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Previous: PRAIRIE MUNICIPAL BOND FUND INC, NSAR-B, 1995-05-09 |
Next: TEMPLETON VARIABLE PRODUCTS SERIES FUND, 497, 1995-05-09 |
Intermediate Bond Fund of America
Semi-Annual Report
for the six months
ended February 28, 1995
[The American Funds Group(R)]
Intermediate Bond Fund of America(R) seeks current income and preservation of
capital primarily through high-quality bonds with effective maturities between
three and 10 years.
Fund results in this report were computed without a sales charge, unless
otherwise indicated. Here are the total returns and average annual compound
returns for the period ended March 31, 1995 (the most recent calendar quarter)
on an investment at the 4.75% maximum sales charge with all distributions
reinvested-Since inception on 2/19/88: +56.45%, or +6.50% a year; five years:
+38.43%, or +6.72% a year; 12 months: -1.14%. Sales charges are lower for
accounts of $25,000 or more. The fund's 30-day yield as of March 31, 1995,
calculated in accordance with the Securities and Exchange Commission formula,
was 6.18%. The fund's distribution rate as of that date was 6.48%. The SEC
yield reflects income earned by the fund, while the distribution rate reflects
dividends actually paid by the fund.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY HAVE A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY,
THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY, OR PERSON. All investments are
subject to certain risks. For example, those which include bonds are affected
by interest rate fluctuations. Accordingly, investors should maintain a
long-term perspective.
FELLOW SHAREHOLDERS:
Interest rates rose and bond prices declined for several months following the
start of our fiscal year last September 1. Then, in the latter part of the
fiscal half, the picture began to brighten for the bond market. As economic
statistics signaled a slowing in the rate of economic growth, credit markets
rallied.
Amid the bond market's fluctuations, Intermediate Bond Fund of America
continued to provide shareholders with a steady stream of attractive income.
Over the six months ended February 28, the fund paid dividends totaling 47 1/2
cents a share. Over the past 12 months, dividends totaled 93 cents a share. If,
like most of the fund's shareholders, you reinvested those dividends, your
12-month income return was 6.84%. If you took your dividends in cash, your
income return was 6.62%.
Meanwhile, despite their recent rally, the prices of intermediate-term bonds
ended the six-month period somewhat lower than where they began. Over this
period, the fund recorded a positive total return of 2.4%, with income more
than offsetting a 1.2% decline in share value. By comparison, the 138
intermediate-term bond funds tracked by Lipper Analytical Services rose an
average of 2.5% and the unmanaged Salomon Brothers Broad Investment-Grade
Medium Term Bond Index increased 3.2% (both also with income reinvested).
GROWTH AND INFLATION
Significant growth in the economy last year created concerns at the Federal
Reserve about inflation. To restrain economic growth and inflationary
pressures, the Fed first moved to raise interest rates in February 1994, when
it increased the federal funds rate-the rate that banks charge each other for
overnight loans-from 3% to 3.25%. By the end of February 1995-six additional
rate hikes later-this short-term rate stood at 6.0%. Higher short-term rates,
together with increased demand for credit, resulted in a rise in interest rates
across all maturities.
While any pickup in the rate of inflation has so far been small, we believe
that the U.S. economy may well maintain enough growth to generate a modest
increase in inflation as 1995 progresses. The Federal Reserve also anticipates
that inflation will be somewhat higher this year. Fed Chairman Alan Greenspan,
in his testimony before Congress in February, said the nation's central bank
projected that consumer prices will climb between 3% and 3.5% in calendar 1995.
He acknowledged that the Fed had raised short-term rates "to head off
inflationary pressures not yet evident in the data." By the same token, he
noted that "there may come a time when we hold our policy stance unchanged, or
even ease, despite adverse price data, should we see signs that underlying
forces are acting ultimately to reduce inflation pressures."
All the same, we would not be surprised to see another one or two hikes in
short-term rates in the months ahead. While intermediate rates may rise as
well, we do not expect them to go up anywhere near as much as they did in 1994.
