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American High-Income Trust
Semi-Annual Report
for the six months ended March 31, 1995
[The American Funds Group(R)]
American High-Income Trust(R)
SEEKS A HIGH LEVEL OF CURRENT INCOME AND, SECONDARILY, CAPITAL APPRECIATION
THROUGH A DIVERSIFIED, CAREFULLY SUPERVISED PORTFOLIO CONSISTING PRIMARILY OF
LOWER RATED, HIGHER RISK CORPORATE BONDS.
ABOUT OUR COVER: Companies involved in revolutionizing the telecommunications
industry represent sizable holdings in American High-Income Trust today.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are the total returns and average annual compound
returns with all distributions reinvested, assuming payment of the 4.75%
maximum sales charge at the beginning of the stated periods.
<TABLE>
<CAPTION>
PERIODS ENDED TOTAL RETURN AVERAGE ANNUAL
23/31/95 COMPOUND RETURN
<S> <C> <C>
Lifetime +92.61% + 9.66%
(since 2/19/88)
Five Years +70.62% +11.28%
One Year - 2.37% --
</TABLE>
Sales charges are lower for accounts of $25,000 or more. THE FIGURES IN THIS
REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY HAVE
A GAIN OR LOSS OF PRINCIPAL WHEN YOU SELL YOUR SHARES. FUND SHARES ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT,
ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY
OTHER AGENCY, ENTITY OR PERSON. All investments are subject to certain risks.
The fund invests principally in high-yield bonds, which are subject to greater
price swings and default risks than higher rated bonds and, of course, payment
of principal and interest is not assured. High-yield bonds share certain
characteristics with stocks (both, for example, are tied closely to the
economic health of the issuer). Investments in non-U.S. bonds are subject to
additional risks. For example, currency fluctuations could reduce the value of
your investment. Additionally, if the value of the portfolio declines due to
market conditions, the value of your investment would also decline, regardless
of current yield. Accordingly, investors should maintain a long-term
perspective.
Fellow Shareholders:
The first half of our 1995 fiscal year was a time of sharp contrasts in the
bond market, with prices falling as the period began, then rallying strongly as
it ended. American High-Income Trust benefited from the rally but nonetheless
lagged the market for the period as a whole.
During the six months ended March 31, American High-Income Trust recorded a
total return of 2.1% with dividends reinvested, reflecting a 3.65% decline in
the fund's net asset value offset by a 5.14% income return. That trailed the
results registered by the unmanaged market indexes during the same period. With
income reinvested, the Salomon Brothers Long-Term High-Yield Index had a total
return of 8.8%. The Salomon Brothers Broad Investment-Grade Bond Index, which
tracks higher-grade bonds, had a total return of 5.5%, also with income
reinvested.
Your fund's results were influenced both by conditions in the bond market as
well as by the structure of the portfolio.
INTEREST RATES RISE
The bond market declined sharply through the first 11 months of 1994 as the
Federal Reserve Board pushed up short-term interest rates in an effort to
pre-empt inflation. The Fed's actions also drove long-term rates higher and
bond prices lower. (Bond prices generally move inversely to interest rates.)
RESULTS AT A GLANCE
<TABLE>
<CAPTION>
TOTAL RETURNS/1/
(for the periods ended 3/31/95) SIX MONTHS ONE YEAR LIFETIME/2/
- -------------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C>
American High-Income Trust +2.1% +2.5% +102.2%
Salomon Brothers Broad +5.5% +5.0% + 80.0%
Investment-Grade Bond Index
Salomon Brothers Long-Term +8.8% +7.6% +106.2%
High-Yield Index
30-DAY RATES (as of 4/30/95)
Yield based on Securities and 9.40%
Exchange Commission formula
Distribution rate based on average offering price 8.53%
Distribution rate based on net asset value 8.96%
</TABLE>
/1/ Change in value of investment with dividends and capital gain distributions
reinvested
/2/ Since 2/19/88
The SEC yield reflects income earned by the fund, while the distribution rate
reflects dividends actually paid by the fund.
Over its seven-year lifetime (2/19/88 through 3/31/95), American High-
Income Trust ranked ninth in total return among the 55 high-yield funds in
existence throughout the period, according to Lipper Analytical Services. For
the 12 months ended March 31, the fund ranked 46th out of 99 high-yield funds;
for the five years ended March 31, it ranked 29th out of 60 high-yield funds.
