N-30D 1 ibfa.txt [logo - American Funds(sm)] The right choice for the long term(sm) INTERMEDIATE BOND FUND OF AMERICA [photograph of a man's hand balancing himself on a gymnastic pommel horse] Semi-annual report for the six months ended February 28, 2002 INTERMEDIATE BOND FUND OF AMERICA(R) Intermediate Bond Fund of America is one of the 29 American Funds,(sm) the nation's third-largest mutual fund family. For seven decades, Capital Research and Management Company,(sm) the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk. Intermediate Bond Fund of America seeks to earn current income, consistent with preservation of capital, by investing 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 Corporation or Moody's Investors Service) or equivalent unrated securities. The fund's investments include U.S. government and federal agency securities; pass-through securities, such as mortgage- and asset-backed securities; and 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 bond funds (which typically provide higher income). Fund results in this report were calculated for Class A shares at net asset value (without a sales charge) unless otherwise indicated. Here are the average annual compound returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2002 (the most recent calendar quarter): CLASS A SHARES One year Five years Ten years reflecting 3.75% maximum sales charge +0.32% +5.53% +5.95% The fund's 30-day yield for Class A shares as of March 31, 2002, calculated in accordance with the Securities and Exchange Commission formula, was 4.02%. The fund's distribution rate for Class A shares as of that date was 4.94%. The SEC yield reflects income the fund expects to earn based on its current portfolio of securities, while the fund's distribution rate is based solely on the fund's past dividends. Accordingly, the fund's SEC yield and distribution rate may differ. Results for other share classes can be found on page 32. For the most current investment results, please refer to americanfunds.com. Please see the inside back cover for important information about other share classes. 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 past six months have been particularly trying for many investors. An economic recession, acts of terrorism and high-profile corporate bankruptcies weighed heavily on the marketplace, dampening returns on many investments. Intermediate Bond Fund of America largely weathered these crises by maintaining its focus on high-quality, short-term bonds, which provided a relatively safe haven for investors. For the six months ended February 28, 2002, the fund produced a total return of 2.0%. Shareholders received monthly dividends totaling 36 cents a share. Those who reinvested dividends earned an income return of 2.63% (5.26% annualized). Those who elected to receive dividends in cash recorded an income return of 2.60% (5.20% annualized) and saw the value of their shares decline 0.6%. The fund's total return was identical to the 2.0% average return of 138 Short-Intermediate Investment-Grade Debt funds tracked by Lipper, but was lower than the 3.3% return of the unmanaged Salomon Smith Barney Broad Investment-Grade (BIG) Medium-Term Bond Index (one to seven years), which does not include expenses. ECONOMIC AND MARKET REVIEW The fund's fiscal year began on September 1, 2001, amid a severe economic slowdown that broadly depressed stock prices but roused fresh interest in the bond market. Bonds benefited from the Federal Reserve Board's eleven short-term interest rate cuts last year, actions intended to re-ignite the economy. Bond prices typically rise when interest rates decline, as they did through most of 2001, and short-term bonds benefited most from the Federal Reserve's rate reductions. Less than two weeks into the reporting period, the attacks of September 11 occurred, stunning an already struggling economy. In the weeks following the tragedy, investors sought refuge in high-quality, short-term bonds. Government obligations, top-rated corporate bonds and municipal debt were among the securities that investors favored. In contrast, lower rated corporate bonds and the debt of companies reliant on travel and tourism - airlines, hotels and restaurants, for example - declined sharply. By early November signs of recovery emerged and the defensive trend began to fade. Stock prices had rebounded steadily from their September lows and investors began to reach for higher yields as short-term rates slid to a 40-year low. Treasury prices weakened through December, while lower rated corporate debt and securities that offered attractive yields generally improved. Early in calendar 2002, the bond markets began to fragment further. Growing concerns over accounting practices cast a long shadow on stocks and bonds alike, weakening a spectrum of companies. Again, investors grew increasingly selective, weighing corporate debt levels against disappointing earnings and murky growth prospects. Returns for the period were mixed, but short-maturity bonds generally posted better returns than did long-term bonds, and high-quality debt withstood the market gyrations better than lower rated bonds. HOW THE FUND RESPONDED Intermediate Bond Fund of America invests in short- to intermediate-maturity bonds, of which more than 60% are rated Triple-A. Most of the portfolio holdings held up well under shifting market conditions. As interest rates fell early in the period, your portfolio counselors further reduced the average maturity of the fund's holdings to 3.2 years from 3.7 years. Short-term debt tends to be less volatile than long-term debt and usually retains greater value when interest rates start to rise. Apart from the broader maturity structure, portfolio counselors adjusted individual holdings in an effort to preserve capital. U.S. Treasury obligations and agency debentures increased as a percent of net assets (to 18.0% from 12.6%), while the fund's exposure to asset-backed obligations was reduced (to 11.7% from 18.2%). This helped to preserve the fund's high level of credit quality and maintain stability. Among corporate bond holdings, the fund increased its exposure to health care equipment, insurance and food companies. As the economy weakened, these sectors proved more resilient to the downturn. Not all corporate holdings fared as well: The fund's airline debt declined sharply after September 11. Although a small percentage of portfolio holdings, these bonds nonetheless dampened returns for the period. By the close of the reporting period, the fund retained a slightly higher