INTERMEDIATE BOND FUND OF AMERICA
A diversified portfolio of high-quality intermediate-term bonds
Semi-Annual Report for the six months
ended February 28, 1997
[Photo collage: Associates in various work settings]
[The American Funds Group(r)]
INTERMEDIATE BOND FUND OF AMERICA(sm)seeks to earn current income, consistent
with preservation of capital, within certain guidelines for quality and
maturity. The fund invests primarily in a portfolio of bonds with effective
maturities of between three and 10 years that are rated in the two highest
categories by Moody's (Aaa, Aa) or Standard & Poor's (AAA, AA), or equivalent
unrated securities.
In pursuing its objective, the fund seeks to provide more income than
short-term obligations such as Treasury bills, and greater stability than
longer term bonds. While short-term investments typically offer greater
stability of principal and long-term bonds generally offer higher yields,
Intermediate Bond Fund of America seeks to take an attractive middle course
between the two.
INVESTMENT HIGHLIGHTS through 2/28/97
- - 6-month total return 4.3% (income plus capital changes, with
dividends reinvested)
- - 12-month total return 5.0% (income plus capital changes, with
dividends reinvested)
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the fund's total returns and average annual
compound returns, with all distributions reinvested, for periods ended March
31, 1997 (the most recent calendar quarter), assuming payment of the 4.75%
maximum sales charge at the beginning of the stated periods:
Average Annual
Total Return Compound Return
Lifetime (since 2/19/88) +78.37% +6.56%
Five Years +29.69% +5.34%
12 Months -00.16% -
Sales charges are lower for accounts of $25,000 or more. The fund's 30-day
yield as of March 31, 1997, calculated in accordance with the Securities and
Exchange Commission formula, was 5.66%. The fund's distribution rate as of that
date was 6.00%. The SEC yield reflects income the fund expects to earn based on
its current portfolio of securities, while the distribution rate is based
solely on the fund's past dividends. Accordingly, the fund's SEC yield and
distribution rate may differ.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL
VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. 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.
[Watermark: Fellow Shareholders]
FELLOW SHAREHOLDERS: The value of your investment in Intermediate Bond Fund of
America rose 4.3% during the six months ended February 28, 1997 if, like the
majority of the fund's shareholders, you reinvested the monthly dividends which
totaled 43 cents a share. By comparison, the unmanaged Salomon Brothers Broad
Investment-Grade Medium Term Index increased 4.9% with dividends reinvested
over the same period. Separating the two components of total return - income
and capital appreciation - shows that the fund produced a 3.3% income return
(6.5% annualized), while its share price rose 1.0%.
These latest results bring the fund's total return over the past 12 months to
+5.0% and its lifetime total return since its introduction in February 1988 to
+88.3%, or an average annual compound return of +7.3%.
THE FEDERAL RESERVE TAKES ACTION
The six months saw moderate swings in intermediate-term interest rates as
measured by 5-year U.S. Treasury yields. Average yields for these securities
peaked in September at 6.6%. Over the next two months, tentative signals of a
cooling economy were compounded by early winter storms that dampened economic
activity leading into the holiday consumer spending season.
In November, weakening economic indicators and the severe weather combined to
drive five-year rates to a six-month low of 5.8%. But as year-end economic data
came in, an acceleration in business activity rekindled worries of possible
wage inflation, nudging these 5-year rates up to 6.4% by the end of February.
In late March, a few weeks after the close of the fund's semi-annual fiscal
period, the Federal Reserve Board took what was deemed a pre-emptive strike
against inflation by increasing the federal funds rate, the rate banks charge
each other for overnight loans, by one-quarter of one percent. This was the
first change since the step down to 5.25% in January 1996 and was the first
increase in more than two years. As would be expected, the net asset value of
the fund fluctuated less than longer maturity securities.
THE FUND REMAINS FOCUSED ON HIGH QUALITY
In pursuit of current income and preservation of capital, the fund remains
focused on U.S. Treasuries, highly rated mortgage- and asset-backed securities,
and federal agency obligations with effective maturities of between three and
10 years. Emphasis continues to be on the shorter part of this maturity range,
in order to moderate the fluctuations in the fund's net asset value. At the end
of each of the past two six-month fiscal periods since February 29, 1996, the
maturity of the portfolio has remained steady, with an average life of 4.4
years.
