INTERMEDIATE BOND FUND OF AMERICA
Defining Our Fund
Annual Report for the Year Ended August 31, 1997
[photo: trading room]
[photo: clocks showing international time]
[The American Funds Group(R)]
THE OBJECTIVE OF INTERMEDIATE BOND FUND OF AMERICA(R) is 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 in
equivalent unrated securities.
These investments include:
U.S. GOVERNMENT AND FEDERAL AGENCY SECURITIES
GNMA CERTIFICATES AND OTHER MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
HIGH-QUALITY CORPORATE OBLIGATIONS
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.
PICTURED ON THE COVER AND THROUGHOUT THE REPORT: The people behind the scenes -
the fixed-income portfolio counselors, analysts and traders of Capital
Research and Management Company.
FELLOW SHAREHOLDERS:
During the fund's 1997 fiscal year, shareholders of Intermediate Bond Fund of
America
* Received monthly dividends totaling 85 cents per share. This represented an
income return of 6.6% with dividends reinvested, or 6.4% with dividends taken
in cash.
* Saw a modest increase in the value of the fund's holdings.
* Had an annual total return of 7.8% with dividends reinvested. (Total return
results are calculated at net asset value.) Total return measures the change in
the account value, assuming dividends were reinvested. During the same time
frame, the Salomon Brothers Broad Investment-Grade Medium Term Index had a
total return of 9.2%. The fund only invests in securities rated "AA" or higher,
while the index includes lower rated investment-grade securities.
These latest results brought the fund's total return since inception in
February 1988 to +94.7%, an average compound return of +7.2% a year. This is
more than twice the 38.6% increase in the Consumer Price Index during the same
period.
In March, continuing low unemployment rates and increasing business
activity led the Federal Reserve to conclude the economy might be growing too
quickly - a trend that could ignite inflation. In response, the Federal Reserve
increased the federal funds rate - the rate at which banks lend to one another
on an overnight basis - from 5.25% to 5.5%. This increase caused longer term
interest rates to rise and bond prices, which move inversely to interest rates,
to fall. When it became apparent later in the year that the economy was slowing
enough to forestall additional increases in short-term rates, bond prices
rallied.
Although this year's market and economic movements were similar to those
in 1996, the relationship between economic activity and inflation is without
precedent from a longer, historical perspective. The U.S. economy entered its
seventh consecutive year of expansion. This expansion fostered an increase in
jobs, causing unemployment to drop to its lowest level in almost a quarter of a
century while moving capacity utilization to higher levels. All in all, we are
in a period of economic growth that has typically generated higher inflation.
However, inflation rates have remained fairly stable and, by some measures,
prices have actually fallen.
Many of the reasons behind this trend appear to be centered on increased
global competition, which has kept inflationary pressures to a minimum. The
U.S. dollar's recent strength, moreover, has kept the costs of imported
merchandise from rising too rapidly in the United States. Also, recent
deregulation of industries such as telecommunications, utilities and finance
has fostered additional competition while technological advances have allowed
corporate America to streamline and increase productivity.
The million-dollar question is, "How long will this period last?" In other
words, do these new economic trends mark a permanent or temporary departure
from a typical business cycle?
We remain concerned about how long the "new era" will persist. The law of
gravity has not been repealed, nor have the laws of supply and demand. The
fund's investment professionals follow a disciplined guideline of investing in
securities in the top two credit rating categories with effective maturities no
longer than 10 years. During the fund's fiscal year, we kept the fund's average
effective maturity at 4.4 years. We believe this shorter maturity will soften
any impact rising interest rates could have on the fund while continuing to
meet its current income objectives.
During the fiscal year, we increased the fund's holdings in
mortgage-backed securities. Mortgage-backed securities, many of which are
guaranteed by the U.S. Treasury or a government agency, have the advantage of
being high-quality and extremely liquid. Moreover, they offer higher yields
than comparable U.S. Treasury or high-quality fixed-income investments. In
part, this higher yield is "compensation" for the uncertain timing of
prepayments - when borrowers pay off their mortgages early and the principal
payment is "passed through" to investors. If prepayments occur at times other
than anticipated, they can have a big impact on the total return during the
period that mortgage-backed securities are held.
Our analysts devote a great deal of research toward anticipating the
timing of prepayments on various groups of mortgage pass-throughs. Currently,
our mortgage-backed investments focus on investing in pools of "seasoned"
mortgages. Since "seasoned" mortgages have been in the market for quite some
time, we have a history of their prepayment activity in response to past
interest rate changes. This allows us to more accurately anticipate future
prepayments and better determine the impact of interest rate changes.
We look forward to reporting to you again in six months.
Cordially,
[/s/ Paul G. Haaga, Jr.] [/s/ Abner D. Goldstine]
Paul G. Haaga, Jr. Abner D. Goldstine
Chairman of the Board President
October 15, 1997
[Pull Quote]
Intermediate Bond Fund of America's latest results bring its total return since
inception in February 1988 to +94.7%...more than twice the 38.6% increase in
the Consumer Price Index during the same period.