cash balance (10.9% compared with 8.7% previously), reflecting a somewhat more cautious outlook among the portfolio counselors and providing ample means to access new investment opportunities as they arise. Finally, the extraordinary decline in short-term interest rates over the past year also affected dividends paid by the fund. In December 2001 and April 2002, the fund trimmed its monthly dividends, in part because lower returns from new bond purchases and the larger cash position could no longer support the higher level of dividend payouts. BONDS FOR THE LONG TERM Facing a weak economy and dwindling stock returns, many investors have flocked to bond funds during the past year. Since last August, Intermediate Bond Fund of America has enjoyed a 36% increase both in the number of shareholder accounts and in its net assets. It is our hope that shareholders will view the fund as more than a refuge in tough times. With its focus on high credit quality and intermediate-term debt, the fund offers a recipe for achieving compelling long-term returns while maintaining relative stability. Over extended periods, the fund has delivered attractive results consistent with that investment focus. Since its inception in 1988, the fund has produced an average annual return of 7%, as noted in the chart below. We take this opportunity to welcome our new shareholders and to invite all of you to re-examine your long-term investment goals in light of the changed market climate this past year. We believe that the value of bond investments is cumulative and enduring. We hope that Intermediate Bond Fund of America will become a vital part of your long-term investment plans. We appreciate your support and 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/ John H. Smet John H. Smet President April 15, 2002 Results at a glance (as of February 28, 2002, with all distributions reinvested)
Average annual Total return compound return One year - +6.1% Five years +6.5% +36.7 Ten years +6.4 +86.1 Lifetime (since February 19, 1988) +7.0 +157.3
Intermediate Bond Fund of America August 31, 2001 Annual Report [pie chart] Sectors Corporate Bonds 23% Federal Agency Mortgage-Backe21% Other Mortgage-Backed 14% US Govt/Agency (Non-Mortgage)18% Asset-Backed 12% Cash & Equivalents 11% [end chart]
Intermediate Bond Fund of America Investment portfolio, February 28, 2002 Unaudited Principal Market amount value Bonds & notes (000) (000) CORPORATE BONDS - 23.29% INSURANCE - 5.54% AIG SunAmerica: (1) Global Financing V 5.20% 2004 $ 8,000 $ 8,293 Global Financing VIII 1.973% 2004 (2) 3,000 2,999 Global Financing II 7.60% 2005 4,000 4,370 Allstate Financial Global Funding LLC: (1) 7.125% 2005 2,000 2,158 6.15% 2006 9,000 9,414 5.25% 2007 15,600 15,647 The Equitable Life Assurance Society of 7,250 7,655 the United States 6.95% 2005 (1) Lincoln National Corp. 7.25% 2005 5,425 5,709 Monumental Global Funding: (1) Trust II-B, Series B, 6.95% 2003 3,000 3,129 Trust II-2001-A, Series A, 6.05% 2006 8,375 8,716 Trust II-2002-A, Series A, 5.20% 2007 16,600 16,554 Nationwide Life Global Funding 5.35% 2007 (1) 19,600 19,604 Prudential Insurance Company of America 8,475 8,782 6.375% 2006 (1) ReliaStar Financial Corp.: 8.625% 2005 2,000 2,183 8.00% 2006 11,470 12,662 6.50% 2008 1,000 1,013 128,888 TRANSPORTATION - 2.99% AIR 2 US, Series A, 8.027% 2020 (1) (3) 9,093 8,576 American Airlines Inc., Series 2001-2: (1) Class A-1, 6.978% 2011 (3) 1,000 1,023 Class A-2, 7.858% 2011 3,200 3,396 Class B, 8.608% 2011 430 453 Continental Airlines, Inc.: (3) Series 1998-2, Class A, 6.41% 2007 20,220 19,072 Series 1997-2, Class A, 7.148% 2007 5,324 5,167 Series 1999-2, Class A-2, 7.056% 2011 4,601 4,494 Series 2001-1, Class B, 7.373% 2015 1,800 1,638 Series 1996-2, Class A, 7.75% 2016 1,080 1,053 Series 1997-1, Class A, 7.461% 2016 894 882 Series 1998-1, Class A, 6.648% 2019 3,207 2,999 Series 2000-1, Class B, 8.388% 2020 3,753 3,465 Delta Air Lines, Inc., Series 2001-1, 2,500 2,525 Class A-2, 7.111% 2011 (3) Jet Equipment Trust, Series 1995-B, 7,376 6,309 Class A, 7.63% 2012 (1) (3) Northwest Airlines, Inc., Series 3,346 3,474 1999-3, Class G, 7.935% 2020 (3) Southwest Airlines Co. 6.50% 2012 1,300 1,308 Southwest Airlines Co., Series 2001-1, 1,000 985 Class A-2, 5.496% 2006 (3) US Airways, Inc., Series 2001-1G, 2,595 2,653 7.076% 2021 (3) 69,472 BANKS & THRIFTS - 2.22% Abbey National PLC 7.95% 2029 100 114 ABN AMRO Bank NV: 7.55% 2006 3,000 3,267 7.125% 2007 200 216 Bank of America Corp.: 7.625% 2005 1,000 1,090 7.875% 2005 3,000 3,313 6.625% 2007 200 213 NationsBank Corp.: 8.125% 2002 1,200 1,220 6.50% 2003 5,000 5,222 BANK ONE CORP., Series A, 5.625% 2004 3,300 3,422 Barclays Bank PLC 7.375% (undated) (1) (2) 2,000 2,134 Danske Bank AS 6.375% 2008 (1) (2) 4,750 5,073 Development Bank of Singapore Ltd.: (1) 7.875% 2009 3,000 3,255 7.125% 2011 800 833 HSBC Bank PLC 6.95% 2011 1,000 1,063 Midland Bank PLC 8.625% 2004 4,200 4,647 J.P. Morgan Chase & Co.: 5.625% 2006 200 204 5.35% 2007 3,350 3,382 Merita Bank Ltd. 7.50% (undated) (1) (2) 6,035 6,373 Regional Diversified Funding Ltd. 9.25% 2030 (1) 750 789 Wells Fargo Bank National Association 1,750 1,887 7.80% 2010 (2) Wells Fargo Financial, Inc. 7.60% 2005 3,500 3,812 51,529 AUTOMOBILES & COMPONENTS - 1.91% DaimlerChrysler North America Holding 9,000 9,134 Corp. 6.40% 2006 Ford Motor Credit Co.: 6.70% 2004 2,500 2,559 7.50% 2005 8,375 8,593 6.875% 2006 4,250 4,276 7.375% 2011 2,900 2,931 General Motors Acceptance Corp.: 6.125% 2006 6,000 6,032 6.75% 2006 5,000 5,129 6.875% 2011 2,500 2,484 General Motors Nova Scotia Finance 3,340 3,338 Co. 6.85% 2008 44,476 TELECOMMUNICATIONS SERVICES - 1.89% AT&T Corp. 5.625% 2004 3,000 3,021 British Telecommunications PLC 7.875% 2005 (2) 7,250 7,807 Cingular Wireless 5.625% 2006 (1) 3,000 3,025 Deutsche Telekom International Finance 5,050 5,331 BV 7.75% 2005 SBC Communications, Inc. 6.25% 2011 2,500 2,563 Verizon Wireless Capital LLC 5.375% 2006 (1) 11,925 11,834 Vodafone Group PLC 7.625% 2005 9,600 10,348 43,929 RETAILING - 1.38% Kohl's Corp.: 6.70% 2006 7,074 7,493 6.30% 2011 4,690 4,788 Lowe's Companies, Inc.: 7.50% 2005 3,000 3,245 8.25% 2010 3,000 3,430 Sears Roebuck Acceptance Corp.: 6.95% 2002 1,800 1,810 6.54% 2003 1,000 1,027 7.00% 2007 4,800 5,081 Wal-Mart Stores, Inc. 5.45% 2006 5,000 5,173 32,047 UTILITIES - 1.31% Exelon Generation Co., LLC 6.95% 2011 (1) 3,470 3,610 Israel Electric Corp. Ltd. 7.25% 2006 (1) 1,250 1,318 Pacificorp Australia LLC, MBIA Insured, 10,000 10,049 6.15% 2008 (1) Texas Eastern Transmission Corp. 7.30% 2010 1,100 1,187 Texas