		-			(.91	)		40.73		(9.20	)		-	(8	)		.76					.34					1.59
Class R-5:
Year ended 10/31/2006		52.58		2.24		8.06			10.30			(2.28	)		(.69	)		(2.97	)		59.91		20.23			467				.38					.36					4.03
Year ended 10/31/2005		50.75		2.11		2.56			4.67			(1.94	)		(.90	)		(2.84	)		52.58		9.33			292				.39					.37					4.00
Year ended 10/31/2004		45.29		1.85		5.68			7.53			(1.90	)		(.17	)		(2.07	)		50.75		16.95			194				.41					.40					3.85
Year ended 10/31/2003		40.73		1.81		5.36			7.17			(2.09	)		(.52	)		(2.61	)		45.29		18.20			121				.44					.44					4.28
Period from 5/15/2002 to 10/31/2002		45.87		.89		(5.02	)		(4.13	)		(1.01	)		-			(1.01	)		40.73		(9.04	)		75				.21					.21					2.10

	Year ended October 31
	2006	2005	2004	2003	2002

Portfolio turnover rate for all classes of shares	26%	20%	24%	27%	36%

(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) For the year ended October 31, 2002, net investment income was lower and net gains (losses) on securities (both realized and unrealized) were higher by approximately $0.14 per share for Class A as a result of an accounting change related to the amortization of bond premium. On an annualized basis, the impact of the accounting change on the other share classes would have been approximately the same.

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

(5) 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.

(6) For the year ended October 31, 2002, the ratio of net income to average net assets for Class A was lower by 0.34 percentage points as a result of an accounting change related to the amortization of bond premium. On an annualized basis, the impact of the accounting change on the other share classes would have been approximately the same.

(7) Annualized.

(8) Amount less than $1 million.

See Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Capital Income Builder, Inc.:

In our opinion, the accompanying statement of assets and liabilities, including the summary investment portfolio, and the related statements of operations and changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Capital Income Builder, Inc. (the "Fund") at October 31, 2006, 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 its financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at October 31, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Los Angeles, California

December 8, 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 fund hereby designates the following amounts for the fund’s fiscal year ended October 31, 2006:

Long-term capital gains		$ 740,369,000
Qualified dividend income		1,846,903,000
Corporate dividends received deduction		684,224,000
U.S. government income that may be exempt from state taxation		132,246,000

Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2007, to determine the calendar year amounts to be included on their 2006 tax returns. Shareholders should consult their tax advisers.

<PAGE>





[logo - American Funds (R)]           The right choice for the long term/(R)/




Capital Income
Builder/(R)/



RETIREMENT PLAN
PROSPECTUS




January 1, 2007







TABLE OF CONTENTS

 1    Risk/Return summary
 4    Fees and expenses of the fund
 6    Investment objectives, strategies and risks
 9    Management and organization
13    Purchase, exchange and sale of shares
16    Sales charges
17    Sales charge reductions
19    Rollovers from retirement plans to IRAs
20    Plans of distribution
20    Other compensation to dealers
21    Distributions and taxes
22    Financial highlights





 THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
 THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
 ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
 OFFENSE.



<PAGE>

[This page was intentionally left blank.]


<PAGE>

Risk/Return summary

The fund primarily seeks to provide you with a level of current income that
exceeds the average yield on U.S. stocks generally and a growing stream of
income over the years.  Secondarily, the fund strives to make your investment
grow over time. The fund invests primarily in a broad range of income-producing
securities, including stocks with a history of, or potential for, increasing
dividends. The fund may also invest significantly in non-U.S. securities.

The fund is designed for investors seeking current income and capital
appreciation through a mix of investments that provide above-average price
stability.  Your investment in the fund is subject to risks, including the
possibility that the fund's income and the value of its portfolio holdings may
fluctuate in response to economic, political or social events in the United
States or abroad.
The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments as well
as by events specifically involving the issuers of those securities. Although
all securities in the fund's portfolio may be adversely affected by currency
fluctuations or global economic, political or social instability, securities
issued by entities based outside the United States may be affected to a greater
extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.


                                       1

                                            Capital Income Builder / Prospectus

<PAGE>

HISTORICAL INVESTMENT RESULTS
The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 3 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results are not predictive of future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]
1996     17.64
1997     23.32
1998     11.75
1999     -2.78
2000     12.52
2001      4.75
2002      0.66
2003     21.57
2004     17.40
2005      4.94
[end bar chart]



Highest/Lowest quarterly results during this time period were:




HIGHEST                 10.48%  (quarter ended June 30, 2003)
LOWEST                  -8.58%  (quarter ended September 30, 2002)


The fund's total return for the nine months ended September 30, 2006, was
12.99%.


                                       2

Capital Income Builder / Prospectus


<PAGE>



Unlike the bar chart on the previous page, the Investment Results table below
reflects, as required by Securities and Exchange Commission rules, the fund's
investment results with the following maximum initial sales charge imposed:

 . Class A share results reflect the maximum initial sales charge of 5.75%. This
   charge is reduced for purchases of $25,000 or more and eliminated for
   purchases of $1 million or more.

 . Class R shares are sold without any initial sales charge.

Results would be higher if calculated without a sales charge.

Unlike the Investment Results table below, the Additional Investment Results
table on page 7 reflects the fund's results calculated without a sales charge.
 INVESTMENT RESULTS (WITH A MAXIMUM SALES CHARGE)
 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:

                                  1 YEAR  5 YEARS  10 YEARS   LIFETIME/1/
--------------------------------------------------------------------------

 CLASS A -- FIRST SOLD 7/30/87    -1.09%   8.28%    10.19%      11.05%



                                  1 YEAR   LIFETIME/1/
-------------------------------------------------------

 CLASS R-1 -- FIRST SOLD 6/11/02  4.00%       9.33%
-------------------------------------------------------
 CLASS R-2 -- FIRST SOLD 5/31/02  4.03        8.86
-------------------------------------------------------
 CLASS R-3 -- FIRST SOLD 6/4/02   4.50        9.55
-------------------------------------------------------
 CLASS R-4 -- FIRST SOLD 5/20/02  4.83        9.77
-------------------------------------------------------
 CLASS R-5 -- FIRST SOLD 5/15/02  5.15       10.08



                               1 YEAR    5 YEARS    10 YEARS    LIFETIME/2/

 INDEXES
 S&P 500/3/                     4.91%      0.54%      9.07%         10.23%
 Lipper Income Funds            3.44       4.06       6.49           9.52
 Average/4/
----------------------------------------------------------------------------------
 Class A annualized 30-day yield at October 31, 2006: 3.42%/5/
 (For current yield information, please call American FundsLine at 800/325-3590.)



/1/  Lifetime results for each share class are measured from the date the share
     class was first sold.
/2/  Lifetime results for the index(es) shown are measured from the date Class A
     shares were first sold. In prior years, each index may have included different
     funds or securities from those that constitute the current year's index.
/3/  Standard & Poor's 500 Composite Index is a market capitalization-weighted
     index based on the average weighted performance of 500 widely held common
     stocks. This index is unmanaged and includes reinvested dividends and/or
     distributions, but does not reflect sales charges, commissions, expenses or
     taxes.
/4/  Lipper Income Funds Average is comprised of funds that normally seek a high
     level of current income through investing in income-producing stocks, bonds and
     money market instruments. The results of the underlying funds in the average
     include the reinvestment of dividends and capital gain distributions, as well
     as brokerage commissions paid by the funds for portfolio transactions, but do
     not reflect sales charges or taxes.
/5/  Reflects a fee waiver (3.40% without the waiver) as described in the Annual
     Fund Operating Expenses table under "Fees and expenses of the fund."


                                       3

                                            Capital Income Builder / Prospectus

<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.



 SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
                                               CLASS A    ALL R SHARE CLASSES
------------------------------------------------------------------------------

 Maximum initial sales charge on purchases      5.75%/*/         none
 (as a percentage of offering price)
------------------------------------------------------------------------------
 Maximum sales charge on reinvested dividends    none            none
------------------------------------------------------------------------------
 Maximum contingent deferred sales charge        none            none
------------------------------------------------------------------------------
 Redemption or exchange fees                     none            none



* The initial sales charge is reduced for purchases of $25,000 or more and
  eliminated for purchases of $1 million or more.




 ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
                                            CLASS  CLASS  CLASS  CLASS   CLASS
                                   CLASS A   R-1    R-2    R-3    R-4     R-5
-------------------------------------------------------------------------------

 Management fees/1/                 0.25%   0.25%  0.25%  0.25%  0.25%   0.25%
-------------------------------------------------------------------------------
 Distribution and/or service        0.23    1.00   0.75   0.50   0.25    none
 (12b-1) fees/2/
-------------------------------------------------------------------------------
 Other expenses                     0.10    0.19   0.55   0.23   0.18    0.13
-------------------------------------------------------------------------------
 Total annual fund operating        0.58    1.44   1.55   0.98   0.68    0.38
 expenses/1/
-------------------------------------------------------------------------------


/1/  The fund's investment adviser is currently waiving 10% of its management fee.
     The waiver may be discontinued at any time in consultation with the fund's
     board, but it is expected to continue at this level until further review. The
     fund's investment adviser and board intend to review the waiver as
     circumstances warrant. In addition, the investment adviser paid a portion of
     the fund's transfer agent fees for certain R share classes. Expenses shown
     above do not reflect any waiver or reimbursement. Information regarding the
     effect of any waiver/reimbursement on total annual fund operating expenses can
     be found in the Financial Highlights table in this prospectus and in the fund's
     annual report.
/2/  Class A, R-1, R-2, R-3 and R-4 12b-1 fees may not exceed .30%, 1.00%, 1.00%,
     .75% and .50%, respectively, of the class' average net assets annually.


                                       4

Capital Income Builder / Prospectus


<PAGE>

OTHER EXPENSES
The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.


                                                   PAYMENTS TO UNAFFILIATED
             PAYMENTS TO AFFILIATED ENTITIES              ENTITIES
-------------------------------------------------------------------------------

 Class A            .05% of assets or                  .05% of assets or
             $12 per participant position/1/    $12 per participant position/1/
-------------------------------------------------------------------------------
 Class R-1           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-2     .15% of assets plus $27 per              .25% of assets
             participant position/2/ or .35%
                      of assets/3/
-------------------------------------------------------------------------------
 Class R-3     .10% of assets plus $12 per              .15% of assets
             participant position/2/ or .19%
                      of assets/3/
-------------------------------------------------------------------------------
 Class R-4           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-5           .05% of assets                     .05% of assets
-------------------------------------------------------------------------------




/1/  Payment amount depends on the date upon which services commenced.
/2/  Payment with respect to Recordkeeper Direct/(R)/ program.
/3/  Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:


                                1 YEAR  3 YEARS  5 YEARS   10 YEARS
--------------------------------------------------------------------

 Class A*                        $631    $750     $880      $1,259
--------------------------------------------------------------------
 Class R-1                        147     456      787       1,724
--------------------------------------------------------------------
 Class R-2                        158     490      845       1,845
--------------------------------------------------------------------
 Class R-3                        100     312      542       1,201
--------------------------------------------------------------------
 Class R-4                         69     218      379         847
--------------------------------------------------------------------
 Class R-5                         39     122      213         480
--------------------------------------------------------------------



* Reflects the maximum initial sales charge in the first year.


                                       5

                                            Capital Income Builder / Prospectus

<PAGE>

Investment objectives, strategies and risks

The fund has two primary investment objectives. It seeks (1) to provide you with
a level of current income that exceeds the average yield on U.S. stocks
generally and (2) to provide you with a growing stream of income over the years.
The fund's secondary objective is to provide you with growth of capital. The
fund invests primarily in a broad range of income-producing securities,
including stocks and bonds. The fund may also invest significantly in securities
of issuers domiciled outside the United States.

The fund normally will invest at least 90% of its assets in income-producing
securities (with at least 50% of its assets in equity securities). The prices of
common stocks and other equity-type securities held by the fund may decline in
response to certain events, including those directly involving issuers of these
securities; adverse conditions affecting the general economy; overall market
declines; world political, social and economic instability; and currency
fluctuations.
The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities.

Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency controls; different accounting, auditing, financial
reporting, and legal standards and practices in some countries; 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. These risks may be heightened in connection with
investments in developing countries.

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.

A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in the event of falling market prices and provide
liquidity to make additional investments or to meet redemptions.


                                       6

Capital Income Builder / Prospectus


<PAGE>

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
securities that, in its opinion, represent above-average long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

ADDITIONAL INVESTMENT RESULTS
Unlike the Investment Results table on page 3, the table below reflects the
fund's results calculated without a sales charge.

 ADDITIONAL INVESTMENT RESULTS (WITHOUT A SALES CHARGE)
 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:

                                   1 YEAR  5 YEARS  10 YEARS  LIFETIME/1/

 CLASS A -- FIRST SOLD 7/30/87     4.94%    9.57%    10.85%      11.40%



                                   1 YEAR   LIFETIME/1/

 CLASS R-1 -- FIRST SOLD 6/11/02   4.00%       9.33%
 CLASS R-2 -- FIRST SOLD 5/31/02   4.03        8.86
 CLASS R-3 -- FIRST SOLD 6/4/02    4.50        9.55
 CLASS R-4 -- FIRST SOLD 5/20/02   4.83        9.77
 CLASS R-5 -- FIRST SOLD 5/15/02   5.15       10.08



                        1 YEAR       5 YEARS       10 YEARS       LIFETIME/2/

 INDEXES
 S&P 500/3/                4.91%        0.54%          9.07%            10.23%
 Lipper Income Funds       3.44         4.06           6.49              9.52
 Average/4/
------------------------------------------------------------------------------------
 Class A distribution rate at December 31, 2005: 4.06%/5/
 (For current distribution rate information, please call American FundsLine at
  800/325-3590.)



/1/  Lifetime results for each share class are measured from the date the share
     class was first sold.
/2/  Lifetime results for the index(es) shown are measured from the date Class A
     shares were first sold. In prior years, each index may have included different
     funds or securities from those that constitute the current year's index.
/3/  Standard & Poor's 500 Composite Index is a market capitalization-weighted
     index based on the average weighted performance of 500 widely held common
     stocks. This index is unmanaged and includes reinvested dividends and/or
     distributions, but does not reflect sales charges, commissions, expenses or
     taxes.
/4/  Lipper Income Funds Average is comprised of funds that normally seek a high
     level of current income through investing in income-producing stocks, bonds and
     money market instruments. The results of the underlying funds in the average
     include the reinvestment of dividends and capital gain distributions, as well
     as brokerage commissions paid by the funds for portfolio transactions, but do
     not reflect sales charges or taxes.
/5/  The distribution rate represents actual distributions paid by the fund. It was
     calculated at net asset value by annualizing the dividends paid by the fund
     over one quarter and dividing that number by the fund's average net asset value
     for the three months.


                                       7

                                            Capital Income Builder / Prospectus
<PAGE>

INDUSTRY SECTOR DIVERSIFICATION AS OF OCTOBER 31, 2006 (percent of net assets)

[begin pie chart]
Financials                                                   19.09%
Utilities                                                     9.77%
Telecommunication services                                    7.64%
Consumer staples                                              5.64%
Industrials                                                   5.41%
Convertible securities & preferred stocks                     0.85%
Bonds & notes                                                19.28%
Other industries                                             19.99%
Short-term securities & other assets less liabilities        12.33%
[end pie chart]



 LARGEST EQUITY HOLDINGS AS OF OCTOBER 31, 2006
                                              PERCENT OF NET ASSETS
--------------------------------------------------------------------

 E.ON                                                 1.6%
--------------------------------------------------------------------
 BellSouth                                            1.5
--------------------------------------------------------------------
 AT&T                                                 1.5
--------------------------------------------------------------------
 Altria Group                                         1.4
--------------------------------------------------------------------
 Royal Dutch Shell                                    1.2
--------------------------------------------------------------------
 Fannie Mae                                           1.2
--------------------------------------------------------------------
 Exelon                                               1.1
--------------------------------------------------------------------
 National Grid                                        1.0
--------------------------------------------------------------------
 Koninklijke KPN                                      1.0
--------------------------------------------------------------------
 Veolia Environnement                                 1.0
--------------------------------------------------------------------



Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.


                                       8

Capital Income Builder / Prospectus


<PAGE>

Management and organization

INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
total management fee paid by the fund, as a percentage of average net assets,
for the previous fiscal year appears in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." As described more fully in the fund's
statement of additional information, the management fee is based on the daily
net assets of the fund and monthly gross investment income. A discussion
regarding the basis for the approval of the fund's investment advisory and
service agreement by the fund's board of directors is contained in the fund's
annual report to shareholders for the fiscal year ended October 31, 2006.

EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. For example, with respect to equity transactions, the fund does
not consider the investment adviser as having an obligation to obtain the lowest
available commission rate to the exclusion of price, service and qualitative
considerations. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.