[End pull quote]
RESULTS:
HOW A $10,000 INVESTMENT IN THE FUND HAS GROWN
[begin chart]
<TABLE>
<CAPTION>
Year Intermediate Bond Salomon Brothers Broad Consumer
Ended Fund of America Investment-Grade Medium Price
August with dividends Term Index with interest Index*
31 reinvested compounded
<S> <C> <C> <C>
2/19/88 $9,525 $10,000 $10,000
1988# 9,613 10,062 10,259
1989 10,478 11,233 10,741
1990 11,152 12,207 11,345
1991 12,460 13,872 11,776
1992 14,054 15,675 12,147
1993 15,452 17,027 12,483
1994 15,174 17,026 12,845
1995 16,439 18,732 13,181
1996 17,199 19,605 13,560
1997 18,545 21,403 13,862
</TABLE>
$21,403 Salomon Brothers Broad Investment-Grade Medium Term Index with interest
compounded
$18,545 Intermediate Bond Fund of America with dividends reinvested
$13,862 Consumer Price Index*
#From inception, February 19, 1988, through August 31, 1988.
*Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
Past results are not predictive of future results.
[end chart]
AVERAGE ANNUAL COMPOUND RETURNS /+/
Periods ended
8/31/97 9/30/97
Lifetime (since 2/19/88) +6.69% +6.73%
Five Years +4.68% +4.57%
One Year +2.71% +2.43%
/+/ Assumes reinvestment of all distributions and payment of the maximum 4.75%
sales charge at the beginning of the stated periods. Sales charges are lower
for accounts of $25,000 or more.
The fund results in the chart on this page reflect payment of the maximum sales
charge of 4.75%. Thus, the net amount invested was $9,525 versus $10,000 in the
Salomon Brothers Broad Investment-Grade Medium Term Index, which is unmanaged
and does not reflect sales charges, commissions or expenses.
THAT INDEX ALSO REPRESENTS A LARGER UNIVERSE OF FIXED-INCOME SECURITIES THAN
THAT IN WHICH INTERMEDIATE BOND FUND OF AMERICA INVESTS. THE FUND INVESTS ONLY
IN SECURITIES RATED "AA" OR HIGHER, WHILE THE SALOMON INDEX INCLUDES LOWER
RATED INVESTMENT-GRADE SECURITIES - THOSE RATED "A" OR "BAA/BBB." SECURITIES IN
THESE RATING CATEGORIES TYPICALLY OFFER HIGHER YIELDS THAN THE HIGHER QUALITY
SECURITIES IN WHICH THE FUND INVESTS.
Fund results in this report were computed without a sales charge unless
otherwise indicated. The fund's 30-day yield as of September 30, 1997,
calculated in accordance with the Securities and Exchange Commission formula,
was 5.55%. The fund's distribution rate as of that date was 5.95%. 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.
DEFINING INTERMEDIATE BOND FUND OF AMERICA
In today's mutual fund market, a fund's name often does not define the fund.
However, the name "Intermediate Bond Fund of America" does mean what it says.
INTERMEDIATE
The word "intermediate" means between two extremes - an appropriate way to
describe how the fund is managed. The fund's portfolio counselors seek a middle
ground - to provide higher income than money market funds, which are managed to
maintain a steady net asset value and greater stability than longer-term bonds.
SEEKING THE MIDDLE GROUND:
* Balancing risk with returns. The fund invests in fixed-income securities with
maturities of up to 10 years. In a typical bond market environment, these
"intermediate" securities provide much of the income of longer term bonds but
with somewhat less volatility. This is because in the world of investing,
safety has a price. To reap higher returns requires taking on additional risk,
in terms of potential market changes. Longer term bonds pay higher yields, but
investors are generally subjected to more price volatility. The longer a bond's
maturity, the more dramatic its price movements are likely to be in response to
interest rate changes.
BOND
The word "bond" is a generic term for all fixed-income securities. The fund
invests in a wide variety of fixed-income securities. What sets the fund apart
from most of its peers is its disciplined, high-quality approach to
fixed-income investing.
THE FUND:
* Investments are limited to government securities and other high-quality
corporate fixed-income securities rated in the two highest credit quality
categories by Standard & Poor's (AAA, AA) and Moody's (Aaa, Aa) or in
equivalent unrated securities. These ratings are generally used to indicate the
bond issuer's ability to repay its debt. Falling in line with the "safety has a
price" theme, these securities generally offer lower yields than securities
with lower credit ratings. However, high-quality securities tend to be less
susceptible to price fluctuations and default risk found in lower quality,
higher yielding securities.
Not all securities in the top two credit categories are alike. Even these
higher rated issues require extensive credit review by Capital Research and
Management Company (CRMC), the fund's investment adviser, to assist in ensuring
that these securities are not headed for a credit downgrade in the near future.
* Adds value through investing in complex, high-quality pass-through
securities, such as mortgage- and asset-backed securities. Pass-through
securities help us increase shareholder yield. These securities are pools of
debt obligations - such as home mortgages, credit card balances and auto loans
- - that are packaged and sold by financial institutions. They are called
pass-through securities since the interest and principal payments made by the
holders of the individual loans are "passed through" to investors in the
security.
Pass-through securities are complex fixed-income instruments. These securities
require intensive research to determine the creditworthiness of the individual
mortgages. They also require a broad understanding of market and economic
conditions - especially in anticipating prepayment activity.
Pass-through securities offer higher yields than comparable fixed-income
securities. In part, this higher yield is "compensation" for the uncertain
timing of prepayments of the underlying loans. One of the major challenges in
managing pass-through securities is anticipating prepayments - when borrowers
pay off the underlying loans and the principal is "passed through" to investors
in these securities. If prepayments occur at times other than anticipated, they
can have a big impact on the total return during the period in which the
securities are held.
