MARKED TO SHOW CHANGES
                                                     SEC. File Nos. 2-12967
                                                                   811-5085
                                                                             
                   SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
   
                                FORM N-1A
                         Registration Statement
                                 Under
                       the Securities Act of 1933
                     Post-Effective Amendment No. 13
                                  and
                         Registration Statement
                                 Under
                  The Investment Company Act of 1940
                         Amendment No. 15    
 
                    CAPITAL  INCOME  BUILDER,  INC.
         (Exact Name of Registrant as specified in charter)
                       333 South Hope Street
                    Los Angeles, California 90071
               (Address of principal executive offices)
 
       Registrant's telephone number, including area code:
                          (213) 486-9200
 
                         Vincent P. Corti
            Capital Research and Management Company
                      333 South Hope Street
                   Los Angeles, California 90071
              (name and address of agent for service)
 
                           Copies to:
                 MICHAEL  J. FAIRCLOUGH, ESQ.
                    O'Melveny & Myers LLP
                    400 South Hope Street
                Los Angeles, California  90071
                 (Counsel for the Registrant)
   
          Approximate date of proposed public offering:
It is proposed that this filing become effective on January 1, 1999, pursuant
to paragraph (a)(1) of rule 485.    
 
<PAGE>
CAPITAL INCOME BUILDER, INC.
CROSS REFERENCE SHEET
 
<TABLE>
<CAPTION>
        ITEM NUMBER OF                                CAPTIONS IN PROSPECTUS           
        PART "A" OF FORM N-1A                         (PART "A")                       
 
<S>     <C>                                           <C>                              
                                                                                       
 
1.      Front and Back Cover Pages                    Front and Back Cover Pages       
 
2.      Risk/Return Summary:  Investments,            Risk/Return Summary              
        Risks and Performance                                                          
 
3.      Risk/Return Summary:  Fee Table               Risk/Return Summary              
 
4.      Investment Objectives, Principal              Investment Objectives,           
        Investment Strategies, and Related            Principal Investment             
        Risks                                         Strategies and Related           
                                                      Risks                            
 
5.      Management's Discussion of Fund               N/A                              
        Performance                                                                    
 
6.      Management, Organization, and Capital         Management and                   
        Structure                                     Organization                     
 
7.      Shareholder Information                       Shareholder Information          
 
8.      Distribution Arrangements                     Distribution Arrangements        
 
9.      Financial Highlights Information              Financial Highlights             
 
</TABLE>
 
 
<TABLE>
<CAPTION>
        ITEM NUMBER OF                                CAPTIONS IN STATEMENT OF         
        PART "B" OF FORM N-1A                         ADDITIONAL INFORMATION           
                                                      (PART "B")                       
 
<S>     <C>                                           <C>                              
                                                                                       
 
10.     Cover Page and Table of Contents              Cover Page and Table of          
                                                      Contents                         
 
11.     Fund History                                  Fund Organization                
 
12.     Description of the Fund and its               Fund Organization;               
        Investments and Risks                         Investment Restrictions;         
                                                      Certain Investment               
                                                      Limitations; Description         
                                                      of Securities and                
                                                      Investment Techniques            
 
13.     Management of the Fund                        Management; Fund Directors       
                                                      and Officers                     
 
14.     Control Persons and Principal Holders         N/A                              
        of Securities                                                                  
 
15.     Investment Advisory and Other Services        Management; General              
                                                      Information; Fund                
                                                      Directors and Officers           
 
16.     Brokerage Allocation and Other                Management; Execution of         
        Practices                                     Portfolio Transactions           
 
17.     Capital Stock and Other Securities            None                             
 
18.     Purchase, Redemption and Pricing of           Purchase of Shares;              
        Shares                                        Selling Shares;                  
                                                      Shareholder Account              
                                                      Services and Privileges;         
                                                      General Information              
 
19.     Taxation of the Fund                          Dividends, Distributions         
                                                      and Federal Taxes                
 
20.     Underwriters                                  Management                       
 
21.     Calculation of Performance Data               Investment Results and           
                                                      Related Statistics               
 
22.     Financial Statements                          Financial Statements             
 
</TABLE>
 
 
<TABLE>
<CAPTION>
        ITEM IN PART "C"                            
 
<S>     <C>                                         
                                                    
 
23.     Exhibits                                    
 
24.     Persons Controlled by or under              
        Common                                      
        Control with the Fund                       
 
25.     Indemnification                             
 
26.     Business and Other Connections of           
        the Investment Adviser                      
 
27.     Principal Underwriters                      
 
28.     Location of Accounts and Records            
 
29.     Management Services                         
 
30.     Undertakings                                
 
        Signature Page                              
 
</TABLE>
<PAGE>
   
 
                             CAPITAL INCOME BUILDER
 
 
                                   PROSPECTUS
 
                                JANUARY 1, 1999
 
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPRROVED OR DISAPPROVED  OF
THESE SECURITIES.  FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE.   ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
 
CAPITAL INCOME BUILDER, INC.
333 South Hope Street
Los Angeles, CA  90071
 
TICKER SYMBOL: CAIBX NEWSPAPER ABBREV.: CapIB FUND NO.: 12
 
TABLE OF CONTENTS
 
Risk/Return Summary 1
Fees and Expenses of the Fund 1
Investment Objective, Strategies and Risks 1
Important Recent Developments 1
Management and Organization 1
Shareholder Information 1
Purchase and Exchange of Shares
Distribution Arrangements 1
Financial Highlights 1
 
RISK/RETURN SUMMARY
 
The fund primarily seeks to provide you with above-average current income and
to make your income grow over time.   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 up to 40% of its assets in
issuers domiciled outside the U.S.
 
The fund is designed for investors seeking current income and capital
appreciation through a mix of investments that provide above-average price
stability.  An investment in the fund is subject to various risks, including
the possibility that its share price and total return may decline in response
to certain events, such as changes in the market or general economy.  The
prices of equity securities held by the fund may be affected by events
involving the issuers of these securities.  The value of debt securities may be
affected by changing interest rates and credit ratings.  In addition, the
prices of non-U.S. securities can decline in response to various factors,
including currency fluctuations and political, social and economic instability. 
Accordingly, you may lose money by investing in the fund.  The likelihood of
loss is greater if you invest for a shorter period of time.
 
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 entity or
person.  
 
INVESTMENT RESULTS
 
The following information illustrates how fund results may vary:
Here are the fund's results calculated without a sales charge on a calendar
year basis.  (If a sales charge were included, results would be lower.)
 
 
[begin bar chart]
1989  22.99
1990  -3.03
1991  23.78
1992  12.03
1993  14.01
1994  -2.50
1995  29.08
1996  15.23
1997  22.16
1998
[end bar chart]
 
1 THE FUND'S YEAR-TO-DATE RETURN FOR THE NINE MONTHS ENDED OCTOBER 31, 1998 WAS
___%.
 
 
The fund's highest/lowest quarterly results during this time period were:
 
- HIGHEST  xx.xx%  (quarter ended xx, 19xx)
- LOWEST   xx.xx%  (quarter ended xx, 19xx)
 
For periods ended December 31, 1997:
 
<TABLE>
<CAPTION>
<S>                               <C>                   <C>                
AVERAGE ANNUAL                    THE FUND              S&P 500/2/         
TOTAL RETURN                      INCLUDING                                
                                  MAXIMUM SALES                            
                                  CHARGE/1/                                
 
One Year                          xx.xx%                xx.xx%             
 
Five Years                        xx.xx%                xx.xx%             
 
Ten Years                         xx.xx%                xx.xx%             
 
Lifetime/3/                       xx.xx%                xx.xx%             
 
</TABLE>
 
Yield/1/: x.xx%
 
(For current yield information call American FundsLine(R) at 1-800-325-3590)
  
/1/ THESE FUND RESULTS WERE CALCULATED ACCORDING TO A STANDARD FORMULA WHICH
REQUIRES THAT THE MAXIMUM SALES CHARGE BE DEDUCTED.  RESULTS WOULD BE HIGHER IF
THEY WERE CALCULATED AT NET ASSET VALUE.
 
/2/ THE STANDARD & POOR'S 500 INDEX REPRESENTS STOCKS.  THIS INDEX IS UNMANAGED
AND DOES NOT REFLECT SALES CHARGES, COMMISSIONS OR EXPENSES.
 
/3/ THE FUND BEGAN INVESTMENT OPERATIONS ON JULY 30, 1987.
 
These results are meant to illustrate the potential fluctuations on the fund's
results over shorter periods of time.
 
Past results are not an indication of future results.
 
FEES AND EXPENSES OF THE FUND
 
THE FOLLOWING DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUND.
 
SHAREHOLDER FEES
 (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
 
Maximum sales charge imposed on purchases
(AS A PERCENTAGE OF OFFERING PRICE)      5.75% /1/
Maximum sales charge imposed on reinvested dividends      0%
Maximum deferred sales charge        0% /2/
Redemption or exchange fees        0%
 
/1/ Sales charges are reduced or eliminated for larger purchases.
 
/2/ A contingent deferred sales charge of 1% applies on certain redemptions
made within 12 months following any purchases you made without a sales charge.
 
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM THE FUND ASSETS)
 
<TABLE>
<CAPTION>
<S>                                                        <C>                 
Management Fees                                            0.00%               
 
Service (12b-1) Fees                                       0.00%*              
 
Other Expenses                                             0.00%               
 
</TABLE>
 
Total Annual Fund Operating Expenses       0.00%
 
*12B-1 EXPENSES MAY NOT EXCEED 0.30% OF THE FUND'S AVERAGE NET ASSETS ANNUALLY.
EXAMPLE
 
This Example 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 and then redeem all of your shares at the end of those periods.  The
Example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same.  Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
 
<TABLE>
<CAPTION>
<S>                                                        <C>                 
One Year                                                   $xx                 
 
Three Years                                                $xx                 
 
Five Years                                                 $xx                 
 
Ten Years                                                  $xx                 
 
                                                           $xx                 
 
</TABLE>
 
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
 
The fund has two primary investment objectives -- 1) to provide you with a
level of current income which 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 and may invest significantly in securities of
issuers domiciled outside the U.S. 
 
The fund, normally will invest at least 90% of its assets in income-producing
securities (with at least 50% of its assets in common stocks).  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, or overall market
declines.  The value of debt securities held by the fund generally will decline
when interest rates rise.  In addition, the values of these securities may be
affected by other factors such as changes to the credit ratings of their
issuers.  The fund may also invest up to 40% of its assets in non-U.S.
securities.  The prices of non-U.S. securities can decline in response to
currency fluctuations, political, social and economic instability, differing
securities regulations, and administrative difficulties such as delays in
clearing and settling portfolio transactions.  The fund may also invest in cash
and cash equivalents.  The extent of the fund's cash position will be dependent
on market conditions, fund purchases and redemptions, and other factors.  For
example, under certain circumstances, in response to abnormal market
conditions, the fund may be invested substantially in cash or cash equivalents. 
This may detract from achievement of the fund's objectives over the short-term
or it may protect the fund during a market downturn.
 
The fund relies on the professional judgment of its investment adviser, Capital
Research and Management Company to make decisions about the fund's portfolio
securities.  The basic investment philosophy of Capital Research and Management
Company is to seek values at reasonable prices. 
 
THE FOLLOWING CHART ILLUSTRATES THE QUALITY RATINGS OF THE VARIOUS BONDS HELD
IN THE  PORTFOLIO AS OF THE END OF THE FUND'S FISCAL YEAR, OCTOBER 31, 1998.
 
Asset Mix [pie chart]
Largest Industry Holdings [table]
Largest Individual Equity Holdings [table]
 
BECAUSE THE FUND IS ACTIVELY MANAGED, ITS HOLDINGS WILL CHANGE FROM TIME TO
TIME.
 
IMPORTANT RECENT DEVELOPMENTS
 
YEAR 2000
 
The date-related computer issue known as the "Year 2000 problem" could have an
adverse impact on the quality of services provided to the fund and its
shareholders.  However, the fund understands that its key service
providers--including the investment adviser and its affiliates--are taking
steps to address the issue.  In addition, the Year 2000 problem may adversely
affect the issuers in which the fund invests.  For example, issuers may incur
substantial costs to address the problem.  They may also suffer losses caused
by corporate and governmental data processing errors.  The fund and its
investment adviser will continue to monitor developments relating to this
issue.
 
EURO INTRODUCTION
 
On January 1, 1999, the European Union will introduce a single European
currency, the Euro.  The first group of countries that will begin to convert
their currencies to the Euro include Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.  The
expected introduction of the Euro presents unique uncertainties, including: 
whether the payment and operational systems of banks and other financial
institutions will be ready by the scheduled launch date; the legal treatment of
certain outstanding financial contracts after January 1, 1999 that refer to
existing currencies rather than the Euro; and the creation of suitable clearing
and settlement payment systems for the new currency.  These or other factors,
including political and economic risks, could cause market disruptions before
or after the introduction of the  Euro.  The fund understandings that the
investment adviser and other key service providers are taking steps to address
Euro-related issues.
 
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 those in The American Funds Group.  Capital Research and
Management Company, a wholly owned subsidiary of The Capital Group Companies,
Inc., is headquartered at 333 South Hope Street, Los Angeles, CA  90071. 
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 is discussed
earlier under "Fees and Expenses." 
 
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's code of ethics.
 
MULTIPLE PORTFOLIO COUNSELOR SYSTEM 
 
Capital Research and Management Company uses a system of multiple portfolio
counselors in managing mutual fund assets. Under this system the portfolio of a
fund is divided into segments which are managed by individual counselors.
Counselors decide how their respective segments will be invested (within the
limits provided by a fund's objective(s) and policies and by Capital Research
and Management Company's investment committee).  In addition, Capital Research
and Management Company's research professionals may make investment decisions
with respect to a portion of a fund's portfolio. The primary individual
portfolio counselors for Capital Income Builder are listed on the following
page.  
 