At the beginning of 1994, 10-year Treasury bonds yielded 5.77%. By the time
your fund's fiscal year began in October, 10-year Treasury rates had climbed to
7.62% and prices had dropped commensurately.
Rates peaked in November, and by late December confidence that the long run-up
in rates had ended was spreading throughout the market. Bond prices also began
to rebound. The rally in high-yield corporate bonds trailed the broader market
slightly but began gaining momentum in January. By March 31 American
High-Income Trust had regained almost half of the value it had lost in the
first three-and-a-half months of the fiscal year. The rally has continued into
the fiscal year's second half.
HIGHER RATES HURT "ZEROS"
The period of rising interest rates was particularly hard on the fund's
holdings of "zero-coupon" bonds. Zero-coupon bonds, which make up a substantial
portion of the fund's portfolio, are sold at a deep discount from their face
value because they do not pay cash interest; rather, most accrue interest over
part of their lifetime. Without income to cushion the volatility, these bonds
fluctuate much more in price than bonds that pay cash interest.
Some other bonds in the portfolio also declined sharply as questions were
raised about their quality. These bonds and the zeros rallied strongly toward
the end of the half-year and maintained their momentum after the end of the
reporting period.
Another development affecting the fund's results was the abrupt devaluation of
the Mexican peso in December. This caused a ripple effect in many fixed-income
markets around the globe, especially in Latin American markets where the fund
has investments. The fund owns bonds issued both by the Mexican government and
by corporations located in Mexico, and it has holdings in Brazil and Argentina
as well. These bonds represented about 5.25% of the portfolio before the
decline and 4.40% after it. Thus, while they fell sharply in value, their
effect on the fund has been relatively minor.
DIVIDENDS REMAIN STRONG
Despite the turbulence in the market, American High-Income Trust continued to
produce a substantial flow of dividend income during the six months ended March
31. The fund paid dividends of 70 cents a share, including a special 8.5
cents-a-share dividend in December. The fund also paid a capital gain
distribution of 7.5 cents a share in December. If, like most investors, you
reinvested these distributions, your income return was 5.14% for the six months
(not annualized) or 5.02% if you took your dividends in cash. For the 12 months
ended March 31, your income return was 9.36% with dividends reinvested or 8.97%
if dividends were taken in cash.
We are pleased to announce that in June, American High-Income Trust will
increase its regular monthly dividend from 10.25 cents per share to 10.50 cents
for shares held since May 26, 1995.
A WORLDWIDE SEARCH FOR VALUE
American High-Income Trust searches for good investments in individual
companies, making its approach to investing similar to that of a stock fund.
The fund's portfolio counselors make their decisions with a view toward the
long term and search for individual firms whose securities offer the most
attractive combination of risk and reward and which seem to be undervalued by
the market. This research-oriented approach has served the fund well over the
years, and we believe it will continue to do so.
Just as we look for good values throughout the economy, not just in a few
industries, we also search for opportunity throughout the world, not just in
the U.S. We believe there are good opportunities outside our borders and will
continue to search globally for sound investments within the prospectus limit
that the fund not invest more than 25% of its assets outside the U.S.
There are, of course, added risks when investing globally, especially in
so-called "emerging markets." However, the majority of your fund's investments
outside the United States are in developed countries such as Canada, Norway and
the United Kingdom. About 17% of the fund's total assets are invested abroad
with about 10% in developed countries and about 7% in emerging markets. Some of
these bonds are issued by governments, but the biggest share of the fund's
non-U.S. holdings is made up of corporate bonds.
This combination of a long-term perspective and in-depth global research has
given the fund an excellent record over its lifetime. An investment made at the
fund's inception in February 1988 has increased 102.2% over that seven-year
span and has grown at an average compound rate of 10.4% a year.
The fund will undoubtedly again go through periods when the value of your
shares will decline; in the high-yield market, price fluctuations should be
anticipated. We believe this fund may be best suited for people who feel
comfortable with the risks and rewards traditionally offered by equity-like
securities.
It is gratifying that in the first half of this fiscal year, as the bond
market suffered through one of the worst downturns in recent history, the
assets of American High-Income Trust continued to grow. During the six-month
period, 4,000 additional shareholders invested in the fund.
We would like to welcome our newest shareholders and reiterate to
all of our shareholders our belief that American High-Income Trust's
value-oriented approach and thorough research will continue to set the fund
apart. We look forward to reporting to you at the end of the fiscal year.
Cordially,
Paul G. Haaga, Jr.