                                       9

                                            Capital Income Builder / Prospectus

<PAGE>

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A list of the fund's top 10
equity holdings, updated as of each month-end, is generally posted to this page
within 14 days after the end of the applicable month. A link to the fund's
complete list of publicly disclosed portfolio holdings, updated as of each
calendar quarter-end, is generally posted to this page within 45 days after the
end of the applicable quarter. Both lists remain available on the website until
new information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of the appropriate investment-related committees of Capital Research
and Management Company.


                                       10

Capital Income Builder / Prospectus


<PAGE>

The primary individual portfolio counselors for Capital Income Builder are:

                                                PRIMARY TITLE WITH              PORTFOLIO
                               PORTFOLIO        INVESTMENT ADVISER              COUNSELOR'S
 PORTFOLIO COUNSELOR/          COUNSELOR        (OR AFFILIATE)                  ROLE IN
 FUND TITLE                    EXPERIENCE       AND INVESTMENT                  MANAGEMENT
 (IF APPLICABLE)              IN THIS FUND      EXPERIENCE                      OF THE FUND
------------------------------------------------------------------------------------------------------

 JAMES B. LOVELACE              15 years        Senior Vice President and       Serves as an
 Vice Chairman and          (plus 3 years of    Director, Capital Research      income-producing
 Director                   prior experience    and Management Company          equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      25 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 JOYCE E. GORDON                7 years         Senior Vice President and       Serves as an
 President                 (plus 11 years of    Director, Capital Research      income-producing
                            prior experience    and Management Company          equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      27 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 MARK R. MACDONALD              7 years         Senior Vice President and       Serves as a fixed-
 Executive Vice President                       Director, Capital Research      income portfolio
                                                and Management Company          counselor

                                                Investment professional for
                                                21 years in total; 13 years
                                                with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------
 MICHAEL COHEN                  3 years         Vice President and Director,    Serves as an
 Vice President             (plus 3 years of    Capital Research Company        income-producing
                            prior experience                                    equity portfolio
                                 as an          Investment professional for     counselor
                           investment analyst   16 years in total; 7 years
                             for the fund)      with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------
 DAVID A. HOAG                  3 years         Senior Vice President,          Serves as a fixed-
 Vice President                                 Capital Research Company        income portfolio
                                                                                counselor
                                                Investment professional for
                                                19 years in total; 15 years
                                                with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------



                                       11

                                            Capital Income Builder / Prospectus

<PAGE>



                                                PRIMARY TITLE WITH              PORTFOLIO
                               PORTFOLIO        INVESTMENT ADVISER              COUNSELOR'S
 PORTFOLIO COUNSELOR/          COUNSELOR        (OR AFFILIATE)                  ROLE IN
 FUND TITLE                    EXPERIENCE       AND INVESTMENT                  MANAGEMENT
 (IF APPLICABLE)              IN THIS FUND      EXPERIENCE                      OF THE FUND
------------------------------------------------------------------------------------------------------

 DAVID M. RILEY                 3 years         Senior Vice President,          Serves as an
 Vice President             (plus 8 years of    Capital Research Company        income-producing
                            prior experience                                    equity portfolio
                                 as an          Investment professional for     counselor
                           investment analyst   12 years, all with Capital
                             for the fund)      Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 TIMOTHY D. ARMOUR               1 year         President and Director,         Serves as an
                                                Capital Research and            income-producing
                                                Management Company              equity portfolio
                                                                                counselor
                                                Investment professional for
                                                24 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 STEVEN T. WATSON               9 years         Senior Vice President and       Serves as an
                            (plus 5 years of    Director, Capital Research      income-producing
                            prior experience    Company                         equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      19 years in total;
                                                17 years with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------




Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.
CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.


                                       12

Capital Income Builder / Prospectus


<PAGE>

Purchase, exchange and sale of shares

AMERICAN FUNDS SERVICE COMPANY, THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND
AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S DISTRIBUTOR, IS REQUIRED BY LAW TO
OBTAIN CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S) ACTING ON
YOUR BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU DO NOT
PROVIDE THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR
ACCOUNT. IF THE TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY
OTHER PERSON(S) AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED
POTENTIALLY CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE
OR REQUIRED BY LAW.

PURCHASES AND EXCHANGES

Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.
Class R shares generally are available only to 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit-sharing and money purchase pension
plans, defined benefit plans and nonqualified deferred compensation plans. Class
R shares also are generally available only to retirement plans where plan level
or omnibus accounts are held on the books of the fund. In addition, Class R-5
shares generally are available only to retirement plans with $1 million or more
in plan assets. Class R shares generally are not available to retail
nonretirement accounts, traditional and Roth Individual Retirement Accounts
(IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs,
individual 403(b) plans and 529 college savings plans.

Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.

FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
resulting in dilution of the value of the shares held by long-term shareholders.
Accordingly, purchases, including those that are part of exchange activity, that
the fund or American Funds Distributors has determined could involve actual or
potential harm to the fund may be rejected.


                                       13

                                            Capital Income Builder / Prospectus

<PAGE>

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the transaction as a systematic
redemption or purchase; purchases and redemptions of shares having a value of
less than $5,000; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

NOTWITHSTANDING THE FUND'S PURCHASE BLOCKING POLICY, ALL TRANSACTIONS IN FUND
SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS DISTRIBUTORS' RIGHT TO
RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING THE TYPES OF
TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER A PURCHASE
BLOCK UNDER THE POLICY). SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE
INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER
POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.


                                       14

Capital Income Builder / Prospectus


<PAGE>

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds will be reinvested in the same share class
from which the original redemption or distribution was made. Redemption proceeds
of Class A shares representing direct purchases in American Funds money market
funds that are reinvested in non-money market American Funds will be subject to
a sales charge. Proceeds will be reinvested at the next calculated net asset
value after your request is received and accepted by American Funds Service
Company. You may not reinvest proceeds in the American Funds as described in
this paragraph if such proceeds are subject to a purchase block as described
under "Frequent trading of fund shares." This paragraph does not apply to
rollover investments as described under "Rollovers from retirement plans to
IRAs."

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.

Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.


                                       15

                                            Capital Income Builder / Prospectus

<PAGE>

Sales charges

CLASS A SHARES

The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.



                              SALES CHARGE AS A
                                         PERCENTAGE OF:
                                                                 DEALER
                                                   NET         COMMISSION
                                       OFFERING   AMOUNT     AS A PERCENTAGE
 INVESTMENT                             PRICE    INVESTED   OF OFFERING PRICE
------------------------------------------------------------------------------

 Less than $25,000                      5.75%     6.10%           5.00%
------------------------------------------------------------------------------
 $25,000 but less than $50,000          5.00      5.26            4.25
------------------------------------------------------------------------------
 $50,000 but less than $100,000         4.50      4.71            3.75
------------------------------------------------------------------------------
 $100,000 but less than $250,000        3.50      3.63            2.75
------------------------------------------------------------------------------
 $250,000 but less than $500,000        2.50      2.56            2.00
------------------------------------------------------------------------------
 $500,000 but less than $750,000        2.00      2.04            1.60
------------------------------------------------------------------------------
 $750,000 but less than $1 million      1.50      1.52            1.20
------------------------------------------------------------------------------
 $1 million or more and certain other   none      none      see below
 investments described below
------------------------------------------------------------------------------



The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares.

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

. investments made by accounts that are part of certain qualified fee-based
  programs and that purchased Class A shares before the discontinuation of your
  investment dealer's load-waived A share program with the American Funds; and


. certain rollover investments from retirement plans to IRAs (see "Rollovers
  from retirement plans to IRAs" below for more information).


                                       16

Capital Income Builder / Prospectus


<PAGE>

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" below).

Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.

 EMPLOYER-SPONSORED RETIREMENT PLANS
 Employer-sponsored retirement plans that are eligible to purchase Class R
 shares may instead purchase Class A shares and pay the applicable Class A sales
 charge, provided their recordkeepers can properly apply a sales charge on plan
 investments. These plans are not eligible to make initial purchases of $1
 million or more in Class A shares and thereby invest in Class A shares without
 a sales charge, nor are they eligible to establish a statement of intention
 that qualifies them to purchase Class A shares without a sales charge. More
 information about statements of intention can be found under "Sales charge
 reductions." Plans investing in Class A shares with a sales charge may purchase
 additional Class A shares in accordance with the sales charge table above.

 Employer-sponsored retirement plans that invested in Class A shares without any
 sales charge on or before March 31, 2004, and that continue to meet the
 eligibility requirements in effect as of that date for purchasing Class A
 shares at net asset value, may continue to purchase Class A shares without any
 initial or contingent deferred sales charge.

CLASS R SHARES
Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution"
below).

Sales charge reductions

TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or


                                       17

                                            Capital Income Builder / Prospectus

<PAGE>

American Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds.
IN ADDITION TO THE INFORMATION BELOW, YOU MAY OBTAIN MORE INFORMATION ABOUT
SALES CHARGE REDUCTIONS THROUGH A LINK ON THE HOME PAGE OF THE AMERICAN FUNDS
WEBSITE AT AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL INFORMATION OR
FROM YOUR FINANCIAL ADVISER.

REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. However,
for this purpose, investments representing direct purchases of American Funds
money market funds are excluded. Following are different ways that you may
qualify for a reduced Class A sales charge:

 CONCURRENT PURCHASES

 Simultaneous purchases of any class of shares of two or more American Funds may
 be combined to qualify for a reduced Class A sales charge.

 RIGHTS OF ACCUMULATION
 You may take into account your accumulated holdings in all share classes of the
 American Funds to determine the initial sales charge you pay on each purchase
 of Class A shares. 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 or (b) the amount you invested
 (excluding capital appreciation) less any withdrawals. Please see the statement
 of additional information for details. You should retain any records necessary
 to substantiate the historical amounts you have invested. The current value of
 existing investments in an American Legacy/(R)/ Retirement Investment Plan may
 also be taken into account to determine your Class A sales charge.

 STATEMENT OF INTENTION
 You may reduce your Class A sales charge by establishing a statement of
 intention. A statement of intention allows you to combine all purchases of all
 share classes of American Funds non-money market funds you intend to make over
 a 13-month period to determine the applicable sales charge; however, purchases
 made under a right of reinvestment, appreciation of your holdings, and
 reinvested dividends and capital gains do not count as purchases made during
 the statement period. The market value of your existing holdings eligible to be
 aggregated as of the day immediately before the start of the statement period
 may be credited toward satisfying the statement. A portion of your account may
 be held in escrow to cover additional Class A sales charges that may be due if
 your total purchases over the statement period do not qualify you for the
 applicable sales charge reduction. Employer-sponsored retirement plans may be



                                       18

Capital Income Builder / Prospectus


<PAGE>

 restricted from establishing statements of intention. See "Sales charges" above
 for more information.

RIGHT OF REINVESTMENT

Please see the "Sales" section of "Purchase, exchange and sale of shares" above
for information on how to reinvest proceeds from a redemption, dividend payment
or capital gain distribution without a sales charge.

Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover. More information on Class B, C and F shares can be
found in the fund's prospectus for nonretirement plan shareholders. Rollovers
invested in Class A shares from retirement plans will be subject to applicable
sales charges. The following rollovers to Class A shares will be made without a
sales charge:

. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
  custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
  meet all of the following three requirements:

  -- the retirement plan from which assets are being rolled over is part of an
     American Funds proprietary retirement plan program (such as PlanPremier,
     Recordkeeper Direct or Recordkeeper Connect/(R)/) or is a plan whose
     participant subaccounts are serviced by American Funds Service Company;

  -- the plan's assets were invested in American Funds at the time of
     distribution; and

  -- the plan's assets are rolled over to an American Funds IRA with Capital Bank
     and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.


                                       19

                                            Capital Income Builder / Prospectus

<PAGE>

Plans of distribution
The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares, up to 1.00% for Class R-1 and R-2
shares, up to .75% for Class R-3 shares and up to .50% for Class R-4 shares. For
all share classes, up to .25% of these expenses may be used to pay service fees
to qualified dealers for providing certain shareholder services. The amount
remaining for each share class may be used for distribution expenses.

The 12b-1 fees paid by the fund, as a percentage of average net assets, for the
previous fiscal year are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." Since these fees are paid out of the
fund's assets or income on an ongoing basis, over time they will increase the
cost and reduce the return of your investment.

Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2006, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.


                                       20

Capital Income Builder / Prospectus


<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS
The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to shareholders each quarter. Dividends
begin accruing one day after payment for shares is received by the fund or
American Funds Service Company.

Capital gains, if any, are usually distributed in December. When a capital gain
is distributed, the net asset value per share is reduced by the amount of the
payment.

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS
Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.


                                       21

                                            Capital Income Builder / Prospectus

<PAGE>

Financial highlights/1/

The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the fund's financial statements, is included in the
statement of additional information, which is available upon request.


                                                 INCOME FROM INVESTMENT OPERATIONS/2/,/3/

                                                                 Net gains
                                                                (losses) on
                                         Net                    securities
                                        asset                      (both
                                       value,        Net         realized      Total from
                                      beginning   investment        and        investment
                                      of period     income      unrealized)    operations
--------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                  $52.58       $2.13         $ 8.06        $10.19
Year ended 10/31/2005                   50.75        2.01           2.56          4.57
Year ended 10/31/2004                   45.29        1.76           5.68          7.44
Year ended 10/31/2003                   40.73        1.72           5.36          7.08
Year ended 10/31/2002                   43.80        1.82          (1.67)          .15
--------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                   52.58        1.65           8.06          9.71
Year ended 10/31/2005                   50.75        1.54           2.56          4.10
Year ended 10/31/2004                   45.29        1.32           5.68          7.00
Year ended 10/31/2003                   40.73        1.35           5.36          6.71
Period from 6/11/2002 to 10/31/2002     45.41         .52          (4.53)        (4.01)
--------------------------------------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                  52.58        1.65           8.06          9.71
 Year ended 10/31/2005                  50.75        1.55           2.56          4.11
 Year ended 10/31/2004                  45.29        1.34           5.68          7.02
 Year ended 10/31/2003                  40.73        1.36           5.36          6.72
 Period from 5/31/2002 to 10/31/2002    46.10         .51          (5.16)        (4.65)
--------------------------------------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                 $52.58       $1.91         $ 8.06        $ 9.97
 Year ended 10/31/2005                  50.75        1.80           2.56          4.36
 Year ended 10/31/2004                  45.29        1.53           5.68          7.21
 Year ended 10/31/2003                  40.73        1.52           5.36          6.88
 Period from 6/4/2002 to 10/31/2002     45.74         .56          (4.80)        (4.24)
--------------------------------------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                  52.58        2.07           8.06         10.13
 Year ended 10/31/2005                  50.75        1.95           2.56          4.51
 Year ended 10/31/2004                  45.29        1.70           5.68          7.38
 Year ended 10/31/2003                  40.73        1.68           5.36          7.04
 Period from 5/20/2002 to 10/31/2002    45.84         .65          (4.85)        (4.20)
--------------------------------------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                  52.58        2.24           8.06         10.30
 Year ended 10/31/2005                  50.75        2.11           2.56          4.67
 Year ended 10/31/2004                  45.29        1.85           5.68          7.53
 Year ended 10/31/2003                  40.73        1.81           5.36          7.17
 Period from 5/15/2002 to 10/31/2002    45.87         .89          (5.02)        (4.13)