We look forward to reporting to you again in six months.
Cordially,
[/s/ Paul G. Haaga, Jr.]
Paul G. Haaga, Jr.
Chairman of the Board
[/s/ Abner D. Goldstine]
Abner D. Goldstine
President
April 15, 1997
[Photo: close-up of associate working]
<TABLE>
Intermediate Bond Fund of America
Investment Portfolio February 28, 1997
Federal Agency Obligations--Non-Mortgage 7.2%
Corporate Bonds 5.8%
Non-U.S. Government Bonds 2.7%
Cash & Equivalents 3.5%
Privately Originated Mortgage Obligations 9.3%
Asset-Backed Obligations 9.8%
Federal Agency Mortgage Obligations 32.5%
U.S. Treasury Securities 29.2%
<S> <C> <C> <C>
Principal Market Percent
Amount Value of Net
Bonds & Notes (000) (000) Assets
Industrial & Service- 0.20%
BP America Inc. 10.00% 2018 (1998) /1/ $2,600 $2,821 .20%
--------- --------
Utilities- 1.02%
Big Rivers Electric Corp. 9.50% 2017 10,000 10,757 .77
Northern Telecom Ltd. 8.75% 2001 3,250 3,492 .25
--------- ---------
14,249 1.02
--------- ---------
Financial Services- 3.99%
AB Svensk Exportkredit (Swedish Export Credit
Corp.) Debentures 9.875% 2038 4,000 4,319 .31
ABN AMRO Bank NV, Chicago Branch 7.55% 2006 4,000 4,118 .30
Barclays North American Capital Corp. 9.75% 2021 7,230 8,194 .59
Beverly Finance Corp. 8.36% 2004 10,000 10,403 .74
Corporate Property Investors:
9.00% 2002 9,500 10,194
7.75% 2004 2,000 2,056 .88
General Electric Capital Corp. 8.375% 2001 1,500 1,588 .11
Town & Country Funding Corp. 5.85% 2000 (1998) /1/ 15,000 14,815 1.06
--------- ---------
55,687 3.99
--------- ---------
Collateralized Mortgage Obligations
(Privately Originated) /2/ - 9.32%
Chase Manhattan Bank, NA:
Series 1996-1, Class A1, 7.60% 2005 1,970 2,027
Series 1993-I, Class 2A-5, 7.25% 2024 7,500 7,500 .68
CS First Boston Mortgage Securities Corp., Series 1995-AEW1:
Class A-1, 6.665% 2027 2,688 2,685
Class B, 7.182% 2027 /2/ 7,200 7,092 .70
GMAC Commercial Mortgage Securities Inc., Series 1996-C1,
Class A2A, 6.79% 2028 17,406 17,341 1.24
J.P. Morgan Commercial Mortgage Finance Corp., pass-through
certificates:
Series 1995-C1, Class A-2, 7.393% 2010 /2/ 18,155 18,373
Series 1997-C4, Class A-1, 6.939% 2028 2,000 2,005 1.46
Merrill Lynch Mortgage Investors Inc.:
Series 1992B, Class A-2, 8.05% 2012 3,672 3,679
Series 1992B, Class A-3, 8.30% 2012 10,000 10,194
Series 1995-C2, Class A, 7.440% 2021 /2/ /3/ 7,964 8,044
Series 1995-C3, Class A-2, 6.848% 2025 /2/ /3/ 5,000 4,953 1.93
Morgan Stanley Capital Inc.,
Series 1995-GA1, Class A1, 7.00% 2002 7,270 7,316 .52
Paine Webber CMO Pac, Series O, Class 5, 9.50% 2019 5,000 5,338 .38
Prudential Home Mortgage Securities Co., Inc.:
Series 1992-33, Class A-12, 7.50% 2022 1,207 1,207
Series 1992-37, Class A-6, 7.00% 2022 6,052 6,048 .52
Structured Asset Securities Corp.,
Series 1996-CFL, Class A1-C, 5.944% 2028 4,900 4,770 .34
Wells Fargo Capital Markets APT Financing Trust 6.56% 2002 10,000 9,850 .71
Westam Mortgage, Class 4-H, 8.95% 2018 11,000 11,677 .84
--------- ---------
130,099 9.32
--------- ---------
Asset-Backed Obligations /2/ - 9.80%
AAMES Mortgage Trust, Series 1996-D, Class A1C, 6.52% 2020 4,500 4,466 .32
Airplanes Pass Through Trust, pass-through certificates,
Series 1, Class A-3, 5.954% 2015 (2001) /1/ /3/ 10,000 10,030 .72