INCOME AND STABILITY
When the fund was introduced in 1988, we hoped that it would provide higher
and more stable income than short-term investments and greater stability than
long-term bonds. That has turned out to be the case despite the fact that
yields on intermediate-maturity issues fluctuated more last year than in any
other year over the past four decades.
The fund's share price has tended to move within a relatively modest range.
Over the fund's lifetime, shareholders have received approximately 40% more
income than they would have from three-month Treasury bills (which have stable
prices) and about 90% of the income they would have received from 30-year
Treasury bonds (whose prices were about twice as volatile).
The fund's 2.4% gain during our recent semi-annual period brings the fund's
lifetime total return to 63.2%, or an average compound rate of 7.2% with
distributions reinvested. That, incidentally, is more than two times the 30.1%
increase in the Consumer Price Index over the same period.
During the first half of the fiscal year, we made a number of adjustments in
Intermediate Bond Fund of America's portfolio. The portion held in corporate
bonds was somewhat reduced as the yield advantage they traditionally enjoy over
U.S. Treasury securities narrowed. In effect, we were able to upgrade
Intermediate Bond Fund of America's already high-quality portfolio with little
sacrifice in yield by increasing the share of the portfolio represented by
government bonds. Treasuries and other federal agency obligations currently
make up more than two-thirds of the fund's net assets.
We also shortened the average maturity of the bonds in the port-folio during
the past six months. This should put the fund in a better position to weather
any further market declines and to take advantage of higher yielding
opportunities as they emerge.
We will continue to monitor economic activity, Federal Reserve policy,
investor sentiment, and a host of other factors that affect interest rates and
bond prices. We look forward to reporting to you again in six months.
Cordially,
Paul G. Haaga, Jr.
Chairman of the Board
Abner D. Goldstine
President
April 12, 1995
Intermediate Bond Fund of America
Investment Portfolio February 28, 1995 (Unaudited)
NON-U.S. GOVERNMENT BONDS AND DEVELOPMENT AGENCIES........4%
CORPORATE BONDS...........................................5%
CASH EQUIVALENTS..........................................8%
FEDERAL AGENCY OBLIGATIONS-NON-MORTGAGE...................10%
ASSET-BACKED OBLIGATIONS..................................12%
MORTGAGE-BACKED SECURITIES................................21%
U.S. TREASURY SECURITIES..................................40%
<TABLE>
<CAPTION>
Principal Market Percent
Amount Value of Net
(000) (000) Assets
<S> <C> <C> <C>
Bonds & Notes
Industrial & Service- .65%
BP America Inc. 10.00% 2018 (1998)/1/ $2,600 $2,893 .20%
Donnelley (R.R) & Sons Co. 9.125% 2000 2,000 2,125 .14
Fletcher Challenge Finance U.S.A., Inc. 9.80% 1998 1,000 1,057 .07
Schering-Plough Corp. 0% 1996 4,000 3,544 .24
------------- --------
9,619 .65
------------ --------
Utilities- .66%
Nippon Telegraph and Telephone Corp. 9.50% 1998 6,000 6,369 .43
Northern Telecommunications 8.75% 2001 3,250 3,395 .23
------------ --------
9,764 .66
----------- --------
Financial- 3.63%