[photos: trading room]
[photo caption] WHAT SETS US APART [end phoro caption]
[photo caption]INDIVIDUAL SECURITY REVIEW [end photo caption]
[photo: associates in discussion]
[photo caption] EXTENSIVE RESEARCH
[pie chart]
COMMITMENT TO QUALITY
U.S. Govt./Agency 61%
AAA 26%
AA 9%
Cash & Equivalents 4%
[end chart]
FUND
Investing in fixed-income securities is a challenging task in today's
complicated bond market - especially for individual investors. By pooling
shareholder investments, the fund increases a shareholder's buying power and
seeks to create value through active management and intensive research.
With nine research offices located on three continents, the investment
professionals of CRMC literally work around the clock to search for value in a
world of investment opportunities. CRMC research assists the fund's portfolio
counselors in making appropriate investment decisions by increasing their
awareness of global and domestic trends as well as identifying security and
sector opportunities. Because of our intensive research capabilities, the
shareholders of Intermediate Bond Fund of America enjoy the benefits of a
well-diversified, high-quality fund.
This research can be both broad and specific in focus. Our broad research
includes examining economic and financial trends as well as monitoring global
and U.S. fiscal and monetary policies. The fund's investment professionals keep
a close watch on numerous economic indicators, including inflation, interest
rates, industrial output, capital spending, inventory levels, employment rates,
personal income and savings, housing starts, auto production and retail sales.
Just as important is our more specific research of bond issuers and individual
securities. Before investing in a security, we review the issuer and the
structure of the issue. We do not rely solely on the ratings from credit
agencies, such as Moody's and Standard & Poor's, but make our own judgment
about the overall credit risk of a security. All in all, we ask the hard
questions we believe our shareholders would want answered before investing in a
security.
WITH THIS FUND, SHAREHOLDERS HAVE:
* The ability to diversify their investments in more fixed-income securities
than they might have been able to afford on their own.
* Access to fixed-income securities not available to or easily analyzed by
individual investors.
* The benefits of an intensive and extensive research effort that allows them
to invest in complex fixed-income instruments such as mortgage-backed
securities.
OF AMERICA
The fund's focus is currently on investing in a wide variety of U.S. government
and agency securities. In fact, a substantial portion of the fund's total
holdings is in U.S. government-guaranteed securities. These securities assist
the fund in maintaining its liquidity and high credit quality.
THE FUND INVESTS IN:
* U.S. Treasury obligations.
* Federal agency securities, such as those issued by the Government National
Mortgage Association (Ginnie Mae), the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
* High-quality (AAA- or AA-rated) U.S. corporate securities and mortgage
obligations.
* High-quality mortgage obligations and asset-backed securities.
The fund may also invest a portion of its assets in securities of issuers
domiciled outside the United States. However, these securities must be U.S.
dollar-denominated and meet stringent liquidity, maturity and credit quality
considerations.
WHAT'S IN A NAME
It takes more than words to define what Intermediate Bond Fund of America does.
It takes action. Over the years, the fund has become an important investment
tool for investors with widely varied and unique investment needs.
HOW SHAREHOLDERS USE THE FUND:
* A liquid, short- or intermediate-term investment for those investors
searching for higher yields than those typically offered by money market funds.
These investors are willing to accept more volatility than money market funds.
* A way to ease in and out of other American Funds through cross-reinvestment.
Shareholders in any American Fund may cross-reinvest dividends (or, in the case
of funds invested in stocks, dividends and capital gain distributions) from one
fund into another at no charge if they have a balance of at least $5,000 in the
originating fund or meet the minimum initial investment for the receiving fund.
* A good intermediate "holding" position for large pools of cash, such as
inheritances, court settlements, etc.
* An asset-building tool to meet future needs, such as building a new home,
expanding a business or covering the costs of a child's college education. Many
endowment funds and nonprofit institutions find the fund attractive, using the
proceeds from the fund to help finance building and other large expenses.
* A good first step out of "guaranteed" investments, such as CDs, and into
mutual funds. This fund has generated relatively low volatility due to its high
quality and shorter maturity and generally offers a yield higher than a CD,
which guarantees a rate of interest and the return of your principal.
* An asset-allocation tool to diversify both stock and bond portfolios. The
fund can help investors temper the volatility of their stock portfolios, since
the stock and bond markets often move in different rhythms. For bond
portfolios, debt securities with various maturities react differently to
changes in market conditions. By investing in bond funds with varying
maturities, investors can generally lessen the impact of market fluctuations on
their portfolios.
Over the years, we realize our shareholders' investment needs and financial
situations change - making it important to readjust their portfolios. This list
shows Intermediate Bond Fund of America can fulfill a number of investment
needs, allowing it to change with the needs of the investor.
[photos: associates in discussion]
[photo caption] CREATING VALUE [end photo caption]
[photo caption] RESEARCH [end photo caption]
[photo caption] ATTENTION TO DETAIL [end photo caption]
[pie chart]
SECTOR DIVERSITY
Federal Agency Mortgage-Backed 34%
Other Mortgage-Backed 12%
U.S. Govt./Agency (Non-Mortgage) 27%
Asset-Backed 15%
Corporate Bonds 6%
Non-U.S. Govt. Bonds/Development Agencies* 2%
Cash & Equivalents 4%
*All non-U.S. bonds in the fund's portfolio as well as those issued by
development authorities such as the World Bank are denominated in U.S. dollars
and conform to U.S. securities market regulations.