                                             DIVIDENDS AND DISTRIBUTIONS
                                                                                                                    Ratio of
                                                                                                                    expenses
                                                                                                                   to average
                                                                                  Net                    Net       net assets
                                      Dividends                       Total      asset                 assets,       before
                                      (from net   Distributions     dividends    value,                end of         reim-
                                      investment      (from            and       end of    Total       period      bursements/
                                       income)    capital gains)  distributions  period  return/4/  (in millions)    waivers
--------------------------------------------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                  $(2.17)       $ (.69)         $(2.86)     $59.91    20.00%      $58,439         .58%
Year ended 10/31/2005                   (1.84)         (.90)          (2.74)      52.58     9.11        42,303         .59
Year ended 10/31/2004                   (1.81)         (.17)          (1.98)      50.75    16.73        28,458         .60
Year ended 10/31/2003                   (2.00)         (.52)          (2.52)      45.29    17.95        18,273         .65
Year ended 10/31/2002                   (2.05)        (1.17)          (3.22)      40.73      .16        10,006         .67
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                   (1.69)         (.69)          (2.38)      59.91    18.98            69        1.44
Year ended 10/31/2005                   (1.37)         (.90)          (2.27)      52.58     8.15            34        1.50
Year ended 10/31/2004                   (1.37)         (.17)          (1.54)      50.75    15.69            11        1.53
Year ended 10/31/2003                   (1.63)         (.52)          (2.15)      45.29    16.94             5        1.66
Period from 6/11/2002 to 10/31/2002      (.67)           --            (.67)      40.73    (8.84)          --/7/       .87
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                  (1.69)         (.69)          (2.38)      59.91    18.98           395        1.55
 Year ended 10/31/2005                  (1.38)         (.90)          (2.28)      52.58     8.18           241        1.61
 Year ended 10/31/2004                  (1.39)         (.17)          (1.56)      50.75    15.73           129        1.75
 Year ended 10/31/2003                  (1.64)         (.52)          (2.16)      45.29    16.99            57        1.85
 Period from 5/31/2002 to 10/31/2002     (.72)           --            (.72)      40.73   (10.10)            4         .77
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                 $(1.95)       $ (.69)         $(2.64)     $59.91    19.51%         $454         .98%
 Year ended 10/31/2005                  (1.63)         (.90)          (2.53)      52.58     8.68           268        1.00
 Year ended 10/31/2004                  (1.58)         (.17)          (1.75)      50.75    16.17           120        1.09
 Year ended 10/31/2003                  (1.80)         (.52)          (2.32)      45.29    17.42            46        1.15
 Period from 6/4/2002 to 10/31/2002      (.77)           --            (.77)      40.73    (9.27)            2         .62
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                  (2.11)         (.69)          (2.80)      59.91    19.88           119         .68
 Year ended 10/31/2005                  (1.78)         (.90)          (2.68)      52.58     9.01            70         .70
 Year ended 10/31/2004                  (1.75)         (.17)          (1.92)      50.75    16.57            15         .74
 Year ended 10/31/2003                  (1.96)         (.52)          (2.48)      45.29    17.84             6         .79
 Period from 5/20/2002 to 10/31/2002     (.91)           --            (.91)      40.73    (9.20)          --/7/       .76
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                  (2.28)         (.69)          (2.97)      59.91    20.23           467         .38
 Year ended 10/31/2005                  (1.94)         (.90)          (2.84)      52.58     9.33           292         .39
 Year ended 10/31/2004                  (1.90)         (.17)          (2.07)      50.75    16.95           194         .41
 Year ended 10/31/2003                  (2.09)         (.52)          (2.61)      45.29    18.20           121         .44
 Period from 5/15/2002 to 10/31/2002    (1.01)           --           (1.01)      40.73    (9.04)           75         .21


                                       Ratio of
                                       expenses       Ratio
                                      to average     of  net
                                      net assets     income
                                         after         to
                                         reim-       average
                                      bursements/      net
                                      waivers/5/    assets/6/
--------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                     .55%        3.82%
Year ended 10/31/2005                     .57         3.79
Year ended 10/31/2004                     .59         3.65
Year ended 10/31/2003                     .65         4.04
Year ended 10/31/2002                     .67         4.19
--------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                    1.41         2.96
Year ended 10/31/2005                    1.46         2.91
Year ended 10/31/2004                    1.50         2.74
Year ended 10/31/2003                    1.53         3.12
Period from 6/11/2002 to 10/31/2002       .60         1.27
--------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                   1.42         2.97
 Year ended 10/31/2005                   1.44         2.95
 Year ended 10/31/2004                   1.47         2.78
 Year ended 10/31/2003                   1.49         3.11
 Period from 5/31/2002 to 10/31/2002      .63         1.29
--------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                    .96%        3.42%
 Year ended 10/31/2005                    .98         3.41
 Year ended 10/31/2004                   1.08         3.15
 Year ended 10/31/2003                   1.11         3.46
 Period from 6/4/2002 to 10/31/2002       .46         1.40
--------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                    .66         3.68
 Year ended 10/31/2005                    .68         3.71
 Year ended 10/31/2004                    .73         3.49
 Year ended 10/31/2003                    .76         3.79
 Period from 5/20/2002 to 10/31/2002      .34         1.59
--------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                    .36         4.03
 Year ended 10/31/2005                    .37         4.00
 Year ended 10/31/2004                    .40         3.85
 Year ended 10/31/2003                    .44         4.28
 Period from 5/15/2002 to 10/31/2002      .21         2.10





                                       22

Capital Income Builder / Prospectus


<PAGE>


                                          YEAR ENDED OCTOBER 31
                        2006        2005        2004        2003         2002
--------------------------------------------------------------------------------

 PORTFOLIO TURNOVER
 RATE FOR ALL CLASSES    26%         20%         24%         27%          36%
 OF SHARES



/1/  Based on operations for the periods shown (unless otherwise noted) and,
     accordingly, may not be representative of a full year.
/2/  Based on average shares outstanding.
/3/  For the year ended October 31, 2002, net investment income was lower and net
     gains (losses) on securities (both realized and unrealized) were higher by
     approximately $.14 per share for Class A shares as a result of an accounting
     change related to the amortization of bond premium. On an annualized basis, the
     impact of the accounting change on other share classes would have been
     approximately the same.
/4/  Total returns exclude all sales charges.
/5/  The ratios in this column reflect the impact, if any, of certain
     reimbursements/waivers from Capital Research and Management Company. See the
     Annual Fund Operating Expenses table under "Fees and expenses of the fund" in
     this prospectus and the fund's annual report for more information.
/6/  For the year ended October 31, 2002, the ratio of net income to average net
     assets for Class A shares was lower by .34% as a result of an accounting change
     related to the amortization of bond premium. On an annualized basis, the impact
     of the accounting change on other share classes would have been approximately
     the same.
/7/  Amount less than $1 million.

                                       23

                                            Capital Income Builder / Prospectus

<PAGE>

NOTES


                                       24

Capital Income Builder / Prospectus


<PAGE>

NOTES


                                       25

                                            Capital Income Builder / Prospectus

<PAGE>

NOTES


                                       26

Capital Income Builder / Prospectus


<PAGE>

NOTES


                                       27

                                            Capital Income Builder / Prospectus

<PAGE>


[logo - American Funds(R)]                The right choice for the long term/(R)/





         FOR SHAREHOLDER SERVICES       American Funds Service Company
                                        800/421-0180
         FOR RETIREMENT PLAN SERVICES   Call your employer or plan administrator
         FOR DEALER SERVICES            American Funds Distributors
                                        800/421-9900
                                        americanfunds.com
         FOR 24-HOUR INFORMATION        For Class R share information, visit
                                        AmericanFundsRetirement.com


         Telephone calls you have with the American Funds organization may be
         monitored or recorded for quality assurance, verification and/or
         recordkeeping purposes. By speaking with us on the telephone, you are
         giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------



MULTIPLE TRANSLATIONS  This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS  The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies, and the independent registered public
accounting firm's report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS  The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com.

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics or annual/semi-annual
report to shareholders, please call American Funds Service Company at
800/421-0180 or write to the Secretary of the fund at 333 South Hope Street,
Los Angeles, California 90071.





[logo - recycle bug]
Printed on recycled paper
RPGEPR-912-0107P Litho in USA CGD/RRD/8030  Investment Company File No. 811-05085
----------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds        Capital Research and Management       Capital International
             Capital Guardian              Capital Bank and Trust







THE FUND PROVIDES SPANISH TRANSLATION IN CONNECTION WITH THE
PUBLIC OFFERING AND SALE OF ITS SHARES. THE FOLLOWING IS A FAIR
AND ACCURATE ENGLISH TRANSLATION OF A SPANISH LANGUAGE PROSPECTUS
FOR THE FUND.


/s/ VINCENT P. CORTI
    VINCENT P. CORTI
    SECRETARY





<PAGE>





[logo - American Funds (R)]           The right choice for the long term/(R)/




Capital Income
Builder/(R)/



RETIREMENT PLAN
PROSPECTUS




January 1, 2007







TABLE OF CONTENTS

 1    Risk/Return summary
 4    Fees and expenses of the fund
 6    Investment objectives, strategies and risks
 9    Management and organization
13    Purchase, exchange and sale of shares
16    Sales charges
17    Sales charge reductions
19    Rollovers from retirement plans to IRAs
20    Plans of distribution
20    Other compensation to dealers
21    Distributions and taxes
22    Financial highlights





 THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
 THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
 ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
 OFFENSE.



<PAGE>

[This page was intentionally left blank.]


<PAGE>

Risk/Return summary

The fund primarily seeks to provide you with a level of current income that
exceeds the average yield on U.S. stocks generally and a growing stream of
income over the years.  Secondarily, the fund strives to make your investment
grow over time. The fund invests primarily in a broad range of income-producing
securities, including stocks with a history of, or potential for, increasing
dividends. The fund may also invest significantly in non-U.S. securities.

The fund is designed for investors seeking current income and capital
appreciation through a mix of investments that provide above-average price
stability.  Your investment in the fund is subject to risks, including the
possibility that the fund's income and the value of its portfolio holdings may
fluctuate in response to economic, political or social events in the United
States or abroad.
The values of, and the income generated by, debt securities owned by the fund
may be affected by changing interest rates and credit risk assessments as well
as by events specifically involving the issuers of those securities. Although
all securities in the fund's portfolio may be adversely affected by currency
fluctuations or global economic, political or social instability, securities
issued by entities based outside the United States may be affected to a greater
extent.

Your investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, entity or person.

YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS MAY BE
GREATER IF YOU INVEST FOR A SHORTER PERIOD OF TIME.


                                       1

                                            Capital Income Builder / Prospectus

<PAGE>

HISTORICAL INVESTMENT RESULTS
The bar chart below shows how the fund's investment results have varied from
year to year, and the Investment Results table on page 3 shows how the fund's
average annual total returns for various periods compare with different broad
measures of market performance. This information provides some indication of the
risks of investing in the fund. All fund results reflect the reinvestment of
dividends and capital gain distributions, if any. Unless otherwise noted, fund
results reflect any fee waivers and/or expense reimbursements in effect during
the period presented. Past results are not predictive of future results.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES
(Results do not include a sales charge; if a sales charge were included,
results would be lower.)

[begin bar chart]
1996     17.64
1997     23.32
1998     11.75
1999     -2.78
2000     12.52
2001      4.75
2002      0.66
2003     21.57
2004     17.40
2005      4.94
[end bar chart]



Highest/Lowest quarterly results during this time period were:




HIGHEST                 10.48%  (quarter ended June 30, 2003)
LOWEST                  -8.58%  (quarter ended September 30, 2002)


The fund's total return for the nine months ended September 30, 2006, was
12.99%.


                                       2

Capital Income Builder / Prospectus


<PAGE>



Unlike the bar chart on the previous page, the Investment Results table below
reflects, as required by Securities and Exchange Commission rules, the fund's
investment results with the following maximum initial sales charge imposed:

 . Class A share results reflect the maximum initial sales charge of 5.75%. This
   charge is reduced for purchases of $25,000 or more and eliminated for
   purchases of $1 million or more.

 . Class R shares are sold without any initial sales charge.

Results would be higher if calculated without a sales charge.

Unlike the Investment Results table below, the Additional Investment Results
table on page 7 reflects the fund's results calculated without a sales charge.
 INVESTMENT RESULTS (WITH A MAXIMUM SALES CHARGE)
 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:

                                  1 YEAR  5 YEARS  10 YEARS   LIFETIME/1/
--------------------------------------------------------------------------

 CLASS A -- FIRST SOLD 7/30/87    -1.09%   8.28%    10.19%      11.05%



                                  1 YEAR   LIFETIME/1/
-------------------------------------------------------

 CLASS R-1 -- FIRST SOLD 6/11/02  4.00%       9.33%
-------------------------------------------------------
 CLASS R-2 -- FIRST SOLD 5/31/02  4.03        8.86
-------------------------------------------------------
 CLASS R-3 -- FIRST SOLD 6/4/02   4.50        9.55
-------------------------------------------------------
 CLASS R-4 -- FIRST SOLD 5/20/02  4.83        9.77
-------------------------------------------------------
 CLASS R-5 -- FIRST SOLD 5/15/02  5.15       10.08



                               1 YEAR    5 YEARS    10 YEARS    LIFETIME/2/

 INDEXES
 S&P 500/3/                     4.91%      0.54%      9.07%         10.23%
 Lipper Income Funds            3.44       4.06       6.49           9.52
 Average/4/
----------------------------------------------------------------------------------
 Class A annualized 30-day yield at October 31, 2006: 3.42%/5/
 (For current yield information, please call American FundsLine at 800/325-3590.)



/1/  Lifetime results for each share class are measured from the date the share
     class was first sold.
/2/  Lifetime results for the index(es) shown are measured from the date Class A
     shares were first sold. In prior years, each index may have included different
     funds or securities from those that constitute the current year's index.
/3/  Standard & Poor's 500 Composite Index is a market capitalization-weighted
     index based on the average weighted performance of 500 widely held common
     stocks. This index is unmanaged and includes reinvested dividends and/or
     distributions, but does not reflect sales charges, commissions, expenses or
     taxes.
/4/  Lipper Income Funds Average is comprised of funds that normally seek a high
     level of current income through investing in income-producing stocks, bonds and
     money market instruments. The results of the underlying funds in the average
     include the reinvestment of dividends and capital gain distributions, as well
     as brokerage commissions paid by the funds for portfolio transactions, but do
     not reflect sales charges or taxes.
/5/  Reflects a fee waiver (3.40% without the waiver) as described in the Annual
     Fund Operating Expenses table under "Fees and expenses of the fund."


                                       3

                                            Capital Income Builder / Prospectus

<PAGE>

Fees and expenses of the fund

These tables describe the fees and expenses that you may pay if you buy and hold
shares of the fund.



 SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
                                               CLASS A    ALL R SHARE CLASSES
------------------------------------------------------------------------------

 Maximum initial sales charge on purchases      5.75%/*/         none
 (as a percentage of offering price)
------------------------------------------------------------------------------
 Maximum sales charge on reinvested dividends    none            none
------------------------------------------------------------------------------
 Maximum contingent deferred sales charge        none            none
------------------------------------------------------------------------------
 Redemption or exchange fees                     none            none



* The initial sales charge is reduced for purchases of $25,000 or more and
  eliminated for purchases of $1 million or more.




 ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
                                            CLASS  CLASS  CLASS  CLASS   CLASS
                                   CLASS A   R-1    R-2    R-3    R-4     R-5
-------------------------------------------------------------------------------

 Management fees/1/                 0.25%   0.25%  0.25%  0.25%  0.25%   0.25%
-------------------------------------------------------------------------------
 Distribution and/or service        0.23    1.00   0.75   0.50   0.25    none
 (12b-1) fees/2/
-------------------------------------------------------------------------------
 Other expenses                     0.10    0.19   0.55   0.23   0.18    0.13
-------------------------------------------------------------------------------
 Total annual fund operating        0.58    1.44   1.55   0.98   0.68    0.38
 expenses/1/
-------------------------------------------------------------------------------


/1/  The fund's investment adviser is currently waiving 10% of its management fee.
     The waiver may be discontinued at any time in consultation with the fund's
     board, but it is expected to continue at this level until further review. The
     fund's investment adviser and board intend to review the waiver as
     circumstances warrant. In addition, the investment adviser paid a portion of
     the fund's transfer agent fees for certain R share classes. Expenses shown
     above do not reflect any waiver or reimbursement. Information regarding the
     effect of any waiver/reimbursement on total annual fund operating expenses can
     be found in the Financial Highlights table in this prospectus and in the fund's
     annual report.
/2/  Class A, R-1, R-2, R-3 and R-4 12b-1 fees may not exceed .30%, 1.00%, 1.00%,
     .75% and .50%, respectively, of the class' average net assets annually.


                                       4

Capital Income Builder / Prospectus


<PAGE>

OTHER EXPENSES
The "Other expenses" items in the table above include custodial, legal, transfer
agent and subtransfer agent/recordkeeping payments, as well as various other
expenses. Subtransfer agent/recordkeeping payments may be made to the fund's
investment adviser, affiliates of the adviser and unaffiliated third parties for
providing recordkeeping and other administrative services to retirement plans
invested in the fund in lieu of the transfer agent providing such services. The
amount paid for subtransfer agent/recordkeeping services will vary depending on
the share class selected and the entity receiving the payments. The table below
shows the maximum payments to entities providing services to retirement plans.


                                                   PAYMENTS TO UNAFFILIATED
             PAYMENTS TO AFFILIATED ENTITIES              ENTITIES
-------------------------------------------------------------------------------

 Class A            .05% of assets or                  .05% of assets or
             $12 per participant position/1/    $12 per participant position/1/
-------------------------------------------------------------------------------
 Class R-1           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-2     .15% of assets plus $27 per              .25% of assets
             participant position/2/ or .35%
                      of assets/3/
-------------------------------------------------------------------------------
 Class R-3     .10% of assets plus $12 per              .15% of assets
             participant position/2/ or .19%
                      of assets/3/
-------------------------------------------------------------------------------
 Class R-4           .10% of assets                     .10% of assets
-------------------------------------------------------------------------------
 Class R-5           .05% of assets                     .05% of assets
-------------------------------------------------------------------------------




/1/  Payment amount depends on the date upon which services commenced.
/2/  Payment with respect to Recordkeeper Direct/(R)/ program.
/3/  Payment with respect to PlanPremier/(R)/ program.