<TABLE>
<CAPTION>
<S>                    <C>                <C>                   <C>                  <C>                          
                                                                YEARS OF EXPERIENCE AS AN INVESTMENT                                
                                                                PROFESSIONAL (INCLUDING THE LAST 5                                
                                                                YEARS)                                            
 
PORTFOLIO              PRIMARY            YEARS OF              WITH CAPITAL         TOTAL YEARS                  
COUNSELORS FOR         TITLE(S)           EXPERIENCE            RESEARCH AND                                      
CAPITAL INCOME                            AS PORTFOLIO          MANAGEMENT                                        
BUILDER                                   COUNSELOR             COMPANY OR                                        
                                          (AND RESEARCH         ITS                                               
                                          PROFESSIONAL,         AFFILIATES                                        
                                          IF                                                                      
                                          APPLICABLE)                                                             
                                          FOR CAPITAL                                                             
                                          INCOME                                                                  
                                          BUILDER                                                                 
                                          (APPROXIMATE)                                                           
 
James B.               President          9 years               16 years             16 years                     
Lovelace               and                                                                                        
                       Director of                                                                                
                       the fund;                                                                                  
                       Senior Vice                                                                                
                       President,                                                                                 
                       Capital                                                                                    
                       Research                                                                                   
                       and                                                                                        
                       Management                                                                                 
                       Company                                                                                    
 
Jon B.                 Vice               10 years              46 years             46 years                     
Lovelace               Chairman of        (since the                                                              
                       the Board          fund began                                                              
                       of the             operations)                                                             
                       fund; Vice                                                                                 
                       Chairman of                                                                                
                       the Board,                                                                                 
                       Capital                                                                                    
                       Research                                                                                   
                       and                                                                                        
                       Management                                                                                 
                       Company                                                                                    
 
Janet A.               Senior Vice        10 years              16 years             22 years                     
McKinley               President          (since the                                                              
                       of the             fund began                                                              
                       fund;              operations)                                                             
                       Director,                                                                                  
                       Capital                                                                                    
                       Research                                                                                   
                       and                                                                                        
                       Management                                                                                 
                       Company                                                                                    
 
William R.             Senior Vice        10 years              28 years             35 years                     
Grimsley               President          (since the                                                              
                       and                fund began                                                              
                       Director,          operations)                                                             
                       Capital                                                                                    
                       Research                                                                                   
                       and                                                                                        
                       Management                                                                                 
                       Company                                                                                    
 
Thierry                Director,          10 years              35 years             35 years                     
Vandeventer            Capital            (since the                                                              
                       Research           fund began                                                              
                       and                operations)                                                             
                       Management                                                                                 
                       Company                                                                                    
 
</TABLE>
 
SHAREHOLDER INFORMATION
 
American Funds Service Company, the fund's transfer agent, offers you a wide
range of services you can use to alter your investment program should your
needs and circumstances change.  These services are available only in states
where they may be legally offered and 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
 
                     (Map of the United States of America)
 
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 a.m. to 8 p.m. ET):
800/421-0180
 
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax:  714/671-7080
 
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax:  210/474-4050
 
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
Fax:  317/735-6620
 
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax:  757/670-4773
 
A COMPLETE DESCRIPTION OF THE SERVICES WE OFFER ARE DESCRIBED IN THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION. In addition, an easy-to-read guide to
owning a fund in The American Funds Group titled "Welcome to the Family" is
sent to new shareholders and is available by writing or calling American Funds
Service Company. 
 
You may invest in the fund through various retirement plans.  However, some
retirement plans or accounts held by investment dealers may not offer certain
services. If you have any questions, please contact your plan
administrator/trustee or dealer.
 
PURCHASE AND EXCHANGE OF SHARES
 
PURCHASE
 
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares.  You may purchase additional shares using
various options described in the statement of additional information and
"Welcome to the Family."
 
EXCHANGE
 
You may exchange your shares into other funds in The American Funds Group
generally without a sales charge.  Exchange of shares from the money market
funds initially purchased without a sales charge generally will be subject to
the appropriate sales charge.  Exchanges have the same tax consequences as
ordinary sales and purchases.  See "Transactions by Telephone..." for
information regarding electronic exchanges.
 
THE FUND AND AMERICAN FUNDS DISTRIBUTORS, THE FUND'S PRINCIPAL UNDERWRITER,
RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER FOR ANY REASON.  ALTHOUGH THERE
IS CURRENTLY NO SPECIFIC LIMIT ON THE NUMBER OF EXCHANGES YOU CAN MAKE IN A
PERIOD OF TIME, THE FUND AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER AND MAY TERMINATE THE EXCHANGE PRIVILEGE OF ANY
INVESTOR WHOSE PATTERN OF EXCHANGE ACTIVITY THEY HAVE DETERMINED INVOLVES
ACTUAL OR POTENTIAL HARM TO THE FUND.
 
INVESTMENT MINIMUMS
 
To establish an account        $ 1,000
 For a retirement plan account      $  250
 For a retirement plan account through payroll deduction   $  25
 
To add to an account        $  50
 For a retirement plan account through payroll deduction   $  25
 
SHARE PRICE
 
The fund calculates its share price, also called net asset value, as of 4:00
p.m. New York time which is the normal close of trading on the New York Stock
Exchange, every day the Exchange is open. In calculating net asset value,
market prices are used when available. If a market price for a particular
security is not available, the fund will determine the appropriate price for
the security.
 
Your shares will be purchased at the offering price, or sold at the net asset
value, next determined after American Funds Service Company receives and
accepts your request.  The offering price is the net asset value plus a sales
charge, if applicable.
 
SALES CHARGE
 
A sales charge may apply to your purchase.  Your sales charge may be reduced
for larger purchases as indicated below.
 
<TABLE>
<CAPTION>
<S>                       <C>                   <C>                  <C>             
                          Sales Charge as a Percentage of                                        
 
INVESTMENT                OFFERING              NET                  DEALER          
                          PRICE                 AMOUNT               CONCESSION      
                                                INVESTED             AS % OF         
                                                                     OFFERING        
                                                                     PRICE           
 
Less than $50,000         5.75%                 6.10%                5.00%           
 
$50,000 but less          4.50%                 4.71%                3.75%           
than $100,000                                                                        
 
$100,000 but less         3.50%                 3.63%                2.75%           
than $250,000                                                                        
 
$250,000 but less         2.50%                 2.56%                2.00%           
than $500,000                                                                        
 
$500,000 but less         2.00%                 2.04%                1.60%           
$1 million                                                                           
 
$1 million or more        see below             see below            see below       
and certain other                                                                    
investments                                                                          
described below                                                                      
 
</TABLE>
 
PURCHASES NOT SUBJECT TO SALES CHARGE 
 
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 100 or more eligible employees are sold
with no initial sales charge.  A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS BY THESE ACCOUNTS MADE WITHIN ONE YEAR OF
PURCHASE. A dealer concession of up to 1% may be paid by the fund under its
Plan of Distribution and/or by American funds Distributors on investments made
with no initial sales charge.
 
REDUCING YOUR SALES CHARGE
 
You and your immediate family may combine investments to reduce your sales
charge. You must let your investment dealer or American Funds Service Company
know if you qualify for a reduction in your sales charge using one or any
combination of the methods described in the statement of additional information
and "Welcome to the Family."
 
PLAN OF DISTRIBUTION
 
The fund has a Plan of Distribution or "12b-1 Plan" 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.  Up to 0.30%
of average net assets is paid annually to qualified dealers for providing
certain services pursuant to the fund's Plan of Distribution.  The 12b-1 fee
paid by the fund, as a percentage of average net assets, fund for the previous
fiscal year is indicated earlier under "Fees and Expenses of the Fund."  Since
these fees are paid out of the fund's assets on an ongoing basis, over time
they will increase the cost of an investment and may cost you more than paying
higher initial sales charges.
 
OTHER COMPENSATION TO DEALERS
 
American Funds Distributors may provide additional compensation to, or sponsor
informational meetings for dealers as described in the statement of additional
information.
 
HOW TO SELL SHARES
 
Once a sufficient period of time has passed to reasonably assure that checks or
drafts (including certified or cashiers' checks) for shares purchased have
cleared (normally 15 calendar days), you may sell (redeem) those shares in any
of the following ways:
 
THROUGH YOUR DEALER (CERTAIN CHARGES MAY APPLY)
 
-  Shares held for you in your dealer's name must be sold through the dealer.
 
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 $50,000;
   --- Made payable to someone other than the registered shareholder(s); or
   --- Sent to an address other than the address of record, or an address of
record which has been changed within the last 10 days.
-  Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
 
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(R):
 
-  Redemptions by telephone or fax (including American FundsLine(r) and
American FundsLine OnLine(r)) are limited to $50,000 per 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
 
TRANSACTIONS BY TELEPHONE, FAX, AMERICAN FUNDSLINE(R), OR AMERICAN FUNDSLINE
ONLINE(R)
 
Generally, you are automatically eligible to use these services for redemptions
and exchanges 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 computer 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 attorney fees) which 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, the fund may be liable
for losses due to unauthorized or fradulent instructions.
 
DISTRIBUTION ARRANGEMENTS 
 
DIVIDENDS AND DISTRIBUTIONS 
 
The fund intends to pay dividends to you, usually  in March, June, September
and December.  All capital gains, if any, are usually distributed in December.
When a dividend or 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 any other fund in The American Funds
Group or you may elect to receive them in cash.
 
FEDERAL TAX CONSEQUENCES
 
Dividends and capital gains are taxable whether they are reinvested or received
in cash -- unless you are exempt from taxation or entitled to tax deferral. 
Capital gains may be taxed at different rates depending on the length of time
the fund holds its assets.
 
 The tax treatment of redemptions from a retirement plan account may differ
from redemptions from an ordinary shareholder account. 
 
You must provide the fund with a certified correct taxpayer identification
number (generally your Social Security Number) and certify that you are not
subject to backup withholding. If you fail to do so, the IRS can require the
fund to withhold 31% of your taxable distributions and redemptions.  Federal
law also requires the fund to withhold 30% or the applicable tax treaty rate
from dividends paid to certain nonresident alien, non-U.S. partnership and
non-U.S. corporation shareholder accounts. 
 
Please see the statement of additional information, "Welcome to the Family," 
and your tax adviser for further information. 
            
FINANCIAL HIGHLIGHTS 
 
The financial highlights table is intended to help you understand the fund's
results for the past five years.  Certain information reflects financial
results for a single fund 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 distributions).  This information
has been audited by PriceWaterhouseCoopers LLP, whose report, along with the
fund's financial statements, are included in the statement of additional
information, which is available upon request.
 
YEAR ENDED OCTOBER 31
                          1997      1996      1995      1994
Net asset value,
beginning of year       $39.70    $36.27    $32.68    $34.42
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income                    1.74      1.95      1.69      1.73
Net realized gain
and change in unrealized
appreciation on
investments               7.20      3.92      3.69     (1.62)
Total from
investment
operations                8.94      5.87      5.38       .11
LESS DISTRIBUTIONS:
Dividends from net
investment income        (1.77)    (1.94)    (1.69)    (1.73)
Distributions from
capital gains             (.73)     (.50)     (.10)     (.12)
Total distributions      (2.50)    (2.44)    (1.79)    (1.85)
Net asset value,
end of year              $46.14    $39.70    $36.27    $32.68
Total return(1)          23.16%    16.76%    16.98%      .47%
RATIOS/SUPPLEMENTAL
DATA:
Net assets,
end of year              $7,301    $5,418    $4,533    $3,629
Ratio of expenses to
average net assets         .65%      .71%      .72%      .73%
Ratio of net income
to average net
assets                    4.04%     5.19%     4.96%     5.29%
Portfolio turnover
rate                     27.65%    27.56%    18.06%    36.19%
 
(1) Excludes maximum sales charge of 5.75%.
 
FOR SHAREHOLDER         FOR RETIREMENT PLAN       FOR DEALER
SERVICES                SERVICES                  SERVICES
 
American Funds          Call your employer or     American Funds 
Service Company         plan administrator        Distributors
800/421-0180 ext.1      800/421-9900 ext.11
 
    FOR 24-HOUR INFORMATION
 American               American Funds
 FundsLine(r)           Internet Web site
 800/325-3590           http://www.americanfunds.com
 
Telephone conversations may be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
 
MULTIPLE TRANSLATIONS
This prospectus may be translated into other languages.  If there are  any
inconsistencies or ambiguities,, the English text will prevail.
 
OTHER FUND INFORMATION
 
ANNUAL/SEMI-ANNUAL REPORT TO SHAREHOLDERS 
 
Contains additional information about the fund including financial statements,
investments results, portfolio holdings, a statement from portfolio management
discussing market conditions and the fund's investment strategies, and the
independent accountants' report (in the annual report).
 
STATEMENT OF ADDITIONAL INFORMATION (SAI)
 
Contains more detailed information on all aspects of the fund, including the
fund's financial statements.
 
A current SAI has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this prospectus.  The SAI and
other related materials about the fund are available for review or to be copied
at the SEC's Public Reference Room (1-800-SEC-0330) or on the SEC's Internet
Web site at http://www.sec.gov.
 
CODE OF ETHICS
 
Includes a description of the fund's personal investing policy.
To request a free copy of any of the documents above:
 
 Call American Funds  or Write to the Secretary of the fund
 Service Company  333 South Hope Street
 800/421-0180   ext.1  Los Angeles, CA  90071
 
Investment Company File No. 811-5085
    
<PAGE>
                        CAPITAL  INCOME  BUILDER,  INC.
                                    Part B
                     Statement of Additional Information
   
                                JANUARY 2, 1999    
   
This document is not a prospectus but should be read in conjunction with the
current Prospectus of Capital Income Builder, Inc. (the fund or CIB) dated
January 2, 1999.  The Prospectus may be obtained from your investment dealer or
financial planner or by writing to the fund at the following address:    
 
Capital Income Builder, Inc.
Attention:  Secretary
333 South Hope Street
Los Angeles, CA  90071
(213) 486-9200
 
Shareholders who purchase shares at net asset value through eligible retirement
plans should note that not all of the services or features described below may
be available to them, and they should contact their employer for details.
 
                               TABLE OF CONTENTS
   
ITEM                                                              PAGE NO.
Certain Investment Limitations and Guidelines                     2
Description of Certain Securities and Investment Techniques       2
Investment Restrictions                                           7
Fund Organization and Voting Rights                               9
Fund Directors and Officers                                       10
Management                                                        14
Dividends, Distributions and Federal Taxes                        17
Purchase of Shares                                                19
Selling Shares                                                    25
Shareholder Account Services and Privileges                       27
Execution of Portfolio Transactions                               29
General Information                                               30
Investment Results and Related Statistics                         31
Description of Commercial Paper and Bond Ratings                  35
Financial Statements                                              Attached
    
   
                 CERTAIN INVESTMENT LIMITATIONS AND GUIDELINES
 
 The following limitations and guidelines are considered at the time of
purchase, under normal market conditions, 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.    
   
OBJECTIVE
 
- 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 common stocks.    
   
DEBT SECURITIES
 
- The fund may invest up to 5% of fixed-income securities rated below Baa/BBB
or unrated but determined to be of equivalent quality.    
   
NON-U.S. SECURITIES
 
- The fund may invest up to 40% of assets in issuers domiciled outside the
U.S.    
   
          DESCRIPTION OF CERTAIN SECURITIES AND INVESTMENT TECHNIQUES    
 
THE DESCRIPTIONS BELOW ARE INTENDED TO SUPPLEMENT THE MATERIAL IN THE
PROSPECTUS UNDER "INVESTMENT POLICIES AND RISKS."
   
DEBT SECURITIES -- Bonds and other debt securities are used by issuers to
borrow money. Issuers pay investors interest, and must repay the amount
borrowed 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.    
    
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality and maturity. In general their prices decline when
interest rates rise and vice versa.    
    
The fund may invest up to 5% of its total assets in debt securities rated Ba
and BB or below by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or in unrated securities that are determined to be of equivalent
quality. These securities are commonly known as "high-yield, high-risk" or
"junk" bonds. The market prices of these securities may fluctuate more than
higher-quality securities and may decline significantly in periods of general
economic difficulty.    
    
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.    
   
 Certain risk factors relating to investing in below investment grade
securities ("high-yield, high-risk bonds") are discussed below.    
 