[end chart]
<TABLE>
Intermediate Bond Fund of America
Investment Portfolio August 31, 1997
<S> <C> <C> <C> <C>
Federal Agency Obligations--Non-Mortgage 4.87%
Corporate Bonds 6.18%
Non-U.S. Government Bonds 2.15%
Cash & Equivalents 3.78%
Privately Originated Mortgage Obligations 11.45%
Asset-Backed Obligations 15.16%
Federal Agency Mortgage Obligations 34.41%
U.S. Treasury Securities 22.00%
Bonds & Notes Principal Market Percent
Amount Value of Net
Industrial & Service - 0.78%
BP America Inc. 10.00% 2018(1998)(1) $2,600 $2,788 .21 %
Taiwan Semiconductor Manufacturing Company Ltd., 0% 2002(2) 7,140 7,604 .57
------------------------
10,392 .78
------------------------
Transportation - 0.75%
Airplanes Pass Through Trust, pass-through certificates,Series 1,
Class A-3, 6.12% 2015 (2001)(1),(3),(4) 10,000 10,009 .75
------------------------
Utilities - 0.79%
Big Rivers Electric Corp. 9.50% 2017 (1998)(1) 10,000 10,621 .79
------------------------
Financial Services - 3.86%
AB Svensk Exportkredit (Swedish Export Credit
Corp.) Debentures 9.875% 2038 (1998)(1) 4,000 4,265 .32
Barclays North American Capital Corp. 9.75% 2021 (2001)(1) 7,230 8,088 .60
Beverly Finance Corp. 8.36% 2004(2) 10,000 10,502 .79
Corporate Property Investors:
9.00% 2002(2) 9,500 10,199
7.75% 2004(2) 2,000 2,076 .92
General Electric Capital Corp. 8.375% 2001 1,500 1,587 .12
Town & Country Funding Corp. 5.85% 2000 (1998)(1) 15,000 14,891 1.11
------------------------
51,608 3.86
------------------------
Collateralized Mortgage Obligations
(Privately Originated)(4) - 11.45%
Chase Commercial Mortgage Securities Corp.:
Series 1997-1, Class A1, 7.27% 2004 4,949 5,062
Series 1996-1, Class A1, 7.60% 2005 1,944 2,018 .53
Chase Manhattan Bank, NA,
Series 1993-I, Class 2A-5, 7.25% 2024 7,500 7,505 .56
CS First Boston Mortgage Securities Corp., Series 1995-AEW1:
Class A-1, 6.665% 2027 660 658
Class B, 7.182% 2027(3) 7,200 7,260 .59
DLJ Mortgage Acceptance Corp.,
Series 1997-CF1, Class A-1A, 7.40% 2006 6,901 7,116 .53
GMAC Commercial Mortgage Securities Inc.,
Series 1996-C1,Class A2A, 6.79% 2028 17,204 17,297 1.29
J.P. Morgan Commercial Mortgage Finance Corp., pass-through
certificates:
Series 1995-C1, Class A-2, 7.403% 2010(3) 18,155 18,618
Series 1997-C4, Class A-1, 6.939% 2028 1,872 1,887 1.53
Merrill Lynch Mortgage Investors Inc.:
Series 1992B, Class A-3, 8.30% 2012 9,664 9,797
Series 1995-C2, Class A-1, 7.434% 2021(3) 7,148 7,263
Series 1995-C3, Class A-2, 6.848% 2025(3) 5,000 4,992
Series 1997-C1, Class A-1, 6.95% 2029 13,916 14,128 2.71
Morgan Stanley Capital I Inc.:
Series 1995-GA1, Class A1, 7.00% 2002(2) 5,734 5,786
Series 1997-HF1, Class A2, 7.27% 2007(2) 8,000 8,186
Series 1997-WF1, Class A1, 6.83% 2029 (2006)(1,2) 8,968 9,039 1.72
Paine Webber CMO, Series O, Class 5, 9.50% 2019 5,000 5,395 .40
Prudential Home Mortgage Securities Co., Inc.:
Series 1992-37, Class A-6, 7.00% 2022 3,913 3,905
Series 1992-33, Class A-12, 7.50% 2022 750 749 .35
Structured Asset Securities Corp.,
Series 1996-CFL, Class A1-C, 5.944% 2028 4,900 4,872 .37
Westam Mortgage, Class 4-H, 8.95% 2018 11,000 11,622 .87
------------------------
153,155 11.45
------------------------
Asset-Backed Obligations(4) - 15.16%
AAMES Mortgage Trust, Series 1996-D, Class A1C, 6.52% 2020 4,500 4,489 .34
Asset Backed Securities Investment Trust,
Series 1997-D, 6.79% 2003(2) 20,000 20,018 1.50
Bear Asset Trust,
Series 1997-2, Class A, 6.686% 2006(2) 10,000 10,003 .75
Blackrock Capital Finance LP,
Series 1996-C2, Class A, 7.584% 2026(2) 569 571 .04
Case Equipment Loan Trust 1995-A, 7.30% 2002 2,906 2,936 .22
Chemical Financial Acceptance Corp., Series 1989-A, Class A,
9.25% 1998 7,353 7,456 .56
ContiMortgage Home Equity Loan Trust, Series 1996-4,
Class A-4, 6.37% 2011 2,000 1,994 .15
Equicredit Funding Trust, Series 1996-A, Class A2, 6.95% 2012 5,500 5,553 .41
First Plus Home Loan Owner Trust:
Series 1997-1, Class A-1, 6.05% 2004 768 767
Series 1997-1, Class A-2, 6.28% 2006 1,450 1,447
Series 1996-4, Class A-3, 6.28% 2009 5,000 4,975
Series 1997-1, Class A-3, 6.45% 2009 4,900 4,887
Series 1996-3, Class A-6, 7.60% 2014 13,000 13,291
Series 1997-1, Class A-6, 6.95% 2015 9,000 8,972 2.57
Ford Motor Credit Co. 1994-A, 6.35% 1999 319 319 .02
GCC Home Equity Trust, asset-backed certificates,
Series 1990-1, Class A, 10.00% 2005 2,203 2,251 .17
Green Tree Financial Corp., pass-through certificates:
Series 1993-3, Class A5, 5.75% 2018 10,000 9,803
Series 1997-A, Class A1, 6.30% 2023 1,779 1,782
Series 1995-1, Class A3, 7.95% 2025 3,356 3,376
Series 1995-9, Class A4, 6.45% 2027 4,250 4,247
Series 1997-D, Class A3, 6.77% 2027 5,000 5,009
Series 1996-8, Class A4, 7.00% 2027 5,000 5,081