Utilities Co., Series A, MBIA Insured, 6,000 6,103 6.20% 2002 Virginia Electric and Power Co., 2002 8,250 8,298 Series A, 5.375% 2007 30,565 FOOD & BEVERAGE - 1.30% H.J. Heinz Finance Co. 6.00% 2012 (1) 4,000 3,970 Kraft Foods Inc.: 4.625% 2006 10,500 10,396 5.625% 2011 5,000 4,948 Nabisco, Inc.: 6.70% 2002 2,000 2,023 7.05% 2007 3,000 3,190 Ralston Purina Co. 7.75% 2015 5,000 5,701 30,228 MEDIA - 1.08% CBS Corp. 7.15% 2005 5,500 5,768 Viacom Inc.: 6.75% 2003 2,475 2,551 6.40% 2006 4,800 4,968 6.625% 2011 8,000 8,209 Cox Radio, Inc. 6.375% 2005 3,500 3,533 25,029 ENERGY - 0.80% Oil Enterprises Ltd., MBIA Insured, 7,382 7,626 6.239% 2008 (1) (3) Pemex Finance Ltd.: (3) 6.125% 2003 3,867 3,948 AMBAC Insured, 6.55% 2008 2,500 2,552 MBIA Insured: 5.72% 2003 2,188 2,240 7.80% 2013 2,000 2,209 18,575 HEALTH CARE EQUIPMENT & SERVICES - 0.70% McKesson Finance of Canada 6.55% 2002 (1) 3,200 3,226 R.P. Scherer International Corp. 6.75% 2004 4,325 4,534 UnitedHealth Group Inc.: 7.50% 2005 1,525 1,637 5.20% 2007 6,950 6,923 16,320 CONSUMER FINANCE - 0.58% Household Finance Corp.: 5.75% 2007 8,000 7,881 7.875% 2007 4,000 4,316 6.75% 2011 1,300 1,303 13,500 CAPITAL GOODS - 0.44% BAE SYSTEMS PLC, Series 2001: (1) (3) Class B, 7.156% 2011 6,459 6,617 Class G, MBIA Insured, 6.664% 2013 3,450 3,553 10,170 HOUSEHOLD & PERSONAL PRODUCTS - 0.26% Gillette Co. 4.00% 2005 (1) 6,150 6,144 6,144 DIVERSIFIED FINANCIALS - 0.26% Chilquinta Energia Finance Co. LLC, MBIA 3,500 3,535 Insured, 6.47% 2008 (1) Citicorp Lease Pass Through Trust, Series 2,475 2,608 1999-1, Class A-1, 7.22% 2005 (1) (3) 6,143 MATERIALS - 0.24% Scotia Pacific Co. LLC, Series B: (3) Class A-1, 6.55% 2028 1,330 1,339 Class A-2, 7.11% 2028 5,000 4,085 5,424 CONSUMER DURABLES & APPAREL - 0.21% Sony Capital Corp., Series C, 4.95% 2006 (1) 5,000 4,933 4,933 PHARMACEUTICALS & BIOTECHNOLOGY - 0.18% Bristol-Myers Squibb Co. 4.75% 2006 4,250 4,260 4,260 FEDERAL AGENCY MORTGAGE-BACKED - 20.95% Federal agency mortgage pass-through obligations (3) - 18.85% Fannie Mae: 5.50% 2016 - 2017 47,504 47,311 6.00% 2013 - 2032 61,695 62,027 6.50% 2013 - 2031 83,680 86,189 7.00% 2008 - 2031 68,730 71,512 7.50% 2009 - 2031 27,035 28,489 8.00% 2002 - 2005 81 82 8.06% 2002 (2) 65 65 8.50% 2008 - 2027 1,181 1,276 9.00% 2009 - 2018 3,285 3,586 9.50% 2009 - 2022 1,530 1,672 10.00% 2018 - 2025 2,431 2,735 11.00% 2020 1,303 1,497 11.50% 2019 - 2020 4,704 5,441 13.50% 2015 1,000 1,210 Freddie Mac: 6.00% 2014 1,917 1,948 7.00% 2008 - 2015 2,550 2,667 7.20% 2006 3,913 4,182 8.00% 2003 - 2017 5,000 5,273 8.50% 2008 - 2027 2,810 3,016 8.75% 2008 - 2009 246 262 9.50% 2010 - 2013 219 235 10.00% 2018 - 2019 4,555 5,140 11.00% 2018 615 704 Government National Mortgage Association: 5.50% 2017 5,750 5,763 6.00% 2029 23,010 22,953 6.50% 2028 - 2029 15,963 16,248 7.00% 2007 - 2031 10,769 11,148 7.50% 2022 - 2031 11,766 12,335 8.00% 2023 - 2030 16,638 17,594 8.50% 2007 - 2023 5,234 5,672 9.00% 2008 - 2021 1,509 1,633 9.50% 2009 - 2021 5,390 5,946 10.00% 2019 2,385 2,695 438,506 Federal agency collateralized mortgage obligations (3) - 2.10% Fannie Mae: Series 91-50, Class H, 7.75% 2006 2,839 2,968 Trust D2, 11.00% 2009 1,103 1,166 Series 88-16, Class B, 9.50% 2018 150 164 Series 90-93, Class G, 5.50% 2020 703 668 Series 90-21, Class Z, 9.00% 2020 4,150 4,427 Series 2001-4, Class GA, 10.03% 2025 (2) 5,694 6,501 Series 2001-4, Class NA, 11.70% 2025 (2) 13,844 15,861 Series 2001-20, Class D, 10.946% 2031 (2) 769 885 Series 1999-T2, Class A-1, 7.50% 2039 4,113 4,338 Series 2001-T10, Class A-1, 7.00% 2041 6,862 6,896 Freddie Mac: Series 83-B, Class B-3, 12.50% 2013 31 35 Series 2310, Class B, 9.819% 2015 (2) 658 733 Series 2310, Class A, 10.53% 2017 (2) 2,588 2,913 Series 1567, Class A, 2.275% 2023 (2) 995 915 48,470 U.S. Treasury notes & bonds - 12.27% 4.25% May 2003 84,000 85,890 5.75% August 2003 31,150 32,547 3.00% January 2004 72,000 72,000 11.625% November 2004 23,400 28,274 3.375% January 2007 (4) 15,895 16,312 6.25% February 2007 27,750 30,148 10.375% November 2009 4,000 4,692 Principal Strip 0% November 2015 22,655 10,430 8.875% August 2017 1,000 1,350 7.875% February 2021 2,000 2,531 5.50% August 2028 1,235 1,216 285,390 ASSET-BACKED OBLIGATIONS (3) - 11.68% Aircraft Finance Trust, Series 1999-1, 2,684 2,637 Class A-2, 2.348% 2024 (2) Airplanes Pass Through Trust, Class B, 5,562 4,450 2.598% 2019 (2) Arcadia Automobile Receivables Trust, 2,900 3,032 Series 1999-C, Class A-3, FSA Insured, 7.20% 2007 Asset Backed Securities Corp. Home Equity Loan Trust: Series 2001-HE2, Class A-IO, interest 37,040 1,992 only, 4.50% 2031 Series 2001-HE3, Class A-IO, interest 37,465 3,318 only, 6.50% 2031 (2) Banco Nacional de Mexico, SA, Series 4,722 5,091 1999-A, Class A-1, MBIA Insured, 7.50% 2006 (1) Case Equipment Loan Trust, Series 1999-A, 534 545 Class B, 5.96% 2005 Chase Funding Mortgage Loan Asset-Backed 4,000 4,124 Certificates, Series 2001-2, Class IA-3, 5.923% 2016 Chase Manhattan Auto Owner Trust, Series 3,700 3,696 2002-A, Class A-3, 3.49% 2006 Chase Manhattan Credit Card Master Trust, 8,750 8,969 Series 1997-5, Class A, 6.194% 2005 Coast-to-Coast Motor Vehicle Owner Trust, 6,548 6,872 Series 2000-A, Class A-4, MBIA Insured, 7.33% 2006 (1) ComEd Transitional Funding Trust, Series 1998-1: Class A-4, 5.39% 2005 2,000 2,044 Class A-5, 5.44% 2007 9,000 9,370 Conseco Finance Home Equity Loan Trust, 6,250 6,727 Series 2000-B, Class AF-6, 7.80% 2020 Conseco Finance Manufactured Housing 4,000 4,075 Contract Trust, Series 2001-3, Class A-2, 5.16% 2033 Green Tree Financial Corp.: Series 1998-2, Class A5, 6.24% 2016 2,268 2,335 Series 1996-10, Class A-5, 6.83% 2028 1,496 1,538 Series 1997-6, Class A-6, 6.90% 2029 2,996 3,098 Series 1997-6, Class A-7, 7.14% 2029 7,241 7,624 Series 1999-2, Class A-2, 5.84% 2030 2,792 2,829 Series 1999-3, Class A-7, 6.74% 2031 4,600 4,668 Continental Auto Receivables Owner Trust, 2,000 2,113 Series 2000-B, Class A-4, MBIA Insured, 6.91% 2005 (1) CS First Boston Mortgage Securities Corp., 36,643 1,678 Series 2001-HE16, Class A, interest only, 5.64% 2004 Embarcadero Aircraft Securitization Trust, 717 667 Series 2000-1, Class A-2, 2.328% 2025 (1) (2) First Consumer Master Trust, Series 1999-A: (1) Class A, 5.80% 2005 6,000 6,228 Class B, 6.28% 2005 9,000 9,167 First Investors Auto Owner Trust, 5,000 4,987 Series 2002-A, Class A, MBIA Insured, 3.46% 2008 (1) GRCT Consumer Loan Trust, Series 1,000 1,030 2001-1, Class A-2BRV, 6.251% 2020 (1) Green Tree Recreational, Equipment & 4,000 4,171 Consumer Trust, Series 1999-A, Class A-6, 6.84% 2010 Hitachi Shinpan