[The American Funds Group(r)]
Intermediate Bond
Fund of America
Semi-Annual Report
for the six months ended
February 29, 2000
Intermediate Bond Fund of America(r) seeks to earn current income, consistent
with preservation of capital, by investing primarily in fixed-income securities
with an average effective maturity of no more than five years and with quality
ratings of A or better (as rated by Standard & Poor's or Moody's Investors
Service) or equivalent unrated securities.
These investments include:
* U.S. government and federal agency securities
* Pass-through securities, such as mortgage- and asset-backed securities
* High-quality corporate obligations
In pursuing its objective, the fund takes a middle course, seeking a higher
yield than money market funds (which typically offer a stable principal value)
with less volatility than longer term bonds (which typically provide higher
income).
Intermediate Bond Fund of America is one of the 29 mutual funds in The American
Funds Group,(r) the nation's third-largest mutual fund family. For nearly seven
decades, Capital Research and Management Company, the American Funds adviser,
has invested with a long-term focus based on thorough research and attention to
risk.
Average Annual Compound Returns*
<TABLE>
<CAPTION>
Periods Ended
2/29/00 3/31/00
<S> <C> <C>
Ten Years +6.33% +6.44%
Five Years +5.03% +5.13%
One Year -1.75% -1.34%
</TABLE>
*Assumes reinvestment of all distributions and payment of the 3.75% maximum
sales charge at the beginning of the stated periods. Sales charges are lower
for accounts of $100,000 or more.
Please see back cover for important information about Class A and Class B
shares.
Fund results in this report were calculated for A shares at net asset value
(without a sales charge) unless otherwise indicated. The fund's 30-day yield as
of March 31, 2000, the most recent calendar quarter, calculated in accordance
with the Securities and Exchange Commission formula, was 6.31%. The fund's
distribution rate as of that date was 5.36%. 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.
FIGURES SHOWN ARE PAST RESULTS AND ARE NOT PREDICTIVE OF FUTURE RESULTS. SHARE
PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY. INVESTING FOR SHORT PERIODS
MAKES LOSSES MORE LIKELY. INVESTMENTS ARE NOT FDIC-INSURED, NOR ARE THEY
DEPOSITS OF OR GUARANTEED BY A BANK OR ANY OTHER ENTITY.
Fellow Shareholders:
The economic expansion in the United States has broken all records for
longevity. In recent months, growth has accelerated in many other parts of the
world as well. So far, this robust activity has not been accompanied by higher
inflation. However, there are signs that inflationary pressures may be
building. With that in mind, the Federal Reserve has raised short-term interest
rates five times in nine months and indicated further increases are likely.
This has created a very challenging environment for bond investors.
Particularly in the portion of the market where Intermediate Bond Fund of
America's assets are concentrated - in three- to five-year issues - prices
weakened considerably during the first half of the fund's 2000 fiscal year.
Ordinarily an increase in interest rates would have a greater effect on the
prices of longer term bonds. However, in this case, supply and demand factors
entered into the picture, with the Treasury announcing plans to buy back
long-term debt.
Comparative Results and Portfolio Changes
Intermediate Bond Fund of America managed to hold its ground comparatively
well. For the six months ended February 29, its net asset value declined from
$13.01 to $12.89, or 0.9%. The fund generated an income return of 2.8% (5.6%
annualized), producing a positive 1.9% total return for shareholders who
reinvested dividends totaling 36 cents a share paid during the period. For the
six months, the average return of 110 Short-Intermediate Investment-Grade Debt
Funds tracked by Lipper, Inc. was 1.5%. The total return for the unmanaged
Salomon Smith Barney Broad Investment-Grade Medium Term Index was 1.8%.
During the fiscal half-year, we reduced the fund's position in five-year
Treasury bonds and purchased a number of longer maturities. The average
effective maturity of the portfolio rose moderately, to 4.88 years on February
29 from 4.41 years at the end of fiscal 1999. This brings us close to our
maximum permitted average maturity of five years.
The portfolio remains well diversified, with positions in more than 200
government, federal agency, asset-backed and mortgage securities, and
high-quality corporate bonds. Currently, about 80% of the holdings are rated
AAA or AA, compared with 86% six months ago.
Adding Value Through Research
Drawing on the resources of our investment adviser, Capital Research and
Management Company, we are continuing to explore fixed-income opportunities
that can enhance the fund's return without adding substantial risk. During this
past fiscal half-year, a number of attractive opportunities were identified in
the A-rated segment of the market. As a result, our holdings of A-rated (mainly
corporate) issues increased to 15% of net assets on February 29 from 10% at the
start of the period.