Series 1996-10, Class A4, 6.42% 2028 3,500 3,475
Series 1996-10, Class A5, 6.83% 2028 14,000 13,947 3.49
Green Tree Home Improvement Loan Trust:
Series 1996-C, Class HIA1, 6.45% 2021 967 969
Series 1997-D, Class HIL, 6.14% 2023 5,000 4,997
Series 1997-C, Class HIA-2, 6.46% 2028 1,750 1,749 .58
IMC Home Equity Loan Trust, Series 1996-4, Class A1, 6.59% 2011 2,115 2,112 .16
Iroquois Trust, Series 1997-2, Class A, 6.752% 2007 5,000 4,982 .37
The Money Store Home Equity Trust:
Series 1996-B, Class A14, 7.35% 2012 5,000 5,093
Series 1996-B, Class A5, 7.18% 2014 5,000 5,056
Series 1996-C, Class A3, 7.07% 2016 6,705 6,778 1.26
Standard Credit Card Master Trust I, credit card
participation certificates:
Series 1991-3, Class A, 8.875% 1999 (1998)(1) 9,050 9,262
Series 1991-6, Class A, 7.875% 2000 (1998)(1) 21,250 21,682 2.31
Structured Assets Notes Transactions, LTD,
Series 1996-A, Class A1, 7.156% 2003(2) 3,510 3,499 .26
------------------------
202,828 15.16
------------------------
Governments (Excluding U.S. Government) &
Government Authorities - 2.15%
British Columbia Hydro & Power Authority 12.50% 2013 (1998)(1) 2,000 2,197 .16
Finland (Republic of) Debentures 9.625% 2028 (1998)(1) 10,639 11,276 .84
Ontario (Province of):
7.75% 2002 8,000 8,400
11.50% 2013 (1998)(1) 3,000 3,207 .87
Victoria (Territory of) Public Authorities Finance Agency
8.45% 2001 3,500 3,744 .28
------------------------
28,824 2.15
------------------------
Federal Agency Mortgage Pass-Through Obligations(4) - 28.77%
Federal Home Loan Mortgage Corp.:
8.00% 2003-2017 5,761 5,982
8.50% 2008-2021 7,132 7,451
8.75% 2008-2009 1,040 1,081
9.50% 2010-2013 2,070 2,195
10.00% 2004-2019 18,683 20,440
11.00% 2018 48 54
12.00% 2013 190 215
12.50% 2013-2015 1,553 1,813
12.75% 2019 63 73 2.94
Federal National Mortgage Assn.:
6.720% 2033(3) 15,543 15,383
7.00% 2008-2027 22,418 22,345
7.50% 2009-2027 32,615 33,131
8.00% 2002-2005 1,741 1,771
8.307% 2002(3) 8,987 9,289
8.50% 2008-2023 11,458 12,039
9.00% 2001-2022 12,940 13,810
9.50% 2009-2022 10,338 11,056
10.00% 2017-2025 22,050 24,404
10.50% 2004-2020 1,776 1,963
11.00% 2000-2020 3,209 3,587
12.25% 2013 19 20 11.12
Government National Mortgage Assn.:
5.00% 2026-2027(3) 12,902 12,888
6.00% 2025-2026(3) 4,900 4,924
6.50% 2024(3) 1,011 982
6.875% 2021-2023(3) 13,426 13,772
7.00% 2007-2024(3) 21,356 21,763
7.125% 2021-2024(3) 40,095 41,286
7.375% 2016-2024(3) 18,415 18,941
8.00% 2023 1,113 1,160
8.50% 2007-2023 19,866 21,027
9.00% 2008-2026 21,769 23,226
9.50% 2009-2021 22,829 24,772
9.75% 1999 53 54
10.00% 2019 9,393 10,479
10.25% 2012 262 284
10.50% 2019 125 141
11.00% 2010-2019 360 413
11.50% 2010-2013 166 192
12.50% 2010-2014 427 506 14.71
------------------------
384,912 28.77
------------------------
Federal Agency Collateralized Mortgage Obligations(4) - 5.64%
Federal Home Loan Mortgage Corp.:
Series 1539, Class PL, 6.50% 2008 2,000 1,972
Class B-3, 12.50% 2013 131 144
Series 76, Class F, 9.125% 2020 2,279 2,358
Series 1567, Class A, 6.0875% 2023(3) 2,279 2,115 .49
Federal National Mortgage Assn.:
Series 91-50, Class H, 7.75% 2006 15,131 15,542
Series 91-146, Class Z, 8.00% 2006 3,981 4,069
Trust D2, 11.00% 2009 3,546 3,954
Series 97-41, Class B, 7.25% 2014 7,967 8,032
Series 88-16, Class B, 9.50% 2018 655 708
Series 90-93, Class G, 5.50% 2020 3,658 3,433
Series 91-78, Class PK, 8.50% 2020 10,000 10,338
Series 90-21, Class Z, 9.00% 2020 21,667 22,852 5.15
------------------------
75,517 5.64
------------------------
Federal Agency Obligations--Non-Mortgage - 4.87%
Federal Home Loan Bank Notes:
6.38% 2003 4,000 3,910
6.16% 2004 15,000 14,475
6.27% 2004 3,000 2,914 1.59
Federal Home Loan Mortgage Notes:
5.78% 2003 2,000 1,913
6.30% 2003 9,300 9,071
6.39% 2003 2,000 1,958
6.50% 2003 2,000 1,966
6.61% 2003 16,650 16,431
6.19% 2004 10,000 9,645 3.06
Federal National Mortgage Assn. Medium-Term Notes,
6.14% 2004 3,000 2,888 .22
------------------------
65,171 4.87
------------------------
U.S. Treasury Obligations - 22.00%
9.25% August 1998 22,250 22,952 1.72
5.125% November 1998 17,500 17,350 1.30
9.125% May 1999 13,250 13,919 1.04
6.75% June 1999 34,500 34,958 2.61
6.875% July 1999 5,750 5,843 .44
5.875% November 1999 17,000 16,950 1.27
7.75% November 1999 2,250 2,330 .17
7.125% February 2000 6,750 6,912 .52
8.00% May 2001 8,000 8,476 .63
13.375% August 2001 16,750 20,888 1.56
10.75% February 2003 5,000 6,018 .45
10.75% May 2003 21,750 26,334 1.97
11.125% August 2003 12,500 15,451 1.15
7.25% May 2004 42,073 44,183 3.30
7.25% August 2004 5,750 6,041 .45
11.625% November 2004 23,250 30,207 2.26
6.50% May 2005 1,500 1,512 .11
6.125% August 2007 8,040 7,913 .59