Bank of Nova Scotia 3.5625%/2/,/3/ 1,000 781 .05
Beverly Finance Corp. 8.36% 2004 10,000 9,814 .66
Corporate Property Investors 9.00% 2002 23,500 24,536 1.66
General Electric Capital Corp. 8.375% 2001 1,500 1,554 .11
National Australia Bank 9.70% 1998 3,000 3,203 .22
National Westminster Bancorp Inc. 12.125% 2002 1,000 1,109 .07
(1997)/1/
S & S Finance International, Inc. 10.125% Euronotes 12,180 12,698 .86
1996
------------ --------
53,695 3.63
------------ --------
Collateralized Mortgage Obligations
(Privately Originated)/1/- 5.66%
Chase Manhattan Bank, 1993-I, Class 2A-5, 7.25% 2024 7,500 7,041 .48
Merrill Lynch Mortgage Investors Inc., Series 1992B,
Class A-2,
8.05% 2012 7,500 7,533 .51
Merrill Lynch Mortgage Investors Inc., Series 1992B,
Class A-3,
8.30% 2012 10,000 10,103 .68
Nomura Asset Securities Corp., Series 1994-MD1,
Class A-1A
7.376% 2018/1/ 3,851 3,798 .26
Nomura Asset Securities Corp., Series 1994-MD1,
Class A-1B
7.526% 2018 /1/ 26,040 25,584 1.73
Prudential Home Mortgage Securities Co., Inc.,
Series
1992-33, Class A-12, 7.50% 2022 2,000 1,978 .13
Prudential Home Mortgage Securities Co., Inc.,
Series
1992-37, Class A-6, 7.00% 2022 11,710 11,505 .78
Resolution Trust Corp., Series 1992-6, Class A-2B, 4,050 4,052 .27
8.40% 2024
Resolution Trust Corp., Series 1992-7, Class A-2D, 7,453 7,456 .50
8.35% 2029
Travelers Mortgage Services, Inc., ,pass-through
certificates,
Series 1989-9, Class Z-2, 8.80% 2019 4,676 4,705 .32
------------ --------
83,755 5.66
------------ --------
Asset-Backed Obligations/1/- 12.63%
Chemical Financial Acceptance Corp., 1989-A, 9.25% 15,343 15,574 1.05
1998
Discover Card Trust, 1991-D, Class A, 8.00% 2000 10,000 10,159 .69
Ford Motor Credit Co. 1994, Class A, 6.35% 1999 2,166 2,153 .15
GCC Home Equity Trust, asset-backed certificates,
Series
1990-1, 10.00% 2005 6,188 6,300 .43
Green Tree Financial Corp., pass-through
certificates,
Series 1993-3, Class A5, 5.75% 2018 10,000 8,922 .60
Green Tree Financial Corp., pass-through
certificates,
Series 1995-1, Class A2, 7.80% 2025 12,000 12,030 .81
Green Tree Financial Corp., pass-through
certificates,
Series 1995-1, Class A3, 7.95% 2025 4,000 4,015 .27
MBNA Credit Card Trust, asset-backed certificates,
Series
1991-1, 7.75% 1998 10,000 10,081 .68
Sears Credit Account Trust, Series 1991-D, 7.75% 10,000 10,088 .68
1998
Sears Credit Account Trust, Series 1991-B1, 8.60% 10,000 10,184 .69
1998
Sears Credit Account Trust, Series 1991-C, 8.65% 24,100 24,574 1.66
1998
Standard Credit Card Master Trust I, credit card
participation
certificates, Series 1991-1A, 8.50% 1997 5,000 5,088 .34
Standard Credit Card Master Trust I, credit card
participation
certificates, Series 1991-3A, 8.875% 1999 9,050 9,466 .64
Standard Credit Card Master Trust I, credit card
participation
certificates, Series 1991-6A, 7.875% 2000 42,000 42,669 2.88
Standard Credit Card Trust , credit card
participation
certificates, Series 1990-6A, 9.375% 1998 1,500 1,566 .11
Town & Country Funding Corp. 5.85% 2000 15,000 13,987 .95
------------ --------
186,856 12.63
------------- --------
Governments (excluding U.S. Government) &
Government Authorities- 3.79%
British Columbia Hydro and Power Authority 12.50% 2,000 2,363 .16
2013 (1998)/1/
Japan Finance Corp. for Municipal Enterprises 9.125% 3,000 3,205 .22
2000