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES -- High-yield, high-risk
bonds can be sensitive to adverse economic changes and corporate developments. 
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing.  If the issuer of a bond defaulted on its obligations to pay
interest or principal or entered into bankruptcy proceedings, the fund may
incur losses or expenses in seeking recovery of amounts owed to it.  In
addition, periods of economic uncertainty and changes can be expected to result
in increased volatility of market prices of high-yield, high-risk bonds.
 
PAYMENT EXPECTATIONS -- High-yield, high-risk bonds may contain redemption or
call provisions.  If an issuer exercised these provisions in a declining
interest rate market, the fund would have to replace the security with a lower
yielding security, resulting in a decreased return for investors.  Conversely,
a high-yield, high-risk bond's value will decrease in a rising interest rate
market, as it will with all bonds.
   
U.S. GOVERNMENT SECURITIES -- Securities guaranteed by the U.S. Government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury.     
    
Certain securities issued by U.S. Government instrumentalities and certain
federal agencies are neither direct obligations of, nor guaranteed by, the
Treasury. However, they generally involve federal sponsorship in one way or
another; some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality.    
    
INVESTING IN VARIOUS COUNTRIES  -- The fund has the flexibility to invest
outside the U.S. Investing outside the U.S. involves special risks,
particularly in certain developing countries, caused by, among other things:
currency controls, fluctuating currency values; different accounting, auditing,
and financial reporting regulations and practices in some countries;
expropriation or confiscatory taxation; changing local and regional economic,
political, and social conditions; greater market volatility; differing
securities market structures; and various administrative difficulties such as
delays in clearing and settling portfolio transactions or in receiving payment
of dividends. However, in the opinion of Capital Research and Management
Company, investing outside the U.S. also can reduce certain portfolio risks due
to greater diversification opportunities.    
    
The risks described above are potentially heightened in connection with
investments in developing countries.  Although there is no universally accepted
definition, a developing country is generally considered to be a country which
is in the initial stages of its industrialization cycle with a low per capital
gross national product.  For example, political and/or economic structures in
these countries may be in their infancy and develping rapidly.  Historically,
the markets of developing countries have been more volatile than the markets of
developed countries.  The fund may only invest in securities of issuers in
developing countries to a limited extent.    
   
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
transactions. Furthermore, increased custodian costs may be associated with the
maintenance of assets in certain jurisdictions.    
    
RESTRICTED SECURITIES AND LIQUIDITY -- The fund may purchase securities subject
to restrictions on resale. All such securities whose principal trading market
is in the U.S. will be considered illiquid unless they have been specifically
determined to be liquid under procedures which may be 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 can change from time to time.
The fund may incur certain additional costs in disposing of illiquid
securities.    
 
CURRENCY TRANSACTIONS -- The fund may enter into forward currency contracts
("forward contracts") in connection with its investments in securities of
non-U.S. issuers.  A forward contract is an obligation to purchase or sell a
currency against another currency at a future date and price as agreed upon by
the parties.  The fund may either accept or make delivery of the currency at
the maturity of the forward contract or, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract. 
The fund engages in forward contracts in anticipation of, or to protect itself
against, fluctuations in exchange rates. The fund might sell a particular
currency forward, for example, when it wanted to hold securities denominated in
that currency but anticipated, and wished to be protected against, a decline in
the currency against the U.S. dollar.  Similarly it might purchase a currency
forward to "lock in" the U.S. dollar price of securities denominated in that
currency which it anticipated purchasing.  Although forward contracts typically
will involve the purchase and sale of a non-U.S. currency against the U.S.
dollar, the fund also may purchase or sell one non-U.S. currency forward
against another non-U.S. currency.
 
PORTFOLIO TRADING -- The fund intends to engage in portfolio trading when
Capital Research and Management Company (the "Investment Adviser") believes
that the sale of a security owned by the fund and the purchase of another
security of better value can enhance principal and/or increase income.  A
security may be sold to avoid any prospective decline in market value in light
of what is evaluated as an expected rise in prevailing yields, or a security
may be purchased in anticipation of a market rise (a decline in prevailing
yields).  A security also may be sold and a comparable security purchased
coincidentally in order to take advantage of what is believed to be a disparity
in the normal yield and price relationship between the two securities, or in
connection with a "roll" transaction as described below.
 
LOANS OF PORTFOLIO SECURITIES -- Although the fund has no current intention of
doing so during the next 12 months, the fund is authorized to lend portfolio
securities to selected securities dealers or to 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
one-third of the value of its total assets, measured at the time any such loan
is made.
 
FORWARD COMMITMENTS -- The fund may enter into commitments to purchase or sell
securities for which payment and delivery for the securities take place at a
future date.  When the fund purchases such securities it assumes the risk of
any decline in value of the securities beginning on the date of the agreement
or purchase.  When the fund sells such securities, it does not participate in
further gains or losses with respect to the securities.  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.
 
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly increases.
   
The fund also may enter into "roll" transactions, which is the sale of
mortgage-backed securities or other securities together with a commitment to
purchase similar, but not identical, securities at a later date.  The fund
intends to treat roll transactions as two separate transactions: one involving
the purchase of a security and a separate transaction involving the sale of a
security.  Since the fund does not intend to enter into roll transactions for
financing purposes, it may treat these transactions as not falling within the
definition of "borrowing" set forth in Section 2(a)(23) of the Investment
Company Act of 1940 (the "1940 Act").      
 
Although the fund has no current intention of doing so during the next 12
months, the fund is authorized to enter into reverse repurchase agreements.  A
reverse repurchase agreement is the sale of a security by a fund and its
agreement to repurchase the security at a specified time and price. 
 
The fund will segregate liquid assets which 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 (but no collateral is
required on reverse repurchase agreements with banks).  Although these
transactions will not be entered into for leveraging purposes, to the extent
the fund's aggregate commitments under 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 were it 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 thereunder. 
 
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. 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 Capital
Research and Management Company.  If the seller under the repurchase agreement
defaults, the fund may incur a loss if the value of the collareral securing the
repurchase agreement has declined and may occur disposition costs in connection
with liquidating the collateral.  If bankruptcy proceedings are commenced with
respect to the seller, liquidation of the collateral by the fund may be delayed
or limited.
 
PASS-THROUGH SECURITIES -- The fund may invest in various debt obligations
backed by a pool of mortgages or other assets including 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 pools backing these obligations
are typically passed through to investors.  Pass-through securities may have
either fixed or adjustable coupons. These securities include those discussed
below.
 
"Mortgage-backed securities" are issued both by U.S. government agencies,
including the Government National Mortgage Association (GNMA), the Federal
National Mortgage Association (FNMA), and the Federal Home Loan Mortgage
Corporation (FHLMC), and by private entities. The payment of interest and
principal on securities issued by U.S. government agencies is guaranteed by the
full faith and credit of the U.S. government (in the case of GNMA securities)
or the issuer (in the case of FNMA and FHLMC securities). However, the
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 mortgage-backed securities issued by GNMA, FNMA, and FHLMC. These securities
and the underlying mortgages are not guaranteed by government agencies. In
addition, these securities generally are structured with one or more types of
credit enhancement. Mortgage-backed securities do not affect the rights of
borrowers to prepay their underlying  mortgages.  Prepayments can alter the
effective maturity of these instruments. 
 
"Collateralized mortgage obligations" (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,
while privately issued CMOs may be backed by either government agency mortgages
or private mortgages.  Payments of principal and interest are passed-through to
each bond at varying schedules resulting in bonds with different coupons,
effective maturities, and sensitivities to interest rates. In fact, some CMOs
may be structured in a way that when interest rates change the impact of
changing prepayment rates on these securities' effective maturities is
magnified. 
 
"Commercial mortgage-backed securities" are backed by mortgages of commercial
property, such as hotels, office buildings, retail stores, hospitals, and other
commercial buildings. These securities may have a lower prepayment risk 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 loan
payments, and the ability of a property to attract and retain tenants.
 
"Asset-backed 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 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 which
can change the securities' effective maturities.
 
MATURITY -- There are no restrictions on the maturity composition of the
portfolio.  Under normal market conditions, longer term securities yield more
than shorter term securities, but are subject to greater price fluctuations.
 
VARIABLE AND FLOATING RATE OBLIGATIONS -- The fund may invest in securities
with interest rates that are not fixed but fluctuate based upon changes in
market rates or designated indexes.  Variable rate obligations have interest
rates that are adjusted at designated intervals, and interest rates on floating
rate obligations are adjusted whenever there are exchanges in the indexes or
market rates on which their interest rates are based.  In some cases the fund
has the ability to demand payment from the dealer or issuer at par plus accrued
interest on short notice (seven days or less).  The effective maturity of a
floating or variable rate obligation is deemed to be the longer of (i) the
notice period required before the fund is entitled to receive payment of the
obligation upon demand or (ii) the period remaining until the obligation's next
interest rate adjustment.  If not sold or redeemed by the fund through the
demand feature, these obligations would mature on a specified date which may
range up to 30 years or more from the date of issuance.
 
LIQUIDITY AND VALUATION -- There may be little trading in the secondary market
for particular bonds, which may affect adversely the fund's ability to value
accurately or dispose of such bonds.  Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
 
                            INVESTMENT RESTRICTIONS
 
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares.  Such majority is defined within the 1940 Act as the vote
of the lesser of (i) 67% or more of the outstanding voting securities present
at a meeting, if the holders of more than 50% of the outstanding voting
securities are present in person or by proxy, or (ii) more than 50% of the
outstanding voting securities.  Investment limitations expressed in the
following restrictions are considered at the time securities are purchased and
are based on the fund's net assets unless otherwise indicated.  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;
 
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;
A further investment policy of the fund, which may be changed by action of the
Board of Directors without shareholder approval, is that 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.
 
With respect to investment restriction number 2, in determining industry
classifications for issuers domiciled outside the U.S., the fund will use
reasonable classifications that are not so 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 U.S.
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
Directors pursuant to an exemptive order granted by the Securities and Exchange
Commission.
   
                      FUND ORGANIZATION AND VOTING RIGHTS
 
The fund is an open-end, diversified management investment company.  It was
organized as a Maryland corporation on June 8, 1987.    
   
All fund operations are supervised by the fund's board of directors.  The board
meets periodically and performs duties required by applicable state and federal
laws.  Members of the board who are not employed by Capital Research and
Management Company or its affiliates are paid certain fees for services
rendered to the fund as described in "Directors and Director Compensation" 
below.  They may elect to defer all or a portion of these fees through a
deferred compensation plan in effect for the fund.      
   
The fund does not hold annual meetings of shareholders.  However, significant
matters which 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.    
 
                          FUND DIRECTORS AND OFFICERS
                      DIRECTORS AND DIRECTOR COMPENSATION
   
<TABLE>
<CAPTION>
NAME,                              POSITION         PRINCIPAL            AGGREGATE            TOTAL                TOTAL          
ADDRESS                            WITH             OCCUPATION(S)        COMPENSATION         COMPENSATION         NUMBER         
AND AGE                            REGISTRANT       DURING               (INCLUDING           (INCLUDING           OF FUND        
                                                    PAST 5 YEARS         VOLUNTARILY          VOLUNTARILY          BOARDS         
                                                                         DEFERRED             DEFERRED             ON WHICH       
                                                                         COMPENSATION         COMPENSATION         DIRECTOR       
                                                                         /1/) FROM THE        /1/) FROM ALL        SERVES         
                                                                         FUND DURING          FUNDS MANAGED        /2/            
                                                                         FISCAL YEAR          BY CAPITAL                          
                                                                         ENDED 10/31/98       RESEARCH AND                        
                                                                                              MANAGEMENT                          
                                                                                              COMPANY OR ITS                      
                                                                                              AFFILIATES /2/                      
                                                                                              FOR THE YEAR                        
                                                                                              ENDED 10/31/98                      
 
<S>                                <C>              <C>                  <C>                  <C>                  <C>            
H. Frederick Christie              Director         Private              $                    $                    18             
P.O. Box 144                                        investor;                                                                     
Palos Verdes Estates,                               former                                                                        
CA  90274                                           President and                                                                 
Age:  65                                            Chief                                                                         
                                                    Executive                                                                     
                                                    Officer, The                                                                  
                                                    Mission Group                                                                 
                                                    (non-utility                                                                  
                                                    holding                                                                       
                                                    company,                                                                      
                                                    subsidiary of                                                                 
                                                    Southern                                                                      
                                                    California                                                                    
                                                    Edison                                                                        
                                                    Company)                                                                      
 
+ Paul G. Haaga, Jr.               Chairman         Executive            None/3/              None/3/              14             
333 South Hope Street              of the           Vice                                                                          
Los Angeles, CA  90071             Board            President and                                                                 
Age: 50                                             Director,                                                                     
                                                    Capital                                                                       
                                                    Research and                                                                  
                                                    Management                                                                    
                                                    Company                                                                       
 
Mary Myers Kauppila                Director         Private              $/4/                 $/4/                 5              
One Winthrop Square                                 Investor;                                                                     
Boston, MA  02110                                   former Owner                                                                  
Age:  44                                            and                                                                           
                                                    President,                                                                    
                                                    Energy                                                                        
                                                    Investment,                                                                   
                                                    Inc.                                                                          
 
+ James B. Lovelace                President        Senior Vice          None/3/              None/3/              1              
333 South Hope Street              and              President,                                                                    
Los Angeles, CA  90071             Director         Capital                                                                       
Age:  42                                            Research and                                                                  
                                                    Management                                                                    
                                                    Company                                                                       
 
+ Jon B. Lovelace                  Vice             Vice Chairman        None/3/              None/3/              4              
333 South Hope Street              Chairman         of the Board,                                                                 
Los Angeles, CA  90071             of               Capital                                                                       
Age:  71                           the Board        Research and                                                                  
                                                    Management                                                                    
                                                    Company                                                                       
 
Gail L. Neale                      Director         President,           $/4/                 $/4/                 5              
The Lovejoy Consulting                              The Lovejoy                                                                   
Group                                               Consulting                                                                    
154 Prospect Parkway                                Group, Inc.;                                                                  
Burlington, VT  05401                               former                                                                        
Age:  63                                            Executive                                                                     
                                                    Vice                                                                          
                                                    President of                                                                  
                                                    the Salzburg                                                                  
                                                    Seminar;                                                                      
                                                    former                                                                        
                                                    Director of                                                                   
                                                    Development                                                                   
                                                    and the                                                                       
                                                    Capital                                                                       
                                                    Campaign,                                                                     
                                                    Hampshire                                                                     
                                                    College                                                                       
 
Robert J. O'Neill                  Director         Chichele             $                    $                    3              
Whitney, OXON                                       Professor of                                                                  
United Kingdom                                      the History                                                                   
Age:  62                                            of War and                                                                    
                                                    Fellow, All                                                                   
                                                    Souls                                                                         
                                                    College,                                                                      
                                                    University of                                                                 
                                                    Oxford                                                                        
 
Donald E. Petersen                 Director         Retired;              $/4/                $/4/                  4             
255 East Brown                                      former                                                                        
Birmingham, MI  48009                               Chairman of                                                                   
Age:  72                                            the                                                                           
                                                    Board and                                                                     
                                                    Chief                                                                         
                                                    Executive                                                                     
                                                    Officer, Ford                                                                 
                                                    Motor Company                                                                 
 
Stefanie Powers                    Director         Actor;               $                    $                    2              
2661 Hutton Drive                                   President,                                                                    
Beverly Hills, CA  90210                            William                                                                       
Age:  56                                            Holden                                                                        
                                                    Wildlife                                                                      
                                                    Foundation                                                                    
 
Frank Stanton                      Director         President            $                    $                    2              
25 West 52nd Street                                 Emeritus, CBS                                                                 
New York, NY  10019                                 Inc.;                                                                         
Age:  90                                            Chairman                                                                      
                                                    Emeritus, The                                                                 
                                                    American Red                                                                  
                                                    Cross                                                                         
 
Charles Wolf, Jr.                  Director         Dean, The            $                    $                    2              
1700 Main Street                                    RAND Graduate                                                                 
Santa Monica, CA  90407                             School;                                                                       
Age:  74                                            Senior                                                                        
                                                    Economic                                                                      
                                                    Adviser, The                                                                  
                                                    RAND                                                                          
                                                    Corporation                                                                   
 
</TABLE>
    
+ Directors who are considered "interested persons" of the fund as defined in
the 1940 Act on the basis of their affiliation with the fund's Investment
Adviser, Capital Research and Management Company.
 