Our investment approach is to follow a middle path, between the two extremes of
the yield curve. Using research to add value, we try to provide a return that
captures as much of the available yield as possible without exposing the fund
to all of the volatility normally associated with longer term maturities. We
remain confident that, over time, this approach should continue to prove
rewarding for our shareholders.
Finally, we would note that the monthly dividend payment has been increased
from 6 to 6.5 cents a share effective with the April payment.
Cordially,
[Paul G. Haaga] [John H. Smet]
Paul G. Haaga, Jr. John H. Smet
Chairman of the Board President
April 18, 2000
<TABLE>
Intermediate Bond Fund of America
Investment Portfolio, February 29, 2000
Federal Agency Mortgage-Backed 20%
Corporate Bonds 19%
Commercial Mortgage-Backed 18%
Asset-Backed 16%
U.S. Government/Agency (Non-Mortgage) 15%
Other Mortgage-Backed 6%
Governments(Excluding U.S. Government)
and Development Authorities 1%
Taxable Municipal Bonds 1%
Cash & Equivalents 4%
Principal Market
Amount Value
Bonds & Notes (000) (000)
----- -----
<S> <C> <C>
Federal Agency Mortgage Pass-Through
Obligations (1) - 18.79%
Fannie Mae:
6.00% 2013 8,209 7,701
6.50% 2013 - 2014 7,819 7,517
7.00% 2008 - 2028 8,809 8,596
7.50% 2009 - 2039 9,356 9,331
8.00% 2002 - 2005 546 551
8.267% 2002 (2) 5,929 5,899
8.50% 2008 - 2027 5,629 5,774
9.00% 2001 - 2022 6,313 6,548
9.50% 2009 - 2022 3,836 4,042
10.00% 2017 - 2025 9,061 9,692
10.50% 2004 - 2020 665 715
11.00% 2000 - 2020 1,641 1,794
11.50% 2015 206 228
12.00% 2015 - 2019 8,482 9,508
12.25% 2012 - 2013 1,229 1,368
12.50% 2016 2,458 2,768
13.00% 2015 - 2028 2,166 2,478
15.00% 2013 772 914
Fannie Mae/
Government National Mortgage Assn.:
11.00% 2020 633 694
12.50% 2015 - 2019 1,783 2,007
15.00% 2013 417 493
Fannie Mae Grantor Trust,
Series 1999-T2, Class A1, 7.50% 2039 6,036 5,916
Federal Housing Administration/
Veterans Affairs 12.50% 2015 232 261
Freddie Mac:
6.00% 2014 - 2029 7,541 6,987
6.50% 2014 1,706 1,638
7.00% 2008 - 2015 4,415 4,343
8.00% 2003 - 2017 8,898 8,994
8.50% 2008 - 2027 5,360 5,488
8.75% 2008 - 2009 506 515
9.00% 2028 1,242 1,283
9.50% 2010 - 2013 544 564
10.00% 2005 - 2019 8,223 8,659
11.00% 2018 973 1,066
12.00% 2016 92 100
12.50% 2015 - 2019 629 699
12.75% 2019 26 29
Government National Mortgage Assn.:
6.00% 2013 - 2029 5,117 4,761
6.50% 2013 - 2029 11,071 10,505
7.00% 2007 - 2028 10,490 10,118
7.50% 2022 - 2029 15,081 14,819
8.00% 2023 - 2030 48,908 49,096
8.50% 2007 - 2023 8,636 8,879
9.00% 2008 - 2025 5,636 5,860
9.50% 2009 - 2021 9,664 10,240
10.00% 2019 3,955 4,253
10.25% 2012 176 188
10.50% 2019 43 47
-----
253,926
-----
Federal Agency Collateralized Mortgage
Obligations (1) - 1.55%
Fannie Mae:
Series 91-50, Class H, 7.75% 2006 6,111 6,132
Series 91-146, Class Z, 8.00% 2006 1,718 1,731
Trust D2, 11.00% 2009 1,921 2,060
Series 88-16, Class B, 9.50% 2018 265 279
Series 90-93, Class G, 5.50% 2020 1,344 1,261
Series 90-21, Class Z, 9.00% 2020 7,830 8,014
Freddie Mac:
Series 83-B, Class B3, 12.50% 2013 54 59
Series 1567, Class A, 5.268% 2023 (2) 1,481 1,437
-----
20,973
-----
Federal Agency Obligations:
Non-Mortgage - 5.22%
Fannie Mae Notes:
4.75% 2003 3,000 2,775
5.625% 2004 9,000 8,520
6.00% 2008 29,150 26,973
5.25% 2009 17,000 14,793
Federal Home Loan Banks Global Bonds:
5.625% 2001 3,000 2,970
5.125% 2003 5,750 5,408