EXAMPLES

The examples below are intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in the fund for the time periods indicated, that your
investment has a 5% return each year, that all dividends and capital gain
distributions are reinvested, and that the fund's operating expenses remain the
same as shown above. The examples do not reflect the impact of any fee waivers
or expense reimbursements.

Although your actual costs may be higher or lower, based on these assumptions,
your cumulative estimated expenses would be:


                                1 YEAR  3 YEARS  5 YEARS   10 YEARS
--------------------------------------------------------------------

 Class A*                        $631    $750     $880      $1,259
--------------------------------------------------------------------
 Class R-1                        147     456      787       1,724
--------------------------------------------------------------------
 Class R-2                        158     490      845       1,845
--------------------------------------------------------------------
 Class R-3                        100     312      542       1,201
--------------------------------------------------------------------
 Class R-4                         69     218      379         847
--------------------------------------------------------------------
 Class R-5                         39     122      213         480
--------------------------------------------------------------------



* Reflects the maximum initial sales charge in the first year.


                                       5

                                            Capital Income Builder / Prospectus

<PAGE>

Investment objectives, strategies and risks

The fund has two primary investment objectives. It seeks (1) to provide you with
a level of current income that exceeds the average yield on U.S. stocks
generally and (2) to provide you with a growing stream of income over the years.
The fund's secondary objective is to provide you with growth of capital. The
fund invests primarily in a broad range of income-producing securities,
including stocks and bonds. The fund may also invest significantly in securities
of issuers domiciled outside the United States.

The fund normally will invest at least 90% of its assets in income-producing
securities (with at least 50% of its assets in equity securities). The prices of
common stocks and other equity-type securities held by the fund may decline in
response to certain events, including those directly involving issuers of these
securities; adverse conditions affecting the general economy; overall market
declines; world political, social and economic instability; and currency
fluctuations.
The values of, and the income generated by, most debt securities held by the
fund may be affected by changing interest rates and by changes in the effective
maturities and credit ratings of these securities. For example, the values of
debt securities in the fund's portfolio generally will decline when interest
rates rise and increase when interest rates fall. In addition, falling interest
rates may cause an issuer to redeem or "call" a security before its stated
maturity, which may result in the fund having to reinvest the proceeds in lower
yielding securities.

Investments in securities issued by entities based outside the United States may
be subject to the risks described above to a greater extent and may also be
affected by currency controls; different accounting, auditing, financial
reporting, and legal standards and practices in some countries; 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. These risks may be heightened in connection with
investments in developing countries.

The fund may also hold cash or money market instruments. The percentage of the
fund invested in such holdings varies and depends on various factors, including
market conditions and purchases and redemptions of fund shares. A larger
percentage of such holdings could moderate the fund's investment results in a
period of rising market prices.

A larger percentage of cash or money market instruments could reduce the
magnitude of the fund's loss in the event of falling market prices and provide
liquidity to make additional investments or to meet redemptions.


                                       6

Capital Income Builder / Prospectus


<PAGE>

The fund relies on the professional judgment of its investment adviser to make
decisions about the fund's portfolio investments. The basic investment
philosophy of the investment adviser is to seek to invest in attractively valued
securities that, in its opinion, represent above-average long-term investment
opportunities. The investment adviser believes that an important way to
accomplish this is through fundamental analysis, which may include meeting with
company executives and employees, suppliers, customers and competitors.
Securities may be sold when the investment adviser believes that they no longer
represent relatively attractive investment opportunities.

ADDITIONAL INVESTMENT RESULTS
Unlike the Investment Results table on page 3, the table below reflects the
fund's results calculated without a sales charge.

 ADDITIONAL INVESTMENT RESULTS (WITHOUT A SALES CHARGE)
 AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2005:

                                   1 YEAR  5 YEARS  10 YEARS  LIFETIME/1/

 CLASS A -- FIRST SOLD 7/30/87     4.94%    9.57%    10.85%      11.40%



                                   1 YEAR   LIFETIME/1/

 CLASS R-1 -- FIRST SOLD 6/11/02   4.00%       9.33%
 CLASS R-2 -- FIRST SOLD 5/31/02   4.03        8.86
 CLASS R-3 -- FIRST SOLD 6/4/02    4.50        9.55
 CLASS R-4 -- FIRST SOLD 5/20/02   4.83        9.77
 CLASS R-5 -- FIRST SOLD 5/15/02   5.15       10.08



                        1 YEAR       5 YEARS       10 YEARS       LIFETIME/2/

 INDEXES
 S&P 500/3/                4.91%        0.54%          9.07%            10.23%
 Lipper Income Funds       3.44         4.06           6.49              9.52
 Average/4/
------------------------------------------------------------------------------------
 Class A distribution rate at December 31, 2005: 4.06%/5/
 (For current distribution rate information, please call American FundsLine at
  800/325-3590.)



/1/  Lifetime results for each share class are measured from the date the share
     class was first sold.
/2/  Lifetime results for the index(es) shown are measured from the date Class A
     shares were first sold. In prior years, each index may have included different
     funds or securities from those that constitute the current year's index.
/3/  Standard & Poor's 500 Composite Index is a market capitalization-weighted
     index based on the average weighted performance of 500 widely held common
     stocks. This index is unmanaged and includes reinvested dividends and/or
     distributions, but does not reflect sales charges, commissions, expenses or
     taxes.
/4/  Lipper Income Funds Average is comprised of funds that normally seek a high
     level of current income through investing in income-producing stocks, bonds and
     money market instruments. The results of the underlying funds in the average
     include the reinvestment of dividends and capital gain distributions, as well
     as brokerage commissions paid by the funds for portfolio transactions, but do
     not reflect sales charges or taxes.
/5/  The distribution rate represents actual distributions paid by the fund. It was
     calculated at net asset value by annualizing the dividends paid by the fund
     over one quarter and dividing that number by the fund's average net asset value
     for the three months.


                                       7

                                            Capital Income Builder / Prospectus
<PAGE>

INDUSTRY SECTOR DIVERSIFICATION AS OF OCTOBER 31, 2006 (percent of net assets)

[begin pie chart]
Financials                                                   19.09%
Utilities                                                     9.77%
Telecommunication services                                    7.64%
Consumer staples                                              5.64%
Industrials                                                   5.41%
Convertible securities & preferred stocks                     0.85%
Bonds & notes                                                19.28%
Other industries                                             19.99%
Short-term securities & other assets less liabilities        12.33%
[end pie chart]



 LARGEST EQUITY HOLDINGS AS OF OCTOBER 31, 2006
                                              PERCENT OF NET ASSETS
--------------------------------------------------------------------

 E.ON                                                 1.6%
--------------------------------------------------------------------
 BellSouth                                            1.5
--------------------------------------------------------------------
 AT&T                                                 1.5
--------------------------------------------------------------------
 Altria Group                                         1.4
--------------------------------------------------------------------
 Royal Dutch Shell                                    1.2
--------------------------------------------------------------------
 Fannie Mae                                           1.2
--------------------------------------------------------------------
 Exelon                                               1.1
--------------------------------------------------------------------
 National Grid                                        1.0
--------------------------------------------------------------------
 Koninklijke KPN                                      1.0
--------------------------------------------------------------------
 Veolia Environnement                                 1.0
--------------------------------------------------------------------



Because the fund is actively managed, its holdings will change over time.

For updated information on the fund's portfolio holdings, please visit us at
americanfunds.com.


                                       8

Capital Income Builder / Prospectus


<PAGE>

Management and organization

INVESTMENT ADVISER
Capital Research and Management Company, an experienced investment management
organization founded in 1931, serves as investment adviser to the fund and other
funds, including the American Funds. Capital Research and Management Company is
a wholly owned subsidiary of The Capital Group Companies, Inc. and is located at
333 South Hope Street, Los Angeles, California 90071, and 135 South State
College Boulevard, Brea, California 92821. Capital Research and Management
Company manages the investment portfolio and business affairs of the fund. The
total management fee paid by the fund, as a percentage of average net assets,
for the previous fiscal year appears in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." As described more fully in the fund's
statement of additional information, the management fee is based on the daily
net assets of the fund and monthly gross investment income. A discussion
regarding the basis for the approval of the fund's investment advisory and
service agreement by the fund's board of directors is contained in the fund's
annual report to shareholders for the fiscal year ended October 31, 2006.

EXECUTION OF PORTFOLIO TRANSACTIONS
The investment adviser places orders with broker-dealers for the fund's
portfolio transactions. The investment adviser strives to obtain best execution
for the fund's portfolio transactions, taking into account a variety of factors
to produce the most favorable total price reasonably attainable under the
circumstances. These factors include the size and type of transaction, the cost
and quality of executions, and the broker-dealer's ability to offer liquidity
and anonymity. For example, with respect to equity transactions, the fund does
not consider the investment adviser as having an obligation to obtain the lowest
available commission rate to the exclusion of price, service and qualitative
considerations. Subject to the considerations outlined above, the investment
adviser may place orders for the fund's portfolio transactions with
broker-dealers who have sold shares of funds managed by the investment adviser,
or who have provided investment research, statistical or other related services
to the investment adviser. In placing orders for the fund's portfolio
transactions, the investment adviser does not commit to any specific amount of
business with any particular broker-dealer. Subject to best execution, the
investment adviser may consider investment research, statistical or other
related services provided to the adviser in placing orders for the fund's
portfolio transactions. However, when the investment adviser places orders for
the fund's portfolio transactions, it does not give any consideration to whether
a broker-dealer has sold shares of the funds managed by the investment adviser.



                                       9

                                            Capital Income Builder / Prospectus

<PAGE>

PORTFOLIO HOLDINGS
Portfolio holdings information for the fund is available on the American Funds
website at americanfunds.com. To reach this information, access the lower
portion of the fund's details page on the website. A list of the fund's top 10
equity holdings, updated as of each month-end, is generally posted to this page
within 14 days after the end of the applicable month. A link to the fund's
complete list of publicly disclosed portfolio holdings, updated as of each
calendar quarter-end, is generally posted to this page within 45 days after the
end of the applicable quarter. Both lists remain available on the website until
new information for the next month or quarter is posted. Portfolio holdings
information for the fund is also contained in reports filed with the Securities
and Exchange Commission.

A description of the fund's policies and procedures regarding disclosure of
information about its portfolio holdings is available in the statement of
additional information.

MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this approach, the portfolio of
a fund is divided into segments managed by individual counselors. Counselors
decide how their respective segments will be invested. In addition, Capital
Research and Management Company's investment analysts may make investment
decisions with respect to a portion of a fund's portfolio. Investment decisions
are subject to a fund's objective(s), policies and restrictions and the
oversight of the appropriate investment-related committees of Capital Research
and Management Company.


                                       10

Capital Income Builder / Prospectus


<PAGE>

The primary individual portfolio counselors for Capital Income Builder are:

                                                PRIMARY TITLE WITH              PORTFOLIO
                               PORTFOLIO        INVESTMENT ADVISER              COUNSELOR'S
 PORTFOLIO COUNSELOR/          COUNSELOR        (OR AFFILIATE)                  ROLE IN
 FUND TITLE                    EXPERIENCE       AND INVESTMENT                  MANAGEMENT
 (IF APPLICABLE)              IN THIS FUND      EXPERIENCE                      OF THE FUND
------------------------------------------------------------------------------------------------------

 JAMES B. LOVELACE              15 years        Senior Vice President and       Serves as an
 Vice Chairman and          (plus 3 years of    Director, Capital Research      income-producing
 Director                   prior experience    and Management Company          equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      25 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 JOYCE E. GORDON                7 years         Senior Vice President and       Serves as an
 President                 (plus 11 years of    Director, Capital Research      income-producing
                            prior experience    and Management Company          equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      27 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 MARK R. MACDONALD              7 years         Senior Vice President and       Serves as a fixed-
 Executive Vice President                       Director, Capital Research      income portfolio
                                                and Management Company          counselor

                                                Investment professional for
                                                21 years in total; 13 years
                                                with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------
 MICHAEL COHEN                  3 years         Vice President and Director,    Serves as an
 Vice President             (plus 3 years of    Capital Research Company        income-producing
                            prior experience                                    equity portfolio
                                 as an          Investment professional for     counselor
                           investment analyst   16 years in total; 7 years
                             for the fund)      with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------
 DAVID A. HOAG                  3 years         Senior Vice President,          Serves as a fixed-
 Vice President                                 Capital Research Company        income portfolio
                                                                                counselor
                                                Investment professional for
                                                19 years in total; 15 years
                                                with Capital Research and
                                                Management Company or
                                                affiliate
------------------------------------------------------------------------------------------------------



                                       11

                                            Capital Income Builder / Prospectus

<PAGE>



                                                PRIMARY TITLE WITH              PORTFOLIO
                               PORTFOLIO        INVESTMENT ADVISER              COUNSELOR'S
 PORTFOLIO COUNSELOR/          COUNSELOR        (OR AFFILIATE)                  ROLE IN
 FUND TITLE                    EXPERIENCE       AND INVESTMENT                  MANAGEMENT
 (IF APPLICABLE)              IN THIS FUND      EXPERIENCE                      OF THE FUND
------------------------------------------------------------------------------------------------------

 DAVID M. RILEY                 3 years         Senior Vice President,          Serves as an
 Vice President             (plus 8 years of    Capital Research Company        income-producing
                            prior experience                                    equity portfolio
                                 as an          Investment professional for     counselor
                           investment analyst   12 years, all with Capital
                             for the fund)      Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 TIMOTHY D. ARMOUR               1 year         President and Director,         Serves as an
                                                Capital Research and            income-producing
                                                Management Company              equity portfolio
                                                                                counselor
                                                Investment professional for
                                                24 years, all with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------
 STEVEN T. WATSON               9 years         Senior Vice President and       Serves as an
                            (plus 5 years of    Director, Capital Research      income-producing
                            prior experience    Company                         equity portfolio
                                 as an                                          counselor
                           investment analyst   Investment professional for
                             for the fund)      19 years in total;
                                                17 years with Capital
                                                Research and Management
                                                Company or affiliate
------------------------------------------------------------------------------------------------------




Information regarding the portfolio counselors' compensation, their ownership of
securities in the fund and other accounts they manage can be found in the
statement of additional information.
CERTAIN PRIVILEGES AND/OR SERVICES DESCRIBED ON THE FOLLOWING PAGES OF THIS
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION MAY NOT BE AVAILABLE
TO YOU DEPENDING ON YOUR INVESTMENT DEALER OR RETIREMENT PLAN RECORDKEEPER.
PLEASE SEE YOUR FINANCIAL ADVISER, INVESTMENT DEALER OR PLAN RECORDKEEPER FOR
MORE INFORMATION.


                                       12

Capital Income Builder / Prospectus


<PAGE>

Purchase, exchange and sale of shares

AMERICAN FUNDS SERVICE COMPANY, THE FUND'S TRANSFER AGENT, ON BEHALF OF THE FUND
AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S DISTRIBUTOR, IS REQUIRED BY LAW TO
OBTAIN CERTAIN PERSONAL INFORMATION FROM YOU OR ANY OTHER PERSON(S) ACTING ON
YOUR BEHALF IN ORDER TO VERIFY YOUR OR SUCH PERSON'S IDENTITY. IF YOU DO NOT
PROVIDE THE INFORMATION, THE TRANSFER AGENT MAY NOT BE ABLE TO OPEN YOUR
ACCOUNT. IF THE TRANSFER AGENT IS UNABLE TO VERIFY YOUR IDENTITY OR THAT OF ANY
OTHER PERSON(S) AUTHORIZED TO ACT ON YOUR BEHALF, OR BELIEVES IT HAS IDENTIFIED
POTENTIALLY CRIMINAL ACTIVITY, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO CLOSE YOUR ACCOUNT OR TAKE SUCH OTHER ACTION THEY DEEM REASONABLE
OR REQUIRED BY LAW.

PURCHASES AND EXCHANGES

Eligible retirement plans generally may open an account and purchase Class A or
R shares by contacting any investment dealer (who may impose transaction charges
in addition to those described in this prospectus) authorized to sell the fund's
shares. Some or all R share classes may not be available through certain
investment dealers. Additional shares may be purchased through a plan's
administrator or recordkeeper.

Class A shares are generally not available for retirement plans using the
PlanPremier or Recordkeeper Direct recordkeeping programs.
Class R shares generally are available only to 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit-sharing and money purchase pension
plans, defined benefit plans and nonqualified deferred compensation plans. Class
R shares also are generally available only to retirement plans where plan level
or omnibus accounts are held on the books of the fund. In addition, Class R-5
shares generally are available only to retirement plans with $1 million or more
in plan assets. Class R shares generally are not available to retail
nonretirement accounts, traditional and Roth Individual Retirement Accounts
(IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs,
individual 403(b) plans and 529 college savings plans.

Shares of the fund offered through this prospectus generally may be exchanged
into shares of the same class of other American Funds. Exchanges of Class A
shares from American Funds money market funds purchased without a sales charge
generally will be subject to the appropriate sales charge.