Ontario (Province of) 7.75% 2002 15,000 14,958 1.01
Ontario (Province of) 17.00% 2011 (1996)/1/ 3,100 3,747 .25
Ontario (Province of) 15.25% 2012 (1997)/1/ 5,550 6,781 .46
Ontario (Province of) 15.75% 2012 (1997)/1/ 105 126 .01
Ontario (Province of) 11.50% 2013 (1997)/1/ 3,000 3,396 .23
Ontario (Province of) 11.75% 2013 (1998)/1/ 4,500 5,169 .35
County of Orange, California Taxable Pension
Obligation Bonds
Series 1994A 6.810% due 9/01/96 5,000 4,660 .31
Republic of Italy 6.00% 2003 5,000 4,378 .30
Victorian (Territory of) Public Authorities Finance
Agency
8.45% 2001 7,000 7,249 .49
------------ --------
56,032 3.79
------------ --------
Development Authorities- 0.89%
African Development Bank 9.30% 2000 3,750 3,991 .27
International Bank for Reconstruction and
Development
14.90% 1997 8,000 9,237 .62
------------ --------
13,228 .89
------------ --------
Federal Agency Mortgage Pass-Through Obligations/4/-
14.36%
Federal Home Loan Mortgage Corp. 8.00% 2003-2010 3,410 3,389 .23
Federal Home Loan Mortgage Corp. 8.50% 2008-2021 3,534 3,582 .24
Federal Home Loan Mortgage Corp. 8.75% 2008-2009 1,726 1,752 .12
Federal Home Loan Mortgage Corp. 9.50% 2013 923 967 .07
Federal Home Loan Mortgage Corp. 10.00% 2004 599 637 .04
Federal Home Loan Mortgage Corp. 11.00% 2018 92 98 .01
Federal Home Loan Mortgage Corp. 12.00% 2013 343 373 .03
Federal Home Loan Mortgage Corp. 12.50% 2013 184 208 .01
Federal Home Loan Mortgage Corp. 12.75% 2019 91 103 .01
Federal National Mortgage Assn. 7.00% 2023 6,349 5,992 .40
Federal National Mortgage Assn. 7.50% 2009-2024 32,257 31,727 2.14
Federal National Mortgage Assn. 8.00% 2002-2005 3,934 3,963 .27
Federal National Mortgage Assn. 8.50% 2008-2023 16,743 16,971 1.15
Federal National Mortgage Assn. 9.00% 2001-2022 12,576 12,953 .88
Federal National Mortgage Assn. 9.50% 2010-2020 2,307 2,426 .16
Federal National Mortgage Assn. 10.00% 2019 1,756 1,874 .13
Federal National Mortgage Assn. 10.50% 2004 906 976 .07
Federal National Mortgage Assn. 11.00% 2000-2010 884 953 .06
Federal National Mortgage Assn. 12.25% 2013 87 93 .01
Government National Mortgage Assn. 4.50% 2024 /2/ 83,616 78,584 5.30
Government National Mortgage Assn. 5.00%/1/024 /1/ 10,037 9,559 .64
Government National Mortgage Assn. 5.50% 2023-2024 /1/ 4,106 3,866 .25
Government National Mortgage Assn. 8.00% 2023 1,625 1,616 .11
Government National Mortgage Assn. 8.50% 2007-2022 10,222 10,483 .71
Government National Mortgage Assn. 9.00% 2008-2021 9,149 9,457 .64
Government National Mortgage Assn. 9.50% 2016-2020 6,696 7,054 .48
Government National Mortgage Assn. 9.75% 1999 302 315 .02
Government National Mortgage Assn. 10.25% 2012 445 471 .03
Government National Mortgage Assn. 10.50% 2019 212 231 .02
Government National Mortgage Assn. 11.00% 2010-2019 625 688 .05
Government National Mortgage Assn. 11.50% 2010-2013 427 472 .03
Government National Mortgage Assn. 12.50% 2010-2014 672 757 .05
------------ --------
212,590 14.36
------------ --------
Federal Agency Collateralized Mortgage Obligations/4/-
1.12%
Federal Home Loan Mortgage Corp., Class B-3, 12.50% 240 257 .02
2013
Federal National Mortgage Assn., Series 91-50, Class
H, 7.75%
2006 9,000 8,946 .60
Federal National Mortgage Assn., Series 91-146,
Class Z, 8.00%
2006 3,261 3,182 .22
Federal National Mortgage Assn., Series 88-16, Class
B, 9.50%