Chairman Of The Board
Richard T. Schotte
President
May 15, 1995
American High-Income Trust
Investment Portfolio March 31, 1995 (Unaudited)
The Fund's 10 Largest
Corporate Issuers Percent of
(as of March 31, 1995) Net Assets
- ------------------------------------------------
Rogers Cantel Mobile
Communications 3.08%
California Energy 2.91
Container Corp. of America 2.90
MFS Communications 2.61
Fort Howard Paper 2.60
Continental Cablevison 2.44
Comcast/Comcast Cellular 2.34
NEXTEL Communications 2.34*
Videotron Holdings 2.07
Bell Cablemedia PLC 1.95
*Company has agreements to acquire Dial Call and
CenCall, also held in the portfolio.
U.S. Corporate Bonds 70%
Non-U.S. Corporate Bonds 13%
Cash and Equivilents 9%
U.S. Treasuries 4%
Stocks 2%
Non-U.S. Government Bonds 1%
Convertible Debentures 1%
<TABLE>
<CAPTION>
Unaudited
Principal Market Percent
Amount Value of Net
(000) (000) Assets
<S> <C> <C> <C>
Bonds and notes - 88.02%
Beverages - 1.94%
Canandaigua Wine Co., Inc. 8.75% 2003 $8,500 $8,181 0.91%
Dr Pepper Bottlng Co. of Texas 10.25%
2000 9,000 9,180 1.03
----------- --------
17,361 1.94
----------- --------
Broadcasting & Publishing - 3.37%
Infinity Broadcasting Corp. 10.375% 2002 8,450 8,746 .98
Marvel Holdings Inc. 0% 1998 24,000 15,240 1.71
Univision Television Group, Inc.:
11.75% 2001 4,350 4,568 .51
7.00% 2002 2,567 1,514 .17
----------- --------
30,068 3.37
----------- --------
Cable & Telephone in the United
Kingdom - 5.41%
Bell Cablemedia PLC 0%/11.95% 2004/1/ 29,000 17,400 1.95
International CableTel Inc.
0%/10.875% 2003/1/ 21,675 12,463 1.39
Videotron Holdings PLC 0%/11.125% 2004/1/ 31,000 18,445 2.07
----------- --------
48,308 5.41
----------- --------
Cellular, Paging & Wireless
Communications -17.38%
Cellular, Inc. 0%/11.75% 2003/1/ 8,500 5,865 .66
CenCall Communications Corp. 0%/10.125%
2004/1/ 25,050 9,394 1.05
Centennial Cellular Corp. 8.875% 2001 16,000 14,880 1.67
Comcast Cellular Corp.:
Series A, 0% 2000 6,000 4,320 .48
Series B, 0% 2000 12,250 8,820 .99
Dial Call Communications, Inc.
0%/12.25% 2004/1/ 29,000 11,020 1.23
Horizon Cellular Telephone Co., LP
Horizon Finance Corp. 0%/11.375%
2000/1/ 17,065 12,927 1.45
MobileMedia Communications, Inc.
0%/10.50% 2003/1/ 19,150 10,916 1.22
NEXTEL Communications, Inc.:/2/
0%/11.50% 2003/1/ 27,000 12,150 1.36
0%/9.75% 2004/1/ 21,000 8,715 .98
Paging Network, Inc.:
11.75% 2002 12,750 13,324 1.49
8.875% 2006 1,500 1,305 .15
PanAmSat, LP PanAmSat Capital Corp.:
9.75% 2000 6,500 6,419 .72
0%/11.375% 2003/1/ 7,000 4,620 .52
PriCellular Wireless Corporation
0%/14.00% 2001/1/ 4,000 2,980 .33
Rogers Cantel Mobile Communications Inc.:
10.75% 2001 24,330 24,877 2.79
11.125% 2002 2,500 2,562 .29
----------- --------
155,094 17.38
----------- --------
Construction & Housing - 0.78%
Del Webb Corp. 9.75% 2003 3,000 2,700 .30
Toll Corp. 9.50% 2003 2,500 2,312 .26
Triangle Pacific Corp. 10.50% 2003 2,000 1,980 .22
----------- --------
6,992 .78
----------- --------
Diversified Media & Cable Television &
Telecommunications - 8.29%
American Media Operation, Inc.