/1/ Amounts may be deferred by eligible directors under a non-qualified
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
funds in The American Funds Group as designated by the Director.
   
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds:  AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP  World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U.S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund Inc.  Capital Research and Management
Company also manages American Variable Insurance Series and Anchor Pathway Fund
which serve as the underlying investment vehicles for certain variable
insurance contracts; and Endowments, Inc. whose shareholders are limited to (i)
any entity exempt from taxation under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended ("501(c)(3) organization"); (ii) any trust, the
present or future beneficiary of which is a 501(c)(3) organization, and (iii)
any other entity formed for the primary purpose of benefiting a 501(c)(3)
organization. An affiliate of Capital Research and Management Company, Capital
International, Inc., manages Emerging Markets Growth Fund, Inc.    
 
/3/ Paul G. Haaga, Jr., James B. Lovelace and Jon B. Lovelace are affiliated
with the Investment Adviser and, accordingly, receive no compensation from the
fund.
   
/4/ Since the deferred compensation plan's adoption, the total amount of
deferred compensation accrued by the fund (plus earnings thereon) as of the
fiscal year ended October 31, 1998 for participating Directors is as follows: 
H. Frederick Christie ($          ), Mary Myers Kauppila ($          ), Gail L.
Neale ($          ) and Donald E. Petersen ($          ).  Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Director.    
 
                                    OFFICERS
   
<TABLE>
<CAPTION>
<S>                            <C>      <C>              <C>                        
NAME AND ADDRESS               AGE      POSITION(S)      PRINCIPAL                  
                                        HELD WITH        OCCUPATION(S)              
                                        REGISTRANT       DURING                     
                                                         PAST 5 YEARS               
 
Paul G. Haaga, Jr.                                                                  
 (see above)                                                                        
 
Jon B. Lovelace                                                                     
 (see above)                                                                        
 
James B. Lovelace                                                                   
 (see above)                                                                        
 
Larry P. Clemmensen            51       Senior Vice      Senior Vice                
333 South Hope Street                   President        President and              
Los Angeles, CA  90071                                   Director, Capital          
                                                         Research and               
                                                         Management Company;        
                                                         President and              
                                                         Director,                  
                                                         The Capital Group          
                                                         Companies, Inc.            
 
Janet A. McKinley              44       Senior Vice      Director, Capital          
630 Fifth Avenue                        President        Research and               
New York, NY  10111                                      Management Company;        
                                                         Senior Vice                
                                                         President, Capital         
                                                         Research Company           
 
Catherine M. Ward              51       Senior Vice      Senior Vice                
333 South Hope Street                   President        President and              
Los Angeles, CA  90071                                   Director,                  
                                                         Capital Research           
                                                         and Management             
                                                         Company                    
 
Joyce E. Gordon                42       Vice             Senior Vice                
333 South Hope Street                   President        President and              
Los Angeles, CA  90071                                   Director,                  
                                                         Capital Research           
                                                         Company                    
 
Darcy B. Kopcho                45       Vice             Executive Vice             
333 South Hope Street                   President        President and              
Los Angeles, CA  90071                                   Director,                  
                                                         Capital Research           
                                                         Company                    
 
Steven T. Watson               43       Vice President   Senior Vice President    
25 Bedford Street                                        and Director,                           
London, England                                          Capital Research                           
                                                         Company                    
 
Vincent P. Corti               42       Secretary        Vice President -           
333 South Hope Street                                    Fund Business              
Los Angeles, CA  90071                                   Mangement Group,           
                                                         Capital Research           
                                                         and Management             
                                                         Company                    
 
R. Marcia Gould                44       Treasurer        Vice President -           
135 South State College                                  Fund Business              
Blvd.                                                    Mangement Group,           
Brea, CA  92821                                          Capital Research           
                                                         and Management             
                                                         Company                    
 
Diana J. Prohoroff             49       Assistant        Assistant Vice             
135 South State College                 Treasurer        President - Fund           
Blvd.                                                    Business Mangement         
Brea, CA  92821                                          Group, Capital             
                                                         Research and               
                                                         Management Company         
 
</TABLE>
    
   
All of the officers listed are officers or employees of Investment Adviser or
affiliated companies.  No compensation is paid by the fund to any director or
officer who is a director, officer or employee of the Investment Adviser or
affiliated companies.  The fund pays fees of $12,500 per annum to directors who
are not affiliated with the Investment Adviser, plus $1,000 for each Board of
Directors meeting attended, plus $500 for each meeting attended as a member of
a committee of the Board of Directors.  No pension or retirement benefits are
accrued as part of fund expenses.  The 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.  As of December  1, 1998, the officers and
directors and their families as a group, owned beneficially or of record less
than 1% of the outstanding shares of the fund.    
 
                                   MANAGEMENT
 
INVESTMENT ADVISER -- The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have a number of years of investment
experience.  The Investment Adviser is located at 333 South Hope Street, Los
Angeles, CA 90071, and at 135 South State College Boulevard, Brea, CA 92821. 
The Investment Adviser's professionals travel several million miles a year,
making more than 5,000 research visits in more than 50 countries around the
world.  The Investment Adviser believes that it is able to attract and retain
quality personnel.  The Investment Adviser is a wholly owned subsidiary of The
Capital Group Companies, Inc.
 
An affiliate of the Investment Adviser compiles indices for major stock markets
around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information on more
than 2,400 companies around the world.
 
The Investment Adviser is responsible for managing more than $175 billion of
stocks, bonds and money market instruments and serves over eight million
investors of all types.  These investors include privately owned businesses and
large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
   
INVESTMENT ADVISORY AND SERVICE AGREEMENT -- The Investment Advisory and
Service Agreement (the "Agreement") between the fund and the Investment
Adviser, dated March 1, 1995, will continue in effect until October 31, 1999
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 (i) 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 (ii) the vote
of a majority of Directors who are not parties to the Advisory 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, 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).    
 
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of
qualified persons to perform the executive and related administrative functions
of the fund, provides necessary office space, all necessary office equipment
and telephone facilities and utilities, and general purpose forms, supplies,
stationery and postage used at the office of the fund relating to the services
furnished by the Investment Adviser.  The fund will pay all expenses not
expressly assumed by the Investment Adviser, including, but not limited to,
compensation and expenses of Directors who are not affiliated persons of the
Investment Adviser; fees and expenses of the transfer agent, dividend
disbursing agent, legal counsel and independent public accountants and
custodian, including charges of such custodian for the preparation and
maintenance of the books of account and records of the fund and the daily
determination of the fund's net asset value per share; costs of designing,
printing, and mailing reports, prospectuses, proxy statements and notices to
shareholders; fees and expenses of sale (including federal and state
registration and qualification), issuance (including costs of any share
certificates) and redemption of shares; expenses pursuant to the fund's Plan of
Distribution (described below); association dues; interest; and taxes.  The
management fee is based on an annual rate of 0.24% of the first $1 billion of
average net assets; 0.20% of such assets in excess of $1 billion but not
exceeding $2 billion; 0.18% of such assets in excess of $2 billion but not
exceeding $3 billion; 0.165% of such assets in excess of $3 billion but not
exceeding $5 billion; 0.155% of such assets in excess of $5 billion but not
exceeding $8 billion; and 0.15% of such assets in excess of $8 billion; plus
3.0% of the fund's gross investment income.  Assuming net assets of  $8 billion
and gross investment income levels of 4%, 5%, 6%, 7% and 8%, management fees
would be 0.31%, 0.34%, 0.37%, 0.40% and 0.43%, respectively.
   
During the fiscal years ended October 31, 1998, 1997 and 1996, the Investment
Adviser's total fees amounted to $                     , $20,097,000 and
$18,213,000, respectively.    
 
Only one state (California) continues to impose expense limitations on funds
registered for sale therein.  The California provision currently limits annual
expenses to the sum of 2-1/2% of the first $30 million of average net assets,
2% of the next $70 million and 1-1/2% of the remaining average net assets. 
Rule 12b-1 distribution plan expenses would be excluded from this limit. 
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are
accounted for as capital items and not as expenses.  The fund might be eligible
to exclude certain additional expenses, such as expenses of maintaining foreign
custody of certain of its portfolio securities, or to obtain a waiver of such
limit in its entirety.
   
PRINCIPAL UNDERWRITER -- American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares.  The principal
Underwriter is located at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92821, 3500 Wiseman Boulevard, San
Antonio, TX 78251, 8332 Woodfield Crossing Boulevard, Indianapolis, IN 46240,
and 5300 Robin Hood Road, Norfolk, VA 23513.  The fund has adopted a Plan of
Distribution (the "Plan"), pursuant to rule 12b-1 under the 1940 Act  The
Principal Underwriter receives amounts payable pursuant to the Plan (see below)
and commissions consisting of that portion of the sales charge remaining after
the discounts which it allows to investment dealers.  Commissions retained by
the Principal Underwriter on sales of fund shares during the fiscal year ended
October 31, 1998 amounted to $                 after allowance of $            
   to dealers.  During the fiscal years ended October 31, 1997 and 1996 the
Principal Underwriter retained $6,383,000 and $4,007,000 after allowance of
$32,064,000 and $20,341,000, respectively.    
 
As required by rule 12b-1 and the 1940 Act, the Plan (together with the
Principal Underwriting Agreement) has been approved by the full Board of
Directors and separately by a majority of the Directors who are not "interested
persons" of the fund and who have no direct or indirect financial interest in
the operation of the Plan or the Principal Underwriting Agreement, and the Plan
has been approved by the vote of a majority of the outstanding voting
securities of the fund.  The Directors and Officers who are "interested
persons" of the fund may be considered to have a direct or indirect financial
interest in the operation of the Plan due to present or past affiliations with
the Investment Adviser and related companies.  Potential benefits of the Plan
to the fund are improved shareholder services, savings to the fund in transfer
agency costs, savings to the fund in advisory fees and other expenses, benefits
to the investment process from growth or stability of assets and maintenance of
a financially healthy management organization.  The selection and nomination of
Directors who are not "interested persons" of the fund are committed to the
discretion of the Directors who are not "interested persons" during the
existence of the Plan.  Expenditures under the Plan are reviewed quarterly and
the Plan must be renewed annually by the Board of Directors.
   
Under the Plan the fund may expend up to 0.30% of its net assets annually 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.  These include service fees for qualified
dealers and dealer commissions and wholesaler compensation on sales of shares
exceeding $1 million (including purchases by any employer-sponsored 403(b)
plan, any defined contribution plan qualified under section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees or a community foundation).    
   
Commissions on sales of shares exceeding $1 million (including purchases by any
employer-sponsored 403(b) plan or purchases by any defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code, including any
"401(k)" plan with 100 or more eligible employees) in excess of the Plan
limitation not reimbursed 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, commissions are not recoverable.  During
the fiscal year ended October 31, 1998, the fund paid $                   
under the Plan.    
 
The Glass-Stegall Act and other applicable laws, among other things, generally
prohibit commercial banks from engaging in the business of underwriting,
selling or distributing securities, but permit banks to make shares of mutual
funds available to their customers and to perform administrative and
shareholder servicing functions.  However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or
their subsidiaries of affiliates, could prevent a bank from continuing to
perform all or a part of its servicing activities.  If a bank were prohibited
from so acting, shareholder clients of such bank would be permitted to remain
shareholders of the fund and alternate means for continuing the servicing of
such shareholders would be sought.  In such event, changes in the operation of
the fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by such bank.  It is not expected that shareholders would suffer
adverse financial consequences as a result of any of these occurrences.
 
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and certain banks and
financial institutions may be required to be registered as dealers pursuant to
state law.
 
                   DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
   
The fund intends to meet all the requirements and has elected the tax status of
a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986, as amended, (the Code).  Under Subchapter M, if
the fund distributes within specified times at least 90% of the sum of its
investment company taxable income (net investment income and the excess of net
short-term capital gains over net long-term capital losses) and its tax-exempt
interest, if any, it will be taxed only on that portion of such investment
company taxable income which it retains.    
 
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and
gains from the sale or other disposition of stock, securities, currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of stock or securities held for less than three
months; and (c) 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 other securities which must
be limited, in respect of any one issuer, to an amount not greater than 5% 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 any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies), or in two or more issuers
which the fund controls and which are engaged in the same or similar trades or
businesses or related trades or businesses.
 
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 (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gains (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 (iii) 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 (i) amounts
actually distributed by the fund from its current year's ordinary income and
capital gain net income and (ii) any amount on which the fund pays income tax
for the year. The fund intends, to the extent practicable, to meet these
distribution requirements to minimize or avoid the excise tax liability.
 
Distributions of investment company taxable income, including short-term
capital gains, generally are taxable to the shareholder as ordinary income,
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the fund.  The fund also intends to continue distributing
to shareholders all of the excess of net long-term capital gain over net
short-term capital loss on sales of securities.  A capital gain distribution,
whether paid in cash or reinvested in shares, is taxable to shareholders as
long-term capital gains, regardless of the length of time a shareholder has
held the shares or whether such gain was realized by the fund before the
shareholder acquired such shares and was reflected in the price paid for the
shares.
 
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 acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose 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 shares.  Also, any loss realized on a redemption or exchange of
shares of a 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.
 
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, non-U.S. corporation, or non-U.S.
partnership (a "non-U.S. shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate).  Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens or domestic corporations will apply. 
Distributions of capital gains not effectively connected with a U.S. trade or
business are not subject to the withholding, but if the non-U.S. shareholder
was an individual who was physically present in the U.S. during the tax year
for more than 182 days and such shareholder is nonetheless treated as a
nonresident alien, the distributions would be subject to a 30% tax.
 
Under the Code, a fund's taxable income for each year will be computed without
regard to any net foreign currency loss attributable to transactions after
October 31, and any such net foreign currency loss will be treated as arising
on the first day of the following taxable year.
 