FREQUENT TRADING OF FUND SHARES
The fund and American Funds Distributors reserve the right to reject any
purchase order for any reason. The fund is not designed to serve as a vehicle
for frequent trading. Frequent trading of fund shares may lead to increased
costs to the fund and less efficient management of the fund's portfolio,
resulting in dilution of the value of the shares held by long-term shareholders.
Accordingly, purchases, including those that are part of exchange activity, that
the fund or American Funds Distributors has determined could involve actual or
potential harm to the fund may be rejected.


                                       13

                                            Capital Income Builder / Prospectus

<PAGE>

In addition to the fund's broad ability to restrict potentially harmful trading
as described above, the fund's board of directors has also adopted certain
policies and procedures with respect to frequent purchases and redemptions of
fund shares. Under the fund's "purchase blocking policy," any shareholder
redeeming shares (including redemptions that are part of an exchange
transaction) having a value of $5,000 or more from the fund will be precluded
from investing in the fund (including investments that are part of an exchange
transaction) for 30 calendar days after the redemption transaction. This
prohibition will not apply to redemptions by shareholders whose shares are held
on the books of third-party intermediaries that have not adopted procedures to
implement this policy. American Funds Service Company will work with
intermediaries to develop such procedures or other procedures that American
Funds Service Company determines are reasonably designed to achieve the
objective of the purchase blocking policy. At the time the intermediaries adopt
these procedures, shareholders whose accounts are on the books of such
intermediaries will be subject to this purchase blocking policy or another
frequent trading policy that is reasonably designed to achieve the objective of
the purchase blocking policy. There is no guarantee that all instances of
frequent trading in fund shares will be prevented.

Under the fund's purchase blocking policy, certain purchases will not be
prevented and certain redemptions will not trigger a purchase block, such as:
systematic redemptions and purchases where the entity maintaining the
shareholder account is able to identify the transaction as a systematic
redemption or purchase; purchases and redemptions of shares having a value of
less than $5,000; retirement plan contributions, loans and distributions
(including hardship withdrawals) identified as such on the retirement plan
recordkeeper's system; and purchase transactions involving transfers of assets,
rollovers, Roth IRA conversions and IRA recharacterizations, where the entity
maintaining the shareholder account is able to identify the transaction as one
of these types of transactions.

NOTWITHSTANDING THE FUND'S PURCHASE BLOCKING POLICY, ALL TRANSACTIONS IN FUND
SHARES REMAIN SUBJECT TO THE FUND'S AND AMERICAN FUNDS DISTRIBUTORS' RIGHT TO
RESTRICT POTENTIALLY ABUSIVE TRADING GENERALLY (INCLUDING THE TYPES OF
TRANSACTIONS DESCRIBED ABOVE THAT WILL NOT BE PREVENTED OR TRIGGER A PURCHASE
BLOCK UNDER THE POLICY). SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE
INFORMATION ABOUT HOW AMERICAN FUNDS SERVICE COMPANY MAY ADDRESS OTHER
POTENTIALLY ABUSIVE TRADING ACTIVITY IN THE AMERICAN FUNDS.


                                       14

Capital Income Builder / Prospectus


<PAGE>

SALES

Please contact your plan administrator or recordkeeper in order to sell shares
from your retirement plan.

If you notify American Funds Service Company, you may reinvest proceeds from a
redemption, dividend payment or capital gain distribution without a sales charge
in the same fund or other American Funds within 90 days after the date of the
redemption or distribution. Proceeds will be reinvested in the same share class
from which the original redemption or distribution was made. Redemption proceeds
of Class A shares representing direct purchases in American Funds money market
funds that are reinvested in non-money market American Funds will be subject to
a sales charge. Proceeds will be reinvested at the next calculated net asset
value after your request is received and accepted by American Funds Service
Company. You may not reinvest proceeds in the American Funds as described in
this paragraph if such proceeds are subject to a purchase block as described
under "Frequent trading of fund shares." This paragraph does not apply to
rollover investments as described under "Rollovers from retirement plans to
IRAs."

VALUING SHARES
The net asset value of each share class of the fund is the value of a single
share. The fund calculates the net asset value each day the New York Stock
Exchange is open for trading as of approximately 4:00 p.m. New York time, the
normal close of regular trading. Assets are valued primarily on the basis of
market quotations. However, the fund has adopted procedures for making "fair
value" determinations if market quotations are not readily available or are not
considered reliable. For example, if events occur between the close of markets
outside the United States and the close of regular trading on the New York Stock
Exchange that, in the opinion of the investment adviser, materially affect the
value of any of the fund's securities that principally trade in those
international markets, those securities will be valued in accordance with fair
value procedures. Use of these procedures is intended to result in more
appropriate net asset values. In addition, such use will reduce, if not
eliminate, potential arbitrage opportunities otherwise available to short-term
investors.

Because the fund may hold securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.

Your shares will be purchased at the net asset value (plus any applicable sales
charge in the case of Class A shares) or sold at the net asset value next
determined after American Funds Service Company receives and accepts your
request.


                                       15

                                            Capital Income Builder / Prospectus

<PAGE>

Sales charges

CLASS A SHARES

The initial sales charge you pay each time you buy Class A shares differs
depending upon the amount you invest and may be reduced or eliminated for larger
purchases as indicated below. The "offering price," the price you pay to buy
shares, includes any applicable sales charge, which will be deducted directly
from your investment. Shares acquired through reinvestment of dividends or
capital gain distributions are not subject to an initial sales charge.



                              SALES CHARGE AS A
                                         PERCENTAGE OF:
                                                                 DEALER
                                                   NET         COMMISSION
                                       OFFERING   AMOUNT     AS A PERCENTAGE
 INVESTMENT                             PRICE    INVESTED   OF OFFERING PRICE
------------------------------------------------------------------------------

 Less than $25,000                      5.75%     6.10%           5.00%
------------------------------------------------------------------------------
 $25,000 but less than $50,000          5.00      5.26            4.25
------------------------------------------------------------------------------
 $50,000 but less than $100,000         4.50      4.71            3.75
------------------------------------------------------------------------------
 $100,000 but less than $250,000        3.50      3.63            2.75
------------------------------------------------------------------------------
 $250,000 but less than $500,000        2.50      2.56            2.00
------------------------------------------------------------------------------
 $500,000 but less than $750,000        2.00      2.04            1.60
------------------------------------------------------------------------------
 $750,000 but less than $1 million      1.50      1.52            1.20
------------------------------------------------------------------------------
 $1 million or more and certain other   none      none      see below
 investments described below
------------------------------------------------------------------------------



The sales charge, expressed as a percentage of the offering price or the net
amount invested, may be higher or lower than the percentages described in the
table above due to rounding. This is because the dollar amount of the sales
charge is determined by subtracting the net asset value of the shares purchased
from the offering price, which is calculated to two decimal places using
standard rounding criteria. The impact of rounding will vary with the size of
the investment and the net asset value of the shares.

CLASS A PURCHASES NOT SUBJECT TO SALES CHARGES

The following investments are not subject to any initial or contingent deferred
sales charge if American Funds Service Company is properly notified of the
nature of the investment:

. investments made by accounts that are part of certain qualified fee-based
  programs and that purchased Class A shares before the discontinuation of your
  investment dealer's load-waived A share program with the American Funds; and


. certain rollover investments from retirement plans to IRAs (see "Rollovers
  from retirement plans to IRAs" below for more information).


                                       16

Capital Income Builder / Prospectus


<PAGE>

The distributor may pay dealers up to 1% on investments made in Class A shares
with no initial sales charge. The fund may reimburse the distributor for these
payments through its plans of distribution (see "Plans of distribution" below).

Certain other investors may qualify to purchase shares without a sales charge,
such as employees of investment dealers and registered investment advisers
authorized to sell American Funds, and employees of The Capital Group Companies.
Please see the statement of additional information for more information.

 EMPLOYER-SPONSORED RETIREMENT PLANS
 Employer-sponsored retirement plans that are eligible to purchase Class R
 shares may instead purchase Class A shares and pay the applicable Class A sales
 charge, provided their recordkeepers can properly apply a sales charge on plan
 investments. These plans are not eligible to make initial purchases of $1
 million or more in Class A shares and thereby invest in Class A shares without
 a sales charge, nor are they eligible to establish a statement of intention
 that qualifies them to purchase Class A shares without a sales charge. More
 information about statements of intention can be found under "Sales charge
 reductions." Plans investing in Class A shares with a sales charge may purchase
 additional Class A shares in accordance with the sales charge table above.

 Employer-sponsored retirement plans that invested in Class A shares without any
 sales charge on or before March 31, 2004, and that continue to meet the
 eligibility requirements in effect as of that date for purchasing Class A
 shares at net asset value, may continue to purchase Class A shares without any
 initial or contingent deferred sales charge.

CLASS R SHARES
Class R shares are sold without any initial or contingent deferred sales charge.
The distributor will pay dealers annually an asset-based compensation of up to
1.00% for sales of Class R-1 shares, up to .75% for Class R-2 shares, up to .50%
for Class R-3 shares and up to .25% for Class R-4 shares. No dealer compensation
is paid on sales of Class R-5 shares. The fund may reimburse the distributor for
these payments through its plans of distribution (see "Plans of distribution"
below).

Sales charge reductions

TO RECEIVE A REDUCTION IN YOUR CLASS A INITIAL SALES CHARGE, YOU MUST LET YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW AT THE TIME YOU
PURCHASE SHARES THAT YOU QUALIFY FOR SUCH A REDUCTION. IF YOU DO NOT LET YOUR
ADVISER OR AMERICAN FUNDS SERVICE COMPANY KNOW THAT YOU ARE ELIGIBLE FOR A
REDUCTION, YOU MAY NOT RECEIVE A SALES CHARGE DISCOUNT TO WHICH YOU ARE
OTHERWISE ENTITLED. In order to determine your eligibility to receive a sales
charge discount, it may be necessary for you to provide your adviser or


                                       17

                                            Capital Income Builder / Prospectus

<PAGE>

American Funds Service Company with information and records (including account
statements) of all relevant accounts invested in the American Funds.
IN ADDITION TO THE INFORMATION BELOW, YOU MAY OBTAIN MORE INFORMATION ABOUT
SALES CHARGE REDUCTIONS THROUGH A LINK ON THE HOME PAGE OF THE AMERICAN FUNDS
WEBSITE AT AMERICANFUNDS.COM, FROM THE STATEMENT OF ADDITIONAL INFORMATION OR
FROM YOUR FINANCIAL ADVISER.

REDUCING YOUR CLASS A INITIAL SALES CHARGE
Consistent with the policies described in this prospectus, two or more
retirement plans of an employer or employer's affiliates may combine all of
their American Funds investments to reduce their Class A sales charge. However,
for this purpose, investments representing direct purchases of American Funds
money market funds are excluded. Following are different ways that you may
qualify for a reduced Class A sales charge:

 CONCURRENT PURCHASES

 Simultaneous purchases of any class of shares of two or more American Funds may
 be combined to qualify for a reduced Class A sales charge.

 RIGHTS OF ACCUMULATION
 You may take into account your accumulated holdings in all share classes of the
 American Funds to determine the initial sales charge you pay on each purchase
 of Class A shares. 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 or (b) the amount you invested
 (excluding capital appreciation) less any withdrawals. Please see the statement
 of additional information for details. You should retain any records necessary
 to substantiate the historical amounts you have invested. The current value of
 existing investments in an American Legacy/(R)/ Retirement Investment Plan may
 also be taken into account to determine your Class A sales charge.

 STATEMENT OF INTENTION
 You may reduce your Class A sales charge by establishing a statement of
 intention. A statement of intention allows you to combine all purchases of all
 share classes of American Funds non-money market funds you intend to make over
 a 13-month period to determine the applicable sales charge; however, purchases
 made under a right of reinvestment, appreciation of your holdings, and
 reinvested dividends and capital gains do not count as purchases made during
 the statement period. The market value of your existing holdings eligible to be
 aggregated as of the day immediately before the start of the statement period
 may be credited toward satisfying the statement. A portion of your account may
 be held in escrow to cover additional Class A sales charges that may be due if
 your total purchases over the statement period do not qualify you for the
 applicable sales charge reduction. Employer-sponsored retirement plans may be



                                       18

Capital Income Builder / Prospectus


<PAGE>

 restricted from establishing statements of intention. See "Sales charges" above
 for more information.

RIGHT OF REINVESTMENT

Please see the "Sales" section of "Purchase, exchange and sale of shares" above
for information on how to reinvest proceeds from a redemption, dividend payment
or capital gain distribution without a sales charge.

Rollovers from retirement plans to IRAs
Assets from retirement plans may be invested in Class A, B, C or F shares
through an IRA rollover. More information on Class B, C and F shares can be
found in the fund's prospectus for nonretirement plan shareholders. Rollovers
invested in Class A shares from retirement plans will be subject to applicable
sales charges. The following rollovers to Class A shares will be made without a
sales charge:

. rollovers to IRAs from 403(b) plans with Capital Bank and Trust Company as
  custodian; and
. rollovers to IRAs that are attributable to American Funds investments, if they
  meet all of the following three requirements:

  -- the retirement plan from which assets are being rolled over is part of an
     American Funds proprietary retirement plan program (such as PlanPremier,
     Recordkeeper Direct or Recordkeeper Connect/(R)/) or is a plan whose
     participant subaccounts are serviced by American Funds Service Company;

  -- the plan's assets were invested in American Funds at the time of
     distribution; and

  -- the plan's assets are rolled over to an American Funds IRA with Capital Bank
     and Trust Company as custodian.
IRA rollover assets that roll over without a sales charge as described above
will not be subject to a contingent deferred sales charge and investment dealers
will be compensated solely with an annual service fee that begins to accrue
immediately. IRA rollover assets that are not attributable to American Funds
investments, as well as future contributions to the IRA, will be subject to
sales charges and the terms and conditions generally applicable to Class A share
investments as described in the prospectus and statement of additional
information if invested in Class A shares.

TRANSFERS TO IRAS

Transfers to IRAs that are attributable to American Funds investments held in
SIMPLE IRAs, SEPs or SARSEPs will not be subject to a sales charge if invested
in Class A shares.


                                       19

                                            Capital Income Builder / Prospectus

<PAGE>

Plans of distribution
The fund has plans of distribution or "12b-1 plans" under which it may finance
activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the fund's board of directors. The plans
provide for payments, based on annualized percentages of average daily net
assets, of up to .30% for Class A shares, up to 1.00% for Class R-1 and R-2
shares, up to .75% for Class R-3 shares and up to .50% for Class R-4 shares. For
all share classes, up to .25% of these expenses may be used to pay service fees
to qualified dealers for providing certain shareholder services. The amount
remaining for each share class may be used for distribution expenses.

The 12b-1 fees paid by the fund, as a percentage of average net assets, for the
previous fiscal year are indicated in the Annual Fund Operating Expenses table
under "Fees and expenses of the fund." Since these fees are paid out of the
fund's assets or income on an ongoing basis, over time they will increase the
cost and reduce the return of your investment.

Other compensation to dealers
American Funds Distributors, at its expense, currently provides additional
compensation to investment dealers. These payments may be made, at the
discretion of American Funds Distributors, to the top 75 dealers (or their
affiliates) who have sold shares of the American Funds. The level of payments
made to a qualifying firm in any given year will vary and in no case would
exceed the sum of (a) .10% of the previous year's American Funds sales by that
dealer and (b) .02% of American Funds assets attributable to that dealer. For
calendar year 2006, aggregate payments made by American Funds Distributors to
dealers were less than .02% of the assets of the American Funds. Aggregate
payments may also change from year to year. A number of factors will be
considered in determining payments, including the qualifying dealer's sales,
assets and redemption rates, and the quality of the dealer's relationship with
American Funds Distributors. American Funds Distributors makes these payments to
help defray the costs incurred by qualifying dealers in connection with efforts
to educate financial advisers about the American Funds so that they can make
recommendations and provide services that are suitable and meet shareholder
needs. American Funds Distributors will, on an annual basis, determine the
advisability of continuing these payments. American Funds Distributors may also
pay expenses associated with meetings conducted by dealers outside the top 75
firms to facilitate educating financial advisers and shareholders about the
American Funds.


                                       20

Capital Income Builder / Prospectus


<PAGE>

Distributions and taxes

DIVIDENDS AND DISTRIBUTIONS
The fund declares daily dividends from net investment income and distributes the
accrued dividends, which may fluctuate, to shareholders each quarter. Dividends
begin accruing one day after payment for shares is received by the fund or
American Funds Service Company.

Capital gains, if any, are usually distributed in December. When a capital gain
is distributed, the net asset value per share is reduced by the amount of the
payment.

All dividends and capital gain distributions paid to retirement plan
shareholders will be automatically reinvested.

TAXES ON DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gains distributed by the fund to tax-deferred retirement
plan accounts are not taxable currently.