11.625% 2004 5,000 5,313 .60
Cablevision Systems Corp. 9.875% 2013 4,000 3,820 .43
Century Communications Corp.:
9.50% 2000 4,100 4,038 .45
9.75% 2002 3,000 2,955 .33
Comcast Corp. 10.25% 2001 4,300 4,386 .49
Continental Cablevision, Inc.:
8.50% 2001 1,000 940 .11
10.625% 2002 8,000 8,280 .93
8.625% 2003 10,000 9,450 1.06
8.875% 2005 1,500 1,425 .16
11.00% 2007 1,500 1,590 .18
Insight Communications Co., LP 8.25%
2000/3/ 1,500 1,451 .16
Jones Intercable, Inc. 9.625% 2002 4,500 4,455 .50
MFS Communications Co., Inc.
0%/9.375% 2004/1/ 36,850 23,308 2.61
Storer Communications, Inc. 10.00% 2003 2,534 2,496 .28
----------- --------
73,907 8.29
----------- --------
Electric & Gas Utilities & Independent
Power Producers - 5.38%
California Energy Co., Inc.
0%/10.25% 2004/1/ 35,000 25,988 2.91
Midland Cogeneration Venture LP:
Series C-91, 10.33% 2002 6,695 6,695 .75
Series c-94, 10.33% 2002 9,918 9,918 1.11
Subic Power Corp. 9.50% 2008/4/ 6,759 5,474 .61
----------- --------
48,075 5.38
----------- --------
Energy & Related Companies - 4.43%
Global Marine, Inc. 12.75% 1999 6,400 6,904 .77
Maxus Energy Corp. 9.875% 2002 3,000 2,610 .29
Mesa Capital Corp. 0%/12.75% 1998/1/ 3,000 2,895 .32
Triton Energy Corp.:
0% 1997 1,000 774 .09
0%/9.75% 2000/1/ 8,000 6,440 .72
Tuboscope Vetco International Inc.
10.75% 2003 7,000 7,035 .79
Wilrig AS 11.25% 2004 13,500 12,960 1.45
----------- --------
39,618 4.43
----------- --------
Food Retailing - 4.48%
Ralphs Grocery Co.:
10.25% 2002 12,750 12,623 1.41
9.00% 2003 3,250 3,169 .36
Safeway Inc. 10.00% 2002 1,700 1,819 .20
Star Markets Company, Inc. 13.00% 2004 11,000 11,522 1.29
Stater Bros. Holdings Inc. 11.00% 2001 11,500 10,868 1.22
----------- --------
40,001 4.48
----------- --------
Forest Products & Paper - 10.95%
Container Corp. of America:
9.75% 2003 23,750 23,275 2.61
11.25% 2004 2,500 2,619 .29
Fort Howard Paper Co.:
9.25% 2001 15,250 14,716 1.65
8.25% 2002 3,000 2,745 .31
10.00% 2003 1,250 1,194 .13
9.00% 2006 5,250 4,594 .51
Klabin Fabricadora de Papel e Cellulose
SA 10.00% 2001/4/ 3,834 3,010 .34
MAXXAM Group Inc. 11.25% 2003 3,000 2,835 .32
Pacific Lumber Co. 10.50% 2003 8,500 7,990 .90
P.T. Indah Kiat Pulp & Paper Corp.:
11.375% 1999 1,000 972 .11
8.875% 2000/4/ 13,750 11,688 1.31
11.875% 2002 1,000 962 .11
P.T. Inti Indorayon Utama 9.125% 2000 1,000 830 .09
P.T. Pabrik Kertas Tjiwi Kimia
13.25% 2001 3,500 3,535 .40
Repap Wisconsin, Inc. Second Priority
9.875% 2007 750 686 .08
Riverwood International Corp.:
10.75% 2000 10,000 10,450 1.17
11.25% 2002 4,250 4,484 .50
Riverwood International Corp. II 10.75%
2000 1,000 1,045 .12
----------- --------
97,630 10.95
----------- --------
Leisure, Tourism & Restaurants - 5.92%
Foodmaker, Inc.:
9.25% 1999 14,000 11,760 1.32
9.75% 2002 6,824 5,118 .57
Four Seasons Hotels Inc. 9.125% 20001/4 7,000 6,790 .76
Harrah's Jazz Company, Harrah's Jazz
Finance Corp. 14.25% 2001 9,750 10,433 1.17
Kloster Cruise Ltd. 13.00% 2003 11,100 8,824 .99
Plitt Theatres, Inc. 10.875% 2004 10,000 9,875 1.11
----------- --------
52,800 5.92
----------- --------
Manufacturing & Materials - 6.18%
ACME Metals Inc.:
12.50% 2002 5,000 5,050 .57
0%/13.50% 2004/1/ 5,750 4,255 .48
AK Steel Corporation 10.75% 2004 1,500 1,513 .17
Coleman Holdings Inc. 0% 1998 4,000 2,800 .31
Coltec Industries Inc.:
9.75% 1999 2,500 2,500 .28
9.75% 2000 12,500 12,500 1.40
Hyster-Yale Materials Handling, Inc.