As of the date of this statement of additional information, the maximum federal
individual stated tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gains on assets held more than eighteen months is 20%, and on assets
held more than one year and not more than eighteen months is 28%; and the
maximum corporate tax applicable to ordinary income and net capital gain is
35%.  (However, to eliminate the benefit of lower marginal corporate income tax
rates, corporations which have income in excess of $100,000 for a taxable year
will be required to pay an additional amount of tax up to $11,750 and
corporations which have taxable income in excess of $15,000,000 for a taxable
year will be required to pay an additional amount of tax up to $100,000). 
Naturally, the amount of tax payable by an individual will be affected by a
combination of tax law rules covering, e.g., deductions, credits, deferrals,
exemptions, sources of income and other matters.  Under the Code, an individual
is entitled to establish an IRA each year (prior to the tax return filing
deadline for that year) whereby earnings on investments are tax-deferred. In
addition, in some cases, the IRA contribution itself may be deductible.
 
The foregoing is limited to a summary discussion of federal taxation and should
not be viewed as a comprehensive discussion of all provisions of the Code
relevant to investors.  Dividends and capital gain distributions may also be
subject to state or local taxes.  Shareholders should consult their own tax
advisers for additional details as to their particular tax status.
 
                               PURCHASE OF SHARES
 
<TABLE>
<CAPTION>
<S>                     <C>                                      <C>                                         
METHOD                  INITIAL INVESTMENT                       ADDITIONAL INVESTMENTS                      
 
                        See "Investment Minimums and             $50 minimum (except where a lower           
                        Fund Numbers" for initial                minimum is noted under "Investment          
                        investment minimums.                     Minimums and Fund Numbers").                
 
By contacting           Visit any investment dealer who          Mail directly to your investment            
your investment         is registered in the state where         dealer's address printed on your            
dealer                  the purchase is made and who has         account statement.                          
                        a sales agreement with American                                                      
                        Funds Distributors.                                                                  
 
By mail                 Make your check payable to the           Fill out the account additions form         
                        fund and mail to the address             at the bottom of a recent account           
                        indicated on the account                 statement, make your check payable          
                        application.  Please indicate an         to the fund, write your account             
                        investment dealer on the account         number on your check, and mail the          
                        application.                             check and form in the envelope              
                                                                 provided with your account                  
                                                                 statement.                                  
 
By telephone            Please contact your investment           Complete the "Investments by Phone"         
                        dealer to open account, then             section on the account application          
                        follow the procedures for                or American FundsLink Authorization         
                        additional investments.                  Form.  Once you establish the               
                                                                 privilege, you, your financial advisor  
                                                                 or any person with your account 
                                                                 information can call American   
                                                                 FundsLine(R) and make   
                                                                 investments by telephone (subject           
                                                                 to conditions noted in "Telephone           
                                                                 and Computer Purchases, Redemptions         
                                                                 and Exchanges" below).                      
 
By computer             Please contact your investment           Complete the American FundsLink             
                        dealer to open account, then             Authorization Form.  Once you               
                        follow the procedures for                establish the privilege, you, your          
                        additional investments.                  financial advisor or any person             
                                                                 with your account information may           
                                                                 access American FundsLine                   
                                                                 OnLine(SM) on the Internet and make         
                                                                 investments by computer (subject to         
                                                                 conditions noted in "Telephone and          
                                                                 Computer Purchases, Redemptions and         
                                                                 Exchanges" below).                          
 
By wire                 Call 800/421-0180 to obtain your         Your bank should wire your                  
                        account number(s), if necessary.         additionalinvestments in the same           
                        Please indicate an investment            manner as described under "Initial          
                        dealer on the account.  Instruct         Investment."                                
                        your bank to                                                                         
                        wire funds to:                                                                       
                        Wells Fargo Bank                                                                     
                        155 Fifth Street                                                                     
                        Sixth Floor                                                                          
                        San Francisco, CA  94106                                                             
                        (ABA #121000248)                                                                     
                        For credit to the account of:                                                        
                        American Funds Service Company                                                       
                        a/c #4600-076178                                                                     
                        (fund name)                                                                          
                        (your fund acct. no.)                                                                
 
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE THE RIGHT TO REJECT ANY PURCHASE
ORDER.                                                                                                       
 
</TABLE>
 
INVESTMENT MINIMUMS AND FUND NUMBERS -- Here are the minimum initial
investments required by the funds in The American Funds Group along with fund
numbers for use with our automated phone line, American FundsLine(R) (see
description below):
 
<TABLE>
<CAPTION>
<S>                                          <C>                     <C>         
FUND                                         MINIMUM                 FUND        
                                             INITIAL                 NUMBER      
                                             INVESTMENT                          
 
STOCK AND STOCK/BOND FUNDS                                                       
 
AMCAP Fund(R)                                $1,000                  02          
 
American Balanced Fund(R)                    500                     11          
 
American Mutual Fund(R)                      250                     03          
 
Capital Income Builder(R)                    1,000                   12          
 
Capital World Growth and Income              1,000                   33          
Fund(SM)                                                                         
 
EuroPacific Growth Fund(R)                   250                     16          
 
Fundamental Investors(SM)                    250                     10          
 
The Growth Fund of America(R)                1,000                   05          
 
The Income Fund of America(R)                1,000                   06          
 
The Investment Company of America(R)         250                     04          
 
The New Economy Fund(R)                      1,000                   14          
 
New Perspective Fund(R)                      250                     07          
 
SMALLCAP World Fund(R)                       1,000                   35          
 
Washington Mutual Investors Fund(SM)         250                     01          
 
BOND FUNDS                                                                       
 
American High-Income Municipal Bond          1,000                   40          
Fund(R)                                                                          
 
American High-Income Trust(SM)               1,000                   21          
 
The Bond Fund of America(SM)                 1,000                   08          
 
Capital World Bond Fund(R)                   1,000                   31          
 
Intermediate Bond Fund of                    1,000                   23          
America(SM)                                                                      
 
Limited Term Tax-Exempt Bond Fund of         1,000                   43          
America(SM)                                                                      
 
The Tax-Exempt Bond Fund of                  1,000                   19          
America(R)                                                                       
 
The Tax-Exempt Fund of                       1,000                   20          
California(R)*                                                                   
 
The Tax-Exempt Fund of Maryland(R)*          1,000                   24          
 
The Tax-Exempt Fund of Virginia(R)*          1,000                   25          
 
U.S. Government Securities Fund(SM)          1,000                   22          
 
MONEY MARKET FUNDS                                                               
 
The Cash Management Trust of                 2,500                   09          
America(R)                                                                       
 
The Tax-Exempt Money Fund of                 2,500                   39          
America(SM)                                                                      
 
The U.S. Treasury Money Fund of              2,500                   49          
America(SM)                                                                      
 
___________                                                                      
*Available only in certain states.                                               
 
</TABLE>
 
 
For retirement plan investments, the minimum is $250, except that the money
market funds have a minimum of $1,000 for individual retirement accounts
(IRAs).  Minimums are reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or to $25 for purchases
by retirement plans through payroll deductions and may be reduced or waived for
shareholders of other funds in The American Funds Group.  TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS.  The minimum is $50 for
additional investments (except as noted above).
   
SALES CHARGES -- The sales charges you pay when purchasing the stock,
stock/bond, and bond funds of The American Funds Group are set forth below. 
The money market funds of The American Funds Group are offered at net asset
value.  (See "Investment Minimums and Fund Numbers" for a listing of the
funds.)    
 
<TABLE>
<CAPTION>
<S>                              <C>              <C>              <C>              
AMOUNT OF PURCHASE               SALES CHARGE AS                   DEALER           
AT THE OFFERING PRICE            PERCENTAGE OF THE:                CONCESSION       
                                                                   AS PERCENTAGE    
                                                                   OF THE           
                                                                   OFFERING         
                                                                   PRICE            
 
                                 NET AMOUNT       OFFERING                          
                                 INVESTED         PRICE                             
 
STOCK AND STOCK/BOND                                                                
FUNDS                                                                               
 
Less than $50,000                6.10%            5.75%            5.00%            
 
$50,000 but less than            4.71             4.50             3.75             
$100,000                                                                            
 
BOND FUNDS                                                                          
 
Less than $25,000                4.99             4.75             4.00             
 
$25,000 but less than            4.71             4.50             3.75             
$50,000                                                                             
 
$50,000 but less than            4.17             4.00             3.25             
$100,000                                                                            
 
STOCK, STOCK/BOND, AND                                                              
BOND FUNDS                                                                          
 
$100,000 but less than           3.63             3.50             2.75             
$250,000                                                                            
 
$250,000 but less than           2.56             2.50             2.00             
$500,000                                                                            
 
$500,000 but less than           2.04             2.00             1.60             
$1,000,000                                                                          
 
$1,000,000 or more               none             none             (see below)      
 
</TABLE>
   
PURCHASES NOT SUBJECT  TO SALES CHARGES --  Investment of $1 million or more
and investments made by employer-sponsored defined contribution-type plans with
100 or more eligible employees are sold with no initial sales charge.  A
contingent deferred sales charge may be imposed on certain redemptions by these
accounts made within one year of purchases.  Investments by retirement plans,
foundations or endowments with $50 million or more in assets made by made with
no sales charge and are not subject to a contingent deferred sales charge.    
    
In addition, the stock, stock/bond and bond funds may sell shares at net asset
value to:     
   
 (1) current or retired directors, trustees, officers and advisory board
members of the funds managed by Capital Research and Management Company,
employees of Washington Management Corporation, employees and partners of The
Capital Group Companies, Inc. and its affiliated companies, certain family
members of the above persons, and trusts or plans primarily for such persons;
    
   
 (2) current registered representatives, retired registered representatives
with respect to accounts established while active, or full-time employees (and
their spouses, parents, and children) of dealers who have sales agreements with
American Funds Distributors (or who clear transactions through such dealers)
and plans for such persons or the dealers;    
   
 (3) companies exchanging securities with the fund through a merger,
acquisition or exchange offer;     
   
 (4) trustees or other fiduciaries purchasing shares for certain retirement
plans of organizations with retirement plan assets of $50 million or more;     
   
 (5) insurance company separate accounts;     
   
 (6) accounts managed by subsidiaries of The Capital Group Companies, Inc.; and
    
   
 (7) The Capital Group Companies, Inc., its affiliated companies and Washington
Management Corporation. Shares are offered at net asset value to these persons
and organizations due to anticipated economies in sales effort and expense.
    
 
DEALER COMMISSIONS -- Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 100 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $50 million or more:  1.00% on amounts of $1 million
to $2 million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts
over $3 million to $50 million, 0.25% on amounts over $50 million to $100
million, and 0.15% on amounts over $100 million.  The level of dealer
commissions will be determined based on sales made over a 12-month period
commencing from the date of the first sale at net asset value.
   
OTHER COMPENSATION TO DEALERS -- American Funds Distributors, at its expense
(from a designated percentage of its income), currently provides additional
compensation to dealers. Currently these payments are limited to the top 100
dealers who have sold shares of the fund or other funds in The American Funds
Group.  These payments will be based on a pro rata share of a qualifying
dealer's sales.  American Funds Distributors will, on an annual basis,
determine the advisability of continuing these payments.    
 
Qualified dealers currently are paid a continuing service fee not to exceed
0.25% of average net assets (0.15% in the case of the money market funds)
annually in order to promote selling efforts and to compensate them for
providing certain services.  These services include processing purchase and
redemption transactions, establishing shareholder accounts and providing
certain information and assistance with respect to the fund.
   
REDUCING YOUR SALES CHARGE -- You and your immediate family may combine
investments to reduce your costs.  You must let your investment dealer or
American Funds Service Company know if you qualify for a reduction in your
sales charge using one or any combination of the methods described below.    
   
 STATEMENT OF INTENTION -- You may enter into a non-binding commitment to
purchase shares of a fund(s) over a 13-month period and receive the same sales
charge as if all shares had purchased at once.  This includes purchases made
during the previous 90 days, but does not include appreciation of your
investment or reinvested distributions.  The reduced sales charges and offering
prices set forth in the Prospectus apply to purchases of $50,000 or more made
within a 13-month period subject to the following statement of intention (the
"Statement").  The Statement is not a binding obligation to purchase the
indicated amount.  When a shareholder elects to utilize a Statement in order to
qualify for a reduced sales charge, shares equal to 5% of the dollar amount
specified in the Statement will be held in escrow in the shareholder's account
out of the initial purchase (or subsequent purchases, if necessary) by the
Transfer Agent.  All dividends and any capital gain distributions on shares
held in escrow will be credited to the shareholder's account in shares (or paid
in cash, if requested).  If the intended investment is not completed within the
specified 13-month period, the purchaser will remit to the Principal
Underwriter the difference between the sales charge actually paid and the sales
charge which would have been paid if the total of such purchases had been made
at a single time.  If the difference is not paid within 45 days after written
request by the Principal Underwriter or the securities dealer, the appropriate
number of shares held in escrow will be redeemed to pay such difference.  If
the proceeds from this redemption are inadequate, the purchaser will be liable
to the Principal Underwriter for the balance still outstanding.  The Statement
may be revised upward at any time during the 13-month period, and such a
revision will be treated as a new Statement, except that the 13-month period
during which the purchase must be made will remain unchanged and there will be
no retroactive reduction of the sales charges paid on prior purchases. 
Existing holdings eligible for rights of accumulation (see the prospectus and
account application) may be credited toward satisfying the Statement.  During
the Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.    
   
When trustees of certain retirement plans purchase shares by payroll deduction, 
the sales charge for the investments made during the 13-month period will be
handled as follows:  The regular monthly payroll deduction investment will be
multiplied by 13 and then multiplied by 1.5.  The current value of existing
American Funds investments (other than money market fund investments) and any
rollovers or transfers reasonably anticipated to be invested in non-money
market American Funds during the 13-month period are added to the figure
determined above.  The sum is the Statement amount and applicable breakpoint
level.  On the first investment and all other investments made pursuant to the
Statement, a sales charge will be assessed according to the sales charge
breakpoint thus determined.  There will be no retroactive adjustments in sales
charges on investments previously made during the 13-month period.    
 
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
 
 AGGREGATION -- Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by these individuals (for example, the
individuals own the entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these individuals. Individual purchases
by a trustee(s) or other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or fiduciary account, including
an employee benefit plan other than those described above, or (2) made for two
or more employee benefit plans of a single employer or of affiliated employers
as defined in the Investment Company Act of 1940, again excluding employee
benefit plans described above, or (3) for a diversified common trust fund or
other diversified pooled account not specifically formed for the purpose of
accumulating fund shares. 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 --  You may combine purchases of two or more funds in The
American Funds Group, except direct purchases of the money market funds. 
Shares of money market funds purchased through an exchange, reinvestment or
cross-reinvestment from a fund having a sales charge do qualify.    
   
 RIGHT OF ACCUMULATION --  You may take into account the current value of your
existing holdings in The American Funds Group, as well as your holdings in
Endowments (shares of which may be owned only by tax-exempt organizations), to
determine your sales charge on investments in accounts eligible to be
aggregated, or when making a gift to an individual or charity.  Direct
purchases of the money market funds are excluded.    
   
PRICE OF SHARES -- Shares are purchased at the offering price next determined
after the purchase order is received and accepted by the fund or American Funds
Service Company; this offering 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, accepted by the Principal Underwriter prior to its close
of business.  In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. The dealer is
responsible for promptly transmitting purchase orders to the Principal
Underwriter.  Orders received by the investment dealer, 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.  Prices which appear in the
newspaper are not always indicative of prices at which you will be purchasing
and redeeming shares of the fund, since share prices generally reflect the
previous day's closing price whereas 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 at the close of trading
(currently 4:00 p.m., New York Time) each day the New York Stock Exchange is
open.  For example, if the Exchange closes at 1:00 p.m. on one day and at 4:00
p.m. on the next, the fund's share price would be determined as of 4:00 p.m.
New York time on both days.  The New York Stock Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Martin Luther King Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.    
   