Freddie Mac Notes:
5.75% 2003 500 481
5.125% 2008 10,000 8,664
-----
70,584
-----
U.S. Treasury Obligations - 9.82%
4.25% November 2003 10,000 9,244
6.00% August 2004 11,370 11,100
7.25% August 2004 5,250 5,368
11.625% November 2004 16,400 19,572
6.25% February 2007 30,250 29,550
6.125% August 2007 355 344
5.50% May 2009 33,250 30,798
10.375% November 2009 4,000 4,555
8.75% May 2017 6,300 7,760
8.875% August 2017 9,000 11,221
8.875% February 2019 2,530 3,187
-----
132,699
-----
Asset-Backed Obligations (1) - 16.43%
Arcadia Automobile Receivables Trust,
Series 1999-C, Class A-3, 7.20% 2007 2,900 2,887
Banco Nacional de Mexico SA,
Series 1999-A, 7.50% 2006 (3) 5,000 4,926
Case Equipment Loan Trust,
Series 1999-A, Class B, 5.96% 2005 1,764 1,729
Chase Manhattan Credit Card Master Trust,
Series 1997-5, Class A, 6.194% 2005 8,750 8,488
ComEd Transitional Funding Trust,
Transitional Funding Trust Notes:
Series 1998-1, Class A4, 5.39% 2005 2,000 1,903
Series 1998-1, Class A5, 5.44% 2007 9,000 8,370
First Consumer Master Trust:
Series 1999-A, Class A, 5.80% 2005 (3) 8,000 7,610
Series 1999-A, Class B, 6.28% 2005 (3) 9,000 8,435
FIRSTPLUS Home Loan Owner Trust,
Series 1997-4, Class A5, 6.62% 2015 3,000 2,968
Green Tree Financial Corp.,
pass-through certificates:
Series 1998-2, Class A5, 6.24% 2016 3,500 3,411
Series 1993-3, Class A5, 5.75% 2018 1,954 1,943
Series 1996-10, Class A4, 6.42% 2028 2,548 2,536
Series 1996-10, Class A5, 6.83% 2028 14,000 13,754
Series 1997-6, Class A6, 6.90% 2029 3,000 2,952
Series 1997-6, Class A7, 7.14% 2029 4,250 4,165
Series 1999-2, Class A2, 5.84% 2030 4,250 4,132
Green Tree Recreational, Equipment
& Consumer Trust, Series 1999-A,
Class A6, 6.84% 2010 8,000 7,842
Hitachi Shinpan Co. Ltd., Series
1999-3, Class A, 9.60% 2006 (3) 6,500 6,425
LML Auto Lease Securitization, Series
1999-A, Class A, 6.45% 2004 (3) 13,305 13,187
Mission State Fund LLC,
Class A1, 6.19% 2003 (3) 5,875 5,846
The Money Store Home Equity Trust,
Series 1994-D, Class A5, 8.925% 2022 9,621 9,758
Nebhelp Trust, Student Loan Interest
Securities, Series 1998-1,
Class A, 6.68% 2016 (3) 17,824 17,368
NPF VI, Inc.,
Series 1999-1, Class A, 6.25% 2003 (3) 2,000 1,945
NPF XII, Inc.,
Series 1999-2, Class A, 7.05% 2003 (3) 18,750 18,311
PECO Energy Co.,
Series 1999-A, Class A2, 5.63% 2005 2,500 2,410
PP&L Transition Bond Co. LLC:
Series 1999-1, Class A5, 6.83% 2007 7,250 7,129
Series 1999-1, Class A8, 7.15% 2009 16,000 15,841
Puerto Rico Public Financing Corp.,
Series 1, Class A, 6.15% 2008 18,073 17,328
Rental Car Finance Corp., Series 1999-1,
Class C, 6.50% 2007 (3) 2,000 1,851
Student Loan Funding LLC, Series 1998-B,
Class B3, 6.25% 2019 13,500 12,617
Triad Auto Receivables Owner Trust,
Series 1999-1, Class A2, 6.09% 2005 4,000 3,893
-----
221,960
-----
Commercial Mortgage-Backed Securities
(1) -18.17%
Asset Securitization Corp.,
Series 1997-D5,
Class APS1, interest only,
1.596% 2043 (2) (4) 170,642 14,662
Bear Stearns Commercial
Mortgage Securities Inc.:
Series 1998-C1, Class A1, 6.34% 2030 5,303 5,067
Series 1999-C1, Class X, interest only,
1.184% 2031 (2) 92,262 5,984
CDC Securitization Corp.,
Series 1999-FL1,
Class C, 7.189% 2007 (2) (3) 5,000 5,026
Chase Commercial
Mortgage Securities Corp.:
Series 1996-1, Class A1, 7.60% 2005 1,540 1,544
Series 1997-1, Class A1, 7.27% 2029 (4) 2,575 2,562
Series 1998-1, Class A1, 6.34% 2030 3,081 2,970