Case Equipment Loan Trust 1995-A 7.30% 2002 4,029 4,075 .29
Chemical Financial Acceptance Corp., Series 1989-A, Class A,
9.25% 1998 8,713 8,884 .64
ContiMortgage Home Equity Loan Trust, Series 1996-4,
Class A-4, MBIA Insured, 6.37% 2011 1,500 1,485 .11
Equicredit Funding Trust, Series 1996-A, Class A2, 6.95% 2012 6,750 6,784 .49
First Plus Home Loan Owner Trust:
Series 1996-4, Class A-3, 6.28% 2009 5,000 4,945
Series 1997-1, Class A-1, 6.05% 2004 1,000 998
Series 1997-1, Class A-3, 6.45% 2009 3,900 3,881 1.24
Series 1997-1, Class A-6, 6.95% 2015 7,500 7,425
Ford Motor Credit Co. 1994-A, 6.35% 1999 550 551 .04
GCC Home Equity Trust, asset-backed certificates,
Series 1990-1, Class A, 10.00% 2005 2,817 2,880 .21
Green Tree Financial Corp., pass-through certificates:
Series 1993-3, Class A5, 5.75% 2018 10,000 9,694
Series 1995-1, Class A2, 7.80% 2025 4,209 4,226
Series 1995-1, Class A3, 7.95% 2025 4,000 4,065 2.12
Series 1995-9, Class A4, 6.45% 2027 4,250 4,206
Series 1996-10, Class A4, 6.42% 2028 3,500 3,445
Series 1996-10, Class A5, 6.83% 2028 4,000 3,930
Green Tree Home Improvement Loan Trust, Series 1996-C,
Class HIA1, 6.45% 2021 1,941 1,946 .14
IMC Home Equity Loan Trust, Series 1996-4, Class A1, 6.59% 2011 4,139 4,141 .30
MBNA Credit Card Trust, asset-backed certificates,
1991-1, Class a, 7.75% 1998 (1997) /1/ 333 333 .02
The Money Store Trust, Series 1996, Class A3, 7.07% 2016 6,705 6,772 .49
Standard Credit Card Master Trust I, credit card
participation certificates:
Series 1991-3, Class A, 8.875% 1999 (1998) /1/ 9,050 9,361
Series 1991-6, Class A, 7.875% 2000 (1998) /1/ 23,750 24,336 2.42
UCFC Acceptance corp. pass-through certificates:
Series 1996-B1, Class A2, 7.075% 2010 1,500 1,511
Series 1996-D1, Class A4, 6.776% 2016 2,000 1,989 .25
--------- ---------
136,359 9.80
--------- ---------
Governments (Excluding U.S. Government) &
Government Authorities- 2.68%
British Columbia Hydro & Power Authority 12.50% 2013 (1998) /1/ 2,000 2,244 .16
Finland (Republic of) Debenture 9.625% 2028 10,639 11,391 .82
Ontario (Province of):
7.75% 2002 10,000 10,467
15.25% 2012 (1997) /1/ 5,550 6,113 1.43
15.75% 2012 (1997) /1/ 105 112
11.50% 2013 (1997) /1/ 3,000 3,275
Victorian (Territory of) Public Authorities Finance Agency
8.45% 2001 3,500 3,742 .27
--------- ---------
37,344 2.68
--------- ---------
Development Authorities- 0.59%
International Bank for Reconstruction and Development
14.90% 1997 8,000 8,160 .59
--------- ---------
Federal Agency Mortgage Pass-Through Obligations /2/ - 28.31%
Federal Home Loan Mortgage Corp.:
8.00% 2003-2017 6,285 6,487
8.50% 2008-2021 7,967 8,307
8.75% 2008-2009 1,174 1,232
9.50% 2013 2,501 2,653
10.00% 2004-2019 20,883 22,845 3.02
11.00% 2018 49 55
12.00% 2013 234 264
12.50% 2013 115 134
12.75% 2019 68 79
Federal National Mortgage Assn.:
6.084% 2023 /2/ 16,353 16,215
7.00% 2008-2023 13,304 13,222
7.50% 2009-2024 24,480 24,765
8.00% 2002-2005 2,084 2,141
8.50% 2008-2023 12,471 13,056
9.00% 2001-2022 14,055 14,918
9.50% 2009-2022 11,783 12,624 9.38
10.00% 2017-2025 24,294 26,897
10.50% 2004-2020 2,017 2,247
11.00% 2000-2020 4,135 4,648
12.25% 2013 22 24
Government National Mortgage Assn.:
5.00% 2025-2026 /2/ 11,904 11,668
6.00% 2025 /2/ 4,101 4,068