10.375% November 2009 5,000 6,107 .46
------------------------
294,344 22.00
------------------------
TOTAL BONDS & NOTES (cost: $1,281,297,000) 1,287,381 96.22
------------------------
Short-Term Securities
Commercial Paper - 5.84%
E. I. du Pont de Nemours and Co. 5.49% due 09/18/97 15,000 14,959 1.12
General Electric Capital Corp. 5.62% due 09/02/97 25,000 24,992 1.87
H.J. Heinz Co. 5.51% due 10/03/97 13,400 13,332 1.00
Pepsico Inc. 5.50% due 10/01/97 15,000 14,929 1.11
Procter & Gamble Co. 5.46% due 09/10/97 10,000 9,985 .74
------------------------
TOTAL SHORT-TERM SECURITIES (cost: $78,197,000) 78,197 5.84
------------------------
TOTAL INVESTMENT SECURITIES (cost: $1,359,494,000) 1,365,578 102.06
Excess of payables over cash and receivables 27,543 2.06
------------------------
Net Assets $1,338,035 100.00 %
========= ======
(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) Purchased in a private placement transaction;
resale may be limited to qualified institutional buyers;
resale to the public may require registration.
(3) Coupon rate may change periodically.
(4) Pass-through securities 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.
See Notes to Financial Statements
</TABLE>
<TABLE>
Intermediate Bond Fund of America
Financial Statements
- ---------------------------------------- ------------ -----------
<S> <C> <C>
Statement of Assets and Liabilities
at August 31, 1997 (dollars in thousands)
- ---------------------------------------- ------------ -----------
Assets:
Investment securities at market
(cost: $1,359,494) $1,365,578
Cash 314
Receivables for-
Sales of investments $ 5,880
Sales of fund's shares 3,678
Accrued interest 13,801 23,359
------------ -----------
1,389,251
Liabilities:
Payables for-
Purchases of investments 44,366
Repurchases of fund's shares 3,323
Dividends payable 2,316
Management services 449
Accrued expenses 762 51,216
------------ -----------
Net Assets at August 31, 1997 -
Equivalent to $13.42 per share on 99,728,961 shares
of beneficial interest issued and outstanding;
unlimited shares authorized $1,338,035
=========
Statement of Operations
for the year ended August 31, 1997 (dollars in thousands)
------------ -----------
Investment Income:
Income:
Interest $ 99,967
Expenses:
Management services fee 5,535
Distribution expenses 4,146
Transfer agent fee 975
Reports to shareholders 132
Registration statement and prospectus 124
Postage, stationery and supplies 237
Trustees' fees 29
Auditing and legal fees 42
Custodian fee 57
Taxes other than federal income tax 22
Other expenses 24 11,323
------------ -----------
Net investment income 88,644
-----------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (9,914)
Net unrealized (depreciation) appreciation on investments:
Beginning of year (19,744)
End of year 6,084
------------
Net unrealized appreciation on investments 25,828
-----------
Net realized loss and unrealized appreciation
on investments 15,914
------------
Net Increase in Net Assets Resulting
from Operations $104,558
=========
Statement of Changes in Net
Assets (dollars in thousands)
- ---------------------------------------- ----------------------------
Year ended August 31
August 31,
1997 1996
Operations: ----------------- ----------
Net investment income $ 88,644 $ 98,319
Net realized loss on investments (9,914) (2,986)
Net change in unrealized appreciation (depreciation)
on investments 25,828 (28,130)
----------------------------
Net increase in net assets
resulting from operations 104,558 67,203
----------------------------
Dividends Paid From Net Investment Income (87,766) (97,453)
----------------------------
Capital Share Transactions:
Proceeds from shares sold:
45,770,888 and 54,126,644 shares, respectively 612,621 732,449
Proceeds from shares issued in
reinvestment of net investment income
dividends:
4,954,744 and 5,424,112 shares, respectively 66,280 73,190
Cost of shares repurchased:
58,792,101 and 62,787,538
shares, respectively (786,616) (847,614)
----------------------------
Net decrease in net assets resulting
from capital share transactions (107,715) (41,975)
----------------------------
Total Decrease in Net Assets (90,923) (72,225)
Net Assets:
Beginning of year 1,428,958 1,501,183
----------------------------
End of year (including undistributed
net investment income of $4,237 and
$3,359, respectively) $1,338,035 $1,428,958
============= ============
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 days 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. Dividends to shareholders are declared daily after the
determination of the fund's net investment income and are paid to shareholders
monthly.