2018 1,095 1,157 .08
Federal National Mortgage Assn., Series 90-93, Class
G, 5.50%
2020 3,600 2,968 .20
------------ --------
16,510 1.12
------------ --------
Federal Agency Obligations-Non-Mortgage- 9.70%
Federal Farm Credit Bank 8.13% 1997 15,000 15,019 1.01
Federal Home Loan Bank Bonds 6.00% 1996 15,000 14,917 1.01
Federal Home Loan Bank Notes 6.38% 2003 4,000 3,612 .24
Federal Home Loan Bank Notes 6.16% 2004 10,000 8,972 .61
Federal Home Loan Bank Notes 6.27% 2004 3,000 2,710 .18
Federal Home Loan Mortgage Notes 6.30% 2003 9,300 8,422 .57
Federal Home Loan Mortgage Notes 6.39% 2003 2,000 1,823 .12
Federal Home Loan Mortgage Notes 6.50% 2003 2,000 1,803 .12
Federal Home Loan Mortgage Notes 6.61% 2003 16,650 15,505 1.05
Federal Home Loan Mortgage Notes 6.19% 2004 9,000 8,047 .54
Federal National Mortgage Assn., Medium-Term Note 3,000 2,693 .18
6.14% 2004
Federal National Mortgage Assn. 6.30% 1997 15,470 15,059 1.02
Federal National Mortgage Assn. 6.40% 2004 1,500 1,363 .09
FNSM Callable Principal STRIPS, 1991-B4, 0%/7.94% 20,000 17,412 1.18
2001/1/
FNSM Callable Principal STRIPS, 1991-B8, 0%/7.89% 25,000 21,250 1.44
2002/1/
Student Loan Marketing Assn. 6.88% 1996 5,000 4,975 .34
------------ --------
143,582 9.70
------------ --------
U.S. Treasury Obligations- 40.03%
9.375% April 1996 75,000 77,250 5.22
7.250% August 1996 12,000 12,107 .82
6.875% October 1996 40,000 40,088 2.71
6.750% February 1997 70,000 69,989 4.73
8.500% April 1997 15,000 15,502 1.05
8.125% February 1998 106,000 109,412 7.39
7.875% April 1998 5,000 5,120 .35
9.00% May 1998 5,000 5,291 .36
9.25% August 1998 29,250 31,266 2.11
5.125% November 1998 42,000 39,441 2.67
9.125% May 1999 31,250 33,613 2.27
6.750% June 1999 70,000 69,256 4.68
8.00% May 2001 8,000 8,353 .56
7.875% August 2001 30,000 31,148 2.10
13.375% August 2001 15,000 19,809 1.34
15.75% November 2001 15,000 21,806 1.47
7.250% May 2004 3,000 3,003 .20
------------ --------
592,454 40.03
------------ --------
Total Bonds & Notes (cost: $1,402,816,000) 1,378,085 93.12
------------ --------
Short-Term Securities
Commercial Paper- 1.68%
Associates Corp. of North America 6.10% due 3/1/95 18,250 18,247 1.23
Dow Chemical 6.07% due 3/1/95 6,600 6,599 .45
------------- --------
24,846 1.68
------------- --------
U. S. Treasury Short-Term Securities 3.33%
12.625% due 5/15/95 4,000 4,052 .27
6.485% due 11/16/95 10,000 9,566 .65
8.875% due 2/15/96 35,000 35,765 2.41
------------ --------
49,383 3.33
------------- --------
Total Short-Term Securities (cost: $75,894,000) 74,229 5.01
------------- --------
Total Investment Securities (cost: $1,478,710,000) 1,452,314 98.13
Excess of cash and receivables over payables 27,645 1.87
------------- --------
Net Assets $1,479,959 100.00%
============= ========
</TABLE>
/1/ Some investments are valued in the market on the basis of
their effective maturity - that is, the dates at which the
securities are expected to be called or refunded by the issuers
or the dates at which the investor can put the securities to
the issuers for redemption. These effective maturity dates are
shown in parentheses.
/2/ Coupon rate may change periodically.
/3/ Issue does not have fixed maturity.
/4/ Pass-through securities backed by a pool of mortgages or
other loans on which principal payments are periodically made.