12.375% 1999 446 473 .05
ISPAT Mexicana SA de CV:
10.375% 2001 1,250 862 .10
144A 10.375% 2001/4/ 2,000 1,380 .15
MagneTek, Inc. 10.75% 1998 8,700 8,700 .97
Owens-Illinois, Inc. 11.00% 2003 7,250 7,739 .87
UCAR Global Enterprises Inc. 12.00% 2005 3,500 3,675 .41
Westpoint Stevens Inc. 8.75% 2001 4,000 3,770 .42
----------- --------
55,217 6.18
----------- --------
Merchandising - 5.04%
Ann Taylor 8.75% 2000 3,000 2,925 .33
Barnes & Noble, Inc. 11.875% 2003 9,450 10,111 1.13
CompUSA Inc. 9.50% 2000 9,075 8,258 .93
Levitz Furniture Corp. 12.375% 1997 3,900 3,822 .43
Payless Cashways, Inc. 9.125% 2003 1,750 1,575 .18
Thrifty Payless, Inc.:
11.75% 2003 6,000 6,240 .70
Unit 12.25% 2004 2,000 2,140 .24
12.25% 2004 9,750 9,847 1.10
----------- --------
44,918 5.04
----------- --------
Miscellaneous Services - 0.83%
Neodata Services, Inc. 0%/12.00% 2003/1/ 9,500 7,410 .83
----------- --------
Real Estate - 0.42%
B.F. Saul Real Estate Investment Trust,
11.625% 2002 4,000 3,720 .42
----------- --------
Transportation - 2.00%
Delta Air Lines, Inc.:
10.375% 2011 1,500 1,599 .18
1993 Pass Through Trusts, Series A2
10.50% 2016 1,000 1,064 .12
NWA Trust, Class D, 13.875% 2008 3,750 3,919 .44
TNT Transport (Europe) PLC TNT (USA)
Inc. 11.50% 2004 5,500 5,610 .63
Viking Star Shipping Inc. 9.625% 2003 6,000 5,640 .63
----------- --------
17,832 2.00
----------- --------
Collateralized Mortgage/Asset-Backed
Obligations/5/ - 0.15%
Resolution Trust Corp., mortgage
pass-through certificates:
Series 1993-C1, Class E, 9.50% 2024 480 462 .05
Series 1993-C2, Class E, 8.50% 2025 918 890 .10
----------- --------
1,352 .15
----------- --------
Non-U.S. Governments and Governmental
Authorities - 1.14%
Argentina (Republic of) 6.50% 2005/3/ 6,000 3,232 .36
Argentina (Republic of) 4.25% 2023/3/ 2,000 818 .09
Brazil (Federal Republic of) DCB, 6.75%
2012/3/ 2,000 855 .10
Brazil (Federal Republic of) PAR,
Series YLD 4.00% 2024 2,000 722 .08
Poland PDI bonds, 3.25% 2014/3/ 2,000 803 .09
United Mexican States Collateralized
Eurobond:
Series A, 6.25% 2019 1,400 660 .07
Series B, 6.25% 2019 6,500 3,063 .35
----------- --------
10,153 1.14
----------- --------
U.S. Treasury Obligations - 3.93%
7.25% 1998 5,000 5,045 .57
6.875% 1999 20,000 19,844 2.22
7.50% 2001 10,000 10,175 1.14
----------- --------
35,064 3.93
----------- --------
Total bonds and notes (cost:
$836,830,000) 785,520 88.02
----------- --------
Shares
Stocks (Common & Preferred) - 2.47%
Cellular Communications, Inc./6/ 35,000 1,654 .18
Comcast Corp., Class A 10,000 155 .02
Comcast Corp., Class A special stock 20,000 310 .03
Dial Page, Inc. Warrants 29,500 0 .00
Foodmaker, Inc./6/ 30,000 123 .01
Host Marriott Corp./6/ 13,896 165 .02
LIN Broadcasting Corp./6/ 2,000 243 .03
Marriott International Inc. 13,896 483 .05
Nacional Financiers S.N.C. Prides
11.25% 1998 20,000 585 .07
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)/4/ 2,016,500 18,350 2.06
----------- --------
Total stocks (Cost: $19,010,000) 22,068 2.47
----------- --------
Principal
Amount
(000)
Convertible Debentures - 0.73%
Comcast Corp. convertible debentures
1.125% 2007 $1,000 415 .05
Euro Disney S.C.A. convertible
6.75% 2001 7,700 1,113 .12
Federated Department Stores, Inc.