6.50% 2024 /2/ 70,017 71,572
6.875% 2022-2023 /2/ 6,345 6,471
7.00% 2007-2024 /2/ 12,444 12,626
7.125% 2023-2024 /2/ 6,150 6,291
8.00% 2023 1,161 1,191
8.50% 2007-2026 38,955 40,752
9.00% 2008-2026 24,332 25,823
9.50% 2009-2021 25,617 27,824 15.91
9.75% 1999 93 98
10.00% 2019 10,564 11,617
10.25% 2012 267 278
10.50% 2019 127 142
11.00% 2010-2019 401 458
11.50% 2010-2013 204 235
12.50% 2010-2014 465 549
--------- ---------
394,476 28.31
--------- ---------
Federal Agency Collateralized Mortgage Obligations /2/ - 4.19%
Federal Home Loan Mortgage Corp:
Class B-3, 12.50% 2013 142 158
Series 76, Class F, 9.125% 2020 2,771 2,853 .22
Federal National Mortgage Assn.:
Series 91-50, Class H, 7.75% 2006 7,126 7,239
Series 91-146, Class Z, 8.00% 2006 3,825 3,890
Series 88-16, Class B, 9.50% 2018 725 787
Series 90-93, Class G, 5.50% 2020 3,850 3,636
Series 91-78, Class PK, 8.50% 2020 10,000 10,278 3.97
Series 90-21, Class Z, 9.00% 2020 24,093 25,169
Trust D2, 11.00% 2009 3,951 4,403
--------- ---------
58,413 4.19
--------- ---------
Federal Agency Obligations--Non-Mortgage- 7.19%
Federal Home Loan Bank Notes:
6.38% 2003 4,000 3,873
6.16% 2004 15,000 14,313 1.51
6.27% 2004 3,000 2,883
Federal Home Loan Mortgage Notes:
5.78% 2003 2,000 1,888
6.30% 2003 9,300 8,982
6.39% 2003 2,000 1,939
6.50% 2003 2,000 1,949 3.29
6.61% 2003 16,650 16,350
6.19% 2004 10,000 9,536
8.36% 2009 5,000 5,119
Federal National Mortgage Assn. Medium-Term Note:
6.14% 2004 3,000 2,856
6.53% 2006 5,625 5,349 .59
FNSM Callable Principal STRIPS,1991-B8,
0%/7.89% 2002 /4/ 25,000 25,000 1.80
--------- ---------
100,037 7.19
--------- ---------
U.S. Treasury Obligations- 29.22%
8.125% February 1998 17,000 17,364 1.25
9.25% August 1998 30,750 32,143 2.31
5.125% November 1998 55,000 54,184 3.89
9.125% May 1999 14,250 15,112 1.08
6.75% June 1999 67,000 67,858 4.87
7.75% November 1999 5,500 5,708 .41
7.125% February 2000 6,750 6,909 .50
6.50% May 2001 11,000 11,048 .79
8.00% May 2001 12,250 12,979 .93
13.375% August 2001 15,000 19,006 1.36
10.75% February 2003 5,000 6,050 .43
10.75% May 2003 21,750 26,450 1.90
11.125% August 2003 12,500 15,520 1.11
7.25% May 2004 45,000 46,842 3.36
7.25% August 2004 5,500 5,729 .41
11.625% November 2004 31,750 41,364 2.97
6.50% May 2005 17,000 16,920 1.21
10.375% November 2009 5,000 6,106 .44
--------- ---------
407,292 29.22
--------- ---------
Total Bonds & Notes (cost: $1,344,897,000) 1,344,937 96.51
--------- ---------
Short-Term Securities
Commercial Paper- 2.54%
Associates Corp. of North America 5.39% due 3/3/97 20,400 20,391 1.46
CIT Group Holdings Inc. 5.40% due 3/3/97 15,000 14,993 1.08
--------- ---------
Total Short-Term Securities (cost: $35,384,000) 35,384 2.54
--------- ---------
Total Investment Securities (cost: $1,380,281,000) 1,380,321 99.05
Excess of cash and receivables over payables 13,274 .95
--------- ---------
Net Assets $1,393,595 100.00%
========= ======
/1/ Valued in the market on the basis of its effective maturity -- that is, the date at which the
security is expected to be called or refunded by the issuer or the date at which the investor can put the security to
the issuer for redemption. Effective maturity date is shown in parentheses.