Co. Ltd., Series 4,604 4,850 1999-3, Class A, 9.60% 2006 (1) Litigation Settlement Monetized Fee 2,775 2,851 Trust I, Series 2001-1, Class A-1, 8.33% 2031 (1) MBNA Master Credit Card Trust II, 5,750 5,770 Series 2000-D, Class B, 2.278% 2009 (2) Metris Master Trust, Series 2001-3, 10,000 10,016 Class A, 2.08% 2008 (2) MMCA Auto Owner Trust: Series 2000-2, Class B, 7.42% 2005 3,500 3,760 Series 2000-1, Class B, 7.55% 2005 9,000 9,605 Series 2001-2, Class B, 5.75% 2007 4,000 4,102 Series 2001-3, Class B, 2.798% 2008 (2) 4,000 4,008 The Money Store Home Equity Trust, Series 1,731 1,747 1994-D, Class A-5, MBIA Insured, 8.925% 2022 Nebhelp Trust, Student Loan Interest Margin 13,249 13,679 Securities, Series 1998-1, Class A, MBIA Insured, 6.68% 2016 (1) NextCard Credit Card Master Note Trust, 3,000 2,762 Series 2001-1A, Class B, 2.728% 2007 (1) (2) NPF VI, Inc., Series 1999-1, Class A, 2,000 2,007 6.25% 2003 (1) NPF XII, Inc.: (1) Series 1999-2, Class A, 7.05% 2003 18,750 19,007 Series 2001-3, Class A, 5.52% 2007 1,000 986 PECO Energy Transition Trust, Series 1,922 1,957 1999-A, Class A-2, 5.63% 2005 Pegasus Aviation Lease Securitization: (1) Series 2000-1, Class A-2, 8.37% 2030 4,000 3,520 Series 2001-1, Class B-2, 7.27% 2031 3,915 3,132 PF Export Receivables Master Trust, 7,375 7,649 Series 2001-B, MBIA Insured, 6.60% 2011 (1) Puerto Rico Public Financing Corp., 9,389 9,365 Series 1999-1, Class A, AMBAC Insured, 6.15% 2008 Rental Car Finance Corp., Series 1999-1, 2,000 2,007 Class C, 6.50% 2007 (1) Residential Asset Mortgage Products, Inc., 20,000 2,524 Series 2001-RZ2, Class A-IO, interest only, 8.00% 2003 Residential Funding Mortgage Securities II, Inc.: Series 2001-H13, Class A-I-4, AMBAC 4,750 4,897 Insured, 6.09% 2015 Series 2001-HS2, Class A-4, AMBAC 2,400 2,486 Insured, 6.43% 2016 Student Loan Funding LLC, Series 1998-B, 13,500 14,006 Class B-3, 6.25% 2019 Team Fleet Financing Corp., Series 2001-3A, 2,500 2,496 Class A, 2.66% 2005 (1) (2) Tobacco Settlement Financing Corp., Series 2,500 2,494 2001-A, 6.36% 2025 Triad Auto Receivables Owner Trust, Series 2,047 2,099 1999-1, Class A-2, FSA Insured, 6.09% 2005 Triton Aviation Finance, Series 1A, Class A-2, 7,912 7,617 2.548% 2025 (1) (2) Xerox Equipment Lease Owner Trust, Series 1,019 1,022 2001-1, Class A, 3.85% 2008 (1) (2) 271,496 Commercial mortgage-backed securities (3) - 11.22% Bear Stearns Commercial Mortgage Securities Inc.: Series 2002-HOME, Class A, 2.45% 7,915 7,915 2013 (1) (2) Series 1998-C1, Class A-1, 6.34% 2030 16,901 17,651 Series 1999-C1, Class X, interest only, 89,523 5,123 1.181% 2031 (2) Series 1999-C1, 5.91% 2031 4,639 4,802 CDC Securitization Corp., Series 1999-FL1, 5,000 5,031 Class C, 3.14% 2007 (1) (2) Chase Commercial Mortgage Securities Corp.: Series 1996-1, Class A-1, 7.60% 2005 861 908 Series 1997-1, Class A-1, 7.27% 2029 12 12 Series 1998-1, Class A-1, 6.34% 2030 1,734 1,811 Series 2000-1, Class A-1, 7.656% 2032 1,846 2,007 Chase Manhattan Bank - First Union National 5,000 5,471 Bank, Commercial Mortgage Trust, Series 1999-1, Class A-2, 7.439% 2031 Commercial Mortgage, Series 2000-FL1, 4,000 4,002 Class E, 2.90% 2011 (1) (2) Commercial Mortgage Acceptance Corp.: Series 1998-C1, Class A-1, 6.23% 2007 1,445 1,508 Series 1998-C2, Class A-1, 5.80% 2030 3,134 3,232 CS First Boston Mortgage Securities Corp.: Series 2001-CF2, Class A-2, 5.935% 2034 3,000 3,109 Series 2001-CK6, Class A-2, 6.103% 2036 5,000 5,126 Series 1998-C1, Class A-1A, 6.26% 2040 7,840 8,191 Series 1998-C1, Class A-1B, 6.48% 2040 4,000 4,186 Series 1998-C1, Class C, 6.78% 2040 6,450 6,581 Deutsche Mortgage & Asset Receiving Corp., 10,345 10,773 Series 1998-C1, Class A-1, 6.22% 2031 DLJ Commercial Mortgage Corp.: Series 1998-CF2, Class A-4, 6.90% 2031 3,250 3,388 Series 1999-CG1, Class A-1B, 6.46% 2032 1,750 1,831 DLJ Mortgage Acceptance Corp.: (1) Series 1997-CF1, Class A1A, 7.40% 2006 1,945 2,035 Series 1995-CF2, Class A-1B, 6.85% 2027 9,645 10,031 First Union National Bank Commercial 9,775 9,848 Mortgage Trust, Series 2002-C1, Class A-1, 5.585% 2034 GGP Mall Properties Trust, Series 2001-C1A, 2,495 2,448 Class A2, 5.007% 2011 (1) GMAC Commercial Mortgage Securities, Inc., 5,000 5,034 Series 1997-C2, Class C, 6.91% 2029 J.P. Morgan Chase Commercial Mortgage 3,465 3,534 Securities Corp., Series 2001-CIBC1, Class A-2, 6.001% 2033 J.P. Morgan Commercial Mortgage Finance 780 790 Corp., Series 1995-C1, Class A-2, 7.502% 2010 (2) LB Commercial Mortgage Trust, Series 1998-C1: Class A-1, 6.33% 2030 1,037 1,070 Class A-3, 6.48% 2030 3,544 3,732 LB-UBS Commercial Mortgage Trust: Series 2000-C3, Class A-2, 7.95% 2010 1,750 1,967 Series 2001-C7, Class A-3, 5.642% 2025 4,980 5,052 Merrill Lynch Mortgage Investors, Inc.: Series 1995-C3, Class A-3, 7.051% 2025 (2) 1,339 1,401 Series 1997-C1, Class A-1, 6.95% 2029 (2) 1,349 1,393 Series 1998-C3, Class A-1, 5.65% 2030 4,830 4,980 Morgan Stanley Capital I, Inc.: Series 1998-HF1, Class A-1, 6.19% 2007 4,424 4,615 Series 1998-HF2, Class A-1, 6.01% 2030 5,909 6,141 Series 1998-WF2, Class A-1, 6.34% 2030 5,107 5,352 Series 1999-FNV1, Class A-1 6.12% 2031 3,937 4,099 Series 1999-FNV1, Class A-2, 6.53% 2031 4,815 5,054 Series 1999-FNV1, Class D, 7.03% 2032 4,000 4,191 Morgan Stanley Dean Witter Capital I Trust, 5,125 5,271 Series 2001-TOP5, Class A-3, 6.16% 2035 Mortgage Capital Funding, Inc., Series 1998-MC1: Class A-2, 6.663% 2008 4,800 5,067 Class A-1, 6.417% 2030 15,249 15,976 Nationslink Funding Corp., Series 1999-1, 4,808 4,991 Class A-1, 6.042% 2007 Nomura Asset Securities Corp., Series 1998-D6, 6,686 7,002 Class A-A1, 6.28% 2030 Prudential Securities Secured Financing 2,000 2,075 Corp., Series 1999-NRF1, Class C, 6.746% 2009 Salomon Brothers Commercial Mortgage Trust, 11,350 11,694 Series 2001-C1, Class A-2, 6.428% 2035 SMA Finance Co., Inc., Series 1998-C1, 14,863 15,267 Class A-1, 6.27% 2032 (1) Structured Asset Securities Corp., Series 1999-C3: (1) (2) Class H, 3.30% 2002 3,763 3,769 Class E, 2.95% 2013 4,465 4,471 261,008 Federal agency debentures - 5.72% Fannie Mae: 4.75% 2004 14,250 14,651 6.50% 2004 25,000 26,688 6.00% 2005 17,750 18,793 7.125% 2005 10,000 10,889 6.00% 2008 21,500 22,602 Freddie Mac: 5.00% 2004 21,750 22,457 5.50% 2006 10,000 10,377 United States Government Guaranteed Ship 6,491 6,593 Financing Obligations, Rowan Companies, Inc. (Title XI) 5.88% 2012 (3) 133,050 Collateralized mortgage obligations (privately originated) (3) - 3.48% Fannie Mae Trust, Series 2001-50, Class 4,045 4,204 BA, 7.00% 2041 First Nationwide Trust, Series 1999-2, 5,304 5,393 Class 1PA-1, 6.50% 2029 