Series 1998-2, Class A2, 6.39% 2030 (4) 21,000 19,307
Series 1999-1, Class C, 7.625% 2031 (4) 7,000 6,774
Commercial Mortgage Acceptance Corp.:
Series 1998-C1, Class A1, 6.23% 2007 1,960 1,873
Series 1998-C2, Class A1, 5.80% 2030 (4) 3,889 3,671
CS First Boston Mortgage Securities Corp.,
Series 1998-C1, Class A1A, 6.26% 2040 6,860 6,541
Deutsche Mortgage & Asset Receiving Corp.:
Series COMM 2000-FL1,
Class E, 6.871% 2011 (2) (3) 4,000 4,003
Series 1998-C1, Class A1, 6.22% 2031 12,363 11,802
DLJ Mortgage Acceptance Corp.:
Series 1997-CF1, Class A1A, 7.40% 2006 (3) 5,777 5,735
Series 1995-CF2, Class A1B, 6.85% 2027 (3) 10,000 9,804
Series 1996-CF1, Class A1A, 7.28% 2028 (3) 1,793 1,774
Series 1998-CF2, Class A3, 6.65% 2031 (2) 5,250 4,801
Series 1998-CF2, Class A4, 6.90% 2031 (2) 3,250 2,976
Freddie Mac Loan Receivables Trust,
Series 1998-A, Class A3, 6.69% 2020 (3) 8,000 7,320
GMAC Commercial Mortgage Securities, Inc.:
Series 1997-C2, Class C, 6.91% 2007 5,000 4,653
Series 1996-C1, Class A2A, 6.79% 2028 12,867 12,713
GS Mortgage Securities Corp. II,
Series 1999-GSFL II,
Class D, 6.993% 2013 (2) (3) 10,000 9,991
J.P. Morgan Commercial
Mortgage Finance Corp.,
Series 1995-C1, Class A2, 7.423% 2010 (2) 18,155 17,874
LB Commercial Mortgage Trust,
Series 1998-C1, Class A1, 6.33% 2030 1,502 1,457
Merrill Lynch Mortgage Investors, Inc.:
Series 1995-C2, Class A1, 7.023% 2021 (2) 2,601 2,568
Series 1995-C3, Class A2, 6.809% 2025 (2) 5,180 5,084
Series 1995-C3, Class A3, 7.049% 2025 (2) 1,500 1,459
Series 1997-C1, Class A1, 6.95% 2029 (2) 2,490 2,461
Series 1998-C3, Class A1, 5.65% 2030 6,037 5,649
Morgan Stanley Capital I Inc.:
Series 1995-GAL1, Class A1, 7.00% 2002 (3) 784 779
Series 1998-HF1, Class A1, 6.19% 2007 (2) 6,641 6,356
Series 1998-HF2, Class A1, 6.01% 2030 4,586 4,325
Series 1998-WF2, Class A1, 6.34% 2030 (2) 6,258 6,001
Series 1999-FNV1, Class D, 7.03% 2032 4,000 3,719
Mortgage Capital Funding, Inc.,
Series 1998-MC1, Class A1 6.417% 2030 12,342 11,855
Nomura Asset Securities Corp.,
Series 1998-D6, Class AA1, 6.28% 2030 (2) 8,625 8,248
Prudential Securities
Secured Financing Corp.,
Series 1999-NRF1, Class C, 6.746% 2009 2,000 1,831
SMA Finance Co., Inc.,
Series 1998-C1,
Class A1, 6.27% 2005 (3) (4) 8,298 8,023
Structured Asset Securities Corp.,
Series 1999-C3,
Class E, 6.98% 2013 (2) (3) 6,148 6,153
-----
245,395
-----
Collateralized Mortgage Obligations
(Privately Originated) (1) - 5.62%
Bay View Financial Acquisition Trust,
Series 1999-C, Class M3, 7.814% 2029
(1) (2) (3) 11,136 11,326
Chase Manhattan Bank, NA,
Series 1993-I, Class 2A5, 7.25% 2024 1,545 1,533
First Nationwide,
Series 1999-2, Class 1PA1, 6.50% 2029 6,794 6,310
Paine Webber CMO,
Series O, Class 5, 9.50% 2019 2,147 2,224
Residential Accredit Loans, Inc.,
Series 1997-QS12,
Class A4, 6.873% 2027 (2) 3,000 2,976
Residential Funding
Mortgage Securities I, Inc.,
Series 1998-S17, Class M1, 6.75% 2028 1,970 1,798
Security National Mortgage Loan Trust,
Series 1999-1, Class B, 9.858% 2030 (3) 7,452 7,322
Structured Asset Notes Transaction, Ltd.,
Series 1996-A, Class A1, 7.156% 2003 (3) 5,207 5,080
Structured Asset Securities Corp.:
Series 1998-RF2,
Class A, 8.545% 2027 (2) (3) 13,825 14,058
Series 1998-RF1,
Class A, 8.673% 2027 (2) (3) 15,561 15,891
Series 1999-BC1,
Class M2, 7.114% 2029 (2) 7,500 7,520
-----
76,038
-----
Financial Services - 8.09%
ABN AMRO Bank NV 7.55% 2006 3,000 2,999
Associates Corp.