/2/ Coupon rate may change periodically.
/3/ Pass-through security backed by a pool of mortgages or other loans on which principal payments are periodically made.
Therefore, the effective maturity is shorter than the stated maturity.
/4/ Zero-coupon bond which will convert to a coupon-bearing security at a later date.
See Notes to Financial Statements
</TABLE>
<TABLE>
Intermediate Bond Fund of America
Financial Statements Unaudited
- ---------------------------------------- ------------ ------------
<S> <C> <C>
Statement of Assets and Liabilities
at February 28, 1997 (dollars in thousands)
- ---------------------------------------- ------------ ------------
Assets:
Investment securities at market
(Cost: $1,380,281) $1,380,321
Cash 1,004
Receivables for-
Sales of investments $ 5,506
Sales of fund's shares 4,959
Accrued interest 14,830 25,295
------------ ------------
1,406,620
Liabilities:
Payables for-
Purchases of investments 5,086
Repurchases of fund's shares 4,864
Dividends payable 1,917
Management services 442
Accrued expenses 716 13,025
------------ ------------
Net Assets at February 28, 1997
Equivalent to $13.39 per share on 104,101,747 shares
of beneficial interest issued and outstanding;
unlimited shares authorized $1,393,595
=========
Statement of Operations
for the six months ended February 28, 1997 (dollars in thousands)
------------ ------------
Investment Income:
Income:
Interest $ 51,238
Expenses:
Management services fee 2,813
Distribution expenses 2,102
Transfer agent fee 518
Reports to shareholders 69
Registration statement and prospectus 48
Postage, stationery and supplies 96
Trustees' fees 11
Auditing and legal fees 41
Custodian fee 29
Taxes other than federal income tax 22
Other expenses 13 5,762
------------ ------------
Net investment income 45,476
------------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (6,415)
Net unrealized (depreciation) appreciation on investments
Beginning of period (19,744)
End of period 40
------------
Net unrealized appreciation on investments 19,784
------------
Net realized loss and unrealized appreciation
on investments 13,369
------------
Net Increase in Net Assets Resulting
from Operations $58,845
=========
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ------------------------------
Six months Year ended
ended February August 31,
28, 1997* 1996
Operations: ----------------- ----------
Net investment income $ 45,476 $ 98,319
Net realized loss on investments (6,415) (2,986)
Net unrealized appreciation (depreciation)
on investments 19,784 (28,130)
------------------------------
Net increase in net assets
resulting from operations 58,845 67,203
------------------------------
Dividends Paid From Net Investment Income (44,783) (97,453)
------------------------------
Capital Share Transactions:
Proceeds from shares sold:
24,949,255 and 54,126,644 shares, respectively 334,716 732,449
Proceeds from shares issued in
reinvestment of net investment income
dividends and distributions of net
realized gain on investments:
2,523,462 and 5,424,112 shares, respectively 33,859 73,190
Cost of shares repurchased:
31,166,400 and 62,787,538
shares, respectively (418,000) (847,614)
------------------------------
Net decrease in net assets resulting
from capital share transactions (49,425) (41,975)
------------------------------
Total Decrease in Net Assets (35,363) (72,225)
Net Assets:
Beginning of period 1,428,958 1,501,183
------------------------------
End of period (including undistributed
net investment income of $4,052 and
$3,359, respectively) $1,393,595 $1,428,958
============= =========
*Unaudited
See Notes to Financial Statements
</TABLE>
INTERMEDIATE BOND FUND OF AMERICA
NOTES TO FINANCIAL STATEMENTS
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 fund seeks current income, consistent with preservation
of capital, within certain guidelines for quality and maturity. 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 prices for securities
of comparable maturity, quality and type. Short-term securities with more than
60 days remaining to maturity are valued at the mean of their representative
quoted bid and asked prices. Where pricing service or market quotations are
not readily available, securities will be valued at fair value by the Board of
Trustees or a committee thereof. Short-term securities with 60 day or less
remaining to maturity are valued at amortized cost, which approximates market
value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed-delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Interest