J.P. Morgan Residential Mortgage Acceptance, 4,000 3,987 Series 2002-R1, Class 1A1, 4.25% 2031 (1) Paine Webber CMO, Series O, Class 5, 9.50% 2019 1,248 1,384 PUMA Global Trust No.1, Class B, 2.40% 2033 (2) 5,500 5,497 Residential Funding Mortgage Securities I, 1,923 1,971 Inc., Series 1998-S17, Class M-1, 6.75% 2028 Security National Mortgage Loan Trust: (1) Series 2000-1, Class A-2, 8.75% 2024 5,200 5,436 Series 1999-1, Class B, 9.858% 2030 2,867 2,965 Structured Asset Notes Transaction, Ltd., 4,372 4,493 Series 1996-A, Class A-1, 7.156% 2003 (1) Structured Asset Securities Corp.: (2) Series 1998-RF1, Class A, 8.669% 2027 (1) 10,171 10,731 Series 1998-RF2, Class A, 8.525% 2027 (1) 10,529 11,035 Series 1999-RF1, Class A, 7.863% 2028 (1) 15,454 16,179 Series 1999-BC1, Class M2, 3.15% 2029 7,500 7,559 80,834 OTHER - 0.55% Taxable municipal bonds - 0.40% California Maritime Infrastructure Authority, 8,990 9,278 Taxable Lease Revenue Bonds (San Diego Unified Port District-South Bay Plant Acquisition), Series 1999, 6.63% 2009 (1) (3) 9,278 Development authorities - 0.15% International Bank Reconstruction & 3,500 3,489 Development 3.50% 2004 3,489 Government (excluding U.S.) & government authorities - 0.00% Manitoba (Province of), Series EF, 5.50% 2008 100 102 Ontario (Province of) 5.50% 2008 100 102 204 Total bonds & notes (cost: $2,051,142,000) 2,073,357 Principal Market amount value Short-term securities (000) (000) Corporate short-term notes - 8.09% Abbott Laboratories 1.72% due 3/7/2002 (1) $ 9,400 $ 9,397 American General Corp. 1.79% due 4/2/2002 19,700 19,668 American General Finance Corp. 1.75% 16,800 16,780 due 3/25/2002 Ciesco LP 1.60% due 3/20/2002 18,700 18,683 Corporate Asset Funding Co. Inc. 1.72% 15,000 14,991 due 3/13/2002 (1) E.W. Scripps Co. 1.75% due 3/28/2002 (1) 20,000 19,973 General Electric Capital Corp. 25,000 24,999 1.88% due 3/1/2002 Kimberly-Clark Worldwide Inc.: 1.75% due 3/8/2002 (1) 25,000 24,990 1.75% due 3/26/2002 (1) 5,850 5,843 Park Avenue Receivables Corp. 1.81% 4,900 4,890 due 4/10/2002 (1) Procter & Gamble Co. 1.77% due 4/2/2002 (1) 20,000 19,967 Verizon Global Funding Corp. 1.60% 7,955 7,953 due 3/5/2002 (1) 188,134 Federal agency discount notes - 4.03% Fannie Mae 1.75% due 5/22/2002 6,000 5,975 Federal Home Loan Banks: 1.70% due 3/8/2002 9,300 9,296 1.73% due 4/19/2002 7,500 7,482 Freddie Mac: 1.58% due 3/12/2002 20,000 19,989 1.685% due 3/19/2002 25,000 24,978 1.67% due 4/18/2002 21,700 21,651 1.765% due 5/30/2002 4,400 4,380 93,751 Total short-term securities (cost: $281,886,000) 281,885 Total investment securities (cost: $2,333,028,000) 2,355,242 Excess of payables over cash and receivables 29,648 Net assets $2,325,594 (1) Purchased in a private placement transaction; resale may be limited to qualified institutional buyers; resale to public may require registration. (2) Coupon rates may change periodically. (3) Pass-through securities 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. (4) Index-linked bond whose principal amount moves with a government retail price index. See Notes to Financial Statements
Intermediate Bond Fund of America Financial statements (dollars and shares in thousands, except per share amounts) Statement of assets and liabilities Unaudited at February 28, 2002 Assets: Investment securities at market Unaffiliated issuers (cost: $X,XXX,XXX) $0 Affiliated issuers (cost: $X,XXX,XXX) 0 $0 Cash denominated in foreign currencies (cost: $2,333,028) $2,355,242 Cash 1,081 Receivables for: Sales of investments $231 Sales of fund's shares 21,524 Interest 17,370 39,125 Other assets 4 2,395,452 Liabilities - Payables for: Purchases of investments 61,080 Repurchases of fund's shares 5,282 Dividends on fund's shares 1,749 Management services 594 Services provided by affiliates 1,056 Deferred Trustees' compensation 63 Other fees and expenses 34 69,858 Net assets at February 28, 2002 $2,325,594 Net assets consist of: Capital paid in on shares of beneficial $2,402,246 interest Distributions in excess of net (172) investment income Accumulated net realized loss (98,694) Net unrealized appreciation 22,214 Net assets at February 28, 2002 $2,325,594 Shares of beneficial interest issued and outstanding - unlimited shares authorized Net assets Shares Net asset outstanding value per share (1) Class A $2,113,069 155,303 $13.61 Class B 99,396 7,305 13.61 Class C 76,821 5,646 13.61 Class F 35,920 2,640 13.61 Class 529-A 272 20 13.61 Class 529-B 46 3 13.61 Class 529-C 70 5 13.61 (1) Maximum offering price and redemption price per share are equal to the net asset value per share for all share classes, except for Class A and Class 529-A, for which the maximum offering price per share is $14.14 for both. Statement of operations for the six months ended February 28, 2002 (dollars in thousands) Investment income: Unaudited Income- Interest $58,892 Fees and expenses: Investment advisory services $3,497 Distribution services 3,427 Transfer agent services 828 Administrative services 66 Reports to shareholders 49 Registration statement and prospectus 199 Postage, stationery and supplies 105 Trustees' compensation 11 Auditing and legal 48 Custodian 19 Other 2 8,251 Net investment income 50,641 Net realized loss and unrealized depreciation on investments: Net realized loss on investments (89) Net unrealized depreciation on investments (11,066) Net realized loss and unrealized depreciation on investments (11,155) Net increase in net assets resulting from operations $39,486 Statement of changes in net assets (dollars in thousands) Six months ended Year ended February 28, August 31, 2002* 2001 Operations: Net investment income $50,641 $83,643 Net realized (loss) gain on investments (89) 15,370 Net unrealized (depreciation) appreciation on investments (11,066) 52,833 Net increase in net assets resulting from operations 39,486 151,846 Dividends paid to shareholders (52,021) (87,927) Capital share transactions 629,634 349,334 Total increase in net assets 617,099 413,253 Net assets: Beginning of period 1,708,495 1,295,242 End of period (including distributions in excess of net investment income and undistributed net investment income: $(172) and $1,208, respectively) $2,325,594 $1,708,495 *Unaudited See Notes to Financial Statements
Notes to financial statements Unaudited 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. The fund offers nine share classes consisting of four retail share classes and five CollegeAmerica savings plan share classes. The CollegeAmerica savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be utilized to save for college education. The fund's share classes are described below:
SHARE CLASS INITIAL SALES CONTINGENT DEFERRED CONVERSION FEATURE CHARGE SALES CHARGE UPON REDEMPTION Class A and Class 529-A Up to 3.75% None None Class B and Class 529-B None Declines from 5% to zero for redemptions Class B and Class within six years of 529-B convert to purchase Class A and Class 529-A, respectively, after eight years Class C None 1% for redemptions Class C converts to within one year of Class F after 10 purchase years Class 529-C None 1% for redemptions None within one year of purchase Class 529-E* None None None Class F and Class 529-F* None None None
* As of February 28, 2002, there were no Class 529-E or Class 529-F shares outstanding. Holders of all share classes have equal pro rata rights to assets, dividends and liquidation. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class. SIGNIFICANT ACCOUNTING POLICIES - The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund: SECURITY VALUATION -Fixed-income securities are valued at prices obtained from a pricing service. However, where the investment adviser deems it appropriate, they will be valued at the mean quoted bid and asked prices or at prices for securities of comparable maturity, quality and type. Some securities may be valued based on their effective maturity, the date the security is expected to be called or refunded by the issuer or the date at which the investor can redeem the security with the issuer. Short-term securities maturing within 60 days are valued at amortized cost, which approximates market value. 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. Securities and other assets for which representative market quotations are not readily available are valued at fair value as determined in good faith by authority of the fund's Board of Trustees. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. 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 fixed-income securities are amortized daily over the expected life of the security. CLASS ALLOCATIONS - Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services are charged directly to the respective share class. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -Dividends to shareholders are declared daily from net investment income and are paid to shareholders monthly. 2. FEDERAL INCOME TAXATION AND DISTRIBUTIONS The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. DISTRIBUTIONS - Distributions are based on net investment income and net realized gains determined on a tax basis which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as short-term capital gains and losses and net capital losses. 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 28, 2002, the cost of investment securities for federal income tax purposes was $2,333,028,000. As of February 28, 2002, the components of distributable earnings on a tax basis were as follows:
(dollars in thousands) Distributions in excess of net investment income $(110) Accumulated short-term losses (97,466) Undistributed long-term gains 578 Unrealized appreciation 38,556 Unrealized depreciation (16,342)
Accumulated short-term losses above include capital loss carryforwards of $37,450,000, $39,736,000, $7,050,000, $3,837,000, $ 7,139,000 and $1,587,000 expiring in 2003, 2004, 2005, 2006, 2008 and 2009, respectively. The capital loss carryforward will be used to offset undistributed capital gains realized by the fund in the current year. The fund will not make distributions from capital gains while a capital loss carryforward remains. The tax character of distributions paid was as follows: SIX MONTHS ENDED FEBRUARY 28, 2002 (dollars in thousands)
DISTRIBUTIONS FROM ORDINARY INCOME DISTRIBUTIONS TOTAL FROM DISTRIBUTIONS NET INVESTMENT SHORT-TERM LONG-TERM PAID INCOME CAPITAL GAINS CAPITAL GAINS Class A $48,758 $- $- $48,758 Class B 1,655 - - 1,655 Class C 982 - - 982 Class F 626 - - 626 Class 529-A(1) - * - - - * Class 529-B(1) - * - - - * Class 529-C(1) - * - - - * Total $52,021 $- $- $52,021
DISTRIBUTIONS FROM ORDINARY INCOME DISTRIBUTIONS TOTAL FROM DISTRIBUTIONS NET INVESTMENT SHORT-TERM LONG-TERM PAID INCOME CAPITAL GAINS CAPITAL GAINS Class A $86,558 $- $- $86,558 Class B 961 - - 961 Class C(2) 186 - - 186 Class F(2) 222 - - 222 Total $87,927 $- $- $87,927
*Amount less than 1,000. (1) Class 529-A, Class 529-B and Class 529-C shares were not offered before February 15, 2002. (2) Class C and Class F shares were not offered before March 15, 2001.// 3. FEES AND TRANSACTIONS WITH RELATED PARTIES Capital Research and Management Company ("CRMC"), the fund's investment adviser, is the parent company of American Funds Service Company ("AFS"), the fund's transfer agent, and American Funds Distributors ("AFD"), the principal underwriter of the fund's shares. INVESTMENT ADVISORY SERVICES - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of annual rates beginning with 0.30% per annum on the first $60 million of daily net assets and decreasing to 0.16% on such assets in excess of $3 billion. The agreement also provides for monthly fees, accrued daily, based on a series of annual rates beginning with 3.00% per annum on the first $3,333,333 of the fund's monthly gross investment income decreasing to 2.00% on such income in excess of $8,333,333. For the six months ended February 28, 2002, the investment advisory services fee was equivalent to an annualized rate of 0.35% of average daily net assets. CLASS-SPECIFIC FEES AND EXPENSES - Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific expenses are described below: DISTRIBUTION SERVICES - The fund has adopted plans of distribution for all share classes. Under the plans, the Board of Trustees approves certain categories of expenses which are used to finance activities primarily intended to sell fund shares. The plans provide for annual expenses, based on average daily net assets of up to 0.30% for Class A shares; 0.50% for Class 529-A shares; 1.00% for Class B, Class 529-B, Class C and Class 529-C shares; 0.75% for Class 529-E shares; and 0.50% for Class F and Class 529-F shares. In some cases, the Board of Trustees approved expense amounts lower than plan limits. All share classes may use up to 0.25% of these expenses to pay service fees, or to compensate AFD for paying service fees to firms that have entered into agreements with AFD for providing certain shareholder services. Additionally, the Board of Trustees has approved the following categories of distribution expenses: CLASS A AND CLASS 529-A - Dealers and wholesalers receive commissions from AFD for certain