of North America 6.45% 2001 7,000 6,922
BankAmerica Corp.:
6.65% 2001 3,000 2,988
5.875% 2009 3,175 2,774
BANK ONE CORP., Series A, 5.625% 2004 3,300 3,075
Barclays North American
Capital Corp. 9.75% 2021 7,230 7,635
Beverly Finance Corp. 8.36% 2004 (3) 10,000 10,033
Citicorp Financial Services (lease-backed),
Series 1999-1,
Class A1, 7.22% 2005 (1) (3) 3,000 2,950
DBS Bank Ltd. 7.875% 2009 (3) 3,000 2,961
Ford Motor Credit Co.:
5.75% 2004 9,000 8,464
6.70% 2004 7,375 7,132
7.375% 2009 7,250 7,010
General Electric Capital Corp.
8.375% 2001 1,500 1,520
General Motors Acceptance Corp.:
6.75% 2002 3,000 2,967
6.85% 2004 12,000 11,704
IKON Capital Inc. 6.33% 2000 2,500 2,494
Lend Lease (US) Finance Inc. 6.75% 2005 5,000 4,699
Merita Bank Ltd. 7.50% 2049 (2) (3) 2,000 1,898
Midland Bank PLC 8.625% 2004 4,000 4,144
NationsBank Corp. 6.125% 2004 3,000 2,843
ReliaStar Financial Corp. 8.00% 2006 6,750 6,702
Toyota Credit Canada 6.625% 2002 3,000 2,953
Toyota Motor Credit Corp. 6.125% 2000 2,495 2,483
-----
109,350
-----
Industrial & Service - 4.87%
Carnival Corp. 7.70% 2004 2,000 2,004
Cox Radio, Inc. 6.375% 2005 3,500 3,245
McKesson Corp. 6.30% 2005 2,000 1,775
McKesson Finance of Canada 6.55% 2002 (3) 3,200 3,028
Oil Enterprises Ltd. 6.239% 2008 (3) 9,240 8,548
Pacificorp Australia LLC 6.15% 2008 (3) 10,000 9,117
Pemex Finance Ltd.:
5.72% 2003 5,000 4,856
7.80% 2013 (3) 2,000 1,960
R.P. Scherer International Corp.