TAXES ON TRANSACTIONS
Exchanges within a tax-deferred retirement plan account will not result in a
capital gain or loss for federal or state income tax purposes. With limited
exceptions, distributions from a retirement plan account are taxable as ordinary
income.

PLEASE SEE YOUR TAX ADVISER FOR MORE INFORMATION.


                                       21

                                            Capital Income Builder / Prospectus

<PAGE>

Financial highlights/1/

The Financial Highlights table is intended to help you understand the fund's
results for the past five fiscal years. Certain information reflects financial
results for a single share of a particular class. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the fund (assuming reinvestment of all dividends and capital gain
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the fund's financial statements, is included in the
statement of additional information, which is available upon request.


                                                 INCOME FROM INVESTMENT OPERATIONS/2/,/3/

                                                                 Net gains
                                                                (losses) on
                                         Net                    securities
                                        asset                      (both
                                       value,        Net         realized      Total from
                                      beginning   investment        and        investment
                                      of period     income      unrealized)    operations
--------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                  $52.58       $2.13         $ 8.06        $10.19
Year ended 10/31/2005                   50.75        2.01           2.56          4.57
Year ended 10/31/2004                   45.29        1.76           5.68          7.44
Year ended 10/31/2003                   40.73        1.72           5.36          7.08
Year ended 10/31/2002                   43.80        1.82          (1.67)          .15
--------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                   52.58        1.65           8.06          9.71
Year ended 10/31/2005                   50.75        1.54           2.56          4.10
Year ended 10/31/2004                   45.29        1.32           5.68          7.00
Year ended 10/31/2003                   40.73        1.35           5.36          6.71
Period from 6/11/2002 to 10/31/2002     45.41         .52          (4.53)        (4.01)
--------------------------------------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                  52.58        1.65           8.06          9.71
 Year ended 10/31/2005                  50.75        1.55           2.56          4.11
 Year ended 10/31/2004                  45.29        1.34           5.68          7.02
 Year ended 10/31/2003                  40.73        1.36           5.36          6.72
 Period from 5/31/2002 to 10/31/2002    46.10         .51          (5.16)        (4.65)
--------------------------------------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                 $52.58       $1.91         $ 8.06        $ 9.97
 Year ended 10/31/2005                  50.75        1.80           2.56          4.36
 Year ended 10/31/2004                  45.29        1.53           5.68          7.21
 Year ended 10/31/2003                  40.73        1.52           5.36          6.88
 Period from 6/4/2002 to 10/31/2002     45.74         .56          (4.80)        (4.24)
--------------------------------------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                  52.58        2.07           8.06         10.13
 Year ended 10/31/2005                  50.75        1.95           2.56          4.51
 Year ended 10/31/2004                  45.29        1.70           5.68          7.38
 Year ended 10/31/2003                  40.73        1.68           5.36          7.04
 Period from 5/20/2002 to 10/31/2002    45.84         .65          (4.85)        (4.20)
--------------------------------------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                  52.58        2.24           8.06         10.30
 Year ended 10/31/2005                  50.75        2.11           2.56          4.67
 Year ended 10/31/2004                  45.29        1.85           5.68          7.53
 Year ended 10/31/2003                  40.73        1.81           5.36          7.17
 Period from 5/15/2002 to 10/31/2002    45.87         .89          (5.02)        (4.13)

                                             DIVIDENDS AND DISTRIBUTIONS
                                                                                                                    Ratio of
                                                                                                                    expenses
                                                                                                                   to average
                                                                                  Net                    Net       net assets
                                      Dividends                       Total      asset                 assets,       before
                                      (from net   Distributions     dividends    value,                end of         reim-
                                      investment      (from            and       end of    Total       period      bursements/
                                       income)    capital gains)  distributions  period  return/4/  (in millions)    waivers
--------------------------------------------------------------------------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                  $(2.17)       $ (.69)         $(2.86)     $59.91    20.00%      $58,439         .58%
Year ended 10/31/2005                   (1.84)         (.90)          (2.74)      52.58     9.11        42,303         .59
Year ended 10/31/2004                   (1.81)         (.17)          (1.98)      50.75    16.73        28,458         .60
Year ended 10/31/2003                   (2.00)         (.52)          (2.52)      45.29    17.95        18,273         .65
Year ended 10/31/2002                   (2.05)        (1.17)          (3.22)      40.73      .16        10,006         .67
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                   (1.69)         (.69)          (2.38)      59.91    18.98            69        1.44
Year ended 10/31/2005                   (1.37)         (.90)          (2.27)      52.58     8.15            34        1.50
Year ended 10/31/2004                   (1.37)         (.17)          (1.54)      50.75    15.69            11        1.53
Year ended 10/31/2003                   (1.63)         (.52)          (2.15)      45.29    16.94             5        1.66
Period from 6/11/2002 to 10/31/2002      (.67)           --            (.67)      40.73    (8.84)          --/7/       .87
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                  (1.69)         (.69)          (2.38)      59.91    18.98           395        1.55
 Year ended 10/31/2005                  (1.38)         (.90)          (2.28)      52.58     8.18           241        1.61
 Year ended 10/31/2004                  (1.39)         (.17)          (1.56)      50.75    15.73           129        1.75
 Year ended 10/31/2003                  (1.64)         (.52)          (2.16)      45.29    16.99            57        1.85
 Period from 5/31/2002 to 10/31/2002     (.72)           --            (.72)      40.73   (10.10)            4         .77
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                 $(1.95)       $ (.69)         $(2.64)     $59.91    19.51%         $454         .98%
 Year ended 10/31/2005                  (1.63)         (.90)          (2.53)      52.58     8.68           268        1.00
 Year ended 10/31/2004                  (1.58)         (.17)          (1.75)      50.75    16.17           120        1.09
 Year ended 10/31/2003                  (1.80)         (.52)          (2.32)      45.29    17.42            46        1.15
 Period from 6/4/2002 to 10/31/2002      (.77)           --            (.77)      40.73    (9.27)            2         .62
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                  (2.11)         (.69)          (2.80)      59.91    19.88           119         .68
 Year ended 10/31/2005                  (1.78)         (.90)          (2.68)      52.58     9.01            70         .70
 Year ended 10/31/2004                  (1.75)         (.17)          (1.92)      50.75    16.57            15         .74
 Year ended 10/31/2003                  (1.96)         (.52)          (2.48)      45.29    17.84             6         .79
 Period from 5/20/2002 to 10/31/2002     (.91)           --            (.91)      40.73    (9.20)          --/7/       .76
--------------------------------------------------------------------------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                  (2.28)         (.69)          (2.97)      59.91    20.23           467         .38
 Year ended 10/31/2005                  (1.94)         (.90)          (2.84)      52.58     9.33           292         .39
 Year ended 10/31/2004                  (1.90)         (.17)          (2.07)      50.75    16.95           194         .41
 Year ended 10/31/2003                  (2.09)         (.52)          (2.61)      45.29    18.20           121         .44
 Period from 5/15/2002 to 10/31/2002    (1.01)           --           (1.01)      40.73    (9.04)           75         .21


                                       Ratio of
                                       expenses       Ratio
                                      to average     of  net
                                      net assets     income
                                         after         to
                                         reim-       average
                                      bursements/      net
                                      waivers/5/    assets/6/
--------------------------------------------------------------

CLASS A:
Year ended 10/31/2006                     .55%        3.82%
Year ended 10/31/2005                     .57         3.79
Year ended 10/31/2004                     .59         3.65
Year ended 10/31/2003                     .65         4.04
Year ended 10/31/2002                     .67         4.19
--------------------------------------------------------------
CLASS R-1:
Year ended 10/31/2006                    1.41         2.96
Year ended 10/31/2005                    1.46         2.91
Year ended 10/31/2004                    1.50         2.74
Year ended 10/31/2003                    1.53         3.12
Period from 6/11/2002 to 10/31/2002       .60         1.27
--------------------------------------------------------------
CLASS R-2:
 Year ended 10/31/2006                   1.42         2.97
 Year ended 10/31/2005                   1.44         2.95
 Year ended 10/31/2004                   1.47         2.78
 Year ended 10/31/2003                   1.49         3.11
 Period from 5/31/2002 to 10/31/2002      .63         1.29
--------------------------------------------------------------
CLASS R-3:
 Year ended 10/31/2006                    .96%        3.42%
 Year ended 10/31/2005                    .98         3.41
 Year ended 10/31/2004                   1.08         3.15
 Year ended 10/31/2003                   1.11         3.46
 Period from 6/4/2002 to 10/31/2002       .46         1.40
--------------------------------------------------------------
CLASS R-4:
 Year ended 10/31/2006                    .66         3.68
 Year ended 10/31/2005                    .68         3.71
 Year ended 10/31/2004                    .73         3.49
 Year ended 10/31/2003                    .76         3.79
 Period from 5/20/2002 to 10/31/2002      .34         1.59
--------------------------------------------------------------
CLASS R-5:
 Year ended 10/31/2006                    .36         4.03
 Year ended 10/31/2005                    .37         4.00
 Year ended 10/31/2004                    .40         3.85
 Year ended 10/31/2003                    .44         4.28
 Period from 5/15/2002 to 10/31/2002      .21         2.10





                                       22

Capital Income Builder / Prospectus


<PAGE>


                                          YEAR ENDED OCTOBER 31
                        2006        2005        2004        2003         2002
--------------------------------------------------------------------------------

 PORTFOLIO TURNOVER
 RATE FOR ALL CLASSES    26%         20%         24%         27%          36%
 OF SHARES



/1/  Based on operations for the periods shown (unless otherwise noted) and,
     accordingly, may not be representative of a full year.
/2/  Based on average shares outstanding.
/3/  For the year ended October 31, 2002, net investment income was lower and net
     gains (losses) on securities (both realized and unrealized) were higher by
     approximately $.14 per share for Class A shares as a result of an accounting
     change related to the amortization of bond premium. On an annualized basis, the
     impact of the accounting change on other share classes would have been
     approximately the same.
/4/  Total returns exclude all sales charges.
/5/  The ratios in this column reflect the impact, if any, of certain
     reimbursements/waivers from Capital Research and Management Company. See the
     Annual Fund Operating Expenses table under "Fees and expenses of the fund" in
     this prospectus and the fund's annual report for more information.
/6/  For the year ended October 31, 2002, the ratio of net income to average net
     assets for Class A shares was lower by .34% as a result of an accounting change
     related to the amortization of bond premium. On an annualized basis, the impact
     of the accounting change on other share classes would have been approximately
     the same.
/7/  Amount less than $1 million.

                                       23

                                            Capital Income Builder / Prospectus

<PAGE>

NOTES


                                       24

Capital Income Builder / Prospectus


<PAGE>

NOTES


                                       25

                                            Capital Income Builder / Prospectus

<PAGE>

NOTES


                                       26

Capital Income Builder / Prospectus


<PAGE>

NOTES


                                       27

                                            Capital Income Builder / Prospectus

<PAGE>


[logo - American Funds(R)]                The right choice for the long term/(R)/





         FOR SHAREHOLDER SERVICES       American Funds Service Company
                                        800/421-0180
         FOR RETIREMENT PLAN SERVICES   Call your employer or plan administrator
         FOR DEALER SERVICES            American Funds Distributors
                                        800/421-9900
                                        americanfunds.com
         FOR 24-HOUR INFORMATION        For Class R share information, visit
                                        AmericanFundsRetirement.com


         Telephone calls you have with the American Funds organization may be
         monitored or recorded for quality assurance, verification and/or
         recordkeeping purposes. By speaking with us on the telephone, you are
         giving your consent to such monitoring and recording.
-----------------------------------------------------------------------------------



MULTIPLE TRANSLATIONS  This prospectus may be translated into other languages.
If there is any inconsistency or ambiguity as to the meaning of any word or
phrase in a translation, the English text will prevail.

ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS  The shareholder reports contain
additional information about the fund, including financial statements,
investment results, portfolio holdings, a discussion of market conditions and
the fund's investment strategies, and the independent registered public
accounting firm's report (in the annual report).
STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CODES OF ETHICS  The current SAI,
as amended from time to time, contains more detailed information on all aspects
of the fund, including the fund's financial statements, and is incorporated by
reference into this prospectus. This means that the current SAI, for legal
purposes, is part of this prospectus. The codes of ethics describe the personal
investing policies adopted by the fund, the fund's investment adviser and its
affiliated companies.

The codes of ethics and current SAI are on file with the Securities and Exchange
Commission (SEC). These and other related materials about the fund are available
for review or to be copied at the SEC's Public Reference Room in Washington, DC
(202/551-8090) or on the EDGAR database on the SEC's website at sec.gov or,
after payment of a duplicating fee, via e-mail request to publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, 100 F Street, NE, Washington,
DC 20549. The current SAI and shareholder reports are also available, free of
charge, on americanfunds.com.

HOUSEHOLD MAILINGS Each year you are automatically sent an updated prospectus
and annual and semi-annual reports for the fund. You may also occasionally
receive proxy statements for the fund. In order to reduce the volume of mail you
receive, when possible, only one copy of these documents will be sent to
shareholders who are part of the same family and share the same household
address.

If you would like to opt out of household-based mailings or receive a
complimentary copy of the current SAI, codes of ethics or annual/semi-annual
report to shareholders, please call American Funds Service Company at
800/421-0180 or write to the Secretary of the fund at 333 South Hope Street,
Los Angeles, California 90071.





[logo - recycle bug]
Printed on recycled paper
RPGEPR-912-0107P Litho in USA CGD/RRD/8030  Investment Company File No. 811-05085
----------------------------------------------------------------------------------
THE CAPITAL GROUP COMPANIES
American Funds        Capital Research and Management       Capital International
             Capital Guardian              Capital Bank and Trust

Capital Income Builder, Inc.

Part C

Other Information

Item 23. Exhibits for Registration Statement (1940 Act No. 811-05085 and 1933 Act No. 033-12967)

(a)

Articles of Incorporation - Articles of Amendment and Restatement effective as of 7/9/87 - previously filed (see Post-Effective ("P/E") Amendment No. 12 filed 12/30/97); Articles Supplementary effective as of 3/4/99; Articles Supplementary effective as of 1/13/00 - previously filed (see P/E Amendment No. 16 filed 3/13/00); Articles Supplementary effective as of 1/24/01 - previously filed (see P/E Amendment No. 18 filed 3/13/01); Articles Supplementary effective as of 1/18/02; Articles Supplementary effective as of 5/27/03 - previously filed (see P/E Amendment No. 22 filed 12/29/03); Articles Supplementary effective as of 3/31/05

(b)	By-laws - By-laws as amended 3/9/06

(c)	Instruments Defining Rights of Security Holders - Form of Share Certificate - previously filed (see P/E Amendment No. 18 filed 3/13/01)

(d)	Investment Advisory Contracts - Amended Investment Advisory and Service Agreement dated 11/1/06

(e)

Underwriting Contracts - Form of Amended and Restated Principal Underwriting Agreement dated 2/1/02; Form of Selling Group Agreement - previously filed (see Post Effective ("P/E") Amendment No. 20 filed 5/14/02); Form of Banking Selling Group Agreement - previously filed (see P/E Amendment No. 20 filed 5/14/02); Form of Omnibus addendum to the Selling Group Agreement (for retirement plan share classes (R shares) only) - previously filed (see P/E Amendment No. 20 filed 5/14/02); Form of Institutional Selling Group Agreement - previously filed (see P/E Amendment No. 23 filed 12/30/04); Form of Amendment to Selling Group Agreement

(f)	Bonus or Profit Sharing Contracts - Form of Deferred Compensation Plan amended effective as of 1/1/05

(g)	Custodian Agreements - Form of Global Custody Agreement dated 12/21/06; Form of JPMorgan Chase Supplemental Agreement dated 10/1/04 - previously filed (see P/E Amendment No. 24 filed 12/29/05)

(h)

Other Material Contracts - Form of Amended and Restated Administrative Services Agreement dated 10/1/05 - previously filed (see P/E Amendment No. 24 filed 12/29/05); Form of Amended Shareholder Services Agreement as of 4/1/03 - previously filed (see P/E Amendment No. 23 filed 12/30/04); Form of Indemnification Agreement dated 7/1/04 (see P/E Amendment No. 23 filed 12/30/04); Form of Amendment of Amended Shareholder Services Agreement dated 11/1/06

(i)	Legal Opinion - previously filed (see P/E Amendment No. 20 filed 5/14/02)

(j)	Other Opinions - Consent of Independent Registered Public Accounting Firm

(k)	Omitted Financial Statements - None

(l)	Initial Capital Agreements - None

(m)

Rule 12b-1 Plan - Form of Plan of Distribution for Class A dated 6/22/89 - previously filed (see P/E Amendment No. 12 filed 12/30/97; Form of Plan of Distribution for Class 529-A; Forms of Amended and Restated Plans of Distribution for Classes B, C, F, 529-B, 529-C, 529-E, 529-F, R-1, R-2, R-3 and R-4 dated 10/1/05 - previously filed (see P/E Amendment No. 24 filed 12/30/05)

(n)	Rule 18f-3 Plan - Form of Amended and Restated Multiple Class Plan dated 2/1/02

(o)

Reserved

(p)	Code of Ethics - Code of Ethics for The Capital Group Companies dated September 2006; Code of Ethics for Registrant dated December 2005

Item 24. Persons Controlled by or Under Common Control with the Fund

None

Item 25. Indemnification

The Registrant is a joint-insured under Investment Adviser/Mutual Fund Errors and Omissions Policies, which insure its officers and directors against certain liabilities. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify the individual.