shares sold without a sales charge. Each class reimburses AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit is not exceeded. Although the Class 529-A plan has an annual expense limit of 0.50% of average daily net assets, currently the expense is limited to 0.30% of such assets. As of February 28, 2002, unreimbursed expenses which remain subject to reimbursement totaled $2,570,000 for Class A. CLASS B, CLASS 529-B, CLASS C AND CLASS 529-C - Each class pays AFD annual fees of 0.75% of its respective average daily net assets to compensate dealers and wholesalers for shares sold. CLASS 529-E - AFD is paid annual fees of 0.25% of average daily net assets to compensate dealers and wholesalers for shares sold. CLASS F AND CLASS 529-F- Although the plan has an annual expense limit of 0.50% of its respective average daily net assets, currently there are no additional approved categories of expense for these classes. TRANSFER AGENT SERVICES - The fund has a transfer agency agreement with AFS for Class A and Class B shares. Under this agreement, these share classes compensate AFS for transfer agency services including shareholder record keeping, communications and transaction processing. AFS is compensated for transfer agency services provided to all other share classes from the administrative services fees paid to CRMC described below. ADMINISTRATIVE SERVICES - The fund has an administrative services agreement with CRMC to provide transfer agency and other related shareholder services for all classes of shares other than Class A and Class B. Each relevant class pays CRMC annual fees of 0.15% based on its respective average daily net assets, plus amounts payable for certain transfer agency services. CRMC may use these fees to compensate third parties for performing these services. Each 529 share class is subject to an additional annual administrative fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the CollegeAmerica plan. Expenses under the agreements described above for the six months ended February 28, 2002 are as follows (dollars in thousands):
FUND SHARE DISTRIBUTION TRANSFER AGENT ADMINISTRATIVE CLASSES SERVICES SERVICES SERVICES Class A $2,797 $796 Not applicable Class B 373 32 Not applicable Class C 227 Not applicable $43 Class F 30 Not applicable 23 Class 529-A - Not applicable - * Class 529-B - * Not applicable - * Class 529-C - * Not applicable - *
* Amount less than 1,000. DEFERRED TRUSTEES' COMPENSATION - Since the adoption of the deferred compensation plan in 1993, Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees' fees in the accompanying financial statements include the current fees (either paid in cash or deferred) and the net increase or decrease in the value of the deferred amounts. AFFILIATED OFFICERS AND TRUSTEES - Officers and certain Trustees of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or Trustees received any compensation directly from the fund. 4. CAPITAL SHARE TRANSACTIONS Capital share transactions in the fund were as follows: SIX MONTHS ENDED FEBRUARY 28, 2002 (dollars and shares in thousands)
SALES REINVESTMENTS OF REPURCHASES NET DIVIDENDS AND INCREASE DISTRIBUTIONS Amount Shares Amount Shares Amount Shares Amount Shares Class A $865,665 63,418 $40,505 2,974 $(409,122) (30,008) $497,048 36,384 Class B 66,120 4,841 1,419 104 (13,513) (992) 54,026 3,953 Class C 66,248 4,858 817 60 (11,604) (851) 55,461 4,067 Class F 41,289 3,027 541 40 (19,118) (1,408) 22,712 1,659 Class 271 20 -* -* - - 271 20 529-A(1) Class 46 3 -* -* - - 46 3 529-B(1) Class 70 5 -* -* - - 70 5 529-C(1) Total net $1,039,709 76,172 $43,282 23,178 $(453,357) (33,259) $629,634 46,091 increase (decrease) in fund
YEAR ENDED AUGUST 31, 2001 (dollars and shares in thousands)
SALES REINVESTMENTS OF REPURCHASES NET INCREASE DIVIDENDS AND DISTRIBUTIONS Amount Shares Amount Shares Amount Shares Amount Shares Class A $801,787 59,545 $71,414 5,315 $(598,761) (44,580) $274,440 20,280 Class B 50,565 3,742 829 61 (11,265) (835) 40,129 2,968 Class C(2) 23,570 1,735 158 12 (2,275) (168) 21,453 1,579 Class F(2) 31,145 2,296 188 14 (18,021) (1,329) 13,312 981 Total net $907,067 67,318 $72,589 5,402 $(630,322) (46,912) $349,334 25,808 increase (decrease) in fund
* Amount less than 1,000. (1) Class 529-A, Class 529-B and Class 529-C shares were not offered before February 15, 2002. (2) Class C and Class F shares were not offered before March 15, 2001. 5. RESTRICTED SECURITIES The fund has invested in certain securities for which resale may be limited to qualified buyers or which are otherwise restricted. These securities are identified in the investment portfolio. Any costs incurred in connection with the disposition of such securities will be recorded in the fund on the date of disposition. As of February 28, 2002, the total value of restricted securities was $554,400,000, which represents 23.84% of the net assets of the fund. 6. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES The fund made purchases and sales of investment securities, excluding short-term securities, of $1,263,447,000 and $687,889,000, respectively, during the six months ended February 28, 2002. The fund receives a reduction in its custodian fee equal to the amount of interest calculated on certain cash balances held at the custodian bank. For the six months ended February 28, 2002, the custodian fee of $19,000 was offset by this reduction rather than paid in cash. Financial Highlights (1) Net asset value, beginning of period Class A: Six months ended 2/28/2002 (2) $ 13.69 Year ended 8/31/2001 13.08 Year ended 8/31/2000 13.01 Year ended 8/31/1999 13.56 Year ended 8/31/1998 13.42 Year ended 8/31/1997 13.26 Class B: Six months ended 2/28/2002 (2) 13.69 Year ended 8/31/2001 13.08 Period from 3/15/2000 to 8/31/2000 13.01 Class C: Six months ended 2/28/2002 (2) 13.69 Period from 3/15/2001 to 8/31/2001 13.61 Class F: Six months ended 2/28/2002 (2) 13.69 Period from 3/19/2001 to 8/31/2001 13.60 Class 529-A - Period from 2/19/2002 to 2/28/2002 (2) 13.59 Class 529-B - Period from 2/26/2002 to 2/28/2002 (2) 13.58 Class 529-C - Period from 2/19/2002 to 2/28/2002 (2) 13.59 Income from investment operations Net (losses)gains on securities (both Total Net realized and from investment unrealized) investment income (3) (3) operations Class A: Six months ended 2/28/2002 (2) $.35 $(.07) $.28 Year ended 8/31/2001 .78 .65 1.43 Year ended 8/31/2000 .78 .03 .81 Year ended 8/31/1999 .76 (.55) .21 Year ended 8/31/1998 .83 .17 1.00 Year ended 8/31/1997 .86 .15 1.01 Class B: Six months ended 2/28/2002 (2) .30 (.07) .23 Year ended 