Convertible debentures 9.72% 2004 5,000 5,000 .56
----------- --------
Total Convertible Debentures (Cost:
$6,317,000) 6,528 .73
----------- --------
Short-Term Securities -
Corporate Short-Term Notes - 5.23%
A.I. Credit Corp. 6.09% due 04/3/95 10,000 9,995 1.12
American Telephone and Telegraph Co.
6.02% due 5/19/95 4,975 4,934 .55
Associates Corp. of North America 6.34%
due 04/3/95 15,300 15,292 1.72
Ford Motor Credit Co. 5.95% due 04/17/95 7,000 6,980 .78
Xerox Corp.:
5.97% due 04/7/95 5,000 4,994 .56
5.95% due 04/19/95 4,500 4,486 .50
----------- --------
46,681 5.23
Federal Agency Discount Notes - 1.67%
Federal Home Loan Mortgage Corporation
6.00% due 05/22/95 15,000 14,871 1.67
Total Short-Term Securities (cost: ----------- --------
$61,551,000) 61,552 6.90
----------- --------
Total Investment Securities (cost:
$923,708,000) 875,668 98.12
Excess of cash and receivables over
payables 16,774 1.88
----------- --------
Net Assets $892,442 100.00%
=========== ========
</TABLE>
/1/ Represents a zero coupon bond which
will convert to a coupon-bearing
security at a later date.
/2/ Company has agreements to acquire Dial
Call and CenCall, also held in the
portfolio.
/3/ Coupon rate may change periodically.
/4/ Purchased in a private placement
transaction; resale to the public may
require registration.
/5/ Pass-through security backed by a pool
of mortgages or other loans on which
principal payments are periodically
made. Therefore, the effective maturity
of these securities is shorter than the
stated maturity.
/6/ Non-income-producing security.
See Notes to Financial Statements
American High-Income Trust
Financial Statements
Statement of Assets and Liabilities
March 31, 1995 (dollars in thousands)
<TABLE>
<CAPTION>
Unaudited
<S> <C> <C>
Assets:
Investment securities
(cost: $923,708) $875,668
Cash 1,581
Receivables for-
Sales of investments $3,511
Sales of fund's shares 2,497
Accrued dividends and interest 17,163 23,171
----------- ------------
900,420
Liabilities:
Payables for-
Purchases of investments 5,517
Repurchases of fund's shares 1,446
Forward currency contracts 92
Dividends on fund's shares 456
Management services 391
Accrued expenses 76 7,978
----------- ------------
Net Assets at March 31, 1995-
Equivalent to $13.46 per share on
66,317,991 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $892,442
============
Statement of Operations
For the Six Months Ended March 31, 1995
(dollars in thousands) Unaudited
Investment Income:
Income:
Dividends $ 3
Interest 43,878 $43,881
---------
Expenses:
Management services fee 2,207
Distribution expenses 884
Transfer agent fee 327
Reports to shareholders 73
Registration statement and prospectus 79
Postage, stationery and supplies 89
Trustees' fees 10
Auditing and legal fees 41
Custodian fee 19
Taxes other than federal income tax 2
Other expenses 2 3,733
---------- ------------
Net investment income 40,148
------------
Realized Loss and Unrealized
Depreciation on Investments:
Net realized loss (5,289)
Net unrealized depreciation
on investments:
Beginning of period (31,188)
End of period (48,132)
----------
Net unrealized depreciation on
investments (16,944)
------------
Net realized loss and unrealized
depreciation on investments (22,233)
------------
Net Increase in Net Assets Resulting
from Operations $17,915
============
See Notes to Financial Statements
Statement of Changes in Net Assets
(dollars in thousands) Six Months Year
Ended Ended
March 31, September 30
1995* 1994
Operations:
Net investment income $40,148 $68,864
Net realized (loss) gain on investments (5,289) 5,459
Net unrealized depreciation on (16,944) (65,611)
investments
------------ ------------
Net increase in net assets
resulting from operations 17,915 8,712
---------- ------------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (42,914) (65,637)
Distributions from net realized gain
on investments (4,494) (13,187)
---------- ------------
Total dividends and distributions (47,408) (78,824)
---------- ------------
Capital Share Transactions:
Proceeds from shares sold:
13,424,805 and 29,570,527
shares, respectively 179,710 438,518
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on
investments: 2,223,234 and
3,412,975 shares, respectively 29,553 50,345
Cost of shares repurchased:
9,104,387 and 19,805,346
shares, respectively (122,241) (291,279)
---------- ------------
Net increase in net assets
resulting from capital share
transactions 87,022 197,584
---------- ------------
Total Increase in Net Assets 57,529 127,472
Net Assets:
Beginning of period 834,913 707,441
---------- ------------
End of period (including undistributed
net investment income: $2,480 and
$5,246 respectively) $892,442 $834,913
========== ============
</TABLE>
*Unaudited
See Notes to Financial Statements
Notes to Financial Statements
1. American High-Income Trust (the "fund") is registered under the Investment
Company Act of 1940 as an open-end, diversified management investment company.