Subsection (b) of Section 2-418 of the General Corporation Law of Maryland empowers a corporation to indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against reasonable expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually incurred by him in connection with such action, suit or proceeding unless it is established that: (i) the act or omission of the person was material to the cause of action adjudicated in the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; or (ii) the person actually received an improper personal benefit of money, property or services; or (iii) with respect to any criminal action or proceeding, the person had reasonable cause to believe that the act or omission was unlawful.

Indemnification under subsection (b) of Section 2-418 may not be made by a corporation unless authorized for a specific proceeding after a determination has been made that indemnification is permissible in the circumstances because the party to be indemnified has met the standard of conduct set forth in subsection (b). This determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such a quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding and who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; (ii) by special legal counsel selected by the Board of Directors of a committee of the Board by vote as set forth in subparagraph (i), or, if the requisite quorum of the full Board cannot be obtained therefore and the committee cannot be established, by a majority vote of the full Board in which directors who are parties may participate; or (iii) by the stockholders (except that shares held by any party to the specific proceeding may not be voted). A court of appropriate jurisdiction may also order indemnification if the court determines that a person seeking indemnification is entitled to reimbursement under subsection (b).

Section 2-418 further provides that indemnification provided for by Section 2-418 shall not be deemed exclusive of any rights to which the indemnified party may be entitled; that the scope of indemnification extends to directors, officers, employees or agents of a constituent corporation absorbed in a consolidation or merger and persons serving in that capacity at the request of the constituent corporation for another; and empowers the corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against and incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 2-418.

Article VIII of the Registrant's Articles of Incorporation and Article V of the Registrant's By-Laws as well as the indemnification agreements that the Registrant has entered into with each of its directors who is not an "interested person" of the Registrant (as defined under the Investment Company Act of 1940 as amended), provide in effect that the Registrant will indemnify its officers and directors against any liability or expenses actually and reasonably incurred by such person in any proceeding arising out of or in connection with his or her service to the Registrant, to the fullest extent permitted by applicable law, subject to certain conditions. In accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940 and their respective terms, these provisions do not protect any person against any liability to the Registrant or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Registrant will comply with the indemnification requirements contained in the Investment Company Act of 1940, as amended, and Release Nos. 7221 (June 9, 1972) and 11330 (September 4, 1980).

Item 26. Business and Other Connections of the Investment Adviser

None

Item 27. Principal Underwriters

(a) American Funds Distributors, Inc. is also the Principal Underwriter of shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds Income Series, The American Funds Tax-Exempt Series I, The American Funds Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American High-Income Trust, American Mutual Fund, Inc., The Bond Fund of America, Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund, Inc., The Cash Management Trust of America, EuroPacific Growth Fund, Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America, Inc., The Investment Company of America, Intermediate Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New Perspective Fund, Inc., New World Fund, Inc., Short-Term Bond Fund of America, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of America, Inc., The Tax-Exempt Money Fund of America, U.S. Treasury Money Fund of America and Washington Mutual Investors Fund, Inc.

(b)

	(1) Name and Principal Business Address	(2) Positions and Offices with Underwriter	(3) Positions and Offices with Registrant
L	E. Grant Abramson	Vice President	None
	David L. Abzug P.O. Box 2248 Agoura Hills, CA 91376	Vice President	None
	William C. Anderson 7780 Boylston Court Dublin, OH 43016	Regional Vice President	None
	Robert B. Aprison 2983 Bryn Wood Drive Madison, WI 53711	Senior Vice President	None
	T. Patrick Bardsley 36 East Woodward Blvd. Tulsa, OK 74114	Regional Vice President	None
	Shakeel A. Barkat 982 Wayson Way Davidsonville, MD 21035	Vice President	None
	Steven L. Barnes 7490 Clubhouse Road Suite 100 Boulder, CO 80301	Senior Vice President	None
	Thomas M. Bartow 20 Cerchio Alto Henderson, NV 89011	Vice President	None
B	Carl R. Bauer	Vice President	None
	Michelle A. Bergeron 4160 Gateswalk Drive Smyrna, GA 30080	Senior Vice President	None
	J. Walter Best, Jr. 7003 Chadwick Drive, Suite 355 Brentwood, TN 37027	Vice President	None
	John A. Blanchard 576 Somerset Lane Northfield, IL 60093	Senior Vice President	None
	Ian B. Bodell 7003 Chadwick Drive, Suite 355 Brentwood, TN 37027	Senior Vice President	None
	Jonathan W. Botts 2231 Garden View Lane Weddington, NC 28104	Regional Vice President	None
	Bill Brady 646 Somerset Drive Indianapolis, IN 46260	Regional Vice President	None
	Mick L. Brethower 510 Cimmaron Hills Trail W. Georgetown, TX 78628	Senior Vice President	None
	C. Alan Brown 7424 Somerset Avenue St. Louis, MO 63105	Vice President	None
L	Sheryl M. Burford	Assistant Vice President	None
B	J. Peter Burns	Vice President	None
	Steven Calabria 161 Bay Avenue Huntington Bay, NY 11743	Regional Vice President	None
S	Kathleen D. Campbell	Assistant Vice President	None
	Matthew C. Carlisle 100 Oakmont Lane, #409 Belleair, FL 33756	Vice President	None
	Damian F. Carroll 40 Ten Acre Road New Britain, CT 06052	Vice President	None
	James D. Carter 560 Valley Hill Lane Knoxville, TN 37922	Regional Vice President	None
	Brian C. Casey 8002 Greentree Road Bethesda, MD 20817	Senior Vice President	None
	Victor C. Cassato 999 Green Oaks Drive Greenwood Village, CO 80121	Senior Vice President	None
	Christopher J. Cassin 120 E. Ogden Ave., Suite 106 Hinsdale, IL 60521	Senior Vice President	None
L	Denise M. Cassin	Director, Senior Vice President	None
L	David D. Charlton	Director, Senior Vice President	None
	Thomas M. Charon 262 Mulberry Drive Delafield, WI 53018	Regional Vice President	None
L	Wellington Choi	Vice President	None
	Paul A. Cieslik 90 Northington Drive Avon, CT 06001	Regional Vice President	None
L	Larry P. Clemmensen	Director	None
L	Kevin G. Clifford	Director, President and Co-Chief Executive Officer	None
H	Cheri Coleman	Vice President	None
	Ruth M. Collier 106 Central Park South, #10K New York, NY 10019	Senior Vice President	None
S	David Coolbaugh	Vice President	None
	Carlo O. Cordasco 4036 Ambassador Circle Williamsburg, VA 23188	Regional Vice President	None
B	Josie Cortez	Assistant Vice President	None
	Charles H. Cote 305 Edgeworth Lane Sewickley, PA 15143	Regional Vice President	None
	Thomas E. Cournoyer 2333 Granada Blvd. Coral Gables, FL 33134	Vice President	None
L	Michael D. Cravotta	Assistant Vice President	None
	Joseph G. Cronin 1281 Fiore Drive Lake Forest, IL 60045	Vice President	None
	William F. Daugherty 1213 Redwood Hills Circle Carlisle, PA 17015	Vice President	None
	Guy E. Decker 2990 Topaz Lane Carmel, IN 46032	Vice President	None
	Daniel J. Delianedis Edina Executive Plaza 5200 Willson Road, Suite 150 Edina, MN 55424	Senior Vice President	None
L	James W. DeLouise	Assistant Vice President	None
	James A. DePerno, Jr. 1 Nehercrest Lane Orchard Park, NY 14127	Vice President	None
L	Bruce L. DePriester	Director, Senior Vice President, Treasurer and Controller	None
	Lori A. Deuberry 130 Aurora Street Hudson, OH 44236	Regional Vice President	None
L	Dianne M. Dexter	Assistant Vice President	None
	Thomas J. Dickson 108 Wilmington Court Southlake, TX 76092	Vice President	None
	Michael A. DiLella 22 Turner’s Lake Drive Mahwah, NJ 07430	Senior Vice President	None
	G. Michael Dill 505 E. Main Street Jenks, OK 74037	Senior Vice President	None
N	Dean M. Dolan	Vice President	None
L	Hedy B. Donahue	Assistant Vice President	None
L	Michael J. Downer	Director	None
	Craig A. Duglin 4170 Vanetta Drive Studio City, CA 91604	Regional Vice President	None
	Michael J. Dullaghan 5040 Plantation Grove Lane Roanoke, VA 24012	Vice President	None
I	Lloyd G. Edwards	Senior Vice President	None
	Timothy L. Ellis 1700 Lelia Drive, Suite 105 Jackson, MS 39216	Senior Vice President	None
	Kristopher A. Feldmeyer 787 Jackson Road Greenwood, IN 46142	Regional Vice President	None
L	Lorna Fitzgerald	Vice President	None
	William F. Flannery 29 Overlook Road Hopkinton, MA 01748	Regional Vice President	None
	John R. Fodor 15 Latisquama Road Southborough, MA 01772	Senior Vice President	None
L	Charles L. Freadhoff	Vice President	None
	Daniel B. Frick 845 Western Avenue Glen Ellyn, IL 60137	Vice President	None
L	Linda S. Gardner	Vice President	None
	Keith R. George 3835 East Turtle Hatch Road Springfield, MO 65809	Regional Vice President	None
L	J. Christopher Gies	Senior Vice President	None
B	Lori A. Giacomini	Assistant Vice President	None
L	David M. Givner	Secretary	None
B	Evelyn K. Glassford	Vice President	None
	Jack E. Goldin 3424 Belmont Terrace Davie, FL 33328	Regional Vice President	None
L	Earl C. Gottschalk	Vice President	None
	Jeffrey J. Greiner 8250-A Estates Parkway Plain City, OH 43064	Senior Vice President	None
	Eric M. Grey 601 Fisher Road N. Dartmouth, MA 02747	Regional Vice President	None
B	Steven Guida	Senior Vice President	None
B	Mariellen Hamann	Vice President	None
	Derek S. Hansen 13033 Ridgedale Drive, #147 Minnetonka, MN 55305	Vice President	None
	David E. Harper 5400 Russell Cave Road Lexington, KY 40511	Senior Vice President	None
	Calvin L. Harrelson, III 2048 Kings Manor Drive Weddington, NC 28104	Vice President	None
	Robert J. Hartig, Jr. 13563 Marjac Way McCordsville, IN 46055	Vice President	None
L	Linda M. Hines	Vice President	None
	Steven J. Hipsley 44 Tyler Drive Saratoga Springs, NY 12866	Regional Vice President	None
L	Russell K. Holliday	Vice President	None
	Heidi Horwitz 5 Christopher Hill Road Weston, CT 06883	Regional Vice President	None
L	Kevin B. Hughes	Vice President	None
	Ronald R. Hulsey 6202 Llano Dallas, TX 75214	Senior Vice President	None
	Marc Ialeggio 13 Prince Royal Passage Corte Madera, CA 94925	Regional Vice President	None
	Robert S. Irish 1225 Vista Del Mar Drive Delray Beach, FL 33483	Senior Vice President	None
L	Linda Johnson	Assistant Vice President	None
G1	Joanna F. Jonsson	Director	None
B	Damien M. Jordan	Senior Vice President	None
L	Marc J. Kaplan	Vice President	None
	John P. Keating 1576 Sandy Springs Dr. Orange Park, FL 32003	Senior Vice President	None
	Brian G. Kelly 76 Daybreak Road Southport, CT 06890	Regional Vice President	None
	Andrew J. Kilbride 3080 Tuscany Court Ann Arbor, MI 48103	Regional Vice President	None
N	Dorothy Klock	Vice President	None
	Dianne L. Koske 6 Black Oak Court Poquoson, VA 23662	Assistant Vice President	None
B	Elizabeth K. Koster	Vice President	None
	Christopher F. Lanzafame 19365 Lovall Valley Court Sonoma, CA 95476	Regional Vice President	None
	Patricia D. Lathrop 822 Monterey Blvd., NE St. Petersburg, FL 33704	Regional Vice President	None
	R. Andrew LeBlanc 78 Eton Road Garden City, NY 11530	Vice President	None
	T. Blake Liberty 5506 East Mineral Lane Littleton, CO 80122	Vice President	None
	Mark J. Lien 1103 Tulip Tree Lane West Des Moines, IA 50266	Vice President	None
L	Lorin E. Liesy	Vice President	None
I	Kelle Lindenberg	Assistant Vice President	None
	Louis K. Linquata 5214 Cass Street Omaha, NE 68132	Vice President	None
	Brendan T. Mahoney 1 Union Avenue, Suite One Sudbury, MA 01776	Vice President	None
	Nathan G. Mains 7711 S. Columbine Street Centennial, CO 80122	Regional Vice President	None
	Stephen A. Malbasa 13405 Lake Shore Blvd. Cleveland, OH 44110	Director, Senior Vice President	None
	Steven M. Markel 5241 South Race Street Greenwood Village, CO 80121	Senior Vice President	None
L	Paul R. Mayeda	Assistant Vice President	None
L	Eleanor P. Maynard	Vice President	None
L	Christopher McCarthy	Vice President	None
	James R. McCrary 28812 Crestridge Rancho Palos Verdes, CA 90275	Vice President	None
L	Will McKenna	Vice President	None
S	John V. McLaughlin	Senior Vice President	None
	Terry W. McNabb 2002 Barrett Station Road St. Louis, MO 63131	Senior Vice President	None
L	Katharine McRoskey	Vice President	None
	Scott M. Meade 41 South Road Rye Beach, NH 03871	Vice President	None
	Charles L. Mitsakos 3017 11^th Avenue West Seattle, WA 98119	Regional Vice President	None
	Monty L. Moncrief 55 Chandler Creek Court The Woodlands, TX 77381	Vice President	None
	David H. Morrison 7021 North Stratton Court Peoria, IL 61615	Regional Vice President	None
	Andrew J. Moscardini 832 Coldwater Creek Circle Niceville, FL 32578	Regional Vice President	None
L	Jack Nitowitz	Assistant Vice President	None
	William E. Noe 3600 Knollwood Road Nashville, TN 37215	Senior Vice President	None
L	Heidi J. Novaes	Vice President	None
	Eric P. Olson 27 Main Street, Suite 200 Topsfield, MA 01983	Senior Vice President	None
	Jeffrey A. Olson 2708 88^th St. Court, NW Gig Harbor, WA 98332	Regional Vice President	None
	Thomas A. O’Neil 4 Hillcrest Avenue Eastborough, KS 67208	Regional Vice President	None
	Michael W. Pak 13929 SE 92^nd Street Newcastle, WA 98059	Regional Vice President	None
	W. Burke Patterson, Jr. 1643 Richland Avenue Baton Rouge, LA 70808	Regional Vice President	None
	Gary A. Peace 291 Kaanapali Drive Napa, CA 94558	Vice President	None
	Samuel W. Perry 4340 East Indian School Road Suite 21 Phoenix, AZ 85018	Vice President	None
	Raleigh G. Peters 1439 Byrd Drive Berwyn, PA 19312	Regional Vice President	None
	David K. Petzke 4016 Saint Lucia Street Boulder, CO 80301	Senior Vice President	None
	Fredric Phillips 175 Highland Avenue, 4th Floor Needham, MA 02494	Senior Vice President	None
	John Pinto 226 Country Club Drive Lansdale, PA 19446	Regional Vice President	None
	Carl S. Platou 7455 80th Place, S.E. Mercer Island, WA 98040	Senior Vice President	None
	Charles R. Porcher One Glenlake Pkwy., Suite 700 Atlanta, GA 30328	Regional Vice President	None
S	Richard P. Prior	Vice President	None
	Mike Quinn 1035 Vintage Club Drive Duluth, GA 30097	Regional Vice President	None
	John W. Rankin 1725 Centennial Club Drive Conway, AR 72034	Regional Vice President	None
	Jennifer D. Rasner 11940 Baypoint Drive Burnsville, MN 55337	Regional Vice President	None
	James P. Rayburn 3108 Roxbury Road Homewood, AL 35209	Regional Vice President	None
	Mark S. Reischmann 4125 Hermitage Drive Colorado Springs, CO 80906	Regional Vice President	None
	Steven J. Reitman 212 The Lane Hinsdale, IL 60521	Senior Vice President	None
	Brian A. Roberts 209-A 60^th Street Virginia Beach, VA 23451	Vice President	None
	Jeffrey Robinson 7 Waterville Lane Shrewsbury, MA 01545	Regional Vice President	None
	Suzette M. Rothberg 4508 Shady Beach Circle Independence, MN 55359	Regional Vice President	None
L	James F. Rothenberg	Director	None
	Romolo D. Rottura 233 Glenhaven Court Swedesboro, NJ 08085	Vice President	None
	Douglas F. Rowe 414 Logan Ranch Road Georgetown, TX 78628	Senior Vice President	None
	William M. Ryan 1408 Cortland Drive Manasquan, NJ 08736	Regional Vice President	None
L	Dean B. Rydquist	Director, Senior Vice President, Chief Compliance Officer	None
	Richard A. Sabec, Jr. 6868 Meadow Glen Drive Westerville, OH 43082	Regional Vice President	None
	Richard R. Samson 4604 Glencoe Avenue, #4 Marina del Rey, CA 90292	Senior Vice President	None
	Paul V. Santoro 28 State Street, Suite 1100 Boston, MA 02109	Vice President	None
H	Diane Sawyer	Senior Vice President	None
	Joseph D. Scarpitti 31465 St. Andrews Westlake, OH 44145	Senior Vice President	None
	Shane D. Schofield 201 McIver Street Greenville, SC 29601	Vice President	None
L	David L. Schroeder	Assistant Vice President	None
	Mark A. Seaman 645 Baltimore Annapolis Blvd Suite 220 Severna Park, MD 21146	Vice President	None
S	Sherrie L. Senft	Vice President	None
	James J. Sewell III 415 East Holyoke Place Claremont, CA 91711	Regional Vice President	None
	Arthur M. Sgroi 76 Fields End Drive Glenmont, NY 12077	Regional Vice President	None
L	R. Michael Shanahan	Director	None
L	Michael J. Sheldon	Vice President	None
	Frederic J. Shipp 1352 Sanjo Farms Drive Chesapeake, VA 23320	Regional Vice President	None
	Daniel S. Shore 3734 North Greenview Avenue Chicago, IL 60613	Vice President	None
	Brad Short 1601 Seal Way Seal Beach, CA 90740	Vice President	None
	David W. Short 1000 RIDC Plaza, Suite 212 Pittsburgh, PA 15238	Chairman of the Board and Co-Chief Executive Officer	None
	Nathan W. Simmons 496 Dogwood Trail Quincy, FL 32352	Regional Vice President	None
	William P. Simon, Jr. 237 Lancaster Avenue, Suite 207 Devon, PA 19333	Director, Senior Vice President	None
L	Connie F. Sjursen	Vice President	None
	Jerry L. Slater 2216 38^th Place E. Seattle, WA 98112	Senior Vice President	None
LW	John H. Smet	Director	None
	Rodney G. Smith 15851 Dallas Parkway, Suite 500 Addison, TX 75001-6016	Senior Vice President	None
	J. Eric Snively 2548 Violet Street Glenview, IL 60025	Regional Vice President	None
	Anthony L. Soave 3780 Foxglove Court NE Grand Rapids, MI 49525	Vice President	None
L	Therese L. Soullier	Vice President	None
	Nicholas D. Spadaccini 855 Markley Woods Way Cincinnati, OH 45230	Senior Vice President	None
L	Kristen J. Spazafumo	Vice President	None
	Mark D. Steburg 12508 160^th Avenue Southeast Renton, WA 98059	Regional Vice President	None
	Michael P. Stern 213 Aptos Place Danville, CA 94526	Regional Vice President	None
	Brad Stillwagon 2438 Broadmeade Road Louisville, KY 40205	Vice President	None
	Thomas A. Stout 1004 Ditchley Road Virginia Beach, VA 23451	Vice President	None
	Craig R. Strauser 175 Berwick Lake Oswego, OR 97034	Senior Vice President	None
L	Libby J. Syth	Vice President	None
L	Drew W. Taylor	Assistant Vice President	None
L	Larry I. Thatt	Assistant Vice President	None
	Gary J. Thoma 401 Desnoyer Kaukauna, WI 54130	Vice President	None
	Cynthia M. Thompson 4 Franklin Way Ladera Ranch, CA 92694	Vice President	None
	David Tippets 15 Player Green Place The Woodlands, TX 77382	Regional Vice President	None
L	James P. Toomey	Vice President	None
I	Christopher E. Trede	Vice President	None
	George F. Truesdail 400 Abbotsford Court Charlotte, NC 28270	Senior Vice President	None
	Scott W. Ursin-Smith 103 E. Blithedale Avenue, Suite 1 Mill Valley, CA 94941	Senior Vice President	None
S	Cindy Vaquiax	Assistant Vice President	None
	J. David Viale 39 Old Course Drive Newport Beach, CA 92660	Senior Vice President	None
D	Bradley J. Vogt	Director	None
L	A. Jordan Wallens 1501 Maple Avenue, #602 Evanston, IL 60201	Regional Vice President	None
	Thomas E. Warren 119 Faubel St. Sarasota, FL 34242	Vice President	None
L	J. Kelly Webb	Senior Vice President	None
	Gregory J. Weimer 143 Redwood Drive Venetia, PA 15367	Director, Senior Vice President	None
B	Timothy W. Weiss	Director	None
SF	Gregory W. Wendt	Director	None
	George J. Wenzel 261 Barden Road Bloomfield Hills, MI 48304	Vice President	None
	Brian E. Whalen 4072 Yellow Ginger Glen Norcross, GA 30092	Regional Vice President	None
	William C. Whittington 11928 Sheldon Road Tampa, FL 33626	Regional Vice President	None
L	N. Dexter Williams, Jr.	Senior Vice President	None
L	Alan J. Wilson	Director	None
	Andrew L. Wilson 11163 Rich Meadow Drive Great Falls, VA 22066	Vice President	None
	Steven C. Wilson 7529 Summit Ridge Road Middleton, WI 53562	Regional Vice President	None
	Timothy J. Wilson 501 Valley Brook Road, Suite 204 McMurray, PA 15317	Senior Vice President	None
B	Laura L. Wimberly	Vice President	None
	Marshall D. Wingo Promenade Two, 25^th Floor 1230 Peachtree Street, N.E. Atlanta, GA 30309	Director, Senior Vice President	None
	Kurt A. Wuestenberg 975 Arboretum Drive Saline, MI 48176	Vice President	None
	William R. Yost 9463 Olympia Drive Eden Prairie, MN 55347	Senior Vice President	None
	Jason P. Young 11141 Whitetail Lane Olathe, KS 66061	Vice President	None
	Jonathan A. Young 2145 Hickory Forrest Chesapeake, VA 23322	Regional Vice President	None
	Scott D. Zambon 2178 Pieper Lane Tustin, CA 92782	Regional Vice President	None