8/31/2001 .69 .65 1.34 Period from 3/15/2000 to 8/31/2000 .25 .13 .38 Class C: Six months ended 2/28/2002 (2) .29 (.07) .22 Period from 3/15/2001 to 8/31/2001 .29 .10 .39 Class F: Six months ended 2/28/2002 (2) .34 (.07) .27 Period from 3/19/2001 to 8/31/2001 .32 .11 .43 Class 529-A - Period from 2/19/2002 to 2/28/2002 (2) .03 .01 .04 Class 529-B - Period from 2/26/2002 to 2/28/2002 (2) .01 .02 .03 Class 529-C - Period from 2/19/2002 to 2/28/2002 (2) .03 .01 .04 Dividends (from net Net asset investment value, end Total income) of period return(4) Class A: Six months ended 2/28/2002 (2) $(.36) $ 13.61 2.04% Year ended 8/31/2001 (.82) 13.69 11.23 Year ended 8/31/2000 (.74) 13.08 6.47 Year ended 8/31/1999 (.76) 13.01 1.55 Year ended 8/31/1998 (.86) 13.56 7.68 Year ended 8/31/1997 (.85) 13.42 7.83 Class B: Six months ended 2/28/2002 (2) (.31) 13.61 1.68 Year ended 8/31/2001 (.73) 13.69 10.47 Period from 3/15/2000 to 8/31/2000 (.31) 13.08 3.63 Class C: Six months ended 2/28/2002 (2) (.30) 13.61 1.63 Period from 3/15/2001 to 8/31/2001 (.31) 13.69 2.92 Class F: Six months ended 2/28/2002 (2) (.35) 13.61 2.02 Period from 3/19/2001 to 8/31/2001 (.34) 13.69 3.24 Class 529-A - Period from 2/19/2002 to 2/28/2002 (2) (.02) 13.61 .28 Class 529-B - Period from 2/26/2002 to 2/28/2002 (2) - 13.61 .25 Class 529-C - Period from 2/19/2002 to 2/28/2002 (2) (.02) 13.61 .25 Net assets, Ratio of Ratio of end of expenses net income period (in to average to average millions) net assets net assets Class A: Six months ended 2/28/2002 (2) $2,113 ,78% (5) 5.09% (5) Year ended 8/31/2001 1,628 .81 5.78 Year ended 8/31/2000 1,290 .83 6.06 Year ended 8/31/1999 1,535 .75 (6) 5.69 Year ended 8/31/1998 1,459 .76 (6) 6.09 Year ended 8/31/1997 1,338 .82 6.40 Class B: Six months ended 2/28/2002 (2) 99 1.47 (5) 4.30 (5) Year ended 8/31/2001 46 1.50 4.85 Period from 3/15/2000 to 8/31/2000 5 .69 2.14 Class C: Six months ended 2/28/2002 (2) 77 1.57 (5) 4.19 (5) Period from 3/15/2001 to 8/31/2001 22 .81 2.16 Class F: Six months ended 2/28/2002 (2) 36 .83 (5) 5.03 (5) Period from 3/19/2001 to 8/31/2001 13 .40 2.43 Class 529-A - Period from 2/19/2002 to 2/28/2002 (2) - (7) .02 .19 Class 529-B - Period from 2/26/2002 to 2/28/2002 (2) - (7) .01 .10 Class 529-C - Period from 2/19/2002 to 2/28/2002 (2) - (7) .04 .17 Supplemental data - all classes Year ended August 31 Six months ended February 28, 2002 2001 2000 Portfolio turnover rate 39% 73% 48% Supplemental data - all classes Year ended August 31 1999 1998 1997 Portfolio turnover rate 70% 79% 42% (1) Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year. (2) Unaudited. (3) Years ended 1999, 1998 and 1997 are based on shares outstanding on the last day of the year; all other periods are based on average shares outstanding. (4) Total returns exclude all sales charges, including contingent deferred sales charges. (5) Annualized. (6) Had CRMC not waived management services fees, the fund's expense ratio would have been 0.78% and 0.79% for the fiscal years ended 1999 and 1998, respectively. (7) Amount less than 1 million.
OTHER SHARE CLASS RESULTS (unaudited) CLASS B, CLASS C, CLASS F AND CLASS 529 Returns for periods ended March 31, 2002 (the most recent calendar quarter):
One Life of year class CLASS B SHARES Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%, payable only if shares are sold within six years of purchase -1.43% +5.33%/1/ Not reflecting CDSC +3.50% +7.16%/1/ CLASS C SHARES Reflecting CDSC, maximum of 1%, payable only if shares are sold within one year of purchase +2.36% +3.36%/2/ Not reflecting CDSC +3.34% +3.36%/2/ CLASS F SHARES Not reflecting annual asset-based fee charged by sponsoring firm +4.16% +4.16%/3/
CLASS 529 SHARES Results for these shares are not shown because of the brief time between their introduction on February 15, 2002, and the end of the period. /1/Average annual compound return from March 15, 2000, when Class B shares first sold. /2/Average annual compound return from March 15, 2001, when Class C shares first sold. /3/Average annual compound return from March 19, 2001, when Class F shares first sold. OFFICE OF THE FUND AND OF THE INVESTMENT ADVISER, CAPITAL RESEARCH AND MANAGEMENT COMPANY 333 South Hope Street Los Angeles, CA 90071-1443 135 South State College Boulevard Brea, CA 92821-5823 TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS American Funds Service Company (Please write to the address nearest you.) P.O. Box 25065 Santa Ana, CA 92799-5065 P.O. Box 659522 San Antonio, TX 78265-9522 P.O. Box 6007 Indianapolis, IN 46206-6007 P.O. Box 2280 Norfolk, VA 23501-2280 CUSTODIAN OF ASSETS JPMorgan Chase Bank 270 Park Avenue New York, NY 10017-2070 COUNSEL Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street Los Angeles, CA 90071-2371 PRINCIPAL UNDERWRITER American Funds Distributors, Inc. 333 South Hope Street Los Angeles, CA 90071-1462 There are several 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. Other share classes, which are generally not available for certain employer-sponsored retirement plans, have no up-front sales charges but are subject to additional annual expenses and fees. Annual expenses for Class B shares were 0.69% higher than for Class A shares; Class B shares convert to Class A shares after eight years of ownership. If redeemed within six years, Class B shares may also be subject to a contingent deferred sales charge (CDSC) of up to 5% that declines over time. Class C shares were subject to annualized expenses 0.79% higher than those for Class A shares and a 1% CDSC if redeemed within the first year after purchase. Class C shares convert to Class F shares after 10 years. Class F shares, which are available only through certain fee-based programs offered by broker-dealer firms and registered investment advisers, had higher expenses (0.05% annualized) than did Class A shares, and an annual asset-based fee charged by the sponsoring firm. Expenses are deducted from income earned by the fund. As a result, dividends and investment results will differ for each share class. [logo - American Funds(sm)]// The right choice for the long term(sm) 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 AT 800/421-0180 OR VISIT US AT AMERICANFUNDS.COM ON THE WORLD WIDE WEB. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. 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, 2002, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter. THE CAPITAL GROUP COMPANIES American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust Lit. No. IBFA-013-0402 Litho in USA KBD/CG/5543 Printed on recycled paper