The following paragraphs summarize the significant accounting policies
consistently followed by the fund in the preparation of its financial
statements:
Stocks and convertible debentures are stated at market value based upon
closing sales prices reported on recognized securities exchanges on the last
business day of the period or, for listed securities having no sales reported
and for unlisted securities, upon last-reported bid prices on that
date. Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at the mean of such
prices for securities of comparable maturity, quality and type. Short-term
securities with original or remaining maturities in excess of 60 days are
valued at the mean of their quoted bid and asked prices. Short-term securities
with 60 days or less to maturity are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Valuation Committee of the Board of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend and interest income is reported on the accrual basis.
Discounts on securities purchased are amortized over the life of the respective
securities. The fund does not amortize premiums on securities purchased.
Dividends are declared on a daily basis after the determination of the fund's
net asset value and paid to shareholders on a monthly basis.
Investment securities, including forward currency contracts, denominated
in non-U.S. currencies are recorded in the financial statements after
translation into U.S. dollars utilizing rates of exchange on the last business
day of the fiscal period. Dividend and interest income from such investments
is calculated using the approximate exchange rate as accrued or when received.
Purchases and sales of investment securities and interest income are calculated
using the approximate exchange rate as accrued. The fund does not identify the
portion of each amount shown in the fund's statement of operations under the
caption "Realized Loss and Unrealized Depreciation on Investments" that arises
from changes in non-U.S.currency exchange rates.
Pursuant to the custodian agreement, the fund receives credit against
its custodian fee for imputed interest on certain balances with the custodian
bank. The custodian fee of $19,000 includes $10,000 that was paid by the
credits rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of March 31, 1995, net unrealized depreciation on investments for book and
federal income tax purposes aggregated $48,132,000, of which $13,302,000
related to appreciated securities and $61,434,000 related to depreciated
securities. There was no difference between book and tax realized gains on
securities transactions for the six months ended March 31, 1995. The cost of
portfolio securities for book and federal income tax purposes was $923,708,000
at March 31, 1995.
3. The fee of $2,207,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Trustees of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.30% of the first $60 million of average net assets;
0.21% of such assets in excess of $60 million but not exceeding $1 billion; and
0.18% of such assets in excess of $1 billion ("asset-based fee"); plus 3.00% of
the first $100 million of the fund's annual gross investment income and 2.50%
of such income in excess of $100 million ("income-based fee").
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Trustees. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended March 31,
1995, distribution expenses under the Plan were $884,000. As of March 31,
1995, accrued and unpaid distribution expenses were $132,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $327,000 under the terms of a contract that provides for transfer
agency services to be performed for the fund. American Funds Distributors,
Inc. (AFD), the principal underwriter of the fund's shares, received $1,967,000
(after allowances to dealers) as its portion of the sales charges paid by
purchasers of the fund's shares. Such sales charges are not an expense of the
fund and, hence, are not reflected in the accompanying statement of operations.
Trustees of the fund who are unaffiliated with CRMC may elect to defer part or
all of the fees earned for services as members of the Board. Amounts deferred
are not funded and are general unsecured liabilities of the fund. As of March
31, 1995, aggregate amounts deferred were $11,000.
CRMC is owned by The Capital Group Companies Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Trustees and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No such persons
received any remuneration directly from the fund.