Therefore the effective maturity of these securities is shorter
than the stated maturity.
/5/ Represents a zero-coupon bond which will convert to an
coupon-bearing security at a later date.
See Notes to Financial Statements
Intermediate Bond Fund of America
Financial Statements (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------- ------------ ------------
Statement of Assets and Liabilities
at February 28, 1995 (dollars in thousands)
- ---------------------------------------- ------------ ------------
<S> <C> <C>
Assets:
Investment securities at market
(cost: $1,478,710) $1,452,314
Cash 2,214
Receivables for-
Sales of investments $ 13,361
Sales of fund's shares 9,866
Accrued interest 18,624 41,851
------------ ------------
1,496,379
Liabilities:
Payables for-
Purchases of investments 8,769
Repurchases of fund's shares 3,701
Dividends payable 2,197
Management services 469
Accrued expenses 1,284 16,420
------------ ------------
Net Assets at February 28, 1995
Equivalent to $13.22 per share on
111,943,389 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $1,479,959
=============
Statement of Operations (Unaudited)
for the six months ended February 28, 1995 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Interest $ 59,616
Expenses:
Management services fee 3,091
Distribution expenses 1,933
Transfer agent fee 501
Reports to shareholders 80
Registration statement and prospectus 82
Postage, stationery and supplies 133
Trustees' fees 16
Auditing and legal fees 34
Custodian fee 26
Taxes other than federal income tax 29 5,925
------------ ------------
Net investment income 53,691
------------
REALIZED LOSS AND UNREALIZED
DEPRECIATION ON INVESTMENTS:
NET REALIZED LOSS (45,463)
Net unrealized depreciation
on investments:
Beginning of period (50,873)
End of period (26,395)
------------
Net change in unrealized depreciation on
investments 24,478
------------
NET REALIZED LOSS AND CHANGE IN
unrealized depreciation on investments (20,985)
------------
NET INCREASE IN NET ASSETS RESULTING
from Operations $32,706
============
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------- -------------
Six months Year
ended ended
2/28/1995* 8/31/94
Operations: ------------- -------------
Net investment income $ 53,691 $ 116,210
NET REALIZED LOSS ON INVESTMENTS (45,463) (28,357)
NET UNREALIZED
DEPRECIATION ON INVESTMENTS 24,478 (122,435)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
resulting from operations 32,706 (34,582)
------------- -------------
Dividends and Distributions Paid
to Shareholders:
Dividends from net investment income (53,574) (114,479)
Distribution from net realized gain
on investments 0 (8,496)
------------- -------------
Total dividends and distributions (53,574) (122,975)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
18,686,531 and 64,292,703
shares, respectively 244,389 904,219
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
3,126,511 and 6,747,529 shares,
respectively 40,860 94,032
Cost of shares repurchased:
31,372,805 and 64,692,200
shares, respectively (410,111) (901,393)
------------- -------------
Net (decrease) increase in net assets resulting
from capital share transactions (124,862) 96,858
------------- -------------
Total Decrease in Net Assets (145,730) (60,699)
Net Assets:
Beginning of period 1,625,689 1,686,388
------------- -------------
End of period (including undistributed
net investment income of $1,878 and
$1,762, respectively) $1,479,959 $1,625,689
============= =============
</TABLE>
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Intermediate Bond Fund of America (the "fund") is registered under the
Investment Company Act of 1940 as an open-end, diversified management
investment company. The following paragraphs summarize the significant
accounting policies consistently followed by the fund in the preparation of its
financial statements:
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at the mean of such
prices for securities of comparable maturity, quality and type. Short-term
securities with original or remaining maturities in excess of 60 days are
valued at the mean of their quoted bid and asked prices. Short-term securities
with 60 days or less to maturity are valued at amortized cost, which
approximates market value. The maturities of variable or floating rate
instruments are deemed to be the time remaining until the next interest rate
adjustment date. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the Valuation
Committee of the Board of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Interest income is reported on the accrual basis. Discounts on
securities purchased are amortized over the life of the respective securities.