income is reported on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. Dividends
to shareholders are declared daily after determination of the fund's net asset
value and paid to shareholders monthly.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $29,000 includes $19,000 that was paid by these 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, 1997, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $40,000, of which $17,227,000
related to appreciated securities and $17,187,000 related to depreciated
securities. During the six months ended February 28, 1997, the fund realized,
on a tax basis, a net capital loss of $6,415,000 on security transactions. The
fund had available at August 31, 1996, a net capital loss carryforward of
$78,879,000 which may be used to offset capital gains realized during
subsequent years through 2004 and thereby relieve the fund and its shareholders
of any federal income tax liability with respect to the capital gains that are
so offset. It is the intention of the fund not to make distributions from
capital gains while there is a capital loss carryforward. The cost of portfolio
securities for book and federal income tax purposes was $1,380,281,000 at
February 28, 1997.
3. The fee of $2,813,000 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; 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.
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,
1997, distribution expenses under the Plan were $2,102,000. As of February 28,
1997, accrued and unpaid distribution expenses were $678,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $518,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $716,000 (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 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,
1997, aggregate amounts deferred and earnings thereon were $36,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain 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, 1997, accumulated net realized loss on investments was
$89,228,000 and paid-in capital was $1,478,731,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $163,844,000 and $196,443,000, respectively, during
the six months ended February 28, 1997.
<TABLE>
PER-SHARE DATA AND RATIOS
- --------------------------------------- ----------- ----------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Six months
ended Year Ended August 31
February 28, ----------- ----------- -------- -------- --------
1997 /1/ 1996 1995 1994 1993 1992
----------- ----------- ----------- -------- -------- --------
Net Asset Value, Beginning
of Period $13.26 $13.52 $13.38 $14.64 $14.28 $13.69
----------- ----------- ----------- -------- -------- --------
Income from Investment
Operations:
Net investment income .43 .88 .93 .95 1.00 1.09
Net realized and unrealized
gain (loss) on investments. .12 (.27) .13 (1.20) .37 .59
Total from investment ----------- ----------- ----------- -------- -------- --------
operations .55 .61 1.06 (.25) 1.37 1.68
----------- ----------- ----------- -------- -------- --------
Less Distributions:
Dividends from net investment
income (.42) (.87) (.92) (.94) (1.01) (1.09)
Distributions from capital gains (.07)
----------- ----------- ----------- -------- -------- --------
Total distributions (.42) (.87) (.92) (1.01) (1.01) (1.09)
----------- ----------- ----------- -------- -------- --------
Net Asset Value, End of Period $13.39 $13.26 $13.52 $13.38 $14.64 $14.28
=========== =========== =========== ======== ======== ======
Total Return /2/ 4.26% /3/ 4.63% 8.33% 1.80% 9.95% 12.79%
Ratios/Supplemental Data:
Net assets, end of period (in
millions) $1,394 $1,429 $1,501 $1,626 $1,686 $1,215
Ratio of expenses to average
net assets .40% /3/ .80% .78% .83% .82% .90%
Ratio of net income to
average net assets 3.13% /3/ 6.53% 6.96% 6.79% 7.00% 7.66%
Portfolio turnover rate 13.87% /3/ 48.25% 71.91% 52.94% 42.59% 45.01%
/1/Unaudited
/2/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.
</TABLE>
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER, CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
(Please write to the address nearest you.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
This report is for the information of shareholders of 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, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA SG/GRS/3392
Lit. No. IBFA-013-0497
Printed on recycled paper
[The American Funds Group(r)]