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 August 31, 1997, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $6,084,000, of which
$15,133,000 related to appreciated securities and $9,049,000 related to
depreciated securities. During the year ended August 31, 1997, the fund
realized, on a tax basis, a net capital loss of $9,914,000 on security
transactions. The fund had available at August 31, 1997 a net capital loss
carryforward of $85,565,000 which may be used to offset capital gains realized
during subsequent years through 2005 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
$1,359,494,000 at August 31, 1997.
3. The fee of $5,535,000 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 year ended August 31, 1997,
distribution expenses under the Plan were $4,146,000. As of August 31, 1997,
accrued and unpaid distribution expenses were $667,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $975,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $1,333,000 (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 August 31,
1997, aggregate amounts deferred and earnings thereon were $60,000.
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 August 31, 1997, accumulated net realized loss on investments was
$92,727,000 and paid-in capital was $1,420,441,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $550,661,000 and $676,185,000, respectively, during
the year ended August 31, 1997.
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 $57,000 includes $44,000 that was paid by these credits
rather than in cash.
<TABLE>
PER-SHARE DATA AND RATIOS
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended August 31
-------------------------------------------------
1997 1996 1995 1994 1993
-------------------------------------------------
Net Asset Value, Beginning
of Year $ 13.26 $ 13.52 $ 13.38 $14.64 $14.28
-------------------------------------------------
Income from Investment
Operations:
Net investment income .86 .88 .93 .95 1.00
Net realized and unrealized
gain (loss) on investments .15 (.27) .13 (1.20) .37
Total from investment -------------------------------------------------
operations 1.01 .61 1.06 (.25) 1.37
-------------------------------------------------
Less Distributions:
Dividends from net investment
income (.85) (.87) (.92) (.94) (1.01)
Distributions from net realized
gains (.07)
-------------------------------------------------
Total distributions (.85) (.87) (.92) (1.01) (1.01)
-------------------------------------------------
Net Asset Value, End of Year $ 13.42 $ 13.26 $ 13.52 $13.38 $14.64
=================================================
Total Return/1/ 7.83% 4.63% 8.33% (1.80%) 9.95%
Ratios/Supplemental Data:
Net assets, end of year (in
millions) $1,338 $1,429 $1,501 $1,626 $1,686
Ratio of expenses to average
net assets .82% .80% .78% .83% .82%
Ratio of net income to
average net assets 6.40% 6.53% 6.96% 6.79% 7.00%
Portfolio turnover rate 41.55% 48.25 % 71.91 % 52.94 % 42.59 %
/1/Calculated without deducting a sales
charge. The maximum sales charge is
4.75% of the fund's offering price.
</TABLE>
Independent Auditors' Report
To the Board of Trustees and Shareholders
of Intermediate Bond Fund of America:
We have audited the accompanying statement of assets and liabilities of
Intermediate Bond Fund of America (the "fund"), including the schedule of
portfolio investments as of August 31, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the per-share data and
ratios for each of the five years in the period then ended. These financial
statements and per-share data and ratios are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and per-share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at August 31, 1997, by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of Intermediate Bond Fund of America as of August 31, 1997, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the per-share
data and ratios for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
Los Angeles, California
September 25, 1997
Tax Information (Unaudited)
Certain states may exempt from income taxation a portion of the dividends paid
from net investment income if derived from direct U.S. Treasury obligations.
For purposes of computing this exclusion, 34% of the dividends paid by the fund
from net investment income was derived from interest on direct U.S. Treasury
obligations.
Dividends received by retirement plans such as IRAs, Keogh-type plans, and
403(b) plans need not be reported as taxable income. However, many retirement
trusts may need this information for their annual information reporting.
Since the amounts above are reported for the FISCAL YEAR and not a CALENDAR
YEAR, shareholders should refer to their Form 1099-DIV or other tax information
which will be mailed in January 1998 to determine the CALENDAR YEAR amounts to
be included on their respective 1997 tax returns. Shareholders should consult
their tax advisers.
SHAREHOLDER SERVICES
The American Funds Group(R)
ARE YOU AWARE OF YOUR RIGHTS?
Did you know you may be eligible for a sales charge discount when you buy
shares of most American Funds? The discounts begin when your investments total
$25,000 for bond funds or $50,000 for stock and stock/bond funds - and the good
news is you don't have to invest the whole amount at one time.
Through your right of accumulation, when you purchase additional shares you can
add the purchase amount to the value of shares you already own - in any of our
eligible funds* - in order to qualify for a sales charge discount on the new
investment. Sales charges are reduced on a sliding scale as the value of your
investments increases.
You'll find a detailed breakdown of all discounts in your fund's prospectus,
which you can obtain from your financial adviser or by calling a Shareholder
Services Representative.