The fund does not amortize premiums on securities purchased. Dividends are
declared on a daily basis after the determination of the fund's net asset value
and are paid to shareholders on a monthly basis.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $26,000 includes $4,000 that was paid with credits rather
than in cash.
2. It is the fund's policy to continue to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of February 28, 1995, net unrealized depreciation on investments for book
and federal income tax purposes aggregated $26,396,000, of which $9,758,000
related to appreciated securities and $36,154,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended February 28, 1995. During the
six months ended February 28, 1995, the fund realized, on a tax basis, a net
capital loss of $45,463,000 on security transactions. The cost of portfolio
securities for book and federal income tax purposes was $1,452,314,000 at
February 28, 1995.
3. The fee of $3,091,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Trustees of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.30% of the first $60 million of average net assets;
0.21% of such assets in excess of $60 million but not exceeding $1 billion;
0.18% of such assets in excess of $1 billion but not exceeding $3 billion; and
0.16% of such assets in excess of $3 billion ("asset-based fee"); plus 3.00% on
the first $3,333,333 of the fund's monthly gross investment income; 2.50% of
such income in excess of $3,333,333 but not exceeding $8,333,333; and 2.00% of
such income in excess of $8,333,333 ("income-based fee").
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Trustees. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended February 28,
1995, distribution expenses under the Plan were $1,933,000. As of February 28,
1995, accrued and unpaid distribution expenses were $711,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $501,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $701,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Trustees of the fund who are unaffiliated with CRMC may elect to defer part
or all of the fees earned for services as members of the board. Amounts
deferred are not funded and are general unsecured liabilities of the fund. As
of February 28, 1995, aggregate amounts deferred were $14,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain of the Trustees and officers of the
fund are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of February 28, 1995, accumulated undistributed net realized loss on
investments was $77,526,000 and paid-in capital was $1,582,003,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $689,241,000 and $728,152,000, respectively, during
the six months ended February 28, 1995.
PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------- --------- -------- -------- -------- --------
Year August 31
Six months -------- -------- --------
ended
February 1994 1993 1991 1990
28, 1995/1/
---------- -------- -------- -------- --------
Net Asset Value, Beginning
of Period...................... $13.38 $14.64 $14.28 $13.37 $13.78
---------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income....... .47 .95 1.00 1.21 1.20
Net realized and unrealized
(loss) gain on investments. (0.16) (1.20) .37 .30 (.35)
Total income (loss) from --------- -------- -------- -------- --------
investment 0.31 (0.25) 1.37 1.51 0.85
operations................
--------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income...................... (.47) (.94) (1.01) (1.19) (1.26)
Distributions from capital gains .00 (.07)
--------- -------- -------- -------- --------
Total distributions........ (.47) (1.01) (1.01) (1.19) (1.26)
--------- -------- -------- -------- --------
Net Asset Value, End of Period.. $13.22 $13.38 $14.64 $13.69 $13.37
========= ======== ======== ======== ==========
Total Return/2/................. 2.45%/3/ (1.80%) 9.95% 11.73% 6.43%
Ratios/Supplemental Data:
Net assets, end of period (in
millions)................... $1,480 $1,626 $1,686 $407 $162
Ratio of expenses to average
net assets.................. .39%/3/ .83% .82% 1.00% 1.00%
Ratio of net income to
average net assets.......... 3.54%/3/ 6.79% 7.00% 8.67% 8.75%
Portfolio turnover rate...... 48.1%/3/ 52.9 % 42.6 % 83.0 % 86.1 %
</TABLE>
/1/ Unaudited
/2/ This was calculated without
deducting a sales charge. The
maximum sales charge is 4.75%
of the fund's offering price.
/3/ Based on operations for the
period shown and, accordingly,
not representative of a full
year's operations.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR SECURITIES DEALER OR FINANCIAL PLANNER, OR CALL THE FUND'S
TRANSFER AGENT, TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of Intermediate Bond Fund
of America but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after June 30, 1995, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA TAG/AL
Lit. No. IBFA-013-0495
Printed on recycled paper
[The American Funds Group(R)]
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