4. As of March 31, 1995, accumulated undistributed net realized loss on
investments was $5,242,000 and additional paid-in capital was $877,018,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $145,765,000 and $117,670,000, respectively, during
the six months ended March 31, 1995.
Per Share
Data and Ratios
<TABLE>
<CAPTION>
Six Months Year Ended Septem ber 30
Ended
March 31,
1995/1/ 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $13.97 $15.18 $14.58 $13.56 $11.81 $13.91
------- ----- ------- ----- ------ -------
Income from Investment
Operations:
Net investment income .69 1.25 1.28 1.35 1.46 1.59
Net realized and
unrealized (loss)
gain on investments (.43) (.99) .74 .99 1.78 (2.11)
------- ----- ------- ----- ----- -------
Total income from
investment operations .26 .26 2.02 2.34 3.24 (.52)
------- ----- ------- ----- ----- -------
Less Distributions:
Dividends from net
investment income (.70) (1.21) (1.29) (1.32) (1.49) (1.58)
Distribution from net
realized gains (.07) (.26) (.13) - - -
------- ----- ------- ----- ----- -------
Total distributions (.77) (1.47) (1.42) (1.32) (1.49) (1.58)
------- ----- ------- ----- ----- -------
Net Asset Value, End of Period $13.46 $13.97 $15.18 $14.58 $13.56 $11.81
======== ====== ======= ===== ====== =======
Total Return/2/ 2.09%/3/ 1.60% 14.59% 18.08% 29.13% (4.02%)
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $892 $835 $707 $438 $255 $140
Ratio of expenses to average
net assets .45%/3/ .86% .87% .94% 1.00% 1.00%
Ratio of net income to
average net assets 4.82%/3/ 8.63% 8.60% 9.58% 11.41% 12.42%
Portfolio turnover rate 14.94%/3/ 42.03% 44.37% 58.04% 44.38% 37.89%
</TABLE>
/1/Unaudited
/2/This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
/3/Based on the period shown and, accordingly, not representative of a full
year's operation
BOARD OF TRUSTEES
H. FREDERICK CHRISTIE
Palos Verdes Estates, California
Private investor; former President and Chief
Executive Officer, The Mission Group; former
President, Southern California Edison Company
DIANE C. CREEL
Long Beach, California
Chairwoman, Chief Executive Officer and
President, The Earth Technology Corporation
MARTIN FENTON, JR.
San Diego, California
Chairman of the Board, Senior Resource
Group, Inc. (senior living centers management)
LEONARD R. FULLER
Los Angeles, California
President, Fuller & Company, Inc. (financial
management consulting firm)
ABNER D. GOLDSTINE
Los Angeles, California
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR.
Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III
Pasadena, California
Private investor
RICHARD G. NEWMAN
Los Angeles, California
Chairman of the Board, President and Chief
Executive Officer, AECOM Technology
Corporation (architectural engineering)
PETER C. VALLI
Long Beach, California
Chairman of the Board and Chief Executive
Officer, BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
RICHARD T. SCHOTTE
Los Angeles, California
President of the fund
Senior Vice President,
Capital Research and Management Company
MARY C. CREMIN
Los Angeles, California
Vice President and Treasurer of the fund
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
MICHAEL J. DOWNER
Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS
Los Angeles, California
Secretary of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK
Los Angeles, California
Assistant Secretary of the fund
Compliance Associate - Fund Business
Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR.
Los Angeles, California
Assistant Treasurer of the fund
Vice President - Fund Business
Management Group,
Capital Research and Management Company
LEONARD WEIL retired from the Board effective December 31, 1994. He had been a
member of the Board of Trustees since the inception of the fund. The Trustees
thank him for his many contributions to the fund.
DIANE CREEL and LEONARD FULLER were elected Trustees effective September 22,
1994.
Offices of the fund and of the investment adviser,
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92621-5804
Transfer agent for shareholder accounts
American Funds Service Company
P.O. Box 2205
Brea, California 92622-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
Custodian of assets
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081-0001
Counsel
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
For information about your account or any of the fund's services,
please contact your securities dealer or financial planner, or
call the fund's transfer agent, toll-free, at 800/421-0180.
This report is for the information of shareholders of American
High-Income Trust, but it may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives
details about charges, expenses, investment objectives and operating
policies of the fund. If used as sales material after June 30, 1995, this
report must be accompanied by an American Funds Group Statistical
Update for the most recently completed calendar quarter.
Litho in USA AGD/FS/2621
Lit. No. AHIT-013-0595
Printed on recycled paper
[The American Funds Group(R)]
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