All portfolio securities of funds managed by Capital Research and Management
Company (other than money market funds) are valued, and the net asset value per
share is determined, as follows:    
 
1.  Equity securities, including depositary receipts, are valued at the last
reported sale price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price.  In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the Investment Adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market.  Fixed-income securities are valued at prices
obtained from a pricing service, when such prices are available; however, in
circumstances where the Investment Adviser deems it appropriate to do so, such
securities will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type. 
 
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 foreign 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 representative market quotations are not
readily available are valued at fair value as determined in good faith under
policies approved by the fund's board.  The fair value of all other assets is
added to the value of securities to arrive at the total assets;
 
2.  Liabilities, including accruals of taxes and other expense items, are
deducted from total assets; and
 
3.  Net assets so obtained are then divided by the total number of shares
outstanding, and the result, rounded to the nearer cent, is the net asset value
per share.
 
Any purchase order may be rejected by the Principal Underwriter or by the fund. 
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 of Directors.
   
                                 SELLING SHARES
 
 Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company.  You may sell
(redeem) shares in your account in any of the following ways:    
   
 THROUGH YOUR DEALER (certain charges may apply)
 
- Shares held for you in your dealer's street name must be sold through the
dealer.
 
 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 $50,000;
  -- Made payable to someone other than the registered shareholder(s); or
  -- Sent to an address that has not been used with the account for at least 10
days.    
   
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.
 
- Additional documentation may be required for sales of shares held in
corporate, partnership or fiduciary accounts.
 
- You must include any shares you wish to sell that are in certificate
form.    
   
TELEPHONING OR FAXING AMERICAN FUNDS SERVICE COMPANY, OR BY USING AMERICAN
FUNDSLINE(R) OR AMERICAN FUNDSLINE ONLINE(SM)
 
- Redemptions by telephone or fax (including American FundsLine(R) and American
FundsLine OnLine(SM)) are limited to $50,000 per shareholder each day.
 
- Checks must be made payable to the registered shareholder(s).
 
- Checks must be mailed to an address of record that has been used with the
account for at least 10 days.    
   
 MONEY MARKET FUNDS
 
- You may have redemptions of $1,000 or more wired to your bank by writing
American Funds Service Company.
 
- You may establish check writing privileges (use the money market funds
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 or
registered shareholders exactly as indicated on your checking account signature
card.    
   
 Redemption proceeds will not be mailed until sufficient time has passed to
provide reasonable assurance that checks or drafts (including certified or
cashier's checks) for shares purchased have cleared (which may take up to 15
calendar days from the purchase date).  Except for delays relating to clearance
of checks for share purchases or in extraordinary circumstances (and as
permissible under the Investment Company Act of 1940), 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 reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge (any contingent deferred sales charge paid
will be credited to your account) in any fund in The American Funds Group
within 90 days after the date of the redemption or distribution.  Redemption
proceeds of shares representing direct purchases in the money market funds are
excluded.  Proceeds will be reinvested at the next calculated net asset value
after your request is received and accepted by American Funds Service
Company.    
   
CONTINGENT DEFERRED SALES CHARGE -- A contingent deferred sales charge of 1%
applies to certain redemptions from funds other than the money market funds
made within twelve months of purchase on investments of $1 million or more and
on any investment made with no initial sales charge by any employer-sponsored
403(b) plan or defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with 100 or more eligible
employees. The charge is 1% of the lesser of the value of the shares redeemed
(exclusive of reinvested dividends and capital gain distributions) or the total
cost of such shares.  Shares held for the longest period are assumed to be
redeemed first for purposes of calculating this charge.  The charge is waived
for exchanges (except if shares acquired by exchange were then redeemed within
12 months of the initial purchase); for distributions from qualified retirement
plans and other employee benefit plans; for redemptions resulting from
participant-directed switches among investment options within a
participant-directed employer-sponsored retirement plan; for distributions from
403(b) plans or IRAs due to death, disability or attainment of age 591/2; for
tax-free returns of excess contributions to IRAs; for redemptions through
certain automatic withdrawals not exceeding 10% of the amount that would
otherwise be subject to the charge; and for redemptions in connection with
loans made by qualified retirement plans.    
 
                  SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
   
AUTOMATIC INVESTMENT PLAN --  An automatic investment plan enables you to make
monthly or quarterly investments into the American Funds through automatic
debits from your bank account.  To set up the plan you must fill out an account
application and specify the amount you would like to invest ($50 minimum) and
the date on which you would like your investments to occur. The plan will begin
within 30 days after your account application is received.  Your bank account
will be debited on the day or a few days before your investment is made,
depending on the bank's capabilities.  American Funds Service Company will then
invest your money into the fund you specified on or around the date you
specified.  If your bank account cannot be debited due to insufficient funds, a
stop-payment order 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 writing to American Funds
Service Company.    
 
AUTOMATIC REINVESTMENT -- Dividends and capital gain distributions are
reinvested in additional shares at no sales charge 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, American
Funds Service Company or your investment dealer.
   
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS --  You may cross-reinvest
dividends and capital gains ("distributions") into any other fund in The
American Funds Group at net asset value, subject to the following
conditions:    
   
 (a) 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),    
   
 (b) If the value of the account of the fund receiving distributions is below
the minimum initial investment requirement, distributions must be automatically
reinvested,    
   
 (c) If you discontinue the cross-reinvestment of distributions, the value of
the account of the fund receiving distribution 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.    
 
EXCHANGE PRIVILEGE -- You may exchange shares into other funds in The American
Funds Group. Exchange purchases are subject to the minimum investment
requirements of the fund purchased and no sales charge generally applies.
However, exchanges of shares from the 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.
 
You may exchange shares by writing to American Funds Service Company (see
"Redeeming Shares"), by contacting your investment dealer, by using American
FundsLine(R) or American FundsLine OnLine(SM) (see "American FundsLine(R) and 
American FundsLine OnLine (SM)" below), or by telephoning 800/421-0180
toll-free, faxing (see "Principal Underwriter and Transfer Agent"  in the
Prospectus for the appropriate fax numbers) or telegraphing American Funds
Service Company. (See "Telephone and Computer Purchases, Redemptions and
Exchanges" below.)  Shares held in corporate-type retirement plans for which
Capital Guardian Trust Company serves as trustee may not be exchanged by
telephone, computer, fax or telegraph. Exchange redemptions and purchases are
processed simultaneously at the share prices next determined after the exchange
order is received. (See "Purchase of Shares--Price of Shares.") THESE
TRANSACTIONS HAVE THE SAME TAX CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
 
AUTOMATIC EXCHANGES -- You may automatically exchange shares in amounts of $50
or more among any of the funds in The American Funds Group on any day (or
preceding business day if the day falls on a non-business day) of each month
you designate.  You must either (a) meet the minimum initial investment
requirement for the receiving fund or (b) the originating fund's balance must
be at least $5,000 and the receiving fund's minimum must be met within one
year.
 
AUTOMATIC WITHDRAWALS -- 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 American
Funds Service Company. Dividend and capital gain reinvestments and purchases
through automatic investment plans and certain retirement plans will be
confirmed at least quarterly.
 
AMERICAN FUNDSLINE(R) AND AMERICAN FUNDSLINE ONLINE(SM)--  You may check your
share balance, the price of your shares, or your most recent account
transaction, redeem shares (up to $50,000 per shareholder each day), or
exchange shares around the clock with American FundsLine(R)  or American
FundsLine OnLine(SM). To use this service, call 800/325-3590 from a TouchTone
(TM) telephone or access the American Funds Web site on the Internet at
www.americanfunds.com.  Redemptions and exchanges through American FundsLine(R)
and  American FundsLine OnLine (SM) are subject to the conditions noted above
and in "Shareholder Account Services and Privileges -- Telephone and Computer
Purchases, Redemptions and Exchanges" below. You will need your fund number
(see the list of funds in The American Funds Group under "Purchase of
Shares--Investment Minimums and Fund Numbers"), personal identification number
(the last four digits of your Social Security number or other tax
identification number associated with your account) and account number.
   
TELEPHONE AND COMPUTER PURCHASES, REDEMPTIONS AND EXCHANGES --  By using the
telephone (including American FundsLine(R)) or computer (including American
FundsLine OnLine (SM)), fax or telegraph purchase redemption and/or exchange
options, 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 liability (including attorney fees) which may be
incurred in connection with the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these options. However, you may
elect to opt out of these options by writing American Funds Service Company
(you may also reinstate them at any time by writing American Funds Service
Company). If American Funds Service Company does not employ reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine, 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.    
   
SHARE CERTIFICATES -- Shares are credited to your account and certificates are
not issued unless you request them by writing to American Funds Service
Company.    
 
REDEMPTION OF SHARES -- The fund's Articles of Incorporation permit the fund to
direct the Transfer Agent to redeem the shares of any shareholder if (a) the
shares owned by such shareholder have a value (determined, for the purpose of
this sentence only, as the greater of the shareholder's cost or the then net
asset value of the shares, including the reinvestment of income dividends and
capital gain distributions, if any) of less than $150, or (b) such shareholder
owns less than ten (10) shares of capital stock of the fund.  Prior notice of
at least 60 days will be given to a shareholder before the involuntary
redemption provision is made effective with respect to the shareholder's
account.  The shareholder will have not less than 30 days from the date of such
notice within which to bring the account up to the minimum determined as set
forth above.  While payment of redemptions normally will be in cash, the fund's
Articles of Incorporation permit payment of the redemption price wholly or
partly in securities or other property included in the assets belonging to the
fund when in the opinion of the fund's Board of Directors, which shall be
conclusive, conditions exist which make payment wholly in cash unwise or
undesirable.
 
                      EXECUTION OF PORTFOLIO TRANSACTIONS
 
Orders for the fund's portfolio securities transactions are placed by the
Investment Adviser.  The Investment Adviser strives to obtain the best
available prices in its portfolio transactions taking into account the costs
and promptness of executions.  When circumstances relating to a proposed
transaction indicate that a particular broker (either directly or through their
correspondent clearing agents) is in a position to obtain the best price and
execution, the order is placed with that broker.  This may or may not be a
broker who has provided investment research, statistical, or other related
services to the Investment Adviser or has sold shares of the fund or other
funds served by the Investment Adviser.  The fund does not have an obligation
to obtain the lowest available commission rate to the exclusion of price,
service and qualitative considerations.
   
Portfolio transactions for the fund may be executed as part of concurrent
authorizations to purchase or sell the same security for other of the funds
served by the Investment Adviser, or for trusts or other accounts served by
affiliated companies of the Investment Adviser.  Although such concurrent
authorizations potentially could be either advantageous or disadvantageous to
the fund, they are effected only when the Investment Adviser believes that to
do so is in the interest of the fund.  When such concurrent authorizations
occur, the objective is to allocate the executions in an equitable manner.  The
fund will not pay a mark-up for research in principal transactioins.    
   
Brokerage commissions paid on portfolio transactions for the fiscal years ended
October 31, 1998, 1997 and 1996 amounted to $                   , $2,123,000
and $2,365,000, respectively.    
 
                              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 The Chase Manhattan Bank, One Chase Manhattan Plaza, New
York, NY  10081, as Custodian.  Non-U.S. securities may be held by the
Custodian pursuant to sub-custodial arrangements in non-U.S. banks or foreign
branches of U.S. banks.
   
TRANSFER AGENT -- American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
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.  American Funds Service Company was paid a fee
of $                      for the fiscal year ended October 31, 1998.    
   
INDEPENDENT ACCOUNTANTS -- PricewaterhouseCoopers LLP, 400 South Hope Street,
Los Angeles, CA  90071, has served as the fund's independent accountants since
the fund's inception, 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 given on the authority of said firm as
experts in auditing and accounting.    
   
REPORTS TO SHAREHOLDERS --  The fund's fiscal year ends on October 31. 
Shareholders are provided, at least semiannually, with reports showing the
investment portfolio, financial statements and other information.  The fund's
annual financial statements are audited by the fund's independent accountants,
PricewaterhouseCoopers LLP, whose selection is determined annually by the Board
of Directors.  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 shareholder reports.  To
receive additional copies of a report shareholders should contact the Transfer
Agent.    
   
YEAR 2000 -- The fund and its shareholders depend on the proper functioning of
computer systems maintained by the Investment Adviser and its affiliates and
other key service providers.  Many computer systems in use today will require
reprogramming or replacement prior to the year 2000 because of the way they
store dates and make date-related calculations.  The fund understands that
these service providers are taking steps to address the "Year 2000 problem". 
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the fund.  In addition, the fund's investments could be
adversely affected by the Year 2000 problem.  For example, the markets for
securities in which the fund invests could experience settlement problems and
liquidity issues. Corporate and governmental data processing errors may cause
losses for individual companies and overall economic uncertainties. Earnings of
individual issuers are likely to be affected by the costs of addressing the
problem, which may be substantial and may be reported inconsistently.    
   
PERSONAL INVESTING POLICY -- Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines.  This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; 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.    
 
The financial statements including the investment portfolio and the report of
Independent Accountants 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 -- OCTOBER 31, 1998
 Net asset value and redemption price per share
  (Net assets divided by shares outstanding)               $
 Maximum offering price per share
  (100/94.25 of per share net asset value, which takes
    into account the fund's current maximum sales charge)  $
    
REMOVAL OF DIRECTORS BY SHAREHOLDERS --  At any meeting of shareholders, duly
called and at which a quorum is present, shareholders holding a majority of the
votes entitled to be cast, remove any director or directors from office and may
elect a successor or 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 shall promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of any director when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
 
                   INVESTMENT RESULTS AND RELATED STATISTICS
   
The fund's yield is          % based on a 30-day (or one month) period ended
October 31, 1998, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:    
 
                         YIELD = 2[( a-b/cd + 1)/6/ -1]
 
 Where: a = dividends and interest earned during the period.
 
        b = expenses accrued for the period (net of reimbursements).
 
        c = the average daily number of shares outstanding during the period
that  were entitled to receive dividends.
 
        d = the maximum offering price per share on the last day of the period.
   
The fund's one-year total return and average annual total returns for the five-
and ten-year periods  ended October 31, 1998 was           % ,           % and 
         %, respectively.  The average annual total return ("T") is computed by
equating the value at the end of the period ("ERV") with a hypothetical initial
investment of $1,000 ("P") over a period of years ("n") according to the
following formula as required by the Securities and Exchange Commission: 
P(1+T)/n/ = ERV.    
 
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales charge of
5.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated.  
 