6.75% 2004 4,325 4,154
Scotia Pacific Co. LLC, Series B:
Class A1, 6.55% 2028 1,737 1,650
Class A2, 7.11% 2028 5,000 4,400
Sony Corp. 6.125% 2003 5,000 4,846
Sotheby's Holdings, Inc. 6.875% 2009 1,000 836
Vodafone AirTouch PLC:
7.625% 2005 (3) 7,610 7,647
7.75% 2010 (3) 1,500 1,503
Walt Disney Co. 7.30% 2005 6,250 6,224
-----
65,793
-----
Transportation - 4.09%
AIR 2 US, Series A, 8.027% 2020 9,815 9,790
American Airlines Inc.:
Series 1999-1, Class C, 7.155% 2006 3,000 2,903
Series 1999-1, Class A2, 7.024% 2009 4,000 3,816
Continental Airlines, Inc.:
Series 1998-3, Class C1, 7.08% 2004 4,499 4,374
Series 1999-2, Class C2, 7.434% 2004 (1) 4,000 3,871
Series 1998-2, Class A, 6.41% 2007 18,551 17,484
Series 1996-2,
Class A, 7.75% 2016 (1) (4) 1,223 1,207
Series 1998-1, Class A, 6.648% 2019 3,425 3,099
Jet Equipment Trust,
Series 1995-B,
Class A, 7.63% 2015 (1) (3) (4) 8,833 8,657
-----
55,201
-----
Utilities - 1.42%
Israel Electric Corp. Ltd. 7.25% 2006 (3) 6,000 5,686
National Rural Utilities
Cooperative Finance Corp.:
5.30% 2003 3,205 3,012
5.50% 2005 5,000 4,626
Texas Utilities Co., Series A, 6.20% 2002 6,000 5,844
-----
19,168
-----
Government (Excluding U.S.) &
Government Authorities - 1.04%
Canadian Government 6.125% 2002 2,000 1,961
KfW International Finance Inc.:
7.625% 2004 2,500 2,526
7.125% 2005 3,500 3,479
Ontario (Province of) 7.375% 2003 2,500 2,510
Victoria (Territory of) Public
Authorities Finance Agency 8.45% 2001 3,500 3,575
-----
14,051
-----
Taxable Municipal Bonds - 0.73%
California Maritime Infrastructure Authority,
Taxable Lease Revenue Bonds (San Diego Unified
Port District-South Bay Plant Acquisition),
Series 1999, 6.63% 2009 (3) 10,604 9,891
-----
Development Authorities - 0.22%
Corporacion Andina de Fomento 7.75% 2004 3,000 2,956
-----
Total Bonds & Notes (cost: $1,340,189,000) 1,297,985
-----
Principal Market
Amount Value
Short-Term Securities (000) (000)
- -------------------------------------------- ----- -----
Commercial Paper - 4.59%
Bell Atlantic Network Funding Corp. 5.77% 10,260 10,239
due 3/13/2000
Bestfoods 5.77% due 3/9/2000 (3) 7,800 7,789
CIT Group, Inc. 5.88% due 3/1/2000 26,590 26,585
Heinz (H.J.) Co. 5.78% due 3/22/2000 4,800 4,783
'SBC Communications Inc.
5.75% due 3/28/2000 (3) 12,700 12,643
-----
Total Short-Term
Securities (cost: $62,039,000) 62,039
-----
Total Investment Securities
(cost: $1,402,228,000) 1,360,024
Excess of payables over receivables and cash 8,836
-----
Net Assets 1,351,188
-----
(1)Pass-through securies backed by a pool of
mortgages or other loans on which
'principal payments are periodically made.
Therefore, the effective maturities
are shorter than the stated maturities.
(2)Coupon rate may change periodically.
(3)Purchased in a private placement
transaction;resale may be limited to
qualified institutional buyers; resale
to the public may require registration.
(4)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.
See Notes to Financial Statements
</TABLE>
<TABLE>
Intermediate Bond Fund of America Unaudited
Financial Statements
- ---------------------------------------- -------- --------
Statement of Assets and Liabilities
at February 29, 2000
- ---------------------------------------- -------- --------
<S> <C> <C>
Assets: (dollars in thousands)
Investment securities at market
(cost: $1,402,228) $1,360,024
Cash 70
Receivables for-
Sales of investments $39,779
Sales of fund's shares 1,648
Accrued interest 12,474 53,901
-------- --------
1,413,995
Liabilities:
Payables for-
Purchases of investments 55,468
Repurchases of fund's shares 4,695
Dividends payable 1,482
Management services 438
Accrued expenses 724 62,807
-------- --------
Net Assets at February 29, 2000 -
Equivalent to $12.89 per share on 104,817,650
shares of beneficial interest issued and
outstanding;unlimited shares authorized $1,351,188
=======
Statement of Operations Unaudited
for the six months ended February 29, 2000
-------- --------
Investment Income: (dollars in thousands)
Income:
Interest $50,602
Expenses:
Management services fee $ 2,862
Distribution expenses 2,207
Transfer agent fee 575
Reports to shareholders 58
Registration statement and prospectus 170
Postage, stationery and supplies 131
Trustees' fees 19
Auditing and legal fees 47
Custodian fee 14
Taxes other than federal income tax 23 6,106
-------- --------
Net investment income 44,496
-------
Realized Loss and Unrealized Depreciation
on Investments:
Net realized loss (15,775)
Net unrealized depreciation on investments:
Beginning of period (40,152)
End of period (42,204)
--------
Net unrealized depreciation on investments (2,052)
-------
Net realized loss and unrealized depreciation
on investments (17,827)
-------
Net Increase in Net Assets Resulting
from Operations $26,669
=======
Statement of Changes in Net Assets (dollars in thousands)
- ---------------------------------------- -------- --------
Six months Year ended
ended February August 31,
Operations: 29, 2000* 1999
-------- --------
Net investment income $ 44,496 $ 88,615
Net realized loss on investments (15,775) (4,010)
Net unrealized depreciation on investments (2,052) (61,031)
-------- --------
Net increase in net assets