OTHER WAYS TO REDUCE SALES CHARGES
You can establish a statement of intention that allows you to invest at a
reduced sales charge immediately, based on purchases you intend to make over a
13-month period.* (If, over the 13 months, you don't invest the intended
amount, you will pay the sales charge applicable to the amount invested.) Or
you can aggregate accounts by adding your purchase amount to the total value of
accounts you, your spouse and your children under the age of 21 have with The
American Funds Group. Call a Shareholder Services Representative for details
and restrictions.
Whether you accumulate, aggregate or establish a statement of intention, it all
adds up - to more purchasing power for you.
INVESTING WITH STYLE
Our many free services are designed to help you meet your needs quickly,
effortlessly and efficiently.
AMERICAN FUNDSLINE(R) AND FUNDSLINE ONLINESM
Handle transactions using your computer or phone 24 hours a day. Obtain current
prices and investment returns, exchange shares between funds, redeem shares,
check your share balances and confirm your most recent transaction. Request a
prospectus (Web site only), duplicate statements and order checks (phone only).
All on your timetable. Just call 800/325-3590 or visit our Web site at
www.americanfunds.com.
AMERICAN FUNDSLINKSM
Link your American Funds accounts with your bank account. You can have fund
dividends or automatic fund withdrawals deposited directly into your bank
account. Or you can invest money directly from your bank account into your fund
account on either a systematic or on-demand basis.
OTHER AUTOMATIC TRANSACTIONS
You can reinvest dividends into the same fund or another fund, make
withdrawals, and exchange shares between funds - quarterly, monthly or during
the months you specify.
DIVIDEND AND CAPITAL GAIN OPTIONS
Use your dividend and capital gain distributions to meet your changing needs.
You may:
* Automatically reinvest distributions back into the fund at no sales charge.
* Cross-reinvest dividends into another fund at no sales charge. (Certain
restrictions apply.)
* Have dividends mailed or sent electronically to you or to someone else.
EXCHANGE PRIVILEGES
When you and your investment adviser feel it's time to adjust your portfolio to
meet your changing investment goals, you can easily exchange shares from one
American Fund to another - without paying a sales charge.* If you are opening
an account in a different fund, you must meet that fund's minimum investment
requirement. An exchange generally constitutes a sale and purchase for tax
purposes. Please read the prospectus before you exchange shares.
OTHER SERVICES
Stay on top of your investments with account statements that keep you abreast
of the activity in your account, consolidated quarterly statements to reduce
paperwork if you have multiple accounts and year-end tax reports that show the
dividends and capital gain distributions paid to you during the year.
[sidebar]
YOUR FINANCIAL ADVISER WILL BE HAPPY TO EXPLAIN THESE SERVICES IN GREATER
DETAIL. OR, TO TALK TO A SHAREHOLDER SERVICES REPRESENTATIVE AT AMERICAN FUNDS,
CALL TOLL-FREE (8 A.M. TO 8 P.M. ET) FROM ANYWHERE IN THE U.S.: 800/421-0180.
VISIT US AT WWW.AMERICANFUNDS.COM ON THE WORLD WIDE WEB.
[map of the United States broken out into regions]
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
WEST CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
EAST CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
[end sidebar]
*Investments in our money market funds - The Cash Management Trust of America,
The Tax-Exempt Money Fund of America and The U.S. Treasury Money Fund of
America - which are purchased without a sales charge, generally do not apply
when determining your sales charges unless the shares were originally purchased
in another American Fund that required a sales charge, then later exchanged
into our money market funds.
FOR MORE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN FUNDS,
INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR FINANCIAL
ADVISER OR AMERICAN FUNDS SERVICE COMPANY AND READ IT CAREFULLY BEFORE YOU
INVEST OR SEND MONEY. THESE SERVICES ARE SUBJECT TO CHANGE OR TERMINATION.
BOARD OF TRUSTEES
H. FREDERICK CHRISTIE, Rolling Hills Estates, California
Private investor; former President and Chief Executive Officer,
The Mission Group; former President, Southern California
Edison Company
DON R. CONLAN, South Pasadena, California
President (retired), The Capital Group Companies, Inc.
DIANE C. CREEL, Long Beach, California
Chief Executive Officer and President,
The Earth Technology Corporation
(international consulting engineering)
MARTIN FENTON, JR., San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER, Marina del Rey, California
President, Fuller & Company, Inc.
(financial management consulting)
ABNER D. GOLDSTINE, Los Angeles, California
President of the fund
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR., Los Angeles, California
Chairman of the Board of the fund
Executive Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III, San Marino, California
Private investor
RICHARD G. NEWMAN, Los Angeles, California
Chairman of the Board, President and Chief Executive Officer,
AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI, Long Beach, California
Retired; former Chairman of the Board, BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
MICHAEL J. DOWNER, Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL, Brea, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
JOHN H. SMET, Los Angeles, California
Vice President of the fund
Vice President, Capital Research and Management Company
JULIE F. WILLIAMS, Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, Jr., Brea, California
Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK, Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
TODD L. MILLER, Brea, California
Assistant Treasurer of the fund
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
Printed on recycled paper
Litho in USA SG/GRS/3210
Lit. No. IBFA-011-1097
[The American Funds Group(R)]
Intermediate Bond Fund of America is one of the 28 funds in The American Funds
Group,(R) managed by Capital Research and Management Company. Since 1931,
Capital has invested with a long-term focus based on thorough research and
attention to risk.
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
American Funds Service Company
(Please write to the address nearest you.)
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
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
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 December 31, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