To calculate total return, an initial investment is divided by the offering
price (which includes the sales charge) as of the first day of the period in
order to determine the initial number of shares purchased.  Subsequent
dividends and capital gain distributions are then reinvested at net asset value
on the reinvestment date determined by the Board of Directors.  The sum of the
initial shares purchased and shares acquired through reinvestment is multiplied
by the net asset value per share as of the end of the period in order to
determine ending value.  The difference between the ending value and the
initial investment divided by the initial investment converted to a percentage
equals total return.  The resulting percentage indicates the positive or
negative investment results that an investor would have experienced from
reinvested dividends and capital gain distributions and changes in share price
during the period.  Total return may be calculated for one year, five years,
ten years and for other periods of years.  The average annual total return over
periods greater than one year also may be computed by utilizing ending values
as determined above.
 
The fund may also calculate a distribution rate on a taxable and tax equivalent
basis.  The distribution rate is computed by dividing the dividends paid by the
fund over the last 12 months by the sum of the month-end net asset value or
maximum offering price and the capital gains paid over the last 12 months.  The
distribution rate may differ from the yield.
 
The fund may also, at times, calculate total return based on net asset value
per share (rather than the offering price), in which case the figure would not
reflect the effect of any sales charges which would have been paid if shares
were purchased during the period reflected in the computation.  Consequently,
total return calculated in this manner will be higher.  Total return for the
unmanaged indices will be calculated assuming reinvestment of dividends and
interest, but will not reflect any deductions for advisory fees, brokerage
costs or administrative expenses.
 
The fund may include, in advertisements or in reports furnished to present or
prospective shareholders, information on its investment results and/or
comparisons of its investment results to various unmanaged indices (such as The
Dow Jones Average of 30 Industrial Stocks and The Standard and Poor's 500
Composite Stock Index) or results of other mutual funds or investment or
savings vehicles.  The fund may also, from time to time, combine its results
with those of other funds in The American Funds Group for purposes of
illustrating investment strategies involving multiple funds.
 
The fund may refer to results and surveys compiled by organizations such as CDA
Investment Technologies, Ibbottson Associates, Lipper Analytical Services,
Morningstar, Inc., Wiesenberger Investment Companies Services and by the U.S.
Department of Commerce.  Additionally, the fund may, from time to time, refer
to results published in various newspapers or periodicals, including BARRON'S,
FORBES, FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S PERSONAL FINANCE MAGAZINE,
MONEY, U.S. NEWS AND WORLD REPORT, and THE WALL STREET JOURNAL.
 
The fund may from time to time illustrate the benefits of tax-deferral by
comparing taxable investments to investments made through tax-deferred
retirement plans.
 
The fund may also from time to time compare its investment results with the
following:
 
 (1) Average of Savings Institutions deposits, which is a measure of all kinds
of savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions).  Savings deposits offer a
guaranteed rate of return on principal, but no opportunity for capital growth. 
The period shown may include periods during which the maximum rates paid on
some savings deposits were fixed by law.
 
 (2) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines and other goods and services that
people buy for day-to-day living).
 
The fund may also, from time to time, refer to statistics compiled by the U.S.
Department of Commerce.
 
The investment results set forth below were calculated as described in the
fund's prospectus.
   
<TABLE>
<CAPTION>
CIB VS. VARIOUS UNMANAGED INDICES                                                       
 
                                                                         
 
Lifetime               CIB              DJIA/1/            S&P 500/2/    
 
                                                                         
 
<S>                  <C>                <C>                <C>           
1987*- 10/31/98      +          %       +         %        +            %   
 
</TABLE>
    
 (*Since inception 7/30/87)
 
/1/ The Dow Jones Average of 30 Industrial Stocks is comprised of 30 industrial
companies such as General Motors and General Electric.
 
/2/ The Standard & Poor's 500 Stock Composite Index is comprised of industrial,
transportation, public utilities, and financial stocks and represents a large
portion of the value of issues traded on the New York Stock Exchange.  Selected
issues traded on the American Stock Exchange are also included.
 
Illustration of a $10,000 investment in CIB with
dividends reinvested and capital gain distributions taken in shares
(for the period July 30, 1987 through October 31, 1998)
   
<TABLE>
<CAPTION>
COST OF SHARES                                               VALUE OF SHARES                                                 
 
                                                                                                                          
 
Year                                         Total                          From              From                        
 
Ended          Annual       Dividends        Investment    From Initial     Capital Gains     Dividends      Total        
 
October 31     Dividends    (cumulative)     Cost          Investment       Reinvested        Reinvested     Value        
 
                                                                                                                          
 
<S>            <C>          <C>              <C>           <C>              <C>               <C>            <C>          
1987#          $92          $92              $10,092       $8,842           -                 $87            $8,929       
 
1988           494          586              10,586        9,429            -                 600            10,029       
 
1989           556          1,142            11,142        10,437           -                 1,252          11,689       
 
1990           633          1,775            11,775        9,737            -                 1,765          11,502       
 
1991           708          2,483            12,483        11,946           -                 2,912          14,858       
 
1992           792          3,275            13,275        12,821           $130              3,942          16,893       
 
1993           881          4,156            14,156        14,342           212               5,343          19,897       
 
1994           975          5,131            15,131        13,617           267               6,052          19,936       
 
1995           1,079        6,210            16,210        15,112           367               7,888          23,367       
 
1996           1,199        7,409            17,409        16,542           751                9,907         27,200       
 
1997           1,324        8,733            18,733        19,307           1,452             12,989         33,748       
 
1998                                                                                                                      
 
</TABLE>
    
   
# From July 30, 1987
The dollar amount of capital gain distributions during the period was $        
    .
EXPERIENCE OF THE INVESTMENT ADVISER - Capital Research and Management Company
manages nine growth and growth-income funds that are at least 10 years old.  In
the 10-year periods since January 1, 1968 (133 in all), those funds have had
better total returns than their comparable Lipper indexes in 124 of 133
periods.
 
Note that past results are not an indication of future investment results. 
Also, the fund has different investment policies than the funds mentioned
above.  These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
 
                DESCRIPTION OF COMMERCIAL PAPER AND BOND RATINGS
 
COMMERCIAL PAPER RATINGS - MOODY'S INVESTORS SERVICE, INC. employs the
designations "Prime-1," "Prime-2" and "Prime-3" to indicate commercial paper
having the highest capacity for timely repayment.  Issuers rated Prime-1 have a
superior capacity for repayment of short-term promissory obligations.  Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earnings coverage
of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.  Issues rated Prime-2 have a strong capacity for repayment
of short-term promissory obligations.  This will normally be evidenced by many
of the characteristics cited above, but to a lesser degree.  Earnings trends
and coverage ratios, while sound, will be more subject to variation. 
Capitalization characteristics, while still appropriate, may be more affected
by external conditions.  Ample alternate liquidity is maintained.
 
STANDARD & POOR'S CORPORATION'S ratings of commercial paper are graded into
four categories ranging from "A" for the highest quality obligations to "D" for
the lowest.  A -- Issues assigned its highest rating are regarded as having the
greatest capacity for timely payment.  Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety.  A-1 --
This designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong.  Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation.  A-2 -- Capacity for timely payments on issues with this
designation is strong;  however, the relative degree of safety is not as high
as for issues designated "A-1."
 
CORPORATE DEBT SECURITIES - MOODY'S INVESTORS SERVICE, INC. rates the long-term
debt securities issued by various entities from "Aaa" to "C".
 
"AAA -- Best quality.  These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edge."  Interest payments are
protected by a large, or by an exceptionally stable margin and principal is
secure.  While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues."
 
"AA -- High quality by all standards.  They are rated lower than the best bond
because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may be
other elements present which make the long-term risks appear somewhat greater."
 
"A -- Upper medium grade obligations.  These bonds possess many favorable
investment attributes.  Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future."
 
"BAA -- Medium grade obligations.  Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unre liable over any great length of time.  Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well."
 
"BA -- Have speculative elements; future cannot be considered as well assured. 
The protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future. 
Bonds in this class are characterized by uncertainty of position."
 
"B -- Generally lack characteristics of the desirable investment; assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small."
 
"CAA -- Of poor standing.  Issues may be in default or there may be present
elements of danger with respect to principal or interest."
 
"CA -- Speculative in a high degree; often in default or have other marked
shortcomings."
 
"C -- Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
 
STANDARD & POOR'S CORPORATION rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
 
"AAA -- Highest rating.  Capacity to pay interest and repay principal is
extremely strong."
 
"AA -- High grade.  Very strong capacity to pay interest and repay principal. 
Generally, these bonds differ from AAA issues only in a small degree."
 
"A -- Have a strong capacity to pay interest and repay principal, although they
are somewhat more susceptible to the adverse effects of change in circumstances
and economic conditions, than debt in higher rated categories."
 
"BBB -- Regarded as having adequate capacity to pay interest and repay
principal.  These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for debt in
higher rated categories."
 
"BB, B, CCC, CC, C -- Regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation.  BB indicates the lowest degree of speculation and C
the highest degree of speculation.  While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions."
 
"C1 -- Reserved for income bonds on which no interest is being paid."
 
"D -- In default and payment of interest and/or repayment of principal is in
arrears."
 
<PAGE>
                                      PART C
                               OTHER INFORMATION
                           CAPITAL INCOME BUILDER, INC.
   
ITEM 23.
(a)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(b)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(C)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(d)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(e)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(f) None.
(g)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(h)  None.
(i) Not applicable to this filing.
(j) Consent of Independent Auditors - to be filed by amendment.
(k) None.
(l)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(m)  Previously filed (see Post-Effective Amendment No. 12 filed December 30,
1997).
(n)  EX-27 Financial data schedule (EDGAR).
(o)  None.    
   
 
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.    
 
  None.
 
   
 
ITEM 25. INDEMNIFICATION.    
 
  Registrant is a joint-insured under an Investment Advisor/Mutual Fund Errors
and Omissions Policies written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company  and ICI Mutual Insurance
Company which insures its officers and Trustees 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.
 
  Article VIII of the Articles of Incorporation of the Fund provides that "The
Corporation shall indemnify (1) its directors to the full extent provided by
the general laws of the State of Maryland now or hereafter in force, including
the advance of expenses under the procedures provided by such laws; (2) its
officers to the same extent it shall indemnify its directors; and (3) its
officers who are not directors to such further extent as shall be authorized by
the Board of Directors and be consistent with law.  The foregoing shall not
limit the authority of the Corporation to indemnify other employees and agents. 
Any indemnification by the Corporation shall be consistent with the
requirements of law, including the Investment Company Act of 1940."
 
  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 therefor 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.
   
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF 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., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, 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.
   
 
<TABLE>
<CAPTION>
(B)                 (1)                                          (2)                              (3)                             
 
                                                                                                              
 
      NAME AND PRINCIPAL                     POSITIONS AND OFFICES            POSITIONS AND OFFICES           
 
      BUSINESS ADDRESS                       WITH UNDERWRITER                 WITH REGISTRANT                 
 
                                                                                                              
 
<S>   <C>                                    <C>                              <C>                             
      David L. Abzug                         Regional Vice President          None                            
 
      27304 Park Vista Road                                                                                   
      Agoura Hills, CA 91301                                                                                  
 
                                                                                                              
 
      John A. Agar                           Vice President                   None                            
      1501 N. University, Suite 227A                                                                          
      Little Rock, AR 72207                                                                                   
 
                                                                                                              
 
      Robert B. Aprison                      Vice President                   None                            
 
      2983 Bryn Wood Drive                                                                                    
 
      Madison, WI  53711                                                                                      
 
                                                                                                              
 
L     William W. Bagnard                     Vice President                   None                            
 
                                                                                                              
 
      Steven L. Barnes                       Senior Vice President            None                            
 
      5400 Mount Meeker Road                                                                                  
 
      Boulder, CO 80301                                                                                       
 
                                                                                                              
 
                                                                                                              
 
B     Carl R. Bauer                          Assistant Vice President         None                            
 
      Michelle A. Bergeron                   Vice President                   None                            
      4160 Gateswalk Drive                                                                                    
      Smyrna, GA 30080                                                                                        
 
                                                                                                              
 
      Joseph T. Blair                        Senior Vice President            None                            
 
      27 Drumlin Road                                                                                         
 
      West Simsbury, CT  06092                                                                                
 
                                                                                                              
 
      John A. Blanchard                      Vice President                   None                            
 
      6421 Aberdeen Road                                                                                      
 
      Mission Hills, KS 66208                                                                                 
 
                                                                                                              
 
      Ian B. Bodell                          Senior Vice President            None                            
 
      P.O. Box 1665                                                                                           
 
      Brentwood, TN 37024-1665                                                                                
 
                                                                                                              
 
      Michael L. Brethower                   Senior Vice President            None                            
 
      2320 North Austin Avenue                                                                                
 
      Georgetown, TX  78626                                                                                   
 
                                                                                                              
 
      C. Alan Brown                          Regional Vice President          None                            
 
 4129 Laclede Avenue                                                                                                           
       St. Louis, MO  63108                                                                                                         
 
 
                                                                                                              
 
H     J. Peter Burns                         Vice President                   None                            
 
                                                                                                              
 
      Brian C. Casey                         Regional Vice President          None                            
 
      8002 Greentree Road                                                                                     
 
      Bethesda, MD 20817                                                                                      
 
                                                                                                              
 
      Victor C. Cassato                      Senior Vice President            None                            
 
      609 W. Littleton Blvd., Suite 310                                                                       
 
      Littleton, CO  80120                                                                                    
 
                                                                                                              
 
      Christopher J. Cassin                  Senior Vice President            None                            
 
      111 W. Chicago Avenue, Suite G3                                                                         
 
      Hinsdale, IL 60521                                                                                      
 
                                                                                                              
 
      Denise M. Cassin                        Vice President                  None                            
 
      1301 Stoney Creek Drive                                                                                 
 
      San Ramon, CA 94538                                                                                     
 
                                                                                                              
 
L     Larry P. Clemmensen                    Director                         None                            
 
                                                                                                              
 
L     Kevin G. Clifford                      Director, President and Co-      None                            
                                             Chief Executive Officer                                          
 
                                                                                                              
 
      Ruth M. Collier                        Senior Vice President            None                            
 
      145 West 67th St., #12K                                                                                 
 
      New York, NY  10023                                                                                     
 
                                                                                                              
 
S     David Coolbaugh                        Assistant Vice President         None                            
 
                                                                                                              
 
      Thomas E. Cournoyer                    Vice President                   None                            
 
      2333 Granada Boulevard                                                                                  
 
      Coral Gables, FL  33134                                                                                 
 
                                                                                                              
 
      Douglas A. Critchell                   Senior Vice President            None                            
 
      3521 Rittenhouse Street, N.W.                                                                           
 
      Washington, D.C.  20015                                                                                 
 
                                                                                                              
 
L     Carl D. Cutting                        Vice President                   None                            
 
      Daniel J. Delianedis                   Regional Vice President          None                            
 
      8689 Braxton Drive                                                                                      
 
      Eden Prairie, MN 55347                                                                                  
 
                                                                                                              
 
      Michael A. Dilella                     Vice President                   None                            
 
      P. O. Box 661                                                                                           
 
      Ramsey, NJ  07446                                                                                       
 
                                                                                                              
 
      G. Michael Dill                        Senior Vice President            None                            
      505 E. Main Street                                                                                      
 
      Jenks, OK 74037                                                                                         
 
                                                                                                              
 
      Kirk D. Dodge                          Senior Vice President            None                            
 
      633 Menlo Avenue, Suite 210                                                                             
 
      Menlo Park, CA 94025                                                                                    
 
                                                                                                              
 