__________

L	Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW	Business Address, 11100 Santa Monica Blvd., 15th Floor, Los Angeles, CA 90025
B	Business Address, 135 South State College Boulevard, Brea, CA 92821
S	Business Address, 3500 Wiseman Boulevard, San Antonio, TX 78251
SF	Business Address, One Market, Steuart Tower, Suite 1800, San Francisco, CA 94105-1016
H	Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I	Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
N	Business Address, 630 Fifth Avenue, 36^th Floor, New York, NY10111
D	Business Address, 3000 K Street N.W., Suite 230, Washington, DC 20007-5140
G1	Business Address, 3 Place des Bergues, 1201 Geneva, Switzerland

(c)

None

Item 28. Location of Accounts and Records

Accounts, books and other records required by Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as amended, are maintained and held in the offices of the Registrant's investment adviser, Capital Research and Management Company, 333 South Hope Street, Los Angeles, California 90071; 135 South State College Boulevard, Brea, California 92821; and/or 5300 Robin Hood Road, Norfolk, Virginia 23513.

Registrant's records covering shareholder accounts are maintained and kept by its transfer agent, American Funds Service Company, 135 South State College Boulevard, Brea, California 92821; 8332 Woodfield Crossing Boulevard, Indianapolis, Indiana 46240; 10001 North 92^nd Street, Suite 100, Scottsdale, Arizona 85258; 3500 Wiseman Boulevard, San Antonio, Texas 78251; and 5300 Robin Hood Road, Norfolk, Viriginia 23513.

Registrant's records covering portfolio transactions are maintained and kept by its custodian, JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017-2070.

Item 29. Management Services

None

Item 30. Undertakings

n/a

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Los Angeles, and State of California, on the 27th day of December, 2006.

CAPITAL INCOME BUILDER, INC.

By /s/ James B. Lovelace

(James B. Lovelace, Vice Chairman of the Board)

Pursuant to the requirements of the Securities Act of 1933, this amendment to Registration Statement has been signed below on December 27, 2006, by the following persons in the capacities indicated.

	Signature	Title
(1)	Principal Executive Officer:

	/s/ James B. Lovelace	Vice Chairman of the Board
	(James B. Lovelace)

(2)	Principal Financial Officer and Principal Accounting Officer

	/s/ Sheryl F. Johnson	Treasurer
	(Sheryl F. Johnson)
(3)	Directors:

	Joseph C. Berenato*	Director
	H. Frederick Christie*	Director
	Robert J. Denison*	Director
	Koichi Itoh*	Director
	Merit E. Janow*	Director
	Mary Myers Kauppila*	Chairman of the Board (Independent and Non-Executive)

	/s/ James B. Lovelace	Vice Chairman of the Board
	(James B. Lovelace)

	Gail L. Neale*	Director
	Robert J. O'Neill*	Director
	Donald E. Petersen*	Director
	Stefanie Powers*	Director
	Steadman Upham*	Director

	/s/ Catherine M. Ward	Director
	Catherine M. Ward

	Charles Wolf, Jr.*	Director

	*By /s/ Vincent P. Corti
	(Vincent P. Corti, pursuant to a power of attorney filed herewith)

Counsel represents that this amendment does not contain disclosures that would make the amendment ineligible for effectiveness under the provisions of rule 485(b).

/s/ Donald H. Rolfe

(Donald H. Rolfe)

POWER OF ATTORNEY

I, Joseph C. Berenato, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-	Fundamental Investors, Inc. (File No. 002-10760, File No. 811-00032)

-	The Growth Fund of America, Inc. (File No. 002-14728, File No. 811-00862)

-	The New Economy Fund (File No. 002-83848, File No. 811-03735)

-	SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

David A. Pritchett

Jeffrey P. Regal

each of them singularly, my true and lawful attorneys-in-fact, with full power of substitution, and with full power to each of them, to sign for me and in my name in the appropriate capacities, all Registration Statements of the Funds on Form N-1A, any and all subsequent Amendments, or Post-Effective Amendments to said Registration Statement on Form N-1A or any successor thereto, and any supplements or other instruments in connection therewith, and generally to do all such things in my name and behalf in connection therewith as said attorneys-in-fact deem necessary or appropriate, to comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940 as amended, and all related requirements of the U. S. Securities and Exchange Commission. I hereby ratify and confirm all that said attorneys-in-fact or their substitutes may do or cause to be done by virtue hereof.

EXECUTED at Rolling Hills, CA, this 5th day of July, 2006.

(City, State)

/s/ Joseph C. Berenato

Joseph C. Berenato, Board member

POWER OF ATTORNEY

I, H. Frederick Christie, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	AMCAP Fund, Inc. (File No. 002-26516, File No. 811-01435)

-	The American Funds Income Series - U.S. Government Securities Fund (File No. 002-98199,

File No. 811-04318)

-	American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-	The American Funds Tax-Exempt Series II - The Tax-Exempt Fund of California (File No. 033-06180, File No. 811-04694)

-	American High-Income Municipal Bond Fund, Inc. (File No. 033-80630, File No. 811-08576)

-	American High-Income Trust (File No. 033-17917, File No. 811-05364)

-	American Mutual Fund, Inc. (File No. 002-10607, File No. 811-00572)

-	The Bond Fund of America, Inc. (File No. 002-50700, File No. 811-02444)

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Bond Fund, Inc. (File No. 033-12447, File No. 811-05104)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-	The Cash Management Trust of America (File No. 002-47940, File No. 811-02380)

-	Intermediate Bond Fund of America (File No. 033-19514, File No. 811-05446)

-	Limited Term Tax-Exempt Bond Fund of America (File No. 033-66214, File No. 811-07888)

-	The New Economy Fund (File No. 002-83848, File No. 811-03735)

-	Short-Term Bond Fund of America, Inc. (File No. 333-135770, File No. 811-21928)

-	SMALLCAP World Fund, Inc. (File No. 033-32785, File No. 811-05888)

-	The Tax-Exempt Bond Fund of America, Inc. (File No. 002-49291, File No. 811-02421)

-	The Tax-Exempt Money Fund of America (File No. 033-26431, File No. 811-05750)

-	The U.S. Treasury Money Fund of America (File No. 033-38475, File No. 811-06235)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Karl C. Grauman

Sheryl F. Johnson

Sharon G. Moseley

David A. Pritchett

Jeffrey P. Regal

Susi M. Silverman

Ari M. Vinocor

EXECUTED at Los Angeles, CA this 21^st day of September, 2006.

(City, State)

/s/ H. Frederick Christie

H. Frederick Christie, Board member

POWER OF ATTORNEY

I, Robert J. Denison, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund (File No. 033-54444, File No. 811-07338)

-	Endowments (File No. 002-34371, File No. 811-01884)

-	Fundamental Investors, Inc. (File No. 002-10760, File No. 811-00032)

-	The Growth Fund of America, Inc. (File No. 002-14728, File No. 811-00862)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

Susi M. Silverman

EXECUTED at Santa Fe, NM, this 6th day of July, 2006.

(City, State)

/s/ Robert J. Denison

Robert J. Denison, Board member

POWER OF ATTORNEY

I, Koichi Itoh, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-	EuroPacific Growth Fund (File No. 002-83847, File No. 811-03734)

-	New Perspective Fund, Inc. (File No. 002-47749, File No. 811-02333)

-	New World Fund, Inc. (File No. 333-67455, File No. 811-09105)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

R. Marcia Gould

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Tokyo, Japan, this 6th day of July, 2006.

(City, State)

/s/ Koichi Itoh

Koichi Itoh, Board member

POWER OF ATTORNEY

I, Merit E. Janow, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at New York, NY, this 6th day of July, 2006.

(City, State)

/s/ Merit E. Janow

Merit E. Janow, Board member

POWER OF ATTORNEY

I, Mary Myers Kauppila, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	AMCAP Fund, Inc. (File No. 002-26516, File No. 811-01435)

-	American Funds Insurance Series (File No. 002-86838, File No. 811-03857)

-	American Mutual Fund, Inc. (File No. 002-10607, File No. 811-00572)

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Karl C. Grauman

Sheryl F. Johnson

David A. Pritchett

Jeffrey P. Regal

EXECUTED at Boston, MA, this 5th day of July, 2006.

(City, State)

/s/ Mary Myers Kauppila

Mary Myers Kauppila, Board member

POWER OF ATTORNEY

I, Gail L. Neale, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

-	Endowments (File No. 002-34371, File No. 811-01884)

-	Fundamental Investors, Inc. (File No. 002-10760, File No. 811-00032)

-	The Growth Fund of America, Inc. (File No. 002-14728, File No. 811-00862)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

Susi M. Silverman

EXECUTED at Burlington, VT, this 5th day of July, 2006.

(City, State)

/s/ Gail L. Neale

Gail L. Neale, Board member

POWER OF ATTORNEY

I, Robert J. O’Neill, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Rylstone, NSW, Australia, this 7th day of July, 2006.

(City, State)

/s/ Robert J. O’Neill

Robert J. O’Neill, Board member

POWER OF ATTORNEY

I, Donald E. Petersen, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Birmingham, MI, this 6th day of July, 2006.

(City, State)

/s/ Donald E. Petersen

Donald E. Petersen, Board member

POWER OF ATTORNEY

I, Stefanie Powers, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Los Angeles, CA, this 19^th day of September, 2006.

(City, State)

/s/ Stefanie Powers

Stefanie Powers, Board member

POWER OF ATTORNEY

I, Steadman Upham, the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Tulsa, OK , this 28th day of July, 2006.

(City, State)

/s/ Steadman Upham

Steadman Upham, Board member

POWER OF ATTORNEY

I, Charles Wolf, Jr., the undersigned Board member of the following registered investment companies (collectively, the “Funds”):

-	Capital Income Builder, Inc. (File No. 033-12967, File No. 811-05085)

-	Capital World Growth and Income Fund, Inc. (File No. 033-54444, File No. 811-07338)

hereby revoke all previous powers of attorney I have signed and otherwise act in my name and behalf in matters involving the Funds and do hereby constitute and appoint

Vincent P. Corti

Chad L. Norton

Patrick F. Quan

Kimberly S. Verdick

Steven I. Koszalka

Sheryl F. Johnson

Jeffrey P. Regal

EXECUTED at Los Angeles, CA, this 6th day of July, 2006.

(City, State)

/s/ Charles Wolf, Jr.

Charles Wolf, Jr., Board member