resulting from operations 26,669 23,574
-------- --------
Dividends Paid From Net Investment Income (40,524) (88,570)
-------- --------
Capital Share Transactions:
Proceeds from shares sold:
22,571,811 and 60,775,441 shares, respectively 293,090 815,044
Proceeds from shares issued in
reinvestment of net investment income
dividends: 2,586,693 and 5,369,952 shares,
respectively 33,553 71,711
Cost of shares repurchased: 38,323,360 and
55,761,176 shares, respectively (496,744) (745,398)
-------- --------
Net increase (decrease) in net assets resulting
from capital share transactions (170,101) 141,357
-------- --------
Total Increase (Decrease) in Net Assets (183,956) 76,361
Net Assets:
Beginning of period 1,535,144 1,458,783
-------- --------
End of period (including undistributed
net investment income of $4,544 and
$572, respectively) $1,351,188 $1,535,144
========= =========
*Unaudited
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - 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.
SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared
in conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of the significant accounting
policies consistently followed by the fund in the preparation of its financial
statements:
SECURITY VALUATION - Fixed-income securities are valued at prices obtained from
a pricing service, when such prices are available; however, in circumstances
where the investment adviser deems it appropriate to do so, such securities
will be valued at the mean quoted bid and asked prices or at prices for
securities of comparable maturity, quality and type. The ability of the issuers
of the debt securities held by the fund to meet their obligations may be
affected by economic developments in a specific industry, state or region.
Short-term securities maturing within 60 days are valued at amortized cost,
which approximates market value.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith by a
committee appointed by the Board of Trustees.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are
accounted for as of the trade date. Realized gains and losses from securities
transactions are determined based on specific identified cost. In the event
securities are purchased on a delayed delivery or "when-issued" basis, the fund
will instruct the custodian to segregate liquid assets sufficient to meet its
payment obligations in these transactions. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual basis. Market
discounts, premiums, and original issue discounts on securities purchased are
amortized daily over the expected life of the security.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends to shareholders are
declared daily after the determination of the fund's net investment income and
are paid to shareholders monthly.
2. FEDERAL INCOME TAXATION
The fund complies with the requirements of the Internal Revenue Code applicable
to regulated investment companies and intends to distribute all of its net
taxable income and net capital gains for the fiscal year. As a regulated
investment company, the fund is not subject to income taxes if such
distributions are made. Required distributions are determined on a tax basis
and may differ from net investment income and net realized gains for financial
reporting purposes. In addition, the fiscal year in which amounts are
distributed may differ from the year in which the net investment income and net
realized gains are recorded by the fund.
As of February 29, 2000, net unrealized depreciation on investments for book
and federal income tax purposes aggregated $42,204,000, of which $3,000,000
related to appreciated securities and $45,204,000 related to depreciated
securities. There was no difference between book and tax realized losses on
securities transactions for the six months ended February 29, 2000. During the
six months ended February 29, 2000, the fund realized, on a tax basis, a net
capital loss of $15,775,000 on securities transactions. The fund had available
at February 29, 2000 a net capital loss carryforward totaling $93,411,000 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. The fund
will not make distributions from capital gains while a capital loss
carryforward remains. The cost of portfolio securities for book and federal
income tax purposes was $1,402,228,000 at February 29, 2000.
3. FEES AND TRANSACTIONS WITH RELATED PARTIES
INVESTMENT ADVISORY FEE - The fee of $2,862,000 for management services was
incurred 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.
DISTRIBUTION EXPENSES - 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 29, 2000, distribution expenses under the Plan were limited to
$2,207,000. Had no limitation been in effect, the fund would have paid
$2,319,000 in distribution expenses under the Plan. As of February 29, 2000,
accrued and unpaid distribution expenses were $655,000.
American Funds Distributors, Inc. (AFD), the principal underwriter of the
fund's shares, received $664,000 (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.
TRANSFER AGENT FEE - American Funds Service Company (AFS), the transfer agent
for the fund, was paid a fee of $575,000.