      Peter J. Doran                         Senior Vice President            None                            
 
      1205 Franklin Avenue                                                                                    
 
      Garden City, NY  11530                                                                                  
 
                                                                                                              
 
L     Michael J. Downer                      Secretary                        None                            
 
                                                                                                              
 
      Robert W. Durbin                       Vice President                   None                            
 
      74 Sunny Lane                                                                                           
 
      Tiffin, OH  44883                                                                                       
 
                                                                                                              
 
I     Lloyd G. Edwards                       Senior Vice President            None                            
 
                                                                                                              
 
L     Paul H. Fieberg                        Senior Vice President            None                            
 
                                                                                                              
 
      John Fodor                              Vice President                  None                            
 
      15 Latisquama Road                                                                                      
 
      Southborough, MA 01772                                                                                  
 
                                                                                                              
 
L     Mark P. Freeman, Jr.                   Director                         None                            
 
                                                                                                              
 
      Clyde E. Gardner                       Senior Vice President            None                            
 
      Route 2, Box 3162                                                                                       
 
      Osage Beach, MO  65065                                                                                  
 
                                                                                                              
 
B     Evelyn K. Glassford                    Vice President                   None                            
 
                                                                                                              
 
      Jeffrey J. Greiner                      Vice President                  None                            
 
      12210 Taylor Road                                                                                       
 
      Plain City, OH 43064                                                                                    
 
L     Paul G. Haaga, Jr.                     Director                         Chairman of the Board           
 
                                                                                                              
 
B     Mariellen Hamann                       Assistant Vice President         None                            
 
                                                                                                              
 
      David E. Harper                        Senior Vice President            None                            
 
      R.D. 1, Box 210, Rte 519                                                                                
 
      Frenchtown, NJ  08825                                                                                   
 
                                                                                                              
 
      Ronald R. Hulsey                       Vice President                   None                            
 
      6744 Avalon                                                                                             
 
      Dallas, TX  75214                                                                                       
 
                                                                                                              
 
      Robert S. Irish                        Regional Vice President          None                            
 
      1225 Vista Del Mar Drive                                                                                
 
      Delray Beach, FL 33483                                                                                  
 
                                                                                                              
 
L     Robert L. Johansen                     Vice President                   None                            
 
                                                                                                              
 
      Michael J. Johnston                    Director                         None                            
 
      630 Fifth Avenue, 36th Floor                                                                            
 
      New York, NY 10111                                                                                      
 
                                                                                                              
 
B     Damien M. Jordan                       Vice President                   None                            
 
                                                                                                              
 
      V. John Kriss                          Senior Vice President            None                            
 
      P. O. Box 247                                                                                           
 
      Surfside, CA 90743                                                                                      
 
                                                                                                              
 
      Arthur J. Levine                       Senior Vice President            None                            
 
      12558 Highlands Place                                                                                   
 
      Fishers, IN  46038                                                                                      
 
                                                                                                              
 
B     Karl A. Lewis                          Assistant Vice President         None                            
 
                                                                                                              
 
      T. Blake Liberty                       Regional Vice President          None                            
 
      5506 East Mineral Lane                                                                                  
 
      Littleton, CO 80122                                                                                     
 
                                                                                                              
 
L     Lorin E. Liesy                         Assistant Vice President         None                            
 
                                                                                                              
 
L     Susan G. Lindgren                      Vice President - Institutional   None                            
 
                                             Investment Services                                              
 
                                                                                                              
 
S     Stella Lopez                           Vice President                   None                            
 
                                                                                                              
 
LW    Robert W. Lovelace                     Director                         None                            
 
                                                                                                              
 
      Stephen A. Malbasa                      Vice President                  None                            
 
      13405 Lake Shore Blvd.                                                                                  
 
      Cleveland, OH  44110                                                                                    
 
                                                                                                              
 
      Steven M. Markel                       Senior Vice President            None                            
 
      5241 South Race Street                                                                                  
 
      Littleton, CO 80121                                                                                     
 
                                                                                                              
 
L     J. Clifton Massar                      Director, Senior Vice President   None                            
 
                                                                                                              
 
L     E. Lee McClennahan                     Senior Vice President            None                            
 
                                                                                                              
 
L     Jamie R. McCrary                       Assistant Vice President         None                            
 
                                                                                                              
 
S     John V. McLaughlin                     Senior Vice President            None                            
 
                                                                                                              
 
      Terry W. McNabb                        Vice President                   None                            
 
      2002 Barrett Station Road                                                                               
 
      St. Louis, MO  63131                                                                                    
 
                                                                                                              
 
L     R. William Melinat                     Vice President - Institutional   None                            
 
                                             Investment Services                                              
 
                                                                                                              
 
      David R. Murray                        Vice President                   None                            
 
      60 Briant Drive                                                                                         
 
      Sudbury, MA 01776                                                                                       
 
                                                                                                              
 
      Stephen S. Nelson                      Vice President                   None                            
 
      P.O. Box 470528                                                                                         
 
      Charlotte, NC  28247-0528                                                                               
 
                                                                                                              
 
      William E. Noe                         Regional Vice President          None                            
 
      304 River Oaks Road                                                                                     
 
      Brentwood, TN 37027                                                                                     
 
                                                                                                              
 
      Peter A. Nyhus                         Vice President                   None                            
 
      3084 Wilds Ridge Court                                                                                  
 
      Prior Lake, MN 55372                                                                                    
 
      Eric P. Olson                          Vice President                   None                            
 
      62 Park Drive                                                                                           
 
      Glenview, IL 60025                                                                                      
 
                                                                                                              
 
      Fredric Phillips                       Vice President                   None                            
 
      175 Highland Avenue, 4th Floor                                                                          
 
      Needham, MA 02494                                                                                       
 
                                                                                                              
 
B     Candance D. Pilgrim                    Assistant Vice President         None                            
 
                                                                                                              
 
      Carl S. Platou                         Vice President                   None                            
 
      4021 96th Avenue, S.E.                                                                                  
 
      Mercer Island, WA 98040                                                                                 
 
                                                                                                              
 
L     John O. Post                           Vice President                   None                            
 
                                                                                                              
 
S     Richard P. Prior                       Assistant Vice President         None                            
 
                                                                                                              
 
      Steven J. Reitman                      Senior Vice President            None                            
 
      212 The Lane                                                                                            
 
      Hinsdale, IL  60521                                                                                     
 
                                                                                                              
 
      Brian A. Roberts                        Vice President                  None                            
 
      P.O. Box 472245                                                                                         
 
      Charlotte, NC  28247                                                                                    
 
                                                                                                              
 
      George S. Ross                         Senior Vice President            None                            
 
      55 Madison Avenue                                                                                       
 
      Morristown, NJ  07962                                                                                   
 
                                                                                                              
 
L     Julie D. Roth                          Vice President                   None                            
 
                                                                                                              
 
L     James F. Rothenberg                    Director                         None                            
 
                                                                                                              
 
      Douglas F. Rowe                        Vice President                   None                            
 
      30008 Oakland Hills Drive                                                                               
 
      Georgetown, TX 78628                                                                                    
 
                                                                                                              
 
      Christopher S. Rowey                   Regional Vice President          None                            
 
      9417 Beverlywood Street                                                                                 
 
      Los Angeles, CA 90034                                                                                   
 
                                                                                                              
 
      Dean B. Rydquist                       Senior Vice President            None                            
 
      1080 Bay Pointe Crossing                                                                                
 
      Alpharetta, GA 30005                                                                                    
 
                                                                                                              
 
      Richard R. Samson                      Senior Vice President            None                            
 
      4604 Glencoe Avenue, #4                                                                                 
 
      Marina del Rey, CA  90292                                                                               
 
                                                                                                              
 
      Joseph D. Scarpitti                    Vice President                   None                            
 
      31465 St. Andrews                                                                                       
 
      Westlake, OH 44145                                                                                      
 
                                                                                                              
 
L     R. Michael Shanahan                    Director                         None                            
 
                                                                                                              
 
      David W. Short                         Director, Chairman of the Board and Co-Chief Executive Officer   None                  
         
      1000 RIDC Plaza, Suite 212                                                                              
      Pittsburgh, PA  15238                                                                                   
 
                                                                                                              
 
      William P. Simon, Jr.                  Senior Vice President            None                            
 
      912 Castlehill Lane                                                                                     
 
      Devon, PA 91333                                                                                         
 
                                                                                                              
 
L     John C. Smith                          Assistant Vice President - Institutional Investment Services   None                    
       
 
                                                                                                              
 
      Rodney G. Smith                        Vice President                   None                            
 
      100 N. Central Expressway                                                                               
      Suite 1214                                                                                              
 
      Richardson, TX  75080                                                                                   
 
                                                                                                              
 
      Nicholas D. Spadaccini                 Regional Vice President          None                            
 
      855 Markley Woods Way                                                                                   
 
      Cincinnati, OH 45230                                                                                    
 
                                                                                                              
 
L     Kristen J. Spazafumo                   Assistant Vice President         None                            
 
                                                                                                              
 
      Daniel S. Spradling                    Senior Vice President            None                            
 
      181 Second Avenue                                                                                       
      Suite 228                                                                                               
 
      San Mateo, CA  94401                                                                                    
 
                                                                                                              
 
B     Max D. Stites                          Vice President                   None                            
 
                                                                                                              
 
      Thomas A. Stout                        Regional Vice President          None                            
 
      3919 Whooping Crane Circle                                                                              
      Virginia Beach, VA 23455                                                                                
 
                                                                                                              
 
                                                                                                              
 
      Craig R. Strauser                      Vice President                   None                            
 
      3 Dover Way                                                                                             
 
      Lake Oswego, OR 97034                                                                                   
 
                                                                                                              
 
      Francis N. Strazzeri                    Vice President                  None                            
 
      31641 Saddletree Drive                                                                                  
 
      Westlake Village, CA 91361                                                                              
 
                                                                                                              
 
L     Drew W. Taylor                         Assistant Vice President         None                            
 
                                                                                                              
 
S     James P. Toomey                         Vice President                  None                            
 
                                                                                                              
 
I     Christopher E. Trede                    Vice President                  None                            
 
                                                                                                              
 
      George F. Truesdail                    Vice President                   None                            
 
      400 Abbotsford Court                                                                                    
 
      Charlotte, NC  28270                                                                                    
 
                                                                                                              
 
      Scott W. Ursin-Smith                   Vice President                   None                            
 
      60 Reedland Woods Way                                                                                   
 
      Tiburon, CA 94920                                                                                       
 
                                                                                                              
 
L     David M. Ward                          Vice President - Institutional Investment Services   None                            
 
                                                                                                              
 
      Thomas E. Warren                       Regional Vice President          None                            
 
      119 Faubel Street                                                                                       
 
      Sarasota, FL  34242                                                                                     
 
                                                                                                              
 
L     J. Kelly Webb                          Senior Vice President, Treasurer   None                            
 
                                                                                                              
 
      Gregory J. Weimer                      Vice President                   None                            
 
      206 Hardwood Drive                                                                                      
 
      Venetia, PA 15367                                                                                       
 
                                                                                                              
 
B     Timothy W. Weiss                       Director                         None                            
 
                                                                                                              
 
      N. Dexter Williams                     Senior Vice President            None                            
      P.O. Box 2200                                                                                           
      Danville, CA 94526                                                                                      
 
                                                                                                              
 
      Timothy J. Wilson                      Vice President                   None                            
 
      113 Farmview Place                                                                                      
 
      Venetia, PA  15367                                                                                      
 
                                                                                                              
 
B     Laura L. Wimberly                       Vice President                  None                            
 
                                                                                                              
 
H     Marshall D. Wingo                      Director, Senior Vice President   None                            
 
                                                                                                              
 
L     Robert L. Winston                      Director, Senior Vice President   None                            
 
                                                                                                              
 
      Laurie B. Wood                         Regional Vice President          None                            
 
      3500 W. Camino de Urania                                                                                
 
      Tucson, AZ 85741                                                                                        
 
                                                                                                              
 
      William R. Yost                        Vice President                   None                            
 
      9320 Overlook Trail                                                                                     
 
      Eden Prairie, MN 55347                                                                                  
 
                                                                                                              
 
      Janet M. Young                         Regional Vice President          None                            
 
      1616 Vermont                                                                                            
 
      Houston, TX  77006                                                                                      
 
                                                                                                              
 
      Scott D. Zambon                        Regional Vice President          None                            
 
      320 Robinson Drive                                                                                      
 
      Tustin Ranch, CA 92782                                                                                  
 
</TABLE>
 
    
L Business Address, 333 South Hope Street, Los Angeles, CA  90071
LW Business Address, 11100 Santa Monica Boulevard, 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    
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240 
 (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 kept in the
offices of the fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071.  Certain accounting
records are maintained and kept in the offices of the fund's accounting
department, 135 South State College Blvd., Brea, CA  92821.
   
  Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA 
92821, 3500 Wiseman Boulevard, San Antonio, TX 78251, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN  42640 and 5300 Robin Hood Road, Norfolk, VA 
23514.    
 
  Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081.
   
ITEM 29. MANAGEMENT SERVICES.    
 
  None.
   
ITEM 30. UNDERTAKINGS.    
 
n/a
 
<PAGE>
                            SIGNATURE OF REGISTRANT
 
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, and State of California, on the 29th day of October,
1998.
 
 CAPITAL INCOME BUILDER, INC.
 By    /s/ Paul G. Haaga, Jr.
 (Paul G. Haaga, Jr., Chairman of the Board)
 
Pursuant to the requirements of the Securities Act of 1933, this amendment to
its Registration Statement has been signed below on October 29, 1998, by the
following persons in the capacities indicated.
 
<TABLE>
<CAPTION>
<S>      <C>                                           <C>                                
         SIGNATURE                                     TITLE                              
 
                                                                                          
 
(1)      Principal Executive Officer:                                                     
 
                                                                                          
 
                                                                                          
 
         /s/ James B. Lovelace                         President and Director             
 
         (James B. Lovelace)                                                              
 
                                                                                          
 
(2)      Principal Financial Officer and                                                  
 
         Principal Accounting Officer:                                                    
 
                                                                                          
 
                                                                                          
 
          /s/ R. Marcia Gould                          Treasurer                          
 
             (R. Marica Gould)                                                            
 
                                                                                          
 
(3)      Directors:                                                                       
 
                                                                                          
 
         H. Frederick Christie*                        Director                           
 
                                                                                          
 
                                                                                          
 
         /s/ Paul G. Haaga, Jr.                        Chairman of the Board              
         (Paul G. Haaga, Jr.)                                                             
 
         Mary Myers Kauppila                           Director                           
 
         /s/ James B. Lovelace                         President and Director             
         (James B. Lovelace)                                                              
 
         Jon B. Lovelace*                              Vice Chairman of the Board         
 
         Gail L. Neale*                                Director                           
 
         Robert J. O'Neill                             Director                           
 
         Donald E. Petersen*                           Director                           
 
         Stefanie Powers                               Director                           
 
         Frank Stanton*                                Director                           
 
         Charles Wolf, Jr.*                            Director                           
 
</TABLE>
 
 *By  /s/ Vincent P. Corti
 (Vincent P. Corti, Attorney-in-Fact)