DEFERRED TRUSTEES' FEES - 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 29, 2000, aggregate deferred amounts and earnings thereon
since the deferred compensation plan's adoption (1993), net of any payments to
Trustees, were $95,000.
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. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding
short-term securities, of $329,204,000 and $493,201,000, respectively, during
the six months ended February 29, 2000.
As of February 29, 2000, accumulated net realized loss on investments was
$109,186,000 and additional paid-in capital was $1,498,034,000.
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 $14,000 includes $12,000 that was paid by these credits
rather than in cash.
<TABLE>
Six months
Per-Share Data and Ratios ended
February Year Ended August 31
29, 2000/1/ 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period 13.01 13.56 13.42 13.26 13.52 13.38
------ ------ ------ ------ ------ ------
Income From Investment Operations:
Net investment income 0.4 0.76 0.83 0.86 0.88 0.93
Net gains or losses on securities (both
realized and unrealized) -0.16 -0.55 0.17 0.15 -0.27 0.13
------ ------ ------ ------ ------ ------
Total from investment operations 0.24 0.21 1 1.01 0.61 1.06
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment income) -0.36 -0.76 -0.86 -0.85 -0.87 -0.92
------ ------ ------ ------ ------ ------
Total distributions -0.36 -0.76 -0.86 -0.85 -0.87 -0.92
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period 12.89 13.01 13.56 13.42 13.26 13.52
====== ====== ====== ====== ====== ======
Total Return /2/ 1.86% /2/ 0.0154 0.0768 0.0783 0.0463 0.0833
Ratios/Supplemental Data:
Net assets, end of period (in millions) 1351 1535 1459 1338 1429 1501
Ratio of expenses to average net assets .41% /3/ .75% /4/ .76% /4/ .82% .80% .78%
Ratio of net income to average
net assets 3.02% /3/ 0.0569 0.0609 0.064 0.0653 0.0696
Portfolio turnover rate 23.15% /3/ 0.7019 0.7919 0.4155 0.4825 0.7191
(1) Unaudited
(2) Excludes maximum sales charge of
4.75%, before January 10, 2000,
and 3.75% thereafter.
(3) Based on operations for the period
shown and, accordingly, not
representative of a full year.
(4) Had CRMC not waived management
services fees, the fund's expense
ratio would have been .78% for
the fiscal year ended August 31,
1999, and .79% for the fiscal
year ended August 31, 1998.
</TABLE>
Results of Shareholders Meeting Unaudited
Held October 28, 1999
Shares Outstanding on August 24, 1999 (record date) 117,169,067
Shares Voting on October 28, 1999 68,199,690 (58.2%)
Proposal 1: Election of Trustees
<TABLE>
<CAPTION>
Percent of Percent of
Trustee Votes For Shares Votes Shares
Voting For Withheld Withheld
<S> <C> <C> <C> <C>
Richard G. Capen, Jr. 67,658,369 99.2% 541,321 0.8%
H. Frederick Christie 67,651,835 99.2% 547,855 0.8%
Don R. Conlan 67,654,566 99.2% 545,124 0.8%
Diane C. Creel 67,640,504 99.2% 559,186 0.8%
Martin Fenton 67,652,147 99.2% 547,543 0.8%
Leonard R. Fuller 67,648,856 99.2% 550,834 0.8%
Abner D. Goldstine 67,626,491 99.2% 573,199 0.8%
Paul G. Haaga, Jr. 67,651,107 99.2% 548,583 0.8%
Richard G. Newman 67,658,035 99.2% 541,655 0.8%
Frank M. Sanchez 67,632,197 99.2% 567,493 0.8%
</TABLE>
Proposal 2: Ratification of Auditors
<TABLE>
<CAPTION>
Percent of Votes Percent Percent of Shares
Votes For Shares Against of Share Abstentions Abstaining
<S> <C> <C> <C> <C> <C>
67,061,701 98.3% 279,165 0.4% 858,824 1.3%
</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 92821-5823
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
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, OR FOR A
PROSPECTUS FOR ANY OF THE AMERICAN FUNDS, 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. PLEASE READ
THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
There are two ways to invest in Intermediate Bond Fund of America. Class A
shares are subject to a 3.75% maximum up-front sales charge that declines for
accounts of $100,000 or more. Class B shares, which are not available for
certain employer-sponsored retirement plans, have no up-front charge. They are,
however, subject to additional expenses of approximately 0.75% a year over the
first eight years of ownership. If redeemed within six years, they may also be
subject to a contingent deferred sales charge (5% maximum) that declines over
time.
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, 2000, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA CGD/GRS/4541
Lit. No. IBFA-013-0400
